Ironwood fights off Denner addition to board post split talk

Ironwood sent a letter to shareholders on Wednesday morning, urging them to vote the “white” proxy card with its slate of three new board members ahead of its May 31 annual meeting. The Ironwood nominees include sitting board members Lawrence Olanoff, Amy Schulman and Douglas Williams. The company said that it “believes there is no compelling reason” to add hedge fund Sarissa Capital’s Chief Investment Officer Alex Denner to the board.

The letter added that “Dr. Denner has not made clear what skills or experience he would bring to the Ironwood Board that it does not already possess,” and noted that Sarissa Capital only own 2.5% of Ironwood shares. It encourages shareholders to discard the “gold” proxy card.

• Ironwood Pharmaceuticals announced Tuesday that it will spin out several pipeline programs into a new, publicly traded company.
• The existing Ironwood will keep three currently marketed products, including the constipation medicine Linzess, as well as two gastrointestinal-focused pipeline products.
• The new company, on the other hand, will encompass R&D programs based on a soluble guanylate cyclase (sGC) research platform. The separation will be completed in the first half of 2019.

Ironwood has operated at a loss for the last several years, despite marketing three products and earning revenue from partnership agreements with Allergan. In 2017, the company brought in only $298 million in total revenues and reported a net loss of $116 million — greater than the loss of $81 million reported in 2016.

Ironwood management said in a statement the decision was made to separate “to unlock value, increase operational performance and strategic flexibility, and tailor capital structure for each business.”

The company expects legacy Ironwood will now be able to reach profitability in 2019.

The split comes after activist investor Alex Denner ratcheted up pressure on the company. Denner’s Sarissa Capital sought to nominate him to the Ironwood board of directors in early April. Denner is known for shaking things up; as a Carl Icahn protégé, that’s par for the course.

The new company will own two mid-stage programs — praliciguat for heart failure with preserved ejection fraction (HFpEF) and diabetic nephropathy; and olinciguat for sickle cell disease and achalasia. It will also have IW-6463 in development for severe CNS diseases, as well as other discovery programs targeting severe liver and lung diseases. The new company will focus on rare disease indications, while partnering out indications that apply to broader populations, Ironwood said.

Ironwood plans to make announcements over the coming months about the new company’s name as well as employee and leadership decisions.

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