INSM Stock: Over 15% Decrease Intraday Explanation

By Amit Chowdhry ● May 10, 2021
  • The stock price of Insmed Incorporated (NASDAQ: INSM) decreased by over 15% during intraday trading this morning. This is why it happened.

The stock price of Insmed Incorporated (NASDAQ: INSM) decreased by over 15% during intraday trading this morning. Investors appear to be responding negatively to Insmed Incorporated announcing today that it intends to offer and sell $250 million of its common stock and $500 million aggregate principal amount of its convertible senior notes due 2028 in separate concurrent underwritten public offerings, a portion of which will be used to repurchase Insmed’s existing outstanding convertible senior notes due 2025. 

And in addition, Insmed intends to grant the underwriters of the offering of the Shares a 30-day option to purchase up to an additional 15% of the Shares and to the underwriters of the offering of the Notes a 30-day option, solely to cover over-allotments, to purchase up to an additional 15% in aggregate principal amount of the Notes. And all of the Shares and Notes to be sold in the offerings are to be sold by Insmed. 

The Notes are going to be senior unsecured obligations of Insmed and will rank senior in right of payment to any of Insmed’s future indebtedness that is expressly subordinated in right of payment to the Notes and will rank equally in right of payment with all of Insmed’s existing and future liabilities that are not so subordinated, including its existing 1.75% Convertible Senior Notes due 2025. And the Notes will accrue interest payable semi-annually in arrears and will mature on June 1, 2028, unless earlier repurchased, redeemed or converted. The Notes are going to be convertible into shares of Insmed’s common stock, cash, or a combination thereof, at Insmed’s election. The interest rate, conversion rate, and other terms of the Notes will be determined at the time of pricing of the offering of the Notes.

Insmed is intending to use a portion of the net proceeds from the Notes Offering to repurchase a portion of the 2025 Notes in privately negotiated transactions. And Insmed intends to use the remainder of the net proceeds from the Notes Offering and the net proceeds from the Equity Offering to fund activities related to the commercialization and development of ARIKAYCE, further research and development of brensocatib, TPIP, or any of Insmed’s product candidates, and for other general corporate purposes, including business expansion activities.

These offerings are subject to market and other conditions and there can be no assurance as to whether or when the offerings may be completed, or as to the actual size or terms of the offerings. And the closing of each offering is not contingent on the closing of the other offering.

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.