Eager for Linzess successor, Ironwood pays $1B for VectivBio and its phase 3 GI drug

Having tasted blockbuster success with its irritable bowel syndrome (IBS) drug Linzess, Ironwood Pharmaceuticals is willing to pay $1 billion for the chance to make lightning strike twice.

The all-cash transaction will see Ironwood put up $17 per share of VectaBio to acquire the Swiss biotech at an 80% premium on the company’s average trading price over the last 90 days. To foot the bill, Ironwood will draw on its cash on hand as well as a four-year $500 million credit facility set up specifically for this purpose.

The prize is VectivBio’s lead asset apraglutide, a GLP-2 analog in a late-stage trial for short bowel syndrome with intestinal failure (SBS-IF), for which a readout is due later this year. The drug is also in a phase 2 study for acute graft-versus-host disease.

Around 18,000 patients in the U.S., Europe and Japan have SBS-IF, meaning they require fluids and nutrients to be administered intravenously, Ironwood explained in the May 22 press release. With its “convenient weekly dosing and potential expansion into additional GI conditions,” the company said it believes apraglutide has the potential to be the best-in-class GLP-2 therapy for SBS-IF, reaching the coveted $1 billion peak net sale mark.

Today’s deal “advances Ironwood’s vision of becoming the leading GI healthcare company,” the biotech said. “The acquisition of VectivBio, including its compelling asset, apraglutide, is an ideal strategic fit with Ironwood,” Ironwood CEO Tom McCourt added in the release.

Ironwood certainly has space for another asset, with the company’s portfolio having shrunk after dropping a couple of candidates back in 2020. Apraglutide will join a narrow clinical-stage pipeline consisting of IW-3300, which is in a phase 2 trial for interstitial cystitis and bladder pain syndrome, as well as CNP-104, a primary biliary cholangitis drug licensed from Cour Pharmaceuticals.

McCourt pointed to his company’s success with Linzess as proof that apraglutide is in good hands. Linzess, which is marketed by Ironwood along with AbbVie, has reached blockbuster status in IBS, bringing in more than $1 billion in net sales in 2022 alone.

The biotech ended March with $740 million in cash and equivalents and announced today that adding apraglutide to its portfolio could extend the company’s “growth horizon through the 2030s.”