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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
    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

https://cdn.kscope.io/175ef7e90eb9b8b158ffd5b9ef547224-mrna-20210331_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,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     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 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
Emerging growth company

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


As of April 30, 2021, there were 401,527,789 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”), 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 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;
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;

the ultimate impact of the current coronavirus pandemic, or the COVID-19 pandemic, or any other health epidemic, on our business, manufacturing, clinical trials, research programs, supply chain, regulatory review, healthcare systems or the global economy as a whole;

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;

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 and maintain regulatory approval of our investigational medicines;

our ability to successfully commercialize any 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;




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;

regulatory developments in the United States and foreign countries;

our ability to produce our products or investigational medicines with advantages in turnaround times or manufacturing cost;

the success of competing therapies that are or may become available;

our ability to attract and retain key scientific or management personnel;

the impact of laws and regulations;

developments relating to our competitors and our industry; and

other risks and uncertainties discussed 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, 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.



Table of Contents

PART I.
Page
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 6.


Table of Contents
Item 1. Financial Statements

MODERNA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions, except per share data)
March 31,December 31,
20212020
Assets
Current assets:
Cash and cash equivalents
$5,442 $2,624 
Investments
2,293 1,984 
Accounts receivable
3,210 1,391 
Inventory494 47 
Prepaid expenses and other current assets
264 252 
Total current assets
11,703 6,298 
Investments, non-current
468 639 
Property and equipment, net
372 297 
Right-of-use assets, operating leases89 90 
Restricted cash, non-current
11 11 
Deferred tax assets50  
Other non-current assets
1 2 
Total assets
$12,694 $7,337 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$8 $18 
Accrued liabilities
753 470 
Deferred revenue
7,531 3,867 
Other current liabilities
149 34 
Total current liabilities
8,441 4,389 
Deferred revenue, non-current
179 177 
Operating lease liabilities, non-current96 97 
Financing lease liabilities, non-current138 110 
Other non-current liabilities
2 3 
Total liabilities
8,856 4,776 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.0001; 162 shares authorized as of March 31, 2021
     and December 31, 2020; no shares issued or outstanding at March 31, 2021 and
     December 31, 2020
  
Common stock, par value $0.0001; 1,600 shares authorized as of March 31, 2021 and December 31, 2020; 401 and 399 shares issued and outstanding as of March 31, 2021 and December 31, 2019, respectively
  
Additional paid-in capital
4,860 4,802 
Accumulated other comprehensive income
1 3 
Accumulated deficit
(1,023)(2,244)
Total stockholders’ equity
3,838 2,561 
Total liabilities and stockholders’ equity
$12,694 $7,337 


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MODERNA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share data)
Three Months Ended March 31,
20212020
Revenue:
Product sales$1,733 $ 
Grant revenue194 4 
Collaboration revenue10 4 
Total revenue1,937 8 
Operating expenses:
Cost of sales193  
Research and development401 115 
Selling, general and administrative77 24 
Total operating expenses671 139 
Income (loss) from operations1,266 (131)
Interest income4 8 
Other expense, net(10)(1)
Income (loss) before income taxes1,260 (124)
Provision for income taxes39  
Net income (loss)$1,221 $(124)
Earnings (loss) per share
Basic$3.05 $(0.35)
Diluted $2.84 $(0.35)
Weighted average common shares used in calculation of earnings (loss) per share
Basic400 353 
Diluted430 353 


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MODERNA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in millions)

Three Months Ended March 31,
20212020
Net income (loss)$1,221 $(124)
Other comprehensive loss:
Unrealized loss on available-for-sale debt securities, net of tax of $0 and $0, for the three months ended March 31, 2021 and 2020, respectively
(2)(8)
Comprehensive income (loss)$1,219 $(132)


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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MODERNA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(Unaudited, in millions)

Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance at December 31, 2020399 $ $4,802 $3 $(2,244)$2,561 
Exercise of options to purchase common stock2 — 28 — — 28 
Stock-based compensation— — 30 — — 30 
Other comprehensive loss, net of tax— — — (2)— (2)
Net income— — — — 1,221 1,221 
Balance at March 31, 2021401 $ $4,860 $1 $(1,023)$3,838 


Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (loss)Accumulated 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 $1
30 — 550 — — 550 
Exercise of options to purchase common stock3 — 28 — — 28 
Stock-based compensation— — 20 — — 20 
Other comprehensive loss, net of tax— — — (8)— (8)
Net loss— — — — (124)(124)
Balance at March 31, 2020370 $ $3,268 $(6)$(1,621)$1,641 



The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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MODERNA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
Three Months Ended March 31,
20212020
Operating activities
Net income (loss)$1,221 $(124)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation
30 20 
Depreciation and amortization
15 7 
Amortization/accretion of investments
5 1 
Deferred income taxes(50) 
Changes in assets and liabilities:
Accounts receivable
(1,819)(2)
Prepaid expenses and other assets
(12)(4)
Inventory(448) 
Right-of-use assets, operating leases
2 (14)
Accounts payable
(15)2 
Accrued liabilities
285 (12)
Deferred revenue
3,666 (1)
Operating lease liabilities
(2)15 
Other liabilities
93 6 
Net cash provided by (used in) operating activities2,971 (106)
Investing activities
Purchases of marketable securities
(726)(621)
Proceeds from maturities of marketable securities
339 269 
Proceeds from sales of marketable securities
242 42 
Purchases of property and equipment
(35)(6)
Net cash used in investing activities
(180)(316)
Financing activities
Proceeds from public offerings of common stock, net of issuance costs 550 
Proceeds from issuance of common stock through equity plans, net
28 28 
Changes in financing lease liabilities(2) 
Net cash provided by financing activities
26 578 
Net increase in cash, cash equivalents and restricted cash2,817 156 
Cash, cash equivalents and restricted cash, beginning of year
2,636 248 
Cash, cash equivalents and restricted cash, end of period
$5,453 $404 
Non-cash investing and financing activities
Purchases of property and equipment included in accounts payable and accrued liabilities
$21 $7 
Right-of-use assets obtained through finance lease modifications and reassessments$51 $ 


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

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MODERNA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Description of the Business

Moderna, Inc. (collectively, with its consolidated subsidiaries, any of Moderna, we, us, or 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 transformative medicines based on messenger RNA (mRNA), 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 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) in individuals 18 years of age or older. We have also received authorization for our COVID-19 vaccine from health agencies in Canada, Israel, the European Union, the United Kingdom, Switzerland, Singapore, Qatar, Taiwan, and the Philippines, and from the World Health Organization. Additional authorizations are currently under review in other countries.

As of March 31, 2021, we had 24 mRNA development programs in our portfolio with 13 having entered the clinic. We have incurred significant expenses in connection with the discovery, development and commercialization of our products, and we expect to continue to incur significant expenses for the foreseeable future. We 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, infrastructure and Research Engine and Early Development Engine (which includes our Moderna Technology Center), digital infrastructure, creation of a portfolio of intellectual property, and administrative support. We may finance our future 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.

We believe that our cash, cash equivalents, and investments as of March 31, 2021 will be sufficient to enable us to fund our projected operations through at least the next 12 months from the issuance of our financial statements. 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 expenses or if we will be able to maintain profitability. If we 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 accordance 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, 2020 (2020 Form 10-K). Any reference in these notes to applicable guidance is meant to refer to the authoritative accounting principles generally accepted in the United States as found in the Accounting Standard Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB). This report should be read in conjunction with the consolidated financial statements in our 2020 Form 10-K.

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The consolidated financial statements include the Company 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 months ended March 31, 2021 are consistent with those described in our 2020 Form 10-K.

Use of Estimates

We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. We base our estimates on historical experience and 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, income tax provisions, stock-based compensation, leases, fair value of financial instruments, derivative financial instruments, inventory, and 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.

Comprehensive Income (Loss)

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

The components of accumulated other comprehensive income for the three months ended March 31, 2021 are as follows (in millions): 
Unrealized Loss on Available-for-Sale Debt Securities
Accumulated other comprehensive income, balance at December 31, 2020$3 
 Other comprehensive loss(2)
Accumulated other comprehensive income, balance at March 31, 2021$1 

Restricted Cash

We 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 millions):
 
March 31,
20212020
Cash and cash equivalents $5,442 $392 
Restricted cash 1 
Restricted cash, non-current 11 11 
Total cash, cash equivalents and restricted cash shown in the condensed consolidated
    statements of cash flows
$5,453 $404 

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 consolidated financial statements and disclosures.

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3. Product Sales

In December 2020, we began selling our COVID-19 vaccine to the 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 are 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 March 31, 2021
United States$1,358 
Rest of world375 
Total $1,733 

There were no product sales for the three months ended March 31, 2020. As of March 31, 2021, we had one commercial product authorized for use, our COVID-19 vaccine.

As of March 31, 2021 and December 31, 2020, we had deferred revenue of $7.5 billion and $3.8 billion, respectively, related to customer deposits, classified as current deferred revenue in our consolidated balance sheet. 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 mobile manufacturing prototype leveraging our existing manufacturing technology that is capable of rapidly producing vaccines and therapeutics. As of March 31, 2021, the committed funding, net of revenue earned was $3 million, with an additional $51 million 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 Office of the Assistant Secretary for Preparedness and Response (ASPR) 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 the novel coronavirus. 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 30,000 participant Phase 3 study in the U.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. As of March 31, 2021, the maximum award from BARDA, inclusive of the March 2021 amendment, was approximately $1.0 billion. Under the terms of the agreement, BARDA will fund the advancement of mRNA-1273 to FDA licensure. All contract options have been exercised. As of March 31, 2021, the remaining available funding net of revenue earned was $317 million. Subsequent to the end of the quarter, on April 18, 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 Phase 3 clinical trials for mRNA-1273 and pharmacovigilance efforts.

In September 2016, we received an award of up to $126 million from BARDA, to help fund our Zika vaccine program. Three of the four contract options have been exercised. As of March 31, 2021, the remaining available funding net of revenue earned was $69 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 Bill and Melinda Gates Foundation (Gates Foundation) to advance mRNA-based development projects for various infectious diseases, including human immunodeficiency virus (HIV). As of March 31, 2021, the available funding net of revenue earned was $11 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 period presented (in millions):

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Three Months Ended March 31,
20212020
BARDA$192 $3 
Other grant revenue2 1 
Total grant revenue$194 $4 


5. Collaboration Agreements

We have entered into collaboration agreements with strategic collaborators to accelerate the discovery and advancement of potential mRNA medicines across therapeutic areas. As of March 31, 2021 and December 31, 2020, we had collaboration agreements with AstraZeneca plc (AstraZeneca), Merck & Co., Inc (Merck), Vertex Pharmaceuticals Incorporated and Vertex Pharmaceuticals (Europe) Limited (together, Vertex), and Chiesi Farmaceutici S.P.A. (Chiesi). Please refer to our 2020 Form 10-K under the heading “Third-Party Strategic Alliances” and Note 5 to our consolidated financial statements for further description of each of the collaboration agreements.

The following table summarizes our total consolidated revenue from our strategic collaborators for the periods presented (in millions):
Three Months Ended March 31,
Collaboration Revenue by Strategic Collaborator:20212020
AstraZeneca$ $1 
Merck 1 
Vertex9 2 
Other1  
Total collaboration revenue$10 $4 

The following table presents changes in the balances of our receivables and contract liabilities related to our strategic collaboration agreements during the three months ended March 31, 2021 (in millions):

December 31, 2020AdditionsDeductionsMarch 31, 2021
Contract Assets:
Accounts receivable$6 $5 $(2)$9 
Contract Liabilities:
Deferred revenue$240 $5 $(10)$235 

As of March 31, 2021, the aggregated amount of the transaction price allocated to performance obligations under our collaboration agreements that are unsatisfied or partially unsatisfied was $314 million.

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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, 2021 and December 31, 2020 (in millions):

March 31, 2021
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated Fair ValueCash and
Cash
Equivalents
Current
Marketable
Securities
Non-
Current
Marketable
Securities
Cash and cash equivalents$5,442 $ $ $5,442 $5,442 $ $ 
Available-for-sale:
Certificates of deposit413   413  413  
U.S. treasury securities374   374  374  
Debt securities of U.S. government agencies and corporate entities1,972 3 (1)1,974 1,506 468 
$8,201 $3 $(1)$8,203 $5,442 $2,293 $468 
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 securities492   492  492  
Debt securities of U.S. government agencies and corporate entities1,888 4  1,892  1,277 615 
$5,243 $4 $ $5,247 $2,624 $1,984 $639 

The amortized cost and estimated fair value of marketable securities by contractual maturity at March 31, 2021 and December 31, 2020 are as follows (in millions):
March 31, 2021
Amortized
Cost
Estimated
Fair Value
Due in one year or less
$2,291 $2,293 
Due after one year through five years
468 468 
Total
$2,759 $2,761 

December 31, 2020
Amortized
Cost
Estimated
Fair Value
Due in one year or less
$1,981 $1,984 
Due after one year through five years
638 639 
Total
$2,619 $2,623 

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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 impairment at the end of each reporting period. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include whether a decline in fair value below the amortized cost basis is due to credit-related factors or noncredit-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. 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 balance sheet with a corresponding adjustment to earnings. We did not recognize any impairment charges related to available-for-sale securities for the three months ended March 31, 2021 and 2020. We did not recognize any credit losses related allowance to available-for-sale securities as of March 31, 2021 and December 31, 2020.

As of March 31, 2021 and December 31, 2020, we did not have material gross unrealized losses. We neither intend to sell these investments, nor do we believe that we are more-likely-than-not to 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

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 March 31, 2021 and December 31, 2020 (in millions):

Fair Value at
March 31, 2021
Fair Value Measurement Using
Level 1Level 2
Assets:
Money market funds$537 $537 $ 
Certificates of deposit413  413 
U.S. treasury securities374  374 
Debt securities of U.S. government agencies and corporate entities1,974  1,974 
Derivative instruments (Note 7)1  1 
Total$3,299 $537 $2,762 
Liabilities:
Derivative instruments (Note 7)$1 $ $1 


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Fair Value at December 31, 2020Fair Value Measurement Using
Level 1Level 2
Assets:
Money market funds$621 $621 $ 
Certificates of deposit239  239 
U.S. treasury securities492  492 
Debt securities of U.S. government agencies and corporate entities1,892  1,892 
Total$3,244 $621 $2,623 

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

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 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 consolidated statements of cash flows.

Balance Sheet Hedges

Our foreign currency forward contracts, primarily accounts receivable, 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 on 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.

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Total gross notional amount and fair value for foreign currency derivatives that are not designated as hedging instruments are accounted for as follows (in millions):

March 31, 2021
Notional AmountFair Value
Asset (1)
Liability (2)
Derivatives not designated as hedging instruments
Foreign currency forward contracts$1,367 $1 $1 
Total $1,367 $1 $1 

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

The effect of foreign currency forward contracts not designated as hedging instruments in our condensed consolidated statements of operations for the three months ended March 31, 2021 was as follows (in millions):

Statement of Operations ClassificationThree Months Ended
March 31, 2021
Derivatives not designated as hedging instruments
Foreign currency forward contractsOther (expense) income, net$35 
Total$35 

There were no hedging activities for the three months ended March 31, 2020.

8. Inventory

Inventory as of March 31, 2021 and December 31, 2020 consists of the following (in millions):
March 31,December 31,
20212020
Raw materials$430 $37 
Work in progress 52 9 
Finished goods12 1 
Total inventory$494 $47 

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9. Property and Equipment, Net

Property and equipment, net, as of March 31, 2021 and December 31, 2020 consists of the following (in millions):

March 31,December 31,
20212020
Laboratory equipment
$125 $121 
Leasehold improvements
184 180 
Furniture, fixtures and other5 5 
Computer equipment and software
15 13 
Internally developed software
7 7 
Right-of-use asset, financing
108 56 
Construction in progress
63 35 
507 417 
Less: Accumulated depreciation
(135)(120)
Property and equipment, net
$372 $297 

Depreciation and amortization expense for the three months ended March 31, 2021 and 2020 was $15 million and $7 million, respectively.

10. Other Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets, as of March 31, 2021 and December 31, 2020 consists of the following (in millions):

March 31,December 31,
20212020
Down payments to manufacturing vendors$224 $217 
Other prepaid expenses 22 16 
Tenant incentives receivables
10 10 
Interest receivable on marketable securities
8 9 
Prepaid expenses and other current assets
$264 $252 
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Accrued Liabilities

Accrued liabilities, as of March 31, 2021 and December 31, 2020 consists of the following (in millions):

March 31,December 31,
20212020
Clinical trials$181 $98 
Raw materials185 78 
Royalties84  
Development operations71 29 
Manufacturing119 53 
Other external goods and services 58 92 
Compensation-related33 95 
Property and equipment17 18 
Commercial5 7 
Accrued liabilities
$753 $470 

Deferred Revenue

The following table summarizes the activities in deferred revenue for the three months ended March 31, 2021 (in millions):

December 31, 2020AdditionsDeductionsMarch 31, 2021
Product sales$3,799 $4,467 $(796)$7,470 
Grant revenue5 2 (2)5 
Collaboration revenue240 5 (10)235 
Total deferred liabilities$4,044 $4,474 $(808)$7,710 



11. Leases

We have entered into various long-term non-cancelable lease arrangements for our facilities and equipment expiring at various times through 2032. Certain of these arrangements have free rent periods or escalating rent payment provisions. We recognize lease cost under such arrangements on a straight-line basis over the life of the leases. We have two campuses in Massachusetts, our Cambridge facility and our Moderna Technology Center (MTC), located in Norwood.

Operating Leases

Cambridge facility

We occupy a multi-building campus in Technology Square in Cambridge, Massachusetts with a mix of offices and research laboratory space totaling approximately 175,000 square feet. Our Cambridge facility leases have expiry ranges from 2020 to 2029.

Finance Leases

Moderna Technology Center manufacturing facility (MTC South)

In August 2016, we entered into a lease agreement for approximately 200,000 square feet of office, laboratory, and light manufacturing space, MTC South, in Norwood, Massachusetts. The lease will expire in September 2032. We have the option to extend the term for two extension periods of ten years each at market-based rents. The base rent is subject to increases over the term of the lease.
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Moderna Technology Center North (MTC North)

In February 2019, we entered into a lease agreement for office and laboratory space of approximately 200,000 square feet, MTC North, located in Norwood, Massachusetts. The lease commenced in the second quarter of 2019 and had an initial expiration date of 2031. We have the option to extend the lease for up to four 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.

Embedded Leases

We have entered into multiple contract manufacturing service agreements with third parties which contain embedded leases within the scope of ASC 842. As of March 31, 2021 and December 31, 2020, we had lease liabilities of $73 million and $24 million, respectively, related to the embedded leases. As of March 31, 2021 and December 31, 2020, we had right-of-use assets of $44 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.

Operating and financing lease right-of-use assets and lease liabilities as of March 31, 2021 and December 31, 2020 were as follows (in millions):

March 31,December 31,
20212020
Assets:
Right-of-use assets, operating, net (1) (2)
$89 $90 
Right-of-use assets, financing, net (3) (4)
99 55 
Total$188 $145 
Liabilities:
Current:
Operating lease liabilities (5)
$7 $6 
Financing lease liabilities (5)
45 24 
Total current lease liabilities52 30 
Non-current:
Operating lease liabilities, non-current96 97 
Financing lease liabilities, non-current138 110 
Total non-current lease liabilities$234 $207 
Total$286 $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 North and MTC South 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 lease agreements at March 31, 2021, are as follows (in millions):

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Fiscal Year
Operating Leases (1)
Financing Leases (1)
2021(remainder of the year)$12 $46 
202216 48 
202316 12 
202416 12 
202517 13 
Thereafter94 428 
Total minimum lease payments
171 559 
Less amounts representing interest or imputed interest(68)(376)
(2)
Present value of lease liabilities
$103 $183 
______
(1) Includes optional extensions in the MTC North and MTC South lease terms which represent a total of $339 million un-discounted future lease payments.
(2) MTC South interest is based on an imputed interest rate of 17.2%. MTC North and the embedded lease interest is based upon incremental borrowing rates of 8.2% and 0.6% respectively.

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 PCV Agreement and PCV/SAV Agreement 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 million for both periods as of March 31, 2021 and December 31, 2020. Please refer to our 2020 Form 10-K Note 5 to our consolidated financial statements.

Legal Proceedings

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

Indemnification Obligations

As permitted under Delaware law, we indemnify our officers, directors, and employees for certain events, occurrences while the officer, or director is, or was, serving at our request in such capacity. The term of the indemnification 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 indemnified party for losses suffered or incurred by the indemnified party as a result of our activities. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited.

Through the three months ended March 31, 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.
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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 March 31, 2021, we had $1.0 billion of non-cancelable purchase commitments related to raw materials and manufacturing agreements, including the Lonza agreement, which are expected to be paid through 2022. As of March 31, 2021, we had $30 million of non-cancelable purchase commitments related to clinical services and other goods and services which are expected to be paid through 2024. 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 March 31, 2021 and December 31, 2020, we had cancelable open purchase orders of $993 million 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 March 31, 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.

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. The development and regulatory milestone payments, up to $2 million for therapeutic and prophylactic products and up to $1 million for diagnostic products will be recognized as a cost of the asset acquired upon resolution of the associated contingency and will be capitalized or expensed depending on the nature of the associated asset as of the date of recognition. Conversely, commercial milestone payments, up to $24 million, and royalties based on annual net sales of licensed products for therapeutic and prophylactic products will be accounted for as additional expense of the related product sales in the period in which the corresponding sales occur. We recognized $84 million of royalty expenses associated with our product sales in the first quarter of 2021, which was recorded to cost of sales in our condensed consolidated statements of operations. We did not recognize any such royalties in the first quarter of 2020 as we did not have product sales in that quarter.

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 March 31, 2021.


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13. Stock-Based Compensation

As of March 31, 2021, we had a total of 62 million shares reserved for future issuance under our Equity Plans, of which 35 million shares were reserved for equity awards previously granted, and 27 million shares were available for future grants under the 2018 Equity Plan.

Options

The following table summarizes our option activity during the three months ended March 31, 2021:
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 Outstanding at Outstanding at December 31, 202034.06 $17.14 $9.12 6.7 years$2,976 
Granted
0.87 171.07 75.13 
Exercised
(1.89)14.80 8.16 
Canceled/forfeited
(0.09)23.92 11.41 
Outstanding at March 31, 202132.95 21.32 10.91 6.6 years