Ironwood Pharmaceuticals Stock

Good morning, everyone. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals Q2 2026 Investor Update Conference Call. [Operator Instructions]

I would like to now turn the call over to Chris Stamm, VP, Investor Relations and Communications. Please go ahead.

Good morning and thanks for joining our second quarter 2026 investor update. A press release issued this morning highlighting Q2 results can be found on our website. Today's call and accompanying slides include forward-looking statements within the meanings 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 slide as well as under the heading Risk Factors in our Annual Report Form 10-K for the year ended December 31, 2025, and in our subsequent 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 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, Tom McCourt, our Chief Executive Officer, will review second quarter business highlights and strategic priorities. After Tom, Chief Commercial Officer Tammi Gaskins will provide an overview of second quarter LINZESS performance. Next, Jeff Silber, our newly appointed Chief Medical Officer and Head of Research and Drug Development, will give a brief update on apraglutide. Then Ron Silver, our Interim Chief Financial Officer, will close our prepared remarks with a financial update before we open the call for questions. Jeff Ruberti, our Chief Strategy Officer, will also be available for the Q&A at the end 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. Thanks, everyone, for joining us to review Ironwood's second quarter 2026 financial results and business update. Before I begin, in addition to welcoming Chris, who joined the team in June to lead our IR and communications efforts, I'd like to introduce two recent additions to the Ironwood leadership team, who you'll be hearing more from today and in the weeks and months ahead. But first, I want to sincerely thank former Chief Medical Officer and Head of R&D, Michael Shetzline, who retired after a distinguished career dedicated to advancing GI science and patient care. Most recently, he led the team through a major company milestone, successful initiation of the confirmatory Phase III STARS II trial.

Last month, we welcomed Dr. Jeff Silber, Mike's successor, who brings more than 30 years of experience in the industry and academia. Jeff is an accomplished leader in drug development from preclinical through submission, commercialization, and expanding value of brands through lifecycle management. Previously Chief Medical Officer at Vedanta Biosciences, he brings broad late-stage development expertise to Ironwood, having supported multiple successful new drug applications and valuable brands in leadership roles at AbbVie, EMD Serono, Merck KGaA, and Merck & Co. His leadership will be instrumental as we advance apraglutide through Phase III and commercialization.

I'd also like to introduce Ron Silver, our Senior Vice President, Corporate Controller, and Chief Accounting Officer, who is serving as Interim Chief Financial Officer. Ron has been with Ironwood for 8 years, serving in key financial leadership roles, providing him with deep knowledge of our business and strategy. His experience and leadership will be invaluable as we continue to execute against our priorities.

Now, let's dive into the second quarter business updates. At the beginning of the year, we outlined three key priorities for 2026: maximizing the performance of LINZESS, advancing apraglutide, and delivering sustained profitability and cash flow. These priorities remain central to achieving our mission to redefine standard of care for patients living with gastrointestinal and rare disease while creating long-term shareholder value. During the second quarter, we made meaningful progress across each priority.

Starting with LINZESS, the brand continues to demonstrate exceptional strength in its 14th year on the market and remains the prescription leader in both irritable bowel syndrome with constipation and chronic idiopathic constipation. We're pleased to report a second consecutive quarter of strong LINZESS performance, delivering $582.3 million in U.S. net sales fueled by improved net price and mid-single-digit prescription demand growth. This outstanding performance supported our decision to raise our full-year 2026 financial guidance. Based on the updated outlook, LINZESS is positioned to grow more than 30% year-over-year, return to blockbuster status, and deliver the highest annual U.S. net sales in the product's history.

We also achieved an important regulatory milestone during the quarter, with the FDA approval of LINZESS for the treatment of functional constipation in pediatric patients 2 years of age and older. This is another important milestone, establishing LINZESS as the only prescription therapy approved for functional constipation in this age group, addressing yet another unmet patient need.

Turning to apraglutide, in June we initiated the STARS II confirmatory Phase III clinical trial evaluating apraglutide in adults with short bowel syndrome with intestinal failure, or SBS-IF. The trial is now actively recruiting patients, and we continue to activate additional sites to drive enrollment. STARS II will build on the positive data from the Phase III STARS trial, which we believe demonstrates that apraglutide has the potential to be a best-in-class therapy for patients with SBS who are dependent on parenteral support. Our goal is to ensure apraglutide will be the first long-acting GLP-2 analog to market.

Finally, we delivered strong financial results during the quarter, generating $51.3 million in GAAP net income and $83 million in adjusted EBITDA. We've also repaid our $200 million convertible notes at maturity with cash on hand. Looking ahead, we expect to leverage LINZESS's generating cash flow to further reduce our debt, and we 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 apraglutide.

With that, I'll turn the call over to Tammi to provide some additional context on LINZESS. Tammi?

Thanks, Tom, and good morning, everyone. As Tom just stated, LINZESS delivered another strong quarter with U.S. net sales of $582.3 million. That's a 14% year-over-year increase driven by both demand growth and improved net price. Now, through the first half, LINZESS U.S. net sales reached $555 million, up 44% year-over-year, underscoring the strength and momentum of the brand. Now, if I just double-click for a minute on demand, the slide you see shows year-on-year EU TRx volume growth of 4% for quarter two and 5% year-to-date June. We expect this demand momentum to persist and anticipate mid-single-digit demand growth for the full year, giving us the confidence to raise our full-year financial guidance.

Turning to price, the positive impact seen in Q1 from elimination of inflationary rebates across channels continued to benefit net price as planned, in addition to favorable timing of gross-to-net rebate reserves as compared to the second quarter of 2025. The full-year net sales guidance reflects the ongoing benefit of improved net price combined with anticipated reduced variability in sequential quarterly U.S. net sales as compared to 2025, really due to more consistent net price across channels. Since demand volume is historically highest in the second half of the year, we expect quarterly performance to build, with the fourth quarter projected to deliver the highest net sales for 2026.

This performance also highlights the significant unmet needs that LINZESS helps to address for millions of patients with IBS-C and CIC across the U.S. And the recent FDA approval for FC, functional constipation, down to 2 years of age, further expands the reach of LINZESS and helps highlight its importance for a broader range of patients. Now I'd like to hand the presentation over to Jeff Silber to highlight our progress advancing apraglutide.

Thanks, Tammi, and good morning, everyone. I'm excited to be joining the Ironwood team at such an important time to work to bring apraglutide to patients suffering from SBS-IF as quickly as possible. Today, I'd like to share my perspective on why the science behind apraglutide and what it could mean for patients is so compelling. There's a considerable unmet need for patients with SBS-IF. On average, these patients require parenteral support, that is IV fluids and nutrients, 10 hours per day, 6 days per week, creating a real burden to their quality of life. Although parenteral support meets the nutritional needs that enable them to survive, patients continue to face many significant daily challenges.

As highlighted in the landmark HCP survey that Ironwood presented at DDW last May, central line infections, fatigue, central line pain, and abdominal pain are all common and highly distressing challenges associated with parenteral support. These findings underscore the need for therapies that reduce patients' IV dependence and the associated burden of parenteral support while improving their quality of life. One of the reasons I'm so excited to have joined Ironwood is the opportunity to help advance a therapy with the potential to address this significant unmet medical need.

First, apraglutide is currently the only once-weekly GLP-2 analog with positive Phase III efficacy and safety data in adults with SBS-IF. Data from the STARS study, the largest Phase III clinical trial in SBS-IF conducted to date, demonstrated significant reductions in parenteral support requirements compared with placebo at week 24, with treatment effects observed as early as week 8. As you can see in the graph on the left, at week 24 in the overall population, the reduction in weekly parenteral support volume in the apraglutide group was more than double that of the placebo group. In addition, a significantly greater proportion of patients receiving apraglutide were able to reduce their dependence on parenteral support by at least 1 day per week.

Importantly, apraglutide was well-tolerated in the STARS study with an overall safety and GI tolerability profile that was similar to that of placebo. The graph on the right comes from our Phase III long-term extension study, STARS-EXTEND. About 90% of the patients enrolled in the STARS trial rolled over into STARS-EXTEND, and the majority remained on treatment at the time of the analysis shown here. These longer-term data show that patients achieve further reductions in their parenteral support requirements with continued exposure to apraglutide. This translates into more patients achieving additional days off of parenteral support, with some reaching enteral autonomy, which is the ultimate goal for patients with SBS-IF. In fact, more than 1 in 5 patients enrolled in STARS-EXTEND had achieved enteral autonomy as of January.

We look forward to sharing additional STARS-EXTEND updates in the future. The clinical profile we have observed to date reflects apraglutide's best-in-class, differentiated molecular design, differentiating it from both native GLP-2 and other GLP-2 analogs. Apraglutide is long-acting, enabling convenient once-weekly dosing, and it's demonstrated a favorable tolerability profile that may support better treatment adherence. This is an important point because maintaining patients on therapy is a key factor in achieving full treatment benefit, including meaningful and sustained reductions in parenteral support.

When you put all this together, the clinical evidence, the favorable tolerability, and the convenience of once-weekly dosing, we believe that apraglutide has the potential to become the preferred GLP-2 treatment option for patients with SBS-IF, which we expect to expand the number of patients who may benefit from GLP-2 therapy. Looking into the future, a uniquely differentiated GLP-2 analog like apraglutide has the potential to restore intestinal function in patients with other types of GI compromise beyond SBS-IF.

Today, however, our top priority is advancing apraglutide to patients with SBS-IF as quickly as possible. And to that end, the confirmatory Phase III STARS II trial was initiated in June as planned and is now actively recruiting patients. STARS II is a 24-week global randomized double-blind placebo-controlled trial. The primary endpoint is relative change from baseline in actual weekly parenteral support volume at week 24. As we continue to add clinical trial sites, we'll be leveraging the infrastructure and the relationships that we developed during the conduct of the STARS study.

As a reminder, the Phase III STARS study was the largest SBS-IF trial conducted to date, with 68 global sites. We're building on that strong foundation, leveraging those existing site relationships and adding new high-potential sites, including more sites in the U.S., and identifying opportunities to accelerate enrollment. Successful execution of STARS II remains one of our highest priorities for Ironwood. And site activation continues. We expect enrollment to build, and we're evaluating opportunities to accelerate the enrollment timeline. We look forward to updating you on our progress in the coming months. In summary, if approved, we believe apraglutide's differentiated clinical profile, once-weekly dosing, and long-term data position it to meaningfully improve the treatment landscape for patients with SBS-IF.

With that, I'll pass the call to Ron.

Thanks, Jeff. Thanks, Tom, for the introduction. I'm pleased to have the opportunity to join the call today and look forward to working closely with our investors and analysts as we continue to advance our strategic priorities, focus on financial discipline and operational excellence. Turning to our financial results. During the second quarter, total revenue was $113 million, GAAP net income was $51 million, and adjusted EBITDA was $83 million. We ended the quarter with $79 million in cash and cash equivalents and $113 million in collaboration receivables.

As Tom mentioned, we repaid our convertible notes at maturity in June. Looking ahead, we intend to continue using operating cash flows to further reduce our debt balance. Based on our current outlook, we expect to end the year with less than $300 million of gross debt outstanding, further strengthening our balance sheet and financial flexibility.

Now turning to guidance. Given the continued strength of LINZESS and our very strong first half performance, I am pleased to share that we are increasing our full year of 2026 guidance. We now expect LINZESS U.S. net sales of between $1.15 billion and $1.2 billion, representing a greater than 30% increase year-over-year. This increase is driven by significantly improved net price and mid-single-digit LINZESS prescription demand growth. Our revenue guidance has increased to between $460 million and $485 million, and we expect adjusted EBITDA of greater than $310 million. This increase in our guidance reflects both the strength of our underlying business and our confidence in continued execution on our priorities throughout the remainder of the year.

Now I'd like to turn the call back over to Tom for some closing remarks. Thanks, Ron. In summary, the second quarter was marked by strong commercial execution of LINZESS, continued advancement of apraglutide with the initiation of STARS II, and meaningful progress towards strengthening our balance sheet. Throughout the second half of the year, we will remain laser-focused on executing on our strategic priorities and advancing our vision to redefine standard of care for patients living with GI and rare disease. Before I turn it over to Q&A, I would like to thank our employees, patients, caregivers, investigators, and advocacy partners for their continued commitment and support. Operator, we're now ready to open up the line for questions.

[Operator Instructions] Our first question comes from the line of Jason Butler from Fergusons.

Hi guys, can you hear me? Hey, it's Jason Butler from Citizens. Thanks for taking the questions. Just a couple for me. First, I know one question at the beginning of the year was, would there be an impact on demand from the net price change? It seems like you have an increased comfort level that isn't going to happen now, even on a delayed basis. Can you just walk us through those dynamics?

Hi, Jason, it's Tammi. Appreciate the question. So as I stated, through June we are tracking to 5% year-to-date EU TRx volume demand growth, which is modestly ahead of what we had shown or indicated early in the year, which was low single-digit demand growth. And based on where we are in the year and the fact that historically our performance from a demand perspective even further increases in the second half of the year, that has given us the confidence and the belief to raise the demand number to mid-single-digit.

We did indicate previously that we thought there could be some demand softening due to the elimination of the inflationary rebates across channels. We've done a lot working with our partner to really help ensure ongoing access for patients across channels, and we think we're in a very good spot now to deliver in that mid-single-digit range to the full year.

Great. And then second one for me just starts to understand you're still relatively early here in the trial, but can you just walk us through how site onboarding is going and then just the comments you made about potentially impacting or improving enrollment timelines. Can you just give us a little more detail about what your strategies could be there? Thank you.

Yes, absolutely, Jason. This is Jeff Ruberti. I'll open the response, but as you noted, it's early days. We initiated the trial in June and we have our first sites activated and enrolling patients. And the full weight of the company is really pressing behind, ramping up the trial, activating more sites, and we look forward to providing more operational details. As you noted, Jeff Silber just joined the team and it is a priority as well. And Jeff, do you want to comment on how can we accelerate the timeline?

Sure. It's week three and so, I am working with the team and what's impressed me so far is the diligence with which the team is executing on the plan that had been laid out over the last several months. I am just now beginning to look through this with a fine-tooth comb. We'll be looking for opportunities to accelerate and look forward to executing optimally on the plan that had already been developed.

Yes, I think the big thing here, Jason, is really the expansion of the number of sites, particularly in the U.S. where we were with STARS. As you recall, there wasn't a lot of U.S. sites. It was largely ex-U.S. And we see a real opportunity here, and obviously that's building off real strong support from our scientific steering committee, who are a lot of the key investigators around the country, and also our ability to identify high-potential sites where there clearly is or we know there are patients that exist. And I think with our trial design and combining that with the clinical profile of the drug, we're pretty confident that we're going to be able to bring in a number of patients fairly quickly. But obviously, we'll be updating you and the rest of the investment community as we progress through that process.

Our next question comes from the line of Mohit Bansal with Wells Fargo.

Great, thank you very much for taking my questions and congrats on all the progress. So I have two questions, one on apraglutide and one on LINZESS. So for LINZESS, there was some concern around could there be some plans they could have an issue given the price is higher now? Are you seeing anything like that in the Medicaid patient population so far? It doesn't seem like that, but we'd love for you to touch upon that. And then for apraglutide, so now that you are expanding to newer sites and all that, how do you make sure that trial conduct issues last time when people did not dose properly, how do you ensure that repeat of that doesn't happen as you go into more sites here? Thank you.

Tammi, do you want to take the first question on this?

Yes, sure. Hi, Mohit. It's Tammi, and I appreciate the question. So, you're absolutely correct in that before we had talked about, and part of the reason we indicated low single-digit demand growth at the beginning of the year is through the elimination of the inflationary rebates across channels, including Medicaid, we thought there could be some demand softening. But based on where we are at the year, the 5%, and the fact that we have done, as I mentioned, a lot with our partners, to work with the states individually to help ensure ongoing access to those patients. We are now very confident in that mid-single-digit expectation for that mid-single-digit demand growth through the rest of the year, especially since historically our demand has a bit of a seasonality and increases towards the latter half for the year, especially in Q4.

Just to be clear on kind of this issue or concern that we had on dose, as you recall, with the original trials, the STARS trial, the intent was to deliver a 5 mg dose. Unfortunately, due to the kit and the instructions, what we actually saw was a delivery of 3.5 mg. Now, clearly the drug worked and was extremely well-tolerated, even at 3.5 mg. So what we wanted to do was match that so we could leverage the great data of STARS with this smaller confirmatory dose.

Now, what we've done since then, based on the root cause analysis on the delivery, we've dramatically improved the kit to avoid any kind of errors in instruction or implementation of the new kit. And we've done several human factors studies around that. We've also done drug exposure and pharmacokinetic data. So we're absolutely confident that we're in complete control of the dose and we're absolutely confident that this error will not happen in STARS II. So I think moving forward, we see a very, very high probability of success to reconfirm the great data we saw in the original STARS trial.

Very helpful. Thank you. And then congrats, Jeff and Ron, and welcome to the group.

[Operator Instructions] Our next question comes from the line of Dominic Rose with Intron Health.

Hi, this is Dominic from Intron Health. Thanks for taking my questions. I've got two. My first question is both Q1 and Q2 saw favorable time phasing of gross-to-net rebate reserves. Do we expect this to unwind in H2 or would there be more favorable moves? Is there anything you can tell us about that? And my second question is in May you flagged that Medicaid would be most likely seeing reduced volume growth in H2. Is that still your expectation now, given the guidance upgrade? Thanks.

Thanks, Dominic. Tammi, do you want to take both of those?

Sure. I appreciate the question. This is Tammi. So, to start with the favorability of phasing of gross-to-net reserves, so first as I indicated in my comments, we do expect less variability in sequential quarterly net sales this year. We had quite a bit of variability last year because there was for general two key reasons. One, there was more difference in net price across channels. And because of accruing rebates relative to actual demands dispensed in a quarter, that variability in price had more of a variability because of seasonality of certain sectors of the business.

So this year, more consistent net price across channels, not be affected nearly to the extent of the seasonality and actual units dispensed, but also we expect to see quarter-on-quarter increase in performance with Q4 actually being the strongest quarter that we'll have this year from a net sales perspective. So, key takeaway, don't expect there to be an unwinding, if you will, due to changes in favorability quarter-on-quarter. And your anticipated reduction for Medicaid volume? Yes. So, as I said, we saw strong 5% demand growth through mid-year. We've worked very hard at a state level with our payer to help maintain access across channels, including Medicaid, and we are still projecting to have our growth across channels to be in line with expectations to drive that mid-single-digit demand growth through the full year.

So, bottom line, Tammi, I think where we're at is we're not seeing the dramatic reduction in Medicaid that we thought we were at risk. So, you know, I think we feel very good about the current trend we're on with regard to volume as well as net price.

And we expect more consistent sequential quarterly net sales growth, continued to improve performance each quarter throughout the end of the year, with fourth quarter being our strongest performer.

Our next question comes from the line of Chase Knickerbocker with Craig-Hallum.

Good morning. Thanks for taking the questions. Maybe just on LINZESS net sales guidance, you know, the high end of the range went up by a higher magnitude than the bottom. Just trying to understand, you know, the edge caps, the end caps on the guidance there. Is it a little bit of conservatism just as far as kind of IRA rebates in the back half as far as the bottom end of the range or just maybe kind of help me understand both sides. Thanks.

Hi, Chase. The increase in the guidance was actually consistent on each end of the range. It was up by $25 million. I think the major driver of the confidence to raise that guidance was the single-digit demand, which we see now, it's only two quarters in a row, so give us confidence we'll be able to land in that range. But just to reiterate, the range was improved consistently across both ends.

Understood. And then just as we think about, you know, the EBITDA guidance on the year. Any additional kind of color you can give us as far as kind of how we should be thinking about kind of R&D progressing in Q3 and Q4 on those step-ups just as we think about kind of the bottom end of the P&L.

Ron, do you want to take that?

Sure. Thanks, Chase. Appreciate the question. So for the remainder of '26, we do expect R&D expense to increase relative to the first half of the year. That reflects the ramp up of the STARS II trial we initiated in June. We also expect a modest increase in SG&A expense as well, I think through OPEX.

And obviously, Chase, that's all going to be depending on how many sites we can get up and running and how fast we can do that. And obviously, that's a critical investment in our future. So, you know, while obviously this quarter the EBITDA was remarkably strong, I think, you know, we certainly see that continuing throughout the end year, but we clearly will see an increased expense, as Ron mentioned, but that's going to be largely dependent on how many sites we can get up and running and how fast we can do it.

And there are no further questions at this time. With that, that concludes today's conference call. Thank you all for joining us. You may now disconnect.

Thank you for standing by. My name is Liz and I'll be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals First Quarter 2026 Investor Update Conference Call. [Operator Instructions]

I would now like to turn the call over to Greg Martini, Chief Financial Officer. Please go ahead.

Good morning and thank you for joining us for our first quarter 2026 investor update. Our press release issued this morning 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 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 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, Tom McCourt, our Chief Executive Officer, will begin with a brief overview. Tammi Gaskins, our Chief Commercial Officer, will provide a commercial update, including discussion of the commercial opportunity for apraglutide in short bowel syndrome with intestinal failure. Mike Shetzline, our Chief Medical Officer, will discuss our pipeline and I will review our financial results and guidance. Today's webcast includes slides. So for those of you dialing in, please go to the Events section of our website to access the accompanying slides separately.

With that, I'll turn the call over to Tom.

Good morning, everyone and thanks for joining us today to review our first quarter 2026 financial guidance results and business updates.

Earlier this year, we laid out our top priorities for 2026, which are maximizing LINZESS, advancing apraglutide and delivering sustained profits and cash flow. We believe these priorities are key to achieving our goals of redefining standard of care for patients suffering from GI and rare diseases, while maximizing shareholder value. During the first quarter, we made significant progress on each of these priorities. First, LINZESS, which continues to be the prescription leader for the treatment of irritable bowel syndrome with constipation and chronic idiopathic constipation in its 14th year on the market. We reported an outstanding first quarter financial performance with 97% year-over-year net sales growth for LINZESS, driven primarily by improved net price and supported by 5% prescription demand growth. These first quarter results position us well to achieve our full year 2026 financial guidance, which will return LINZESS to blockbuster status and will set a new all-time high for annual U.S. net sales for the brand since launch.

We are also continuing to make progress in bringing LINZESS to younger age groups. In the first quarter, the FDA accepted a supplementary new drug application for LINZESS for the treatment of functional constipation in patients 2 to 5 years of age. The application received a priority review with a PDUFA target action date set for May 24, 2026. At present, LINZESS is the only FDA-approved drug for the treatment of children 7 years and older with irritable bowel syndrome with constipation and for children 6 to 17 years old for functional constipation. If approved, the indication in children 2 to 5 years old for the treatment of functional constipation would further broaden the clinical utility of LINZESS in younger age groups and we look forward to hearing from the FDA in the coming weeks.

Also in the first quarter, we advanced our STARS-2 confirmatory Phase III clinical trial, assessing apraglutide for the treatment of patients with short bowel syndrome with intestinal failure, including completion of the clinical site feasibility and we remain on track for the clinical site initiation in the second quarter. This past weekend, we had a chance to present findings at Digestive Disease Week meeting in Chicago from the LANDMARK survey which underscores the need for therapies that address multiple dynamics and dimensions of the burden of total parenteral nutrition based on real-world experience of patients suffering from short bowel syndrome with intestinal failure. The survey identified reduction in days of total parenteral nutrition as the top priority for patients.

At DDW, we also presented additional data from the long-term extension study of apraglutide showing a long-term safety profile consistent with previous studies. Dr. Mike Shetzline, our Chief Medical Officer, will share more details of this data later in the call. Finally, in the first quarter, we delivered strong profits with $40.8 million in GAAP net income and $76.7 million in adjusted EBITDA. Looking ahead for the year, we believe the cash flows from LINZESS will continue to fund development and commercialization of apraglutide approved, while simultaneously reducing our debt.

With that, I'll hand the call over to our Chief Commercial Officer, Tammi Gaskins, for a LINZESS commercial update and an overview of the opportunity in short bowel syndrome with apraglutide. Tammi?

Thanks, Tom and good morning, everyone. As Tom highlighted, the first quarter U.S. net sales of $272.5 million for LINZESS represent a 97% increase compared to the first quarter of 2025, driven by significantly improved net price and 5% year-over-year demand growth for LINZESS.

Now I'd like to share some additional context from these results. To start, improved year-over-year net price in the first quarter of 2026 was driven primarily by 2 factors: First, net price benefited from elimination of inflationary rebates across channels, including Medicaid. We expect that this benefit from reduced inflationary rebates to persist throughout 2026 as captured in our full year LINZESS U.S. net sales guidance. The second factor that contributed to improved net price in the first quarter was favorable time phasing of gross to net rebate reserves as compared to the first quarter of 2025.

Looking ahead in 2026, we expect reduced variability in sequential quarterly LINZESS U.S. net sales than occurred in 2025 as a result of more consistent net price across channels in 2026. Additionally, we recognized $104.2 million in U.S. brand collaboration revenue in the first quarter of 2026, which represents a 169% increase compared to $38.8 million in the first quarter of 2025. So in just a minute, Greg will speak to additional first quarter 2026 financial results.

Now moving on from LINZESS's performance. I would like to spend a few minutes on the anticipated commercial potential of apraglutide for SBS-IF. For some context, SBS is a severe organ failure condition resulting from surgical resection of a significant portion of the small intestine, leading to a dependence on parenteral support to meet patients' nutritional needs for survival. And on average, SBS-IF patients require 10 hours a day, 6 days per week of parenteral support, with a severe quality of life burden. Parenteral support meets patients' nutritional needs for survival but as highlighted by the LANDMARK survey, central line infections, fatigue, central line pain and abdominal pain are all common, highly distressing challenges associated with parenteral support, thereby underscoring the need for therapies to address multiple dimensions of total parenteral nutrition.

Now data from the STARS Phase III clinical trial, which is the largest Phase III trial in SBS-IF conducted to date, demonstrated a twofold relative PS volume reduction from baseline at 24 weeks with apraglutide once weekly dosing as compared to placebo. Importantly, these longer-term data have demonstrated that more patients continue to lean off PS with longer exposure to apraglutide. In our Phase III long-term extension study called STARS Extend, approximately 1 in 5 or 20% of patients achieved enteral autonomy as of January 2025.

At DDW this week, we presented new data highlighting the long-term safety profile of apraglutide that was pooled from the STARS clinical program that includes the Phase II STARS Nutrition trial, STARS Phase III trial and the ongoing open-label extension STARS Extend. These data for apraglutide showed a long-term tolerability and safety profile consistent with previous studies, low discontinuation rates due to treatment-emergent adverse events and no new safety observations. Based on the clinical data generated to date, we believe that apraglutide has the potential to reduce volume and days on parenteral support for patients with SBS-IF.

Now turning from data, let's look at the market size. We estimate that there are roughly 18,000 SBS-IF patients across the U.S., Europe and Japan. Within that patient population, we estimate that there are more than 8,000 patients in the U.S. with SBS-IF who are dependent on parenteral support for 3 or more days a week. This group of patients dependent on parenteral support 3 or more days per week represents the total addressable SBS-IF market of more than $4 billion in the U.S. Based on apraglutide's clinical profile and our market research, we believe that apraglutide has the potential to increase the number of GLP-2 treated patients extend days on therapy and achieve greater than $700 million in peak net sales in the U.S.

With that, I'll turn the call over to Mike Shetzline, our Chief Medical Officer, to discuss apraglutide's ongoing clinical development. Mike?

Thanks, Tammi and good morning, everyone. As you've heard today, we're very excited about the opportunity to help more patients with SBS-IF and have generated strong clinical data, some of which can be highlighted through our STARS and STARS Extend trials.

Over the past few months, we've made significant progress as we moved towards site initiation of our confirmatory Phase III trial, STARS-2, this quarter. STARS-2 is designed based on our interactions with the FDA to confirm and further support the positive data generated in the STARS Phase III clinical trial. We plan to enroll 124 patients with SBS-IF in a 1:1 randomization. Enrollment will be for the overall SBS-IF patient population, which includes patients with both stoma and colon-in-continuity. Our primary endpoint for the study will be the same as our prior STARS Phase III clinical trial, evaluating relative parenteral support volume change from baseline for the overall population at week 24.

Secondary endpoints also to be measured at week 24 for the overall population include clinical response defined as a 20% reduction in parenteral support volume, number of days off parenteral support per week and enteral autonomy. In designing the Phase II trial, we've incorporated feedback from our prior FDA interactions and leveraged learnings from the positive STARS Phase III trial. In preparing for the STARS-2 trial, we've taken steps to refine and optimize the dose administration instructions. A key consideration in designing STARS-2 was the dose selection, which we intended to confirm the efficacy and tolerability demonstrated in STARS with patients receiving 3.5 milligrams once weekly of apraglutide. We're getting close to initiating clinical trial sites in anticipation of dosing our first patient and look forward to providing additional updates as we continue to progress.

Before turning the call over to Greg, I'd like to take a few minutes to highlight our presence at DDW this week. As you've heard, we had the opportunity to present pooled long-term safety data on apraglutide as well as new findings from the LANDMARK survey in which surveyed providers emphasized the importance of reducing patients dependent on total parenteral nutrition or TPN, to improve quality of life, reduce line infections and lower the risk of thrombosis. About 46% of providers identified reducing the number of days per week on TPN as a priority attribute for further -- for future therapies and an additional 30% prioritized reducing TPN hours per day. Survey results also highlighted the significant burden associated with long-term TPN dependence among patients with SBS.

Our development strategy is informed by what we're hearing from patients in the medical community. The design of our STARS and STARS-2 clinical trials of apraglutide evaluate multiple dimensions of parenteral support dependence. These real-world insights from providers and patients will help us better target the outcomes that most impact SBS patient lives. Our strong presence at DDW this past week further highlights our commitment to developing life-changing therapies for people living with gastrointestinal and rare diseases through enhanced research and a deeper understanding of the challenges these patients face.

With that, I'll turn it over to Greg to review our financial performance in the first quarter. Greg?

Thanks, Mike and good morning, everyone. I'm happy to walk through the highlights of our very strong first quarter financial performance, beginning on Slide 12. In the first quarter, total revenue was $106.5 million. GAAP net income was $40.8 million and adjusted EBITDA was $76.7 million. We ended the first quarter of 2026 with $220.5 million of cash and cash equivalents on the balance sheet as well as $105.8 million in accounts receivable, which we expect to collect prior to the June 15 convertible note maturity. As noted in prior updates, we plan to use cash on hand and cash flows generated throughout 2026 to reduce our total debt balance and plan to repay the 2026 convertible note in cash at maturity in June. We also expect to end the year with approximately $300 million of total debt on the balance sheet, less than 1x our expected 2026 adjusted EBITDA.

Moving to financial guidance on Slide 13. We are reiterating our 2026 guidance at this time. This includes LINZESS U.S. net sales of between $1.125 billion and $1.175 billion. We continue to expect low single-digit percentage LINZESS prescription demand growth. We expect Ironwood revenues of between $450 million and $475 million and we expect adjusted EBITDA of greater than $300 million. In summary, 2026 is off to a great start with strong LINZESS performance, a significantly improved financial position relative to 2025 and the impending initiation of the STARS confirmatory -- STARS-2 confirmatory trial. We continue to make progress on executing on our strategic priorities as we strive to redefine the standard of care for patients living with GI and rare diseases.

I'd like to close by thanking all of our employees, patients, caregivers and advocates for their shared dedication to advancing life-changing therapies. Operator, you may now open up the line for questions.

[Operator Instructions] Your first question comes from the line of Mohit Bansal with Wells Fargo.

Congrats on all the progress. So one question I have is on LINZESS. So LINZESS has been very strong in first quarter of '26 and wondering like so the volume growth and improved pricing, it does seem like a very strong quarter. So would love to understand like how -- what is your thought process on the guidance given this quarter? Or is there any onetime item that we need to think about here?

Yes. Thanks, Mohit. I think overall, we're very encouraged by the first quarter results. Prescription demand, as you noted, 5% in the first quarter is slightly above our full year commentary on low single digits. That is a dynamic that we did anticipate the first quarter to be in line with our expectations that are factored into our overall full year guidance. And from an overall brand performance and improved net price, I would say, again, first quarter was very much in line with our expectations. I think positions us very well for our full year guidance. And one dynamic that we called out in the prepared remarks is we don't expect the same fluctuation or volatility in quarterly net sales for the rest of this year as we saw in 2025. So I would expect more consistency in the quarterly phasing of LINZESS net sales for 2026, which puts us on a nice trajectory for the full year.

Very helpful. And if I may ask one on apraglutide as well. So I mean, in our chat at DDW, it does seem like there are a lot of patients who are on parenteral nutrition and the expert mentioned that about 70% of them probably could be on -- could be SBS patients -- SBS-IF patients. So in that context, first is like how underpenetrated the market is currently when you talk about GATTEX? And with the ICD-10 code and all, do you -- how do you expect this to improve in terms of penetration of these GLP-2s in this market?

Tammi, do you want to comment on that?

Sure. Thanks for the question, Mohit. Just to sort of start at the top, as I mentioned in my remarks, we look at the total SBS population across U.S., Europe and Japan is about 18,000 patients. And then we've distilled that further based on research and the patient claims data codes that you've talked about to identify about 8,000-plus patients who we see as most likely to be prescribed a GLP-2 therapy as based on the definition of having -- requiring parenteral support 3 or more days a week.

Now within that and the numbers that I referenced from a total addressable market of $4 billion, that's looking essentially at that 8,000 patients times the price that we know for the currently available therapy of GATTEX. Within that opportunity, today, we estimate based on public disclosures and available claims data that about 1,500 to 2,000 of those patients are on GATTEX at any given time. So there's still significant opportunity to increase GLP-2 utilization overall and we believe in the potential of a brand such as apraglutide to also help improve adherence or days on therapy to really optimize treatment for those patients.

Your next question comes from the line of Amy Li with Jefferies.

This is Kathy on for Amy. I just wanted to ask a quick question about your plans for life cycle management for LINZESS after LOE. So you've previously alluded to being able to pursue OTC for LINZESS. When can we get an update on that? And have you had any conversations with the FDA on any additional data that you would need to share?

Thanks, Katherine. Mike, do you want to take that one?

Sure. It's a good question. I mean we've always been impressed with the performance of LINZESS and the availability of it for patients and we have a tremendously large safety database for LINZESS use. So we do think that the product has an opportunity for OTC. We have our ongoing engagement with AbbVie, our partner with a plan for OTC. We'll continue to do that and we look forward to updating you as we get more in the future.

Next question comes from the line of Jason Butler with Citizens JMP.

Just a couple on the STARS-2 trial. One, just a clarification point. Are you stratifying CIC and stoma patients in STARS-2? What's your expectation for the proportion of those patients, like 2 different populations that will enroll in the trial? And then just in terms of learnings from the first Phase III trial, how specifically when we think about operationally, what are you doing to make sure your enrollment time lines remain on track? And what's the overlap in sites versus what you used in the prior trial?

Thanks, Jason. Mike?

Yes. Thanks, Jason. So stratification is a good question. For the STARS-2 program, we're not formally stratifying. This was actually an outcome from our discussions with the agency. It's clearly recognized by the agency and prescribers that CIC, colon-in-continuity and stoma patients have a significant medical need and benefit from GLP-2 therapy. So in our study, our endpoints now, both primary and secondary are aligned with the overall population, which includes colon-in-continuity and stoma patients. However, we do need to show a benefit over the populations. So we'll actually track the recruitment of stoma and CIC patients. But again, to the point, there's no forced stratification but we'll align to get a representative group for both CIC and stoma patients as we discussed with the agency.

In regards to the operational execution, I think this SBS is a complex disorder and we certainly did an excellent job in the original STARS program operationally. As you know, that was a very robust, largest SBS-IF study ever performed. We had a very well-executed trial as demonstrated by the low placebo response and the 2x, as Tammi highlighted, the twice benefit in terms of parenteral support volume reduction. So we're certainly leveraging that experience on the path forward to STARS-2 and we feel confident in our ability to execute STARS-2 as we did in the original STARS program. We'll continue to use sites we have used in the original trial. We're looking at all the sites carefully. As you know, this is a rare disease. So the number of patients per site is something we have to actively include. So we need to consider that in the calculus. But that's, as Tom mentioned, we did a lot of site feasibility already and we're taking those learnings into as we initiate sites and prepare to dose patients in the near term.

And I think the other piece there, the bottom line on this is, one, working with the sites where we know there are existing patients and we certainly have a track record there. But this is also opening up additional sites because this is all about recruiting patients as fast as we can. And we're certainly going to make the most of the sites we have relationships with but we've identified a number of additional sites that we believe we could also harvest patients from. So I think we're excited to get rolling on this and that will be initiated in the upcoming weeks.

The next question comes from the line of Chase Knickerbocker with Craig-Hallum.

Maybe just on guidance again, sorry, Tom or Greg, maybe just walk me through what went better than expected from a demand generation perspective in Q1? And then what are you keeping in mind or don't expect to recur to drive the decline in volume growth through the year that your guidance implies?

Yes. Thanks, Chase. This is Greg. So I think as we gave our initial guidance for 2026, we had commented to the low single-digit prescription demand growth and that is still our expectation for this full year. And part of the reason we had anticipated that we may see a slowing in growth relative to 2025 or prior years is, as we enacted this pricing change, we expected that there would be some response and impact to prescription demand. But we were really focused on how we could maximize net sales overall over the remaining life cycle of brand. So we didn't expect that all of that would happen in the first quarter. We thought this would happen progressively throughout the year. And I would say Medicaid, in particular, is one of those areas that we would expect to potentially have reduced growth in the second half of 2026 or -- for later portions. And so that's really what's factored into the guidance and where the 5% was more in line with expectations to start the year.

Got it. Helpful. Maybe just on kind of gross to net through the year. Obviously, there's been quite a bit of change as far as the calculation there over the last 24 months. Can you just help us with how we should think about it sequentially, kind of balancing all the different drivers, including some of the dynamics later in the year with the redesign?

Yes, absolutely. So I would say the biggest takeaway is full year, we feel very good about our overall forecast, the guidance we provided, which implies a more than 30% increase in net sales relative to 2025. I think to your point, there were quite a few fluctuations in net price throughout the quarters in 2025. In '26, we don't expect that same dynamic to occur because we now have more consistent or less variability in net price across channels. So we do expect more consistent net sales in each quarter in '26 than occurred in 2025. From a growth rate perspective, the quarterly year-over-year comparisons could have some anomalies, I'd say, such as the 97% year-over-year in Q1. But from a dollar value, we expect more consistency in 2026.

Got it. And then just last for me on the expense side. $300 million on EBITDA is seeming like a pretty safe floor at this point. But is there any incremental expense kind of outside of STARS-2 that we should be considering that could kind of materially drive spend sequentially from here?

Yes. So I think you hit on the key point. As we initiate activities associated with STARS-2, we do expect our R&D expenses will ramp up throughout the remainder of 2026. But to your point, we continue to believe we'll be able to deliver greater than $300 million of adjusted EBITDA for the year.

Your next question comes from the line of Tom Rosenfeld with Intron Health Research.

Tom Rosenfeld [indiscernible] from Intron Health. My first one is, can you talk us through the magnitude of the opportunity to invest in functional constipation in 2 to 5 year-olds and whether you anticipate any material revenues from this label expansion in H2.

Yes. Thanks, Dominic (sic) [ Tom ]. I'm going to ask Tammi to speak to the opportunity we see with 2- to 5-year-olds pending an approval.

Yes. Thanks, Tom. First, we're very excited about the potential opportunity to extend -- expand and offer a -- potentially offer a prescription therapy for an additional pediatric patient population. We do expect that if approved, the 2 to 5, will support additional demand for LINZESS overall but we still see the adult IBS-C, CIC population as the main driver of growth over the next few years. So yes, all these additional pediatric indications add to supporting demand but the real continued inflection will come from the adult population.

That's really helpful. And one more question, if I may. So AbbVie's reimbursement for the Ironwood commercial expenses was down 90% this quarter versus the prior year. Is that around the right run rate we should assume going forward?

Yes. So if you recall, in first quarter of 2025, we completed a restructuring of our organization, which reduced the Ironwood portion of the selling efforts for LINZESS. So I would say first quarter 2026 is more representative of a run rate for the remainder of this year in terms of those reimbursements.

We have no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals Q4 and Full Year 2025 Investor Update Conference Call. [Operator Instructions]

I would now like to turn the call over to Greg Martini, Chief Financial Officer. Please go ahead.

Good morning, and thank you for joining us for our fourth quarter and full year 2025 investor update. Our press release issued this morning 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, 2024, and in our subsequent 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 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, Tom McCourt, our Chief Executive Officer, will begin with an overview of our 2025 progress on our strategic priorities and will provide an update on how we are maximizing LINZESS. Mike Shetzline, our Chief Medical Officer, will discuss how we are advancing apraglutide, and I will review our financial results and 2026 guidance. Tammi Gaskins, our Chief Commercial Officer, will also be available for Q&A at the end of the call.

Today's webcast includes slides. So for those of you dialing in, please go to the Events section of our website to access the accompanying slides separately. With that, I'll turn the call over to Tom.

Good morning, everyone, and thanks for joining us today to review the fourth quarter and full year 2025 financial results and business updates.

In 2025, we took several important steps to maximize LINZESS, advance apraglutide and deliver sustained profits and cash flows to strengthen our financial position and position the company for long-term success. For LINZESS, we delivered on the full year 2025 guidance with $865 million in LINZESS U.S. net sales, supported by an impressive 11% demand growth and 8% new-to-brand volume growth year-over-year. We also further strengthened the clinical utility of LINZESS with FDA approval in November 2025 for the treatment of irritable bowel syndrome with constipation in patients 7 years of age and older.

This new indication establishes LINZESS as the first and only prescription drug approved for the treatment of IBS-C in patients 7 to 17 years of age, which is great for patients in need. In addition to expanding the clinical profile of LINZESS, we also took steps to lower the LINZESS list price effective January 1, 2026, in response to the evolving health care dynamics and to support ongoing patient access. For advancing apraglutide, we met with the FDA in the fourth quarter of 2025 and aligned on key elements of a confirmatory Phase III clinical trial design, which we will be referring to as STARS-2. We are on track to begin site activation in the second quarter of this year and continue to believe that the data generated in the prior STARS Phase III trial will support an eventual NDA submission. Mike will discuss the Phase II trial design in more detail later in the call.

Lastly, for 2025, we finished the year strong, delivering $138 million in adjusted EBITDA and ending the year with $250 million of cash and cash equivalents on the balance sheet, positioning us well for 2026.

Now looking ahead to 2026. On January 2, we announced a strong outlook for 2026 with our full year financial guidance, highlighted by our expectation that LINZESS will return to blockbuster status with greater than $1.1 billion in U.S. net sales in 2026, driven by improved net price and low single-digit prescription demand growth. We expect increased LINZESS U.S. net sales and our continued disciplined expense management to drive greater than $300 million in adjusted EBITDA in 2026, which will enable us to continue to advance apraglutide and reduce our debt to further strengthen our financial position.

As such, our priorities in 2026 are clear. We'll continue to maximize LINZESS. We'll advance apraglutide by initiating STARS-2 for short bowel syndrome patients with intestinal failure, and we'll continue to emphasize disciplined expense management to deliver profits and meaningful cash flows, which will enable us to reduce our debt and further strengthen our financial position. With clear 2026 priorities and our improved financial position, we now have a clear path to execute our strategy, and we'll continue to evaluate all options to maximize shareholder value.

Moving to Slide 6. We're particularly excited about the opportunity we have with apraglutide, which has demonstrated strong efficacy and tolerability to date, becoming the first and only GLP-2 to achieve a statistically significant reduction in weekly parenteral support volume with once-weekly administration. Patients in our open-label extension study, STARS Extend, continue to reduce parenteral support volumes with longer-term exposure to apraglutide.

Data presented at the American College of Gastroenterology meeting in October reported 34 patients have achieved and maintained enteral autonomy or complete weaning of parenteral support for at least 3 months. Our conviction for the commercial opportunity for apraglutide remains high because of the strength of these data and the fact that many GLP-2 eligible patients with high parenteral support burden go untreated or discontinue therapy. We believe that the clinical profile with demonstrated efficacy, tolerability and once-weekly administration of apraglutide can redefine standard of care for short bowel syndrome with the potential to improve adherence and increase the number of GLP-2 treated patients to generate greater than $700 million in U.S. peak net sales. The addition of potential approvals in geographies abroad would further increase the opportunity.

I'd also like to take a moment to acknowledge that February 1 was Intestinal Failure Awareness Day and February is Rare Disease month. As we work towards our goal of developing and commercializing life-changing therapies for patients suffering from GI and rare diseases, we also seek to increase awareness for people we serve, who are at the center of our work year round.

Short bowel syndrome is a devastating condition, and we thank you for your trust as we work with urgency to deliver this important new medicine to short bowel syndrome patients who are dependent on parenteral support. With that, I'll now hand it over -- I will now move to our commercial performance update on Page 7. Throughout 2025, LINZESS continued to maintain its prescription market leadership. for the treatment of IBS-C and chronic constipation in the U.S., recently surpassing 5.7 million unique patients treated since launch and ending the year with roughly 45% market share. With over 40 million addressable patients in the U.S., we believe LINZESS still has a significant potential to grow prescription demand over the coming years due to the significant unmet need and the dissatisfaction with OTC therapies.

Once again, LINZESS delivered strong double-digit demand growth, increasing 13% year-over-year for the fourth quarter and 11% for the full year in 2025, the second consecutive year delivering 11% prescription demand growth. LINZESS demand growth consistently outpaced the market and was supported by all-time highs in new-to-brand patient volumes.

Turning to 2026. After 2 consecutive years of declining LINZESS net sales driven by price headwinds associated with legislative changes, we expect to return LINZESS U.S. net sales growth in 2026. Effective January 1, LINZESS list price was lowered in response to the evolving health care dynamics and to support ongoing patient access.

As a result of this change, we expect more than a 30% increase in 2026 LINZESS U.S. net sales year-over-year, specifically driven by the elimination of the inflationary component of statutory required rebates across the channels, including Medicaid due to this decrease in list price. We've maintained our class-leading payer access in 2026 and expect low single-digit prescription demand growth over the course of the year. With this improved pricing and net sales growth, we expect LINZESS will continue to drive meaningful cash flows to fund the next stage of growth with the commercialization of apraglutide, if approved.

With that, I'll turn the call over to Mike to share more details on the continued development of apraglutide. Mike?

Thanks, Tom, and good morning, everyone. 2026 is shaping up to be a critical year for advancing the apraglutide development program with the launch of our Phase III confirmatory trial, STARS-2, expected in the second quarter of 2026. In April 2025, we announced that the FDA requested a confirmatory Phase III trial to seek approval for apraglutide given the pharmacokinetic analysis of our prior STARS Phase III data indicated that the exposure and dose delivered in the trial were lower than planned due to dose preparation and administration. As a reminder, STARS was the largest ever Phase III trial conducted of the treatment for short bowel syndrome with intestinal failure, and we continue to anticipate this data set, along with the data from STARS-2, will support a future NDA submission.

As Tom mentioned, we met with the FDA in the fourth quarter of 2025 and aligned on key elements for the STARS-2 trial, and we're pleased to share some initial details with you today. For STARS-2, we plan to enroll 124 patients with short bowel syndrome with intestinal failure in a 1:1 randomization. Enrollment will include patients with both stoma and colon incontinuity anatomy to be representative of the heterogeneity of the overall population of patients with this condition.

Our primary endpoint for the study will be the same as our prior STARS Phase III clinical trial, evaluating the relative change from baseline in actual weekly parenteral support volume at week 24 in the overall patient population. Key secondary endpoints also to be measured at week 24 for the overall population include clinical response, defined as less than 20% reduction of -- defined as at least 20% reduction in parenteral sport volume, number of days off parenteral support per week and enteral autonomy. Patients will receive a 3.5 milligram once-weekly dose of apraglutide to align with what was delivered in the prior Phase III trial. In designing the STARS-2 trial, we have leveraged learnings from prior STARS Phase III to refine the instructions for use to optimize dose administration. We expect to begin initiation of trial sites in the second quarter of 2026 and anticipate the study time line to support an NDA submission before the end of 2029.

We are encouraged by the efficacy and tolerability data of apraglutide to date through the STARS trial and the long-term extension study, which give us confidence in the potential outcome of this confirmatory trial and in apraglutide's potential to be a best-in-class treatment for short bowel syndrome with intestinal failure as we pursue an eventual regulatory approval. We look forward to initiating the STARS-2 trial as we continue to grow our body of clinical evidence supporting apraglutide's potential to become the first long-acting once-weekly GLP-2 therapy for the treatment of short bowel syndrome, if approved.

With that, I'll turn it over to Greg to review our financial performance in 2025. Greg?

Thanks, Mike. We ended 2025 in a strong financial position, achieving our latest full year 2025 guidance. Turning to Slide 14 to review full year 2025 financial highlights. LINZESS U.S. net sales were $163 million in the fourth quarter and $865 million for the full year. Fourth quarter LINZESS U.S. net sales decreased 27% year-over-year with net price erosion being partially offset by 13% prescription demand growth. Fourth quarter net price was impacted by unfavorable quarterly phasing of gross to net rebate reserves due to units dispensed for the quarter exceeding units sold to wholesalers.

As a reminder, in the fourth quarter of 2025 -- in the first quarter of 2025, we noted a change in AbbVie's estimate of gross to net rebate reserves for 2025 based on expected rebates owed for units dispensed by channel in each quarter, which was expected to impact the quarterly phasing of LINZESS U.S. net sales, but not impact full year results. Accordingly, full year LINZESS U.S. net sales decreased 6% year-over-year with net price erosion primarily associated with the Medicare Part D redesign, partially offset by 11% prescription demand growth. Total Ironwood revenue was $296 million. GAAP net income was $24 million and adjusted EBITDA was $138 million.

Now moving to our balance sheet. We significantly improved our financial position by the end of 2025. Disciplined expense management, including a $61 million reduction in operating expenses year-over-year, resulted in $127 million in cash flows from operations and $215 million of cash and cash equivalents at year-end. We expect our strong cash position and 2026 outlook will support delevering of our balance sheet while simultaneously funding investment to drive long-term growth. We plan to use our cash on hand and cash flows generated to reduce our total debt balance in 2026, including repayment of our 2026 convertible notes at maturity in June and expect to end the year with approximately $300 million of debt on the balance sheet, less than 1x 2026 adjusted EBITDA by year-end.

Moving to our financial guidance on Slide 16. We are reiterating our 2026 guidance. This includes U.S. LINZESS net sales between $1.125 billion and $1.175 billion, a greater than 30% increase year-over-year, driven by improved net price and low single-digit prescription demand growth. We expect Ironwood revenue between $450 million and $475 million, and we expect adjusted EBITDA of greater than $300 million.

In summary, we are entering 2026 in a position of renewed financial strength and have a clear set of priorities as we strive to deliver long-term value by maximizing LINZESS, advancing apraglutide and delivering sustained profits and cash flows. We look forward to beginning site initiation for STARS-2, a confirmatory Phase III trial for apraglutide in the second quarter, and we believe we have the opportunity to redefine the standard of care for patients living with short bowel syndrome with intestinal failure.

I want to close by thanking all of our employees, patients, caregivers and advocates for their shared dedication to advancing life-changing therapies for patients with GI and rare diseases. Operator, you may now open up the line for questions.

[Operator Instructions] Your first question comes from the line of Jason Butler from Citizens.

Just a couple on STARS-2. Can you give us any more details on the learnings from STARS and the refined options for use that you're now including in STARS-2? Can you also just give us an overview of where you and FDA aligned on using the same primary and key secondary endpoints? What gives you the confidence in repeating the data from STARS 1? And then just lastly, when you think about the enrollment time line and enrollment criteria, how should we think about, a, the ability to enroll the trial on the time line you gave; and b, the similarities of the patient populations between 1 and 2?

Thanks, Jason. Mike?

Yes. Thanks, Jason. So in terms of the learnings, as you know, the original STARS trial was a very successful outcome in terms of the primary endpoint and the benefit for patients as well as the GI and other systemic tolerability. As we mentioned, what we learned most was about the dose and administration and what was involved in discussion with the agency was along those lines. So we really made a great effort in the revised approach to STARS-2 to ensure very accurate dosing and administration with better kit components and also better instructions for use. I mean that's the main difference, so to speak, in the 2 trials.

In terms of your next question was about the alignment on the endpoints. The agency clearly appreciated the endpoint in the primary STARS trial, the trial we completed successfully. And that's why the STARS-2 trial has the same primary endpoint as well as the components in the key secondary endpoints as well. So those remain pretty much the same. And we obviously have a high degree of confidence in the outcome of the STARS-2 trial because of that similarity. And we do think we've drastically improved the instructions for use and the dose and administration for patients. So expect that to be a positive contribution for the study as well.

In terms of time lines, we learned a lot with the STARS original program. We certainly have taken those learnings to better inform us to start the STARS-2 trial. We already have a lot of sites in the STARS Extend program, which we're going to continue to use as well. So we're thinking we're in a good position to successfully enroll the program in a timely fashion. That's why we put the time lines on the table in this call. But we're certainly going to do everything we can. It's a lot of work, and the team puts a lot of effort into it. We're going to have to push to make it successful, but we absolutely believe we can do that and achieve it in the time lines we propose.

Your next question comes from the line of Chase Knickerbocker from Craig-Hallum.

Maybe just to start on the strategic alternatives process. In [ respect ], we're not getting kind of a formal update, but can you maybe just update us on your thinking as far as kind of now that you can, at least in our model, clearly continue on as a stand-alone company or retire the debt, kind of how you're thinking about the strategic alternatives process as we kind of go forward into '26?

Thanks, Chase. This is Tom. And we're obviously in a very, very different financial position today than we were 9 months ago when we were looking at what are our strategic alternatives. And I think because of that, we clearly have a path forward to certainly leverage the revenue that is coming -- the increased revenue that is coming off LINZESS as well as reduce our debt and mobilize the trial.

That being said, we're obviously always open to alternatives that would increase shareholder value. There was a lot of interest in Ironwood and our assets. But we wanted to make sure that we were really smart with regard to choices we made to make sure that we could protect the shareholders. So I think as we move forward, we'll focus on executing as quickly as we can and as strongly as we can and always consider are there ways in which we can increase shareholder value.

Understood. Maybe just another one for Mike on STARS-2. It seems like time lines -- expectations for full enrollment are somewhat similar to STARS 1, maybe a little bit shorter. Maybe just talk about kind of some of the assumptions you're making as far as kind of that time line to full enrollment. I know there's another large study in the same patient population, at least relative to overall kind of market size. Can you just kind of talk about some of the assumptions that you're making on total enrollment as it compares to STARS 1?

Well, I think that's a good question, Chase. Thanks for the question. I think it's -- you're correct. In a lot of ways, we've aligned with how we saw STARS 1 play out. We thought we did a fair job executing that study as well. So that's where a lot of the assumptions are based. We certainly think we can achieve that in the STARS-2 program, and that's what the team is pushing and positioning to do and deliver the trial as we project here for an eventual NDA submission. But it really is grounded in what we did in STARS 1, which, as we said, was a very successful study.

The other thing to consider here, Chase, is, this is a very attractive study if you're a patient. You think about how strong the drug performed in the first trial. So there's a very high probability of success. It's an extremely well-tolerated once-weekly dosing administration. And it's a 24-week trial. So I think when you combine the fact that you have a very, very high probability of success, you have a highly effective, extremely well-tolerated, once-weekly therapy and a 24-week trial, I think, we're delighted with what Mike has been able to do with the FDA as far as not only get the trial up and running with the design we have, but also the length of the trial as well, which obviously is a big driver with regard to the time to get to market.

Got it. Maybe just last for me on -- I'm actually going to ask a question on 2027. But just on LINZESS, as we kind of approach that negotiated price, can you maybe just talk to us kind of what you've seen in the market from prior negotiated drugs as far as actually kind of some volume acceleration. As we kind of go into that negotiated price year and kind of how you think we should be thinking about 2027 for LINZESS when that negotiated price goes in place?

Yes. Thanks, Chase. This is Greg. So for 2026, we're clearly excited about the improved outlook that we have with our guidance that we provided back in January, reiterated today. We have a significant growth we're expecting in LINZESS net sales for 2026. We haven't provided any guidance for 2027 and beyond, but I would say that we continue to be very optimistic about the future of the brand and its ability to continue to drive strong net sales. which will continue to deliver profits and cash flows for Ironwood.

Your next question comes from the line of Amy Li from Jefferies.

So for STARS-2, how much of your existing clinical data is the FDA allowing you to reference or bridge to a future NDA? And I think people have said that your planned enrollment size seems slightly higher than your competitors, which is enrolling 90 patients. So just curious if the trial size was by FDA request? Or is it more conservative decision on your end to have a more robustly powered trial? And then finally, given the competitive pressure in SBS-IF and potential for GATTEX generic, could you potentially add a higher dose arm to maximize efficacy differentiation?

Yes. Thanks, Amy. So yes, so in terms of the STARS-2 data, we were hoping to leverage the STARS data as much as possible, honestly. As we said, we're bridging based on the similar dose. The dose is aligned in the STARS-2 trial with what we put in the STARS original trial. So we're anticipating that we'll have to -- we'll be able to use the original STARS data in the NDA submission. Now obviously, that's going to be a review decision because obviously, we'll have to see the data and progress the trial as planned. But given that PK bridging, we think that the STARS -- original STARS data will be applicable for our future NDA.

In terms of the size of the STARS trial, we certainly did align with the agency on the key elements of the program to take forward. And we believe this current sample size that we've put on the table here with 124 patients gives us adequate and robust power along the primary endpoint and secondary endpoints as well. And so that's what really drove the decision on the sample size was to make sure we had a very robust clinical trial and confidence in the outcome. That's what we wanted to achieve. We recognize there may be differences with some other trials being performed, but this is where we settled based on the confidence we have in the program. We also had a significant amount of data from 007 to put strong numbers behind that selection.

And your last comment was about the higher doses. I think, again, we certainly have considered -- continue to consider the opportunity with high doses. We're actually in, I think, excellent position given the fact that STARS already has very robust efficacy data with a potential best-in-class profile and outstanding GI tolerability and weekly dosing. So we certainly want to leverage that going forward. But we do continue to evaluate the opportunity to introduce a higher dose. As you know, not everybody responds in a clinical trial. So there's certainly opportunity to potentially increase the breadth of response. But right now, we're focused on getting fastest to market. And the best way to do that is to bridge with the 007 or the original STARS data set and complete this trial and confirm that evidence for an eventual submission.

Your next question comes from the line of Mohit Bansal from Wells Fargo.

Congrats on all the progress here. So a couple of questions from my side. So one is, did you ever see data from the STARS trial to look at patients who could achieve the optimum dose? Did they benefited more than the other patients who couldn't get to the optimum dose? That's the first question. And the second question, I would love to understand how you are thinking about market opportunity for apra in the case you have GATTEX generic potentially reaching the market around the same time? Or what is the latest on the GATTEX generic at this point?

How about I start with the -- Mohit, your question. Thanks. Good question on the optimum dose. I think it's a really great question because obviously, you raised the point of optimum dose. I think what has been amazing in the original STARS data set is the robust efficacy in the presence of basically placebo-like tolerability. So that's a pretty amazing outcome in our industry where you really don't see any really negative consequences, and it was a pretty robust large trial. So that is quite a big learning.

So we really think we had a way to get into sort of optimum dose with the STARS trial. And as I mentioned, that came out to be 3.5 milligrams, which is what we're taking forward in the STARS-2. I think in the background of your question is kind of what we alluded to earlier is, is there an opportunity for greater efficacy? And as you know, we did do some early trials looking at 2.55 and 10 milligrams from a biomarker perspective. So there clearly is some biomarker evidence that there could be some response out there above 3.5, and as I said, we certainly have been considering that. But for right now, with, again, giving the optimum outcome we have in the original STARS trial, meaning robust efficacy in a very well-tolerated once-weekly therapy that people like, maintain and continue because we still see improved outcomes even a year and 2 years out in the STARS Extend trial.

We really think the best opportunity is to take that forward in the confirmatory trial and get to market as soon as possible because as we're hearing patients and investigators really like the drug and really want to maintain patients on it, and we'd like to get it to market as soon as possible. I think for the market question.

Mohit, this is Tammi. Thanks for the question on the commercial opportunity. Just to echo Mike's comments, commercially, we have very strong conviction in the overall clinical profile of apraglutide, right, and its potential to be differentiated in the GLP-2 class. Especially because as Mike was just talking about, not only did we have a positive Phase III trial, but also in the STARS Extend long-term extension study, we continue to see increased improvement in PS volume reduction in days off of PS and even enteral autonomy achievement, which we know is really critical for patients in this market who are burdened by the everyday demands being on parenteral support.

And when we look to, as Tom referenced in the presentation, peak U.S. net sales of greater than $700 million, that assumes that there will be a glepaglutide and at least one generic [ kind of glutide ] on the marketplace. But even with that, we still believe in the potential to drive apraglutide to market leadership through expanding utilization of GLP-2 therapies and improved adherence. And we don't anticipate that this would be a multisource generic market because of a lot of the demands required for small patient size for rare disease and demands required to support these patients, both clinically and from a reimbursement perspective. So full belief in the commercial opportunity and what apraglutide can do as a differentiated agent within that market.

[Operator Instructions] Your next question comes from the line of Dominic Rose from Intron Health.

I've got 2. My first question is, can you help us to understand what channel mix effects drove the LINZESS rebate in Q4 and whether we should expect ongoing volatility in pricing this year? And my second question is that the LINZESS commercial volume looks to have fallen at the beginning of the year based on the data we can see. So can you tell us what your formulary positioning looks like in this year versus the prior year?

Thanks, Dominic. This is Greg. So fourth quarter pricing wasn't necessarily impacted by channel mix. It was really based on timing of recognition of gross to net rebate reserves. And in 2025, gross to net rebate reserves are based on units dispensed in the quarter. So we had a higher volume of units dispensed in fourth quarter relative to the units sold to wholesalers. So we saw a disproportionate impact from those gross to net rebates in the fourth quarter.

So it wasn't mix. It was really timing of when those rebates were recognized. And if you look across the full year, it's really normalized from a timing perspective and you don't see as significant of an impact on the full year results as you did in first quarter and fourth quarter specifically, which were unfavorably impacted by that trend.

Moving forward in '26, we do not expect to have the same degree of volatility quarter-over-quarter. We do expect '26 will be a bit more consistent sequentially quarter-over-quarter than what we saw in 2025. And then from an overall payer access, I'll have Tammi talk to that in terms of 2026 coverage.

Yes. So -- as we've talked about already, of course, we issued our full year guidance, which has both significantly improved year-over-year due to a combination of improved net price as well as low single-digit -- anticipated low single-digit demand volume growth. So we have maintained a big part of our decision to lower the [ WACC ] was also to ensure patient access. And we have maintained broad patient access for LINZESS across our biggest books of business, both commercial and Medicare Part D, which was critical in this.

And in terms of the low single digit, we did expect some impact on Medicaid as a percentage of business as states may decide to respond to the removal of the inflationary component of the statutory rebates, but we feel that we've taken the right approach for the guidance and continue to give patients branded prescription leading market access for LINZESS.

I think the other question you had was the reduction in volume year-over-year. And this drug has been on a linear growth curve since we launched it. And it's remarkable what sustained growth we've seen. We do see some seasonality in the first part of the year because of the high deducting plans that there's a reset. So we always -- we generally always see -- in fact, for the last 10 years, we saw a reduction in the first quarter versus the prior fourth quarter, but then it accelerates through the year. So I think we're right on track from where we said we wanted to be, and we feel very, very good about what the outlook for 2026 looks like.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.