Item 8. Financial Statements and Supplementary Data

190K characters. Original on sec.gov · Markdown

Item 8. Financial Statements and Supplementary Data

MODERNA, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm						100
Consolidated Balance Sheets as of December 31, 202 5 and 20 24						102
Consolidated Statements of Operations for the years ended December 31, 202 5 , 202 4 , and 20 23						103
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 202 5 , 202 4 , and 2 023						104
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 202 5 , 202 4 , and 20 23						105
Consolidated Statements of Cash Flows for the years ended December 31, 202 5 , 202 4 , and 20 23						107
Notes to Consolidated Financial Statements						108

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, 2025 and 2024, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, 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, 2025, 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 20, 2026 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.


						Provisions for returns on product sales
Description of the Matter						During the year ended December 31, 2025, the Company’s net product sales were $1.8 billion. As explained in Note 2 of the consolidated financial statements, revenue from product sales includes estimates of variable consideration for which provisions are established, including provisions for product sales returns. Auditing the Company’s measurement of provisions for returns on product sales under its contracts with customers was especially challenging because (1) the estimate relies on management’s assumptions regarding inventory remaining in the distribution channel as of the balance sheet date that may be subject to return in future periods, as well as projected market demand, and (2) the Company has limited historical returns on which to base its assumptions.
How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s process to determine provisions for returns on product sales. For example, we tested controls over management’s review of the completeness and accuracy of the data used in the process and the assumptions about the amount of inventory in the distribution channel that could be subject to return in future periods. To test the Company’s provisions for returns on product sales, our audit procedures included, among other procedures, testing the accuracy and completeness of the underlying data used in the calculations and evaluating the assumptions applied by management in estimating the provisions. To test management’s assumptions, we inspected agreements with significant customers to validate the rights of return, made inquiries of members of the commercial function regarding any changes to the terms and conditions of commercial contracts, and assessed the historical accuracy of management’s estimates. We also examined credit memos issued during and after year end to identify any unusual items or trends inconsistent with the Company’s analysis of product returns and performed revenue cutoff testing at period end to evaluate whether any unusual trends should have been considered in the Company’s analysis of product returns. In addition, we reviewed inventory on hand-reporting from significant customers around the balance sheet date and subsequent to the balance sheet date and inspected vaccination data from third-party sources after the balance sheet date. We also performed sensitivity analyses on the Company’s return rate to assess the impact of changes in assumptions.

/s/ Ernst & Young LLP

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

Boston, Massachusetts

February 20, 2026

MODERNA, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)


	December 31,
	2025		2024
Assets
Current assets:
Cash and cash equivalents	$	2,595	$	1,927
Investments	3,204		5,098
Accounts receivable, net	184		358
Inventory	153		117
Prepaid expenses and other current assets	408		599

Total current assets	6,544		8,099
Investments, non-current	2,336		2,494
Property, plant and equipment, net	2,134		2,196
Right-of-use assets, operating leases	719		759


Other non-current assets	605		594
Total assets	$	12,338	$	14,142
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	317	$	405
Accrued liabilities	1,386		1,427
Deferred revenue	99		153

Other current liabilities	185		221
Total current liabilities	1,987		2,206
Deferred revenue, non-current	153		58
Operating lease liabilities, non-current	653		671
Financing lease liabilities, non-current	20		39
Long-term debt	590		—
Other non-current liabilities	285		267
Total liabilities	3,688		3,241
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.0001; 162 shares authorized as of December 31, 2025 and 2024; no shares issued or outstanding at December 31, 2025 and 2024	—		—
Common stock, par value $0.0001; 1,600 shares authorized as of December 31, 2025 and 2024; 394 and 386 shares issued and outstanding as of December 31, 2025 and 2024, respectively	—		—
Additional paid-in capital	1,382		866
Accumulated other comprehensive income (loss)	45		(10)
Retained earnings	7,223		10,045
Total stockholders’ equity	8,650		10,901
Total liabilities and stockholders’ equity	$	12,338	$	14,142

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

MODERNA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)


	Years Ended December 31,
	2025		2024		2023
Revenue:
Net product sales	$	1,818	$	3,109	$	6,671
Other revenue	126		127		177




Total revenue	1,944		3,236		6,848
Operating expenses:
Cost of sales	868		1,464		4,693
Research and development	3,132		4,543		4,845
Selling, general and administrative	1,018		1,174		1,549
Total operating expenses	5,018		7,181		11,087
Loss from operations	(3,074)		(3,945)		(4,239)
Interest income	314		425		421
Other expense, net	(8)		(87)		(124)
Loss before income taxes	(2,768)		(3,607)		(3,942)
Provision for (benefit from) tax provision	54		(46)		772
Net loss	$	(2,822)	$	(3,561)	$	(4,714)

Net loss per share
Basic and diluted	$	(7.26)	$	(9.28)	$	(12.33)


Weighted average common shares used in calculation of loss per share:
Basic and diluted	389		384		382

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

MODERNA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)


	Years Ended December 31,
	2025		2024		2023
Net loss	$	(2,822)	$	(3,561)	$	(4,714)
Other comprehensive income, net of tax:
Available-for-sale securities:
Unrealized gains on available-for-sale securities	31		120		210
Less: net realized (gains) losses on available-for-sale securities reclassified in net loss	(3)		4		38
Net increase from available-for-sale securities	28		124		248
Cash flow hedges:

Net realized losses on derivative instruments reclassified in net loss	—		—		8
Net increase from derivatives designated as hedging instruments	—		—		8

Gains (losses) on foreign currency translation	11		(8)		—
Pension and postretirement obligation adjustments	16		(3)		(9)
Total other comprehensive income	55		113		247
Comprehensive loss	$	(2,767)	$	(3,448)	$	(4,467)

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

MODERNA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In millions)


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
		Shares	Amount
Balance at December 31, 2022		385	$	—	$	1,173	$	(370)	$	18,320	$	19,123

Vesting of restricted common stock		1	—		—		—		—		—
Exercise of options to purchase common stock		4	—		25		—		—		25
Issuance of common stock under employee stock purchase plan		—	—		21		—		—		21


Stock-based compensation		—	—		305		—		—		305
Other comprehensive income, net of tax		—	—		—		247		—		247
Repurchase of common stock, including excise tax		(8)	—		(1,153)		—		—		(1,153)
Net loss		—	—		—		—		(4,714)		(4,714)
Balance at December 31, 2023		382	$	—	$	371	$	(123)	$	13,606	$	13,854


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
		Shares	Amount
Balance at December 31, 2023		382	$	—	$	371	$	(123)	$	13,606	$	13,854

Vesting of restricted common stock		2	—		—		—		—		—
Exercise of options to purchase common stock		1	—		42		—		—		42
Issuance of common stock under employee stock purchase plan		1	—		24		—		—		24
Stock-based compensation		—	—		429		—		—		429
Other comprehensive income, net of tax		—	—		—		113		—		113

Net loss		—	—		—		—		(3,561)		(3,561)
Balance at December 31, 2024		386	$	—	$	866	$	(10)	$	10,045	$	10,901


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total Stockholders’ Equity
		Shares	Amount
Balance at December 31, 2024		386	$	—	$	866	$	(10)	$	10,045	$	10,901

Vesting of restricted common stock		7	—		—		—		—		—
Exercise of options to purchase common stock		1	—		17		—		—		17
Tax payments related to net share settlements on equity awards		—	—		(2)		—		—		(2)
Issuance of common stock under employee stock purchase plan		—	—		18		—		—		18
Stock-based compensation		—	—		483		—		—		483
Other comprehensive income, net of tax		—	—		—		55		—		55

Net loss		—	—		—		—		(2,822)		(2,822)
Balance at December 31, 2025		394	$	—	$	1,382	$	45	$	7,223	$	8,650

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

MODERNA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


	Years Ended December 31,
	2025		2024		2023
Operating activities
Net loss	$	(2,822)	$	(3,561)	$	(4,714)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	483		429		305
Depreciation and amortization	215		189		621

Amortization/accretion of investments	(67)		(95)		(61)

Loss on equity investments, net	8		52		35

Other non-cash items	77		60		7
Changes in assets and liabilities:
Accounts receivable, net	156		534		493
Prepaid expenses and other assets	153		145		1,802
Inventory	(34)		83		747
Right-of-use assets, operating leases	38		(53)		(605)
Accounts payable	(92)		(69)		13
Accrued liabilities	(2)		(385)		(340)
Deferred revenue	41		(439)		(2,060)

Operating lease liabilities	(21)		28		551
Other liabilities	(6)		78		88
Net cash used in operating activities	(1,873)		(3,004)		(3,118)
Investing activities
Purchases of marketable securities	(5,768)		(6,529)		(3,760)
Proceeds from maturities of marketable securities	5,563		5,562		5,575
Proceeds from sales of marketable securities	2,353		3,967		3,206
Purchases of property, plant and equipment	(192)		(1,051)		(707)
Acquisition of business, net of cash acquired	—		—		(85)
Purchase of intangible asset	(10)		—		—
Investment in convertible notes and equity securities	—		—		(23)
Net cash provided by investing activities	1,946		1,949		4,206
Financing activities



Proceeds from credit facility	600		—		—
Payment of credit facility issuance costs	(22)		—		—
Proceeds from issuance of common stock through equity plans	35		66		46

Tax payments related to net share settlements on equity awards	(2)		—		(1,153)
Changes in financing lease liabilities	(18)		(10)		(270)


Net cash provided by (used in) financing activities	593		56		(1,377)
Effect of changes in exchange rates on cash and cash equivalents	2		—		—
Net increase (decrease) in cash, cash equivalents and restricted cash	668		(999)		(289)
Cash, cash equivalents and restricted cash, beginning of year	1,929		2,928		3,217
Cash, cash equivalents and restricted cash, end of year	$	2,597	$	1,929	$	2,928
Supplemental cash flow information
Cash paid (received) for income taxes	$	26	$	197	$	(357)
Cash paid for interest	$	10	$	24	$	39
Non-cash investing and financing activities

Purchases of property, plant and equipment included in accounts payable and accrued liabilities	$	83	$	97	$	130

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

MODERNA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of the Business

Moderna, Inc. (collectively, with its consolidated subsidiaries, any of Moderna, we, us, our or the Company) is a biotechnology company advancing a new class of medicines made of messenger RNA (mRNA). 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 medicines across infectious disease vaccines, oncology therapeutics and rare disease therapeutics.

Since our founding in 2010, we have transformed from a research-stage company advancing programs in the field of mRNA to a commercial enterprise with a diverse clinical portfolio of vaccines and therapeutics across several modalities, a broad intellectual property portfolio and integrated manufacturing capabilities that allow for rapid clinical and commercial production at scale. We currently have three commercial products—Spikevax® and mNEXSPIKE®, our COVID vaccines, and mRESVIA®, our vaccine against respiratory syncytial virus (RSV). Additionally, we also have a diverse development pipeline of 25 development candidates across our 35 development programs currently in clinical studies.

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 Standards 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. Changes in our estimates are recorded in the financial results of the period in which the new information becomes available. The actual results that we experience may differ materially from our estimates.

Segment Information

The Company operates as a single operating and reportable segment, reflecting the integrated nature of our business focused on the research, development, and commercialization of mRNA-based medicines. Our Chief Executive Officer serves as the Chief Operating Decision Maker (CODM), responsible for assessing the Company's performance and making resource allocation decisions. The CODM evaluates financial information on a consolidated basis, focusing on key metrics such as total revenue, operating expenses, and net income or loss, which is our reported measure of segment profit or loss. The CODM allocates resources based on the Company's available cash resources, forecasted cash flow, and expenditures on a consolidated basis, as well as an assessment of the probability of success of its research and development activities. Resource allocation decisions are informed by budgeted and forecasted expense information, along with actual expenses incurred to date. Disaggregated profit or loss information at the program or functional level is not regularly provided to or relied upon by the CODM, as our integrated operating model emphasizes shared resources and centralized decision-making. The interdependent nature of our research, development, and commercialization activities, supported by common infrastructure such as our mRNA platform, makes further disaggregation of expenses less meaningful for assessing performance. Additionally, there are no segment managers accountable for operations, operating results, and planning for levels or components below the consolidated unit level.

Revenue Recognition

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.

Net Product Sales

We sell our COVID and RSV vaccines to the commercial market as well as to foreign governments and international organizations. In the U.S., our COVID vaccine and RSV vaccine are sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers.

We recognize net product sales when control of the product transfers to the customer, typically upon delivery. Payment terms generally range from 30 to 60 days, in line with customary practices in each country. Net product sales are recognized net of estimated wholesaler chargebacks, invoice discounts for prompt payments and pre-orders, provisions for sales returns, government rebates, and other related deductions. These provisions are recorded based on contractual terms, our estimate of returns for product sold during the period, and other relevant considerations, using the expected value method or the most likely amount method. We update our estimates quarterly and record necessary adjustments in the period when we identify the adjustments. Product sales, net of provisions, are recorded only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable when the uncertainty associated with the provisions is subsequently resolved. Shipping and handling activities are considered fulfillment activities and not a separate performance obligation. Taxes assessed by governmental authorities that are imposed on and collected from our product sales are excluded from net product sales.

Wholesaler chargebacks, discounts and fees

We contract with retailers, healthcare providers, and group purchasing organizations (GPO) to broaden our customer reach and offer contractual discounts. The chargeback represents the difference between the invoice price billed to the wholesaler and the negotiated price charged to the retailers, healthcare providers and GPO members. For distribution and related services, such as stocking and cold chain storage, we provide compensation to our wholesalers and distributors. We typically offer our customers invoice discounts on product sales for prompt payments and pre-orders. The estimation of these discounts and fees is based on contractual terms and our expectations regarding future customer payment behaviors. Wholesaler fees and invoice discounts are deducted from our gross product sales and accounts receivable at the time such product sales are recognized.

Product returns

We typically offer customers in the U.S. the right to return products, up to a certain limit as stipulated in our contracts. Estimated returns for our vaccines are determined considering available return rates for similar products, estimated levels of inventory in the distribution channel, projected market demand, and our historical experience with returns. The estimated amount for product returns is presented within accrued liabilities on our consolidated balance sheets and is deducted from our gross product sales in the period the related product sales are recognized.

Government rebates and other fees

Fees payable to third party payers and healthcare providers, along with fees to our direct customers that are settled via cash payments, including certain patient assistance programs, are recorded as accrued liabilities on our consolidated balance sheets. In 2024, we began recognizing Medicare rebates associated with our RSV product. The estimation of Medicare rebates requires judgment and is based on historical utilization trends, and the mix of customers and payers. The estimated liability for unpaid or unbilled rebates is presented as accrued liabilities on our consolidated balance sheets. For 2024 and 2025, the product sales subject to Medicare rebates were immaterial.

Determining the amount of variable consideration to recognize necessitates substantial judgment, especially when assessing factors outside our direct control, such as the limited historical data, constrained third-party information, and evolving market dynamics. Among all variables, estimating returns continues to present the most significant judgment due to the broad range of potential outcomes and the lack of established return trends. While we now have two years of data on our product returns, this remains limited and subject to significant variability given current market conditions. We will continue to refine our projections as additional information becomes available. The actual results could differ from our estimates, and such differences could have a material impact to our financial statements.

Other Revenue

Other revenue consists primarily of grant revenue, collaboration revenue, licensing and royalty revenue, and stand-ready manufacturing revenue.

Grant revenue

We have contracts with 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 grant 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. Grant revenue 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 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.

Licensing and Royalty Revenue

License revenue is recognized when the license is granted to the licensee, provided no significant performance obligations remain. Royalty revenue is recognized based on sales by licensees when the underlying sales occur, in accordance with the terms of the licensing agreement and when collectibility is reasonably assured.

Stand-Ready Manufacturing Revenue

We have entered into long-term strategic agreements with government entities to establish domestic mRNA manufacturing capabilities and support pandemic readiness. Under these agreements, we are required to build and maintain manufacturing facilities and to supply vaccines in accordance with minimum spend commitments or annual demand forecasts established by the respective governments. A portion of the total consideration under each agreement is allocated to a stand-ready obligation to maintain manufacturing readiness and is recognized as other revenue on a straight-line basis over the contractual period. The remaining consideration is related to our obligation to supply vaccines and will be recognized as product sales when control of the vaccines transfers upon delivery.

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.

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,
	2025		2024		2023
Cash and cash equivalents	$	2,595	$	1,927	$	2,907
Restricted cash(1)	1		1		17
Restricted cash, non-current(2)	1		1		4
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	2,597	$	1,929	$	2,928

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

(2)Included in other non-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 our available-for-sale securities 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 income (loss), a component of stockholders’ equity. Realized gains and losses are determined using the specific-identification method, and are included in other income (expense), net in our consolidated statements of operations. We classify our available-for-sale 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. Available-for-sale securities with maturities of less than 12 months are classified as current and are included in investments in the consolidated balance sheets. Available-for-sale 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 income (loss), net of applicable taxes.

Investments in publicly traded equity securities with readily determinable fair values are recorded at quoted market prices for identical securities, with changes in fair value recorded in other income (expense), net, in our consolidated statements of operations. Investments in equity securities without readily determinable fair values are recorded at cost minus impairment, if any, adjusted for changes resulting from observable price changes in orderly transactions for identical or similar securities. Such adjustments are recorded in other income (expense), net, in our consolidated statements of operations.

Accounts Receivable, net

Accounts receivable, net represent amounts due from customers less wholesalers chargebacks, discounts and fees (see our “Revenue Recognition” policy within Note 2 for product sales provision) and allowance for expected credit losses. Amounts payable to us are recorded as accounts receivable when our right to consideration is unconditional. To estimate the allowance for credit losses, we determine the allowance based on ongoing credit evaluation, historical experience and the aging of such receivables, among other factors. The allowance for doubtful accounts was immaterial at December 31, 2025 and 2024. Additionally, bad debt expenses were immaterial for the years ended December 31, 2025, 2024 and 2023.

Concentrations of Credit Risk

Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable debt securities, and accounts receivable, net. 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. We invest in a variety of financial instruments and limit the amount of credit exposure with any individual financial institution.

We are also subject to credit risk from our accounts receivable, net related to our net product sales and other revenue. We sell our products primarily to wholesalers and distributors and other governments and organizations. We do not require collateral or other security to support accounts receivable. To date, we have not experienced material losses with respect to the collection of our accounts receivable.

Significant Customers

Our accounts receivable, net are generally unsecured and are from customers in different countries. We generated revenue from product sales to wholesalers and distributors and other governments and organizations, and to a lesser extent, stand-ready manufacturing revenue from international government entities, grants made by government-sponsored and private organizations, and collaboration revenue from our 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,
	2025		2024		2023		2025		2024
FFF Enterprises	15	%	13	%	*		*		*
Public Works and Government Services Canada	13	%	*		*		33	%	*
Cardinal Health	11	%	*		*		*		*
United Kingdom Health Security Agency	*		16	%	*		*		65	%
Mexico Medistik	*		*		*		29	%	*
Boryung Biopharma Korea	*		*		*		17	%	*
Taiwan Food and Drug Administration	*		*		*		*		10	%
Ministry of Health, Labor, and Welfare of Japan	*		*		21	%	*		*

________

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

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;
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 debt 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.

Inventory

Inventory is recorded at the lower of cost or net realizable value, with cost determined principally using first-in, first-out method. 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. We also assess whether we have any excess firm, non-cancelable, purchase commitment liabilities, resulting from our supply agreements with third-party vendors. The determination of net realizable value and firm purchase commitment liabilities requires judgment, including consideration of many factors, such as estimates of future product demand, product net selling prices, current and future market conditions, potential product obsolescence, expiration and utilization of raw materials under firm purchase commitments and contractual minimums, among others. We hold raw materials beyond our one year forecasted production plan, which were classified as non-current and included in other non-current assets in our consolidated balance sheets.

Pre-launch Inventory

Costs relating to raw materials and production of inventory in preparation for product launch prior to regulatory approval are capitalized when future commercialization is considered probable, the future economic benefit is expected to be realized, and we believe that material uncertainties related to the ultimate regulatory approval have been significantly reduced. For pre-launch inventory that is capitalized, we consider a number of factors based on the information available at the time, including the product candidate’s current status in the drug development and regulatory approval process, results from the related clinical trials, results from meetings with relevant regulatory agencies prior to the filing of regulatory applications, potential impediments to the approval process such as product safety or efficacy, historical experience, viability of commercialization and market trends. As of December 31, 2025 and 2024, we did not have any capitalized pre-launch inventory on our consolidated balance sheets.

Property, Plant and Equipment

Property, plant 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, plant and equipment are described below:


						Estimated Useful Life
Land and permanent land improvements						Not depreciated
Limited-life land improvements						Determined on a project-by-project basis
Buildings and building improvements						Up to 40 years
Manufacturing and laboratory equipment						5-12 years
Leasehold improvements						Lesser of estimated useful life of improvement or remaining life of related lease
Computer equipment and software						3 to 5 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, plant and equipment, and is stated at original cost. Once the asset is placed into service, these capitalized costs will be allocated to certain property, plant and equipment categories and will be depreciated over the estimated useful life of the underlying assets.

Goodwill and Intangible Assets

Goodwill represents the excess of purchase price over the fair value of net assets acquired and is carried at cost. Goodwill is tested at least annually for impairment by assessing qualitative factors in determining whether it is more likely than not that the fair value of net assets is below their carrying amounts. To date, an impairment of goodwill has not been recorded.

Finite-lived intangible assets primarily consist of acquired intellectual property and regulatory approval and commercial sales milestone payments. These assets are recorded at cost, net of accumulated amortization, and amortized on a straight-line basis over their estimated useful lives.

Impairment of Long-Lived Assets, including Intangibles and Lease Right-of-Use Assets

We evaluate our long-lived assets, which consist of property, plant and equipment, finite-lived intangibles and right-of-use assets 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, 2025, 2024 and 2023 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 initially measured as the lease liability plus 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 the statements of operations on a straight-line basis over the lease term.

Collaboration Arrangements

We analyze our collaboration arrangements to assess whether they are within the scope of ASC 808 (Collaborative Arrangements) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. To the extent the arrangement is within the scope of ASC 808, we assess whether aspects of the arrangement between us and our collaborator are within the scope of other accounting literature. If we conclude that some or all aspects of the arrangement represent a transaction with a customer, we account for those aspects of the arrangement within the scope of ASC 606 (Revenue from Contracts with Customers). See our "Revenue Recognition" policy within Note 2 for additional discussion of revenue recognition under these types of arrangements. If we conclude that some or all aspects of the arrangement are within the scope of ASC 808 and do not represent a transaction with a customer, we recognize our allocation of the shared costs incurred with respect to the jointly conducted activities as a component of the related expense in the period incurred. Additionally, for any payments related to capital expenditures that are partially reimbursed by a collaborator, to the extent the underlying capital costs qualify for capitalization, any reimbursements received will offset the capitalized cost of the asset.

Research and Development Funding Arrangements

We have entered into research and development funding arrangements to support a targeted programs, under which a third party has committed to fund us up to a specified amount. Contingent upon the regulatory approval of the program, we are obligated to pay certain milestones and royalties as outlined in the respective agreements. We account for funding received under research and development arrangements as a reduction to expenses when substantive financial risk is transferred to the funding party. These arrangements are accounted for as an obligation to conduct research and development activities. The funding is recognized proportionally as the related costs are incurred, using an input method. Contingent payments, such as milestones or royalties, will be recognized separately upon achievement of the related conditions.

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. Research and development costs also include costs and shared cost associated with third-party collaboration arrangements, including upfront fees and milestones paid to third-parties in connection with technologies that had not reached technological feasibility and did not have an alternative future use.

Assets that are acquired or constructed for research and development activities and that have alternative future uses, in research and development projects or otherwise, are capitalized and depreciated over their useful lives. 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 expensed when incurred.

Advertising Costs

Costs associated with advertising are expensed as incurred and are included in selling, general and administrative expense in the consolidated statements of operations. Advertising expenses were $133 million in 2025, $146 million in 2024, and $204 million in 2023.

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.

Prior to 2025, we estimated the expected term of our stock options using the simplified method, whereby, the expected term equals the average of the vesting term and the original contractual term of the option. During 2025, we used historical exercise data in estimating the expected term of stock options, utilizing a methodology that combines historical settlement data with a hypothetical settlement pattern for outstanding options, based on estimated time to arrival at-the-money and adjusted for employee departure rates. The change in methodology used during 2025 did not have a material impact on stock-based compensation and our financial statements. However, during the fourth quarter of 2025, in connection with our stock option exchange program (see Note 13), which resulted in changes to our stock option population, we determined that we no longer have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term, as such data is no longer indicative of future exercise patterns. Accordingly, beginning in 2026, we will estimate the expected term of stock options using the simplified method. We will continue to apply this process until a sufficient amount of historical information regarding the expected term becomes available and we believe that historical experience is relevant to our expectations for current grants. The expected volatility is based on our stock price volatility and incorporates both historical volatility of our stock price and implied volatility derived from the price of exchange traded options on 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 periodically reassess the need for valuation allowances on our deferred tax assets, considering both positive and negative

evidence to evaluate whether it is more likely than not that all or a portion of such assets will not be realized. 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 stock units, performance stock units, stock options, and shares under the employee stock purchase plan 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, derivatives designated as hedging instruments, and foreign currency translation, as well as, pension and postretirement obligation adjustments. 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 for the years ended December 31, 2025 and 2024 were as follows (in millions):


	Unrealized Gains on Available-for-Sale Securities		Pension and Postretirement Obligation Adjustments		Losses (gains) on Foreign Currency Translation		Total
Accumulated other comprehensive loss, balance at December 31, 2023	$	(114)	$	(9)	$	—	$	(123)
Other comprehensive income	124		(3)		(8)		113
Accumulated other comprehensive loss, balance at December 31, 2024	10		(12)		(8)		(10)
Other comprehensive income	28		16		11		55
Accumulated other comprehensive income, balance at December 31, 2025	$	38	$	4	$	3	$	45

Share Repurchases

Shares of our common stock repurchased pursuant to our repurchase programs are retired. The purchase price of such repurchased shares of common stock is recorded as a reduction to additional paid-in-capital. If the balance in additional paid-in-capital is exhausted, the excess is recorded as a reduction to retained earnings.

Recently Issued Accounting Standards

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. Except as noted below, 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.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The standard requires entities to disclose federal, state, and foreign income taxes in their rate reconciliation tables and elaborate on reconciling items that exceed a quantitative threshold. Additionally, it requires an annual disclosure of income taxes paid, net of refunds, categorized by jurisdiction based on a quantitative threshold. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, and early adoption is permitted. We adopted this ASU prospectively in the fourth quarter of 2025, and the required disclosures are included in Note 14, Income Taxes.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires entities to disclose, on an annual and interim basis, disaggregated information in the footnotes related to certain expense categories included in income statement line items. Specifically, entities are expected to provide tabular disclosures for prescribed categories such as inventory purchases, employee compensation, depreciation, and intangible asset amortization for each relevant expense caption. The standard also requires disclosure of total selling expenses and a definition of those expenses in annual filings. Any remaining amounts not quantitatively disclosed are expected to be described qualitatively. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption permitted, and the standard may be applied on a prospective or retrospective basis. We are currently assessing the impact that this new accounting standard will have on our consolidated financial statement disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU makes targeted amendments to the accounting for and disclosure of software costs under ASC 350-40. The amendments modernize the guidance to reflect current software development practices, including nonlinear development approaches, and remove references to “development stages.” Under the ASU, the following two criteria must be met for entities to begin capitalizing software costs: (1) management, with the relevant authority, implicitly or explicitly authorizes and commits to funding a computer software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). The ASU clarifies that this threshold would not be met when there is “significant uncertainty associated with the development activities of the software (referred to as ‘significant development uncertainty’).” The ASU is effective for all entities for annual reporting periods beginning after December 15, 2027, and for interim reporting periods within those fiscal years. Early adoption is permitted, and entities may apply the amendments prospectively, retrospectively, or using a modified prospective transition approach. We are currently evaluating the impact that this new accounting standard will have on our consolidated financial statements and disclosures.

In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration From a Customer in a Revenue Contract. This ASU expands the scope exceptions in the derivatives guidance to exclude certain non-exchange-traded contracts with underlyings based on the operations or activities of one of the parties to the contract, including the occurrence or nonoccurrence of an event specific to those operations or activities. The ASU also clarifies that share-based noncash consideration received from a customer in exchange for goods or services should be accounted for as noncash consideration under ASC 606 unless and until the entity’s right to receive or retain such consideration becomes unconditional. The ASU is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods. Early adoption is permitted. We are currently evaluating the impact that adoption of this new accounting standard will have on our consolidated financial statements and disclosures.

In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. This ASU establishes guidance on the recognition, measurement, presentation, and disclosure of government grants received by business entities. The guidance defines a government grant as a transfer of a monetary asset or a tangible nonmonetary asset from a government to a business entity other than in an exchange transaction and excludes transactions within the scope of other U.S. GAAP. Under the ASU, government grants are classified as either grants related to an asset or grants related to income, and recognition is permitted only when it is probable that the entity will comply with the conditions attached to the grant and that the grant will be received. The ASU permits alternative presentation approaches depending on the nature of the grant and requires disclosures regarding the nature of the grant, affected financial statement line items, and significant terms and conditions. The ASU is effective for public business entities for annual reporting periods beginning after December 15, 2028, including interim periods within those annual reporting periods. Early adoption is permitted, and the standard may be applied on a modified prospective, modified retrospective, or full retrospective basis. We are currently evaluating the impact of this new accounting standard and do not expect its adoption to have a material impact on our consolidated financial statements and disclosures.

3. Net Product Sales

Net product sales by customer geographic location were as follows for the periods presented (in millions):


	Years Ended December 31,
	2025		2024		2023
United States	$	1,165	$	1,726	$	1,720
Europe	50		573		1,353
Rest of world	603		810		3,598
Total	$	1,818	$	3,109	$	6,671

Net product sales by product were as follows (in millions):


	Years Ended December 31,
	2025		2024		2023
COVID(1)	$	1,810	$	3,084	$	6,671
RSV	8		25		—

Total	$	1,818	$	3,109	$	6,671

(1)Includes sales of Spikevax and mNEXSPIKE.

As of December 31, 2025, we have three commercial products, our COVID vaccines, Spikevax and mNEXSPIKE, and our RSV vaccine, mRESVIA. mRESVIA was approved by the FDA in May 2024 for adults aged 60 years and older, and in June 2025, the approved use was expanded to include adults aged 18 through 59 years who are at increased risk for lower respiratory tract disease (LRTD) caused by RSV. We launched commercial sales of mRESVIA in the third quarter of 2024. In May 2025, mNEXSPIKE was approved for use in adults aged 65 years and older, as well as individuals aged 12 through 64 years with at least one underlying risk factor. We launched commercial sales of mNEXSPIKE in the third quarter of 2025.

We sell our COVID and RSV vaccines to the commercial market as well as to foreign governments and international organizations. In the U.S., our COVID and RSV vaccines are sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers. Wholesalers and distributors typically do not make upfront payments to us. Net product sales are recognized net of estimated wholesaler chargebacks, invoice discounts for prompt payments and pre-orders, provisions for sales returns and government rebates, and other related deductions.

The following table summarizes product sales provision for the periods presented (in millions):


	Years Ended December 31,
		2025		2024		2023
Gross product sales		$	3,304	$	4,517	$	8,203
Product sales provision:
Wholesaler chargebacks, discounts and fees		(1,037)		(1,141)		(976)
Returns, rebates and other fees (1)		(449)		(267)		(556)
Total product sales provision		$	(1,486)	$	(1,408)	$	(1,532)
Net product sales		$	1,818	$	3,109	$	6,671

(1)Includes an adjustment of approximately $216 million in 2024, reflecting a reduction in prior year provision estimates, primarily related to returns and chargebacks for the previous COVID vaccine season. Adjustments recorded in 2025 related to prior year provision estimates were not material.

The following table summarizes the activities related to product sales provision recorded as accrued liabilities for the year ended December 31, 2025 (in millions):


	Returns, rebates and other fees
Balance at December 31, 2024	$	(370)
Provision related to sales made in current period	(436)
Provision related to sales made in prior periods	(13)
Payments and returns related to sales made in current period	28
Payments and returns related to sales made in prior periods	282
Balance at December 31, 2025	$	(509)

4. Other Revenue

The following table summarizes other revenue for the periods presented (in millions):


	Years Ended December 31,
		2025		2024		2023
Grant revenue		$	22	$	37	$	94
Collaboration revenue (Note 5)		13		48		83
Licensing and royalty revenue		11		42		—
Stand-ready manufacturing revenue		80		$	—	$	—
Total other revenue		$	126	$	127	$	177

Grant Revenue

In April 2020, we entered into an agreement with the Biomedical Advanced Research and Development Authority (BARDA), a division of the Administration for Strategic Preparedness and Response (ASPR) within the U.S. Department of Health and Human Services (HHS), for an award of up to $483 million to accelerate development of our original COVID vaccine, mRNA-1273. The agreement has been subsequently amended to provide for additional commitments to support various late-stage clinical development efforts of our original COVID vaccine, including a 30,000 participant Phase 3 study, pediatric clinical trials, adolescent clinical trials and pharmacovigilance studies. The maximum award from BARDA, inclusive of all amendments, was approximately $1.8 billion. All contract options have been exercised. The BARDA contract concluded on June 15, 2025, upon completion of all contractual deliverables. We accrued and recognized revenue through that date for eligible costs incurred in accordance with the agreement. As of December 31, 2025, the remaining available funding, net of revenue earned, was approximately $62 million. While this funding remains available, we do not expect to recognize material additional revenue, as the contract has concluded and all obligations have been fulfilled. Final billing and closeout activities are ongoing and may result in immaterial adjustments to the recognized revenue amount.

The following table summarizes grant revenue for the periods presented (in millions):


	Years Ended December 31,
	2025		2024		2023
BARDA	$	9	$	34	$	88
Other grant revenue	13		3		6
Total grant revenue	$	22	$	37	$	94

Collaboration Revenue

We have entered into collaboration agreements with strategic collaborators to accelerate the discovery and advancement of potential mRNA medicines across therapeutic areas. As of December 31, 2025, 2024 and 2023, we had collaboration agreements with Merck & Co., Inc (Merck), Vertex Pharmaceuticals Incorporated and Vertex Pharmaceuticals (Europe) Limited (together, Vertex), and others. See Note 5 to for further description of these collaboration agreements.

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:	2025		2024		2023
Vertex	$	13	$	23	$	82


Other	—		25		1
Total collaboration revenue	$	13	$	48	$	83

Licensing and Royalty Revenue

In April 2024, we entered a non-exclusive out-licensing agreement with a pharmaceutical company based in Japan for mRNA COVID-related intellectual property for the territory of Japan. Under the terms of the agreement, we received an upfront payment of $50 million, which included a $20 million prepayment creditable against future royalties. Additionally, we are entitled to receive low double-digit royalties on the net sales of the company’s COVID product. Upon execution of the agreement, we recognized $30 million of the upfront payment as other revenue in our consolidated statements of operations. The remaining $20 million was recorded as deferred revenue in our consolidated balance sheets and recognized as royalty revenue as the underlying sales occurred. In accordance with the terms of the agreement, the $20 million was fully recognized by the end of the first quarter of 2025.

Stand-Ready Manufacturing Revenue

Stand-ready manufacturing revenue relates to amounts recognized under long-term strategic agreements with government entities for maintaining mRNA manufacturing capacities and support pandemic readiness.

5. Collaboration Agreements and Research and Development Funding Arrangement

Merck – Personalized mRNA Cancer Vaccines (Intismeran Autogene)

In June 2016, we entered into a Collaboration and License Agreement, which was subsequently amended in 2018, with Merck for the development and commercialization of personalized mRNA cancer vaccines (PCV), also known as Individualized Neoantigen Therapy (INT), which has been assigned the generic name intismeran autogene. This agreement was subsequently amended in 2018. Under the PCV Agreement, we received an upfront payment of $200 million from Merck and we were responsible for designing and researching intismeran, providing manufacturing capacity and manufacturing intismeran and conducting Phase 1 and Phase 2 clinical trials for intismeran, alone and in combination with KEYTRUDA (pembrolizumab), Merck’s anti-PD-1 therapy, all in accordance with an agreed upon development plan and budget. We concluded that the collaboration arrangement was governed by the revenue recognition standard ASC 606.

In September 2022, Merck exercised its option for intismeran, including mRNA-4157, under the terms of the agreement and in October 2022 paid us an option exercise fee of $250 million. Following this exercise, the Merck Participation Term commenced, under which we and Merck collaborate on development and potential commercialization of PCV, with costs and any profits or losses generally shared equally on a worldwide basis, subject to certain exceptions as outlined in the agreement. During the development phase, we are primarily responsible for process development and the manufacture of intismeran materials, while Merck generally leads clinical trials. We concluded that the collaboration arrangement under the Merck Participation Term is within the scope of ASC 808. For the years ended December 31, 2025, 2024 and 2023, we recognized expenses, net of Merck's reimbursements, of $407 million,

$390 million, and $184 million, respectively, related to the PCV collaboration under the Merck Participation Term. Additionally, the net cost recovery for capital expenditures during the same periods were $24 million, $109 million, and $102 million, respectively, which were applied to reduce the capitalized cost of the assets.

Development and Commercialization Funding Arrangement with Blackstone Life Sciences (Blackstone)

In March 2024, we entered into a development and commercialization funding arrangement with Blackstone, under which Blackstone has committed to providing up to $750 million in funding to us. This funding supports the development of our investigational mRNA-based influenza vaccine. Contingent upon regulatory approval in the U.S. and only if the approval is dependent on data from the funded activities, Blackstone will be entitled to receive low single-digit percentage royalties and up to $750 million in sales milestone payments. These payments are based on net sales of our future influenza and combination vaccines, with sales milestone payments contingent upon achieving specified cumulative net sales targets.

Given the substantive transfer of financial risk to Blackstone, we account for this arrangement as an obligation to conduct research and development activities. The funding is recognized as a reduction to the expenses of our mRNA-based influenza program. This reduction is recognized proportionally as the related costs are incurred, based on an input method. For the year ended December 31, 2025 and 2024, we recorded research and development expense reductions of $340 million and $267 million, respectively. As of December 31, 2025 and 2024, we had a research and development funding liability of $43 million and $58 million, respectively, related to the advance funding received from Blackstone.

Vertex – 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, 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. This collaboration arrangement is accounted for under ASC 606 and currently ongoing.

Immatics – Strategic Multi-Platform Collaboration to Develop Oncology Therapeutics

In September 2023, we entered into a strategic collaboration with Immatics to jointly discover and develop T cell-redirecting cancer immunotherapies. Upon effectiveness of the agreement in October 2023, we made an upfront payment of $120 million, recognized as research and development expense. Immatics is also eligible for research funding, milestone payments, tiered royalties on global net sales of TCER® products and certain vaccine products that are commercialized under the agreement. Additionally, Immatics has an option to enter into a global profit and loss share arrangement for the most advanced TCER®.

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.

6. Financial Instruments and Fair Value Measurements

Cash and Cash Equivalents and Investments

The following tables summarize our cash, cash equivalents, and available-for-sale securities by significant investment category at December 31, 2025 and 2024 (in millions):


	December 31, 2025
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non- Current Marketable Securities
Cash and cash equivalents	$	2,595	$	—	$	—	$	2,595	$	2,595	$	—	$	—
Available-for-sale:
Certificates of deposit	91		—		—		91		—		86		5
U.S. treasury bills	653		—		—		653		—		653		—
U.S. treasury notes	2,188		5		(3)		2,190		—		1,185		1,005
Corporate debt securities	2,535		6		(1)		2,540		—		1,250		1,290
Government debt securities	66		—		—		66		—		30		36
Total	$	8,128	$	11	$	(4)	$	8,135	$	2,595	$	3,204	$	2,336

	December 31, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non- Current Marketable Securities
Cash and cash equivalents	$	1,927	$	—	$	—	$	1,927	$	1,927	$	—	$	—
Available-for-sale:
Certificates of deposit	52		—		—		52		—		52		—
U.S. treasury bills	786		—		—		786		—		786		—
U.S. treasury notes	3,048		3		(15)		3,036		—		1,958		1,078
Corporate debt securities	3,590		3		(13)		3,580		—		2,172		1,408
Government debt securities	138		—		—		138		—		130		8
Total	$	9,541	$	6	$	(28)	$	9,519	$	1,927	$	5,098	$	2,494

The amortized cost and estimated fair value of available-for-sale securities, by contractual maturity at December 31, 2025 and 2024 were as follows (in millions):


	December 31, 2025
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	3,199	$	3,204
Due after one year through five years	2,334		2,336
Total	$	5,533	$	5,540
	December 31, 2024
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	5,106	$	5,098
Due after one year through five years	2,508		2,494
Total	$	7,614	$	7,592

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, 2025, 2024, and 2023. We did not recognize any credit-related allowance to available-for-sale securities as of December 31, 2025 and 2024.

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, 2025 and 2024 (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, 2025:

U.S. treasury bills	$	—	$	111	$	—	$	—	$	—	$	111
U.S. treasury notes	(1)		176		(2)		235		(3)		411
Corporate debt securities	—		608		(1)		40		(1)		648
Government debt securities	—		36		—		8		—		44
Total	$	(1)	$	931	$	(3)	$	283	$	(4)	$	1,214

As of December 31, 2024:
U.S. treasury bills	$	—	$	101	$	—	$	—	$	—	$	101
U.S. treasury notes	(2)		729		(13)		960		(15)		1,689
Corporate debt securities	(4)		843		(9)		1,646		(13)		2,489
Government debt securities	—		—		—		37		—		37
Total	$	(6)	$	1,673	$	(22)	$	2,643	$	(28)	$	4,316

At December 31, 2025 and 2024, we held 108 and 252 available-for-sale securities, respectively, out of our total investment portfolio that were in a continuous unrealized loss position. 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.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 (in millions):


	Fair value at December 31, 2025			Fair Value Measurement Using
			Level 1			Level 2
Assets:
Money market funds	$	963		$	963		$	—
Certificates of deposit	91			—			91
U.S. treasury bills	1,445			—			1,445
U.S. treasury notes	2,190			—			2,190
Corporate debt securities	3,163			—			3,163
Government debt securities	66			—			66
Equity investments(1)	6			6			—
Derivative instruments	1			—			1
Total	$	7,925		$	969		$	6,956
Liabilities:
Derivative instruments	$	4		$	—		$	4


	Fair value at December 31, 2024			Fair Value Measurement Using
			Level 1			Level 2
Assets:
Money market funds	$	1,195		$	1,195		$	—
Certificates of deposit	52			—			52
U.S. treasury bills	1,016			—			1,016
U.S. treasury notes	3,036			—			3,036
Corporate debt securities	3,763			—			3,763
Government debt securities	138			—			138
Equity investments(1)	14			14			—
Derivative instruments	10			—			10
Total	$	9,224		$	1,209		$	8,015
Liabilities:
Derivative instruments	$	2		$	—		$	2

(1)Investments in publicly traded equity securities with readily determinable fair values are recorded at quoted market prices for identical securities, with changes in fair value recorded in other expense net, in our consolidated statements of operations.

As of December 31, 2025 and 2024, we did not have non-financial assets or liabilities measured at fair value on a recurring basis.

For the years ended December 31, 2025, 2024 and 2023, we recognized net losses of $8 million, $52 million and $35 million, respectively, on equity investments from changes in fair value of the securities.

Fair Value of Other Financial Instruments

We estimate the fair value of our term loan using Level 2 inputs. The fair value of the term loan approximates its carrying value as of December 31, 2025, because the instrument bears interest at a variable rate that reflects current market rates. See Note 11 for additional information.

7. Inventory

Inventory, as of December 31, 2025 and 2024 consisted of the following (in millions):


	December 31,
	2025		2024
Raw materials	$	91	$	63
Work in progress	29		26
Finished goods	33		28
Total inventory	$	153	$	117

Inventory, non-current(1)	$	114	$	150

(1)Consisted of raw materials with an anticipated consumption beyond one year. Inventory, non-current is included in other non-current assets in the consolidated balance sheets.

Inventory write-downs as a result of excess, obsolescence, scrap or other reasons, and losses on firm purchase commitments are recorded as a component of cost of sales in our consolidated statements of operations. For the years ended December 31, 2025, 2024, and 2023, inventory write-downs were $291 million, $495 million, and $2.2 billion, respectively. For the years ended December 31, 2025, 2024, and 2023, losses on firm purchase commitments were $24 million, $60 million, and $141 million, respectively. Inventory write-downs were mainly related to inventory in excess of expected demand and shelf-life expiration. Losses on firm purchase commitments were primarily related to excess raw material purchase commitments that will expire before the anticipated consumption of those raw materials.

These charges in 2025 and 2024 were primarily driven by the continued operation of the COVID vaccine market as a seasonal market, along with a decline in overall customer demand and excess inventory. Forecasting demand for COVID vaccines requires advance production planning ahead of each season, including production of multiple COVID vaccine products, which resulted in excess inventory and capacity as actual demand differed from forecasted demand. The higher charges in 2023 primarily reflect our strategic initiative to resize its manufacturing cost structure in response to the transition to an endemic seasonal COVID vaccine market. In the third quarter of 2023, we completed our long-range financial planning process, incorporating revised forecasts of vaccination rates. This resulted in the reassessment of future demand for our COVID vaccine, leading to a strategic initiative to resize our manufacturing cost structure. This initiative, launched in the same quarter, involved reassessing our inventory levels and renegotiating with our suppliers to reduce our purchase commitments related to raw materials which were not expected to be consumed before expiration. This initiative resulted in a raw materials write-down of $903 million, included in the total inventory write-down amount for the quarter.

As of December 31, 2025 and December 31, 2024, the accrued liability for losses on firm future purchase commitments in our consolidated balance sheets was $5 million and $60 million, respectively. As of December 31, 2025 and December 31, 2024, we had inventory on hand of $267 million and $267 million, respectively, inclusive of inventory for our COVID and RSV vaccines. Our raw materials and work-in-progress inventory have variable shelf lives. We expect that the majority of this inventory will be consumed over the next three years. The shelf life of Spikevax, our original COVID vaccine, is nine to twelve months. mNEXSPIKE has a shelf life of twelve months. The shelf life of mRESVIA, our RSV vaccine, is eighteen months.

8. Property, Plant and Equipment, Net

Property, plant and equipment, net as of December 31, 2025 and 2024 consisted of the following (in millions):


	December 31,
	2025		2024
Land and land improvements	$	78	$	59
Building and building improvements	1,183		743
Manufacturing and laboratory equipment	542		344
Leasehold improvements	403		207
Furniture, fixtures and other	39		31
Computer equipment and software	196		150
Construction in progress	298		1,057
Right-of-use assets, financing (Note 10)	132		132
Total	2,871		2,723
Less: Accumulated depreciation	(737)		(527)
Property, plant and equipment, net	$	2,134	$	2,196

Depreciation and amortization expense for the years ended December 31, 2025, 2024, and 2023 was $211 million, $185 million, and $617 million, respectively.

9. Other Balance Sheet Components

Accounts Receivable, Net

Accounts receivable, net, as of December 31, 2025 and 2024 consisted of the following (in millions):


	December 31,
	2025		2024
Accounts receivable	$	368	$	698
Less: Wholesalers chargebacks, discounts and fees	(181)		(340)

Less: Allowance for doubtful accounts	(3)		—
Accounts receivable, net	$	184	$	358

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets, as of December 31, 2025 and 2024 consisted of the following (in millions):


	December 31,
	2025		2024
Prepaid services	$	169	$	173

Down payments and prepayments related to manufacturing and materials	61		106
Interest receivable	42		59
Value added tax receivable	37		45
Prepaid income tax	33		28
Collaboration receivable	13		58


Income tax receivable	8		72




Other current assets	45		58
Prepaid expenses and other current assets	$	408	$	599

Other Non-Current Assets

Other non-current assets, as of December 31, 2025 and 2024 consisted of the following (in millions):


	December 31,
	2025		2024
Income tax receivable, non-current	$	161	$	97
Inventory, non-current(1)	114		150
Down payments and prepayments, non-current	100		139
Deferred tax assets	81		81
Goodwill	52		52
Finite-lived intangible asset	45		40
Equity investments	6		14

Other	46		21
Other non-current assets	$	605	$	594

(1)Consisted of raw materials with an anticipated consumption beyond one year.

Accrued Liabilities

Accrued liabilities, as of December 31, 2025 and 2024 consisted of the following (in millions):


	December 31,
	2025		2024
Provisions related to product sales (Note 3)	$	509	$	370
Compensation-related	420		312
Manufacturing	140		109
Development operations	106		120
Other external goods and services	57		131
Property, plant and equipment	45		99
Royalties	31		46
Raw materials	30		41
Commercial	23		45
Clinical trials	20		94
Loss on future firm purchase commitments(1)	5		60

Accrued liabilities	$	1,386	$	1,427

(1)Related to losses that are expected to arise from firm, non-cancellable, commitments for future raw material purchases (Note 7).

Other Current Liabilities

Other current liabilities, as of December 31, 2025 and 2024 consisted of the following (in millions):


	December 31,
	2025		2024
Estimated reimbursements to wholesalers and distributors	$	84	$	103
Research and development funding liability (Note 5)	43		58
Lease liabilities - financing (Note 10)	25		23
Lease liabilities - operating (Note 10)	17		14

Other	16		23
Other current liabilities	$	185	$	221

Other Non-Current Liabilities

Other non-current liabilities, as of December 31, 2025 and 2024 consisted of the following (in millions):


	December 31,
	2025		2024
Tax liabilities	$	249	$	231
Other	36		36
Other non-current liabilities	$	285	$	267

Deferred Revenue

The following table summarizes the activities in deferred revenue during the year ended December 31, 2025 (in millions):


	December 31, 2024		Additions		Deductions		December 31, 2025
Net product sales	$	188	$	108	$	(189)	$	107



Other revenue	23		212		(90)		145
Total deferred revenue	$	211	$	320	$	(279)	$	252

10. Leases

We have entered into various long-term, non-cancelable lease arrangements for our facilities and equipment, expiring at various times through 2039. Certain of these arrangements have free rent periods or escalating rent payment provisions. We recognize lease costs under such arrangements on a straight-line basis over the life of the lease. We have two main campuses in Massachusetts, our Moderna Science Center (MSC), located in Cambridge, which serves as our headquarters, and our Moderna Technology Center (MTC), located in Norwood. In addition, we own and lease facilities, including office, laboratory, and manufacturing sites, in various locations globally to support our research, development, manufacturing, and business operations.

Moderna Science Center

Our Cambridge campus previously included multiple leased properties at Technology Square and the MSC, a facility comprising approximately 462,000 square feet, that serves as our principal executive office, along with additional office and laboratory spaces. The MSC lease commenced during the third quarter of 2023 and has a term of 15 years, with options for two additional seven-year extensions. During the fourth quarter of 2023, we amended the expiration dates of our Technology Square leases to conclude in January 2025, as we transitioned operations to the MSC. As of December 31, 2024, we substantially exited our leased spaces at Technology Square, completing the consolidation of our Cambridge operations into the MSC.

Moderna Technology Center

The MTC is a multiple-building campus spanning approximately 722,000 square feet. that previously operated under long-term finance leases expiring in 2042, with options for three five-year extensions. The MTC has been a critical facility for our manufacturing, laboratory, and office operations. In December 2024, we completed the acquisition of the MTC campus, including the underlying land and buildings, for a total purchase price of $385 million. Upon acquisition, we derecognized the right-of-use assets and lease liabilities associated with the Norwood leases. The purchase price, after adjustments related to lease terminations, was allocated to land and buildings, with approximately $231 million recorded as property, plant, and equipment on our consolidated balance sheets as of December 31, 2024.

Operating and financing lease right-of-use assets and lease liabilities as of December 31, 2025 and 2024 were as follows (in millions):


	December 31,
	2025		2024
Assets:
Right-of-use assets, operating, net(1) (2)	$	719	$	759
Right-of-use assets, financing, net(3) (4)	42		65
Total	$	761	$	824

Liabilities:
Current:
Operating lease liabilities(5)	$	17	$	14
Financing lease liabilities(5)	25		23
Total current lease liabilities	42		37
Non-current:
Operating lease liabilities, non-current	653		671
Financing lease liabilities, non-current	20		39
Total non-current lease liabilities	673		710
Total	$	715	$	747

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

(2) Net of accumulated amortization.

(3) These assets are related to contract manufacturing service agreements.

(4) Included in property, plant 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 were as follows for the periods presented (in millions):


	Years ended December 31,
	2025		2024		2023
Operating lease costs	$	89	$	103	$	88
Financing lease costs:
Amortization of right-of-use assets, financing leases	24		22		500
Interest expense for financing lease liabilities	3		24		38
Total financing lease costs	$	27	$	46	$	538
Short term lease costs	$	—	$	13	$	2
Variable lease costs	$	22	$	42	$	113

Supplemental cash flow information relating to our leases was as follows for the periods presented (in millions):


	December 31,
	2025		2024		2023
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows used in operating leases	$	(71)	$	(78)	$	(93)
Operating cash flows used in financing leases	(3)		(19)		(39)
Financing cash flows used in financing leases	(23)		(12)		(292)

Operating lease non-cash items:
Decrease in right-of-use assets related to lease modifications and reassessments	$	(10)	$	(4)	$	(67)
Right-of-use assets obtained in exchange for operating lease liabilities	—		100		714

Finance lease non-cash items:
Decrease in right-of-use assets related to lease modifications and reassessments	$	—	$	(425)	$	(213)
Right-of-use assets obtained in exchange for financing lease liabilities	—		75		—
Changes in financing lease liabilities	(5)		2		3
Lease liability derecognized upon purchase of underlying leased asset	—		579		—

Weighted average remaining lease terms and discount rates as of December 31, 2025 and 2024 were as follows:


	December 31,
	2025		2024
Remaining lease term:
Operating leases	12 years		13 years
Finance leases	2 years		3 years
Discount rate:
Operating leases	7.6	%	7.6	%
Finance leases	5.9	%	5.9	%

Future minimum lease payments under non-cancelable lease agreements as of December 31, 2025, were as follows (in millions):


Fiscal Year	Operating Leases		Financing Leases
2026	$	65	$	27
2027	78		20
2028	81		—
2029	82		—
2030	80		—
Thereafter	680		—
Total minimum lease payments	1,066		47
Less amounts representing interest	(396)		(2)
Present value of lease liabilities	$	670	$	45

11. Credit Agreement

In November 2025, we entered into a Credit and Guaranty Agreement (the Credit Agreement) with lenders led by Ares Capital Corporation, as administrative agent. The Credit Agreement provides for a senior secured term loan facility with aggregate term loan commitments of $1.5 billion, consisting of a $600 million initial term loan, which was funded at closing, and $900 million of delayed draw term loan commitments. The initial term loan matures on November 24, 2030. The delayed draw term loan commitments consist of (1) a $400 million delayed draw term loan facility (DDTL-1), which is available, subject to customary conditions, through November 24, 2027, and (2) a $500 million delayed draw term loan facility (DDTL-2), which is available, subject to customary conditions and the achievement of specified regulatory approval milestones for certain product candidates, through November 24, 2028.

Borrowings under the Credit Agreement bear interest at a variable rate equal to, at our option, (i) Term SOFR plus a margin of 5.50% or (ii) a base rate plus a margin of 4.50%. The base rate is calculated as the highest of (a) the Wall Street Journal prime rate, (b) the federal funds rate plus one half of one percent and (c) Term SOFR plus one percent. We are also required to pay commitment fees on the undrawn portions of DDTL-1 and DDTL-2. The interest rate applicable to the initial term loan was approximately 9.38% as of December 31, 2025.

The obligations under the Credit Agreement are guaranteed by certain of our subsidiaries and are secured by a first-priority lien on substantially all of our assets, in each case subject to customary exceptions and limitations. The Credit Agreement is subject to compliance with customary representations and warranties, affirmative covenants, restrictive covenants and events of default. The restrictive covenants, subject to specified limitations and exceptions, limit, among other things, our ability to incur additional indebtedness and liens, make certain investments, engage in certain fundamental changes, dispose of assets and make restricted payments. Events of default under the Credit Agreement include, among others, nonpayment of principal, interest or other amounts when due, failure to comply with covenants (subject to applicable notice and cure periods), breaches of certain representations and warranties, the occurrence of certain significant adverse events and certain insolvency-related events. The Credit Agreement also includes a financial covenant requiring us to maintain minimum cash and cash equivalents (as defined in the Credit Agreement, which primarily consist of our cash, cash equivalents, and available-for-sale securities) as of the last business day of each week of at least $500 million, increasing to $750 million if more than $1.0 billion is drawn under the Credit Agreement. The financial covenant is not required to be tested at any time that the trailing 30-day average market capitalization of the Company exceeds $5.0 billion and is subject to a customary equity cure. As of December 31, 2025, we were in compliance with the applicable terms and covenants under the Credit Agreement.

As of December 31, 2025, the initial term loan had an outstanding principal balance of $600 million and a carrying amount of $590 million, net of unamortized original issue discount and debt issuance costs, which was classified as long-term debt in our consolidated balance sheet. No amounts had been drawn under DDTL-1 or DDTL-2. The principal amount of $600 million is due in full at maturity, and no principal payments are required prior to that date.

12. Commitments and Contingencies

Legal Proceedings

We are a party to various legal proceedings and claims. Accruals are recognized for legal matters when a loss is both probable and reasonably estimable. As of December 31, 2025, no material contingent liabilities have been recognized. If a material loss is reasonably possible and we can estimate the amount or range of the loss, we disclose such information. Unless otherwise noted, either the outcome of these matters is not expected to be material, or the potential loss cannot be reasonably estimated.

From time to time, we may be a party to litigation, arbitration, or other legal proceedings in the course of our business. The outcome of such matters is inherently uncertain and often involves significant judgment in assessing risk and estimating potential exposure. While we do not currently expect any pending proceedings to have a material adverse effect on our financial position, results of operations, or cash flows, there can be no assurance that future developments will not have a material impact.

The following summarizes our significant legal proceedings and matters outstanding as of December 31, 2025.

We have brought patent-infringement actions against Pfizer Inc. (Pfizer), BioNTech SE (BioNTech) and related entities in the U.S. District Court for the District of Massachusetts, Germany, the Netherlands, the UK, Ireland and Belgium concerning our mRNA platform technology and disease-specific vaccine designs. Pfizer and BioNTech have commenced actions or asserted defenses seeking to revoke our patents in these jurisdictions.

Arbutus Biopharma Corporation (Arbutus) and Genevant Sciences GmbH (Genevant) have brought patent-infringement actions against us in the U.S. District Court for the District of Delaware, as well as in Canada, Japan, Switzerland and the Unified Patent Court (UPC) asserting patents concerning lipid nanoparticles. Arbutus and Genevant are seeking judgment of infringement of the asserted patents and monetary damages. The U.S. case has set trial to begin March 9, 2026.

GlaxoSmithKline Biologicals SA (GSK) has filed two complaints against us in the U.S. District Court for the District of Delaware asserting certain patents owned by GSK. GSK has filed two patent-infringement lawsuits against us in the UPC and two complaints in Spain concerning liposomes and modified liposomes for RNA delivery.

Northwestern University has filed a complaint against us in the U.S. District Court for the District of Delaware asserting U.S. patents concerning lipid nanoparticle technology.

Bayer CropSciences LLC, Monsanto Company, and Monsanto Technology, LLC have filed a complaint in U.S. District Court for the District of Delaware asserting a U.S. patent directed to methods of modifying gene sequences.

mNG Bio, LLC has filed a complaint against us in U.S District Court for the District of Massachusetts asserting a U.S. patent directed to a yellow-green fluorescent protein.

BioNTech SE has filed a complaint against us in the U.S. District Court for the District of Delaware asserting a U.S. patent directed to modified mRNA compositions encoding a spike protein fragment.

We are subject to shareholder class action and shareholder derivative litigation pending in the U.S. District Court for the District of Massachusetts related to statements about our RSV vaccine (mRNA-1345).

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 collaborators, 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, 2025 and 2024, we had not experienced any significant 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, 2025, we had $411 million of non-cancelable purchase commitments related to raw materials and manufacturing agreements, which are expected to be paid through 2029. This amount includes $5 million of the purchase commitments related to raw materials that was recorded as an accrued liability for loss on future firm purchase commitments. As of December 31, 2025, we had $1.0 billion of non-cancelable purchase commitments related to research and development and other goods and services which are expected to be paid through 2032. 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, 2025, we had cancelable open purchase orders of approximately $1.8 billion, reflecting amounts associated with our significant vendor arrangements, under such agreements for our 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, 2025, 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

In 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 and royalties based on annual net sales of licensed products for therapeutic and prophylactic products are accounted for as additional expense of the related net product sales in the period in which the corresponding sales occur.

In December 2022, we entered into a non-exclusive patent license agreement with the National Institute of Allergy and Infectious Diseases (NIAID), an Institute or Center of the National Institutes of Health (NIH) to license certain patent rights concerning stabilizing prefusion coronavirus spike proteins and the resulting stabilized proteins for use in COVID vaccine products. Pursuant to the agreement, we have agreed to pay low single-digit royalties on future net sales, a minimum annual royalty payment, and certain contingent development, regulatory and commercial milestone payments on a licensed product-by-licensed product basis.

In January 2025, we entered into a non-exclusive patent license agreement with NIAID to license certain patent rights related to the development of mRNA-based vaccines for the prevention or treatment of RSV infection. Upon execution of the agreement, we made a total payment of $10 million, which was capitalized as an intangible asset and is amortized to cost of sales on a straight-line basis over the estimated useful life of the licensed patents. In addition, we are obligated to pay low single-digit royalties on future net sales of licensed products.

For the years ended December 31, 2025, 2024, and 2023 we recognized $88 million, $155 million, and $301 million, respectively, of royalties and commercial milestone payments associated with our net product sales, which was recorded to cost of sales in our consolidated statements of operations.

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 have not yet occurred as of December 31, 2025.

13. Stock-Based Compensation and Share Repurchase Programs

Equity Plans

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 Stock Option and Incentive Plan (the 2016 Equity 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 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 Equity Plan will be added back to the shares of common stock available for issuance under the 2018 Equity Plan.

The Board of Directors may grant to employees, non-employee directors, consultants and independent advisors equity-based awards during their period of service, generally in the form of stock options, restricted stock units, and performance stock units. 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 vest 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, 2025, we had a total of 62 million shares reserved for future issuance under our Equity Plans, of which 38 million shares were reserved for equity awards previously granted, and 24 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.

Stock Option Exchange Program

On November 13, 2025, we commenced an offer to exchange certain eligible stock options held by eligible employees of the Company for new stock options (the “Exchange Offer”). Executive officers and members of our Board of Directors were not eligible to participate. The Exchange Offer expired on December 12, 2025.

Under the Exchange Offer, 2,864 eligible employees elected to exchange, and we accepted for cancellation, eligible stock options to purchase an aggregate of 4,289,694 shares of our common stock, representing approximately 80% of the total shares of common stock underlying eligible options. Immediately following the expiration of the Exchange Offer, we granted replacement stock options to purchase an aggregate of 1,653,121 shares of our common stock. The exercise price of the replacement stock options was $29.46 per share, which was the closing price of our common stock on December 12, 2025. The replacement stock options are subject to new vesting schedules based on continued service.

The exchange of stock options resulted in an immaterial incremental stock-based compensation expense, calculated using a lattice option pricing model, which will be recognized together with any unrecognized compensation cost remaining on the exchanged options over the remaining requisite service period of the modified awards.

Options

We have granted options generally through the 2018 Equity Plan and 2016 Equity Plan. The following table summarizes our option activity during the year ended December 31, 2025:


	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, 2024	26.20	$	59.64	5.1 years	$	359
Granted	8.91	30.47
Exercised	(1.22)	14.06
Canceled/forfeited	(6.71)	114.24
Outstanding at December 31, 2025	27.18	38.63		4.8 years	153
Exercisable at December 31, 2025	19.54	38.22		3.3 years	151
Expected to vest at December 31, 2025	7.64	$	39.67	8.7 years	$	2

(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, 2025.

The total intrinsic value of options exercised was $19 million, $122 million, and $413 million for the years ended December 31, 2025, 2024, and 2023, 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 $2 million, $24 million, and $84 million during the years ended December 31, 2025, 2024, and 2023, respectively. The total consideration recorded as a result of stock option exercises was approximately $17 million, $42 million, and $25 million, respectively, for the years ended December 31, 2025, 2024, and 2023.

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, 2025:


	Number of Units (in millions)	Weighted Average Grant Date Fair Value per Unit
Outstanding, non-vested at December 31, 2024	7.86	$	91.60
Issued	12.67	30.77
Vested	(6.81)	63.70
Canceled/forfeited	(2.52)	60.43
Outstanding, non-vested at December 31, 2025	11.20	46.11

The total grant date fair value of RSUs and PSUs vested during the years ended December 31, 2025, 2024, and 2023, was $434 million, $228 million, and $99 million, respectively. The total intrinsic value of RSUs and PSUs vested during the years ended December 31, 2025, 2024, and 2023, was $186 million, $161 million and $120 million, respectively.

During 2025, 2024 and 2023, we granted an immaterial amount of PSUs, respectively, primarily 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.

Valuation and Stock-Based Compensation Expense

Stock-based compensation for options granted under our Equity Plans (excluding options issued in connection with the Exchange Offer) is determined using the Black-Scholes option pricing model. The weighted-average assumptions used to estimate the fair value of options granted for the years ended December 31, 2025, 2024, and 2023 were as follows:


	Weighted Average
	Years Ended December 31,
	2025			2024			2023
Options:
Risk-free interest rate	4.04		%	4.28		%	4.13		%
Expected term	5.54 years			6.10 years			6.07 years
Expected volatility	66		%	50		%	48		%
Expected dividends	—		%	—		%	—		%
Weighted average fair value per share	$	18.64		$	49.76		$	57.87

Stock-Based Compensation Expense

The following table presents the components and classification of stock-based compensation expense for the years ended December 31, 2025, 2024, and 2023 (in millions):


	Years Ended December 31,
	2025		2024		2023
Options	$	152	$	163	$	136
RSUs	314		254		144
PSUs	8		5		17
Employee stock purchase plan	9		7		8
Total	$	483	$	429	$	305

Cost of sales	$	26	$	25	$	37
Research and development	291		264		157
Selling, general and administrative	166		140		111
Total	$	483	$	429	$	305

Stock-based compensation expenses related to non-employee awards were immaterial for the years ended December 31, 2025, 2024, and 2023.

As of December 31, 2025, there were $633 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 2.1 years at December 31, 2025.

Share Repurchase Programs

On February 22, 2022, our Board of Directors authorized a share repurchase program of our common stock for up to $3.0 billion, with no expiration date. On August 1, 2022, our Board of Directors authorized an additional $3.0 billion under the repurchase program, with no expiration date (collectively with the February 22, 2022 authorization, the 2022 Repurchase Programs). As of December 31, 2025, $1.7 billion of our Board of Directors’ authorization for repurchases of our common stock remains outstanding under the 2022 Repurchase Programs, with no expiration date. The timing and actual number of shares repurchased under the 2022 Repurchase Programs 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 Securities Exchange Act of 1934, as amended.

The following table summarizes activity related to our share repurchase programs (in millions, except per share data):


	Years Ended December 31,
	2025		2024		2023
Number of shares repurchased	—		—		8
Average price per share(1)	$	—	$	—	$	143.26
Aggregate purchase price	$	—	$	—	$	1,153
Remaining authorization at end of period	$	1,667	$	1,667	$	1,667

(1)Average price paid per share includes related expenses and excise tax, applicable beginning January 1, 2023.

14. Income Taxes

Loss before income taxes for the years ended December 31, 2025, 2024, and 2023 consisted of the following (in millions):


	Years Ended December 31,
	2025		2024		2023
United States	$	(2,655)	$	(3,697)	$	(4,056)
Foreign	(113)		90		114
Loss before income taxes	$	(2,768)	$	(3,607)	$	(3,942)

The provision for income taxes for the years ended December 31, 2025, 2024, and 2023 consisted of the following components (in millions):


	Years Ended December 31,
	2025		2024		2023
Current:
Federal	$	11	$	(57)	$	(225)
State	4		(1)		72
Foreign	29		13		24
Total current	$	44	$	(45)	$	(129)
Deferred:
Federal	$	—	$	—	$	888
State	—		—		8
Foreign	10		(1)		5
Total deferred	10		(1)		901
Total provision for (benefit from) income taxes	$	54	$	(46)	$	772

The reconciliation of the federal statutory income tax amount and rate to our effective tax rate for the year ended December 31, 2025 was as follows (in millions, except percentages):


	Year Ended December 31,
	2025
Federal statutory tax rate	$	(581)	21.0	%
State and local income tax, net of federal income tax effect	3		(0.2)	%
Foreign tax effects	62		(2.1)	%


Tax credits	(11)		0.4	%

Changes in valuation allowances	509		(18.4)	%
Nontaxable or nondeductible items	2		(0.1)	%
Stock-based compensation windfall/shortfall	43		(1.6)	%
Changes in unrecognized tax benefits	10		(0.4)	%
Other	17		(0.6)	%
Effective tax rate	$	54	(2.0)	%

The effective tax rate reconciliation for the year ended December 31, 2025 is presented in accordance with ASU 2023-09, while the effective tax rate reconciliations for the years ended December 31, 2024 and 2023 have not been recast and continue to be presented under the prior guidance. As a result of the adoption of ASU 2023-09, certain items in the effective tax rate reconciliation may have been reclassified between categories compared to prior periods; however, such reclassifications did not have a material impact on any individual line items or the overall effective tax rate.

The reconciliation of the federal statutory income tax rate to our effective tax rate for the years ended December 31, 2024 and 2023 was as follows:


	Years Ended December 31,
	2024		2023
Federal statutory tax rate	21.0	%	21.0	%
Change in valuation allowance	(23.5)	%	(52.6)	%
Foreign-derived intangible income	—	%	0.2	%
Stock-based compensation windfall/shortfall	0.2	%	2.4	%
Federal research and development credits	5.5	%	4.6	%
State taxes, net of federal benefits	(0.7)	%	5.7	%
Non-deductible items	(0.4)	%	(0.4)	%
Other	(0.8)	%	(0.5)	%
Effective tax rate	1.3	%	(19.6)	%

Our effective tax rate for the year ended December 31, 2025 was (2.0)% and was higher than the federal statutory tax rate, primarily due to our global valuation allowance, which limits our ability to recognize tax benefits from the loss. The higher effective tax rate was also impacted by certain of our foreign subsidiaries that have taxable income, while we incurred a net loss before income taxes in other jurisdictions. For the year ended December 31, 2024, the effective tax rate was lower than the federal statutory tax rate as a result of an increase in valuation allowance against deferred tax assets, which limited the recognition of tax benefits on our pre-tax loss. The tax benefits from research and development credits provided a partial offset. For the year ended December 31, 2023, despite being in a pre-tax loss position, our effective tax rate exceeded the federal statutory tax rate, primarily due to the establishment of a valuation allowance against the majority of the deferred tax assets, which resulted in a net tax expense rather than a benefit. This was partially offset by tax benefits from research and development credits and stock-based compensation.

For the year ended December 31, 2025, income taxes paid, net of refunds, by jurisdiction were immaterial both individually and in the aggregate and, accordingly, have not been separately disclosed.

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, 2025 and 2024 were as follows

(in millions):


	December 31,
	2025		2024
Deferred tax assets:
Net operating loss carryforwards	$	1,156	$	424
Stock-based compensation	129		131
Capitalized licenses, research and development and start-up costs	1,693		1,794
Tax credit carryforwards	308		251

Operating lease liabilities	134		138

Other comprehensive income	3		4
Inventory reserve and capitalization	152		205
Wholesaler chargebacks, discounts and fees	26		43
Returns and other fees	116		86
Outside basis difference	84		125
Other	213		160
Total deferred tax assets	4,014		3,361
Less: valuation allowance	(3,738)		(3,084)
Net deferred tax assets	$	276	$	277
Deferred tax liabilities:

Right-of-use assets, operating	$	(135)	$	(139)
Property, plant and equipment	(58)		(55)
Other	(23)		(16)
Total deferred tax liabilities	(216)		(210)
Net deferred tax assets	$	60	$	67

The table below summarizes changes in the valuation allowance for deferred tax assets for the periods presented (in millions):


	Years Ended December 31,
	2025		2024		2023
Valuation allowance at beginning of the period	$	3,084	$	2,224	$	155

Increases to valuation allowance	654		860		2,069
Valuation allowance at December 31	$	3,738	$	3,084	$	2,224

We periodically reassess the need for valuation allowances on our deferred tax assets, considering both positive and negative evidence to evaluate whether it is more likely than not that all or a portion of such assets will not be realized. During 2023, following the completion of our long-range financial planning process, we reassessed the evidence and concluded that a valuation allowance was necessary due to the preponderance of negative evidence, including:

A pre-tax loss for the full year 2023, serving as a significant source of objectively verifiable negative evidence in accordance with ASC 740 (Income Taxes).
A projected three-year cumulative loss resulting from our long-range financial planning process. This projection was due to a significant decrease in expected sales of our COVID vaccine as we transitioned to a seasonal market. Additionally, we anticipated substantial research and development expenses for our on-going Phase 3 clinical trials and to advance our product candidates into later-stage development. These factors contributed additional negative evidence with respect to the realizability of our deferred tax assets. The projections were based upon revenue from our approved drug product, which we believe can be reasonably estimated. In contrast, future taxable income projections from our investigational medicines are deemed inherently subjective and not objectively verifiable; they are insufficient to override negative evidence, and therefore, they were not assigned any weight in our valuation allowance analysis assessment.

Our evaluation also included whether there were other sources of taxable income that would allow us to realize our deferred tax assets, such as taxable income in carryback years, available tax planning strategies and the future reversals of taxable temporary differences. After assessing these strategies and all evidence, we determined it was more likely than not that we will not realize all of our deferred tax assets and therefore increased the valuation allowance by $2.1 billion during 2023.

In 2025 and 2024, we continued to maintain a global valuation allowance against the majority of our deferred tax assets, consistent with the assessment established in 2023. The valuation allowance reflects the ongoing preponderance of negative evidence, including continued and projected losses.

Significant management judgment is required in assessing the realizability of our deferred tax assets. In the event that actual results differ from our estimates, we adjust our estimates in future periods and we may need to modify our valuation allowance, which could materially impact our financial position and results of operations.

At December 31, 2025, we had $4.1 billion, $3.3 billion, and $89 million of federal, state and foreign net operating loss carryforwards, respectively, of which $4.1 billion, $1.6 billion, and $89 million respectively, will not expire and $1.7 billion of state net operating loss carryforwards will begin to expire in 2032. At December 31, 2025, we also had federal and state research and development tax credit carryforwards of $111 million and $208 million, respectively, the majority of which will begin to expire in 2030.

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, 2025, 2024, and 2023 were as follows (in millions):


	Years Ended December 31,
	2025		2024		2023
Unrecognized tax benefits at beginning of the period	$	240	$	231	$	128
Decrease due to prior positions:
Tax positions for prior years	(3)		(10)		—

Settlements with tax authorities	—		—		(27)
Increase due to current year tax positions:
Additions based on tax positions for current year	4		19		44
Additions based on tax positions for prior years	—		—		86
Unrecognized tax benefits at end of the period	$	241	$	240	$	231

As of December 31, 2025, we had $241 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.

We file income tax returns in U.S. and various state, local and foreign jurisdictions. The income tax returns of all material taxing jurisdictions remain open to tax examination for all tax years since our date of incorporation for those jurisdictions. We have federal, state, and foreign carryforward attributes generated in past years which may be adjusted upon examination. As of December 31, 2025, we are under audit in various U.S., and foreign jurisdictions; however, no adjustments to our tax positions have been proposed at this time.

15. 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, 2025, 2024 and 2023 were calculated as follows (in millions, except per share data):


	Years Ended December 31,
	2025		2024		2023
Numerator:
Net loss	$	(2,822)	$	(3,561)	$	(4,714)



Denominator:
Basic and diluted weighted-average common shares outstanding	389		384		382



Basic and diluted EPS	$	(7.26)	$	(9.28)	$	(12.33)

The following common stock equivalents, presented based on amounts outstanding as of December 31, 2025, 2024 and 2023, were excluded from the calculation of diluted EPS attributable to common stockholders for the periods indicated because their inclusion would have been anti-dilutive (in millions):


	December 31,
	2025	2024	2023
Options	27	26	26

RSUs and PSUs	11	8	5
Total	38	34	31

16. 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 collaborators was as follows (in millions):


	Years Ended December 31,
	2025		2024		2023
United States	$	1,199	$	1,785	$	1,895
Europe	53		598		1,355
Rest of world	692		853		3,598
Total	$	1,944	$	3,236	$	6,848

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


	December 31,
	2025		2024
United States	$	1,468	$	1,532
Europe	303		283
Rest of world	363		381
Total	$	2,134	$	2,196

Previous: Item 7A. Quantitative and Qualitative Disclosures about Market Risk · Next: Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure