Ironwood bulks up on digestive therapies with $1.15 billion VectivBio buy

By Raghav Mahobe

(Reuters) -Ironwood Pharmaceuticals Inc said on Monday it would buy Switzerland-based drug developer VectivBio Holding AG for $1.15 billion, adding a promising treatment for digestive disorders to its portfolio.

Ironwood has offered $17 per share for VectivBio, a premium of about 43% to the stock's last close.

VectivBio's shares were at $16.21 in morning trade, while Ironwood's stock fell 4.5% to $10.

The deal, expected to close in the second half, will help ease Massachusetts-based Ironwood's dependence on bowel disease drug Linzess, which it sells along with AbbVie.

AbbVie reported first-quarter U.S. sales of $250.2 million from Linzess.

VectivBio is developing apraglutide for a type of short bowel syndrome, where the body is unable to properly absorb nutrients and can be potentially fatal.

Data from a late-stage study is expected by year-end.

Ironwood hopes the treatment will become a blockbuster therapy, banking on a longer dosing interval and potentially better effectiveness to help it compete against other treatments.

"There's certainly challenges with daily injections versus a once-week injection. But I think what's going to really drive it (apraglutide) is the overall efficacy of the drug," Ironwood CEO Thomas McCourt said in a conference call.

The deal would add to its earnings from 2026, Ironwood added, with a successful commercialization of the therapy.

The disease has an estimated addressable population of 18,000 adult patients in the U.S., Europe and Japan, according to the companies.

Apraglutide belongs to a class of treatments known as GLP-2s, which includes Takeda Pharmaceutical's Gattex that is already approved to treat short bowel syndrome and needs to be injected daily.

(Reporting by Raghav Mahobe in Bengaluru; Editing by Janane Venkatraman, Shounak Dasgupta and Sriraj Kalluvila)