– LINZESS (Iinaclotide) EUTRx prescription demand growth in Q2 2022 increased 9% year-over-year –

– GAAP net income of $37 million and adjusted EBITDA of $56 million; ended Q2 2022 with $504 million in cash and cash equivalents –

– Completes Board of Directors authorized share repurchase program; repays remaining principal amount of the 2022 Convertible Notes in cash –

– Reiterates 2022 guidance of U.S. LINZESS net sales growth of low single digits %, total Ironwood revenue of $420 to $430 million and adjusted EBITDA of >$250 million –

BOSTON--(BUSINESS WIRE )--Ironwood Pharmaceuticals, Inc. (Nasdaq: IRWD), a GI-focused healthcare company, today reported its second quarter 2022 results and recent business performance.

“We made progress towards our goal of becoming the leading GI healthcare company in the U.S., as the positive momentum across our business continued in the second quarter,” said Tom McCourt, chief executive officer of Ironwood. “We are pleased by the year-over-year double-digit LINZESS prescription demand growth in the first half of 2022, and we believe there is still significant opportunity to reach appropriate new patients and drive additional growth for the brand. In addition to the commercial success of LINZESS, we continue to make progress with our ongoing clinical trials. We now expect our Phase 3 pediatric study of linaclotide in 6 to 17 year-olds with functional constipation to readout in the third quarter of this year and remain on track with the previously shared data readout timing for IW-3300 and CNP-104. We believe our capabilities in GI, strong balance sheet and disciplined capital allocation continue to position our company for growth moving forward.”

(in thousands, except for per share amounts)

GAAP net income per share – basic

GAAP net income per share –diluted

Non-GAAP net income per share – basic

Non-GAAP net income per share – diluted

– LINZESS commercial margin was 69% in the second quarter of 2022, compared to 72% in the second quarter of 2021. See the U.S. LINZESS Full Brand Collaboration table below and at the end of this press release.

– Net profit for the LINZESS U.S. brand collaboration, net of commercial and research and development (“R&D”) expenses, was $163.8 million in the second quarter of 2022, compared to $176.6 million in the second quarter of 2021. See U.S. LINZESS Full Brand Collaboration table below and at the end of this press release.

U.S. LINZESS Full Brand Collaboration

(in thousands, except for percentages)

LINZESS U.S. net sales as reported by AbbVie

AbbVie & Ironwood commercial costs, expenses and other discounts

AbbVie & Ironwood R&D Expenses

Total net profit on sales of LINZESS

– The functional constipation study in 6- to 17-year-olds is expected to readout in the third quarter of 2022. There are currently no FDA approved prescription pediatric therapies for functional constipation.

– Ironwood has successfully completed Phase I studies to evaluate the safety and tolerability of IW-3300 in healthy volunteers and expects to initiate a Phase 2 proof of concept study in IC/BPS patients by the end of 2022.

– COUR is currently conducting a clinical study for CNP-104 evaluating the safety, tolerability, pharmacodynamic effects and efficacy of CNP-104 in PBC patients, and remains on track with a data readout estimated in 2023.

– Total revenues in the second quarter of 2022 consisted of $94.5 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S. and $2.7 million in royalties and other revenue. Total revenues in the second quarter of 2021 consisted of $100.3 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S., and $3.7 million in linaclotide royalties and other revenue.

– Operating expenses in the second quarter of 2022 consisted of $30.1 million in selling, general and administrative (“SG&A”) expenses, and $11.5 million in research and development (“R&D”) expenses. Operating expenses in the second quarter of 2021 consisted of $27.0 million in SG&A expenses and $12.2 million in R&D expenses, partially offset by a $0.3 million adjustment to restructuring expenses.

Non-GAAP net income excludes the impact of mark-to-market adjustments on the derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, and the release of the company’s valuation allowance against the majority of deferred tax assets in the second quarter of 2021. See Non-GAAP Financial Measures below.

– Adjusted EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization from GAAP net income. See Non-GAAP Financial Measures below.

– Ironwood generated $61.4 million in cash from operations in the second quarter of 2022, compared to $48.6 million in cash from operations in the second quarter of 2021.

– Ironwood used $120.7 million of cash to repay the remaining aggregate principal amount of the 2022 Convertible Notes and $33.9 million of cash to repurchase shares of its Class A Common Stock in the second quarter of 2022.

U.S. LINZESS Net Sales Growth

1 Adjusted EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization from GAAP net income. For purposes of this guidance, Ironwood has assumed that it will not incur material expenses related to business development activities in 2022.

Ironwood presents non-GAAP net income and non-GAAP net income per share to exclude the impact of net gains and losses on derivatives related to Ironwood’s 2022 Convertible Notes that are required to be marked-to-market, restructuring expenses, and the release of the company’s valuation allowance

against the majority of deferred tax assets in the second quarter of 2021. Non-GAAP adjustments are further detailed below:

Ironwood also presents adjusted EBITDA, a non-GAAP measure, as well as guidance on adjusted EBITDA. Adjusted EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization from GAAP net income. The adjustments are made on a similar basis as described above related to non-GAAP net income, as applicable.

Management believes this non-GAAP information is useful for investors, taken in conjunction with Ironwood’s GAAP financial statements, because it provides greater transparency and period-over-period comparability with respect to Ironwood’s operating performance. These measures are also used by management to assess the performance of the business. Investors should consider these non-GAAP measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. For a reconciliation of non-GAAP net income and non-GAAP net income per share to GAAP net income and GAAP net income per share, respectively, and for a reconciliation of adjusted EBITDA to GAAP net income, please refer to the tables at the end of this press release.

Ironwood does not provide guidance on GAAP net income or a reconciliation of expected adjusted EBITDA to expected GAAP net income because, without unreasonable efforts, it is unable to predict with reasonable certainty the non-GAAP adjustments used to calculate adjusted EBITDA. These adjustments are uncertain, depend on various factors and could have a material impact on GAAP net income for the guidance period.

Ironwood will host a conference call and webcast at 8:30 a.m. Eastern Time on Thursday, August 4, 2022 to discuss its second quarter 2022 results and recent business activities. Individuals interested in participating in the call should dial (888) 330-2384 (U.S. and Canada) or (240) 789-2701 (international) using conference ID number and event passcode 4671230. To access the webcast, please visit the Investors section of Ironwood’s website at www.ironwoodpharma.com at least 15 minutes prior to the start of the call to ensure adequate time for any software downloads that may be required. The call will be available for replay via telephone starting at approximately 11:30 a.m. Eastern Time on August 4, 2022 running through 11:59 p.m. Eastern Time on August 18, 2022. To listen to the replay, dial (800) 770-2030 (U.S. and Canada) or (647) 362-9199 (international) using conference ID number 4671230. The archived webcast will be available on Ironwood’s website for 14 days beginning approximately one hour after the call has completed.

Ironwood Pharmaceuticals (Nasdaq: IRWD), an S&P SmallCap 600® company, is a leading gastrointestinal (GI) healthcare company on a mission to advance the treatment of GI diseases and redefine the standard of care for GI patients. We are pioneers in the development of LINZESS® (linaclotide), the U.S. branded prescription market leader for adults with irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (CIC). Under the guidance of our seasoned industry leaders, we continue to build upon our history of GI innovation and challenge what has been done before to shape what the future holds. We keep patients at the heart of our R&D and commercialization efforts to reduce the burden of GI diseases and address significant unmet needs.

Founded in 1998, Ironwood Pharmaceuticals is headquartered in Boston, Massachusetts.

We routinely post information that may be important to investors on our website at www.ironwoodpharma.com. In addition, follow us on Twitter and on LinkedIn.

LINZESS® is the #1 prescribed brand in the U.S. for the treatment of adult patients with irritable bowel syndrome with constipation (“IBS-C”) or chronic idiopathic constipation (“CIC”), based on IQVIA data.

LINZESS is a once-daily capsule that helps relieve the abdominal pain, constipation, and overall abdominal symptoms of bloating, discomfort and pain associated with IBS-C, as well as the constipation, infrequent stools, hard stools, straining, and incomplete evacuation associated with CIC. The recommended dose is 290 mcg for IBS-C patients and 145 mcg for CIC patients, with a 72-mcg dose approved for use in CIC depending on individual patient presentation or tolerability. LINZESS should be taken at least 30 minutes before the first meal of the day.

LINZESS is contraindicated in pediatric patients less than 2 years of age. In neonatal mice, linaclotide increased fluid secretion as a consequence of age-dependent elevated GC-C agonism resulting in mortality within the first 24 hours due to dehydration. There was no age-dependent trend in GC-C intestinal expression in a clinical study of children 2 to less than 18 years of age; however, there are insufficient data available on GC-C intestinal expression in children less than 2 years of age to assess the risk of developing diarrhea and its potentially serious consequences in these patients. The safety and effectiveness of LINZESS in patients less than 18 years of age have not been established.

LINZESS is not a laxative; it is the first medicine approved by the FDA in a class called GC-C agonists. LINZESS contains a peptide called linaclotide that activates the GC-C receptor in the intestine. Activation of GC-C is thought to result in increased intestinal fluid secretion and accelerated transit and a decrease in the activity of pain-sensing nerves in the intestine. The clinical relevance of the effect on pain fibers, which is based on nonclinical studies, has not been established.

In the United States, Ironwood and AbbVie co-develop and co-commercialize LINZESS for the treatment of adults with IBS-C or CIC. In Europe, AbbVie markets linaclotide under the brand name CONSTELLA® for the treatment of adults with moderate to severe IBS-C. In Japan, Ironwood's partner, Astellas, markets linaclotide under the brand name LINZESS for the treatment of adults with IBS-C or CIC. Ironwood also has partnered with AstraZeneca for development and commercialization of LINZESS in China, and with AbbVie for development and commercialization of linaclotide in all other territories worldwide.

LINZESS (linaclotide) is indicated in adults for the treatment of both irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC).

WARNING: RISK OF SERIOUS DEHYDRATION IN PEDIATRIC PATIENTS LESS THAN 2 YEARS OF AGE

LINZESS is contraindicated in patients less than 2 years of age. In nonclinical studies in neonatal mice, administration of a single, clinically relevant adult oral dose of linaclotide caused deaths due to dehydration.

Common Adverse Reactions (incidence ≥2% and greater than placebo)

Please see full Prescribing Information including Boxed Warning: http://www.allergan.com/assets/pdf/linzess_pi

LINZESS® and CONSTELLA® are registered trademarks of Ironwood Pharmaceuticals, Inc. Any other trademarks referred to in this press release are the property of their respective owners. All rights reserved.

This press release contains forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements, including statements about Ironwood’s ability to execute its mission; Ironwood’s strategy, business, financial position and operations; Ironwood’s ability to drive growth and profitability; the demand, development, commercial availability and commercial potential of linaclotide and the drivers, timing, impact and results thereof; Ironwood’s continued focused investments and commitment to reaching new patients to drive prescription demand growth moving forward, which include a clinical pediatric programs in IBS-C and functional constipation (including the timing and results thereof); the potential indications for, and benefits of, linaclotide; financial performance and results, and guidance and expectations related thereto, including expectations related to LINZESS U.S. net sales growth, total revenue and adjusted EBITDA in 2022; Ironwood’s plans to maximize LINZESS growth via commercial innovation and lifecycle management; the progress of our ongoing clinical trials and the timing of related data readouts; the potential of IW-3300 as a treatment of visceral pain conditions and the size of the IC/BPS and endometriosis populations; the size of estimated U.S. population affected by PBC; and the potential of CNP-104 to be the first PBC disease modifying therapy. These forward-looking statements speak only as of the date of this press release, and Ironwood undertakes no obligation to update these forward-looking statements. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statement. Applicable risks and uncertainties include those related to the effectiveness of development and commercialization efforts by us and our partners; preclinical and clinical development, manufacturing and formulation development of linaclotide, CNP-104 and our product candidates; the risk that clinical programs and studies may not progress or develop as anticipated, including that studies are delayed or discontinued for any reason, such as safety, tolerability, enrollment, manufacturing, economic or other reasons; the risk that findings from our completed nonclinical and clinical studies may not be replicated in later studies; the risk that we or our partners are unable to obtain, maintain or manufacture sufficient LINZESS or our product candidates, or otherwise experience difficulties with respect to supply or manufacturing; the efficacy, safety and tolerability of linaclotide and our product candidates; the risk that the therapeutic opportunities for LINZESS or our product candidates are not as we expect; decisions by regulatory and judicial authorities; the risk we may never get additional patent protection for linaclotide and other product candidates, that patents for linaclotide or other products may not provide adequate protection from competition, or that we are not able to successfully protect such patents; the risk that we are unable to manage our expenses or cash use, or are unable to commercialize our products as expected; the risk that we may elect to not exercise our option to acquire the exclusive license for CNP-104; the risk that the development of either our clinical pediatric programs in IBS-C and functional constipation in 6 to 17 year-olds, CNP-104 and/or IW-3300 is not successful or that any of our product candidates is not successfully commercialized; outcomes in legal proceedings to protect or enforce the patents relating to our products and product candidates, including abbreviated new drug application litigation; the risk that financial and operating results may differ from our projections; developments in the intellectual property landscape; challenges from and rights of competitors or potential competitors; the risk that our planned investments do not have the anticipated effect on our company revenues; developments in accounting guidance or practice; Ironwood’s or AbbVie’s accounting practices, including reporting and settlement practices as between Ironwood and AbbVie; the risk that we are unable to manage our expenses or cash use, or are unable to commercialize our products as expected; the impact of the COVID-19 pandemic; and the risks listed under the heading “Risk Factors” and elsewhere in Ironwood’s Annual Report on Form 10-K for the year ended December 31, 2021, and in our subsequent Securities and Exchange Commission filings.

Prepaid expenses and other current assets

Restricted cash, net of current portion

Accounts receivable, net of current portion

Accrued research and development costs

Accrued expenses and other current liabilities

Current portion of operating lease liabilities

Current portion of convertible senior notes

Convertible senior notes, net of current portion

Operating lease liabilities, net of current portion

Total liabilities and stockholders’ equity

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

Sale of active pharmaceutical ingredient

GAAP net income per share—basic

GAAP net income per share—diluted

Reconciliation of GAAP Results to Non-GAAP Financial Measures

(In thousands, except per share amounts) (unaudited)

A reconciliation between net income on a GAAP basis and on a non-GAAP basis is as follows:

Mark-to-market adjustments on the derivatives related to convertible notes, net

A reconciliation between basic net income per share on a GAAP basis and on a non-GAAP basis is as follows:

GAAP net income per share –basic

Adjustments to GAAP net income per share (as detailed above)

Non-GAAP net income per share –basic

Weighted average number of common shares used to calculate net income per share — basic

A reconciliation between diluted net income per share on a GAAP basis and on a non-GAAP basis is as follows:

GAAP net income per share –diluted

Adjustments to GAAP net income per share (as detailed above)

Non-GAAP net income per share –diluted

Weighted average number of common shares used to calculate net income per share — diluted1

1 Following the adoption of ASU 2020-06 on January 1, 2022, the dilutive impact of Ironwood’s convertible senior notes is determined using the if-converted method. As a result of this change, the weighted average number of common shares used to calculate diluted net income per share includes approximately 29.9 million shares related to the assumed conversion of the 2024 and 2026 convertible senior notes. Under the modified retrospective transition method elected by the Company in connection with the adoption of ASU 2020-06, diluted earnings per share for prior fiscal periods is not required to be restated.

A reconciliation of GAAP net income to adjusted EBITDA:

Mark-to-market adjustments on the derivatives related to convertible notes, net

U.S. LINZESS Commercial Collaboration1

LINZESS U.S. net sales as reported by AbbVie2

AbbVie & Ironwood commercial costs, expenses and other discounts3

Commercial profit on sales of LINZESS

Ironwood’s share of net profit5

Reimbursement for Ironwood’s commercial expenses

Ironwood’s collaborative arrangement revenue2

1 Ironwood collaborates with AbbVie on the development and commercialization of linaclotide in North America. Under the terms of the collaboration agreement, Ironwood receives 50% of the net profits and bears 50% of the net losses from the commercial sale of LINZESS in the U.S. The purpose of this table is to present calculations of Ironwood’s share of net profit (loss) generated from the sales of LINZESS in the U.S. and Ironwood’s collaboration revenue/expense; however, the table does not present the research and development expenses related to LINZESS in the U.S. that are shared equally between the parties under the collaboration agreement. Please refer to the table at the end of this press release for net profit for the U.S. LINZESS brand collaboration with AbbVie. 2 LINZESS net sales are recognized using AbbVie’s revenue recognition accounting policies and reporting conventions. As a result, certain rebates and discounts are classified as LINZESS U.S. commercial costs, expenses and other discounts within Ironwood’s calculation of collaborative arrangements revenue. 3 Includes certain discounts recognized and cost of goods sold incurred by AbbVie; also includes commercial costs incurred by AbbVie and Ironwood that are attributable to the cost-sharing arrangement between the parties. 4 Commercial margin is defined as commercial profit on sales of LINZESS as a percent of total LINZESS U.S. net sales. 5 Ironwood has recalculated its share of net profit on sales of LINZESS in the U.S. to conform with AbbVie’s recast of historically reported LINZESS U.S. net sales (previously reported by Allergan).

LINZESS U.S. net sales as reported by AbbVie2

AbbVie & Ironwood commercial costs, expenses and other discounts3

AbbVie & Ironwood R&D Expenses4

Total net profit on sales of LINZESS5

1 Ironwood collaborates with AbbVie on the development and commercialization of linaclotide in North America. Under the terms of the collaboration agreement, Ironwood receives 50% of the net profits and bears 50% of the net losses from the commercial sale of LINZESS in the U.S. The purpose of this table is to present calculations of the total net profit (loss) generated from the sales of LINZESS in the U.S., including the commercial costs and expenses and the research and development expenses related to LINZESS in the U.S. that are shared equally between the parties under the collaboration agreement. 2 LINZESS net sales are recognized using AbbVie’s revenue recognition accounting policies and reporting conventions. As a result, certain rebates and discounts are classified as LINZESS U.S. commercial costs, expenses and other discounts within Ironwood’s calculation of collaborative arrangements revenue. 3 Includes certain discounts recognized and cost of goods sold incurred by AbbVie; also includes commercial costs incurred by AbbVie and Ironwood that are attributable to the cost-sharing arrangement between the parties. 4 R&D expenses related to LINZESS in the U.S. are shared equally between Ironwood and AbbVie under the collaboration agreement. 5 Ironwood has recalculated its share of net profit on sales of LINZESS in the U.S. to conform with AbbVie’s recast of historically reported LINZESS U.S. net sales (previously reported by Allergan).

Investors: Greg Martini, 617-374-5230 gmartini@ironwoodpharma.com

Matt Roache, 617-621-8395 mroache@ironwoodpharma.com

Media: Beth Calitri, 978-417-2031 bcalitri@ironwoodpharma.com

Investors: Greg Martini, 617-374-5230 gmartini@ironwoodpharma.com

Matt Roache, 617-621-8395 mroache@ironwoodpharma.com

Media: Beth Calitri, 978-417-2031 bcalitri@ironwoodpharma.com