Born as Microbia over twenty years ago, Ironwood Pharmaceuticals(IRWD) trades just 21% above its 2010 IPO price. It has managed to get to market with LINZESS, a treatment for IBS. Partnered with Allergan(AGN), LINZESS did $761.2 million in 2018 US sales. Now, Ironwood will be spinning off much of its R&D business as Cyclerion. Current Ironwood CEO and founder Peter Hecht will be joining Cyclerion as CEO, while Mark Mallon will become CEO of Ironwood. It is expected that Ironwood will be profitable following the transaction.
Cyclerion, which will work on advancing its soluble guanylate cyclase (sGC) programs targeting breakthrough treatments for serious and orphan diseases, has announced plans to raise up to $175 million in a private placement following the spinoff. This is expected to fund two years of development including 4 data readouts later this year.
Cyclerion’s Form 10 has already been declared effective, and the spinoff date is rapidly approaching. Ironwood shareholders as of close of business on March 19, 2019 will be entitled to receive shares of Cyclerion stock. Shareholders will receive one share of Cyclerion stock for every ten shares of Ironwood stock held. The distribution will take place on April 1. Cyclerion stock will begin regular way trading on April 2 under the ticker symbol CYCN. The transaction is expected to be tax-free to shareholders.
Disclosure: The author holds no position in any stock mentioned
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