INSMED IncINSM
INSMED Inc Debt Disclosure
10. Debt
Debt, long-term consists of the following commitments as of December 31, 2025 and 2024 (in thousands):
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Convertible notes | $ | — | $ | 567,164 | ||||||||||
| Term Loans | 540,964 | 536,218 | ||||||||||||
| Debt, long-term | $ | 540,964 | $ | 1,103,382 | ||||||||||
2028 Convertible Notes
In May 2021, the Company completed an underwritten public offering of $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 bore interest payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2021. 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.
As of December 31, 2024, holders of seventy-seven thousand dollars of aggregate principal amount of 2028 Convertible Notes elected to convert their notes, resulting in an issuance of an aggregate of 2,362 shares of the Company’s common stock. The 2028 Convertible Notes would have matured on June 1, 2028 but, on April 24, 2025, the Company issued a redemption notice for the 2028 Convertible Notes with a redemption date of June 6, 2025 (the Redemption Date). The
Company elected to settle any conversions of the 2028 Convertible Notes that occurred on or before the business day prior to the Redemption Date in shares of the Company’s common stock.
Through April 24, 2025, holders of $5.5 million of aggregate principal amount of 2028 Convertible Notes elected to convert their notes into shares of the Company’s common stock at a conversion rate of 30.7692 shares of common stock per $1,000 principal amount of notes (equivalent to a conversion price of approximately $32.50 per share of common stock), resulting in an issuance of an aggregate of 168,944 shares of the Company's common stock. After April 24, 2025, holders of $567.5 million of aggregate principal amount of the then outstanding 2028 Convertible Notes elected to convert their notes into shares of the Company's common stock at a conversion rate of 31.2861 shares of common stock per $1,000 principal amount of notes (equivalent to a conversion price of approximately $31.96 per share of common stock), resulting in the issuance of an aggregate of 17,756,196 shares of the Company’s common stock. On the Redemption Date, all then outstanding 2028 Convertible Notes were redeemed at a redemption price equal to 100% of the principal amount of such 2028 Convertible Notes, plus accrued and unpaid interest on such 2028 Convertible Notes to, but excluding, the Redemption Date (the Redemption Price). For each $1,000.00 principal amount of 2028 Convertible Notes, the Redemption Price was equal to approximately $1,000.10.
2025 Convertible Notes
In January 2018, the Company completed an underwritten public offering of $450.0 million aggregate principal 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 bore interest payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2018. 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 2025 Convertible Notes would have matured on January 15, 2025 but on June 27, 2024, the Company called the outstanding 2025 Convertible Notes for redemption, which was completed on August 9, 2024. The Company elected to settle any conversions of the 2025 Convertible Notes that occurred on or before the business day prior to the Redemption Date in shares of the Company’s common stock. Holders of $224.8 million aggregate principal amount of the then outstanding 2025 Convertible Notes elected to convert their notes into shares of the Company's common stock at a conversion rate of 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). These conversions resulted in the issuance of an aggregate of 5,741,063 shares of the Company’s common stock.
The remaining $0.2 million aggregate principal amount of 2025 Convertible Notes outstanding were redeemed by the Company on the Redemption Date at a redemption price equal to 100% of the principal amount of the 2025 Convertible Notes, plus accrued and unpaid interest on the 2025 Convertible Notes to, but excluding, the Redemption Date (the Redemption Price). For each $1,000 principal amount of 2025 Convertible Notes, the Redemption Price was approximately $1,001.17.
The following table presents the carrying value of the Company’s convertible notes balance (in thousands):
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Face value of outstanding convertible notes | $ | — | $ | 574,923 | |||||||
| Debt issuance costs, unamortized | — | (7,759) | |||||||||
| Convertible notes | $ | — | $ | 567,164 | |||||||
The $567.2 million carrying value of the 2028 Convertible Notes as of December 31, 2024 is net of $7.8 million of unamortized debt issuance costs.
Secured Senior Term Loan
In October 2022, the Company entered into the $350.0 million Tranche A Term Loan with Pharmakon that would have matured on October 19, 2027. The Tranche A Term Loan originally bore 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 Tranche A Term Loan could have been paid-in-kind at the Company's election. If elected, paid-in-kind
interest would have been capitalized and added to the principal amount of the Tranche A Term Loan. The Tranche A Term Loan, including the paid-in-kind interest, would have been repaid in eight equal quarterly payments starting in the 13th quarter following the closing of the Tranche A Term Loan (i.e., the quarter ending March 31, 2026), except that the repayment start date could have been extended at the Company's option for an additional four quarters, so that repayments start in the 17th quarter following the closing of the Tranche A Term Loan, subject to the achievement of specified ARIKAYCE data thresholds and certain other conditions. Net proceeds from the Tranche A Term Loan, after deducting the lenders fees and deal expenses of $15.1 million, were $334.9 million.
Amended and Restated Loan Agreement
In October 2024, the Company entered into the A&R Loan Agreement, as amended on July 10, 2025, with BioPharma Credit PLC, BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP, which are funds managed by Pharmakon, and the guarantors party to such agreement. The A&R Loan Agreement amended and restated the Loan Agreement, dated as of October 19, 2022, pursuant to which the Tranche A Term Loan was provided. The A&R Loan Agreement, among other items, provides an additional $150.0 million senior secured term loan tranche. The A&R Loan Agreement extends the maturity of the Term Loans to September 30, 2029, subject to acceleration to February 1, 2028 on the occurrence of certain prespecified events, and amends the interest rate on the Term Loans to a fixed rate of 9.6% per annum. As consideration for the provision of the Tranche B Term Loan, the Company agreed to pay Pharmakon a fee equal to 2.0% of the Tranche B Term Loan at the closing date of the Tranche B Term Loan and an additional exit fee of 2.0% of the amount of each prepayment or repayment of the Term Loans. The Term Loans will be repaid in eight equal quarterly payments starting on January 3, 2028. Net proceeds from the Tranche B Term Loan, after deducting the lenders fees and administrative expenses of $3.7 million, were $146.3 million.
The Company evaluated whether the A&R Loan Agreement represented a debt modification or extinguishment in accordance with ASC 470-50, Debt – Modifications and Extinguishments. As the present value of the cash flows under the terms of the A&R Loan Agreement was less than 10% different from the remaining cash flows under the terms of the Tranche A Term Loan, the A&R Loan Agreement was accounted for as a debt modification. The unamortized balance of debt issuance costs incurred in connection with the Term Loans are being amortized through September 2029 utilizing the effective interest rate method. The effective interest rate of the Term Loans was 10.6% at modification.
The following table presents the carrying value of the Company’s Term Loans balance as of December 31, 2025 and 2024 (in thousands):
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Principal | $ | 500,000 | $ | 500,000 | ||||||||||
| Paid-in-kind interest capitalized | 46,770 | 46,770 | ||||||||||||
| Debt discount, net | (5,806) | (10,552) | ||||||||||||
| Term Loans | $ | 540,964 | $ | 536,218 | ||||||||||
As of December 31, 2025, future principal repayments of debt for each of the fiscal years through maturity were as follows (in thousands):
| Year Ending December 31: | ||||||||
| 2026 | $ | — | ||||||
| 2027 | — | |||||||
| 2028 | 341,731 | |||||||
| 2029 | 205,039 | |||||||
| 2030 | — | |||||||
| 2031 and thereafter | — | |||||||
| $ | 546,770 | |||||||
The estimated fair value of the debt (categorized as a Level 2 liability for fair value measurement purposes) is determined using current market factors and the ability of the Company to obtain debt at comparable terms to those that are currently in place.
Interest expense for the years ended December 31, 2025, 2024, and 2023, is as follows (in thousands):
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Convertible debt contractual interest expense | $ | 1,680 | $ | 6,397 | $ | 8,250 | ||||||||||||||
| Term Loans contractual interest expense | 53,219 | 51,587 | 46,743 | |||||||||||||||||
Royalty Financing Agreement non-cash interest expense | 20,675 | 20,044 | 18,846 | |||||||||||||||||
| Amortization of debt issuance costs | 6,216 | 6,884 | 7,320 | |||||||||||||||||
| Swap interest income | — | (2,229) | (1,882) | |||||||||||||||||
| Total debt interest expense | $ | 81,790 | $ | 82,683 | $ | 79,277 | ||||||||||||||
| Finance lease interest expense | 2,005 | 2,230 | 2,417 | |||||||||||||||||
| Total interest expense | $ | 83,795 | $ | 84,913 | $ | 81,694 | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 25, 2016 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.