GREENWICH, Conn., May 31, 2018 /PRNewswire/ -- Sarissa Capital Management LP today made the following statement regarding Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD).
We believe the plan to separate Ironwood's R&D programs from its commercial business is a good first step toward creating shareholder value at Ironwood while preserving strategic optionality. In meeting with Ironwood we advocated for separation as one of the ways to create shareholder value. However, as we have previously stated, the details of the spin are of paramount importance.
Alex Denner, Ph.D., Chief Investment Officer of Sarissa Capital, stated, "I respect the members of the board and believe that they are good people. The numerous conversations we have had since March have been productive. I have expressed to Terrance McGuire, the Chairman of Ironwood, our views on how to maximize value for shareholders via the spin. While he has indicated that the board is still discussing the optimal design of the spin, they have been receptive to our input."
We also advocated for the spin of Bioverativ from Biogen which created $11.6 billion of value from a company with an initial market capitalization of $4.9 billion. We believe the Ironwood spin should pursue the Biogen/Bioverativ model. In other words, the two companies should be completely separate (except for transition service agreements, etc.) with no cross-ownership. Each company should have governance similar to Bioverativ with unclassified boards, no supervoting stock, no supermajority voting provisions, etc. Importantly, the R&D spinco should have only enough cash to transition to having the capital markets provide funding for its programs.
- The two post-spin companies should be completely separate entities without cross-ownership.
- Each company should have modern, shareholder-friendly governance without classified boards, supervoting stock, etc.
- Capital allocation should be optimal. For example, adding significant debt to one company to capitalize the other or an IPO of 20% of one of the companies in order to capitalize the other would destroy significant shareholder value.
Dr. Denner continued, "One of our primary issues with Ironwood has been the fact that its commercial efforts are sub-scale. Pursuing a separation of the commercial business is a good first step to address the problem. Based on our productive discussions and the announcement of the spin, we are supporting the board at this time. We look forward to continuing the discussions on the spin and other strategic matters with the board."
SOURCE Sarissa Capital Management LP