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reviews such criteria based on factors it considers appropriate. The Board evaluates each nominee in the context of the Board as a whole, with the objective of recommending a group of directors that can best oversee the business and affairs of the Company and use its diversity of experience to represent shareholder interests through the exercise of sound judgment. The Board seeks director nominees with experience in the pharmaceutical and biotechnology industries, as well as business, management, accounting and financial experience, among other areas. Among the factors that the Board considersand the Nominations and Governance Committee consider are strength of character, maturity ofsound business judgment, career specialization, relevant technical skills, diversity, independence, the ability to commit sufficient time to the Board, and the extent to which the candidate would fill a present need of the Board. The committee takes a leadership role in shaping our corporate governance, including overseeing the evaluation of the Board, along with geographic, gender, age, racial and its committees. The committee's Charter contains information concerning its responsibilities, including identifyingethnic diversity.

              Nominations and evaluating the director candidates.Governance Committee Process for Identifying and Evaluating Director Candidates.    The Nominations and Governance Committee Charterevaluates all director candidates in accordance with the director qualification standards described above. The Nominations and Governance Committee evaluates a candidate's qualifications to serve as a member of the Corporate Governance Guidelines are both availableBoard based on our website at www.insmed.com under the heading "Investors—Corporate Governance." Theskills and characteristics of such individual Board has determined that all membersmember, as well as the composition of the Board as a whole. In addition, the Nominations and Governance Committee are independent as definedwill evaluate a candidate's independence, diversity, skills and experience in Rule 5605(a)(2)the context of the Nasdaq Listing Rules and our Corporate Governance Guidelines.Board's needs.

              Director Candidate Recommendations and Nominations by Shareholders.    The Nominations and Governance Committee's Chartercharter provides that the committee will consider director candidate recommendations by shareholders. Shareholders should submit any such recommendations for the Nominations and Governance Committee through the method described below under "Corporate Governance—Communications with the Board." In addition, in accordance with our Bylaws, any person who is a shareholder of record on the record date for the shareholder meeting, on the date of the shareholder meeting, and on the date such person provides required notice to the Company may nominate persons for election to the Board if such shareholder complies with the notice procedures set forth in the Bylaws and summarized in this Proxy Statement under the heading "Proposals for 20172020 Annual Meeting."

        Nominations and Governance Committee Process for Identifying and Evaluating Director Candidates.    The Nominations and Governance Committee evaluates all director candidates in accordance with the director qualification standards described in the Corporate Governance Guidelines and the Nominations and Governance Committee Charter, including the provision that diversity of backgrounds and experience should be emphasized in board composition, and seeks candidates with experience in the pharmaceutical and biotechnology industries, as well as business, management, accounting and financial experience. The Nominations and Governance Committee evaluates a candidate's qualifications to serve as a member of the Board based on the skills and characteristics of such individual Board members, as well as the composition of the Board as a whole. In addition, the Nominations and Governance Committee will evaluate a candidate's independence, diversity, skills and experience in the context of the Board's needs.

Communications with the Board

              The Board has approved a process for shareholders to send communications to the Board. Shareholders can send communications to the Board and, if applicable, to the Nominations and Governance Committee or to specified individual directors in writing c/o Ms. Christine Pellizzari, Corporate Secretary, Insmed Incorporated, 10 Finderne Avenue, Building 10, Bridgewater, New Jersey, 08807. All letterscommunications sent to Ms. Pellizzari will be forwarded, as appropriate, to the Board, the Nominations and Governance Committee or any specified individual directors.

Director Attendance at Annual Meeting

              Our policy is that directors are expected to make reasonable efforts to attend the annual meeting of shareholders absent unusual circumstances. All directors then on the Board, including Ms. Potter, attended the 2018 Annual Meeting of Shareholders.

Board Leadership Structure

              The Board believes that it is in the best interests of the Company to maintain the flexibility to make determinations about the separation of the positions of Board Chair and CEO. The Nominations and Governance Committee considers this structure as part of its annual review of the size, organization, structure, composition and operations of the Board and its committees. In November

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Director Attendance at Annual Meeting

        Our policy is that directors attend the annual meeting2018, Mr. Hayden stepped down as Chairman of shareholders. All directors attended the 2015 Annual Meeting of Shareholders in accordance with our policy.

Board Leadership Structure

        Our corporate governance documents provide the Board withand was succeeded by Mr. Lewis. Mr. Lewis continued as President and CEO of the flexibility to select the appropriate leadership for the company in the way it believes best at a given time.Company and Mr. Brennan was elected as Lead Independent Director. The Board believes that its current leadership structure, with Mr. Lewis serving as Chief Executive OfficerCEO and Chairman and Mr. HaydenBrennan serving as our independent non-executive Chairman,Lead Independent Director, is appropriate for the Company at this time. Both Mr. Lewis and Mr. HaydenBrennan are actively engaged on significant matters affecting us, such as long-term strategy. The Chief Executive OfficerCEO has overall responsibility for all aspects of our operation, while the ChairmanLead Independent Director has a greater focus on governance of the Company, including oversight of the Board. We believe this balancethe combined role of CEO and Chairman balanced with the shared leadership betweenwith the two positionsLead Independent Director is a strength for the Company. As our independent non-executive Chairman,Lead Independent Director, Mr. HaydenBrennan calls and chairs regular and special meetings of the Board and all executive sessions of the independent directors, chairs and presides at annual or special meetings of shareholders, provides meaningful input into the agenda of Board meetings, authorizesoversees the retention of outside advisors, consultants and legal counsel who report directly to the Board, consults frequently with committee chairs and management and has the right to and often does attend Board committee meetings.

The Role of the Board in Risk Oversight

        The Board has primary responsibility for overseeing the Company's risk management. The Board administers its oversight responsibility for risk management directly and through its committees. Each committee chairman reports to the Board regarding the committee's considerations of management's processes for identifying, evaluating, and controlling significant risks. In addition, the officers responsible for oversight of particular risks within the Company provide updates and information to our Board. The Board considers specific risk topics, including risks associated with our strategic plan, our capital structure, our research and development activities, our manufacturing and supply chain, and our operations. Our Board believes that full and open communication between management and the Board is essential for effective risk management and oversight. The Board and each of its committees have full access to our senior management, as well as the ability to engage outside advisors and other experts. Management routinely informs the Board of developments that could affect our risk profile or other aspects of our business and development. We face a number of risks, including those described under the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2015, which is available on our website at www.insmed.com under the heading "Investor Relations—SEC Filings."

        The Audit Committee periodically discusses with management our policies and guidelines regarding risk assessment and risk management as well as our major financial and operational risk exposures and the steps that management has taken to monitor and control such exposures. The Audit Committee oversees disclosure controls and procedures, including applicable internal control over financial reporting and meets with the Chief Financial Officer, the General Counsel, the Vice President of Quality Assurance, the Vice President, Corporate Controller, external audit personnel, and other senior managers as appropriate to review issues regarding compliance with the applicable legal and regulatory requirements.

        The Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk taking. The Compensation Committee periodically discusses with management and our independent auditor major risk exposures of the Company and the steps taken to monitor, control and minimize such exposures. The Compensation

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Committee also reviews and evaluates our processes and policies for identifying and assessing key risk areas and for formulating and implementing steps to address such risk areas. As part of this process, the Compensation Committee develops and periodically reviews guidelines and policies to govern the process by which this is handled. Our Compensation Committee typically engages an independent consultant to advise it on topics related to Board and executive compensation. The Company believes that the risks arising from our overall compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company. During the last year, the Compensation Committee, with the assistance of ExeQuity, its independent compensation consultant, reviewed the executive compensation program and determined that the design of the compensation policies, including the components, weightings and focus of the elements of executive compensation, do not encourage management to assume excessive or inappropriate risks.

        The Nominations and Governance Committee oversees the risks associated with our corporate governance and operating practices, including those relating to the composition of the Board, the structure and function of Board committees and meeting logistics and policies. The Nominations and Governance Committee regularly reviews the Board's performance, oversees evaluation of each of the Board's committees, oversees our corporate governance and formulates and recommends corporate governance standards to our Board.

Committees of the Board

              Our Bylaws provide that the Board may create one or more committees of the Board. Currently, the Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominations and Governance Committee.

Audit Committee

              Composition and Attendance.    Our Audit Committee consists of Mr. McGirr (Chairman), Dr. Engelsen, and Mr. Altomari.Altomari, each of whom is an independent Board member. During 2015,2018, the Audit Committee held six meetings. Each of Mr. McGirr, Dr. Engelsen and Mr. Altomari attended all meetings of the Audit Committee held during their respective time served on the Audit Committee.in 2018.

              Responsibilities and Duties.    The Audit Committee assists our Board in fulfilling its oversight responsibilities relating to the accounting, reporting and financial practices of the Company and seeking to ensureas well as overseeing our compliance with applicable legal and regulatory requirements. The Committee reviews and oversees:

•

the auditing, accounting, and financial statements,reporting processes, including the audits of our financial reports and other financial information that we provide to governmental bodies, our shareholders and others;statements;



•

our systems of internal controls regarding finance and accounting;



•

our auditing, accounting and financial reporting processes;that we have established;



•

the qualifications and independence of our independent registered public accounting firm; and



•

the engagementappointment, retention and compensationperformance of our independent registered public accounting firm to performand the performance of any internal audit servicesfunctions; and any permissible non-audit services.



•

our compliance with legal and regulatory requirements.

        Our Board has adopted an amended written charter for the Audit Committee, which is available on our website at www.insmed.com under the heading "Investor Relations—Corporate Governance."              The Audit Committee reviews and reassesses the adequacy of theits charter at least annually.

              Committee Independence.    Rule 5605(c)(2) of the Nasdaq Listing Rules and Rule 10A-3 of the Exchange Act of 1934, as amended (the "Exchange Act"), each require that the members of our Audit Committee be independent.    Our Board has determined that all three of the current Audit Committee members, Mr. McGirr, Dr. Engelsen, and Mr. Altomari, satisfy the heightened

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Mr. McGirr, Dr. Engelsen, and Mr. Altomari, are "independent directors" within the meaning of Rule 5605(a)(2)independence requirements of the Nasdaq Listing Rules,listing standards and Rule 10A-3 ofunder the Securities Exchange Act and our Corporate Governance Guidelines.of 1934, as amended (the Exchange Act).

              Financial Literacy and Expertise.    Our Board determined that each of the members of the Audit Committee is able to read and understand fundamental financial statements, including our consolidated balance sheet, statement of operations,comprehensive income/loss, statement of cash flows, and statement of stockholders equity, and has accounting or related financial management expertise, as such terms are interpreted by our Board.shareholders' equity. Our Board also has determined that Mr. McGirr is an "audit committee financial expert," as that term is defined in the rules promulgated by the SecuritiesSEC and Exchange Commission ("SEC") pursuant tohas accounting or related financial management expertise as required under the Sarbanes-Oxley Act of 2002, as amended.Nasdaq listing standards.

Compensation Committee

              Composition and Attendance.    Our Compensation Committee consists of Mr. Altomari (Chairman), Mr. Brennan, Ms. Potter,Dr. Sharoky, and Dr. Sharoky.Mr. Lee, each of whom is an independent Board member. During fiscal 2015,2018, the Compensation Committee held nineseven meetings. Each of Mr. Altomari and Mr. Brennan Ms. Potter, Dr. Sharoky, and Dr. Randall Whitcomb, who resigned from the Board effective as of May 21, 2015, attended all Compensation Committee meetings that occurredheld in 2015 during their tenure on2018, and Dr. Sharoky attended six Compensation Committee meetings in 2018. Mr. Lee was not a member of the Compensation Committee.Committee during 2018 and therefore did not attend any of the Compensation Committee meetings held in 2018.

              Responsibilities and Duties.    The Compensation Committee develops and oversees the implementation of our compensation philosophy for our executive officers and is responsible for our executive and other compensation plans. The Committee's primary objectives are to develop and maintain an executive compensation policyprogram that:

•

creates a direct relationship between pay levels and corporate performance and returns to shareholders;



•

provides overall competitive pay levels to effectively attract and retain executive talent;



•

creates proper incentives to enhance shareholder value; and



•

rewards performance.

        Our Board has adopted an amended written charter for the Compensation Committee, a copy of which is available on our website at www.insmed.com under the heading "Investor Relations—Corporate Governance."              The Compensation Committee reviews and reassesses the adequacy of theits charter at least annually.

              Independence.Committee Independence and Related Requirements.    Rule 5605(d)(2) of the Nasdaq Listing Rules requires that the members of our Compensation Committee be independent.    Our Board has determined that all four of the current Compensation Committee members, Mr. Altomari, Mr. Brennan, Ms. Potter and Dr. Sharoky, are "independent directors" withinand Mr. Lee satisfy the meaning of Rule 5605(a)(2)heightened independence requirements of the Nasdaq Listing Rules and our Corporate Governance Guidelines.listing standards. In addition, all of the members of our Compensation Committee are "non-employee directors" within the meaning of the rules ofunder Section 16 of the Securities Exchange Act and "outside directors" for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"Code and Section 162(m)). The Board has determined that Ms. Potter also satisfied these independence and related requirements during her tenure on the Compensation Committee.

Nominations and Governance Committee

              Composition and Attendance.    Our Nominations and Governance Committee consists of Dr. Engelsen (Chairman), Mr. Hayden, Dr. Sharoky, and Dr. Sharoky.Ms. Anderson, each of whom is an independent Board member. During fiscal 2015,2018, the Nominations and Governance Committee held five four

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meetings. Each of Dr. Engelsen, Mr. Hayden, Dr. Sharoky, and Dr. WhitcombSharoky attended all meetings of the Nominations and Governance Committee that occurredheld in

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2015the Nominations & Governance Committee during their respective time served on2018 and therefore did not attend any of the Nominations and Governance Committee. Dr. Whitcomb's resignation from the Board was effective as of May 21, 2015.Committee meetings held in 2018.

              Responsibilities and Duties.    The Nominations and Governance Committee identifies and nominates qualified candidates for directorship and serves in a leadership role in shaping our corporate governance and overseeing the evaluation of the Board and its committees. The Nominations and Governance Committee:

•

assists the Board by identifying and recruiting individuals qualified to become Board members and recommending to the Board the director nominees for election at shareholder meetings and to fill vacancies on the next annual meeting of shareholders;Board;



•

recommendsmakes recommendations to the Board director nominees for each committee;regarding Board and committee organization, structure and composition;



•

oversees our governance, including recommending toevaluates the overall effectiveness of the Board Corporate Governance Guidelines;



•

leads the Board inand its annual review of the Board's performance and oversees the evaluation of each of the Board's committees;



•

oversees the management continuity planning process;



•

ensures that the Board consists of a diversified group of individuals with strong business experience, good judgment and high integrity; and



•

seeksdevelops and assesses the Company's corporate governance policies and practices, including risks related to ensure that directors, executive managementsuch policies and employees adhere to a high ethical standard in performing their duties.practices.

        Our Board has adopted an amended written charter for the Nominations and Governance Committee, a copy of which is available on our website at www.insmed.com under the heading "Investor Relations—Corporate Governance."              The Nominations and Governance Committee reviews and reassesses the adequacy of theits charter at least annually.

        Independence. The Role of the Board in Risk Oversight

              The Board has primary responsibility for overseeing the Company's risk management. The Board administers its oversight responsibility for risk management directly and through its committees. Each committee chairman reports to the Board regarding the committee's considerations of management's processes for identifying, evaluating, and controlling significant risks. In addition, the officers responsible for oversight of particular risks within the Company provide updates and information to our Board. The Board considers specific risk topics, including risks associated with our strategic plan, our capital structure, our research and development activities, our manufacturing and supply chain, and our operations. Our Board believes that full and open communication between management and the Board is essential for effective risk management and oversight. The Board and each of its committees have full access to our senior management, as well as the ability to engage outside advisors and other experts. Management routinely informs the Board of developments that could affect our risk profile or other aspects of our business and development.

              The Audit Committee is responsible for overseeing the Company's program for identifying, evaluating and controlling significant risks. The Audit Committee periodically discusses with management and the independent auditor the Company's major risk exposures, including financial, legal, regulatory and cybersecurity risk exposures, and the steps taken to monitor, control and minimize such exposures. The Audit Committee also reviews and evaluates our processes and policies for identifying and assessing key risk areas and for formulating and implementing steps to address such risk areas. The Audit Committee oversees disclosure controls and procedures, including applicable internal control over financial reporting and meets with the Chief Financial Officer, the Chief Legal Officer, the Chief Compliance Officer, the Vice President of Quality Assurance, the Vice President, Corporate Controller, external audit personnel, and other senior managers as appropriate to review issues regarding compliance with the applicable legal and regulatory requirements.

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              The Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk taking. Our Compensation Committee engages an independent consultant to advise it on topics related to Board and executive compensation. During the last year, the Compensation Committee, with the assistance of Frederic W. Cook & Co., Inc. (FW Cook), its independent compensation consultant, reviewed the executive compensation program and determined that all threethe design of the current memberscompensation policies, including the components, weightings and focus of the elements of executive compensation, do not encourage management to assume excessive or inappropriate risks.

              The Nominations and Governance Committee Dr. Engelsen, Mr. Hayden,oversees the risks associated with our corporate governance and Dr. Sharoky, are "independent directors" withinoperating practices, including those relating to the meaning of Rule 5605(a)(2)composition of the Nasdaq Listing RulesBoard, the structure and function of Board committees and meeting logistics and policies. The Nominations and Governance Committee regularly reviews the Board's performance, oversees the self-evaluation of each of the Board's committees, oversees our Corporate Governance Guidelines.corporate governance and formulates and recommends corporate governance standards to our Board.

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AUDIT COMMITTEE REPORT*REPORT AND INDEPENDENT AUDITOR FEES

Report of the Audit Committee

              The Audit Committee of the Board (the "Audit Committee") is comprised of three independent directors and operates under a written charter adopted by the Board. The Audit Committee reviews and reassesses the adequacy of the charter at least annually. The Audit Committee approves and recommends to the Board, the selection of the Company's independent registered public accounting firm. The Audit Committeefirm and regularly meets with and holds discussions with management and Ernst & Young LLP, the Company's independent registered public accounting firm.

              The Audit Committee oversees the Company's financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 20152018 (the "Annual Report")Annual Report) with management, including a discussion of the quality, the accounting principles, the reasonableness of significant judgments, and the quality and clarity of disclosures in the financial statements.

              The Audit Committee reviewed with the independent registered public accounting firm, who areErnst & Young, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgments as to the overall quality of financial reporting, the Company's accounting principles, and such other matters as are required to be discussed with the Audit Committee by Public Company Accounting Oversight Board Standards.(PCAOB) standards.

              In addition, the Audit Committee has discussed with the independent registered public accounting firm theErnst & Young its independence of the independent registered public accounting firm from management and the Company, including the matters described in the written disclosures and letter required by PCAOB standards from the independent registered public accounting firmErnst & Young to the Audit Committee required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit Committee concerning independence, and has considered the compatibility of non-audit services with the independence of the independent registered public accounting firm.

              In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the SEC. The Audit Committee and the Board also recommended the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ending December 31, 2016.

THE AUDIT COMMITTEE

David W.J. McGirr, Chairman
Alfred F. Altomari
Steinar J. Engelsen, M.D., C.E.F.A.
Alfred F. Altomari

*

The foregoing report of the Audit Committee is not to be deemed "soliciting material" or deemed to be "filed" with the SEC (irrespective of any general incorporation language in any document filed with the SEC) or subject to Regulation 14A of the Exchange Act, or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically incorporate the text of such report by reference into a document filed with the SEC.

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Audit Committee Pre-Approval Policy

              The Audit Committee has adopted an Audit Committee Pre-Approval Policy for the pre-approval of audit services and permitted non-audit services by the Company's independent registered public accounting firm in orderan effort to assureensure that the provision of such services does not impair the independence of the independent registered public accounting firm from the Company and is consistent with the rules of the SEC. The policy requires pre-approval by the Audit Committee of the terms and fees of all audit, review and attestation engagements and related services. The policy also requires the Audit Committee to determine that the provision of any audit-related services or non-audit services would not impair the independence of our independent registered public accounting firm. The policy also prohibits the Audit Committee from retaining our independent registered public accounting firm in connection with a transaction initially recommended by such firm, the purpose of which may be tax deferral or reduction. The policy delegates pre-approval authority to the Chair of the Audit Committee or, if the Chair is not available, to any of the Audit Committee's independent members, but any pre-approval decision must be reported to the full Audit Committee at its next scheduled meeting. All of the services performed by Ernst & Young LLP ("Ernst & Young") in the year ended December 31, 20152018 were pre-approved in accordance with the applicable pre-approval policy.

Independent Registered Public Accounting Firm Fee Disclosure

              The Audit Committee reviewed the aggregate fees billed by Ernst & Young for professional services rendered for the fiscal years ended December 31, 20152018 and 2014,2017, which were as follows:

              Audit fees in 2018 and 2017 include fees for services performed to comply with generally accepted auditing standards. These services include the integrated year-end audit of our consolidated financial statements, attestation services with respect to our internal control over financial reporting, quarterly reviews, accounting consultations on matters addressed during the audit or quarterly reviews, review of other documents filed with the SEC, and $115,000, with respect to 2018, and $100,000, with respect to 2017, paid to Ernst & Young for consent and comfort letter procedures for registration statements filed in 2015.

        Audit Fees in 2015 and 2014 include fees for services performed to comply with Generally Accepted Auditing Standards. These services include the quarterly reviews, the integrated year-end audit of our consolidated financial statements, review of documents filed with the SEC, and accounting consultations on matters addressed during the audit or quarterly reviews. All of the Ernst & Young fees were pre-approved by the Audit Committee.

        In considering the nature of the services provided by Ernst & Young, the Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with Ernst & Young and our management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as by the American Institute of Certified Public Accountants.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Review and Approval of Related PersonParty Transactions

              All ofPursuant to our directors and officers complete a directors and officers questionnaire in the first calendar quarter of each year, in which they are asked to disclose family relationships and otherwritten related party transactions. Ourpolicy, our Audit Committee must review and consider whether to approve or ratify all related party transactions, as defined in Item 404 of Regulation S-K promulgated under the Securities Act of 1933. In examining related party transactions, our Audit Committee considers whether any of our directors, officers, holders of more than five percent (5%) of our voting stock, or any immediate family members of the foregoing persons and any other persons whom the Audit Committee determines to be related parties, have a conflict of interest where an individual may have a private interest which interferes with or appears to interfere with our interests.S-K. In determining whether to approve or ratify a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, the purpose and potential benefits to us of the transaction, the related party's interest in the transaction, the approximate dollar value involved in the transaction, whether the transaction was undertaken in the ordinary course of business, whether the related party transaction is on terms no less favorable to us than terms generally available to us from an unaffiliated third-party under the same or similar circumstances, and whether, under all the

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circumstances, the extent of the related party's interest in the transaction.transaction is not inconsistent with our best interests. Any transaction which is deemed to be a related party transaction requires the approval initially byof a majority of the disinterested Audit Committee members, and finally by a majority of the disinterested Board members. Our Audit Committee's procedures for reviewing related party transactions are in writing.

Related PersonParty Transactions

              Since January 1, 2015,2018, there were not anyno related party transactions, nor are there currently any proposed related party transactions, which in accordance with SEC rules, would require disclosure in this Proxy Statement.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

              Section 16(a) of the Exchange Act requires that our directors, executive officers and holders of more than 10% of our Common Stock report to the SEC their ownership of our Common Stock and changes in that ownership. Directors, executive officers and beneficial owners of more than 10% of our Common Stock are required by applicable regulations to furnish us with copies of all Section 16(a) forms they file. As a matter of practice, members of our staff assist our executive officers and directors in preparing initial ownership reports and reporting ownership changes and typically file these reports on their behalf. We reviewed copiesBased solely upon a review of the reports filed pursuant to Section 16(a) of the Exchange Act. Based solely upon that review and information provided to us by our directors and executive officers,Act, we believe that during the year ended December 31, 2015,2018, our executive officers, directors and holdersbeneficial owners of more than 10% of our Common Stock complied with applicable Section 16(a) requirements.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT

              The following table setstables set forth information about the beneficial ownership of our Common Stock as of the Record Date March 28, 2016 (except as otherwise noted), by:

•

based on reports filed with the SEC, each person, or group of persons, who beneficially owns more than five percent (5%) of our common stock;Common Stock, based on reports filed with the SEC;



•

each of our directors and director nominees;



•

each of our Named Executive Officers;named executive officers; and



•

all directors and executive officers as a group.

              Beneficial ownership and percentage ownership are determined in accordance with Section 13 of the Exchange Act and related rules and regulations of the SEC and include voting or investment power with respect to shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose.SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within 60 days of March 28, 2016the Record Date and restricted stock units that may vest within 60 days of the Record Date are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following tabletables or pursuant to applicable community property laws, to our knowledge each shareholder named in the tabletables has sole voting and investment power with respect to the shares set forth opposite such

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shareholder's name. The percentageAs of beneficial ownership is based on 61,870,206the Record Date, there were 77,591,460 shares of Common Stock outstanding on the Record Date, March 28, 2016.outstanding.

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		Shares Beneficially Owned(1)
Name		Number			Percentage
Directors and Executive Officers
Donald Hayden, Jr.(2)			121,687			*
Alfred F. Altomari			22,432			*
David R. Brennan			22,812			*
Steinar J. Engelsen, M.D.			239,708			*
David W.J. McGirr			9,852			*
Myrtle Potter			6,466			*
Melvin Sharoky, M.D.			256,727			*
William H. Lewis(3)			1,262,981			2.04	%
Andrew T. Drechsler(4)			241,876			*
Eugene J. Sullivan, M.D.(5)			32,500			*
Christine Pellizzari(6)			135,000			*
S. Nicole Schaeffer(7)			144,062			*
All current directors and executive officers as a group (12 persons)(8)			2,496,103			4.03	%

		Shares Beneficially Owned
Name		Number		Percentage
Directors and Executive Officers
Elizabeth M. Anderson		—		*
Alfred F. Altomari(1)		25,942		*
David R. Brennan(1)		48,322		*
Steinar J. Engelsen, M.D.(1)		281,303		*
Donald Hayden, Jr.(2)		72,197		*
Leo Lee(1)		6,066		*
David W.J. McGirr(1)		35,362		*
Melvin Sharoky, M.D.(1)		231,794		*
William H. Lewis(3)		2,282,390		2.86%
Paolo Tombesi(4)		64,203		*
Roger Adsett(5)		162,634		*
Christine Pellizzari(6)		474,695		*
S. Nicole Schaeffer(7)		302,772		*
John Soriano(8)		13,507		*
Paul Streck, M.D.(9)		3,888		*
All current directors and executive officers as a group (14 persons)(10)		4,001,187		4.95%

---

*

Denotes ownership of less than 1% of the outstanding shares of our Common Stock.

(1)

Except as indicated otherwise inIncludes 6,066 restricted stock units (RSUs) that will vest within 60 days of the footnotes below, each individual has sole voting and investment power with respect to the shares reported.Record Date.

(2)

Includes 85,0006,066 RSUs that will vest within 60 days of the Record Date and 10,000 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days after March 28, 2016.of the Record Date.

(3)

Includes 1,166,0092,160,074 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days after March 28, 2016.of the Record Date.

(4)

Includes 241,87661,535 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days after March 28, 2016.of the Record Date.

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(5)

Includes 32,500154,720 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days after March 28, 2016.of the Record Date.

(6)

Includes 135,000441,012 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days after March 28, 2016.of the Record Date.

(7)

Includes 144,062301,083 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days after March 28, 2016.of the Record Date.

(8)

Includes 1,804,44712,550 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days after March 28, 2016.of the Record Date.

(9)

On January 9, 2019, Dr. Streck resigned as our chief medical officer, effective January 18, 2019.

(10)

Includes 42,462 RSUs that will vest within 60 days of the Record Date and 3,140,974, shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date. Does not include Dr. Streck's holdings as he was no longer an officer as of the Record Date.

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PROPOSAL NO. 2

ADVISORY VOTE ON THE 2018 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Information Regarding the Advisory Vote on the 2018 Compensation of our Named Executive Officers

              Pursuant to Section 14A of the Exchange Act, we are holding a shareholder advisory vote on the compensation of our named executive officers, as described in the "Compensation Discussion and Analysis" section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure set forth in this Proxy Statement. At the 2017 Annual Meeting, shareholders voted to hold advisory votes on an annual basis, and the Board subsequently adopted a resolution providing for such an annual vote. At the Annual Meeting, shareholders will be asked to approve the following resolution:

              RESOLVED, that the shareholders of Insmed Incorporated approve, on an advisory basis, the compensation of the Company's named executive officers, disclosed pursuant to Item 402 of Regulation S-K in the Company's Proxy Statement.

              The Compensation Committee oversees and administers our executive compensation program, including the evaluation and approval of compensation plans, policies and programs offered to our named executive officers. Our executive compensation program is designed to meet the following objectives:

•

align management interests with the interests of our shareholders;



•

emphasize use of "at-risk" and performance-based compensation to motivate executives to advance our interests; and



•

provide executive compensation packages that are competitive in order to attract and retain executives whose skills are critical to the current and long-term success of the Company.

              Please read the "Compensation Discussion and Analysis" section starting on page 28 of this Proxy Statement for a detailed discussion about our executive compensation programs, including information about the 2018 compensation of our named executive officers.

Vote Required for Approval of this Proposal

              The advisory vote on the compensation of our named executive officers will be approved by the affirmative vote of the majority of votes properly cast, in person or by proxy, at the Annual Meeting. Abstentions or broker non-votes will not have an effect on the outcome of this proposal.

              While this vote is being conducted on an advisory basis, and is therefore not binding on us, the vote will be carefully considered by the Compensation Committee and our Board. Both our Compensation Committee and our Board value the opinions of our shareholders and, to the extent there is any meaningful vote against the 2018 compensation of our named executive officers, we will consider our shareholders' concerns and evaluate what actions, if any, may be appropriate to address those concerns. The outcome of the vote, however, will not be construed as overruling any prior decision by the Company, the Compensation Committee or the Board.

Recommendation

THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL, ON AN ADVISORY BASIS, OF THE 2018 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS

              This Compensation Discussion and Analysis (the "CD&A")CD&A) explains our compensation philosophy, policies and decisions for 20152018 for the following executives, whowhom we refer to in this CD&A and in the following tables as our named executive officers:

1.

William H. Lewis, President and Chief Executive Officer ("CEO"),CEO, responsible for developing, in connection with the Board, our corporate mission and objectives and providing direction and leadership to ensure the execution of our corporate strategy and achievement of our objectives;objectives. Mr. Lewis was appointed as our Chairman in November 2018.



2.

Andrew T. DrechslerPaolo Tombesi,, Chief Financial Officer, responsible for managing all financial and technical operations activities, including internal and external reporting, treasury, accounting, tax, investor relations manufacturing and supply chain;manufacturing.



3.

Eugene J. SullivanRoger Adsett, Chief MedicalCommercial Officer, responsible for managing all marketing, sales and Scientificcommercial, technical operations and supply chain activities.



4.

Paul Streck, M.D., Former Chief Medical Officer, responsible for leading global research, clinical development, clinical operations, regulatory affairs, drug safety and pharmacovigilance, and medical affairs. On January 9, 2019, Dr. Streck resigned as our chief medical officer, effective January 18, 2019.



4.5.

Christine Pellizzari, General Counsel and Corporate Secretary,Chief Legal Officer, responsible for oversight of all corporate and litigation relatedlitigation-related legal matters, global compliancegovernment affairs and for providing ongoing legal support for development,with respect to regulatory strategy, financing opportunities, business development initiatives, and intellectual property matters;



5.

S. Nicole Schaeffer, Senior Vice President, Human Resources and Corporate Services, is responsible for all aspects of Human Resources and Corporate services inclusive of organizational and leadership development, total compensation and employee communications, facilities, environmental health and safety, and information technology.matters.

Executive Summary of Our 20152018 Business and Strategic Achievements

              We are a global biopharmaceutical company focused on a mission to transform the unmet needslives of patients with serious and rare diseases. Our leadfirst commercial product, candidate is ARIKAYCE™ARIKAYCE (amikacin liposome inhalation suspension), or liposomal amikacinreceived accelerated approval in the United States (US) on September 28, 2018 for inhalation (LAI), which is in late-stage developmentthe treatment ofMycobacterium avium complex (MAC) lung disease as part of a combination antibacterial drug regimen for adult patients with nontuberculous mycobacteria (NTM)limited or no alternative treatment options. MAC lung disease is a rare and often chronic infection that is capable of causingcan cause irreversible lung damage and can be fatal. Our earlier stageclinical-stage pipeline includes INS1007 and INS1009. INS1007 is a novel oral, reversible inhibitor of dipeptidyl peptidase 1 (DPP1) with therapeutic potential in non-cystic fibrosis (non-CF) bronchiectasis and other inflammatory diseases. INS1009 a nebulized prodrugis an inhaled formulation of a treprostinil a vasodilator of pulmonary arterial vascular beds. We believe INS1009prodrug that may offer a differentiated product profile with therapeutic potential infor rare pulmonary disorders, including pulmonary arterial hypertension (PAH), idiopathic pulmonary fibrosis (IPF), sarcoidosis, and severe refractory asthma.

        We are conducting a global phase 3 clinical study of ARIKAYCE (the 212 or CONVERT study) in adult patients with NTM lung disease caused byMycobacterium avium complex (MAC), the predominant infective species in NTM lung disease in the U.S., Europe, and Japan. The European Medicines Agency (EMA) Committee for Medicinal Products for Human Use (CHMP) is reviewing our marketing authorization application (MAA) seeking approval of ARIKAYCE for the treatment of MAC lung disease in adult patients who have persistent positive sputum cultures despite the use of medically appropriate first-line therapy. We recently completed a phase 1 study of INS1009 in healthy subjects. In addition to INS1009, ourhypertension. Our earlier-stage pipeline includes preclinical compounds that we are evaluating in multiple rare diseases of unmet medical need, including methicillin-resistant staph aureus (MRSA), NTM, PAHgram positive pulmonary infections in CF, nontuberculous mycobacteria (NTM) lung disease and sarcoidosis. We are also evaluating additional formulations and delivery options for treprostinil, including delivery via a metered dose inhaler.refractory localized infections involving biofilm. To complement our internal research and development, we actively seekevaluate in-licensing and acquisition opportunities for a broad range of rare diseases.

              In 2018, our named executive officers played critical roles in the achievement of our goal of transforming from a clinical-stage biopharmaceutical company to a commercial biopharmaceutical company. We announced interim data from the CONVERT study and the 312 extension study in January 2018. In September 2018, the US Food and Drug Administration (FDA) granted accelerated

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        Our current primary development focus is to enroll and complete our global phase 3 CONVERT study, obtain regulatory approval for ARIKAYCE in the U.S. and Europe for the NTM indication, and prepare for commercialization, assuming regulatory approval of ARIKAYCE for the treatment of MAC lung disease as part of a combination antibacterial drug regimen for adult patients who have limited or no alternative treatment options. We continued to enroll patients in the U.S., Europe, CanadaWILLOW study of INS1007 in patients with non-CF bronchiectasis, and Japan. We have commenced the build-out of a core commercial team in preparation for potential commercial launches in Europe, Canada and the U.S. We also plan to develop, acquire, in-license or co-promote other products that address orphan or rare diseases possibly in the fields of pulmonology and infectious disease.

2015 Company Performance

        In 2015, our executive officers played critical roles in achieving several key strategic steps toward our goal of building a leading biopharmaceutical company. We advanced the ARIKAYCE clinical programs to treat NTM lung disease, we also advanced the development of INS1009, and we expanded our leadership team with talented executives in key finance, medical, commercial, sales, and clinical medical affairs, compliance,roles. The Board, with respect to our President and European operating roles. We madeCEO, and the followingCompensation Committee, with respect to the other named executive officers, took into account these and other achievements in 2015:

•

We advanced the CONVERT study, a randomized, open-label global phase 3 clinical study of ARIKAYCE in adult patients with treatment refractory NTM lung disease caused by MAC.



•

We responded to the EMA's 120-day questions, which are a standard part of the EMA's centralized review process in the EU.



•

We submitted an investigational new drug (IND) application with the United States Food and Drug Administration (FDA) for INS1009, our novel nebulized prodrug formulation of trepostinil.



•

We initiated a phase 1 randomized, double-blind, placebo-controlled single ascending dose study to determine the safety, tolerability, and pharmacokinetics of INS1009 in healthy volunteers.



•

We established European operations through the creation of six entities in Europe, appointed Dr. Olaf Bartsch, vice president of Europe, general manager—Germany, and Dr. Francois Cornu, vice president of Europe, general manager—France, to lead the European team, established a global tax structure, and hired key personnel.



•

The French National Agency for Medicines and Health Products Safety (ANSM) granted LAI a Temporary Authorization for Use (Autorisation Temporaire d'Utilisation or ATU). Pursuant to this program, we shipped ARIKAYCE to pharmacies after receiving requests from physicians for patients in France.



•

We established commercial supply agreements with key vendors.



•

We made the following appointments to our leadership team: Eugene J. Sullivan, M.D., chief medical and scientific officer, Reinilde Heyrman, M.D., senior vice president of clinical development & operations, Don Nociolo, vice president of technical operations, George Georges, M.D., vice president of medical affairs, and Ela Bochenek, vice president of global compliance.

        As a result, we mostly met or exceeded a numberevaluation of our performance against our annual corporate objectives during 2015 including:

•

Advancing LAI regulatory filings;



•

Progressing manufacturing readinesswhen determining payouts for commercial launch; and



•

Advancing infrastructure activities in preparation for commercialization.

the annual cash incentives.

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Compensation Philosophy and Principles

              We operate in a very competitive, rapidly-changingrapidly changing and heavily-regulated industry. The long termlong-term success of our business requires the abilityus to be resourceful, adaptable, and innovative. As we transition from a development stage company to a commercial biopharmaceutical company, the skills, talent, and dedication of our executive officers are critical components to the success of this transition and the future growth of the company. Therefore, our compensation program for our executive officers, including our named executive officers, is designed to attract, retain, incentivize, and motivateincentivize the best possible talent. The Company's compensation program for named executive officers is structured to implement the following guiding principles:

              Alignment with Shareholder Interests.    The compensation program is designed to align the compensation realized by our named executive officers with the value realized by our shareholders. For instance, a significant portion of our named executive officers' compensation is in the form of equity awards based on our belief that equity awards align management's interests with the creation of future shareholder value.

              Use of "At-Risk" Compensation to Incentivize Executives.    As shown in the charts below, the compensation program is designed such that a substantial portion of our named executive officers' compensation is based on "at risk," or variable, compensation, such as annual cash incentives and stock options. We believe this mix of compensation best aligns the interests of our named executive officers with those of our shareholders over time and contributes to the achievement of short-term goals and the advancement of our long-term strategy through long-term goals. Accordingly, in 2018, approximately 90% of our CEO's compensation was "at risk," and 80% of our other named executive officers' compensation was "at risk":

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2018 CEO Compensation		At-Risk vs. Guaranteed CEO Compensation for 2018

2018 Other Named Executive Officer Compensation		At-Risk vs. Guaranteed Other NEO Compensation for 2018

Pay for performance.Performance.    The compensation program is designed to reward the named executive officers for attaining established business and individual goals. The attainment of these goals requires the named executive officer to dedicate theirhis or her time, effort, skills and business experience to the success of the Company and the maximization of shareholder value. A significant portion of the named executive officers' compensation is based on theCompany and individual performance, of the Company, and the compensation program is designed to reward both short-term and long-term performance. Short-term performance of our named executive officers is principally rewarded through base salary and annual cash incentive awardsincentives that are measured byreflect the achievement of corporate and individual goals. Long-term performance of our named executive officers is largely rewarded though long-term equitythrough stock option awards that are eligible to vest based on continued service (time based). Accordingly, 84% ofand have a value tied to our CEO's compensation for 2015 was variable, or "at risk," and 78% of our other named executive officers' compensation for 2015 was "at risk":share price appreciation.

2015 CEO Compensation		Variable Performance-Based vs. Guaranteed CEO Compensation for 2015

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2015 Other NEO Compensation		Variable Performance-Based vs. Guaranteed Other NEO Compensation for 2015

              Pay competitively for the retention of ourto attract and retain skilled executive officers.    The compensation program is designed to allow the Company to attract and retain individuals whose skills are critical to the current and long-term success of the Company. Because the implementation of our strategic goals requires long-term commitments on the part of the named executive officers, and because competition for top talent is intense in our industry, retention is a key objective of the compensation program. The compensation program is designed to appropriately compensate the namedour executive officers for the success of the Company from a competitive standpoint, so that our named executive officersthey remain with the Company and continue to contribute to the Company's

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long-term success. With this in mind, we introduced annual RSU awards in 2018 as an additional retention incentive.

              At our 2018 Annual Meeting of Shareholders, we held an advisory vote on the compensation of our named executive officers. Over 99% of the shares voted were voted in favor of our say-on-pay proposal. The Compensation Committee considered these voting results and believes they affirm the Company's compensation philosophy and the principles discussed above.

Corporate Governance Perspectives on our Executive Compensation Program

              We believe that our executive compensation program reflects our commitment to strong corporate governance practices. This ispractices as evidenced by the following aspects of our executive compensation program:

•

Our Compensation Committee has governanceoverall responsibility over executive paycompensation plans, policies and incentives while theprograms, although our independent Board ratifiesmembers approve recommendations made by our Compensation Committee on our President and CEO's pay and incentives;compensation;



•

Performance metrics that will govern incentive compensation are defined by our Compensation Committee at the start of each fiscal year and are reviewed by our Compensation Committee at the end of the year;



•

The executive compensation program, in the aggregate, rewards performance in a variety of ways, aimed at a balanced assessment based on Company financial andthe Company's strategic objectives;



•

Individual and corporate multiplier ranges underin our incentive compensation program are developed and implemented such that payouts are capped at a predetermined maximum amount, irrespective of performance that exceeds objectives;



•

Our Compensation Committee has the ability to exercise its discretion to reduce or eliminate incentive compensation payouts;



•

We have share ownership guidelines in place for our President and CEO, pursuant to which he must hold shares of Common Stock, vested in-the-money stock options and unvested restricted stock that aggregate to at least three times his base salary within 5 years of the adoption of the guidelines or date of hire, whichever is later. As of the Record Date, Mr. Lewis satisfied these guidelines;



•

We also have share ownership guidelines in place for certain of our other senior executives, including each of our current non-CEO named executive officers, pursuant to which each of them must hold shares of Common Stock, vested in-the-money stock options and unvested restricted stock that aggregate equal to his or her base salary within 5 years of the adoption of the guidelines or date of hire, whichever is later. As of the Record Date, Mr. Tombesi, Mr. Adsett and Ms. Pellizari satisfied these guidelines. Mr. Streck is no longer an officer and is no longer subject to our share ownership guidelines;



•

Our outsideCompensation Committee regularly meets in executive session without members of management present;

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•

Our independent executive compensation consultants reportconsultant reports directly to the Compensation Committee which hasand meets regularly with the ability to engage and terminate relationships with outside advisors and other experts.Compensation Committee without management present;



•

The employment agreements for our named executive officers do not provide for tax "gross-ups" or severance payments on a change in control absent termination of the named executive officer's employment;



•

Our executive compensation program balances short-term pay opportunities through base salary and annual cash incentives with long-term incentive opportunities through equity awards and




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balances fixed compensation (base salary) with variable compensation (annual cash incentives and equity awards); and





•

Our insider trading policy prohibits insidersour officers and directors from engaging in hedging transactions involving the Company's securities and prohibits insiders from pledging the Company's securities as collateral for loans of any type which further mitigates risk.

        In addition, the Compensation Committee conducts a compensation risk assessment annually. We do not believe that our incentive programs encourage short-term risky behavior because the performance criteria on which our incentive programs are primarily based are longer-term corporate goals designed to reward our executives and employees for outstanding corporate performance, including success in progressing our development programs and our commercialization activities.

Say on Pay and Say on Pay Frequency

        At our 2014 Annual Meeting of Shareholders, as required under federal securities laws, we held an advisory vote on our executive compensation, commonly referred to as "say-on-pay." Over 98% of the shares voted at our 2014 Annual Meeting of Shareholders approved our say-on-pay proposal. The Compensation Committee considered these voting results and believes they affirm shareholders' support of our Company's approach to executive compensation. The Compensation Committee will continue to take into account future shareholder advisory votes on executive compensation in analyzing whether any subsequent changes to our executive compensation programs and policies would be warranted. Taking into account the voting preference of our shareholders, the frequency of "say-on-pay" votes will be every three years. As a result, a shareholder advisory vote on executive officer compensation will next occur at the 2017 Annual Meeting of Shareholders.

Anti-Hedging and Pledging Policies

        As part of our corporate insider trading policy, all of our employees, including our named executive officers, as well as our directors, may not hold our securities in margin accounts; are restricted from pledging, without the prior approval of the Compensation Committee. No such pledges were approved during 2018.

              In addition, the Compensation Committee annually reviews a compensation risk assessment conducted by management. The Compensation Committee does not believe that our securities as collateral;compensation program is reasonably likely to have a material adverse effect on the Company based on our compensation philosophy and are prohibited from engaging in hedging transactions in our company securities, includingprinciples and the use of financial instruments such as prepaid variable forwards, equity swaps, collars, exchange funds or otherwise.governance principles described above.

Executive Compensation Determination Process

              Role of the Compensation Committee and the Board in Making Compensation Decisions.    Our Compensation Committee has been delegated the authority to make determinations regarding all elements of compensation for our executive officers, except for Mr. Lewis, our President and CEO. Our Compensation Committee recommends to our independent Board members the individual elements of total compensation for Mr. Lewis for final approval. The independent Board reviews those recommendationsmembers review this recommendation and determinesdetermine the compensation for Mr. Lewis. As discussed in further detail below, in assessing and determining ourexecutive compensation, programs, our Compensation Committee conducts a peer group review and engages an outside independent executive compensation consultantsconsultant to assess the competitiveness of our programs onand periodically conducts a periodic basis. A review of peer company data was conducted in August 2014 which resulted in modifications to our 2015 peer group. We plan to continue conducting peer group review.

              Role of Management.    The Compensation Committee, in making executive compensation decisions, may solicit input from management as appropriate with respect to individual and outside consultant reviewCompany performance and results. The Compensation Committee receives recommendations and evaluations with respect to the compensation and performance of our programs at leastnamed executive officers from the President and CEO (aside from his own compensation and performance) and Company performance. The Compensation Committee considered management's assessment along with the input of its independent executive compensation consultant when making 2018 compensation decisions.

              Role of the Compensation Consultant.    The Compensation Committee is authorized to select and retain its own independent compensation consultant and has routinely sought the advice of an independent compensation consultant regarding our executive compensation practices. The Compensation Committee evaluates the independence of its compensation consultant on an annual basis. See "Selectionbasis and has concluded that FW Cook was independent during 2018. During 2018, FW Cook advised the Compensation Committee on evolving best pay practices, provided benchmarking data and recommendations on executive officer compensation, including the use of Peer Companies/Benchmarking" below for additional information regarding our Peer Group analysis.annual RSU awards as a

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component of equity compensation, and provided recommendations about certain changes to our 2018 peer group.

              Compensation Evaluation Processes and Criteria.    The Compensation Committee has previously implemented some enhancements to our executive compensation program, including the introduction of performance-based equity awards and the practice of routinely seeking the advice of an independent compensation consultant, ExeQuity, regarding the establishment of a peer group intended to better align target compensation with competitive data. Based on the information it gathers, the Compensation Committee establishes benchmarks used for the purpose of evaluating appropriate compensation ranges for base salary, annual cash incentive targets and long-term incentives. Given the high demand for the experienced and well-qualified executives of the type we seek to employ, the Compensation Committee reviews data and information from a variety of sources such as outside surveys of compensation and benefits for executive officers in the biotechnology industry, as well as public information regarding executive compensation at peer biotechnology companies. The Compensation Committee with the help of ExeQuity, established a peer group to better align target compensation with competitive data. The Compensation Committee furtheralso draws upon the personal knowledge of its members with respect to executive compensation at comparable companies.

              In determining the amount and composition of compensation elements (cash and non-cash elements and shortshort- and long-term elements), for our non-CEO named executive officers, our Compensation Committee relies upon its judgment aboutreviews the performance of each individual executive officer and not on rigid formulas or short-term changes in business performance.holistically. In setting final compensation levels for our executive officers for 20152018, our Compensation Committee considered many factors, including, but not limited to, the following (the "compensation factors"):factors:

•

our achievement of certain product development, corporate partnering, financial, strategic planning and other goals;



•

each non-CEO named executive officer's individual performance usingagainst certain subjective criteria, including an evaluation of each officer's initiative, contribution to overall corporate performance and managerial ability;pre-established goals, as discussed in more detail below;



•

the scope and strategic impact of each executive officer's responsibilities;



•

our past business performance and future expectations;performance;



•

our long-term goals and strategies;



•

the experience of each individual;executive officer;



•

past compensation levels of each individualexecutive officer and of the executives as a group;



•

relative levels of pay among theexecutive officers;



•

the amount of each element of compensation in the context of the executive officer's total compensation and other benefits;



•

for each executive officer, other than the President and CEO, the evaluations and recommendations of our President and CEO; and



•

the competitiveness of our compensation relative to the selected peer group companies and benchmarks (whichother survey data, which are described below).in detail below.

              Consideration of the compensationthese factors is subjective; no relative weights or rankings are assigned to these factorsthem (except as otherwise discussed in this CD&A).

              For the President and CEO's compensation, the Compensation Committee reviews and evaluates the performance of the President and CEO and recommends to the Board the individual elements of his total compensation, considering, among other things, individual performance, experience, prior compensation levels, and our general performance objectives, as well as the compensation practices of peer companies and the markets where we compete for executive talent. The

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Board then must approve the President and CEO's compensation; the President and CEO may not be present during voting or deliberations on his compensation.

Selection of Peer Companies/Benchmarking

              In August 2014,November 2017, the Compensation Committee, upon advice received from ExeQuity,FW Cook, selected the companies that comprisecomprised our 20152018 peer group through a screening process that considered publicly traded biopharmaceutical companies that were similar to us in size,number of employees, market capitalization and stage of product development. The median number of employees and market capitalization of the companies selected

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forThis review resulted in modifications from our 20152017 peer group was 89 employees and approximately $1.09 billion respectively.as described below.

              The number of employees at the companies in our 20152018 peer group ranged from 2036 to 445,456, with a median of 195 employees, and these companies had market capitalizations that ranged from approximately $357.6$734 million to $3.12$3.40 billion, with a median of $1.82 billion. We had 61161 employees and a market capitalization of approximately $724.8 million at the time of selection.$1.07 billion. Employee numbers were as of the most recently reported fiscal year-end prior to November 2017 and market capitalizations were the three month trailing average as of SeptemberJune 30, 2014.2017. The table below depicts our 20152018 peer group:

AegerionACADIA Pharmaceuticals Inc.*		HyperionCorcept Therapeutics Inc.Incorporated*		Raptor Pharmaceutical Corp.Sage Therapeutics
Amicus Therapeutics,Acceleron Pharma Inc.*		Inovio Pharmaceuticals,Halozyme Therapeutics, Inc.		Sangamo BioSciences, Inc.
AnacorAgios Pharmaceuticals, Inc.*		Heron Therapeutics, Inc.*		Sarepta Therapeutics, Inc.*
Amicus Therapeutics, Inc.		Intercept Pharmaceuticals, Inc.*		Spark Therapeutics, Inc.*
Array BioPharma Inc.*		Keryx Biopharmaceuticals, Inc.		Sunesis Pharmaceuticals,Ultragenyx Pharmaceutical Inc.
Celldex Therapeutics, Inc.		Ligand Pharmaceutical Incorporated		*
Clovis Oncology, Inc.		Nektar TherapeuticsPuma Biotechnology, Inc.*
Dyax Corp.		Novavax,ZIOPHARM Oncology, Inc.
Halozyme Therapeutics, Inc.		NPS Pharmaceuticals, Inc.

              Based onThe 2018 peer group reflects the information it gathers,following changes from our 2017 peer group: (i) the removal of Achillion Pharmceuticals, Inc., Celldex Therapeutics, Inc., Cempra, Inc., Dynavax Technologies Corp., Novavax, Inc., and Raptor Pharmaceuticals Corp. and (ii) the addition of the companies above that are marked by an asterisk. The Compensation Committee concluded that these adjustments to the peer group were appropriate given changes in the number of employees, market capitalization, stage of development and merger-and-acquisition activity of the Company and historical and potential peer companies.

              FW Cook provided comparative data regarding cash compensation, long-term equity incentives, and short-term incentives to executive officers at companies in the 2018 peer group. Using this compensation data and relevant survey data, the Compensation Committee establishes benchmarks used for the purpose of evaluating appropriate compensation ranges for base salary, annual cash incentive targets and long-term incentives. Our Compensation Committee uses the benchmarks in various combinations in an effort to obtain comparative compensation information that reflectslong term equity incentives for each of our particular facts and circumstances over the periodnamed executive officers.

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Components of Compensation

              In summary, the compensation paid to our executive officers includesin 2018 included the following components:

Component		Purpose of Component
Base Salary		Provide our executive officers with a level of stability and certainty each year.
​	​	​
Annual Cash Incentive AwardsIncentives		Motivate and reward executive officers for short-term individual and corporate performance.
​	​	​
Long-term Equity Incentives (Stock Options)		Motivate and reward executive officers for long-term corporate performance.
		Encourage stock ownership by management, which is beneficial for aligningAlign the interests of management and shareholders, thereby enhancing shareholder value.
		Equity-based incentive to help attract,Attract, motivate, and retain talented employees.
​	​	​
Health, Welfare and Retirement Programs		Provide market competitive benefits to protect employees' and their covered dependents' health and welfare. Provide a program to foster retirement savings.
​	​	​
Severance and Change in Control Benefits		Discourage turnover and cause executives to be better able to respond tomitigate the possibilityinfluence of a change in control without being influenced by the potential effect of a change in control on theiran executive officer's decision-making due to concerns regarding job security.

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              The components of our compensation program and compensation decisions for 20152018 for each named executive officer are described in more detail below:

Base Salary

              The Compensation Committee reviews and sets base salaries for executives, other than the President and CEO, on an annual basis during the first quarter of each fiscal year. The Compensation Committee reviews and recommends to our Board annually determines the base salary for our President and CEO andbased on the Board determines the base salary forrecommendation of our President and CEO.Compensation Committee.

              Our Board and Compensation Committee seek to establish and maintain base salaries for each position and level of responsibility that are competitive with those of executive officers at various other biotechnology companies of comparable size and stage of development. Whenin our compensation is benchmarked, ourpeer group. Our Compensation Committee reviews variances between the salary levels for each of our executive officers and those of the companies included in our peer group and determines, in its discretion, individual salary adjustments after considering the compensation factors described above, although no relative weights or rankings are assigned to these factors. In setting the base salary for our executive officers other than our President and CEO, the Compensation Committee also considers the recommendations of our President and CEO.

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              The base salaries for our named executive officers were adjusted as follows in 2015:2018:

		Base Salaries										Base Salaries
Name		Annual Rate Approved in 2014 Fiscal Year			Annual Rate Approved in 2015 Fiscal Year			% Increase				Annual Rate Approved in 2017		Annual Rate Approved in 2018		% Increase
William H. Lewis		$	465,000		$	505,000			8.6	%		$566,500		$610,000		7.68%
Andrew T. Drechsler		$	340,800		$	351,024			3.0	%
Eugene J. Sullivan			N/A		$	400,000			N/A
Paolo Tombesi												$435,000		$442,620		1.75%
Roger Adsett												$436,450		$458,280		5.00%
Christine Pellizzari		$	354,740		$	365,382			3.0	%		$415,340		$436,110		5.00%
S. Nicole Schaeffer		$	303,800		$	312,914			3.0	%
Paul Streck												$425,000		$439,140		3.33%

Mr. Lewis, Mr. Drechsler, Ms. Pellizzari, and Ms. Schaeffer              The named executive officers were given merit increases based on their respective performance in 2014. The base salary for Dr. Sullivan is2017 and comparative salaries received by the result of arm's-length negotiation of his employment agreement at the time of his hireexecutives in March 2015.our peer group.

Annual Cash Incentives

              We maintain an annual cash incentive program for all of our employees to motivate and reward the attainment of annual corporate goals and individual goals. In establishing targets for the cash incentive awards potentially payable tofor our executive officers, the Compensation Committee (and the Board in the case of our President and CEO) considers target annual cash incentive opportunities extended to executive officers in similar positions at companies included in our peer group.

              For 2015,2018, there were no changes to target cash incentive award percentages that were were set at 60% of our President and CEO's base salary;salary and 40% of base salary for each of Mr. Drechsler.Tombesi, Mr. Adsett, Ms. Pellizzari, and Dr. Sullivan, and Ms. Pellizzari; and 35% of base salary forStreck in 2017.

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Ms. Schaeffer. The target percentages set for 2015 are comparable to the percentages set for the prior fiscal year for certain named executive officers, as reflected in the table below.

        At the beginning of each fiscal year, management recommends annual corporate objectives to the Compensation Committee for approval. These objectives serve as the basis for determining our performance against key strategic and operating parameters for the year. In the past, criteria for cash incentive awards for executive officers ranged from success in raising capital, to success in conducting clinical trials, obtaining FDA and EMA approvals, entering into new and expanded collaborations, licensing, acquisitions, divestitures, and establishing and expanding our manufacturing capabilities.

        The Compensation Committee approved our corporate objectives and assigned weightings for 2015 as follows:

        The Compensation Committee believes that these corporate objectives are challenging but attainable, and attainment was uncertain at the time the objectives were established.

              For 2015,2018, the Compensation Committee determined that the cash incentive award for our named executive officers other than Mr. Lewis would be determined by reference to both corporate and individual goals, with 75% tied to corporate goals and 25% tied to individual goals. While the Compensation Committee believes that achievement of our corporate goals should continue to be the dominant factor in determining cash incentive award payouts because it best aligns our named executive officers' compensation with the interests of our shareholders, they also believe that some portion of the executives' compensation, except with respect to the compensation of our CEO, should be linked to individual performance. The Compensation Committee believesbelieved that including the achievement of individual goals as a component of our 20152018 cash incentive award payouts iswas important to incent our officers as we continue to transform the organization from a development stage company into a commercial biopharmaceutical company.non-CEO named executive officers. Given Mr. Lewis's substantial influence on the overall performance of the Company, the Compensation Committee believesbelieved it iswas appropriate and in the best interests of our shareholders to continue to have Mr. Lewis's cash incentive award be based solely upon the achievement of corporate objectives.objectives, and the Board concurred in this view.

              AwardsPayouts for corporate goals arewere based upon the product of each named executive officer's respective target award times an overall corporate multiplier (ranging between 0% and 200%), which iswas determined based on Company performance during the trailing fiscal year. Awards2018. For our non-CEO named executive officers, payouts for individual objectives arewere based upon the product of each named executive officer's respective target award times

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officer's respective target award times an individual multiplier (ranging between 25% and 150%), which iswas determined based on achievement of individual goals established for 2018.

Corporate Goals

              At the beginning of each year, management recommends annual corporate objectives to the Compensation Committee for approval. These objectives serve as the basis for determining our performance against key strategic and operating parameters for the year.

              The Compensation Committee (and the Board, with respect to our President and CEO) approved the following corporate objectives and weightings for 2018:

              At that time, the Compensation Committee believed that these corporate objectives were challenging but attainable, and attainment was uncertain.

Individual Goals

              In consultation with our named executive officer (other than the CEO) for the trailing fiscal year.

officers, Mr. Lewis in consultation with Ms. Schaeffer, established individual goals for each of our named executive officers at the beginning of 20152018 that are(i) were specific to theeach named executive officer's area of responsibility and are in(ii) were intended to support of our corporate objectives for 2015.2018. These individual goals were then recommended to and approved by our Compensation Committee.

        Mr. Drechsler's individual At the time these goals included:

•

supporting technical operations;



•

building process development capability;



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ensuring timely and accurate accounting and related filings;



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raising capital;



•

providing a full financial forecast model going out five years; and



•

advancing corporate development objectives.