Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-30739

INSMED INCORPORATED

(Exact name of registrant as specified in its charter)


Virginia						54-1972729
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification no.)

700 US Highway 202/206,
Bridgewater, New Jersey						08807
(Address of principal executive offices)						(Zip Code)

(908) 977-9900

(Registrant’s telephone number including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section12(b) of the Act:


Title of each class	Trading symbols	Name of each exchange on which registered
Common stock, par value $0.01 per share	INSM	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer x						Accelerated filer o

Non-accelerated filer o						Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of October 23, 2023, there were 143,062,065 shares of the registrant’s common stock outstanding.

INSMED INCORPORATED

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2023

INDEX


PART I. FINANCIAL INFORMATION

ITEM 1	Consolidated Financial Statements

	Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	3

	Consolidated Statements of Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2023 and 2022	4

	Consolidated Statements of Shareholders' Equity (unaudited) for the three and nine months ended September 30, 2023 and 2022	5

	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2023 and 2022	7

	Notes to Consolidated Financial Statements (unaudited)	8

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	47
ITEM 4	Controls and Procedures	47

PART II. OTHER INFORMATION

ITEM 1	Legal Proceedings	47
ITEM 1A	Risk Factors	47
ITEM 2	Unregistered Sales of Equity Securities , Use of Proceeds, and Issuer Purchases of Equity Securities	49
ITEM 5	Other Information	49
ITEM 6	Exhibits	49

SIGNATURE		50

Unless the context otherwise indicates, references in this Form 10-Q to “Insmed Incorporated” refers to Insmed Incorporated, a Virginia corporation, and the “Company,” “Insmed,” “we,” “us” and “our” refer to Insmed Incorporated together with its consolidated subsidiaries. INSMED, PULMOVANCE, ARIKARES and ARIKAYCE are trademarks of Insmed Incorporated. This Form 10-Q also contains trademarks of third parties. Each trademark of another company appearing in this Form 10-Q is the property of its owner.

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

INSMED INCORPORATED

Consolidated Balance Sheets

(in thousands, except par value and share data)


	As of		As of
	September 30, 2023		December 31, 2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	487,113	$	1,074,036
Marketable securities	298,838		74,244
Accounts receivable	35,579		29,713
Inventory	77,923		69,922
Prepaid expenses and other current assets	27,123		25,468
Total current assets	926,576		1,273,383

Fixed assets, net	64,630		56,491
Finance lease right-of-use assets	21,663		23,697
Operating lease right-of-use assets	18,441		21,894
Intangibles, net	64,967		68,756
Goodwill	136,110		136,110
Other assets	92,486		76,104
Total assets	$	1,324,873	$	1,656,435

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and accrued liabilities	$	187,783	$	182,117


Finance lease liabilities	2,527		1,217
Operating lease liabilities	6,418		6,909

Total current liabilities	196,728		190,243

Debt, long-term	1,147,519		1,125,250
Royalty financing agreement	153,430		148,015
Contingent consideration	69,900		51,100
Finance lease liabilities, long-term	27,712		29,636
Operating lease liabilities, long-term	13,023		14,853
Other long-term liabilities	5,918		9,387
Total liabilities	1,614,230		1,568,484

Shareholders’ equity:
Common stock, $0.01 par value; 500,000,000 authorized shares, 143,049,197 and 135,653,731 issued and outstanding shares at September 30, 2023 and December 31, 2022, respectively	1,430		1,357
Additional paid-in capital	2,971,375		2,782,416
Accumulated deficit	(3,260,084)		(2,696,578)
Accumulated other comprehensive (loss) income	(2,078)		756
Total shareholders’ (deficit) equity	(289,357)		87,951
Total liabilities and shareholders’ equity	$	1,324,873	$	1,656,435

See accompanying notes to the unaudited consolidated financial statements

INSMED INCORPORATED

Consolidated Statements of Comprehensive Loss (unaudited)

(in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Product revenues, net	$	79,072	$	67,730	$	221,515	$	186,058

Operating expenses:
Cost of product revenues (excluding amortization of intangible assets)	16,706		13,471		47,130		42,057
Research and development	109,148		99,872		433,982		272,755
Selling, general and administrative	90,626		75,583		254,971		192,305
Amortization of intangible assets	1,263		1,263		3,789		3,789
Change in fair value of deferred and contingent consideration liabilities	8,997		5,238		12,997		(19,002)
Total operating expenses	226,740		195,427		752,869		491,904

Operating loss	(147,668)		(127,697)		(531,354)		(305,846)

Investment income	10,583		1,791		32,279		2,763
Interest expense	(20,288)		(3,353)		(60,910)		(10,001)
Change in fair value of interest rate swap	(1,301)		—		(1,650)		—

Other income (expense), net	285		(1,514)		(314)		(7,069)
Loss before income taxes	(158,389)		(130,773)		(561,949)		(320,153)

Provision for income taxes	544		372		1,557		1,258

Net loss	$	(158,933)	$	(131,145)	$	(563,506)	$	(321,411)

Basic and diluted net loss per share	$	(1.11)	$	(1.09)	$	(4.06)	$	(2.68)

Weighted average basic and diluted common shares outstanding	142,899		120,789		138,960		119,780

Net loss	$	(158,933)	$	(131,145)	$	(563,506)	$	(321,411)
Other comprehensive income (loss):
Foreign currency translation loss	(1,075)		(553)		(3,448)		(1,255)
Unrealized gain (loss) on marketable securities	248		96		614		(1,099)
Total comprehensive loss	$	(159,760)	$	(131,602)	$	(566,340)	$	(323,765)

See accompanying notes to the unaudited consolidated financial statements

INSMED INCORPORATED

Consolidated Statements of Shareholders' Equity (unaudited)

(in thousands)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at June 30, 2022	119,865	$	1,199	$	2,449,281	$	(2,405,310)	$	(929)	$	44,241
Comprehensive loss:
Net loss						(131,145)				(131,145)
Other comprehensive loss								(457)		(457)
Exercise of stock options and ESPP shares issuance	395	3		4,066						4,069
Net proceeds from issuance of common stock	1,290	13		33,370						33,383
Issuance of common stock for vesting of RSUs	5	—								—
Deferred business combination payments	171	2		4,294						4,296
Stock compensation expense				15,654						15,654
Balance at September 30, 2022	121,726	$	1,217	$	2,506,665	$	(2,536,455)	$	(1,386)	$	(29,959)

Balance at June 30, 2023	142,750	$	1,428	$	2,945,229	$	(3,101,151)	$	(1,251)	$	(155,745)
Comprehensive loss:
Net loss						(158,933)				(158,933)
Other comprehensive income								(827)		(827)
Exercise of stock options and ESPP shares issuance	121	—		2,258						2,258

Issuance of common stock for vesting of RSUs	1	—		—						—
Deferred payments for Business Acquisition	177	2		3,895						3,897

Stock compensation expense				19,993						19,993
Balance at September 30, 2023	143,049	$	1,430	$	2,971,375	$	(3,260,084)	$	(2,078)	$	(289,357)

See accompanying notes to the unaudited consolidated financial statements

INSMED INCORPORATED

Consolidated Statements of Shareholders' Equity (unaudited)

(in thousands)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at December 31, 2021	118,738	$	1,187	$	2,673,556	$	(2,265,243)	$	968	$	410,468
Cumulative impact of ASU 2020-06 adoption				(264,609)		50,199				(214,410)
Comprehensive loss:
Net loss						(321,411)				(321,411)
Other comprehensive loss								(2,354)		(2,354)
Exercise of stock options and ESPP shares issuance	1,190	11		17,318						17,329
Net proceeds from issuance of common stock	1,290	13		33,370						33,383
Issuance of common stock for vesting of RSUs	337	4								4
Deferred business combination payments	171	2		4,294						4,296
Stock compensation expense				42,736						42,736
Balance at September 30, 2022	121,726	$	1,217	$	2,506,665	$	(2,536,455)	$	(1,386)	$	(29,959)

Balance at December 31, 2022	135,654	$	1,357	$	2,782,416	$	(2,696,578)	$	756	$	87,951
Comprehensive loss:
Net loss						(563,506)				(563,506)
Other comprehensive income								(2,834)		(2,834)
Exercise of stock options and ESPP shares issuance	716	7		10,674						10,681
Net proceeds from issuance of common stock	2,028	20		37,994						38,014
Issuance of common stock for vesting of RSUs	543	5								5
Deferred payments for Business Acquisition	177	2		3,895						3,897
Issuance of common stock for asset acquisition	3,931	39		81,601						81,640
Stock compensation expense				54,795						54,795
Balance at September 30, 2023	143,049	$	1,430	$	2,971,375	$	(3,260,084)	$	(2,078)	$	(289,357)

See accompanying notes to the unaudited consolidated financial statements

INSMED INCORPORATED

Consolidated Statements of Cash Flows (unaudited)

(in thousands)


	Nine Months Ended September 30,
	2023		2022
Operating activities
Net loss	$	(563,506)	$	(321,411)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	4,052		3,095
Amortization of intangible assets	3,789		3,789
Stock-based compensation expense	54,795		42,736

Amortization of debt issuance costs	5,568		2,465

Paid-in-kind interest capitalized	17,202		—
Royalty financing non-cash interest expense	14,016		—
Accretion of discount on marketable securities, net	(6,291)		—
Finance lease amortization expense	2,034		1,846
Non-cash operating lease expense	8,423		11,440
Change in fair value of deferred and contingent consideration liabilities	12,997		(19,002)
Change in fair value of interest rate swap	1,650		—
Vertuis acquisition	10,250		—
Adrestia acquisition	76,481		—
Changes in operating assets and liabilities:
Accounts receivable	(7,428)		(5,440)
Inventory	(9,179)		624
Prepaid expenses and other current assets	(1,196)		1,806
Other assets	(16,905)		(13,023)
Accounts payable and accrued liabilities	(6,554)		15,137
Other liabilities	(5,626)		(21,352)

Net cash used in operating activities	(405,428)		(297,290)
Investing activities
Purchase of fixed assets	(11,135)		(5,187)
Purchase of marketable securities	(292,689)		(99,706)
Cash acquired in asset acquisition	3,417		—
Maturities of marketable securities	75,000		50,000
Net cash used in investing activities	(225,407)		(54,893)
Financing activities
Proceeds from exercise of stock options and ESPP	10,763		17,333
Proceeds from issuance of common stock, net	38,014		33,383




Payments of finance lease principal	(2,383)		(830)

Payment of debt issuance costs	(1,218)		—
Net cash provided by financing activities	45,176		49,886
Effect of exchange rates on cash and cash equivalents	(1,264)		148
Net decrease in cash and cash equivalents	(586,923)		(302,149)
Cash and cash equivalents at beginning of period	1,074,036		716,782
Cash and cash equivalents at end of period	$	487,113	$	414,633
Supplemental disclosures of cash flow information:
Cash paid for interest	$	27,461	$	7,442
Cash paid for income taxes	$	1,880	$	1,626

See accompanying notes to the unaudited consolidated financial statements

Table of Contents

INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The Company and Basis of Presentation

Insmed is a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. The Company's first commercial product, ARIKAYCE, is approved in the United States (US) as ARIKAYCE® (amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion and in Japan as ARIKAYCE inhalation 590mg (amikacin sulfate inhalation drug product). ARIKAYCE received accelerated approval in the US in September 2018 for the treatment of Mycobacterium avium complex (MAC) lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options in a refractory setting. In October 2020, the European Commission (EC) approved ARIKAYCE for the treatment of nontuberculous mycobacterial (NTM) lung infections caused by MAC in adults with limited treatment options who do not have cystic fibrosis (CF). In March 2021, Japan's Ministry of Health, Labour and Welfare (MHLW) approved ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrug regimen. NTM lung disease caused by MAC (which the Company refers to as MAC lung disease) is a rare and often chronic infection that can cause irreversible lung damage and can be fatal. The Company's pipeline includes brensocatib, treprostinil palmitil inhalation powder (TPIP) and early-stage research programs. Brensocatib is a small molecule, oral, reversible inhibitor of dipeptidyl peptidase 1 (DPP1), which the Company is developing for the treatment of patients with bronchiectasis, as well as other neutrophil-mediated diseases, including chronic rhinosinusitis without nasal polyps (CRSsNP). TPIP is an inhaled formulation of the treprostinil prodrug treprostinil palmitil which may offer a differentiated product profile for pulmonary hypertension associated with interstitial lung disease (PH-ILD) and pulmonary arterial hypertension (PAH). The Company is also advancing its early-stage research programs encompassing a wide range of technologies and modalities, including gene therapy, artificial intelligence-driven protein engineering, protein manufacturing, and synthetic rescue.

The Company was incorporated in the Commonwealth of Virginia on November 29, 1999 and its principal executive offices are located in Bridgewater, New Jersey. The Company has legal entities in the US, France, Germany, Ireland, Italy, the Netherlands, Switzerland, the United Kingdom (UK), and Japan.

The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the US (GAAP) for complete consolidated financial statements are not included herein. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Any references in these notes to applicable accounting guidance are meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB).

The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. The unaudited interim consolidated financial information presented herein reflects all normal adjustments that are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. All intercompany transactions and balances have been eliminated in consolidation.

The Company had $487.1 million in cash and cash equivalents and $298.8 million of marketable securities as of September 30, 2023 and reported a net loss of $563.5 million for the nine months ended September 30, 2023. The Company has funded its operations through public offerings of equity securities, debt financings and revenue interest financings. The Company expects to continue to incur consolidated operating losses, including losses in its US and certain international entities, while funding research and development (R&D) activities for ARIKAYCE, brensocatib, TPIP and its other pipeline programs, continuing commercialization and regulatory activities for ARIKAYCE and pre-commercial, regulatory and, if approved, commercialization activities for brensocatib, and funding other general and administrative activities.

The Company expects its future cash requirements to be substantial. While the Company currently has sufficient funds to meet its financial needs for at least the next 12 months, the Company may raise additional capital in the future to fund its operations, its ongoing commercialization and clinical trial activities, and its future product candidates, and to develop, acquire, in-license or co-promote other products or product candidates, including those that address orphan or rare diseases. The source, timing and availability of any future financing or other transaction will depend principally upon continued progress in the Company’s commercial, regulatory and development activities. Any future financing will also be contingent upon market conditions. If the Company is unable to obtain sufficient additional funds when required, the Company may be forced to delay, restrict or eliminate all or a portion of its development programs or commercialization efforts.

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies

The Company’s complete listing of significant accounting policies is set forth in Note 2 of the notes to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Selected significant accounting policies are discussed in further detail below.

Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions. The amounts of assets and liabilities reported in the Company's balance sheets and the amounts of revenues and expenses reported for each period presented are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue allowances, stock-based compensation, income taxes, loss contingencies, acquisition related intangibles including in process research and development (IPR&D) and goodwill, fair value of contingent consideration, and accounting for research and development costs. Actual results could differ from those estimates.

Concentration of Credit Risk - Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash equivalents with high credit-quality financial institutions and may invest its short-term investments in US treasury securities, mutual funds and government agency bonds. The Company has established guidelines relative to credit ratings and maturities that seek to maintain safety and liquidity.

The Company is exposed to risks associated with extending credit to customers related to the sale of products. The Company does not require collateral to secure amounts due from its customers. The Company uses an expected loss methodology to calculate allowances for trade receivables. The Company's measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company does not currently have a material allowance for uncollectible trade receivables. The following table presents the percentage of gross product revenue represented by the Company's three largest customers as of the nine months ended September 30, 2023 and their respective percentages for the nine months ended September 30, 2022.


	September 30,
	2023	2022
Customer A	35%	33%
Customer B	35%	35%
Customer C	18%	19%

The Company relies on third-party manufacturers and suppliers for manufacturing and supply of its products. The inability of the suppliers or manufacturers to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with the suppliers or manufacturers, or an adverse change in their business, could materially impact future operating results.

Cost of product revenues (excluding amortization of intangible assets) consist primarily of direct and indirect costs related to the manufacturing of ARIKAYCE sold, including third-party manufacturing costs, packaging services, freight, and allocation of overhead costs, in addition to royalty expenses and revenue-based milestone payments. Cost is determined using a standard cost method, which approximates actual cost, and assumes a first in, first out flow of goods. Inventory used for clinical development purposes is expensed to R&D expense when consumed. See Note 5 - Inventory for further details.

Acquisitions - The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met,

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business.

If determined to be a business combination, the Company accounts for the transaction under the acquisition method of accounting as indicated in ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquiree and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, and non-controlling interest in the acquiree based on the fair value estimates as of the date of acquisition. In accordance with ASC 805, Business Combinations, the Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.

The consideration for the Company’s business acquisitions may include future payments that are contingent upon the occurrence of a particular event or events. The obligations for such contingent consideration payments are recorded at fair value on the acquisition date. The contingent consideration obligations are then evaluated each reporting period. Changes in the fair value of contingent consideration, other than changes due to payments, are recognized as a gain or loss and recorded within change in the fair value of deferred and contingent consideration liabilities in the consolidated statements of comprehensive loss.

If determined to be an asset acquisition, the Company accounts for the transaction under ASC 805-50, which requires the acquiring entity to recognize assets acquired and liabilities assumed based on the cost to the acquiring entity on a relative fair value basis, which includes transaction costs in addition to consideration given. No gain or loss is recognized as of the date of acquisition unless the fair value of non-cash assets given as consideration differs from the assets’ carrying amounts on the acquiring entity’s books. Consideration transferred that is non-cash will be measured based on either the cost (which shall be measured based on the fair value of the consideration given) or the fair value of the assets acquired and liabilities assumed, whichever is more reliably measurable. Goodwill is not recognized in an asset acquisition and any excess consideration transferred over the fair value of the net assets acquired is allocated to the identifiable assets based on relative fair values. If the in-licensed agreement for IPR&D does not meet the definition of a business and the assets have not reached technological feasibility and therefore have no alternative future use, the Company expenses payments made under such license agreements as acquired IPR&D expense in its consolidated statement of comprehensive loss. Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the consideration is paid or becomes payable (unless the contingent consideration meets the definition of a derivative, in which case the amount becomes part of the basis in the asset acquired). Upon recognition of the contingent consideration payment, the amount is included in the cost of the acquired asset or group of assets. See Note 16 - Acquisitions for further information.

Indefinite-lived Intangible Assets - Indefinite-lived intangible assets consist of IPR&D. IPR&D acquired directly in a transaction other than a business combination is capitalized if the projects will be further developed or have an alternative future use; otherwise, they are expensed. The fair values of IPR&D project assets acquired in business combinations are capitalized. The Company generally utilizes the Multi-Period Excess Earning Method to determine the estimated fair value of the IPR&D assets acquired in a business combination. The projections used in this valuation approach are based on many factors, such as relevant market size, patent protection, and expected pricing and industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate. Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company considers many factors in evaluating whether the value of its intangible assets with indefinite lives may not be recoverable, including, but not limited to, expected growth rates, the cost of equity and debt capital, general economic conditions, the Company’s outlook and market performance of the Company’s industry and recent and forecasted financial performance. The Company performs a qualitative test for its indefinite-lived intangible assets annually as of October 1. See Note 6 - Intangibles, Net and Goodwill for further details.

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

Finite-lived Intangible Assets - Finite-lived intangible assets are measured at their respective fair values on the date they were recorded. The fair values assigned to the Company's intangible assets are based on reasonable estimates and assumptions given available facts and circumstances. See Note 6 - Intangibles, Net and Goodwill for further details.

Impairment Assessment - The Company reviews the recoverability of its finite-lived intangible assets and long-lived assets for indicators of impairments. Events or circumstances that may require an impairment assessment include negative clinical trial results, a significant decrease in the market price of the asset, or a significant adverse change in legal factors or the manner in which the asset is used. If such indicators are present, the Company assesses the recoverability of affected assets by determining if the carrying value of such assets is less than the sum of the undiscounted future cash flows of the assets. If such assets are found to not be recoverable, the Company measures the amount of the impairment by comparing the carrying value of the assets to the fair value of the assets.

Goodwill - Goodwill represents the amount of consideration paid in excess of the fair value of net assets acquired as a result of the Company’s business acquisitions accounted for using the acquisition method of accounting. Goodwill is not amortized and is subject to impairment testing at a reporting unit level on an annual basis or when a triggering event occurs that may indicate the carrying value of the goodwill is impaired. An entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. As of September 30, 2023 and December 31, 2022, the Company continues to operate as one reporting unit. The Company will perform its next annual impairment testing for goodwill as of October 1, 2023. See Note 6 - Intangibles, Net and Goodwill for further details.

Leases are measured at present value using the rate implicit in the lease or, if the implicit rate is not determinable, the lessee's implicit borrowing rate. As the implicit rate is not typically available, the Company uses its implicit borrowing rate based on the information available at the lease commencement date to determine the present value of future lease payments. The implicit borrowing rate approximates the rate the Company would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments. See Note 9 - Leases for further details.

Foreign Currency - The Company has operations in the US, France, Germany, Ireland, Italy, the Netherlands, Switzerland, the UK, and Japan. The results of the Company's non-US dollar based functional currency operations are translated to US dollars at the average exchange rates during the period. Assets and liabilities are translated at the exchange rate prevailing at the balance sheet date. Equity is translated at the prevailing exchange rate at the date of the equity transaction. Translation adjustments are included in shareholders' (deficit) equity, as a component of accumulated other comprehensive (loss) income.

The Company realizes foreign currency transaction gains and losses in the normal course of business based on movements in the applicable exchange rates. These gains and losses are included as a component of other income (expense), net.

Debt Issuance Costs - Debt issuance costs are amortized to interest expense using the effective interest rate method over the term of the debt. Unamortized debt issuance costs paid to the lender and third parties are reflected as a discount to the debt in the consolidated balance sheets. Unamortized debt issuance costs associated with extinguished debt are expensed in the period of the extinguishment.

Synthetic Royalty Financing Agreement - In October 2022, the Company entered into a revenue interest purchase agreement (the Royalty Financing Agreement) with OrbiMed Royalty & Credit Opportunities IV, LP (OrbiMed). The fair value of the Royalty Financing Agreement at the time of the transaction was based on the Company’s estimates of future royalties

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

expected to be paid to OrbiMed over the life of the arrangement, which was determined using forecasts from market data sources, which are considered Level 3 inputs. This liability is being amortized using the effective interest method over the life of the arrangement, in accordance ASC 470, Debt and ASC 835, Interest. The Company is utilizing the prospective method to account for subsequent changes in the estimated future payments to be made to OrbiMed and updates the effective interest rate on a quarterly basis. See Note 11 - Royalty Financing Agreement for further details.

Derivatives - In the normal course of business, the Company is exposed to the effects of interest rate changes. The Company may enter into derivative instruments, including interest rate swaps and caps, to manage or hedge interest rate risk. Derivative instruments are recorded at fair value on the balance sheet date. The Company has not elected hedge accounting treatment for the changes in the fair value of derivatives. Changes in the fair value of derivatives are recorded each period and are included in change in fair value of interest rate swap in the consolidated statements of comprehensive loss and consolidated statements of cash flows.

Net Loss Per Share - Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of common shares and other dilutive securities outstanding during the period. Potentially dilutive securities from stock options, restricted stock (RS), restricted stock units (RSUs), performance stock units (PSUs) and convertible debt securities would be anti-dilutive as the Company incurred a net loss. Potentially dilutive common shares resulting from the assumed exercise of outstanding stock options and from the assumed conversion of the Company's convertible notes are determined based on the treasury stock method.

The following table sets forth the reconciliation of the weighted average number of common shares used to compute basic and diluted net loss per share for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Numerator:
Net loss	$	(158,933)	$	(131,145)	$	(563,506)	$	(321,411)
Denominator:
Weighted average common shares used in calculation of basic net loss per share:	142,899		120,789		138,960		119,780
Effect of dilutive securities:
Common stock options	—		—		—		—
RS and RSUs	—		—		—		—
PSUs	—		—		—		—
Convertible debt securities	—		—		—		—
Weighted average common shares outstanding used in calculation of diluted net loss per share	142,899		120,789		138,960		119,780
Net loss per share:
Basic and diluted	$	(1.11)	$	(1.09)	$	(4.06)	$	(2.68)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

The following potentially dilutive securities have been excluded from the computations of diluted weighted average common shares outstanding as of September 30, 2023 and 2022, respectively, as their effect would have been anti-dilutive (in thousands):


	September 30,
	2023	2022
Common stock options	22,496	17,459
Unvested RS and RSUs	2,787	1,582
PSUs	666	672
Convertible debt securities	23,438	23,438

Recently Adopted Accounting Pronouncements - In August 2020, the Financial Accounting Standards Board issued ASU 2020-06, Debt — Accounting for Convertible Instruments, to reduce the complexity associated with applying GAAP to certain financial instruments with characteristics of liabilities and equity. For convertible instruments, the number of accounting models for convertible debt instruments is reduced, which results in fewer embedded conversion features being separately recognized from the host contract. Only convertible instruments that meet the definition of a derivative or are issued with substantial premiums will continue to be subject to the separation models. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021. A modified retrospective and a fully retrospective transition method are both permitted. The Company transitioned using the modified retrospective method. The impact of adopting ASU 2020-06 on January 1, 2022 resulted in an opening balance sheet adjustment increasing debt by approximately $221.9 million, increasing issuance costs classified to debt by $6.1 million, decreasing the deferred tax liability by $1.4 million, and increasing retained earnings by $50.2 million, with an offsetting reduction to additional paid-in-capital of $264.6 million, net of tax.

3. Fair Value Measurements

The Company categorizes its financial assets and liabilities measured and reported at fair value in the financial statements on a recurring basis based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs used to determine the fair value of financial assets and liabilities, are as follows:

•Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

•Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

•Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Each major category of financial assets and liabilities measured at fair value on a recurring basis is categorized based upon the lowest level of significant input to the valuations. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Financial instruments in Level 1 generally include US treasuries and mutual funds listed in active markets. The Company's cash and cash equivalents permit daily redemption and the fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions.

The following table shows assets and liabilities that are measured at fair value on a recurring basis and their carrying value (in millions):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Fair Value Measurements (Continued)


	September 30, 2023
			Fair Value
	Carrying Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	487.1	$	487.1	$	—	$	—
Marketable securities	$	298.8	$	298.8	$	—	$	—
Collateral for interest rate swap	$	5.0	$	5.0	$	—	$	—
Liabilities
Interest rate swap	$	3.2	$	—	$	3.2	$	—
Deferred consideration	$	4.7	$	—	$	4.7	$	—
Contingent consideration	$	69.9	$	—	$	—	$	69.9


	December 31, 2022
			Fair Value
	Carrying Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	1,074.0	$	1,074.0	$	—	$	—
Marketable securities	$	74.2	$	74.2	$	—	$	—
Collateral for interest rate swap	$	5.0	$	5.0	$	—	$	—
Liabilities
Interest rate swap	$	1.5	$	—	$	1.5	$	—
Deferred consideration	$	7.4	$	—	$	7.4	$	—
Contingent consideration	$	58.1	$	—	$	—	$	58.1

The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. The collateral for interest rate swap and the interest rate swap are recorded in other assets and accounts payable and accrued liabilities, respectively, in the consolidated balance sheet as of September 30, 2023 and December 31, 2022. The collateral for interest rate swap is cash, a Level 1 asset. The interest rate swap is a Level 2 liability as it uses observable inputs other than quoted market prices in an active market. There were no transfers in or out of Level 1, Level 2 or Level 3 during the three and nine months ended September 30, 2023.

As of September 30, 2023, the Company held $298.8 million of current available-for-sale securities, net of an unrealized gain of $0.1 million recorded in accumulated other comprehensive (loss) income. Marketable securities maturing in one year or less are classified as current assets and marketable securities maturing in more than one year are classified as non-current assets.

The Company reviews the status of each security quarterly to determine whether an other-than-temporary impairment has occurred. In making its determination, the Company considers a number of factors, including: (1) the significance of the decline; (2) whether the security was rated below investment grade; (3) failure of the issuer to make scheduled interest or principal payments; and (4) the Company's ability and intent to retain the investment for a sufficient period of time for it to recover. The Company has determined that there were no other-than-temporary impairments during the three and nine months ended September 30, 2023.

Deferred Consideration

The deferred consideration arose from the acquisitions of Motus Biosciences, Inc. (Motus) and AlgaeneX, Inc. (AlgaeneX) (the Business Acquisition) in August 2021. The Company is obligated to issue to Motus equityholders an aggregate of 184,433 shares of the Company’s common stock on each of the first, second and third anniversaries of the closing date, subject to certain reductions. During August 2022 and August 2023, the Company fulfilled the payments due on the first and second anniversaries of the closing date by issuing 171,427 shares and 177,203 shares of the Company's common stock,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Fair Value Measurements (Continued)

respectively, after certain reductions. A valuation of the deferred consideration is performed quarterly with gains and losses included within change in fair value of deferred and contingent consideration liabilities in the consolidated statements of comprehensive loss. As the deferred consideration is settled in shares, there is no discount rate applied in the fair value calculation.

The deferred consideration has been classified as a Level 2 recurring liability as its valuation utilizes an input, the Insmed share price, which is a directly observable input at the measurement date and for the duration of the liabilities' anticipated lives. Deferred consideration expected to be settled within twelve months or less is classified as a current liability within accounts payable and accrued liabilities. As of September 30, 2023, the fair value of deferred consideration included in accounts payable and accrued liabilities was $4.7 million.

The following observable input was used in the valuation of the deferred consideration as of September 30, 2023:


	Fair Value as of September 30, 2023 (in millions)	Observable Input	Input Value
Deferred consideration	$4.7	Insmed share price as of September 30, 2023	$25.25

Contingent Consideration

The contingent consideration liabilities arose from the Business Acquisition in August 2021 (Note 16). The contingent consideration liabilities consist of developmental and regulatory milestones, a priority review voucher milestone and net sales milestones. Upon the achievement of certain development and regulatory milestone events, the Company is obligated to issue to Motus equityholders up to 5,348,572 shares in the aggregate and AlgaeneX equityholders up to 368,867 shares in the aggregate. The fair value of the development and regulatory milestones are estimated utilizing a probability-adjusted approach. At September 30, 2023, the weighted average probability of success was 42%. The development and regulatory milestones will be settled in shares of the Company's common stock. As such, there is no discount rate applied in the fair value calculation.

If the Company were to receive a priority review voucher, the Company is obligated to pay to the Motus equityholders a portion of the value of the priority review voucher, subject to certain reductions. The potential payout will be either 50% of the after tax net proceeds received by the Company from a sale of the priority review voucher or 50% of the average of the sales prices for the last three publicly disclosed priority review voucher sales, less certain adjustments. The fair value of the priority review voucher milestone is estimated utilizing a probability-adjusted discounted cash flow approach. This obligation will be settled in cash.

The contingent consideration liabilities for net sales milestones were valued using an option pricing model with Monte Carlo simulation. As of September 30, 2023, the fair value of these net sales milestones were deemed immaterial to the overall fair value of the contingent consideration.

The contingent consideration liabilities have been classified as a Level 3 recurring liability as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market. If different assumptions were used for the inputs to the valuation approach, the estimated fair value could be significantly different than the fair value the Company determined. Contingent consideration expected to be settled within twelve months or less is classified as a current liability within accounts payable and accrued liabilities. There is no contingent consideration expected to be settled within twelve months of September 30, 2023. Contingent consideration expected to be settled in more than twelve months is classified as a non-current liability. As of September 30, 2023, the fair value of non-current contingent consideration was $69.9 million.

A valuation of the contingent consideration liabilities is performed quarterly with gains and losses included within change in fair value of contingent consideration liabilities in the consolidated statements of comprehensive loss. The following significant unobservable inputs were used in the valuation of the development and regulatory milestones and the priority review voucher milestone as of September 30, 2023:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Fair Value Measurements (Continued)

Fair Value as of September 30, 2023 (in millions)

Valuation Technique

Unobservable Inputs

Values

Development and regulatory milestones

$61.0

Probability-adjusted

Probabilities of success

14% - 97%

Priority review voucher milestone

$5.6

Probability-adjusted discounted cash flow

Probability of success

16.4%

Discount rate

11.2%

The following table is a summary of the changes in the fair value of the Company's valuations for the deferred and contingent consideration liabilities for the nine months ended September 30, 2023 and 2022 (in thousands):


	Deferred Consideration (Level 2 Liabilities)		Contingent Consideration (Level 3 Liabilities)
Balance as of December 31, 2021	$	14,931	$	75,668
Additions	—		—
Change in Fair Value	(2,635)		(16,368)
Payments	(4,296)		—
Balance as of September 30, 2022	$	8,000	$	59,300

Balance as of December 31, 2022	$	7,400	$	58,100
Additions	—		—
Change in Fair Value	1,200		11,800
Payments	(3,900)		—
Balance as of September 30, 2023	$	4,700	$	69,900

Convertible Notes

The fair value of the convertible notes, which differs from their carrying value, is influenced by interest rates, the Company's stock price and stock price volatility (collectively, the Current Market Factors), and is determined by prices for the convertible notes observed in market trading which are Level 2 inputs.

The estimated fair value of the liability component of the Company's 0.75% convertible senior notes due 2028 (the 2028 Convertible Notes) (categorized as a Level 2 liability for fair value measurement purposes) as of September 30, 2023 was $581.5 million, determined using Current Market Factors and the ability of the Company to obtain debt on comparable terms to the 2028 Convertible Notes.

The estimated fair value of the liability component of the Company's 1.75% convertible senior notes due 2025 (the 2025 Convertible Notes) (categorized as a Level 2 liability for fair value measurement purposes) as of September 30, 2023 was $223.9 million, determined using Current Market Factors, and the ability of the Company to obtain debt on comparable terms to the 2025 Convertible Notes. See Note 10 - Debt for further details on the Company's convertible notes.

4. Product Revenues, Net

In accordance with ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies a performance obligation. At contract inception, the Company assesses the goods or services promised within each contract to determine which are performance obligations and to assess whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. For all contracts that fall into the scope of ASC 606, the Company has identified one performance obligation: the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Product Revenues, Net (Continued)

sale of ARIKAYCE to its customers. The Company has not incurred or capitalized any incremental costs associated with obtaining contracts with customers.

Product revenues, net consist of net sales of ARIKAYCE. The Company's customers in the US include specialty pharmacies and specialty distributors. In December 2020, the Company began recognizing product revenue from commercial sales of ARIKAYCE in Europe. In July 2021, the Company began recognizing product revenue from commercial sales of ARIKAYCE in Japan. Globally, product revenues are recognized once the Company performs and satisfies all five steps of the revenue recognition criteria mentioned above.

The following table presents a summary of the Company's product revenues, net, by geographic location for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
US	$	59,203	$	49,539	$	165,935	$	137,511
Japan	16,033		14,483		44,782		41,008
Europe and rest of world	3,836		3,708		10,798		7,539
Total product revenues, net	$	79,072	$	67,730	$	221,515	$	186,058

Revenue is recorded at net selling price (transaction price), which includes estimates of variable consideration for which reserves are established for (a) customer credits, such as invoice discounts for prompt pay, (b) estimated government rebates, such as Medicaid and Medicare Part D reimbursements, and estimated managed care rebates, (c) estimated chargebacks, and (d) estimated costs of co-payment assistance. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (prompt pay discounts and chargebacks), prepaid expenses (co-payment assistance), or as a current liability (rebates). Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as the Company's historical experience, current contractual and statutory requirements, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on the terms of the applicable contract. The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known.

Customer credits: Certain of the Company's customers are offered various forms of consideration, including prompt payment discounts. The payment terms for sales to specialty pharmacies and specialty distributors for prompt payment discounts are based on contractual rates agreed with the respective specialty pharmacies and distributors. The Company anticipates that its customers will earn these discounts and, therefore, deducts the full amount of these discounts from total gross product revenues at the time such revenues are recognized.

Rebates: The Company contracts with certain government agencies and managed care organizations, or collectively, third-party payors, so that ARIKAYCE will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. The Company estimates the rebates it will provide to third-party payors and deducts these estimated amounts from total gross product revenues at the time the revenues are recognized. These reserves are recorded in the same period in which the revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. The current liability is included in accounts payable and accrued liabilities on the consolidated balance sheets. The Company estimates the rebates that it will provide to third-party payors based upon (i) the Company's contracts with these third-party payors, (ii) the government mandated discounts applicable to government-funded programs, (iii) a range of possible outcomes that are probability-weighted for the estimated payor mix, and (iv) information obtained from the Company's specialty pharmacies.

Chargebacks: Chargebacks are discounts that occur when certain contracted customers, currently public health service institutions and federal government entities purchasing via the Federal Supply Schedule, purchase directly from the Company's specialty distributor. Contracted customers generally purchase the product at a discounted price and the specialty distributor, in turn, charges back to the Company the difference between the price the specialty distributor initially paid and the discounted price paid by the contracted customers. The Company estimates chargebacks provided to the specialty distributor and deducts these estimated amounts from gross product revenues, and from accounts receivable, at the time revenues are recognized.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Product Revenues, Net (Continued)

Co-payment assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. Based upon the terms of the program and information regarding programs provided for similar specialty pharmaceutical products, the Company estimates the average co-pay mitigation amounts and the percentage of patients that it expects to participate in the program in order to establish accruals for co-payment assistance. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue. The Company adjusts its accruals for co-pay assistance based on actual redemption activity and estimates of future redemptions related to sales in the current period.

If any, or all, of the Company's actual experience varies from its estimates, the Company may need to adjust prior period accruals, affecting revenue in the period of adjustment.

The Company also recognizes revenue related to various early access programs (EAPs) in Europe. EAPs are intended to make products available on a named patient basis before they are commercially available in accordance with local regulations.

5. Inventory

As of September 30, 2023 and December 31, 2022, the Company's inventory balance consists of the following (in thousands):


	September 30, 2023		December 31, 2022

Raw materials	$	26,278	$	27,245
Work-in-process	31,891		22,460
Finished goods	19,754		20,217
	$	77,923	$	69,922

The Company has not recorded any significant inventory write-downs. The Company currently uses a limited number of third-party contract manufacturing organizations (CMOs) to produce its inventory.

6. Intangibles, Net and Goodwill

Intangibles, Net

Finite-lived Intangible Assets

As of September 30, 2023, the Company's finite-lived intangible assets consisted of acquired ARIKAYCE R&D and the milestones paid to PARI for the license to use Lamira for the delivery of ARIKAYCE to patients as a result of the FDA and EC approvals of ARIKAYCE in September 2018 and October 2020, respectively. The Company began amortizing the intangible assets acquired in connection with the ARIKAYCE R&D and PARI milestones in October 2018. These intangible assets will be amortized over ARIKAYCE's initial regulatory exclusivity period of 12 years. Amortization of these assets during each of the next five years is estimated to be approximately $5.1 million per year.

Indefinite-lived Intangible Assets

As of September 30, 2023, the Company's indefinite-lived intangible assets consisted of acquired IPR&D from the Business Acquisition (Note 16). Indefinite-lived intangible assets are not amortized.

A rollforward of the Company's intangible assets for the nine months ended September 30, 2023 and September 30, 2022 is as follows (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Intangibles, Net and Goodwill (Continued)



Intangible Asset	December 31, 2022		Additions		Amortization		September 30, 2023
Acquired ARIKAYCE R&D	$	37,588	$	—	$	(3,638)	$	33,950
Acquired IPR&D	29,600		—		—		29,600
PARI milestones	1,568		—		(151)		1,417
	$	68,756	$	—	$	(3,789)	$	64,967

Intangible Asset	December 31, 2021		Additions		Amortization		September 30, 2022
Acquired ARIKAYCE R&D	$	42,439	$	—	$	(3,638)	$	38,801
Acquired IPR&D	29,600		—		—		29,600
PARI milestones	1,770		—		(151)		1,619
	$	73,809	$	—	$	(3,789)	$	70,020

Goodwill

The Company's goodwill balance of $136.1 million as of September 30, 2023 and December 31, 2022, resulted from the August 2021 Business Acquisition. See Note 16 - Acquisitions for further details.

7. Fixed Assets, Net

Fixed assets are stated at cost and depreciated using the straight-line method, based on useful lives as follows (in thousands):


	Estimated Useful Life (years)	As of
Asset Description		September 30, 2023		December 31, 2022

Lab equipment	7	$	22,503	$	16,403
Furniture and fixtures	7	6,428		6,428
Computer hardware and software	3-5	5,959		5,227
Office equipment	7	89		89
Manufacturing equipment	7	1,336		1,203
Leasehold improvements	2-10	37,937		37,057
Construction in progress	—	33,512		29,529
		107,764		95,936
Less: accumulated depreciation		(43,134)		(39,445)
		$	64,630	$	56,491

8. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Accounts Payable and Accrued Liabilities (Continued)


	As of
	September 30, 2023		December 31, 2022
Accounts payable and other accrued operating expenses	$	65,377	$	50,461
Accrued clinical trial expenses	21,183		36,456
Accrued professional fees	19,239		14,403
Accrued technical operation expenses	4,252		3,345

Accrued compensation and employee related costs	33,870		32,040
Accrued royalty and milestones payable	5,979		4,710
Accrued interest payable	2,262		6,340
Revenue Interest Payments payable	3,163		2,149
Accrued sales allowances and related costs	9,464		6,974
Accrued France ATU reimbursement payable	15,072		12,943
Deferred and contingent consideration	5,700		10,700

Other accrued liabilities	2,222		1,596
	$	187,783	$	182,117

9. Leases

The Company's lease portfolio consists primarily of office and laboratory space, manufacturing facilities, research equipment and fleet vehicles. All of the Company's leases are classified as operating leases, except for the Company's leases of its corporate headquarters and a research facility in San Diego, which are classified as finance leases. The terms of the Company's lease agreements that have commenced range from less than one year to ten years, ten months. In its assessment of the term of each such lease, the Company has not included any options to extend or terminate the lease due to the absence of economic incentives in its lease agreements. Leases that qualify for treatment as a short-term lease are expensed as incurred. These short-term leases are not material to the Company's financial position. Furthermore, the Company does not separate lease and non-lease components for all classes of underlying assets. The Company's leases do not contain residual value guarantees and it does not sublease any of its leased assets.

The Company outsources its manufacturing operations to CMOs. Upon review of the agreements with its CMOs, the Company determined that these contracts contain embedded leases for dedicated manufacturing facilities. The Company obtains substantially all of the economic benefits from the use of the manufacturing facilities, the Company has the right to direct how and for what purpose the facility is used throughout the period of use, and the supplier does not have the right to change the operating instructions of the facility. The operating lease right-of-use assets and corresponding lease liabilities associated with the manufacturing facilities is the sum of the minimum guarantees over the life of the production contracts.

The Company also records variable consideration for variable lease payments in excess of fixed fees or minimum guarantees. Variable consideration related to the Company's leasing arrangements was $3.9 million and $3.2 million for the three months ended September 30, 2023 and 2022, respectively, and $8.1 million and $4.9 million for the nine months ended September 30, 2023 and 2022, respectively. Variable costs related to CMO manufacturing agreements are direct costs related to the manufacturing of ARIKAYCE and are capitalized within inventory in the Company's consolidated balance sheet, while the variable costs related to other leasing arrangements, not related to the manufacturing of ARIKAYCE, have been classified within operating expenses in the Company's consolidated statements of comprehensive loss.

The table below summarizes the supplemental non-cash disclosures of the Company's leases included in its consolidated financial statements (in thousands):


	Three Months Ended September 30,			Nine Months Ended September 30,
		2023		2022		2023		2022
Finance right-of-use assets obtained in exchange for lease obligations		$	—	$	—	$	—	$	9,287
Operating right-of-use assets obtained in exchange for lease obligations		$	3,089	$	58	$	4,970	$	565

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. Leases (Continued)

In addition to the Company's lease agreements that have previously commenced and are reflected in the consolidated financial statements, the Company has entered into additional lease agreements that have not yet commenced. The Company entered into certain agreements with Patheon UK Limited (Patheon) related to increasing its long-term production capacity for ARIKAYCE commercial inventory. The Company has determined that these agreements with Patheon contain an embedded lease for the manufacturing facility and the specialized equipment contained therein. Costs of $47.0 million and $40.7 million incurred by the Company under these additional agreements have been classified within other assets in the Company's consolidated balance sheet as of September 30, 2023 and December 31, 2022, respectively. Upon the commencement date, prepaid costs and minimum guarantees specified in the agreement will be combined to establish an operating lease ROU asset and operating lease liability.

10. Debt

Debt, long-term consists of the following commitments as of September 30, 2023 and December 31, 2022 (in thousands):


	As of
	September 30, 2023		December 31, 2022
Convertible notes	$	788,087	$	785,621
Term Loan	359,432		339,629
Debt, long-term	$	1,147,519	$	1,125,250

Convertible Notes

In May 2021, the Company completed an underwritten public offering of the 2028 Convertible Notes, in which the Company sold $575.0 million aggregate principal amount of the 2028 Convertible Notes, including the exercise in full of the underwriters' option to purchase an additional $75.0 million in aggregate principal amount of 2028 Convertible Notes. The Company's net proceeds from the offering, after deducting underwriting discounts and commissions and other offering expenses of $15.7 million, were approximately $559.3 million. The 2028 Convertible Notes bear interest payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2021. The 2028 Convertible Notes mature on June 1, 2028, unless earlier converted, redeemed, or repurchased.

In January 2018, the Company completed an underwritten public offering of the 2025 Convertible Notes, in which the Company sold $450.0 million aggregate principal amount of the 2025 Convertible Notes, including the exercise in full of the underwriters' option to purchase an additional $50.0 million in aggregate principal amount of 2025 Convertible Notes. The Company's net proceeds from the offering, after deducting underwriting discounts and commissions and other offering expenses of $14.2 million, were approximately $435.8 million. The 2025 Convertible Notes bear interest payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2018. The 2025 Convertible Notes mature on January 15, 2025, unless earlier converted, redeemed, or repurchased.

A portion of the net proceeds from the 2028 Convertible Notes was used to repurchase $225.0 million of the Company's outstanding 2025 Convertible Notes. The Company recorded a loss on early extinguishment of debt of $17.7 million, primarily related to the premium paid on extinguishment of a portion the 2025 Convertible Notes.

On or after October 15, 2024, until the close of business on the second scheduled trading day immediately preceding January 15, 2025, holders may convert their 2025 Convertible Notes at any time. The initial conversion rate for the 2025 Convertible Notes is 25.5384 shares of common stock per $1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of approximately $39.16 per share of common stock). On or after March 1, 2028, until the close of business on the second scheduled trading day immediately preceding June 1, 2028, holders may convert their 2028 Convertible Notes at any time. The initial conversion rate for the 2028 Convertible Notes is 30.7692 shares of common stock per $1,000 principal amount of 2028 Convertible Notes (equivalent to an initial conversion price of approximately $32.50 per share of common stock). Upon conversion of either the 2025 Convertible Notes or the 2028 Convertible Notes, holders may receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's option. The conversion rates will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

Holders may convert their 2025 Convertible Notes prior to October 15, 2024 or their 2028 Convertible Notes prior to March 1, 2028, only under the following circumstances, subject to the conditions set forth in the applicable indenture: (i) during

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Debt (Continued)

the five business day period immediately after any five consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of the applicable series of convertible notes, as determined following a request by a holder of such convertible notes, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on such trading day, (ii) the Company elects to distribute to all or substantially all holders of the common stock (a) any rights, options or warrants (other than in connection with a stockholder rights plan for so long as the rights issued under such plan have not detached from the associated shares of common stock) entitling them, for a period of not more than 45 days from the declaration date for such distribution, to subscribe for or purchase shares of common stock at a price per share that is less than the average of the last reported sale prices of the common stock for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the declaration date for such distribution, or (b) the Company's assets, debt securities or rights to purchase securities of the Company, which distribution has a per share value, as reasonably determined by the board of directors, exceeding 10% of the last reported sale price of the common stock on the trading day immediately preceding the declaration date for such distribution, (iii) if a transaction or event that constitutes a fundamental change or a make-whole fundamental change occurs, or if the Company is a party to (a) a consolidation, merger, combination, statutory or binding share exchange or similar transaction, pursuant to which the common stock would be converted into, or exchanged for, cash, securities or other property or assets, or (b) any sale, conveyance, lease or other transfer or similar transaction in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole, all or any portion of the applicable series of convertible notes may be surrendered by a holder for conversion at any time from or after the date that is 30 scheduled trading days prior to the anticipated effective date of the transaction, (iv) if during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 or June 30, 2021 for the 2025 Convertible Notes and the 2028 Convertible Notes, respectively (and only during such calendar quarter), the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day, or (v) if the Company sends a notice of redemption, a holder may surrender all or any portion of its convertible notes to which the notice of redemption relates for conversion at any time on or after the date the applicable notice of redemption was sent until the close of business on (a) the second business day immediately preceding the related redemption date or (b) if the Company fails to pay the redemption price on the redemption date as specified in such notice of redemption, such later date on which the redemption price is paid. To date, there have not been any holder-initiated redemption requests of either series of convertible notes.

Each series of convertible notes can be settled in cash, common stock, or a combination of cash and common stock at the Company's option, and thus, the Company determined the embedded conversion options in both series of convertible notes are not required to be separately accounted for as a derivative. However, since the convertible notes are within the scope of the accounting guidance for cash convertible instruments, the Company is required to separate each series of convertible notes into liability and equity components. The carrying amount of the liability component of each series of convertible notes as of the date of issuance was calculated by measuring the fair value of a similar liability that did not have an associated equity component. The fair value was based on data from readily available pricing sources that utilize market observable inputs and other characteristics for similar types of instruments. The carrying amount of the equity component representing the embedded conversion option for each series of convertible notes was determined by deducting the fair value of the liability component from the gross proceeds of the applicable convertible notes. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense over the expected life of a similar liability that does not have an associated equity component using the effective interest method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification in the accounting guidance for contracts in an entity’s own equity. The fair value of the liability component of the 2025 Convertible Notes on the date of issuance was estimated at $309.1 million using an effective interest rate of 7.6% and, accordingly, the residual equity component on the date of issuance was $140.9 million. The fair value of the liability component of the 2028 Convertible Notes on the date of issuance was estimated at $371.6 million using an effective interest rate of 7.1% and, accordingly, the residual equity component on the date of issuance was $203.4 million. The respective discounts were amortized to interest expense over the term of the applicable series of convertible notes through December 31, 2021, prior to the adoption of ASU 2020-06. The 2025 Convertible Notes and 2028 Convertible Notes have remaining terms of approximately 1.29 years and 4.67 years, respectively.

The $564.4 million carrying value of the 2028 Convertible Notes as of September 30, 2023 excludes $10.6 million of unamortized debt issuance costs. The $223.7 million carrying value of the 2025 Convertible Notes as of September 30, 2023 excludes $1.3 million of unamortized debt issuance costs. The following table presents the carrying value of the Company's

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Debt (Continued)

convertible notes balance (in thousands):


	As of
	September 30, 2023		December 31, 2022
Face value of outstanding convertible notes	$	800,000	$	800,000
Debt issuance costs, unamortized	(11,913)		(14,379)

Convertible notes	$	788,087	$	785,621

Secured Senior Term Loan

In October 2022, the Company entered into a $350 million senior secured term loan agreement with Pharmakon Advisors LP, manager of the BioPharma Credit funds (the Term Loan). The Term Loan matures on October 19, 2027 and bears interest at a rate based upon the secured overnight financing rate (SOFR), subject to a SOFR floor of 2.5%, in addition to a margin of 7.75% per annum. Up to 50% of the interest payable during the first 24 months from the closing of the Term Loan may be paid-in-kind at the Company's election. If elected, paid-in-kind interest will be capitalized and added to the principal amount of the Term Loan. The Term Loan, including the paid-in-kind interest, will be repaid in eight equal quarterly payments starting in the 13th quarter following the closing of the Term Loan (i.e., the quarter ending March 31, 2026), except that the repayment start date may be extended at the Company's option for an additional four quarters, so that repayments start in the 17th quarter following the closing of the Term Loan, subject to the achievement of specified ARIKAYCE data thresholds and certain other conditions. During the nine months ended September 30, 2023, paid-in-kind interest capitalized was $17.2 million. Net proceeds from the Term Loan, after deducting the lenders fees and deal expenses of $15.2 million, were $334.8 million.

The following table presents the carrying value of the Company’s Term Loan balance as of September 30, 2023 (in thousands):


	As of
	September 30, 2023		December 31, 2022
Original Term Loan balance	$	350,000	$	350,000
Paid-in-kind interest capitalized	21,367		4,165
Term Loan issuance costs, unamortized	(11,935)		(14,536)
Term Loan	$	359,432	$	339,629

As of September 30, 2023, future principal repayments of debt for each of the years through maturity were as follows (in thousands):


Year Ending December 31:
2023	$	—
2024	—
2025	225,000
2026	185,684
2027	185,683
2028 and thereafter	575,000
	$	1,171,367

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Debt (Continued)

Interest Expense

Interest expense related to debt and finance leases for the three and nine months ended September 30, 2023 and 2022 is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Convertible debt contractual interest expense	$	2,063	$	2,063	$	6,188	$	6,188
Term Loan contractual interest expense	12,002		—		34,403		—
Royalty Financing Agreement interest expense	4,447		—		14,016		—
Amortization of debt issuance costs	1,840		822		5,568		2,465

Swap interest income	(666)		—		(1,093)		—
Total debt interest expense	19,686		2,885		59,082		8,653
Finance lease interest expense	602		468		1,828		1,348
Total interest expense	$	20,288	$	3,353	$	60,910	$	10,001

11. Royalty Financing Agreement

In October 2022, the Company entered into the Royalty Financing Agreement with OrbiMed. Under the Royalty Financing Agreement, OrbiMed paid the Company $150 million in exchange for the right to receive, on a quarterly basis, royalties in an amount equal to 4% of ARIKAYCE global net sales prior to September 1, 2025 and 4.5% of ARIKAYCE global net sales on or after September 1, 2025, as well as 0.75% of brensocatib global net sales, if approved (the Revenue Interest Payments). In the event that OrbiMed has not received aggregate Revenue Interest Payments of at least $150 million on or prior to March 31, 2028, the Company must make a one-time payment to OrbiMed for the difference between the $150 million and the aggregated Revenue Interest Payments that have been paid. In addition, the royalty rate for ARIKAYCE will be increased beginning March 31, 2028 to the rate which would have resulted in aggregate Revenue Interest Payments as of March 31, 2028 equaling $150 million. The total Revenue Interest Payments payable by us to OrbiMed are capped at 1.8x of the purchase price or up to a maximum of 1.9x of the purchase price under certain conditions. Net proceeds from the Royalty Financing Agreement, after deducting the lenders fees and deal expenses of $3.8 million were, $146.2 million.

The fair value of the Royalty Financing Agreement at the time of the transaction was based on the Company’s estimates of future royalties expected to be paid to OrbiMed over the life of the arrangement, which was determined using forecasts from market data sources, which are considered Level 3 inputs. This liability is being amortized using the effective interest method over the life of the arrangement, in accordance ASC 470, Debt and ASC 835, Interest. The initial annual effective interest rate was determined to be 12.4%. The Company is utilizing the prospective method to account for subsequent changes in the estimated future payments to be made to OrbiMed and updates the effective interest rate on a quarterly basis.

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Royalty Financing Agreement (Continued)

The following table shows the activity within the liability account for the nine month period ended September 30, 2023 and year ended December 31, 2022 (in thousands):


	Nine Months Ended September 30, 2023		Twelve Months Ended December 31, 2022
Royalty financing agreement liability - beginning balance	$	151,538	$	150,000
Revenue Interest Payments paid and payable	(8,865)		(2,149)
Interest expense recognized	14,016		3,687
Royalty financing agreement liability - ending balance	$	156,689	$	151,538
Royalty financing issuance costs:
Royalty issuance costs, unamortized - beginning balance	$	(3,523)	$	(3,624)
Amortization of issuance costs	393		101
Other	(129)		—
Deferred issuance costs, unamortized - ending balance	$	(3,259)	$	(3,523)
Royalty Financing Agreement	$	153,430	$	148,015

The Revenue Interest Payments payable in connection with the royalty financing agreement were $3.2 million and $2.1 million as of September 30, 2023 and December 31, 2022, respectively, which were recorded within accounts payable and accrued expenses on the consolidated balance sheet. Non-cash interest expense is recorded within interest expense in the consolidated statements of comprehensive loss.

12. Shareholders' Equity

Common Stock — As of September 30, 2023, the Company had 500,000,000 shares of common stock authorized with a par value of $0.01 per share and 143,049,197 shares of common stock issued and outstanding. In addition, as of September 30, 2023, the Company had reserved 22,495,537 shares of common stock for issuance upon the exercise of outstanding stock options, 2,787,364 shares of common stock for issuance upon the vesting of RSUs and 666,382 shares for issuance upon the vesting of PSUs. The Company has also reserved 23,438,430 shares of common stock in the aggregate for issuance upon conversion of the 2025 Convertible Notes and 2028 Convertible Notes, subject to adjustment in accordance with the applicable indentures. In connection with the Business Acquisition, the Company reserved 9,406,112 shares of the Company’s common stock, subject to certain closing-related reductions. The shares of the Company’s common stock reserved in connection with the Motus acquisition were partly issued as acquisition consideration at closing and on the first and second anniversaries of the closing date of the acquisition, and will also be issued upon the third anniversary of the closing date of the acquisition and upon the achievement of certain development and regulatory milestone events, subject to certain reductions. The shares of the Company’s common stock reserved in connection with the AlgaeneX acquisition will be issued upon the achievement of a development milestone event, subject to certain reductions.

Of the 9,406,112 shares reserved, subject to certain closing-related reductions, the Company issued 2,889,367 shares of the Company's common stock in connection with the Business Acquisition (Note 16) in the third quarter of 2021, after certain closing-related deductions. In the third quarter of 2022, the Company issued 171,427 shares of the Company's common stock to fulfill the payment required to Motus equityholders on the first anniversary of the Business Acquisition. In the third quarter of 2023, the Company issued 177,203 shares of the Company's common stock to fulfill the payment required to Motus equityholders on the second anniversary of the Business Acquisition.

In the second quarter of 2023, in connection with the Company's acquisition of Adrestia Therapeutics Ltd. (Adrestia), the Company issued 3,430,867 shares of the Company's common stock as consideration at closing. See Note 16 - Acquisitions for further details.

In connection with the Company’s acquisition of Vertuis Bio, Inc. (Vertuis), the Company reserved 550,000 shares of the Company’s common stock, subject to future adjustment. An aggregate of 500,000 of the reserved shares were issued as acquisition consideration at closing. An additional $1 million of shares of common stock will be issued to Vertuis’ former stockholders on July 1, 2024, based on the share price on June 28, 2024. See Note 16 - Acquisitions for further details.

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Shareholders' Equity (Continued)

In October 2022, the Company completed an underwritten offering of 13,750,000 shares of the Company's common stock at a public offering price of $20.00 per share. The Company's net proceeds from the sale of the shares, after deducting the underwriting discounts and offering expense of $16.2 million, were $258.8 million.

In the second quarter of 2021, the Company completed an underwritten public offering of 11,500,000 shares of the Company's common stock, including 1,500,000 shares issued pursuant to the exercise in full of the underwriters' option to purchase additional shares from the Company, at a public offering price of $25.00 per share. The Company's net proceeds from the sale of the shares, after deducting the underwriting discounts and offering expenses of $17.5 million, were $270.1 million.

In the first quarter of 2021, the Company entered into a sales agreement with SVB Leerink LLC (now known as Leerink Partners LLC) (Leerink), to sell shares of the Company's common stock, with aggregate gross sales proceeds of up to $250.0 million, from time to time, through an “at the market” equity offering program (the ATM program), under which Leerink acts as sales agent. In the second quarter of 2023, the Company issued and sold an aggregate of 2,000,000 shares of common stock through the ATM program at a weighted-average public offering price of $19.35 per share and received net proceeds of $37.5 million. During the third quarter of 2022, the Company issued and sold an aggregate of 1,289,995 shares of common stock through the ATM program at a weighted-average public offering price of $26.68 per share and received net proceeds of $33.4 million. As of September 30, 2023, an aggregate of $176.9 million of shares of common stock remain available to be issued and sold under the ATM program.

Preferred Stock — As of September 30, 2023, the Company had 200,000,000 shares of preferred stock authorized with a par value of $0.01 per share and no shares of preferred stock were issued and outstanding.

13. Stock-Based Compensation

The Company's current equity compensation plan, the Insmed Incorporated Amended and Restated 2019 Incentive Plan (the 2019 Incentive Plan), was approved by shareholders at the Company's Annual Meeting of Shareholders on May 11, 2023. The 2019 Incentive Plan replaced the Insmed Incorporated 2019 Incentive Plan, as amended. The 2019 Incentive Plan is administered by the Compensation Committee of the Board of Directors of the Company. Under the terms of the 2019 Incentive Plan, the Company is authorized to grant a variety of incentive awards based on its common stock, including stock options (both incentive stock options and non-qualified stock options), RSUs, performance options/shares and other stock awards to eligible employees and non-employee directors. At the May 2023 Annual Meeting of Shareholders, in connection with approval of the 2019 Incentive Plan, the Company's shareholders approved the issuance of an additional 10,500,000 shares under the plan. As of September 30, 2023, 7,052,203 shares remain available for future issuance under the 2019 Incentive Plan. The 2019 Incentive Plan will terminate on May 16, 2029 unless it is extended or terminated earlier pursuant to its terms. In addition, from time to time, the Company makes inducement grants of stock options to new hires, which awards are made pursuant to the Nasdaq's inducement grant exception to the shareholder approval requirement for grants of equity compensation. During the nine months ended September 30, 2023, the Company granted inducement stock options covering 2,135,330 shares of the Company's common stock to new employees.

On May 15, 2018, the 2018 Employee Stock Purchase Plan (ESPP) was approved by shareholders at the Company's 2018 Annual Meeting of Shareholders. The Company has reserved the following for issuance under the ESPP: (i) 1,000,000 shares of common stock, plus (ii) commencing on January 1, 2019 and ending on December 31, 2023, an additional number of shares to be added on the first day of each calendar year equal to the lesser of (A) 1,200,000 shares of common stock, (B) 2% of the number of outstanding shares of common stock on such date and (C) an amount determined by the administrator.

Stock Options — As of September 30, 2023, there was $138.4 million of unrecognized compensation expense related to unvested stock options. As of September 30, 2023, the Company had performance-conditioned options totaling 114,780 shares outstanding which had not yet met the recognition criteria.

Restricted Stock Units — As of September 30, 2023, there was $46.2 million of unrecognized compensation expense related to unvested RSU awards.

Performance Stock Units — As of September 30, 2023, there were 266,550 unvested PSUs outstanding with an unrecognized compensation expense of $10.4 million, which assumes a payout of 100% of the target.

The following table summarizes the aggregate stock-based compensation expense recorded in the consolidated statements of comprehensive loss related to stock options, RSUs and the ESPP during the three and nine months ended September 30, 2023 and 2022, respectively (in millions):

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Stock-Based Compensation (Continued)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	9.6	$	7.3	$	26.3	$	19.6
Selling, general and administrative	10.4		8.3		28.5		23.1
Total	$	20.0	$	15.6	$	54.8	$	42.7

There was no stock-based compensation expense recorded in the consolidated statements of comprehensive loss related to PSUs during the three and nine months ended September 30, 2023 or September 30, 2022, as the performance conditions associated with the PSU awards were not probable as of either date.

14. Income Taxes

The Company recorded a provision for income taxes of $0.5 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively, and $1.6 million and $1.3 million for the nine months ended September 30, 2023 and 2022, respectively. The provisions recorded for the three and nine months ended September 30, 2023 and 2022 are primarily a result of certain of the Company's international subsidiaries, which had taxable income during the periods. Additionally, the Company is impacted by certain state taxes which effectively impose income tax on modified gross revenues. In jurisdictions where the Company has net losses, there was a full valuation allowance recorded against the Company's deferred tax assets and therefore no tax benefit was recorded.

The Company is subject to US federal, state and international income taxes and the statute of limitations for tax audit is open for the Company’s federal tax returns for the years ended 2019 and later, generally open for certain states for the years 2018 and later, and generally open for international jurisdictions for the years 2017 and later. The Company has incurred net operating losses since inception, except for the year ended December 31, 2009. Such loss carryforwards would be subject to audit in any tax year in which those losses are utilized, notwithstanding the year of origin. As of September 30, 2023 and December 31, 2022, the Company had recorded reserves for unrecognized income tax benefits against certain deferred tax assets in the US. However, given the Company’s valuation allowance position, these reserves do not have an impact on the balance sheet as of September 30, 2023 and December 31, 2022 or the consolidated statements of comprehensive loss for the three and nine months ended September 30, 2023 and 2022. The Company has not recorded any accrued interest or penalties related to uncertain tax positions. The Company does not anticipate any material changes in the amount of unrecognized tax positions over the next twelve months.

15. Commitments and Contingencies

Rent expense charged to operations was $2.6 million and $2.0 million for the three months ended September 30, 2023 and 2022, respectively, and $6.9 million and $5.9 million for the nine months ended September 30, 2023 and 2022, respectively.

Legal Proceedings

From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.

16. Acquisitions

Asset Acquisitions

Adrestia Therapeutics Ltd

In June 2023, the Company acquired all of the issued and outstanding share capital of Adrestia, a privately held, preclinical stage company. At the closing of the transaction, the Company issued an aggregate of 3,430,867 shares of the Company’s common stock to Adrestia’s former shareholders (collectively, the Adrestia shareholders). The closing share price on the date of the transaction was $21.10, resulting in a purchase price of $72.4 million. The Adrestia shareholders may also become entitled to receive contingent payments up to an aggregate of $326.5 million in cash upon the achievement of certain development, regulatory and commercial milestone events, as well as royalty payments based upon a low single-digit percentage of net sales of certain products, both subject to the terms and conditions of the agreement.

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. Acquisitions (Continued)

The shares of the Company’s common stock issued to the Adrestia shareholders were issued pursuant to Section 4(a)(2) of the Securities Act of 1933 (and, with respect to certain Adrestia shareholders, in reliance on Regulation S promulgated under the Securities Act of 1933). The Company did not receive any net proceeds from the issuance of common stock to the Adrestia shareholders.

The Company evaluated the acquisition under ASC 805 and ASU 2017-01 and concluded that substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets and accounted for the transaction as an asset acquisition. The Company determined that the IPR&D acquired did not have any future alternative use and, in accordance with ASC 730, Research and Development, expensed the assets within research and development in the consolidated statement of comprehensive loss as of the date of the acquisition. The Company recognized $76.5 million as IPR&D expense, after adjusting for working capital assumed in connection with the asset acquisition.

Vertuis Bio, Inc.

In January 2023, the Company acquired Vertuis, a privately held, preclinical stage company. At the closing of the transaction, the Company issued an aggregate of 500,000 shares of the Company’s common stock to Vertuis’ former stockholders and an individual who are entitled to receive a portion of the acquisition consideration (collectively, the Vertuis equityholders). The closing share price on the date of the transaction was $18.50. The Company is obligated to issue to Vertuis equityholders shares of the Company’s common stock on July 1, 2024 with an aggregate value of $1.0 million, based on the share price on June 28, 2024, and pay to the Vertuis equityholders up to an aggregate of $23.0 million in cash upon the achievement of certain development and regulatory milestone events, and up to an aggregate of $63.8 million in cash upon the achievement of certain net sales-based milestone events, in each case, subject to certain reductions.

The shares of the Company’s common stock issued to the Vertuis equityholders were issued, and the shares issuable in the future will be issued, pursuant to Section 4(a)(2) of the Securities Act of 1933.

The following table summarizes the purchase price (in millions).


Shares of Insmed common stock issued on closing	$	9.25
Shares of Insmed common stock issuable on July 1, 2024	1.00
Total purchase price	$	10.25

The Company evaluated the acquisition under ASC 805 and ASU 2017-01 and concluded that substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets and accounted for the transaction as an asset acquisition. The Company determined that the assets acquired did not have any future alternative use and, in accordance with ASC 730, Research and Development, expensed the assets within research and development in the consolidated statement of comprehensive loss as of the date of the acquisition.

Business Combination

On August 4, 2021, the Company acquired all of the equity interests of Motus and AlgaeneX, each a privately held, preclinical stage company. In connection with the closing of the Company’s acquisition of Motus, the Company issued an aggregate of 2,889,367 shares of the Company’s common stock, following certain closing-related reductions, to Motus’s former stockholders and option holders and certain individuals who are entitled to receive a portion of the acquisition consideration (collectively, Motus equityholders), subject to certain adjustments. The Company is obligated to issue to Motus equityholders an aggregate of 184,433 shares of the Company’s common stock on each of the first, second and third anniversaries of the closing date and up to 5,348,572 shares in the aggregate upon the achievement of certain development and regulatory milestone events, and to pay to the Motus equityholders an aggregate of $35 million upon the achievement of certain net sales-based milestones and a portion of the value of a priority review voucher (to the extent issued to the Company), in each case, subject to certain reductions. During August 2022 and August 2023, the Company fulfilled the payments due on the first and second anniversaries of the closing date by issuing 171,427 shares and 177,203 shares of the Company's common stock, respectively, after certain reductions.

At the closing of the Company’s acquisition of AlgaeneX, the Company paid $1.5 million in cash to AlgaeneX’s former stockholders and certain individuals who are entitled to receive a portion of the acquisition consideration (collectively, the AlgaeneX equityholders). The Company is obligated to issue to the AlgaeneX equityholders an aggregate of 368,867 shares of the Company’s common stock upon the achievement of a development milestone event and pay to the AlgaeneX

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INSMED INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. Acquisitions (Continued)

equityholders a mid-single digits licensing fee on certain future payments received by the Company in licensing transactions for AlgaeneX’s manufacturing technology, in each case, subject to certain reductions.

The shares of the Company’s common stock issued to the Motus equityholders and the AlgaeneX equityholders were issued, and the shares issuable in the future will be issued, pursuant to Section 4(a)(2) of the Securities Act of 1933, and the numbers of such issued and issuable shares was calculated based on a per share value of $27.11, which was the weighted average price per share of the Company's common stock preceding the closing of the Business Acquisition for the 45 consecutive trading day period beginning on May 24, 2021. The Company will not receive any proceeds from the issuance of common stock to the Motus equityholders or the AlgaeneX equityholders.

The Company evaluated the Business Acquisition under ASC 805 and ASU 2017-01. The Company concluded that substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset or a group of similar identifiable assets. The transaction does not pass the screen test and thus management performed a full assessment to determine if the acquired entities met the definition of a business. For the full assessment, management considered whether it has acquired (a) inputs, (b) substantive processes, and (c) outputs. Under ASC 805, to be considered a business, a set of activities and assets is required to have only the first two of the three elements, which together are or will be used in the future to create outputs. Management determined that the acquired entities met the definition of a business since the Company acquired inputs and substantive processes capable of producing outputs.

Therefore, the transaction has been accounted for under the acquisition method of accounting. Under the acquisition method, the total purchase price of the acquisition is allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on the fair values as of the date of the acquisition. The fair value of the consideration totaled approximately $165.5 million. The results of Motus's and AlgaeneX's operations have been included in the Company's consolidated statements of comprehensive loss beginning on the acquisition date.

The fair value of IPR&D was capitalized as of the acquisition date and accounted for as indefinite-lived intangible assets until completion or disposition of the assets or abandonment of the associated research and development efforts. Upon successful completion of the development efforts, the useful lives of the IPR&D assets will be determined based on the anticipated period of regulatory exclusivity and will be amortized within operating expenses. Until that time, the IPR&D assets will be subject to impairment testing and will not be amortized. The goodwill recorded related to the acquisition is the excess of the fair value of the consideration transferred by the acquirer over the fair value of the net identifiable assets acquired and liabilities assumed at the date of acquisition. The goodwill recorded is not deductible for tax purposes.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. "Forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are statements that are not historical facts and involve a number of risks and uncertainties. Words herein such as "may," "will," "should," "could," "would," "expects," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "intends," "potential," "continues," and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) identify forward-looking statements.

Forward-looking statements are based on our current expectations and beliefs, and involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance and achievements and the timing of certain events to differ materially from the results, performance, achievements or timing discussed, projected, anticipated or indicated in any forward-looking statements. Such risks, uncertainties and other factors include, among others, the following:

•failure to successfully commercialize ARIKAYCE, our only approved product, in the US, Europe or Japan (amikacin liposome inhalation suspension, Liposomal 590 mg Nebuliser Dispersion, and amikacin sulfate inhalation drug product, respectively), or to maintain US, European or Japanese approval for ARIKAYCE;

•uncertainties in the degree of market acceptance of ARIKAYCE by physicians, patients, third-party payors and others in the healthcare community;

•our inability to obtain full approval of ARIKAYCE from the US Food and Drug Administration (FDA), including the risk that we will not successfully or in a timely manner validate a patient reported outcome (PRO) tool and complete the confirmatory post-marketing clinical trial required for full approval of ARIKAYCE;

•inability of us, PARI Pharma GmbH (PARI) or our other third-party manufacturers to comply with regulatory requirements related to ARIKAYCE or the Lamira® Nebulizer System (Lamira);

•our inability to obtain and maintain adequate reimbursement from government or third-party payors for ARIKAYCE or acceptable prices for ARIKAYCE;

•development of unexpected safety or efficacy concerns related to ARIKAYCE, brensocatib, TPIP or our other product candidates;

•inaccuracies in our estimates of the size of the potential markets for ARIKAYCE, brensocatib, TPIP or our other product candidates or in data we have used to identify physicians, expected rates of patient uptake, duration of expected treatment, or expected patient adherence or discontinuation rates;

•the risks and uncertainties associated with, and the perceived benefits of, our secured senior loan with certain funds managed by Pharmakon Advisors, LP and our royalty financing with OrbiMed Royalty & Credit Opportunities IV, LP, including our ability to maintain compliance with the covenants in the agreements for the senior secured loan and royalty financing and the impact of the restrictions on our operations under these agreements;

•our inability to create an effective direct sales and marketing infrastructure or to partner with third parties that offer such an infrastructure for distribution of ARIKAYCE or any of our product candidates that are approved in the future;

•failure to obtain regulatory approval to expand ARIKAYCE’s indication to a broader patient population;

•risk that brensocatib or TPIP does not prove to be effective or safe for patients in ongoing and future clinical studies, including, for brensocatib, the ASPEN study;

•risk that our competitors may obtain orphan drug exclusivity for a product that is essentially the same as a product we are developing for a particular indication;

•failure to successfully predict the time and cost of development, regulatory approval and commercialization for novel gene therapy products;

•failure to successfully conduct future clinical trials for ARIKAYCE, brensocatib, TPIP and our other product candidates due to our limited experience in conducting preclinical development activities and clinical trials necessary for regulatory approval and our potential inability to enroll or retain sufficient patients to conduct and complete the trials or generate data necessary for regulatory approval, among other things;

•risks that our clinical studies will be delayed, that serious side effects will be identified during drug development, or that any protocol amendments submitted will be rejected;

•risks that interim or partial data sets are not representative of a complete or larger data set or that blinded data will not be predictive of unblinded data;

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•failure to obtain, or delays in obtaining, regulatory approvals for ARIKAYCE outside the US, Europe or Japan, or for our product candidates in the US, Europe, Japan or other markets, including separate regulatory approval for Lamira in each market and for each usage;

•failure of third parties on which we are dependent to manufacture sufficient quantities of ARIKAYCE or our product candidates for commercial or clinical needs, to conduct our clinical trials, or to comply with our agreements or laws and regulations that impact our business or agreements with us;

•our inability to attract and retain key personnel or to effectively manage our growth;

•our inability to successfully integrate our recent acquisitions and appropriately manage the amount of management’s time and attention devoted to integration activities;

•risks that our acquired technologies, products and product candidates are not commercially successful;

•our inability to adapt to our highly competitive and changing environment;

•risk that we are unable to maintain our significant customers;

•risk that government healthcare reform materially increases our costs and damages our financial condition;

•business or economic disruptions due to catastrophes or other events, including natural disasters or public health crises;

•impact of the COVID-19 pandemic and efforts to reduce its spread on our business, employees, including key personnel, patients, partners and suppliers;

•deterioration in general economic conditions in the US, Europe, Japan and globally, including the effect of prolonged periods of inflation, affecting us, our suppliers, third-party service providers and potential partners;

•our inability to adequately protect our intellectual property rights or prevent disclosure of our trade secrets and other proprietary information and costs associated with litigation or other proceedings related to such matters;

•restrictions or other obligations imposed on us by agreements related to ARIKAYCE or our product candidates, including our license agreements with PARI and AstraZeneca AB (AstraZeneca), and failure to comply with our obligations under such agreements;

•the cost and potential reputational damage resulting from litigation to which we are or may become a party, including product liability claims;

•risk that our operations are subject to a material disruption in the event of a cybersecurity attack or issue;

•our limited experience operating internationally;

•changes in laws and regulations applicable to our business, including any pricing reform, and failure to comply with such laws and regulations;

•our history of operating losses, and the possibility that we never achieve or maintain profitability;

•goodwill impairment charges affecting our results of operations and financial condition;

•inability to repay our existing indebtedness and uncertainties with respect to our ability to access future capital; and

•delays in the execution of plans to build out an additional third-party manufacturing facility approved by the appropriate regulatory authorities and unexpected expenses associated with those plans.

We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Any forward-looking statement is based on information current as of the date of this Quarterly Report on Form 10-Q and speaks only as of the date on which such statement is made. Actual events or results may differ materially from the results, plans, intentions or expectations anticipated in these forward-looking statements as a result of a variety of factors, many of which are beyond our control. More information on factors that could cause actual results to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission (SEC), including, but not limited to, those described in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

The following discussion should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the consolidated financial statements and related notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2022.

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OVERVIEW

We are a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. Our first commercial product, ARIKAYCE, is approved in the US as ARIKAYCE® (amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion and in Japan as ARIKAYCE inhalation 590mg (amikacin sulfate inhalation drug product). ARIKAYCE received accelerated approval in the US in September 2018 for the treatment of MAC lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options in a refractory setting. In October 2020, the EC approved ARIKAYCE for the treatment of NTM lung infections caused by MAC in adults with limited treatment options who do not have CF. In March 2021, Japan's MHLW approved ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrug regimen. NTM lung disease caused by MAC (which we refer to as MAC lung disease) is a rare and often chronic infection that can cause irreversible lung damage and can be fatal.

Our pipeline includes brensocatib, TPIP and early-stage research programs. Brensocatib is a small molecule, oral, reversible inhibitor of DPP1, which we are developing for the treatment of patients with bronchiectasis, and other neutrophil-mediated diseases, including CRSsNP. TPIP is an inhaled formulation of the treprostinil prodrug treprostinil palmitil which may offer a differentiated product profile for PH-ILD and PAH. Our early-stage research programs encompass a wide range of technologies and modalities, including gene therapy, artificial intelligence-driven protein engineering, protein manufacturing, and synthetic rescue.

The information below summarizes our updates and anticipated near-term milestones for ARIKAYCE and our product candidates.

ARIKAYCE

•We announced positive topline results from the ARISE trial in the third quarter of 2023. Based on these results, we plan to propose to the FDA that the Quality of Life – Bronchiectasis (QOL-B) respiratory domain PRO be the primary endpoint for the ENCORE study without any modifications.

•We continue to enroll patients in the ENCORE study, with 250 patients expected to be enrolled by the end of 2023. Enrollment is expected to continue into 2024, pending additional discussions with the FDA. We anticipate reporting topline data from ENCORE in 2025.

Brensocatib

•In the first quarter of 2023, we completed enrollment of the Phase 3 ASPEN trial in adult patients with bronchiectasis, and we anticipate sharing topline data in the second quarter of 2024.

•We plan to explore the potential of brensocatib in additional neutrophil-mediated diseases. We have activated sites in our Phase 2b BiRCh trial of brensocatib in patients with CRSsNP and are nearing randomization of our first patients.

•We are advancing commercial readiness activities in 2023 in preparation for a launch of brensocatib for patients with bronchiectasis, if approved.

TPIP

•We shared certain blended and blinded dose titration and safety and tolerability data from both the PH-ILD and PAH studies, as well as blinded pulmonary vascular resistance (PVR) data from the PAH study.

•We anticipate sharing topline results from the PH-ILD study in the first half of 2024.

Early-Stage Research

•We continue to progress our early-stage research efforts, including advancing our gene therapy program in Duchenne muscular dystrophy (DMD).

To complement our internal research and development, we also actively evaluate in-licensing and acquisition opportunities for a broad range of rare diseases.

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Our Strategy

Our strategy focuses on the needs of patients with rare diseases. Our first product ARIKAYCE, is approved in the US as ARIKAYCE® (amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion and in Japan as ARIKAYCE inhalation 590mg (amikacin sulfate inhalation drug product). We are not aware of any other approved inhaled therapies specifically indicated to treat MAC lung disease in North America, Europe or Japan. We believe that ARIKAYCE has the potential to prove beneficial in other patients with MAC. Our product candidates are brensocatib, our Phase 3 product candidate which we are developing for patients with bronchiectasis, and other neutrophil-mediated diseases, and TPIP, our product candidate that may offer a differentiated product profile for patients with PH-ILD and PAH. We are also advancing our early-stage research programs encompassing a wide range of technologies and modalities, including gene therapy, artificial intelligence-driven protein engineering, protein manufacturing, and synthetic rescue. Our key priorities are as follows:

•Continue to provide ARIKAYCE to appropriate patients by leveraging and expanding our reliable revenue stream;

•Produce topline clinical data readouts in the near and long term;

•Advance commercial readiness activities to serve significantly more patients with serious and rare diseases; and

•Control spending, prudently deploying capital to support the best return-generating opportunities.

ARIKAYCE for Patients with MAC Lung Disease

ARIKAYCE is our first approved product. ARIKAYCE received accelerated approval in the US in September 2018 for the treatment of refractory MAC lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options. In October 2020, ARIKAYCE received approval in Europe for the treatment of NTM lung infections caused by MAC in adults with limited treatment options who do not have CF. In March 2021, ARIKAYCE received approval in Japan for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrug regimen. MAC lung disease is a rare and often chronic infection that can cause irreversible lung damage and can be fatal. Amikacin solution for parenteral administration is an established drug that has activity against a variety of NTM; however, its use is limited by the need to administer it intravenously and by toxicity to hearing, balance, and kidney function. Unlike amikacin solution for intravenous administration, our proprietary Pulmovance™ technology uses charge-neutral liposomes to deliver amikacin directly to the lungs where liposomal amikacin is taken up by the lung macrophages where the MAC infection resides. This technology also prolongs the release of amikacin in the lungs, while minimizing systemic exposure, thereby offering the potential for decreased systemic toxicities. ARIKAYCE's ability to deliver high levels of amikacin directly to the lung and sites of MAC infection via the use of our Pulmovance technology distinguishes it from intravenous amikacin. ARIKAYCE is administered once-daily using Lamira, an inhalation device developed and manufactured by PARI. Lamira is a portable nebulizer that enables aerosolization of liquid medications via a vibrating, perforated membrane, and was designed specifically for ARIKAYCE delivery.

The FDA has designated ARIKAYCE as an orphan drug and a Qualified Infectious Disease Product (QIDP) for NTM lung disease. Orphan designated drugs are eligible for seven years of exclusivity for the orphan indication. QIDP designation provides an additional five years of exclusivity for the designated indication. The FDA granted a total of 12 years of exclusivity in the indication for which ARIKAYCE was approved.

ARIKAYCE also has been included in the international treatment guidelines for NTM lung disease. The evidence-based guidelines, issued by the American Thoracic Society (ATS), European Respiratory Society (ERS), European Society of Clinical Microbiology and Infectious Diseases (ESCMID), and Infectious Diseases Society of America (IDSA), strongly recommend the use of ARIKAYCE for MAC lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options who have failed to convert to a negative sputum culture after at least six months of treatment.

In October 2020, the FDA approved a supplemental new drug application for ARIKAYCE, adding important efficacy data regarding the durability and sustainability of culture conversion to the ARIKAYCE label. The data, which are from the Phase 3 CONVERT study of ARIKAYCE, demonstrate that the addition of ARIKAYCE to guideline-based therapy (GBT) was associated with sustained culture conversion through the end of treatment as well as durable culture conversion three months post-treatment compared with GBT alone.

Accelerated Approval

In March 2018, we submitted a new drug application (NDA) for ARIKAYCE to the FDA to request accelerated approval. Accelerated approval allows drugs that (i) are being developed to treat a serious or life-threatening disease or condition and (ii) provide a meaningful therapeutic benefit over existing treatments to be approved substantially based on an intermediate endpoint or a surrogate endpoint that is reasonably likely to predict clinical benefit, rather than a clinical endpoint such as survival or irreversible morbidity. In September 2018, the FDA granted accelerated approval for ARIKAYCE under the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) for the treatment of refractory MAC lung disease

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as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options via the accelerated approval pathway. LPAD, which was enacted as part of the 21st Century Cures Act, serves to advance the development of new antibacterial drugs to treat serious or life-threatening infections in limited populations of patients with unmet needs. As required for drugs approved under the LPAD pathway, labeling for ARIKAYCE includes certain statements to convey that the drug has been shown to be safe and effective only for use in a limited population.

As a condition of accelerated approval, we must conduct a post-marketing confirmatory clinical trial. In December 2020, we commenced the post-marketing confirmatory clinical trial program for ARIKAYCE in patients with MAC lung disease consisting of the ARISE trial, an interventional study designed to validate cross-sectional and longitudinal characteristics of a PRO tool in MAC lung disease, and the ENCORE trial, designed to establish the clinical benefits and evaluate the safety of ARIKAYCE in patients with newly diagnosed or recurrent MAC lung infection who have not started antibiotics using the PRO tool validated in the ARISE trial. In September 2023, we announced positive topline results from the ARISE trial. The study met its primary objective of demonstrating that the QOL-B respiratory domain works effectively as a PRO tool in patients with MAC lung disease. Based on these results, we plan to propose to the FDA that the QOL-B respiratory domain PRO be the primary endpoint for the ENCORE study without any modifications. We continue to enroll patients in ENCORE, with 250 patients expected to be enrolled by the end of 2023. Enrollment is expected to continue into 2024, pending additional discussions with the FDA. We anticipate reporting topline data from ENCORE in 2025.

Regulatory Pathway Outside of the US

In October 2020, the EC granted marketing authorization for ARIKAYCE for the treatment of NTM lung infections caused by MAC in adults with limited treatment options who do not have CF. ARIKAYCE is now available commercially for patients in several of the major European Union (EU) countries. In October 2022, we secured reimbursement approval for ARIKAYCE in England, at which point ARIKAYCE became reimbursed across all UK nations. In September 2022, patient supply of ARIKAYCE in Germany was enabled by import from other EU countries. We have worked with the German National Association of Statutory Health Insurance Funds (GKV-SV) towards an agreement on the price of ARIKAYCE that would allow us to better serve the needs of patients in Germany; however, to date, we have been unable to reach an agreement. We are working to ensure an uninterrupted supply of ARIKAYCE for patients in Germany and to provide physicians and pharmacists the information they need to obtain ARIKAYCE for their patients through the importation pathway. Discussions remain ongoing with the GKV-SV with the goal of reaching an agreement and re-initiating direct access to ARIKAYCE. In January 2023, we agreed upon reimbursement terms with the French authorities. To date, we have been unable to reach an acceptable agreement of a nationally reimbursed price with the Italian Medicines Agency (AIFA). ARIKAYCE remains commercially available for physicians to prescribe in Italy under Class C, where we set the price and funding is agreed locally. We anticipate recommencing negotiations for national reimbursement in 2023 with the newly constituted AIFA.

In March 2021, Japan's MHLW approved ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrug regimen. In July 2021, we launched ARIKAYCE in Japan.

The CONVERT Study and 312 Study

Accelerated approval of ARIKAYCE was supported by preliminary data from the CONVERT study, a global Phase 3 study evaluating the safety and efficacy of ARIKAYCE in adult patients with refractory MAC lung disease, using achievement of sputum culture conversion (defined as three consecutive negative monthly sputum cultures) by Month 6 as the primary endpoint. Patients who achieved sputum culture conversion by Month 6 continued in the CONVERT study for an additional 12 months of treatment following the first monthly negative sputum culture in order to assess the durability of culture conversion, as defined by patients that have completed treatment and continued in the CONVERT study off all therapy for three months. In May 2019, we presented at the American Thoracic Society meeting that 41/65 (63.1%) of patients on ARIKAYCE plus GBT who had achieved culture conversion by Month 6 had maintained durable culture conversion for three months off all therapy compared to 0/10 (0%) on GBT only (p<0.0002). Safety data for these patients were consistent with safety data previously reported for patients by Month 6 of the CONVERT study.

Patients who did not culture convert by Month 6 may have been eligible to enroll in the 312 study, an open-label extension study for these non-converting patients who completed six months of treatment in the CONVERT study. The primary objective of the 312 study was to evaluate the long-term safety and tolerability of ARIKAYCE in combination with a standard multi-drug regimen. The secondary objectives of the 312 study included evaluating the proportion of subjects achieving culture conversion (defined in the same way as the CONVERT study) by Month 6 and the proportion of subjects achieving culture conversion by Month 12, which was the end of treatment. We previously reported interim data as of December 2017 for patients in the 312 study, with 28.4% of patients who received GBT only in the CONVERT study (19/67) and 12.3% of patients who had received ARIKAYCE plus GBT in the CONVERT study (7/57) achieving culture conversion by Month 6 of the 312 study. The 312 study has concluded and final efficacy data regarding culture conversion were consistent with these interim data. We have analyzed the safety and efficacy data from the 312 study, and we did not observe any new safety signals.

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The ARISE Study

The ARISE trial was a randomized, double-blind, placebo-controlled Phase 3b study in adult patients with newly diagnosed or recurrent MAC lung infections that aimed to generate evidence demonstrating the domain specification, reliability, validity, and responsiveness of PRO-based scores, including a respiratory symptom score. The ARISE study met its primary objective of demonstrating that the QOL-B respiratory domain works effectively as a PRO tool in patients with MAC lung disease. Based on these results, the Company plans to propose to the FDA that the QOL-B respiratory domain PRO be the primary endpoint for the ENCORE study without any modifications.

Patients in ARISE (N=99) were randomized 1:1 to treatment with ARIKAYCE plus macrolide-based background regimen (ARIKAYCE arm) or placebo plus macrolide-based background regimen (comparator arm) once daily for six months, followed by one month off treatment. ARIKAYCE-treated patients performed better than those in the comparator arm as measured by the QOL-B instrument, with 43.8% of patients achieving an improvement in QOL-B respiratory score above the estimated meaningful within-subject score difference of 14.8, compared with 33.3% of patients in the comparator arm. While the study was not powered to show a statistically significant difference between treatment arms, a strong trend toward significance was observed for improvement from baseline at Month 7 (12.24 vs. 7.76, p=0.1073). Patients in the ARIKAYCE arm also achieved nominally statistically significantly higher culture conversion rates at Month 7 versus patients in the comparator arm (78.8% vs. 47.1%, p=0.0010), and culture conversion was faster and more likely to persist through Month 7 for the ARIKAYCE arm.

Based on the results of ARISE, further detailed below, the Company plans to explore with global regulators accelerating the filing for approval of ARIKAYCE in newly infected patients with MAC lung disease.

ARISE Culture Conversion

Consistent with prior clinical studies, a higher proportion of patients in the ARIKAYCE arm achieved culture conversion by Month 6 (defined as negative cultures at Months 5 and 6) compared to patients in the comparator arm (80.6% vs. 63.9%, p=0.0712). Among patients who achieved culture conversion by Month 6, more patients in the ARIKAYCE arm achieved the first of their two required monthly negative cultures for clinical conversion at Month 1 versus the comparator arm (74.3% vs. 46.7%). As reported above, at Month 7 (one month following the cessation of treatment), 78.8% of patients in the ARIKAYCE arm vs. 47.1% of patients in the comparator arm were culture-converted, suggesting that ARIKAYCE-treated patients are more likely to remain negative.

Correlation Between ARISE Culture Conversion and QOL-B Performance

Patients in the ARIKAYCE arm who achieved culture conversion at both Month 6 and Month 7 had nominally statistically significantly greater improvements in QOL-B respiratory domain scores at Month 7 compared to patients in the ARIKAYCE arm who did not achieve culture conversion (15.74 vs. 3.53, p=0.0167 at Month 6 and 14.89 vs. 4.50, p=0.0416 at Month 7).

ARISE Safety and Tolerability

The discontinuation rate of ARIKAYCE or the placebo used in the comparator arm was 22.9% in the ARIKAYCE arm and 7.8% in the comparator arm. Study completion rates were 91.7% in the ARIKAYCE arm and 94.1% in the comparator arm. No new safety events were observed in the ARIKAYCE arm, and the safety profile in general was as expected in both treatment arms. Treatment-emergent adverse events (TEAEs) were reported by 91.7% of patients in the ARIKAYCE arm and 80.4% of patients in the comparator arm. The most common TEAEs were dysphonia (41.7% for the ARIKAYCE arm vs. 3.9% for the comparator arm), cough (27.1% vs. 7.8%), diarrhea (27.1% vs. 25.5%), and COVID-19 (12.5% vs. 9.8%). Of the treatment-emergent serious adverse events observed in the trial, none were determined to be related to ARIKAYCE by investigators and none were deemed related to COVID-19.

Further Research and Lifecycle Management

We are currently exploring and supporting research and lifecycle management programs for ARIKAYCE beyond treatment of refractory MAC lung disease as part of a combination antibacterial regimen for adult patients who have limited or no treatment options. As noted above, we will continue to advance the post-marketing confirmatory, MAC lung disease clinical trial program for ARIKAYCE, through the ARISE and ENCORE trials, which are intended to fulfill the FDA's post-marketing requirement to allow for the full approval of ARIKAYCE in the US, as well as to support the use of ARIKAYCE as a treatment for patients with MAC lung infection.

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The ENCORE trial is a randomized, double-blind, placebo-controlled Phase 3b study to evaluate the efficacy and safety of an ARIKAYCE-based regimen in patients with newly diagnosed or recurrent MAC lung infection who have not started antibiotics. Patients are randomized 1:1 to receive ARIKAYCE plus background regimen or placebo plus background regimen once daily for 12 months. Patients will then discontinue all study treatments and remain in the trial for three months for the assessment of durability of culture conversion. The primary endpoint is change from baseline to Month 13 in respiratory symptom score. The key secondary endpoint is the proportion of subjects achieving durable culture conversion at Month 15. We remain on track to enroll 250 patients in the registrational ENCORE study by the end of 2023. Enrollment is expected to continue into 2024, pending additional discussions with the FDA. We anticipate reporting topline data from ENCORE in 2025.

Subsequent lifecycle management studies could also potentially enable us to reach more patients. These initiatives may include new clinical studies sponsored by us and may also include investigator-initiated studies, which are independent clinical studies initiated and sponsored by physicians or research institutions, with funding from us.

Product Pipeline

Brensocatib

Brensocatib is a small molecule, oral, reversible inhibitor of DPP1, which we licensed from AstraZeneca in October 2016. DPP1 is an enzyme responsible for activating neutrophil serine proteases (NSPs) in neutrophils when they are formed in the bone marrow. Neutrophils are the most common type of white blood cell and play an essential role in pathogen destruction and inflammatory mediation. Neutrophils contain the NSPs (including neutrophil elastase, proteinase 3, and cathepsin G) that have been implicated in a variety of inflammatory diseases. In chronic inflammatory lung diseases, neutrophils accumulate in the airways and result in excessive active NSPs that cause lung destruction and inflammation. Brensocatib may decrease the damaging effects of inflammatory diseases such as bronchiectasis by inhibiting DPP1 and its activation of NSPs.

Based on the positive results of the WILLOW study discussed below, in December 2020 we commenced our Phase 3 trial, ASPEN, which will investigate brensocatib in bronchiectasis. ASPEN is a global, randomized, double-blind, placebo-controlled Phase 3 study to assess the efficacy, safety, and tolerability of brensocatib in adult patients with bronchiectasis. Patients with bronchiectasis due to CF may not be enrolled in the study. Patients will be randomized to receive brensocatib 10 mg, brensocatib 25 mg, or placebo once daily for 52 weeks. The primary endpoint is the rate of pulmonary exacerbations over the 52-week treatment period. Secondary endpoints include time to first pulmonary exacerbation, percentage of subjects who remain pulmonary exacerbation-free, change from baseline in post-bronchodilator FEV1, rate of severe pulmonary exacerbations, change from baseline in the Bronchiectasis QOL-B Respiratory Symptoms Domain Score, and incidence and severity of treatment-emergent adverse events (AEs). This study completed enrollment of adult patients in the first quarter of 2023. The study enrolled more than 1,700 adult patients at approximately 460 sites in 40 countries. We anticipate sharing topline data in the second quarter of 2024.

In March 2020, AstraZeneca exercised its first option pursuant to our October 2016 license agreement under which AstraZeneca can advance clinical development of brensocatib in the indications of chronic obstructive pulmonary disease (COPD) or asthma. Under the terms of the agreement, upon exercise of this option, AstraZeneca is solely responsible for all aspects of the development of brensocatib up to and including Phase 2b clinical trials in COPD or asthma. The agreement also includes a second and final option which, if exercised, would permit AstraZeneca to further develop brensocatib beyond Phase 2b clinical trials upon reaching agreement on commercial terms satisfactory to each party for the further development and commercialization of brensocatib in COPD or asthma. We retain full development and commercialization rights for brensocatib in all other indications and geographies.

In June 2020, the FDA granted breakthrough therapy designation for brensocatib for the treatment of adult patients with non-cystic fibrosis bronchiectasis (NCFBE) for reducing exacerbations. The FDA's breakthrough therapy designation is designed to expedite the development and review of therapies that are intended to treat serious or life-threatening diseases and for which preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy. The benefits of breakthrough therapy designation include more frequent communication and meetings with FDA, eligibility for rolling and priority review, intensive guidance on an efficient drug development program, and organizational commitment from the FDA involving senior managers. In November 2020, brensocatib was granted access to the PRIME scheme from the European Medicines Agency (EMA) for patients with NCFBE.

In October 2021, the EMA’s Paediatric Committee approved the brensocatib Pediatric Investigational Plan for the treatment of patients with NCFBE. Subsequently, the ASPEN trial will now include 40 adolescent patients between ages 12 to 17, which will fulfill the pediatric study requirements to support marketing applications in this patient population in the US, Europe and Japan.

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The WILLOW Study

The WILLOW study was a randomized, double-blind, placebo-controlled, parallel-group, multi-center, multi-national, Phase 2 study to assess the efficacy, safety and tolerability, and pharmacokinetics of brensocatib administered once daily for 24 weeks in patients with NCFBE. The WILLOW study was conducted at 116 sites and enrolled 256 adult patients diagnosed with NCFBE who had at least two documented pulmonary exacerbations in the 12 months prior to screening. Patients were randomized 1:1:1 to receive either 10 mg or 25 mg of brensocatib or matching placebo. The primary efficacy endpoint was the time to first pulmonary exacerbation over the 24-week treatment period in the brensocatib arms compared to the placebo arm.

WILLOW Efficacy Data

We announced topline data for the WILLOW study in February 2020 and full data for the WILLOW study in June 2020. In September 2020, final results from the WILLOW study were published online in the New England Journal of Medicine. The data demonstrate that the WILLOW study met its primary endpoint of time to first pulmonary exacerbation over the 24-week treatment period for both the 10 mg and 25 mg dosage groups of brensocatib compared to placebo (p=0.027, p=0.044, respectively). The risk of exacerbation at any time during the trial was reduced by 42% for the 10 mg group versus placebo (HR 0.58, p=0.029) and by 38% for the 25 mg group versus placebo (HR 0.62, p=0.046). In addition, treatment with brensocatib 10 mg resulted in a significant reduction in the rate of pulmonary exacerbations, a key secondary endpoint, versus placebo. Specifically, patients treated with brensocatib experienced a 36% reduction in the 10 mg arm (p=0.041) and a 25% reduction in the 25 mg arm (p=0.167) versus placebo. Change in concentration of active neutrophil elastase in sputum versus placebo from baseline to the end of the treatment period was also statistically significant (p=0.034 for 10 mg, p=0.021 for 25 mg).

WILLOW Safety and Tolerability Data

Brensocatib was generally well-tolerated in the study. Rates of AEs leading to discontinuation in patients treated with placebo, brensocatib 10 mg, and brensocatib 25 mg were 10.6%, 7.4%, and 6.7%, respectively. The most common AEs in patients treated with brensocatib were cough, headache, sputum increase, dyspnea, fatigue, and upper respiratory tract infection. Rates of adverse events of special interest (AESIs) in patients treated with placebo, brensocatib 10 mg, and brensocatib 25 mg, respectively, were as follows: rates of skin events (including hyperkeratosis) were 11.8%, 14.8%, and 23.6%; rates of dental events were 3.5%, 16.0%, and 10.1%; and rates of infections that were considered AESIs were 17.6%, 13.6%, and 16.9%.

Further Research and Development

In August 2019, we received notice from the FDA that we were awarded a development grant of $1.8 million for specific work to be performed on a PRO tool. The grant funding is for the development of a novel PRO tool for use in clinical trials to measure symptoms in patients with NCFBE with and without NTM lung infection.

In January 2023, we reported topline data from the Phase 2, multiple-dose, pharmacokinetic/pharmacodynamic study of brensocatib in patients with CF. This Phase 2 study included both patients who were on background CFTR modulator drugs and patients who were not on CFTR modulator drugs. The study duration was approximately one month and dosed CF patients to placebo, 10 mg, 25 mg, and 40 mg of brensocatib. A clear dose-dependent and exposure-dependent inhibition of blood NSPs was observed in patients treated with brensocatib across all doses in this study, consistent with the mechanism of action of brensocatib. Safety and tolerability were consistent with what was observed during the Phase 2 WILLOW study, with no significant drug-related findings. We concluded that an additional cohort evaluating a 65 mg dose of brensocatib is not needed in this patient population. We believe that we can use the data from this Phase 2 study, in addition to the clinical work done for the WILLOW and ASPEN studies, to help inform the safety and efficacy of brensocatib for CF patients.

We also plan to explore the potential of brensocatib in additional neutrophil-mediated diseases, including CRSsNP. CRSsNP currently has no approved therapies and many patients do not respond to corticosteroids or endoscopic sinus surgery. We have activated sites in our Phase 2b BiRCh trial in patients with CRSsNP, and are nearing randomization of our first patients.

Market Opportunity for Brensocatib in Bronchiectasis

Bronchiectasis is a severe, chronic pulmonary disorder in which the bronchi become permanently dilated due to a cycle of infection, inflammation, and lung tissue damage. The condition is marked by frequent pulmonary exacerbations requiring antibiotic therapy and/or hospitalizations. Symptoms include chronic cough, excessive sputum production, shortness of breath, and repeated respiratory infections, which can worsen the underlying condition. Based on information from external sources, including market research funded by us and third parties, and internal analyses and calculations, we estimate the

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potential addressable market at launch in the US, the European 5 and Japan will be as follows (approximately):


Potential Market			Estimated Number of Patients Diagnosed with Bronchiectasis
United States			450,000
European 5			400,000
Japan			150,000

Today, there are no approved therapies in the US, Europe, or Japan for the treatment of patients with bronchiectasis.

Treprostinil Palmitil Inhalation Powder

TPIP is an investigational inhaled formulation of a treprostinil prodrug that has the potential to address certain of the current limitations of existing prostanoid therapies. We believe that TPIP prolongs duration of effect and may provide patients with greater consistency in pulmonary arterial pressure reduction over time. Current inhaled prostanoid therapies must be dosed four to nine times per day. Reducing dose frequency has the potential to ease treatment burden for patients and improve compliance. Additionally, we believe that TPIP may be associated with fewer side effects, including severity and/or frequency of cough, headache, throat irritation, nausea, flushing and dizziness that are associated with high initial drug levels and local upper airway exposure when using current inhaled prostanoid therapies. We believe TPIP may offer a differentiated product profile for PH-ILD and PAH.

In February 2021, we announced topline results from the Phase 1 study of TPIP in healthy volunteers. The objective of this first-in-human single ascending dose and multiple ascending dose study was to assess the pharmacokinetics and tolerability profile of TPIP. Data from the study demonstrated that TPIP was generally well tolerated, with a pharmacokinetic profile that supports continued development with once-daily dosing. The most common AEs across all cohorts in the study were cough, dizziness, headache, and nausea. Most AEs were mild in severity and consistent in nature with those typically seen with other inhaled prostanoid therapies. There were few moderate AEs and no severe or serious AEs. Subjects in the multiple dose panel that incorporated an up-titration approach beginning at 112.5 µg once-daily and progressing to 225 µg once-daily reported fewer AEs compared to the panel dosed with 225 µg once-daily from the first dose.

Overall pharmacokinetic results demonstrated that treprostinil exposure (AUC and Cmax) was dose-proportional, with low to moderate inter-subject variability. Treprostinil was detected in the plasma at 24 hours at all doses and throughout the 48-hour sampling period for the two highest doses. Compared with currently available inhaled treprostinil therapy, TPIP showed substantially lower Cmax and longer half-life. Data from this study were presented in an oral session at the European Society of Cardiology Congress in August 2021.

We are advancing the development of TPIP with two ongoing Phase 2 studies. The first study is designed to assess the safety and tolerability of TPIP in patients with PH-ILD over a 16-week treatment period using an up-titration, once-daily dosing schedule. The second study is designed to investigate the effect of TPIP in patients with PAH on changes in PVR and six-minute walk distance over a 16-week treatment period and will also employ an up-titration, once-daily dosing schedule. A third study, which was a Phase 2a study designed to study the immediate impact of a single dose of TPIP in PAH patients over a 24-hour period was discontinued primarily due to hospital and intensive care unit restrictions during the COVID-19 pandemic that were necessary to conduct the study. One patient was dosed in this study at 112.5 µg. This patient went on to complete the 16-week extension period for the study and was titrated to a dose of 320 µg once daily, which was found to be safe and tolerable. We did not observe any safety concerns with TPIP, and the data suggested a trend toward improvement in various cardiac measures during the study period.

In October 2023, we shared certain blended and blinded dose titration and safety and tolerability data from both the PH-ILD and PAH studies. In the PAH study, of the 24 patients who had reached their Week 5 visit, which is the last point in the study at which the TPIP dose can be increased, 83% of patients were able to titrate up to the maximum dose of 640 µg. In the PH-ILD study, of the 10 patients who had reached their Week 5 visit, 80% reached the maximum dose.

Based on a review of 22 patients who had completed 16 weeks of treatment in the ongoing PAH study, including patients receiving placebo, the average reduction in PVR from baseline was 21.5%. Among the 64% of patients who experienced reductions in their PVR, the average rate of reduction was 47%, and several patients experienced PVR reductions in excess of 65%. No new or unexpected safety concerns have been observed in either study so far. AEs observed to date have been consistent with the events commonly seen in patients with PAH or PH-ILD and with the known effects of inhaled prostacyclin therapies. AEs related to cough were reported to be mostly mild and there have been no observed instances of throat irritation or pain, which are among the most common reasons for limiting the dose of inhaled treprostinil in clinical practice. Based on the blended and blinded data from these studies, we plan to seek to increase the maximum tolerated dose of TPIP from 640 µg to up to 1,280 µg, once a day, for certain PAH patients.

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With respect to the observations from the ongoing studies noted above, the does titration, efficacy, and safety analyses were based on data available as of August 28, September 12, and October 23, 2023, respectively. These findings may not be representative of results after the studies are completed and all data is collected and analyzed. As a result, later interim data readouts and final data from these studies may be materially different than the observations described above, including with respect to efficacy, safety and tolerability of TPIP.

We will continue to advance our Phase 2 development work in both PH-ILD and PAH. We expect topline results from the PH-ILD study to be shared in the first half of 2024.

Early-Stage Research

Our early-stage research efforts are comprised of our preclinical programs, advanced through internal research and development and augmented through business development activities. In March 2021, we acquired a proprietary protein deimmunization platform, called Deimmunized by Design, focused on the reengineering of therapeutic proteins to evade immune recognition and reaction. In August 2021, we acquired Motus and AlgaeneX, preclinical stage companies engaged in the research, development and manufacturing of gene therapies for rare genetic disorders. In January 2023, we acquired Vertuis, a privately held, preclinical stage company engaged in the research and development of gene therapies for rare genetic disorders. In June 2023, we acquired Adrestia, a privately held, preclinical stage company using precision genetic models to search for therapeutic targets, precision diagnostics, novel drug compounds and new applications for existing drugs.

We continue to progress our early-stage research efforts, including advancing our gene therapy program in DMD.

Corporate Development

We plan to continue to develop, acquire, in-license or co-promote other products, product candidates and technologies, including those that address serious and rare diseases that currently have significant unmet needs. We are focused broadly on serious and rare disease therapeutics and prioritizing those areas that best align with our core competencies.

KEY COMPONENTS OF OUR RESULTS OF OPERATIONS

Product Revenues, Net

Product revenues, net, consist of net sales of ARIKAYCE. In October 2018, we began shipping ARIKAYCE to our customers in the US, which include specialty pharmacies and specialty distributors. In December 2020, we began commercial sales of ARIKAYCE in Europe. In July 2021, we began recognizing product revenue from commercial sales of ARIKAYCE in Japan. We recognize revenue for product received by our customers net of allowances for customer credits, including prompt pay discounts, service fees, estimated rebates, including government rebates, such as Medicaid rebates and Medicare Part D coverage gap reimbursements in the US, and chargebacks.

Cost of Product Revenues (Excluding Amortization of Intangible Assets)

Research and Development (R&D) Expenses

R&D expenses consist of salaries, benefits and other related costs, including stock-based compensation, for personnel serving in our research and development functions, including medical affairs and program management. R&D expenses also includes other internal operating expenses, the cost of manufacturing product candidates, including the medical devices for drug delivery, for clinical study, the cost of conducting clinical studies, and the cost of conducting preclinical and research activities. In addition, R&D expenses include payments to third parties for the license rights to products in development (prior to marketing approval), such as brensocatib. Our R&D expenses related to manufacturing our product candidates and medical devices for clinical study are primarily related to activities at CMOs that manufacture brensocatib, TPIP and early-stage research activities. Our R&D expenses related to clinical trials are primarily related to activities at contract research organizations (CROs) that conduct and manage clinical trials on our behalf. These contracts with CROs set forth the scope of work to be completed at a fixed fee or amount per patient enrolled. Payments under these contracts with CROs primarily depend on performance criteria such as the successful enrollment of patients or the completion of clinical trial milestones as well as time-based fees. Expenses are accrued based on contracted amounts applied to the level of patient enrollment and to activity according to the clinical trial protocol. Deposits for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are then recognized as an expense as the related goods are delivered or the services are performed.

Selling, General and Administrative (SG&A) Expenses

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SG&A expenses consist of salaries, benefits and other related costs, including stock-based compensation, for our non-employee directors and personnel serving in our executive, finance and accounting, legal and compliance, commercial and pre-commercial, corporate development, field sales, information technology and human resource functions. SG&A expenses also include professional fees for legal services, consulting services, including commercial activities, insurance, board of director fees, tax and accounting services and certain milestones related to ARIKAYCE.

Amortization of Intangible Assets

Upon commercialization of ARIKAYCE, our intangible assets began to be amortized over their estimated useful lives. The fair values assigned to our intangible assets are based on estimates and assumptions we believe are reasonable based on available facts and circumstances. Unanticipated events or circumstances may occur that require us to review the assets for impairment.

Change in Fair Value of Deferred and Contingent Consideration Liabilities

In connection with our Business Acquisition, we recorded deferred and contingent consideration liabilities related to potential future milestone payments. Adjustments to the fair value are due to changes in: the probability of achieving milestones; our stock price; or certain other estimated assumptions. The change in fair value of deferred and contingent consideration liabilities is calculated quarterly with gains and losses recorded in the consolidated statements of comprehensive loss.

Investment Income and Interest Expense

Investment income consists of interest and dividend income earned on our cash and cash equivalents and marketable securities. Interest expense consists primarily of contractual interest costs, Royalty Financing Agreement non-cash interest expense and the amortization of debt issuance costs related to our debt. Debt issuance costs are amortized to interest expense using the effective interest rate method over the term of the debt. Our balance sheet reflects debt, net of the debt discount, debt issuance costs paid to the lender, and other third-party costs. Unamortized debt issuance costs associated with extinguished debt are expensed in the period of the extinguishment.

Change in Fair Value of Interest Rate Swap

We record derivative and hedge transactions in accordance with GAAP. In the fourth quarter of 2022, we entered into an interest rate swap contract (the Swap Contract) with a notional value of $350 million to economically hedge our variable rate-based term debt for three years, effectively changing the variable rate under the term debt to a fixed interest rate. Our interest rate swap has not been designated as a hedging instrument for accounting purposes. Consequently, all changes in the fair value of the Swap Contract are reported as a component of net loss in the consolidated statements of comprehensive loss.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2023 and 2022

Overview - Operating Results

Our operating results for the three months ended September 30, 2023, included the following:

•Product revenues, net, increased $11.3 million, or 16.7%, as compared to the same period in the prior year as a result of the growth in ARIKAYCE sales;

•Cost of product revenues (excluding amortization of intangible assets) increased $3.2 million as compared to the same period in the prior year as a result of the increase in sales volumes of ARIKAYCE;

•R&D expenses increased $9.3 million as compared to the same period in the prior year primarily as a result of increases in compensation and benefit-related expenses;

•SG&A expenses increased $15.0 million as compared to the same period in the prior year primarily as a result of increases in compensation and benefit-related expenses;

•Amortization of intangible assets of $1.3 million was consistent with the same period in the prior year;

•Change in fair value of deferred and contingent consideration liabilities increased $3.8 million, primarily as a result of the change in our share price; and

•Interest expense increased $16.9 million as compared to the same period in the prior year due to entering into the Term Loan and Royalty Financing Agreement in the fourth quarter of 2022.

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Product Revenues, Net

Product revenues, net, consists of net sales of ARIKAYCE. The following table summarizes revenue by geography for the three months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Increase (decrease)
	2023		2022		$		%
US	$	59,203	$	49,539	$	9,664	19.5%
Japan	16,033		14,483		1,550		10.7%
Europe and rest of world	3,836		3,708		128		3.5%
Total product revenues, net	$	79,072	$	67,730	$	11,342	16.7%

Product revenues, net, for the three months ended September 30, 2023 increased to $79.1 million as compared to $67.7 million in the same period in 2022, an increase of 16.7%, as a result of growth in ARIKAYCE sales in the US, Japan and Europe and the rest of the world.

Cost of Product Revenues (excluding amortization of intangible assets)

Cost of product revenues (excluding amortization of intangible assets) for the three months ended September 30, 2023 and 2022 were comprised of the following (in thousands):


	Three Months Ended September 30,						Increase (decrease)
	2023			2022			$		%
Cost of product revenues (excluding amortization of intangible assets)	$	16,706		$	13,471		$	3,235	24.0	%
Cost of product revenues, as % of revenues	21.1		%	19.9		%

Cost of product revenues (excluding amortization of intangible assets) increased by $3.2 million, or 24.0%, to $16.7 million for the three months ended September 30, 2023 as compared to $13.5 million in the same period in 2022. The increase in cost of product revenues (excluding amortization of intangibles) for the three months ended September 30, 2023 was primarily attributable to the increase in product revenues discussed above.

R&D Expenses

R&D expenses for the three months ended September 30, 2023 and 2022 were comprised of the following (in thousands):


	Three Months Ended September 30,				Increase (decrease)
	2023		2022		$		%
External Expenses
Clinical development and research	$	39,395	$	34,337	$	5,058	14.7	%

Manufacturing	11,296		18,580		(7,284)		(39.2)	%
Regulatory, quality assurance, and medical affairs	4,813		3,964		849		21.4	%
Subtotal—external expenses	$	55,504	$	56,881	$	(1,377)	(2.4)	%
Internal Expenses
Compensation and benefit-related expenses	$	35,027	$	26,932	$	8,095	30.1	%
Stock-based compensation	9,653		7,315		2,338		32.0	%
Other internal operating expenses	8,964		8,744		220		2.5	%
Subtotal—internal expenses	$	53,644	$	42,991	$	10,653	24.8	%
Total R&D expenses	$	109,148	$	99,872	$	9,276	9.3	%

R&D expenses increased to $109.1 million during the three months ended September 30, 2023 from $99.9 million in the same period in 2022. The $9.3 million increase in R&D expenses was due to a $10.4 million increase in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount and a $5.1 million increase in clinical development and research expenses to support the ongoing Phase 3 ASPEN trial of brensocatib and the ARIKAYCE MAC lung disease clinical trial program partially offset by a $7.3 million decrease in manufacturing expense.

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External R&D expenses by product for the three months ended September 30, 2023 and 2022 were comprised of the following (in thousands):


	Three Months Ended September 30,				Increase (decrease)
	2023		2022		$		%
ARIKAYCE external R&D expenses	$	13,485	$	11,837	$	1,648	13.9	%
Brensocatib external R&D expenses	23,015		28,514		(5,499)		(19.3)	%

Other external R&D expenses	19,004		16,530		2,474		15.0	%
Total external R&D expenses	$	55,504	$	56,881	$	(1,377)	(2.4)	%

SG&A Expenses

SG&A expenses for the three months ended September 30, 2023 and 2022 were comprised of the following (in thousands):


	Three Months Ended September 30,				Increase (decrease)
	2023		2022		$		%
Compensation and benefit-related expenses	$	29,316	$	22,891	$	6,425	28.1	%
Stock-based compensation	10,340		8,341		1,999		24.0	%
Professional fees and other external expenses	38,341		33,475		4,866		14.5	%
Facility related and other internal expenses	12,629		10,876		1,753		16.1	%
Total SG&A expenses	$	90,626	$	75,583	$	15,043	19.9	%

SG&A expenses increased to $90.6 million during the three months ended September 30, 2023 from $75.6 million in the same period in 2022. The $15.0 million increase resulted primarily from an $8.4 million increase in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount and a $4.9 million increase in professional fees and other external expenses driven by commercial readiness activities for brensocatib.

Amortization of Intangible Assets

Amortization of intangible assets for both the three months ended September 30, 2023 and 2022 was $1.3 million. Amortization of intangible assets is comprised of amortization of acquired ARIKAYCE R&D and amortization of the milestones paid to PARI for the FDA and EC approvals of ARIKAYCE.

Change in Fair Value of Deferred and Contingent Consideration Liabilities

The change in fair value of deferred and contingent consideration for the three months ended September 30, 2023 was $9.0 million. The change is related to the fair value of the potential future consideration to be paid to former equityholders of the businesses we acquired. Adjustments to the fair value are due to changes in: the probability of achieving milestones; our stock price; or certain other estimated assumptions.

Investment Income

Investment income increased to $10.6 million for the three months ended September 30, 2023 as compared to $1.8 million in the same period in 2022 due to an increase in the marketable securities balance and increase in interest rates in 2023 relative to 2022.

Interest Expense

Interest expense increased to $20.3 million for the three months ended September 30, 2023 as compared to $3.4 million in the same period in 2022 primarily due to entering into the Term Loan and Royalty Financing Agreement in the fourth quarter of 2022. See Note 10 - Debt and Note 11 - Royalty Financing Agreement for further details.

Change in Fair Value of Interest Rate Swap

The change in fair value of interest rate swap for the three months ended September 30, 2023 was $1.3 million. Adjustments to the fair value are due to changes in interest rates as of September 30, 2023 relative to the fair value of interest rate swap as of December 31, 2022.

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Comparison of the Nine Months Ended September 30, 2023 and 2022

Overview - Operating Results

Our operating results for the nine months ended September 30, 2023, included the following:

•Product revenues, net, increased $35.5 million, or 19.1%, as compared to the same period in the prior year as a result of the growth in ARIKAYCE sales;

•Cost of product revenues (excluding amortization of intangible assets) increased $5.1 million as compared to the same period in the prior year as a result of the increase in sales volumes of ARIKAYCE;

•R&D expenses increased $161.2 million as compared to the same period in the prior year primarily as a result of the non-cash costs of the Adrestia and Vertuis acquisitions;

•SG&A expenses increased $62.7 million as compared to the same period in the prior year primarily as a result of increases in professional fees and other external expenses;

•Amortization of intangible assets of $3.8 million was consistent with the same period in the prior year;

•Change in fair value of deferred and contingent consideration liabilities increased $32.0 million, primarily as a result of the change in our share price; and

•Interest expense increased $50.9 million as compared to the same period in the prior year due to entering into the Term Loan and Royalty Financing Agreement in the fourth quarter of 2022.

Product Revenues, Net

Product revenues, net, consists of net sales of ARIKAYCE. The following table summarizes revenue by geography for the nine months ended September 30, 2023 and 2022 (in thousands):


	Nine Months Ended September 30,				Increase (decrease)
	2023		2022		$		%
US	$	165,935	$	137,511	$	28,424	20.7%
Japan	44,782		41,008		3,774		9.2%
Europe and rest of world	10,798		7,539		3,259		43.2%
Total product revenues, net	$	221,515	$	186,058	$	35,457	19.1%

Product revenues, net, for the nine months ended September 30, 2023 increased to $221.5 million as compared to $186.1 million in the same period in 2022, an increase of 19.1%, as a result of growth in ARIKAYCE sales in the US, Japan and Europe and the rest of the world.

Cost of Product Revenues (excluding amortization of intangible assets)

Cost of product revenues (excluding amortization of intangible assets) for the nine months ended September 30, 2023 and 2022 were comprised of the following (in thousands):


	Nine Months Ended September 30,						Increase (decrease)
	2023			2022			$		%
Cost of product revenues (excluding amortization of intangible assets)	$	47,130		$	42,057		$	5,073	12.1	%
Cost of product revenues, as % of revenues	21.3		%	22.6		%

Cost of product revenues (excluding amortization of intangible assets) increased by $5.1 million, or 12.1%, to $47.1 million for the nine months ended September 30, 2023 as compared to $42.1 million in the same period in 2022. The increase in cost of product revenues (excluding amortization of intangibles) in the nine months ended September 30, 2023 was primarily attributable to the increase in product revenues discussed above.

R&D Expenses

R&D expenses for the nine months ended September 30, 2023 and 2022 were comprised of the following (in thousands):

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	Nine Months Ended September 30,				Increase (decrease)
	2023		2022		$		%
External Expenses
Clinical development and research	$	127,808	$	98,771	$	29,037	29.4	%
Adrestia and Vertuis non-cash asset acquisitions	86,747		—		86,747		NA
Manufacturing	43,069		42,875		194		0.5	%
Regulatory, quality assurance, and medical affairs	20,107		14,953		5,154		34.5	%
Subtotal—external expenses	$	277,731	$	156,599	$	121,132	77.4	%
Internal Expenses
Compensation and benefit-related expenses	$	100,676	$	75,896	$	24,780	32.6	%
Stock-based compensation	26,339		19,577		6,762		34.5	%
Other internal operating expenses	29,236		20,683		8,553		41.4	%
Subtotal—internal expenses	$	156,251	$	116,156	$	40,095	34.5	%
Total R&D expenses	$	433,982	$	272,755	$	161,227	59.1	%

R&D expenses increased to $434.0 million during the nine months ended September 30, 2023 from $272.8 million in the same period in 2022. The $161.2 million increase was primarily due to the $86.7 million non-cash cost of the Adrestia and Vertuis acquisitions, a $29.0 million increase in clinical development and research expenses to support the ongoing Phase 3 ASPEN trial of brensocatib and the ARIKAYCE MAC lung disease clinical trial program, and a $31.5 million increase in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount.

External R&D expenses by product for the nine months ended September 30, 2023 and 2022 were comprised of the following (in thousands):


	Nine Months Ended September 30,				Increase (decrease)
	2023		2022		$		%
ARIKAYCE external R&D expenses	$	47,107	$	45,613	$	1,494	3.3	%
Brensocatib external R&D expenses	76,289		70,587		5,702		8.1	%
Non-cash asset acquisitions	86,747		—		86,747		NA
Other external R&D expenses	67,588		40,399		27,189		67.3	%
Total external R&D expenses	$	277,731	$	156,599	$	121,132	77.4	%

We expect R&D expenses to continue to increase in 2023 relative to 2022 primarily due to our clinical trial activities and related spend, including our Phase 3 ASPEN trial of brensocatib, our confirmatory clinical trial of ARIKAYCE in a treatment setting for patients with MAC lung disease, our TPIP clinical trials and our research efforts in early-stage research.

SG&A Expenses

SG&A expenses for the nine months ended September 30, 2023 and 2022 were comprised of the following (in thousands):


	Nine Months Ended September 30,				Increase (decrease)
	2023		2022		$		%
Compensation and benefit-related expenses	$	85,480	$	67,891	$	17,589	25.9	%
Stock-based compensation	28,456		23,159		5,297		22.9	%
Professional fees and other external expenses	104,505		74,650		29,855		40.0	%
Facility related and other internal expenses	36,530		26,605		9,925		37.3	%
Total SG&A expenses	$	254,971	$	192,305	$	62,666	32.6	%

SG&A expenses increased to $255.0 million during the nine months ended September 30, 2023 from $192.3 million in the same period in 2022. The $62.7 million increase resulted primarily from a $29.9 million increase in professional fees and other external expenses driven by commercial readiness activities for brensocatib. The increase was also due to a $22.9 million increase in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount. We

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expect SG&A expenses to continue to increase in 2023 relative to 2022 due, in part, to commercial readiness activities for brensocatib.

Amortization of Intangible Assets

Amortization of intangible assets for both the nine months ended September 30, 2023 and 2022 was $3.8 million. Amortization of intangible assets is comprised of amortization of acquired ARIKAYCE R&D and amortization of the milestones paid to PARI for the FDA and EC approvals of ARIKAYCE.

Change in Fair Value of Deferred and Contingent Consideration Liabilities

The change in fair value of deferred and contingent consideration for the nine months ended September 30, 2023 was $13.0 million. The change is related to the fair value of the potential future consideration to be paid to former equityholders of the businesses we acquired. Adjustments to the fair value are due to changes in: the probability of achieving milestones; our stock price; or certain other estimated assumptions.

Investment Income

Investment income increased to $32.3 million for the nine months ended September 30, 2023 as compared to $2.8 million in the same period in 2022 due to an increase in the marketable securities balance and interest rates in 2023 relative to 2022.

Interest Expense

Interest expense increased to $60.9 million for the nine months ended September 30, 2023 as compared to $10.0 million in the same period in 2022 due primarily to entering into the Term Loan and Royalty Financing Agreement in the fourth quarter of 2022. See Note 10 - Debt and Note 11 - Royalty Financing Agreement for further details.

Change in Fair Value of Interest Rate Swap

The change in fair value of interest rate swap for the nine months ended September 30, 2023 was $1.7 million. Adjustments to the fair value are due to changes in interest rates as of September 30, 2023 relative to the fair value of interest rate swap as of December 31, 2022.

LIQUIDITY AND CAPITAL RESOURCES

Overview

There is considerable time and cost associated with developing potential pharmaceutical products to the point of regulatory approval and commercialization. We commenced commercial shipments of ARIKAYCE in October 2018. We expect to continue to incur consolidated operating losses, including losses at our US and certain international entities, as we plan to fund R&D for ARIKAYCE, brensocatib, TPIP and our other pipeline programs, continue commercialization and regulatory activities for ARIKAYCE, fund pre-commercialization activities for brensocatib, and engage in other general and administrative activities.

During the nine months ended September 30, 2023, we issued and sold an aggregate of 2,000,000 shares of common stock through our ATM program at a weighted-average public offering price of $19.35 per share and received net proceeds of $37.5 million. As of September 30, 2023, an aggregate of $176.9 million of shares of common stock remain available to be issued and sold under the ATM program.

In October 2022, we entered into the $350 million Term Loan with Pharmakon that matures on October 19, 2027. The Term Loan bears interest at a rate based upon the SOFR, subject to a SOFR floor of 2.5% in addition to a margin of 7.75% per annum. Up to 50% of the interest payable during the first 24 months from the closing of the Term Loan may be paid-in-kind at our election. If elected, paid-in-kind interest will be capitalized and added to the principal amount of the Term Loan. The Term Loan, including the paid-in-kind interest, will be repaid in eight equal quarterly payments starting in the 13th quarter following the closing of the Term Loan (i.e., the quarter ending March 31, 2026), except that the repayment start date may be extended at our option for an additional four quarters, so that repayments start in the 17th quarter following the closing of the Term Loan, subject to the achievement of specified ARIKAYCE data thresholds and certain other conditions. Net proceeds from the Term Loan, after deducting the lenders' fees and deal expenses of $15.2 million, were $334.8 million.

In October 2022, we entered into the Royalty Financing Agreement with OrbiMed, whereby OrbiMed paid us $150 million in exchange for the right to receive, on a quarterly basis, royalties in an amount equal to 4% of ARIKAYCE global net sales prior to September 1, 2025 and 4.5% of ARIKAYCE global net sales on or after September 1, 2025, as well as 0.75% of brensocatib global net sales, if approved. In the event that OrbiMed has not received aggregate Revenue Interest Payments equal to or greater than $150 million on or prior to March 31, 2028, the royalty rate for ARIKAYCE will be increased for all subsequent fiscal quarters to a rate which, if applied retroactively, would have resulted in aggregate Revenue

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Interest Payments to OrbiMed for all fiscal quarters ended on or prior to March 31, 2028 equal to $150 million. In addition, we must make a one-time payment to OrbiMed in an amount that, when added to the aggregate amount of Revenue Interest Payments received by OrbiMed as of March 31, 2028, would equal $150 million. The total Revenue Interest Payments payable by us to OrbiMed are capped at 1.8x of the purchase price or up to a maximum of 1.9x of the purchase price under certain conditions. Net proceeds from the Royalty Financing Agreement, after deducting the lenders fees and deal expenses of $3.8 million, were $146.2 million.

In October 2022, we also completed an underwritten offering of 13,750,000 shares of our common stock at a public offering price of $20.00 per share. Our net proceeds from the sale of the shares, after deducting the underwriting discounts and offering expense of $16.2 million, were $258.8 million.

We may need to raise additional capital to fund our operations, the continued commercialization of ARIKAYCE, launch readiness activities for the potential launch of brensocatib for the treatment of patients with bronchiectasis, if approved, clinical trials for brensocatib, TPIP, and our future product candidates, and to develop, acquire, in-license or co-promote other products or product candidates, including those that address serious or rare diseases. While we believe we currently have sufficient funds to meet our financial needs for at least the next 12 months, we may opportunistically raise additional capital and may do so through equity or debt financing(s), strategic transactions or otherwise. Our cash requirements for the next 12 months will be impacted by a number of factors, the most significant of which we expect to be the ASPEN trial, expenses related to our commercialization efforts and our ARISE and ENCORE clinical trials for ARIKAYCE, and other development activities for brensocatib, and to a lesser extent, expenses related to the clinical development of TPIP and our early-research programs.

Cash Flows

As of September 30, 2023, we had cash and cash equivalents of $487.1 million, as compared with $1,074.0 million as of December 31, 2022. In addition, as of September 30, 2023, we had marketable securities of $298.8 million as compared with $74.2 million as of December 31, 2022. The $586.9 million decrease in cash and cash equivalents was primarily due to the purchase of marketable securities and cash used in operating activities. Our working capital was $729.8 million as of September 30, 2023, as compared with $1,083.1 million as of December 31, 2022.

Net cash used in operating activities was $405.4 million and $297.3 million for the nine months ended September 30, 2023 and 2022, respectively. The net cash used in operating activities during the nine months ended September 30, 2023 and 2022 was primarily for the commercial, clinical and manufacturing activities related to ARIKAYCE, as well as other SG&A expenses and clinical trial expenses related to brensocatib and TPIP. The increase in cash used in operating activities for the nine months ended September 30, 2023 compared to the corresponding period in 2022 was primarily due to the increase in net loss, excluding the adjustments to reconcile net loss to net cash used in operating activities.

Net cash used in investing activities was $225.4 million and $54.9 million for the nine months ended September 30, 2023 and 2022, respectively. The increase in 2023 is due to purchases of marketable securities in nine months ended September 30, 2023.

Net cash provided by financing activities was $45.2 million and $49.9 million for the nine months ended September 30, 2023 and 2022, respectively. The decrease in 2023 is due to proceeds received from stock option exercises and the ESPP in the nine months ended September 30, 2022.

Contractual Obligations

There were no material changes outside of the ordinary course of business in our contractual obligations during the nine months ended September 30, 2023 from those disclosed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We do not have any interest in special purpose entities, structured finance entities or other variable interest entities.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to our critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022. For the required interim disclosure updates related to our accounting policies and estimates, see Note 2 - Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September 30, 2023, our cash and cash equivalents were in cash accounts and money market funds. Our investments in money market funds are not insured by the federal government. As of September 30, 2023, our marketable securities were invested in US treasury notes with an original maturity of greater than 90 days.

As of September 30, 2023, we had $800.0 million of convertible notes outstanding. Our 2025 Convertible Notes and our 2028 Convertible Notes bear interest at a coupon rate of 1.75% and 0.75%, respectively. In addition, as of September 30, 2023, we had a $350 million Term Loan and a $150.0 million Royalty Financing Agreement outstanding. The Term Loan accrues interest quarterly at the SOFR subject to a floor of 2.5%, plus a margin of 7.75% per annum. We entered into the Swap Contract as a hedge to the Term Loan variable interest rate. The Royalty Financing Agreement pays interest at 4% of ARIKAYCE global net sales prior to September 1, 2025 and 4.5% thereafter as well as 0.75% of brensocatib global net sales, if approved. If a 10% change in interest rates had occurred on September 30, 2023, it would not have had a material effect on the fair value of our debt as of that date, nor would it have a material effect on our future earnings or cash flows.

The majority of our business is conducted in US dollars. However, we do conduct certain transactions in other currencies, including Euros, British Pounds, and Japanese Yen. Historically, fluctuations in foreign currency exchange rates have not materially affected our results of operations and during the nine months ended September 30, 2023 and 2022, our results of operations were not materially affected by fluctuations in foreign currency exchange rates.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit with the SEC is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation as of September 30, 2023, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

Our business is subject to substantial risks and uncertainties. You should carefully consider the information contained in this Quarterly Report on Form 10-Q, the risks and uncertainties described below, and the risk factors and other information contained in our other public filings in evaluating our business, including our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 23, 2023. Any of the risks and uncertainties described herein and in our other filings with the SEC, either alone or taken together, could materially and adversely affect our business, financial condition, results of operations, prospects for growth, and the value of an investment in our common stock. In addition, these risks and uncertainties could cause actual results to differ materially from those expressed or implied by forward-looking statements contained in this Form 10-Q (please read the Cautionary Note Regarding Forward-Looking Statements in this Form 10-Q).

Pharmaceutical research and development is very costly and highly uncertain, and we may not succeed in developing product candidates in the future.

Product development in the pharmaceutical industry is an expensive, high-risk, lengthy, complicated, resource intensive process. In order to develop a product successfully, we must, among other things:

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•Identify potential product candidates;

•Submit for and receive regulatory approval to perform clinical trials;

•Design and conduct appropriate preclinical and clinical trials, including confirmatory clinical trials, according to good laboratory practices and good clinical practices and disease-specific expectations of the FDA and other regulatory bodies;

•Select and recruit clinical investigators and subjects for our clinical trials;

•Obtain and correctly interpret data establishing adequate safety of our product candidates and demonstrating with statistical significance that our product candidates are effective for their proposed indications, as indicated by satisfaction of pre-established endpoints;

•Submit for and receive regulatory approvals for marketing; and

•Manufacture the product candidates and device constituent parts according to cGMP and other applicable standards and regulations.

There is a high rate of failure inherent in this process, and potential products that appear promising at early stages of development may fail for a number of reasons. Importantly, positive results from preclinical studies of a product candidate may not be predictive of similar results in human clinical trials, promising results from earlier clinical trials of a product candidate may not be replicated in later clinical trials, and observations from ongoing trials, including observations based on interim, preliminary, or blinded data, may not be representative of results after the trials are completed and all data is collected and analyzed. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving positive results in earlier stages of development and have abandoned development efforts or sought partnerships in order to continue development.

In addition, there are many other difficulties and uncertainties inherent in pharmaceutical research and development that could significantly delay or otherwise materially impair our ability to develop future product candidates, including the following:

•Conditions imposed by regulators, ethics committees or institutional review boards for preclinical testing and clinical trials relating to the scope or design of our clinical trials, including selection of endpoints and number of required patients or clinical sites;

•Challenges in designing our clinical trials to support potential claims of superiority over current standard of care or future competitive therapies;

•Restrictions placed upon, or other difficulties with respect to, clinical trials and clinical trial sites, including with respect to potential clinical holds or suspension or termination of clinical trials due to, among other things, potential safety or ethical concerns or noncompliance with regulatory requirements;

•Delayed or reduced enrollment in clinical trials, high discontinuation rates or overly concentrated patient enrollment in specific geographic regions;

•Failure by third-party contractors, contract research organizations (CROs), clinical investigators, clinical laboratories, or suppliers to comply with regulatory requirements or meet their contractual obligations in a timely manner;

•Greater than anticipated cost of our clinical trials; and

•Insufficient product supply or inadequate product quality.

Failure to successfully develop future product candidates for any of these reasons may materially adversely affect our business, financial condition, results of operations and prospects and the value of our common stock.

Inadequate funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products, provide feedback on clinical trials and development programs, meet with sponsors and otherwise review regulatory submissions can be affected by a variety of factors, including government budget and funding levels; ability to hire and retain key personnel and accept the payment of user fees; and statutory, regulatory, and policy changes, among other factors. Average review times at the agency may fluctuate as a result. In addition, government funding of other government agencies on which our operations may rely is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies or to otherwise respond to regulatory submissions, which would adversely affect our business. For example, over the last several years, the US government has shut down multiple times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA and other government employees and stop critical activities. If a

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prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES

On August 4, 2021, the Company acquired all of the equity interests of Motus, a privately held, preclinical stage company. Among other consideration, in connection with the acquisition of Motus, the Company is obligated to issue to Motus equityholders an aggregate of 184,433 shares of the Company’s common stock on each of the first, second and third anniversaries of the closing date and up to 5,348,572 shares in the aggregate upon the achievement of certain development and regulatory milestone events, in each case, subject to certain reductions. On August 8, 2023, the second anniversary of the closing, the Company fulfilled the payment due by issuing 177,203 shares of the Company’s common stock. The shares of the Company’s common stock issued to the Motus equityholders were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, and the number of such shares was calculated based on a per share value of $27.11. The Company did not receive any proceeds from the issuance of common stock to the Motus equityholders.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the three months ended September 30, 2023, certain of our officers and directors adopted or terminated Rule 10b5-1 trading plans as follows:

Sara Bonstein, our Chief Financial Officer, entered into a prearranged stock trading arrangement (the Trading Plan) on September 15, 2023. Ms. Bonstein’s Trading Plan provides for the sale of an aggregate number of up to 22,493 shares of the Company's common stock between December 15, 2023 and February 28, 2024. The Trading Plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and the Company’s policies regarding insider transactions.

ITEM 6. EXHIBITS

Exhibit Index


3.1						Articles of Incorporation of Insmed Incorporated, as amended through June 14, 2012 (incorporated by reference from Exhibit 3.1 to Insmed Incorporated’s Annual Report on Form 10-K filed on March 18, 2013).

3.2						Amended and Restated Bylaws of Insmed Incorporated (effective as of May 11, 2023) (incorporated by reference from Exhibit 3.1 to Insmed Incorporated’s Current Report on Form 8-K filed on May 11, 2023).



















31.1						Certification of William H. Lewis, Chair and Chief Executive Officer (Principal Executive Officer) of Insmed Incorporated, pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

31.2						Certification of Sara Bonstein, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) of Insmed Incorporated, pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

32.1						Certification of William H. Lewis, Chair and Chief Executive Officer (Principal Executive Officer) of Insmed Incorporated, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

32.2						Certification of Sara Bonstein, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) of Insmed Incorporated, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

101						The following materials from Insmed Incorporated’s quarterly report on Form 10-Q for the quarter ended September 30, 2023 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, (ii) Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022, (iii) Consolidated Statements of Shareholders' Equity for the three and nine months ended September 30, 2023 and 2022, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022, (v) Notes to the Unaudited Consolidated Financial Statements, and (vi) Cover Page.

104						The cover page from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in iXBRL and contained in Exhibit 101.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		INSMED INCORPORATED


Date: October 26, 2023	By	/s/ Sara Bonstein
		Sara Bonstein
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EXHIBIT 31.1

Section 302 Certification

I, William H. Lewis, Chief Executive Officer of Insmed Incorporated, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Insmed Incorporated;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

(5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 26, 2023


/s/ William H. Lewis
William H. Lewis
Chair and Chief Executive Officer
(Principal Executive Officer)

EXHIBIT 31.2

Section 302 Certification

I, Sara Bonstein, Chief Financial Officer of Insmed Incorporated, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Insmed Incorporated;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 26, 2023


/s/ Sara Bonstein
Sara Bonstein
Chief Financial Officer
(Principal Financial and Accounting Officer)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2003

In connection with this Quarterly Report on Form 10-Q of Insmed Incorporated (the "Company") for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William H. Lewis, Chief Executive Officer of the Company, certify, pursuant to 18 USC. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2003, that:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ William H. Lewis
William H. Lewis
Chair and Chief Executive Officer
(Principal Executive Officer)

October 26, 2023

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Insmed Incorporated under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2003

In connection with this Quarterly Report on Form 10-Q of Insmed Incorporated (the "Company") for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Sara Bonstein, Chief Financial Officer of the Company, certify, pursuant to 18 USC. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2003, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Sara Bonstein
Sara Bonstein
Chief Financial Officer
(Principal Financial and Accounting Officer)

October 26, 2023

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2023	Oct. 23, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	000-30739
Entity Registrant Name	INSMED INC
Entity Incorporation, State or Country Code	VA
Entity Tax Identification Number	54-1972729
Entity Address, Address Line One	700 US Highway 202/206
Entity Address, City or Town	Bridgewater
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08807
City Area Code	908
Local Phone Number	977-9900
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	INSM
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		143,062,065
Entity Central Index Key	0001104506
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 487,113	$ 1,074,036
Marketable securities	298,838	74,244
Accounts receivable	35,579	29,713
Inventory	77,923	69,922
Prepaid expenses and other current assets	27,123	25,468
Total current assets	926,576	1,273,383
Fixed assets, net	64,630	56,491
Finance lease right-of-use assets	21,663	23,697
Operating lease right-of-use assets	18,441	21,894
Intangibles, net	64,967	68,756
Goodwill	136,110	136,110
Other assets	92,486	76,104
Total assets	1,324,873	1,656,435
Current liabilities:
Accounts payable and accrued liabilities	187,783	182,117
Finance lease liabilities	2,527	1,217
Operating lease liabilities	6,418	6,909
Total current liabilities	196,728	190,243
Debt, long-term	1,147,519	1,125,250
Royalty financing agreement	153,430	148,015
Contingent consideration	69,900	51,100
Finance lease liabilities, long-term	27,712	29,636
Operating lease liabilities, long-term	13,023	14,853
Other long-term liabilities	5,918	9,387
Total liabilities	1,614,230	1,568,484
Shareholders’ equity:
Common stock, $0.01 par value; 500,000,000 authorized shares, 143,049,197 and 135,653,731 issued and outstanding shares at September 30, 2023 and December 31, 2022, respectively	1,430	1,357
Additional paid-in capital	2,971,375	2,782,416
Accumulated deficit	(3,260,084)	(2,696,578)
Accumulated other comprehensive (loss) income	(2,078)	756
Total shareholders’ (deficit) equity	(289,357)	87,951
Total liabilities and shareholders’ equity	$ 1,324,873	$ 1,656,435

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares (in shares)	500,000,000	500,000,000
Common stock, issued shares (in shares)	143,049,197	135,653,731
Common stock, outstanding shares (in shares)	143,049,197	135,653,731

Consolidated Statements of Comprehensive Loss (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Product revenues, net	$ 79,072	$ 67,730	$ 221,515	$ 186,058
Revenue from Contract with Customer, Product and Service [Extensible List]	Product [Member]	Product [Member]	Product [Member]	Product [Member]
Operating expenses:
Cost of product revenues (excluding amortization of intangible assets)	$ 16,706	$ 13,471	$ 47,130	$ 42,057
Cost, Product and Service [Extensible List]	Product [Member]	Product [Member]	Product [Member]	Product [Member]
Research and development	$ 109,148	$ 99,872	$ 433,982	$ 272,755
Selling, general and administrative	90,626	75,583	254,971	192,305
Amortization of intangible assets	1,263	1,263	3,789	3,789
Change in fair value of deferred and contingent consideration liabilities	8,997	5,238	12,997	(19,002)
Total operating expenses	226,740	195,427	752,869	491,904
Operating loss	(147,668)	(127,697)	(531,354)	(305,846)
Investment income	10,583	1,791	32,279	2,763
Interest expense	(20,288)	(3,353)	(60,910)	(10,001)
Change in fair value of interest rate swap	(1,301)	0	(1,650)	0
Other income (expense), net	285	(1,514)	(314)	(7,069)
Loss before income taxes	(158,389)	(130,773)	(561,949)	(320,153)
Provision for income taxes	544	372	1,557	1,258
Net loss	$ (158,933)	$ (131,145)	$ (563,506)	$ (321,411)
Basic net loss per share (in dollars per share)	$ (1.11)	$ (1.09)	$ (4.06)	$ (2.68)
Diluted net loss per share (in dollars per share)	$ (1.11)	$ (1.09)	$ (4.06)	$ (2.68)
Weighted average basic common shares outstanding (in shares)	142,899	120,789	138,960	119,780
Weighted average diluted common shares outstanding (in shares)	142,899	120,789	138,960	119,780
Net loss	$ (158,933)	$ (131,145)	$ (563,506)	$ (321,411)
Other comprehensive income (loss):
Foreign currency translation loss	(1,075)	(553)	(3,448)	(1,255)
Unrealized gain (loss) on marketable securities	248	96	614	(1,099)
Total comprehensive loss	$ (159,760)	$ (131,602)	$ (566,340)	$ (323,765)

Consolidated Statements of Shareholders' Equity (unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative impact of ASU 2020-06 adoption	Common Stock	Additional Paid-in Capital	Additional Paid-in Capital Cumulative impact of ASU 2020-06 adoption	Accumulated Deficit	Accumulated Deficit Cumulative impact of ASU 2020-06 adoption	Accumulated Other Comprehensive Income (Loss)
Balance (in shares) at Dec. 31, 2021			118,738
Balance at Dec. 31, 2021	$ 410,468	$ (214,410)	$ 1,187	$ 2,673,556	$ (264,609)	$ (2,265,243)	$ 50,199	$ 968
Comprehensive loss:
Net loss	(321,411)					(321,411)
Other comprehensive (loss) income	(2,354)							(2,354)
Exercise of stock options and ESPP shares issuance (in shares)			1,190
Exercise of stock options and ESPP shares issuance	17,329		$ 11	17,318
Net proceeds from issuance of common stock (in shares)			1,290
Net proceeds from issuance of common stock	33,383		$ 13	33,370
Issuance of common stock for vesting of RSUs (in shares)			337
Issuance of common stock for vesting of RSUs	4		$ 4
Issuance of common stock for asset acquisition (in shares)			171
Issuance of common stock for asset acquisition	4,296		$ 2	4,294
Stock compensation expense	42,736			42,736
Balance (in shares) at Sep. 30, 2022			121,726
Balance at Sep. 30, 2022	(29,959)		$ 1,217	2,506,665		(2,536,455)		(1,386)
Balance (in shares) at Jun. 30, 2022			119,865
Balance at Jun. 30, 2022	44,241		$ 1,199	2,449,281		(2,405,310)		(929)
Comprehensive loss:
Net loss	(131,145)					(131,145)
Other comprehensive (loss) income	(457)							(457)
Exercise of stock options and ESPP shares issuance (in shares)			395
Exercise of stock options and ESPP shares issuance	4,069		$ 3	4,066
Net proceeds from issuance of common stock (in shares)			1,290
Net proceeds from issuance of common stock	33,383		$ 13	33,370
Issuance of common stock for vesting of RSUs (in shares)			5
Issuance of common stock for asset acquisition (in shares)			171
Issuance of common stock for asset acquisition	4,296		$ 2	4,294
Stock compensation expense	15,654			15,654
Balance (in shares) at Sep. 30, 2022			121,726
Balance at Sep. 30, 2022	(29,959)		$ 1,217	2,506,665		(2,536,455)		(1,386)
Balance (in shares) at Dec. 31, 2022			135,654
Balance at Dec. 31, 2022	87,951		$ 1,357	2,782,416		(2,696,578)		756
Comprehensive loss:
Net loss	(563,506)					(563,506)
Other comprehensive (loss) income	(2,834)							(2,834)
Exercise of stock options and ESPP shares issuance (in shares)			716
Exercise of stock options and ESPP shares issuance	10,681		$ 7	10,674
Net proceeds from issuance of common stock (in shares)			2,028
Net proceeds from issuance of common stock	38,014		$ 20	37,994
Issuance of common stock for vesting of RSUs (in shares)			543
Issuance of common stock for vesting of RSUs	5		$ 5
Deferred payments for Business Acquisition (in shares)			177
Deferred payments for Business Acquisition	3,897		$ 2	3,895
Issuance of common stock for asset acquisition (in shares)			3,931
Issuance of common stock for asset acquisition	81,640		$ 39	81,601
Stock compensation expense	54,795			54,795
Balance (in shares) at Sep. 30, 2023			143,049
Balance at Sep. 30, 2023	$ (289,357)		$ 1,430	2,971,375		(3,260,084)		(2,078)
Comprehensive loss:
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2020-06
Balance (in shares) at Jun. 30, 2023			142,750
Balance at Jun. 30, 2023	$ (155,745)		$ 1,428	2,945,229		(3,101,151)		(1,251)
Comprehensive loss:
Net loss	(158,933)					(158,933)
Other comprehensive (loss) income	(827)							(827)
Exercise of stock options and ESPP shares issuance (in shares)			121
Exercise of stock options and ESPP shares issuance	2,258		$ 0	2,258
Issuance of common stock for vesting of RSUs (in shares)			1
Deferred payments for Business Acquisition (in shares)			177
Deferred payments for Business Acquisition	3,897		$ 2	3,895
Stock compensation expense	19,993			19,993
Balance (in shares) at Sep. 30, 2023			143,049
Balance at Sep. 30, 2023	$ (289,357)		$ 1,430	$ 2,971,375		$ (3,260,084)		$ (2,078)

Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating activities
Net loss	$ (563,506)	$ (321,411)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	4,052	3,095
Amortization of intangible assets	3,789	3,789
Stock-based compensation expense	54,795	42,736
Amortization of debt issuance costs	5,568	2,465
Paid-in-kind interest capitalized	17,202	0
Royalty financing non-cash interest expense	14,016	0
Accretion of discount on marketable securities, net	(6,291)	0
Finance lease amortization expense	2,034	1,846
Non-cash operating lease expense	8,423	11,440
Change in fair value of deferred and contingent consideration liabilities	12,997	(19,002)
Change in fair value of interest rate swap	1,650	0
Changes in operating assets and liabilities:
Accounts receivable	(7,428)	(5,440)
Inventory	(9,179)	624
Prepaid expenses and other current assets	(1,196)	1,806
Other assets	(16,905)	(13,023)
Accounts payable and accrued liabilities	(6,554)	15,137
Other liabilities	(5,626)	(21,352)
Net cash used in operating activities	(405,428)	(297,290)
Investing activities
Purchase of fixed assets	(11,135)	(5,187)
Purchase of marketable securities	(292,689)	(99,706)
Cash acquired in asset acquisition	3,417	0
Maturities of marketable securities	75,000	50,000
Net cash used in investing activities	(225,407)	(54,893)
Financing activities
Proceeds from exercise of stock options and ESPP	10,763	17,333
Proceeds from issuance of common stock, net	38,014	33,383
Payments of finance lease principal	(2,383)	(830)
Payment of debt issuance costs	(1,218)	0
Net cash provided by financing activities	45,176	49,886
Effect of exchange rates on cash and cash equivalents	(1,264)	148
Net decrease in cash and cash equivalents	(586,923)	(302,149)
Cash and cash equivalents at beginning of period	1,074,036	716,782
Cash and cash equivalents at end of period	487,113	414,633
Supplemental disclosures of cash flow information:
Cash paid for interest	27,461	7,442
Cash paid for income taxes	1,880	1,626
Vertuis Bio, Inc.
Adjustments to reconcile net loss to net cash used in operating activities:
Vertuis acquisition	10,250	0
Adrestia acquisition	10,250	0
Adrestia Therapeutics Ltd
Adjustments to reconcile net loss to net cash used in operating activities:
Vertuis acquisition	76,481	0
Adrestia acquisition	$ 76,481	$ 0

The Company and Basis of Presentation	9 Months Ended
The Company and Basis of Presentation	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
The Company and Basis of Presentation	1. The Company and Basis of Presentation Insmed is a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. The Company's first commercial product, ARIKAYCE, is approved in the United States (US) as ARIKAYCE® (amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion and in Japan as ARIKAYCE inhalation 590mg (amikacin sulfate inhalation drug product). ARIKAYCE received accelerated approval in the US in September 2018 for the treatment of Mycobacterium avium complex (MAC) lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options in a refractory setting. In October 2020, the European Commission (EC) approved ARIKAYCE for the treatment of nontuberculous mycobacterial (NTM) lung infections caused by MAC in adults with limited treatment options who do not have cystic fibrosis (CF). In March 2021, Japan's Ministry of Health, Labour and Welfare (MHLW) approved ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrug regimen. NTM lung disease caused by MAC (which the Company refers to as MAC lung disease) is a rare and often chronic infection that can cause irreversible lung damage and can be fatal. The Company's pipeline includes brensocatib, treprostinil palmitil inhalation powder (TPIP) and early-stage research programs. Brensocatib is a small molecule, oral, reversible inhibitor of dipeptidyl peptidase 1 (DPP1), which the Company is developing for the treatment of patients with bronchiectasis, as well as other neutrophil-mediated diseases, including chronic rhinosinusitis without nasal polyps (CRSsNP). TPIP is an inhaled formulation of the treprostinil prodrug treprostinil palmitil which may offer a differentiated product profile for pulmonary hypertension associated with interstitial lung disease (PH-ILD) and pulmonary arterial hypertension (PAH). The Company is also advancing its early-stage research programs encompassing a wide range of technologies and modalities, including gene therapy, artificial intelligence-driven protein engineering, protein manufacturing, and synthetic rescue. The Company was incorporated in the Commonwealth of Virginia on November 29, 1999 and its principal executive offices are located in Bridgewater, New Jersey. The Company has legal entities in the US, France, Germany, Ireland, Italy, the Netherlands, Switzerland, the United Kingdom (UK), and Japan. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the US (GAAP) for complete consolidated financial statements are not included herein. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Any references in these notes to applicable accounting guidance are meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB). The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. The unaudited interim consolidated financial information presented herein reflects all normal adjustments that are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. All intercompany transactions and balances have been eliminated in consolidation. The Company had $487.1 million in cash and cash equivalents and $298.8 million of marketable securities as of September 30, 2023 and reported a net loss of $563.5 million for the nine months ended September 30, 2023. The Company has funded its operations through public offerings of equity securities, debt financings and revenue interest financings. The Company expects to continue to incur consolidated operating losses, including losses in its US and certain international entities, while funding research and development (R&D) activities for ARIKAYCE, brensocatib, TPIP and its other pipeline programs, continuing commercialization and regulatory activities for ARIKAYCE and pre-commercial, regulatory and, if approved, commercialization activities for brensocatib, and funding other general and administrative activities. The Company expects its future cash requirements to be substantial. While the Company currently has sufficient funds to meet its financial needs for at least the next 12 months, the Company may raise additional capital in the future to fund its operations, its ongoing commercialization and clinical trial activities, and its future product candidates, and to develop, acquire, in-license or co-promote other products or product candidates, including those that address orphan or rare diseases. The source, timing and availability of any future financing or other transaction will depend principally upon continued progress in the Company’s commercial, regulatory and development activities. Any future financing will also be contingent upon market conditions. If the Company is unable to obtain sufficient additional funds when required, the Company may be forced to delay, restrict or eliminate all or a portion of its development programs or commercialization efforts.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies


	September 30,
	2023	2022
Customer A	35%	33%
Customer B	35%	35%
Customer C	18%	19%

further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Numerator:
Net loss	$	(158,933)	$	(131,145)	$	(563,506)	$	(321,411)
Denominator:
Weighted average common shares used in calculation of basic net loss per share:	142,899		120,789		138,960		119,780
Effect of dilutive securities:
Common stock options	—		—		—		—
RS and RSUs	—		—		—		—
PSUs	—		—		—		—
Convertible debt securities	—		—		—		—
Weighted average common shares outstanding used in calculation of diluted net loss per share	142,899		120,789		138,960		119,780
Net loss per share:
Basic and diluted	$	(1.11)	$	(1.09)	$	(4.06)	$	(2.68)


	September 30,
	2023	2022
Common stock options	22,496	17,459
Unvested RS and RSUs	2,787	1,582
PSUs	666	672
Convertible debt securities	23,438	23,438

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

•Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

The following table shows assets and liabilities that are measured at fair value on a recurring basis and their carrying value (in millions):


	September 30, 2023
			Fair Value
	Carrying Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	487.1	$	487.1	$	—	$	—
Marketable securities	$	298.8	$	298.8	$	—	$	—
Collateral for interest rate swap	$	5.0	$	5.0	$	—	$	—
Liabilities
Interest rate swap	$	3.2	$	—	$	3.2	$	—
Deferred consideration	$	4.7	$	—	$	4.7	$	—
Contingent consideration	$	69.9	$	—	$	—	$	69.9


	December 31, 2022
			Fair Value
	Carrying Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	1,074.0	$	1,074.0	$	—	$	—
Marketable securities	$	74.2	$	74.2	$	—	$	—
Collateral for interest rate swap	$	5.0	$	5.0	$	—	$	—
Liabilities
Interest rate swap	$	1.5	$	—	$	1.5	$	—
Deferred consideration	$	7.4	$	—	$	7.4	$	—
Contingent consideration	$	58.1	$	—	$	—	$	58.1

Deferred Consideration

The following observable input was used in the valuation of the deferred consideration as of September 30, 2023:


	Fair Value as of September 30, 2023 (in millions)	Observable Input	Input Value
Deferred consideration	$4.7	Insmed share price as of September 30, 2023	$25.25

Contingent Consideration

Fair Value as of September 30, 2023 (in millions)

Valuation Technique

Unobservable Inputs

Values

Development and regulatory milestones

$61.0

Probability-adjusted

Probabilities of success

14% - 97%

Priority review voucher milestone

$5.6

Probability-adjusted discounted cash flow

Probability of success

16.4%

Discount rate

11.2%


	Deferred Consideration (Level 2 Liabilities)		Contingent Consideration (Level 3 Liabilities)
Balance as of December 31, 2021	$	14,931	$	75,668
Additions	—		—
Change in Fair Value	(2,635)		(16,368)
Payments	(4,296)		—
Balance as of September 30, 2022	$	8,000	$	59,300

Balance as of December 31, 2022	$	7,400	$	58,100
Additions	—		—
Change in Fair Value	1,200		11,800
Payments	(3,900)		—
Balance as of September 30, 2023	$	4,700	$	69,900

Convertible Notes

Product Revenues, Net

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Product Revenues, Net

4. Product Revenues, Net

sale of ARIKAYCE to its customers. The Company has not incurred or capitalized any incremental costs associated with obtaining contracts with customers.

The following table presents a summary of the Company's product revenues, net, by geographic location for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
US	$	59,203	$	49,539	$	165,935	$	137,511
Japan	16,033		14,483		44,782		41,008
Europe and rest of world	3,836		3,708		10,798		7,539
Total product revenues, net	$	79,072	$	67,730	$	221,515	$	186,058

If any, or all, of the Company's actual experience varies from its estimates, the Company may need to adjust prior period accruals, affecting revenue in the period of adjustment.

Inventory

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Inventory

5. Inventory

As of September 30, 2023 and December 31, 2022, the Company's inventory balance consists of the following (in thousands):


	September 30, 2023		December 31, 2022

Raw materials	$	26,278	$	27,245
Work-in-process	31,891		22,460
Finished goods	19,754		20,217
	$	77,923	$	69,922

The Company has not recorded any significant inventory write-downs. The Company currently uses a limited number of third-party contract manufacturing organizations (CMOs) to produce its inventory.

Intangibles, Net and Goodwill

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangibles, Net and Goodwill

6. Intangibles, Net and Goodwill

Intangibles, Net

Finite-lived Intangible Assets

Indefinite-lived Intangible Assets

As of September 30, 2023, the Company's indefinite-lived intangible assets consisted of acquired IPR&D from the Business Acquisition (Note 16). Indefinite-lived intangible assets are not amortized.

A rollforward of the Company's intangible assets for the nine months ended September 30, 2023 and September 30, 2022 is as follows (in thousands):



Intangible Asset	December 31, 2022		Additions		Amortization		September 30, 2023
Acquired ARIKAYCE R&D	$	37,588	$	—	$	(3,638)	$	33,950
Acquired IPR&D	29,600		—		—		29,600
PARI milestones	1,568		—		(151)		1,417
	$	68,756	$	—	$	(3,789)	$	64,967

Intangible Asset	December 31, 2021		Additions		Amortization		September 30, 2022
Acquired ARIKAYCE R&D	$	42,439	$	—	$	(3,638)	$	38,801
Acquired IPR&D	29,600		—		—		29,600
PARI milestones	1,770		—		(151)		1,619
	$	73,809	$	—	$	(3,789)	$	70,020

Goodwill

The Company's goodwill balance of $136.1 million as of September 30, 2023 and December 31, 2022, resulted from the August 2021 Business Acquisition. See Note 16 - Acquisitions for further details.

Fixed Assets, Net

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Fixed Assets, Net

7. Fixed Assets, Net

Fixed assets are stated at cost and depreciated using the straight-line method, based on useful lives as follows (in thousands):


	Estimated Useful Life (years)	As of
Asset Description		September 30, 2023		December 31, 2022

Lab equipment	7	$	22,503	$	16,403
Furniture and fixtures	7	6,428		6,428
Computer hardware and software	3-5	5,959		5,227
Office equipment	7	89		89
Manufacturing equipment	7	1,336		1,203
Leasehold improvements	2-10	37,937		37,057
Construction in progress	—	33,512		29,529
		107,764		95,936
Less: accumulated depreciation		(43,134)		(39,445)
		$	64,630	$	56,491

Accounts Payable and Accrued Liabilities

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities

8. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following (in thousands):


	As of
	September 30, 2023		December 31, 2022
Accounts payable and other accrued operating expenses	$	65,377	$	50,461
Accrued clinical trial expenses	21,183		36,456
Accrued professional fees	19,239		14,403
Accrued technical operation expenses	4,252		3,345

Accrued compensation and employee related costs	33,870		32,040
Accrued royalty and milestones payable	5,979		4,710
Accrued interest payable	2,262		6,340
Revenue Interest Payments payable	3,163		2,149
Accrued sales allowances and related costs	9,464		6,974
Accrued France ATU reimbursement payable	15,072		12,943
Deferred and contingent consideration	5,700		10,700

Other accrued liabilities	2,222		1,596
	$	187,783	$	182,117

Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

9. Leases

The table below summarizes the supplemental non-cash disclosures of the Company's leases included in its consolidated financial statements (in thousands):


	Three Months Ended September 30,			Nine Months Ended September 30,
		2023		2022		2023		2022
Finance right-of-use assets obtained in exchange for lease obligations		$	—	$	—	$	—	$	9,287
Operating right-of-use assets obtained in exchange for lease obligations		$	3,089	$	58	$	4,970	$	565

Leases

9. Leases

The table below summarizes the supplemental non-cash disclosures of the Company's leases included in its consolidated financial statements (in thousands):


	Three Months Ended September 30,			Nine Months Ended September 30,
		2023		2022		2023		2022
Finance right-of-use assets obtained in exchange for lease obligations		$	—	$	—	$	—	$	9,287
Operating right-of-use assets obtained in exchange for lease obligations		$	3,089	$	58	$	4,970	$	565

Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

10. Debt

Debt, long-term consists of the following commitments as of September 30, 2023 and December 31, 2022 (in thousands):


	As of
	September 30, 2023		December 31, 2022
Convertible notes	$	788,087	$	785,621
Term Loan	359,432		339,629
Debt, long-term	$	1,147,519	$	1,125,250

Convertible Notes

convertible notes balance (in thousands):


	As of
	September 30, 2023		December 31, 2022
Face value of outstanding convertible notes	$	800,000	$	800,000
Debt issuance costs, unamortized	(11,913)		(14,379)

Convertible notes	$	788,087	$	785,621

Secured Senior Term Loan

The following table presents the carrying value of the Company’s Term Loan balance as of September 30, 2023 (in thousands):


	As of
	September 30, 2023		December 31, 2022
Original Term Loan balance	$	350,000	$	350,000
Paid-in-kind interest capitalized	21,367		4,165
Term Loan issuance costs, unamortized	(11,935)		(14,536)
Term Loan	$	359,432	$	339,629

As of September 30, 2023, future principal repayments of debt for each of the years through maturity were as follows (in thousands):


Year Ending December 31:
2023	$	—
2024	—
2025	225,000
2026	185,684
2027	185,683
2028 and thereafter	575,000
	$	1,171,367

Interest Expense

Interest expense related to debt and finance leases for the three and nine months ended September 30, 2023 and 2022 is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Convertible debt contractual interest expense	$	2,063	$	2,063	$	6,188	$	6,188
Term Loan contractual interest expense	12,002		—		34,403		—
Royalty Financing Agreement interest expense	4,447		—		14,016		—
Amortization of debt issuance costs	1,840		822		5,568		2,465

Swap interest income	(666)		—		(1,093)		—
Total debt interest expense	19,686		2,885		59,082		8,653
Finance lease interest expense	602		468		1,828		1,348
Total interest expense	$	20,288	$	3,353	$	60,910	$	10,001

Royalty Financing Agreement

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Royalty Financing Agreement

11. Royalty Financing Agreement

The following table shows the activity within the liability account for the nine month period ended September 30, 2023 and year ended December 31, 2022 (in thousands):


	Nine Months Ended September 30, 2023		Twelve Months Ended December 31, 2022
Royalty financing agreement liability - beginning balance	$	151,538	$	150,000
Revenue Interest Payments paid and payable	(8,865)		(2,149)
Interest expense recognized	14,016		3,687
Royalty financing agreement liability - ending balance	$	156,689	$	151,538
Royalty financing issuance costs:
Royalty issuance costs, unamortized - beginning balance	$	(3,523)	$	(3,624)
Amortization of issuance costs	393		101
Other	(129)		—
Deferred issuance costs, unamortized - ending balance	$	(3,259)	$	(3,523)
Royalty Financing Agreement	$	153,430	$	148,015

Shareholders' Equity	9 Months Ended
Shareholders' Equity	Sep. 30, 2023
Equity [Abstract]
Shareholders' Equity	12. Shareholders' Equity Common Stock — As of September 30, 2023, the Company had 500,000,000 shares of common stock authorized with a par value of $0.01 per share and 143,049,197 shares of common stock issued and outstanding. In addition, as of September 30, 2023, the Company had reserved 22,495,537 shares of common stock for issuance upon the exercise of outstanding stock options, 2,787,364 shares of common stock for issuance upon the vesting of RSUs and 666,382 shares for issuance upon the vesting of PSUs. The Company has also reserved 23,438,430 shares of common stock in the aggregate for issuance upon conversion of the 2025 Convertible Notes and 2028 Convertible Notes, subject to adjustment in accordance with the applicable indentures. In connection with the Business Acquisition, the Company reserved 9,406,112 shares of the Company’s common stock, subject to certain closing-related reductions. The shares of the Company’s common stock reserved in connection with the Motus acquisition were partly issued as acquisition consideration at closing and on the first and second anniversaries of the closing date of the acquisition, and will also be issued upon the third anniversary of the closing date of the acquisition and upon the achievement of certain development and regulatory milestone events, subject to certain reductions. The shares of the Company’s common stock reserved in connection with the AlgaeneX acquisition will be issued upon the achievement of a development milestone event, subject to certain reductions. Of the 9,406,112 shares reserved, subject to certain closing-related reductions, the Company issued 2,889,367 shares of the Company's common stock in connection with the Business Acquisition (Note 16) in the third quarter of 2021, after certain closing-related deductions. In the third quarter of 2022, the Company issued 171,427 shares of the Company's common stock to fulfill the payment required to Motus equityholders on the first anniversary of the Business Acquisition. In the third quarter of 2023, the Company issued 177,203 shares of the Company's common stock to fulfill the payment required to Motus equityholders on the second anniversary of the Business Acquisition. In the second quarter of 2023, in connection with the Company's acquisition of Adrestia Therapeutics Ltd. (Adrestia), the Company issued 3,430,867 shares of the Company's common stock as consideration at closing. See Note 16 - Acquisitions for further details. In connection with the Company’s acquisition of Vertuis Bio, Inc. (Vertuis), the Company reserved 550,000 shares of the Company’s common stock, subject to future adjustment. An aggregate of 500,000 of the reserved shares were issued as acquisition consideration at closing. An additional $1 million of shares of common stock will be issued to Vertuis’ former stockholders on July 1, 2024, based on the share price on June 28, 2024. See Note 16 - Acquisitions for further details. In October 2022, the Company completed an underwritten offering of 13,750,000 shares of the Company's common stock at a public offering price of $20.00 per share. The Company's net proceeds from the sale of the shares, after deducting the underwriting discounts and offering expense of $16.2 million, were $258.8 million. In the second quarter of 2021, the Company completed an underwritten public offering of 11,500,000 shares of the Company's common stock, including 1,500,000 shares issued pursuant to the exercise in full of the underwriters' option to purchase additional shares from the Company, at a public offering price of $25.00 per share. The Company's net proceeds from the sale of the shares, after deducting the underwriting discounts and offering expenses of $17.5 million, were $270.1 million. In the first quarter of 2021, the Company entered into a sales agreement with SVB Leerink LLC (now known as Leerink Partners LLC) (Leerink), to sell shares of the Company's common stock, with aggregate gross sales proceeds of up to $250.0 million, from time to time, through an “at the market” equity offering program (the ATM program), under which Leerink acts as sales agent. In the second quarter of 2023, the Company issued and sold an aggregate of 2,000,000 shares of common stock through the ATM program at a weighted-average public offering price of $19.35 per share and received net proceeds of $37.5 million. During the third quarter of 2022, the Company issued and sold an aggregate of 1,289,995 shares of common stock through the ATM program at a weighted-average public offering price of $26.68 per share and received net proceeds of $33.4 million. As of September 30, 2023, an aggregate of $176.9 million of shares of common stock remain available to be issued and sold under the ATM program. Preferred Stock — As of September 30, 2023, the Company had 200,000,000 shares of preferred stock authorized with a par value of $0.01 per share and no shares of preferred stock were issued and outstanding.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

13. Stock-Based Compensation

Restricted Stock Units — As of September 30, 2023, there was $46.2 million of unrecognized compensation expense related to unvested RSU awards.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	9.6	$	7.3	$	26.3	$	19.6
Selling, general and administrative	10.4		8.3		28.5		23.1
Total	$	20.0	$	15.6	$	54.8	$	42.7

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	14. Income Taxes The Company recorded a provision for income taxes of $0.5 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively, and $1.6 million and $1.3 million for the nine months ended September 30, 2023 and 2022, respectively. The provisions recorded for the three and nine months ended September 30, 2023 and 2022 are primarily a result of certain of the Company's international subsidiaries, which had taxable income during the periods. Additionally, the Company is impacted by certain state taxes which effectively impose income tax on modified gross revenues. In jurisdictions where the Company has net losses, there was a full valuation allowance recorded against the Company's deferred tax assets and therefore no tax benefit was recorded. The Company is subject to US federal, state and international income taxes and the statute of limitations for tax audit is open for the Company’s federal tax returns for the years ended 2019 and later, generally open for certain states for the years 2018 and later, and generally open for international jurisdictions for the years 2017 and later. The Company has incurred net operating losses since inception, except for the year ended December 31, 2009. Such loss carryforwards would be subject to audit in any tax year in which those losses are utilized, notwithstanding the year of origin. As of September 30, 2023 and December 31, 2022, the Company had recorded reserves for unrecognized income tax benefits against certain deferred tax assets in the US. However, given the Company’s valuation allowance position, these reserves do not have an impact on the balance sheet as of September 30, 2023 and December 31, 2022 or the consolidated statements of comprehensive loss for the three and nine months ended September 30, 2023 and 2022. The Company has not recorded any accrued interest or penalties related to uncertain tax positions. The Company does not anticipate any material changes in the amount of unrecognized tax positions over the next twelve months.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	15. Commitments and Contingencies Rent expense charged to operations was $2.6 million and $2.0 million for the three months ended September 30, 2023 and 2022, respectively, and $6.9 million and $5.9 million for the nine months ended September 30, 2023 and 2022, respectively. Legal Proceedings From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.

Acquisitions

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions

16. Acquisitions

Asset Acquisitions

Adrestia Therapeutics Ltd

Vertuis Bio, Inc.

The following table summarizes the purchase price (in millions).


Shares of Insmed common stock issued on closing	$	9.25
Shares of Insmed common stock issuable on July 1, 2024	1.00
Total purchase price	$	10.25

The Company evaluated the acquisition under ASC 805 and ASU 2017-01 and concluded that substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets and accounted for the transaction as an asset acquisition. The Company determined that the assets acquired did not have any future alternative use and, in accordance with ASC 730, Research and Development, expensed the assets within research and development in the consolidated statement of comprehensive loss as of the date of the acquisition.

Business Combination

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net loss	$ (158,933)	$ (131,145)	$ (563,506)	$ (321,411)

Insider Trading Arrangements	3 Months Ended	9 Months Ended
Insider Trading Arrangements	Sep. 30, 2023 shares	Sep. 30, 2023 shares
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		During the three months ended September 30, 2023, certain of our officers and directors adopted or terminated Rule 10b5-1 trading plans as follows: Sara Bonstein, our Chief Financial Officer, entered into a prearranged stock trading arrangement (the Trading Plan) on September 15, 2023. Ms. Bonstein’s Trading Plan provides for the sale of an aggregate number of up to 22,493 shares of the Company's common stock between December 15, 2023 and February 28, 2024. The Trading Plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and the Company’s policies regarding insider transactions.
Rule 10b5-1 Arrangement Adopted	true
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	true
Non-Rule 10b5-1 Arrangement Terminated	false
Sara Bonstein [Member]
Trading Arrangements, by Individual
Name	Sara Bonstein
Title	Chief Financial Officer
Adoption Date	September 15, 2023
Arrangement Duration	75 days
Aggregate Available	22,493	22,493

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Use of Estimates

Concentration of Credit Risk


	September 30,
	2023	2022
Customer A	35%	33%
Customer B	35%	35%
Customer C	18%	19%

Inventory and Cost of Product Revenues (excluding amortization of intangible assets)

Inventory and Cost of Product Revenues (excluding amortization of intangible assets) - Inventory is stated at the lower of cost or net realizable value and consists of raw materials, work-in-process and finished goods. The Company periodically reviews inventory for expiry and obsolescence and, if necessary, writes down accordingly. If quality specifications are not met during the manufacturing process, such inventory is written off to cost of product revenues (excluding amortization of intangible assets) in the period identified.Cost of product revenues (excluding amortization of intangible assets) consist primarily of direct and indirect costs related to the manufacturing of ARIKAYCE sold, including third-party manufacturing costs, packaging services, freight, and allocation of overhead costs, in addition to royalty expenses and revenue-based milestone payments. Cost is determined using a standard cost method, which approximates actual cost, and assumes a first in, first out flow of goods. Inventory used for clinical development purposes is expensed to R&D expense when consumed.

Acquisitions

further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business.

Indefinite-lived Intangible Assets, Finite-lived Intangible Assets, Impairment Assessment, and Goodwill

Leases

Leases - A lease is a contract, or part of a contract, that conveys the right to control the use of explicitly or implicitly identified property, plant or equipment in exchange for consideration. Control of an asset is conveyed to the Company if the Company obtains the right to obtain substantially all of the economic benefits of the asset or the right to direct the use of the asset. The Company recognizes right-of-use (ROU) assets and lease liabilities at the lease commencement date based on the present value of future, fixed lease payments over the term of the arrangement. ROU assets are amortized on a straight-line basis over the term of the lease or are amortized based on consumption, if this approach is more representative of the pattern in which benefit is expected to be derived from the underlying asset. Lease liabilities accrete to yield and are reduced at the time when the lease payment is payable to the vendor. Variable lease payments are recognized at the time when the event giving rise to the payment occurs and are recognized in the consolidated statements of comprehensive loss in the same line item as expenses arising from fixed lease payments.Leases are measured at present value using the rate implicit in the lease or, if the implicit rate is not determinable, the lessee's implicit borrowing rate. As the implicit rate is not typically available, the Company uses its implicit borrowing rate based on the information available at the lease commencement date to determine the present value of future lease payments. The implicit borrowing rate approximates the rate the Company would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments.

Foreign Currency

Debt Issuance Costs and Synthetic Royalty Financing Agreement

Derivatives

Net Loss Per Share

Recently Adopted Accounting Pronouncements

Revenue Recognition

sale of ARIKAYCE to its customers. The Company has not incurred or capitalized any incremental costs associated with obtaining contracts with customers.

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Schedule of Percentage of Total Gross Product Revenue Represented by the Three Largest Customers

The following table presents the percentage of gross product revenue represented by the Company's three largest customers as of the nine months ended September 30, 2023 and their respective percentages for the nine months ended September 30, 2022.


	September 30,
	2023	2022
Customer A	35%	33%
Customer B	35%	35%
Customer C	18%	19%

Schedule of Reconciliation of the Weighted Average Number of Shares Used to Compute Basic and Diluted Net Loss per Share


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Numerator:
Net loss	$	(158,933)	$	(131,145)	$	(563,506)	$	(321,411)
Denominator:
Weighted average common shares used in calculation of basic net loss per share:	142,899		120,789		138,960		119,780
Effect of dilutive securities:
Common stock options	—		—		—		—
RS and RSUs	—		—		—		—
PSUs	—		—		—		—
Convertible debt securities	—		—		—		—
Weighted average common shares outstanding used in calculation of diluted net loss per share	142,899		120,789		138,960		119,780
Net loss per share:
Basic and diluted	$	(1.11)	$	(1.09)	$	(4.06)	$	(2.68)

Schedule of Potentially Dilutive Securities Excluded from Computations of Diluted Weighted Average Common Shares Outstanding


	September 30,
	2023	2022
Common stock options	22,496	17,459
Unvested RS and RSUs	2,787	1,582
PSUs	666	672
Convertible debt securities	23,438	23,438

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Carrying Value and Fair Value of Assets and Liabilities

The following table shows assets and liabilities that are measured at fair value on a recurring basis and their carrying value (in millions):


	September 30, 2023
			Fair Value
	Carrying Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	487.1	$	487.1	$	—	$	—
Marketable securities	$	298.8	$	298.8	$	—	$	—
Collateral for interest rate swap	$	5.0	$	5.0	$	—	$	—
Liabilities
Interest rate swap	$	3.2	$	—	$	3.2	$	—
Deferred consideration	$	4.7	$	—	$	4.7	$	—
Contingent consideration	$	69.9	$	—	$	—	$	69.9


	December 31, 2022
			Fair Value
	Carrying Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	1,074.0	$	1,074.0	$	—	$	—
Marketable securities	$	74.2	$	74.2	$	—	$	—
Collateral for interest rate swap	$	5.0	$	5.0	$	—	$	—
Liabilities
Interest rate swap	$	1.5	$	—	$	1.5	$	—
Deferred consideration	$	7.4	$	—	$	7.4	$	—
Contingent consideration	$	58.1	$	—	$	—	$	58.1

Schedule of Observable Inputs in Valuation of Deferred Consideration

The following observable input was used in the valuation of the deferred consideration as of September 30, 2023:


	Fair Value as of September 30, 2023 (in millions)	Observable Input	Input Value
Deferred consideration	$4.7	Insmed share price as of September 30, 2023	$25.25

The following significant unobservable inputs were used in the valuation of the development and regulatory milestones and the priority review voucher milestone as of September 30, 2023:

Fair Value as of September 30, 2023 (in millions)

Valuation Technique

Unobservable Inputs

Values

Development and regulatory milestones

$61.0

Probability-adjusted

Probabilities of success

14% - 97%

Priority review voucher milestone

$5.6

Probability-adjusted discounted cash flow

Probability of success

16.4%

Discount rate

11.2%


	Deferred Consideration (Level 2 Liabilities)		Contingent Consideration (Level 3 Liabilities)
Balance as of December 31, 2021	$	14,931	$	75,668
Additions	—		—
Change in Fair Value	(2,635)		(16,368)
Payments	(4,296)		—
Balance as of September 30, 2022	$	8,000	$	59,300

Balance as of December 31, 2022	$	7,400	$	58,100
Additions	—		—
Change in Fair Value	1,200		11,800
Payments	(3,900)		—
Balance as of September 30, 2023	$	4,700	$	69,900

Product Revenues, Net (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Product Revenues By Geographic Location

The following table presents a summary of the Company's product revenues, net, by geographic location for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
US	$	59,203	$	49,539	$	165,935	$	137,511
Japan	16,033		14,483		44,782		41,008
Europe and rest of world	3,836		3,708		10,798		7,539
Total product revenues, net	$	79,072	$	67,730	$	221,515	$	186,058

Inventory (Tables)

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

As of September 30, 2023 and December 31, 2022, the Company's inventory balance consists of the following (in thousands):


	September 30, 2023		December 31, 2022

Raw materials	$	26,278	$	27,245
Work-in-process	31,891		22,460
Finished goods	19,754		20,217
	$	77,923	$	69,922

Intangibles, Net and Goodwill (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Rollforward of Intangible Assets

A rollforward of the Company's intangible assets for the nine months ended September 30, 2023 and September 30, 2022 is as follows (in thousands):



Intangible Asset	December 31, 2022		Additions		Amortization		September 30, 2023
Acquired ARIKAYCE R&D	$	37,588	$	—	$	(3,638)	$	33,950
Acquired IPR&D	29,600		—		—		29,600
PARI milestones	1,568		—		(151)		1,417
	$	68,756	$	—	$	(3,789)	$	64,967

Intangible Asset	December 31, 2021		Additions		Amortization		September 30, 2022
Acquired ARIKAYCE R&D	$	42,439	$	—	$	(3,638)	$	38,801
Acquired IPR&D	29,600		—		—		29,600
PARI milestones	1,770		—		(151)		1,619
	$	73,809	$	—	$	(3,789)	$	70,020

Fixed Assets, Net (Tables)

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of Fixed Assets

Fixed assets are stated at cost and depreciated using the straight-line method, based on useful lives as follows (in thousands):


	Estimated Useful Life (years)	As of
Asset Description		September 30, 2023		December 31, 2022

Lab equipment	7	$	22,503	$	16,403
Furniture and fixtures	7	6,428		6,428
Computer hardware and software	3-5	5,959		5,227
Office equipment	7	89		89
Manufacturing equipment	7	1,336		1,203
Leasehold improvements	2-10	37,937		37,057
Construction in progress	—	33,512		29,529
		107,764		95,936
Less: accumulated depreciation		(43,134)		(39,445)
		$	64,630	$	56,491

Accounts Payable and Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following (in thousands):


	As of
	September 30, 2023		December 31, 2022
Accounts payable and other accrued operating expenses	$	65,377	$	50,461
Accrued clinical trial expenses	21,183		36,456
Accrued professional fees	19,239		14,403
Accrued technical operation expenses	4,252		3,345

Accrued compensation and employee related costs	33,870		32,040
Accrued royalty and milestones payable	5,979		4,710
Accrued interest payable	2,262		6,340
Revenue Interest Payments payable	3,163		2,149
Accrued sales allowances and related costs	9,464		6,974
Accrued France ATU reimbursement payable	15,072		12,943
Deferred and contingent consideration	5,700		10,700

Other accrued liabilities	2,222		1,596
	$	187,783	$	182,117

Leases (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Schedule of Supplemental Noncash Disclosures included in Consolidated Financial Statements

The table below summarizes the supplemental non-cash disclosures of the Company's leases included in its consolidated financial statements (in thousands):


	Three Months Ended September 30,			Nine Months Ended September 30,
		2023		2022		2023		2022
Finance right-of-use assets obtained in exchange for lease obligations		$	—	$	—	$	—	$	9,287
Operating right-of-use assets obtained in exchange for lease obligations		$	3,089	$	58	$	4,970	$	565

Debt (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Debt, long-term consists of the following commitments as of September 30, 2023 and December 31, 2022 (in thousands):


	As of
	September 30, 2023		December 31, 2022
Convertible notes	$	788,087	$	785,621
Term Loan	359,432		339,629
Debt, long-term	$	1,147,519	$	1,125,250

Schedule of Components of Debt Balance

The following table presents the carrying value of the Company's

convertible notes balance (in thousands):


	As of
	September 30, 2023		December 31, 2022
Face value of outstanding convertible notes	$	800,000	$	800,000
Debt issuance costs, unamortized	(11,913)		(14,379)

Convertible notes	$	788,087	$	785,621

The following table shows the activity within the liability account for the nine month period ended September 30, 2023 and year ended December 31, 2022 (in thousands):


	Nine Months Ended September 30, 2023		Twelve Months Ended December 31, 2022
Royalty financing agreement liability - beginning balance	$	151,538	$	150,000
Revenue Interest Payments paid and payable	(8,865)		(2,149)
Interest expense recognized	14,016		3,687
Royalty financing agreement liability - ending balance	$	156,689	$	151,538
Royalty financing issuance costs:
Royalty issuance costs, unamortized - beginning balance	$	(3,523)	$	(3,624)
Amortization of issuance costs	393		101
Other	(129)		—
Deferred issuance costs, unamortized - ending balance	$	(3,259)	$	(3,523)
Royalty Financing Agreement	$	153,430	$	148,015

Schedule of Carrying Value of Term Loan Balance

The following table presents the carrying value of the Company’s Term Loan balance as of September 30, 2023 (in thousands):


	As of
	September 30, 2023		December 31, 2022
Original Term Loan balance	$	350,000	$	350,000
Paid-in-kind interest capitalized	21,367		4,165
Term Loan issuance costs, unamortized	(11,935)		(14,536)
Term Loan	$	359,432	$	339,629

Schedule of Future Principal Repayments of Debt

As of September 30, 2023, future principal repayments of debt for each of the years through maturity were as follows (in thousands):


Year Ending December 31:
2023	$	—
2024	—
2025	225,000
2026	185,684
2027	185,683
2028 and thereafter	575,000
	$	1,171,367

Schedule of Interest Expense

Interest expense related to debt and finance leases for the three and nine months ended September 30, 2023 and 2022 is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Convertible debt contractual interest expense	$	2,063	$	2,063	$	6,188	$	6,188
Term Loan contractual interest expense	12,002		—		34,403		—
Royalty Financing Agreement interest expense	4,447		—		14,016		—
Amortization of debt issuance costs	1,840		822		5,568		2,465

Swap interest income	(666)		—		(1,093)		—
Total debt interest expense	19,686		2,885		59,082		8,653
Finance lease interest expense	602		468		1,828		1,348
Total interest expense	$	20,288	$	3,353	$	60,910	$	10,001

Royalty Financing Agreement (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Carrying Value of Royalty Financing Agreement

The following table presents the carrying value of the Company's

convertible notes balance (in thousands):


	As of
	September 30, 2023		December 31, 2022
Face value of outstanding convertible notes	$	800,000	$	800,000
Debt issuance costs, unamortized	(11,913)		(14,379)

Convertible notes	$	788,087	$	785,621

The following table shows the activity within the liability account for the nine month period ended September 30, 2023 and year ended December 31, 2022 (in thousands):


	Nine Months Ended September 30, 2023		Twelve Months Ended December 31, 2022
Royalty financing agreement liability - beginning balance	$	151,538	$	150,000
Revenue Interest Payments paid and payable	(8,865)		(2,149)
Interest expense recognized	14,016		3,687
Royalty financing agreement liability - ending balance	$	156,689	$	151,538
Royalty financing issuance costs:
Royalty issuance costs, unamortized - beginning balance	$	(3,523)	$	(3,624)
Amortization of issuance costs	393		101
Other	(129)		—
Deferred issuance costs, unamortized - ending balance	$	(3,259)	$	(3,523)
Royalty Financing Agreement	$	153,430	$	148,015

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Allocation of Employee Stock-Based Compensation


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	9.6	$	7.3	$	26.3	$	19.6
Selling, general and administrative	10.4		8.3		28.5		23.1
Total	$	20.0	$	15.6	$	54.8	$	42.7

Acquisitions (Tables)

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Asset Acquisition

The following table summarizes the purchase price (in millions).


Shares of Insmed common stock issued on closing	$	9.25
Shares of Insmed common stock issuable on July 1, 2024	1.00
Total purchase price	$	10.25

The Company and Basis of Presentation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 487,113		$ 487,113		$ 1,074,036
Marketable securities	298,800		298,800
Net loss	$ (158,933)	$ (131,145)	$ (563,506)	$ (321,411)

Summary of Significant Accounting Policies - Concentration Risk (Details) - Sales Revenue, Product Line - Customer Concentration Risk	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Customer A
Concentration Risk [Line Items]
Concentration risk, percentage	35.00%	33.00%
Customer B
Concentration Risk [Line Items]
Concentration risk, percentage	35.00%	35.00%
Customer C
Concentration Risk [Line Items]
Concentration risk, percentage	18.00%	19.00%

Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2022	Sep. 30, 2023 USD ($) reportingUnit	Dec. 31, 2022 USD ($) reportingUnit	Jan. 01, 2022 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Number of reporting units \| reportingUnit		1	1
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2020-06	Accounting Standards Update 2020-06
Debt, long-term		$ 1,147,519	$ 1,125,250
Accumulated deficit		(3,260,084)	(2,696,578)
Additional paid-in capital		$ 2,971,375	$ 2,782,416
Accounting Standards Update 2020-06
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Accumulated deficit				$ 50,200
Cumulative impact of ASU 2020-06 adoption \| Accounting Standards Update 2020-06
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt, long-term				221,900
Unamortized debt issuance costs				6,100
Deferred tax liabilities				1,400
Additional paid-in capital				$ 264,600

Summary of Significant Accounting Policies - Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator:
Net loss	$ (158,933)	$ (131,145)	$ (563,506)	$ (321,411)
Denominator:
Weighted average common shares used in calculation of basic net loss per share (in shares)	142,899	120,789	138,960	119,780
Weighted average common shares used in calculation of basic net loss per share:
Convertible debt securities (in shares)	0	0	0	0
Weighted average common shares outstanding used in calculation of diluted net loss per share (in shares)	142,899	120,789	138,960	119,780
Net loss per share:
Basic (in dollars per share)	$ (1.11)	$ (1.09)	$ (4.06)	$ (2.68)
Diluted (in dollars per share)	$ (1.11)	$ (1.09)	$ (4.06)	$ (2.68)
Common stock options
Weighted average common shares used in calculation of basic net loss per share:
Effect of dilutive securities (in shares)	0	0	0	0
RS and RSUs
Weighted average common shares used in calculation of basic net loss per share:
Effect of dilutive securities (in shares)	0	0	0	0
PSUs
Weighted average common shares used in calculation of basic net loss per share:
Effect of dilutive securities (in shares)	0	0	0	0

Summary of Significant Accounting Policies - Anti-dilutive Securities (Details) - shares shares in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Common stock options
Anti-dilutive securities excluded from computations of diluted weighted-average common shares outstanding
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding (in shares)	22,496	17,459
Unvested RS and RSUs
Anti-dilutive securities excluded from computations of diluted weighted-average common shares outstanding
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding (in shares)	2,787	1,582
PSUs
Anti-dilutive securities excluded from computations of diluted weighted-average common shares outstanding
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding (in shares)	666	672
Convertible debt securities
Anti-dilutive securities excluded from computations of diluted weighted-average common shares outstanding
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding (in shares)	23,438	23,438

Fair Value Measurements - Schedule of Carrying Value and Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Assets
Marketable securities	$ 298,800
Liabilities
Deferred consideration	4,700
Level 2
Liabilities
Contingent consideration	4,700	$ 7,400	$ 8,000	$ 14,931
Level 3
Liabilities
Contingent consideration	69,900	58,100	$ 59,300	$ 75,668
Carrying Value \| Recurring basis
Assets
Cash and cash equivalents	487,100	1,074,000
Marketable securities	298,800	74,200
Collateral for interest rate swap	5,000	5,000
Liabilities
Interest rate swap	3,200	1,500
Deferred consideration	4,700	7,400
Contingent consideration	69,900	58,100
Estimate of Fair Value Measurement \| Recurring basis \| Level 1
Assets
Cash and cash equivalents	487,100	1,074,000
Marketable securities	298,800	74,200
Collateral for interest rate swap	5,000	5,000
Liabilities
Interest rate swap	0	0
Deferred consideration	0	0
Contingent consideration	0	0
Estimate of Fair Value Measurement \| Recurring basis \| Level 2
Assets
Cash and cash equivalents	0	0
Marketable securities	0	0
Collateral for interest rate swap	0	0
Liabilities
Interest rate swap	3,200	1,500
Deferred consideration	4,700	7,400
Contingent consideration	0	0
Estimate of Fair Value Measurement \| Recurring basis \| Level 3
Assets
Cash and cash equivalents	0	0
Marketable securities	0	0
Collateral for interest rate swap	0	0
Liabilities
Interest rate swap	0	0
Deferred consideration	0	0
Contingent consideration	$ 69,900	$ 58,100

Fair Value Measurements - Narrative (Details) $ in Thousands		1 Months Ended			3 Months Ended			9 Months Ended
	Aug. 04, 2021 USD ($) shares	Aug. 31, 2023 shares	Aug. 31, 2022 shares	Aug. 31, 2021 shares	Sep. 30, 2023 USD ($) sale shares	Sep. 30, 2022 USD ($) shares	Sep. 30, 2021 shares	Sep. 30, 2023 USD ($) sale	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	May 31, 2021 USD ($)	Jan. 31, 2018 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Current available-for-sale securities					$ 298,800			$ 298,800
Unrealized gain								100
Deferred consideration					4,700			4,700
Non-current contingent consideration					$ 69,900			$ 69,900	$ 51,100
Convertible notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible senior notes												$ 309,100
0.75% convertible senior notes due 2028 \| Convertible notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate (as a percent)					0.75%			0.75%
Convertible senior notes											$ 371,600
1.75% convertible senior notes due 2025 \| Convertible notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate (as a percent)					1.75%			1.75%
Convertible senior notes											$ 203,400
Probabilities of success
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted average probability of success					0.42			0.42
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration					$ 69,900	$ 59,300		$ 69,900	58,100	$ 75,668
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration					4,700	$ 8,000		4,700	7,400	$ 14,931
Recurring basis \| Level 3 \| Estimate of Fair Value Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred consideration					0			0	0
Contingent consideration					69,900			69,900	58,100
Recurring basis \| Level 2 \| Estimate of Fair Value Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred consideration					4,700			4,700	7,400
Contingent consideration					0			0	$ 0
Recurring basis \| Level 2 \| 0.75% convertible senior notes due 2028 \| Estimate of Fair Value Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible senior notes					581,500			581,500
Recurring basis \| Level 2 \| 1.75% convertible senior notes due 2025 \| Estimate of Fair Value Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible senior notes					223,900			223,900
Accrued Liabilities, Current
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred consideration					$ 4,700			$ 4,700
Motus
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Shares issued in acquisition (in shares) \| shares	2,889,367	177,203	171,427		177,203	171,427	2,889,367
Shares issued upon milestone achievements (in shares) \| shares	5,348,572
Potential payout percentage					50.00%			50.00%
Percent of sales					50.00%			50.00%
Number of publicly disclosed priority review voucher sales \| sale					3			3
Contingent consideration	$ 35,000
Motus \| Second anniversary of closing date
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Shares issued in acquisition (in shares) \| shares	184,433
Motus \| First anniversary of closing date
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Shares issued in acquisition (in shares) \| shares	184,433
Motus \| Third anniversary of closing date
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Shares issued in acquisition (in shares) \| shares	184,433
Motus \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration					$ 0			$ 0
Motus \| Other Noncurrent Liabilities \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-current contingent consideration					$ 69,900			$ 69,900
AlgaeneX
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Shares issued upon milestone achievements (in shares) \| shares				368,867

Fair Value Measurements - Observable Input in Valuation of Deferred Consideration (Details) $ in Millions	Sep. 30, 2023 USD ($) $ / shares
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred consideration \| $	$ 4.7
Level 2 \| Share Price
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Insmed share price (in usd per share) \| $ / shares	25.25

Fair Value Measurements - Significant Unobservable Inputs in the Valuation of Contingent Consideration Liabilities (Details) $ in Thousands	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 69,900	$ 58,100	$ 59,300	$ 75,668
Probabilities of success
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Values	0.42
Development and regulatory milestones
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 61,000
Priority review voucher milestone
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 5,600
Priority review voucher milestone \| Probabilities of success \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Values	0.164
Priority review voucher milestone \| Discount rate \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Values	0.112
Minimum \| Development and regulatory milestones \| Probabilities of success \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Values	0.14
Maximum \| Development and regulatory milestones \| Probabilities of success \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Values	0.97

Fair Value Measurements - Deferred and Contingent Consideration Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Deferred Consideration (Level 2 Liabilities)
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Consideration, beginning balance	$ 7,400	$ 14,931
Additions	0	0
Change in Fair Value	1,200	(2,635)
Payments	(3,900)	(4,296)
Consideration, ending balance	4,700	8,000
Contingent Consideration (Level 3 Liabilities)
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Consideration, beginning balance	58,100	75,668
Additions	0	0
Change in Fair Value	11,800	(16,368)
Payments	0	0
Consideration, ending balance	$ 69,900	$ 59,300

Product Revenues, Net - Product Revenues By Geographic Location (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Product revenues, net	$ 79,072	$ 67,730	$ 221,515	$ 186,058
US
Disaggregation of Revenue [Line Items]
Product revenues, net	59,203	49,539	165,935	137,511
Japan
Disaggregation of Revenue [Line Items]
Product revenues, net	16,033	14,483	44,782	41,008
Europe and rest of world
Disaggregation of Revenue [Line Items]
Product revenues, net	$ 3,836	$ 3,708	$ 10,798	$ 7,539

Inventory - Schedule of Inventory, Current (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 26,278	$ 27,245
Work-in-process	31,891	22,460
Finished goods	19,754	20,217
Inventory, Net	$ 77,923	$ 69,922

Intangibles, Net and Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets estimated useful life (in years)	12 years		12 years
Amortization of intangible assets, remainder of 2023	$ 5,100		$ 5,100
Amortization of intangible assets, 2024	5,100		5,100
Amortization of intangible assets, 2025	5,100		5,100
Amortization of intangible assets, 2026	5,100		5,100
Amortization of intangible assets, 2027	5,100		5,100
Goodwill	136,110		136,110		$ 136,110
Finite-lived Intangible Assets [Roll Forward]
Intangibles, gross					68,756	$ 73,809
Additions			0	$ 0
Amortization	(1,263)	$ (1,263)	(3,789)	(3,789)
Intangibles, net	64,967	70,020	64,967	70,020	68,756
Acquired ARIKAYCE R&D
Finite-lived Intangible Assets [Roll Forward]
Intangibles, gross					37,588	42,439
Additions			0	0
Amortization			(3,638)	(3,638)
Intangibles, net	33,950	38,801	33,950	38,801
Acquired IPR&D
Finite-lived Intangible Assets [Roll Forward]
Intangibles, gross					29,600	29,600
Additions			0	0
Amortization			0	0
Intangibles, net	29,600	29,600	29,600	29,600
PARI milestones
Finite-lived Intangible Assets [Roll Forward]
Intangibles, gross					$ 1,568	$ 1,770
Additions			0	0
Amortization			(151)	(151)
Intangibles, net	$ 1,417	$ 1,619	$ 1,417	$ 1,619

Fixed Assets, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Fixed assets, gross	$ 107,764	$ 95,936
Less: accumulated depreciation	(43,134)	(39,445)
Fixed assets, net	$ 64,630	56,491
Lab equipment
Property, Plant and Equipment [Line Items]
Estimated Useful Life (years)	7 years
Fixed assets, gross	$ 22,503	16,403
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated Useful Life (years)	7 years
Fixed assets, gross	$ 6,428	6,428
Computer hardware and software
Property, Plant and Equipment [Line Items]
Fixed assets, gross	$ 5,959	5,227
Computer hardware and software \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (years)	3 years
Computer hardware and software \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (years)	5 years
Office equipment
Property, Plant and Equipment [Line Items]
Estimated Useful Life (years)	7 years
Fixed assets, gross	$ 89	89
Manufacturing equipment
Property, Plant and Equipment [Line Items]
Estimated Useful Life (years)	7 years
Fixed assets, gross	$ 1,336	1,203
Leasehold improvements
Property, Plant and Equipment [Line Items]
Fixed assets, gross	$ 37,937	37,057
Leasehold improvements \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (years)	2 years
Leasehold improvements \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (years)	10 years
Construction in progress
Property, Plant and Equipment [Line Items]
Fixed assets, gross	$ 33,512	$ 29,529

Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accounts payable and other accrued operating expenses	$ 65,377	$ 50,461
Accrued clinical trial expenses	21,183	36,456
Accrued professional fees	19,239	14,403
Accrued technical operation expenses	4,252	3,345
Accrued compensation and employee related costs	33,870	32,040
Accrued royalty and milestones payable	5,979	4,710
Accrued interest payable	2,262	6,340
Revenue Interest Payments payable	3,163	2,149
Accrued sales allowances and related costs	9,464	6,974
Accrued France ATU reimbursement payable	15,072	12,943
Deferred and contingent consideration	5,700	10,700
Other accrued liabilities	2,222	1,596
Total accounts payable and accrued liabilities	$ 187,783	$ 182,117

Leases - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
Leases - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Lessee, Lease, Description [Line Items]
Variable lease, cost	$ 3.9	$ 3.2	$ 8.1	$ 4.9
Lease cost, future right-of-use asset			$ 47.0		$ 40.7
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term			1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term			10 years 10 months

Leases - Lease, costs (Details) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Lease, Cost [Abstract]
Finance right-of-use assets obtained in exchange for lease obligations	$ 0	$ 0	$ 0	$ 9,287
Operating right-of-use assets obtained in exchange for lease obligations	$ 3,089	$ 58	$ 4,970	$ 565

Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Convertible notes	$ 1,147,519	$ 1,125,250
Convertible notes
Debt Instrument [Line Items]
Term Loan	788,087	785,621
Convertible notes	788,087	785,621
Term Loan
Debt Instrument [Line Items]
Term Loan	$ 359,432	$ 339,629

Debt - Narrative (Details) $ / shares in Units, $ in Thousands	1 Months Ended			9 Months Ended
	Oct. 31, 2022 USD ($)	May 31, 2021 USD ($) day $ / shares	Jan. 31, 2018 USD ($) day $ / shares	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Debt Instrument [Line Items]
Paid-in-kind interest capitalized				$ 17,202	$ 0
0.75% convertible senior notes due 2028
Debt Instrument [Line Items]
Initial conversion rate		0.0307692	30.7692
0.75% convertible senior notes due 2028 \| Level 2 \| Carrying Value \| Recurring basis
Debt Instrument [Line Items]
Convertible senior notes				564,400
1.75% convertible senior notes due 2025
Debt Instrument [Line Items]
Initial conversion rate		0.0255384	25.5384
1.75% convertible senior notes due 2025 \| Level 2 \| Carrying Value \| Recurring basis
Debt Instrument [Line Items]
Convertible senior notes				223,700
Term Loan \| Secured Debt
Debt Instrument [Line Items]
Original Term Loan balance	$ 350,000			350,000		$ 350,000
Debt issuance costs, unamortized	$ 15,200
Interest payable	50.00%
Debt term (in months)	24 months
Proceeds from loans	$ 334,800
Term Loan \| Secured Debt \| Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Interest rate	2.50%
Term Loan \| Secured Debt \| Secured Overnight Financing Rate (SOFR) \| Variable Rate Component Two
Debt Instrument [Line Items]
Interest rate	7.75%
Convertible notes
Debt Instrument [Line Items]
Convertible senior notes			$ 309,100
Effective interest rate		7.10%	7.60%
Residual equity component of debt			$ 140,900
Convertible notes \| 0.75% convertible senior notes due 2028
Debt Instrument [Line Items]
Original Term Loan balance		$ 575,000
Option to purchase additional debt		75,000
Debt issuance costs, unamortized		15,700		$ 10,600
Net proceeds		$ 559,300
Initial conversion price (in dollars per share) \| $ / shares		$ 32.50
Convertible senior notes		$ 371,600
Remaining discount amortization period (in years)				4 years 8 months 1 day
Convertible notes \| 0.75% convertible senior notes due 2028 \| Conversion Term (i)
Debt Instrument [Line Items]
Threshold trading days \| day		5
Threshold consecutive trading days \| day		5
Threshold percent of stock price trigger		98.00%
Convertible notes \| 0.75% convertible senior notes due 2028 \| Conversion Term (ii)
Debt Instrument [Line Items]
Threshold trading days \| day		45
Threshold consecutive trading days \| day		10
Threshold percent of stock price trigger		10.00%
Convertible notes \| 0.75% convertible senior notes due 2028 \| Conversion Term (iii)
Debt Instrument [Line Items]
Threshold trading days following fundamental change \| day		30
Convertible notes \| 0.75% convertible senior notes due 2028 \| Conversion Term (iv)
Debt Instrument [Line Items]
Threshold trading days \| day		20
Threshold consecutive trading days \| day		30
Threshold percent of stock price trigger		130.00%
Convertible notes \| 1.75% convertible senior notes due 2025
Debt Instrument [Line Items]
Original Term Loan balance			450,000
Option to purchase additional debt			50,000
Debt issuance costs, unamortized			14,200	$ 1,300
Net proceeds			$ 435,800
Repurchased amount		$ 225,000
Loss on extinguishment of debt		17,700
Initial conversion price (in dollars per share) \| $ / shares			$ 39.16
Convertible senior notes		$ 203,400
Remaining discount amortization period (in years)				1 year 3 months 14 days
Convertible notes \| 1.75% convertible senior notes due 2025 \| Conversion Term (i)
Debt Instrument [Line Items]
Threshold trading days \| day			5
Threshold consecutive trading days \| day			5
Threshold percent of stock price trigger			98.00%
Convertible notes \| 1.75% convertible senior notes due 2025 \| Conversion Term (ii)
Debt Instrument [Line Items]
Threshold trading days \| day			45
Threshold consecutive trading days \| day			10
Threshold percent of stock price trigger			10.00%
Convertible notes \| 1.75% convertible senior notes due 2025 \| Conversion Term (iii)
Debt Instrument [Line Items]
Threshold trading days following fundamental change \| day			30
Convertible notes \| 1.75% convertible senior notes due 2025 \| Conversion Term (iv)
Debt Instrument [Line Items]
Threshold trading days \| day			20
Threshold consecutive trading days \| day			30
Threshold percent of stock price trigger			130.00%

Debt - Components of Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Convertible notes	$ 1,147,519	$ 1,125,250
Convertible notes
Debt Instrument [Line Items]
Face value of outstanding convertible notes	800,000	800,000
Debt issuance costs, unamortized	(11,913)	(14,379)
Convertible notes	$ 788,087	$ 785,621

Debt - Schedule of Carrying Value of Term Loan Balance (Details) - Term Loan - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Oct. 31, 2022
Debt Instrument [Line Items]
Term Loan	$ 359,432	$ 339,629
Secured Debt
Debt Instrument [Line Items]
Original Term Loan balance	350,000	350,000	$ 350,000
Paid-in-kind interest capitalized	21,367	4,165
Term Loan issuance costs, unamortized	(11,935)	(14,536)
Term Loan	$ 359,432	$ 339,629

Debt - Future Principal Repayments of Debt (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Year Ending December 31:
2023	$ 0
2024	0
2025	225,000
2026	185,684
2027	185,683
2028 and thereafter	575,000
Total	$ 1,171,367

Debt - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Debt - Interest Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Debt Instrument [Line Items]
Amortization of debt issuance costs	$ 1,840	$ 822	$ 5,568	$ 2,465
Swap interest income	(666)	0	(1,093)	0
Total debt interest expense	19,686	2,885	59,082	8,653
Finance lease interest expense	602	468	1,828	1,348
Total interest expense	20,288	3,353	60,910	10,001
Convertible Debt
Debt Instrument [Line Items]
Convertible debt contractual interest expense	2,063	2,063	6,188	6,188
Term Loan
Debt Instrument [Line Items]
Convertible debt contractual interest expense	12,002	0	34,403	0
Royalty Agreements
Debt Instrument [Line Items]
Convertible debt contractual interest expense	$ 4,447	$ 0	$ 14,016	$ 0

Royalty Financing Agreement - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended
	Oct. 31, 2022	Sep. 01, 2025	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Royalty financing liability			$ 5,979	$ 4,710
Royalty Agreements
Debt Instrument [Line Items]
Royalty maximum	1.8
Royalty financing liability			$ 3,200	$ 2,100
Royalty Agreements \| Maximum
Debt Instrument [Line Items]
Royalty maximum	1.9
Royalty Agreements \| ARIKAYCE Global Net Sales
Debt Instrument [Line Items]
Royalty percentage	450.00%
Royalty Agreements \| ARIKAYCE Global Net Sales \| Forecast
Debt Instrument [Line Items]
Royalty percentage		4.00%
Royalty Agreements \| Brensocatib Global Net Sales
Debt Instrument [Line Items]
Royalty percentage	75.00%
Secured Debt \| Royalty Agreements
Debt Instrument [Line Items]
Proceeds from royalty financing	$ 150,000
Interest payments	150,000
Face amount	150,000
Lenders fees and deal expenses	3,800
Proceeds from royalty financing agreement, net	$ 146,200
Effective interest rate	12.40%

Royalty Financing Agreement - Carrying Value of Royalty Financing Agreement (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Royalty Financing Agreement [Roll Forward]
Royalty financing agreement liability - beginning balance			$ 148,015
Royalty financing agreement liability - ending balance	$ 153,430		153,430		$ 148,015
Amortization of issuance costs	1,840	$ 822	5,568	$ 2,465
Royalty financing agreement	153,430		153,430		148,015
Royalty Agreements
Royalty Financing Agreement [Roll Forward]
Interest expense recognized	4,447	$ 0	14,016	0
Secured Debt
Royalty Financing Agreement [Roll Forward]
Amortization of issuance costs			393		101
Secured Debt \| Royalty Agreements
Royalty Financing Agreement [Roll Forward]
Royalty financing agreement liability - beginning balance			151,538	150,000	150,000
Revenue Interest Payments paid and payable			(8,865)		(2,149)
Interest expense recognized			14,016		3,687
Royalty financing agreement liability - ending balance	156,689		156,689		151,538
Royalty issuance costs, unamortized - beginning balance			3,523	$ 3,624	3,624
Other			(129)		0
Deferred issuance costs, unamortized - ending balance	3,259		3,259		3,523
Royalty financing agreement	$ 156,689		$ 156,689		$ 151,538

Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended				3 Months Ended
	Aug. 04, 2021	Aug. 31, 2023	Jan. 31, 2023	Oct. 31, 2022	Aug. 31, 2022	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2022
Class of Stock [Line Items]
Common stock, authorized shares (in shares)						500,000,000						500,000,000
Common stock, par value (in dollars per share)						$ 0.01						$ 0.01
Common stock, outstanding shares (in shares)						143,049,197						135,653,731
Common stock, issued shares (in shares)						143,049,197						135,653,731
Offering price per share (in dollars per share)				$ 20.00						$ 25.00
Payments of stock issuance costs				$ 16.2						$ 17.5
Preferred stock, authorized (in shares)						200,000,000
Preferred stock, par value (in dollars per share)						$ 0.01
Preferred stock, shares issued (in shares)						0
Preferred stock, shares outstanding (in shares)						0
Public Stock Offering
Class of Stock [Line Items]
Shares sold in offering (in shares)				13,750,000						11,500,000
Aggregate net proceeds from stock offering				$ 258.8						$ 270.1
Over-Allotment Option
Class of Stock [Line Items]
Shares sold in offering (in shares)										1,500,000
ATM Program
Class of Stock [Line Items]
Offering price per share (in dollars per share)							$ 19.35	$ 26.68
Aggregate net proceeds from stock offering							$ 37.5	$ 33.4
Common stock authorized, aggregate gross sales proceeds (up to)											$ 250.0
Remaining shares sold offering price						$ 176.9
Motus
Class of Stock [Line Items]
Common stock shares reserved for issuance (in shares)						9,406,112
Shares issued in acquisition (in shares)	2,889,367	177,203			171,427	177,203		171,427	2,889,367
Contingent consideration	$ 35.0
Shares sold in offering (in shares)							2,000,000	1,289,995
Adrestia Therapeutics Ltd
Class of Stock [Line Items]
Issuance of common stock for business acquisition (in shares)							3,430,867
Vertuis Bio, Inc.
Class of Stock [Line Items]
Common stock shares reserved for issuance (in shares)			550,000
Issuance of common stock for business acquisition (in shares)			500,000
Contingent consideration						$ 1.0
Convertible notes
Class of Stock [Line Items]
Common stock shares reserved for issuance (in shares)						23,438,430
Common stock options
Class of Stock [Line Items]
Common stock shares reserved for issuance (in shares)						22,495,537
Unvested RS and RSUs
Class of Stock [Line Items]
Common stock shares reserved for issuance (in shares)						2,787,364
PSUs
Class of Stock [Line Items]
Common stock shares reserved for issuance (in shares)						666,382

Stock-Based Compensation - Narrative (Details) - USD ($)			3 Months Ended		9 Months Ended
	May 11, 2023	May 15, 2018	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Stock-Based Compensation
Inducement stock options granted to new employees (in shares)					2,135,330
Common stock options
Stock-Based Compensation
Unrecognized compensation expense related to unvested stock options			$ 138,400,000		$ 138,400,000
Options outstanding (in shares)			114,780		114,780
Unvested RS and RSUs
Stock-Based Compensation
Unrecognized compensation expense related to unvested RSU awards			$ 46,200,000		$ 46,200,000
Performance options
Stock-Based Compensation
Options outstanding, nonvested (in shares)			266,550		266,550
Unrecognized compensation expense			$ 10,400,000		$ 10,400,000
Potential award payout					100.00%
Allocated share-based compensation expense			$ 0	$ 0	$ 0	$ 0
Amended and Restated Plan
Stock-Based Compensation
Number of additional shares authorized (in shares)	10,500,000
2019 Incentive Plan
Stock-Based Compensation
Shares available for grant (in shares)			7,052,203		7,052,203
2018 ESPP
Stock-Based Compensation
Number of additional shares authorized (in shares)		1,200,000
Shares of common stock, maximum authorized for issuance (in shares)		1,000,000
Percentage of outstanding shares		2.00%

Stock-Based Compensation - Restricted Stock and Restricted Stock Units (Details) - Stock options and RSUs - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Stock-Based Compensation
Allocated share-based compensation expense	$ 20.0	$ 15.6	$ 54.8	$ 42.7
Research and development
Stock-Based Compensation
Allocated share-based compensation expense	9.6	7.3	26.3	19.6
Selling, general and administrative
Stock-Based Compensation
Allocated share-based compensation expense	$ 10.4	$ 8.3	$ 28.5	$ 23.1

Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 544,000	$ 372,000	$ 1,557,000	$ 1,258,000
Deferred tax benefit			0
Unrecognized tax benefits, interest and penalties accrued	$ 0		$ 0

Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Rent expense charged to operations	$ 2.6	$ 2.0	$ 6.9	$ 5.9

Acquisitions - Narrative (Details) $ / shares in Units, $ in Thousands			1 Months Ended					3 Months Ended			9 Months Ended
	Aug. 04, 2021 USD ($) shares	May 24, 2021 days	Aug. 31, 2023 shares	Jun. 30, 2023 USD ($) $ / shares shares	Jan. 31, 2023 USD ($) $ / shares shares	Aug. 31, 2022 shares	Aug. 31, 2021 USD ($) $ / shares shares	Sep. 30, 2023 shares	Sep. 30, 2022 shares	Sep. 30, 2021 shares	Sep. 30, 2023 USD ($)
Business Acquisition [Line Items]
Share price (in usd per share) \| $ / shares				$ 21.10	$ 18.50
Consecutive trading day period \| days		45
Motus and AlgaeneX
Business Acquisition [Line Items]
Aggregate value							$ 165,500
Motus
Business Acquisition [Line Items]
Shares issued in acquisition (in shares) \| shares	2,889,367		177,203			171,427		177,203	171,427	2,889,367
Shares issued upon milestone achievements (in shares) \| shares	5,348,572
Contingent consideration	$ 35,000
Share price used to calculate issuable shares (in dollars per share) \| $ / shares							$ 27.11
Motus \| Second anniversary of closing date
Business Acquisition [Line Items]
Shares issued in acquisition (in shares) \| shares	184,433
Motus \| Third anniversary of closing date
Business Acquisition [Line Items]
Shares issued in acquisition (in shares) \| shares	184,433
Motus \| First anniversary of closing date
Business Acquisition [Line Items]
Shares issued in acquisition (in shares) \| shares	184,433
AlgaeneX
Business Acquisition [Line Items]
Shares issued upon milestone achievements (in shares) \| shares							368,867
Cash paid in acquisition							$ 1,500
Share price used to calculate issuable shares (in dollars per share) \| $ / shares							$ 27.11
Adrestia Therapeutics Ltd
Business Acquisition [Line Items]
Shares issued in asset acquisition (in shares) \| shares				3,430,867
Asset acquisition, consideration transferred				$ 72,400
Contingent payment, value				$ 326,500
Vertuis Bio, Inc.
Business Acquisition [Line Items]
Shares issued in asset acquisition (in shares) \| shares					500,000
Asset acquisition, consideration transferred					$ 10,250
Contingent payment, value					1,000
IPR&D expense											$ 76,500
Vertuis Bio, Inc. \| Milestone Event 1
Business Acquisition [Line Items]
Contingent payment, value					1,000
Vertuis Bio, Inc. \| Milestone Event 2
Business Acquisition [Line Items]
Contingent payment, value					23,000
Vertuis Bio, Inc. \| Milestone Event 3
Business Acquisition [Line Items]
Contingent payment, value					$ 63,800

Acquisitions - Asset Acquisition (Details) - Vertuis Bio, Inc. $ in Thousands	1 Months Ended
	Jan. 31, 2023 USD ($)
Business Acquisition [Line Items]
Shares of Insmed common stock issued on closing	$ 9,250
Shares of Insmed common stock issuable on July 1, 2024	1,000
Total purchase price	$ 10,250