Ironwood Pharmaceuticals Inc (IRWD) Q4 2020 Earnings Call Transcript

Image source: The Motley Fool.

Ironwood Pharmaceuticals Inc (IRWD 2.79%)
Q4 2020 Earnings Call
Feb 17, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Ironwood Pharmaceuticals Fourth Quarter and Full Year 2020 Investor Update Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Meredith Kaya. Thank you. Please go ahead.

Meredith Kaya -- Vice President, Investor Relations and Corporate Communications

Good morning, and thanks for joining us for our fourth quarter and full year 2020 investor update. Our press release crossed the wire this morning and can be found on our website.

Today's call and accompanying slides include forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially. The discussion of these statements and risk factors is available on the current Safe Harbor statement slide as well as under the heading Risk Factors in our quarterly report on Form 10-Q for the quarter ended September 30, 2020 and in our future SEC filings. All forward-looking statements speak as of the date of this presentation and we undertake no obligation to update such statements.

Also included are non-GAAP financial measures, which should be considered only as a supplement to and not a substitute for or superior to GAAP measures. To the extent applicable, please refer to the tables at the end of our press release for reconciliations of these measures to the most directly comparable GAAP measures.

During today's call, Mark Mallon, our CEO, will begin with an overview, followed by Tom McCourt, our President and incoming Interim CEO, who will review our strategic priorities and commercial performance of LINZESS; and Gina Consylman, our CFO, will review our 2020 financial results and provide guidance for 2021. And finally, Mike Shetzline, our Chief Medical Officer, will provide an overview of our current focus on GI innovation. We will close with a Q&A session. We will be referring to slides via the webcast. For those of you dialing in, please go to the Events section of our website to access the webcast slides.

With that, I will turn the call over to Mark.

Mark Mallon -- Chief Executive Officer

Thanks. Meredith. Good morning, everyone, and thanks for joining us today. Let me begin by saying how proud I am of the entire Ironwood team who truly showed their passion and commitment throughout 2020 to advance treatment for GI diseases and redefine the standard of care for GI patients. Their passion and mission-driven approach is one of the things that has most inspired me during my time with Ironwood.

As I shared last week, deciding to leave Ironwood wasn't easy, but the chance to pursue certain passions of mine is really the right decision for me personally and for my family. I'm confident Ironwood will be in great hands with Tom as Interim CEO while the board conducts its search. Tom has been an incredible colleague of mine for many years and a key member of the leadership team since joining Ironwood in 2009. In addition to his many accomplishments over the years, he led the successful launch and commercialization of LINZESS.

Despite the challenges of COVID-19 pandemic over the last year, Ironwood's business fundamentals and financials are strong. We believe the resilience and strength of LINZESS combined with the continued profit and cash generation in 2020 provides a solid foundation for the future. I'm confident Ironwood is well positioned to deliver value for patients and shareholders.

Turning to our 2020 performance. We began 2020 focused on our three core priorities; to drive LINZESS growth, advance our GI portfolio and deliver sustainable profits. LINZESS continues to be the prescription market leader within its category, demonstrating exceptional growth in the brand's eighth year since launch. Additionally, Ironwood has now delivered its second consecutive year of profits and ended 2020 with over $360 million in cash, more than doubling our cash position from the end of 2019.

Turning to our pipeline. The results from the 3718 and 7246 clinical programs were disappointing. These are two distinct programs that were being developed to treat high unmet medical needs and represented an opportunity to potentially help millions of patients. While these types of outcomes are not uncommon in drug development, they are certainly never easy, especially when they affect our own teammates, as these did with the recent workforce reduction.

We're pleased -- we were pleased to receive the approval of linaclotide sNDA for overall abdominal symptoms data in adults with IBS-C as well as the progress of our ongoing pediatric studies. With several GI diseases in desperate need of new therapies, continued scientific progress within this category and our unique expertise and capabilities, the team is focused on finding and advancing innovative treatments for GI diseases. I'm proud of the strong foundation we've built together. All of you at Ironwood are true champions of this GI -- in the GI community, and I'm privileged to have worked alongside you. I look forward to following Ironwood as it seeks to drive continued success.

With that, I'll turn it over to Tom. Tom?

Thomas McCourt -- President

Thanks, Mark, and good morning, everyone. I look forward to serving as the Interim CEO following Mark's transition as we build on the strong foundation we have in place. Our path forward strategy begins with maximizing LINZESS. We believe there is substantial opportunity for continued growth and are working closely with our partner to deploy innovative commercial strategies and enhancing clinical -- the clinical profile through life cycle management.

Second, we are focused on building an innovative GI development portfolio by pursuing assets that target serious organic GI diseases. We maintained a disciplined approach through exploring and assessing potential new assets, including applying a focused set of criteria and a high bar for any potential deal that we may consider. We believe our new refreshed approach has the potential to drive our business further and faster and with the potential for providing great benefit to patients we can serve.

And third, we seek to continue to take a thoughtful and disciplined approach to capital allocation in an effort to continue generating sustainable profits and cash flow. We are steadfast in our mission, and importantly, remain focused on our goals of driving value to shareholders by bringing important medicines to patients and building a growing and successful business.

Now let me turn to the commercial performance. In 2020, LINZESS showed incredible strength and resilience in the face of the pandemic, further strengthening its position as the number one prescribed medicine in the U.S. for the treatment of adults with IBS-C and chronic constipation. LINZESS prescription demand grew 8% in the fourth quarter and 9% for the full year 2020 year-over-year.

This strong performance translated into full year U.S. net sales of $931 million, a remarkable achievement. And we are seeing strong LINZESS demand growth continuing into the first quarter. And while it's still early, we're very encouraged by the performance thus far. We believe LINZESS remains on track to exceed $1 billion in U.S. net sales with several additional opportunities to drive further growth.

The brand hit all-time highs in new-to-brand prescriptions in the second half of 2020, reinforcing the patients and healthcare practitioners continue choosing LINZESS for appropriate patients despite the pandemic-related limitations. We also saw an increase in 90-day prescriptions as a percent of our total business. In the fourth quarter, 90-day prescription demand was 20% of our business versus 17% during the same time in 2019. Meaning on average, more total pills per prescription.

The brand success to date in the U.S. has come through consistent and strong execution of the commercial strategy. That's grounded in three core fundamentals; increasing awareness of LINZESS among physicians, motivating appropriate patients to seek care and request LINZESS and securing broad payer access.

Moving forward, we intend to continue to focus on these core fundamentals, but to execute in new ways in an effort to further maximize the LINZESS potential. First, to further support our clinical discussions with healthcare practitioners, we're working to strengthen the virtual selling capabilities we deployed in 2020 and create a hybrid selling model. We think this will be important capability for the future. In addition, we intend to build further awareness of the overall abdominal symptom data in adults with IBS-C based on the FDA approved labeling update in 2020. We also intend to advance our efforts in telemedicine in light of the expansion of the use of telemedicine by patients and physicians. We're in the process of expanding our telemedicine efforts and capabilities and seeking to strengthen the impact in 2021.

Since launch, there has been a significant focus on establishing broad payer access. As the prescription market leader in its category, LINZESS has wide unrestricted access, and we seek to maintain this status as a key growth driver for the brand. Lastly, we expect to advance additional life cycle management efforts for linaclotide. We believe we have a long runway to continue to grow. And we are currently evaluating opportunities for linaclotide, both with regard to new indications and new patient populations.

With that, I'll turn the call over to Gina. Gina?

Gina Consylman -- Senior Vice President, Chief Financial Officer

Thanks, Tom, and good morning, everyone. I am pleased to be able to highlight our strong financial performance for 2020 and provide our 2021 financial guidance. Please refer to our press release for our detailed financial information.

First, touching on our 2020 financial performance. Ironwood's total revenues in the fourth quarter of 2020 were $117 million, driven primarily by a 9% increase in U.S. collaboration revenue from LINZESS year-over-year and $390 million for the full year, exceeding our 2020 revenue guidance. A reminder that 2019 revenues included $42 million in license and milestone payments and $49 million in sales of linaclotide API recorded in 2019.

Beginning in 2020, we are no longer responsible for the supply of linaclotide API to our ex-U.S. partners. API sales during this past year reflected the remaining API shipments to Astellas and AstraZeneca per our amended agreements. Regarding LINZESS, U.S. net sales were up 16% in the fourth quarter and 10% for the full year 2020 year-over-year. I'd like to briefly comment on commercial margin in the fourth quarter, as it was lower than we have seen in previous quarters. This decrease is due primarily to an adjustment to selling expenses recorded during the period.

During the first three quarters of 2020, only cost associated with in-person details were included as part of the LINZESS U.S. brand collaboration. Since we weren't able to execute as many in-person details due to COVID-19 restrictions, we saw a significant improvement in commercial contribution during those periods. Therefore, we and AbbVie determined to adjust the selling expenses recorded in the fourth quarter to include costs incurred throughout the year related to virtual detailing and overhead due to the COVID-19 pandemic. As such, full Year 2020 expenses are similar to our investments in 2019 and the adjustment simply reflects timing across the quarters. Looking ahead to 2021. We expect the commercial investment behind LINZESS to be in line with our investment in 2020. And we continue to seek to expand margins through growing LINZESS net sales and disciplined investment behind the brand.

Turning now to Ironwood's profitability and cash. For full year 2020, our profitability was driven by significantly higher LINZESS net sales and lower operating expenses compared to 2019. GAAP net income was $106 million and adjusted EBITDA was $161 million in 2020. Additionally, we generated $169 million in cash flow from operations and ended the year with $363 million in cash and investments.

We are pleased to provide our full year 2021 financial guidance, in which we expect U.S. LINZESS net sales growth of 3% to 5%. We anticipate net sales growth to be driven by high-single-digit percent growth in LINZESS prescription demand continuing this momentum for 2020, offset by mid-single-digit percent price erosion resulting from certain contract changes going into effect this year. We expect total revenue of $370 million to $385 million, mainly driven by growth in U.S. collaboration revenues and inclusive of approximately $10 million that we anticipate from royalty, co-promotion and other revenue. And lastly, we expect adjusted EBITDA of greater than $190 million with adjusted EBITDA continuing to be a proxy for cash generation, as it was in 2020.

We believe our continued financial performance, our current cash balance and the numerous steps taken to strengthen our financial profile positions us well for 2021 and beyond. Delivering shareholder value is at the heart of successfully meeting our strategic priorities. This is a critical threshold for our investment decisions as we continue to invest thoughtfully into our business.

Our capital allocation strategy is focused on maximizing LINZESS. As Tom mentioned earlier, we can we expect to continue to invest in opportunities to drive further growth in LINZESS. This is our highest priority and where we believe we can create the most value today. We are also leveraging our GI expertise in an effort to build an innovative pipeline by pursuing inorganic opportunities to diversify our GI portfolio. And lastly, we expect to continue to explore ways to deploy any excess free cash, including the potential for opportunistic share repurchases.

Before I turn it over to Mike, I want to briefly highlight our new strategy to build our GI pipeline. We are focused on diseases that are largely managed by GE, prioritizing organic GI diseases with well defined pathology and where we have an opportunity to accelerate developments within shorter timelines. In addition, we are focused on innovative clinical assets that are already -- that already have demonstrated preliminary efficacy and safety. And finally, we seek to maintain our ability to deliver profits and cash, as we have been doing.

With that, I'll turn it over to Mike.

Michael Shetzline -- Chief Medical Officer, Senior Vice President and Head of Drug Development

Thanks, Gina. I'll spend the last few minutes touching on the opportunities within the GI space and our own IW-3300 program. We've been steadfast in our efforts to advance treatments for GI diseases. And over the past two years -- I'm sorry, with the best GI diseases over the past two years. And the learnings we've gained gives us confidence in our refreshed strategy to also explore earlier stage development opportunities in serious organic diseases.

Through our recent assessment in the GI landscape, we identified over 100 GI assets across more than 25 disease areas that support our new focus strategy. Through these efforts, we've prioritized eight disease areas with high unmet need and where we believe we can have the most impact. These areas where we've seen a lot of progress in the understanding of the disease, the pathophysiology and the potential targets. For example, two of the disease areas we're looking at are pancreatitis and celiac disease. Pancreatitis has a significant medical need since unfortunately today patients are still treated with IV fluids and pain management with no approved therapies targeting the underlying pathology of their disease. Celiac disease where the pathophysiology is very well defined and the mechanism is well understood and there lots of opportunities to target new medications for suffering -- for patients suffering from this diseases is still has no medical therapies. While these are just two examples, clearly there remains tremendous unmet need with GI.

In conjunction with this strategy, we're also advancing 3300, a GC-C agonist being developed for the potential treatment of visceral pain conditions, such as bladder pain syndrome and endometriosis. 3300 is a stable and potent GC-C agonist that provides a true opportunity to test the crosstalk hypothesis in humans. Crosstalk is a well known biologic phenomenon where sensations are injury originating one organ can cause altered sensation in the nearby organ because of overlapping nerve pathways. We believe this can result in enhanced pain perception affecting the bladder and reproductive organs in the pelvic area.

We have strong preclinical data in a number of visceral pain models, including vaginal and bladder pain that suggest the potential for GC-C stimulation with 3300 to alleviate the visceral pain. We expect to submit an IND application with the U.S. FDA in the second half of 2021, putting us on track if approved to initiate a Phase 1 clinical trial with 3300 in early 2022. We expect this trial will help us determine the assets potential for further clinical development.

I'll now turn it over to Mark for some closing comments before Q&A. Mark?

Mark Mallon -- Chief Executive Officer

Sorry, I was on mute. Apologies everyone. So thanks, Mike, for catching that end. Thanks for the update on 3300. It's certainly an exciting opportunity for Ironwood. As you've heard from the team this morning, Ironwood has a significant opportunity ahead to advance our vision of becoming the leading GI-focused healthcare company in the U.S. And I want to thank the entire Ironwood team for a tremendous effort in putting patients at the forefront of everything we do. Thanks again for joining us this morning.

Operator. I think we can now open the line for Q&A.

Questions and Answers:

Operator

Certainly. [Operator Instructions] Our first question is from Martin Auster with Credit Suisse. Your line is open.

Mark Mallon -- Chief Executive Officer

Hi, Martin.

Mark Connolly -- Credit Suisse -- Analyst

Hi, everyone. This is actually Mark on for Marty, but thanks for taking my question. I guess, two for me. I was wondering if you might be able to provide a little more clarity on your 2021 guidance. It looks like revenue guidance was roughly flat year-over-year, while you expect LINZESS U.S. net sales to grow 3% to 5%. Is that discrepancy due to higher AbbVie-Ironwood commercial costs or is there something else we need to consider? And I guess are there any additional details if you could provide on how we should think about these costs moving forward?

And then the second question I have relates to I believe generic amenities entered the market the other month. I'm just curious if you could kind of speak to what impact you have seen since they entered the market? And has it resulted in any pressure on LINZESS pricing? And if so, how does that impact on pricing compared to your expectations coming into the year?

Mark Mallon -- Chief Executive Officer

So thanks for the questions, Mark. Gina, can you take the first one. And Tom, maybe you can pick up the question on amenities then.

Thomas McCourt -- President

Sure.

Gina Consylman -- Senior Vice President, Chief Financial Officer

Sure. I'm happy to. Thanks, Mark. So if I understood it correctly, I think you're asking about the decline in revenue despite the fact that -- decline of Ironwood revenue despite the fact that we are guiding to increased LINZESS revenue. So maybe just a quick reminder that the Ironwood revenue includes a bit more than the collaboration revenue that we've recognized from the LINZESS collaboration with AbbVie.

The other revenue, for instance in 2020, included a small amount of API sales. We had just a wrap-up of the API sales to Astellas and AstraZeneca in 2020 from the restructured arrangements in 2019. We actually had significant revenue in 2019 related to those agreements and then a small amount in 2020, that's done now. At this point, it's wrapped up and we're not expecting revenue to continue in 2020. So that's one part of it.

And the other part of it is related to the $10 million that I called out as part of the guidance. The 10 million is included in the overall Ironwood revenue, and it's actually down a bit year-over-year or expected to be in 2021 versus 2020. And that is in part due to the restructured Alnylam agreement that we mentioned as well. In 2020, we received fixed payment plus royalties. And in 2021, going forward, we are expecting to only receive royalty.

Mark Connolly -- Credit Suisse -- Analyst

Got it. [Speech Overlap] Yeah, go ahead.

Thomas McCourt -- President

So yeah, you're absolutely right, generic entities or the single source generic is now available. I think as far as its impact, it's been -- its market share has been eroding over time. Keep in mind, it was the market leader when we entered the market. And obviously, really within the first 18 months, we were able to actually catch it and actually surpassed it with regard to market share. And these -- it's important to remember, these are very different molecules and the overall efficacy and tolerability looks quite different. And the piece that it was been driving LINZESS growth over time has been the high level treatment satisfaction both on the part of the payer -- the part of the physician and the patient.

As far as pricing pressure, yeah, I think it's important to remember, we've been playing in a generic market since we launched with Generic PEG. And so there has been multiple generic options available to patients. And I think it also is important to note that the far majority of patients still continue to be treated by OTCs even though they're not satisfied, and that's really where our source of business comes from.

Hey, we all anticipate further pricing pressure from a variety of areas, including the government. But as we've mentioned before, this year, we've guided to stable price, which we realized. Next year, we did show up a couple of contracts. So there will be some price erosion that Gina had mentioned. But I think the important thing -- the most important thing is how healthy the brand is. And when you look at its demand growth, its ongoing demand growth and what we're seeing certainly as we finished last year and we're heading into this year, I think we're very confident in the ongoing viability of the brand in the marketplace.

Mark Connolly -- Credit Suisse -- Analyst

Great. Thanks for taking my question.

Operator

Your next question is from Eric Joseph with J.P. Morgan. Your line is open.

Mark Mallon -- Chief Executive Officer

Hi, Eric.

Eric Joseph -- J.P. Morgan -- Analyst

Hi, good morning. Thanks for taking the question. I guess, just one following up on -- well really, I just [Indecipherable]

Mark Mallon -- Chief Executive Officer

Eric, could you repeat that question? I don't know about the others, but it broke up a little bit and it was hard to hear.

Eric Joseph -- J.P. Morgan -- Analyst

Sure. Can you hear me now? Sorry about this.

Mark Mallon -- Chief Executive Officer

That's better, yeah. That's better. Thanks.

Eric Joseph -- J.P. Morgan -- Analyst

Okay. Yeah, just wondering if there is any further color on potential transactions that you're thinking about in the organic GI space, particularly around size of the deal and speed of developments in a target asset? And whether the change in leadership might have any impact on timing? Thanks.

Mark Mallon -- Chief Executive Officer

So Tom, why don't you take how you're seeing the sort of organic opportunities in GI. And Gina, certainly jump in with any thoughts you have as well. And Tom, it's just the question about the strategic direction at the end. Sorry Tom.

Thomas McCourt -- President

Sure. Yes, as Mark -- as both Mark and Gina mentioned, we're really focusing on these serious organic diseases. We've identified a number of assets, as Mike mentioned. And mostly, these are held by fairly small companies with limited development expertise and essentially no commercial expertise. So obviously, we're really focusing on particularly assets that we can leverage our internal expertise to accelerate time to market.

So we're really looking for an asset that where there is clear incremental value to be created. So we have a very high bar. We've looked at a number of assets to date. But we will continue to strive to make sure that it is the right next move for us as far as where we're going. I mean, obviously it is built -- it is very complementary to LINZESS with regard to the commercial model. But obviously, Mike and his team bring very deep scientific and medical expertise to make a good choice. And then obviously working with Gina's corporate development team to make sure we get the right deal done.

Gina Consylman -- Senior Vice President, Chief Financial Officer

Sure. Thanks, Tom. I mean, I might just continue to add, I don't expect it to impact -- the leadership change to impact our ability to be able to continue to execute hopefully our transactions this year. One, I just have a lot of confidence in Tom, especially working with him over these last seven years plus in addition to the fact that Julie has stepped up in giving us additional time as Executive Chair. So I think the combination has put us in great hands.

I would also just remind you that we just talked a little bit on the last question about that small amount of revenue and the fluctuations in API and royalty for instance or milestone payments, but the core business is strong. So the collaboration revenue related to LINZESS is incredibly strong and growing year-over-year. And with that fundamental for growing revenue of our core business and cash generation, it just positions us in a great place to be able to have the financial capacity to be able to not only afford the upfront related to our development stage asset, but also gives us the ability to continue to fund it through development. I guess, this is a P&L based to maintain profitability at the same time.

Mark Mallon -- Chief Executive Officer

Eric, I just want to add one more thought about sort of the readiness of the team to continue to execute. I don't think I've seen Ironwood more ready to keep executing at a high level in the time I've been, whether you're talking about driving LINZESS growth. The team -- we've got a fantastic commercial team that Tom has built and strengthened actually over the last year. It's executing extremely well. They've got new ideas. They're collaborating well with AbbVie, that's being driven.

In the business development standpoint, we've got a fully aligned board with the fully aligned management team, a number of strengths in the team. We've got a clear set of targets that Mike and Tom have talked about. And we've got the resources to focus on the people and the alignment to move fast on that. And the third is that, look, you clearly saw the ability to sort of generate profit and cash in 2020 and that sort of execution and delivery focus is as high as ever. So I think we're really ready to keep executing. I don't think they're going to miss a beat. They might even step up the beat.

Eric Joseph -- J.P. Morgan -- Analyst

Okay. Thanks for all the color there. I appreciate that. Appreciate you taking the question. Apologies for the line.

Operator

Our final question is from Boris Peaker with Cowen. Your line is open.

Boris Peaker -- Cowen and Company -- Analyst

Good morning.

Mark Mallon -- Chief Executive Officer

Hi, Boris.

Boris Peaker -- Cowen and Company -- Analyst

How are you? Can you talk about the trend in gross to net discounting and the outlook for that over the next several years?

Mark Mallon -- Chief Executive Officer

Sure. I'll ask Gina to maybe share her thoughts on that. And Tom may want to add some additional color too, I'm sure. Go ahead, Gina.

Gina Consylman -- Senior Vice President, Chief Financial Officer

Sure. Hi, Boris. Yes, I'm happy to. Especially since 2020 was certainly a great year and one we were quite pleased with. Tom mentioned, we originally guided to net sales price for the year. We actually did recognize price. If you think about the year-over-year growth in net sales, it wasn't just due to the strong demand, it was also price depreciation as well. That price depreciation was really due to thoughtful plan design changes that we implemented at the beginning of the year. So beginning of 2020 where, for instance, we were no longer exclusive in certain plans. But fortunate for us, we didn't see a dip in demand because of those changes.

We also had -- and that was the bottom of the change. We also had some small, I would say, unfavorable -- small unfavorable adjustments in 2019 related to gross to net typical adjustments from time to time. But because they weren't repeated in 2020, it did add to some price depreciation for the year. So then looking forward to 2021, we've obviously we've guided to mid-single-digit price erosion for the year. That is also due to contract changes that we are aware of.

We continue to see pricing pressure, mainly due to some competitive pressures in addition to the fact that [Indecipherable] is going generic. But our strategy for demand growth hasn't changed. We continue to invest fully behind the brands, believe that it will continue for many years to come through demand. And at the same time we want to focus on broad payer access with an affordable co-pay, which is for most of our patients is $30 or less. So in order to maintain that broad access, there are times year-over-year that we need to make changes to make sure that our patients can still access LINZESS at an affordable price. So that's the change this year.

You've heard me say this before that I would expect price depreciation as the norm. I'm personally -- I'm pleased with 2020, but I wouldn't expect that going forward. I do expect continued pressure even pressure throughout 2021. We've guided to the mid-single-digit price erosion, but payers don't always wait till the contracts expire to knock on the door. So we'll just continuing to monitor and execute according to plan, right? Focus on demand growth and broad payer access at the same time.

Boris Peaker -- Cowen and Company -- Analyst

Great. And then -- go ahead.

Thomas McCourt -- President

Boris, just one last thought, and this is really kind of an awakening for us this year. As you know, the far majority of our major plants were preferred unrestricted, meaning we're one of one. And we have made -- we made a couple of decisions last year to forego the exclusivity and move to basically one of two or even a non-preferred position. Yet, we continue -- in those plans, we continued to drive growth, like double-digit growth.

So I think it offers us some flexibility knowing where we are with these plans as far as other options that maybe we wouldn't have normally had. And I think it speaks to how strong the brand is with regard to the preference that physicians or payers want. I completely agree with Gina, as we move forward, I think you have to anticipate some price erosion year-on-year, which is a reason why we have to continue to drive demand.

Boris Peaker -- Cowen and Company -- Analyst

Got it. That's very helpful. My second question is, I think not so long ago, we're talking about our previous prescription option becoming over the counter and how that was contributing to your price growth. Can you kind of -- is that still out there? Is that still helping prescription growth? And maybe can you provide any update on that altogether?

Thomas McCourt -- President

Yeah. I think, specifically, you're talking about removal of Generic PEG from the prescription market. Is that...

Boris Peaker -- Cowen and Company -- Analyst

Yeah, yeah.

Thomas McCourt -- President

Yeah. So there is no question at the end of last year we saw -- not last year, the year before '19, we saw this removal and we saw a bolus, an influx of prescriptions. But I think the big thing that we saw was dynamic change in the market because you've just eliminated the market leader. It's available by prescription. So if they're going to choose a prescription drug, we just eliminate an option and obviously that had a significant impact in people's choice to LINZESS because when patients are frustrated with OTC, the last thing they want is another OTC walking out the door. So not only does LINZESS have a great clinical performance profile, level of satisfaction, but now it's one of actually fewer options with the exception of the recent new entrants into the market, which really are not differentiated at all and have struggled to gain share, as you know.

So we've continued to see LINZESS thrive. The far majority of the business is coming directly from the OTC market, which is where it needs to come from. And we're continuing to increase our overall market share in the marketplace. So I think it's this dynamic change of choice, which has also helped fuel the growth of LINZESS.

Boris Peaker -- Cowen and Company -- Analyst

Got you. Okay, great. Thanks for the detailed answers to my questions.

Thomas McCourt -- President

Sure.

Operator

Our final question is from Jacob Hughes with Wells Fargo Securities. Your line is open.

Jacob Hughes -- Wells Fargo -- Analyst

Hey guys, good morning.

Mark Mallon -- Chief Executive Officer

Good morning.

Gina Consylman -- Senior Vice President, Chief Financial Officer

Good morning.

Jacob Hughes -- Wells Fargo -- Analyst

I just have a follow-up question on your guidance. If I just -- on your revenue guidance, if I just take kind of the midpoint of your revenue guidance and take out the $10 million that you mentioned for other, it kind of implies collaboration revenues flattish or up modestly year-over-year. And I was just wondering, is that point to kind of a reduction in the commercial margin or higher investment or what's the explanation there? Thanks.

Mark Mallon -- Chief Executive Officer

Gina, you want to take that?

Gina Consylman -- Senior Vice President, Chief Financial Officer

Sure. Of course. We do expect LINZESS revenues to continue to grow over time. We also expect margin to continue to expand over time. Just through growing revenue, thoughtful investments. The investments have been -- we've been investing fully behind the brands. If you see -- if you take a look at the numbers this year, I think they're about $10 million last year-over-year. So I think we can still fully invest behind the brand and make more thoughtful investments with the higher ROI as well.

I will go back to thinking about it as we guided to growing LINZESS sales of 3% to 5% for the year, roughly same level of investment. And just to remind you that obviously we get 50% of that increase, right?

Jacob Hughes -- Wells Fargo -- Analyst

Okay. All right. Thank you.

Gina Consylman -- Senior Vice President, Chief Financial Officer

All right. Hopefully, that's helpful.

Operator

We have no further questions at this time. I'll turn the call back to presenters for closing remarks.

Mark Mallon -- Chief Executive Officer

Tom, I just want -- and the team, again, I just want to thank all of you for great work in 2020. And I want to wish you the best of luck, Tom, as you move into the Interim CEO, and of course to whole team for continuing their great work and success. As I said in my remarks, I have full confidence of everything moving forward. And Tom, if I'll give you a chance to have the last word as you're going to be moving into the Interim CEO role. Thanks for all your support over the last few years.

Thomas McCourt -- President

Sure. And Mark, I speak on behalf of the board and certainly the management team. It's been a terrific experience with you and we've learned a lot from your leadership. I mean, think about what we've achieved over the last couple of years and really rightsizing the company, getting it focused, making it more profitable. And I think you're leaving it in our hands in very good shape. As the Interim CEO coming in, I couldn't be more excited about the opportunity here. I think everybody knows, I'm a big believer in LINZESS. I think we have a long ways to go with it, particularly with a healthy life cycle, and we have a great partner. I mean, AbbVie has turned out to be a tremendous partner and a new catalyst to help us think even broader about the brand, both in terms of the life cycle, but also some of the innovation in the market -- in the commercial space, which we've invested in virtual sell units, hybrid model. The telemedicine area is very exciting, particularly in this category for this brand. And certainly, we have a very strong expert team to move forward. So thank you for everything. And I look forward to the upcoming year and making a very good decision with the board on the future CEO. Thank you.

Mark Mallon -- Chief Executive Officer

Thanks, operator. That's it for us.

Operator

[Operator Closing Remarks]

Duration: 39 minutes

Call participants:

Meredith Kaya -- Vice President, Investor Relations and Corporate Communications

Mark Mallon -- Chief Executive Officer

Thomas McCourt -- President

Gina Consylman -- Senior Vice President, Chief Financial Officer

Michael Shetzline -- Chief Medical Officer, Senior Vice President and Head of Drug Development

Mark Connolly -- Credit Suisse -- Analyst

Eric Joseph -- J.P. Morgan -- Analyst

Boris Peaker -- Cowen and Company -- Analyst

Jacob Hughes -- Wells Fargo -- Analyst

More IRWD analysis

All earnings call transcripts