Meredith Kaya - Director of Investor Relations Peter M. Hecht - Co-Founder, Chief Executive Officer and Director Thomas A. McCourt - Chief Commercial Officer and Senior Vice President of Marketing & Sales Mark G. Currie - Chief Scientific Officer, President of Research & Development and Senior Vice President Michael J. Higgins - Chief Financial Officer, Chief Operating Officer, Principal Accounting Officer and Senior Vice President

Ravi Mehrotra - Crédit Suisse AG, Research Division Irina Rivkind - Cantor Fitzgerald & Co., Research Division Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division Jason M. Gerberry - Leerink Swann LLC, Research Division Raghuram Selvaraju - Aegis Capital Corporation, Research Division Gary Nachman - Goldman Sachs Group Inc., Research Division Juan F. Sanchez - Ladenburg Thalmann & Co. Inc., Research Division Gregory R. Wade - Wedbush Securities Inc., Research Division David Friedman - Morgan Stanley, Research Division Patricia L. Bank - DISCERN Investment Analytics, Inc David W. Maris - BMO Capital Markets U.S. Mario Vincent Corso - Mizuho Securities USA Inc., Research Division Rachel L. McMinn - BofA Merrill Lynch, Research Division

Good day, ladies and gentlemen, and welcome to the Ironwood Pharmaceuticals Fourth Quarter 2013 Investor Update. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Meredith Kaya, Director of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for our fourth quarter 2013 investor update. By now, you should have a copy of our press release, which crossed the wire earlier this morning. If you need a copy of the press release, you can go to our website, www.ironwoodpharma.com, to find an electronic copy. Some of the information discussed in today's call is based on information as of today, Tuesday, January 21, 2014, and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. We do not undertake any obligation to update any forward-looking statements made during this call or contained in the accompanying slides as a result of new information, future events or otherwise. For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure on our press release and on the current slide with the heading, Safe Harbor Statement, as well as the risks under the heading Risk Factors in our quarterly report on Form 10-Q for the quarter ended September 30, 2013, and any of our future SEC filings. Joining me for today's call are Peter Hecht, Chief Executive Officer, who will provide introductory remarks; Tom McCourt, Chief Commercial Officer, who will give an update on the commercialization of LINZESS; Mark Currie, Chief Scientific Officer, who will summarize our pipeline efforts; and Michael Higgins, Chief Operating Officer, who will review our financial performance and guidance, and then open the call to your questions. Our speakers will be referring to slides available via the webcast. For those of you dialing in, it may be helpful for you to go to the Events section of our website to access the webcast slides, if you haven't done so already. I would now like to turn the call over to Peter.

Thanks, Meredith, and good morning, everyone. I've had the good fortune of seeing many of you recently at our Investor Day last month in New York and at the JPMorgan conference in San Francisco just last week, where we detailed our strategy to build on the successful launch of LINZESS and grow a leading GI therapeutics company. For those of you whom we did not have a chance to meet with or who weren't able to participate in our recent Investor Day, I encourage you to listen to the webcast, which can be found on the Investors section of our website. Before I start, I'd like to take a moment to acknowledge and thank all of the people who have been instrumental in getting us to where we are today. This includes our current and former employees, our fellow shareholders, our board members and our partners. I'm honored for the support, guidance and commitment all of you have provided in helping us to deliver on our mission. 2013 was transformational for us at Ironwood. We made important progress across many fronts, starting with LINZESS, which has just finished its first full year of being on the market and is well on its way to becoming a very important product, with the potential to help millions of adult patients with IBS-C or CIC. We made important progress in our R&D pipeline as well. And through LINZESS and our pioneering work with GC-C agonist, we have developed deep therapeutic and pharmacological expertise, laying the groundwork for us to advance a robust pipeline of GI therapeutic candidates and execute on our strategy. LINZESS is the core of this strategy. As I just mentioned, the LINZESS launch has been strong. Over 200,000 unique patients have filled a LINZESS prescription from launch through November of…

Thanks, Peter, and good morning, everyone. As Peter mentioned, LINZESS has been on the market now for just over a year, and we've been able to establish strong fundamentals across the key leading indicators in line with some of the most successful primary care launches. We are pleased with the progress to date and believe our combined efforts with our physician, payer and patient customers have resulted in strong uptick in growth of LINZESS prescriptions. Since launch, more than 580,000 total LINZESS prescriptions have been filled, including 220,000 in the fourth quarter alone, representing 25% growth quarter-over-quarter. This was driven by both new patient starts and a strong refill rate. We are still in the early days of growth for this brand, and we'll continue to execute on our strategy to fuel the acceleration of LINZESS into the marketplace over the coming months and years. As we continue to share our progress and launch, we will focus on a few key metrics that we feel are the most accurate indicators for the success of LINZESS, including physician adoption, payer status and patient engagement. Beginning with physicians. Our combined sales force engaged with more than 85,000 physicians last year, resulting in a broad and growing prescriber base of more than 50,000 health care practitioners since launch. This includes approximately 90% of high-prescribing gastroenterologists and approximately 70% of high-prescribing health care practitioners, largely made up of primary care physicians. We're very encouraged by the breadth of the prescriber base, and also that as they continue to gain experience with LINZESS, physicians are expanding use to more and more of their appropriate patients. We believe this increase is largely driven by physician knowledge and satisfaction with LINZESS. Based on market research, over 90% of physician surveys report being knowledgeable, and 74% report being…

Thanks, Tom. We were thrilled to host our first Investor Day last month where we had a chance to share in greater detail the exciting programs that we have in development. Looking at a snapshot of our pipeline, we have a very robust and focused R&D platform, including up to 7 GI clinical development program, with opportunity to generate proof-of-concept data over the next 24 months. As you can see, we are highly focused on our opportunity with linaclotide, including our effort to enhance the clinical profile of LINZESS within its current indication and to expand its utility by seeking additional approved indications in population such as opioid-induced constipation, pediatrics and potentially in the prevention of colon cancer, which is currently in the early stages of development. We are particularly excited about our opportunity with linaclotide colonic delivery, which has the potential to enhance the relief of lower abdominal pain and importantly, could result in 2 product opportunities within a single program: first, for patients with the current LINZESS-indicated population, IBS-C and CIC; and second, for patients suffering from GI disorders with severe lower abdominal pain as a predominant symptom, such as other forms of IBS, ulcerative colitis and diverticulitis. Assuming success, this program would provide patent protection for these new products through the mid-2030s. In addition, we are investigating additional GI therapeutic development programs aimed at addressing the unmet needs of millions of patients suffering from highly symptomatic disorders of the lower and -- of the upper and lower GI tract. These include IW-9179, our second GTT agonist that is designed to act locally and potently in the small intestine. IW-9179 is currently in a Phase II study for functional dyspepsia, and we also intend to evaluate this program in the area of gastroparesis. IW-3718, a molecule we're studying for the treatment of refractory GERD, is expected to initiate a Phase II clinical study shortly. With several important milestones expected over the next 24 months, we look forward to sharing our continued progress with you. With that, I'll turn it over to Michael.

Thanks, Mark. Turning to our financial performance, let's begin with LINZESS where we continue to see solid growth. Forest reported $51 million in net sales of LINZESS for the fourth quarter of 2013 compared with $34.4 million net sales reported in the third quarter of 2013, a 48% increase quarter-over-quarter. For the full year 2013, LINZESS net sales were $118.8 million, and total net sales since launch in December 2012 were $138 million. As Peter and Tom both detailed earlier on the call, LINZESS is on a positive trajectory, which we expect to continue into 2014. Wholesaler inventory levels remain in the 3- to 4-week range during the fourth quarter where we expect them to stay going forward. Gross to net discounts for the quarter were approximately 20% as compared to approximately 24% in the third quarter. We continue to expect gross to net discounts to settle in the mid-20% range over time. We and Forest also increased the price of LINZESS in early December by approximately 8.5%, from a lag price of $7.10 per day to its current $7.70 per day. This price increase had minimal impact on LINZESS net sales for the quarter. The LINZESS collaboration produced a total net loss of $11.7 million in the fourth quarter. In the first 3 full quarters of launch, we recorded collaboration expense for our portion of the net cost and profits of LINZESS. I'm pleased to say today that we have shifted to collaborative arrangements revenue. After backing out the $8.8 million that we incurred in LINZESS marketing and sales expense during the fourth quarter, a payment of $2.9 million is due to Ironwood from Forest. As a quick reminder, we and Forest share the U.S. LINZESS net profit and loss equally and present the settlement payments required to adjust…

[Operator Instructions] And our first question comes from Ravi Mehrotra from Crédit Suisse. Ravi Mehrotra - Crédit Suisse AG, Research Division: Could you give us more granularity on the inventory levels for LINZESS and/or the gross net discounts you observed in Q4?

Certainly. Let me start with the inventory levels. We've been talking for some time since -- really, since early in 2013 that we expected that the inventory levels would level out at the wholesaler level of about 3 to 4 weeks. That's where we've been for the past couple of quarters, and that's where we've remained. Over the course of the quarter, the -- in order to maintain that 3- to 4-week level, there always are purchases by the wholesalers to maintain that level as the TRx growth continues. With regard to the gross to net changes, we've talked for some time about -- that these gross to net adjustments, which are estimates, will level out in the mid-20 range. Last quarter, it was 24%. We're down a bit this quarter to 20%. We still expect a little bit of volatility in there until we finalize all of the contract work. But we still expect, over time, that we'll level out that mid-20% range.

And our next question comes from Irina Rivkind from Cantor Fitzgerald. Irina Rivkind - Cantor Fitzgerald & Co., Research Division: I just wanted to understand a little bit more about -- if you could give us granularity on your API sales to partners and how we can better estimate the timing for that? And then the second question is, it's great that the JV has turned profitable, probably earlier than expected, but do you expect it to remain this way as you guys continue through the DTC campaign?

So we're going to start -- with regard to API sales, it's very difficult to give you specific guidance. Those requests come through from our partners as needed, so we don't have any real clarity on those ones. They're relatively small at this stage. As they get more predictable as we go forward, we can -- I'll try and give you a little more color on it. But right now, they come in as needed and they're going to be a little bumpy for a little bit longer. Let's see, with regard to -- I apologize, the other question? Irina Rivkind - Cantor Fitzgerald & Co., Research Division: Well, the JV is now profitable, so just wondering if it's going to stay that way as you progress through the DTC campaign.

Yes, sorry, the -- so our expectation is directionally that we should continue to trend in this same direction. The -- as you see each quarter, you know how the calculation does. I reviewed it very quickly. But there are 10 [ph] -- there is an opportunity that it could move back into a loss position. But our expectation right now is that we'll continue to be in a profit position going forward. If it is a quarter-over-quarter flux, there is a chance in a single quarter it might happen, but for the most part, we expect to stay in this zone going forward.

And our next question comes from Geoff Meacham from JPMorgan. Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division: My question is also on the DTC campaign. Any specifics on that in terms of rollout and sort of the strategy for the DTC campaign? And then, also curious about what the contribution to SG&A the DTC campaign is for this fiscal year. And I have one follow-up.

Thanks, Geoff. It's Peter. Tom, why don't you take the first part of the question, and then we'll have Michael talk about the impact to SG&A.

Yes. As far as the campaign itself, Geoff, this will be a multi-channel campaign that will include TV, print and digital. It will literally be initiated simultaneously in late March, as we mentioned. Also keeping in mind, we continue to refine the marketing mix across all of our investments and promotion between physician, payer and patient. And we want -- we intend to stay within the range that we mentioned before, recognizing we're going to continue to make robust investment, both on the physician, as well as the patient side.

Michael?

So Geoff, in terms of the SG&A impact, the number, as Tom has stated, the number for DTC is incorporated into the total cost, the $240 million to $270 million that we articulated. That will ultimately flow through because of the way the investments are being made. A significant portion of that is being made at Forest and we're responsible for it, so it'll ultimately flow through the collaboration revenue line. It won't flow directly through the -- through our SG&A expense line. Did you -- let me just clarify, you were looking for the geography answer, I think, embedded in your question, as well as the numbers? Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division: Yes, that's exactly right. And then just a follow-up, you guys gave some data on persistence rates in your slide presentation. Just curious, you're 1 year out with the launch and I know you said after about 1 year, you'd be able to speak more specifically to duration therapy. And I'm just curious if you had any color on that now or if not, when do you feel like you can have enough data to give us that number with some confidence?

Yes, thanks a lot, Geoff. The whole purpose of doing this analysis was to get a relative sense of how we're tracking against the other analogs. We know what the other analogs were with regard to annual days of therapy, as we've mentioned before. Both Zelnorm and Amitiza range between 90 to 100 days, depending on when you measured it. And of course, it's a little early to still give you an exact number what we think annual days of therapy are, but I think as you can see, we're tracking well ahead of certainly our launch aligned analogs. I believe probably some time between now and the next 6 months, we'll have a better idea of exactly what that annual data therapy looks like. But obviously, a lot of that is going to depend on what happens with the DTC campaign, both with regard to new patient starts, as well as its impact on reminding people to refill their prescriptions.

Geoff, it's Peter. If I can just add a little extra color, I think at a macro level, one of the things we're very encouraged by in seeing these data is the extent to which the patients are using the drug as a chronic therapy, chronic pain management therapy to a large extent. And also from these data and also the qualitative market research we've done with both patients and physicians, the speed with which the perception of this category by both physicians and patients is evolving to one of a chronic pain management category. So that's very encouraging for us and I think speaks to the response patients are having with LINZESS. And with respect to days of therapy, just a reminder, that's not a hard number ever. It evolves as a brand evolves, as new indications are added. DTC campaigns both bring new patients in, which will affect it on an annualized basis, the number, but also reminds patients with an existing script to refill their prescriptions. So it's a dynamic metric but it is one where, I think, on a relative basis, we're increasingly encouraged by the relative benefit we're seeing compared to the earlier analogs in this category.

And our next question comes from Jason Gerberry from Leerink Partners.

Just as we think about 2014, can you talk a little bit about where you're seeing the majority of your LINZESS patients coming from? Are these largely untreated patients? Are these OTC MiraLAX patients? And then on the prescriber base, you talked about roughly over 50,000 prescribers. Where do you want to be with that number, the prescriber base? Are you looking to significantly expand it, or do you feel like you've pretty much got the right size prescriber base in place now?

Tom?

Yes, as far as the initial source of patient population, as we mentioned before, the far majority of these patients are being treated -- actively treated with OTC laxatives. And what we've seen so far is roughly 65% of the patients that are initiated on therapy were moved right from an OTC directly to LINZESS, with the remainder coming from prescription laxatives. So the majority of the patients that have been treated to date are patients that are actively seeking care and have been treated with OTCs that are getting moved, which we feel very good about. It's what we really needed to see in order to believe that the drug will continue to grow nicely. As far as the physician base, we wanted to make sure we had a broad enough prescriber base that had significant experience with the drug before we initiated broader patient education. I think as we move forward, just like any other category, there will be probably somewhere between 30,000 and 40,000 docs who are going to generate 70% to 80% of the business. And we want to make sure that we're concentrating on them to make sure that we're really maximizing the promotional response. So I think, as I think about moving forward, I think the far majority of these patients will be patients currently treated with OTCs, and I think we're going to continue to see the prescriber base grow. However, I think there's going to be a real core group of 40,000 to 50,000 docs that are really going to drive the long-term growth of the brand. Does that help?

Yes.

And our next question comes from Ram Selvaraju from Aegis Capital.

Just a couple of things with respect to what you may be seeing from your partner, Almirall, in Europe. Can you comment on the relative growth of CONSTELLA prescriptions in that territory and how you anticipate that evolving? And can you give us a little bit more color on what Almirall is communicating to you or its promotional activities in Europe as of right now?

Yes. Why don't I take a start on that? It's Peter. Almirall has done a very good job securing a very strong label for CONSTELLA in Europe. The label includes the clear characterization of the product as a visceral analgesic, and they're doing a very good job under difficult circumstances. Europe is not easy these days. As you know and as we're seeing, most pharmaceutical companies manage their way through. They've launched now in 9 countries. They've gotten good price and reimbursement status in most of those countries. And particularly in the U.K, they had a positive pricing response, and they're working to roll that out throughout the U.K. They're working through the pricing negotiations in Germany with the GBA, and I can't give you any further color on that. But I think they're making good progress there. I think one thing you ought to expect is the rollout in Europe will be slower than it is in the U.S. for a couple of reasons. One is, obviously, the time needed to work through each of the countries on the pricing and reimbursement status. The other is, just to remind you, there hasn't ever been an IBS product approved in Europe. So whereas here, both we and Forest have the benefit of having the market, both on a patient and physician side be somewhat conditioned by -- particularly by the previous terrific work done by Novartis in Zelnorm, and to some extent, by Amitiza as well. In Europe, in all of those countries, there's no prior experience with a IBS products. So there's a need to do very intensive education with physicians and particularly, patients in Europe. So we see great promise for the product over time in Europe, but you should expect the kinetics to be slower.

I think the other piece, Peter, that I would add on is based on kind of what we saw and what we agreed on in the marketing plans, they're executing very, very well. They're driving good demand based on the conditions that Peter outlined within the U.K. and certainly early in Germany and Scandinavia. But they're very committed to the brand, and we feel very good about the way they're executing thus far.

Okay, that's helpful. Two other very quick questions. Firstly, with regard to future price increases for LINZESS, can you give us an idea of what motivated the most recent price increase? What factors contributed to that and the magnitude of that increase and whether at this juncture you're seeing a response from the market that leads you to believe that further significant price increases could be possible and that these would not have significant uptake -- impact on uptake of the drug as we go forward? And then finally, if you could just talk a little about non-GI tract-related drug candidates in your pipeline. Are you refocusing the R&D effort more towards the GI tract-focused agents of the pipeline? Is that something we should expect to continue to see going forward or not?

Sure. This is Tom. I'll take the first one on pricing. I think, first of all, I think we have a very strong value proposition for the brand. And the reason why we came into the market at the price we came is we felt we wanted to establish a very strong value proposition out of the gate. And we certainly let our market research guide us with regard to what we felt the appropriate -- that price should be, which was significantly below where some of the other industry products are. That being said, we think there's significant room for growth, but we will certainly let the data guide us as we interact with payers moving forward. But we'll certainly let the data guide us as we make future pricing decisions. Mark, do you want to take the second?

Sure. Yes, thanks, Ram, for the question. Certainly, as we indicated from our Investor Day, we are turning our focus much more to our GI project. We -- if you look through the project that we highlighted, the focus on LINZESS opportunity leading that way and then our other GTT agonist, 9179, and ultimately, also our other GI opportunity, IW-3718. Relative to the non-GI, really, our only other major area of focus right now is in the soluble guanylate cyclase simulator area. We think we have some very interesting molecules there that we're advancing, and we think that will ultimately grow our pipeline with a number of different opportunities. But relative to the other assets that currently are in our portfolio, we're at the stage where we're de-prioritizing those and focusing mostly on our GI assets at this current time.

And our next question comes from Gary Nachman from Goldman Sachs.

A couple of questions. First, on a relative basis, the new Rxs still seem a little sluggish, while the refills do look pretty strong. Do you think the DTC campaign is really the only way to accelerate NRxs in a meaningful way to get a real inflection in the news and roughly how long you think it will take to see that? And then if the total commercial expenses for LINZESS are coming down a little from what you originally guided, are you spending less than you thought on the DTC program? Or as far as scaling back on physician details, what's causing that slightly lower expectation?

Yes, this is Tom...

Take the NRx question.

Okay, I'll the NRx question. So as far as the new Rxs, I mean, out of the gate, we certainly, like any other brand, and particularly in a category like this, you're going to get the highly-visible, high-need patients out of the gate. And over time, obviously, we need to broaden the view of who the appropriate patient is for the doc as they continue to gain experience over time. Certainly, the lead indicators that we're seeing from the physician with regard to their level of satisfaction, their intent to prescribe more broadly and their willingness to honor patient requests are extremely encouraging as we look to the future. No question, the patients' role in this equation is critical. We certainly saw that with Prilosec, we saw that with Zelnorm, where you saw the acceleration then it slowed down a little bit and then as you activated the patient, it obviously started to accelerate again. And DTC will drive not only new patient starts, but also remind patients to refill their prescriptions. So I think we feel that the timing is right. We think the investment is right, and we will continue to evolve that marketing mix as far as the investment. Do you want to take...

Yes. With regard to guidance, let me just state, as we put out the original $250 million to $300 million a little over 3 months ago now, and as we go through our planning process, we just refined that and we thought we could get a little bit tighter on that as we went through the process. To reiterate though, our view is we've got the right mix that we're planning for this year. We think we have -- we will put on the ground a significant number -- significant effort from a sales perspective. We'll continue to do that as you've heard multiple times, and incorporated in this number is what we believe it to be the right investment from a DTC perspective. So we think we've got the right mix, and we're very confident we can deliver in this range that we just -- that I just gave to you today.

Okay. And then just one follow-up. On the last reduction of the overall workforce, and not touching the sales force at all, is that something that you would potentially reconsider, especially if you can't get another product into the bag at some point? I guess, I just want to gauge how much of a priority is it for you guys, and you mentioned it earlier in your prepared remarks, looking externally for additional products to try and leverage that sales force better.

Thanks, Gary. It's Peter. We built our commercial capability broadly, and our sales force specifically, with an idea of maximizing the benefits of LINZESS could provide to patients in the U.S. And I think we feel very good about the way the team has delivered, the value they brought to the collaboration. We shared some of those data with you at the Investor Day in December, and the ability that, that team has to educate physicians, gain good access to offices and perform at a very high level. I think that's increasingly clear to us it's becoming a competitive advantage and a platform for us to grow our business and build a robust GI commercial business, both with internally and externally derived products. I think we're feeling very, very bullish about that whole commercial capability at this time.

[Operator Instructions] And our next question comes from Juan Sanchez from Ladenburg. Juan F. Sanchez - Ladenburg Thalmann & Co. Inc., Research Division: I only have one question left on the OIC program. Why did you choose to go into Phase II as opposed to doing a Phase III program? What do you need to learn from this Phase II?

Yes, Juan, obviously, this is a new patient population for us and trying to understand the appropriate dose, whether 145 or 290. So it's in the level of the investment, obviously going in and understanding that, the effect size that we will see and then being able to power up the Phase III studies and have discussions with the FDA. So really, that's the reason that it's starting as a Phase II program.

And our next question comes from Greg Wade from Wedbush.

Tom, I wonder if you might just help us to focus in on some of the metrics you'd be looking at with respect to evaluating the DTC program, and when do you expect the data from that analysis to be mature enough to make some assessment as to whether it's working?

Thanks, Greg. Yes, I think like you, I think we're going to focus primarily on new patient starts. That is by far their most sensitive lead indicator on seeing what impact it has out of the gate. I mean, obviously, we'll be monitoring refill rates as well. But for the DTC to really bring value, we need to be able to see a nice growth in new patient starts. As far as how quickly we see the response and the magnitude of the response, obviously, it's always variable. We can certainly look at analog such as Zelnorm to give us some idea of how quickly we might see that, recognizing that the market has changed significantly since then. But I believe we should see, certainly, an impact within the first 2 to 3 months as far as some kind of inflection. The magnitude of the benefit will take a bit more time to really understand how dramatic the overall increase in growth will be. And obviously, based on that, we'll continue to assess the level of investment. Because one of the key questions we want to be able to answer as we launch is, what is the right level of investment to really expand the overall awareness, keeping in mind that right now we have a very low relative level of awareness. We're right around 9% to 10%. And when you consider that, there's a tremendous opportunity for us to really grow the top of the funnel to really drive patients and to raise their hand and ask for the therapy. But I think we should see -- we should get a pretty good indication the first 2 or 3 months as to whether it's working or not.

Should we expect that any change in the slope of the curve this year is as a result of DTC?

Again, assuming that we start in March, late March, we would expect to see some impact in the new RX growth curve within the first 2 to 3 months. Does that answer your question, Greg?

Yes. I was just curious as to whether there's anything else going on that can contribute to a change in the growth dynamic this year.

And our next question comes from David Friedman from Morgan Stanley.

The question is on the part of the R&D expense that was supply chain and rest of world support. I was wondering if you could maybe describe how much of it is supply chain versus rest of world? And then, if you can provide any more detail on the sort of trajectory of each segment over time?

David, let me take that. So we don't provide that level of granularity down to the individual line item. But I can tell you directionally that the supply chain component is an important and, early on, an expensive element to getting up and running. And until you get everything validated and operational and products approved, things flow through R&D. Once you get the -- move further down the process, then you end up -- becomes balance sheet item. So we would expect over time that, that supply chain component would continue to go down. And the rest of world support, we're working hard to ensure that we're getting a good return on every one of those investments that we're making. In the territories where we have royalties, we're working very hard to make sure we only make those investments that provide a nice return to us. In China and specifically where we have a partnership, the cost there relative to the clinical studies will continue to be maintained for a period of time. So we don't give the level of granularity, but I hope directionally, that helps a little bit. The supply chain numbers will diminish over time and the others, we'll manage very tightly.

And our next question comes from Patti Bank from DISCERN Securities.

Just a brief question for Tom. Tom, with Bill Meury taking over for Elaine Hochberg at Forest on the sales and marketing side, can you just kind of give us any -- like on any changes or nuances that he brings to the table there?

Yes, I think -- thanks a lot, Patti. I think, first of all, I think it's a really important resource then. We've developed a very, very good working relationship with Forest. And obviously, Elaine was a big part of that. On a day-to-day basis, Bill and I, of course, have worked pretty closely together. We talk almost daily. So the 2 of us have a pretty unified view of what we think -- where to think where the brand is going and how we get there. So again, I would expect a continued great collaboration with Bill, now taking added responsibility and certainly look forward to really growing the brand together with him.

And then just a quick question on a different topic. On the commercial payer side, can you give us any more color maybe on any major wins that you've had there, maybe examples of big plans? And on the ones that are not onboard, do any of those have restrictions that they want to see the drug in the market for a year and get experience?

Yes. I mean, Patti, it's a great question. As you know, we've made really good progress at this point in time to have 75%, 80% unrestricted access in the commercial place and space. And of course, there's a number of plans, mainly regional plans where we're continuing to try to pull access through. The Med D plans, as you know, are a little slower. There's a couple of big plans out there we're in active negotiations with right now. We have about 50% access there. And we got 2 or 3 sizable plans that we're really working hard to land to broaden access, keeping in mind that the far majority of our business is on the commercial side of the business. There isn't -- there's very step edits and prior authorizations at this point. Obviously, those that are in place, we're working very hard to remove through active negotiations. But at this point in time, I think we're very pleased with the progress that we've made in collaboration with the Forest account management team.

And our next question comes from David Maris from BMO Capital Markets.

First, can you remind us what data releases you hope to have in the first half of this year? And then secondly, Forest has been very clear on its conference calls that LINZESS is very important to the future of their company. But maybe you could talk a little bit about why you think the Aptalis deal and the cost cuts and the rest that your partner's announcements are net positive or they're concerning for you? Or how should investors be thinking about it? I think I can see it both ways, but I wanted to hear from you what your thoughts are.

Sure, David. Mark, why don't you first take the question on the pipeline news?

Thanks, David, for the question. So yes, we are planning to have a pretty detailed release of information around our chronic constipation bloating and risk study our -- that we reported a top-level data back in the fall. But we intend to have much more detailed data around that program coming up in the major GI conference, hopefully at DDW. And also, the other area is in our 9179. We intend to update our progress there, particularly around the -- and this in functional dyspepsia, particularly around the enrollment of patients and also the characteristics for those patients. It's a fairly small exploratory around the data, so it's not a pivotal decision-making study around data as much as the effect of the drug, but really teaching us about the functional dyspepsia patients and the characteristics of those patients as we look at the enrollment criteria.

And then David, let me take the question about Forest. I guess I'd say we've been very pleased by the collaboration really from its inception in 2007. We've had a great working relationship across all of the functions. I had a very strong relationship and partnership with Howard Solomon, and we're thrilled to see the progress and excitement at Forest since Brent's taken over. And he and I are building a quite strong relationship as well. And I, again, Tom and Bill -- I mean, Tom says they talk almost every day. I think Tom and Bill probably talk 6 to 7x a day, and that's true, really, across the organization. We operate, to a very large extent, as a single unified LINZESS effort. With respect to Aptalis, specifically, I think anything that reinforces Forest's commitment to LINZESS, anything that helps the Forest sales reps have better relevancy with their customers and get more mindshare and time in the physician's offices to talk about LINZESS, anything that grows LINZESS is good for them, is good for us, is good for LINZESS and most important, it's good for the patients who can benefit from the product. So we see a lot of positives there. It's been very pleasing for us to see LINZESS evolve and grow and become a very big part of the future story of Forest and a key growth driver for them. The collaboration all along has prioritized LINZESS as highest priority at Forest, but to hear very clear external communication from Brent and the leadership team that LINZESS is priority #1 for them at Forest is always helpful. So we've been very pleased.

And our next question comes from Mario Corso from Mizuho USA.

Just a couple of quick questions. On gross to net, we've seen it bounce around a bit the last 2 quarters, and you've talked about mid-20s over time. For 2014, should we assume mid-20s? Or would it be something more likely in the range of the last couple of quarters of 20%, 24%? And then on the direct-to-consumer, I'm wondering, I don't know if you mentioned anything about the duration of the direct-to-consumer advertising. Should we be thinking about it as you're purchasing airtime and online space for that kind of 2 to 3 month assessment period and then you have to decide if you re-up after that?

Michael, can you take the gross to net?

Yes. So a quick response, I think the mid-20s is still the right place to be, Mario. It may -- the question that's really more difficult to answer is, do we get there immediately or does it take a couple of quarters to get there? I think ultimately, that's where we're going to get. And it really depends -- as you know, that calculation is based on estimates and our projections of what the mix is going to look like. But I still feel quite comfortable that that's the right range over time. And yes, for 2014, I'd use that as the appropriate range.

Tom, DTC?

Yes. Thanks, Mario. With regards to the commitment on the investment on DTC, as you know, traditionally, you buy media in 90-day blocks to really maximize the efficiency of the media buy. And certainly, we'll make the initial investment in -- probably in that kind of a purchase. And it will give us enough time to really understand the impact of the DTC. And then moving forward, as we have a better understanding of the overall response and the ROI of the investment in media, we could start stretching that out to get more desirable, efficient media buys over time. But I think for the most part, we're really going to let the data guide us with regard to the current -- the immediate purchase, as well as purchase over time.

And our last question comes from Rachel McMinn from Bank of America Merrill Lynch.

Yes, just 2 questions. On the price, I wanted to ask, you mentioned that this didn't really have much of an impact in the fourth quarter. Were there specific terms that extended that? How should we model that? Is that going to be a full impact in the first quarter or kind of more gradually, if you have particular contracts around that? And then just to doublecheck on inventory stocking, you mentioned it's in the normal range. But was there any buy-in? It is typical for companies -- wholesalers to buy in ahead of a price increase. So I'm just wondering how confident you are based on the data that you have that there is no 1- or 2-week extra bump-up in the quarter.

So Rachel, let me take that. With regard to price, the price change has been implemented, so I think you can use that on a go-forward basis as you're calculating. So I think you should use the new pricing. With regard to the inventory levels, specifically at the wholesale level, there's quite detailed reporting that's available, and we're quite confident that we're in that 3- to 4-week range. To be clear, as the volume goes up and as TRxs continue to increase, in order to maintain the inventory necessary to meet demand, the absolute volume of inventory goes up on a quarterly basis. And so those numbers do -- every quarter will continue to contain some level of inventory as the demand goes up. But no, we're very confident in the range that we've given you from a wholesaler perspective.

And I would now like to turn the call back to Peter for any further remarks.

Thank you, Danielle, for your help this morning, and thanks to all of you for participating and listening in. We'll be around the rest of the day. So contact Meredith if you'd like to follow up with any additional questions. And again, many thanks, and have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.

Thank you, Danielle.