Ladies and gentlemen, good morning. My name is Abbey and I will be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals Fourth Quarter and Full Year 2021 Investor Update Conference Call. Today’s conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. And I would like to introduce Matt Roache, the Director of Investor Relations. Mr. Roache, you may begin your conference.

Thank you, Abbey. Good morning and thanks for joining us for our fourth quarter and full year 2021 investor update. Our press release crossed the wire this morning and can be found on our website. Today's call and accompanying slides include forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially. A discussion of these statements and risk factors is available on the current Safe Harbor Statement slide as well as under the heading Risk Factors in our quarterly report on Form 10-Q for the quarter ended September 30, 2021, and in our future SEC filings. All forward-looking statements speak as of the date of this presentation, and we undertake no obligation to update such statements. Also included are non-GAAP financial measures, which will be considered only as a supplement to and not a substitute for or superior to GAAP measures. To the extent applicable, please refer to the tables at the end of our press release for reconciliations of these measures to the most directly comparable GAAP measures. During today's call, Tom McCourt, our CEO, will begin with an overview and provide an update on the commercial performance of LINZESS. Mike Shetzline, our Chief Medical Officer, will provide an update on our pipeline; Sravan Emany, our Chief Financial Officer, will review our financial results and guidance. These webcasts include slides. For those of you dialing in, please go to the Events section of our website to access the accompanying slides. With that, I will turn the call over to Tom.

Thanks, Matt. Good morning, everyone and thanks for joining us today. When I became CEO last year, I was energized about the commitment to developing innovative solutions in the area of high unmet need in GI. In 2021, we made significant progress against this important mission. I am proud of the Ironwood team who, even through the ongoing pandemic, remained committed to advancing the treatment of GI diseases and redefining the standard of care for patients. Thanks to their hard work and dedication, we closed out the year with a lot to be proud of. We started 2021 with a clear roadmap, which included three strategic priorities: one, maximizing LINZESS; two, strengthening our innovative GI pipeline; and three, delivering sustained profits and generating cash flow. By the end of 2021, I'm excited to report that we made tremendous headway across all three of these key pillars. Let's begin on Slide 6 with a quick overview of some of our highlights and achievements in 2021. First, LINZESS has been an extraordinarily resilient, market-leading brand that continues to deliver strong demand growth and profitability. In 2021, I'm proud to share that LINZESS achieved blockbuster status exceeding $1 billion in U.S. net sales, representing 8% growth year-over-year. Prescription demand grew a robust 12% year-over-year, and commercial margins were 74%. The continued impressive LINZESS performance is no small feat and I want to acknowledge the dedication of our team who made this achievement of $1 billion in sales a reality. In addition, we previously announced that the FDA approved a revised label for LINZESS modifying the prior box warning, which included all children under 18 years of age to the warning of a risk of serious dehydration and contraindication against use in children younger than 2 years of age. This label change is a significant accomplishment for the team as we continue to advance the pediatric program. As a reminder, LINZESS is not currently approved for use in patients under 18 years of age. Next, we strengthened our pipeline by entering into a collaboration and license option agreement with COUR Pharmaceuticals to develop and commercialize CNP-104, which, if successful, has the potential to be the first approved disease-modifying therapy for primary biliary cholangitis. In addition, we advanced IW-3300, our wholly owned asset for the treatment of visceral pain conditions and our linaclotide pediatric development program in IBS-C and functional constipation. Mike will elaborate on these exciting pipeline updates in a few moments. Finally, we ended the year with $528 million in GAAP net income, which includes a $338 million non-recurring income tax benefit related to the release of a valuation allowance in the second quarter of 2021. Adjusted EBITDA was $234 million with $620 million in cash and cash equivalents, a significant increase from the end of 2020. Also, we initiated our Board authorized share buyback program with $27 million of shares repurchased as of the end of 2021. Another important highlight in 2021 was the addition of several experienced leaders including Andrew Davis, our Chief Business Officer; John Monarto, our Chief Legal Officer; and most recently, Sravan Emany, our Chief Financial Officer. We're thrilled that Andrew, John, and Sravan have joined the team and I'm honored to be at the helm of a very talented group of leaders, uniquely capable of advancing our mission and ushering in a new era of growth and innovation at Ironwood, as we look to continue to grow the company and our pipeline to address areas of GI diseases. Now let's turn our attention to LINZESS, starting on Slide 7. Ironwood has had tremendous success with LINZESS from its inception to its recent achievement of blockbuster status, and it continues to serve as the backbone of the company. As I mentioned a few moments ago, LINZESS prescription demand increased 12% year-over-year in 2021, resulting in U.S. net sales of over $1 billion. LINZESS ended the year with approximately 44% total prescription share, a new record high for the brand. As you can see on Slide 8, new-to-brand prescription growth increased a robust 15% year-over-year, which outpaced the market. In addition, 90-day prescription growth has continued to increase over time, making up approximately 20% of the business as of the end of 2021. Turning to Slide 9. It's not every day that a brand achieves blockbuster status and it doesn't happen by accident. First, LINZESS has demonstrated an improvement in constipation plus overall abdominal symptoms, which is important in the treatment for adults with IBS-C who are often frustrated by bloating, pain, and discomfort. Additionally, the strong brand awareness has helped LINZESS become the number one prescribed branded treatment for adults with IBS-C and chronic constipation by gastroenterologists and primary care physicians. This robust momentum and market leadership position have enabled us to refine our overall marketing mix and investment over time while we continue to deliver strong demand growth and expand brand margins. We expect to continue to grow LINZESS through patient activation, refined professional promotion, our class-leading payer access, and by pursuing future life cycle management opportunities. Looking ahead, we're confident in our strategy and in the future, and we will continue to focus on delivering value to our patients and shareholders. We believe the investments we're making in the brand and in our pipeline will position our company for long-term growth. Since joining the company in 2009, I have seen firsthand the outstanding capabilities of the Ironwood team in advancing our development and commercialization strategies as well as our unsurpassed level of commitment to making a positive difference for millions of patients affected by GI diseases. I'm very honored to lead this organization full of talented people, and I look forward to continuing to build upon Ironwood's success as we plan for 2022 and beyond. I'll now turn the call over to Mike to discuss our pipeline and clinical development efforts. Mike?

Thanks, Tom. We're thrilled that we have expanded our pipeline as we seek to bring new potentially first-in-class therapies to patients suffering from GI diseases and disorders that we think we can impact in a clinically meaningful way. I'll start with the linaclotide pediatric program on Slide 11. Functional constipation affects an estimated 4 million to 6 million 6 to 17-year-olds in the U.S., and currently, there are no FDA-approved prescription pediatric therapies for functional constipation. We believe this is a significant opportunity to potentially expand the clinical utility of LINZESS to this large patient population. We're excited to continue to advance this program, and we expect the functional constipation study in 6 to 17-year-olds to read out in the second half of this year. Next is an update on IW-3300. I'm pleased to share that our clinical study is officially underway. IW-3300 is a guanylate CKC agonist and a wholly owned asset for the potential treatment of visceral pain conditions, such as interstitial cystitis, bladder pain syndrome, and endometriosis. Interstitial cystitis and bladder pain syndrome affect an estimated 4 million to 12 million Americans according to the Interstitial Cystitis Association. These diseases have a limited number of treatment options available and significantly impact patient quality of life. The scientific evidence to date supports the opportunity for IW-3300 acting in the colon to offer a pain benefit to other visceral organs through a mechanism known as cross-talk. Cross-talk is a biological phenomenon where sensations of injury originating in one abdominal or visceral organ can result in altered sensation in a nearby organ because of overlapping nerve pathways. We're particularly excited about the launch of this Phase 1 study as it will be the foundation to clinically test the cross-talk hypothesis in humans for the first time later this year. Next, CNP-104. We're tapping into external partners as we identify opportunities to meaningfully advance novel GI treatments for patients, where we can leverage our GI expertise and resources to help drive success. We're thrilled to collaborate with COUR on CNP-104 for primary biliary cholangitis, which is a prime example of our strategic approach to enhancing our pipeline. PBC is a slowly progressive and debilitating rare autoimmune disease of the liver that affects an estimated 133,000 people in the U.S. Currently, there are no approved therapies that address the underlying pathology or root cause of bile duct destruction in PBC. The loss of bile duct is fundamental to this disease and leads to decreased bile secretion and the retention of toxic substances in the liver, resulting in continuous hepatic damage, which can ultimately require a liver transplant. Since signing the agreement with COUR, CNP-104 has been granted fast-track designation by the U.S. FDA, underscoring the significant unmet medical need of patients with PBC. We're also pleased to share that COUR has initiated the clinical study of CNP-104, which will look at safety, tolerability, pharmacodynamics, and efficacy, with the readout currently expected in 2023. We recently participated in a virtual symposium with leading experts in gastroenterology and hepatology to discuss the impact of PBC and existing gaps in care and treatment. During this forum, many leading gastroenterologists and hepatologists who treat PBC highlighted the importance of stopping the progression of liver bile duct destruction that is foundational to this disease. So you can see why we're really excited about this clinical program. We believe CNP-104 has the potential to shift the treatment paradigm in PBC and could be the first truly disease-modifying therapy for this condition, if successful, and potentially a real game changer for patients suffering from PBC. This collaboration with COUR allows us to expand our pipeline, leverage our deep relationships within the GI community, and advance innovation via differentiated opportunities. We believe COUR's expertise in immune programming and Ironwood's development and commercial strength, as well as reach in the GI disease area, will help advance this exciting program. And this is how we plan to focus our business development efforts going forward: on assets that are highly differentiated, target clear unmet medical needs, have an established method of action, and provide clear decision points. We are seeking to identify more assets like this as we further build out our pipeline. I'll now turn it over to Sravan to review our financial performance.

Thanks, Mike, and good morning, everyone. I'm excited to be part of such a great team here at Ironwood and to be part of such a great culture. As the new CFO, it is fantastic to report such great numbers and see how much Ironwood has strengthened its financial position over the past few years. I would like to provide a few updates. First, I will highlight our fourth quarter and full year 2021 performance, then I will discuss our capital allocation strategy and finally, I'll review our 2022 guidance. Please refer to our press release for our detailed financial information. I'll start on Slide 13 with LINZESS. U.S. net sales were $279 million in the fourth quarter of 2021, a slight increase over the fourth quarter of 2020. As a reminder, we saw fewer inventory channel fluctuations in 2021, which resulted in favorable net sales growth in the first half of the year, which resulted in a dampening of net sales growth in the second half. Going forward, we expect quarterly inventory channel levels similar to 2021. For full year 2021, U.S. LINZESS net sales were $1.6 billion, an 8% increase compared to full year 2020. Growth was mostly driven by robust prescription demand. Turning to LINZESS brand profitability, commercial margin in the fourth quarter of 2021 was 76%. For full year 2021, commercial margins were 74% versus 72% for full year 2020. Moving to Ironwood revenues. In the fourth quarter, Ironwood revenues were $117 million. For full year 2021, Ironwood revenues were $414 million, with U.S. LINZESS collaboration revenues of $400 million. Ironwood U.S. LINZESS collaboration revenues increased 9% compared to full year 2020. GAAP net income was $41 million in the fourth quarter of 2021 and $528 million for the full year, which includes a non-recurring income tax benefit of $338 million, which was recorded in the second quarter relating to the release of our valuation allowance against the majority of our deferred tax assets. Adjusted EBITDA was $57 million in the fourth quarter of 2021, which includes $19.5 million in expenses associated with the COUR option agreement. Adjusted EBITDA was $234 million for full year 2021. Moving to cash and capital allocation priorities on Slide 14, we are in a unique position of being a profitable biotech company that is delivering meaningful cash flow. In the fourth quarter, we generated $65 million in cash flow from operations and $262 million for the full year 2021, and ended the year with $620 million in cash and cash equivalents, up from $363 million at the end of 2020. We continue to execute our Board authorized share repurchase program of up to $150 million that runs through the end of this year. As previously mentioned and announced at the J.P. Morgan Healthcare Conference in January, we repurchased $27 million of shares of our common stock as of December 31st. And we repurchased an additional $51 million of shares through February 15, 2022. We believe we are positioning our company for future success by maximizing LINZESS growth and actively pursuing innovative, highly differentiated GI assets to bolster our portfolio. We continue to take a balanced and disciplined approach to capital deployment and remain focused on identifying and investing in opportunities that we believe will create value for our patients and shareholders over the long term. Next, I'll review our 2022 guidance on Slide 15. As we previously stated in January, we expect LINZESS net sales growth in the low single digits. We again anticipate continued double-digit prescription demand growth. Over time, we have continued to refine our investment in the brand to support demand growth, improve brand margins, and ultimately maximize Ironwood cash flow. In 2022, we made an investment to maintain broad payer access, which we anticipate will result in high single-digit price erosion this year. We expect to manage price erosion to be more modest in 2023. Next, we expect total Ironwood revenue of $420 million to $430 million. And lastly, we expect adjusted EBITDA of greater than $250 million. So as you can see, we are pleased with the progress we made in 2021, successfully driving LINZESS growth, leading it to blockbuster status, adding CNP-104, a potential game-changing asset to our pipeline, advancing IW-3300, the linaclotide pediatric program, and initiating our share repurchase program. With this momentum carrying us forward, coupled with our current balance sheet and skilled management team, we have confidence in our ability to pursue new GI assets that potentially will help us make a difference for patients and help grow our position as a leading GI healthcare company in the United States. We are excited about the work ahead of us, and we'll continue to keep you posted on our progress.

Thank you. And we will take our first question from Boris Peaker with Cowen.

Good morning. Question on 3300, can you discuss what you need to see in the data update later this year to invest further in this drug, and are there any kind of reference data sets or reference drugs that we should be considering when we're looking at this data?

Well, good morning, Boris. This is Sravan. I'll hand it over to Mike to answer that question.

Yes, sure. So for 2022, we're actually, again, excited to kick off the program. The clinical program, as we said, started in quarter one, 2022. It's a significant undertaking because it's a very well-established medical need. So to your point, through 2022 we're going to complete the Phase 1 program. So we will have data available from a safety and tolerability perspective, and we do plan to kick off what we call the Phase 2 proof-of-concept studies later this year. So that design of that study is actually being worked on as we speak today. But it's also found that in other analogs, there are a couple of products approved for bladder pain syndrome. They don't work well from the information we get from externals but that's just a clinical opinion. But that's one of the reasons why we think the medical need is quite significant. So using those analogs, we're sort of designing the program and, of course, we'll run it by the FDA to get their feedback as well. But it really is looking at the symptomatic improvement of patients suffering from visceral hypersensitivity due to bladder pain syndrome.

Got it. And my last question is obviously, the valuation of biotech has come down quite significantly, you guys seem to be actively buying back your own shares. I'm just curious if with this newly evaluated environment, are you being more aggressive in M&A, is that an objective or are you happy with the pipeline you have right now more focused on just returning cash to shareholders via buyback?

Yes, thanks Boris. Look, I think from where we stand today, again, I think we've said it a few times now that we're going to be pretty disciplined with our capital allocation strategy, whether that's deploying capital for future acquisitions or for repurchasing our own shares. And I think part of that comes down to when we find an opportunity that makes sense for us and that we think creates value, we'll actively pursue it. Part of it's finding those opportunities, but we're open to whatever makes sense in the best interest of shareholders.

Yes, Boris, this is Tom. A couple of thoughts, too. I think the thing that's been remarkable to me is the resilience of LINZESS and our ability to continue to refine the marketing mix and the investment to really flow bigger numbers to the bottom line, which is going to set us up for the future. And I think CNP-104 is a classic example of an area of significant high unmet need and a potential game changer for the treatment. And it's assets like that that we would be excited to be able to bring on board and get through proof of concept to determine whether we continue to invest in the future. So we're very excited about where we are right now. I think about where we were three years ago and I think the team has just done a really strong job in getting us on the right track.

Great, thank you very much for taking my questions.

And we will take our next question from Eric Joseph with J.P. Morgan.

Good morning everyone. Thank you for your questions. I would like to discuss the pediatric opportunity. Can you provide any insights regarding the anticipated uptake among the approximately 5 million children with functional constipation? Do you have information on how many of these children are currently being treated with over-the-counter laxatives for their condition?

Yeah, good morning Eric and thanks for your question. I'll hand it to Tom and then Mike.

Yes. I mean, what I can share with you is really kind of what we've learned in market research in this space and the reality is there's really not many good options for kids. And as Mike mentioned earlier, there's nothing currently approved for pediatric constipation or IBS. I think there are a couple of sizable pieces to this market; one is the adolescent population, which is probably the most visible high-need population that I think we can access very quickly. A lot of these patients are treated both by gastroenterologists as well as primary care physicians and they're actively seeking help. I think the one difference in this population is when these kids are suffering, they're actively engaging physicians for help. And I think to have a drug that's actually approved and can not only improve your constipation symptoms but also improve abdominal symptoms is a huge step forward for this population. Mike, maybe you can comment further with regard to your clinical view of the need and the opportunity.

Yes, I think similarly, the key is that constipation in general is a significant medical morbidity for patients and primarily in one of the populations we're studying. The study that will be out later this year is the 6 to 17-year-olds. From a functional constipation perspective, or IBS-C perspective or IBS with constipation perspective, they are fairly prevalent conditions in the pediatric population. And as I mentioned, as you know, they sort of rotate through laxatives. They don't have really good alternatives, and nothing is currently approved. So that's why we're really excited to see the data at the end of this year in the 6 to 17-year-old population because moving forward with improving symptoms of bowel frequency in patients with functional constipation could provide a really good therapy for patients in this patient population.

One other closing thought in this, Eric, I mentioned there's always been this question about drug safety in the younger population. Due to the hard work of Mike and his team, they've really resolved many of those concerns, both with regard to the basic science as far as what was hypothesized when we launched a drug, but more importantly, what we're seeing in the clinical data that this drug does look effective and well tolerated. We're going to continue to work with the FDA to make sure that it's going in the right direction. But we do see this as a very sizable commercial opportunity.

I was trying to get more information on the premium expectations for the readout in the second half, specifically what the trial is designed to show in terms of improvement and whether that data set is positive enough for label expansion.

Yes, so the current study, which is a 6 to 17-year-old study, is looking at improving bowel function obviously in 6 to 17-year-olds with diagnosed functional constipation. So at that level and as with other constipation disorders, that's really founded in an improvement in bowel function. Bowel movement frequency and spontaneous bowel movement measurements are the endpoints we’re looking at, seeing improvement in bowel movement function in those patients. And that hopefully will give us a path to an indication for functional constipation. Clearly, we've got to see the data at the end of the year; we will have discussions with the agency earlier this year to prepare for that, and it will obviously be data-driven and a discussion with the agency to endeavor to move that forward.

Okay, great. Final question, if I could. Strong commercial margin for LINZESS exited fourth quarter. How should we be thinking about the trend in 2022? You talked earlier about sort of additional spend for the franchise, any diminishment of that commercial margin we should be anticipating?

Yes, so first of all, let me just take a step back, Eric, and just say look, we're really proud of where LINZESS is from a profile perspective in terms of having a brand that's thriving and being able to produce double-digit prescription demand growth year-over-year, 10 years into its life cycle. At the same time, we've been pretty prudent in terms of what goes into our commercial spend to maintain that. And as Tom had mentioned, and I think we talked about a little earlier, we've made some choices as to where to make those investments in either payer access, marketing, etc., to manage and drive that prescription demand growth. Because we think that's the ultimate driver of overall profitability and ultimate driver of overall cash flows for the company. Specifically, to your question what I would say is, look, I think like every other CFO, I'd be wanting if I didn’t mention that we're in an inflationary environment. And like the broader economy, we're exposed to inflation repressions within our business, whether that's labor and the like. And so we continue to monitor that. But I think from where we stand today from a commercial margin perspective, we think we're going to hold steady about where we're at for 2022 and continue to drive profitability through cost containment.

Yes. Just one other, thanks Sravan. Just one other comment as I think about this is, we talked about the momentum that this brand has in the market, which has allowed us to really tune up the marketing mix. And as you know, we have dramatically pulled back on personal promotion, which is one of the biggest ticket items with regard to expense, and we haven't seen the demand growth waiver, which says a lot for the effectiveness of this drug in the marketplace and ongoing growth. But obviously, we continue to look at promotional response and investments both on the consumer and professional side. And of course, the payer mix is also critically important, which has continued to enable patients to easily access the drug.

Excellent. Thanks, guys, for taking the questions.

And we will take our question from Tim Chiang with Northland Securities.

Thanks. Hey Tom, just given the revaluation in a lot of pharma biotech names, have you guys considered looking at other existing approved products that complement LINZESS, just given the fact that you already have a commercial infrastructure in place?

So Tim, this is Sravan. Look, I'll start by saying that we don't comment on business development activities as a standard course. What I will say is, look, we are open from a strategic direction perspective to whatever creates the most amount of value for the company, and we will evaluate any and all opportunities that we think can drive that for us. So it's a broad answer to your question, I appreciate that, but we are not going to get specific about where and what we're looking at.

I agree with you. The environment is changing, which could present us with great opportunities. The team is currently exploring various options, and we have several prospects that we are carefully assessing. We are working closely with our Board to ensure we make sound decisions for you as an investor.

Okay, great. And maybe just a follow-up. I know you guys have provided 2022 guidance, which is solid. But do you expect R&D expenses to ramp up this year or is it more of a flat year for R&D?

Yes. So just as a reminder, taking a step back, last year in 2021 with respect to R&D expenses, first of all, one, Tim, we don't give guidance on R&D expenses. I think is the first one. We just talk about EBITDA. But what I would say is our 2021 R&D expense included about $19.5 million associated with the COUR license option agreement, and we don't expect those costs to recur in 2022. At the same time, we've got some interesting things that we're looking to get readouts on this year, specifically pediatrics and the progress we're making on IW-3300 and CNP-104 itself. So I'd just say that we don't have those recurring costs and we don't provide guidance on that.

Okay, great. Thanks.

And we'll take our next question from Jacob Hughes with Wells Fargo.

Hey, good morning. It's Nick on for Jacob. Thanks for taking the question. Just one from us. Is there any update you can share on the LINZESS OTC pathway and maybe what progress you expect for this year?

Well, thanks for the question. At this time, we don't have an update on the OTC pathway and we'll provide an update when we have one.

Yes, I think that’s accurate, Sravan. We are still collaborating with our partner to assess feasibility and timing. Currently, our main focus is on advancing the pediatric program and addressing any pending questions from the FDA regarding drug safety before we can proceed with the OTC evaluation.

Got it, thank you.

And ladies and gentlemen, that concludes our question-and-answer session. And this also concludes today's conference call. We do appreciate your participation, and you may now disconnect.