What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-02-16 compared with 2023-02-16 · 360 added, 150 removed, 342 unchanged (60% of the section changed)

2 unchanged sentences

LINZESS ® (linaclotide), our commercial product, is the first product approved by the United States Food and Drug Administration, or U.S.

FDA, in a class of GI medicines called guanylate cyclase type C agonists, or GC-C agonists, and is indicated for adult men and women suffering from irritable bowel syndrome with constipation, or IBS-C, or chronic idiopathic constipation, or CIC.

LINZESS is available to adult men and women suffering from IBS-C or CIC in the United States, or the U.S., and Mexico, IBS-C or chronic constipation in Japan, and IBS-C in China.

LINZESS is available to adult men and women suffering from IBS-C or CIC in the United States, or the U.S., Mexico, and Saudi Arabia, to adult men and women suffering from IBS-C or chronic constipation in Japan, IBS-C in China and for pediatric patients ages 6-17 with FC in the U.S.

Linaclotide is available under the trademarked name CONSTELLA ® to adult men and women suffering from IBS-C or CIC in Canada, and to adult men and women suffering from IBS-C in certain European countries.

3 unchanged sentences

We also aim to leverage our leading development and commercialization capabilities in GI to bring additional treatment options to GI patients.

for example, in November 2021, we entered into a collaboration and license option agreement, or the COUR Collaboration Agreement, with COUR Pharmaceutical Development Company, Inc., or COUR, that grants us an option to acquire an exclusive license, or the License, to research, develop, manufacture and commercialize, in the U.S., products containing CNP-104, a tolerizing immune modifying nanoparticle for the treatment of primary biliary cholangitis, or PBC.

In June 2023, we completed a tender offer to purchase 98% of the outstanding ordinary shares of VectivBio Holding AG, or VectivBio, a clinical-stage biotechnology company focused on the discovery and development of treatments for severe, rare GI conditions for which there is a significant unmet medical need, or the VectivBio Acquisition.

In December 2023, we completed a squeeze-out merger to acquire all remaining shares.

The VectivBio Acquisition was partially funded with $400.0 million of borrowings under a new revolving credit facility, or the Revolving Credit Facility, as further described in Note 10, Debt , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Through the acquisition, the Company is advancing apraglutide, a next-generation, synthetic peptide analog of glucagon-like peptide-2, or GLP-2, for rare gastrointestinal diseases, including short bowel syndrome dependent on parenteral support, also known as SBS-IF, as well as several earlier stage assets.

In November 2021, we entered into a collaboration and license option agreement, or the COUR Collaboration Agreement, with COUR Pharmaceutical Development Company, Inc., or COUR, that grants us an option to acquire an exclusive license to research, develop, manufacture and commercialize, in the U.S., products containing CNP-104, a tolerizing immune modifying nanoparticle, for the treatment of primary biliary cholangitis, or PBC.

We are also advancing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, such as interstitial cystitis/bladder pain syndrome, or IC/BPS, and endometriosis.

In 2022, our GI-focused strategy, building on our commercial success and GI development capabilities, continued to focus on three core priorities:

maximize LINZESS, strengthen our innovative GI pipeline, and deliver sustained profits and generate cash flow.

We were incorporated in Delaware on January 5, 1998 as Microbia, Inc.

2 unchanged sentences

Performance Against 2023 Core Priorities

In 2023, our GI-focused strategy, building on our commercial success and GI development capabilities, continued to focus on three core priorities:

maximize LINZESS, strengthen and progress our innovative GI portfolio, and deliver sustained profits and generate cash flow.

Maximize LINZESS

● We recognized $430.5 million in collaborative arrangements revenue related to sales of LINZESS in the U.S.

during the year ended December 31, 2022, a slight decrease compared to the year ended December 31, 2021.

The slight decrease was primarily driven by net price erosion and inventory channel fluctuations, partially offset by an increase in LINZESS prescription demand.

● In September 2022, we announced positive topline data from a Phase III clinical trial evaluating linaclotide 72 mcg in pediatric patients aged 6-17 years with functional constipation, or FC.

The trial met its primary and secondary endpoints, demonstrating that linaclotide 72 mcg improved frequency of spontaneous bowel movements and stool consistency.

Linaclotide was generally well-tolerated, and the safety profile is consistent with previously reported studies with linaclotide in FC and irritable bowel syndrome in pediatric patients.

In December 2022, we and AbbVie submitted a Supplemental New Drug Application, or sNDA,

FDA seeking approval of a new indication of linaclotide for FC in pediatric patients aged 6-17 years.

In February 2023, the U.S.

FDA granted priority review to our sNDA and assigned a Prescription Drug User Free Act, or PDUFA, date of June 14, 2023.

during the year ended December 31, 2023, a n increase of $31.7 million compared to the year ended December 31, 2022.

The increase was primarily driven by an increase in LINZESS prescription demand, partially offset by inventory channel fluctuations.

● In June 2023, the U.S.

FDA approved LINZESS as a once-daily treatment for pediatric patients ages 6-17 years-old with FC, making LINZESS the first and only FDA-approved prescription therapy for FC in this patient population.

The safety and effectiveness of LINZESS in patients with FC less than 6 years of age or in patients with IBS-C less than 18 years of age have not been established.

Additional clinical pediatric programs in IBS-C and FC are ongoing.

There are currently no U.S.

FDA approved prescription therapies for FC.

Strengthen Innovative GI Pipeline

● Through the COUR Collaboration Agreement, we and COUR are developing CNP-104 for the potential treatment of PBC, a rare autoimmune disease targeting the liver that affects approximately 130,000 people in the U.S., according to a study published in Clinical Gastroenterology and Hepatology in 2018.

If successful, CNP-104 has the potential to be the first approved PBC disease modifying therapy.

Strengthen and progress our innovative GI portfolio

● We are conducting a Phase III clinical trial, STARS, to assess the safety and efficacy of apraglutide in adult patients with SBS-IF, and expect to report topline results in March 2024.

In April 2023, the U.S.

FDA granted Fast Track Designation to apraglutide in SBS-IF.

In October 2023, we presented positive final data from the STARS Nutrition Phase II study of apraglutide in patients with SBS-IF and colon-in-continuity.

We are also conducting open label extension studies to further evaluate the efficacy, safety and tolerability of apraglutide in SBS-IF and to support potential submissions of marketing applications for apraglutide in the U.S., European Union, or E.U., and Japan.

● We are also conducting a Phase II exploratory study, STARGAZE, to evaluate apraglutide in patients with steroid-refractory gastrointestinal acute Graft versus Host Disease, or aGvHD, a life-threatening condition that occurs when immune cells from the donor attack a recipient’s healthy cells after an allogeneic hematopoietic stem cell transplant, and expect data in the first quarter of 2024.

● Through the COUR Collaboration Agreement, we and COUR are developing CNP-104 for the treatment of PBC, a rare autoimmune disease targeting the liver.

In December 2021, the U.S.

FDA granted Fast Track Designation to CNP-104.

COUR is currently conducting a clinical study to evaluate the safety, tolerability, pharmacodynamic effects and efficacy of CNP-104 in PBC patients, with early data assessing T-cell response from patients enrolled in the clinical study expected in the second half of 2023 .

We expect that such early data will inform timing of topline data readout.

● We are advancing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, including interstitial cystitis/bladder pain syndrome, or IC/BPS, and endometriosis.

IC/BPS affects an estimated 4 to 12 million people in the U.S., according to the Interstitial Cystitis Association as of 2022.

An estimated 4 million reproductive-age women in the U.S.

have been diagnosed with endometriosis, according to a study published in Gynecologic and Obstetric Investigation in 2017.

Both diseases have a limited number of treatment options available.

We successfully completed Phase I studies to evaluate the safety and tolerability of IW-3300 in healthy volunteers and expect to begin patient dosing for the Phase II proof of concept study in IC/BPS patients in early 2023.

Deliver Sustained Profits and Generate Cash Flow

● Delivered net income of $175.1 million during the year ended December 31, 2022.

COUR is currently conducting a clinical study to evaluate the safety, tolerability, pharmacodynamic effects and efficacy of CNP-104 in PBC patients, with topline data expected in the third quarter of 2024.

● We are developing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, including IC/BPS and endometriosis.

We successfully completed Phase I studies to evaluate the safety and tolerability of IW-3300 in healthy volunteers and are continuing the Phase II proof of concept study in IC/BPS.

Deliver sustained profits and cash flow

● In 2023, we recognized a net loss of approximately $1.0 billion, which included a non-recurring charge of approximately $1.1 billion for acquired in-process research and development in connection with the VectivBio Acquisition.

● We generated $183.4 million in cash from operations during the year ended December 31, 2023, ending the year with $92.2 million in cash and cash equivalents.

Impact of the COVID-19 Pandemic on our Business

There continue to be significant uncertainties surrounding the extent and duration of the impact of the COVID-19 pandemic on our business and operations and the COVID-19 pandemic may have a material adverse impact on our business and financial condition in the future.

We continue to evaluate the impact of the COVID-19 pandemic on our operating results and financial condition.

The impact of COVID-19 on our business and financial condition is more fully described below in Part II, Item 7:

Management's Discussion and Analysis of Financial Condition and Results of —Trends and Uncertainties.

GI Programs – IBS-C and CIC

The following table presents the status and anticipated near-term catalysts of selected key development programs in our pipeline as of December 31, 2023:

The status of our development programs in the table above represents the ongoing phase of development and does not correspond to the completion of a particular phase.

Drug development involves a high degree of risk and investment, and the status, timing and scope of our development programs are subject to change.

Important factors that could adversely affect our drug development efforts are discussed under the heading “Risk Factors” in this Annual Report on Form 10-K.

IBS-C and CIC are chronic, functional GI disorders that afflict millions of sufferers worldwide.

11 unchanged sentences

In September 2020, based on Phase IIIb data demonstrating the efficacy and safety of LINZESS 290 mcg on the overall abdominal symptoms of bloating, pain and discomfort, in adult patients with IBS-C, the U.S.

FDA approved our sNDA to include a more comprehensive description of the effects of LINZESS in its approved label.

FDA approved our Supplemental New Drug Application, or sNDA, to include a more comprehensive description of the effects of LINZESS in its approved label.

In addition, we and AbbVie have established a nonclinical and clinical post-marketing plan with the U.S.

3 unchanged sentences

The updated label modified the boxed warning for risk of serious dehydration and contraindication against use in children to those less than two years of age.

The boxed warning and contraindication previously applied to all children less than 18 years of age and less than 6 years of age, respectively.

In September 2022, we announced positive topline data from a Phase III clinical trial evaluating linaclotide 72 mcg in pediatric patients aged 6-17 years with FC.

The trial met its primary and secondary endpoints, demonstrating that linaclotide 72 mcg improved frequency of spontaneous bowel movements and stool consistency.

Linaclotide was generally well-tolerated, and the safety profile is consistent with previously reported studies with linaclotide in FC and irritable bowel syndrome in pediatric patients.

In December 2022, we and AbbVie submitted an sNDA to the U.S.

FDA seeking approval of a new indication of linaclotide for FC in pediatric patients aged 6-17 years.

In February 2023, the U.S.

FDA granted priority review to our sNDA and assigned a PDUFA date of June 14, 2023.

There are currently no U.S.

FDA approved prescription pediatric therapies for FC.

The safety and effectiveness of LINZESS in patients less than 18 years of age have not been established.

The boxed warning and contraindication previously applied to all children less than 18

years of age and less than 6 years of age, respectively.

In June 2023, the U.S.

The safety and effectiveness of LINZESS in patients with FC less than 6 years of age or in patients with IBS-C less than 18 years of age have not been established.

Additional clinical pediatric programs in IBS-C and FC are ongoing.

1 unchanged sentence

AbbVie has rights to develop and commercialize linaclotide in all countries worldwide other than China (including Hong Kong and Macau) and Japan.

In November 2012, the European Commission granted marketing authorization to CONSTELLA for the symptomatic treatment of moderate to severe IBS-C in adults.

CONSTELLA is the first, and to date, only drug approved in the European Union, or E.U., for IBS-C.

CONSTELLA first became commercially available in certain European countries beginning in the second quarter of 2013.

AbbVie is commercializing CONSTELLA in a number of European countries, including the United Kingdom, Italy and Spain.

In December 2013 and February 2014, linaclotide was approved in Canada and Mexico, respectively, as a treatment for adult men and women suffering from IBS-C or CIC.

CONSTELLA first became commercially available in certain European countries beginning 2013.

AbbVie is commercializing CONSTELLA in a number of European countries, including the United Kingdom, Italy and Spain for adults with IBS-C.

AbbVie has exclusive rights to commercialize linaclotide in Canada as CONSTELLA and in Mexico as LINZESS.

In May 2014, CONSTELLA became commercially available in Canada and in June 2014, LINZESS became commercially available in Mexico.

CONSTELLA became commercially available in Canada in 2014 for adults with IBS-C or CIC.

LINZESS became commercially available in Mexico in 2014, and in Saudi Arabia in 2023, for adults with IBS-C or CIC.

Astellas has rights to develop, manufacture and commercialize linaclotide in Japan.

In December 2016, the Japanese Ministry of Health, Labor and Welfare approved LINZESS for the treatment of adults with IBS-C in Japan.

In March 2017, Astellas began commercializing LINZESS for the treatment of adults with IBS-C in Japan.

In August 2018, the Japanese Ministry of Health, Labor and Welfare approved LINZESS for the treatment of adults with chronic constipation in Japan.

In September 2018, Astellas began commercializing LINZESS for the treatment of adult patients with chronic constipation in Japan.

Astellas began commercializing LINZESS in Japan for adults with IBS-C in 2017, and for adults with chronic constipation in 2018.

AstraZeneca has rights to develop, manufacture and commercialize linaclotide in China (including Hong Kong and Macau).

In January 2019, the Chinese National Medical Products Administration approved the marketing application for LINZESS for adults with IBS-C in China.

AstraZeneca began commercializing LINZESS in China in November 2019.

In 2019, AstraZeneca began commercializing LINZESS in China for adults with IBS-C.

Through the VectivBio Acquisition, we are advancing apraglutide, a next-generation, long-acting synthetic peptide analog of GLP-2, as a potentially differentiated therapeutic for rare diseases, including SBS-IF and aGvHD.

SBS is a malabsorption disorder caused by the loss of functional small intestine, with symptoms that include diarrhea, dehydration, malnutrition and weight loss.

SBS typically occurs in adults as a consequence of irreparable GI damage caused by physical trauma, Crohn’s disease, ulcerative colitis, ischemia or cancer requiring surgeries that result in the removal of large portions of the small intestine or colon.

In infants and children, SBS is typically a consequence of congenital defects or decreases in intestinal absorptive capacity secondary to surgical procedures.

The symptoms and severity of SBS can vary depending upon the length and function of the remaining portion of the intestine.

Patients suffer from SBS-IF when their gut function is reduced below the minimum function necessary for the absorption of macronutrients or water and electrolytes required to survive and, in the case of infants and children, to maintain health and growth.

We are conducting a Phase III clinical trial, STARS, to assess the safety and efficacy of apraglutide in adult patients with SBS-IF, and expect to report topline results in March 2024.

In October 2023, we presented positive final data from the STARS Nutrition Phase II study of apraglutide in patients with SBS-IF and colon-in-continuity.

We are also conducting a Phase II exploratory study, STARGAZE, to evaluate apraglutide in patients with steroid-refractory gastrointestinal aGvHD and expect data in the first quarter of 2024.

Through the COUR Collaboration Agreement, we and COUR are developing CNP-104 for the potential treatment of PBC, a rare autoimmune disease targeting the liver that affects approximately 130,000 people in the U.S., according to a study published in Clinical Gastroenterology and Hepatology in 2018 .

If successful, CNP-104 has the potential to be the first approved PBC disease modifying therapy.

In December 2021, the U.S.

FDA granted Fast Track Designation to CNP-104.

We are advancing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, including IC/BPS and endometriosis.

3 unchanged sentences

Both diseases have a limited number of treatment options available.

If successful, CNP-104 has the potential to be the first approved PBC disease modifying therapy.

In December 2021, the U.S.

FDA granted Fast Track Designation to CNP-104.

COUR is currently conducting a clinical study for CNP-104 to evaluate the safety, tolerability, pharmacodynamic effects and efficacy of CNP-104 in PBC patients, with early data assessing T-cell response expected from patients enrolled in the clinical study in the second half of 2023.

We expect that such early data will inform timing of topline data readout.

We successfully completed Phase I studies to evaluate the safety and tolerability of IW-3300 in healthy volunteers and are continuing the Phase II proof of concept study in IC/BPS.

Collaborations and Partnerships

14 unchanged sentences

Our revenue from our LINZESS collaboration with AbbVie for the U.S.

is highly dependent on the responsiveness of patients to fill prescriptions and other factors such as retail chains’ and wholesalers’ buying patterns and inventory levels.

is highly dependent on the responsiveness of patients to fill prescriptions and other factors such as retail chain and wholesaler buying patterns, pricing and reimbursement and inventory channel levels.

Our collaborative arrangements revenue may continue to fluctuate as a result of the timing and amount of royalties from sales of linaclotide in the markets in which it is currently approved, or any other markets where linaclotide receives approval, as well as clinical and commercial milestones received and recognized under our strategic partnerships outside of the U.S.

14 unchanged sentences

In November 2009, we entered into a license agreement with Astellas to develop and commercialize linaclotide for the treatment of IBS-C, CIC, and other GI conditions in Japan.

Pursuant to this license agreement, as amended, we were responsible for the supply of linaclotide active pharmaceutical ingredient, or API, to Astellas.

On August 1, 2019, we and Astellas amended and restated the license agreement.

Under the terms of the amended and restated license agreement, we are no longer responsible for the supply of linaclotide API to Astellas and Astellas is responsible for its own supply of linaclotide API in Japan.

Astellas is obligated to pay royalties to us at rates beginning in the mid-single-digits percent and escalating to low-double-digits percent, based on aggregate annual net sales in Japan of products containing linaclotide API.

Under the terms of the amended and restated license agreement, Astellas is obligated to pay royalties to us at rates beginning in the mid-single-digits percent and escalating to low-double-digits percent, based on aggregate annual net sales in Japan of products containing linaclotide API.

Collaboration Agreement for China (including Hong Kong and Macau), with AstraZeneca

7 unchanged sentences

FDA granted Fast Track Designation to CNP-104.

COUR has initiated a clinical study to evaluate the safety, tolerability, and pharmacodynamic effects and efficacy of CNP-104 in PBC patients, with early data assessing T-cell response from patients enrolled in the clinical study expected in the second half of 2023.

We expect that such early data will inform timing of topline data readout.

COUR has initiated a clinical study to evaluate the safety, tolerability, and pharmacodynamic effects and efficacy of CNP-104 in PBC patients, with topline data expected in the third quarter of 2024.

Pursuant to the terms of the COUR Collaboration Agreement, we made an upfront, non-refundable payment of $6.0 million to COUR during the year ended December 31, 2021, and agreed to pay a non-contingent payment and milestone payments to COUR totaling $13.5 million in connection with certain development activities and regulatory milestones.

In April 2023, the Company and COUR executed an amendment to the COUR Collaboration Agreement, in which the Company agreed to pay a one-time, non-refundable, upfront payment of $6.0 million to COUR in exchange for the right to apply a credit of $6.6 million against future amounts due to COUR in connection with the exercise of the Option, commercial milestones, or royalties.

In connection with such payment, COUR also granted the Company a right of first negotiation over certain additional potential research and development programs.

After reviewing the data from the clinical study for CNP-104, if we exercise the option, we will pay COUR $28.4 million in exchange for the exclusive license.

Upon commercialization, we will pay royalties to COUR in the

high-single digits to low-double digits percentage of the aggregated annual net sales in the U.S.

Upon commercialization, we will pay royalties to COUR in the high-single digits to low-double digits percentage of the aggregated annual net sales in the U.S.

of products containing CNP-104, and COUR will be eligible to receive commercial milestone payments of up to $440.0 million over the term of the agreement.

Our vision is to become the leading U.S.

GI-focused healthcare company.

Development and Commercialization Agreement with AKP

In March 2022, VectivBio entered into a development and commercialization agreement with Asahi Kasei Pharma Corporation, or AKP, in which VectivBio granted an exclusive license to AKP, with the right to sublicense in multiple tiers, to develop, commercialize and exploit products derived from apraglutide in Japan.

Pursuant to the terms of the development and commercialization agreement with AKP, VectivBio received an upfront payment of JPY 3,000 million ($24.6 million at date of agreement) and is eligible to receive development related payments of JPY 1,600 million in the aggregate ($13.1 million at date of agreement), development milestones of JPY 1,000 million ($8.2 million at date of agreement) and up to JPY 19,000 million ($155.8 million at date of agreement) of commercial and sales-based milestone payments.

We are also eligible to receive payments in the commercial period for manufacturing supply equal to cost-plus manufacturing mark-up and tiered royalties of up to a mid-double-digit percentage on product sales continuing until the later of (i) expiration of regulatory exclusivity in Japan, or (ii) expiration of the last valid patent claim that provides exclusivity to apraglutide in Japan, or the Royalty Term.

The development and commercialization agreement will terminate upon the expiration of the Royalty Term.

Our vision is to become the leading GI healthcare company.

To achieve this vision, we assembled a team with demonstrated success in creating, acquiring and partnering, developing, and commercializing medicines that can make a difference in patients’ lives.

1 unchanged sentence

Our strategy is focused on three core priorities:

maximize LINZESS, strengthen and progress our innovative GI portfolio, and deliver sustained profits and generate cash flow.

maximize LINZESS, advance our GI pipeline, and deliver sustained profits and cash flow.

Key elements of our strategy include:

3 unchanged sentences

● Collaborating with global partners who share our vision, values, culture, and processes to develop and commercialize linaclotide outside of the U.S.

Strengthen and progress our innovative GI portfolio

● Evaluating innovative, externally developed clinical and commercial products for in-licensing, or acquisition opportunities.

We are prioritizing assets that address serious GI diseases in areas primarily managed by gastroenterologists/hepatologists and provide scientific innovation.

In addition, we are pursuing assets that we believe have a sound mechanistic rationale, a strong clinical safety profile, and a clear development path towards potential regulatory approval and commercialization.

● Progressing our current pipeline, including LINZESS in a pediatric population, CNP-104 for the potential treatment of PBC, and progressing our wholly owned GC-C agonist, IW-3300, for the potential treatment of IC/BPS and endometriosis.

Deliver sustained profits and cash flow

● Executing our strategy with our stockholders’ long-term interests in mind by delivering sustainable profits and cash flows.

Advance GI pipeline

● Advancing our GI pipeline programs, highlighted by apraglutide for the potential treatment of SBS-IF and CNP-104 for the potential treatment of PBC.

● Evaluating strategic partnership options for our wholly owned GC-C agonist, IW-3300, for the potential treatment of IC/BPS and endometriosis.

Deliver sustained profits and cash flows

● Executing our strategy by delivering sustainable profits and cash flows.

● Applying a thoughtful and disciplined capital allocation strategy to deliver value for our shareholders over the long-term.

1 unchanged sentence

OTC laxatives make up the majority of the treatments in the U.S.

for IBS-C and CIC, according to our internal research.

for IBS-C and CIC, according to our research.

LINZESS is the number one prescribed branded treatment in the U.S.

4 unchanged sentences

AMITIZA is being commercialized in the U.S.

by Takeda Pharmaceuticals Limited.

by Takeda Pharmaceuticals Limit ed, or Takeda.

AMITIZA also is being commercialized for the treatment of adults with CIC in certain European countries, including the United Kingdom and Switzerland by Sucampo AG, and for the treatment of chronic constipation in Japan by Mylan N.V.

Authorized generic versions of AMITIZA became available in the U.S.

by Endo International plc and Dash Pharmaceuticals LLC in January 2021 and in October 2022, respectively, and we expect additional generic versions of AMITIZA may become available.

since January 2021.

TRULANCE® (plecanatide) was approved in the U.S.

for the treatment of CIC in adults in January 2017 and for the treatment of IBS-C in adults in January 2018 and is being commercialized in the U.S.

by Bausch Health Companies.

Shire plc obtained approval of MOTEGRITY™

(prucalopride) in the U.S.

by Bausch Health Companies, or Bausch.

Shire plc obtained approval of MOTEGRITY™ (prucalopride) in the U.S.

for the treatment of CIC in adults in December 2018.

In April 2022, Ardelyx, Inc., or Ardelyx, launched IBSRELA TM (tenapanor), a U.S.

FDA approved treatment for IBS-C in adults.

In April 2022, Ardelyx, Inc., or Ardelyx, launched IBSRELATM (tenapanor), a U.S.

FDA approved treatment for IBS-C in adults, and in August 2022, Vibrant Gastro Inc.

launched Vibrant, a drug-free capsule that the U.S.

FDA granted marketing authorization for the treatment of CIC in adults who have not experienced relief of their bowel symptoms by using laxative therapies at the recommended dosage for at least one month.

OTC laxatives such as MiraLAX® and DULCOLAX®, and lactulose, a prescription laxative treatment, are also available for the treatment of constipation.

In addition, any product candidates that we successfully develop and commercialize will compete with existing drugs and new drugs that may become available in the future.

For example, for apraglutide, we compete with companies that are commercializing or developing drugs for SBS, such as Takeda, which currently distributes the GLP-2 analog teduglutide, marketed as GATTEX® (teduglutide) in the U.S.

and REVESTIVE® (teduglutide for injection) in Europe, and Zealand Pharma A/S, which is developing the GLP-2 analog glepaglutide for the treatment of SBS and which submitted an NDA to the U.S.

FDA in December 2023.

Hanmi Pharmaceutical is also developing a GLP-2 analog which is in Phase 2.

Products with other mechanisms of action may emerge as future competition.

Manufacturing and Supply

7 unchanged sentences

Our efforts to date have led to formulations that are both cost effective and able to meet the stability requirements for commercial pharmaceutical products.

We do not currently own or operate manufacturing facilities for the production of clinical, or, if approved, commercial quantities of apraglutide.

We design and develop the manufacturing process for apraglutide together with contract development and manufacturing organizations, or CDMOs.

We utilize these CDMOs for the manufacture of apraglutide for human use.

Although we intend to rely on third-party CDMOs to produce apraglutide, we have personnel with experience managing third-party CDMOs producing apraglutide in clinical or commercial quantities.

Our clinical trials of apraglutide currently use the product in the form of a lyophilized powder in vial that is solubilized and reconstituted with a diluent prior to injection.

We are also evaluating novel drug product presentations, with the goal of providing increased patient convenience and increased simplicity of the dosing and self-injection.

Sales and Marketing

2 unchanged sentences

In executing our strategy, our goal is to retain oversight over the worldwide development and commercialization of our products by playing an active role in their commercialization or finding partners who share our vision, values, culture and processes.

To date, we have established a high-quality commercial organization dedicated to supporting our vision of becoming the leading GI healthcare company in the U.S.

To date, we have established a high-quality commercial organization dedicated to supporting our vision of becoming the leading GI healthcare company.

Our GI commercial capabilities, including marketing, patient engagement and sales, are designed to support our existing product as well as potential future internally and externally developed products.

1 unchanged sentence

By leveraging the knowledge base and expertise of our experienced commercial team and the insights of each of our linaclotide commercialization partners, we continually improve our collective marketing strategies.

We are currently in the process of planning for the commercial launch of apraglutide, if successfully developed and approved, for commercialization, in the U.S.

and with partners in territories outside the U.S.

For example, we granted AKP an exclusive license to sublicense, develop, commercialize and exploit products derived from apraglutide in Japan.

We are considering potential partnerships in other territories outside the U.S.

Patents and Proprietary Rights

9 unchanged sentences

Linaclotide Patent Portfolio

Our linaclotide patent portfolio is currently composed of 14 patents in the U.S., including 12 U.S.

After the recent expiration of a number of patents in our linaclotide patent portfolio, our linaclotide patent portfolio is currently composed of 11 patents in the U.S., including 7 U.S.

patents listed in the U.S.

FDA publication, Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book, eight granted European patents, most of which have been validated in available European countries, ten granted Japanese patents, five granted Chinese patents, 80 issued patents in other foreign jurisdictions, and numerous pending U.S., foreign and Patent Cooperation Treaty, or PCT, patent applications.

FDA publication, Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book, six granted European patents, most of which have been validated in available European countries, ten granted Japanese patents, three granted Chinese patents, 49 issued patents in other foreign jurisdictions, and numerous pending U.S., foreign and Patent Cooperation

Treaty, or PCT, patent applications.

We and our partners own, either jointly or individually, all of the issued patents and pending applications.

The issued U.S.

The issued, unexpired U.S.

patents, which will expire between 2026 and 2033, contain claims directed to the linaclotide molecule, pharmaceutical compositions thereof, methods of using linaclotide to treat GI disorders, processes for making the molecule, and room temperature stable formulations of linaclotide and methods of use thereof.

The 72 mcg, 145 mcg and 290 mcg LINZESS doses are covered by various composition of matter patents in the U.S., the latest of which expires in 2026.

The 72 mcg, 145 mcg and 290 mcg LINZESS doses are covered by composition of matter patent in the U.S., which expires in 2026.

In addition, the commercial formulations of the 72 mcg, 145 mcg and 290 mcg LINZESS doses are covered by patents in the U.S.

that expire in the early 2030s.

The granted European patents, which will expire between 2024 and 2036, some of which are subject to potential patent term extension, contain claims directed to the linaclotide molecule, pharmaceutical compositions thereof, uses of linaclotide to prepare medicaments for treating GI disorders, and room temperature stable formulations of linaclotide and their use in treating IBS-C and chronic constipation.

The granted Chinese patents, which will expire between 2024 and 2032, the granted Japanese patents, which will expire between 2025 and 2036, some of which are subject to granted and potential patent term extension, and the granted patents in other foreign jurisdictions, which will expire between 2024 and 2034, some of which may be subject to potential patent term extension, contain claims directed to the linaclotide molecule, pharmaceutical compositions of linaclotide for use in treating GI disorders, and room temperature stable formulations of linaclotide.

The granted, unexpired European patents, which will expire between 2027 and 2036, some of which have received patent term extension, contain claims directed to the linaclotide molecule, pharmaceutical compositions thereof, uses of linaclotide to prepare medicaments for treating GI disorders, and room temperature stable formulations of linaclotide and their use in treating IBS-C and chronic constipation.

The granted, unexpired Chinese patents, which will expire between 2029 and 2032, the granted Japanese patents, which will expire between 2026 and 2036, some of which are subject to granted and potential patent term extension, and the granted patents in other foreign jurisdictions, which will expire between 2026 and 2034, some of which may be subject to potential patent term extension, contain claims directed to the linaclotide molecule, pharmaceutical compositions of linaclotide for use in treating GI disorders, and room temperature stable formulations of linaclotide.

We have pending patent applications in certain countries worldwide that, if issued, will expire between 2029 and 2044 and which include claims covering the linaclotide molecule, methods of using linaclotide to treat GI disorders, the current commercial formulations of linaclotide and uses thereof to treat GI disorders and delayed release and other potential formulations of linaclotide.

9 unchanged sentences

We have also received patent term extensions, called supplementary protection certificates, for certain linaclotide patents from several national patent offices in Europe.

We and AbbVie received Paragraph IV certification notice letters regarding ANDAs submitted to the U.S.

We and AbbVie received Paragraph IV certification notice letters regarding abbreviated new drug applications, or ANDAs, submitted to the U.S.

FDA by five generic drug manufacturers requesting approval to engage in commercial manufacture, use, sale and offer for sale of linaclotide capsules (72 mcg, 145 mcg and 290 mcg), proposed generic versions of LINZESS.

2 unchanged sentences

FDA Approval), unless certain limited circumstances, customary for settlement agreements of this nature, occur.

Apraglutide Patent Portfolio

Our apraglutide patent portfolio includes a patent family which we exclusively license that is composed of one issued U.S.

patent and 56 foreign patents.

This patent family contains composition-of-matter claims covering apraglutide and methods of treatment using apraglutide.

The patents in this patent family that we exclusively license outside of the U.S.

are issued in Europe, Japan, China, Australia, Canada, as well as other jurisdictions.

The issued European patent is validated and issued in 37 countries, including Germany, the United Kingdom, France, Italy and Spain.

Not accounting for any patent term adjustment, regulatory patent term extensions or terminal disclaimers, and assuming that all annuity and/or maintenance fees are paid timely, the patents in this patent family are expected to expire in 2030.

Our apraglutide portfolio also includes two wholly owned patent families.

The first patent family includes one granted U.S.

patent and five pending U.S.

non-provisional patent applications, as well as 27 pending foreign patent

applications related to apraglutide.

The granted U.S.

patent in this patent family claims a method of treating SBS, and the pending U.S.

and foreign patent applications contain composition-of-matter claims to ultrapure compositions of apraglutide, methods of manufacturing apraglutide, and methods of treatment using apraglutide.

Not accounting for any patent term adjustment, regulatory patent term extensions or terminal disclaimers, and assuming that all annuity and/or maintenance fees are paid timely, the U.S.

patent, as well as patents granted from the pending U.S and foreign patent applications, would be expected to expire in 2041.

The second patent family which we wholly own includes two pending U.S.

non-provisional patent applications and 13 pending foreign patent applications related to methods of treating GvHD using apraglutide.

Not accounting for any patent term adjustment, regulatory patent term extension or terminal disclaimers, and assuming that all annuity and/or maintenance fees are paid timely, any U.S.

and foreign patents granted from the pending patent applications would be expected to expire in 2042.

Government Regulation

Our business is subject to government regulation in both the U.S.

and in other countries.

In the U.S., pharmaceutical products are subject to extensive regulation by the U.S.

The Federal Food, Drug, and Cosmetic Act and other federal and state statutes and regulations, as well as similar foreign regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-marketing requirements and assessments, post-approval monitoring and reporting,

sampling, and import and export of pharmaceutical products.

FDA and other regulatory authorities have very broad enforcement authority and failure to abide by applicable regulatory requirements can result in administrative or judicial sanctions being imposed on us, including warning letters, refusals of government contracts, clinical holds, civil penalties, injunctions, restitution, disgorgement of profits, recall or seizure of products, total or partial suspension of production or distribution, withdrawal of approval, refusal to approve pending applications, and civil or criminal prosecution.

Our business is subject to government regulation in the U.S., E.U., and in other countries.

FDA, the European Medicines Agency, or EMA, and other regulatory authorities have very broad enforcement authority and failure to abide by applicable regulatory requirements can result in administrative or judicial sanctions being imposed on us, including warning letters, refusals of government contracts, clinical holds, civil penalties, injunctions, restitution, disgorgement of profits, recall or seizure of products, total or partial suspension of production or distribution, withdrawal of approval, refusal to approve pending applications, and civil or criminal prosecution.

FDA Approval Process

In the U.S., pharmaceutical products are subject to extensive regulation by the U.S.

The Federal Food, Drug and Cosmetic Act, or FDCA, and other federal and state statutes and regulations, as well as similar foreign regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-marketing requirements and assessments, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products.

No company may market a new drug in the U.S.

until it has submitted an NDA to the U.S.

until it has submitted a new drug application, or NDA, to the U.S.

FDA, and the U.S.

2 unchanged sentences

FDA may approve an NDA generally include:

● conducting nonclinical laboratory tests and animal tests in compliance with U.S.

● conducting non-clinical laboratory tests and animal tests in compliance with U.S.

FDA’s good laboratory practice, or GLP, requirements;

● design of a clinical protocol and submission to the U.S.

FDA of an investigational new drug application, or IND, for human clinical testing, which must become effective before human clinical trial may begin;

● approval by an institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;

● development, manufacture and testing of active pharmaceutical product and dosage forms suitable for human use in compliance with current GMP;

● conducting adequate and well-controlled human clinical trials that establish the safety and efficacy of the product for its specific intended use(s);

● in order to evaluate a drug in humans in the U.S., an IND must be submitted and come into effect before human clinical trials may begin;

● the submission to the U.S.

● conducting adequate and well-controlled human clinical trials that establish the safety and efficacy of the product for its specific intended use(s), in accordance with good clinical practices, or GCP;

● preparation and submission to the U.S.

FDA of an NDA;

● review of the NDA by a U.S.

FDA advisory committee, where applicable;

● satisfactory completion of one or more U.S.

FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current GMP requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity;

● inspections of other sources of data in the NDA, such as inspection of clinical trial sites to assess compliance with good clinical practice, or GCP, requirements are also generally required;

FDA review and approval of the NDA.

Nonclinical tests include laboratory evaluation of the product candidate, as well as animal studies to assess the potential safety and efficacy of the product candidate.

The conduct of the nonclinical tests must comply with federal regulations and requirements including GLP.

We must submit the results of the nonclinical tests, together with manufacturing information, analytical data and a proposed clinical trial protocol to the U.S.

FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current GMP

requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity;

● satisfactory completion of any U.S.

FDA inspections of non-clinical and clinical trial sites to assure compliance with GLP and GCP requirements;

FDA review and approval of the NDA, which may be subject to post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and any post-approval studies required by the U.S.

Non-clinical tests include laboratory evaluation of the product candidate, as well as animal studies to assess the potential safety and efficacy of the product candidate.

The conduct of the non-clinical tests must comply with federal regulations and requirements including GLP.

We must submit the results of the non-clinical tests, together with manufacturing information, analytical data and a proposed clinical trial protocol to the U.S.

FDA as part of an IND, which must become effective before we may commence human clinical trials in the U.S.

7 unchanged sentences

FDA to modify, suspend or terminate such trials.

The study protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board, or IRB, for approval.

The study protocol and informed consent information for patients in clinical trials must also be submitted to an IRB, for approval.

An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB requirements or if the trial has been associated with unexpected serious harm to subjects.

4 unchanged sentences

Clinical trials are typically conducted in three sequential phases, though the phases may overlap or be combined.

In Phase I, the initial introduction of the drug into healthy human subjects, the drug is usually tested for safety (adverse effects), dosage tolerance and

pharmacologic action, as well as to understand how the drug is taken up by and distributed within the body.

In Phase I, the initial introduction of the drug into healthy human subjects, the drug is usually tested for safety (adverse effects), dosage tolerance and pharmacologic action, as well as to understand how the drug is taken up by and distributed within the body.

Phase II usually involves studies in a limited patient population (individuals with the disease under study) to:

7 unchanged sentences

We may also suspend clinical trials at any time on various grounds.

The results of the nonclinical and clinical studies, together with other detailed information, including the manufacture and composition of the product candidate, are submitted to the U.S.

The results of the non-clinical and clinical studies, together with other detailed information, including the manufacture and composition of the product candidate, are submitted to the U.S.

FDA in the form of an NDA requesting approval to market the drug.

3 unchanged sentences

The review process, however, may be extended by U.S.

FDA requests for additional information, nonclinical or clinical studies, clarification regarding information already provided in the submission, or submission of a risk evaluation and mitigation strategy.

FDA requests for additional information, non-clinical or clinical studies, clarification regarding information already provided in the submission, or submission of a REMS.

FDA may refer an application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved.

FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

FDA is not bound by the recommendations of an advisory committee, but

it considers such recommendations carefully when making decisions.

Before approving an NDA, the U.S.

7 unchanged sentences

FDA approval for regulated products can frequently exceed the time and expense of the research and development initially required to create the product.

The results of nonclinical studies and initial clinical trials of our product candidates are not necessarily predictive of the results from large-scale clinical trials, and clinical trials may be subject to additional costs, delays or modifications due to a number of factors, including difficulty in obtaining enough patients, investigators or product candidate supply.

Failure by us or our collaborators, licensors or licensees, including AbbVie, Astellas and AstraZeneca, to obtain, or any delay in obtaining, regulatory approvals or in complying with requirements could adversely affect commercialization and our ability to receive product or royalty revenues.

The results of non-clinical studies and initial clinical trials of our product candidates are not necessarily predictive of the results from large-scale clinical trials, and clinical trials may be subject to additional costs, delays or modifications due to a number of factors, including difficulty in obtaining enough patients, investigators or product candidate supply.

Failure by us or our collaborators, licensors or licensees to obtain, or any delay in obtaining, regulatory approvals or in complying with requirements could adversely affect commercialization and our ability to receive product or royalty revenues.

Hatch-Waxman Act

1 unchanged sentence

Approval to market and distribute these drugs is obtained by submitting an ANDA with the U.S.

The application for a generic drug is “abbreviated” because it need not include nonclinical or clinical data to demonstrate safety and effectiveness and may instead rely on the U.S.

The application for a generic drug is “abbreviated” because it need not include non-clinical or clinical data to demonstrate safety and effectiveness and may instead rely on the U.S.

FDA’s previous finding that the brand drug, or reference drug, is safe and effective.

In order to obtain approval of an ANDA, an applicant must, among other things, establish that its product is bioequivalent to an existing approved drug and that it has the same active ingredient(s), strength, dosage form, and route of administration.

A generic drug is considered bioequivalent to its reference drug if testing demonstrates that the rate and extent of

absorption of the generic drug is not significantly different from the rate and extent of absorption of the reference drug when administered under similar experimental conditions.

A generic drug is considered bioequivalent to its reference drug if testing demonstrates that the rate and extent of absorption of the generic drug is not significantly different from the rate and extent of absorption of the reference drug when administered under similar experimental conditions.

The Hatch-Waxman Act also provides incentives by awarding, in certain circumstances, certain legal protections from generic competition.

14 unchanged sentences

A certification that a listed patent is invalid, unenforceable or will not be infringed by the sale of the proposed product is called a “Paragraph IV” certification.

A certification that provides the date a listed patent will expire, but does not challenge the validity, enforceability or infringement of the patent, is called a “Paragraph III” certification.

A certification that provides the date a listed patent will expire, but does not challenge the validity,

enforceability or infringement of the patent, is called a “Paragraph III” certification.

FDA can approve the ANDA or 505(b)(2) application containing the Paragraph III certification upon expiration of the patent.

13 unchanged sentences

Only one unexpired patent claiming the drug product, a method of using the product or a method of manufacturing the product is eligible for extension and the patent holder must apply for extension within 60 days of approval.

Patent and Trademark Office, in consultation with the U.S.

Patent and Trademark Office, or USPTO, in consultation with the U.S.

FDA, reviews and approves the application for patent term extension.

Other Regulatory Requirements

Orphan Drug Designation and Exclusivity

Orphan drug designation in the U.S.

is designed to encourage sponsors to develop products intended for the treatment of rare diseases or conditions.

In the U.S., a rare disease or condition is statutorily defined as a condition that affects fewer than 200,000 individuals in the U.S.

or that affects more than 200,000 individuals in the U.S.

and for which there is no reasonable expectation that the cost of developing and making the product available for the disease or condition will be recovered from sales of the product in the U.S.

Orphan drug designation qualifies a company for certain tax credits.

In addition, if a product candidate that has orphan drug designation subsequently receives the first U.S.

FDA approval for that drug for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the U.S.

FDA may not approve any other applications to market the same drug for the same indication for seven years following product approval unless the subsequent product candidate is demonstrated to be clinically superior.

Absent a showing of clinical superiority, the U.S.

FDA cannot approve the same product made by another manufacturer for the same indication during the market exclusivity period unless it has the consent of the sponsor, or the sponsor is unable to provide sufficient quantities.

Regulation of Drug-Device Combination Products in the U.S.

Certain products may be comprised of components, such as drug components and device components that would normally be subject to different regulatory frameworks by the U.S.

FDA and frequently regulated by different centers at the U.S.

These products are known as drug-device combination products.

Under the FDCA and its implementing regulations, the U.S.

FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a drug-device combination product.

The determination of which center will be the lead center is based on the “primary mode of action” of the drug-device combination product.

Thus, if the primary mode of action of a drug-device combination product is attributable to the drug product, the U.S.

FDA center responsible for premarket review of the drug product would have primary jurisdiction for the drug-device combination product.

FDA has also established an Office of Combination Products to address issues surrounding combination products and provide more certainty to the regulatory review process.

That office serves as a focal point for combination product issues for agency reviewers and industry.

It is also responsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the U.S.

FDA center that has primary jurisdiction for review of drug-device combination products where the jurisdiction is unclear or in dispute.

A drug-device combination product with a primary mode of action attributable to the drug component generally would be reviewed and approved pursuant to the drug approval processes set forth in the FDCA.

In reviewing the NDA for such a product, however, U.S.

FDA reviewers could consult with their counterparts in the device center to ensure that the device component of the combination product met applicable requirements regarding safety, effectiveness, durability and performance.

Approval may require the performance of certain clinical studies, such as clinical usability or human factors studies to demonstrate the safety and/or effectiveness of the device component of the combination product.

In addition, under U.S.

FDA regulations, drug-device combination products are subject to current GMP requirements applicable to both drugs and devices, including the Quality System Regulations applicable to medical devices.

Regulatory Requirements

After approval, finished drug products are subject to extensive continuing regulation by the U.S.

FDA, which include company obligations to manufacture products in accordance with current GMP, maintain and provide to the U.S.

FDA, which includes company obligations to manufacture products in accordance with current GMP, maintain and provide to the U.S.

FDA updated safety and efficacy information, report adverse experiences with the product, keep certain records and submit periodic reports, obtain U.S.

22 unchanged sentences

FDA uses similar procedures and actions in reviewing such sNDAs as it does in reviewing NDAs.

Adverse event reporting and submission of periodic reports is required following U.S.

Adverse event reporting and submission of periodic reports are required following U.S.

FDA approval of an NDA.

FDA also may require post-marketing testing, known as Phase IV testing, risk evaluation and mitigation strategies, and surveillance to monitor the effects of an approved product or to place conditions on an approval that restrict the distribution or use of the product.

FDA also may require post marketing testing, known as Phase IV testing, REMS, and surveillance to monitor the effects of an approved product or to place conditions on an approval that restrict the distribution or use of the product.

Outside the U.S., our and our collaborators’ abilities to market a product are contingent upon receiving marketing authorization from the appropriate regulatory authorities.

7 unchanged sentences

Foreign Corrupt Practices Act, or FCPA, which prohibits U.S.

corporations and their representatives from offering, promising, authorizing, or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad.

corporations and their representatives from offering, promising, authorizing, or making payments to any foreign

government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad.

The scope of the FCPA encompasses certain healthcare professionals in many countries.

We are also subject to similar laws of other countries that have enacted anti-corruption laws and regulations.

EU Marketing Approval of Medicinal Products

In order to market any product outside of the U.S., a company also must comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of products.

Regardless of whether or not it obtains U.S.

FDA approval for a product, an applicant will need to obtain the necessary marketing approvals by the comparable foreign regulatory authorities before it can initiate clinical trials or marketing of the product in those countries or jurisdictions.

Specifically, there are a number of similarities between the process regarding regulatory approval of medicinal products in the European Economic Area, or EEA, and that in the U.S.

Marketing approval requires satisfactory completion of pharmaceutical development, non-clinical studies and adequate and well-controlled clinical trials to establish the safety and efficacy of the medicinal product for each proposed indication.

It also requires the submission to relevant competent authorities for a clinical trial authorization to be granted and to the EMA, or to competent authorities in E.U.

Member States for granting of a marketing authorization by these authorities before the product can be marketed and sold in the E.U.

Clinical Trial Approval .

Similar to the U.S., the various phases of preclinical and clinical research in the E.U.

are subject to significant regulatory controls.

Certain preclinical (also termed “non-clinical”) data is required in order to inform the scientific basis for clinical trials to be conducted and later for such data to be used in the dossier for supporting a marketing authorization application, or MAA.

Preclinical data are required to guide the clinical development, from Phase I (first-in-human clinical trials) through to Phases II and III, to establish the safety and efficacy of a medicinal product.

During all phases of clinical development, national competent authorities of E.U.

Member States and other comparable regulatory authorities require extensive monitoring and auditing of all clinical trial related activities, to ensure safety of the trial participants, and quality and integrity of trial data.

In the E.U., clinical trials are governed by the Clinical Trials Regulation (E.U.) No.

536/2014, or CTR, which entered into application on January 31, 2022, replacing Directive 2001/20/EC or CTD.

The CTR is intended to harmonize and streamline clinical trial authorizations, simplify adverse-event reporting procedures, improve the supervision of clinical trials and increase their transparency.

Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization from competent authorities of E.U.

Member States in which the sponsor intends on carrying out clinical trials, and a positive opinion from an independent Ethics Committee.

The CTR, which is directly applicable in all E.U.

Member States, introduces a streamlined application procedure through a single-entry point, the “E.U.

portal”, the Clinical Trials Information System, or CTIS.

Since January 31, 2023, the use of CTIS has become mandatory for all clinical trial sponsors submitting initial applications for the approval of their clinical trials in the E.U.

The CTR also establishes a single set of documents to be prepared and submitted for the application including, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation as well as simplified reporting procedures for clinical trial sponsors.

Ongoing clinical trials authorized under CTD with at least one active site in the E.U.

on January 30, 2025 must be transitioned to CTR.

Active site in the context of transitioning means that the last visit of the last subject, or the other trial-related interventions with the subject specified in the protocol will take place after January 30, 2025.

Clinical Trials with no active sites authorized under CTD do not need to be transitioned even if the global trial is still ongoing outside the E.U.

after the transition deadline.

Clinical trials of medicinal products in the E.U.

must be conducted in accordance with current good clinical practices requirements and the applicable regulatory requirements, including those foreseen in the Good Clinical Practice Directive 2005/28/EC, and the ethical principles that have their origin in the Declaration of Helsinki.

Studies should also be conducted in accordance with all applicable EMA, European Commission and national guidelines.

Medicinal products used in clinical trials must be manufactured in accordance with the guidelines on current GMP, and in a GMP compliant facility, which can be subject to GMP inspections.

Marketing Authorization .

To obtain a marketing authorization to market a medicinal product in the EEA, an applicant must submit an MAA, either in accordance with a centralized procedure administered by the EMA or one of

the procedures administered by competent authorities in E.U.

Member States (decentralized procedure, national procedure or mutual recognition procedure).

A marketing authorization may be granted only to an applicant established in the E.U.

The centralized procedure provides for the grant of a single MA by the European Commission that is valid in all E.U.

Member States and through the EEA Member States – Norway, Iceland and Liechtenstein.

Pursuant to Regulation (EC) No 726/2004, the centralized procedure is compulsory for specific medicinal products, including those (i) derived from biotechnological processes, (ii) designated as orphan medicinal products, (iii) that are classified as advanced therapy medicinal products, or ATMPs, and (iv) containing a new active substance indicated for the treatment of HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other immune dysfunctions and viral diseases.

For medicinal products containing a new active substance indicated for the treatment of other diseases and products that are highly innovative or for which a centralized process is in the interest of patients, authorization through the centralized procedure is optional for product approval.

Under the centralized procedure, the EMA’s Committee for Medicinal Products for Human Use, or CHMP, conducts the scientific assessment of a medicinal product in respect of its safety, quality and efficacy for the purpose of determining its approvability.

Under the centralized procedure in the EEA, the maximum timeframe for the evaluation of an MAA is 210 days, excluding clock stops.

Procedural clock-stops provide the applicant with the time to gather additional information in response to the outstanding questions raised by the CHMP.

Accelerated assessment may be accepted by the CHMP in exceptional cases, when a medicinal product is considered to be of major interest from the point of view of public health, and, in particular, from the viewpoint of therapeutic innovation.

If the CHMP accepts a request for accelerated assessment, the time limit of 210 days will be reduced to 150 days.

The CHMP can, however, revert to the standard time limit for the centralized procedure if it considers that it is no longer appropriate to conduct an accelerated assessment.

A marketing authorization granted under the E.U.

regulatory system is valid for five years.

The MA may be renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the E.U.

Member State in which the original MA was granted.

To support the application, the MA holder must provide the EMA or the competent authority with a consolidated version of the electronic Common Technical Document providing up-to-date data concerning the quality, safety and efficacy of the product, including all variations introduced since the MA was granted, at least nine months before the MA ceases to be valid.

The European Commission or the competent authorities of the E.U.

Member States may decide on justified grounds relating to pharmacovigilance, to proceed with one further five-year renewal period for the MA.

Thereafter, the MA shall be valid for an unlimited period.

Any authorization which is not followed by the actual placing of the medicinal product on the E.U.

market (for a centralized MA) or on the market of the authorizing E.U.

Member State within three years after authorization ceases to be valid (the so-called sunset clause).

Innovative products that target an unmet medical need and are expected to be of major public health interest may be eligible for a number of expedited development and review programs, such as the Priority Medicines, or PRIME, scheme, which provides incentives similar to the breakthrough therapy designation in the U.S.

PRIME is a voluntary scheme aimed at enhancing the EMA’s support for the development of medicinal products that target unmet medical needs.

Eligible products must target conditions for which there is an unmet medical need (there is no satisfactory method of diagnosis, prevention or treatment in the E.U.

or, if there is, the new medicinal product will bring a major therapeutic advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods of therapy or improving existing ones.

Benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and potentially accelerated MAA assessment once a dossier has been submitted.

Combination Products .

As in the U.S., the regulation of combination drug-device products depends in large part on which component has the primary mode of action.

Where a medical device incorporates a medicinal product as an integral part as a single use drug delivery system, it is regulated as a medicinal product in accordance with Directive 2001/83/EC.

In this case, the relevant General Safety and Performance Requirements, or GSPRs of the MDR will apply to the safety and performance of the drug delivery device component.

Orphan Medicinal Product Designation and Exclusivity .

Regulation (EC) No.

141/2000, as implemented by Regulation (EC) No.

847/2000, provides that a medicinal product can be designated as an orphan medicinal product by the European Commission if its sponsor can establish that (1) the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition;

(2) either (a) such condition affects no more than five in ten thousand persons in the E.U.

when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the E.U.;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized in the E.U.

or, if such method exists, the product will be of significant benefit to those affected by that condition.

In the E.U., an application for designation as an orphan product can be made any time prior to the filing of the MAA.

Orphan medicinal product designation entitles a sponsor to incentives such as fee reductions or fee waivers, protocol assistance, and access to the centralized MA procedure.

Upon grant of an MA, provided that the orphan designation is maintained following a satisfactory re-assessment by the Committee for Orphan Medicinal Products, or COMP, of the EMA of the criteria for orphan designation, orphan medicinal products are entitled to a ten-year period of market exclusivity for the approved therapeutic indication, which means that the EMA cannot accept another MAA, or grant an MA, or accept an application to extend an MA for a similar product for the same indication for a period of ten years.

The period of market exclusivity is extended by two years for orphan medicinal products provided that the results of all studies conducted in compliance with an agreed PIP are provided – even though the results do not lead to an approval of a pediatric indication, but the results of the studies conducted are reflected in the summary of product characteristics and, if appropriate, in the package leaflet of the medicinal product concerned.

Orphan medicinal product designation does not confer any advantage in, or shorten the duration of, the regulatory review and approval process.

The period of market exclusivity may, however, be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria on the basis of which it received orphan medicinal product destination, including where it can be demonstrated on the basis of available evidence that the original orphan medicinal product is sufficiently profitable not to justify maintenance of market exclusivity or where the prevalence of the condition has increased above the threshold.

Additionally, an MA may be granted to a similar medicinal product with the same orphan indication during the 10 year period if:

(i) if the applicant consents to a second original orphan medicinal product application, (ii) if the manufacturer of the original orphan medicinal product is unable to supply sufficient quantities;

or (iii) if the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior to the original orphan medicinal product.

A company may voluntarily remove a product from the register of orphan products.

Post-Approval Requirements .

Where an MA is granted in relation to a medicinal product in the EEA, the holder of the MA is required to comply with a range of regulatory requirements applicable to the manufacturing, marketing, promotion and sale of medicinal products.

Similar to the U.S., both MA holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA, the European Commission and/or the competent regulatory authorities of the individual EEA countries.

The holder of an MA must establish and maintain a pharmacovigilance system and appoint a qualified person for pharmacovigilance who is responsible for oversight of that system.

Key obligations include expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports, or PSURs.

All new MAAs must include a risk management plan describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated with the product.

The regulatory authorities may also impose specific obligations as a condition of the MA.

Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-authorization safety studies.

In the E.U., the advertising and promotion of medicinal products are subject to both E.U.

Member States’ laws governing promotion of medicinal products, interactions with physicians and other healthcare professionals, misleading and comparative advertising and unfair commercial practices.

Although general requirements for advertising and promotion of medicinal products are established under E.U.

law, the implementing rules in each member state may differ from one country to another.

In addition, the statutory control regime could be supplemented by the voluntary control of advertising of medicinal products by self-regulatory bodies.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

International Regulation

In addition to regulations in the U.S.

and the E.U., we could become subject to a variety of other foreign regulations regarding development, approval, commercial sales and distribution of our products if we seek to market our product candidates in other jurisdictions.

Whether or not we obtain U.S.

FDA or EMA approval for a product, we must obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries.

The approval process varies from country to country and can involve additional product testing and additional review periods, and the time may be longer or shorter than that required to obtain U.S.

FDA or EMA approval.

The requirements governing, among other things, the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Pricing and Reimbursement

Within the U.S., significant uncertainty exists regarding the coverage and reimbursement status of products approved by the U.S.

Sales of our products depend, in part, on the extent to which our products will be covered by third-party payors, such as government health programs, commercial insurance and managed healthcare organizations.

The process for determining whether a third-party payor will provide coverage for a finished drug product typically is separate from the process for setting the price of a finished drug product or for establishing the reimbursement rate that the payor will pay for the finished drug product once coverage is approved.

Third-party payors may limit coverage to specific finished drug products on an approved list, also known as a formulary, which might not include all of the U.S.

Sales of our product, and any future products which obtain marketing approval, depend, in part, on the extent to which our products will be covered by third-party payors, such as government health programs, commercial insurance and managed healthcare organizations.

The process for determining whether a third-party payor will provide coverage for a drug or biologic typically is separate from the process for setting the price of such a product or for establishing the reimbursement rate that the payor will pay for the product once coverage is approved.

Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the U.S.

FDA-approved drugs for a particular indication.

2 unchanged sentences

Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

Additionally, coverage and reimbursement for finished drug products can differ significantly from payor to payor.

One third-party payor’s decision to cover a particular finished drug product or service does not ensure that other payors will also provide coverage for the medical product or service or will provide coverage at an adequate reimbursement rate.

The containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort.

Additionally, coverage and reimbursement for products can differ significantly from payor to payor.

One third-party payor’s decision to cover a particular product or service does not ensure that other payors will also provide coverage for the medical product or service or will provide coverage at an adequate reimbursement rate.

The containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs and biologics have been a focus in this effort.

Federal and state governments have shown significant interest in implementing cost-containment programs, including restrictions on reimbursement and requirements for substitution of generic products.

3 unchanged sentences

We expect that the pharmaceutical industry will experience pricing pressures due to the increasing influence of managed care (and related implementation of managed care strategies to control utilization), additional federal and state legislative and regulatory proposals to regulate pricing of drugs, limit coverage of drugs or reduce reimbursement for drugs, and public scrutiny of drug pricing.

There have been and likely will continue to be health care reform efforts.

For example, federal legislation enacted in 2021 eliminates a statutory cap on Medicaid drug rebate program rebates effective January 1, 2024.

As another example, the Inflation Reduction Act, or IRA, of 2022, contains various drug pricing and payment provisions.

Among other provisions, the IRA imposes a yearly cap ($2,000 in 2025) on out-of-pocket prescription drug prices in Medicare Parts B and D.

In addition, the IRA requires Medicare to negotiate Medicare prices for certain high-cost drugs and biologicals, including both physician-administered products covered under Medicare Part B benefit and self-administered drugs covered under the Medicare Part D benefit.

The Centers of Medicare & Medicaid Services, or CMS, annually selects a specified number of negotiation-eligible drugs from those drugs with the highest total Medicare Part B or D expenditures over a preceding 12-month period.

Eligible drugs generally include single source brand-name drugs or biological products that

have been on the market without therapeutically-equivalent generic or biosimilar alternatives for a specified number of years with certain exceptions (e.g., orphan drugs indicated for only one rare disease or condition and drugs with less than $200 million in annual Medicare expenditures).

CMS will publish the negotiated price, known as the “Maximum Fair Price”, or MFP, for each of the selected products.

Manufacturers of selected drugs would be required to offer the drug for Medicare recipients at the MFP.

Manufacturers who fail to negotiate or offer the MFP can face significant civil money penalties or excise tax liability on sales of that drug.

The first drugs were selected in 2023 and the MFP for those drugs will take effect in 2026.

Only Medicare Part D drugs are selected for the first two years of the program (i.e., MFPs that take effect in 2026 and 2027).

Depending on the share of Medicare spending each year that is attributed to LINZESS or any other product candidate that we develop and whether or not those drugs become eligible for Medicare negotiation, those drugs and our revenue may be adversely impacted by this provision.

While we cannot predict what executive, legislative and regulatory proposals will be adopted or other actions will occur, such events could have a material adverse effect on our business, financial condition and profitability.

6 unchanged sentences

Department of Justice, state Attorneys General, state departments of health and state pharmacy boards.

We are subject to the requirements of the Federal Food, Drug, and Cosmetic Act and accompanying regulations that prohibit pharmaceutical companies from promoting a drug prior to approval from the U.S.

We are subject to the requirements of the FDCA and accompanying regulations that prohibit pharmaceutical companies from promoting a drug prior to approval from the U.S.

FDA and from promoting an approved drug in a manner inconsistent with the approved label.

7 unchanged sentences

Many of these laws and regulations contain ambiguous requirements or require administrative guidance for implementation.

Data Privacy and Security Laws

Pharmaceutical companies may be subject to U.S.

federal and state health information privacy, security and data breach notification laws, which may govern the collection, use, disclosure and protection of health-related and other personal information.

State laws may be more stringent, broader in scope or offer greater individual rights with respect to protected health information, or PHI, than the federal Health Insurance Portability and Accountability Act of 1996, as amended, and its implementing regulations, which are collectively referred to as HIPAA, and state laws may differ from each other, which may complicate compliance efforts.

Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices or an audit by the Department of Health and Human Services, or HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional

reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.

In addition to federal regulation, many states have begun to focus on efforts to regulate privacy and data security.

For example, in California the California Consumer Privacy Act, or CCPA, which went into effect on January 1, 2020 and was expanded by the California Consumer Privacy Rights Act, or CPRA, which went into effect on January 1, 2023, collectively establishes a privacy framework for covered businesses by creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe statutory damages framework for violations and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.

The California Confidentiality of Medical Information Act also applies to pharmaceutical companies, including requirements for written authorization to use and disclose medical information and restrictions on the circumstances under which medical information can be used for marketing purposes.

Other states that have also recently enacted comprehensive data privacy and security laws, include Washington, Utah, Virginia, Colorado, and Connecticut.

Furthermore, all fifty states, the District of Columbia, Puerto Rico, and U.S.

territories have enacted data breach notification laws.

These various state laws differ from one another and impose significant compliance efforts.

EEA Member States, the United Kingdom, Switzerland and other jurisdictions have also adopted data protection laws and regulations, which impose significant compliance obligations.

In the EEA and the United Kingdom, the collection and use of personal data, including clinical trial data, is governed by the provisions of the General Data Protection Regulation, or GDPR.

The GDPR, together with national legislation, regulations and guidelines of the EEA Member States, the United Kingdom and Switzerland governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, analyze and transfer personal data, including health data from clinical trials and adverse event reporting.

In particular, these obligations and restrictions concern the consent of the individuals to whom the personal data relates, the information provided to the individuals, the transfer of personal data out of the EEA, the United Kingdom or Switzerland, data breach notifications, security and confidentiality, responding and handling data subject rights, ensuring appropriate assessments are carried out on processing operations and documented.

Under these laws, data protection authorities can impose substantial potential fines for breaches of the data protection obligations.

European data protection authorities may interpret the GDPR and national laws differently and impose additional requirements, which add to the complexity of processing personal data in or from the EEA, United Kingdom or Switzerland.

Guidance on implementation and compliance practices are often updated or otherwise revised.

Human Capital

8 unchanged sentences

Women represent approximately 50% of our employee base, 20% of our leadership team (vice president and above) and 33% of our board of directors (including our board and audit committee chairs).

Additionally, approximately 18% of our employees are racially or ethnically diverse and in 2022, approximately 28% of our new hires were racially or ethnically diverse.

Additionally, approximately 20% of our employees are racially or ethnically diverse and in 2023, approximately 40% of our new hires were racially or ethnically diverse (excluding Europe-based employees, for which race and ethnicity is not disclosed).

We are focused on fostering an environment where employees feel included and empowered.

This approach includes DE&I initiatives such as learning and development opportunities, strengthened talent acquisition strategies, the support of equality programs in our local communities, and added metrics related to retention and career advancement of diverse populations.

This approach includes DE&I initiatives such as learning and development opportunities, strengthened talent acquisition strategies, and the support of equality programs in our local communities.

We are also proud to have three strong and growing employee resource groups:

11 unchanged sentences

To this end, we utilize a variety of channels to facilitate open and direct communication, including frequent town hall meetings, Ironwood intranet, CEO blog, leadership engagement opportunities, regular communications regarding business updates, and employee engagement surveys.

Health, Wellness and Safety in the Face of the COVID-19 Pandemic

The health and safety of all our employees is a top priority for us.

We have augmented certain healthcare, childcare and leave benefits in an effort to support our employees and their families in the face of the continuing challenges brought on by the COVID-19 pandemic.

We maintain a working group focused on creating and keeping employees well informed about the company’s latest plans and guidance around COVID-19.

We also provided personal protective equipment, at-home COVID-19 test kits and safety trainings for field-based employees, a home supply stipend to create home office space, and extended additional wellness benefits including backup childcare, among other efforts.

Available Information

You may obtain free copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after they are electronically filed or furnished to the SEC, on the Investors section of our website at www.ironwoodpharma.com or by contacting our

Investor Relations department at (617) 621-8395.

The contents of our website are not incorporated by reference into this report and you should not consider information provided on our website to be part of this report.

1 unchanged sentence

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-K

Item 1. Business