2.9. Ironwood’s woes or why a stock craters after a ‘successful’ phase 3 trial

A 40% share price drop after an investigational drug hits the primary endpoint of a phase 3 trial is not typical. But that’s what happened to Ironwood Pharmaceuticals when it reported data from a trial of apraglutide in patients with intestinal failure due to short bowel syndrome (SBS-IF). 

The condition arises from the loss of gut function following surgical removal of a large portion of the small intestine due to conditions such as severe inflammatory bowel disease or cancer in adults or congenital problems or necrotizing enterocolitis in infants. Because patients are then unable to absorb sufficient nutrients or water, they rely on parenteral nutrition and fluid delivered directly to the bloodstream by a catheter. It’s far from ideal. Complications and infections can occur, and patients’ quality of life is severely affected. The goal of therapy is to reduce the volume of parenteral support needed. A secondary goal is to reduce the number of days per week when it needs to be administered. 

Apraglutide mimics the effects of a natural peptide hormone, GLP-2, which is normally released in response to food intake. It aids nutrient absorption by slowing the passage of food through the intestine and promoting the regrowth of intestinal tissue. It is rapidly broken down and cleared from the system, however. Therapeutic analogues have been developed to resist degradation and act over longer timescales.   

Ironwood reported that apraglutide reduced patients need for parenteral support by 25.5% from baseline levels – the reduction in those on placebo was 12.5%, so the net treatment effect appears modest but real. Some 43% of patients on apraglutide were able to do without parenteral support for at least one additional day per week, as compared with 27.5% of those in the placebo arm. Ironwood’s problem is that it pitting apraglutide against a long-established competitor, Takeda’s Gattex (teduglutide), another GLP-2 analogue. Generic competition cannot be too far away, as Gattex, a notoriously expensive drug, is about to lose patent protection. Apraglutide has one key advantage – it is dosed on a weekly basis, whereas Gattex requires daily administration. Whether that is enough to make it a successful product is not clear at this point. But some investors clearly think it isn’t. 

Companies mentioned in this episode:
9Meters Biopharma, Hanmi Pharmaceutical, Ironwood Pharmaceuticals, Merck KGaA, NPS Pharmaceuticals, Serono, Shire, Takeda, VectivBio, Zealand Pharmaceuticals

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