Item 8. Financial Statements and Supplementary Data

MODERNA, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm						114
Consolidated Balance Sheets as of December 31, 2021 and 2020						116
Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019						117
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020 and 2019						118
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019						119
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019						121
Notes to Consolidated Financial Statements						122

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Moderna, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Moderna, Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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						Product Sales Revenue Recognition
Description of the Matter						As discussed in Note 2 to the consolidated financial statements, the Company has entered into supply agreements with the U.S. Government, other international governments, Gavi (on behalf of the COVAX facility), and the African Union. Under the supply agreements, the Company is entitled to upfront deposits for COVID-19 vaccine supply, which are initially recorded as deferred revenue. Revenue is recognized pursuant to Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, based on the fixed price per dose when control of the product has transferred and customer acceptance has occurred, unless such acceptance provisions are deemed perfunctory. The Company must evaluate the contractual terms and conditions in its supply agreements to determine the timing of revenue recognition. For the year ended December 31, 2021, product sales revenue totaled $17.7 billion and related deferred revenue totaled $6.7 billion. Auditing the Company's revenue recognition was especially challenging due to the volume of executed supply agreements, the varying contractual terms within the agreements, and because the amounts are material to the consolidated financial statements and related disclosures.
How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company's internal controls over the recognition of revenue related to product sales. This included testing controls over the Company's process to evaluate the contractual terms of the supply agreements and determine the appropriate revenue recognition. We also tested the Company’s controls over evaluating transfer of control and customer acceptance, as applicable, and controls over the Company’s IT systems that are important to the initiation, processing and recording of revenue transactions. To test the recognition of revenue associated with supply agreements, our audit procedures included, among others, evaluating the contractual terms of supply agreements, testing the transfer of control, and assessing the timing of revenue recognition. For example, we performed procedures to test the completeness and accuracy of the underlying data in the Company’s revenue and deferred revenue calculations, including testing the mathematical accuracy of the Company’s calculations, and testing the accuracy of revenue recognized by tracing key terms to the supply agreements and agreeing a sample of revenue transactions to supporting documentation, including evidence of control transfer. We also assessed the appropriateness of the related disclosures in the consolidated financial statements.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2014.

Boston, Massachusetts

February 25, 2022

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MODERNA, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)

			December 31,
			2021						2020
Assets
Current assets:
Cash and cash equivalents			$	6,848					$	2,624
Investments			3,879						1,984
Accounts receivable			3,175						1,391
Inventory			1,441						47
Prepaid expenses and other current assets			728						252
Total current assets			16,071						6,298
Investments, non-current			6,843						639
Property and equipment, net			1,241						297
Right-of-use assets, operating leases			142						90
Restricted cash, non-current			12						11
Deferred tax assets			326						—
Other non-current assets			34						2
Total assets			$	24,669					$	7,337
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable			$	302					$	18
Accrued liabilities			1,472						470
Deferred revenue			6,253						3,867
Income taxes payable			876						—
Other current liabilities			225						34
Total current liabilities			9,128						4,389
Deferred revenue, non-current			615						177
Operating lease liabilities, non-current			106						97
Financing lease liabilities, non-current			599						110
Other non-current liabilities			76						3
Total liabilities			10,524						4,776
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.0001; 162 shares authorized as of December 31, 2021 and 2020; no shares issued or outstanding at December 31, 2021 and 2020			—						—
Common stock, par value $0.0001; 1,600 shares authorized as of December 31, 2021 and 2020; 403 and 399 shares issued and outstanding as of December 31, 2021 and 2020, respectively			—						—
Additional paid-in capital			4,211						4,802
Accumulated other comprehensive (loss) income			(24)						3
Retained earnings (accumulated deficit)			9,958						(2,244)
Total stockholders’ equity			14,145						2,561
Total liabilities and stockholders’ equity			$	24,669					$	7,337

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

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MODERNA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

			Years Ended December 31,
			2021						2020						2019
Revenue:
Product sales			$	17,675					$	200					$	—
Grant revenue			735						529						12
Collaboration revenue			61						74						48
Total revenue			18,471						803						60
Operating expenses:
Cost of sales			2,617						8						—
Research and development			1,991						1,370						496
Selling, general and administrative			567						188						110
Total operating expenses			5,175						1,566						606
Income (loss) from operations			13,296						(763)						(546)
Interest income			18						25						39
Other expense, net			(29)						(6)						(8)
Income (loss) before income taxes			13,285						(744)						(515)
Provision for (benefit from) income taxes			1,083						3						(1)
Net income (loss)			$	12,202					$	(747)					$	(514)
Earnings (loss) per share:
Basic			$	30.31					$	(1.96)					$	(1.55)
Diluted			$	28.29					$	(1.96)					$	(1.55)
Weighted average common shares used in calculation of earnings (loss) per share:
Basic			403						381						331
Diluted			431						381						331

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

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MODERNA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

			Years Ended December 31,
			2021						2020						2019
Net income (loss)			$	12,202					$	(747)					$	(514)
Other comprehensive (loss) income, net of tax
Available-for-sales securities:
Unrealized (losses) gains on available-for-sale debt securities			(42)						2						3
Less: net realized (gains) on available-for-sale securities reclassified to net income (loss)			(1)						(1)						—
Net (decrease) increase from available-for-sale debt securities			(43)						1						3
Cash flow hedges:
Unrealized gains on derivative instruments			74						—						—
Less: net realized (gains) on derivative instruments reclassified to net income (loss)			(58)						—						—
Net increase from derivatives designated as hedging instruments			16						—						—
Total other comprehensive (loss) income			(27)						1						3
Comprehensive income (loss)			$	12,175					$	(746)					$	(511)

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

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MODERNA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

															Common Stock												Additional Paid-In Capital						Accumulated Other Comprehensive (Loss) Income						Accumulated Deficit						Total Stockholders’ Equity
																					Shares						Amount
Balance at December 31, 2018																					329						$	—					$	2,538					$	(1)					$	(1,007)					$	1,530
Vesting of restricted common stock and restricted stock units																					1						—						—						—						—						—
Exercise of options to purchase common stock																					7						—						48						—						—						48
Purchase of common stock under employee stock purchase plan																					—						—						3						—						—						3
Transition adjustment from adoption of ASC 606																					—						—						—						—						28						28
Transition adjustment from adoption of ASC 842																					—						—						—						—						(4)						(4)
Stock-based compensation																					—						—						81						—						—						81
Other comprehensive income, net of tax																					—						—						—						3						—						3
Net loss																					—						—						—						—						(514)						(514)
Balance at December 31, 2019																					337						$	—					$	2,670					$	2					$	(1,497)					$	1,175

															Common Stock												Additional Paid-In Capital						Accumulated Other Comprehensive Income						Accumulated Deficit						Total Stockholders’ Equity
																					Shares						Amount
Balance at December 31, 2019																					337						$	—					$	2,670					$	2					$	(1,497)					$	1,175
Proceeds from public offering of common stock, net of issuance costs of $2																					48						—						1,853						—						—						1,853
Exercise of options to purchase common stock																					14						—						179						—						—						179
Purchase of common stock under employee stock purchase plan																					—						—						7						—						—						7
Stock-based compensation																					—						—						93						—						—						93
Other comprehensive income, net of tax																					—						—						—						1						—						1
Net loss																					—						—						—						—						(747)						(747)
Balance at December 31, 2020																					399						$	—					$	4,802					$	3					$	(2,244)					$	2,561

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															Common Stock												Additional Paid-In Capital						Accumulated Other Comprehensive (Loss) Income						Retained Earnings (Accumulated Deficit)						Total Stockholders’ Equity
																					Shares						Amount
Balance at December 31, 2020																					399						$	—					$	4,802					$	3					$	(2,244)					$	2,561
Exercise of options to purchase common stock																					7						—						112						—						—						112
Purchase of common stock under employee stock purchase plan																					—						—						12						—						—						12
Stock-based compensation																					—						—						142						—						—						142
Other comprehensive loss, net of tax																					—						—						—						(27)						—						(27)
Repurchase of common stock																					(3)						—						(857)						—						—						(857)
Net income																					—						—						—						—						12,202						12,202
Balance at December 31, 2021																					403						$	—					$	4,211					$	(24)					$	9,958					$	14,145

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

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MODERNA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

			Years Ended December 31,
			2021						2020						2019
Operating activities
Net income (loss)			$	12,202					$	(747)					$	(514)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation			142						93						81
Depreciation and amortization			232						31						31
Leased assets expensed			—						62						—
Amortization/accretion of investments			54						10						(4)
Deferred income taxes			(318)						—						—
Changes in assets and liabilities:
Accounts receivable			(1,784)						(1,385)						7
Prepaid expenses and other assets			(489)						(241)						10
Inventory			(1,394)						(47)						—
Right-of-use assets, operating leases			(58)						(11)						(6)
Accounts payable			204						12						(24)
Accrued liabilities			989						388						(3)
Deferred revenue			2,824						3,842						(44)
Income taxes payable			876						—						—
Operating lease liabilities			17						12						13
Other liabilities			123						8						(6)
Net cash provided by (used in) operating activities			13,620						2,027						(459)
Investing activities
Purchases of marketable securities			(12,652)						(2,956)						(1,145)
Proceeds from maturities of marketable securities			1,338						1,137						993
Proceeds from sales of marketable securities			3,105						215						169
Purchases of property and equipment			(284)						(68)						(32)
Investment in convertible notes			(30)						—						—
Net cash used in investing activities			(8,523)						(1,672)						(15)
Financing activities
Proceeds from offerings of common stock, net of issuance costs			—						1,853						—
Proceeds from issuance of common stock through equity plans, net			124						186						51
Repurchase of common stock			(857)						—						—
Changes in financing lease liabilities			(140)						(6)						1
Net cash (used in) provided by financing activities			(873)						2,033						52
Net increase (decrease) in cash, cash equivalents and restricted cash			4,224						2,388						(422)
Cash, cash equivalents and restricted cash, beginning of year			2,636						248						670
Cash, cash equivalents and restricted cash, end of year			$	6,860					$	2,636					$	248
Supplemental cash flow information
Cash paid for income taxes			$	480					$	1					$	—
Cash paid for interest			$	14					$	9					$	6
Non-cash investing and financing activities
Purchases of property and equipment included in accounts payable and accrued liabilities			$	111					$	18					$	5

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

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MODERNA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

Moderna, Inc. (collectively, with its consolidated subsidiaries, any of Moderna, we, us, our 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 pioneering messenger RNA (mRNA) therapeutics and vaccines to create a new generation of 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.

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 70 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. In January 2022, we received full FDA approval for Spikevax to prevent COVID-19 in individuals 18 years of age and older in the United States. In February 2022, we received approval for the administration of Spikevax to children ages 6-11 in Australia and a positive recommendation from the European Medicines Agency’s Committee for Medicinal Products for Human Use for the administration of Spikevax in children ages 6-11 years.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). 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 Updates (ASU) of the Financial Accounting Standards Board (FASB).

The consolidated financial statements include the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

We have made estimates and judgments affecting the amounts reported in our 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 revenue 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, revenue recognition, research and development expense, leases, fair value of financial instruments, derivative financial instruments, inventory, useful lives of property and equipment, stock-based compensation, income taxes, and our valuation allowance on our deferred tax assets. The actual results that we experience may differ materially from our estimates.

Segment Information

We have determined that our chief executive officer is the chief operating decision maker (CODM). The CODM reviews financial information presented on a consolidated basis. Resource allocation decisions are made by the CODM based on consolidated results. There are no segment managers who are held accountable by the CODM for operations, operating results, and planning for levels or components below the consolidated unit level. As such, we have concluded that we operate as one segment.

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Revenue Recognition

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. 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. 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 five steps (the five-step model): (i) identify the contract(s) with our 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.

Our revenue is primarily generated through product sales. We also generate grant revenue from government-sponsored and private organizations, and collaboration revenue through collaboration arrangements.

Product Sales

Product sales are associated with our COVID-19 vaccine supply agreements with the U.S. Government, other international governments, Gavi (on behalf of the COVAX Facility), and the African Union. These agreements generally do not include variable consideration, such as discounts, rebates or returns. Under these agreements, we are entitled to upfront deposits for our COVID-19 vaccine supply, initially recorded as deferred revenue. We recognize revenue from product sales, using the five-step model under ASC 606, based on the fixed price per dose according to the contracts when control of the product transfers to the customer and customer acceptance has occurred, unless such acceptance provisions are deemed perfunctory.

We pay distribution fees to certain customers in connection with the sales of our product. We record distribution fees paid to our customers as a reduction of revenue, unless the payment is for a distinct good or service from the customer and we can reasonably estimate the fair value of the goods or services received. If both conditions are met, we record the consideration paid to the customer as an operating expense. These costs are typically known at the time of sale, resulting in minimal adjustments subsequent to the period of sale. Such distribution fees were immaterial for the year ended December 31, 2021. We did not have any distribution fees for the years ended December 31, 2020 and 2019.

Grant Revenue

We have contracts with 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); the U.S. government’s Defense Advanced Research Projects Agency (DARPA); the Bill & Melinda Gates Foundation (Gates Foundation) and other government-sponsored and private organizations for research and development 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 recognize revenue from these contracts as we perform services under these arrangements when the funding is committed. Associated expenses are recognized when incurred as research and development expense. Revenues and related expenses are presented gross in the 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.

Collaboration Revenue

We have entered into several strategic collaborations and other similar arrangements with third parties for research and other licenses, development and commercialization of certain products and product candidates. Such arrangements provide for various types of payments to us, including upfront fees, funding of research and development services and preclinical and clinical material, technical, development, regulatory, and commercial milestone payments, licensing fees, option exercise fees, and royalty and earnout payments on product sales. Such payments are often not commensurate with the timing of revenue recognition and therefore result in deferral of revenue recognition. 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.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of 90 days or less from the date of purchase to be cash equivalents.

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Restricted Cash

Restricted cash is composed of amounts held on deposit related to our lease arrangements. The funds are maintained in money market accounts and are recorded at fair value. We classify our restricted cash as either current or non-current based on the terms of the underlying lease arrangement.

Cash, Cash Equivalents and Restricted Cash shown in the Consolidated Statements of Cash Flows

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):

						December 31,
						2021						2020						2019
Cash and cash equivalents						$	6,848					$	2,624					$	236
Restricted cash (1)						—						1						1
Restricted cash, non-current						12						11						11
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows						$	6,860					$	2,636					$	248

(1) Included in prepaid expenses and other current assets in the consolidated balance sheets.

Investments

We invest our excess cash balances in marketable debt securities. We classify our investments in marketable debt securities as available-for-sale. We report available-for-sale investments at fair value at each balance sheet date, and include any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive (loss) income, a component of stockholders’ equity. Realized gains and losses are determined using the specific-identification method, and are included in other expense, net in our consolidated statements of operations. We classify our available-for-sale marketable securities as current or non-current based on each instrument’s underlying effective maturity date and for which we have the intent and ability to hold the investment for a period of greater than 12 months. Marketable securities with maturities of less than 12 months are classified as current and are included in investments in the consolidated balance sheets. Marketable securities with maturities greater than 12 months for which we have the intent and ability to hold the investment for greater than 12 months are classified as non-current and are included in investments, non-current in the consolidated balance sheets.

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 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. A credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. Any impairment that is not credit- related is recognized in other comprehensive (loss) income, net of applicable taxes.

Accounts Receivable and Allowance for Doubtful Accounts

We have accounts receivable amounts due from our product sales and related vaccine supply agreements and our grant agreements. We also have accounts receivable amounts due from strategic collaborators as a result of manufacturing and research and development services provided under collaboration arrangements, or milestones achieved, but not yet paid. Amounts payable to us are recorded as accounts receivable when our right to consideration is unconditional. To estimate the allowance for doubtful accounts, we make judgments about the creditworthiness of our customers based on ongoing credit evaluation and historical experience. There was no allowance for doubtful accounts at December 31, 2021 or 2020. There was no bad debt expense for the years ended December 31, 2021, 2020 or 2019.

Concentrations of Credit Risk

Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, marketable securities, and accounts receivable. Our investment portfolio comprises 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. Our cash management and investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds can be used in business operations. Bank accounts in the United States are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Our primary operating accounts significantly exceed the FDIC limits.

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Significant Customers

Our accounts receivable are generally unsecured and are from customers in different countries. We generated revenue from product sales to the U.S. Government, other international governments, Gavi (on behalf of the COVAX Facility), the African Union. grants made by government-sponsored and private organizations, and to a lesser extent, strategic alliances in 2021 and 2020. Historically, we generated revenue primarily from strategic alliances.

A significant portion of our revenue to date has been generated from the following entities that accounted for more than 10% of total revenue and accounts receivable for the periods presented:

			Percentage of Revenue Years Ended December 31,																		Percentage of Accounts Receivable December 31,
			2021						2020						2019						2021						2020
European Commission			32		%				*						*						46		%				28		%
U.S. Government (excluding BARDA)			29		%				24		%				*						*						*
BARDA			*						65		%				13		%				16		%				22		%
Merck			*						*						61		%				*						*
Vertex			*						*						10		%				*						*
United Kingdom Government			*						*						*						*						11		%
South Korea Government			*						*						*						*						24		%

________

** - Represents an amount of less than 10%*

Derivative Instruments and Hedging Activities

We record all derivatives on our consolidated balance sheets at fair value. The accounting for changes in the fair value of a derivative depends on whether the derivative has been designated and qualifies for hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

The gains or losses resulting from changes in the fair value of cash flow hedges are initially recorded as a component of accumulated other comprehensive (loss) 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 consolidated statements of operations. We may enter into derivative contracts that are intended to economically hedge certain risk, even though hedge accounting does not apply or we elect not to apply hedge accounting. Gains or losses associated with foreign currency derivatives that are not designated as hedging instruments for accounting purposes are recorded within other expense, net, in our consolidated statements of operations.

Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. ASC 820 (Fair Value Measurement) establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from our independent sources. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. 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;

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• 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).

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Our cash equivalents and marketable securities are reported at fair value determined using Level 1 and Level 2 inputs (Note 6). The fair value of our foreign currency forward contracts is calculated using Level 2 inputs, which include currency spot rates, forward rates, interest rate curve and credit or non-performance risk (Note 7). We do not have any non-financial assets or liabilities that should be recognized or disclosed at fair value on a recurring basis at December 31, 2021, 2020, and 2019.

We maintained letters of credit of $12 million as of December 31, 2021 and 2020, related to our lease arrangements, which are secured by money market accounts in accordance with certain of our lease agreements. The amounts are recorded at fair value using Level 1 inputs and included as restricted cash in our consolidated balance sheets.

Inventory

Inventory is recorded at the lower of cost or net realizable value, with cost determined using first-in, first-out and average cost methods for different components of inventory. We periodically review the composition of inventory in order to identify excess, obsolete, slow-moving or otherwise unsaleable items. If unsaleable items are observed and there are no alternate uses for the inventory, we will record a write-down to net realizable value in the period that the decline in value is first recognized through a charge to cost of sales. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required. The determination of net realizable value requires judgment including consideration of many factors, such as estimates of future product demand, product net selling prices, current and future market conditions and potential product obsolescence, among others.

Prior to an initial regulatory approval for our investigational medicines, we expense costs relating to raw materials and production of inventory as research and development expense in our consolidated statements of operations, in the period incurred. Upon the authorization of distribution and use of our COVID-19 vaccine under an EUA in December 2020, we began to capitalize inventory costs associated with our COVID-19 vaccine, as it was determined that inventory costs incurred subsequent to the EUA had a probable future economic benefit.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of property and equipment are described below:

						Estimated Useful Life
Laboratory equipment						5 years
Leasehold improvements						Lesser of estimated useful life of improvement or remaining life of related lease
Computer equipment and software						3 years
Internally developed software						3 years
Furniture, fixtures and other						5 years
Right of use asset, financing						Lease term

Construction in progress includes direct costs related to the construction of various property and equipment, including leasehold improvements, and is stated at original cost. Construction in progress includes costs incurred under construction contracts including project management services, engineering services, design services and development, construction services and other construction-related fees and services. Such costs are not depreciated until the asset is completed and placed into service. Once the asset is placed into service, these capitalized costs will be allocated to certain property and equipment categories and will be depreciated over the estimated useful life of the underlying assets.

Expenditures for maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost of the assets disposed of, and the related accumulated depreciation, are removed from the accounts, and any resulting gain or loss is recorded to other expense, net in our consolidated statements of operations.

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Impairment of Long-Lived Assets

We evaluate our long-lived assets, which consist of property and equipment, to determine if facts and circumstances indicate that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, we assess the recoverability of the long-lived assets by comparing the projected future undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. If such review indicates that such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets or based on appraisals. Impairment expenses for the years ended December 31, 2021, 2020 and 2019 were immaterial.

Leases

Leases are classified at their commencement date, which is defined as the date on which the lessor makes the underlying asset available for use by the lessee, as either operating or finance leases based on the economic substance of the agreement. We recognize lease right-of-use assets and related liabilities in our consolidated balance sheets for both operating and finance leases. Lease liabilities are measured at the lease commencement date as the present value of the future lease payments using the interest rate implicit in the lease. If the rate implicit is not readily determinable, we will utilize our incremental borrowing rate as of the lease commencement date. Lease right-of-use assets are measured as the lease liability plus initial direct costs and prepaid lease payments less lease incentives. The lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised.

We recognize operating lease cost in operating expenses in our consolidated statements of operations, inclusive of rent escalation provisions and rent holidays, on a straight-line basis over the respective lease term. For our finance leases, we recognize depreciation expense associated with the leased asset acquired and recognize interest expense related to the portion of the financing in our consolidated statements of operations.

We do not separate non-lease components from lease components for all classes of underlying assets. We do not recognize right-of-use assets and lease liabilities for leases with a lease term of 12 months or less. Instead, these lease payments are recognized in profit or loss on a straight-line basis over the lease term.

Cost of Sales

Cost of sales includes cost of raw materials, production, transportation, freight and indirect overhead costs associated with our product sales during the period and third-party royalties on net sales of our product. Cost of sales also includes adjustments for excess and obsolete inventory to the extent management determines that the cost cannot be recovered based on estimates about future demand.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract services, and other outside costs. The value of goods and services received from contract research organizations and contract manufacturing organizations in the reporting period are estimated based on the level of services performed, and progress in the period in cases when we have not received an invoice from the supplier.

Equipment or facilities that are acquired or constructed for research and development activities and that have alternative future uses, in research and development projects or otherwise, should be capitalized and depreciated as tangible assets. However, the costs of equipment or facilities that are acquired or constructed and intangibles that are purchased from others for a particular research and development project and that have no alternative future uses and therefore no separate economic values are considered research and development costs and are expensed when incurred.

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Stock-Based Compensation

We issue stock-based awards to employees and non-employees, generally in the form of stock options, restricted stock units (RSUs), and performance stock units (PSUs). We account for our stock-based compensation awards in accordance with ASC 718 (Compensation—Stock Compensation). Most of our stock-based awards have been made to employees. We measure compensation cost for equity awards at their grant-date fair value and recognize compensation expense over the requisite service period, which is generally the vesting period, on a straight-line basis. The grant date fair value of stock options is estimated using the Black-Scholes option pricing model, which requires management to make assumptions with respect to the fair value of our common stock on the grant date, including the expected term of the award, the expected volatility of our stock, calculated based on a period of time generally commensurate with the expected term of the award, risk-free interest rates and expected dividend yields of our stock. The grant date fair value of RSUs is estimated based on the fair value of our underlying common stock. For performance-based stock awards, we recognize stock-based compensation expense over the requisite service period using the accelerated attribution method when achievement is probable. We classify stock-based compensation expense in our consolidated statements of operations in the same manner in which the award recipient’s salary and related costs are classified or in which the award recipient’s service payments are classified. We made an accounting policy election to recognize forfeitures of stock-based awards as they occur.

Income Taxes

We account for income taxes based on an asset and liability approach. 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 and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided when the expected realization of deferred tax assets does not meet a “more likely than not” criterion. We make estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance could be materially impacted. Changes in these estimates may result in significant increases or decreases to our tax provision in a period in which such estimates are changed, which in turn would affect net income or loss. We recognize tax benefits from uncertain tax positions if we believe the position is more likely than not to be sustained on examination by the taxing authorities based on the technical merits of the position. We make adjustments to these tax reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of any reserves for uncertain tax positions, as well as the related net interest and penalties.

Earnings (Loss) per Share

We calculate diluted net earnings (loss) per share attributable to common stockholders by dividing net earnings (loss) by the weighted average number of common shares outstanding after giving consideration to the dilutive effect of restricted common stock and stock options that are outstanding during the period. For periods in which we have generated a net loss, the basic and diluted net loss per share attributable to common stockholders are the same, as the inclusion of the potentially dilutive securities would be anti-dilutive.

Comprehensive Income (Loss)

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

The components of accumulated other comprehensive (loss) income for the years ended December 31, 2021 and 2020 were as follows (in millions):

			Unrealized Gain (Loss) on Available-for-Sale Debt Securities						Net Unrealized Gains on Derivatives Designated As Hedging Instruments						Total
Accumulated other comprehensive income, balance at December 31, 2019			$	2					$	—					$	2
Other comprehensive income			1						—						1
Accumulated other comprehensive income, balance at December 31, 2020			3						—						3
Other comprehensive loss			(43)						16						(27)
Accumulated other comprehensive loss, balance at December 31, 2021			$	(40)					$	16					$	(24)

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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.

3. Product Sales

Product sales are primarily associated with our COVID-19 vaccine supply agreements with the U.S. Government, other international governments, Gavi (on behalf of the COVAX Facility), and the African Union.

Product sales by customer geographic location was as follows (in millions):

						Year Ended December 31,
						2021						2020
United States						$	5,393					$	194
Europe						6,834						—
Rest of world (1)						5,448						6
Total						$	17,675					$	200

---

(1) Includes product sales recognized under the agreement with Gavi as Gavi facilitates a fair allocation and distribution of our COVID-19 vaccine around the world.

There were no product sales in 2019. As of December 31, 2021 and 2020, our COVID-19 vaccine was our only commercial product authorized for use.

As of December 31, 2021 and 2020, we had deferred revenue of $6.7 billion and $3.8 billion, respectively, related to customer deposits. We expect $6.2 billion of our deferred revenue related to customer deposits as of December 31, 2021 to be realized in less than one year. 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 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 December 31, 2021, the committed funding, net of revenue earned was $2 million. An additional $42 million of funding will be available if DARPA exercises additional contract options.

In April 2020, we entered into an agreement with BARDA 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 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. 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 Phase 3 clinical trials for mRNA-1273 and pharmacovigilance efforts. In June 2021, the agreement with BARDA was further amended to award additional funding of $144 million to support pediatric clinical trials for mRNA-1273. The maximum award from BARDA, inclusive of the 2020 and 2021 amendments, was $1.4 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 December 31, 2021, the remaining available funding, net of revenue earned was $189 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. Three of the four contract options have been exercised. As of December 31, 2021, the remaining available funding, net of revenue earned was $48 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 Gates Foundation to advance mRNA-based development projects for various infectious diseases, including human immunodeficiency virus (HIV). As of December 31, 2021, the

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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 for the periods presented (in millions):

			Years Ended
			2021						2020						2019
BARDA			$	713					$	522					$	8
Other grant revenue			22						7						4
Total grant revenue			$	735					$	529					$	12

5. Collaboration Agreements

AstraZeneca – Strategic Alliances in Cardiovascular and Oncology

2013 Option Agreement and Services and Collaboration Agreement, amended and restated in 2018

In March 2013, we entered into an Option Agreement, the AZ Option Agreement, and a related Services and Collaboration Agreement (2013 AZ Agreements), the AZ Services Agreement, with AstraZeneca, which were amended and restated in June 2018 (2018 A&R Agreements). Under the 2018 A&R 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. 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.

As of the effective date of the 2013 AZ Agreements, AstraZeneca made upfront cash payments to us totaling $240 million in exchange for the acquired options and our performance of certain research-related services, each as described above. Under the 2018 A&R Agreements, we are entitled to receive, on a product-by-product basis, payments for achievement of certain development, regulatory and commercial milestones, as well as 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.

In 2016, AstraZeneca exercised a product option under the 2013 AZ Agreements to obtain exclusive rights to develop and commercialize with respect to AstraZeneca's VEGF-A product (AZD8601). It is currently being developed in a Phase 2 clinical trial.

2016 Strategic Alliance with AstraZeneca – IL-12

In January 2016, we entered into a Strategic Drug Development Collaboration and License Agreement (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 IL-12 protein. 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 IL-12 program and any other discovery program the parties agree to conduct under the 2016 AZ Agreement.

Merck – Strategic Alliances in Infectious Diseases and Cancer Vaccines

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 (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

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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 million from Merck.

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 or V941, 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 PCV increased to $243 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. 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 million, of which $13 million was determined to be a premium and recorded to deferred revenue. In December 2021, Merck elected to terminate the Merck participation election with respect to the joint SAV program.

Vertex – Strategic Alliance in Cystic Fibrosis

2016 Strategic Alliance in Cystic Fibrosis

In July 2016, we entered into a Strategic Collaboration and License Agreement (Vertex Agreement), with Vertex Pharmaceuticals Incorporated, and Vertex Pharmaceuticals (Europe) Limited, together, Vertex. The Vertex Agreement, which was amended in July 2019 (2019 Vertex Amendment), 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 cystic fibrosis transmembrane conductance regulator (CFTR) proteins. Pursuant to the Vertex Agreement, we lead discovery efforts during an initial research period that currently extends until August 2022, 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.

2020 Strategic Alliance in Cystic Fibrosis

In September 2020, we entered into a new Strategic Collaboration and License Agreement with Vertex (Vertex 2020 Agreement). The Vertex 2020 Agreement is aimed at the discovery and development of potential medicines to treat CF by delivering gene-editing therapies to lung cells to facilitate production of functional CFTR proteins. The three-year research period of the Vertex 2020 Agreement will initially focus on the identification and optimization of novel LNPs and mRNAs that can deliver gene-editing therapies to cells in the lungs. Following the initial three-year period, 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. Vertex is also obligated to pay us for research services in connection with our performance of certain activities in accordance with a jointly agreed research plan. Subject to customary “back-up” supply rights granted to Vertex, under the agreement, we are the exclusive manufacturer of related mRNA and LNPs for preclinical, clinical, and commercialization purposes.

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The following table summarizes our total consolidated net revenue from our strategic collaborators for the periods presented (in millions):

						Years Ended December 31,
Collaboration Revenue by Strategic Collaborator:						2021						2020						2019
AstraZeneca						$	7					$	33					$	5
Merck						23						26						37
Vertex						26						15						6
Other						5						—						—
Total collaboration revenue						$	61					$	74					$	48

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

						December 31, 2020						Additions						Deductions						December 31, 2021
Contract Assets:
Accounts receivable						$	6					$	26					$	(23)					$	9
Contract Liabilities:
Deferred revenue						$	240					$	27					$	(63)					$	204

As of December 31, 2021, the aggregated amount of the transaction price allocated to performance obligations under our collaboration agreements that are unsatisfied or partially unsatisfied was $286 million.

In addition to the collaborative arrangements mentioned above, we have other collaborative and licensing arrangements that we do not consider to be individually significant to our business at this time. Pursuant to these agreements, we may be required to make upfront payments and payments upon achievement of various development, regulatory and commercial milestones, which in the aggregate could be significant. Future milestone payments, if any, will be reflected in our consolidated financial statements when the corresponding events become probable. In addition, we may be required to pay significant royalties on future sales if products related to these arrangements are commercialized.

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6. Financial Instruments and Fair Value Measurements

Cash and Cash Equivalents and Investments

The following tables summarize our cash and available-for-sale securities by significant investment category at December 31, 2021 and 2020 (in millions):

						December 31, 2021
						Amortized Cost						Unrealized Gains						Unrealized Losses						Fair Value						Cash and Cash Equivalents						Current Marketable Securities						Non- Current Marketable Securities
Cash and cash equivalents						$	6,848					$	—					$	—					$	6,848					$	6,848					$	—					$	—
Available-for-sale:
Certificates of deposit						80						—						—						80						—						80						—
U.S. treasury bills						479						—						—						479						—						479						—
U.S. treasury notes						6,595						—						(31)						6,564						—						1,984						4,580
Corporate debt securities						3,508						—						(20)						3,488						—						1,323						2,165
Government debt securities						112						—						(1)						111						—						13						98
Total						$	17,622					$	—					$	(52)					$	17,570					$	6,848					$	3,879					$	6,843
						December 31, 2020
						Amortized Cost						Unrealized Gains						Unrealized Losses						Fair Value						Cash 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 deposit						239						—						—						239						—						215						24
U.S. treasury bills						492						—						—						492						—						492						—
U.S. treasury notes						87						—						—						87						—						38						49
Corporate debt securities						1,788						4						—						1,792						—						1,239						553
Government debt securities						13						—						—						13						—						—						13
Total						$	5,243					$	4					$	—					$	5,247					$	2,624					$	1,984					$	639

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The amortized cost and estimated fair value of marketable securities, by contractual maturity at December 31, 2021 and 2020 were as follows (in millions):

						December 31, 2021
						Amortized Cost						Estimated Fair Value
Due in one year or less						$	3,882					$	3,879
Due after one year through five years						6,892						6,843
Total						$	10,774					$	10,722
						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

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. We did not record any impairment charges related to our available-for-sale securities during the years ended December 31, 2021, 2020, and 2019. We did not recognize any credit-related allowance to available-for-sale securities as of the years ended December 31, 2021 and 2020.

The following table summarizes the amount of gross unrealized losses and the estimated fair value for our available-for-sale securities in an unrealized loss position by length of time the securities have been in an unrealized loss position at December 31, 2021 (in millions):

						Less than 12 Months												12 Months or More												Total
						Gross Unrealized Losses						Estimated Fair Value						Gross Unrealized Losses						Estimated Fair Value						Gross Unrealized Losses						Estimated Fair Value
As of December 31, 2021:
U.S. treasury bills						$	—					$	329					$	—					$	—					$	—					$	329
U.S. treasury notes						(31)						6,332						—						—						(31)						6,332
Corporate debt securities						(20)						2,573						—						1						(20)						2,574
Government debt securities						(1)						112						—						—						(1)						112
Total						$	(52)					$	9,346					$	—					$	1					$	(52)					$	9,347

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

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize our financial assets measured at fair value on a recurring basis as of December 31, 2021 and 2020 (in millions):

						Fair value at December 31, 2021						Fair Value Measurement Using
									Level 1						Level 2
Assets:
Money market funds						$	2,329					$	2,329					$	—
Certificates of deposit						80						—						80
U.S. treasury bills						479						—						479
U.S. treasury notes						6,564						—						6,564
Corporate debt securities						3,488						—						3,488
Government debt securities						111						—						111
Derivative instruments (Note 7)						21						—						21
Total						$	13,072					$	2,329					$	10,743
Liabilities:
Derivative instruments (Note 7)						$	7					$	—					$	7

						Fair value at December 31, 2020						Fair Value Measurement Using
									Level 1						Level 2
Assets:
Money market funds						$	660					$	660					$	—
Certificates of deposit						239						—						239
U.S. treasury bills						492						—						492
U.S. treasury notes						87						—						87
Corporate debt securities						1,792						—						1,792
Government debt securities						13						—						13
Total						$	3,283					$	660					$	2,623

During the years ended December 31, 2021 and 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.

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 consolidated balance sheets. The gains or losses resulting from changes in the fair value of these hedges are initially recorded as a component of 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

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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 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 consolidated statements of operations. As of December 31, 2021, we had net deferred gains of $21 million on our foreign currency forward contracts included in AOCI that are expected to be recognized into product sales within the next 12 months.

Balance Sheet Hedges

We enter into foreign currency forward contracts to hedge fluctuations associated with foreign currency denominated monetary assets and liabilities, primarily accounts receivable, accounts payable, and lease liabilities in Euro and 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 on our 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 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 consolidated statements of operations.

Total gross notional amount and fair value for foreign currency derivatives were as follows (in millions):

						December 31, 2021
						Notional Amount						Fair Value
									Asset (1)						Liability (2)
Derivatives designated as cash flow hedging instruments:
Foreign currency forward contracts						$	565					$	20					$	—
Derivatives not designated as hedging instruments:
Foreign currency forward contracts						1,370						1						7
Total derivatives						$	1,935					$	21					$	7

						December 31, 2020
						Notional Amount						Fair Value
									Asset (1)						Liability (2)
Derivatives not designated as hedging instruments
Foreign currency forward contracts						$	368					$	—					$	—
Total						$	368					$	—					$	—

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(1) As presented in the consolidated balance sheet within prepaid expenses and other current assets.

(2) As presented in the consolidated balance sheets within other current liabilities.

Gains on our foreign currency derivatives, net of tax, recognized in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2021 was as follows (in millions):

						Year Ended December 31, 2021
Derivatives in cash flow hedging relationships:
Foreign currency forward contracts						$	74

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The effect of derivative instruments in our consolidated statements of operations for the year ended December 31, 2021 was as follows (in millions):

						Statement of Operations Classification						Year Ended December 31, 2021
Derivatives in cash flow hedging relationships:
Foreign currency forward contracts
Net gains reclassified from AOCI into income						Product sales						$	58
Derivatives not designated as hedging instruments:
Foreign currency forward contracts
Net realized and unrealized (losses)						Other expense, net						$	(8)

There were immaterial hedging gains and losses for the year ended December 31, 2020 and no hedging gains or losses for the year ended December 31, 2019.

8. Inventory

Inventory as of December 31, 2021 and 2020 consisted of the following (in millions):

						December 31,						December 31,
						2021						2020
Raw materials						$	870					$	37
Work in progress						338						9
Finished goods						233						1
Total inventory						$	1,441					$	47

9. Property and Equipment

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

						December 31,
						2021						2020
Laboratory equipment						$	175					$	121
Leasehold improvements						313						180
Furniture, fixtures and other						11						5
Computer equipment and software						16						13
Internally developed software						9						7
Right-of-use asset, financing						857						56
Construction in progress						212						35
						1,593						417
Less: Accumulated depreciation						(352)						(120)
Property and equipment, net						$	1,241					$	297

Depreciation and amortization expense for the years ended December 31, 2021, 2020, and 2019 was $232 million, $31 million, and $31 million, respectively.

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10. Other Balance Sheet Components

Prepaid Expenses and Other Current Assets

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

						December 31,
						2021						2020
Down payments to manufacturing vendors						$	405					$	217
Other prepaid expenses						126						7
Value added tax receivable						70						7
Derivative assets						21						—
Tenant improvement allowance receivable						51						10
Other current assets						55						11
Prepaid expenses and other current assets						$	728					$	252

Accrued Liabilities

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

						December 31,
						2021						2020
Clinical trials						$	283					$	98
Raw materials						260						78
Royalties						241						—
Development operations						137						29
Manufacturing						227						53
Other external goods and services						79						92
Compensation-related						126						95
Other						119						25
Accrued liabilities						$	1,472					$	470

Other Current Liabilities

Other current liabilities, as of December 31, 2021 and 2020 consisted of the following (in millions):

						December 31,
						2021						2020
Lease liabilities - financing (Note 11)						$	165					$	24
Lease liabilities - operating (Note 11)						46						6
Other						14						4
Other current liabilities						$	225					$	34

Deferred Revenue

The following table summarizes the activities in deferred revenue during the year ended December 31, 2021 (in millions):

						December 31, 2020						Additions						Deductions						December 31, 2021
Product sales						$	3,799					$	11,657					$	(8,798)					$	6,658
Grant revenue						5						12						(11)						6
Collaboration revenue						240						27						(63)						204
Total deferred liabilities						$	4,044					$	11,696					$	(8,872)					$	6,868

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11. Leases

We have entered into various long-term non-cancelable lease arrangements for our facilities and equipment expiring at various times through 2042. Certain of these arrangements have free rent periods or escalating rent payment provisions, which 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 campus and our Moderna Technology Center (MTC), located in Norwood. We also lease other office and lab spaces globally for our business operations.

Operating Leases

Cambridge Campus

We occupy a multi-building campus at Technology Square in Cambridge, Massachusetts with a mix of offices and research laboratory space totaling approximately 261,000 square feet. Our Cambridge campus leases have expiry ranges from 2024 to 2029.

In August 2019, we entered into an amendment to our lease agreements to consolidate our Technology Square space in Cambridge, Massachusetts. This included entering into a forward-starting lease agreement starting in January 2020 to acquire approximately 50,000 square feet of additional space at 200 Technology Square. In addition, our existing 200 Technology Square lease was extended for two years to 2029. As part of the lease amendment, we completely exited our leased space of approximately 60,000 square feet at 500 Technology Square by May 2020. We are also investing in a new Moderna Science Center (MSC) in Cambridge, to create a purpose-built space to support our next chapter of discovery (see Note 12). In connection with our MSC investment, in September 2021, we entered into an amendment to our lease agreements to allow for an option for early termination of the leases, either in part or full. Notification of the intent to exercise the option must be provided by August 2023. We have not elected to exercise this option.

We record operating lease cost for each of our operating leases on a straight-line basis from lease commencement date through the end of the lease term. Operating lease cost is recorded in operating expenses in our consolidated statements of operations.

Finance Leases

Moderna Technology Center

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

In August 2016, we entered into a lease agreement for approximately 200,000 square feet of office, laboratory, and light manufacturing space (MTC South). The lease had an initial expiration of September 2032 with the option to extend the term for two extension periods of ten years each at market-based rents.

In February 2019, we entered into a lease agreement for office and laboratory space of approximately 200,000 square feet (MTC North). The lease commenced in the second quarter of 2019 and had an initial expiration date of 2031 with 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.

In April 2021, we entered into a lease agreement for a 240,000 square foot building for expansion of our commercial and clinical activities (MTC East). The lease had an initial expiration date of February 2034 with the option to extend the term for two extension periods of five years each at market-based rents.

In December 2021, we entered into an omnibus amendment to extend the lease terms of our three MTC leases to 2042. We have the option to extend the term for three extension periods of five years. The base rent is subject to increases over the term of the lease.

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 December 31, 2021 and 2020, we had lease liabilities of $166 million and $24 million, respectively, related to the embedded leases. Certain embedded leases dedicated to our COVID-19 vaccine program prior to the EUA from the FDA were deemed to have no alternative use. The related right-of-use assets of $62 million were charged to research and development expense for the year ended December 31, 2020.

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

						December 31,
						2021						2020
Assets:
Right-of-use assets, operating, net (1) (2)						$	142					$	90
Right-of-use assets, financing, net (3) (4)						665						55
Total						$	807					$	145
Liabilities:
Current:
Operating lease liabilities (5)						$	46					$	6
Financing lease liabilities (5)						165						24
Total current lease liabilities						211						30
Non-current:
Operating lease liabilities, non-current						106						97
Financing lease liabilities, non-current						599						110
Total non-current lease liabilities						705						207
Total						$	916					$	237

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(1) These assets are real estate related assets, which include land, office and laboratory spaces.

(2) Net of accumulated amortization.

(3) These assets are real estate assets related to the MTC leases as well as assets related to contract manufacturing service agreements.

(4) Included in property and equipment in the consolidated balance sheets, net of accumulated depreciation.

(5) Included in other current liabilities in the consolidated balance sheets.

The components of the lease costs for the years ended December 31, 2021 and 2020 were as follows (in millions):

						December 31,
						2021						2020
Operating lease costs						$	24					$	17
Financing lease costs:
Amortization of right-of-use assets, financing leases						189						1
Interest expense for financing lease liabilities						17						10
Total financing lease costs						$	206					$	11
Short term lease costs						$	49					$	13
Variable lease costs						$	100					$	5

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Supplemental cash flow information relating to our leases for the years ended December 31, 2021 and 2020 was as follows (in millions):

						December 31,
						2021						2020
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows used in operating leases						$	(19)					$	(15)
Operating cash flows used in financing leases						(14)						(9)
Financing cash flows used in financing leases						(140)						(8)
Operating lease non-cash items:
Changes in right-of-use assets related to lease modifications and reassessments						$	(7)					$	7
Right-of-use assets obtained in exchange for operating lease liabilities						72						17
Finance lease non-cash items:
Changes in right-of-use assets related to lease modifications and reassessments						$	674					$	46
Right-of-use assets obtained in exchange for financing lease liabilities						126						—
Changes in financing lease liabilities						3						1

Weighted average remaining lease terms and discount rates as of December 31, 2021 were as follows:

						December 31,
						2021
Remaining lease term:
Operating leases						5 years
Finance leases						28 years
Discount rate:
Operating leases						6.8		%
Finance leases						3.1		%

Future minimum lease payments under non-cancelable lease agreements as of December 31, 2021, were as follows (in millions):

Fiscal Year						Operating Leases						Financing Leases (1)
2022						$	54					$	184
2023						39						20
2024						15						20
2025						16						20
2026						16						21
Thereafter						51						1,058
Total minimum lease payments						191						1,323
Less amounts representing interest						(39)						(559)
Present value of lease liabilities						$	152					$	764

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(1) Include the optional extensions in the MTC lease terms which represent a total of $637 million undiscounted future lease payments.

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12. Commitments and Contingencies

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 December 31, 2021 and 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 December 31, 2021, we had $2.5 billion of non-cancelable purchase commitments related to raw materials and manufacturing agreements, which are expected to be paid through 2025. As of December 31, 2021, we had $89 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 December 31, 2021, we had cancelable open purchase orders of $2.4 billion 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 December 31, 2021, 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. 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. In 2021 and 2020, we recognized $641 million and $7 million, respectively, of royalties and commercial milestone payments associated with our product sales, which was recorded to cost of sales in our consolidated statements of operations. We did not recognize any such royalties and payments in 2019.

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 December 31, 2021.

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Moderna Science Center

In September 2021, we announced an investment in the development of the MSC in Cambridge, Massachusetts. The MSC is expected to integrate scientific and non-scientific spaces, including our principal executive offices, and will be 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 completion of the building project, the lease term is 15 years, subject to our right to extend the lease for up to two 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. We expect to begin a phased move-in process in 2023.

13. Stockholders' Equity

On February 14, 2020, we sold 26,315,790 shares of common stock at a price of $19.00 per share through a public equity offering. The aggregate net proceeds from the offering were $478 million, net of underwriting discounts, commissions and offering expenses. In addition, the underwriters exercised their options to purchase an additional 3,947,368 shares of common stock at the public offering price less underwriting discounts, resulting in additional net proceeds of $72 million.

On May 21, 2020, we sold 17,600,000 shares of common stock at a price of $76.00 per share through a public equity offering. The aggregate net proceeds from the offering were $1.3 billion, net of underwriting discounts, commissions and offering expenses.

14. Stock-Based Compensation

Equity Plans

In August 2016, we adopted the 2016 Stock Option and Grant Plan (the 2016 Equity Plan), which replaced the 2013 Option Plan and the 2013 Incentive Plan. The 2016 Equity Plan and provided for the grant of incentive stock options, non-qualified stock options, restricted stock, unrestricted stock, and restricted stock units to our employees, officers, directors, consultants, and other key persons.

In connection with our initial public offering (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 Plan. The 2018 Equity Plan provides flexibility to our compensation committee to use various equity-based incentive awards as compensation tools to motivate our workforce. The 2018 Equity Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2019, by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31, or such lesser number of shares as determined by the Compensation and Talent Committee of our Board of Directors. The Compensation and Talent Committee chose not to increase the number of shares available under the 2018 Plan on January 1, 2021 or January 1, 2022. The shares of common stock underlying any awards that are forfeited, canceled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) under the 2018 Equity Plan and the 2016 Plan will be added back to the shares of common stock available for issuance under the 2018 Equity Plan.

The terms and conditions of stock-based awards are defined at the sole discretion of our Board of Directors. We issue service-based awards, vesting over a defined period of service, and performance-based awards, vesting upon achievement of defined conditions. Service based awards generally vest over a four-year period, with the first 25% of such awards vesting following twelve months of continued employment or service. The remaining awards vests in twelve quarterly installments over the following twelve quarters. Stock options granted under the 2018 Equity Plan and the 2016 Equity Plan expire ten years from the date of grant and the exercise price must be at least equal to the fair market value of common stock on the grant date.

As of December 31, 2021, we had a total of 57 million shares reserved for future issuance under our Equity Plans, of which 30 million shares were reserved for equity awards previously granted, and 27 million shares were available for future grants under the 2018 Equity Plan. No additional awards will be granted under the 2016 Equity Plan as it was replaced by the 2018 Equity Plan.

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Options

We have granted options generally through the 2018 Equity Plan and 2016 Equity Plan. The following table summarizes our option activity as of December 31, 2021 and 2020:

						Number of Options (in millions)						Weighted Average Exercise Price per Share												Weighted- Average Remaining Contractual Term						Aggregate Intrinsic Value (1) (in millions)
Outstanding at December 31, 2020						34.06						$	17.14											6.7 years						$	2,976
Granted						1.48						209.41
Exercised						(7.07)						15.84
Canceled/forfeited						(1.06)						37.46
Outstanding at December 31, 2021						27.41						27.08												5.8 years						6,247
Exercisable at December 31, 2021						17.33						13.23												4.9 years						4,173
Expected to vest at December 31, 2021						10.08						50.94												7.5 years						2,074

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(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 December 31, 2021.

The total intrinsic value of options exercised was $1.6 billion, $786 million, and $76 million for the years ended December 31, 2021, 2020, and 2019, respectively. 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 excess tax benefits realized from tax deductions from option exercises were $325 million during the year ended December 31, 2021. For the years ended December 31, 2020 and 2019, there were no excess tax benefits realized from tax deductions from option exercises due to cumulative losses and valuation allowances. The total consideration recorded as a result of stock option exercises was approximately $112 million, $179 million, and $48 million for the years ended December 31, 2021, 2020, and 2019.

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

We have granted RSUs and PSUs generally through the 2018 Equity Plan. The following table summarizes our RSU and PSU activity during the year ended December 31, 2021:

			Number of Units (in millions)						Weighted Average Grant Date Fair Value per Unit
Outstanding, non-vested at December 31, 2020			2.19						$	30.85
Issued			0.71						210.33
Vested			(0.60)						29.29
Canceled/forfeited			(0.16)						63.72
Outstanding, non-vested at December 31, 2021			2.14						88.55

The total fair value of RSUs and PSUs vested during the years ended December 31, 2021, 2020, and 2019, was $18 million, $5 million, and $5 million, respectively. The total intrinsic value of RSUs and PSUs vested during the years ended December 31, 2021, 2020, and 2019, was $141 million, $14 million and $12 million, respectively.

During the first quarter of 2021, we granted an immaterial amount of 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 shares 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 fair value.

2018 Employee Stock Purchase Plan

In November 2018, we adopted the 2018 Employee Stock Purchase Plan (ESPP), which became effective on December 5, 2018. We will make one or more offerings, consisting of one or more purchase periods, each year to our eligible employees to purchase shares under the ESPP. Offerings will usually begin every six months and will continue for six-month periods, referred to as offering periods.

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The purchase price at which shares are sold under the ESPP will be equal to 85% of the lower of the fair market value of the shares on the first business day of the offering period or the last business day of the purchase period. Employees are generally eligible to participate through payroll deductions of between 1% to 50% of their compensation and may not purchase more than 3,000 shares of common stock during each purchase period or $25,000 worth of shares of common stock in any calendar year. We began our first ESPP offering on June 1, 2019. There were 81,423, 251,752, and 171,343 shares of common stock sold at a weighted average price of $145.90, $27.97, and $16.87 per share under the ESPP during the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, 4 million shares were available for future issuance under the ESPP.

Valuation and Stock-Based Compensation Expense

Stock-based compensation for options granted under our Equity Plans and share purchases under our ESPP is determined using the Black-Scholes option pricing model. The weighted-average assumptions used to estimate the fair value of options granted and ESPP for the years ended December 31, 2021, 2020, and 2019 were as follows:

						Weighted Average
						Years Ended December 31,
						2021						2020						2019
Options:
Risk-free interest rate						0.84		%				0.83		%				2.29		%
Expected term						6.10 years						6.11 years						6.07 years
Expected volatility						46		%				58		%				61		%
Expected dividends						—		%				—		%				—		%
Weighted average fair value per share						$	91.84					$	19.30					$	11.35
ESPP:
Risk-free interest rate						0.08		%				0.14		%				1.95		%
Expected term						0.50 years						0.50 years						0.50 years
Expected volatility						34		%				54		%				53		%
Expected dividends						—		%				—		%				—		%
Weighted average fair value per share						$	64.25					$	32.18					$	5.98

Stock-Based Compensation Expense

The following table presents the components and classification of stock-based compensation expense for the years ended December 31, 2021, 2020, and 2019 (in millions):

			Years Ended December 31,
			2021						2020						2019
Options			$	96					$	78					$	75
RSUs and PSUs			42						12						5
ESPP			4						3						1
Total			$	142					$	93					$	81
Cost of sales			$	22					$	—					$	—
Research and development			68						56						48
Selling, general and administrative			52						37						33
Total			$	142					$	93					$	81

For the years ended December 31, 2021, 2020, and 2019, we recognized stock-based compensation expense of $16 million, $10 million, and $10 million, respectively, related to performance-based awards, including awards with vesting or commencement contingent upon our IPO. Stock-based compensation expenses related to non-employee awards were immaterial for the years ended December 31, 2021, 2020, and 2019.

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As of December 31, 2021, there were $349 million of total unrecognized compensation cost related to non-vested stock-based compensation with respect to options, RSUs and PSUs granted. That cost is expected to be recognized over a weighted-average period of 2.9 years at December 31, 2021.

Share Repurchase Program

On August 2, 2021, our Board of Directors authorized a Share Repurchase Program (2021 Repurchase Program) of our common stock, with an expiration date no later than August 2, 2023. Pursuant to the 2021 Repurchase Program, we may repurchase up to $1.0 billion of our outstanding common stock. The timing and actual number of shares repurchased depend on a variety of factors, including price, general business and market conditions, and other investment opportunities, and shares may be repurchased through open market purchases through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the Exchange Act).

In the fourth quarter of 2021, we repurchased 3.5 million shares of our common stock under the 2021 Repurchase Program for an aggregate of $857 million, including commissions and fees. As of December 31, 2021, there was a total of $143 million remaining for repurchases of our common stock under the 2021 Repurchase Program.

15. Employee Benefit Plans

We provide a retirement savings option to our eligible U.S. employees through the Moderna, Inc. 401(k) Plan (the 401(k) Plan), subject to certain limitations. As allowed under Section 401(k) of the Internal Revenue Code, the 401(k) Plan allows tax deferred salary deductions for eligible employees. We match 50% up to the first 6% contributed by a participant. All matching contributions are immediately vested. Total matching contributions to the 401(k) Plan were $18 million, $5 million, and $4 million for the years ended December 31, 2021, 2020, and 2019, respectively.

We maintain various defined benefit plans to provide termination and postretirement benefits to certain eligible employees outside of the U.S. The unfunded benefit plan obligations were $9 million as of December 31, 2021, which is recognized in other long-term liabilities in our consolidated balance sheets.

16. Income Taxes

Income (loss) before income taxes for the years ended December 31, 2021, 2020, and 2019 consisted of the following (in millions):

			Years Ended December 31,
			2021						2020						2019
United States			$	13,108					$	(745)					$	(509)
Foreign			177						1						(6)
Income (loss) before income taxes			$	13,285					$	(744)					$	(515)

The provision for (benefit from) income taxes for the years ended December 31, 2021, 2020, and 2019 consisted of the following components (in millions):

			Years Ended December 31,
			2021						2020						2019
Current:
Federal			$	1,304					$	—					$	—
State			35						—						—
Foreign			40						3						—
Total current			$	1,379					$	3					$	—
Deferred:
Federal			$	(288)					$	—					$	(1)
State			(6)						—						—
Foreign			(2)						—						—
Total deferred			(296)						—						(1)
Total provision for (benefit from) income taxes			$	1,083					$	3					$	(1)

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The reconciliation of the federal statutory income tax rate to our effective tax rate for the years ended December 31, 2021, 2020, and 2019 was as follows:

			Years Ended December 31,
			2021						2020						2019
Federal statutory tax rate			21.0		%				21.0		%				21.0		%
Change in valuation allowance			(5.4)		%				(47.4)		%				(33.0)		%
Foreign-derived intangible income			(4.8)		%				—		%				(0.2)		%
Stock-based compensation			(2.6)		%				19.8		%				—		%
Federal research and development credits			(0.7)		%				3.8		%				2.5		%
State taxes, net of federal benefits			0.5		%				3.6		%				7.9		%
Non-deductible items			—		%				(0.8)		%				1.6		%
Other			0.1		%				(0.3)		%				0.2		%
Effective tax rate			8.1		%				(0.3)		%				—		%

We are subject to U.S. federal, state, and foreign income taxes. Our effective tax rate for the year ended December 31, 2021 was 8.1% and was lower than the federal statutory tax rate primarily due to the tax benefits related to the release of the valuation allowance on most of our deferred tax assets, foreign-derived intangible income deduction and stock-based compensation. Our effective tax rate for the years ended December 31, 2020 and December 31, 2019 was lower than the federal statutory tax rate primarily due to the valuation allowance on our deferred tax assets.

Deferred income taxes reflect the tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting and the amounts used for income tax purposes, tax credit carryforwards and the tax effect of net operating loss carryforwards. Significant components of our deferred tax assets and tax liabilities as of December 31, 2021 and 2020 were as follows (in millions):

			December 31,
			2021						2020
Deferred tax assets:
Net operating loss carryforwards			$	69					$	587
Stock-based compensation			44						33
Capitalized licenses, research and development and start-up costs			204						14
Tax credit carryforwards			80						99
Deferred revenue			43						30
Operating lease liabilities			32						22
Financing lease liabilities			136						24
Other			67						65
Total deferred tax assets			675						874
Less: valuation allowance			(149)						(823)
Net deferred tax assets			$	526					$	51
Deferred tax liabilities:
Right-of-use assets, financing			$	(119)					$	(12)
Right-of-use assets, operating			(31)						(20)
Property and equipment			(49)						(18)
Other			(1)						(1)
Total deferred tax liabilities			(200)						(51)
Net deferred tax assets			$	326					$	—

On a quarterly basis, we reassess the valuation allowance on our deferred tax assets, weighing positive and negative evidence to assess the realizability 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

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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, and we released the valuation allowance on the majority of our deferred tax assets, accordingly. We continue to maintain a valuation allowance on certain state deferred tax assets.

Changes in the valuation allowance for deferred tax assets during the year ended December 31, 2021 primarily related to the release of the valuation allowance on deferred tax assets. The changes during the years ended December 31, 2020 and 2019 primarily related to the increase in valuation allowance on net operating loss carryforwards and research and development tax credit carryforwards. The changes were as follows (in millions):

			Years Ended December 31,
			2021						2020						2019
Valuation allowance at beginning of the period			$	823					$	471					$	308
Decreases recorded as benefit to income tax provision			(722)						—						—
Increases to valuation allowance			48						352						163
Valuation allowance at December 31			$	149					$	823					$	471

At December 31, 2021, we had $1.0 billion of state net operating loss carryforwards, which begin to expire in 2032. At December 31, 2021, we also had state tax credit carryforwards of $102 million, the majority of which will begin to expire in 2030.

We file U.S. federal income tax returns and income tax returns in various state, local and foreign jurisdictions. All tax years since date of incorporation remain open to examination by the major taxing jurisdictions (federal and state) to which we are subject, as carryforward attributes generated in past years may still be adjusted upon examination by the Internal Revenue Service or the state authorities if they have or will be used in a future period. There are no open tax examinations at this time.

We recognize, in our financial statements, the effect of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. A reconciliation of the beginning and ending amounts of unrecognized tax benefits during the years ended December 31, 2021, 2020, and 2019 were as follows (in millions):

			Years Ended December 31,
			2021						2020						2019
Unrecognized tax benefits at beginning of the period			$	—					$	—					$	—
Additions based on tax positions for current year			54						—						—
Additions based on tax positions for prior years			14						—						—
Unrecognized tax benefits at end of the period			$	68					$	—					$	—

As of December 31, 2021, we had $43 million of net unrecognized tax benefits, which would affect our tax rate if recognized. Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business. We do not anticipate a material change to our unrecognized tax benefits over the next twelve months that would have an adverse effect on our consolidated operating results. We recognize interest and penalties, if applicable, related to uncertain tax positions as a component of income tax expense; however, there has been no interest or penalties accrued to date.

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17. Earnings (Loss) per Share

The computation of basic earnings (loss) per share (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 EPS for the years ended December 31, 2021, 2020 and 2019 were calculated as follows (in millions, except per share data):

			Years Ended December 31,
			2021						2020						2019
Numerator:
Net income (loss)			$	12,202					$	(747)					$	(514)
Denominator:
Basic weighted-average common shares outstanding			403						381						331
Effect of dilutive securities			28						—						—
Diluted weighted-average common shares outstanding			431						381						331
Basic EPS			$	30.31					$	(1.96)					$	(1.55)
Diluted EPS			$	28.29					$	(1.96)					$	(1.55)

The following common stock equivalents, presented based on amounts outstanding as of December 31, 2021, 2020 and 2019, were excluded from the calculation of diluted net income (loss) per share attributable to common stockholders for the periods indicated because their inclusion would have been anti-dilutive (in millions):

						December 31,
						2021						2020						2019
Stock options						1						34						46
Restricted common stock units						—						2						1
Total						1						36						47

18. Geographic Information

Geographic Revenue

We operate in one reporting segment that primarily focuses on the discovery, development and commercialization of mRNA medicines. Our chief executive officer manages our operations and evaluates our financial performance on a consolidated basis. Most of our principal operations, other than manufacturing, and our decision-making functions are located at our corporate headquarters in the United States.

Total revenue by geographic area of our customers and collaboration partners was as follows (in millions):

						Years Ended December 31,
						2021						2020						2019
United States						$	6,177					$	764					$	55
Europe						6,846						33						5
Rest of world (1)						5,448						6						—
Total						$	18,471					$	803					$	60

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(1) Includes product sales recognized under the agreement with Gavi (on behalf of the COVAX Facility) as Gavi facilitates a fair allocation and distribution of our COVID-19 vaccine around the world.

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Our property and equipment, including financing right-of-use assets, by geographic area was as follows (in millions):

						December 31,
						2021
United States						$	1,050
Europe						181
Rest of world						10
Total						$	1,241

Our property and equipment, including financing right-of-use assets, was principally located within the United States as of December 31, 2020.

19. Subsequent Events

In January 2022, we repurchased an additional 0.6 million shares of our common stock under the 2021 Repurchase Program for an aggregate of $143 million including commissions and fees. We have repurchased the entire $1.0 billion of common stock that was authorized under the 2021 Repurchase Program.

On February 22, 2022, our Board of Directors authorized a new Share Repurchase Program (2022 Repurchase Program) of our common stock, with no expiration date. Pursuant to the 2022 Repurchase Program, we may repurchase up to $3.0 billion of our outstanding common stock. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and other investment opportunities, and shares may be repurchased through open market purchases through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act.

Subsequent to December 31, 2021, we have entered into several supply agreements with customers to provide our COVID-19 vaccine, up to 66 million doses, and have received upfront deposits of $210 million, based on the initial confirmed volume, subject to modifications.

Subsequent to December 31, 2021, we have entered binding purchase commitments with third-party contractual manufacturing organizations for dedicated facilities and fill & finish services for our COVID-19 vaccine. We are currently committed to minimum non-cancelable purchase obligations of $1.9 billion related to these agreements, of which $213 million is expected to be paid within 2022 and the remaining is expected to be paid through 2029.

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