Item 1. Financial Statements

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Item 1. Financial Statements

MODERNA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in millions, except per share data)


	September 30,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	5,550	$	2,624
Investments	3,356		1,984
Accounts receivable	3,142		1,391
Inventory	965		47
Prepaid expenses and other current assets	412		252
Total current assets	13,425		6,298
Investments, non-current	6,442		639
Property and equipment, net	845		297
Right-of-use assets, operating leases	115		90
Restricted cash, non-current	11		11
Deferred tax assets	81		—
Other non-current assets	4		2
Total assets	$	20,923	$	7,337
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	87	$	18
Accrued liabilities	1,076		470
Deferred revenue	7,977		3,867
Income taxes payable	565		—
Other current liabilities	252		34
Total current liabilities	9,957		4,389
Deferred revenue, non-current	498		177
Operating lease liabilities, non-current	105		97
Financing lease liabilities, non-current	238		110
Other non-current liabilities	1		3
Total liabilities	10,799		4,776
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, par value $0.0001; 162 shares authorized as of September 30, 2021 and December 31, 2020; no shares issued or outstanding at September 30, 2021 and December 31, 2020	—		—
Common stock, par value $0.0001; 1,600 shares authorized as of September 30, 2021 and December 31, 2020; 405 and 399 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	—		—
Additional paid-in capital	5,003		4,802
Accumulated other comprehensive income	31		3
Retained earnings (accumulated deficit)	5,090		(2,244)
Total stockholders’ equity	10,124		2,561
Total liabilities and stockholders’ equity	$	20,923	$	7,337

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

MODERNA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue:
Product sales	$	4,810	$	—	$	10,740	$	—
Grant revenue	140		145		473		187
Collaboration revenue	19		12		47		45
Total revenue	4,969		157		11,260		232
Operating expenses:
Cost of sales	722		—		1,665		—
Research and development	521		344		1,343		611
Selling, general and administrative	168		48		366		109
Total operating expenses	1,411		392		3,374		720
Income (loss) from operations	3,558		(235)		7,886		(488)
Interest income	4		6		11		21
Other expense, net	(10)		(3)		(22)		(6)
Income (loss) before income taxes	3,552		(232)		7,875		(473)
Provision for income taxes	219		1		541		1
Net income (loss)	$	3,333	$	(233)	$	7,334	$	(474)

Earnings (loss) per share:
Basic	$	8.27	$	(0.59)	$	18.25	$	(1.26)
Diluted	$	7.70	$	(0.59)	$	17.00	$	(1.26)

Weighted average common shares used in calculation of earnings (loss) per share:
Basic	404		395		402		376
Diluted	434		395		431		376

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

MODERNA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in millions)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss)	$	3,333	$	(233)	$	7,334	$	(474)
Other comprehensive income (loss), net of tax:
Available-for-sales securities:
Unrealized (losses) gains on available-for-sale debt securities	(3)		(3)		(10)		2
Less: net realized (gains) losses on available-for-sale securities reclassified in net income (loss)	(1)		—		(2)		1
Net (decrease) increase from available-for-sale debt securities	(4)		(3)		(12)		3
Cash flow hedges:
Unrealized gains on derivative instruments	30		—		51		—
Less: net realized (gains) on derivative instruments reclassified in net income	(11)		—		(11)		—
Net increase from derivatives designated as hedging instruments	19		—		40		—
Total other comprehensive income (loss)	15		(3)		28		3
Comprehensive income (loss)	$	3,348	$	(236)	$	7,362	$	(471)

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

MODERNA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Unaudited, in millions)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at June 30, 2021	403	$	—	$	4,931	$	16	$	1,757	$	6,704

Exercise of options to purchase common stock	2	—		32		—		—		32

Stock-based compensation	—	—		40		—		—		40
Other comprehensive income, net of tax	—	—		—		15		—		15
Net income	—	—		—		—		3,333		3,333
Balance at September 30, 2021	405	$	—	$	5,003	$	31	$	5,090	$	10,124


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at June 30, 2020	393	$	—	$	4,677	$	8	$	(1,738)	$	2,947


Exercise of options to purchase common stock	2	—		27		—		—		27

Stock-based compensation	—	—		22		—		—		22
Other comprehensive loss, net of tax	—	—		—		(3)		—		(3)
Net loss	—	—		—		—		(233)		(233)
Balance at September 30, 2020	395	$	—	$	4,726	$	5	$	(1,971)	$	2,760


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2020	399	$	—	$	4,802	$	3	$	(2,244)	$	2,561

Exercise of options to purchase common stock	6	—		91		—		—		91
Purchase of common stock under employee stock purchase plan	—	—		5		—		—		5
Stock-based compensation	—	—		105		—		—		105
Other comprehensive income, net of tax	—	—		—		28		—		28
Net income	—	—		—		—		7,334		7,334
Balance at September 30, 2021	405	$	—	$	5,003	$	31	$	5,090	$	10,124


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2019	337	$	—	$	2,670	$	2	$	(1,497)	$	1,175
Proceeds from public offering of common stock, net of issuance costs of $2	48	—		1,853		—		—		1,853

Exercise of options to purchase common stock	10	—		133		—		—		133
Purchase of common stock under employee stock purchase plan	—	—		3		—		—		3
Stock-based compensation	—	—		67		—		—		67
Other comprehensive income, net of tax	—	—		—		3		—		3
Net loss	—	—		—		—		(474)		(474)
Balance at September 30, 2020	395	$	—	$	4,726	$	5	$	(1,971)	$	2,760

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

MODERNA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)


	Nine Months Ended September 30,
	2021		2020
Operating activities
Net income (loss)	$	7,334	$	(474)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation	105		67
Depreciation and amortization	154		24
Amortization/accretion of investments	33		5

Deferred income taxes	(89)		—
Changes in assets and liabilities:
Accounts receivable	(1,751)		(185)
Prepaid expenses and other assets	(186)		(68)
Inventory	(918)		—
Right-of-use assets, operating leases	(25)		(13)
Accounts payable	26		14
Accrued liabilities	600		132
Deferred revenue	4,431		1,240
Income taxes payable	565		—
Operating lease liabilities	8		14
Other liabilities	23		7
Net cash provided by operating activities	10,310		763
Investing activities
Purchases of marketable securities	(10,279)		(2,326)
Proceeds from maturities of marketable securities	1,075		748
Proceeds from sales of marketable securities	1,983		140
Purchases of property and equipment	(164)		(44)
Net cash used in investing activities	(7,385)		(1,482)
Financing activities
Proceeds from public offerings of common stock, net of issuance costs	—		1,853
Proceeds from issuance of common stock through equity plans, net	96		136

Changes in financing lease liabilities	(96)		—
Net cash provided by financing activities	—		1,989
Net increase in cash, cash equivalents and restricted cash	2,925		1,270
Cash, cash equivalents and restricted cash, beginning of year	2,636		248
Cash, cash equivalents and restricted cash, end of period	$	5,561	$	1,518
Non-cash investing and financing activities
Purchases of property and equipment included in accounts payable and accrued liabilities	$	66	$	13
Right-of-use assets obtained through finance lease modifications and reassessments	$	364	$	46
Right-of-use assets obtained in exchange for financing lease liabilities	$	126	$	—

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

MODERNA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Description of the Business

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

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

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

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

As of September 30, 2021, we had 37 mRNA development programs in our portfolio with 22 having entered the clinic. In the third quarter of 2021, we refined the way we track our development programs and now separately track each indication of our COVID-19 and RSV vaccine candidates, which resulted in an increase in the number of our development programs. We have incurred significant expenses in connection with the discovery, development and commercialization of our products, and we expect to continue to incur significant expenses for the foreseeable future. We anticipate that our expenses will increase significantly in connection with the ongoing development and commercialization of our COVID-19 vaccine and ongoing activities to support our platform research, drug discovery and clinical development, including development of any new generations of boosters and vaccines against variants of SARS-CoV-2 and vaccines against other respiratory diseases, infrastructure and Research Engine and Early Development Engine (which includes our Moderna Technology Center), digital infrastructure, creation of a portfolio of intellectual property, and administrative support. We may finance our future cash needs that exceed our operating costs through a combination of public or private equity offerings, structured financings and debt financings, government funding arrangements, strategic alliances and marketing, manufacturing, distribution and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements on favorable terms, or at all.

We believe that our cash, cash equivalents, and investments as of September 30, 2021 will be sufficient to enable us to fund our projected operations through at least the next 12 months from the issuance of these financial statements. We are subject to numerous risks and uncertainties associated with pharmaceutical development and commercialization, and we are unable to predict the timing or amount of expenses or if we will be able to maintain profitability. If we are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce our operations.

2. Summary of Basis of Presentation and Recent Accounting Standards

Basis of Presentation and Principles of Consolidation

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

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

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

Use of Estimates

We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. We base our estimates on historical experience and various relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods that are not readily apparent from other sources. Significant estimates relied upon in preparing these financial statements include, but are not limited to, critical accounting policies or estimates related to revenue recognition, research and development expenses, stock-based compensation, leases, fair value of financial instruments, derivative financial instruments, inventory, useful lives of property and equipment, income taxes and our valuation allowance on our deferred tax assets. The actual results that we experience may differ materially from our estimates.

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/losses and gains/losses on our investments and derivatives designated as hedging instruments. Total comprehensive income (loss) for all periods presented has been disclosed in the condensed consolidated statements of comprehensive income (loss).

The components of accumulated other comprehensive income for the three and nine months ended September 30, 2021 were as follows (in millions):


	Unrealized Loss on Available-for-Sale Debt Securities		Net Unrealized Gains on Derivatives Designated As Hedging Instruments		Total
Accumulated other comprehensive income, balance at December 31, 2020	$	3	$	—	$	3
Other comprehensive loss	(2)		—		(2)
Accumulated other comprehensive income, balance at March 31, 2021	1		—		1
Other comprehensive (loss) income	(6)		21		15
Accumulated other comprehensive income, balance at June 30, 2021	$	(5)	$	21	$	16
Other comprehensive (loss) income	(4)		19		15
Accumulated other comprehensive income, balance at September 30, 2021	$	(9)	$	40	$	31

Restricted Cash

We include our restricted cash balance in the cash, cash equivalents and restricted cash reconciliation of operating, investing and financing activities in the condensed consolidated statements of cash flows.

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


	September 30,
	2021		2020
Cash and cash equivalents	$	5,550	$	1,506
Restricted cash	—		1
Restricted cash, non-current	11		11
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	5,561	$	1,518

Recently Issued Accounting Standards Not Yet Adopted

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

3. Product Sales

In December 2020, we began selling our COVID-19 vaccine to the U.S. Government and international governments. Under the supply agreements with these governments, we received or billed for upfront deposits for our future vaccine supply, which are initially recorded as deferred revenue. We recognize revenue based on the fixed price per dose when control of the product has transferred and customer acceptance has occurred as applicable, unless such acceptance provisions are deemed perfunctory.

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


	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
United States	$	1,197	$	4,648
Rest of world	3,613		6,092
Total	$	4,810	$	10,740

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

As of September 30, 2021 and December 31, 2020, we had deferred revenue of $8.3 billion and $3.8 billion, respectively, related to customer deposits. We expect $7.9 billion of our deferred revenue related to customer deposits as of September 30, 2021 to be realized in less than one year. Timing of product manufacturing, delivery, and receipt of marketing approval will determine the period in which revenue is recognized.

4. Grant Revenue

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

In April 2020, we entered into an agreement with the Biomedical Advanced Research and Development Authority (BARDA), a division of the Office of the Assistant Secretary for Preparedness and Response within the U.S. Department of Health and Human Services (HHS), for an award of up to $483 million to accelerate development of mRNA-1273, our vaccine candidate against COVID-19. In July 2020, we amended our agreement with BARDA to provide for an additional commitment of up to $472 million to support late-stage clinical development of mRNA-1273, including the execution of a 30,000 participant Phase 3 study in the U.S. We further amended the agreement in March 2021 to provide for an additional commitment of $63 million to further support late-stage clinical development, including Phase 2/3 mRNA-1273 pediatric studies. In April 2021, we entered into a further amendment to the BARDA agreement, increasing the amount of potential reimbursements by $236 million in connection with costs associated with the Phase 3 clinical trials for mRNA-1273 and pharmacovigilance efforts. In June 2021, the agreement with BARDA was further amended to award additional funding of $144 million to support pediatric clinical trials for mRNA-1273. The maximum award from BARDA, inclusive of the 2020 and 2021 amendments, was approximately $1.4 billion. Under the terms of the agreement, BARDA will fund the advancement of mRNA-1273 to FDA licensure. All contract options have been exercised. As of September 30, 2021, the remaining available funding, net of revenue earned, was $441 million.

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

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

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
BARDA	$	128	$	143	$	454	$	183
Other grant revenue	12		2		19		4
Total grant revenue	$	140	$	145	$	473	$	187

5. Collaboration Agreements

We have entered into collaboration agreements with strategic collaborators to accelerate the discovery and advancement of potential mRNA medicines across therapeutic areas. As of September 30, 2021 and December 31, 2020, we had collaboration agreements with AstraZeneca plc (AstraZeneca), Merck & Co., Inc (Merck), Vertex Pharmaceuticals Incorporated and Vertex Pharmaceuticals (Europe) Limited (together, Vertex), and others. Please refer to our 2020 Form 10-K under the heading “Third-Party Strategic Alliances” and Note 5 to our consolidated financial statements for further description of these collaboration agreements.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
Collaboration Revenue by Strategic Collaborator:	2021		2020		2021		2020
AstraZeneca	$	3	$	—	$	7	$	17
Merck	7		6		11		18
Vertex	5		6		23		10
Other	4		—		6		—
Total collaboration revenue	$	19	$	12	$	47	$	45

The following table presents changes in the balances of our receivables and contract liabilities related to our strategic collaboration agreements during the nine months ended September 30, 2021 (in millions):


	December 31, 2020		Additions		Deductions		September 30, 2021
Contract Assets:
Accounts receivable	$	6	$	21	$	(21)	$	6
Contract Liabilities:
Deferred revenue	$	240	$	23	$	(45)	$	218

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

6. Financial Instruments

Cash and Cash Equivalents and Investments

The following tables summarize our cash and available-for-sale securities by significant investment category at September 30, 2021 and December 31, 2020 (in millions):


	September 30, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non- Current Marketable Securities
Cash and cash equivalents	$	5,550	$	—	$	—	$	5,550	$	5,550	$	—	$	—
Available-for-sale:
Certificates of deposit	85		—		—		85		—		85		—
U.S. treasury bills	95		—		—		95		—		95		—
U.S. treasury notes	6,557		1		(5)		6,553		—		2,046		4,507
Corporate debt securities	2,956		1		(4)		2,953		—		1,118		1,835
Government debt securities	113		—		(1)		112		—		12		100
Total	$	15,356	$	2	$	(10)	$	15,348	$	5,550	$	3,356	$	6,442

	December 31, 2020
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non- Current Marketable Securities
Cash and cash equivalents	$	2,624	$	—	$	—	$	2,624	$	2,624	$	—	$	—
Available-for-sale:
Certificates of deposit	239		—		—		239		—		215		24
U.S. treasury bills	492		—		—		492		—		492		—
U.S. treasury notes	87		—		—		87		—		38		49
Corporate debt securities	1,788		4		—		1,792		—		1,239		553
Government debt securities	13		—		—		13		—		—		13
Total	$	5,243	$	4	$	—	$	5,247	$	2,624	$	1,984	$	639

The amortized cost and estimated fair value of marketable securities by contractual maturity at September 30, 2021 and December 31, 2020 were as follows (in millions):


	September 30, 2021
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	3,356	$	3,356
Due after one year through five years	6,450		6,442
Total	$	9,806	$	9,798


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

In accordance with our investment policy, we place investments in investment grade securities with high credit quality issuers, and generally limit the amount of credit exposure to any one issuer. We evaluate securities for impairment at the end of each reporting period. 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. Any impairment that is not credit related is recognized in other comprehensive loss, net of applicable taxes. A credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. We did not recognize any impairment charges related to available-for-sale securities for the three and nine months ended September 30, 2021 and 2020. We did not recognize any credit-related allowance to available-for-sale securities as of September 30, 2021 and December 31, 2020.

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used to value the assets and liabilities:

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

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 (in millions):


	Fair value at September 30, 2021			Fair Value Measurement Using
			Level 1			Level 2
Assets:
Money market funds	$	4,606		$	4,606		$	—
Certificates of deposit	85			—			85
U.S. treasury bills	95			—			95
U.S. treasury notes	6,553			—			6,553
Corporate debt securities	2,953			—			2,953
Government debt securities	112			—			112
Derivative instruments (Note 7)	51			—			51
Total	$	14,455		$	4,606		$	9,849
Liabilities:
Derivative instruments (Note 7)	$	1		$	—		$	1


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

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

7. Derivative Financial Instruments

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

Cash Flow Hedges

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

Balance Sheet Hedges

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

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


	September 30, 2021
	Notional Amount			Fair Value
			Asset (1)			Liability (2)
Derivatives designated as cash flow hedging instruments:
Foreign currency forward contracts	$	1,436		$	48		$	—

Derivatives not designated as hedging instruments:
Foreign currency forward contracts	556			3			1
Total derivatives	$	1,992		$	51		$	1


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

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

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

Gains on our foreign currency derivatives, net of tax, recognized in our condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 were as follows (in millions):


	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Derivatives in cash flow hedging relationships:
Foreign currency forward contracts	$	30	$	51

The effect of our foreign currency derivatives in our condensed consolidated statements of operations for the three and nine months ended September 30, 2021 was as follows (in millions):


	Statement of Operations Classification	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Derivatives in cash flow hedging relationships:
Foreign currency forward contracts
Net gain reclassified from AOCI into income	Product sales	$	(11)	$	(11)

Derivatives not designated as hedging instruments:
Foreign currency forward contracts
Net realized and unrealized gain (loss)	Other expense, net	$	3	$	(16)

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

8. Inventory

Inventory as of September 30, 2021 and December 31, 2020 consists of the following (in millions):


	September 30,		December 31,
	2021		2020
Raw materials	$	605	$	37
Work in progress	233		9
Finished goods	127		1
Total inventory	$	965	$	47

9. Property and Equipment, Net

Property and equipment, net, as of September 30, 2021 and December 31, 2020 consists of the following (in millions):


	September 30,		December 31,
	2021		2020
Laboratory equipment	$	152	$	121
Leasehold improvements	231		180
Furniture, fixtures and other	8		5
Computer equipment and software	15		13
Internally developed software	9		7
Right-of-use asset, financing (Note 11)	546		56
Construction in progress	158		35
Total	1,119		417
Less: Accumulated depreciation	(274)		(120)
Property and equipment, net	$	845	$	297

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

10. Other Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets, as of September 30, 2021 and December 31, 2020 consists of the following (in millions):


	September 30,		December 31,
	2021		2020
Down payments to manufacturing vendors	$	156	$	217
Other prepaid expenses	105		7
Value added tax receivable	57		7
Derivative assets	51		—
Other current assets	43		21
Prepaid expenses and other current assets	$	412	$	252

Accrued Liabilities

Accrued liabilities, as of September 30, 2021 and December 31, 2020 consists of the following (in millions):


	September 30,		December 31,
	2021		2020
Clinical trials	$	166	$	98
Raw materials	141		78
Royalties	168		—
Development operations	125		29
Manufacturing	196		53
Other external goods and services	87		92
Compensation-related	105		95
Other	88		25


Accrued liabilities	$	1,076	$	470

Other Current Liabilities

Other current liabilities, as of September 30, 2021 and December 31, 2020 consists of the following (in millions):


	September 30,		December 31,
	2021		2020
Lease liabilities - financing (Note 11)	$	218	$	24
Lease liabilities - operating (Note 11)	22		6

Other	12		4
Other current liabilities	$	252	$	34

Deferred Revenue

The following table summarizes the activities in deferred revenue for the nine months ended September 30, 2021 (in millions):


	December 31, 2020		Additions		Deductions		September 30, 2021
Product sales	$	3,799	$	9,615	$	(5,163)	$	8,251
Grant revenue	5		20		(19)		6
Collaboration revenue	240		23		(45)		218
Total deferred revenue	$	4,044	$	9,658	$	(5,227)	$	8,475

11. Leases

We have entered into various long-term non-cancelable lease arrangements for our facilities and equipment expiring at various times through 2035. Certain of these arrangements have free rent periods or escalating rent payment provisions. We recognize lease cost under such arrangements on a straight-line basis over the life of the leases. We have two campuses in Massachusetts, our Cambridge facility and our Moderna Technology Center, located in Norwood. We also lease other office spaces globally for our business operations.

Operating Leases

Cambridge facility

We occupy a multi-building campus in Technology Square in Cambridge, Massachusetts with a mix of offices and research laboratory space totaling approximately 261,000 square feet. Our Cambridge facility leases have expiry ranges from 2022 to 2029.

Finance Leases

Moderna Technology Center

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

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

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

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

Embedded Leases

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

Operating and financing lease right-of-use assets and lease liabilities as of September 30, 2021 and December 31, 2020 were as follows (in millions):


	September 30,		December 31,
	2021		2020
Assets:
Right-of-use assets, operating, net (1) (2)	$	115	$	90
Right-of-use assets, financing, net (3) (4)	416		55
Total	$	531	$	145

Liabilities:
Current:
Operating lease liabilities (5)	$	22	$	6
Financing lease liabilities (5)	218		24
Total current lease liabilities	240		30
Non-current:
Operating lease liabilities, non-current	105		97
Financing lease liabilities, non-current	238		110
Total non-current lease liabilities	$	343	$	207
Total	$	583	$	237

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

(2) Net of accumulated depreciation.

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

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

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

Future minimum lease payments under our non-cancelable lease agreements at September 30, 2021, are as follows (in millions):


Fiscal Year		Operating Leases (1)		Financing Leases (1)
2021	(remainder of the year)	$	7	$	66
2022		31		173
2023		25		19
2024		16		19
2025		17		19
Thereafter		94		600
Total minimum lease payments		190		896
Less amounts representing interest or imputed interest		(63)		(440)		(2)
Present value of lease liabilities		$	127	$	456

(1) Includes optional extensions in the MTC South, MTC North, and MTC East lease terms, which represent a total of $445 million undiscounted future lease payments.

(2) MTC South interest is based on an imputed interest rate of 17.2%. MTC North, MTC East, and the embedded lease interest is based upon incremental borrowing rates of 8.2%, 3.7%, and 0.6%, respectively.

12. Commitments and Contingencies

Strategic Collaborations

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

Legal Proceedings

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

Indemnification Obligations

As permitted under Delaware law, we indemnify our officers, directors, and employees for certain events, occurrences while the officer, or director is, or was, serving at our request in such capacity. The term of the indemnification is for the officer’s or director’s lifetime.

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

We enter into indemnification provisions under our agreements with counterparties in the ordinary course of business, typically with business partners, contractors, clinical sites and customers. Under these provisions, we generally indemnify and hold harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of our activities. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited.

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

Purchase Commitments and Purchase OrdersWe 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 September 30, 2021, we had $2.3 billion of non-cancelable purchase commitments related to raw materials and manufacturing agreements, which are expected to be paid through 2024. As of September 30, 2021, we had $69 million of non-cancelable purchase commitments related to clinical services and other goods and services which are expected to be paid through 2026. These amounts represent our minimum contractual obligations, including termination fees.

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

Licenses to Patented Technology

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

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

Moderna Science Center

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

13. Stock-Based Compensation

As of September 30, 2021, we had a total of 58 million shares reserved for future issuance under our Equity Plans, of which 31 million shares were reserved for equity awards previously granted, and 27 million shares were available for future grants under the 2018 Equity Plan.

Options

The following table summarizes our option activity during the nine months ended September 30, 2021:


	Number of Options (in millions)	Weighted- Average Exercise Price per Share		Weighted- Average Grant Date Fair Value per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (1) (in millions)
Outstanding at December 31, 2020	34.06	$	17.14	$	9.12	6.7 years	$	2,976
Granted	1.28	195.93		86.02
Exercised	(5.69)	15.77		8.89
Canceled/forfeited	(0.86)	26.97		14.51
Outstanding at September 30, 2021	28.79	25.09		12.43		6.1 years	10,362
Exercisable at September 30, 2021	16.84	12.68		6.56		5.0 years	6,266
Expected to vest at September 30, 2021	11.95	42.56		20.71		7.6 years	4,096

(1)Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of common stock for those options in the money as of September 30, 2021.

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

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

The following table summarizes our RSU and PSU activity during the nine months ended September 30, 2021:


	Units (in millions)	Weighted-Average Fair Value per Unit
Outstanding, non-vested at December 31, 2020	2.19	$	30.85
Issued	0.63	198.19
Vested	(0.48)	27.41
Canceled/forfeited	(0.10)	43.72
Outstanding, non-vested at September 30, 2021	2.24	78.43

The total fair value of restricted stock units vested during the nine months ended September 30, 2021 was $13 million. The total intrinsic value of restricted stock units vested during the nine months ended September 30, 2021 was $108 million.

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

2018 Employee Stock Purchase Plan (ESPP)

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

The following table presents the components and classification of stock-based compensation expense for the three and nine months ended September 30, 2021 and 2020 as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Options	$	27	$	18	$	73	$	57
RSUs and PSUs	12		3		29		8
ESPP	1		1		3		2
Total	$	40	$	22	$	105	$	67

Cost of sales	$	1	$	—	$	13	$	—
Research and development	25		13		54		40
Selling, general and administrative	14		9		38		27
Total	$	40	$	22	$	105	$	67

As of September 30, 2021, there was $348 million of total unrecognized compensation cost related to unvested stock-based compensation with respect to options, RSUs and PSUs granted. That cost is expected to be recognized over a weighted-average period of 3.0 years at September 30, 2021.

Share Repurchase Program

On August 2, 2021, our Board of Directors authorized a Share Repurchase Program of our common stock, which expires on August 2, 2023. Pursuant to the Share Repurchase Program, we may repurchase up to $1.0 billion of our outstanding common stock. The timing and actual number of shares repurchased depend on a variety of factors, including price, general business and market conditions, and other investment opportunities, and shares may be repurchased through open market purchases through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act.

During the three and nine months ended September 30, 2021, we did not make any repurchases under the Share Repurchase Program.

14. Income Taxes

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

We recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to be in effect for the years in which differences are expected to reverse. On a periodic basis, we reassess any valuation allowances that we maintain on our deferred tax assets, weighing positive and negative evidence to assess the recoverability of the deferred tax assets. In the first quarter of 2021, we reassessed the valuation allowance noting the increase in positive evidence, including significant revenue growth, expectations regarding future profitability, and successful supply chain and manufacturing capabilities to meet global product demand. After assessing both the positive evidence and negative evidence, we determined it was more likely than not that we will realize the majority of our deferred tax assets. Therefore, we determined we should reverse the majority of our valuation allowance through the annual effective tax rate (AETR) with respect to amounts we expect to realize through current year income. In addition, for the nine months ended September 30, 2021, we have recorded a discrete benefit of $49 million related to the release of the valuation allowance on deferred tax assets that we expect to utilize in future years. We maintain a valuation allowance on certain state tax attributes that we expect will expire prior to the utilization.

We file U.S. federal income tax returns and income tax returns in various state, local and foreign jurisdictions. We are not currently subject to any tax assessment from an income tax examination in the United States or any other major taxing jurisdiction since inception.

15. Earnings (Loss) per Share

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

Basic and diluted EPS for the three and nine months ended September 30, 2021 and 2020 were calculated as follows (in millions, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator:
Net income (loss)	$	3,333	$	(233)	$	7,334	$	(474)
Denominator:
Basic weighted-average common shares outstanding	404		395		402		376
Effect of dilutive securities	30		—		29		—
Diluted weighted-average common shares outstanding	434		395		431		376

Basic EPS	$	8.27	$	(0.59)	$	18.25	$	(1.26)
Diluted EPS	$	7.70	$	(0.59)	$	17.00	$	(1.26)

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


									September 30,
									2020
Stock options									37

Restricted common stock units									2
Total									39

For the three and nine months ended September 30, 2021, we had an immaterial number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive.

16. Subsequent Events

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

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