What happened

Shares of Ironwood Pharmaceuticals (NASDAQ:IRWD) gained 12% today after the company published a filing with the Securities and Exchange Commission. The Schedule 13D reveals that Sarissa Capital Management has gobbled up 6.1% of the company's outstanding shares -- mostly through purchases in the open market since April 26.

The recent purchases signal that the activist investor sees something in the gastrointestinal (GI) disease drug developer, which has seen its shares fall 41% in the last year. A closer look at recent developments provides a few reasons for that enthusiasm.

As of 1:32 p.m. EDT, the stock had settled to a 10.2% gain.

A businessman looking through binoculars.

Image source: Getty Images.

So what

Ironwood Pharmaceuticals spun off its noncore business unit as a separate publicly traded company, Cyclerion Therapeutics, in early April. That allows the business to focus all of its bandwidth on its promising GI portfolio, which is headlined by Linzess. The drug treats irritable bowel syndrome with constipation and is marketed with Allergan. It's a slow-growing franchise, but it provides a solid financial foundation for the rest of the business.

Case in point: Full-year 2019 revenue guidance calls for $370 million to $390 million, along with adjusted EBITDA of at least $65 million. That will certainly help fund the development of a promising late-stage pipeline that includes multiple phase 3 trials. And if operating expenses can be held in check, the separation also makes Ironwood Pharmaceuticals an attractive acquisition target. After all, four of its five drug candidates and products are partnered with Allergan.

Now what

Investors can get into a lot of trouble by speculating about acquisitions, but now that an activist investor has entered the fray, it's reasonable to expect that at least some changes are on the way. For instance, Ironwood Pharmaceuticals reported selling, general, and administrative expenses of $64.7 million in Q1. While that should decrease after the spinoff, it's still a remarkably high figure. It might be an easy target for Sarissa Capital Management should it wrestle away more control of the business -- and it might be just the start.