Cowen Compares: Allergan’s and Ironwood’s Linzess Vs. Synergy Pharmaceuticals’ Trulance


Allergan (NYSE:AGN) and Ironwood Pharmaceuticals (NASDAQ:IRWD) announced this morning the approval of the 72 mcg formulation of Linzess for the treatment of chronic constipation in adults.

Earlier this month, Synergy Pharmaceuticals Inc (NASDAQ:SGYP) secured approval for Trulance, a new constipation drug that will compete against Linzess.

From a competitive perspective, Cowen analyst Boris Peaker believes that even if Trulance can compete very effectively in this patient population, he sees limited impact on overall Linzess sales. The analyst also points out that both the Trulance and Linzess labels have black box warnings for pediatric risk of dehydration and are contraindicated in this population. Both labels also highlight the risk of severe diarrhea with recommendations to suspend dosing in such instances.

“We continue to believe physicians will view the two products as very similar, but remain more comfortable with Linzess’ safety and efficacy due to their experience with it over the last 4+ years. We believe Trulance’s uptake will be primarily determined based on Synergy’s resources and ability to establish payor relationships and not on the diarrhea and efficacy differences with Linzess,” Peaker noted.

The analyst concludes, “The diarrhea rates are similar to the 145mg dose, which is a disappointing finding. However, since we always expected an incremental benefit from the 72mcg dose, we see very limited downside with today’s news and don’t anticipate Linzess script trajectory to change significantly.”

Peaker reiterated an Outperform rating on shares of Ironwood Pharma, with a price target of $16, which represents a potential upside of 13% from where the stock is currently trading.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Boris Peaker has a yearly average return of -0.7% and a 36% success rate. Peaker has a 10.1% average return when recommending IRWD, and is ranked #3347 out of 4378 analysts.

Out of the 11 analysts polled in the past 12 months, 5 rate Ironwood Pharmaceuticals stock a Buy, 5 rate the stock a Hold and 1 recommends Sell. With a return potential of 5.7%, the stock’s consensus target price stands at $14.91.

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