Ironwood’s bargain might be a poisoned chalice

You can empathise with AstraZeneca in 2014, having to talk up its pipeline in a desperate attempt to ward off Pfizer and setting wildly optimistic forecasts for some of its R&D assets. The sellside complied, bullishly marking up even lesinunrad as a potential near-blockbuster in the notoriously tricky area of gout.

Now a different picture has emerged as Astra effectively gave up on lesinurad after getting it over the regulatory finishing line, yesterday selling it to Ironwood for just $100m up front. Ironwood might have picked up a bargain, but its problems with lesinurad as well as its lead drug, Linzess, might just be beginning.

The issues for lesinurad have been outlined by Leerink analysts, who reckon that the drug’s peak sales will reach only $280m. This contrasts sharply with sellside consensus, which stands at $924m in expected 2022 revenue, as compiled by EvaluatePharma.

Already late-stage data had painted lesinurad as a dubious asset, with kidney toxicity causing a high dose to be abandoned, and lower doses giving questionable efficacy (Lesinurad data far from a crystal clear win for Astra, August 13, 2014). Nevertheless, Astra secured US FDA approval for it in December.

Now Leerink says the drug’s launch, set for mid-2016, will be problematic too, mainly because of the difficulties in educating physicians and ensuring that patients stick to a multi-drug, chronic regimen. Ironwood will use an existing 160-170 person sales force, but Leerink questions whether its $75m marketing budget will be enough.

Market punishment

Ironwood stock fell sharply yesterday morning, but then recovered some lost ground to finish down 5%.

However, the decline probably had more to do with a scathing report about its lead marketed drug, Linzess, for constipation-predominant irritable bowel syndrome, issued by Phase Five Research, a fund that builds short positions in healthcare stocks.

Linzess, Phase Five alleges, has been associated with severe and fatal adverse events not limited to the gastrointestinal tract. The findings come from freedom-of-information requests into the FDA’s Adverse Event Reporting System database – though crucially they have yet to be independently verified.

Linzess sold $455m last year via Ironwood’s partner Allergan, and EvaluatePharma sees sellside expectations of $1.1bn in 2022. Ironwood can hardly be blamed for trying to fill out its product offering, and Astra's willingness to let lesinurad go for a mere $100m must have seemed attractive.

But gout is hardly a slam dunk, notwithstanding the FDA’s willingness to approve. One of the fundamental problems is that it is reasonably treatable with allopurinol, a cheap generic, and thus lesinurad is to be positioned as an add-on for patients who cannot achieve normal uric acid levels with allopurinol alone.

Despite the doubts, gout has yielded business development activity, including Horizon Pharma’s $510m purchase of Krystexxa from Crealta, a company that had picked up the asset at a bankruptcy auction of its originator, Savient. Novartis’s Ilaris is approved for gouty arthritis, and today secured US breakthrough designation for three rare diseases.

Clearly Astra once saw huge potential in gout – after all it gained lesinurad through the purchase of Ardea Biosciences for a generous $1.3bn. That of course was under its previous chief executive, David Brennan, under whose legacy the current incumbent, Pascal Soriot, has been working hard to draw a line.

Getting out of lesinurad is the latest Astra “externalisation” effort for non-stellar assets. The asset is now Ironwood’s problem.

To contact the writer of this story email Jacob Plieth in London at [email protected] or follow @JacobPlieth on Twitter

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