Ironwood Pharmaceuticals has found a way to sustain its momentum, even in a downturn. The Cambridge, MA-based biotech company is announcing today it has secured $40 million in upfront payments by finding a partner to develop and commercialize its top drug candidate in Europe.
Ironwood said it is providing European development and commercial rights for linaclotide, its experimental drug for irritable bowel syndrome with constipation, to Barcelona, Spain-based Laboratorios Almirall. This deal provides Ironwood with $40 million upfront, another $15 million in payments for reaching near-term milestones, plus $40 million in payments before the drug is commercialized. Like most outlicensing deals, Almirall will pay the expenses of commercializing and seeking regulatory approval in Europe.
The real key to the deal, though, is that it will pay Ironwood an undisclosed percentage royalty on sales if linaclotide can become a marketed product. The royalties will escalate as revenues climb—which could enable Ironwood to retain half of the drug’s value in Europe over time.
“Almirall presented us with the best strategy to rapidly and effectively deliver linaclotide to the market, and terms that, should linaclotide meet our expectations, allow us to share approximately half of the long-term value of the product,” said Peter Hecht, Ironwood’s CEO, in a statement.
Ironwood was able to command those terms, even in a global recession, because linaclotide has rare potential, as Hecht pointed out last week at an Xconomy Forum held at Biogen Idec. There are fewer than 10 “substantial” drugs in the pharmaceutical industry in the final stage of development, outside of cancer and rare orphan diseases, Hecht said. When you whittle the list down to novel, first-in-class medicines in large markets, “there are really only two or three.”
Almirall, and Ironwood’s U.S. partner, New York-based Forest Laboratories, are betting on what may be a novel drug to fight irritable bowel syndrome and associated illnesses of the gut. Irritable bowel syndrome—a condition associated with cramping, abdominal pain, bloating, and constipation—affects an estimated one out of every five people in the U.S., according to the National Institutes of Health. It can mostly be controlled by diet and stress management, but can be disabling for some people, making it difficult to work, travel, or attend social events, according to the NIH.
Almirall was one of eight companies that were competing for the European partnership rights to linaclotide, … Next Page »