Hello everyone, my name is Megan and I will be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals Q3 2026 Investor Update Conference Call. 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. Thank you. I would now like to turn the call over to Chris Stamm, VP of Investor Relations and Communications. Please go ahead.

Good morning, and thanks for joining our third quarter 2026 investor update call. A press release issued this morning highlighting third quarter results can be found on our website. Today's call and accompanying slides include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 annual report on Form 10-K for the year ended December 31, 2025 and in our subsequent SEC filing. All forward-looking statements speak as of the date of this presentation and we undertake no obligation to update such statements. also included our non-GAAP financial measures, which should 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, Chief Executive Officer Tom McCourt will review third quarter business highlights and our progress advancing our 2026 strategic priorities. Following Tom, Chief Commercial Officer and CEO-elect Tammi Gaskins will provide an overview of third quarter Linzess performance. Next, Jeff Silber, our Chief Medical Officer and Head of Research and Drug Development, will provide an update on amperglutide in the STARS II trial. Then Ron Silver, our Interim Chief Financial Officer, will provide a financial update before turning the call back to Tom and Tammi for some closing remarks prior to opening the call for questions. Jeff Ruberti, Ironwood's Chief Strategy Officer, will also be available during the Q&A portion of the call. Today's webcast includes accompanying slides. For those joining by phone, please visit the events section of our website to access the presentation. And with that, I'll turn the call over to Tom.

Thanks, Chris, and thank you all for joining us this morning to review Ironwood's third quarter 2026 financial results and business updates. Ironwood's momentum carried into the third quarter as we continued our focused execution across three strategic priorities, maximizing the value of Linzess, advancing the development of apriclutide, and delivering sustained profits and cash flow. 2026 continues to be a turnaround year for the company as we make meaningful progress across each of these priorities. We believe Linzess is on its way to returning to blockbuster status this year, demonstrating exceptional durability and growth in its 14th year on the market, and remaining the U.S.-branded leading prescription therapy for both IBSC and chronic constipation. We delivered a strong third quarter, and based on this momentum, are once again raising our full-year 2026 LINZUS guidance now to the range of $1.2 to $1.25 billion, representing growth of more than 35% year-over-year. Turning to apraglutide, we continue to advance the global rollout of the STARS-2, our confirmatory phase 3 trial, evaluating the apraglutide in patients with short bowel syndrome with intestinal failure. With our plans for clinical trial site activation progressing across the U.S. and internationally, Building on the positive results from the Phase III STARS trial, STARS II is designed to confirm apriclutide's efficacy in reducing parenteral support requirements. We believe the strength of the STARS data and apriclutide's once-weekly administrative support is potential to deliver a meaningful benefit to patients with short bowel syndrome who are dependent on parenteral support. We delivered strong financial results during the quarter, generating $60 million in GAAP net income and a record $98 million in adjusted EBITDA. Looking ahead, we expect to utilize LINZUS-generated cash flow to further reduce our debt and are well-positioned to end 2026 with a gross leverage below 1x, while maintaining resources necessary to advance and prepare for the potential commercialization of apriclutide. With that, I'll ask Tammi to provide some additional context on Linzess.

Thanks, Tom, and good morning, everyone. As Tom noted, this quarter continues a remarkable turnaround for Linzess, highlighting the strength of the brand's prescription market leadership. In summary, Q3 net sales for Linzess came in at $325 million, with year-to-date net sales of $880 million through Q3, driven primarily by improved net price. In addition to price, EU TRX demand volume growth of 5% year-over-year has also supported year-to-date net sales, with mid-single-digit demand growth still expected for the full year. This slide, as you see, also reflects the steadiness in consecutive quarterly net sales because of greater price consistency across channels versus prior year. In Linzess year-to-date net sales of $880 million, already exceeded full-year 2025 net sales, and we expect Q4 to be our strongest quarter of the year. The strong finish to the year is expected to be driven by continued demand and improved net price relating to the elimination of inflationary rebates across channels and fewer Medicare Part D patients reaching the catastrophic phase resulting from the lower list price. These factors support the raise of our full-year Linzess net sales guidance by $50 million to $1.20 to $1.25 billion, representing growth of more than 35% year-over-year. Most importantly, Linzess continues to be prescribed to help address the unmet needs of millions of patients with IBSC and CIC. Now, I'd like to pass the presentation over to my colleague, Jeff Silber, to highlight the latest updates regarding the abraclutide program. Jeff?

Thanks, Tammi. Good morning, everyone. This quarter, we continue to advance STARS-2, our randomized, double-blind, placebo-controlled 24-week confirmatory phase 3 trial evaluating abraclutide in adults with short bowel syndrome with intestinal failure, or SPSIF. As with any clinical trial, the pathway to ramping up patient enrollment runs through broad site activation. To this end, I'm happy to share that as we continue to add sites in the U.S., all of the planned clinical trial applications have been submitted to international health authorities, and these are now either under review or already approved. We remain on track with our plans to activate more than 100 clinical trial sites across 22 countries spanning the Americas, Europe, and Asia Pacific, establishing a broad global network to support patient recruitment. At this stage, the activated sites have begun recruiting patients. STARS II is designed with a substantially expanded global clinical trial network compared with the original STARS study, which involved 68 sites. STARS II includes approximately twice as many planned US sites, representing a thoughtful effort to accelerate patient recruitment and study execution. As a reminder, abraglutide is the only once-weekly GLP-2 analog to demonstrate positive Phase III efficacy data and a favorable safety profile in adults with SPS-IF based on the results of the STARS study. As you can see on the left, in the STARS trial, the group receiving abraglutide once-weekly achieved a statistically significant reduction in weekly parenteral support volume compared with the placebo recipients at week 24. In fact, patients receiving apraglutide experienced approximately twice the percentage reduction observed with placebo. Importantly, more than 90% of the STARS patients opted to enroll in the STARS-Extend long-term extension study, and of these, about three-quarters remain on treatment with some having received apraglutide for up to five years. As shown on the right, patients in STARS EXTEND continued to decrease their parenteral support requirements over time, with some gaining incremental days off, including achievement of enteral autonomy, highlighting the potential for continued reductions in parenteral support requirements with longer-term apraglutide treatment. We believe that patients will be motivated to stay on apraglutide long-term because of the potential for ongoing clinical benefit, the convenience of once-weekly administration, and an observed safety and tolerability profile to date that would enable sustained use. We remain encouraged by the evolving long-term findings from STARS Xtend, and we look forward to presenting updated clinical results from the study at medical congresses in the first half of 2027. Our overall goal remains to get apraglutide to patients as quickly as possible and, if approved, to be the first long-acting GLP-2 analog for patients with SPSIF in the United States. I look forward to providing additional details on the progress of STARS II during our fourth quarter update. And with that, I'll turn the call over to Ron.

Thanks, Jeff. Turning to our financial results. In the third quarter, federal revenue was $133 million, Gaffnutt Income was $60 million, and adjusted EBITDA was a record $98 million. During the quarter, we paid down $60 million of the revolving credit facility with cash on hand, placing our outstanding principal balance at $325 million at quarter end. Looking ahead, we intend to continue using operating cash flows to further reduce our debt balance and expect to end the year with less than $300 million of debt, further strengthening our balance sheet and financial flexibility. We ended the quarter with $86 million in cash and cash equivalents and $133 million in collaboration receivables. Turning to earnings guidance. As Tom and Tammi mentioned, given the continued strength of Linzess and our outstanding year-to-date performance, we're raising our full year of 2026 guidance, marking the second increase to our outlook this year. We now expect Linzess U.S. net sales of between $1.2 and $1.25 billion, representing a 35% year-over-year increase. driven primarily by improved net price and mid-single-digit prescription demand growth. Our total revenue guidance has increased to between $485 and $510 million, and we expect adjusted EBITDA of greater than $350 million. This guidance raise reflects both the strength of our underlying business and our confidence in continued execution throughout the remainder of the year. Now I'll turn the call back to Tom and Tammi for some closing remarks. Thank you, Ron.

In summary, the third quarter was marked by strong commercial execution of Linzess, continued advancement of Apraglutide as the STARS II trial continues to ramp up, and meaningful progress in strengthening our balance sheet. I'd like to close by providing some perspective on last month's announcement that the Board of Directors appointed Tammi to be Ironwood's next Chief Executive Officer on January 1st of 2027 when I retire. At that time, Tammi will assume leadership of the company and become a member of the board of directors. I will remain and will continue to serve on the board in the incoming years. After an incredibly fulfilling 40-year career, 17 of which have been with Ironwood, I'm ready to embark on my retirement. And I could not be more confident and excited to transition Ironwood leadership to Tammi. She's a proven leader with deep understanding of our business, culture, and vision for the future. Tammi played a critical role establishing Linzess as the leading brand it has become and has been instrumental in driving the turnaround of the business this year. She has also been involved in Apiglutide from day one, bringing a deep understanding of the clinical and commercial opportunities to the development of this potential best-in-class therapy. This makes her uniquely positioned to build upon the momentum that we've delivered so far this year and to lead the company through the next phase of growth. I'm grateful for the honor of leading Ironwood. The company is in very good hands and the future is extraordinarily bright. I'd like to ask Tammi to say a few words. Tammi?

Thank you so much, Tom. Appreciate the support. Needless to say, honored to be named Ironwood's next CEO and would like to thank Tom and the board for their leadership and support. I'm so excited to continue working with such a talented team to bring innovation to patients living with GI and rare diseases. As noted a few times, this has been a turnaround year for Ironwood. And with each step, you're shaping Ironwood for the future, working to bring treatment advances to patients and creating value for shareholders. I look forward to helping the company continue to grow as we extend this momentum we outline today into the next year and beyond. Operator, we're now ready to open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mohit Banzal with Wells Fargo. Your line is open. Please go ahead.

Great. Thank you very much for taking my question. And Tom, I really, really appreciate all the help you have provided over the years. And congrats to Tammi. You are passing on the baton to the right person here. So congrats to both of you here. Thank you. So I think the question on lenses, if I can ask, so you have delivered three strong quarters so far. and obviously there was price benefit given the price cut you have taken in the beginning of the year. Can you help us understand how the volume trend has turned out to be versus your previous expectations when you embarked on this journey earlier this year? and how much comfort do you get as you head into 27 and 28 that those volume trends could persist and the product could grow despite no more pricing tailwinds next year and year after? And I have one more question after that. Thank you.

Thank you so much, Mohith, for the comments and the question. So to break that down a little bit. As both Tom and I mentioned, this has been our strongest net sales quarter for Linzess ever, and we expect fourth quarter to be our strongest quarter of the year. If you remember back to January when we provided our initial guidance, we also indicated that we believed there would be low single-digit demand growth year-on-year, and that was our Thinking at the start of the year because we didn't know for sure at a channel level what the reaction would be from a demand perspective to the change in list price. But we worked very hard with our partner, AVI, to maintain broad access across each channel to ensure the accessibility for patients. And that's why we were able at the mid-year point to increase our estimates for the full year forecast to mid single digit growth. And we expect that to continue based on the trends we're seeing and the strength of the volume and the growth in the overall market. We expect that to continue through the full year. Now, as you know, we're not giving any guidance yet for 2027, but we do expect strong demand to continue based on the trends we've seen and already what we have been able to maintain again with our partner, broad access across channels. And as you know, we go into next year with MFP going into place for Linzess. It must be covered or made available for Medicare Part D patients. So we exceeded our expectations this year for demand from the beginning of the year, and we expect to continue Strong Demand going forward. And we'll provide more updates as we get into it.

Very, very helpful. Thank you, Tammi. And then the other question I have is regarding the most favored nation pricing. I think you talked about this being $136 per month for next year. Wondering if you could comment on, like, is this a tail headwind at all or I mean the pricing is really fluid given the price that you took this year so I don't know should we like how should you think about this MFP price in the context of where we stand right now?

So you are correct of course Mohit for MFP for next year that goes into effect January 1st for Medicare Part D patients that price is $136 right so that price I think just a brief comment, Maureen. You know, this is all about

and there's still just tremendous opportunity. So our number one priority is to make sure we have broad access and reimbursement. Because there's just, you know, as we've talked about before with you, 70 to 80% of our business is coming in out of the OTC market. And as a market leader, that has to be our focus is how do we continue to expand, you know, the category growth and own it. So I think we feel very good about where we are right now and very bullish on the future.

Awesome. Thank you very much, Tom. Appreciate it. And thank you again.

Your next question comes from the line of Chase Knickerbocker with Craig Hallam. Your line is open. Please go ahead.

Hi, guys. This is Nick Mariachi on for Chase. Thanks for taking our questions. So with the increased Ironwood revenue guidance of $25 million at the midpoint and compared to the Linzess net sales guide raised by $50 million, I think that appears to imply that there are kind of limited incremental brand costs on those higher sales. So is there anything changing around commercial spending with your partner or other discounts? And how should we think about brand margin into Q4 and the sustainability of that into 2027?

Yeah, thanks, Nick. I appreciate the question. So you're correct. The pull-through from top-line guidance rates is exactly 50% in line with our collaboration arrangement. There have been no meaningful changes to our commercial margins throughout the year. Our guidance implies an 80% margin, and we continue to expect that margin throughout the remainder of the year.

I think the other key thing here, too, is even though this is the 14th year, this brand continues to be remarkably promotionally sensitive. and I think Tammi and Abby have worked very closely to really optimize where we're placing our bets in the tactics and channels where we're seeing the highest ROIs and this brand is becoming extraordinarily efficient with regard to its margins and I think we expect that to continue.

Got it. And then Tammi, I'll add my congratulations on the new role. We were hoping to get your thoughts on capital allocation just as you guys make progress on deleveraging. Should we think about any uses of capital beyond debt pay down and funding of APRA?

So thank you, Nick, for the congratulations and great question. As we talk about the turnaround year, we are in a very strong financial position, as you said, and we are fully expecting with our cash flows to be able to support the development and the commercial launch of Africa Glutide. That being said, of course, returning value to shareholders is always top of mind, and we will be very disciplined in our capital allocation approach and certainly look to further strengthen our

Your next question comes from the line of Tom Rosenfeld with Intron Health Research. Your line is open. Please go ahead.

Good morning, everyone. Tom Rosenzold from Intron Health Research. A question on the STARS 2 progress. Firstly, congratulations on the progress. Of the 100-pound sites, how many are active today? Roughly when do you expect enrollment to complete and for top line data to read out ahead of the 2019 filing?

So this is Jeff. I'll take that. The team's main focus right now is on disciplined and efficient execution, and our site activations remain on track. We're focused on activating sites in the U.S. and globally as quickly as possible. In addition to the overall study, the cadence of site activation is on track, and those that have been activated are recruiting and screening patients. Per our clinicaltrials.gov posting, primary study completion date is estimated for October 28. That still remains on track, and that would support an NDA submission in 2029. We're looking to accelerate the program as possible, and as these sites are ramping up, we'll provide more details at the 4Q update.

Thank you very much. One more question, if that's okay. We had, obviously, an earlier question on the growth rates for Linzess in prescription demand. Could you give some more color on which channels that growth is coming from and which indications?

Yeah, so our growth across channels has really been consistent with our expectations since the beginning of the year. Of course, Medicare Part D continues to be our biggest book of business, followed by commercial and Medicaid. So, we're really seeing utilization in all three of those key channels driving the net sales and demand support that we've seen and are expecting for the full year.

That's great. Thank you very much.

I believe the answer to your question was, you know, which patients. and, you know, with the two indications of IBS and chronic constipation, you know, it's really kind of difficult to tease that out. You know, I think what we have learned over time is, you know, the big driver for utilization of lenses is patients that have involved some kind of abdominal symptom and constipation. You know, and, you know, where that crosses the line between IBS and chronic constipation, you know, we really don't It's really hard to tease that out, but what we do know is across the board, about 80% of patients have both abdominal, some kind of abdominal symptom and constipation. I think that's where the majority of the growth, but it's coming across both populations in a very effective way.

That makes sense. Thank you very much.

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.