Ironwood Pharmaceuticals Inc <IRWD.O> said on Tuesday it will cut about 100 jobs after its therapy to treat digestive disorder refractory gastroesophageal reflux failed to significantly reduce heartburn severity in a late-stage trial.
Shares of the drugmaker fell 8% to $8.80, after the company also said it would discontinue development of the treatment, IW-3718.
Ironwood expects to incur one-time costs of about $10 million to $12 million in connection with discontinuing trial and planned reduction in workforce.
It said it will focus on growth of its constipation drug, Linzess, marketed by AbbVie Inc <ABBV.N>. Linzess is on track to bring in more than $1 billion in sales, Ironwood reiterated on an investor call.
Even in the face of the COVID-19 pandemic, the company said it was seeing steady growth in Linzess. Its sales increased 5% to $219 mln in the second quarter this year.
"As part of this workforce reduction and in light of recent changes in market dynamics related to the COVID-19 pandemic, Ironwood plans to restructure its commercial organization," the company said.
It said it plans to implement a restructuring that will affect both field-based and home-office employees.
The planned reduction of nearly 35% of the company's workforce is expected to be completed in the first quarter of 2021.
These changes will result in total cost savings of greater than $95 million, the company said.
(Reporting by Dania Nadeem in Bengaluru; Editing by Shinjini Ganguli)
