Insmed Inc.
02/19/2026 | Press release | Distributed by Public on 02/19/2026 06:02
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion also should be read in conjunction with our consolidated financial statements and the notes thereto contained elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the section entitled Risk Factors, Cautionary Note Regarding Forward-Looking Statements and elsewhere herein, our actual results may differ materially from those anticipated in these forward-looking statements.
EXECUTIVE OVERVIEW
We are a people-first global biopharmaceutical company striving to deliver first- and best-in-class therapies to transform the lives of patients facing serious diseases. Our commercial portfolio and clinical pipeline are organized around three therapeutic areas: Respiratory, Immunology & Inflammation, and Neuro & Other Rare.
Our two commercial products, ARIKAYCE and BRINSUPRI, are both part of the Respiratory therapeutic area. 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 590 mg (amikacin sulfate inhalation drug product). ARIKAYCE was approved in the US in September 2018, in the EU in October 2020 and in Japan in March 2021.
BRINSUPRI (brensocatib 25 mg and 10 mg tablets), an oral, once-daily treatment for NCFBin patients 12 years of age and older, was approved in the US in August 2025. In November 2025, the EC approved BRINSUPRI (brensocatib 25 mg tablets) for the treatment of NCFB in patients 12 years ofage and older with two or more exacerbations in the prior 12 months.
Our Respiratory therapeutic area also includes the clinical-stage programs TPIP and INS1148. TPIP is an inhaled dry powder formulation of the treprostinil prodrug treprostinil palmitil that may offer a differentiated product profile for PH-ILD, PAH, PPF, and IPF. INS1148 is a monoclonal antibody targeting SCF248.
The clinical-stage program in our Inflammation & Immunology therapeutic area is brensocatib, a small molecule, oral, reversible inhibitor of DPP1, for the treatment of patients with HS.
The clinical-stage programs in our Neuro & Other Rare therapeutic area are INS1201, an intrathecally delivered gene therapy for patients with DMD, and INS1202, an intrathecally delivered gene therapy for patients with ALS.
Our pre-clinical research programs encompass a wide range of technologies and modalities, including gene therapy, AI-driven protein engineering, protein manufacturing, RNA end-joining, and synthetic rescue.
Refer to Part I, Item 1. "Business" for a detailed discussion of our ongoing commercial and clinical programs.
Prior to 2019, we had not generated significant revenue, and through December 31, 2025, we had an accumulated deficit of $5.6 billion. We have financed our operations primarily through the public offerings of our equity securities, debt financings and revenue interest financings. Although it is difficult to predict our future funding requirements, based upon our current operating plan, we anticipate that our cash and cash equivalents and marketable securities as of December 31, 2025 will enable us to fund our operations for at least the next 12 months.
Our ability to reduce our operating loss and begin to generate positive cash flow from operations depends on the continued success in commercializing our marketed products and achieving positive results from the ARIKAYCE confirmatory clinical trial program in order to obtain full approval of ARIKAYCE in the US and potentially reach more patients. Our continued success also depends on obtaining regulatory approval for brensocatib in an additional indication, bringing additional clinical stage products, such as TPIP, INS1148, INS1201, and INS1202, to market and advancing our pre-clinical research programs. We expect to continue to incur substantial expenses related to our research and development activities as we continue the ARIKAYCE confirmatory clinical program, conduct studies to explore the potential of brensocatib in HS, conduct trials of TPIP in PH-ILD, PAH, PPF, and IPF, and fund development of our pre-clinical research programs. We also expect to continue to incur significant costs related to the commercialization of our marketed products. Our financial results may fluctuate from quarter to quarter and will depend on, among other factors, the net sales of our marketed products; the scope and progress of our research and development efforts; and the timing of certain expenses. We cannot predict whether or when new products or new indications for marketed products will receive regulatory approval or, if any such approval is received, whether we will be able to successfully commercialize such products and whether or when we may become profitable.
KEY COMPONENTS OF OUR RESULTS OF OPERATIONS
Product Revenues, Net
Product revenues, net, consist of net sales of ARIKAYCE and BRINSUPRI. 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 reimbursements in the US, and chargebacks.
Cost of Product Revenues (Excluding Amortization of Intangible Assets)
Cost of product revenues (excluding amortization of intangible assets) consist primarily of direct and indirect costs related to the manufacturing of ARIKAYCE and BRINSUPRI sold, including third-party manufacturing costs, packaging services, freight, and allocation of overhead costs, in addition to royalty expenses.
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. R&D expenses also include 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 pre-clinical 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), and may include the cost of asset acquisitions. 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 our product candidates 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 billed at a per-unit cost, and increase proportionally to the volume of services rendered. 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
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.
Amortization of Intangible Assets
Upon commercialization of each of ARIKAYCE and BRINSUPRI, the related 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 the 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. Our deferred consideration liabilities were fully settled in the third quarter of 2024. As of December 31, 2025 and 2024, only contingent consideration liabilities exist.
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 consolidated balance sheets reflect debt, net of the debt issuance costs paid to the lender, and other third-party costs.
Change inFair Value of Interest Rate Swap
We record derivative and hedge transactions in accordance with generally accepted accounting principles in the US (GAAP). In the fourth quarter of 2022, we entered into an interest rate swap contract (the Swap Contract) with a notional value of $350.0 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 was not designated as a hedging instrument for accounting purposes. We settled and terminated the Swap Contract in October 2024. All changes in the fair value of the Swap Contract were reported as change in fair value of interest rate swap in the consolidated statements of comprehensive loss.
RESULTS OF OPERATIONS
Comparison of the Years Ended December 31, 2025 and 2024
Product Revenues, Net
Product revenues, net, consist of net sales of ARIKAYCE and BRINSUPRI. The following table summarizes revenue by product and geography for the years ended December 31, 2025 and 2024 (in thousands):
| Years Ended December 31, | Increase (decrease) | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| ARIKAYCE | |||||||||||||||||||||||
| US | $ | 280,294 | $ | 254,800 | $ | 25,494 | 10.0 | % | |||||||||||||||
| International | 153,471 | 108,907 | 44,564 | 40.9 | % | ||||||||||||||||||
| Total | $ | 433,765 | $ | 363,707 | $ | 70,058 | 19.3 | % | |||||||||||||||
| BRINSUPRI | |||||||||||||||||||||||
| US | $ | 172,658 | $ | - | $ | 172,658 | NA | ||||||||||||||||
| Total | $ | 172,658 | $ | - | $ | 172,658 | NA | ||||||||||||||||
| Total | |||||||||||||||||||||||
| US | $ | 452,952 | $ | 254,800 | $ | 198,152 | 77.8 | % | |||||||||||||||
| International | 153,471 | 108,907 | 44,564 | 40.9 | % | ||||||||||||||||||
| Total product revenues, net | $ | 606,423 | $ | 363,707 | $ | 242,716 | 66.7 | % | |||||||||||||||
Product revenues, net for the year ended December 31, 2025 were $606.4 million as compared to $363.7 million for the year ended December 31, 2024, an increase of $242.7 million, or 66.7%. This increase was a result of $172.7 million of US commercial sales of BRINSUPRI following FDA approval in August 2025 and a 19.3% growth in sales of ARIKAYCE, driven primarily by a 40.9% growth in international sales.
Cost of Product Revenues (Excluding Amortization of Intangibles)
Cost of product revenues (excluding amortization of intangibles) for the years ended December 31, 2025 and 2024 were comprised of the following (in thousands):
| Years Ended December 31, | Increase (decrease) | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| Cost of product revenues (excluding amortization of intangibles) | $ | 122,938 | $ | 85,742 | $ | 37,196 | 43.4% | ||||||||||||||||
| Cost of product revenues, as % of revenues | 20.3 | % | 23.6 | % | |||||||||||||||||||
Cost of product revenues (excluding amortization of intangibles) were $122.9 million for the year ended December 31, 2025 as compared to $85.7 million for the year ended December 31, 2024, an increase of $37.2 million, or 43.4%. This increase was primarily attributable to the increase in total product revenues discussed above. Cost of product revenues as a percentage of revenues decreased in the current period due to sales of BRINSUPRI, which has lower manufacturing costs than ARIKAYCE.
All product costs for BRINSUPRI incurred prior to FDA approval on August 12, 2025 were expensed as R&D expenses. We expect our cost of product revenues (excluding amortization of intangible assets) to benefit during 2026 and beyond, as we sell through inventory that was expensed prior to FDA approval of BRINSUPRI.
R&D Expenses
R&D expenses for the years ended December 31, 2025 and 2024 were comprised of the following (in thousands):
| Years Ended December 31, | Increase (decrease) | |||||||||||||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||||||||||||
| External Expenses | ||||||||||||||||||||||||||
| Clinical development and research | $ | 178,037 | $ | 171,635 | $ | 6,402 | 3.7% | |||||||||||||||||||
| Manufacturing | 140,245 | 94,766 | 45,479 | 48.0% | ||||||||||||||||||||||
| Regulatory, quality assurance, and medical affairs | 43,742 | 36,476 | 7,266 | 19.9% | ||||||||||||||||||||||
| AstraZeneca milestone | - | 12,500 | (12,500) | (100.0)% | ||||||||||||||||||||||
| INS1148 asset acquisition | 40,000 | - | 40,000 | NA | ||||||||||||||||||||||
| Subtotal-external expenses | $ | 402,024 | $ | 315,377 | $ | 86,647 | 27.5% | |||||||||||||||||||
| Internal Expenses | ||||||||||||||||||||||||||
| Compensation and benefit-related expenses | $ | 249,203 | $ | 194,907 | $ | 54,296 | 27.9% | |||||||||||||||||||
| Stock-based compensation | 70,046 | 47,674 | 22,372 | 46.9% | ||||||||||||||||||||||
| Other internal operating expenses | 49,820 | 40,409 | 9,411 | 23.3% | ||||||||||||||||||||||
| Subtotal-internal expenses | $ | 369,069 | $ | 282,990 | $ | 86,079 | 30.4% | |||||||||||||||||||
| Total R&D expenses | $ | 771,093 | $ | 598,367 | $ | 172,726 | 28.9% | |||||||||||||||||||
R&D expenses were $771.1 million for the year ended December 31, 2025 as compared to $598.4 million for the year ended December 31, 2024, an increase of $172.7 million, or 28.9%. This increase was primarily due to the $76.7 million increase in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount, a $45.5 million increase in manufacturing expense, and the $40.0 million up-front cash consideration in connection with the acquisition of INS1148, partially offset by the $12.5 million AstraZeneca milestone upon our release of an official public statement that we intended to file an NDA for brensocatib in 2024.
External R&D expenses by product for the years ended December 31, 2025 and 2024 were comprised of the following (in thousands):
| Years Ended December 31, | Increase (decrease) | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| ARIKAYCE external R&D expenses | $ | 41,441 | $ | 60,269 | $ | (18,828) | (31.2)% | ||||||||||||||||
| Brensocatib external R&D expenses | 96,516 | 98,569 | (2,053) | (2.1)% | |||||||||||||||||||
| TPIP external R&D expenses | 94,201 | 65,935 | 28,266 | 42.9% | |||||||||||||||||||
| INS1148 asset acquisition | 40,000 | - | 40,000 | NA | |||||||||||||||||||
| AstraZeneca milestone | - | 12,500 | (12,500) | (100.0)% | |||||||||||||||||||
| Other external R&D expenses | 129,866 | 78,104 | 51,762 | 66.3% | |||||||||||||||||||
| Total external R&D expenses | $ | 402,024 | $ | 315,377 | $ | 86,647 | 27.5% | ||||||||||||||||
We expect R&D expenses to increase in 2026 relative to 2025 primarily due to our clinical trial activities and related spend, including our TPIP and brensocatib clinical trials, and other research efforts for our product candidates. INS1201 and INS1202 are included within other external R&D expenses.
SG&A Expenses
SG&A expenses for the years ended December 31, 2025 and 2024 were comprised of the following (in thousands):
| Years Ended December 31, | Increase (decrease) | |||||||||||||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||||||||||||
| Compensation and benefit-related expenses | $ | 248,498 | $ | 168,498 | $ | 80,000 | 47.5% | |||||||||||||||||||
| Stock-based compensation | 82,664 | 49,161 | 33,503 | 68.1% | ||||||||||||||||||||||
| Professional fees and other external expenses | 281,187 | 173,631 | 107,556 | 61.9% | ||||||||||||||||||||||
| Facility related and other internal expenses | 88,818 | 69,826 | 18,992 | 27.2% | ||||||||||||||||||||||
| Total SG&A expenses | $ | 701,167 | $ | 461,116 | $ | 240,051 | 52.1% | |||||||||||||||||||
SG&A expenses were $701.2 million during the year ended December 31, 2025 as compared to $461.1 million for the year ended December 31, 2024, an increase of $240.1 million, or 52.1%. This increase was primarily due to a $113.5 million
increase in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount, and a $107.6 million increase in professional fees and other external expenses, both driven by commercial and commercial readiness activities for BRINSUPRI. We expect SG&A expenses to continue to increase in 2026 relative to 2025 due, in part, to commercial activities for BRINSUPRI.
Amortization of Intangible Assets
Amortization of intangible assets for the years ended December 31, 2025 and 2024 was $6.0 million and $5.1 million, respectively. This increase was due to amortization of the AstraZeneca milestones achieved upon FDA and EC approvals of BRINSUPRI in August 2025 and November 2025, respectively.
Change in Fair Value of Deferred and Contingent Consideration Liabilities
The change in fair value of deferred and contingent consideration liabilities for the year ended December 31, 2025 was $252.0 million and was primarily due to the increase in our share price. The change is related to the fair value of the potential future consideration to be paid to former equityholders of certain businesses we have acquired.
Investment Income
Investment income was $60.7 million for the year ended December 31, 2025 as compared to $53.3 million for the year ended December 31, 2024. The increase was primarily due to an increase in our average cash and cash equivalents and marketable securities balances in 2025 relative to 2024.
Interest Expense
Interest expense was $83.8 million for the year ended December 31, 2025 as compared to $84.9 million for the year ended December 31, 2024. This decrease was primarily due to a reduction in interest expense related to the redemptions of the outstanding 0.75% Convertible Senior Notes due 2028 (the 2028 Convertible Notes) in the second quarter of 2025 and the outstanding 1.75% Convertible Senior Notes due 2025 (the 2025 Convertible Notes) in the third quarter of 2024, partially offset by the interest income related to the Swap Contract in 2024. See Note 10 - Debtand Note 11 - Royalty Financing Agreementin this Annual Report on Form 10-K for further details.
Change in Fair Value of Interest Rate Swap
Prior to settlement and termination of the Swap Contract in October 2024, the change in fair value of interest rate swap was due to changes in interest rates during 2024 relative to the interest rate of the Swap Contract.
Provision for Income Taxes
The income tax provision was $5.0 million for the year ended December 31, 2025 as compared to $3.7 million for the year ended December 31, 2024. The income tax provision for the years ended December 31, 2025 and 2024 reflects the income tax expense recorded as a result of taxable income in certain of our subsidiaries in Europe and Japan, as well as a liability for certain state income taxes.
Comparison of the Years Ended December 31, 2024 and 2023
Please refer to the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for a comparative discussion of our fiscal years ended December 31, 2024 and December 31, 2023.
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 and BRINSUPRI in August 2025. 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, TPIP, brensocatib, INS1148, INS1201, INS1202, and our other pipeline programs, continue commercialization and regulatory activities for ARIKAYCE and BRINSUPRI, and engage in other general and administrative activities.
In June 2025, we completed an underwritten offering of 8,984,375 shares of our common stock at a public offering price of $96.00 per share. 1,171,875 of the shares of common stock were issued pursuant to the exercise in full of the underwriters' option to purchase additional shares. Our net proceeds from the sale of the shares, after deducting the underwriting discounts and offering expenses of $39.2 million, were $823.3 million.
In May 2024, we completed an underwritten offering of 14,514,562shares of our common stock at a public offering price of $51.50 per share. 1,893,203 of the shares of common stock were issued pursuant to the exercise in full of the
underwriters' option to purchase additional shares. Our net proceeds from the sale of the shares, after deducting underwriting discounts and offering expenses of $34.3 million, were $713.2 million.
In October 2022, we entered into a $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 Secured Overnight Financing Rate (SOFR), subject to a SOFR floor of 2.5%, in addition to a margin of 7.75% per annum. Net proceeds from the Tranche A Term Loan, after deducting the lenders fees and deal expenses of $15.1 million, were $334.9 million. In October 2024, we entered into the A&R Loan Agreement, as amended 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, among other items, provides an additional $150.0 million senior secured Tranche B Term Loan. 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, we 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.
In October 2022, we entered into the Royalty Financing Agreement with OrbiMed, whereby OrbiMed paid us $150.0 million in exchange for the right to receive, on a quarterly basis, royalties in an amount equal to 4.0% 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, which includes BRINSUPRI. In the event that OrbiMed has not received aggregate Revenue Interest Payments equal to or greater than $150.0 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 Interest Payments to OrbiMed for all fiscal quarters ended on or prior to March 31, 2028 equal to $150.0 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 $150.0 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 $3.6 million, were $146.4 million. The Royalty Financing Agreement was amended in October 2024 to, among other things, amend certain restrictions on the Company's ability to incur indebtedness.
In the first quarter of 2021, we entered into a sales agreement with SVB Leerink LLC (now known as Leerink Partners LLC) (Leerink Partners), to sell shares of our 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 Partners acted as sales agent. During the year ended December 31, 2023, we issued and sold an aggregate of 6,503,041 shares of common stock through the ATM program at a weighted-average public offering price of $24.12 per share and received net proceeds of $152.2 million. In the first quarter of 2024, we entered into a new sales agreement (the new sales agreement) with Leerink Partners to sell shares of our common stock, with aggregate gross sales proceeds of up to $500.0 million, from time to time, through a new "at the market" equity offering program (the new ATM program), under which Leerink Partners acted as sales agent. In connection with entering into the new ATM program, we terminated the ATM program. During the year ended December 31, 2024, we issued and sold an aggregate of 5,022,295 shares of common stock through the new ATM program at a weighted-average public offering price of $75.64 per share and received net proceeds of $371.3 million. On November 18, 2024, we terminated the new sales agreement.
Based on our current operating plan we anticipate that our cash and cash equivalents and marketable securities as of December 31, 2025 will enable us to fund our operations. While webelieve we currently have sufficient funds to meet our financial needs for at least the next 12 months, we may raise additional capital to fund future development of our product candidates, and to develop, acquire, in-license or co-promote other products or product candidates, including those that address serious diseases with significant unmet need.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 expenses related to our commercialization efforts for ARIKAYCE and BRINSUPRI and development costs for our clinical-stage assets, and, to a lesser extent, our pre-clinical research programs.
Cash Flows
We had cash and cash equivalents of $510.4 million as of December 31, 2025 as compared with $555.0 million as of December 31, 2024. In addition, as of December 31, 2025, we had marketable securities of $919.6 million as compared to $878.8 million as of December 31, 2024. Our working capital was $1.3 billion as of December 31, 2025 and 2024.
Net cash used in operating activities was $935.0 million and $683.9 million for the years ended December 31, 2025 and 2024, respectively, which was primarily driven by commercial, clinical, and manufacturing activities related to ARIKAYCE, commercial and commercial readiness activities for BRINSUPRI, as well as other SG&A expenses, clinical trial expenses related to brensocatib and TPIP, and the $40.0 million acquisition of INS1148. The increase in cash used in operating activities for the year ended December 31, 2025 as compared to 2024 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 $64.6 million and $583.2 million for the years ended December 31, 2025 and 2024, respectively. During the year ended December 31, 2025, net cash used in investing activities consisted primarily of purchases of property and equipment. During the year ended December 31, 2024, net cash used in investing activities consisted primarily of purchases of marketable securities, partially offset by maturities of marketable securities.
Net cash provided by financing activities was $954.1 million and $1,341.0 million for the years ended December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024, net cash provided by financing activities consisted primarily of proceeds from the issuance of common stock in our underwritten public equity offerings and proceeds from the exercise of stock options and the Employee Stock Purchase Plan (ESPP). During the year ended December 31, 2024, net cash provided by financing activities also included $150.0 million in proceeds from the Tranche B Term Loan.
Contractual Obligations
In December 2025, we acquired the global rights to OpSCF (renamed INS1148) from Opsidio. The Opsidio shareholders may become entitled to receive contingent payments up to an aggregate of $382 million in cash upon the achievement of certain development, regulatory and sales milestones, as well as earnout payments based upon a low to mid single-digit percentage of net sales of certain products, both subject to the terms and conditions of the agreement. See Note 15 - Licenses and Other Agreementsin this Annual Report on Form 10-K for further details.
In June 2023, we acquired all of the issued and outstanding share capital of Adrestia, a privately held, pre-clinical stage company. Adrestia's former 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. See Note 15 - Licenses and Other Agreementsin this Annual Report on Form 10-K for further details.
In January 2023, we acquired Vertuis, a privately held, pre-clinical stage company. The Company is obligated to pay 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. See Note 15 - Licenses and Other Agreementsin this Annual Report on Form 10-K for further details.
In October 2022, we entered into financings resulting in aggregate gross proceeds of $500.0 million, comprised of the $350.0 million Tranche A Term Loan with funds managed by Pharmakon and the $150.0 million Royalty Financing Agreement with OrbiMed, which was subsequently amended in October 2024. Under the Royalty Financing Agreement, OrbiMed will be entitled to receive royalties of 4.0% on ARIKAYCE global net sales until September 1, 2025, and royalties of 4.5% on ARIKAYCE global net sales on or after September 1, 2025, as well as royalties of 0.75% on brensocatib global net sales, which includes BRINSUPRI. The total royalty payable to OrbiMed is capped at 1.8x of the $150.0 million purchase price or up to a maximum of 1.9x of the $150.0 million purchase price under certain conditions. See Note 10 - Debtand Note 11 - Royalty Financing Agreementin this Annual Report on Form 10-K for further details.
In October 2024, we entered into the A&R Loan Agreement, as amended 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 amends and restates 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 the Tranche B Term Loan. 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. See Note 10 - Debtin this Annual Report on Form 10-K for further details.
In January 2024, we entered into certain agreements with Patheon Inc., a wholly-owned subsidiary of Thermo Fisher, related to the manufacture and supply of commercial brensocatib products, including BRINSUPRI, for our commercial needs and brensocatib for our clinical needs by Patheon Inc. Under these agreements, we are required to deliver to Patheon Inc. the active pharmaceutical ingredients needed to manufacture BRINSUPRI and brensocatib. In addition, in September 2024, we entered into a commercial manufacturing and supply agreement with Esteve for the manufacture and supply of BRINSUPRI's and brensocatib's active pharmaceutical ingredient.
In April 2020, we entered into a master services agreement with PPD pursuant to which we retained PPD to perform clinical development services in connection with certain of our clinical research programs. The master services agreement has an initial term of five years. In March 2025, we amended the agreement to extend the term three years. Either party may terminate (i) any project addendum under the master services agreement for any reason and without cause upon 30 days' written notice, (ii) any project addendum in the event of the other party's breach of the master services agreement or such project addendum upon 30 days' written notice, provided that such breach is not cured within such 30-day period, (iii) the master services agreement or any project addendum immediately upon the occurrence of an insolvency event with respect to the other party or (iv) any project addendum upon 30 days' written notice if (a) the continuation of the services under such project addendum would pose material ethical or safety risks to study participants, (b) any approval from a regulatory authority necessary to perform the applicable study is revoked, suspended or expires without renewal or (c) in the reasonable opinion of such party, continuation of the services provided under such project addendum would be in violation of applicable law. We have entered into project addenda with PPD to perform clinical development services over several years for, but not limited to, our PALM-ILD and PAH studies and other trials involving brensocatib and TPIP. The anticipated future cost of these project addenda is $295.7 million.
In September 2018, we entered into an agreement (the Lease) with Bridgewater Biotech Center LLC (assumed from Exeter 700 Route 202/206, LLC) to lease 117,022 square feet of office space located in Bridgewater, New Jersey for our corporate headquarters. Subject to certain conditions, we had the one-time option to expand the leased premises by up to 50,000 rentable square feet, exercisable prior to the fifth anniversary of the Commencement Date, which was October 1, 2019. We did not exercise this one-time option. The initial Lease term runs 130 months from the Commencement Date and we have the option to extend that term for up to three additional five-year periods. In addition, we are responsible for operating expenses and taxes pursuant to the Lease. Future minimum payments under the Lease during the initial Lease term are approximately $12.7 million. The Lease contains customary default provisions, including those relating to payment defaults, performance defaults and events of bankruptcy.
In October 2017, we entered into certain agreements with Patheon related to the increase of our long-term production capacity for ARIKAYCE. The agreements provide for Patheon to manufacture and supply ARIKAYCE for our anticipated commercial needs. Under these agreements, we are required to deliver to Patheon the required raw materials, including active pharmaceutical ingredients, and certain fixed assets needed to manufacture ARIKAYCE. Patheon's supply obligations will commence once certain technology transfer and construction services are completed. Our manufacturing and supply agreement with Patheon will remain in effect for a fixed initial term, after which it will continue for successive renewal terms unless either we or Patheon have given written notice of termination. The technology transfer agreement will expire when the parties agree that the technology transfer services have been completed. The agreements may also be terminated under certain other circumstances, including by either party due to a material uncured breach of the other party or the other party's insolvency. These early termination clauses may reduce the amounts due to the relevant parties. The aggregate investment to increase our long-term production capacity, including under the Patheon agreements and related agreements or purchase orders with third parties for raw materials and fixed assets, is estimated to be approximately $127.7 million.
In October 2016, we entered into the AZ License Agreement, pursuant to which AstraZeneca granted us exclusive global rights for the purpose of developing and commercializing AZD7986 (which we renamed brensocatib). Following FDA approval, brensocatib was commercially designated as BRINSUPRI. In consideration of the licenses and other rights granted by AstraZeneca, we made an upfront payment of $30.0 million, which was included as research and development expense in the fourth quarter of 2016. In December 2020, we incurred a $12.5 million milestone payment obligation upon first dosing in a Phase 3 clinical trial of brensocatib. In May 2024, upon our release of an official public statement that we intended to file an NDA, we incurred an additional $12.5 million milestone payment obligation. Upon regulatory approval by the FDA of an NDA, we paid AstraZeneca an additional $30.0 million. In November 2025, a $15.0 million milestone commitment became payable to AstraZeneca upon EC approval of BRINSUPRI. Subsequent to this milestone, we are also obligated to make an additional $15.0 million contingent payment upon the achievement of a regulatory filing milestone. If we elect to develop brensocatib for a second indication, we will be obligated to make an additional series of contingent milestone payments totaling up to $42.5 million, the first of which occurs at the initiation of a Phase 3 trial in the additional indication. We are not obligated to make payments for additional indications. In addition, we have agreed to pay AstraZeneca tiered royalties ranging from high single-digit to mid-teens on net sales of any approved product based on brensocatib and one additional payment of $35.0 million upon the first achievement of $1.0 billion in annual net sales. The AZ License Agreement provides AstraZeneca with
the option to negotiate a future agreement with us for commercialization of brensocatib in chronic obstructive pulmonary disease or asthma.
We have a licensing agreement with PARI for the use of optimized Lamira for delivery of ARIKAYCE in treating patients with NTM lung infections, CF and bronchiectasis. Under the licensing agreement, we have rights under several US and foreign issued patents, and patent applications involving improvements to optimized Lamira, to exploit the system with ARIKAYCE for the treatment of such indications, but we cannot manufacture the nebulizers except as permitted under our Commercialization Agreement with PARI, as described below. Lamira has been approved for use in the US (in combination with ARIKAYCE), the EU and Japan. Under the licensing agreement, we made an upfront license fee and milestone payments to PARI. Upon the FDA acceptance of our NDA and the subsequent FDA and EMA approvals of ARIKAYCE, we made additional milestone payments of €1.0 million, €1.5 million, and €0.5 million, respectively, to PARI. In October 2017, we exercised an option to buy-down the royalties payable to PARI, which was included within selling, general and administrative expenses in the fourth quarter of 2017. PARI is entitled to receive royalty payments in the mid-single digits on the annual global net sales of ARIKAYCE, pursuant to the licensing agreement, subject to certain specified annual minimum royalties.
In July 2014, we entered into a Commercialization Agreement with PARI for the manufacture and supply of Lamira, which is an e-Flow®nebulizer modified and optimized for use with ARIKAYCE. Under the Commercialization Agreement, PARI manufactures Lamira except in the case of certain defined supply failures, when the Company will have the right to make Lamira and have it made by third parties (but not certain third parties deemed under the Commercialization Agreement to compete with PARI). The Commercialization Agreement has an initial term of 15 years that began in October 2018. The term of the Commercialization Agreement may be extended by us for an additional five years by providing written notice to PARI at least one year prior to the expiration of the Initial Term.
In February 2014, we entered into a contract manufacturing agreement with Therapure Biopharma Inc., which has been assumed by Resilience, for the manufacture of ARIKAYCE, on a non-exclusive basis, at a 200 kg scale. Pursuant to the agreement, we collaborated with Resilience to construct a production area for the manufacture of ARIKAYCE in Resilience's existing manufacturing facility in Canada. The agreement has an initial term of five years, which began in October 2018, and renews automatically for successive periods of two years each, unless terminated by either party by providing the required two years' prior written notice to the other party. Under the agreement, we are obligated to pay certain minimum amounts for the batches of ARIKAYCE produced each calendar year.
Future Funding Requirements
Based on our current operating plan we anticipate that our cash and cash equivalents and marketable securities as of December 31, 2025 will enable us to fund our operations. We may raise additional capital to fund development of our future product candidates, and to develop, acquire, in-license or co-promote other products or product candidates, including those that address serious diseases with significant unmet need. We expect that our future capital requirements may be substantial and will depend on many factors, including:
•The timing, outcome, and cost of our ongoing and anticipated clinical trials for our product candidates;
•The cost of supporting the sales and marketing efforts necessary to support the continued commercial efforts of our marketed products;
•The cost of discovering or in-licensing additional product candidates;
•The costs of activities related to the regulatory approval process and the timing of approvals, if received;
•The timing and costs of supporting the commercial launch activities of BRINSUPRI in additional markets, if any;
•The cost of eventually supporting the commercial launches of TPIP and our other product candidates, if approved;
•The cost of filing, prosecuting, defending, and enforcing patent claims;
•The costs of our manufacturing-related activities;
•The cost of hiring more personnel to support our ongoing development and commercialization efforts; and
•The levels, timing and collection of revenue earned from sales of our marketed products and other products approved in the future, if any.
We have raised $2.2 billion in net proceeds from securities offerings and other financing transactions since January 1, 2023. We believe we currently have sufficient funds to meet our financial needs for at least the next 12 months. However, our business strategy may require us to raise additional capital at any time through equity or debt financing(s), strategic transactions or otherwise.
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
Preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues and expenses and the disclosures of contingent assets and liabilities. We use our historical experience and other relevant factors when developing our estimates and assumptions and we regularly evaluate these estimates and assumptions. The amounts of assets and liabilities reported in our consolidated balance sheets and the amounts reported in our consolidated statements of comprehensive loss are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition and indefinite-lived intangible assets. The accounting estimates discussed below involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Actual results could differ materially from our estimates. See Note 2 - Summary of Significant Accounting Policies in this Annual Report on Form 10-K for our required disclosures on accounting policies and estimates.
Revenue Recognition
In accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, we recognize revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration we expect to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC 606, we perform 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, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize 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, we have identified one performance obligation: the sale of marketed products to our customers. We have not incurred or capitalized any incremental costs associated with obtaining contracts with customers.
Product revenues, net, consist of global net sales of ARIKAYCE and US net sales of BRINSUPRI. Our customers in the US include specialty pharmacies and a specialty distributor. Product revenues are recognized once we perform and satisfy all five steps of the revenue recognition criteria mentioned above.
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 our historical experience, current contractual and statutory requirements, and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are 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 our estimates. If actual results in the future vary from estimates, we adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.
Rebates: We contract with certain government agencies and managed care organizations, or collectively, third-party payors, so that our marketed products will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. We estimate the rebates we will provide to third-party payors and deduct 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. We estimate the rebates that will be provided to third-party payors based upon (i) our 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 our specialty pharmacies.
If any, or all, of our actual experience vary from the estimates above, we may need to adjust prior period accruals, affecting revenue in the period of adjustment.
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