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Ironwood, traditional drug maker, spins off edgy kid brother Cyclerion

Logo jackets for employees will help mark the debut of Ironwood’s spinoff, Cyclerion.David L. Ryan/Globe Staff/Globe Staff

Ironwood Pharmaceuticals, one of Cambridge’s largest biotech firms, is spinning off a new company Monday to treat rare diseases. And if you want a symbol of their diverging paths, look no further than the laboratory that Ironwood has used in the sleek, curved building it occupies on Binney Street.

Ironwood has leased more than 200,000 square feet on the first three floors for several years, and dozens of its scientists have worked in the second-floor lab. Now it will be used by the spinoff, Cyclerion Therapeutics, which has taken over that floor. Ironwood will operate from part of the first and third floors and won’t have its own lab.


The new setup was still a work in progress during a recent visit, based on the plastic moving boxes stacked in offices and tarpaulins on the floor. But it reflects the different priorities of Ironwood and Cyclerion.

Founded in 1998, Ironwood developed Linzess, a drug that treats irritable bowel syndrome accompanied by constipation, and brought it to market in 2012 with a corporate partner later bought by Allergan. Now Ironwood is doubling down on treating common gastrointestinal disorders — make that tripling down — with two experimental drugs in mid- and late-stage clinical trials.

In contrast, Cyclerion has five drug development programs, including two that haven’t even entered the clinic. The spinoff is focusing on novel treatments for rare and life-threatening disorders, such as sickle cell disease and conditions that affect the central nervous system, liver, and lungs.

Think of Ironwood as a mature traditional drug maker and Cyclerion as its edgy, risk-taking kid brother.

“These two companies are particularly well-positioned, post the spin[off], to really do great things,” said Mark Mallon, who joined Ironwood as CEO recently after 24 years at the British drug company AstraZeneca. “It was the right strategy at the right time.”


Peter Hecht, who cofounded Ironwood and served as its only chief executive, has moved over to Cyclerion to be its CEO. Given that Ironwood had evolved into a company with something of a split personality, he, too, said the separation was a good idea.

“I’m very bullish about it,” said Hecht, who has moved the office he shares with an assistant from the third to the second floor — along with a bag of his favorite jelly beans. “We’re going to make great medications for patients.”

As part of the tax-free spinoff, Ironwood shareholders will on Monday receive one share of Cyclerion stock for every 10 shares of Ironwood stock. Cyclerion will begin trading on the Nasdaq exchange Tuesday.

David Nierengarten, an analyst for Wedbush Securities in San Francisco who follows Ironwood, said the split was a “reasonable strategy” that played to the strengths of the two chief executives — Hecht in research and development and Mallon in marketing gastrointestinal franchises.

Both CEOs, in addition to promoting the potential benefits to patients, mentioned shareholders, repeatedly. That’s not by happenstance.

Ironwood announced it would split into two independent publicly traded firms last May, three weeks after it took the unusual step of telling shareholders that an activist investor, Alex Denner, was seeking to join its board.

Denner is the chief investment officer of Sarissa Capital Management, a Greenwich, Conn., hedge fund. He ran biotech investments for the famed corporate raider Carl Icahn before starting Sarissa in 2012 and made it clear in Globe interviews last spring that he wasn’t happy with Ironwood’s stock price.


Denner told the Globe it was “suboptimal” for the company to be marketing drugs for common disorders like irritable bowel syndrome at the same time it was working on treatments for rare diseases. He also said that sales of Linzess — more than $761 million last year — were lackluster, and he endorsed the spinoff.

But Hecht says that for years he had discussed with key shareholders the idea of splitting up Ironwood. Denner, he said, was “not a key protagonist in the story.”

“It’s an idea that we’ve talked about with a broad range of investors for many years,” Hecht said. He added, “I would give credit to the investors who did bring it up.”

Despite being one of only a handful of biotechs in Cambridge with a drug on the market, Ironwood has never been profitable and has plowed revenue from Linzess back into other drug development programs, including several that Cyclerion is now pursuing.

Ironwood’s new CEO, Mallon, said the company will be profitable from day one. It will also be considerably slimmer.

At the end of 2017, Ironwood had 730 employees, from executives to scientists to sales representatives, said Meredith Kaya, a company spokeswoman.

In its new incarnation, Ironwood will have about 330 employees, having moved about 140 workers to Cyclerion and eliminated roughly 260 jobs since January of last year, Kaya said. Most of the layoffs stemmed from Ironwood’s decision to stop selling lesinurad, a gout drug it had licensed from AstraZeneca in 2016 that posted disappointing sales.


Cyclerion is starting with about 140 employees, over half of them involved in drug discovery and development.

The new Ironwood is pushing to increase sales of Linzess, Ironwood’s only drug on the market. The company recently won approval from China to market the drug for irritable bowel syndrome with constipation, and company officials hope the medicine can reach blockbuster status, meaning at least $1 billion in sales.
Ironwood also has two potential drugs in mid- to late-stage clinical trials. One is an extended-release form of the compound in Linzess to treat abdominal pain linked to irritable bowel syndrome. The other is a compound to treat persistent acid reflux for the estimated 10 million Americans who are unable to get relief from proton pump inhibitors, the standard remedy.

Mallon, 56, a Framingham native, spent much of his career at AstraZeneca marketing gastrointestinal drugs in the United States and abroad, including in China.

It was in Shanghai, in 2011, that Hecht and Mallon first met, while the latter was working for AstraZeneca. Hecht said he was so impressed with Mallon that he repeatedly tried to recruit him to a leadership position at Ironwood. Hecht said he would have gladly worked for Mallon.

That’s not how it played out, though. Hecht, 55, will be working just a floor below him, running the spinoff. Cyclerion has five drug development programs, in various stages, and hopes to tackle diseases ranging from sickle cell to dementia to a form of heart failure.


“This is going to be a heck of a turbocharged startup,” he said.

Jonathan Saltzman can be reached at,