UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
FORM 10-Q
(Mark One)
x☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019September 30, 2021
OR
o☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _ to _
Commission File Number: 001-38753


mrna-20210930_g1.jpg


Moderna, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware81-3467528
(State or Other Jurisdiction of Incorporation or Organization)(IRS Employer Identification No.)
200 Technology Square
Cambridge, Massachusetts
02139
Cambridge,Massachusetts02139
(Address of Principal Executive Offices)(Zip Code)
(617) 714-6500
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, par value $0.0001 per shareMRNAThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒No o


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x ☒No o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒
Accelerated filer o
Non-accelerated filer o
Smaller reporting company☐
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o
Emerging growth companyx
☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x☒


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, par value $0.0001 per shareMRNAThe NASDAQ Stock Market LLC



As of AprilOctober 29, 2019,2021, there were 329,003,270405,449,527 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.





SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ("(“Form 10-Q"10-Q”), including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this Form 10-Q include, but are not limited to, statements about:

•our activities with respect to our COVID-19 vaccine, and our plans and expectations regarding future generations of our COVID-19 vaccine, including boosters, that we may develop in response to variants of the SARS-CoV-2 virus, ongoing clinical development, manufacturing and supply, pricing, commercialization, if approved, regulatory matters (including dosage for vaccines and authorization or approval for boosters) and third-party and governmental arrangements and potential arrangements;

•our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately, particularly with respect to the timely production and delivery of our COVID-19 vaccine, including any variant booster vaccine candidate, if authorized;
•our ability and the ability of third parties with whom we contract to successfully manufacture our commercial products at scale, as well as drug substances, delivery vehicles, development candidates, and investigational medicines for preclinical and clinical use;
•the scope of protection we are able to establish and maintain for intellectual property rights covering our commercial products, investigational medicines and technology;
•the initiation, timing, progress, results, and cost of our research and development programs and our current and future preclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;

•risks related to the direct or indirect impact of the COVID-19 pandemic or any future large-scale adverse health event, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, material delays in diagnoses, initiation or continuation of treatment for diseases that may be addressed by our development candidates and investigational medicines, or in patient enrollment in clinical trials, potential clinical trials, regulatory review or supply chain disruptions, and other potential impacts to our business, the effectiveness or timeliness of steps taken by us to mitigate the impact of the pandemic, and our ability to execute business continuity plans to address disruptions caused by the COVID-19 pandemic or future large-scale adverse health event;

•our anticipated next steps for our development candidates and investigational medicines that may be slowed down due to the impact of the COVID-19 pandemic, including our resources being significantly diverted towards our COVID-19 vaccine efforts, particularly if the federal government seeks to require us to divert such resources;

•our ability to identify research priorities and apply a risk-mitigated strategy to efficiently discover and develop development candidates and investigational medicines, including by applying learnings from one program to our other programs and from one modality to our other modalities;
our ability and the potential to successfully manufacture our drug substances, delivery vehicles, development candidates, and investigational medicines for preclinical use, for clinical trials and on a larger scale for commercial use, if approved;
the ability and willingness of our third-party strategic collaborators to continue research and development activities relating to our development candidates and investigational medicines;
our ability to obtain funding for our operations necessary to complete further development and commercialization of our investigational medicines;
•our ability to obtain and maintain regulatory approval of our investigational medicines;

•our ability to successfully commercialize ourany future products, if approved;

•the pricing and reimbursement of our investigational medicines, if approved;

•the implementation of our business model, and strategic plans for our business, investigational medicines, and technology;
the scope of protection we are able to establish and maintain for intellectual property rights covering our investigational medicines and technology;
•estimates of our future expenses, revenues, capital requirements, and our needs for additional financing;

•the potential benefits of strategic collaboration agreements, our ability to enter into strategic collaborations or arrangements, and our ability to attract collaborators with development, regulatory, and commercialization expertise;



•future agreements with third parties in connection with the commercialization of our investigational medicines, if approved;

•the size and growth potential of the markets for our investigational medicines, and our ability to serve those markets;

•our financial performance;

•the rate and degree of market acceptance of our investigational medicines;

•legal and regulatory developments in the United States and foreign countries;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
•our ability to produce our products or investigational medicines with advantages in turnaround times or manufacturing cost;

•the success of competing therapies or treatments that are or may become available;available as an alternative to our products;

•our ability to attract and retain key scientific or management personnel; and
the impact of laws and regulations;

•developments relating to our competitors and our industry; andindustry.
other risks and uncertainties, including those discussed in Part II, Item 1A - Risk Factors in this Form 10-Q. 
In some cases, forward-looking statements can be identified by terminology such as “will,” “may,” “should,” “could,” “expects,” “intends,” “plans,” “aims,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology.terminology, although not all forward-looking statements contain these words. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section entitled “Risk Factors” and elsewhere in this Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those expressed or implied by the forward-looking statements. No forward-looking statement is a promise or a guarantee of future performance.

The forward-looking statements in this Form 10-Q represent our views as of the date of this Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Form 10-Q.

This Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We have not independently verified the information contained in such sources.


NOTE REGARDING COMPANY REFERENCES

Unless the context otherwise requires, the terms “Moderna,” “the Company,” “we,” “us,” and “our” in this Form 10-Q refer to Moderna, Inc. and its consolidated subsidiaries.






ADDITIONAL INFORMATION

Our website, www.modernatx.com, including the Investor Relations section, www.investors.modernatx.com; and corporate blog www.modernatx.com/moderna-blog; as well as our social media channels: Facebook, www.facebook.com/modernatx; Twitter, www.twitter.com/modernatx; and LinkedIn, www.linkedin.com/company/modernatx; contain a significant amount of information about us, including financial and other information for investors. We encourage investors to visit these websites and social media channels as information is frequently updated and new information is shared. Information contained on our website and social media channels shall not be deemed incorporated into, or be a part of this Form 10-Q.


Table of Contents


PART I.I.
Page
Item 1.
56
56
67
78
89
911
1012
Item 2.
3930
Item 3.
5948
Item 4.
5949
PART II.
II.
Item 1.
6049
Item 1A.
6049
Item 26.
6050
Item 6.
Exhibits
60
51



Table of Contents
Item 1. Financial Statements


MODERNA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands,millions, except share and per share data)
September 30,December 31,
20212020
Assets
Current assets:
Cash and cash equivalents$5,550 $2,624 
Investments3,356 1,984 
Accounts receivable3,142 1,391 
Inventory965 47 
Prepaid expenses and other current assets412 252 
Total current assets13,425 6,298 
Investments, non-current6,442 639 
Property and equipment, net845 297 
Right-of-use assets, operating leases115 90 
Restricted cash, non-current11 11 
Deferred tax assets81 — 
Other non-current assets4 2 
Total assets$20,923 $7,337 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$87 $18 
Accrued liabilities1,076 470 
Deferred revenue7,977 3,867 
Income taxes payable565 — 
Other current liabilities252 34 
Total current liabilities9,957 4,389 
Deferred revenue, non-current498 177 
Operating lease liabilities, non-current105 97 
Financing lease liabilities, non-current238 110 
Other non-current liabilities1 3 
Total liabilities10,799 4,776 
Commitments and contingencies (Note 12)00
Stockholders’ equity:
Preferred stock, par value $0.0001; 162 shares authorized as of September 30, 2021 and December 31, 2020; no shares issued or outstanding at September 30, 2021 and December 31, 2020— — 
Common stock, par value $0.0001; 1,600 shares authorized as of September 30, 2021 and December 31, 2020; 405 and 399 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively— — 
Additional paid-in capital5,003 4,802 
Accumulated other comprehensive income31 3 
Retained earnings (accumulated deficit)5,090 (2,244)
Total stockholders’ equity10,124 2,561 
Total liabilities and stockholders’ equity$20,923 $7,337 
 March 31, December 31,
 2019 2018
Assets   
Current assets:   
Cash and cash equivalents$502,934
 $658,364
Investments605,990
 863,063
Accounts receivable5,646
 11,686
Accounts receivable from related party965
 899
Prepaid expenses and other current assets25,292
 28,399
Restricted cash—
 595
Total current assets1,140,827
 1,563,006
Investments, non-current437,659
 172,990
Property and equipment, net213,460
 211,977
Restricted cash, non-current11,823
 11,532
Other non-current assets2,438
 2,644
Total assets$1,806,207
 $1,962,149
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$38,509
 $31,210
Accrued liabilities42,183
 79,073
Deferred revenue73,958
 109,056
Other current liabilities4,509
 3,464
Total current liabilities159,159
 222,803
Deferred revenue, non-current156,862
 165,352
Deferred lease obligation, non-current10,556
 10,006
Lease financing obligation33,384
 33,489
Other non-current liabilities213
 258
Total liabilities360,174
 431,908
Commitments and contingencies (Note 7)
 
Stockholders’ equity:   
Preferred stock, par value $0.0001; 162,000,000 shares authorized as of March 31, 2019
     and December 31, 2018; no shares issued or outstanding at March 31, 2019 and
     December 31, 2018
—
 —
Common stock, par value $0.0001; 1,600,000,000 shares authorized as of March 31, 2019 and December 31, 2018; 328,853,340 and 328,798,904 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively33
 33
Additional paid-in capital2,556,709
 2,538,155
Accumulated other comprehensive income (loss)591
 (1,320)
Accumulated deficit(1,111,300) (1,006,627)
Total stockholders’ equity1,446,033
 1,530,241
Total liabilities and stockholders’ equity$1,806,207
 $1,962,149


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6
Table of Contents
MODERNA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands,millions, except share and per share data)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenue:
Product sales$4,810 $— $10,740 $— 
Grant revenue140 145 473 187 
Collaboration revenue19 12 47 45 
Total revenue4,969 157 11,260 232 
Operating expenses:
Cost of sales722 — 1,665 — 
Research and development521 344 1,343 611 
Selling, general and administrative168 48 366 109 
Total operating expenses1,411 392 3,374 720 
Income (loss) from operations3,558 (235)7,886 (488)
Interest income4 6 11 21 
Other expense, net(10)(3)(22)(6)
Income (loss) before income taxes3,552 (232)7,875 (473)
Provision for income taxes219 1 541 1 
Net income (loss)$3,333 $(233)$7,334 $(474)
Earnings (loss) per share:
Basic$8.27 $(0.59)$18.25 $(1.26)
Diluted$7.70 $(0.59)$17.00 $(1.26)
Weighted average common shares used in calculation of earnings (loss) per share:
Basic404 395 402 376 
Diluted434 395 431 376 
 Three Months Ended March 31,
 2019 2018
Revenue:   
Collaboration revenue$13,301
 $20,110
Collaboration revenue from related party814
 7,350
Grant revenue1,910
 1,579
Total revenue16,025
 29,039
Operating expenses:   
Research and development130,575
 90,124
General and administrative27,283
 16,317
Total operating expenses157,858
 106,441
Loss from operations(141,833) (77,402)
Interest income10,972
 5,209
Other expense, net(1,820) (183)
Loss before benefit from income taxes(132,681) (72,376)
Benefit from income taxes(24) —
Net loss$(132,657) $(72,376)
Net loss attributable to common stockholders (Note 11)$(132,657) $(75,857)
Net loss per share attributable to common stockholders, basic and diluted$(0.40) $(1.16)
Weighted average common shares used in net loss per share attributable to common stockholders, basic and diluted328,809,986
 65,430,835

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7
Table of Contents
MODERNA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSINCOME (LOSS)
(Unaudited, in thousands)millions)
 Three Months Ended March 31,
 2019 2018
Net loss$(132,657) $(72,376)
Other comprehensive income (loss):   
Unrealized gain (loss) on available-for-sale debt securities, net of tax, $540 and $01,908
 (1,999)
Less: Amounts recognized for net realized loss included in net loss3
 6
Total other comprehensive income (loss)1,911
 (1,993)
Comprehensive loss$(130,746) $(74,369)

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net income (loss)$3,333 $(233)$7,334 $(474)
Other comprehensive income (loss), net of tax:
Available-for-sales securities:
Unrealized (losses) gains on available-for-sale debt securities(3)(3)(10)2 
Less: net realized (gains) losses on available-for-sale securities reclassified in net income (loss)(1)— (2)1 
Net (decrease) increase from available-for-sale debt securities(4)(3)(12)3 
Cash flow hedges:
Unrealized gains on derivative instruments30 — 51 — 
Less: net realized (gains) on derivative instruments reclassified in net income(11)— (11)— 
Net increase from derivatives designated as hedging instruments19 — 40 — 
Total other comprehensive income (loss)15 (3)28 3 
Comprehensive income (loss)$3,348 $(236)$7,362 $(471)


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8
Table of Contents
MODERNA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS'STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Unaudited, in thousands)millions)


Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeRetained EarningsTotal Stockholders’ Equity
SharesAmount
Balance at June 30, 2021403 $— $4,931 $16 $1,757 $6,704 
Exercise of options to purchase common stock2 — 32 — — 32 
Stock-based compensation— — 40 — — 40 
Other comprehensive income, net of tax— — — 15 — 15 
Net income— — — — 3,333 3,333 
Balance at September 30, 2021405 $— $5,003 $31 $5,090 $10,124 



Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance at June 30, 2020393 $— $4,677 $8 $(1,738)$2,947 
Exercise of options to purchase common stock2 — 27 — — 27 
Stock-based compensation— — 22 — — 22 
Other comprehensive loss, net of tax— — — (3)— (3)
Net loss— — — — (233)(233)
Balance at September 30, 2020395 $— $4,726 $5 $(1,971)$2,760 




9
Table of Contents
  
Redeemable Convertible
Preferred Stock
   Common Stock 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Accumulated
Deficit
 
Total
Stockholders’
Equity
  Shares Amount   Shares Amount    
                   
Balance at December 31, 2018 —
 $—
   328,798,904
 $33
 $2,538,155
 $(1,320) $(1,006,627) $1,530,241
Transition adjustment from adoption of ASU Topic 606 (Note 2)       —
 —
 —
 —
 27,984
 27,984
Vesting of restricted common stock —
 —
   48,911
 —
 —
 —
 —
 —
Exercise of options to purchase common stock, net —
 —
   5,525
 —
 57
 —
 —
 57
Stock-based compensation —
 —
   —
 —
 18,497
 —
 —
 18,497
Unrealized gain on marketable securities —
 —
   —
 —
 —
 1,911
 —
 1,911
Net loss —
 —
   —
 —
 —
 —
 (132,657) (132,657)
Balance at March 31, 2019 —
 $—
   328,853,340
 $33
 $2,556,709
 $591
 $(1,111,300) $1,446,033
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeRetained Earnings (Accumulated Deficit)Total Stockholders’ Equity
SharesAmount
Balance at December 31, 2020399 $— $4,802 $3 $(2,244)$2,561 
Exercise of options to purchase common stock6 — 91 — — 91 
Purchase of common stock under employee stock purchase plan— — 5 — — 5 
Stock-based compensation— — 105 — — 105 
Other comprehensive income, net of tax— — — 28 — 28 
Net income— — — — 7,334 7,334 
Balance at September 30, 2021405 $— $5,003 $31 $5,090 $10,124 





  
Redeemable Convertible
Preferred Stock
   Common Stock 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Accumulated
Deficit
 
Total
Stockholders’
Deficit
  Shares Amount   Shares Amount    
                   
Balance at December 31, 2017 448,686,791
 $1,176,661
   65,206,999
 $6
 $71,679
 $(1,157) $(621,893) $(551,365)
Vesting of restricted common stock —
 —
   335,053
 —
 —
 —
 —
 —
Issuance of Series G redeemable convertible preferred stock, net of issuance costs of $10,517 55,666,004
 549,413
   —
 —
 152
 —
 —
 152
Exercise of options to purchase common stock, net —
 —
   1,789
 —
 22
 —
 —
 22
Stock-based compensation —
 —
   —
 —
 11,851
 —
 —
 11,851
Unrealized loss on marketable securities —
 —
   —
 —
 —
 (1,993) —
 (1,993)
Net loss —
 —
   —
 —
 —
 —
 (72,376) (72,376)
Balance at March 31, 2018 504,352.795
 $1,726,074
   65,543,841
 $6
 $83,704
 $(3,150) $(694,269) $(613,709)
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance at December 31, 2019337 $— $2,670 $2 $(1,497)$1,175 
Proceeds from public offering of common stock, net of issuance costs of $248 — 1,853 — — 1,853 
Exercise of options to purchase common stock10 — 133 — — 133 
Purchase of common stock under employee stock purchase plan— — 3 — — 3 
Stock-based compensation— — 67 — — 67 
Other comprehensive income, net of tax— — — 3 — 3 
Net loss— — — — (474)(474)
Balance at September 30, 2020395 $— $4,726 $5 $(1,971)$2,760 





MODERNA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 Three Months Ended March 31,
 2019 2018
Operating activities   
Net loss$(132,657) $(72,376)
Adjustments to reconcile net loss to net cash (used in) operating activities:   
Stock-based compensation18,497
 11,851
Depreciation and amortization7,328
 5,153
Amortization of investment premiums(1,005) (83)
Loss on disposal of property and equipment19
 —
Changes in assets and liabilities:   
Accounts receivable6,040
 3,876
Accounts receivable from related party(66) (28,529)
Prepaid expenses and other assets3,313
 (2,241)
Accounts payable1,731
 1,467
Accrued liabilities(32,557) (37,031)
Deferred revenue(15,604) 6,193
Deferred lease obligation550
 152
Other liabilities484
 183
Net cash used in operating activities(143,927) (111,385)
Investing activities   
Purchases of marketable securities(429,517) (660,239)
Proceeds from maturities of marketable securities403,940
 189,814
Proceeds from sales of marketable securities21,413
 18,630
Purchases of property and equipment(7,595) (31,909)
Net cash used in investing activities(11,759) (483,704)
Financing activities   
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs—
 549,531
Proceeds from issuance of common stock through equity plans57
 22
Reimbursement of assets under lease financing obligation—
 1,727
Payments on financing lease obligation(105) (1,285)
Net cash (used in) provided by financing activities(48) 549,995
Net decrease in cash, cash equivalents and restricted cash(155,734) (45,094)
Cash, cash equivalents and restricted cash, beginning of year670,491
 147,608
Cash, cash equivalents and restricted cash, end of period$514,757
 $102,514
Non-cash investing and financing activities   
Issuance costs included in accounts payable and accrued liabilities$796
 $—
Purchases of property and equipment included in accounts payable and accrued liabilities$14,127
 $28,527
Leasehold improvements included in prepaid and other current assets$10,089
 $9,889
Lease financing obligation$10,089
 $9,889

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

10
Table of Contents
MODERNA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
Nine Months Ended September 30,
20212020
Operating activities
Net income (loss)$7,334 $(474)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation105 67 
Depreciation and amortization154 24 
Amortization/accretion of investments33 5 
Deferred income taxes(89)— 
Changes in assets and liabilities:
Accounts receivable(1,751)(185)
Prepaid expenses and other assets(186)(68)
Inventory(918)— 
Right-of-use assets, operating leases(25)(13)
Accounts payable26 14 
Accrued liabilities600 132 
Deferred revenue4,431 1,240 
Income taxes payable565 — 
Operating lease liabilities8 14 
Other liabilities23 7 
Net cash provided by operating activities10,310 763 
Investing activities
Purchases of marketable securities(10,279)(2,326)
Proceeds from maturities of marketable securities1,075 748 
Proceeds from sales of marketable securities1,983 140 
Purchases of property and equipment(164)(44)
Net cash used in investing activities(7,385)(1,482)
Financing activities
Proceeds from public offerings of common stock, net of issuance costs— 1,853 
Proceeds from issuance of common stock through equity plans, net96 136 
Changes in financing lease liabilities(96)— 
Net cash provided by financing activities— 1,989 
Net increase in cash, cash equivalents and restricted cash2,925 1,270 
Cash, cash equivalents and restricted cash, beginning of year2,636 248 
Cash, cash equivalents and restricted cash, end of period$5,561 $1,518 
Non-cash investing and financing activities
Purchases of property and equipment included in accounts payable and accrued liabilities$66 $13 
Right-of-use assets obtained through finance lease modifications and reassessments$364 $46 
Right-of-use assets obtained in exchange for financing lease liabilities$126 $— 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

11
Table of Contents

MODERNA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1. Description of the Business


Moderna, Inc. is a Delaware Corporation, incorporated under the laws of the State of Delaware on July 22, 2016 (collectively, with its consolidated subsidiaries, any of Moderna, Company, we, us, our, or our). In August 2018, we changed our name from Moderna Therapeutics, Inc. to Moderna, Inc.the Company) was incorporated in Delaware on July 22, 2016. We are the successor in interest to Moderna LLC, a limited liability company formed under the laws of the State of Delaware in 2013. Our principal executive office is located at 200 Technology Square, Cambridge, MA.

We are a biotechnology company creating a new generation of potentially transformative medicines based on messenger RNA (mRNA), to improve the lives of patients. Since inception,mRNA medicines are designed to direct the body’s cells to produce intracellular, membrane, or secreted proteins that have a therapeutic or preventive benefit with the potential to address a broad spectrum of diseases. Our platform builds on continuous advances in basic and applied mRNA science, delivery technology, and manufacturing, providing us the capability to pursue in parallel a robust pipeline of new development candidates. We are developing vaccines and therapeutics for infectious diseases, immuno-oncology, rare diseases, autoimmune and cardiovascular diseases, independently and with our strategic collaborators.

On December 18, 2020, we received an Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA) for the emergency use of the Moderna COVID-19 Vaccine (also referred to as mRNA-1273 and marketed under the brand name Spikevax) in individuals 18 years of age or older. We have also received authorization for our COVID-19 vaccine from health agencies in more than 60 countries and from the World Health Organization. Additional authorizations are currently under review in other countries. In addition, we have received authorization for our COVID-19 vaccine for use in adolescents in the United Kingdom, European Union, Japan, Canada, Switzerland, Taiwan, Saudi Arabia, Australia, and the Philippines, and have pending applications for authorization to administer the vaccine to adolescents with regulatory agencies in the United States and other countries.

The FDA has approved an update to the EUA for the Moderna COVID-19 vaccine to include a third dose at the 100 µg level for immunocompromised individuals 18 years of age or older in the United States, as well as the administration of 50 µg booster doses for individuals age 65 and older, people aged 18 to 64 who are at high risk of severe COVID-19, and people aged 18 to 64 with frequent institutional or occupational exposure to SARS-CoV-2. In October 2021, the U.S. Advisory Committee on Immunization Practices (ACIP) also endorsed recommending the Moderna COVID-19 Vaccine as a booster, regardless of the original vaccine received by an individual in their primary series. The European Medicines Agency (EMA) has also authorized a third dose of the Moderna COVID-19 vaccinegiven at least 28 days after the second dose to severely immunocompromised individuals 12 years of age or older, as well as the administration of 50 µg booster doses for individuals 18 years of age and older. In August 2021, we completed the rolling submission process with the FDA for a Biologics License Application (BLA) for our COVID-19 vaccine, which is subject to Priority Review.

As of September 30, 2021, we had 37 mRNA development programs in our portfolio with 22 having entered the clinic. In the third quarter of 2021, we refined the way we track our development programs and now separately track each indication of our COVID-19 and RSV vaccine candidates, which resulted in an increase in the number of our development programs. We have incurred significant net losses. Weexpenses in connection with the discovery, development and commercialization of our products, and we expect to continue to incur significant expenses and operating losses for the foreseeable future. In addition, weWe anticipate that our expenses will increase significantly in connection with the ongoing development and commercialization of our COVID-19 vaccine and ongoing activities to support our platform research, drug discovery and clinical development, including development of any new generations of boosters and vaccines against variants of SARS-CoV-2 and vaccines against other respiratory diseases, infrastructure and Research Engine and Early Development engine,Engine (which includes our Moderna Technology Center), digital infrastructure, creation of a portfolio of intellectual property, and administrative support.

We do not expect to generate significant revenue from sales of potential mRNA medicines unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our investigational medicines. If we seek to obtain regulatory approval for any of our investigational medicines, we expect to incur significant commercialization expenses.

As a result, we will need substantial additional funding to support our continued operations and pursue our growth strategy. Until we can generate significant revenue from potential mRNA medicines, if ever, we expect tomay finance our operationsfuture cash needs that exceed our operating costs through a combination of public or private equity offerings, structured financings and debt financings, government funding arrangements, strategic alliances and marketing, manufacturing, distribution and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization

12
Table of one or more of our programs. Contents
We believe that our cash, cash equivalents, and investments as of March 31, 2019September 30, 2021 will be sufficient to enable us to fund our projected operations through at least the next 12 months from the issuance of these financial statements.

Because of the We are subject to numerous risks and uncertainties associated with pharmaceutical development and commercialization, and we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenues from the sale of our medicines, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce our operations.



2. Summary of Basis of Presentation and Recent Accounting Standards


Basis of Presentation and Principles of Consolidation


The accompanying unaudited condensed consolidated financial statements that accompany these notes have been prepared in conformityaccordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting, consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December 31, 2018 (20182020 (2020 Form 10-K), except for changes associated with recent. Any reference in these notes to applicable guidance is meant to refer to the authoritative accounting standards for revenue recognitionprinciples generally accepted in the United States as detailedfound in "Note 2 - Recentthe Accounting Standard Codification (ASC) and Accounting Standards andUpdate (ASU) of the Financial Accounting Policies."Standards Board (FASB). This report should be read in conjunction with the consolidated financial statements in our 20182020 Form 10-K.


The condensed consolidated financial statements include Moderna, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and nine months ended September 30, 2021 are consistent with those described in our 2020 Form 10-K, except for “Derivative financial instruments” disclosed within Note 6.

Use of Estimates

We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. On an ongoing basis, we evaluate our estimates, including critical accounting policies or estimates related to revenue recognition, income tax provisions, stock-based compensation, and useful lives of long-lived assets. We base our estimates on historical experience and on various relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods that are not readily apparent from other sources. Significant estimates relied upon in preparing these financial statements include, but are not limited to, critical accounting policies or estimates related to revenue recognition, research and development expenses, stock-based compensation, leases, fair value of financial instruments, derivative financial instruments, inventory, useful lives of property and equipment, income taxes and our valuation allowance on our deferred tax assets. The actual results that we experience may differ materially from our estimates. The condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2019.


Recent Accounting Standards and Accounting Policies

Revenue Recognition

On January 1, 2019, we adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2019. We recognized the cumulative effect of the adoption as an adjustment to the opening balance of accumulated deficit in the current period condensed consolidated balance sheet. Results for reporting periods beginning after January 1, 2019 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, Revenue Recognition (ASC 605). ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.

Our revenue is primarily generated through collaboration arrangements and grants from government-sponsored and private organizations. Our collaboration arrangements typically contain multiple promises, including licenses to our intellectual property, options to obtain development and commercialization rights, research and development services, and obligations to develop and manufacture preclinical and clinical material. Such arrangements provide for various types of payments to us, including upfront payments, funding of research and development activities, funding for the purchase of preclinical and clinical material, development, regulatory and commercial milestone payments, licensing fees, option exercise payments, and royalties based on product sales. We have received grants from various government-sponsored and private organizations for research and related activities that provide for payments for reimbursed costs, which may include overhead and general and administrative costs as well as a related profit margin.

We analyze our collaboration arrangements to assess whether they are within the scope of ASC Topic 808, Collaborative Arrangements (ASC 808) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. To the extent the arrangement is within the scope of ASC 808, we assess whether aspects of the arrangement between us and our collaboration partner are within the scope of other accounting literature. If we conclude that some or all aspects of the arrangement represent a transaction with a customer, we account for those aspects of the arrangement within the scope of ASC 606. If we conclude that some or all aspects of the arrangement are within the scope of ASC 808 and do not represent a transaction with a customer, we recognize our allocation of the shared costs incurred with respect to the jointly conducted activities as a component of the related expense in the period incurred. Pursuant to ASC 606, a customer is a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. If we conclude a counter-party to a transaction is not a customer or otherwise not within the scope of ASC 606 or ASC 808, we consider the guidance in other accounting literature as applicable or by analogy to account for such transaction. We also consider the guidance in ASC 606 with respect to principal versus agent considerations, in determining the appropriate treatment for the transactions between us and the strategic collaborator and the transactions between us and other third parties. The classification of transactions under our arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. Any consideration related to activities in which we are considered the principal, which includes being in control of the good or service before such good or service is transferred to the customer, are accounted for as gross revenue.

We receive payments from our customers based on billing schedules established in each contract. Upfront payments and fees are recorded as contract liabilities upon receipt or when due and may require deferral of revenue recognition to a future period when we perform our obligations under the arrangement. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current liabilities on our condensed consolidated balance sheets. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as non-current liabilities on our condensed consolidated balance sheets. Amounts payable to us are recorded as accounts receivable when our right to consideration is unconditional. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial. As of March 31, 2019, we had not capitalized any costs to obtain any of our contracts.

Collaboration Revenue

To determine the appropriate amount of revenue to be recognized for arrangements that we determine are within the scope of ASC 606, we perform the following steps: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the

contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) each performance obligation is satisfied.

We account for a contract with a customer that is within the scope of ASC 606 when all of the following criteria are met: (i) the arrangement has been approved by the parties and the parties are committed to perform their respective obligations; (ii) each party’s rights regarding the goods and/or services to be transferred can be identified; (iii) the payment terms for the goods and/or services to be transferred can be identified; (iv) the arrangement has commercial substance; and (v) collection of substantially all of the consideration to which we will be entitled in exchange for the goods and/or services that will be transferred to the customer is probable. We also determine the term of the contract based on the period in which we and our customer have present and enforceable rights and obligations for purposes of identifying the performance obligations and determining the transaction price.

We evaluate contracts that contain multiple promises to determine which promises are distinct. Promises are considered to be distinct and therefore, accounted for as separate performance obligations, provided that: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer and (ii) the promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. In assessing whether a promise is distinct, we consider factors such as whether: (i) we provide a significant service of integrating goods and/or services with other goods and/or services promised in the contract; (ii) one or more of the goods and/or services significantly modifies or customizes, or are significantly modified or customized by one or more of the other goods and/or services promised in the contract; and (iii) the goods and/or services are highly interdependent or highly interrelated.Individual goods or services (or bundles of goods and/or services) that meet both criteria for being distinct are accounted for as separate performance obligations. Promises that are not distinct at contract inception are combined and accounted for as a single performance obligation. Options to acquire additional goods and/or services are evaluated to determine if such option provides a material right to the customer that it would not have received without entering into the contract. If so, the option is accounted for as a separate performance obligation. If not, the option is considered a marketing offer which would be accounted for as a separate contract upon the customer’s election.

The transaction price is generally comprised of an upfront payment due at contract inception and variable consideration in the form of payments for our services and materials and milestone payments due upon the achievement of specified events. Other payments the Company could be entitled to include tiered royalties earned when customers recognize net sales of licensed products. We consider the existence of any significant financing component within our arrangements and have determined that a significant financing component does not exist in our arrangements as substantive business purposes exist to support the payment structure other than to provide a significant benefit of financing. We measure the transaction price based on the amount of consideration we expect to be entitled in exchange for transferring the promised goods and/or services to the customer. We utilize either the expected value method or the most likely amount method to estimate the amount of variable consideration, depending on which method is expected to better predict the amount of consideration to which we will be entitled. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.With respect to arrangements that include payments for a development or regulatory milestone payment, we evaluate whether the associated event is considered probable of achievement and estimate the amount to be included in the transaction price using the most likely amount method. Milestone payments that are not within our control or the licensee, such as those dependent upon receipt of regulatory approval, are not considered to be probable of achievement until the triggering event occurs. At the end of each reporting period, we re-evaluate the probability of achievement of each milestone and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment. For arrangements that include sales-based royalties, including milestone payments based upon the achievement of a certain level of product sales, wherein the license is deemed to be the sole or predominant item to which the payments relate, we recognize revenue upon the later of: (i) when the related sales occur or (ii) when the performance obligation to which some or all of the payment has been allocated has been satisfied (or partially satisfied). Consideration that would be received for optional goods and/or services is excluded from the transaction price at contract inception.

We generally allocate the transaction price to each performance obligation based on a relative standalone selling price basis. We develop assumptions that require judgment to determine the standalone selling price for each performance obligation in consideration of applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated research and development costs. However, in certain instances, we allocate variable consideration entirely to one or more performance obligation if the terms of the variable consideration relate to the satisfaction of the respective performance obligation and the amount allocated is consistent with the amount we would expect to receive for the satisfaction of the respective performance obligation.


We recognize revenue based on the amount of the transaction price that is allocated to each respective performance obligation when or as the performance obligation is satisfied by transferring a promised good or service to the customer. For performance obligations that are satisfied at a point in time, we recognize revenue when control of the goods and/or services is transferred to the customer. For performance obligations that are satisfied over time, we recognize revenue by measuring the progress toward complete satisfaction of the performance obligation using a single method of measuring progress which depicts the performance in transferring control of the associated goods and/or services to the customer. We generally use input methods to measure the progress toward the complete satisfaction of performance obligations satisfied over time. With respect to arrangements containing a license to our intellectual property that is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenue from amounts allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which we are expected to complete our performance obligations under an arrangement. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment.

Grant Revenue

We have contracts with the U.S. government’s Defense Advanced Research Projects Agency (DARPA), Biomedical Advanced Research (BARDA), and the Bill & Melinda Gates Foundation (Gates Foundation). We recognize revenue from these contracts as we perform services under these arrangements when the funding is committed. Revenues and related expenses are presented gross in the condensed consolidated statements of operations as we have determined we are the primary obligor under the arrangements relative to the research and development services we perform as lead technical expert.


Comprehensive LossIncome (Loss)


Comprehensive lossincome (loss) includes net lossincome (loss) and other comprehensive income (loss) for the period. Other comprehensive income (loss) consists of unrealized gainsgains/losses and gains/losses on our investments.investments and derivatives designated as hedging instruments. Total comprehensive lossincome (loss) for all periods presented has been disclosed in the condensed consolidated statements of comprehensive loss.income (loss).


13
Table of Contents
The components of accumulated other comprehensive lossincome for the three and nine months ended March 31, 2019 areSeptember 30, 2021 were as follows (in thousands)millions): 
Unrealized Loss on Available-for-Sale Debt SecuritiesNet Unrealized Gains on Derivatives Designated As Hedging InstrumentsTotal
Accumulated other comprehensive income, balance at December 31, 2020$3 $— $3 
Other comprehensive loss(2)— (2)
Accumulated other comprehensive income, balance at March 31, 20211 — 1 
Other comprehensive (loss) income(6)21 15 
Accumulated other comprehensive income, balance at June 30, 2021$(5)$21 $16 
Other comprehensive (loss) income(4)19 15 
Accumulated other comprehensive income, balance at September 30, 2021$(9)$40 $31 
 Unrealized Gain on Available-for-Sale Debt Securities
Accumulated other comprehensive loss, balance at December 31, 2018$(1,320)
Other comprehensive income1,911
Accumulated other comprehensive loss, balance at March 31, 2019$591


Emerging Growth Company Status

We are an “emerging growth company,” (EGC) as defined in the Jumpstart Our Business Startups Act, (JOBS Act), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. We may take advantage of these exemptions until we are no longer an EGC under Section 107 of the JOBS Act, which provides that an EGC can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards, and as a result of this election, our condensed consolidated financial statements may not be comparable to companies that comply with public company FASB standards’ effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of our initial public offering (IPO) or such earlier time that we are no longer an EGC.


Recently Adopted Accounting Standards

ASU No. 2014-09, Revenue from Contracts with Customers

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements in ASC 605 and most industry specific guidance. ASC 606 provides a single comprehensive model for use in accounting for revenue arising from contracts with customers. We adopted the new revenue standard on January 1, 2019 using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2019. We recognized the cumulative effect of the adoption as an adjustment to the opening balance of accumulated deficit in the first quarter of 2019. We have elected to use the practical expedient to aggregate the impact of all contract modifications that occurred prior to the ASC 606 adoption with respect to (i) identification of the satisfied and unsatisfied performance obligations, (ii) determination of the transaction price and (iii) allocation of the transaction price to the satisfied and unsatisfied performance obligations.

ASC 606 requires significant judgment and estimates and results in changes to, but not limited to: (i) the determination of the transaction price, including estimates of variable consideration, (ii) the allocation of the transaction price, including the determination of estimated selling price, and (iii) the pattern of recognition, including the application of proportional performance as a measure of progress on service-related promises and application of point-in-time recognition for supply-related promises. We recorded the cumulative-effect adjustment of $28.0 million to the opening balance of accumulated deficit as of January 1, 2019 with a corresponding decrease to deferred revenue. The effect of the adoption of ASC 606 on our condensed consolidated balance sheet is as follows (in thousands):
Condensed Consolidated Balance Sheet Balance at December 31, 2018 Adjustments 
Balance at
January 1, 2019
Deferred revenue, current $109,056
 $(27,281) $81,775
Deferred revenue, non-current 165,352
 (3,441) 161,911
Accounts receivable 11,686
 (2,738) 8,948
Accumulated deficit (1,006,627) 27,984
 (978,643)

The cumulative-effect adjustment is primarily due to the application of ASC 606 to our strategic collaboration agreements, particularly our Combined 2018 AZ Agreements, 2016 VEGF Exercise and Merck PCV/SAV Agreement (see Note 3). In addition, as a result of the cumulative decrease in deferred revenue, our corresponding deferred tax asset was decreased by $8.4 million, which was offset by a corresponding decrease to our valuation allowance.
A substantial portion of the $28.0 million cumulative-effect adjustment is the result of the application of ASC 606 regarding the allocation of the transaction price and the measurement of progress in satisfying performance obligations. In particular, for the Combined 2018 AZ Agreements, the adoption of ASC 606 resulted in the decrease of previously deferred revenue of $39.9 million. For the Merck PCV/SAV Agreement, the adoption of ASC 606 resulted in a reversal of previously recognized revenue and an increase in deferred revenue of $13.9 million. These adjustments are due to the change in the way we allocate the transaction price to each performance obligation and measure our performance under each agreement from a straight-line method to a proportional performance model. In addition, the adoption of ASC 606 resulted in the decrease of $4.3 million of previously deferred revenue relating to the 2016 VEGF Exercise. Under ASC 605, the product option fee and the clinical milestone payment we received pursuant to the VEGF Exercise were deferred until the consideration pertaining to the clinical supply of mRNA can be reasonably estimated. Under ASC 606, we are required to estimate the total variable consideration to determine the total consideration and recognize the revenue as clinical supply is shipped to the customer based on the proportionate amount of the transaction price. As a result, the balance of remaining deferred revenues at January 1, 2019 was $75.7 million, $37.1 million and $125.2 million related to the Combined 2018 AZ Agreements, 2016 VEGF Exercise and the Merck PCV/SAV Agreement, respectively.


The following tables summarize the effects of adopting ASC 606 on our condensed consolidated financial statements at March 31, 2019, and for the three months ended March 31, 2019 (in thousands, except per share data):
  March 31, 2019
Condensed Consolidated Balance Sheet As reported under ASC 606 Adjustments Balance without adoption of ASC 606
Deferred revenue, current $73,958
 $36,452
 $110,410
Deferred revenue, non-current 156,862
 (29,840) 127,022
Accumulated deficit (1,111,300) (6,077) (1,117,377)

  Three Months Ended March 31, 2019
Condensed Consolidated Statement of Operations As reported under ASC 606 Adjustments Amount without adoption of ASC 606
Revenue:      
   Collaboration revenue $13,301
 $(1,786) $11,515
   Collaboration revenue from related party 814
 24,377
 25,191
Total revenue 16,025
 21,907
 37,932
Loss from operations (141,833) 21,907
 (119,926)
Loss before benefit from income taxes (132,681) 21,907
 (110,774)
Net (loss) income (132,657) 21,907
 (110,750)
Net loss per share - basic and diluted (0.40) 0.06
 (0.34)

ASU No. 2016-18, Statement of Cash Flows: Restricted Cash


In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230):Restricted Cash, which requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents and restricted cash. When cash, cash equivalents and restricted cash are presented in more than one line item on the balance sheet, the new standard requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. This reconciliation can be presented either on the face of the statement of cash flows or in the notes to the financial statements. The new standard became effective for us on January 1, 2019. As a result of adopting this new standard using a retrospective transition method for each period presented, weWe include our restricted cash balance in the cash, cash equivalents and restricted cash reconciliation of operating, investing and financing activities in the condensed consolidated statements of cash flows. 


The following table provides a reconciliation of cash, cash equivalents and restricted cash in the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands)millions):
September 30,
20212020
Cash and cash equivalents$5,550 $1,506 
Restricted cash— 1 
Restricted cash, non-current11 11 
Total cash, cash equivalents and restricted cash shown in the condensed consolidated
    statements of cash flows		$5,561 $1,518 
  As of March 31,
  2019 2018
Cash and cash equivalents $502,934
 $90,479
Restricted cash —
 237
Restricted cash, non-current 11,823
 11,798
Total cash, cash equivalents and restricted cash shown in the condensed consolidated
    statements of cash flows
 $514,757
 $102,514


ASU No. 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which is intended to simplify aspects of share-based compensation issued to non-employees by making the guidance generally consistent with the accounting for employee share-based compensation. The new standard will be effective for us on January 1, 2020, with early adoption permitted. We early adopted this standard in the first quarter of 2019. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and disclosure.

ASU No. 2018-18, Collaborative Arrangements: Clarifying the Interaction between Topic 808 and Topic 606

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which clarifies the interaction between Topic 808 and Topic 606, Revenue from Contracts with Customers. Currently, Topic 808 does not provide comprehensive recognition or measurement guidance for collaborative arrangements, and the accounting for those arrangements is often based on an analogy to other accounting literature or an accounting policy election. Similarly, aspects of Topic 606 have resulted in diversity in practice on the effect of the revenue standard on the accounting for collaborative arrangements. The standard will become effective for us beginning on January 1, 2021, with early adoption permitted. We early adopted this standard in connection with the adoption of ASC 606 in the first quarter of 2019. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and disclosure.


Recently Issued Accounting Standards Not Yet Adopted


From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our condensed consolidated financial statements and disclosures.


3. Product Sales

In February 2016,December 2020, we began selling our COVID-19 vaccine to the FASB issued ASU No. 2016-02, Leases (Topic 842),U.S. Government and international governments. Under the supply agreements with these governments, we received or billed for upfront deposits for our future vaccine supply, which supersedes all existing lease guidance. This guidance offers specific accounting guidanceare initially recorded as deferred revenue. We recognize revenue based on the fixed price per dose when control of the product has transferred and customer acceptance has occurred as applicable, unless such acceptance provisions are deemed perfunctory.

Product sales by customer geographic location was as follows (in millions):
Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2021
United States$1,197 $4,648 
Rest of world3,613 6,092 
Total$4,810 $10,740 

There were no product sales for a lessee, a lessorthe three and salenine months ended September 30, 2020. As of September 30, 2021, our COVID-19 vaccine was our only commercial product authorized for use.

14
Table of Contents
As of September 30, 2021 and leaseback transactions. The new standard requires lesseesDecember 31, 2020, we had deferred revenue of $8.3 billion and $3.8 billion, respectively, related to recognize an operating lease with a term greatercustomer deposits. We expect $7.9 billion of our deferred revenue related to customer deposits as of September 30, 2021 to be realized in less than one year on their balance sheets asyear. Timing of product manufacturing, delivery, and receipt of marketing approval will determine the period in which revenue is recognized.

4. Grant Revenue

In September 2020, we entered into an agreement with the Defense Advanced Research Projects Agency (DARPA) for an award of up to $56 million to fund development of a right-of-use assetmobile manufacturing prototype leveraging our existing manufacturing technology that is capable of rapidly producing vaccines and corresponding lease liability, measured attherapeutics. As of September 30, 2021, the present valuecommitted funding, net of revenue earned, was $4 million. An additional $43 million of funding will be available if DARPA exercises additional contract options.

In April 2020, we entered into an agreement with the Biomedical Advanced Research and Development Authority (BARDA), a division of the lease payments. Lessees are required to classify leases as either finance or operating leases. If the lease is effectively a financed-purchase by the lessee, it is classified as a financing lease, otherwise it is classified as an operating lease. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the termOffice of the lease. ASC 842 provides accounting guidanceAssistant Secretary for transactions that meet specific criteriaPreparedness and Response within the U.S. Department of Health and Human Services (HHS), for an award of up to $483 million to accelerate development of mRNA-1273, our vaccine candidate against COVID-19. In July 2020, we amended our agreement with BARDA to provide for an additional commitment of up to $472 million to support late-stage clinical development of mRNA-1273, including the execution of a leaseback transaction. If the criteria are not met, the transaction is considered a “failed sale” and the transaction must be accounted for as a financing arrangement. The new standard will be effective for us on January 1, 2020, assuming we continue to qualify as an EGC.. Upon adoption, the new standard, as amended, allows lessees to apply the transition requirements either (1) retrospectively to each prior reporting period presented30,000 participant Phase 3 study in the financial statementsU.S. We further amended the agreement in March 2021 to provide for an additional commitment of $63 million to further support late-stage clinical development, including Phase 2/3 mRNA-1273 pediatric studies. In April 2021, we entered into a further amendment to the BARDA agreement, increasing the amount of potential reimbursements by $236 million in connection with costs associated with the cumulative effectPhase 3 clinical trials for mRNA-1273 and pharmacovigilance efforts. In June 2021, the agreement with BARDA was further amended to award additional funding of applying the new rules recognized at the beginning$144 million to support pediatric clinical trials for mRNA-1273. The maximum award from BARDA, inclusive of the earliest comparative period presented, or (2) retrospectively at2020 and 2021 amendments, was approximately $1.4 billion. Under the beginningterms of the periodagreement, BARDA will fund the advancement of adoptionmRNA-1273 to FDA licensure. All contract options have been exercised. As of September 30, 2021, the remaining available funding, net of revenue earned, was $441 million.

In September 2016, we received from BARDA an award of up to $126 million, subsequently adjusted to $117 million in 2021, to help fund our Zika vaccine program. NaN of the 4 contract options have been exercised. As of September 30, 2021, the remaining available funding, net of revenue earned, was $55 million, with an additional $8 million available if the final contract option is exercised.

In January 2016, we entered a global health project framework agreement with the cumulative effectBill and Melinda Gates Foundation (Gates Foundation) to advance mRNA-based development projects for various infectious diseases, including human immunodeficiency virus (HIV). As of applyingSeptember 30, 2021, the new rules recognized then. available funding, net of revenue earned, was $7 million, with up to an additional $80 million available if additional follow-on projects are approved.

The following table summarizes grant revenue as of and for the periods presented (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
BARDA$128 $143 $454 $183 
Other grant revenue12 2 19 4 
Total grant revenue$140 $145 $473 $187 

15
Table of Contents
5. Collaboration Agreements

We are currently evaluatinghave entered into collaboration agreements with strategic collaborators to accelerate the discovery and advancement of potential impact ASU 2016-02 may have on our financial positionmRNA medicines across therapeutic areas. As of September 30, 2021 and results of operations. Our assessment will include, but is not limited to, evaluating the impact this standard has on the lease of our corporate headquarters at 200 Technology Square in Cambridge, MA, the lease of our officeDecember 31, 2020, we had collaboration agreements with AstraZeneca plc (AstraZeneca), Merck & Co., Inc (Merck), Vertex Pharmaceuticals Incorporated and laboratory space at 500 Technology Square, Cambridge, MA and our manufacturing and additional facilities in Norwood, MA, (see Note 7)Vertex Pharmaceuticals (Europe) Limited (together, Vertex), and others. Please refer to our 2020 Form 10-K under the identification of any embedded leases.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 will change how companies account for credit losses for most financial assetsheading “Third-Party Strategic Alliances” and certain other instruments. For trade receivables, loans and held-to-maturity debt securities, companies will be requiredNote 5 to recognize an allowance for credit losses rather than reducing the carrying value of the asset. Assuming we continue to qualify as an EGC, ASU 2016-13 will be effective for us for fiscal years beginning after December 15, 2020, , including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact that the adoption of ASU 2016-13 will have on the Company’s financial position and results of operations.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard requires capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This standard should be applied either retrospectively or prospectively, and will be effective for us in January 2021, assuming we continue to qualify as an EGC, with early adoption permitted. We are currently evaluating the potential impact this standard may have on our condensed consolidated financial statements and resultsfor further description of operations upon adoption.these collaboration agreements.

3. Collaboration Agreements


The following table summarizes our total consolidated net revenuesrevenue from our strategic collaborators for the periods presented (in thousands)millions):
Three Months Ended September 30,Nine Months Ended September 30,
Collaboration Revenue by Strategic Collaborator:2021202020212020
AstraZeneca$3 $— $7 $17 
Merck7 6 11 18 
Vertex5 6 23 10 
Other4 — 6 — 
Total collaboration revenue$19 $12 $47 $45 
  Three Months Ended
Collaboration Revenue by Strategic Collaborator: 
March 31, 2019
as reported
(under ASU 606)
 
March 31, 2019
without adoption of 606
(under ASC 605)
 
March 31, 2018
as reported
(under ASC 605)
Merck $10,687
 $11,515
 $15,967
AstraZeneca 814
 25,191
 7,350
Vertex 2,614
 —
 4,143
Total collaborative revenue $14,115
 $36,706
 $27,460


The following table presents changes in the balances of our receivables and contract liabilities related to our strategic collaboration agreements during the threenine months ended March 31, 2019September 30, 2021 (in thousands)millions):
December 31, 2020AdditionsDeductionsSeptember 30, 2021
Contract Assets:
Accounts receivable$6 $21 $(21)$6 
Contract Liabilities:
Deferred revenue$240 $23 $(45)$218 
  January 1, 2019 Additions Deductions March 31, 2019
Contract Assets:        
Accounts receivable $4,612
 $2,735
 $(3,747) $3,600
Contract Liabilities:        
Deferred revenue $240,924
 $1,137
 $(13,582) $228,479

During the three months ended March 31, 2019, we recognized the following revenues as a result of the change in the contract liability balances related to our collaboration agreements (in thousands):
Revenue recognized in the period from: Three Months Ended March 31, 2019
Amounts included in contract liabilities at the beginning of the period (1)
 $13,582

(1) We first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance. If additional consideration is received on those contracts in subsequent periods, we assume all revenue recognized in the reporting period first applies to the beginning contract liability.


As of March 31, 2019,September 30, 2021, the aggregated amount of the transaction price allocated to performance obligations under our collaboration agreements that are unsatisfied or partially unsatisfied was $279.5$310 million.




AstraZeneca – Strategic Alliances in Cardiovascular and Oncology
16

Table of Contents
2013 Option Agreement and Services and Collaboration Agreement

In March 2013, we entered into an Option Agreement, the AZ Option Agreement, and a related Services and Collaboration Agreement, the AZ Services Agreement, with AstraZeneca, which were amended and restated in June 2018. We refer to these agreements in the forms that existed prior to the 2018 amendment and restatement as the 2013 AZ Agreements. Under the 2013 AZ Agreements, we granted AstraZeneca certain exclusive rights and licenses, and options to obtain exclusive rights to develop and commercialize potential therapeutic mRNA medicines directed at certain targets for the treatment of cardiovascular and cardiometabolic diseases and cancer, and agreed to provide related services to AstraZeneca. Pursuant to the 2013 AZ Agreements, AstraZeneca was responsible for all research, development and commercialization activities, while we provided specified research and manufacturing services during a research and evaluation period, as described below, to further AstraZeneca’s activities pursuant to an agreed upon services plan. Under the 2013 AZ Agreements, AstraZeneca could have requested we provide additional services, at AstraZeneca’s expense. Subject to customary “back-up” supply rights granted to AstraZeneca, we exclusively manufactured (or had manufactured) mRNA for all research, development and commercialization purposes under the 2013 AZ Agreements until, on a product-by-product basis, the expiration of the time period for which we are entitled to receive earn-out payments with respect to such product pursuant to the 2013 AZ Agreements.

As of the effective date of the 2013 AZ Agreements, AstraZeneca acquired forty options that it may exercise to obtain exclusive rights to clinically develop and commercialize identified development candidates (and related back-up candidates) directed to specified targets that arise during the research and evaluation period. During the research and evaluation period for research candidates under the 2013 AZ Agreements, AstraZeneca could have elected to designate a limited number of research candidates as development candidates in order to continue preclinical development on such development candidates (and related back-up candidates). From such pool of development candidates designated by AstraZeneca, during a specified option exercise period, AstraZeneca could have then exercised one of its options to obtain exclusive rights to clinically develop and commercialize an identified development candidate (and related back-up candidates). If AstraZeneca did not exercise one of its options to acquire exclusive rights to clinically develop and commercialize a particular development candidate during the defined option exercise period for such development candidate, AstraZeneca’s rights to exercise an option and other rights granted under the 2013 AZ Agreements with respect to such development candidate (and related back-up candidates) would terminate, all rights to exploit such development candidate (and related back-up candidates) would be returned to us and all data and results generated by AstraZeneca with respect to such development candidate (and related back-up candidates) would be either assigned or licensed to us. Upon the earlier of termination of the 2013 AZ Agreements for any reason and a specified anniversary of the effective date of the 2013 AZ Agreements, all unexercised options, and the right to exercise any and all options if not previously exercised by AstraZeneca, would automatically terminate. On a target-by-target basis, we and AstraZeneca agreed to certain defined exclusivity obligations under the 2013 AZ Agreements with respect to the research, development and commercialization of mRNA medicines for such target.

As of the effective date of the 2013 AZ Agreements, AstraZeneca made upfront cash payments to us totaling $240.0 million. Under the 2013 AZ Agreements, we were entitled to receive payments that are not related to any specific program of up to $180.0 million in the aggregate for the achievement of three technical milestones relating to toxicity, delivery, and competition criteria. We achieved the toxicity and competition milestones in the year ended December 31, 2015. The delivery milestone has expired. Under the 2013 AZ Agreements, AstraZeneca was obligated to pay us a $10.0 million option exercise fee with respect to each development candidate (and related back-up candidates) for which it exercised an option. In addition, upon AstraZeneca’s exercise of each option, we were eligible to receive certain payments contingent upon the achievement of specified clinical, regulatory, and commercial events. For any product candidate optioned by AstraZeneca, we were eligible to receive, per product candidate, up to $100.0 million in payments for achievement of development milestones, up to $100.0 million payments for achievement of regulatory milestones, and up to $200.0 million payments for achievement of commercial milestones. Additionally, under the 2013 AZ Agreements, we were entitled to receive, on a product-by-product basis, earn-out payments on worldwide net sales of products ranging from a high-single digit percentage to 12%, subject to certain reductions, with an aggregate minimum floor.

We received from AstraZeneca under the 2013 AZ Agreements an option exercise payment of $10.0 million in the year ended December 31, 2016, and a clinical milestone payment of $30.0 million with respect to AstraZeneca’s VEGF-A product (AZD8601) during the year ended December 31, 2018, that is currently being developed in a Phase 2 clinical trial in certain fields.
Unless earlier terminated, the 2013 AZ Agreements would have continued until the expiration of AstraZeneca’s earn-out and contingent option exercise payment obligations for optioned product candidates. Either party had the right to terminate the 2013 AZ Agreements upon the other party’s material breach, either in its entirety or in certain circumstances, with respect to relevant candidates, subject to a defined materiality threshold and specified notice and cure provisions. If AstraZeneca had the right to terminate the 2013 AZ Agreements for our material breach, then AstraZeneca could have elected, in lieu of terminating the 2013 AZ

Agreements, in their entirety or with respect to such candidates, to have the 2013 AZ Agreements remain in effect, subject to reductions in certain payments we were eligible to receive and certain adjustments to AstraZeneca’s obligations under the 2013 AZ Agreements. AstraZeneca had the right to terminate the 2013 AZ Agreements in full, without cause, upon 90-days’ prior notice to us.

2016 Strategic Alliance with AstraZeneca – IL12

In January 2016, we entered into a new Strategic Drug Development Collaboration and License Agreement, which we refer to as the 2016 AZ Agreement, with AstraZeneca to discover, develop and commercialize potential mRNA medicines for the treatment of a range of cancers.

Under the terms of the 2016 AZ Agreement, we and AstraZeneca have agreed to work together on an immuno-oncology program focused on the intratumoral delivery of a potential mRNA medicine to make the IL12 protein.The 2016 AZ Agreement initially included research activities with respect to a second discovery program. During a limited period of time, each party had an opportunity to propose additional discovery programs to be conducted under the 2016 AZ Agreement. We are responsible for conducting and funding all discovery and preclinical development activities under the 2016 AZ Agreement in accordance with an agreed upon discovery program plan for the IL12 program and any other discovery program the parties agree to conduct under the 2016 AZ Agreement. For the IL12 program and any other discovery program the parties agree to conduct under the 2016 AZ Agreement, during a defined election period that commenced as of the effective date of the 2016 AZ Agreement (for the IL12 program) and otherwise will commence on initiation of any such new discovery program, AstraZeneca may elect to participate in the clinical development of a development candidate arising under the 2016 AZ Agreement from such program. If AstraZeneca so elects (as it has for the IL12 program), AstraZeneca will lead clinical development activities worldwide and we will be responsible for certain activities, including being solely responsible for manufacturing activities, all in accordance with an agreed upon development plan. AstraZeneca will be responsible for funding all Phase 1 clinical development activities (including costs associated with our manufacture of clinical materials in accordance with the development plan), and Phase 2 clinical development activities (including costs associated with our manufacture of clinical materials in accordance with the development plan) up to a defined dollar threshold. We and AstraZeneca will equally share the costs of Phase 2 clinical development activities in excess of such dollar threshold, all Phase 3 clinical development activities and certain other costs of late-stage clinical development activities, unless we elect not to participate in further development and commercialization activities and instead receive tiered royalties, as described below.

We and AstraZeneca will co-commercialize products in the U.S. in accordance with an agreed upon commercialization plan and budget, and on a product-by-product basis will equally share the U.S. profits or losses arising from such commercialization. Notwithstanding, on a product-by-product basis, prior to a specified stage of development of a given product, we have the right to elect not to participate in the further development and commercialization activities for such product. If we make such election, instead of participating in the U.S. profits and losses share with respect to such product, we are obligated to discuss future financial terms with AstraZeneca. If we are unable to agree on future financial terms within a short, defined period of time, we are entitled to receive tiered royalties at default rates set forth in the 2016 AZ Agreement, ranging from percentages in the mid-single digits to 20% on worldwide net sales of products, subject to certain reductions with an aggregate minimum floor. AstraZeneca has sole and exclusive responsibility for all ex-U.S. commercialization efforts. Unless we have elected to not to participate in further development (in which case royalties on ex-U.S. net sales will be at the default rates as described above, unless otherwise agreed by the parties), we are entitled to tiered royalties at rates ranging from 10% to 30% on ex-U.S. net sales of the products, subject to certain reductions with an aggregate minimum floor. Subject to customary “back-up” supply rights granted to AstraZeneca, we exclusively manufacture (or have manufactured) products for all development and commercialization purposes. We and AstraZeneca have agreed to certain defined exclusivity obligations with each other under the 2016 AZ Agreement with respect to the development and commercialization of mRNA medicines for IL12.

Unless earlier terminated, our strategic alliance under the 2016 AZ Agreement will continue on a product-by-product basis (i) until both parties cease developing and commercializing such product without the intention to resume, if we have not elected our right not to participate in further development and commercialization of such product or (ii) on a country-by-country basis, until the end of the applicable royalty term for such product in such country, if we have elected our right not to participate in further development and commercialization of such product.
Either party may terminate the 2016 AZ Agreement upon the other party’s material breach, subject to specified notice and cure provisions. Each party may also terminate the 2016 AZ Agreement in the event the other party challenges such party’s patent rights, subject to certain defined exceptions. AstraZeneca has the right to terminate the 2016 AZ Agreement in full or with respect to any program for scientific, technical, regulatory or commercial reasons at any time upon 90 days’ prior written notice to us. On a product-by-product basis, we have the right to terminate the 2016 AZ Agreement in certain cases if AstraZeneca has suspended or is no longer proceeding with the development or commercialization of such product for a period of twelve consecutive months, subject to specified

exceptions, including tolling for events outside of AstraZeneca’s control. On a product-by-product basis, if the 2016 AZ Agreement is terminated with respect to a given product, AstraZeneca’s rights in such product will terminate and, to the extent we terminated for AstraZeneca’s breach, patent challenge or cessation of development or AstraZeneca terminated in its discretion, AstraZeneca will grant us reversion licenses and take certain other actions so as to enable us to continue developing and commercializing such product in the oncology field.

If we continue developing and commercializing a given product following termination of the 2016 AZ Agreement by AstraZeneca in its discretion with respect to such product, AstraZeneca is entitled to receive a mid-single digit royalty on our worldwide net sales of such product and a high-single digit percentage of the amounts received by us from a third party in consideration of a license to such third party to exploit such product, in each case, until AstraZeneca recovers an amount equal to specified development costs incurred by AstraZeneca under the 2016 AZ Agreement with respect to such product prior to such termination. Such percentages increase by a low to mid-single digit amount to the extent such termination occurs after such product achieves a specified stage of development.

2017 Strategic Alliance with AstraZeneca – Relaxin

In October 2017, we entered a new Collaboration and License Agreement, which we refer to as the 2017 AZ Agreement, under which AstraZeneca may clinically develop and commercialize a development candidate, now known as AZD7970, which is comprised of an mRNA construct for the relaxin protein designed by us and encapsulated in one of our proprietary lipid nanoparticles ("LNP"). We discovered and performed preclinical development activities for AZD7970 prior to the initiation of the strategic alliance with AstraZeneca under the 2017 AZ Agreement.

Under the terms of the 2017 AZ Agreement, we will fund and be responsible for conducting preclinical development activities for AZD7970 through completion of IND-enabling GLP toxicology studies and AstraZeneca will lead pharmacological studies, each in accordance with an agreed upon discovery program plan. During a defined election period that commences as of the effective date of the 2017 AZ Agreement, AstraZeneca may elect to participate in further development and commercialization of AZD7970. Upon such election, AstraZeneca will lead clinical development activities for AZD7970 worldwide and we will be responsible for manufacturing AZD7970, certain regulatory matters and any other development activities that we agree to perform and that are set forth in an agreed upon development plan. AstraZeneca will be responsible for funding Phase 1 clinical development activities (including costs associated with our manufacture of clinical materials in accordance with the development plan, up to a cap above which such costs are shared), and Phase 2 clinical development activities (including costs associated with our manufacture of clinical materials in accordance with the development plan, up to a cap above which such costs are shared) up to a defined dollar threshold. Thereafter, we and AstraZeneca will equally share the costs of Phase 2 clinical development activities in excess of such defined dollar threshold, all Phase 3 clinical development activities and certain other costs of late-stage clinical development activities, unless we elect not to participate in further development and co-commercialization activities and instead receive tiered royalties as described below. If the development candidate is determined to be IND-ready, and AstraZeneca does not timely elect to participate in the clinical development of AZD7970, AstraZeneca is obligated to reimburse us for certain costs we incurred in the manufacture and development of AZD7970, since execution of the 2017 AZ Agreement.

We and AstraZeneca will co-commercialize AZD7970 in the United States in accordance with an agreed upon commercialization plan and budget, and will equally share U.S. profits or losses arising from such commercialization. Notwithstanding, prior to a specified stage of development of AZD7970, we have the right to elect not to participate in the further development and commercialization activities for AZD7970. If we make such election, instead of participating in the U.S. profits and losses share with respect to AZD7970, we are obligated to discuss future financial terms with AstraZeneca. If we are unable to agree on future financial terms within a short, defined period of time, we are entitled to receive tiered royalties at default rates set forth in the 2017 AZ Agreement, ranging from percentages in the mid-single digits to the low 20s on worldwide net sales by AstraZeneca of AZD7970, subject to certain reductions, with an aggregate minimum floor. AstraZeneca has sole and exclusive responsibility for all ex-U.S. commercialization efforts. Unless we have elected not to participate in further development (in which case royalties on ex-U.S. net sales will be at the default rates as described above, unless otherwise agreed by the parties), we are entitled to receive tiered royalties at rates ranging from 10% to 30% on annual ex-U.S. net sales of AZD7970, subject to certain reductions with an aggregate minimum floor. Subject to customary “back-up” supply rights granted to AstraZeneca, we exclusively manufacture (or have manufactured) products for all development and commercialization purposes. Additionally, we and AstraZeneca have agreed to certain defined exclusivity obligations under the 2017 AZ Agreement with respect to the development and commercialization of mRNA medicines for Relaxin.

Unless earlier terminated, our strategic alliance under the 2017 AZ Agreement will continue (i) until the expiration of AstraZeneca’s election period, if it does not elect to participate in the clinical development of AZD7970, (ii) until both parties cease developing and commercializing AZD7970 without the intention to resume, if we have not elected our right not to participate in further development

and commercialization of AZD7970, (iii) on a country-by-country basis, until the end of the applicable royalty term for AZD7970 in such country, if we have elected our right not to participate in further development and commercialization of AZD7970 or (iv) following completion of IND-enabling studies with respect to AZD7970, if we provide AstraZeneca with written notice that we do not reasonably believe that the product is IND-ready.

Either party may terminate the 2017 AZ Agreement upon the other party’s material breach, subject to specified notice and cure provisions. Each party may also terminate the 2017 AZ Agreement in the event the other party challenges the validity or enforceability of such party’s patent rights, subject to certain defined exceptions. AstraZeneca has the right to terminate the 2017 AZ Agreement in full for scientific, technical, regulatory or commercial reasons at any time upon 90 days’ prior written notice to us. We have the right to terminate the 2017 AZ Agreement in certain cases if AstraZeneca has suspended or is no longer proceeding with the development or commercialization of AZD7970 for a period of twelve consecutive months, subject to specified exceptions, including tolling for events outside of AstraZeneca’s control. If AstraZeneca does not timely elect to participate in clinical development of AZD7970, or the Agreement is terminated, AstraZeneca’s rights in AZD7970 will terminate and, to the extent we terminated for AstraZeneca’s breach, patent challenge or cessation of development or AstraZeneca terminated in its discretion, AstraZeneca will grant us reversion licenses and take certain other actions so as to enable us to continue developing and commercializing AZD7970 in the cardiovascular and cardiometabolic fields.

If we continue developing and commercializing AZD7970 following a termination of the 2017 AZ Agreement by AstraZeneca in its discretion, AstraZeneca is entitled to receive a mid-single digit royalty on our worldwide net sales of AZD7970 and a high-single digit percentage of the amounts received by us from a third party in consideration for a license to such third party to exploit AZD7970, in each case until AstraZeneca recovers an amount equal to specified development costs incurred by AstraZeneca under the 2017 AZ Agreement with respect to AZD7970 prior to such termination. Such percentages increase by a low to mid-single digit amount to the extent such termination occurs after such product achieves a specified stage of development.
2013 Agreements with AstraZeneca, amended and restated in 2018

In June 2018, we entered into an Amended and Restated Option Agreement and a related Amended and Restated Services and Collaboration Agreement with AstraZeneca, or the 2018 A&R Agreements, which amended and restated the 2013 AZ Agreements. Under the 2018 A&R Agreements, we granted AstraZeneca certain exclusive rights and licenses to research, develop and commercialize potential therapeutic mRNA medicines directed at certain targets for the treatment of cardiovascular and cardiometabolic diseases and cancer, and agreed to provide related services to AstraZeneca. The activities to be performed by the parties under the 2018 A&R Agreements are limited to defined biological targets in the cardiovascular and cardiometabolic fields and one defined target in the cancer field.

Pursuant to the 2018 A&R Agreements, AstraZeneca is responsible for all research, development and commercialization activities and associated costs, while we provide specified research and manufacturing services during a research and evaluation period, as described below, to further AstraZeneca’s activities conducted pursuant to an agreed upon services plan. During this research and evaluation period, these research services, and manufacturing services in excess of a specified threshold, are provided at AstraZeneca’s expense, and manufacturing services below the specified threshold are provided at no additional expense to AstraZeneca. AstraZeneca may request we provide additional research and manufacturing services, at AstraZeneca’s expense, following the end of the research and evaluation period. Subject to customary “back-up” supply rights granted to AstraZeneca, we exclusively manufacture (or have manufactured) mRNA for all research, development and commercialization purposes under the 2018 A&R Agreements until, on a product-by-product basis, the expiration of the time period for which we are entitled to receive earn-out payments with respect to such product pursuant to the 2018 A&R Agreements.

As of the effective date of the 2013 AZ Agreements, and as further reflected in the 2018 A&R Agreements, AstraZeneca acquired forty options that it may exercise to obtain exclusive rights to clinically develop and commercialize identified development candidates (and related back-up candidates) directed to specified targets that arise during the research and evaluation period. During the research and evaluation period for research candidates, AstraZeneca may elect to designate a limited number of research candidates as development candidates in order to continue preclinical development on such development candidates (and related back-up candidates). From such pool of development candidates designated by AstraZeneca, during a specified option exercise period, AstraZeneca may then exercise one of its options to obtain exclusive rights to clinically develop and commercialize an identified development candidate (and related back-up candidates) in certain fields. If AstraZeneca does not exercise one of its options to acquire exclusive rights to clinically develop and commercialize a particular development candidate during the defined option exercise period for such development candidate, AstraZeneca’s rights to exercise an option and other rights granted under the 2018 A&R Agreements with respect to such development candidate (and related back-up candidates) will terminate, all rights to exploit such development candidate (and related back-up candidates) will be returned to us and all data and results generated by AstraZeneca with respect to such development

candidate (and related back-up candidates) will be either assigned or licensed to us. Upon the earlier of termination of the 2018 A&R Agreements for any reason and a specified anniversary of the effective date of the 2013 AZ Agreements, all unexercised options, and the right to exercise any and all options if not previously exercised by AstraZeneca, will automatically terminate.

On a target-by-target basis, we and AstraZeneca have agreed to certain defined exclusivity obligations under the 2018 A&R Agreements with respect to the research, development and commercialization of mRNA medicines for such target in certain fields. In addition, we and AstraZeneca have agreed to certain defined exclusivity obligations with respect to the research, development and commercialization of mRNA medicines coding for the same polypeptide as any development candidate being developed under the 2018 A&R Agreements.

Unless earlier terminated, the 2018 A&R Agreements will continue until the expiration of AstraZeneca’s earn-out and contingent option exercise payment obligations for optioned product candidates. Either party may terminate the 2018 A&R Agreements upon the other party’s material breach, either in its entirety or in certain circumstances, with respect to relevant candidates, subject to a defined materiality threshold and specified notice and cure provisions. If AstraZeneca has the right to terminate the 2018 A&R Agreements for our material breach, then AstraZeneca may elect, in lieu of terminating the 2018 A&R Agreements, in their entirety or with respect to such candidates, to have the 2018 A&R Agreements remain in effect, subject to reductions in certain payments we are eligible to receive and certain adjustments to AstraZeneca’s obligations under the 2018 A&R Agreements. AstraZeneca may terminate the 2018 A&R Agreements in full, without cause, upon 90 days’ prior notice to us.

Accounting Treatment

For periods prior to January 1, 2019, we applied the provisions of ASC 605 in accounting for these arrangements, except for the 2017 AZ Agreement which was accounted for under ASC 808. In August 2016, AstraZeneca exercised a product option available pursuant to the 2013 AZ Agreements to obtain exclusive rights to clinically develop and commercialize the VEGF-A product (AZD8601). This option exercise is referred to as the 2016 VEGF Exercise. Consistent with our conclusions under ASC 605 and pursuant to ASC 606, we determined that the 2016 VEGF Exercise and the 2017 AZ Agreement should be accounted for as separate transactions as the agreements are not interrelated or interdependent. Conversely, the 2013 Agreements, as amended by the 2018 A&R Agreements, and the 2016 AZ Agreement, were combined for accounting purposes and treated as a single agreement, as these agreements were negotiated in contemplation of each other. As of the date of our initial application of ASC 606, we applied the practical expedient to include the aggregate effect of all modifications to the arrangement that occurred before January 1, 2019 with respect to (i) identification of the satisfied and unsatisfied performance obligations, (ii) determination of the transaction price and (iii) allocation of the transaction price to the satisfied and unsatisfied performance obligations. Therefore, we aggregated effects of all the modifications prior to January 1, 2019 to the 2013 Agreements, including the effects of the 2018 A&R Agreements, and the 2016 AZ Agreement were combined into one transaction for accounting purposes. We will refer to this combined transaction as the Combined 2018 AZ Agreements. We determined that all aspects of Combined 2018 AZ Agreements and the 2016 VEGF Exercise represent a transaction with a customer and therefore is accounted for in accordance with ASC 606 as of the date of the initial application.

Combined 2018 AZ Agreements

We identified the following performance obligations in the Combined 2018 AZ Agreements: (i) a combined performance obligation that includes a research license, research and development pool services, and manufacturing obligations related to the 2013 AZ Agreements, as amended by the 2018 A&R Agreements, collectively referred to as the Combined 2018 AZ Agreement Performance Obligation, (ii) preclinical development services for IL12, (iii) preclinical development services for an oncology development target, (iv) a combined performance obligation for a development and commercialization license and manufacturing obligations for IL12, and (v) a material right to receive development and commercialization rights and manufacturing services for an oncology development target.

We concluded that the research license is not distinct from the research and development pool services or the manufacturing obligations related to the 2018 A&R Agreements, as AstraZeneca cannot fully exploit the value of the research license without receipt of such services and supply. Our services and supply involve specialized expertise, particularly as it relates to mRNA technology that is not available in the marketplace. Any supply requested by AstraZeneca in excess of the minimum quantities specified in the agreement are considered customer options and treated as separate contracts for accounting purposes. Further, we concluded that AstraZeneca cannot exploit the value of the development and commercialization license for IL12 without receipt of supply as the development and commercialization license does not convey to AstraZeneca the right to manufacture and therefore combined the development and commercialization license and the manufacturing obligations for IL12 into one performance obligation.


As of January 1, 2019, the date of initial adoption of ASC 606, the total transaction price was determined to be $400.0 million comprised of the $240.0 million in upfront payments pertaining to the 2013 AZ Agreements and $160.0 million of variable consideration comprised of $40.0 million of estimated reimbursement for IL12 manufacturing obligations and $120.0 million of milestone payments ($60.0 million toxicity milestone and $60.0 million competition milestone), received prior to the adoption date of ASC 606. We utilize the most likely amount method to determine the amount of reimbursement for IL12 manufacturing obligations to be received. We determined that any sales-based royalties related to IL12 will be recognized when the related sales occur as they were determined to relate predominately to the license granted and therefore have been excluded from the transaction price. In addition, we are eligible to receive future milestones and royalties on future commercial sales for optioned product candidates under the 2018 A&R Agreements and future royalties under the 2016 Agreement; however, these amounts are not considered variable consideration under the Combined 2018 Agreements as we are only eligible to receive such amounts if AstraZeneca exercises its options (including certain options that are deemed to be material rights). We have concluded that the exercise of an optioned product candidate represents a separate transaction under ASC 606. We will re-evaluate the transaction price at the end of each reporting period. There was a $0.3 million increase to the transaction price resulting from a change in estimate of the variable consideration during the three months ended March 31, 2019.

The transaction price was allocated to the performance obligations based on the relative estimated standalone selling prices of each performance obligation. We developed the estimated standalone selling price for the licenses included in the Combined 2018 AZ Agreement Performance Obligation and the combined performance obligation for a development and commercialization license and manufacturing obligations for IL12 primarily based on the probability-weighted present value of expected future cash flows associated with each license related to each specific program. In developing such estimate, we also considered applicable market conditions and relevant entity-specific factors, including those factors contemplated in negotiating the agreement, probability of success and the time needed to commercialize a product candidate pursuant to the associated license. We developed the estimated standalone selling price for the services and/or manufacturing and supply included in each of the performance obligation, as applicable, primarily based on the nature of the services to be performed and/or goods to be manufactured and estimates of the associated costs, adjusted for a reasonable profit margin that would be expected to be realized under similar contracts. The estimated standalone selling price of the material right to receive development and commercialization rights and manufacturing services for an oncology development target was developed by estimating the amount of discount that AstraZeneca would receive when exercising the option and adjusting such amount by the likelihood that the option will be exercised.

The transaction price allocated to each performance obligation was as follows: (i) $292.4 million to the Combined 2018 AZ Agreement Performance Obligation, (ii) $8.1 million to the preclinical development services for IL12 performance obligation, (iii) $8.1 million to the preclinical development services for an oncology development target performance obligation, (iv) $89.8 million to the combined performance obligation for a development and commercialization license and manufacturing obligations for IL12, and (v) $1.6 million to the material right to receive development and commercialization rights and manufacturing services for an oncology development target. As part of the allocation of the transaction price to each of the performance obligations, we concluded that the $60.0 million toxicology milestone and the estimated reimbursement for IL12 manufacturing costs can be allocated entirely to specific performance obligations because the variable payment relates specifically to our effort to satisfy the performance obligation and such allocation is consistent with the allocation objectives of ASC 606.

We measure proportional performance over time using an input method based on cost incurred relative to the total estimated costs for the Combined 2018 AZ Agreement Performance Obligation and the preclinical development services for IL12 and the other oncology target performance obligations. We recognize revenue related to the amounts allocated to the combined performance obligation for a development and commercialization license and manufacturing obligations for IL12 based on the point in time upon which control of supply is transferred to AstraZeneca for each delivery of the associated supply.

We recognize revenue for the Combined 2018 AZ Agreement Performance Obligation, on a quarterly basis, by determining the proportion of effort incurred as a percentage of total effort we expect to expend. This ratio is applied to the transaction price allocated to this combined performance obligation. We also estimate the development plan, including expected demand from AstraZeneca, and the associated costs for this combined performance obligation, as we will satisfy this combined performance obligation as the manufacturing services are performed. Management has applied significant judgment in the process of developing our budget estimates. Any changes to these estimates will be recognized in the period in which they change as a cumulative catch up.

For the three months ended March 31, 2019 and 2018, we recognized collaboration revenue of $0.8 million and $7.4 million, respectively, from the Combined 2018 AZ Agreements. The revenue recognized for the three months ended March 31, 2019 includes the amortization of deferred revenue due to the satisfaction of our performance obligation during the period. As of March 31, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligations that are unsatisfied is $112.5 million. $102.8 million is expected to be recognized as revenue through December 31, 2027 and $9.7 million is expected to be recognized as

revenue at the earlier of expiration or modification of the Combined 2018 AZ Agreement. We had deferred revenue of $75.5 million and $115.6 million as of March 31, 2019 and December 31, 2018, respectively, from the Combined 2018 AZ Agreements, which is classified as current or non-current in the condensed consolidated balance sheets based on the period the services are expected to be performed or control of the supply is expected to be transferred.

2016 VEGF Exercise

We concluded that the 2016 VEGF Exercise should be treated as a separate transaction for accounting purposes. We identified one performance obligation in this arrangement which is comprised of the exclusive license to develop and commercialize VEGF and the manufacturing of clinical supply. We concluded that the VEGF license is not distinct from the manufacturing obligations because AstraZeneca cannot fully exploit the value of the license without receipt of such supply. This is due to limitations inherent in the licenses conveyed wherein AstraZeneca does not have the contractual right to manufacture during the term of the agreement.

As of January 1, 2019, the date of initial adoption of ASC 606, the total transaction price was determined to be $55.1 million comprised of the $40.0 million in fixed payments pertaining to a $10.0 million option exercise fee and a $30.0 million milestone achieved prior to the adoption of ASC 606 and $15.1 million of variable consideration related to the estimated reimbursement for clinical supply. We are eligible to receive future milestones and royalties on future commercial sales under this arrangement. We utilize the most likely amount method to estimate any development and regulatory milestone payments to be received and the amount of estimated reimbursement for clinical supply. As of January 1, 2019, there were no milestones that had not been achieved included in the transaction price. We considered the stage of development and the risks associated with the remaining development required to achieve each milestone, as well as whether the achievement of the milestone is outside of our or AstraZeneca’s control. The outstanding milestone payments were fully constrained, as a result of the uncertainty whether any of the milestones would be achieved. We determined that any commercial milestones and sales-based royalties will be recognized when the related sales occur as they were determined to relate predominantly to the license granted and therefore have also been excluded from the transaction price. We will re-evaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur. When a milestone payment is included in the transaction price in the future, it will be recognized as revenue based on the relative completion of the underlying performance obligation. There were no changes to the transaction price during the three months ended March 31, 2019.

We recognize revenue related to the amount of the transaction price allocated to the VEGF Exercise performance obligation based on the point in time upon which control of supply is transferred to AstraZeneca for each delivery of the associated supply.

For the three months ended March 31, 2019 and 2018, we did not recognize any collaboration revenue from the 2016 VEGF Exercise. As of March 31, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligation that is unsatisfied is $51.0 million, which is expected to be recognized as revenue through December 31, 2023. We had deferred revenue of $37.1 million and $41.2 million as of March 31, 2019 and December 31, 2018, respectively, from the 2016 VEGF Exercise, which is classified as current or non-current in the condensed consolidated balance sheets based on the period the control of the supply is expected to be transferred.

2017 AZ Agreement

We concluded the 2017 AZ Agreement is under the scope of ASC 808 as we and AstraZeneca are both active participants in the development, manufacturing and commercialization activities and are exposed to significant risks and rewards that are dependent on commercial success of the activities of the arrangement. Additionally, we determined the development, manufacturing and commercialization activities are not deliverables under ASC 606. As a result, the activities conducted pursuant to the development, manufacturing and commercialization activities are accounted for as a component of the related expense in the period incurred. We considered the guidance in ASC 606 by analogy in determining the appropriate treatment for the transactions between us and AstraZeneca and concluded that reimbursement for transactions in which we are considered to be principal because we control a promised good or service before transferring that good or service to the customer, are accounted for as gross revenue.

We did not recognize any revenue from the 2017 AZ Agreement for the three months ended March 31, 2019 and 2018, respectively.


Merck – Strategic Alliances in Infectious Diseases and Cancer Vaccines

2015 Strategic Alliance with Merck – Infectious Disease

In January 2015, we entered into a Master Collaboration and License Agreement with Merck, which was amended in January 2016, June 2016, and May 2019, and which we refer to, as amended, as the 2015 Merck Agreement. Pursuant to the 2015 Merck Agreement, we and Merck have agreed to research, develop, and commercialize potential mRNA medicines for the prevention of infections by RSV. Pursuant to the 2015 Merck Agreement, Merck is primarily responsible for research, development, and commercialization activities and associated costs of such research and commercialization. We are responsible for designing and manufacturing all mRNA constructs for preclinical and Phase 1 and Phase 2 clinical development purposes, and Merck pays us for such manufacture, and we are responsible for certain costs associated with the conduct of a Phase 1 clinical trial for a RSV vaccine product candidate (mRNA-1172). Responsibility for manufacturing mRNA constructs for late stage clinical development and commercialization purposes is to be determined.

The 2015 Merck Agreement includes a three-year period, expected to end on January 12, 2022, during which Merck may continue to preclinically and clinically develop RSV vaccine product candidates that arose during an initial four-year research period which terminated in January 2019. Merck may, prior to the end of this three-year period, elect to exclusively develop and commercialize up to five RSV vaccine product candidates.

We and Merck have agreed to certain defined exclusivity obligations during the term of the 2015 Merck Agreement with respect to potential mRNA medicines against RSV infection. As part of the May 2019 amendment of the 2015 Merck Agreement, these exclusivity obligations do not restrict Moderna from researching, developing, and commercializing a potential mRNA medicine for the prevention of a specific set of respiratory infections, including RSV, for the pediatric population.

Under the terms of the 2015 Merck Agreement, we received a $50.0 million upfront payment. We are eligible to receive, on a product-by-product basis, up to $300.0 million in aggregate milestone payments upon the achievement of certain development, regulatory, and commercial milestone events. To date, we have received from Merck a clinical milestone payment of $5.0 million with respect to the initiation of a Phase 1 clinical trial for a Merck RSV vaccine product candidate. In addition, under the terms of the 2015 Merck Agreement, we are eligible to receive an additional milestone payment unless Merck elects not to continue with further clinical development of mRNA-1172. On a product-by-product basis, we are also entitled to receive royalties on Merck’s net sales of products at rates ranging from the mid-single digits to low teens, subject to certain reductions, with an aggregate minimum floor. Additionally, concurrent with entering into the 2015 Merck Agreement in 2015, Merck made a $50.0 million equity investment in us, and concurrent with amending the 2015 Merck Agreement in January 2016, we received an upfront payment of $10.0 million from Merck.

Unless earlier terminated, the 2015 Merck Agreement will continue on a product-by-product and country-by-country basis for so long as royalties are payable by Merck on a given product in a given country. Either party may terminate the 2015 Merck Agreement upon the other party’s material breach, either in its entirety or with respect to a particular program, product candidate, product or country, subject to specified notice and cure provisions. Merck may terminate the 2015 Merck Agreement in full or with respect to a particular product candidate or product upon certain advance notice to us for any reason, or earlier if Merck determines the alliance or product is no longer commercially practicable. If Merck has the right to terminate the 2015 Merck Agreement, in its entirety or with respect to a program, product candidate or product, for our material breach, then Merck may elect, in lieu of terminating the 2015 Merck Agreement, to have the 2015 Merck Agreement remain in effect, subject to reductions in certain payments we are eligible to receive with respect to the terminable rights. Upon a termination of the 2015 Merck Agreement with respect to a program, all licenses and other rights granted to Merck with respect to such program will terminate and the continued development and commercialization of product candidates and products will revert to us. If the 2015 Merck Agreement is terminated with respect to a given product candidate or product, all licenses and other rights granted to Merck with respect to such product candidate or product will terminate and, to the extent we terminated for Merck’s breach, Merck will grant us licenses under select Merck technology for our continued development and commercialization of such product candidate or product. As a part of the May 2019 amendment of the 2015 Merck Agreement, we and Merck agreed to and conclude the collaboration as it relates to development of potential mRNA medicines for other viruses, including mRNA-1278 for the prevention of VZV infection.

Accounting Treatment

For periods prior to January 1, 2019, we applied the provisions of ASC 605 in accounting for this arrangement. As of the date of our initial application of ASC 606, we applied the practical expedient to include the aggregate effect of all modifications to the arrangement that occurred before January 1, 2019 with respect to (i) identification of the satisfied and unsatisfied performance obligations, (ii) determination of the transaction price and (iii) allocation of the transaction price to the satisfied and unsatisfied

performance obligations. Additionally, we determined that all aspects of amended 2015 Merck Agreement represent a transaction with a customer and therefore the amended 2015 Merck Agreement is accounted for in accordance with ASC 606 as of the date of the initial application. As of the date of initial adoption of ASC 606, the four-year research period was substantially complete and we concluded there were no unsatisfied performance obligations pertaining to the amended 2015 Merck Agreement. Additionally, we concluded the following customer options are marketing offers as such options did not provide any discounts or other rights that would be considered a material right in the arrangement: (i) research services during the three-year period following the initial four-year research period during which Merck may continue to preclinically and clinically develop product candidates and (ii) clinical mRNA supply for Phase 1 and Phase 2 and/or non-cGMP mRNA supply beyond the initial four-year research period. Therefore, such options will be accounted for as a separate contract upon the customer’s election. After completion of the initial four-year research period and as a part of the May 2019 amendment of the 2015 Merck Agreement, Merck elected to establish a new RSV vaccine product candidate and to conduct a Phase 1 clinical trial. We and Merck agreed to focus the collaboration activities on RSV and discontinue the collaboration as it relates to the development of development candidates for other viruses.

As of the date of initial application of ASC 606, the total transaction price of $65.0 million comprised of the $60.0 million in aggregate upfront payments, including $50.0 million related to research and development funding plus a $10.0 million funding from the 2016 amendment of the 2015 Merck Agreement, and a $5.0 million payment pertaining to achievement of a development milestone during the year ended December 31, 2017, which had been allocated entirely to the satisfied performance obligation and recognized in full. We utilize the most likely amount method to estimate any development and regulatory milestone payments to be received. As of January 1, 2019, there were no milestones that had not been achieved included in the transaction price. We considered the stage of development and the risks associated with the remaining development required to achieve each milestone, as well as whether the achievement of the milestone is outside of our or Merck’s control. The outstanding milestone payments were fully constrained, as a result of the uncertainty whether any of the milestones would be achieved. We determined that any commercial milestones and sales-based royalties will be recognized when the related sales occur as they were determined to relate predominantly to the license granted and therefore have also been excluded from the transaction price. We will re-evaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur. When a milestone payment is included in the transaction price in the future, it will be recognized as revenue based on the relative completion of the underlying performance obligation. There were no changes to the transaction price during the three months ended March 31, 2019.

We had no deferred revenue as of March 31, 2019 or December 31, 2018 from the amended Merck 2015 Agreement as all performance obligations under the amended 2015 Merck Agreement were completed. For the three months ended March 31, 2018, we recognized collaboration revenue of $2.0 million from the amended 2015 Merck Agreement.

Additionally, we recognized collaboration revenue of $0.5 million for the three months ended March 31, 2019, pursuant to separate agreements with Merck related to the exercise of customer options to purchase clinical mRNA supply to further develop a product candidate after the initial four-year research period. Clinical mRNA supply is recognized as collaboration revenue at a point in time upon which control of supply is transferred to Merck for each delivery of the associated supply.

We are currently evaluating the accounting related to the May 2019 amendment of the 2015 Merck Agreement.

2016 Cancer Vaccine Strategic Alliance—Personalized mRNA Cancer Vaccines

In June 2016, we entered into a personalized mRNA cancer vaccines (PCV) Collaboration and License Agreement with Merck Sharp & Dohme Corp., or Merck, which we refer to as the PCV Agreement, to develop and commercialize PCVs for individual patients using our mRNA vaccine and formulation technology. Under the strategic alliance, we identify genetic mutations present in a particular patient’s tumor cells, synthesize mRNA for these mutations, encapsulate the mRNA in one of our proprietary LNPs and administer to each patient a unique mRNA cancer vaccine designed to specifically activate the patient’s immune system against her or his own cancer cells.

Pursuant to the PCV Agreement, we are responsible for designing and researching PCVs, providing manufacturing capacity and manufacturing PCVs, and conducting Phase 1 and Phase 2 clinical trials for PCVs, alone and in combination with KEYTRUDA (pembrolizumab), Merck’s anti-PD-1 therapy, all in accordance with an agreed upon development plan and budget and under the oversight of a committee comprised of equal representatives of each party. The parties have entered into a clinical quality agreement with respect to Moderna’s manufacture and supply activities. We received an upfront payment of $200.0 million from Merck. In November 2017, we and Merck announced the achievement of a key milestone for the first-in-human dosing of a PCV (mRNA-4157) as a part of the alliance. The Phase 1 open-label, dose escalation, multicenter clinical trial in the United States (KEYNOTE-603) is

designed to assess the safety, tolerability and immunogenicity of mRNA-4157 alone in subjects with resected solid tumors and in combination with KEYTRUDA, in subjects with unresectable solid tumors.

Until the expiration of a defined period of time following our completion of Phase 1 and Phase 2 clinical trials for PCVs under the PCV Agreement and delivery of an associated data package to Merck, Merck has the right to elect to participate in future development and commercialization of PCVs by making a $250.0 million participation payment to us. If Merck exercises its election and pays the participation payment, then the parties will equally co-fund subsequent clinical development of PCVs, with Merck primarily responsible for conducting clinical development activities under a jointly agreed development plan and budget. Each party may also conduct additional clinical trials for PCVs that are not included in the jointly agreed development plan and budget, in which case the non-conducting party will reimburse the conducting party for half of the total costs for such trials, plus interest, from its share of future profits resulting from sales of such PCVs, if any. Merck will lead worldwide commercialization of PCVs, subject to Moderna’s option to co-promote PCVs in the United States, and the parties will equally share the profits or losses arising from worldwide commercialization. Until a PCV becomes profitable, we may elect to defer payment of our share of the commercialization and related manufacturing costs and instead reimburse Merck for such costs, plus interest, from our share of future profits resulting from sales of such PCV, if any. Subject to customary “back-up” supply rights granted to Merck, we will manufacture (or have manufactured) PCVs for preclinical and clinical purposes. Manufacture of PCVs for commercial purposes will be determined by the parties in accordance with the terms of the PCV Agreement. Under the PCV Agreement, we grant certain licenses to Merck to perform its collaboration activities.

If Merck does not exercise its right to participate in future development and commercialization of PCVs, then Moderna will retain the exclusive right to develop and commercialize PCVs developed during the strategic alliance, subject to Merck’s rights to receive a percentage in the high teens to the low 20s, subject to reductions of our net profits on sales of such PCVs. During a limited period following such non-exercise, Merck has the right to perform clinical studies of such PCVs in combination with KEYTRUDA, for which we agree to use reasonable efforts to supply such PCVs. During such limited period, we also have the right to perform clinical studies of PCVs in combination with KEYTRUDA, for which Merck agrees to use reasonable efforts to supply KEYTRUDA. In addition, following its non-exercise, Merck is also entitled to receive a percentage in the high teens to the low 20s, subject to reductions, of our net profits on sales of certain PCVs first developed by us following such non-exercise and reaching a specified development stage within a defined period of time.

We and Merck have agreed to certain defined, limited exclusivity obligations with respect to the development and commercialization of PCVs.

2018 Expansion of the Cancer Vaccine Strategic Alliance—Shared Neoepitope Cancer Vaccines

In April 2018, we and Merck agreed to expand our cancer vaccine strategic alliance to include the development and commercialization of our KRAS vaccine development candidate, mRNA-5671, and potentially other shared neoantigen mRNA cancer vaccines (SAVs). We preclinically developed mRNA-5671 prior to its inclusion in the cancer vaccine strategic alliance and it is comprised of a novel mRNA construct designed by us and encapsulated in one of our proprietary LNPs. The PCV Agreement was amended and restated to include the new SAV strategic alliance (PCV/SAV Agreement).

We have granted Merck certain licenses and we and Merck have agreed to certain exclusivity obligations with respect to SAVs and particular SAV programs, which obligations are subject to termination or expiration upon certain triggering events.
Under the PCV/SAV Agreement, Merck will be responsible for conducting Phase 1 and Phase 2 clinical trials for mRNA-5671 and for all costs associated with such activities, in accordance with a jointly agreed development plan and budget, and we will be responsible for manufacturing and supplying all mRNA-5671 required to conduct such trials and for all costs and expenses associated with such manufacture and supply. Under the PCV/SAV Agreement, our budgeted commitment for PCVs increased to $243.0 million. Until the expiration of a defined period of time following the completion of Phase 1 and Phase 2 clinical trials for mRNA-5671 under the PCV/SAV Agreement and our delivery of an associated data package to Merck, Merck has the right to elect to participate in future development and commercialization of mRNA-5671 by making a participation payment to us. If Merck exercises its participation rights, then the parties will equally co-fund subsequent clinical development of mRNA-5671, with Merck primarily responsible for conducting clinical development activities under a jointly agreed development plan and budget. If Merck declines to participate in future development and commercialization activities following the initial Phase 1 and Phase 2 clinical trials for mRNA-5671, then we will retain the rights to develop and commercialize mRNA-5671. If Merck elects to participate in future development and commercialization of mRNA-5671, Merck may also conduct additional clinical trials for mRNA-5671 that are not included in the jointly agreed development plan and budget, in which case we will reimburse Merck for half of the total development costs for such clinical trials, plus interest, from our share of future profits resulting from sales of mRNA-5671, if any. If Merck does conduct additional clinical trials for mRNA-5671, we will be responsible for manufacturing and supplying all mRNA-5671 required to conduct

such trials. Merck will lead worldwide commercialization of mRNA-5671, subject to our option to co-promote mRNA-5671 in the United States, and the parties will equally share the operating profits or losses arising from worldwide commercialization. Until mRNA-5671 becomes profitable, we may elect to defer payment of our share of the commercialization and related manufacturing costs and instead reimburse Merck for such costs, plus interest, from our share of future profits resulting from sales of mRNA-5671, if any. Subject to “back-up” supply rights granted to Merck, we will manufacture (or have manufactured) mRNA-5671 and other SAVs for preclinical and clinical purposes. After Merck exercises its right to participate in future development and commercialization of mRNA-5671 and other SAVs, we will grant the applicable development and commercialization licenses and the parties are obligated to discuss responsibility for future manufacturing, giving consideration to applicable criteria.

Pursuant to the PCV/SAV Agreement, for a defined period of time, either party may propose that the parties conduct additional programs for the research and development of SAVs directed to different shared neoantigens. If the parties agree to conduct any such programs, then we will be responsible for conducting and funding preclinical discovery and research activities for such SAVs, and otherwise the programs would be conducted on substantially the same terms as mRNA-5671 program. If we or Merck propose a new SAV program and the other party does not agree to conduct such program, then the PCV/SAV Agreement includes provisions allowing the proposing party to proceed with such development, at the proposing party’s expense. If Merck is the proposing party, we will be responsible for manufacturing and supplying material for such program at Merck’s expense. In such case, the non-proposing party will have the right to opt-in to such SAV program any time before the proposing party commits to performing Good Laboratory Practice (GLP)-toxicity studies. Until the expiration of a defined period of time following our completion of Phase 1 and Phase 2 clinical trials for any SAV program mutually agreed by the parties under the PCV/SAV Agreement and our delivery of an associated data package to Merck, Merck has the right to elect to participate in future development and commercialization of such SAV by making a participation payment to us.

Unless earlier terminated, the PCV/SAV Agreement will continue on a program-by-program basis until Merck terminates its participation in such program. Following any such termination, we will retain the exclusive right to develop and commercialize PCVs or SAVs developed as a part of such program, subject to restrictions and certain limited rights retained by Merck.

In connection with the amendment of the PCV Agreement to include the development and commercialization of mRNA-5671 and potentially other SAVs, Merck made a contemporaneous equity investment in our Series H redeemable convertible preferred stock, resulting in gross proceeds of $125.0 million, of which $13.0 million is determined to be a premium and recorded to deferred revenue.

Accounting Treatment

We determined that the PCV/SAV Agreement should be accounted for separately from the amended 2015 Merck Agreement, as the agreements were not negotiated in contemplation of one another and the elements within each of the agreements are not closely interrelated or interdependent on each other.

For periods prior to January 1, 2019, we applied the provisions of ASC 605 in accounting for this arrangement. As of the date of our initial application of ASC 606, we applied the practical expedient to include the aggregate effect of all modifications to the arrangement that occurred before January 1, 2019 with respect to: (i) identification of the satisfied and unsatisfied performance obligations, (ii) determination of the transaction price and (iii) allocation of the transaction price to the satisfied and unsatisfied performance obligations. Additionally, we determined that all aspects of the PCV/SAV Agreement represent a transaction with a customer and therefore the PCV/SAV Agreement is accounted for in accordance with ASC 606 as of the date of the initial application. Further, the equity investment in our Series H redeemable convertible preferred stock was considered together with the PCV/SAV Agreement as the transactions were executed contemporaneously in contemplation of one another. Further, the purchase price paid by Merck with respect to the investment in the Series H redeemable convertible preferred stock was not representative of fair value on the date of such purchase. As such, the incremental proceeds received in excess of the fair value of the underlying stock related to the equity investment were included in the transaction price related to the PCV/SAV Agreement and the shares of Series H redeemable convertible preferred stock purchased by Merck were recorded at their respective fair value on the date of issuance.

We identified the following performance obligations in the PCV/SAV Agreement: (i) a research license and research and development services, including manufacturing and supply of PCVs, during the proof of concept (POC) term for the PCV program, referred to as the PCV Performance Obligation, and (ii) research license and manufacturing and supply of mRNA-5671 during the POC term for the KRAS program, referred to as the KRAS Performance Obligation. We concluded that the research license is not distinct from the research and development services, including manufacturing and supply of PCVs, during the POC term for the PCV program, as Merck cannot fully exploit the value of the license without receipt of such services and supply. Our services and supply involve specialized expertise, particularly as it relates to mRNA technology that is not available in the marketplace. Therefore, the research license has been combined with the research and development services, including manufacturing and supply

of PCVs, during the POC term for the PCV program, into a single performance obligation. Similarly, we concluded that the research license is not distinct from the manufacturing and supply of mRNA-5671 during the POC term for the KRAS program, as Merck cannot fully exploit the value of the license without receipt of such supply which must be provided by us. This is due to limitations inherent in the licenses conveyed wherein Merck does not have the contractual right to manufacture during the POC term. Therefore, the research license has been combined with the manufacturing and supply of mRNA-5671, during the POC term for the KRAS program, into a single performance obligation. Conversely, we concluded that the PCV Performance Obligation and the KRAS Performance Obligation are distinct from each other because Merck can fully exploit the value of each program for its intended purpose without the promises associated with the other program. Additionally, we concluded the following customer options are marketing offers as such options did not provide any discounts or other rights that would be considered a material right in the arrangement: (i) Merck participation election license related to future joint development and commercialization on a program-by-program basis, (ii) manufacturing and supply in support of certain SAV programs and/or the PCV program upon Merck election to not participate in future development and commercialization of that program and (iii) research and development services associated with certain SAV programs. Therefore, such options will be accounted for as a separate contract upon the customer’s election.

As of January 1, 2019, the date of initial application of ASC 606, the total transaction price was determined to be $213.0 million comprised of the $200.0 million upfront payment pertaining to the PCV Agreement and the premium associated with the contemporaneous sale of Series H redeemable convertible preferred stock of $13.0 million. We determined there are no components of variable consideration that should be included in the transaction price as of the date of initial application, as additional consideration to which we could be entitled is subject to Merck’s election to exercise a customer option that was deemed to be a marketing offer. We will re-evaluate the transaction price at the end of each reporting period. There were no changes to the transaction price during the three months ended March 31, 2019.

The transaction price was allocated to the performance obligations based on the relative estimated standalone selling price of each performance obligation. We developed the estimated standalone selling price for the license included in each of the PCV Performance Obligation and the KRAS Performance Obligation primarily based on the probability-weighted present value of expected future cash flows associated with each license related to each specific program. In developing such estimate, we also considered applicable market conditions and relevant entity-specific factors, including those factors contemplated in negotiating the agreement, probability of success and the time needed to commercialize a product candidate pursuant to the associated license. We developed the estimated standalone selling price for the services and/or manufacturing and supply included in each of the PCV Performance Obligation and the KRAS Performance Obligation, as applicable, primarily based on the nature of the services to be performed and/or goods to be manufactured and estimates of the associated cost, adjusted for a reasonable profit margin that would be expected to be realized under similar contracts.

The transaction price allocated to each performance obligation was as follows: (i) $206.3 million to the PCV Performance Obligation and (ii) $6.7 million allocated to the KRAS Performance Obligation. We will recognize revenue related to amounts allocated to the PCV Performance Obligation over time as the underlying services are performed using a proportional performance model. We measure proportional performance using an input method based on the costs incurred relative to the total estimated costs of research and development efforts. We recognize revenue related to the amounts allocated to the KRAS Performance Obligation based on the point in time upon which control of supply is transferred to Merck for each delivery of the associated supply.

For the three months ended March 31, 2019 and 2018, we recognized collaboration revenue of $10.2 million and $14.0 million, respectively, in the condensed consolidated statements of operations, from the Merck PCV/SAV Agreement. The revenue recognized during the three months ended March 31, 2019 includes $10.2 million related to the amortization of deferred revenue due to the satisfaction of our performance during the period. As of March 31, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligations that are unsatisfied is $115.0 million, which is expected to be recognized as revenue through December 31, 2021. We had deferred revenue of $115.0 million and $111.3 million, as of March 31, 2019 and December 31, 2018, respectively, from the Merck PCV/SAV Agreement, which is classified as current or non-current in the condensed consolidated balance sheets based on the period the services are expected to be performed or control of the supply is expected to be transferred.

Vertex – 2016 Strategic Alliance in Cystic Fibrosis

In July 2016, we entered into a Strategic Collaboration and License Agreement, with Vertex Pharmaceuticals Incorporated, and Vertex Pharmaceuticals (Europe) Limited, together, Vertex, which we refer to as the Vertex Agreement. The Vertex Agreement is aimed at the discovery and development of potential mRNA medicines for the treatment of cystic fibrosis (CF) by enabling cells in the lungs of people with CF to produce functional CFTR proteins.


Pursuant to the Vertex Agreement, we lead discovery efforts during a three-year research period, leveraging our Platform technology and mRNA delivery expertise along with Vertex’s scientific experience in CF biology and the functional understanding of CFTR. Vertex is responsible for conducting development and commercialization activities for candidates and products that arise from the strategic alliance, including the costs associated with such activities. Subject to customary “back-up” supply rights granted to Vertex, we exclusively manufacture (or have manufactured) mRNA for preclinical, clinical and commercialization purposes. The parties established a joint steering committee to oversee and coordinate activities under the Vertex Agreement. We and Vertex have granted each other certain licenses under the Vertex Agreement.

Under the terms of the Vertex Agreement, we received a $20.0 million upfront payment from Vertex. Vertex has the right to extend the initial three-year research period by one additional year by making an additional payment to us. We are eligible to receive up to $55.0 million in payments for achievement of development milestones, up to $220.0 million in payments for achievement of regulatory milestones and potentially could receive an additional $3.0 million milestone payment for achievement of a regulatory milestone for second and each subsequent product under the Vertex Agreement. Vertex will also pay us tiered royalties at rates ranging from the low- to high-teens on worldwide net sales of products arising from the strategic alliance, subject to certain reductions, with an aggregate minimum floor. In connection with the strategic alliance, Vertex also made a $20.0 million equity investment in our Series F redeemable convertible preferred stock. During the term of the Vertex Agreement, we and Vertex have agreed to certain defined exclusivity obligations under the Vertex Agreement with respect to the development and commercialization of certain mRNA medicines.

Unless earlier terminated, the Vertex Agreement will continue until the expiration of all royalty terms. Vertex may terminate the Vertex Agreement for convenience upon 90 days’ prior written notice, except if termination relates to a product in a country where Vertex has received marketing approval, which, in such case, Vertex must provide 180 days’ prior written notice. Either party may terminate the Vertex Agreement upon the other party’s material breach, subject to specified notice and cure provisions. Each party may also terminate the Vertex Agreement in the event that the other party challenges the validity or enforceability of such party’s patent rights, subject to certain exceptions, or if the other party becomes insolvent.

Accounting Treatment

For periods prior to January 1, 2019, we applied the provisions of ASC 605 in accounting for this arrangement. As of the date of the initial application of ASC 606, we determined that all aspects of the arrangement with Vertex represent a transaction with a customer and therefore should be accounted for in accordance with ASC 606. We identified one performance obligation comprised of: (i) a research, development and commercialization license and (ii) research and development services, including manufacturing and supply of non-cGMP mRNA, during the initial three-year research period. We concluded that the license is not distinct from the research and development services, including manufacturing and supply of non-cGMP mRNA, during the initial three-year research period, as Vertex cannot fully exploit the value of the license without receipt of such services and supply. Our services and supply involve specialized expertise, particularly as it relates to mRNA technology that is not available in the marketplace. Therefore, the license has been combined with the research and development services, including manufacturing and supply of non-cGMP supply, into a single performance obligation. Additionally, we concluded the following customer options are marketing offers as such options did not provide any discounts or other rights that would be considered a material right in the arrangement: (i) Vertex’s right to extend the research period for an additional year and (ii) clinical mRNA supply and/or non-cGMP mRNA supply beyond the initial three-year research period. Therefore, such options will be accounted for as a separate contract upon the customer’s election.

As of January 1, 2019, the date of initial application of ASC 606, the total transaction price was determined to be $24.4 million, comprised of the $20.0 million upfront payment and $4.4 million in research and development funding related to the research and development services and supply of non-cGMP mRNA. We utilize the most likely amount method to determine the amount of research and development funding to be received. We also utilize the most likely amount method to estimate any development and regulatory milestone payments to be received. As of January 1, 2019, there were no milestones included in the transaction price. We considered the stage of development and the risks associated with the remaining development required to achieve each milestone, as well as whether the achievement of the milestone is outside of our or Vertex’s control. The outstanding milestone payments were fully constrained, as a result of the uncertainty whether any of the milestones would be achieved. We determined that any sales-based royalties will be recognized when the related sales occur as they were determined to relate predominantly to the license granted and therefore have also been excluded from the transaction price. We will re-evaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur. There were no changes to the transaction price during the three months ended March 31, 2019.

The transaction price was allocated entirely to the single performance obligation. We recognize revenue related to amounts allocated to the single performance obligation over time as the underlying services are performed using a proportional performance model. We

measure proportional performance using an input method based on the costs incurred relative to the total estimated costs of the research and development efforts.

For the three months ended March 31, 2019 and 2018, we recognized collaboration revenue of $2.6 million and $4.1 million, respectively, in the condensed consolidated statements of operations, from Vertex. The revenue recognized during the three months ended March 31, 2019 includes $2.6 million related to the amortization of the deferred revenue due to the satisfaction of our performance during the period. As of March 31, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligation that is unsatisfied is $1.1 million, which is expected to be recognized as revenue through June 30, 2019. We had deferred revenue of $0.8 million and $3.3 million, as of March 31, 2019 and December 31, 2018, respectively, from Vertex, which is classified as current in the condensed consolidated balance sheets based on the period the services are expected to be performed.



4. Grants

Biomedical Advanced Research and Development Authority (BARDA)

In September 2016, we received an award of up to $125.8 million under Agreement No. HHSO100201600029C from BARDA, a component of the Office of the Assistant Secretary for Preparedness and Response, or ASPR within the U.S. Department of Health and Human Services, or HHS, to help fund our Zika vaccine program. Under the terms of the agreement with BARDA, an initial base award of $8.2 million supported toxicology studies, a Phase 1 clinical trial, and associated manufacturing activities. Contract options were available, for $117.6 million to support an additional Phase 1 study of an improved Zika vaccine candidate, Phase 2 and Phase 3 clinical studies, as well as large-scale manufacturing for the Zika vaccine.

As of March 31, 2019, three of the four contract options had been exercised resulting in $117.3 million of available funding with an additional $8.5 million available if the final contract option is exercised. For the three months ended March 31, 2019 and 2018, we recognized revenue of $1.5 million and $1.0 million, respectively, relating to the BARDA Agreement.

The Bill & Melinda Gates Foundation (Gates Foundation)

In January 2016, we entered a global health project framework agreement with the Gates Foundation to advance mRNA-based development projects for various infectious diseases. The Gates Foundation has committed up to $20.0 million in grant funding to support our initial project related to the evaluation of antibody combinations in a preclinical setting as well as the conduct of a first-in-human Phase 1 clinical trial of a potential mRNA medicine to help prevent human immunodeficiency virus, or HIV, infections. Follow-on projects which could bring total potential funding under the framework agreement up to $100.0 million (including the HIV antibody project) to support the development of additional mRNA-based projects for various infectious diseases can be proposed and approved until the sixth anniversary of the framework agreement, subject to the terms of the framework agreement, including our obligation to grant to the Gates Foundation certain non-exclusive licenses. In March 2019, the Gates Foundation provided an
additional funding commitment up to $1.1 million to support a follow-on project.
As of March 31, 2019, up to $21.1 million has been committed for funding with up to an additional $80 million available, if additional follow-on projects are approved. For the three months ended March 31, 2019 and 2018, we recognized $0.3 million for each period, relating to the Gates Foundation agreement. Deferred revenue of $0.6 million and $0.8 million was recorded for both March 31, 2019, and December 31, 2018, respectively, related to the Gates Foundation agreement.

Defense Advanced Research Projects Agency (DARPA)

In October 2013, DARPA awarded us up to $24.6 million under Agreement No. W911NF-13-1-0417, which was subsequently adjusted to $19.7 million, to research and develop potential mRNA medicines as a part of DARPA’s Autonomous Diagnostics to Enable Prevention and Therapeutics, or ADEPT, program, which is focused on assisting with the development of technologies to rapidly identify and respond to threats posed by natural and engineered diseases and toxins. The DARPA awards have been deployed primarily in support of our vaccine and antibody programs to protect against chikungunya infection.
As of March 31, 2019 and December 31, 2018, $19.7 million has been committed by DARPA. There was no revenue recognized for the three months ended March 31, 2019, related to the DARPA agreement. We recognized revenue of $0.2 million for the three months ended March 31, 2018, related to the DARPA agreement.


5.6. Financial Instruments


Cash and Cash Equivalents and Investments


The following tables summarize our cash and available-for-sale securities by significant investment category at March 31, 2019September 30, 2021 and December 31, 20182020 (in thousands)millions):
September 30, 2021
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Estimated Fair ValueCash and
Cash
Equivalents		Current
Marketable
Securities		Non-
Current
Marketable
Securities
Cash and cash equivalents$5,550 $— $— $5,550 $5,550 $— $— 
Available-for-sale:
Certificates of deposit85 — — 85 — 85 — 
U.S. treasury bills95 — — 95 — 95 — 
U.S. treasury notes6,557 1 (5)6,553 — 2,046 4,507 
Corporate debt securities2,956 1 (4)2,953 — 1,118 1,835 
Government debt securities113 — (1)112 — 12 100 
Total$15,356 $2 $(10)$15,348 $5,550 $3,356 $6,442 
December 31, 2020
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Estimated Fair ValueCash and
Cash
Equivalents		Current
Marketable
Securities		Non-
Current
Marketable
Securities
Cash and cash equivalents$2,624 $— $— $2,624 $2,624 $— $— 
Available-for-sale:
Certificates of deposit239 — — 239 — 215 24 
U.S. treasury bills492 — — 492 — 492 — 
U.S. treasury notes87 — — 87 — 38 49 
Corporate debt securities1,788 4 — 1,792 — 1,239 553 
Government debt securities13 — — 13 — — 13 
Total$5,243 $4 $— $5,247 $2,624 $1,984 $639 
  March 31, 2019
  
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 Fair Value 
Cash and
Cash
Equivalents
 
Current
Marketable
Securities
 
Non-
Current
Marketable
Securities
Cash and cash equivalents $502,935
 $—
 $(1) $502,934
 $502,934
 $—
 $—
Available-for-sale:              
Level 2:              
Certificates of deposit 84,114
 72
 (1) 84,185
 —
 80,483
 3,702
U.S. treasury securities 119,347
 155
 (4) 119,498
 —
 79,475
 40,023
Debt securities of U.S. government agencies and corporate entities 839,055
 1,129
 (218) 839,966
 —
 446,032
 393,934
  $1,545,451
 $1,356
 $(224) $1,546,583
 $502,934
 $605,990
 $437,659
  December 31, 2018
  
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 Fair Value 
Cash and
Cash
Equivalents
 
Current
Marketable
Securities
 
Non-
Current
Marketable
Securities
Cash and cash equivalents $658,365
 $20
 $(21) $658,364
 $658,364
 $—
 $—
Available-for-sale:              
Level 2:              
Certificates of deposit 173,102
 42
 (36) 173,108
 —
 157,920
 15,188
U.S. treasury securities 152,205
 18
 (48) 152,175
 —
 152,175
 —
Debt securities of U.S. government agencies and corporate entities 712,065
 40
 (1,335) 710,770
 —
 552,968
 157,802
  $1,695,737
 $120
 $(1,440) $1,694,417
 $658,364
 $863,063
 $172,990



The amortized cost and estimated fair value of marketable securities by contractual maturity at March 31, 2019September 30, 2021 and December 31, 2018 are2020 were as follows (in thousands)millions):
 March 31, 2019September 30, 2021
 
Amortized
Cost
 
Estimated
Fair Value
Amortized
Cost		Estimated
Fair Value
Due in one year or less $605,687
 $605,990
Due in one year or less$3,356 $3,356 
Due after one year through five years 436,829
 437,659
Due after one year through five years6,450 6,442 
Total $1,042,516
 $1,043,649
Total$9,806 $9,798 
 December 31, 2018
 
Amortized
Cost
 
Estimated
Fair Value
Due in one year or less $864,003
 $863,063
Due after one year through five years 173,369
 172,990
Total $1,037,372
 $1,036,053


At March 31, 2019, we held 32 available-for-sale securities, or an estimated fair value of $135.8 million, out of our total investment portfolio that were in a continuous unrealized loss position for more than 12 months with a gross unrealized loss of $0.2 million. At December 31, 2018, we held 25 available-for-sale securities, or an estimated fair value of $82.8 million, out of our total investment portfolio that were in a continuous unrealized loss position for more than 12 months with a gross unrealized loss of $0.4 million. We concluded that the net declines in market value of our available-for-sale securities investment portfolio were temporary in nature and did not consider any of our investments to be other-than-temporarily impaired.
December 31, 2020
Amortized
Cost		Estimated
Fair Value
Due in one year or less$1,981 $1,984 
Due after one year through five years638 639 
Total$2,619 $2,623 

In accordance with our investment policy, we place investments in investment grade securities with high credit quality issuers, and generally limit the amount of credit exposure to any one issuer. We evaluate securities for other-than-temporary impairment at the end of each reporting period. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation.
17
Table of Contents
Factors considered include the length of time and extent to whichwhether a decline in fair value has been less thanbelow the amortized cost basis is due to credit-related factors or non-credit-related factors, the financial condition and near-term prospects of the issuer, and our intent and ability to hold the investment to allow for an anticipated recovery in fair value. Furthermore,Any impairment that is not credit related is recognized in other comprehensive loss, net of applicable taxes. A credit-related impairment is recognized as an allowance on the aggregate of individual unrealized losses that had been outstandingbalance sheet with a corresponding adjustment to earnings. We did not recognize any impairment charges related to available-for-sale securities for 12the three and nine months or less wasended September 30, 2021 and 2020. We did not significantrecognize any credit-related allowance to available-for-sale securities as of March 31, 2019September 30, 2021 and December 31, 2018.2020.

As of September 30, 2021 and December 31, 2020, we did not have material gross unrealized losses. We neither intend to sell these investments, nor concludedo we believe that we are more-likely-than-not thatto conclude we will have to sell them before recovery of their carrying values. We also believe that we will be able to collect both principal and interest amounts due to us at maturity.


Assets and Liabilities Measured at Fair Value on a Recurring Basis
6.
The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used to value the assets and liabilities:

•Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
•Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or
•Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 (in millions):
Fair value at September 30, 2021Fair Value Measurement Using
Level 1Level 2
Assets:
Money market funds$4,606 $4,606 $— 
Certificates of deposit85 — 85 
U.S. treasury bills95 — 95 
U.S. treasury notes6,553 — 6,553 
Corporate debt securities2,953 — 2,953 
Government debt securities112 — 112 
Derivative instruments (Note 7)51 — 51 
Total$14,455 $4,606 $9,849 
Liabilities:
Derivative instruments (Note 7)$1 $— $1 

18
Table of Contents
Fair value at December 31, 2020Fair Value Measurement Using
Level 1Level 2
Assets:
Money market funds$660 $660 $— 
Certificates of deposit239 — 239 
U.S. treasury bills492 — 492 
U.S. treasury notes87 — 87 
Corporate debt securities1,792 — 1,792 
Government debt securities13 — 13 
Total$3,283 $660 $2,623 

As of September 30, 2021 and December 31, 2020, we did not have non-financial assets or liabilities measured at fair value on a recurring basis and did not have any Level 3 financial assets or financial liabilities.

7. Derivative Financial Instruments

We transact business in various foreign currencies and have international sales and expenses denominated in foreign currencies. Therefore, we are exposed to certain risks arising from both our business operations and economic conditions. Our risk management strategy includes the use of derivative financial instruments to hedge: (1) forecasted product sales that are denominated in foreign currencies and (2) foreign currency exchange rate fluctuations on monetary assets or liabilities denominated in foreign currencies. We do not enter into derivative financial contracts for speculative or trading purposes. We do not believe that we are exposed to more than a nominal amount of credit risk in our foreign currency hedges, as counterparties are large, global and well-capitalized financial institutions. We classify cash flows from our derivative transactions as cash flows from operating activities in our condensed consolidated statements of cash flows.

Cash Flow Hedges

We mitigate the foreign exchange risk arising from the fluctuations in foreign currency denominated product sales in Euro through a foreign currency cash flow hedging program, using forward contracts and foreign currency options that do not exceed 15 months in duration. We hedge these cash flow exposures to reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative assets or liabilities associated with our hedging activities are recorded at fair value in other current assets or other current liabilities, respectively, in our condensed consolidated balance sheets. The gains or losses resulting from changes in the fair value of these hedges are initially recorded as a component of accumulated other comprehensive income (AOCI) in stockholders’ equity and subsequently reclassified to product sales in the period during which the hedged transaction affects earnings. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, within the defined hedge period, we reclassify the gains or losses on the related cash flow hedge from AOCI to other expense, net, in our condensed consolidated statements of operations. We evaluate hedge effectiveness at the inception of the hedge prospectively, and on an on-going basis both retrospectively and prospectively. If we do not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded as a component of other expense, net, in our condensed consolidated statements of operations. As of September 30, 2021, we had net deferred gains of $48 million on our foreign currency forward contracts included in AOCI that are expected to be recognized into product sales within the next 12 months.










19
Table of Contents
Balance Sheet ComponentsHedges


Prepaid ExpensesWe enter into foreign currency forward contracts to hedge fluctuations associated with foreign currency denominated monetary assets and Other Current Assetsliabilities, primarily accounts receivable in Euro and lease liabilities in Swiss Franc, that are not designated for hedge accounting treatment. Therefore, these forward contracts are accounted for as derivatives whereby the fair value of the contracts are reported as other current assets or other current liabilities in our condensed consolidated balance sheets, and gains and losses resulting from changes in the fair value are recorded as a component of other expense, net, in our condensed consolidated statements of operations. The gains and losses on these foreign currency forward contracts generally offset the gains and losses in the underlying foreign currency denominated assets and liabilities, which are also recorded to other expense, net, in our condensed consolidated statements of operations.


PrepaidTotal gross notional amount and fair value of our foreign currency derivatives were as follows (in millions):
September 30, 2021
Notional AmountFair Value
Asset (1)
Liability (2)
Derivatives designated as cash flow hedging instruments:
Foreign currency forward contracts$1,436 $48 $— 
Derivatives not designated as hedging instruments:
Foreign currency forward contracts556 3 1 
Total derivatives$1,992 $51 $1 

December 31, 2020
Notional AmountFair Value
Asset (1)
Liability (2)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts$368 $— $— 
Total derivatives$368 $— $— 
_________
(1) As presented in the condensed consolidated balance sheets within prepaid expenses and other current assets,assets.
(2) As presented in the condensed consolidated balance sheets within other current liabilities.

Gains on our foreign currency derivatives, net of tax, recognized in our condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 were as follows (in millions):
Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2021
Derivatives in cash flow hedging relationships:
Foreign currency forward contracts$30 $51 

20
Table of Contents
The effect of our foreign currency derivatives in our condensed consolidated statements of operations for the three and nine months ended September 30, 2021 was as follows (in millions):
Statement of Operations ClassificationThree Months Ended
September 30, 2021		Nine Months Ended
September 30, 2021
Derivatives in cash flow hedging relationships:
Foreign currency forward contracts
Net gain reclassified from AOCI into incomeProduct sales$(11)$(11)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts
Net realized and unrealized gain (loss)Other expense, net$3 $(16)

There were no hedging activities for the three and nine months ended September 30, 2020.

8. Inventory

Inventory as of March 31, 2019September 30, 2021 and December 31, 20182020 consists of the following (in thousands)millions):
September 30,December 31,
20212020
Raw materials$605 $37 
Work in progress233 9 
Finished goods127 1 
Total inventory$965 $47 

  March 31, December 31,
  2019 2018
Prepaid expenses $7,895
 $10,401
Tenant incentives receivables 11,336
 10,089
Interest receivable on marketable securities 6,061
 7,909
Prepaid expenses and other current assets $25,292
 $28,399

9. Property and Equipment, Net


Property and equipment, net, as of March 31, 2019September 30, 2021 and December 31, 20182020 consists of the following (in thousands)millions):
September 30,December 31,
20212020
Laboratory equipment$152 $121 
Leasehold improvements231 180 
Furniture, fixtures and other8 5 
Computer equipment and software15 13 
Internally developed software9 7 
Right-of-use asset, financing (Note 11)546 56 
Construction in progress158 35 
Total1,119 417 
Less: Accumulated depreciation(274)(120)
Property and equipment, net$845 $297 
  March 31, December 31,
  2019 2018
Building $140,442
 $140,442
Laboratory equipment 98,891
 96,907
Leasehold improvements 15,861
 13,741
Furniture, fixtures and other 2,122
 2,122
Computer equipment and software 9,456
 11,513
Internally developed software 7,020
 7,020
Construction in progress 11,403
 4,688
  285,195
 276,433
Less: Accumulated depreciation (71,735) (64,456)
Property and equipment, net $213,460
 $211,977


Depreciation and amortization expense for the three months ended March 31, 2019September 30, 2021 and 20182020 was $7.3$70 million and $5.2$8 million, respectively. Depreciation and amortization expense for the nine months ended September 30, 2021 and 2020 was $154 million and $24 million, respectively.








21
Table of Contents
10. Other Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets, as of September 30, 2021 and December 31, 2020 consists of the following (in millions):
September 30,December 31,
20212020
Down payments to manufacturing vendors$156 $217 
Other prepaid expenses105 7 
Value added tax receivable57 7 
Derivative assets51 — 
Other current assets43 21 
Prepaid expenses and other current assets$412 $252 

Accrued Liabilities


Accrued liabilities, as of March 31, 2019September 30, 2021 and December 31, 20182020 consists of the following (in thousands)millions):
September 30,December 31,
20212020
Clinical trials$166 $98 
Raw materials141 78 
Royalties168 — 
Development operations125 29 
Manufacturing196 53 
Other external goods and services87 92 
Compensation-related105 95 
Other88 25 
Accrued liabilities$1,076 $470 

Other Current Liabilities

Other current liabilities, as of September 30, 2021 and December 31, 2020 consists of the following (in millions):
September 30,December 31,
20212020
Lease liabilities - financing (Note 11)$218 $24 
Lease liabilities - operating (Note 11)22 6 
Other12 4 
Other current liabilities$252 $34 

Deferred Revenue

The following table summarizes the activities in deferred revenue for the nine months ended September 30, 2021 (in millions):
December 31, 2020AdditionsDeductionsSeptember 30, 2021
Product sales$3,799 $9,615 $(5,163)$8,251 
Grant revenue5 20 (19)6 
Collaboration revenue240 23 (45)218 
Total deferred revenue$4,044 $9,658 $(5,227)$8,475 


22
Table of Contents
  March 31, December 31,
  2019 2018
In-licenses $—
 $22,000
Property and equipment 7,756
 12,089
Compensation-related 11,577
 23,406
External goods and services 22,850
 21,578
Accrued liabilities $42,183
 $79,073
11. Leases

7. Commitments and Contingencies

Lease Obligations


We have entered into various long-term non-cancelable operating lease arrangements for our facilities and equipment expiring at various times through 2032.2035. Certain of these arrangements have free rent periods or escalating rent payment provisions, which weprovisions. We recognize rent expenselease cost under such arrangements on a straight-line basis over the life of the leases. We have two2 campuses in Massachusetts. Massachusetts, our Cambridge facility and our Moderna Technology Center, located in Norwood. We also lease other office spaces globally for our business operations.

Operating Leases

Cambridge facility

We occupy a multi-building campus in Technology Square in Cambridge, MAMassachusetts with a mix of offices and research laboratory space totaling approximately 200,000261,000 square feet. Our Cambridge facility leases have expiry ranges from 20202022 to 2027. 2029.

Finance Leases

Moderna Technology Center

We have an industrial technology center in Norwood, Massachusetts, our Moderna Technology Center (MTC), which comprises 3 buildings, MTC South, MTC North, and MTC East.

In August 2016, we entered into a lease agreement for approximately 200,000 square feet of aoffice, laboratory, and light manufacturing facilityspace (MTC South). The lease will expire in Norwood, MA. This facility is leased throughSeptember 2032. We have the option to extend the term for 2 extension periods of ten years each at market-based rents.


In February 2019, we entered into a new lease agreement for office and laboratory space of approximately 200,000 square feet located in Norwood, MA.(MTC North). The lease will commencecommenced in the second quarter of 2019 and expires in earlyhad an initial expiration date of 2031. We have the option to extend the lease for up to four4 additional five-year terms. In May 2020, we entered into an amendment to the lease whereby we exercised an option available in the original lease to receive a tenant improvement allowance in the amount of $22 million to be paid back over the term of the lease with interest and extend the term of the lease to 2035.



In April 2021, we entered into a lease agreement for a 240,000 square foot building located on the same campus for expansion of our commercial and clinical activities (MTC East). The lease will expire in February 2034. We have the option to extend the term for 2 extension periods of five years each at market-based rents.
Total rent expense, for
Embedded Leases

We have entered into multiple contract manufacturing service agreements with third parties which contain embedded leases within the three months ended Marchscope of ASC 842. As of September 30, 2021 and December 31, 2019 and 2018 was $4.82020, we had lease liabilities of $218 million and $5.2$24 million, respectively. respectively, related to the embedded leases. As of September 30, 2021 and December 31, 2020, we had right-of-use assets of $238 million and zero, as certain embedded leases dedicated to our COVID-19 vaccine program were deemed to have no alternative use prior to the EUA from the FDA in December 2020.

23
Table of Contents
Operating and financing lease right-of-use assets and lease liabilities as of September 30, 2021 and December 31, 2020 were as follows (in millions):
September 30,December 31,
20212020
Assets:
Right-of-use assets, operating, net (1) (2)
$115 $90 
Right-of-use assets, financing, net (3) (4)
416 55 
Total$531 $145 
Liabilities:
Current:
Operating lease liabilities (5)
$22 $6 
Financing lease liabilities (5)
218 24 
Total current lease liabilities240 30 
Non-current:
Operating lease liabilities, non-current105 97 
Financing lease liabilities, non-current238 110 
Total non-current lease liabilities$343 $207 
Total$583 $237 
_______
(1) These assets are real estate related assets, which include land, office, and laboratory spaces.
(2) Net of accumulated depreciation.
(3) These assets are real estate assets related to the MTC South, MTC North, and MTC East leases as well as assets related to contract manufacturing service agreements.
(4) Included in property and equipment in the condensed consolidated balance sheets, net of accumulated depreciation.
(5) Included in other current liabilities in the condensed consolidated balance sheets.

Future minimum lease payments under our non-cancelable operating lease agreements at March 31, 2019,September 30, 2021, are as follows (in thousands)millions):
Fiscal Year
Operating Leases (1)
Financing Leases (1)
2021(remainder of the year)$7 $66 
202231 173 
202325 19 
202416 19 
202517 19 
Thereafter94 600 
Total minimum lease payments190 896 
Less amounts representing interest or imputed interest(63)(440)(2)
Present value of lease liabilities$127 $456 
______
(1) Includes optional extensions in the MTC South, MTC North, and MTC East lease terms, which represent a total of $445 million undiscounted future lease payments.
(2) MTC South interest is based on an imputed interest rate of 17.2%. MTC North, MTC East, and the embedded lease interest is based upon incremental borrowing rates of 8.2%, 3.7%, and 0.6%, respectively.

24
Fiscal YearMinimum Lease Payments
2019(remainder of the year)$15,190
2020 22,874
2021 24,105
2022 23,455
2023 20,498
Thereafter140,384
Total$246,506
Table of Contents

12. Commitments and Contingencies

Strategic Collaborations


Under our strategic collaboration agreements, we are committed to perform certain research, development, and manufacturing activities. As part of our PCVpersonalized cancer vaccine (PCV) Agreement and PCV/SAV Agreement (which also relates to shared neoantigen mRNA cancer vaccine) with Merck, we are committed to perform certain research, development and manufacturing activities related to PCV products through an initial Phase 2 clinical trial up to a budgeted amount of $243.0$243 million for both periods as of March 31, 2019September 30, 2021 and December 31, 2018 (see2020. Please refer to Note 3).5 for our consolidated financial statements in our 2020 Form 10-K.


Legal Proceedings


We are not currently a party to any material legal proceedings.


Indemnification Obligations
8. Shareholders' Equity

On February 28, 2018As permitted under Delaware law, we indemnify our officers, directors, and May 7, 2018,employees for certain events, occurrences while the Board of Directors approved an amendment toofficer, or director is, or was, serving at our Certificate of Incorporation resultingrequest in a total of 775,000,000 shares of common stock and a total of 509,352,795 shares of redeemable convertible preferred stock being authorized, respectively. Upon completion of our IPO, our authorized capital stock consists of 1,600,000,000 shares of common stock, par value $0.0001 per share, and 162,000,000 shares of preferred stock, par value $0.0001 per share, all of which shares of preferred stock are undesignated.

On December 11, 2018, we completed our IPO, whereby we sold 26,275,993 shares of common stock at a price of $23.00 per share.such capacity. The aggregate net proceeds received by us from the IPO were $563.0 million, net of underwriting discounts and commissions of $33.2 million and offering expenses of $8.1 million payable by us. Upon the closingterm of the IPO, allindemnification is for the officer’s or director’s lifetime.

We have standard indemnification arrangements in our leases for laboratory and office space that require us to indemnify the landlord against any liability for injury, loss, accident, or damage from any claims, actions, proceedings, or costs resulting from certain acts, breaches, violations, or non-performance under our leases.

We enter into indemnification provisions under our agreements with counterparties in the ordinary course of business, typically with business partners, contractors, clinical sites and customers. Under these provisions, we generally indemnify and hold harmless the outstanding shares of our redeemable convertible preferred stock were converted into 236,012,913 shares ofindemnified party for losses suffered or incurred by the common stock.

9. Stock-Based Compensation

Equity Plans

In connection with the IPO, we adopted the 2018 Stock Option and Incentive Plan (the 2018 Equity Plan) in November 2018. The 2018 Equity Plan became effective on the date immediately prior to the effective date of the IPO and replaced our 2016 Stock Option and Grant Plan (the 2016 Equity Plan). The number of shares of common stock available for issuance under the 2018 Equity Plan was increased by 13.2 million sharesindemnified party as a result of the automatic increase provisionour activities. These indemnification provisions generally survive termination of the 2018 Equity Plan.underlying agreement. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited.

Through the three and nine months ended September 30, 2021 and the year ended December 31, 2020, we had not experienced any losses related to these indemnification obligations, and no material claims were outstanding. We do not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.

Purchase Commitments and Purchase Orders

We enter into agreements in the normal course of business with vendors and contract manufacturing organizations (CMOs) for raw materials and manufacturing services and with vendors for preclinical research studies, clinical trials and other goods or services. As of MarchSeptember 30, 2021, we had $2.3 billion of non-cancelable purchase commitments related to raw materials and manufacturing agreements, which are expected to be paid through 2024. As of September 30, 2021, we had $69 million of non-cancelable purchase commitments related to clinical services and other goods and services which are expected to be paid through 2026. These amounts represent our minimum contractual obligations, including termination fees.

In addition to purchase commitments, we have agreements with third parties for various services, including services related to clinical operations and support and contract manufacturing, for which we are not contractually able to terminate for convenience and avoid any and all future obligations to the vendors. Certain agreements provide for termination rights subject to termination fees or wind down costs. Under such agreements, we are contractually obligated to make certain payments to vendors, mainly, to reimburse them for their unrecoverable outlays incurred prior to cancellation. At September 30, 2021 and December 31, 2019,2020, we had cancelable open purchase orders of $1.3 billion and $897 million, respectively, in total under such agreements for our significant clinical operations and support and contract manufacturing. These amounts represent only our estimate of those items for which we had a contractual commitment to pay at September 30, 2021 and December 31, 2020, assuming we would not cancel these agreements. The actual amounts we pay in the future to the vendors under such agreements may differ from the purchase order amounts.
25
Table of Contents


Licenses to Patented Technology

On June 26, 2017, we entered into sublicense agreements with Cellscript, LLC and its affiliate, mRNA RiboTherapeutics, Inc. to sublicense certain patent rights. Pursuant to each agreement, we are required to pay certain license fees, annual maintenance fees, minimum royalties on future net sales and milestone payments contingent on achievement of certain development, regulatory and commercial milestones for specified products, on a product-by-product basis. Commercial milestone payments, up to $24 million, and royalties based on annual net sales of licensed products for therapeutic and prophylactic products are accounted for as additional expense of the related product sales in the period in which the corresponding sales occur. For the three and nine months ended September 30, 2021, we recognized $168 million and $400 million, respectively, of royalty expenses associated with our product sales, which was recorded to cost of sales in our condensed consolidated statements of operations. We did not recognize any such royalties for the three and nine months ended September 30, 2020 as we did not have product sales during the period.

Additionally, we have other in-license agreements with third parties which require us to make future development, regulatory and commercial milestone payments for specified products associated with the agreements. The achievement of these milestones was not deemed probable as of September 30, 2021.

Moderna Science Center

In September 2021, we announced an investment in our Moderna Science Center (MSC), in Cambridge, Massachusetts. MSC will integrate scientific and non-scientific spaces, including our principal executive offices, and is being built to support our growth as we continue to advance our pipeline of mRNA medicines. In relation to the investment, we entered into a lease agreement for approximately 462,000 square feet and will undergo an approximately two-year building project. Following the building project, the lease term is 15 years, subject to our right to extend the lease for up to 2 additional seven-year terms. Pursuant to this lease agreement, we are committed to approximately $1.1 billion non-cancellable rent payments for the initial lease term. Construction at the location has begun, and we expect to begin a phased move-in process in 2023.

13. Stock-Based Compensation

As of September 30, 2021, we had a total of 72.458 million shares reserved for future issuance under our Equity Plans, of which 17.931 million shares were reserved for equity awards previously granted, and 27 million shares were available for future grants.


Options

We have granted options generally throughgrants under the 2018 Equity Plan and 2016 Equity Plan. Plan.

Options

The following table summarizes our option activity as of March 31, 2019:during the nine months ended September 30, 2021:
  
Number of
Options
 
Weighted-
Average
Exercise
Price per
Share
 
Weighted-
Average
Grant
Date Fair
Value per
Share
 
Weighted-
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value (1)
(in thousands)
Outstanding at December 31, 2018 50,821,132
 12.16
 6.59
 7.1 years 220,434
Granted 5,443,286
 20.59
 12.16
    
Exercised (5,525) 9.62
 5.62
    
Canceled/forfeited (2,987,612) 14.29
 8.48
    
Outstanding at March 31, 2019 53,271,281
 12.92
 6.99
 7.5 years 412,480
Exercisable at March 31, 2019 24,769,502
 8.54
 4.05
 5.7 years 292,602
Vested and expected to vest at March 31, 2019 28,501,493
 16.73
 9.55
 9.0 years 119,876
Number of
Options
(in millions)
Weighted-
Average
Exercise
Price per
Share		Weighted-
Average
Grant Date Fair
Value per
Share		Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value (1)
(in millions)
Outstanding at December 31, 202034.06 $17.14 $9.12 6.7 years$2,976 
Granted1.28 195.93 86.02 
Exercised(5.69)15.77 8.89 
Canceled/forfeited(0.86)26.97 14.51 
Outstanding at September 30, 202128.79 25.09 12.43 6.1 years10,362 
Exercisable at September 30, 202116.84 12.68 6.56 5.0 years6,266 
Expected to vest at September 30, 202111.95 42.56 20.71 7.6 years4,096 
_______
(1)Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of common stock for those options in the money as of March 31, 2019.September 30, 2021.


For the three months ended March 31, 2019, 5,525 stock options were exercised.

26
Table of Contents
The total intrinsic value of options exercised was $0.1 million.$1.2 billion for the nine months ended September 30, 2021. The aggregate intrinsic value represents the difference between the exercise price and the selling price received by option holders upon the exercise of stock options during the period. The total consideration recorded as a result of stock option exercises was approximately $0.1$91 million for the threenine months ended March 31, 2019.September 30, 2021.

Stock-based compensation for options granted is determined using the Black-Scholes option pricing model. The weighted-average assumptions used to estimate the fair value of the options granted for the three months ended March 31, 2019 and 2018 are as follows:
  Weighted Average
  Three Months Ended March 31,
  2019 2018
Risk-free interest rate 2.48% 2.71%
Expected term 6.12 years
 6.06 years
Expected volatility 62% 63%
Expected dividends —% —%
Weighted average fair value per share $12.16
 $8.48


Restricted Common Stock Units (RSUs) and Performance Stock Units (PSUs)


We have granted restricted stock awards generally through the 2016 Equity Plan. The following table summarizes our restricted stockRSU and PSU activity during the threenine months ended March 31, 2019:September 30, 2021:
Units
(in millions)		Weighted-Average Fair Value per Unit
Outstanding, non-vested at December 31, 20202.19 $30.85 
Issued0.63 198.19 
Vested(0.48)27.41 
Canceled/forfeited(0.10)43.72 
Outstanding, non-vested at September 30, 20212.24 78.43 
 Number of
Shares		 
Weighted
Average
Grant Date
per Share
Outstanding, non-vested at December 31, 2018198,597
 $12.15
Issued—
 —
Vested(48,911) 12.15
Canceled, forfeited and adjustments, net711
 12.15
Outstanding, non-vested at March 31, 2019150,397
 12.15



Restricted Common Stock Units

We have granted restricted stock awards generally through the 2018 Equity Plan and 2016 Equity Plan. The following table summarizes our restricted stock unit activity during the three months ended March 31, 2019:
 Units 
Weighted-Average
Grant Date
per Unit
Outstanding, non-vested at December 31, 2018458,715
 $11.93
Issued558,208
 20.77
Vested (1)
14,334
 11.93
Canceled/forfeited(5,440) 20.93
Pending settlement (1)
(14,334) 11.93
Outstanding, non-vested at March 31, 20191,011,483
 16.76
_________
(1) The vestedtotal fair value of restricted stock units will be settled forvested during the nine months ended September 30, 2021 was $13 million. The total intrinsic value of restricted stock units vested during the nine months ended September 30, 2021 was $108 million.

During the first quarter of 2021, we granted PSUs to certain senior executives with vesting that is contingent upon the achievement of specified preestablished goals over the performance period, generally three years. The actual number of common stockshares ultimately issued is calculated by multiplying the number of PSUs by a payout percentage ranging from 0% to 200%. The estimated fair value of PSUs is based on the grant date which is 360 days afterfair value.

2018 Employee Stock Purchase Plan (ESPP)

We sold an immaterial number of shares under the consummationESPP during the nine months ended September 30, 2021. As of September 30, 2021, 4 million shares were available for future issuance under the IPO.ESPP.

Stock-Based Compensation Expense


The following table presents the components and classification of stock-based compensation expense for the three and nine months ended March 31, 2019September 30, 2021 and 20182020 as follows (in thousands)millions):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Options$27 $18 $73 $57 
RSUs and PSUs12 3 29 8 
ESPP1 1 3 2 
Total$40 $22 $105 $67 
Cost of sales$1 $— $13 $— 
Research and development25 13 54 40 
Selling, general and administrative14 9 38 27 
Total$40 $22 $105 $67 
 Three Months Ended
March 31,
 2019 2018
Options$17,487
 $10,048
Restricted common stock and units1,010
 1,803
Total$18,497
 $11,851
Research and development$10,783
 $7,356
General and administrative7,714
 4,495
Total$18,497
 $11,851



As of March 31, 2019,September 30, 2021, there were $253.1was $348 million of total unrecognized compensation cost related to unvested stock-based compensation with respect to options, RSUs and restricted stockPSUs granted. That cost is expected to be recognized over a weighted-average period of 3.53.0 years at March 31, 2019.September 30, 2021.


2018 Employee Stock Purchase Plan
27
Table of Contents

Share Repurchase Program
In November 2018,
On August 2, 2021, our Board of Directors authorized a Share Repurchase Program of our common stock, which expires on August 2, 2023. Pursuant to the Share Repurchase Program, we adopted the 2018 Employee Stock Purchase Plan (the ESPP), which became effective on December 5, 2018. The ESPP initially reserves and authorizes the issuance ofmay repurchase up to $1.0 billion of our outstanding common stock. The timing and actual number of shares repurchased depend on a totalvariety of 810,000factors, including price, general business and market conditions, and other investment opportunities, and shares may be repurchased through open market purchases through the use of common stocktrading plans intended to participating employees. We hadqualify under Rule 10b5-1 under the Exchange Act.

During the three and nine months ended September 30, 2021, we did not mademake any offerings as of March 31, 2019.repurchases under the Share Repurchase Program.


10.14. Income Taxes


We are subject to U.S. federal and state and foreign income taxes. For the three and nine months ended September 30, 2021, we recorded provisions for income taxes of $219 million and $541 million, respectively, compared to $1 million in each of the same periods in 2020. Our effective tax rate for the three and nine months ended September 30, 2021 was 6% and 7%, respectively, and was lower than the U.S. statutory rate primarily due to the benefit related to the release of the valuation allowance on the majority of our tax attributes and other deferred tax assets, the benefit of the foreign derived intangible income deduction, as well as a discrete item for excess tax benefits related to stock-based compensation. Our effective tax rate for the three and nine months ended September 30, 2020 was lower than the U.S. statutory rate primarily due to the valuation allowance.

We recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to be in effect for the years in which differences are expected to reverse. ValuationOn a periodic basis, we reassess any valuation allowances are provided when the expected realization ofthat we maintain on our deferred tax assets, does notweighing positive and negative evidence to assess the recoverability of the deferred tax assets. In the first quarter of 2021, we reassessed the valuation allowance noting the increase in positive evidence, including significant revenue growth, expectations regarding future profitability, and successful supply chain and manufacturing capabilities to meet a “moreglobal product demand. After assessing both the positive evidence and negative evidence, we determined it was more likely than not” criterion. Realizationnot that we will realize the majority of our deferred tax assets is dependent uponassets. Therefore, we determined we should reverse the generationmajority of future taxable income, the amount and timing of which are uncertain. We continued to maintain a fullour valuation allowance against allthrough the annual effective tax rate (AETR) with respect to amounts we expect to realize through current year income. In addition, for the nine months ended September 30, 2021, we have recorded a discrete benefit of our$49 million related to the release of the valuation allowance on deferred tax assets basedthat we expect to utilize in future years. We maintain a valuation allowance on management’s evaluation of all available evidence.certain state tax attributes that we expect will expire prior to the utilization.


There were no significantWe file U.S. federal income tax provisionsreturns and income tax returns in various state, local and foreign jurisdictions. We are not currently subject to any tax assessment from an income tax examination in the United States or benefits for the three months ended March 31, 2019 and 2018.any other major taxing jurisdiction since inception.


Upon adoption
28
Table of ASC 606 (see Note 2), we recorded a cumulative-effect adjustment of $28.0 million to the opening balance of accumulated deficit as of January 1, 2019 with a decrease in deferred revenue of $30.7 million and a decrease in accounts receivable of $2.7 million. As a result of the cumulative decrease in deferred revenue, our corresponding deferred tax asset decreased by $8.4 million, which was offset by a corresponding decrease to our valuation allowance.Contents

11. Net Loss15. Earnings (Loss) per Share


Net LossThe computation of basic earnings (loss) per Share Attributable to Common Stockholdersshare (EPS) is based on the weighted-average number of our common shares outstanding. The computation of diluted EPS is based on the weighted-average number of our common shares outstanding and potential dilutive common shares outstanding during the period as determined by using the treasury stock method.


Basic and diluted net loss per share attributable to common stockholdersEPS for the three and nine months ended March 31, 2019September 30, 2021 and 2018 are2020 were calculated as follows (in thousands,millions, except share and per share data):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Numerator:
Net income (loss)$3,333 $(233)$7,334 $(474)
Denominator:
Basic weighted-average common shares outstanding404 395 402 376 
Effect of dilutive securities30 — 29 — 
Diluted weighted-average common shares outstanding434 395 431 376 
Basic EPS$8.27 $(0.59)$18.25 $(1.26)
Diluted EPS$7.70 $(0.59)$17.00 $(1.26)
 Three Months Ended March 31,
 2019 2018
Numerator:   
Net loss$(132,657) $(72,376)
Cumulative dividends on redeemable convertible preferred stock—
 (3,481)
Net loss attributable to common stockholders$(132,657) $(75,857)
Denominator:   
Weighted average common shares used in net loss per share attributable to common stockholders, basic and diluted328,809,986
 65,430,835
Net loss per share attributable to common stockholders, basic and diluted$(0.40) $(1.16)



The following common stock equivalents, presented based on amounts outstanding as of March 31, 2019 and 2018September 30, 2020 were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because their inclusion would have been anti-dilutive:anti-dilutive (in millions):
September 30,
2020
Stock options37 
Restricted common stock units2 
Total39 

For the three and nine months ended September 30, 2021, we had an immaterial number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive.
29
 March 31,
 2019 2018
Redeemable convertible preferred stock—
 260,817,303
Stock options53,271,281
 43,135,998
Restricted common stock150,397
 729,877
Restricted common stock units1,011,483
 458,715
 54,433,161
 305,141,893
Table of Contents

16. Subsequent Events

Subsequent to September 30, 2021, we have entered into additional commitments and supply agreements with customers to provide up to 58 million doses of our COVID-19 vaccine and our updated variant booster vaccine candidate based on the initial confirmed volume, subject to modifications.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited financial information and related notes included in this Form 10-Q and our consolidated financial statements and related notes and other financial information in our Annual Report on Form 10-K for the year ended December 31, 2018,2020, which was filed with the SEC on March 13, 2019 and amended by Amendment No. 1 to our Annual Report onFebruary 26, 2021 (the “2020 Form 10-K/A, which was filed with the SEC on April 25, 2019 (as amended, the "2018 Form 10-K"10-K”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in Part II, Item 1A - Risk Factors in this Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical stage biotechnology company pioneering messenger RNA (mRNA) therapeutics and vaccines to create a new generation of potentially transformative medicines to improve the lives of patients. mRNA medicines are designed to direct the body’s cells to produce intracellular, membrane, or secreted proteins that have a therapeutic or preventive benefit with the potential to address a broad spectrum of diseases. Our platform builds on continuous advances in basic and applied mRNA science, delivery technology, and manufacturing, providing us the capability to pursue in parallel a robust pipeline of new development candidates. We are developing therapeutics and vaccines for infectious diseases, immuno-oncology, rare diseases, autoimmune diseases and cardiovascular diseases, independently and with our strategic collaborators. As

Within our platform, we unlockdevelop technologies that enable the inherent advantages of mRNA, we aim to address as many diseases and impact as many patients as our technology, talent, and capital permit
We have a diverse development pipeline of 21 development candidates. Of these 21 development candidates, 11 are in various early stage clinical studies. The broad potential applications of mRNA medicines have led us to raise significant capital and adoptfor diverse applications. When we identify technologies that we believe could enable a long-term approach to capital allocation that balances near-term risks and long-term value creation. As of March 31, 2019, we had cash, cash equivalents, and investments of approximately $1.5 billion. We use this capital to fund operations and investing activities for technology creation, drug discovery and clinical development programs, infrastructure and capabilities to enable our research engine and early development engine (which includes our manufacturing facility in Norwood), our digital infrastructure, creation of our portfolio of intellectual property, and administrative support.
Since our inception, we have incurred significant operating losses. Our net losses were $384.7 million and $255.9 million for the years ended December 31, 2018 and 2017, respectively. Our net loss was $132.7 million for the three months ended March 31, 2019. As of March 31, 2019, our accumulated deficit was $1.1 billion. We expect to continue to incur significant expenses and operating losses for the foreseeable future.
In addition, we anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:
continue our platform research and drug discovery and development efforts;
conduct clinical studies for our investigational medicines;
manufacture clinical study materials and develop large-scale manufacturing capabilities;

seek regulatory approval for our investigational medicines;
maintain, expand, and protect our intellectual property;
hire additional personnel to support our program development effort to obtain regulatory approval and secure additional facilities for operations; and
operate as a public company.

We do not expect to generate revenue from the sale of potential mRNA medicines unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our investigational medicines. If we seek to obtain regulatory approval for and commercialize any of our investigational medicines, we expect to incur significant commercialization expenses.
As a result, we will need substantial additional funding to support our continued operations and pursue our growth strategy. Until we can generate significant revenue from sales of our medicines, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings, government funding arrangements, strategic alliances and marketing, distribution, and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back, or discontinue the development and commercialization of one or more of our programs.
Because of the numerous risks and uncertainties associated with pharmaceutical development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenues from the sale of our medicines, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce our operations.
Our Pipeline
This section describes the pipeline that has emerged thus far from the combination of our strategy, our platform, our infrastructure, and the resources we have amassed.
We have 21 development candidates in our pipeline, with 11 in various early stage clinical studies on three different continents. Over 1,000 subjects have been enrolled in our clinical trials since December 2015. Our diverse pipeline comprises programs across six modalities and a broad range of therapeutic areas. A modality is anew group of potential mRNA medicines with shared product features, andwe call that group a “modality.”While the associated combination ofprograms within a modality may target diverse diseases, they share similar mRNA technologies, delivery technologies, and manufacturing processes. Aspects of our pipeline have been supported through strategic alliances, including with AstraZeneca, Merck, and Vertex, and government-sponsored organizations and private foundations focused on global health initiatives, including BARDA, DARPA, and the Bill & Melinda Gates Foundation.
Our pipeline is shown below in two formats, with a cell map illustrating the diversity of biology addressed by our mRNA pipeline programs, and a traditional format that shows the current stages of development of our pipeline programs. We believe the 21 programs in our pipeline represent only an initial wave of potential development candidates, and that our platform over time may yield both multiple newprocesses to achieve shared product features. The programs within our existinga modality will also generally share similar pharmacology profiles, including the desired dose response, the expected dosing regimen, the target tissue for protein expression, safety and tolerability goals, and pharmaceutical properties. Programs within a modality often have correlated technology risk, but, because they pursue diverse diseases, they often have uncorrelated biology risk. We have created seven modalities to date:

•prophylactic vaccines;
•systemic secreted and the potential for multiple programs in new modalities.cell surface therapeutics;

•cancer vaccines;
a190502pipeline.jpg•intratumoral immuno-oncology;

•localized regenerative therapeutics;
a190425cellmapa02.jpg•systemic intracellular therapeutics; and

•inhaled pulmonary therapeutics.


We have developed sixdesignated our prophylactic vaccines and systemic secreted and cell surface therapeutics modalities as our “core modalities. We have 11 programs that have reached clinical trials and a total of 21” In these core modalities, our strategy is to invest in additional development candidates summarized by modality as follows:using our accumulated innovations in technology, our process insights and our preclinical and clinical experience. Our exploratory modalities continue to be a critical part of advancing our strategy to maximize the application of our potential mRNA medicines.


Prophylactic vaccines included eight development candidates: RSV vaccine (mRNA-1777 and mRNA-1172), CMV vaccine (mRNA-1647), hMPV+PIV3 vaccine (mRNA-1653), H10N8 vaccine (mRNA-1440), H7N9 vaccine (mRNA-1851), Zika vaccine (mRNA-1893), and Chikungunya vaccine (mRNA-1388). We currently have six programs for which the Phase 1 trial is either ongoing or has been completed;
30
Table of Contents
Business Highlights
Cancer vaccines included two development candidates: Personalized cancer vaccine, or PCV, (mRNA-4157) and KRAS vaccine (mRNA-5671). We are collaborating with Merck on both programs. PCV is in a Phase 1 clinical trial and
Moderna COVID-19 Vaccine

On December 18, 2020, we and Merck have submitted a protocol toreceived an Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA) for the emergency use of the Moderna COVID-19 Vaccine (also referred to as mRNA-1273 and marketed under the brand name Spikevax) in individuals 18 years of age or older. We have also received authorization for our COVID-19 vaccine from health agencies in more than 50 countries and from the World Health Organization (WHO). Additional authorizations are currently under review in other countries. In addition, we have received authorization for our COVID-19 vaccine for use in adolescents in the United Kingdom, European Union, Japan, Canada, Switzerland, Taiwan, Saudi Arabia, Australia and the Philippines, and have pending applications for authorization to administer the vaccine to adolescents with regulatory agencies in the United States and other countries.

The FDA has approved an update to the EUA for the Moderna COVID-19 Vaccine to include a third dose for immunocompromised individuals 18 years of age or older in the United States, as well as the administration of 50 µg booster doses for individuals age 65 and older, people aged 18 to 64 who are at high risk of severe COVID-19, and people aged 18 to 64 with frequent institutional or occupational exposure to SARS-CoV-2. In October 2021, the U.S. Advisory Committee on Immunization Practices (ACIP) also endorsed recommending the Moderna COVID-19 Vaccine as a booster, regardless of the original vaccine received by an individual in their primary series. The European Medicines Agency (EMA) has also authorized a third dose of the Moderna COVID-19 vaccine given at least 28 days after the second dose to severely immunocompromised individuals 12 years of age or older, as well as the administration of 50 µg booster doses for individuals 18 years of age and older. In August 2021, we completed the rolling submission process with the FDA for a Biologics License Application (BLA) for our COVID-19 vaccine, which is subject to Priority Review.

On October 29, 2021, the FDA informed us that the agency will require additional time to evaluate recently conducted international analyses of the risk of myocarditis (inflammation of the heart muscle) after vaccination in connection with our requested EUA to administer the Moderna COVID-19 Vaccine in adolescents (12-17 years of age). The FDA notified us that this review may not be completed before January 2022. An increased risk of myocarditis has been described for mRNA COVID-19 vaccines, including the Moderna COVID-19 vaccine, particularly in young men and following the second dose. The U.S. Centers for Disease Control (CDC) and Prevention and the WHO have stated that myocarditis following vaccination with mRNA vaccines has been rare and generally mild. We are committed to conducting our own careful review of new external analyses as they become available. We do not yet have access to data from some recent international analyses. We currently expect that we will also delay filing a request for EUA of our COVID-19 vaccine at the 50 µg dose level in the pediatric population (6-11 years of age) while the FDA completes its review of the adolescent EUA request.

We have entered into supply agreements with the U.S. Government, several other governments outside the United States and with UNICEF (on behalf of the COVAX Facility) and the African Union for the supply of our COVID-19 vaccine. The agreements are generally subject to receipt of authorization or approval for the use and distribution of the vaccine from the relevant regulatory authority in each jurisdiction. Under these agreements, we are entitled to upfront deposits for our COVID-19 vaccine supply, initially recorded as deferred revenue. As of September 30, 2021, we had approximately $8.3 billion in deferred revenue in connection with the supply agreements with the U.S. Government and other customers, which will be recognized as revenue when revenue recognition criteria have been met.

For the third quarter of 2021, we delivered approximately 73 million doses of our COVID-19 vaccine to the U.S. Government and approximately 136 million doses to other governments, and recognized $4.8 billion in product sales. For the nine months ended September 30, 2021, we delivered approximately 287 million doses of our COVID-19 vaccine to the U.S. Government and approximately 222 million doses to other governments, and recognized $10.7 billion in product sales.

In the second quarter of 2021, we announced additional investments to facilitate the increased supply of our COVID-19 vaccine from our own and partnered manufacturing facilities, and an expansion of the Moderna Technology Center (MTC) in Norwood, Massachusetts, to more than double our facility space to help transform it from a production and lab space to an industrial technology center. These investments are expected to facilitate a doubling of drug substance manufacturing from Lonza’s Switzerland-based facility, a more than doubling of formulation, fill/finish and drug substance manufacturing at Rovi’s Spain-based facility, as well as a 50% increase of drug substance at Moderna’s facilities in the U.S. When completed, the investments are expected to also result in an increase in safety stock of raw materials and finished product used to deliver committed volumes. These forecasted increases to our supply are subject in part to performance by our manufacturing partners, which will require ramping-up capabilities at their own facilities and the hiring of qualified manufacturing personnel.



31
Table of Contents
We currently anticipate that we will be supply between 700 million and 800 million doses of our COVID-19 vaccine in 2021, at the 100 µg dose.Key variables impacting output include longer delivery lead times for international shipments and exports that may shift deliveries to early 2022, temporary impact from expansion of fill/finish capacity and ramp up of product release to market. The ultimate number of doses that we anticipate delivering in 2022 is subject to a number of factors, including demand for the vaccine as the COVID-19 pandemic shifts to an anticipated endemic phase, demand for presentations of our vaccine, the dosage for the vaccine (including different dose amounts for primary series, booster series and pediatric vaccines), and other factors.

Moderna COVID-19 Vaccine Clinical Studies

The final analysis of adjudicated cases from the Phase 3 clinical trial for mRNA-1273, which we refer to as the COVE Study, demonstrated efficacy of 93% through six months after the second dose of the vaccine. The final analysis also demonstrated greater than 98% efficacy against severe cases of COVID-19 and 100% efficacy against death caused by COVID-19 in the per protocol cohort. The final analysis also demonstrated consistency in our subgroup analysis, including analyses by gender, by race and by preexisting medical conditions. The safety profile for mRNA-1273 continues to be consistent with the Phase 3 data over the longer period of safety follow up and across population subgroups.

The Phase 2/3 TeenCOVE study of mRNA-1273 in adolescents ages 12-17 years has completed enrollment in the United States. An initial analysis of 3,732 participants randomized 2:1 in the TeenCOVE study showed a vaccine efficacy rate of 93% in seronegative participants who received at least one injection (modified intent-to-treat cohort) in a secondary analysis. The median duration for follow-up in this analysis was 53 days following the second dose. mRNA-1273 was generally well tolerated. The majority of adverse events were mild or moderate in severity. No serious safety concerns have been identified to date. The most common solicited local adverse event was injection site pain. The most common solicited systemic adverse events after the second dose of mRNA-1273 were headache, fatigue, myalgia and chills. We have received authorization for our COVID-19 vaccine for use in adolescents in the United Kingdom, European Union, Japan, Canada, Switzerland, Taiwan, Saudi Arabia, Australia and the Philippines. We have filed for an EUA for adolescents with the FDA and a determination is pending, as described in further detail above.

The Phase 2/3 KidCOVE study of mRNA-1273 in the pediatric population ages 6 months to 11 years is ongoing. We expect to enroll more than 12,000 healthy pediatric participants in the U.S. and Canada into this two-part, dose escalation study. Data from the KidCOVE study two weeks after the first dose of mRNA-1273 at the 50 µg dose level showed a vaccine efficacy of 100%, using the Phase 3 COVE study primary case definition for COVID-19. Additionally, for asymptomatic infection two weeks after the first dose, vaccine efficacy was 65% (95% CI: .16, .85). For SARS-CoV-2 infection regardless of symptoms, vaccine efficacy was 80% (95% CI: .62, .90) two weeks after the first dose. On October 24, the Company announced positive top line top line data from the Phase 2/3 study of mRNA-1273 in children 6 to 11 years of age. GMR comparing the response in children to the response in young adults from the Phase 3 COVE study was 1.5 (95% CI: 1.3, 1.8), with a seroresponse rate of 99.3%. Two 50 μg doses of mRNA-1273 were generally well tolerated. The Company plans to submit results to the U.S. FDA, EMA and regulatory agencies around the world. The age groups are 6 years to <12 years, 2 years to <6 years and 6 months to <2 years. In part 1, each age group tests one of two dose levels. Following an interim analysis, a dose will be selected for part 2, a placebo-controlled expansion portion of the study, which is expected to enroll 4,000 participants. We are in part 1 of the study for the two other age groups, 2 years to <6 years and 6 months to <2 years old. Dose selection studies are underway for the 2 to <6 years and 6 months to <2 years age groups.

The Phase 1 study of mRNA-1283 is fully enrolled and ongoing.An interim analysis of data from the Phase 1 study of mRNA-1283 at three dose levels indicates that a lower dose of mRNA-1283 achieved similar neutralizing antibody responses compared to a primary series of mRNA-1273. mRNA-1283 had an acceptable tolerability profile. The Company is preparing to begin a Phase 2 booster study of mRNA-1283.mRNA-1283 is a next-generation vaccine candidate against COVID-19 that encodes for the portions of the SARS-CoV-2 spike protein critical for neutralization, specifically the Receptor Binding Domain (RBD) and N-terminal Domain (NTD). The encoded mRNA-1283 antigen is shorter than mRNA-1273 and is being developed as a potential refrigerator-stable mRNA vaccine that will facilitate easier distribution and administration by healthcare providers.

Variant-Specific Booster Candidates

In February 2021, we announced that we had completed manufacturing of clinical trial material for our variant-specific vaccine candidate, mRNA-1273.351, against the SARS-CoV-2 variant known as the Beta variant (or B.1.351, first identified in the Republic of mRNA-4157,South Africa) and that this vaccine had been shipped to the KRAS vaccine has an open investigational new drug application (IND) ;
Intratumoral immuno-oncology included three development candidates: OX40L (mRNA-2416), OX40L+IL23+IL36γ (Triplet) (mRNA-2752), and IL12 (MEDI1191). The OX40L and OX40L+IL23+IL36γ programs are currently in Phase 1 clinical trials and the INDNational Institutes of Health (NIH) for a Phase 1 clinical trial to be led and funded by the NIH’s National Institute of IL12 is open;
Localized regenerative therapeutics included one developmentAllergy and Infectious Diseases. We are also developing a multivalent booster candidate, VEGF-A (AZD8601). The program is being led by AstraZeneca through clinical developmentmRNA-1273.211, which combines mRNA-1273 (Moderna’s authorized vaccine against ancestral strains) and isthe Beta variant in a Phase 2a clinical trial;single vaccine.



32
Table of Contents
Systemic secreted therapeutics includedData from our Phase 2 study showed that a single 50 µg dose of mRNA-1273, mRNA-1273.351 or mRNA-1273.211 given as a booster to previously vaccinated individuals (n=20 per group) increased neutralizing antibody titer responses against SARS-CoV-2 and important variants of concern, including the Gamma variant (or P.1, first identified in Brazil), the Beta variant, and the Delta variant (B.1.617.2). Neutralizing antibody levels following the boost approached those observed after primary vaccination with two doses of 100 µg of mRNA-1273. These data have been published in Nature Medicine. Safety and tolerability profiles following third dose booster injections of 50 µg of mRNA-1273, mRNA-1273.351 or mRNA-1273.211 were generally comparable to those observed after the second dose of mRNA-1273 in the previously reported Phase 2 and Phase 3 studies. Our Phase 2 study to evaluate three development candidates: antibody against Chikungunya virus (mRNA-1944), Relaxin (AZD7970)approaches to boosting is ongoing. We are also in the process of developing a booster tailored to the Delta variant (mRNA-1273.617), and Fabry disease (mRNA-3630). The antibody against Chikungunya virus
anticipate developing a multivalent booster (referred to as mRNA-1273.213) that combines mRNA-1273.617 with another COVID-19 candidate.


Other Business Updates

On November 1, 2021, we announced that, as part of our commitment to sustainability, we will work to achieve net-zero carbon emissions from our operations globally by 2030. These efforts to reduce our environmental impact are expected to include implementing key initiatives to reduce the carbon footprint from both our existing and future facilities, encouraging green transportation and working with our suppliers as they move toward their own carbon reduction goals.

On November 2, 2021, we announced that we have entered into a strategic research and development candidate is in collaboration with DARPAMetagenomi, Inc., focused on advancing novel gene editing technologies for in vivo human therapeutic applications. The collaboration will utilize Metagenomi’s next generation gene editing tools and the program is in a Phase 1 clinical trial. The Relaxin program in collaboration with AstraZeneca and the Fabry disease program are both in preclinical development; and
Systemic intracellular therapeutics included four development candidates: MMA (mRNA-3704), PA (mRNA-3927), PKU (mRNA-3283), and GSD1a (mRNA-3745). The MMA program has an open IND, and the PA, PKU, and GSD1a programs are in preclinical development.
Since reporting on the quarter ended December 31, 2018, we reported the following updates for our development candidates:
RSV vaccine (mRNA-1777 and mRNA-1172): Merck has filed an IND with the FDA and plans to run a Phase 1 study for a follow-on development candidate (mRNA-1172), a vaccine for RSV which has shown enhanced potency in preclinical studies and uses a Merck proprietary formulation. As a result, further development of mRNA-1777 has been paused and next steps will be determined based on data from the new mRNA-1172 Phase 1 study.
CMV vaccine (mRNA-1647): The first three dose levels in our ongoing study of mRNA-1647 are fully enrolled, and the study is currently enrolling subjects into the fourth (300 µg) dose cohort. The Phase 1 study is randomized, observer-blind and placebo-controlledleverage Moderna’s mRNA platform, as well as LNP delivery technologies, with the goal of evaluating the safety and immunogenicity of mRNA-1647,developing curative therapies for patients with serious genetic diseases.

Key Updates for our Other Development Candidates

•Cytomegalovirus (CMV) vaccine (mRNA-1647): Our vaccine against CMV (mRNA-1647) is a vaccine againstcombining six mRNAs in a single vial, which encode for two antigens located on the surface of CMV: five mRNAs encoding the subunits that form the membrane-bound pentamer complex and one mRNA encoding the full-length membrane-bound glycoprotein B (gB). Both the pentamer and gB complexesare essential for CMV to infect barrier epithelial surfaces and gain access to the body. mRNA-1647 is designed to produce an immune response against both the pentamer and gB for the prevention of CMV.
CMV infection.
VZV vaccine (mRNA-1278): Merck has discontinued preclinical development of mRNA-1278, an investigational vaccine for VZV (the virus that causes shingles). Merck has returned rights to us, and we will not continue development at this time

Antibody against Chikungunya virus (mRNA-1944): We completed enrollmentBased on the interim analysis of the secondPhase 2 study, which we announced in April 2021, the 100 μg dose level cohort (0.3 mg/kg, 8 subjects)has been chosen for the Phase 3 pivotal study for mRNA-1647, known as the CMVictory study, which will evaluate the prevention of primary CMV infection in seronegative women ages 16-40 years. We plan to enroll up to a total of 8,000 participants, including 6,900 women of child-bearing age from approximately 150 sites across the U.S., Europe and Asia-Pacific into the Phase 3 study, and the first participant was dosed in the Phase 1 trial of mRNA-1944 in healthy adults.
3 study on October 26, 2021. Moderna owns worldwide commercial rights for mRNA-1647.
Propionic acidemia (PA) (mRNA-3927): The European Commission has adopted the recommendation from the Committee for Orphan Medicinal Products for orphan drug designation for mRNA-3927, a development candidate for propionic acidemia (PA).

Glycogen storage disease type 1a (GSD1a) (mRNA-3745): We designated mRNA-3745 as a new development candidate for the rare inherited metabolic disease GSD1a. Please refer to the section of this Form 10-Q entitled “Overview-New Development Candidate in our Systemic Intracellular Therapeutics Modality” for the program description for mRNA-3745.
Update to a Development Candidate in our Prophylactic Vaccines Modality
RSV vaccine (mRNA-1777 and mRNA-1172): Summary
Our strategic collaborator Merck has determined to pursue a Phase 1 study with an improved RSV antigen and a proprietary Merckformulation before conducting a Phase 2a study
•Respiratory syncytial virus ("RSV")(RSV) vaccine (mRNA-1345): mRNA-1345 is one of the most common causes of respiratory disease in infants and the elderly. More than 86,000 children and about 177,000 older adults are hospitalized due toa vaccine against RSV associated respiratory infections each year in the United States. To date, no effective vaccine to prevent RSV has been approved, and the only approved prophylaxis treatment is limited to the monoclonal antibody palivizumab, marketed as Synagis in the United Statesencoding for pediatric patients at high risk for RSV infection. In collaboration with Merck, we designed mRNA-1777 to encode a membrane-anchored version of stabilized prefusion F protein, the main target of potently neutralizing and protective antibodies. This vaccine is administered as a single dose with no boost. The Phase 1 trial is currently ongoing in Australia, forglycoprotein, which we are the sponsor.
Our strategic collaborator, Merck, has submitted an IND for a Phase 1 trial of a second mRNA vaccine (mRNA-1172). In preclinical models, the new development candidate, which uses a proprietary Merck formulation, demonstrated enhanced potency over mRNA-1777. Following the first Phase 1 study with mRNA-1172, we and Merck will determine whether to pursue further clinical development.
RSV vaccine (mRNA-1777 and mRNA-1172): Disease overview
RSV impacts young children and older adults, and no approved vaccine exists today
RSV causes upper and lower respiratory tract illness worldwide and is transmitted primarily via contamination of environmental surfaces with infectious secretions, or possibly also via aerosolized droplets from an infected person. Following introduction of RSV into the nose or upper respiratory tract, the virus replicates primarily in the ciliated cells of the respiratory epithelium. Upper respiratory symptoms typically begin within several days of exposure. In healthy adults, the infection may remain confined to the

upper respiratory tract. However, in those with compromised immune systems, such as premature infants, the elderly, or individuals with underlying respiratory disease, lower respiratory tract infections commonly occur and may manifest as wheezing, bronchiolitis, pneumonia, hospitalization or even death. Infections with RSV follow a seasonal pattern, occurring primarily in the Northern hemisphere between the months of November and April, and in the Southern hemisphere primarily between March and October.
More than 86,000 children are hospitalized due to RSV infection each year in the United States. About 177,000 older adults are hospitalized each year in the United States due to RSV-associated respiratory infections, with approximately 14,000 deaths as a result. RSV infection is common in adults over the age of 60 years, occurring in an average of 5.5% of older adults every season and resulting in physician’s visits for 17% of infected older adults. The cost of RSV disease to society can be considerable.
RSV vaccine (mRNA-1777 and mRNA-1172): Our product concept
Prevent RSV infections with an improved RSV antigen using a single vaccine dose
Our RSV development candidates, mRNA-1777 and mRNA-1172, include an mRNA encoding an engineered form of the RSV fusion (F) glycoprotein stabilized in the prefusion conformation in an LNP. The F protein is present as a homotrimer on the surface of RSV. The prefusion conformation of the F protein interacts with a host cell membrane, and the conformational change from prefusion to postfusion drives virus fusion with a host cell. The majority of RSV-specific neutralizing antibodies in convalescent people are directed to epitopes present only on the prefusion conformation of the F protein. The prefusion state of the F protein elicits a superior neutralizing antibody response compared to the postfusion statestate. The Phase 1 study of mRNA-1345 to evaluate the tolerability, reactogenicity and immunogenicity of mRNA-1345 in animal studies conductedyounger adults, older adults, women of child-bearing age and children is ongoing. All younger adult (ages 18-49 years) and older adult (ages 65-79 years) cohorts are fully enrolled. Dosing in the older adult cohort (ages 65-79 years) is ongoing. Phase 1 interim data from the older adult cohort showed that a single mRNA-1345 vaccination at 50 µg, 100 µg or 200 µg boosted neutralizing antibody titers against RSV-A by others.approximately 14-fold and against RSV-B by approximately 10-fold. We are preparing for a global Phase 2/3 study with approximately 34,000 participants, which will test the 50 µg dose and we expect the trial to begin by the end of 2021. The age range of toddlers in this de-escalation Phase 1 study is 12-59 months and the pediatric cohort is ongoing, as are the cohorts of women of child-bearing potential. The FDA has granted Fast Track designation for mRNA-1345 in adults older than 60 years of age. There is no approved vaccine for RSV. Moderna owns worldwide commercial rights to mRNA-1345.

•Seasonal influenza (flu) (mRNA-1010, mRNA-10202 and mRNA-1030): In January 2021, we announced three development candidates for a seasonal influenza vaccine (mRNA-1010, mRNA-1020 and mRNA-1030). In July 2021, the first participants were dosed in the Phase 1/2 study of mRNA-1010, our first generation flu program, and the Phase 1 portion of the Phase1/2 study is fully enrolled. Preparation for the Phase 2 portion of the study are ongoing. mRNA-1010 is a quadrivalent seasonal influenza vaccine candidate targeting WHO recommendations including A schematicH1N1, H3N2 and influenza B Yamagata and Victoria lineages. Our vision is to develop a respiratory vaccine for the adult and elderly populations combining seasonal flu, a COVID-19 variant booster and RSV. Moderna owns worldwide commercial rights to mRNA-1010.
33
Table of Contents

•Human metapneumovirus (hMPV) and parainfluenza type 3 (PIV3) vaccine (mRNA-1653): We are enrollingseropositive pediatric participants (12-36 months of age) in the Phase 1 study of hMPV/PIV3 study (mRNA-1653). The first cohort in this study is fully enrolled. Moderna owns worldwide commercial rights to mRNA-1653.

•Pediatric RSV and hMPV combination vaccine (mRNA-1365): mRNA-1365 is a vaccine against RSV encoding for the prefusion F protein onglycoprotein and the surface ofhMPV F protein. Moderna owns worldwide commercial rights to mRNA-1365.

•Zika vaccine (mRNA-1893): mRNA-1893 is a host cell, with sites recognized by neutralizing antibodies, is depicted in the figure below; the inset on the leftvaccine against ZIKV. After administration of the figure showsvaccine, the intended designmRNA is translated as a polyprotein and processed inside the cell to make a virus-like particle (VLP). This process mimics the response of the mRNA formulated in LNP,cell after natural infection. This program is funded by BARDA. In 2020, we announced positive Phase 1 data showing that mRNA-1893 was well-tolerated at all dose levels, and safety and tolerability did not appear to be influenced by the inset on the right shows the intended prefusion F protein on the surfaceserostatus of the cell. We believe thatparticipants at baseline. All dose levels of mRNA-1893 induced a strong neutralizing antibodies elicited by our RSV development candidates may leadZIKV-specific antibody response in baseline flavivirus seronegative participants. Geometric mean titers (GMTs) post-dose two were comparable to an efficacious RSV vaccine.
rsv.jpg
RSV vaccine (mRNA-1777 and mRNA-1172): Preclinical information
mRNA vaccines encoding different versionsthose in a small panel of Zika convalescent sera collected during the prefusion F protein have been evaluated in mice, cotton rats, and African green monkeys ("AGM"). These studies demonstrate that mRNA vaccines encoding the prefusion F protein induce robust neutralizing antibody titers in preclinical species tested, do not lead to vaccine-enhanced respiratory disease (evaluated in cotton rats), and are protective against RSV challenge (evaluated in cotton rats and AGM). The data for a study in AGM are shown in the figure below.epidemic. In this study, one group of AGM (4 per group) was vaccinated intramuscularlyparticipants with vaccine, a second group was infected with 5.5 log 10 plaque forming units, or pfu, of RSV strain A2 intranasally as a positive control, and a third group received no vaccine as a negative control, each on weeks 0, 4, and 8. Serum neutralizing antibody titers, or SN titers, were measured on the indicated weeks and are shown in panel A. All animals were challenged intranasally and intratracheally on study week 10. On multiple time points after the challenge, virus present in bronchoalveolar lavage, or BAL, fluid was quantified by plaque assay as shown in panel B. In this study, we observed an increase in serum neutralizing titers with each vaccine dose. The animals that received mRNA-1777 showed complete protection (no virus detected) in lungs, similar to the control group immunized with RSV A2. These results are shown in the figures below.

Serum neutralizing titers for mRNA-1777 in non-human primate study
a0001193125183449821_image43.jpg
Panel (A)
Lung viremia detected post challenge in non-human primate study with mRNA-1777
a0001193125183449821_image44.jpg
Panel (B)
Recent studies in cotton rats and AGM demonstrate immunogenicity of mRNA-1172. The data for a study in AGM are shown below. In this study, two groups of AGM (4 per group) were vaccinated intramuscularly with the same dose level (µg) of vaccine, a fifth group was infected with 5.5 log10 plaque forming units, or pfu, of RSV strain A2 intranasally as a positive control, and a sixth group received no vaccine as a naïve control, each on weeks 0, 4, and 8. Serumpre-existing flavivirus antibodies, neutralizing antibody titers were measured on the indicated weeks and are shown in panel C. In this study, mRNA-1172 was shown to be significantly more potent than mRNA-1777.

Serum neutralizing titers for mRNA-1172 and mRNA-1777 in non-human primate study
a190430rsvmrna1172andmrna177.jpg
Panel (C)

RSV vaccine (mRNA-1777 and mRNA-1172): Clinical data
Merck has submitted an IND for mRNA-1172 and plans to conduct a Phase 1 trial for mRNA-1172, data from which will be used to inform planning of a Phase 2a trial for our RSV vaccine
The Phase 1 trial for mRNA-1777 has met its objectives of assessing its safety and tolerability profile versus placebo including capturing solicited and unsolicited local and systemic adverse events. The Phase 1 trial for mRNA-1777 has also demonstrated immunogenicity and we have observed a humoral immune response as measured by neutralizing antibody titers against RSV A for dose levels one, two, and three of mRNA-1777. Based on the interim data and other considerations, Merck will not advance mRNA-1777 into Phase 2a at this time.
The mRNA-1777 Phase 1 study is a randomized, partially double-blind, placebo-controlled, dose-escalation first-in-human study to describe the safety, tolerability, and immunogenicity in healthy adult subjects in Australia. We are the sponsor for this trial. The study evaluated three dose levels in healthy younger adults, and 4 dose levels in healthy older adults. All subjects were givenboosted with a single intramuscular injection. The key objectivesdose of the study included:
assess the safety and tolerability of mRNA-1777 versus placebo; and
determine the immunogenicity of mRNA-1777 by measuring serum neutralizing antibody titers against RSV.
The key endpoints for the study included safety and tolerability of mRNA-1777.
The study is being conducted in two parts. Part A evaluates healthy younger subjects (ages > 18 and < 49 years) and Part B evaluates healthy older subjects (ages > 60 and < 79 years). There are four dose levels, where the highest dose, or dose four, is twelve times the lowest dose, or dose one, and dose three, the second highest dose, is eight times the lowest dose. In Part A, dose levels one, two, and three are being evaluated. In Part B, all four dose levels are being evaluated. The first sentinel dose cohort was triggered after review of the first sentinel dose level cohort in Part A. For both Parts A and B, the safety data from the sentinel safety group for each dose level cohort was reviewed before permitting enrollment of the expansion group within that dose level cohort and the safety data of each expansion group was reviewed before permitting dose escalation/enrollment of the sentinel safety group at the next dose level. Part B includes the highest dose level, dose four, which was enrolled after review of the available safety and immunogenicity data of the preceding Part B dose level cohorts. Expansion groups in Part A and B were both randomized 3:1 mRNA-1777: placebo.
This 200-subject study is fully enrolled and all subjects have been dosed. As of April 9, 2018, we have the majority of data through three months (90 days) post-vaccination for younger subjects in dose levels one and two, and for older subjects in dose levels one, two, and three. Based on the interim data as of April 2018, dose levels one, two, and three of mRNA-1777 were observed to elicit a humoral immune response as measured by neutralizing antibody titers against RSV A, neutralizing antibody titers against RSV B (dose level three only, dose levels one and two have yet to be assayed), absolute serum antibody titers to RSV prefusion F protein and

RSV postfusion F protein, and competing antibody titers to RSV prefusion F protein in a dose-dependent manner up to dose level two in both younger and older subjects. The immune response measured by neutralizing antibody titers against RSV A in older adults that received dose level three of mRNA-1777 was not higher than that of the subjects that received dose level two. We have observed an increase in neutralizing antibody titers relative to placebo in younger adult subjects in panel A and older adult subjects in panel B who received our RSV vaccine as shown inby the figure below. InGMTs and the figure, geometric mean titer and 95% confidence interval are depicted by time for neutralizing antibody titers against RSV A for older and younger subjects. At day ninety, between 10 and 19 healthy younger subjects and between 11 and 27 healthy older subjects were tested at each dose level.
Neutralizing antibody titers in healthy younger subjects
[Ages>18 and< 49 years] in Phase 1 trial for mRNA-1777 per protocol set
a0001193125183449821_image45.jpg
Panel (A)
Neutralizing antibody titers in healthy older subjects
[Ages>60 and< 79 years] in Phase 1 trial for mRNA-1777 per protocol set
a0001193125183449821_image46.jpg
Panel (B)
In addition, based on interim data as of April 2018, we observed an increase in T cell response relative to baseline at day 15 and day 60 in both healthy younger and healthy older adult subjects vaccinated with dose levels two and three of mRNA-1777.
Based on interim safety data as of April 9, 2018, mRNA-1777 was well tolerated with no dose limiting toxicities at dose levels one, two, and three in both the younger and older adults. As of September 2018, the highest dose level, which was evaluated in older subjects only, dose level four, was not as well tolerated as the lower dose levels. However, across all treatment arms, there were no treatment-related serious adverse events, or SAEs, treatment emergent adverse events, or TEAEs, leading to withdrawals, adverse events, or AEs of special interest, or new onset of chronic illnesses or autoimmune disorders in either of the age cohorts. There were no patterns in clinically significant laboratory abnormalities.

As of September 19, 2018, weseroconversion rates. We have observed 15 SAEs in nine subjects, all of which were deemed unrelated to study product. These SAEs occurred approximately one to ten months from receipt of study product and included aortic aneurysm repair, paralytic ileus, spinal decompression, death from pre-existing cardiomyopathy, hernia, transient ischemic attack, peripheral vascular disorder, vasovagal syncope, diagnosis of non-small cell lung cancer, anterior cruciate ligament tear, left knee tendon tear, right knee tendon tear, left patella dislocation, right patella dislocation, and bilateral patella tendon repair.
The trial is ongoing and, consistent with the study protocol, we remain blinded to treatment at the individual subject level and continue to collect safety, tolerability, and immunogenicity data through day 365 of the study. In parallel, Merck plans to conductstarted a Phase 1 trial for mRNA-1172, data from which will be used2 study that is expected to inform planning of a possible Phase 2a trial for the RSV vaccine. Merck submitted the IND for mRNA-1172 in May 2019.
New Development Candidate in our Systemic Intracellular Therapeutics Modality
Glycogen storage disease type 1a (mRNA-3745): Summary

Our approach to glycogen storage disease type 1a using an mRNA encoding for intracellular human glucose 6-phosphatase

Glycogen storage disease type 1a ("GSD1a") is an inherited metabolic disease caused by the deficiency in the catalytic activity of glucose 6-phosphatase (“G6Pase”), which is encoded by the glucose 6-phosphatase gene (“G6PC”). The G6Pase enzyme is involved in the metabolic pathways of glycogenolysis and gluconeogenesis which allow the liver and kidney to release glucose into the blood. Those affected by GSD1a present with life-threatening hypoglycemia and a wide range of severe metabolic derangements and long-term complications such as hyperlipidemia, lactic acidemia, hepatomegaly, hepatocellular adenomas, and end-stage renal disease. The standard of care consists of strict diet control. Enzyme replacement therapy (“ERT”) is not an option for these patients due to challenges associated with delivering an enzyme inside the cell. Strict diet control via the frequent consumption of uncooked cornstarch is effective in improving hypoglycemia. However, the underlying pathologies continue and its efficacy in preventing the long-term metabolic complications has yet to be established. With our mRNA platform, cells in the liver may be instructed to produce functional G6Pase, with the goal of restoring the homeostasis of glycogenolysis and gluconeogenesis pathways and correcting the underlying pathologies. We are developing an intravenously administered mRNA which encodes for G6Pase and is encapsulated in our proprietary lipid nanoparticle ("LNP"). We have demonstrated activity in mouse models in the form of reduction in both liver and serum biomarkers and improvements in liver morphology. We plan to conduct a Phase 1 clinical trial for mRNA-3745.

Glycogen storage disease type 1a (mRNA-3745): Disease overview

There are no approved therapies for GSD1a that address the enzymatic deficiency

GSD1a is an inherited metabolic disorder caused by a deficiency in the catalytic activity of G6Pase, an enzyme encoded by G6PC gene and involved in two metabolic pathways associated with glucose homeostasis. G6Pase catalyzes the hydrolysis of glucose-6-phosphate to glucose and inorganic phosphate, the final step of glycogenolysis and gluconeogenesis that mainly takes place in liver and kidney. GSD1a patients suffer from severe fasting hypoglycemia, hepatomegaly, nephromegaly, lactic acidemia, hypertriglyceridemia, hyperuricemia, hypercholesterolemia, hepatic steatosis, and growth retardation. In addition, hepatocellular adenomas occur in 70% to 80% of GSD1a patients by their third decade of life and carries risk of transformation into hepatocellular carcinomas. Proteinuria has been observed in over half of patients above 25 years of age.
GSD1a occurs inenroll approximately 1:100,000 live births800 participants in the United States and European Union butPuerto Rico. There is more commonno approved vaccine for Zika.

•Human immunodeficiency virus (HIV) (mRNA-1644 and mRNA-1574): In January 2021, we announced two vaccine programs against HIV. mRNA-1644 is a novel approach to HIV vaccine strategy in Ashkenazi Jews where the incidence is reported to be 1:20,000 live births. There are an estimated 2,500 people in the United States and over 4,000 people in the European Union with GSD1a. Although strict diet therapy, including frequent feeding with uncooked cornstarch, allows GSD1a patients to live into adulthood by preventing hypoglycemia, the underlying pathological processes remain uncorrected resulting in the development of many long-term complications including liver adenomas and hepatocellular carcinoma.
One option for GSD1a patients may be treatment with gene therapy. We believe there are potential advantages for mRNA therapeutics for this disorder over gene therapy.

Glycogen storage disease type 1a (mRNA-3745): Our product concept

We intend to utilize the cells in the human body to produce G6Pase intracellularly

We believe that our platform can address GSD1a with its ability to instruct cells in the human body to produce complex functional intracellular membrane proteins such as G6Pase. Our program, mRNA-3745, consists of an mRNA encoding for modified human G6Pase encapsulated in our proprietary LNPs. The human G6Pase sequence is modified for improved protein production and G6Pase

activity. mRNA-3745 ishumans designed to be administered intravenouslyelicit broadly neutralizing HIV-1 antibodies (bNAbs) and encodes G6Pase protein to restore this deficient or defective enzyme as illustratedis being developed in the figure below.
a190418gsd1acellimage.jpg
Glycogen storage disease type 1a (mRNA-3745): Preclinical information

We have demonstrated the ability to improve hypoglycemia and other metabolic abnormalities associated with GSD1a in a mouse model

We have conducted several in vitro and in vivo pharmacology studies to demonstrate preclinical proof-of-concept for GSD1a therapy. mRNA encoding for G6Pase introduced in human cells resulted in robust production of active G6Pase with subcellular localization into endoplasmic reticulum. We have examined the activity of mRNA encoding for human G6Pase in a liver-specific G6Pase -/- mouse model (G6PC.LKO). Like GSD1a patients, the G6PC.LKO mice are unable to produce endogenous glucose, leading to severe hypoglycemia during the fasting state.
In a dose-response study performed in G6PC.LKO mice, we treated the mice with three different doses of 0.2, 0.5, and 1 mg/kg of G6Pase mRNA encapsulated in our proprietary LNP and examined fasting glucose, serum triglycerides, and liver enzymes (n=5-8). Of note, mice treated with G6Pase mRNA showed a dose-dependent improvement in fasting glycemia and a reduction in serum triglycerides, without a significant increase in liver enzymes (e.g. alanine transaminase – ALT). Fasting blood glucose and triglycerides are shown in the figure below. Each bar represents the mean ± standard deviation. Single and double asterisk denotes p < 0.05 and p < 0.0001, respectively, by one-way ANOVA, followed by Dunnett’s post-hoc test for multiple comparisons.
Serum biomarkers after single dose of G6Pase mRNA in G6PC.LKO mice

a190419gsd1a1.jpg


In the same study, a reduction in liver weight compared to the control-treated group was observed after 24 hours of administration of G6Pase encoded mRNA in LNP. The reduction in liver weight was associated with significant improvement in liver morphology presumably due to reduction in liver glucose 6-phosphate, glycogen, and triglycerides.

Reduction in liver weight 24 hours after IV administration of G6Pase mRNA in G6PC.LKO mice

a190419gsd1a2.jpg

In addition, data for a 7-week repeat-dose study in G6PC.LKO mice receiving G6Pase mRNA in LNP at 0.25 mg/kg IV every other week have shown a pronounced improvement in fasting glycemia, in comparisoncollaboration with the G6PC.LKO mice receiving a control mRNA treatment as shown below (n=7-9).

Restoration of blood glucose above therapeutic threshold with repeat dosing of G6Pase mRNA in G6PC.LKO mice

a190419gsd1a3.jpg

Glycogen storage disease type 1a (mRNA-3745): Clinical plan

We are planning a Phase 1 clinical trial

We plan to conduct an open-label, dose escalationInternational AIDS Vaccine Initiative (IAVI) and the Gates Foundation. A Phase 1 study for mRNA-1644 will use iterative human testing to validate the approach and antigens and multiple novel antigens will be used for germline-targeting and immuno-focusing. A second approach, mRNA-1574, is being evaluated in collaboration with the National Institutes of mRNA-3745 in adolescentHealth (NIH) and adult patients with GSD1a inincludes multiple native-like trimer antigens.

•Propionic acidemia (PA) (mRNA-3927): Enrollment for the United States.Phase 1/2 clinical trial for mRNA-3927, our therapy for the treatment of propionic acidemia, or PA, is ongoing and the first cohort is fully enrolled. The objectives of thisPhase 1/2 study areis designed to evaluate the safety and tolerability of mRNA-3745,mRNA-3927 in patients with PA. PA, is a rare, life-threatening, inherited metabolic disorder due to assessa defect in the pharmacodynamic response through changes in maintenance of euglycemia, and to characterizemitochondrial enzyme propionyl-CoA carboxylase (PCC). It primarily affects the pharmacokinetic profile of mRNA-3745.


Third-Party Strategic Alliances

Merck (NYSE: MRK)—Strategic Alliances in Infectious Diseases

pediatric population. There is no approved therapy for PA, including no approved enzyme replacement therapy. We have established a multi-faceted relationship with Merck that includes distinct strategic alliances directed toreceived Rare Pediatric Disease Designation and Orphan Drug Designation from the research, development,FDA and commercialization of mRNA medicinesOrphan Drug Designation from the European Commission for the prevention of viral infections andPA program. The FDA has also granted Fast Track designation to mRNA-3927. This is the first development candidate to enter the clinic in our intracellular therapeutics modality.

•Methylmalonic acidemia (MMA) (mRNA-3705): Enrollment for the Phase 1/2 clinical trial for mRNA-3705, our therapy for the treatment of cancer.

2015 Strategic Alliancemethylmalonic acidemia, or MMA, is ongoing and the first patient has been dosed. The Phase 1/2 study is designed to evaluate the safety and tolerability of mRNA-3705 in patients with Merck-Infectious Disease

In January 2015, we entered intoMMA. MMA is a Master Collaboration and License Agreement with Merck, which was amendedrare, life-threatening, inherited metabolic disorder that is primarily caused by a defect in January 2016, June 2016, and May 2019, and which we refer to, as amended, as the 2015 Merck Agreement. Pursuantmitochondrial enzyme methylmalonyl-coenzyme A mutase, or MUT. It primarily affects the pediatric population. There is no approved therapy that addresses the underlying disorder, including no approved enzyme replacement therapy, due to the 2015 Merck Agreement, wecomplexity of the protein and Merckits mitochondrial localization.

•Glycogen storage disease type 1a (GSD1a) (mRNA-3745): The FDA has granted mRNA-3745 Orphan Drug Designation and completed its review of the IND application allowing it to proceed to clinic. Individuals with GSD1a have agreeda deficiency in glucose-6-phosphatase resulting in pathological blood glucose imbalance.mRNA-3745 is an IV-administered mRNA encoding human G6Pase enzyme, designed to research, develop, and commercialize potential mRNA medicinesrestore the deficient or defective intracellular enzyme activity in patients with GSD1a. Moderna owns worldwide commercial rights to mRNA-3745.

•Crigler-Najjar Syndrome Type 1 (CN-1)(mRNA-3351): mRNA-3351 encodes for the prevention of infectionshuman UGT1A1 and is designed to restore the missing or dysfunctional proteins that causes Crigler-Najjar Syndrome Type 1. mRNA-3351 has been granted Rare Pediatric Disease designation by RSV. Pursuantthe FDA. We are providing investigational mRNA-3351 to the 2015 Merck Agreement, Merck is primarilynonprofit Institute for Life Changing Medicines (ILCM) free of charge. ILCM will be responsible for research,the clinical development of mRNA-3351 and commercialization activitiesplans to initiate clinical studies of mRNA-3351 in 2022.

•IL-2 Mutein (mRNA-6231): mRNA-6231 is an mRNA-encoded IL-2 modified for the expansion of regulatory T cells. A Phase 1 study in healthy volunteers has dosed its first participants. It is also our first subcutaneously administered therapeutic program.

34
Table of Contents
•Intratumoral Immuno-Oncology: The Phase 1 trial evaluating Triplet (mRNA-2752), which includes OX40L and associated costs of such researchtwo proinflammatory cytokines, IL-23, and commercialization. WeIL-36γ, encapsulated in our proprietary LNP, is ongoing. New expansion cohorts are responsible for designing and manufacturing all mRNA constructs for preclinical andalso enrolling.

•Personalized cancer vaccine (mRNA-4157): Our personalized cancer vaccine, or PCV, is currently being evaluated in a Phase 1 and Phase 2 clinical development purposes,study. The randomized, placebo-controlled Phase 2 study investigating a 1 mg dose of mRNA-4157 in combination with Merck’s pembrolizumab (KEYTRUDA®), compared to pembrolizumab alone, for the adjuvant treatment of high-risk resected melanoma is fully enrolled (n=150). The primary endpoint of the Phase 2 study is recurrence-free survival at 12 months. The Phase 1 in multiple cohorts is ongoing and Merck pays us for such manufacture,the expanded head and neck cohort is recruiting additional patients. Moderna shares worldwide commercial rights to mRNA-4157 with Merck.

•Cystic Fibrosis (CF) (VXc-522): VXc-522 is an mRNA therapeutic that we are responsibledesigning in collaboration with Vertex Pharmaceuticals. VXc-522 is designed to treat the underlying cause of CF by enabling cells in the lungs to produce functional cystic fibrosis transmembrane conductance regulator (CFTR) protein for certain costs associatedthe treatment of the 10% of patients who do not produce any CFTR protein. IND-enabling studies are underway and Vertex expects to submit an IND for this program in 2022. VXc-522 is being advanced by Vertex.

35
Table of Contents
Our Pipeline

The following chart shows our current pipeline of 37 development programs, grouped into modalities—first our two core modalities where we believe we have reduced the technology risk, followed by our four exploratory modalities in which we are continuing to investigate the clinical use of mRNA medicines. In the third quarter of 2021, we refined the way we track our development programs and now separately track each indication of our COVID-19 and RSV vaccine candidates, which resulted in an increase in the number of our development.

mrna-20210930_g2.jpg

Abbreviations: AZ, AstraZeneca; BARDA, Biomedical Advanced Research and Development Authority; CMV, Cytomegalovirus; DARPA, Defense Advanced Research Projects Agency; EBV, Epstein-Barr virus; HIV, human immunodeficiency virus; hMPV, human metapneumovirus; IAVI, International AIDS Vaccine Initiative; ILCM, Institute for Life Changing Medicines; IL-2, interleukin 2; IL-12, interleukin 12; IL-23, interleukin 23; IL-36γ, interleukin-36 gamma; NIH, National Institutes of Health; OX40L, wildtype OX40 ligand; RSV, respiratory syncytial virus; VEGF-A, vascular endothelial growth factor A.
36
Table of Contents

The breadth of biology addressable using mRNA technology is reflected in our current development pipeline of 37 programs. The diversity of proteins made from mRNA within our development pipeline is shown in the figure below.
mrna-20210930_g3.jpg
We have developed seven modalities, which are summarized as follows:
•Prophylactic vaccines: Our prophylactic vaccines modality currently includes 23 development programs, 13 of which have entered into clinical trials. We have ongoing Phase 1 trials for our RSV vaccine in pediatrics and older adults (mRNA-1345), flu vaccine (mRNA-1010), and hMPV/PIV3 vaccine (mRNA-1653). We have ongoing Phase 2 studies for our Zika vaccine (mRNA-1893) and CMV vaccine (mRNA-1647). The Phase 3 trial for our CMV vaccine commenced in October 2021. Our COVID-19 vaccine (mRNA-1273) is described in detail above. Our ten preclinical programs within our prophylactic vaccines modality are for our COVID-19 variant- specific candidate (mRNA-1273.213), our combined COVID-19 and flu vaccine and flu vaccine (mRNA-1073), our seasonal flu vaccines (mRNA-1020 and mRNA-1030), our combination pediatric RSV and hMPV vaccine (mRNA-1365), Epstein-Barr virus (EBV) (mRNA-1189), EBV therapeutic vaccine (mRNA-1195), Nipah virus (mRNA-1215) and HIV (mRNA-1644 and mRNA-1574). Three other vaccines as part of public health programs have had positive Phase 1 readouts―H10N8 vaccine (mRNA-1440), H7N9 flu vaccine (mRNA-1851), and Chikungunya vaccine (mRNA-1388)― but are not being further developed without government or other funding.

•Systemic secreted and cell surface therapeutics: We have four systemic secreted and cell surface therapeutics development candidates in our pipeline. Our secreted programs include our antibody against Chikungunya virus (mRNA-1944), Relaxin (mRNA-0184) for cardiac disorders, PD-L1 (mRNA-6981) for autoimmune hepatitis and IL-2 (mRNA-6231) for autoimmune disorders. Our antibody against Chikungunya virus (mRNA-1944) has had positive Phase 1 readouts to date, but we do not have plans to advance to a Phase 2 study. Our IL-2 program (mRNA-6231) is currently in a Phase 1 study, and is our first autoimmune therapeutic candidate to enter the clinic. The remaining programs for Relaxin (mRNA-0184) and PD-L1 (mRNA-6981) are currently in preclinical development.

•Cancer vaccines: We are currently developing two programs within our cancer vaccines modality. Our personalized cancer vaccine program mRNA-4157 is being developed in collaboration with the conduct ofMerck and is in a multiple-arm Phase 1 trial and a randomized Phase 2 trial, which is fully enrolled. Our second program within this modality, mRNA-5671, is a KRAS vaccine. Our strategic collaborator Merck has a Phase 1 clinical trial ongoing for mRNA-5671.

•Intratumoral immuno-oncology: We have two programs in this modality. Our first program, OX40L/IL-23/IL-36γ (Triplet) (mRNA-2752), is currently in a Phase 1 study that is designed as an RSV vaccine product candidate (mRNA-1172)open-label, multicenter study of intratumoral injections of Triplet (mRNA-2752) alone or in combination with durvalumab (anti-PD-L1). Responsibility for manufacturing mRNA constructs for late stage clinical development and commercialization purposesOur second program, IL-12 (MEDI1191), is to be determined.

The 2015 Merck Agreement includes a three-year period, expected to end on January 12, 2022, during which Merck may continue to preclinically and clinically develop RSV vaccine product candidates that arose duringbeing developed in collaboration with AstraZeneca. AstraZeneca is currently enrolling an initial four-year research period which terminated in January 2019. Merck may, prior to the end of this three-year period, elect to exclusively develop and commercialize up to five RSV vaccine product candidates.

We and Merck have agreed to certain defined exclusivity obligations during the term of the 2015 Merck Agreement with respect to potential mRNA medicines against RSV infection. As part of the May 2019 amendment of the 2015 Merck Agreement, these exclusivity obligations do not restrict Moderna from researching, developing, and commercializing a potential mRNA medicine for the prevention of a specific set of respiratory infections, including RSV, for the pediatric population.

Under the terms of the 2015 Merck Agreement, we received a $50.0 million upfront payment. We are eligible to receive, on a product-by-product basis, up to $300.0 million in aggregate milestone payments upon the achievement of certain development, regulatory, and commercial milestone events. To date, we have received from Merck a clinical milestone payment of $5.0 million with respect to the initiation of aopen-label multicenter Phase 1 clinical trial of intratumoral injections of MEDI1191 alone and in combination with the checkpoint inhibitor, durvalumab.

37
Table of Contents
•Localized regenerative therapeutics: Our localized VEGF-A program, AZD8601, which is being developed by AstraZeneca, has completed a Phase 1a/b trial to describe its safety, tolerability, protein production, and activity in diabetic patients. The study has met its primary objectives of describing safety and tolerability and secondary objectives of demonstrating protein production and changes in blood flow post AZD8601 administration. We believe these data provide clinical proof of mechanism for a Merck RSV vaccine product candidate. In addition, under the termsour mRNA technology outside of the 2015 Merck Agreement, wevaccine setting. The Phase 2a study of AZD8601 VEGF-A, which is being developed for patients with ischemic heart disease undergoing coronary artery bypass grafting surgery with moderately impaired systolic function, led by AstraZeneca, has completed recruitment after enrollment of the low dose cohort (n=11). Moderna has licensed worldwide commercial rights to AZD8601 to AstraZeneca.

•Systemic intracellular therapeutics: We have five systemic intracellular therapeutics development candidates in our pipeline. Our intracellular programs address propionic acidemia, or PA (mRNA-3927), methylmalonic acidemia (MMA) (mRNA-3705), phenylketonuria (PKU) (mRNA-3283), glycogen storage disorder type 1a (GSD1a) (mRNA-3745) and Crigler-Najjar Syndrome Type 1 (CN-1) (mRNA-3351). We have an ongoing Phase 1 clinical trials for PA (mRNA-3927) and MMA (mRNA-3705). PKU (mRNA-3283), GSD1a (mRNA-3745) and CN-1 (mRNA-3351) are eligiblecurrently in preclinical development. The FDA has granted Orphan Drug Designation for mRNA-3745 and has completed its review of the IND application allowing it to receive an additional milestone payment unless Merck elects notproceed to continueclinic. We have entered into a collaboration agreement with furtherthe Institute for Life Changing Medicines (ILCM) to license mRNA-3351 to ILCM with no upfront fees, and without any downstream payments. ILCM will be responsible for the clinical development of mRNA-1172. On a product-by-product basis, we are also entitledmRNA-3351.

•Inhaled pulmonary therapeutics: We have one inhaled pulmonary therapeutic development candidate in our pipeline. Our program addresses cystic fibrosis, or CF (VXc-522), in collaboration partnership with Vertex Pharmaceuticals. VXc-522 is an mRNA therapeutic designed to receive royalties on Merck’s net salestreat the underlying cause of products at rates ranging fromCF by enabling cells in the mid-single digitslungs to low teens, subject to certain reductions, with an aggregate minimum floor. Additionally, concurrent with entering intoproduce functional cystic fibrosis transmembrane conductance regulator (CFTR) protein for the 2015 Merck Agreement in 2015, Merck made a $50.0 million equity investment in us, and concurrent with amending the 2015 Merck Agreement in January 2016, we received an upfront payment of $10.0 million from Merck.

Unless earlier terminated, the 2015 Merck Agreement will continue on a product-by-product and country-by-country basis for so long as royalties are payable by Merck on a given product in a given country. Either party may terminate the 2015 Merck Agreement upon the other party’s material breach, either in its entirety or with respect to a particular program, product candidate, product or country, subject to specified notice and cure provisions. Merck may terminate the 2015 Merck Agreement in full or with respect to a particular product candidate or product upon certain advance notice to us for any reason, or earlier if Merck determines the alliance or product is no longer commercially practicable. If Merck has the right to terminate the 2015 Merck Agreement, in its entirety or with respect to a program, product candidate or product, for our material breach, then Merck may elect, in lieu of terminating the 2015 Merck Agreement, to have the 2015 Merck Agreement remain in effect, subject to reductions in certain payments we are eligible to receive with respect to the terminable rights. Upon a terminationtreatment of the 2015 Merck Agreement with respect10% of patients who do not produce any CFTR protein. IND-enabling studies are underway and Vertex expects to asubmit an IND for this program all licenses and otherin 2022. Moderna has licensed worldwide commercial rights granted to Merck with respectVXc-522 to such program will terminate and the continued development and commercialization of product candidates and products will revert to us. If the 2015 Merck Agreement is terminated with respect to a given product candidate or product, all licenses and other rights granted to Merck with respect to such product candidate or product will terminate and, to the extent we terminated for Merck’s breach, Merck will grant us licenses under select Merck technology for our continued development and commercialization of such product candidate or product. As a part of the May 2019 amendment of the 2015 Merck Agreement, we and Merck agreed to and conclude the collaboration as it relates to development of potential mRNA medicines for other viruses, including mRNA-1278 for the prevention of VZV infection.Vertex.



Financial Operations Overview


Revenue


To date,The following table summarizes revenue for each period presented (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenue:
Product sales$4,810 $— $10,740 $— 
Grant revenue140 145 473 187 
Collaboration revenue19 12 47 45 
Total revenue$4,969 $157 $11,260 $232 

We began to record product sales for our COVID-19 vaccine subsequent to its authorization for emergency use by the FDA and Health Canada in December 2020. For the three months ended September 30, 2021, we have notrecognized $4.8 billion of product sales from our COVID-19 vaccine, of which $1.2 billion was generated any revenuein the United States and $3.6 billion was generated from the salerest of potential mRNA medicines. Ourthe world. For the nine months ended September 30, 2021, we recognized $10.7 billion of product sales from our COVID-19 vaccine, of which $4.6 billion was generated in the United States and $6.1 billion was generated from the rest of the world.

Other than product sales, our revenue has been primarily derived from strategic alliances with Merck, Vertex and AstraZeneca, and from contracts with government-sponsored and private organizations including BARDA, DARPA BARDA, and the Bill & Melinda Gates Foundation and from strategic alliances with AstraZeneca, Merck and Vertex to discover, develop, and commercialize potential mRNA medicines. On January 1, 2019, we adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), using

38
Table of Contents
Grant revenue was comprised as follows for the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2019. We recorded the cumulative-effect adjustment of $28.0 million to the opening balance of accumulated deficit as of January 1, 2019 with a corresponding decrease to deferred revenue.periods presented (in millions):

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Grant revenue:
BARDA (1)
$128 $143 $454 $183 
Other12 2 19 4 
Total grant revenue$140 $145 $473 $187 
Total revenue for_______
(1) For the three months ended March 31, 2019September 30, 2021, $124 million of BARDA grant revenue was related to our mRNA-1273 program and 2018$4 million was $16.0related to our Zika vaccine program. For the nine months ended September 30, 2021, $447 million of BARDA grant revenue was related to our mRNA-1273 program and $29.0$7 million respectively, and is primarily comprised of collaborationwas related to our Zika vaccine program.

Collaboration revenue from our strategic alliances was comprised as follows (in thousands):

 Three Months Ended March 31,
 2019 2018
Collaboration revenue:   
Merck$10,687
 $15,967
Vertex2,614
 4,143
AstraZeneca814
 7,350
Total collaboration revenue$14,115
 $27,460

Cash received from strategic alliances was $4.8 million and $10.6 million for the three months ended March 31, 2019periods presented (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Collaboration revenue:
AstraZeneca$3 $— $7 $17 
Merck7 6 11 18 
Vertex5 6 23 10 
        Other4 — 6 — 
Total collaboration revenue$19 $12 $47 $45 

We expect our product sales to significantly increase in 2021 compared to 2020. As of September 30, 2021, we had signed supply agreements of approximately $25.1 billion for the future supply of our COVID-19 vaccine through 2023 and 2018, respectively. The timinghad deferred revenue of $8.3 billion associated with customer deposits received or billable under these agreements. Additional supply agreements have been agreed upon since September 30, 2021, and others are under discussion for 2021 and 2022 deliveries. In addition, we expect to continue to receive funding from our contract with BARDA. As of September 30, 2021, the remaining available funding, net of revenue, recognition is not directly correlated toearned under our agreement with BARDA for the timingdevelopment of cash receipts. Total deferred revenue related to our strategic alliances as of March 31, 2019 and December 31, 2018mRNA-1273 vaccine was $230.8 million and $274.4 million, respectively.

For further information on our adoption of ASC 606 and our revenue recognition policies, see Note 2 to our condensed consolidated financial statements “Recent Accounting Standards and Accounting Policies”. Our ability to generate revenue from sales of mRNA medicines and become profitable depends upon our ability to successfully develop and commercialize mRNA medicines. For the foreseeable future, we do not expect to generate revenue from product sales.$441 million. To the extent that existing or potential future strategic alliancesproducts generate revenue, our revenue may vary due to many uncertainties in the independent development of our mRNA medicines under theseand pursuant to our strategic alliances and other factors. We expect

Cost of sales

Cost of sales includes raw materials, personnel and facility and other costs associated with manufacturing our commercial product. These costs include production materials, production costs at our manufacturing facilities, third-party manufacturing costs, and final formulation and packaging costs. Cost of sales also includes shipping costs and royalties payable to incur losses for the foreseeable future, and we expect these losses to increase as we continuethird parties based on sales of our research and development efforts. We expect our programs to mature and advance to later stage clinical development, and we expect expenses to increase as we seek regulatory approvals for our investigational medicines and begin to commercialize any approved mRNA medicines.products.


Research and development expenses


The nature of our business and primary focus of our activities generate a significant amount of research and development costs.
Research and development expenses represent costs incurred by us for the following:
•cost to develop our platform;
•discovery efforts leading to development candidates;
•preclinical, nonclinical, and clinical development costs for our programs;
•cost to develop our manufacturing technology and infrastructure; and
•digital infrastructure costs.


The costs above comprise the following categories:
•personnel-related expenses, including salaries, benefits, and stock-based compensation expense;
•expenses incurred under agreements with third parties, such as consultants, investigative sites, contract research organizations or CROs,(CROs) that conduct our preclinical studies and clinical studies,trials, and in-licensing arrangements;

costs of•expenses associated with developing manufacturing capabilities and acquiring developing, and manufacturing materials for preclinical studies and clinical studies,trials, including both internal manufacturing and third-party contract manufacturing organizations or CMOs;(CMOs);
39
Table of Contents
•expenses incurred for the procurement of materials, laboratory supplies, and non-capital equipment used in the research and development process; and
•facilities, depreciation, and amortization, and other direct and allocated expenses incurred as a result of research and development activities.


We use our employee and infrastructure resources for the advancement of our platform, and for discovering and developing programs. Due to the number of ongoing programs and our ability to use resources across several projects, indirect or shared operating costs incurred for our research and development programs are generally not recorded or maintained on a program- or modality-specific basis.
The following table reflects our research and development expenses, including direct program specificprogram-specific expenses summarized by modality and indirect or shared operating costs summarized under other research and development expenses during the three and nine months ended March 31, 2019September 30, 2021 and 20182020 (in thousands)millions):
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
2019 20182021202020212020
Program expenses by modality:   Program expenses by modality:
Prophylactic vaccines$20,262
 $5,591
Prophylactic vaccines$271 $163 $760 $208 
Cancer vaccines10,086
 7,848
Cancer vaccines11 8 35 24 
Intratumoral immuno-oncology4,418
 5,489
Intratumoral immuno-oncology6 4 19 7 
Localized regenerative therapeutics8
 75
Systemic secreted therapeutics4,633
 5,349
Systemic secreted and cell surface therapeuticsSystemic secreted and cell surface therapeutics3 1 5 2 
Systemic intracellular therapeutics6,743
 8,150
Systemic intracellular therapeutics6 2 17 15 
Total program-specific expenses by modality (1)
46,150
 32,502
Total program-specific expenses by modality (1)
297 178 836 256 
Other research and development expenses:   Other research and development expenses:
Discovery programs12,915
 9,146
Discovery programs15 16 43 37 
Platform research24,497
 21,135
Platform research28 24 80 64 
Technical development and unallocated manufacturing expenses21,347
 13,129
Technical development and unallocated manufacturing expenses79 80 165 138 
Shared discovery and development expenses14,883
 6,856
Shared discovery and development expenses77 33 165 76 
Stock-based compensation10,783
 7,356
Stock-based compensation25 13 54 40 
Total research and development expenses$130,575
 $90,124
Total research and development expenses$521 $344 $1,343 $611 
__________
(1)
Includes a total of 20 and 18 development candidates at March 31, 2019 and 2018, respectively. Program-specific expenses include external costs and allocated manufacturing costs of mRNA supply and consumables, and reflect these expenses beginning in the period the program was internally advanced to development or these expenses ending in the period the program was ceased.


(1)Includes a total of 34 and 23 development candidates at September 30, 2021 and 2020, respectively. Program-specific expenses include external costs and allocated manufacturing costs of pre-launch inventory, mRNA supply and consumables, and are reflected as of the beginning of the period in which the program was internally advanced to development or removed if development was ceased.

A “modality” refers to a group of programs with common product features and the associated combination of enabling mRNA technologies, delivery technologies, and manufacturing processes. The program-specific expenses by modality summarized in the table above include expenses we directly attribute to our programs, which consist primarily of external costs, such as fees paid to outside consultants, central laboratories, investigative sites, and CROs in connection with our preclinical studies and clinical trials, CMOs, and allocated manufacturing costs of inventory, mRNA supply and consumables. Costs to acquire and manufacture inventory, mRNA supply for preclinical studies and clinical trials are recognized and included in unallocated manufacturing expenses when incurred, and subsequently allocated to program-specific manufacturing costs after completion of the program-specific production. The timing of allocating manufacturing costs to the specific program varies depending on the program development and production schedule. We generally do not allocate personnel-related costs, including stock-based compensation, costs associated with our general platform research, technical development, and other shared costs on a program-specific basis. These costs were therefore excluded from the summary of program-specific expenses by modality. Our newest modality, for inhaled pulmonary therapeutics, was added subsequent to the end of the third quarter of 2021.


Discovery program expenses are costs associated with research activities for our programs in the preclinical discovery stage, and primarily consist of external costs for CROs and lab services, and allocated manufacturing cost of preclinical mRNA supply and consumables.


Platform research expenses are mainly costs to develop technical advances in mRNA science, delivery science, and manufacturing process design. These costs include personnel-related costs, computer equipment, facilities, preclinical mRNA supply and

consumables, and other administrative costs to support our platform research. Technology development and unallocated manufacturing expenses are primarily related to non-program-specific manufacturing process development and manufacturing costs.

40
Table of Contents
Shared discovery and development expenses are research and development costs such as personnel-related costs and other costs, which are not otherwise included in development programs, discovery programs, platform research, technical development and unallocated manufacturing expenses, stock-based compensation, and other expenses.


The largest component of our total operating expenses has historically been our investment in research and development activities, including preclinical and clinical development of our product candidates, development of our platform, mRNA technologies, and manufacturing technologies. We expense research and development costs as incurred and cannot reasonably estimate the nature, timing, and estimated costs required to complete the development of the development candidates and investigational medicines we are currently developing or may develop in the future. There are numerous risks and uncertainties associated with the research and development of such development candidates and investigational medicines, including, but not limited to:
•scope, progress, and expense of developing ongoing and future development candidates and investigational medicines;
•entry in and completion of related preclinical studies;
•enrollment in and completion of subsequent clinical trials;
•safety and efficacy of investigational medicines resulting from these clinical trials;
•changes in laws or regulations relevant to the investigational medicines in development;
•receipt of the required regulatory approvals; and
•commercialization, including establishing manufacturing and marketing capabilities.
A change
As we continue to progress mRNA-1273 through the development process toward a Biologics License Application approval, indication expansion of mRNA-1273 and potential development of variant-specific vaccine candidates during the current pandemic, we expect to continue to incur significant additional expenses. At this time, the magnitude of these potential expenditures is not known. In connection with the BARDA agreement to accelerate development of mRNA-1273, significant grant revenue and expenses are expected in 2021. BARDA’s funding is expected to offset those expenses that are covered under the BARDA agreement, subject to our obtaining reimbursement from BARDA. As of September 30, 2021, the remaining available funding, net of revenue earned was $441 million.

Changes in expectations or outcomes of any of the known or unknown risks and uncertainties may materially impact our expected research and development expenditures. Continued research and development is central to the ongoing activities of our business. Investigational medicines in later stages of clinical development, such as our CMV vaccine (mRNA-1647) and our COVID-19 vaccine, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development costs to continue to increase in the foreseeable future as our investigational medicines progress through the development phases and as we identify and develop additional programs. However, we do not believe that it is possible at this time to accurately project total program-specific expenses through commercialization. There are numerous factors associated with the successful commercialization of any of our investigational medicines, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time due to the early stage of development of our investigational medicines. Additionally,Moreover, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans.


GeneralSelling, general and administrative expenses


GeneralWe started to incur sales and marketing expenses in the fourth quarter of 2020 to prepare for commercial operations in connection with the sale of our COVID-19 vaccine. Selling, general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for executives, finance, legal, human resources, business development and other administrative and operational functions, professional fees, accounting and legal services, sales and marketing, information technology and facility-related costs, and expenses associated with obtaining and maintaining intellectual property, or IP. These costs relate to the operation of the business, unrelated to the research and development function, or any individual program.


We anticipate selling, general and administrative expenses will increase as researchwe continue to expand the number of programs in development and development expands. These increases will likely relate to additional personnelestablish our commercial activities both within and increased costs related to finance, legal and IP-related matters along with increasedoutside the United States. We have already incurred additional expenses related to operating asbuilding out a publicly traded company, such as fees relatedregulatory, sales and marketing team to audit, legal,support the sale, marketing and tax services, regulatory compliance programs, and investor relations. In addition, ifdistribution of our COVID-19 vaccine. If we obtain regulatory approval for any of our other investigational medicines, and do not enter into aone or more third-party commercialization collaboration and manufacturing arrangements, we expect towill incur significant additional expenses related to building a sales and marketing team to support medicine sales, marketing, and distribution activities.out these functions.


We have a broad IP portfolio covering our development and commercialization of mRNA vaccine and therapeutic programs, including those related to mRNA design, formulation, and manufacturing platform technologies. We regularly file patent applications to protect innovations arising from our research and development. We also hold trademarks and trademark applications in the United States and foreign jurisdictions. Costs to secure and defend our IP are expensed as incurred and are classified as selling, general and administrative expenses.


General and administrative expenses, including IP-related expenses, totaled $27.3 million and $16.3 for the three months ended March 31, 2019 and 2018, respectively. IP-related expenses, including our internal personnel-related costs, were $2.8 million and
41

Table of Contents
$2.1 million, for the three months ended March 31, 2019 and 2018, respectively. We did not incur litigation expenses related to our IP during the three months ended March 31, 2019 and 2018.

Other income (expense), net

Interest income


Interest income consists of interest generated from our investments in cash and cash equivalents, money market funds, and high-quality fixed income securities.


Other income (expense)expense, net


Other income (expense),expense, net consists of interest expense, gains (losses) from the sale of investments in marketable securities, interest expense,foreign currency transaction and remeasurement gains (losses), gains (losses) on foreign currency balance sheet hedges, and other income and expense unrelated to our core operations. Interest expense is primarily derived from our lease financing obligationfinance leases related to our NorwoodModerna Technology Center, and certain contract manufacturing facility.service agreements.


We expect to continue to incur significant expenses as we continue our research and development and commercialization efforts. We expect our programs to mature and advance to later stage clinical development, and we expect expenses to increase as we seek regulatory approvals for our investigational medicines and commercialize any approved mRNA medicines. If we fail to sustain profitability on a continuing basis, we may incur losses in the future.

Critical accounting policies and significant judgments and estimates


Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, are reflected in the condensed consolidated financial statements prospectively from the date of change in estimates.


On January 1, 2019, we adopted ASC 606, Revenue from Contracts with Customers, using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2019. We recognized the cumulative effect of the adoption as an adjustment to the opening balance of accumulated deficit in the current period's condensed consolidated balance sheet. Results for reporting periods beginning after January 1, 2019, are presented under ASC 606. Prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, Revenue Recognition (ASC 605). ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.

Other than our adoption of ASC 606, thereThere have been no material changes in our critical accounting policies and estimates in the preparation of our condensed consolidated financial statements during the three months ended March 31, 2019September 30, 2021 compared to those disclosed in our Annual Report on2020 Form 10-K for the year ended December 31, 2018, as amended.10-K.


Recently issued accounting pronouncements


We have reviewed all recently issued standards and have determined that other than as disclosed in Note 2 to our condensed consolidated financial statements, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations.

42
Table of Contents

Results of operations


The following table summarizes our condensed consolidated statements of operations for each period presented (in thousands)millions):
Three Months Ended September 30,Change 2021 vs. 2020
20212020$%
Revenue:
Product revenue$4,810 $— $4,810 100%
Grant revenue140 145 (5)(3)%
Collaboration revenue19 12 7 58%
Total revenue4,969 157 4,812 3,065%
Operating Expenses:
Cost of sales722 — 722 100%
Research and development521 344 177 51%
Selling, general and administrative168 48 120 250%
Total operating expenses1,411 392 1,019 260%
Income (loss) from operations3,558 (235)3,793 1,614%
Interest income4 6 (2)(33)%
Other expense, net(10)(3)(7)233%
Income (loss) before income taxes3,552 (232)3,784 1,631%
Provision for income taxes219 1 218 21,800%
Net income (loss)$3,333 $(233)$3,566 1,530%
 Three Months Ended March 31, Change 2019 vs. 2018
 2019 2018 $ %
Revenue:       
Collaboration revenue$14,115
 $27,460
 $(13,345) (49)%
Grant revenue1,910
 1,579
 331
 21 %
Total revenue16,025
 29,039
 (13,014) (45)%
Operating Expenses:      
Research and development130,575
 90,124
 40,451
 45 %
General and administrative27,283
 16,317
 10,966
 67 %
Total operating expenses157,858
 106,441
 51,417
 48 %
Loss from operations(141,833) (77,402) (64,431) 83 %
Other income, net9,152
 5,026
 4,126
 82 %
Loss before benefit from income taxes(132,681) (72,376) (60,305) 83 %
Benefit from income taxes(24) —
 (24) 
Net loss$(132,657) $(72,376) $(60,281) 83 %


Nine Months Ended September 30,Change 2021 vs. 2020
20212020$%
Revenue:
Product revenue$10,740 $— $10,740 100%
Grant revenue473 187 286 153%
Collaboration revenue47 45 2 4%
Total revenue11,260 232 11,028 4,753%
Operating Expenses:
Cost of sales1,665 — 1,665 100%
Research and development1,343 611 732 120%
Selling, general and administrative366 109 257 236%
Total operating expenses3,374 720 2,654 369%
Income (loss) from operations7,886 (488)8,374 1,716%
Interest income11 21 (10)(48)%
Other expense, net(22)(6)(16)267%
Income (loss) before income taxes7,875 (473)8,348 1,765%
Provision for income taxes541 1 540 54,000%
Net income (loss)$7,334 $(474)$7,808 1,647%

Revenue


Total revenue decreasedincreased by $13.0 million, or 45%$4.8 billion for the three months ended September 30, 2021, compared to the same period in 2019,2020, due to a decreaseincreases in collaborationproduct sales. Product revenue across allwas $4.8 billion for the three months ended September 30, 2021 from sales of our strategic alliances, particularly AstraZenecaCOVID-19 vaccine. For the three months ended September 30, 2021, we delivered approximately 73 million doses to the U.S. Government and Merck, largelyapproximately 136 million doses to other governments of our COVID-19 vaccine. We did not have product sales until December 2020.

43
Table of Contents
Total revenue increased by $11.0 billion for the nine months ended September 30, 2021, compared to the same period in 2020, due to increases in product sales and grant revenue. Product revenue was $10.7 billion for the nine months ended September 30, 2021 from sales of our COVID-19 vaccine. For the nine months ended September 30, 2021, we delivered approximately 287 million doses to the U.S. Government and approximately 222 million doses to other governments. We did not have product sales until December 2020. Grant revenue increased by $286 million for the nine months ended September 30, 2021, compared to the same period in 2020, primarily driven by our adoption of ASC 606. See Note 2an increase in revenue from BARDA related to our condensed consolidated financial statements for further information on our adoption of ASC 606.mRNA-1273 vaccine development.


Operating expenses


Cost of sales

We began capitalizing our COVID-19 vaccine inventory costs in December 2020, in connection with an EUA from the FDA, and based upon our expectation that these costs would be recoverable through commercialization of our COVID-19 vaccine. Prior to the capitalization of our COVID-19 vaccine inventory costs, such costs were recorded as research and development expenses in the period incurred. We expensed $242 million of pre-launch inventory costs in 2020. Our cost of sales was $722 million, or 15%, of our product sales, for the three months ended September 30, 2021, including third-party royalties of $168 million. Our cost of sales was $1.7 billion, or 16%, of our product sales, for the nine months ended September 30, 2021, including third-party royalties of $400 million. A portion of the inventory costs associated with our product sales for the nine months ended September 30, 2021 was expensed previously. At the end of the first quarter of 2021, we had substantially utilized our zero-cost COVID-19 vaccine inventory. If inventory sold for the nine months ended September 30, 2021 was valued at cost, our cost of sales for the period would have been $1.9 billion, or 17%, of our product sales. We expect that our cost of sales as a percentage of product sales will remain at a similar level for the remainder of 2021.

Research and development expenses


Research and development expenses increased by $40.5$177 million, or 45%51%, for the three months ended September 30, 2021, compared to the same period in 2019,2020. The increase was primarily attributable to an increase in personnel related costsclinical trial expenses of $12.1$155 million and an increase in stock-based compensationpersonnel-related costs of $3.4$40 million.

Research and development expenses increased by $732 million, or 120%, for the nine months ended September 30, 2021, compared to the same period in 2020. The increase was primarily attributable to an increase in clinical trial and manufacturing costsexpenses of $10.7$591 million, an increase in lab supplies and materialspersonnel-related costs of $6.7$77 million, and an increase in consulting and outside services of $5.0$45 million. The

These increases for both the three and nine month periods in personnel related costs and stock-based compensation2021 were largely driven by an increase in the number of employees supporting our researchincreased mRNA-1273 clinical development and development programs.headcount.


GeneralSelling, general and administrative expenses


GeneralSelling, general and administrative expenses increased by $11.0$120 million, or 67%250%, for the three months ended September 30, 2021, compared to the same period in 2019, primarily2020. The increase was mainly due to an increase in personnel related costs of $2.0 million and an increase in stock-based compensation of $3.2 million, an increase in consulting and outside services of $2.4$30 million, an increase in distributor fees of $29 million, an increase in marketing expenses of $23 million, and an increase in information technology, facility and insurance relatedpersonnel-related costs of $2.4$17 million.

Selling, general and administrative expenses increased by $257 million, or 236%, for the nine months ended September 30, 2021, compared to the same period in 2020. The increase was mainly due to an increase in consulting and outside services of $80 million, an increase in personnel-related costs of $48 million, an increase in marketing expenses of $41 million, and an increase in distributor fees of $32 million.

These increases for both the three and nine month periods in 2021 were primarily driven by an increase in the number of employeesour COVID-19 vaccine commercialization-related activities and increased costs related to operating as a publicly traded company.headcount.


OtherInterest income net


The following table summarizes otherInterest income net for each period presented (in thousands):
 Three Months Ended March 31, Change 2019 vs. 2018
 2019 2018 $ %
Interest income$10,972
 $5,209
 $5,763
 111 %
(Loss) gain on investment(3) 58
 (61) (105)%
Interest expense(1,533) (27) (1,506) 5,578 %
Other expense, net(284) (214) (70) 33 %
Total other income, net$9,152
 $5,026
 $4,126
 82 %

Other income, net increaseddecreased by $4.1$2 million, or 82%33%, for the three months ended September 30, 2021, compared to the same period in 2019, primarily due2020. Interest income decreased by $10 million, or 48%, for the nine months ended September 30, 2021, compared to an increase of $5.8 millionthe same period in 2020. The decreases in interest income from our investments in marketable securities for both the three and nine month periods in 2021 were mainly driven by a higher weighted average balance of cash and investments and market performance. This increase wasan overall lower interest rate environment, partially offset by higherincreased investment balances.

44
Table of Contents
Other expense, net

The following table summarizes other expense, net for each period presented (in millions):

Three Months Ended September 30,Change 2021 vs. 2020
20212020$%
Interest expense(4)$(2)(2)100%
Other expense, net(6)(1)(5)500%
Total other expense, net$(10)$(3)$(7)233%

Nine Months Ended September 30,Change 2021 vs. 2020
20212020$%
Gain on investments$2 $1 $1 100%
Interest expense(12)$(6)(6)100%
Other expense, net(12)(1)(11)1,100%
Total other expense, net$(22)$(6)$(16)267%

Total other expense, net was immaterial for each of the three months ended September 30, 2021 and 2020. Total other expense, net increased by $16 million, or 267%, for the nine months ended September 30, 2021, compared to the same period in 2020. The increase in other expense, net for the nine-month period in 2021 was primarily due to losses related to our balance sheet hedging activities, partially offset by gains on foreign currency transactions and remeasurements. Our interest expense is primarily related to our finance leases.

Income taxes

Our provision for income taxes for the three and nine months ended September 30, 2021 was $219 million and $541 million, respectively, compared to $1 million for each of $1.5the same periods in 2020. Our effective tax rate for the three and nine months ended September 30, 2021 was lower than the U.S. statutory rate primarily due to the benefit related to the release of the valuation allowance on the majority of our tax attributes and other deferred tax assets, the benefit of the foreign derived intangible income deduction, as well as a discrete item for excess tax benefits related to stock-based compensation. Our effective tax rate for the three and nine months ended September 30, 2020 was lower than the U.S. statutory rate primarily due to the valuation allowance.

On a periodic basis, we reassess any valuation allowances that we maintain on our deferred tax assets, weighing positive and negative evidence to assess the recoverability of the deferred tax assets. In the first quarter of 2021, we reassessed the valuation allowance noting the increase in positive evidence, including significant revenue growth, expectations regarding future profitability, and successful supply chain and manufacturing capabilities to meet global product demand. After assessing both the positive evidence and negative evidence, we determined it was more likely than not that we will realize the majority of our deferred tax assets. Therefore, in the first quarter of 2021, we released our valuation allowance on the majority of our federal and state net operating losses and other deferred tax assets through the annual effective tax rate (AETR) as income is earned, resulting in a reduction in the AETR. In addition, we have recorded a discrete benefit of $49 million related to our Norwood lease financing obligation. We began recording interest expense upon the completiondeferred tax assets that we expect to utilize in future years. As of our Norwood manufacturing facility in July 2018.September 30, 2021, we continue to maintain a valuation allowance on certain state tax attributes.


45
Table of Contents
Liquidity and capital resources


We have historically funded our operations primarily from the sale of equity instruments and from proceeds from certain strategic alliance arrangements and grant agreements. As of March 31, 2019,September 30, 2021, we had cash, cash equivalents and investments of $1.5$15.3 billion. Cash, and cash equivalents and investments are invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Investments, consisting primarily of government and corporate debt securities, are stated at fair value. As of March 31, 2019,September 30, 2021, we had current and non-current investments of approximately $606.0 million$3.4 billion and $437.7 million,$6.4 billion, respectively.


We historically funded our operations primarily from the sale of equity instruments and from proceeds from certain strategic alliance arrangements and grant agreements. Starting in August 2020, we have entered into supply agreements with the U.S. Government and several governments outside the United States for the supply of our COVID-19 vaccine and receive upfront deposits. As of September 30, 2021, we had $8.3 billion in deferred revenue related to customer deposits received or billable. In addition, as of September 30, 2021, BARDA has committed to fund up to $1.4 billion for the clinical development and advancement of mRNA-1273 to FDA licensure and the scale-up of manufacturing processes of our COVID-19 vaccine. As of September 30, 2021, the remaining available funding from BARDA, net of revenue earned, was $441 million.

We began constructioncontinue to work toward the large-scale technical development, manufacturing scale-up in several countries and larger scale deployment of our Norwood manufacturing facility, or Norwood, inCOVID-19 vaccine. To support the second half of 2016. Our capital expenditures relatedscale-up, we have expended and will need to Norwood were $3.6 millioncontinue to expend significant resources and $38.1 million for the three months ended March 31, 2019 and 2018, respectively. Cash disbursements related to Norwood were $5.7 million and $29.6 million for the three months ended March 31, 2019 and 2018.capital.

On January 30, 2018 and February 15, 2018, we issued Series G preferred stock for total gross proceeds of $560.0 million. On May 7, 2018, we issued Series H preferred stock for gross proceeds of $125.0 million of which $13.0 million is determined to be a premium and recorded to deferred revenue as part of the Merck PCV/SAV agreement executed contemporaneously with our Series H redeemable convertible preferred stock issuance. Please refer to Note 3 to our condensed consolidated financial statements.

On December 11, 2018, we closed our IPO, whereby we sold 26,275,993 shares of common stock at a price of $23.00 per share. The shares began trading on the Nasdaq Global Select Market on December 7, 2018. The aggregate net proceeds received by us from the IPO were $563.0 million, net of underwriting discounts, commissions and offering expenses payable by us.


Cash flow


The following table summarizes the primary sources and uses of cash for each period presented (in thousands)millions):
Nine Months Ended September 30,
20212020
Net cash provided by (used in):
Operating activities$10,310 $763 
Investing activities(7,385)(1,482)
Financing activities— 1,989 
Net increase in cash, cash equivalents and restricted cash$2,925 $1,270 
 Three Months Ended March 31,
 2019 2018
Net cash (used in) provided by:   
Operating activities$(143,927) $(111,385)
Investing activities(11,759) (483,704)
Financing activities(48) 549,995
Net decrease in cash and cash equivalents$(155,734) $(45,094)


Operating activities


We derive cash flows from operations primarily from cash collected from customer deposits and accounts receivable related to our COVID-19 vaccine supply agreements, as well as certain government-sponsored and private organizations and strategic alliances. Our cash flows from operating activities are significantly influencedaffected by our use of cash for operating expenses and working capital to support the business. We have historically experienced negative cash flows from operating activities as we have invested early in our mRNA technologies, digital infrastructure, manufacturing technology, and infrastructure.


Net cash used inprovided by operating activities for the threenine months ended March 31, 2019September 30, 2021 was $143.9 million$10.3 billion and consisted of net lossincome of $132.7 million less$7.3 billion and non-cash adjustments of $24.8$203 million, plus a net change in assets and liabilities of $36.1 million.$2.8 billion. Non-cash items primarily included stock-based compensation of $18.5 million, depreciation and amortization of $7.3$154 million, stock-based compensation of $105 million, deferred income taxes of $89 million, and amortization of investment premium and discount of $1.0$33 million. The net change in assets and liabilities was primarilymainly due to a decreasean increase in deferred revenue of $4.4 billion, an increase in accrued liabilities of $32.6$600 million, and a decreasean increase in deferred revenueincome taxes payable of $15.6 million, partially offset by a decrease in accounts receivable of $6.0 million, a decrease in prepaid expenses and other assets of $3.3$565 million, and an increase in accounts payable of $1.7$26 million, partially offset by an increase in accounts receivable of $1.8 billion, an increase in inventory of $918 million, an increase in prepaid expenses and other assets of $186 million, and an increase in operating lease right-of-use assets of $25 million.


Net cash used inprovided by operating activities for the threenine months ended March 31, 2018September 30, 2020 was $111.4$763 million and consisted of net loss of $72.4$474 million lessand non-cash adjustments of $16.9$96 million, plus a net change in assets and liabilities of $55.9 million.$1.1 billion. Non-cash items primarily included stock-based compensation of $11.9$67 million, and depreciation and amortization of $5.2$24 million, and amortization of investment premium and discount of $5 million. The net change in assets and liabilities was primarilymainly due to a decreasean increase in deferred revenue of $1.2 billion and an increase in accrued liabilities of $37.0 million, an increase in accounts receivable of $24.7 million and an increase in prepaid expense and other assets of $2.2$132 million, partially offset by an increase in deferred revenueaccounts receivable of $6.2$185 million.


Investing activities


Our primary investing activities consist of purchases, sales, and maturities of our investments and capital expenditures for leasehold improvements, manufacturing, laboratory, computer equipment and software.


46
Table of Contents
Net cash used in investing activities for the threenine months ended March 31, 2019September 30, 2021 was $11.8 million,$7.4 billion, which included purchases of marketable securities of $429.5$10.3 billion and purchases of property and equipment of $164 million, partially offset by proceeds from sales of marketable securities of $2.0 billion and capital expendituresproceeds from maturities of $7.6marketable securities of $1.1 billion.

Net cash used in investing activities for the nine months ended September 30, 2020 was $1.5 billion, which included purchases of marketable securities of $2.3 billion and purchases of property and equipment of $44 million, partially offset by proceeds from maturities of marketable securities of $403.9$748 million and proceeds from sales of marketable securities of $21.4$140 million.

Net cash used in investing activities for the three months ended March 31, 2018 was $483.7 million, which included purchases of marketable securities of $660.2 million and capital expenditures of $31.9 million, partially offset by proceeds from maturities of marketable securities of $189.8 million and proceeds from sales of marketable securities of $18.6 million.


Financing activities


We did not generate significantThere was no net cash fromprovided by financing activities for the threenine months ended March 31, 2019.September 30, 2021.


We generatedNet cash fromprovided by financing activities of $550.0 million for the threenine months ended March 31, 2018,September 30, 2020 was $2.0 billion, primarily from net proceeds from equity offerings of $1.9 billion, and net proceeds from the issuance of redeemable convertible preferredcommon stock in connection with the exercise of $549.5stock options under our equity plans of $136 million.


Operation and funding requirements


SinceFrom our inception to the end of 2020, we have incurred significant losses and negative cash flows from operations due to our significant research and development expenses. We generated net income in the first nine months of 2021 in connection with our product sales. We have an accumulated deficitretained earnings of $1.1$5.1 billion as of March 31, 2019.September 30, 2021. We expect to continue to incur significant losses in the foreseeable future and expect our expenses to increase in connection with our ongoing activities, particularly as we continue research and development of our development candidates and clinical activities for our investigational medicines. In addition, weWe also expect our expenses to incur additional costsincrease associated with operatingmanufacturing costs, including our arrangements with our international supply and manufacturing partners. Our ongoing work on mRNA-1273, including development of any new generations of boosters and vaccines against variants of SARS-CoV-2, will require significant cash outflows during 2021, most of which may not be reimbursed or otherwise paid for by our partners or collaborators.

We believe that our cash, cash equivalents, and investments as a public company.
of September 30, 2021, together with cash expected to be generated from operations, will be sufficient to enable us to fund our projected operations, capital expenditures and stock repurchases through at least the next 12 months from the issuance of these financial statements. We are subject to all the risks related to the development and commercialization of novel medicines, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors thatincluding expenses related to the ongoing coronavirus pandemic, which may adversely affect our business. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. We believe that our cash, cash equivalents, and investments as of March 31, 2019, will

If we are unable to sustain profitability on a continuing basis, we may be sufficient to enable us to fund our projected operations through at least the next 12 months from the issuance of these financial statements.

Until we can generate a sufficient amount of revenue from our programs, we expectrequired to finance future cash needs through a combination of public or private equity orofferings, structured financings and debt offerings andfinancings, government funding arrangements, potential future strategic alliances from which we receive upfront fees, milestone payments, and other forms of consideration. Additionalconsideration, and marketing, manufacturing, distribution and licensing arrangements. If we are required to finance future cash needs, additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of one or more of our investigational medicines, or slow down or cease work on one or more of our programs. If we raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders or increased fixed payment obligations, and any such securities may have rights senior to those of our common stock. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise funds through strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or investigational medicines or grant licenses on terms that may not be favorable to us. Any of these events could significantly harm our business, financial condition, and prospects.

47
Table of Contents

Contractual Obligations


As of March 31, 2019September 30, 2021, other than disclosed within Note 11 and Note 12 to our condensed consolidated financial statements, there have been no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report onour 2020 Form 10-K for the year ended December 31, 2018.10-K.


Off balance sheet arrangements


As of March 31, 2019,September 30, 2021, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.


JOBS Act and emerging growth company status

In April 2012, the JOBS Act was enacted. As an "emerging growth company," or EGC under the JOBS Act, we may delay the adoption of certain accounting standards until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for EGCs include an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation, and less extensive disclosure about our executive compensation arrangements. Additionally, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, therefore, while we are an EGC we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not EGCs.

We will remain classified as an EGC until the earlier of (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.07 billion or more, (ii) December 31, 2023, being the last day of the fiscal year following the fifth anniversary of the completion of our IPO, (iii) the date on which we have issued more than $1.0 billion of non-convertible debt instruments during the previous three fiscal years, or (iv) the date on which we are deemed a “large accelerated filer” under the rules of the SEC.

Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our primary exposure to market risk relates to changes in interest rates. Interest Rate Risk
As of March 31, 2019September 30, 2021 and December 31, 2018,2020, we had cash, cash equivalents, restricted cash, and investments in marketable securities of $1.5$15.3 billion and $1.7$5.2 billion, respectively. Our investment portfolio is comprised of money market funds and marketable debt securities (including U.S. Treasury securities, debt securities of U.S. government agencies and corporate entities, and commercial paper)., which are classified as available-for-sale securities. Our primary investment objectives are the preservation of capital and the maintenance of liquidity and our investment policy defines allowable investments based on quality of the institutions and financial instruments designed to minimize risk exposure. Our exposure to interest rate sensitivity is affected by changes in the general level of U.S. interest rates. Our available for saleavailable-for-sale securities are subject to interest rate risk and will fall in value if market interest rates increase.
We generally hold investments in marketable debt securities to maturity to limit our exposure to interest rate risk. Due to the short-term maturities and low risk profiles of our investments, we do not anticipate a significant exposure to interest rate risk. If market interest rates were to increase immediately and uniformly by 100 basis points, or one percentage point from levels at March 31, 2019,September 30, 2021, the net fair value of our interest sensitive marketable securities would not experience a material change in fair market value.decrease by approximately $144 million.
We currently do not have significant exposure to foreign currencies as we hold no foreign exchange contracts, option contracts, or other foreign hedging arrangements. Further, our operations andForeign Currency Risk
Our revenue generating activities areand operations have been primarily denominated in U.S. dollars. OurAs we expand internationally, our results of operations may beand cash flows will become increasingly subject to fluctuations due to changes in foreign currency exchange rates. To help manage the exposure to foreign currency exchange rate fluctuations, we have implemented cash flow hedging and balance sheet hedging programs.

Cash Flow Hedging Activities

We hedge foreign currency product sales denominated in Euros, including the use of foreign exchange forward contracts or purchased options. We hedge our cash flow exposures to reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates. These transactions are designated and qualify as cash flow hedges. Our foreign exchange contracts at September 30, 2021, carried at fair value, had maturities of up to 12 months.

Balance Sheet Hedging Activities

We use foreign currency forward contracts to mitigate foreign currency exchange risk associated with foreign currency-denominated monetary assets and liabilities. These contracts reduce the impact of currency exchange rate movements on our assets and liabilities. As of September 30, 2021, our outstanding balance sheet hedging derivatives, carried at fair value, had maturities of less than three months.

We enter into these foreign exchange contracts to hedge forecasted revenue in the normal course of business and accordingly, they are not speculative in nature. We believe the counterparties to our foreign currency forward contracts are creditworthy multinational commercial banks. While we believe the risk of counterparty nonperformance is not material, a sustained decline in the financial stability of financial institutions as a result of disruption in the financial markets could affect our ability to secure creditworthy counterparties for our foreign currency hedging programs.








48
Table of Contents
Notwithstanding our efforts to mitigate some foreign currency exchange risks, there can be no assurance that our hedging activities will adequately protect us against the risks associated with foreign currency fluctuations. As of September 30, 2021, a hypothetical adverse movement of 10 percent in foreign currency exchange rates compared to the U.S. dollars across all maturities would have resulted in potential declines in the future.
Inflation generally affects us by increasing our cost of labor. We do not believe that inflation had a material effectfair value on our business, financial condition,foreign currency forward contracts used in cash flow hedging of approximately $138 million. As of September 30, 2021, a hypothetical adverse movement of 10 percent in foreign currency exchange rates compared to the U.S. dollars across all maturities would have resulted in potential declines in the fair value on our foreign currency forward contracts used in balance sheet hedging of approximately $28 million. We expect that any increase or resultsdecrease in the fair value of operations during the three months ended March 31, 2019 and 2018.balance sheet hedging portfolio would be substantially offset by increases or decreases in the underlying exposures being hedged.


Item 4. Controls and Procedures
Disclosure Controls and Procedures


We maintainOur management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that the Companyit files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and formsforms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including theits principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer),officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Ourobjectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures have been designed to provide reasonable assuranceas of achieving their objectives. Based on such evaluation,September 30, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2019.level.



Changes in Internal Control over Financial Reporting


During the three months ended March 31, 2019, we implemented certain internal controls in connection with our adoption of ASC 606 on January 1, 2019. There were no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2019 thatSeptember 30, 2021, which have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.


Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by the collusion of two or more people or by a management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II
Item 1. Legal Proceedings
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently a party to any material legal proceedings.





49
Table of Contents
Item 1A. Risk Factors
In additionInvesting in our common stock involves a high degree of risk. Information regarding risk and uncertainties related to our business appears in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission, or the SEC, on February 26, 2021. There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K. You should carefully consider the risks and uncertainties described below, together with all of the other information set forthcontained in this Form 10-Q, including under“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the heading “Special Note Regarding Forward-Looking Statements”,condensed consolidated financial statements and the related notes. If any of the risks actually occur, it could harm our business, prospects, operating results and uncertainties that we believe are most important for you to consider are discussed in “Part I, Item 1A—Risk Factors”financial condition and future prospects. In such event, the market price of our 2018 Form 10-K, whichcommon stock could adversely affect our business, financial condition,decline and you could lose all or resultspart of operations. The risks described in our 2018 Form 10-K are not the only risks facing our Company.your investment. Additional risks and uncertainties not currentlypresently known to us or that we currently deem to be immaterial may also may adversely affectimpair our business financial condition, oroperations. This Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results of operations. There are no material changes to the Risk Factors described in our 2018 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
None.
Use of Proceedscould differ materially from Public Offering of Common Stock
There has been no material changethose anticipated in the planned useforward-looking statements as a result of proceeds from our initial public offering asfactors that are described below and elsewhere in our final prospectus filed with the SEC pursuant to Rule 424(b) of the Securities Act. We are holding the balance of the net proceeds in cash, cash equivalents, and investments. We invested the funds received in short-term, interest-bearing investment-grade securities and government securities.this Quarterly Report.


Item 6. Exhibits


The Exhibits listed below are filed or incorporated by reference as part of this Form 10-Q.

Exhibit No.Exhibit Index
10.1*†
10.2*†
Exhibit No.Exhibit Index
10.1#31.1*
31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.231.2*
32.1+
101.INS101.INS*XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL101.CAL*XBRL Taxonomy Extension Calculation Document
101.DEF101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB101.LAB*XBRL Taxonomy Extension LabelsLabel Linkbase Document
101.PRE101.PRE*XBRL Taxonomy Extension Presentation Link Document
104*Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

*Filed herewith
+




†
Portions of this exhibit (indicated by asterisks) have been omitted in accordance with the rules of the Securities and Exchange Commission.
+

The certification furnished in Exhibit 32.1 hereto is deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certification will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.

#Indicates a management contract or any compensatory plan, contract or arrangement.

50

Table of Contents


SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
                                

MODERNA, INC.
Date:By:MODERNA, INC.
Date:By:/s/ Stéphane Bancel
May 9, 2019November 4, 2021
Stéphane Bancel
Chief Executive Officer and Director
(Principal Executive Officer)
Date:By:/s/ Lorence Kim, M.D.David W. Meline
May 9, 2019November 4, 2021
David W. Meline
Chief Financial Officer
Lorence Kim, M.D.

(Principal Financial Officer)
Chief Financial Officer
(Principal Financial Officer)




62
51