Insmed(INSM) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides a comprehensive overview of Insmed's financial performance, statements, and analysis ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS This section presents Insmed Incorporated's unaudited consolidated financial statements, including the Balance Sheets, Statements of Comprehensive Loss, Statements of Shareholders' Equity, and Statements of Cash Flows, along with detailed notes explaining significant accounting policies, fair value measurements, revenue recognition, debt, equity, and other financial commitments for the periods ended June 30, 2025, and December 31, 2024 Consolidated Balance Sheets This statement details Insmed's financial position, including assets, liabilities, and equity Balance Sheet Summary (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $1,284,324 | $555,030 | | Marketable securities | $572,441 | $878,796 | | Total current assets | $2,081,580 | $1,621,661 | | Total assets | $2,479,857 | $2,025,231 | | Total current liabilities | $311,681 | $297,528 | | Total liabilities | $1,230,122 | $1,739,852 | | Total shareholders' equity | $1,249,735 | $285,379 | - Total assets increased by $454.6 million (22.4%) from December 31, 2024, to June 30, 2025, primarily driven by a significant increase in cash and cash equivalents[10] - Total shareholders' equity saw a substantial increase of $964.4 million (337.9%) from December 31, 2024, to June 30, 2025, largely due to new equity issuances[10] Consolidated Statements of Comprehensive Loss This statement presents Insmed's financial performance, detailing revenues, expenses, and net loss Comprehensive Loss Summary (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenues, net | $107,415 | $90,340 | $200,238 | $165,840 | | Total operating expenses | $420,291 | $379,244 | $761,254 | $600,249 | | Operating loss | $(312,876) | $(288,904) | $(561,016) | $(434,409) | | Net loss | $(321,686) | $(300,609) | $(578,269) | $(457,700) | | Basic and diluted net loss per share | $(1.70) | $(1.94) | $(3.12) | $(3.02) | - Product revenues, net, increased by 18.9% for the three months ended June 30, 2025, and by 20.7% for the six months ended June 30, 2025, compared to the respective prior-year periods[12] - Net loss increased for both the three-month and six-month periods ended June 30, 2025, primarily due to higher operating expenses, particularly R&D and SG&A[12] Consolidated Statements of Shareholders' Equity This statement details changes in Insmed's equity, including common stock, paid-in capital, and deficit Shareholders' Equity Summary (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------- | :------------ | :---------------- | :------------ | | Common Stock Amount | $2,111 | $1,794 | $1,667 | | Additional Paid-in Capital | $6,184,078 | $4,645,791 | $3,943,826 | | Accumulated Deficit | $(4,938,186) | $(4,359,917) | $(3,903,845) | | Total Shareholders' Equity | $1,249,735 | $285,379 | $38,818 | - Total shareholders' equity significantly increased from $285.4 million at December 31, 2024, to $1,249.7 million at June 30, 2025, primarily driven by net proceeds from common stock issuances and conversion of convertible notes[14][124] - The accumulated deficit grew to $(4,938.2) million by June 30, 2025, reflecting ongoing net losses[14] Consolidated Statements of Cash Flows This statement summarizes Insmed's cash flows from operating, investing, and financing activities Cash Flow Activities (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(467,657) | $(306,987) |\n| Net cash provided by investing activities | $308,247 | $288,538 |\n| Net cash provided by financing activities | $886,804 | $784,515 |\n| Net increase in cash and cash equivalents | $729,294 | $764,425 |\n| Cash and cash equivalents at end of period | $1,284,324 | $1,246,799 | - Net cash used in operating activities increased by $160.7 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to increased net loss[18][257] - Net cash provided by financing activities increased by $102.3 million, driven by proceeds from common stock offerings and convertible note conversions[18][259] Notes to Consolidated Financial Statements 1. The Company and Basis of Presentation Insmed is a global biopharmaceutical company focused on serious diseases, with its primary commercial product ARIKAYCE approved in the US, Europe, and Japan for MAC lung disease - ARIKAYCE is approved in the US, Europe, and Japan for Mycobacterium avium complex (MAC) lung disease[20] - Key pipeline programs include brensocatib (bronchiectasis, other neutrophil-mediated diseases), TPIP (pulmonary hypertension), and INS1201 (Duchenne muscular dystrophy gene therapy)[20] - As of June 30, 2025, the Company had $1,284.3 million in cash and cash equivalents and $572.4 million in marketable securities, with an accumulated deficit of $4.9 billion[24] 2. Summary of Significant Accounting Policies This section outlines Insmed's key accounting policies, including the use of estimates, concentration of credit risk, accounting for finite-lived and indefinite-lived intangible assets, business combinations, leases, debt issuance costs, foreign currency translation, inventory valuation, and net loss per share calculation - The Company's three largest customers accounted for 28%, 28%, and 22% of gross product revenue for the six months ended June 30, 2025, showing a slight shift in concentration compared to 2024[33][34] - Indefinite-lived intangible assets (IPR&D) are tested for impairment annually as of October 1, with no impairment identified during the six months ended June 30, 2025[44][46] - New accounting standards ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation) are being evaluated for their impact on future financial statements, with ASU 2023-09 effective for fiscal years beginning after December 15, 2024[58][60] 3. Fair Value Measurements This note details the fair value measurements of Insmed's financial assets and liabilities, categorizing them into Level 1, 2, or 3 based on input observability Fair Value Measurements (in millions) | Metric (in millions) | June 30, 2025 (Carrying Value) | December 31, 2024 (Carrying Value) | | :------------------- | :----------------------------- | :--------------------------------- | | Cash and cash equivalents | $1,284.3 | $555.0 | | Marketable securities | $572.4 | $878.8 | | Contingent consideration | $246.2 | $168.9 | - Contingent consideration liabilities, classified as Level 3, increased from $168.9 million at December 31, 2024, to $246.2 million at June 30, 2025, primarily due to changes in fair value[62][76] - The deferred consideration liabilities were fully settled by December 31, 2024, and no longer exist as of June 30, 2025[70][76] 4. Product Revenues, Net Insmed recognizes product revenue from ARIKAYCE sales, net of various allowances, showing growth across all regions for both the three and six months ended June 30, 2025, compared to 2024 Net Product Revenues by Region (in thousands) | Region (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | US | $68,683 | $63,793 | $132,958 | $120,142 | | Japan | $30,672 | $21,111 | $52,755 | $36,002 | | Europe and rest of world | $8,060 | $5,436 | $14,525 | $9,696 | | Total product revenues, net | $107,415 | $90,340 | $200,238 | $165,840 | - Total product revenues, net, increased by 18.9% for the three months and 20.7% for the six months ended June 30, 2025, driven by growth in all geographic segments[83] - Japan and Europe/rest of world segments showed higher percentage growth rates (45.3% and 48.3% respectively for Q2 2025) compared to the US (7.7%)[83] 5. Inventory The Company's inventory, valued at the lower of cost and net realizable value using FIFO, increased to $107.6 million as of June 30, 2025, from $98.6 million at December 31, 2024, with finished goods showing the largest increase Inventory Breakdown (in thousands) | Inventory Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Raw materials | $22,304 | $19,682 | | Work-in-process | $36,028 | $39,932 | | Finished goods | $49,273 | $38,964 | | Total Inventory | $107,605 | $98,578 | - Total inventory increased by $9.0 million (9.1%) from December 31, 2024, to June 30, 2025, primarily due to an increase in finished goods[91] 6. Intangibles, Net and Goodwill Insmed's intangible assets include finite-lived assets amortized over 12 years and indefinite-lived assets which are not amortized but tested for impairment, while goodwill remains unchanged Intangible Assets and Goodwill (in thousands) | Intangible Asset (in thousands) | December 31, 2024 | June 30, 2025 | | :------------------------------ | :---------------- | :------------ | | Acquired ARIKAYCE R&D | $27,888 | $25,463 | | Acquired IPR&D | $29,600 | $29,600 | | PARI milestones | $1,164 | $1,063 | | Total Intangibles, Net | $58,652 | $56,126 | - Goodwill remained constant at $136.1 million as of June 30, 2025, and December 31, 2024, resulting from the August 2021 Business Acquisition[96] - Amortization of finite-lived intangible assets is estimated at approximately $5.1 million per year for the next five years[92] 7. Fixed Assets, Net Fixed assets, net, increased to $89.995 million as of June 30, 2025, from $80.052 million at December 31, 2024, primarily due to additions in lab equipment and leasehold improvements, partially offset by depreciation Fixed Assets Breakdown (in thousands) | Asset Description (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Lab equipment | $31,883 | $26,753 | | Leasehold improvements | $51,458 | $38,058 | | Construction in progress | $45,877 | $51,127 | | Total Fixed Assets, Net | $89,995 | $80,052 | - The net increase in fixed assets was $9.9 million (12.4%) from December 31, 2024, to June 30, 2025[97] 8. Accounts Payable and Accrued Liabilities Total accounts payable and accrued liabilities increased to $305.0 million at June 30, 2025, from $285.2 million at December 31, 2024, driven by increases in deferred and contingent consideration, accrued sales allowances, and professional fees Accounts Payable and Accrued Liabilities (in thousands) | Liability Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accounts payable and other accrued operating expenses | $74,054 | $73,033 | | Accrued compensation and employee related costs | $50,198 | $80,312 | | Accrued sales allowances and related costs | $22,956 | $16,762 | | Deferred and contingent consideration | $65,700 | $24,700 | | Total Accounts Payable and Accrued Liabilities | $305,019 | $285,209 | - Deferred and contingent consideration increased significantly from $24.7 million to $65.7 million, reflecting changes in fair value[99] - Accrued compensation and employee related costs decreased by $30.1 million, while accrued sales allowances increased by $6.2 million[99] 9. Leases Insmed's lease portfolio primarily consists of operating leases for office, laboratory, and manufacturing facilities, with finance leases for corporate headquarters and a research facility - Variable lease payments were $3.4 million for Q2 2025 (up from $3.2 million in Q2 2024) and $5.9 million for the six months ended June 30, 2025 (down from $8.1 million in 2024)[102] - The Company has incurred $64.2 million in costs for future manufacturing facility and equipment leases with Patheon UK Limited, which will be recorded as operating lease ROU assets and liabilities upon commencement[104] 10. Debt Insmed's long-term debt decreased significantly due to the conversion of all outstanding 2028 Convertible Notes into common stock in Q2 2025, with remaining debt consisting of secured senior term loans Debt Summary (in thousands) | Debt Category (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Convertible notes | $0 | $567,164 | | Term Loans | $538,508 | $536,218 | | Total Debt, long-term | $538,508 | $1,103,382 | - All $567.5 million aggregate principal amount of 2028 Convertible Notes were converted into 17,756,196 shares of common stock in Q2 2025, eliminating this debt[108] - The Term Loans were amended in October 2024, extending maturity to September 30, 2029, and fixing the interest rate at 9.6% per annum, with repayments starting January 3, 2028[112] Interest Expense (in thousands) | Interest Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total debt interest expense | $20,737 | $20,703 | $41,782 | $41,709 | | Finance lease interest expense | $508 | $564 | $1,032 | $1,100 | | Total interest expense | $21,245 | $21,267 | $42,814 | $42,309 | 11. Royalty Financing Agreement Insmed has a Royalty Financing Agreement with OrbiMed, providing $150.0 million in exchange for royalties on ARIKAYCE and brensocatib net sales, amortized using the effective interest method - The agreement entails royalties of 4% on ARIKAYCE global net sales (increasing to 4.5% after September 1, 2025) and 0.75% on brensocatib global net sales, if approved[118] - The total Revenue Interest Payments are capped at 1.8x (or 1.9x under certain conditions) of the $150.0 million purchase price[118] Royalty Financing Agreement Liability (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Twelve Months Ended December 31, 2024 | | :-------------------- | :----------------------------- | :------------------------------------ | | Royalty Financing Agreement liability - beginning balance | $163,671 | $158,162 | | Revenue Interest Payments paid and payable | $(8,010) | $(14,535) | | Interest expense recognized | $10,215 | $20,044 | | Royalty Financing Agreement liability - ending balance | $165,876 | $163,671 | 12. Shareholders' Equity Insmed's common stock outstanding increased significantly due to the conversion of convertible notes and a June 2025 underwritten public offering, which generated $823.1 million in net proceeds - As of June 30, 2025, there were 211,110,658 shares of common stock issued and outstanding[122] - In Q2 2025, 17,922,626 shares were issued from the conversion of 2028 Convertible Notes[123] - A June 2025 underwritten offering of 8,984,375 shares generated $823.1 million in net proceeds[124] 13. Stock-Based Compensation Insmed's stock-based compensation expense increased significantly for both the three and six months ended June 30, 2025, primarily due to higher R&D and SG&A compensation Stock-Based Compensation Expense (in thousands) | Expense Category (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development expenses | $15,970 | $11,301 | $33,350 | $21,636 | | Selling, general and administrative expenses | $27,006 | $11,985 | $48,888 | $23,100 | | Total stock-based compensation expense | $42,976 | $23,286 | $82,238 | $44,736 | - Total stock-based compensation expense increased by 84.5% for the three months and 83.8% for the six months ended June 30, 2025, compared to the prior year[136] - As of June 30, 2025, unrecognized compensation expense totaled $170.3 million for stock options and $152.4 million for RSUs[132] 14. Income Taxes Insmed recorded income tax provisions primarily due to taxable income in certain international subsidiaries, with a full valuation allowance against deferred tax assets in jurisdictions with net losses Income Tax Provision (in millions) | Income Tax Provision (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $1.2 | $0.8 | $2.2 | $1.4 | - The Company has incurred net operating losses since inception (except 2009) and has a full valuation allowance against deferred tax assets[138] - The recently enacted H.R.1, reinstating R&D expense deductibility, is not expected to significantly impact the Company's near-term financial position due to existing net operating losses[140] 15. Commitments and Contingencies This section covers Insmed's rent expenses and legal proceedings, with rent expense increasing for both periods and management anticipating no material adverse effect from legal matters Rent Expense (in millions) | Rent Expense (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Rent expense | $3.3 | $2.8 | $6.8 | $5.9 | - Rent expense increased by 17.9% for the three months and 15.3% for the six months ended June 30, 2025, compared to the prior year[141] - The Company is involved in various lawsuits and claims in the ordinary course of business, but management anticipates no material adverse effect on financial results[142] 16. Acquisitions In August 2021, Insmed acquired Motus Biosciences, Inc. and AlgaeneX, Inc., accounted for as a business combination involving initial payments and future contingent consideration tied to milestones - The acquisition of Motus and AlgaeneX in August 2021 was accounted for as a business combination, with a total purchase price of approximately $165.5 million[145][149] - Contingent consideration for Motus equityholders includes up to 5,348,572 shares of common stock for development/regulatory milestones and $35 million for net sales milestones[145] - Contingent consideration for AlgaeneX equityholders includes 368,867 shares for a development milestone and a mid-single digit licensing fee on future manufacturing technology payments[146] 17. Segment Reporting Insmed operates as a single operating segment, with the CEO managing the business on a consolidated basis and evaluating performance based on total revenues, expenses by function, and net loss - The Company manages its business activities on a consolidated basis and operates as a single operating segment[151] - The CODM reviews total revenues, total expenses, and expenses by function, using net loss to evaluate segment performance[152][154] Segment Performance (in thousands) | Segment Item (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenues, net | $107,415 | $90,340 | $200,238 | $165,840 | | Cost of product revenues | $28,075 | $20,964 | $49,353 | $38,421 | | ARIKAYCE external R&D expenses | $11,003 | $14,896 | $23,124 | $28,822 | | Brensocatib external R&D expenses | $33,560 | $37,806 | $54,221 | $57,324 | | TPIP external R&D expenses | $20,649 | $14,773 | $29,802 | $28,555 | | R&D compensation and benefit-related expenses | $56,389 | $43,908 | $109,947 | $85,368 | | SG&A compensation and benefit-related expenses | $51,320 | $35,087 | $106,156 | $67,672 | | Segment net loss | $(321,686) | $(300,609) | $(578,269) | $(457,700) | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on Insmed's financial performance and operational highlights for the three and six months ended June 30, 2025, covering revenues, expenses, investment income, interest expense, strategic priorities, and liquidity Cautionary Note Regarding Forward-Looking Statements The report contains forward-looking statements subject to substantial risks and uncertainties, including successful commercialization of ARIKAYCE, regulatory approvals for pipeline products, market acceptance, reimbursement, manufacturing dependencies, and intellectual property disputes - The report contains forward-looking statements subject to substantial risks and uncertainties, including successful commercialization of ARIKAYCE, regulatory approvals for pipeline products, market acceptance, reimbursement, manufacturing dependencies, and intellectual property disputes[157][158] - Key risks include failure to obtain full FDA approval for ARIKAYCE, delays in regulatory approvals for brensocatib and TPIP, and the inability to maintain adequate reimbursement[158] OVERVIEW Insmed is a global biopharmaceutical company focused on serious diseases, with ARIKAYCE as its first commercial product and a pipeline including brensocatib, TPIP, and INS1201, expecting to fund operations for at least the next 12 months - Insmed is a global biopharmaceutical company focused on serious diseases, with ARIKAYCE as its first commercial product and a pipeline including brensocatib, TPIP, and INS1201[163] - The Company had an accumulated deficit of $4.9 billion through June 30, 2025, and expects to fund operations for at least the next 12 months with current cash and marketable securities[164] - Key near-term milestones include anticipated topline data from the ARIKAYCE ENCORE trial in H1 2026, FDA target action date for brensocatib NDA in August 2025, and planned Phase 3 studies for TPIP in PH-ILD (H2 2025) and PAH (early 2026)[168][171] KEY COMPONENTS OF OUR RESULTS OF OPERATIONS This section details the key components driving Insmed's results of operations, including product revenues from ARIKAYCE, and the composition of R&D and SG&A expenses - Product revenues, net, are derived from ARIKAYCE sales, adjusted for customer credits, rebates, and chargebacks[221] - R&D expenses include personnel costs, clinical study costs, manufacturing of product candidates, and payments for license rights, with a focus on CMOs and CROs[223] - SG&A expenses cover executive, finance, legal, commercial, and HR functions, including professional fees and certain ARIKAYCE milestones[224] RESULTS OF OPERATIONS This section analyzes Insmed's financial performance for the reported periods, detailing changes in revenues, expenses, and net loss Comparison of the Three Months Ended June 30, 2025 and 2024 For Q2 2025, Insmed reported an 18.9% increase in net product revenues, driven by ARIKAYCE sales growth across all regions, while operating expenses rose significantly due to increased R&D and SG&A costs, leading to a higher net loss Financial Performance (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Product revenues, net | $107,415 | $90,340 | $17,075 | 18.9% | | Cost of product revenues | $28,075 | $20,964 | $7,111 | 33.9% | | R&D expenses | $177,190 | $146,748 | $30,442 | 20.7% | | SG&A expenses | $154,763 | $106,569 | $48,194 | 45.2% | | Investment income | $13,225 | $10,285 | $2,940 | 28.6% | - R&D expenses increased primarily due to a $25.2 million rise in manufacturing expenses and a $17.2 million increase in compensation and benefit-related costs[232] - SG&A expenses were driven up by a $31.3 million increase in compensation and stock-based compensation, and an $11.8 million rise in professional fees, largely for brensocatib commercial readiness[234] Comparison of the Six Months Ended June 30, 2025 and 2024 For the first half of 2025, Insmed's net product revenues grew 20.7%, with ARIKAYCE sales increasing across all geographies, while operating expenses saw substantial increases in R&D and SG&A, leading to a wider net loss Financial Performance (in thousands) | Metric (in thousands) | H1 2025 | H1 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Product revenues, net | $200,238 | $165,840 | $34,398 | 20.7% | | Cost of product revenues | $49,353 | $38,421 | $10,932 | 28.5% | | R&D expenses | $329,767 | $267,831 | $61,936 | 23.1% | | SG&A expenses | $302,308 | $199,671 | $102,637 | 51.4% | | Investment income | $27,131 | $19,068 | $8,063 | 42.3% | - R&D expenses increased due to a $36.3 million rise in compensation and stock-based compensation, and a $33.0 million increase in manufacturing expenses, partially offset by a $12.5 million milestone payment to AstraZeneca in 2024[243] - SG&A expenses surged due to a $64.3 million increase in compensation and stock-based compensation, and a $27.7 million rise in professional fees, both driven by brensocatib commercial readiness[245] LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents increased by $729.3 million to $1,284.3 million as of June 30, 2025, primarily due to a June 2025 common stock offering, with the Company believing it has sufficient funds for at least the next 12 months - Cash and cash equivalents increased by $729.3 million to $1,284.3 million as of June 30, 2025, primarily due to an $823.6 million net proceeds from a June 2025 common stock offering[252][256] - Net cash used in operating activities increased to $467.7 million for the six months ended June 30, 2025, from $307.0 million in the prior year, reflecting higher commercial, clinical, and manufacturing activities[257] - The Company believes it has sufficient funds for at least the next 12 months but may raise additional capital opportunistically for operations, commercialization, and pipeline development[255] CRITICAL ACCOUNTING ESTIMATES There have been no material changes to the Company's critical accounting policies and estimates as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the Company's critical accounting policies and estimates as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024[262] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Insmed's market risk disclosures indicate that a 10% change in interest rates would not materially affect the fair value of its debt or future earnings/cash flows as of June 30, 2025, and foreign currency fluctuations have not materially impacted results - As of June 30, 2025, the Company held $1,284.3 million in cash and cash equivalents (money market funds) and $572.4 million in marketable securities[263] - A 10% change in interest rates would not have a material effect on the fair value of the Company's debt or its future earnings/cash flows[264] - Foreign currency exchange rate fluctuations have not materially affected the Company's results of operations[265] ITEM 4. CONTROLS AND PROCEDURES Management concluded that Insmed's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[266] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[267] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other relevant information ITEM 1. LEGAL PROCEEDINGS Insmed is periodically involved in legal proceedings arising in the ordinary course of business, and management does not anticipate a material adverse effect on the Company's financial position, results of operations, or cash flows - The Company is a party to various lawsuits and claims in the ordinary course of business[269] - Management does not expect these legal proceedings to have a material adverse effect on the Company's financial condition, results of operations, or cash flows[269] ITEM 1A. RISK FACTORS This section highlights that Insmed's business is subject to substantial risks and uncertainties, advising readers to carefully consider the risk factors detailed in this Quarterly Report on Form 10-Q and other SEC filings - The Company's business is subject to substantial risks and uncertainties, which could materially and adversely affect its business, financial condition, results of operations, prospects for growth, and stock value[270] - Readers are advised to review risk factors in this Form 10-Q and the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[270] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS In Q2 2025, Insmed issued a total of 17,922,626 shares of common stock upon the conversion of $572.9 million aggregate principal amount of 2028 Convertible Notes, with no proceeds received by the Company from these conversions - In Q2 2025, 17,756,196 shares of common stock were issued from the conversion of $567.5 million of 2028 Convertible Notes[271] - An additional 166,430 shares were issued from the conversion of $5.4 million of 2028 Convertible Notes prior to the redemption announcement[272] - The Company did not receive any proceeds from these conversions, which were issued under Section 3(a)(9) of the Securities Act[271][272] ITEM 5. OTHER INFORMATION This section details Rule 10b5-1 trading plans adopted by officers and directors during Q2 2025, including a plan by S. Nicole Schaeffer for 76,520 shares, and 'sell-to-cover' arrangements for RSU vesting - S. Nicole Schaeffer, Chief People Strategy Officer, adopted a Rule 10b5-1 trading plan on June 13, 2025, for a maximum of 76,520 shares[275] - Officers entered into 'sell-to-cover' arrangements for RSUs granted in May 2025, to satisfy tax withholding obligations upon vesting[276] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, a consulting agreement, amendments to the incentive plan, certifications from the CEO and CFO, and XBRL financial data - Exhibits include Articles of Incorporation, Amended and Restated Bylaws, a Consulting Agreement, and Amendment No. 2 to the 2019 Incentive Plan[279] - Certifications from the CEO and CFO (pursuant to Sarbanes-Oxley Act Sections 302 and 906) are included[279] - The financial statements are provided in iXBRL format as Exhibit 101[279] SIGNATURE The report is duly signed on behalf of Insmed Incorporated by Sara Bonstein, Chief Financial Officer (Principal Financial and Accounting Officer), on August 7, 2025 - The report was signed by Sara Bonstein, Chief Financial Officer, on August 7, 2025[283]