Insmed Announces Redemption of all $225 Million of Outstanding 1.75% Convertible Senior Notes Due 2025

Rhea-AI Summary

Insmed announced the redemption of all $225 million in outstanding 1.75% Convertible Senior Notes due 2025. The redemption date is set for August 9, 2024, and the redemption price will be 100% of the principal amount plus accrued interest, totaling approximately $1,001.17 per $1,000 principal. Interest on the Notes will cease to accrue after this date. Holders may convert their Notes into shares of Insmed common stock at a rate of 25.5384 shares per $1,000 principal until August 8, 2024. This conversion could result in up to 5,746,140 shares being issued if all Notes are converted.

Positive

• Redemption of $225 million in Notes, potentially reducing future interest expenses.
• Option for noteholders to convert to common stock, potentially resulting in up to 5,746,140 new shares.

Negative

• Redemption could lead to shareholder dilution if many notes are converted to stock.

Insights

Financial Analyst

Insmed's decision to redeem all $225 million of its 1.75% Convertible Senior Notes due 2025 is an interesting financial maneuver that has several implications for investors. By redeeming these notes ahead of their maturity date, Insmed will pay the principal plus accrued interest, amounting to approximately $1,001.17 for every $1,000 of principal. This action reflects a strategic move to manage its debt structure and potentially reduce future interest expenses. Additionally, it could signify Insmed's confidence in its current liquidity position, suggesting that the company has sufficient cash reserves or access to capital markets to facilitate this redemption.

From the perspective of debt management, this is a positive move. It allows the company to avoid the dilution that might occur if noteholders decide to convert their notes into shares at the specified conversion rate of 25.5384 shares per $1,000 principal. With a conversion price of approximately $39.16 per share, the redemption also avoids the issuance of up to 5,746,140 new shares, which would have diluted the existing shareholders' equity. For investors, this means a better control of the share count and avoidance of potential dilution.

However, this move also indicates that the company may be attempting to take advantage of a strategic window. The notes' conversion price and current market conditions may have led the company to believe that it is more advantageous to redeem the notes now rather than risk higher dilution or interest costs in the future.

Market Research Analyst

For retail investors, it's important to understand that convertible notes are a form of debt that can be converted into equity, usually at the discretion of the holder. This dual nature makes them a flexible and potentially attractive financial instrument for investors. Insmed's announcement of the redemption means that noteholders have a clear path forward: redeem their notes for cash or convert them into shares of common stock before the redemption date.

The redemption price being slightly above the principal, at approximately $1,001.17 per $1,000, indicates a standard redemption premium aimed at incentivizing noteholders to comply with the redemption process. For investors, this is a fairly neutral event in itself but reveals strategic financial management by Insmed.

The opportunity to convert notes into shares could be particularly appealing if investors believe the stock price will appreciate. The current conversion rate sets a conversion price which is close to market sentiment regarding the stock's future performance. If Insmed's stock performs well, converting might yield a better return compared to holding the debt. Conversely, if investors believe the stock will underperform or remain stable, they might prefer the redemption payout.

BRIDGEWATER, N.J., June 27, 2024 /PRNewswire/ -- Insmed Incorporated (Nasdaq: INSM), a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases, today announced that it has called all $225 million aggregate principal amount of its outstanding 1.75% Convertible Senior Notes Due 2025 (the "Notes") (CUSIP No. 457669AA7) for redemption on August 9, 2024 (the "Redemption Date"). Insmed is redeeming the Notes as permitted under Section 11.03 of the indenture governing the Notes (the "Indenture").

Redemption Process

The redemption price will be payable on the Redemption Date in cash and equal to 100% of the principal amount of the Notes outstanding on the Redemption Date, plus accrued and unpaid interest on such Notes to, but excluding, the Redemption Date (the "Redemption Price"). For each $1,000 principal amount of Notes, the Redemption Price will be equal to approximately $1,001.17. Unless Insmed defaults in making the payment of the Redemption Price, interest on the Notes will cease to accrue on and after the Redemption Date.

For all Notes surrendered in book-entry form, payment of the Redemption Price will be made through the facilities of the Depository Trust Company ("DTC"), and all redeemed Notes in book-entry form will be surrendered for payment of the Redemption Price in accordance with the applicable rules and procedures of DTC. The paying agent is Computershare Trust Company, N.A. and the address of the paying agent for delivery of any Notes in certificated form is Corporate Trust Operations, 1505 Energy Park Drive, St. Paul, MN 55108.

Right to Convert the Notes

Holders of the Notes may surrender their Notes (or any portion thereof having a principal amount that is an integral multiple of $1,000) for conversion at any time prior to 5:00 p.m. (New York City time) on August 8, 2024 or, if the Company fails to pay the Redemption Price on the Redemption Date, such later date on which the Redemption Price is paid. To convert any Note, the holder must comply with the applicable rules and procedures of DTC. The Company has elected to settle any conversions of Notes in shares of common stock in accordance with the Indenture. As of June 27, 2024, the conversion rate of the Notes is 25.5384 shares of common stock of the Company per $1,000 principal amount of Notes, which is equivalent to a conversion price of approximately $39.16 per share of common stock. Based on this conversion rate, an aggregate of up to 5,746,140 shares of common stock will be issued if all of the Notes are converted.

This press release shall not constitute a notice of redemption or convertibility of the Notes. This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful. No representation is made as to the correctness or accuracy of the CUSIP number either as printed on the Notes or as contained in this press release.

About Insmed

Insmed Incorporated is a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. Insmed's first commercial product is a first-in-disease therapy approved in the United States, Europe, and Japan to treat a chronic, debilitating lung disease. The Company is progressing a robust pipeline of investigational therapies targeting areas of serious unmet need, including neutrophil-mediated inflammatory diseases and rare pulmonary disorders. Insmed is also advancing an early-stage research engine encompassing a wide range of technologies and modalities, including artificial intelligence-driven protein engineering, gene therapy, and protein manufacturing. Insmed is headquartered in Bridgewater, New Jersey, with additional offices and research locations throughout the United States, Europe, and Japan.

Forward-Looking Statements

This press release 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, 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) may identify forward-looking statements.

The forward-looking statements in this press release are based upon the Company's current expectations and beliefs, and involve known and unknown risks, uncertainties and other factors, which may cause the Company's actual results, performance and achievements and the timing of certain events to differ materially from the results, performance, achievements or timings discussed, projected, anticipated or indicated in any forward-looking statements. The Company may not actually achieve the results, plans, intentions or expectations indicated by the Company's forward-looking statements because, by their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. For additional information about the risks and uncertainties that may affect the Company's business, please see the factors discussed in Item 1A, "Risk Factors," in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and any subsequent Company filings with the Securities and Exchange Commission (SEC).

The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date of this press release. The Company disclaims 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 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.

Contact:

Investors:

Bryan Dunn
Executive Director, Investor Relations
Insmed
(646) 812-4030
bryan.dunn@insmed.com 

Eleanor Barisser
Associate Director, Investor Relations
Insmed
(718) 594-5332
eleanor.barisser@insmed.com

Media:

Mandy Fahey
Executive Director, Corporate Communications
Insmed
(732) 718-3621
amanda.fahey@insmed.com

 

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SOURCE Insmed Incorporated

FAQ

What is the redemption date for Insmed's Convertible Senior Notes?

The redemption date for Insmed's $225 million Convertible Senior Notes is August 9, 2024.

What is the conversion rate for Insmed's Convertible Senior Notes?

The conversion rate is 25.5384 shares of Insmed common stock per $1,000 principal amount of Notes.

How many shares could be issued if all Insmed Convertible Senior Notes are converted?

If all Notes are converted, up to 5,746,140 shares of Insmed common stock could be issued.

What is the total amount of Insmed's Convertible Senior Notes being redeemed?

Insmed is redeeming a total of $225 million in Convertible Senior Notes.

When will interest stop accruing on Insmed's Convertible Senior Notes?

Interest on the Notes will cease to accrue on and after August 9, 2024.