Categories Earnings Call Transcripts, Health Care

Ironwood Pharmaceuticals, Inc. (IRWD) Q4 2021 Earnings Call Transcript

IRWD Earnings Call - Final Transcript

Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD) Q4 2021 earnings call dated Feb. 17, 2022

Corporate Participants:

Matt Roach — Director of Investor Relations

Thomas McCourt — Chief Executive Officer

Michael Shetzline — Senior Vice President, Chief Medical Officer and Head of Research and Development

Sravan K. Emany — Chief Financial Officer

Analysts:

Boris Peaker — Cowen — Analyst

Eric Joseph — JPMorgan — Analyst

Tim Chiang — Northland Securities — Analyst

Unidentified Participant — — Analyst

Presentation:

Operator

Ladies and gentlemen, good morning, my name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals’ Fourth Quarter and Full Year 2021 Investor Update Conference Call. Today’s conference is being recorded and all lines have been placed on mute to prevent any background noise. [Operator Instructions]

And I would like to introduce Matt Roach, the Director of Investor Relations. Mr. Roach, you may begin your conference.

Matt Roach — Director of Investor Relations

Thank you, Abby. Good morning and thanks for joining us for our fourth quarter full year 2021 investor update. Our press release crossed the wire this morning can be found on our website. Today’s call and accompanying slides include forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially. A discussion of these statements and risk factors is available on the current safe harbor statement slide, as well as under the heading Risk Factors in our quarterly report on Form 10-Q for the quarter ended September 30, 2021, and in our future SEC filings. All forward-looking statements speak as of the date of this presentation, and we undertake no obligation to update such statements. Also included are non-GAAP financial measures, which will be considered only as a supplement to and not a substitute for or superior to GAAP measures.

To the extent and applicable, please refer to the tables at the end of our press release for reconciliations of these measures to the most directly comparable GAAP measures. During today’s call, Tom McCourt, our CEO, will begin with an overview and provide an update on the commercial performance of LINZESS. Mike Shetzline, our Chief Medical Officer, will provide an update on our pipeline; Sravan Emany, our Chief Financial Officer reviewing our financial results and guidance. Today’s webcast includes from slides, for those of you dialing in, please go to the events section of our website to access the accompanying slides.

With that, I will turn the call over to Tom.

Thomas McCourt — Chief Executive Officer

Thanks, Matt. Good morning, everyone, and thanks for joining us today. When I became CEO last year, I was energized about the commitment to developing innovative solutions in the area of high unmet need in GI. In 2021, we made significant progress against this important mission. I am proud of the Ironwood team who, even through the ongoing pandemic with resistant and their commitment to advancing the treatment of GI diseases and redefining the standard of care for patients.

Thanks to the hard work and dedication, we closed out the year with a lot to be proud of. We started 2021 with a clear road map, which included three strategic priorities. One, maximizing LINZESS; two, strengthening our innovative GI pipeline; and three, deliver sustained profits to generate cash flow. By the end of 2021, I’m excited to report that we made tremendous headway across all three of these key pillars.

Let’s begin on Slide 6, with a quick overview of some of our highlights and achievements in 2021. First, LINZESS has been an extraordinarily resilient market leading brand that continue to deliver strong demand growth and profitability. In 2021, I’m proud to share that LINZESS achieved blockbuster status exceeding $1 billion in U.S. net sales, representing 8% growth year-over-year. Prescription demand grew a robust 12% year-over-year and commercial margins were 74%. The continued impressive LINZESS performance is no small deal. And I want to acknowledge the dedication of our team who made this achievement of $1 billion in sales a reality. In addition, we previously announced that the FDA approved a revised label for LINZESS modifying the prior box warning, which included all children under 18 years of age to the warning of a risk of serious dehydration and contraindication against use in children to less than two years of age. This label change is a significant accomplishment for the team as we continue to advance the pediatric program.

As a reminder, LINZESS is not currently approved for the use in patients under 18 years of age. Next, we strengthened our pipeline by entering into a collaboration and license option agreement with COUR Pharmaceuticals to develop and commercialize CNP-104, which, if successful, has the potential to be the first approved disease-modifying therapy for primary biliary cholangitis. In addition, the advanced IW-3300, our wholly-owned asset for the treatment of visceral pain conditions and our linaclotide pediatric development program in IBS-C and functional constipation. Mike will elaborate on these exciting pipeline updates in a few moments.

Finally, we ended the year with $528 million in GAAP net income, which includes a $338 million non-recurring income tax benefit related to the release of valuation allowance in the second quarter of 2021. Adjusted EBITDA of $234 million at $620 million in cash and cash equivalents, a significant increase from the end of 2020. Also, we initiated our board authorized share buyback program with $27 million of shares repurchased as of the end of 2021.

Another important highlight in 2021 was the addition of several experienced leaders including Andrew Davis, our Chief Business Officer; John Minardo, our Chief Legal Officer; and most recently, Sravan Emany, our Chief Financial Officer. We’re thrilled that Andrew, John and Sravan have joined the team, and I’m honored to be at the helm of a very talented group of leaders, uniquely capable of advancing our mission and ushering in a new era in growth and innovation at Ironwood, as we look to continue to grow the company and our pipeline to address areas of GI diseases.

Now let’s turn our attention to LINZESS, starting on Slide 7. Ironwood has had tremendous success with LINZESS from its inception to its recent achievement of blockbuster status, and it continues to serve as the backbone of the company. As I mentioned a few moments ago, LINZESS prescription demand increased 12% year-over-year in 2021, resulting in U.S. net sales of over $1 billion. LINZESS ended the year with approximately 44% total prescription share, a new record high for the brand. As you can see on Slide 8, new-to-brand prescription growth increased a robust 15% year-over-year, which outpaced the market. In addition, 90 day prescription growth has continued to increase over time, making up approximately 20% of the business as of the end of 2021.

Turning to Slide 9. It’s not every day that a brand achieved blockbuster status and it doesn’t happen by exit. First, LINZESS has demonstrated an improvement in constipation plus overall abdominal symptoms, which is important in the treatment for adults with IBS-C were often frustrated by bloating, pain and discomfort. Additionally, the strong brand awareness has helped LINZESS become the number prescribed branded treatment for adults with IBS-C and chronic constipation by gastroenterologists and primary care physicians. This robust momentum and market leadership position has enabled us to refine our overall marketing mix and investment over time, while we continue to deliver strong demand growth and expand brand margins. We expect to continue to grow LINZESS through patient activation, refined professional promotion, our class-leading payer access and by pursuing future life cycle management opportunities.

Looking ahead, we’re confident in our strategy and in the future, and we will continue to focus on delivering value to our patients and shareholders. We believe the investments we’re making in the brand and in our pipeline will position our company for long-term growth. Since joining the company in 2009, I see firsthand the outstanding capabilities of the Ironwood team in advancing our development and commercialization strategies as well as our unsurpassed level of commitment to making a positive difference for millions of patients affected by GI diseases. I’m very honored to lead this organization full of talented people, and I look forward to continuing to build upon Ironwood’s success as we plan for 2022 and beyond.

I’ll now turn the call over to Mike to discuss our pipeline and clinical development efforts. Mike?

Michael Shetzline — Senior Vice President, Chief Medical Officer and Head of Research and Development

Thanks, Tom. We’re thrilled that we have expanded our pipeline as we seek to bring new potentially first-in-class therapies to patients suffering from GI diseases and disorders that we think we can impact in a clinically meaningful way.

I’ll start with the linaclotide pediatric program on Slide 11. Functional constipation affects an estimated 4 million to 6 million, six to 17 year olds in the U.S. and there are currently no FDA-approved prescription pediatric therapies for functional constipation. We believe this is a significant opportunity to potentially expand the clinical utility of LINZESS to this large patient population. We’re excited to continue to advance this program, and we expect the functional constipation study in six to 17 year olds to read out in the second half of this year.

Next is an update on IW-3300. I’m pleased to share that our clinical study is officially underway. IW-3300 is a guanylate cyclase-C agonist and a wholly-owned asset for the potential treatment of visceral pain conditions, such as interstitial cystitis, bladder pain syndrome and endometriosis. Interstitial cystitis and bladder pain syndrome affect an estimated 4 million to 12 million Americans according to the Interstitial Cystitis Association. These diseases have a limited number of treatment options available and significantly impact the patient quality of life.

The scientific evidence to-date supports the opportunity for IW-3300, acting in the colon to offer a pain benefit to other visceral organs to mechanism known as crosstalk. Crosstalk is a biological phenomenon where sensations of injury originating in one abdominal or visual organ can result in altered sensation in a nearby organ because of overlapping nerve pathways. We’re particularly excited about the launch of this Phase I study as it will be the foundation to clinically test a crosstalk hypothesis in humans for the first time later this year.

Next, CNP-104. We’re tapping into external partners as we identify opportunities to meaningfully advance novel GI treatments for patients, where we can leverage our GI expertise and resources to help drive success. We’re thrilled to collaborate with COUR on CNP-104 for primary biliary cholangitis, which is a prime example of our strategic approach to enhancing our pipeline. PBC is a slowly progressive and debilitating rare autoimmune disease to the liver that affects an estimated 133,000 people in the U.S. Apparently, there’s no approved therapy that addresses the underlying pathology for root cause of bile duct destruction in PBC. The loss of bile duct is fundamental to this disease and leads to decreased bile secretion and the retention on toxic substances they deliver, resulting in continuous hepatic damage, which can ultimately require a liver transplant.

Since signing the agreement with COUR, CNP-104 has been granted Fast Track designation by the U.S. FDA, underscoring the significant unmet medical need of patients with PBC. We’re also pleased to share that COUR has initiated the clinical study of CNP-104, which will look at safety, tolerability, pharmacodynamics and efficacy with the readout currently expected in 2023. We recently participated in a virtual symposium leading experts in gastroenterology and hepatology to discuss the impact of PBC and existing gaps in care and treatment. During this forum, many leading gastroenterologists and hepatologists who treat PBC highlighted the importance of stopping the progression of liver bile duct destruction that is foundational for this disease.

So you can see why we’re really excited about this clinical program. We believe CNP-104 has the potential to shift the treatment paradigm in PBC and could be the first truly disease-modifying therapy for this condition, if successful and potentially a real game changer for patients suffering with PBC. This collaboration with COUR allows us to expand our pipeline, leverage our deep relationships within the GI community and advance innovation via differentiated opportunities.

We believe COUR’s expertise in immune programming and Ironwood’s development and commercial strength as well as reach in the GI disease area will help advance this exciting program. And this is how we plan to focus our business development efforts going forward on assets that are highly differentiated, or get clear unmet medical needs, have an established method of action and provide clear decision points. And we’re seeking to identify more assets like this as we further build out our pipeline.

I’ll now turn it over to Sravan to review our financial performance.

Sravan K. Emany — Chief Financial Officer

Thanks, Mike, and good morning, everyone. I’m excited to be part of such a team, great team here at Ironwood and a great culture. As the new CFO, it is fantastic to report such great numbers and see how much Ironwood has strengthened its financial position over the past few years.

I would like to provide a few updates. First, I will highlight our fourth quarter and full year 2021 performance. Then I will discuss our capital allocation strategy and finally, I’ll review our 2022 guidance. Please refer to our press release for our detailed financial information.

I’ll start on Slide 13 with LINZESS. U.S. net sales were $279 million in the fourth quarter of 2021, a slight increase over the fourth quarter of 2020. As a reminder, we saw fewer inventory channel fluctuations in 2021, which resulted in favorable net sales growth in the first half of the year, resulted in a dampening of net sales growth in the second half. Going forward, we expect quarterly inventory channels levels similar to 2021. For full year 2021, U.S. LINZESS net sales were $1.6 [Phonetic] billion, an 8% increase compared to full year 2020. Growth was mostly driven by robust prescription demand. Turning to LINZESS brand profitability. Commercial margin in the fourth quarter of 2021 was 76%. For full year 2021, commercial margins were 74% versus 72% for full year 2020.

Moving to Ironwood revenues. In the fourth quarter, Ironwood revenues were $117 million. For full year 2021, Ironwood revenues were $414 million, with U.S. LINZESS collaboration revenues of $400 million. Ironwood U.S. LINZESS collaboration revenues increased 9% compared to full year 2020. GAAP net income was $41 million in the fourth quarter of 2021 and $528 million for the full year, which includes a non-recurring income tax benefit of $338 million, which was recorded in the second quarter relating to the release of our valuation allowance against the majority of our deferred tax assets. Adjusted EBITDA was $57 million in the fourth quarter of 2021, which includes $19.5 million in expenses associated with the COUR option agreement. Adjusted EBITDA was $234 million for full year 2021.

Moving to cash and capital allocation priorities on Slide 14. We are in a unique position of being a profitable biotech company that is delivering meaningful cash flow. In the fourth quarter, we generated $65 million in cash flow from operations and $262 million for the full year 2021, and ended the year with $620 million in cash and cash equivalents, up from $363 million at the end of 2020. We continue to execute our board authorized share repurchase program of up to $150 million that runs through the end of this year.

As previously mentioned and announced at the JPMorgan Healthcare Conference in January, we repurchased $27 million of shares of our common stock as of December 31. And we repurchased an additional $51 million of shares through February 15, 2022. We believe we are positioning our company for future success by maximizing LINZESS growth and actively pursuing innovative, highly differentiated GI assets to bolster our portfolio. We continue to take a balanced and disciplined approach to capital deployment and remain focused on identifying and investing in opportunities that we believe will create value for our patients and shareholders over the long-term.

Next, I’ll review our 2022 guidance on Slide 15. As we previously stated in January, we expect LINZESS net sales growth in the low single-digits. We again anticipate continued double-digit prescription demand growth. Over time, we have continued to refine our investment in the brand to support demand growth, improve brand margins and ultimately maximize Ironwood cash flow. In 2022, we made an investment to maintain broad payer access, which we anticipate will result in high single-digit price erosion this year. We expect to manage price erosion to be more modest in 2023. Next, we expect total Ironwood revenue of $420 million to $430 million. And lastly, we expect adjusted EBITDA of greater than $250 million.

So as you can see, we are pleased with the progress we made in 2021, successfully driving LINZESS growth, leading it to blockbuster status, adding CNP-104, a potential game-changing asset to our pipeline, advancing IW-3300, and then linaclotide pediatric program and initiating our share repurchase program. With this momentum carrying us forward, coupled with our current balance sheet and skilled management team, we have confidence in our ability to pursue new GI assets that potentially will help us make a difference for patients and help grow our position as a leading GI health care company in the United States. We are excited about the work ahead of us, and we’ll continue to keep you posted on our progress.

Operator, you may now open up the line for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And we will take our first question from Boris Peaker with Cowen.

Boris Peaker — Cowen — Analyst

Good afternoon — good morning, yes. Question on 3300. Can you discuss what you need to see in the data update later this year to invest further in this drug? And are there any kind of reference data sets or reference drugs that we should be considering when we’re looking at this data?

Sravan K. Emany — Chief Financial Officer

Good morning, Boris, this is Sravan. I’ll hand it over to Mike to answer that question.

Michael Shetzline — Senior Vice President, Chief Medical Officer and Head of Research and Development

Yeah, sure. So for 2022, we’re actually, again, excited to kick off the program, the clinical program, as we said, started in quarter one 2022. It’s a significant undertaking because it’s a very well-established medical need. So to your point, through 2022, we’re going to complete the Phase I program. So we’ll have data available from a safety and tolerability perspective, and we do plan to kick off what we call the Phase II proof-of-concept studies later this year.

So that design of that study is actually being worked on as we speak today. But it’s also found that in other analogs, there are a couple of products approved for bladder pain syndrome. They don’t work well from the information we get from externals, that’s just a clinical opinion. But — and that’s one of the reasons why we think the medical need is quite significant. So using those analogs, we’re sort of designing the program. And of course, we’ll run it by the FDA to get their feedback as well. But it really is looking at the symptomatic improvement of patients suffering for visceral hypersensitivity from bladder pain syndrome.

Boris Peaker — Cowen — Analyst

Got it. And my last question is obviously, the valuation of biotech have come down quite significantly. You guys seem to be actively buying back your own shares. I’m just curious if with this new revaluated environment, are you being more aggressive in M&A? Is that an objective? Or are you happy with the pipeline you have right now more focused on just returning cash to shareholders via buyback?

Sravan K. Emany — Chief Financial Officer

Yeah. Thanks, Boris. Look, I think from where we stand today, again, I think we’ve said it a few times now that we’re going to be pretty disciplined with our capital allocation strategy, whether that’s deploying capital for future acquisitions or for repurchasing our own shares. And I think part of that comes down to when we find an opportunity makes sense for us, and that we think creates value, we’ll actively pursue it, part of it’s finding those opportunities, but we’re open to whatever makes sense in the best interest of shareholders.

Thomas McCourt — Chief Executive Officer

Yeah, Boris, this is Tom. A couple of our thoughts, too. I think the thing that’s been really kind of remarkable to me is the other resilience of LINZESS and our ability to continue to refine the marketing mix and the investments to really drop bigger numbers to the bottom line, which is going to set us up for the future. And I think CNP-104 is a classic example of a really area of significant high unmet need and a potential game changer for the treatment. And it’s assets like that, that we would be excited to be able to bring on board and get through proof-of-concept to determine whether we continue to invest in the future. So we’re very excited about where we are right now. I think about where we were three years ago. And I think the team has just done a really strong job in kind of getting us on the right track.

Boris Peaker — Cowen — Analyst

Great. Thank you very much for taking my questions.

Operator

And we will take our next question from Eric Joseph with JPMorgan.

Eric Joseph — JPMorgan — Analyst

Hey, good morning, guys. Thanks for taking the questions. Just picking up on the pediatric opportunity. Any color that you might be willing to share in terms of the type of uptake you’d be expecting within that around 5 million patient — patients or children the functional constipation that you’re setting [Phonetic] here. Do you have a sense of how many children [Technical Issues].

Sravan K. Emany — Chief Financial Officer

Good morning, Eric and thanks for your question. I’ll hand it to Tom and then Mike.

Thomas McCourt — Chief Executive Officer

Yeah. I mean, what I can share with you is really kind of what we’ve learned in market research in this space. And the reality is there’s really not many good options for kids. And as Mike mentioned earlier, there’s nothing actually currently approved for pediatric constipation or IBS. I think there’s a couple of sizable pieces to this marketer. One is the adolescent population, which is probably the most visible high-need population that I think we can access very quickly. These a lot of these patients are treated both by gastroenterologists as well as primary care physicians. And they’re actively seeking here. I think the one difference in this population is when these kids are suffering, they’re actively engaging physicians for help. And I think to have a drug that’s actually approved and cannot only improve constipation symptoms, but also improve abdominal symptoms is a huge step forward for this population. Mike, maybe you can comment further with regard to kind of your clinical view of the need and the opportunity.

Michael Shetzline — Senior Vice President, Chief Medical Officer and Head of Research and Development

Yeah. I think similarly, the key is that constipation in general is a significant medical morbidity for patients and primarily actually in one of the populations we’re studying and the study don’t read out labor this year is the six to 17 year old. So from a functional constipation perspective, from an IBS-C perspective or IBS with constipation perspective, there are fairly prevalent conditions in the pediatric population. And as I mentioned, as you know, they sort of rotate through laxatives, they don’t have really good alternatives and nothing is currently approved. So that’s why we’re really excited to see the data at the end of this year in the six to 17 year-old population, because moving forward, with improving symptoms about frequency in patients with functional constipation could provide a real good therapy for patients in this patient population.

Thomas McCourt — Chief Executive Officer

One other closing saw this, Eric. And I mentioned there’s always been this question as far as drug safety in the younger population. And due to the hard work of Mike and his team, they’ve really kind of resolved many of those concerns, both with regard to the basic science as far as what was hypothesized when we launch a drug, but more importantly, what we’re seeing in the clinical data that this drug does look like as well effective and well tolerated. We’re going to continue to work with the FDA to make sure that it’s going in the right direction. But we do see this as a very sizable commercial opportunity.

Eric Joseph — JPMorgan — Analyst

I was just trying to — Mike to get a little more help for the premium expectations for the readout in the second half, which is the total study side, what might be — what the trial is powered to go in terms of improvement in FDM and really whether those — that data set is positive would be used for the purposes of labeling expansion.

Michael Shetzline — Senior Vice President, Chief Medical Officer and Head of Research and Development

Yeah. So the current study, which is a six to 17 year-old study, looking at — it’s looking at improving bowel function, obviously, at six to 17 year olds with diagnosed functional constipation. So at that level and as with other constipation disorders, that’s really founded in an improvement in bowel function, about movement frequency, spontaneous bowel movement measurements. They’re sort of the end points and what we’re looking for seeing improvement in bowel movement function in those patients. And that hopefully will give us a path to an indication for functional constipation. Clearly, we’ve got to see the data at the end of the year. We’ll have discussions with the agency actually earlier this year to prepare for that. And it will obviously be data-driven and discussion with the agency endeavor to move that forward.

Eric Joseph — JPMorgan — Analyst

Okay. Great. A final question, if I could. Strong commercial margin for LINZESS exited fourth quarter. How should we be thinking about the trend in 2022? You talked earlier about sort of additional spend for the franchise. Any — I guess, diminishing of that commercial margin we should be anticipating.

Sravan K. Emany — Chief Financial Officer

Yeah. So first of all, let me just take a step back, Eric, and just say, look, we’re really proud of where LINZESS is from a profile perspective in terms of having a brand that’s thriving and being able to produce double-digit prescription in demand growth year-over-year, 10 years into its life cycle. At the same time, we’ve been pretty prudent in terms of what goes into our commercial spend to maintain that. And as Tom had mentioned, and I think we talked about a little earlier, we’ve made some choices as to where to make those investments in either payer access, marketing, etc, to manage and drive that prescription demand growth, because we think that’s the ultimate driver of overall profitability and ultimate driver of overall cash flows for the company.

Specifically to your question, what I would say is, look, I think like every other CFO, I’d be launching if didn’t mention that, we’re in an inflationary environment, right, and like the broader economy, we’re exposed to inflation near repressions within our business, whether that’s labor and the like. And so we continue to monitor that. But I think from where we stand today from a commercial margins perspective, I think we’re — hold steady about where we’re at for 2022 and continue to drive profitability through cost containment.

Thomas McCourt — Chief Executive Officer

Yeah. Just one other — thanks, Sravan. Just one other comment. As I think about this is, we talked about the momentum that this brand has in the market, which has allowed us to really tune up the marketing mix. And as you know, we have dramatically pulled back on personal promotion, which is one of the biggest ticket items with regard to expense, and we haven’t seen the demand growth waiver which says a lot for the effectiveness of this drug in the marketplace and ongoing growth. But obviously, we continue to look at promotional response. We look at investment both on the consumer and the professional side. And of course, the payer mix is also critically important, which has continued to enable patients to easily access the drug.

Eric Joseph — JPMorgan — Analyst

Okay. Excellent. Thanks guys for answering the questions.

Sravan K. Emany — Chief Financial Officer

No problem.

Operator

And we will take our question from Tim Chiang with Northland Securities.

Tim Chiang — Northland Securities — Analyst

Thanks. Hey Tom, just given the revaluation in a lot of pharma biotech names, have you guys considered looking at other existing approved products complement LINZESS, just given the fact that you already have a commercial infrastructure in place?

Sravan K. Emany — Chief Financial Officer

So Tim, this is Sravan. Look, I’ll start by saying that we don’t comment on business development activities as a standard of course. What I will say is, look, we are open from a strategic direction perspective to whatever creates the most amount of value for the company, and we will evaluate any and all opportunities that we think can and drive that for us. So it’s a broad answer to your question. I appreciate that, but you’re not going to get specific about where and what we’re looking at.

Thomas McCourt — Chief Executive Officer

Yeah. I mean just — I mean, I agree, I think this is — the environment is changing, which could create nice opportunities for us. And the team is looking at a lot of different things right now, Tim. I think we have a number of opportunities in front of us that we’re critically evaluating and working closely with our Board to make sure that we’re making very sound decisions for you as an investor.

Tim Chiang — Northland Securities — Analyst

Okay. Great. And maybe just a follow up. Just on — I know you guys have provided 2022 guidance, which I think is — which is solid. But, do you guys expect R&D expenses to ramp up this year? Or is it more of a flat type of year for R&D?

Sravan K. Emany — Chief Financial Officer

Yeah. So just as a reminder, taking a step back, last year in 2022 — in 2021 with respect to R&D expenses, first of all, one, Tim, we don’t give guidance on R&D expenses, I think, is the first one. We just talk about EBITDA. But what I would say is our 2021 R&D expense included about $19.5 million associated with the COUR license option agreement, and we don’t expect those costs to recur in 2022. At the same time, we’ve got some interesting things that we’re looking to get readouts on this year, specifically pediatrics and the progress we’re making on IW-3300 and I’m sorry, CNP-104 itself. So I’d just say that we don’t have those recurring costs, we don’t provide guidance on that.

Tim Chiang — Northland Securities — Analyst

Okay, great. Thanks.

Operator

And we will take our next question from Jacob Hughes with Wells Fargo.

Unidentified Participant — — Analyst

Good morning. It’s Nick on…

Thomas McCourt — Chief Executive Officer

Good morning, Jacob.

Unidentified Participant — — Analyst

Hey, it’s Nick on for Jacob. Thanks for taking the questions.

Thomas McCourt — Chief Executive Officer

Hi, Nick.

Unidentified Participant — — Analyst

Just one from us. Is there any update you can share on the LINZESS OTC pathway and maybe what progress you expect into this year?

Sravan K. Emany — Chief Financial Officer

Well, thanks for the question. At this time, we don’t have an update on the OTC pathway and we’ll provide an update when we have one.

Thomas McCourt — Chief Executive Officer

Yeah. I would just comment, I think that’s spot on, Sravan. And we’re still working through that, obviously, with our partner to look at feasibility and the timing of that. So right now, we’re primarily focused on getting — moving the pediatric program forward and resolving any outstanding questions that the FDA may have on drug safety before we can even really move forward with the OTC assessment.

Unidentified Participant — — Analyst

Got it. Thank you.

Operator

Ladies and gentlemen, that concludes our question-and-answer session. [Operator Closing Remarks]

Disclaimer

This transcript is produced by AlphaStreet, Inc. While we strive to produce the best transcripts, it may contain misspellings and other inaccuracies. This transcript is provided as is without express or implied warranties of any kind. As with all our articles, AlphaStreet, Inc. does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Neither the information nor any opinion expressed in this transcript constitutes a solicitation of the purchase or sale of securities or commodities. Any opinion expressed in the transcript does not necessarily reflect the views of AlphaStreet, Inc.

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