12. Commitments and Contingencies

Commitments

In June 2011, we entered into a short-term sublease and a three-year lease for a larger facility totaling 27,035 square feet of lab and office space at 9 Deer Park Drive. From September 2011 through December 2011 we subleased the new facility from the existing lessor, a large pharmaceutical company that has vacated the facility. Following expiration of the sublease on December 31, 2011 the lease for the same building commenced with our current landlord, Princeton Corporate Plaza LLC, beginning in January 2012 and expiring in December 2014. We began full occupancy of the new facility, which is adjacent to our prior lab and offices, in October 2011. We have also retained approximately 1,350 sq. ft. of lab space at 11 Deer Park Drive under a lease which also expires in December 2014. The additional space at 11 Deer Park Drive will be utilized to support the manufacture of ARIKACE for our clinical programs. Total financial obligations through the term of the new facility lease are approximately $2.1 million. We determined that the larger facility is required for our growing clinical, regulatory and development efforts in support of our ARIKACE programs in CF and NTM. The Richmond Office lease runs through October 2016 and we are actively seeking to sublet this facility. Commitments for the Richmond office lease through October 2016 term are approximately $2.3 million. At December 31, 2011, we have recorded a net present value charge of $1.2 million in general and administrative expenses associated with the vacant Richmond facility.

Rent expense charged to operations was $1.0 million, $0.5 million and $0.5 million for the years ended December 31, 2011, 2010 and 2009, respectively. Future minimum rental payments required under operating leases are as follows.

Years ending December 31,
2012	$	1,183
2013		1,189
2014		1,201
2015		498
2016		425
	$	4,496

Legal Proceedings

Cacchillo v. Insmed

On October 6, 2010, a complaint was filed against us by Angeline Cacchillo (“Plaintiff”) in the U.S. District Court for the Northern District of New York (the “Court”), captioned Cacchillo v. Insmed, Inc., No. 1:10-cv-0199, seeking monetary damages and a court order requiring Insmed to support her compassionate use application to the FDA and if approved, to provide her with IPLEX. Plaintiff was a participant in the phase II clinical trial of IPLEX sponsored by us evaluating the effectiveness of the investigational drug in patients with type 1 myotonic muscular dystrophy (“MMD”). In the complaint, Plaintiff alleged (i) violation of constitutional due process and equal protection by depriving Plaintiff of continued access to IPLEX, (ii) fraudulent inducement to enter the phase II clinical trial with the false promise to support Plaintiff's compassionate use application to the FDA, (iii) negligent representation that we would support Plaintiff's compassionate use application, (iv) breach of contract, seeking monetary and non-monetary damages, (v) intentional infliction of emotional distress by refusing to support Plaintiff's compassionate use application after providing IPLEX, (vi) violation of an assumed duty of care to Plaintiff, (vii) breach of fiduciary duty to Plaintiff, (viii) negligence and (ix) unjust enrichment. Plaintiff seeks compensatory and punitive monetary damages and sought injunction relief as noted above.

On October 7, 2010, Plaintiff filed a motion for a preliminary injunction that would require us to provide a written statement supporting the “compassionate use” of IPLEX for Plaintiff and directing us to provide IPLEX to Plaintiff at cost in the event that the compassionate use application were granted by the FDA. On October 22, 2010, the Court denied Plaintiff's motion for the preliminary injunction concluding that the Court lacked subject matter jurisdiction with respect to her claim for a preliminary injunction. Plaintiff appealed the Court's denial of her motion for a preliminary injunction to the U.S. Court of Appeals for the Second Circuit, which affirmed the trial court's order denying the Plaintiff's motion for a preliminary injunction.

We filed a motion with the Court to dismiss all of the outstanding claims, and on June 29, 2011, the Court dismissed six of Plaintiff's claims, leaving outstanding the claims for (i) fraudulent inducement, (ii) negligent misrepresentation, and (iii) breach of contract. We filed an answer and affirmative defenses with the Court on July 12, 2011. Plaintiff's claim for monetary damages with respect to these claims remains outstanding. The Court has scheduled a trial date in October 2012.

We believe that the allegations contained in the complaint are without merit and we intend to continue to vigorously defend this action. It is not possible at this time to estimate the amount of loss or range of possible loss, if any, that might result from an adverse resolution of this action.

Mackinson et al. v. Insmed

On February 24, 2011, an action was filed in the Court of Chancery of the State of Delaware against us, our subsidiary Transave, LLC, Transave, our directors and the former directors of Transave, captioned Mackinson et al. v. Insmed Incorporated et al., C.A. No. 6216, as a purported class action seeking a quasi-appraisal remedy for alleged violations of Delaware's appraisal statute and the fiduciary duty of disclosure in connection with the Merger consummated pursuant to that certain Agreement and Plan of Merger, dated as of December 1, 2010, by and among Insmed Incorporated, River Acquisition Co., Transave, LLC, Transave and TVM V Life Science Ventures GmbH & Co. KG, in its capacity as stockholders' agent (the “Merger Agreement”). The parties to this action agreed to a settlement, which was approved by the Court on October 6, 2011. As part of the settlement, we mailed a revised notice of appraisal rights to the former Transave stockholders who did not consent to the Merger. In addition, pursuant to the terms of the settlement, we agreed to pay plaintiff's legal fees and expenses.

Pilkiewicz v. Transave LLC

On March 28, 2011, Frank G. Pilkiewicz and other former stockholders of Transave (collectively, the “Petitioners”) filed an appraisal action against our subsidiary Transave, LLC in the Delaware Court of Chancery captioned Frank G. Pilkiewicz, et al. v. Transave, LLC, C.A. No. 6319-CS. On December 13, 2011, following the mailing of the revised notice of appraisal rights in accordance with the settlement terms of Mackinson et al. v. Insmed, an Amended Petition for Appraisal of Stock was filed by the Petitioners.

The Petitioners seek appraisal under Delaware law of their total combined common stock holdings of approximately 7.77 million shares of Transave, Inc. common stock (the “Transave Stock”). The Petitioners are challenging the value of the consideration that they would be entitled to receive for their Transave Stock under the terms of the Merger.

Under the terms of the Merger Agreement, certain of the former stockholders of Transave are obligated to indemnify us for certain liabilities in connection with the appraisal action. We believe that the allegations contained in the amended petition are without merit and we intend to continue to vigorously defend this action. It is not possible at this time to estimate the amount of loss or range of possible loss, if any, that might result from an adverse resolution of this action.

From time to time, we are a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.