What changed in this filing

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Item 1A. Risk Factors

2021-08-05 compared with 2021-05-06 · 68 added, 70 removed, 790 unchanged (15% of the section changed)

45 unchanged sentences

The most commonly reported adverse reaction since linaclotide became commercially available, as well as in the clinical trials for linaclotide in IBS-C and CIC, has been diarrhea.

In the linaclotide Phase III IBS-C and CIC trials, severe diarrhea was reported in 2% or less of the linaclotide-treated patients and its incidence was similar between the IBS-C and CIC populations.

In the linaclotide Phase III

IBS-C and CIC trials, severe diarrhea was reported in 2% or less of the linaclotide-treated patients and its incidence was similar between the IBS-C and CIC populations.

The number and type of patients treated with linaclotide could continue to grow if physicians prescribe linaclotide to more patients and as we and our partners conduct clinical trials, including in new indications, populations or formulations, as well as explore potential combination products, in existing and new territories.

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Certain third-party payors also require prior authorization for, or even refuse to provide, reimbursement for our products, and others may do so in the future.

Our business would be materially adversely affected if we and our partners are not able to receive approval for reimbursement of our products from third-party payors on a broad, timely or satisfactory basis;

Our business would be materially adversely affected if we and our partners are not able to receive

approval for reimbursement of our products from third-party payors on a broad, timely or satisfactory basis;

if reimbursement is subject to overly broad or restrictive prior authorization requirements;

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CONSTELLA was first launched in certain European countries for the symptomatic treatment of moderate to severe IBS-C in adults in the second quarter of 2013 and our partner, AbbVie, is currently commercializing CONSTELLA in a number of European countries, including the United Kingdom, Italy and Spain.

LINZESS was first launched in Japan for the treatment of IBS-C in adults in the first quarter of 2017, and for the treatment of chronic constipation in adults in the third quarter of 2018, and our partner Astellas Pharma, Inc., or Astellas, is currently commercializing LINZESS in Japan.

LINZESS was first

launched in Japan for the treatment of IBS-C in adults in the first quarter of 2017, and for the treatment of chronic constipation in adults in the third quarter of 2018, and our partner Astellas Pharma, Inc., or Astellas, is currently commercializing LINZESS in Japan.

In addition, LINZESS was first launched in China for the treatment of IBS-C in adults in November 2019, and our partner AstraZeneca AB (together with its affiliates), or AstraZeneca, is currently commercializing LINZESS in China (including Hong Kong and Macau).

9 unchanged sentences

We are working closely with AbbVie to execute our joint commercialization plan for LINZESS.

The commercialization plan includes an agreed upon marketing campaign that targets the physicians who see patients who

could benefit from LINZESS treatment.

The commercialization plan includes an agreed upon marketing campaign that targets the physicians who see patients who could benefit from LINZESS treatment.

Our marketing campaign also targets the adult men and women who suffer from IBS-C or CIC.

10 unchanged sentences

however, they are limited in the number of in-person details they are able to conduct due to containment and mitigation measures related to the COVID-19 pandemic.

We monitor the impact of the COVID-19 pandemic in the territories where our customer-facing employees are engaged in in-person work practices, and in some cases, we have paused or delayed in-person work practices as a result of the impact of the COVID-19 pandemic in those territories, and may do so again in the future.

Customer-facing employees who are not providing in-person services continue to support their customers virtually through telephone and web-based technologies.

44 unchanged sentences

We and AbbVie have established a nonclinical and clinical post-marketing plan with the U.S.

FDA to understand the safety and efficacy of LINZESS in pediatric patients, and clinical pediatric programs in IBS-C and functional constipation are ongoing.

FDA to understand the safety and efficacy of LINZESS in pediatric patients, and clinical pediatric programs in IBS-C and

functional constipation are ongoing.

Our ability to expand the indication or label information for LINZESS to pediatrics will depend on, among other things, our successful completion of pediatric clinical programs.

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Manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the U.S.

FDA and other regulatory authorities for compliance with GMP and other applicable regulations.

FDA and other regulatory authorities for compliance with current good manufacturing practices, or GMP, and other applicable regulations.

If we or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with a facility where the product is manufactured, a regulatory agency may impose restrictions on that product or the manufacturer, including withdrawal of the product from the market or suspension of manufacturing.

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Additionally, we cannot be certain of the duration or extent to which the COVID-19 pandemic may impact operations of regulatory authorities in jurisdictions around the world, and any reduction in resources dedicated to review and approval of products in applicable jurisdictions could delay or otherwise impact approval or other regulatory decisions or actions.

Further, regulatory approval in one jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory processes in others.

Further, regulatory approval in one jurisdiction does not ensure

regulatory approval in another, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory processes in others.

If linaclotide is not approved for all indications or patient populations or with the label requested, this would limit the uses of linaclotide and have an adverse effect on its commercial potential or require costly post-marketing studies.

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It is possible that none of the product candidates we may in-license or acquire will be approved for commercial sale or be otherwise commercially viable, which would impair our ability to grow.

Furthermore, we may have little or no insight or control over the development and commercialization of any product that we in-license outside the licensed territory.

Furthermore, we may have little or no insight or

control over the development and commercialization of any product that we in-license outside the licensed territory.

If other licensees do not effectively develop or commercialize any such product outside the licensed territory, our reputation or the reputation of any such product may be impacted.

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Although we have entered into such arrangements with respect to the development and commercialization of linaclotide worldwide, there can be no assurance that we will be able to do so in the future with respect to other products or product candidates that we either develop internally or in- license or that we will be able to gain the interest of potential partners;

establish and maintain development, manufacturing, marketing, sales or distribution relationships on acceptable terms;

establish and maintain development,

manufacturing, marketing, sales or distribution relationships on acceptable terms;

that such relationships, if established, will be successful or on favorable terms;

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Additionally, changes in regulatory requirements and guidance may occur, and we may need or otherwise determine to amend clinical trial protocols to reflect these changes.

Each protocol amendment would require institutional review board review and approval, which may adversely impact the costs, timing or successful completion of the associated clinical trials.

Each protocol amendment would require institutional

review board review and approval, which may adversely impact the costs, timing or successful completion of the associated clinical trials.

If we or our partners terminate or experience delays in the completion of any clinical trials, the commercial prospects for our products or product candidates may be harmed, and our ability to generate product revenues will be delayed.

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We and/or our partners have commercial supply agreements with independent third parties to manufacture the linaclotide API.

any new challenges, including those arising out of the COVID-19 pandemic, that arise in those regions.

The integration of our efforts with our partners’ efforts is subject to the uncertainty of the markets for pharmaceutical products in each partner’s respective territories, and accordingly, these relationships must evolve to meet any new challenges, including those arising out of the COVID-19 pandemic, that arise in those regions.

These integrated functions may not be carried out effectively and efficiently if we fail to communicate and coordinate with our linaclotide partners, and vice versa.

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We and/or our partners have commercial supply agreements with independent third parties to manufacture linaclotide API.

Each of our partners and the third-party manufacturers we or our partners engage must comply with current good manufacturing practices, or GMP, and other stringent regulatory requirements enforced by the U.S.

Each of our partners and the third-party manufacturers we or our partners engage must comply with GMP and other stringent regulatory requirements enforced by the U.S.

FDA and foreign regulatory authorities in other jurisdictions.

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Our partners and the third-party manufacturers we or our partners engage may experience problems with their respective manufacturing and distribution operations and processes, including, for example, quality issues, such as product specification and stability failures, procedural deviations, improper equipment installation or operation, utility failures, contamination, natural disasters and public health epidemics, including the COVID-19 pandemic.

the raw materials necessary to make API for our products and product candidates are acquired from a limited number of sources.

In addition, the raw materials necessary to make API for our products and product candidates are acquired from a limited number of sources.

Any delay or disruption in the availability of raw materials or a change in raw material suppliers could result in production disruptions, delays or higher costs with consequent adverse effects on us.

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If any of our linaclotide partners undergoes a change of control and the acquirer either (i) is unable to perform such partner’s obligations under its collaboration or license agreement with us or (ii) does not comply with the divestiture or certain other provisions of the applicable agreement, we have the right to terminate the collaboration or license agreement and reacquire that partner’s rights with respect to linaclotide.

If we elect to exercise these rights in

such circumstances, we will need to either establish the capability to develop, manufacture and commercialize linaclotide in that partnered territory on our own or we will need to establish a relationship with a new partner.

If we elect to exercise these rights in such circumstances, we will need to either establish the capability to develop, manufacture and commercialize linaclotide in that partnered territory on our own or we will need to establish a relationship with a new partner.

We have assembled a team that represents the functional areas necessary to support the commercialization of LINZESS in the U.S.

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The use of our product candidates in clinical trials and the sale of our approved products, including the sale of linaclotide, expose us to product liability claims.

If we do not successfully defend ourselves against product liability claims, we could incur substantial liabilities.

If we do not successfully defend ourselves against product liability

claims, we could incur substantial liabilities.

In addition, regardless of merit or eventual outcome, product liability claims may result in:

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Although the U.S.

FDA and other regulatory agencies do not

regulate a physician’s choice of treatments, the U.S.

FDA and other regulatory agencies do not regulate a physician’s choice of treatments, the U.S.

FDA and other regulatory agencies do restrict manufacturer communications on off-label use.

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For example, the processing of personal data in the European Economic Area, or the EEA, is subject to the General Data Protection Regulation, or the GDPR, which took effect in May 2018.

The GDPR increases obligations with respect to clinical trials conducted in the EEA, such as in relation to the provision of fair processing notices, exercising data subject rights and reporting certain data breaches to regulators and affected individuals, as well as how we document our relationships with third parties that process GDPR-covered personal data on our behalf.

individuals, as well as how we document our relationships with third parties that process GDPR-covered personal data on our behalf.

The GDPR also increases the scrutiny applied to transfers of personal data from the EEA (including from clinical trial sites in the EEA) to countries that are considered by the European Commission to lack an adequate level of data protection, such as the United States.

26 unchanged sentences

The ACA has also been subject to judicial challenge.

The case Texas v.

Azar , which challenges the constitutionality of the ACA, including provisions that are unrelated to healthcare reform but were enacted as part of the ACA, was argued before the Supreme Court in November 2020.

The Department of Justice under the Biden Administration informed the Supreme Court, in connection with the case Texas v.

Azar , that the government no longer takes the position that the individual mandate is unconstitutional and cannot be severed from the rest of the ACA.

Pending resolution of the litigation, all of the ACA but the individual mandate to buy health insurance remains in effect.

Beyond the ACA, other health care reform efforts are ongoing.

Some healthcare reform efforts have sought to address certain issues related to the COVID-19 pandemic, including an expansion of telehealth coverage under Medicare, accelerated or advanced Medicare payments to healthcare providers and payments to providers for COVID-19-related expenses and lost revenues.

Other reform efforts affect pricing or payment for prescription drug products, including the increase in discount that manufacturers of Medicare Part D brand name drugs must provide to Medicare Part D beneficiaries during the coverage gap from 50% to 70%.

Other reform efforts affect pricing or payment for prescription drug products, including the increase in

discount that manufacturers of Medicare Part D brand name drugs must provide to Medicare Part D beneficiaries during the coverage gap from 50% to 70%.

Healthcare reform efforts have been and may continue to be subject to scrutiny and legal challenge.

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If the distribution, together with certain related transactions, fails to qualify as a transaction that is generally tax-free under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code, in general, for U.S.

federal income tax

purposes, we would recognize taxable gain with respect to Cyclerion’s distributed common stock and our stockholders who received shares of Cyclerion common stock in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.

federal income tax purposes, we would recognize taxable gain with respect to Cyclerion’s distributed common stock and our stockholders who received shares of Cyclerion common stock in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.

We may not achieve some or all of the anticipated benefits of the Separation, which may adversely affect our business .

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FDA-approved drug LINZESS.

In the past, we have filed patent infringement lawsuits against five companies making such ANDA filings, and we have entered into settlement agreements dismissing the lawsuits with each company that has made ANDA filings.

In the past, we have filed patent infringement lawsuits against five companies making such ANDA filings, and we have entered into settlement agreements with each of these filers.

Frequently, innovators receive multiple ANDA filings.

Consequently, we expect to receive additional notice letters regarding ANDAs submitted to the U.S.

Consequently, we may receive additional notice letters regarding ANDAs submitted to the U.S.

FDA, and may receive amendments to those notice letters.

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Litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distraction of our management and other employees.

In addition, we may not be able to prevent, alone or with

our partners, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the U.S.

In addition, we may not be able to prevent, alone or with our partners, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the U.S.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, as well as the potential for public announcements of the results of hearings, motions or other interim proceeding or developments, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

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Prior to the year ended December 31, 2019, we incurred net losses in each year since our inception in 1998.

As of March 31, 2021, we had an accumulated deficit of approximately $1.4 billion.

As of June 30, 2021, we had an accumulated deficit of approximately $1.0 billion.

We cannot be certain that sales of our products, and the revenue from our other commercial activities will not fall short of our projections or be delayed, particularly in light of the negative financial impact that the COVID-19 pandemic may have on our business in the future.

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● the timing of any regulatory approvals of our product candidates;

● whether the holders of our Convertible Senior Notes hold the notes to maturity without conversion into our Class A Common Stock and whether we are required to repurchase any of our Convertible Senior Notes prior to maturity upon a fundamental change, as defined in each of the indentures governing the Convertible Senior Notes;

● whether the holders of our Convertible Senior Notes hold the notes to maturity without conversion into our Class A Common Stock or cash and whether we are required to repurchase any of our Convertible Senior Notes prior to maturity upon a fundamental change, as defined in each of the indentures governing the Convertible Senior Notes;

● whether we seek to redeem, repurchase or retire all or part of our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions, by tender offer or otherwise.

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Our indebtedness could adversely affect our financial condition or restrict our future operations.

As of March 31, 2021, we had total indebtedness of $520.7 million and available cash and cash equivalents of $438.5 million.

As of June 30, 2021, we had total indebtedness of $520.7 million and available cash and cash equivalents of $492.7 million.

Our indebtedness, combined with our other financial obligations and contractual commitments, could have important consequences on our business, including:

6 unchanged sentences

If we do not generate sufficient cash flows from operations or if future borrowings are not available to us in an amount sufficient to pay our indebtedness, including payments of principal when due on our outstanding indebtedness or, in the case of our Convertible Senior Notes, in connection with a transaction involving us that constitutes a fundamental change under the indentures governing the Convertible Senior Notes, or to fund our liquidity needs, we may be forced to refinance all or a portion of our indebtedness on or before the maturity dates thereof, sell assets, reduce or delay currently planned activities or curtail operations, seek to raise additional capital or take other actions.

We may not be able to execute any of these actions on commercially reasonable terms or at all.

be able to execute any of these actions on commercially reasonable terms or at all.

This, together with any of the factors described above, could materially and adversely affect our business, financial condition and results of operations.

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In connection with the issuance of our 2022 Convertible Notes, we entered into convertible note hedge transactions, or the Convertible Note Hedges, and separate note hedge warrant transactions, or the Note Hedge Warrants, with certain financial institutions.

The Convertible Note Hedges and Note Hedge Warrants were partially terminated in

connection with the repurchase of $215.0 million aggregate principal amount of the 2022 Convertible Notes in August 2019.

The Convertible Note Hedges and Note Hedge Warrants were partially terminated in connection with the repurchase of $215.0 million aggregate principal amount of the 2022 Convertible Notes in August 2019.

Additionally, in connection with the issuance of our 2024 Convertible Notes and our 2026 Convertible Notes, we entered into capped call transactions, or the Capped Calls, with certain financial institutions.

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These rules generally operate by focusing on ownership changes involving stockholders owning directly or indirectly 5% or more of the stock of a company and any change in ownership arising from a new issuance of stock by the company.

Generally, if an ownership change occurs, the yearly taxable income limitation on the use of net operating loss and tax credit carryforwards and certain built-in losses is equal to the product of the applicable long term tax exempt rate and the value of the company’s stock immediately before the ownership change.

ownership change.

Certain future equity offerings or strategic transactions, if any, could potentially result in a 50% or greater change of control.

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Public health emergencies, epidemics, or pandemics, such as the COVID-19 pandemic, impact our business.

In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China.

On March 11, 2020, the World Health Organization declared a global pandemic and recommended containment and mitigation measures worldwide.

On March 13, 2020, former U.S.

President Donald Trump announced a national emergency relating to the pandemic.

Government authorities in the U.S.

have recommended or imposed various containment and mitigation measures on large portions of the population, and similar measures have also been taken in many other countries around the world.

Both the outbreak of COVID-19 and the containment and mitigation efforts have a serious adverse impact on the U.S.

economy and the economies of other countries around the world, the severity and duration of which are uncertain.

Government stabilization efforts will only partially mitigate the consequences.

The COVID-19 pandemic has impacted, and is expected to continue to impact, our business and operations in a number of ways and there are significant uncertainties surrounding the extent and duration of such impacts.

Factors that will influence the impact on our business and operations include the duration and extent of the outbreak, the duration and extent of imposed or recommended containment and mitigation measures, periodic spikes in infection rates, new strains of the virus that cause outbreaks of COVID-19, the broad availability of effective vaccines, and the general economic consequences of the pandemic.

Addressing the impacts of the COVID-19 pandemic has, and likely will for an extended period, required significant time and has diverted the attention of our management, other employees and our board of directors.

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Revenue from LINZESS sales or the progression of our trials will be affected should the COVID-19 pandemic cause significant disruptions to manufacturing operations or supply of LINZESS to the U.S.

or API, finished drug product or finished goods for linaclotide or our product candidates , for example due to impacts of the COVID-19 pandemic on personnel involved in the manufacturing and supply chain, international travel and shipping restrictions, inability of vendors to provide services, closed manufacturing sites, or any other disruptions in the international supply chain.

In addition, the COVID-19 pandemic has impacted enrollment in our clinical trials, and may impact clinical trial enrollment or participation in the future, for example due to suspension of in-person procedures required for enrollment or lower or discontinued patient participation compared to pre-COVID-19 pandemic levels.

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We may not be able to attract, motivate or retain qualified management and scientific, clinical, operations and commercial personnel due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses, particularly in the greater-Boston area.

If we are not able to attract, motivate and retain necessary

personnel to accomplish our business objectives, we will experience constraints that will significantly impede the achievement of our objectives.

If we are not able to attract, motivate and retain necessary personnel to accomplish our business objectives, we will experience constraints that will significantly impede the achievement of our objectives.

We are highly dependent on the drug research, development, regulatory, commercial, financial and other expertise of our management, particularly Thomas A.

McCourt, our president and interim chief executive officer;

Gina Consylman, our senior vice president, chief financial officer, and treasurer;

McCourt, our chief executive officer;

John Minardo, our senior vice president and chief legal officer;

Jason Rickard, our senior vice president and chief operating officer;

and Michael Shetzline, our senior vice president, chief medical officer and head of drug development.

On February 4, 2021, Mark Mallon, our former chief executive officer, notified us that he was resigning his position as chief executive officer and a member of our company’s board of directors, in each case effective March 12, 2021.

Mark Mallon, our former chief executive officer, resigned from his position as chief executive officer and a member of our company’s board of directors, in each case effective March 12, 2021.

Effective upon Mr.

Mallon’s departure, Mr.

McCourt began serving as our interim chief executive officer while the Board conducts a candidate search for Mr.

Mallon’s permanent successor.

This and any additional transitions in our senior management team or other key employees, or the unavailability of any such persons for any reason (including due to the COVID-19 pandemic), can be inherently difficult to manage and may disrupt our operations or business or otherwise harm our business, for example due to the diversion of our board and management’s time and attention and a decline in employee morale.

Further, if we are unable to attract a qualified candidate to become our permanent chief executive officer in a timely manner, our business and prospects may be adversely affected.

McCourt began serving as our interim chief executive officer, and in June 2021, Mr.

McCourt was appointed as our permanent chief executive officer and as a member of our board of directors.

In addition, Gina Consylman, our former chief financial officer, resigned from her position as senior vice president and chief financial officer, effective July 2, 2021.

Effective upon Ms.

Consylman’s departure, Mr.

Rickard began serving as our principal financial officer while we conduct a retained search for Ms.

Consylman’s permanent successor.

These and any additional transitions in our senior management team or other key employees, or the unavailability of any such persons for any reason, can be inherently difficult to manage and may disrupt our operations or business or otherwise harm our business, for example due to the diversion of our board and management’s time and attention and a decline in employee morale.

In addition to the competition for personnel, the Boston area in particular is characterized by a high cost of living.

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We also rely to a large extent on information technology systems to operate our business, including to deliver our products.

We have outsourced elements of our confidential information processing and information technology structure, and as a result, we are managing independent vendor relationships with third parties who may or could have access to our confidential information.

We have outsourced elements of our confidential information processing and information technology structure, and as a result, we are managing

independent vendor relationships with third parties who may or could have access to our confidential information.

Similarly, our business partners and other third-party providers possess certain of our sensitive data.

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Incorporated by reference to Exhibit 3.2 of Ironwood Pharmaceuticals, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 30, 2010 .

Amendment to the Amended and Restated License Agreement, dated as of January 8, 2021, by and between Ironwood Pharmaceuticals, Inc.

and Astellas Pharma Inc.

Incorporated by reference to Exhibit 10.13.1 of Ironwood Pharmaceuticals, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 17, 2021.

S econd Amended and Restated Executive Severance Agreement, June 22, 2021, between Ironwood Pharmaceuticals, Inc.

and Thomas McCourt.

Incorporated by reference to Exhibit 10.1 of Ironwood Pharmaceuticals, Inc.’s Current Report on Form 8-K/A, filed with the SEC on June 24, 2021.

Certification of Chief Executive Officer pursuant to Rules 13a-14 or 15d-14 of the Exchange Act .

13 unchanged sentences

‡ Furnished herewith.

Management contract or compensatory plan, contract, or arrangement.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Ironwood Pharmaceuticals, Inc.

August 5, 2021

/s/ THOMAS MCCOURT

Thomas McCourt

President and Interim Chief Executive Officer

Chief Executive Officer

(Principal Executive Officer)

/s/ GINA CONSYLMAN

Gina Consylman

Senior Vice President, Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

August 5, 2021

/s/ RONALD SILVER

Ronald Silver

Senior Director, Corporate Controller

(Principal Accounting Officer)

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors