MRNA US Equity☆

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in “Part I, Item 1A - Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a 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 therapeutics and vaccines for infectious diseases, immuno-oncology, rare diseases and autoimmune diseases, independently and with our strategic collaborators.

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 six modalities, a broad intellectual property portfolio and integrated manufacturing capabilities that allow for rapid clinical and commercial production at scale. We have a diverse and extensive development pipeline of 42 development candidates across our 45 development programs, of which 40 are in clinical studies currently.

Our COVID-19 vaccine is our first commercial product and is marketed, where approved, under the name Spikevax®. Our original vaccine, mRNA-1273, targeted the SARS-CoV-2 ancestral strain, and we have leveraged our mRNA platform to rapidly adapt our vaccine to emerging SARS-CoV-2 strains to provide protection as the virus evolves and regulatory guidance is updated.

2023 Business Highlights

On September 11, 2023, we received approval of the supplemental Biologics License Application from the U.S. Food and Drug Administration (FDA) for our updated COVID-19 vaccine, which targets the Omicron XBB.1.5 sublineage of SARS-CoV-2 (mRNA-1273.815), for individuals 12 years and older. The FDA also issued an Emergency Use Authorization for mRNA-1273.815 for children aged 6 months to 11 years old. We subsequently received authorization from regulatory authorities around the globe for mRNA-1273.815 and initiated the shipment of doses both in the U.S. and internationally.

For the year ended December 31, 2023, we recognized net product sales of $6.7 billion from sales of our COVID-19 vaccines, compared to $18.4 billion and $17.7 billion for the years ended December 31, 2022 and 2021, respectively.

In January 2023, we announced positive data from the interim analysis of our pivotal ConquerRSV study of our vaccine candidate against respiratory syncytial virus (RSV) (mRNA-1345). In the study, mRNA-1345 met primary efficacy endpoints, demonstrating vaccine efficacy of 83.7% against RSV lower respiratory tract disease in older adults. We have filed for a Biologics License Application to the FDA for our RSV vaccine for adults aged 60 years or older, and used a Priority Review Voucher to accelerate review. We have also submitted marketing authorization applications for the vaccine for adults aged 60 years or older to medical authorities in several countries beyond the U.S. We have initiated the manufacturing of mRNA-1345 and are preparing for a marketing launch in 2024, subject to approval.

During the third quarter of 2023, we embarked on a strategic initiative to optimize the cost structure of our COVID-19 business, with a focus on resizing our manufacturing cost structure. The launch of this initiative was prompted by the completion of our long-range planning within the third quarter of 2023, which incorporated revised forecasts of vaccination rates. These projections accounted for the market’s transition from COVID-19 pandemic conditions towards an endemic seasonal market. Consequently, this strategic shift resulted in charges of $1.4 billion for the quarter. In the fourth quarter of 2023, we incurred additional charges of $169 million related to this initiative. Despite the immediate impact to our financial statements, we believe this strategic initiative will enhance the efficiency of our manufacturing operations and equip us with the agility to better adjust our scale according to future market demands.

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Program Developments

As of December 31, 2023, nine of our 45 development programs are in late-stage development, including seven programs in Phase 3 and two rare disease programs that are expected to enter pivotal studies in 2024.

Respiratory Vaccines

•Respiratory syncytial virus (RSV) vaccine: We have filed for regulatory approvals for our vaccine for the prevention of RSV-associated lower respiratory tract disease (RSV-LRTD) and acute respiratory disease (ARD) in adults ages 60 years or older (mRNA-1345). We expect regulatory approvals beginning in the first half of 2024. We anticipate entering the RSV market with a strong competitive profile as the only pre-filled syringe product available at the time of launch, along with robust efficacy data, a well-established safety and tolerability profile, and widespread consumer awareness and demand established in 2023.

•Next-generation COVID-19 vaccine: Our next-generation COVID-19 vaccine candidate, which is designed to be refrigerator-stable (mRNA-1283), is currently in its pivotal Phase 3 study. We anticipate data from the study in the first half of 2024.

•Seasonal flu vaccine: Our seasonal flu vaccine candidate (mRNA-1010) demonstrated consistently acceptable safety and tolerability across three Phase 3 trials. In the most recent Phase 3 trial, mRNA-1010 met all immunogenicity endpoints, demonstrating higher titers compared to a currently licensed vaccine. mRNA-1010 has also shown higher or comparable titers compared to a currently licensed enhanced vaccine (Fluzone HD®) in a separate Phase 1/2 study. We are in discussions with regulators and intend to file in 2024.

•Seasonal flu + COVID-19 vaccine: The Phase 3 trial of our combination vaccine candidate against seasonal flu and COVID-19 (mRNA-1083) is fully enrolled. We anticipate data from the study in 2024.

Latent and Other Vaccines

•Cytomegalovirus (CMV) vaccine: The pivotal Phase 3 study of our CMV vaccine candidate (mRNA-1647) is fully enrolled and accruing cases, evaluating its efficacy, safety and immunogenicity in the prevention of primary infection in women of childbearing age. We anticipate potential efficacy data from the study in 2024.

Oncology Therapeutics

•Individualized Neoantigen Therapy (INT): We continue to demonstrate the potential clinical benefit of our INT program (mRNA-4157), which we are developing in collaboration with Merck. Two separate Phase 3 trials continue to enroll patients with resected high-risk (stage III/IV) melanoma and completely resected stage II, IIIA or IIIB non-small cell lung cancer. We and Merck plan to expand their clinical studies to additional tumor types in 2024.

In December 2023, we announced results of a three-year analysis of our Phase 2b study evaluating INT in combination with KEYTRUDA®, Merck’s anti-PD-1 therapy, in patients with resected high-risk melanoma. Compared to KEYTRUDA alone, this combination continued to show an improvement in recurrence-free survival, reducing the risk of recurrence or death by 49%, as well as in distant metastasis-free survival, reducing the risk of developing distant metastasis or death by 62%.

Rare Diseases

•Propionic acidemia (PA) & methylmalonic acidemia (MMA): We expect to advance our rare disease therapeutic programs for PA (mRNA-3927) and MMA (mRNA-3705) into pivotal studies in 2024.

Other Business Updates

In January 2023, we acquired OriCiro Genomics K.K., a Japan-based, privately held biotech company primarily focused on cell-free DNA synthesis and amplification technologies, for $86 million. With this acquisition, we obtained tools for cell-free synthesis and amplification of plasmid DNA, a key building block in mRNA manufacturing. OriCiro’s technology strategically complements our manufacturing process, and we expect it will allow us to further accelerate our research and development efforts.

In February 2023, we entered into a strategic collaboration and license agreement with Life Edit Therapeutics Inc. (Life Edit) to collaborate on the discovery and development of in vivo mRNA gene editing therapies. The partnership will combine Life Edit’s suite of proprietary gene editing technologies, including base editing, with our mRNA platform to advance in vivo gene editing therapies against a select set of therapeutic targets.

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In March 2023, we entered into a strategic collaboration and license agreement with Generation Bio Co. (GBIO). The collaboration aims to expand the application of each company’s platform by developing novel nucleic acid therapeutics, including those capable of reaching immune cells, to accelerate our respective pipelines of non-viral genetic medicines. Under the agreement, we have the option to license GBIO’s proprietary cell-targeted lipid nanoparticle (ctLNP) and closed-ended DNA (ceDNA) technology for two immune cell programs and two liver programs, with an additional option for either a third immune cell or liver program.

In September 2023, we announced a strategic research and development collaboration agreement with Immatics, a clinical-stage biopharmaceutical company active in the discovery and development of T cell-redirecting cancer immunotherapies. Upon effectiveness of the agreement in October 2023, we made an upfront payment of $120 million to Immatics. This collaboration between Moderna and Immatics centers on combining mRNA technology and T-cell receptor (TCR) platforms to develop cancer therapies, focusing on in vivo expression of TCR bispecifics (TCER®), creation of mRNA-based cancer vaccine utilizing extensive tumor data, and enhancing TCR-T cell therapy through combined preclinical and clinical studies.

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Financial Operations Overview

Revenue

Net product sales

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

Years Ended December 31,

In the third quarter of 2023, we commenced sales of our COVID-19 vaccine to the U.S. commercial market, in addition to continuing sales to foreign governments and organizations. In the U.S., our COVID-19 vaccine is now sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers. Net product sales are recognized net of estimated wholesaler chargebacks, invoice discounts for prompt payments and pre-orders, provisions for sales returns, and other related deductions. Please refer to Note 3 to our consolidated financial statements.

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

Years Ended December 31,

Product sales provision:

Wholesaler chargebacks, discounts and fees (976) — —

Returns and other fees (556) — —

Total product sales provision $ (1,532) $ — $ —

As of December 31, 2023, our COVID-19 vaccine was our only commercial product authorized for use.

As of December 31, 2023, we had deferred revenue of $613 million associated with customer deposits received or billable under supply agreements for delivery of our COVID-19 vaccine primarily in 2024.

Our net product sales for the full year 2023 declined significantly as compared to the full year 2022, reflecting the ongoing shift of the COVID-19 vaccine market toward a seasonal commercial market. In addition, we experienced greater seasonality for sales, with greater demand in the fall/winter seasons in each hemisphere as countries seek to provide booster vaccinations to their populations. For 2024, we expect the progression toward a seasonal commercial market to persist, resulting in further projected reductions in net product sales for our COVID-19 vaccine relative to 2023.

Other revenue

Other than net product sales, our revenue has been primarily derived from government-sponsored and private organizations including the Biomedical Advanced Research and Development Authority (BARDA), the Defense Advanced Research Projects Agency (DARPA) and the Bill & Melinda Gates Foundation and from strategic alliances with Merck & Co., Inc (Merck), Vertex Pharmaceuticals Incorporated and Vertex Pharmaceuticals (Europe) Limited (together, Vertex) and others to discover, develop, and commercialize potential mRNA medicines.

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

Years Ended December 31,

Cost of sales

Cost of sales includes raw materials, personnel and facility and other costs associated with manufacturing our commercial products. These costs include production materials, production costs at our manufacturing facilities, third-party manufacturing costs, and final formulation and packaging costs. Cost of sales also includes shipping costs, indirect overhead costs associated with our product sales during the period, third-party royalties on net sales of our products, and charges for inventory valuation, excess and obsolete inventory and losses on firm purchase commitments.

Research and development expenses

The nature of our business and primary focus of our activities generate a significant amount of research and development costs.

Research and development expenses represent costs incurred by us for the following:

•cost to develop our platform;

•discovery efforts leading to development candidates;

•preclinical, nonclinical, and clinical development costs for our programs;

•cost to develop our manufacturing technology and infrastructure; and

•digital infrastructure costs related to our drug discovery efforts and clinical trials.

The costs above comprise the following categories:

•personnel-related expenses, including salaries, benefits, and stock-based compensation expense;

•expenses incurred under agreements with third parties, such as consultants, investigative sites, contract research organizations (CROs), that conduct our preclinical studies and clinical trials, and in-licensing arrangements;

•expenses associated with developing manufacturing, modification of formulation or design of a product or process, advancing the design to meet specific functional and economic requirements for manufacture and obtaining materials for preclinical studies, clinical trials and pre-launch inventory from internal and third-party contract manufacturing organizations (CMOs);

•expenses incurred for the procurement of materials, laboratory supplies, and non-capital equipment used in the research and development process;

•upfront fees and milestones paid to third-parties for licenses and technologies that had not reached technological feasibility and did not have an alternative future use; and

•facilities, depreciation, and amortization, and other direct and allocated expenses incurred as a result of research and development activities.

We use our employee and infrastructure resources for the advancement of our platform, and for discovering and developing programs. Due to the number of ongoing programs and our ability to use resources across several projects, indirect or shared operating costs incurred for our research and development programs are generally not recorded or maintained on a program- or modality-specific basis.

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The following table reflects our research and development expenses, including direct program specific expenses summarized by modality and indirect or shared operating costs summarized under other research and development expenses during the years ended December 31, 2023, 2022, and 2021 (in millions):

Years Ended December 31,

Program expenses by modality:

Cancer vaccines & therapeutics 70 14 47

Rare disease intracellular therapeutics 75 42 26

Intratumoral immuno-oncology 23 10 20

Inhaled pulmonary therapeutics 17 18 1

Systemic secreted and cell surface therapeutics 33 23 3

Total program-specific expenses by modality (1) $ 2,562 $ 1,841 $ 1,196

Other research and development expenses:

Technical development and unallocated manufacturing expenses 821 464 275

Shared discovery and development expenses 945 658 242

Total research and development expenses $ 4,845 $ 3,295 $ 1,991

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(1)Includes a total of 42 development candidates at December 31, 2023, 45 development candidates at December 31, 2022, and 37 development candidates at December 31, 2021. Program-specific expenses are reflected as of the beginning of the period in which the program was internally advanced to development or removed if development was ceased.

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

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

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

Technology development and unallocated manufacturing expenses are primarily related to non-program-specific manufacturing process development and manufacturing costs.

Shared discovery and development expenses are research and development costs such as personnel-related costs and other costs, which are not otherwise included in development programs, discovery programs, platform research, technical development, certain collaborative and licensing arrangements, and unallocated manufacturing expenses, stock-based compensation, and other expenses.

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Historically, we have made substantial investments in research and development activities, including development of our platform, mRNA technologies, and manufacturing technologies. We expense research and development costs as incurred and cannot reasonably estimate the nature, timing, and estimated costs required to complete the development of the development candidates and investigational medicines we are currently developing or may develop in the future.

Changes in expectations or outcomes of any of the known or unknown risks and uncertainties may materially impact our expected research and development expenditures. Continued research and development is central to the ongoing activities of our business. Investigational medicines in later stages of clinical development, such as our RSV vaccine, seasonal flu vaccine, CMV vaccine, new generations of COVID-19 vaccines, combination vaccines, and our INT program, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development costs to be substantial in the near term as our investigational medicines advance through development phases and as we identify and develop additional programs. We expect a modest reduction in research and development costs in 2024. There are numerous factors associated with the successful commercialization of any of our investigational medicines, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time due to the early stage of development of many of our investigational medicines. Moreover, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans.

Selling, general and administrative expenses

Selling, general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for executives, finance, legal, human resources, business development, commercial, marketing, and other administrative and operational functions, professional fees, accounting and legal services, information technology and facility-related costs, and expenses associated with obtaining and maintaining intellectual property (IP). These costs relate to the operation of the business, unrelated to the research and development function, or any individual program.

We anticipate selling, general and administrative expenses to decrease marginally in 2024 compared to 2023. This is due to the continued development of our programs and preparations for commercial activities both within and outside the United States. Our global expansion has already led to increased expenses, particularly as we build our regulatory, sales and marketing teams to support the commercialization of our COVID-19 vaccinesand extend our global presence, with active subsidiaries in 19 countries as of December 31, 2023. Commercial and marketing efforts were significant contributors to our selling, general and administrative expenses in 2023, making up a substantial portion of these costs. If we obtain regulatory approval for additional investigational medicines without establishing third-party commercialization collaboration and manufacturing collaborations, we may incur further costs in developing these operational capacities. However, we anticipate selling, general and administrative expenses to decrease slightly compared to 2024, reflecting efficiencies gained from our established infrastructure and operations.

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

Interest income

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

Other expense, net

Other expense, net consists of interest expense, gains (losses) from the sale of investments in marketable securities, gains (losses) related to changes in fair value of investments in equity securities, and other income and expense unrelated to our core operations. Interest expense is primarily derived from our finance leases related to our Moderna Technology Center and certain contract manufacturing service agreements.

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Critical accounting policies and significant judgments and estimates

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

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies used in the preparation of our

consolidated financial statements require the most significant judgments and estimates.

Net product sales

Prior to the third quarter of 2023, we sold our COVID-19 vaccine to the U.S. Government, foreign governments and organizations. The agreements and related amendments with these entities generally do not include variable consideration, such as discounts, rebates or returns. In the third quarter of 2023, we commenced sales of our latest COVID-19 vaccine to the U.S. commercial market, in addition to continuing sales to foreign governments and organizations. In the U.S., our COVID-19 vaccine is 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. Net product sales in the U.S. are recognized net of estimated wholesaler chargebacks, invoice discounts for prompt payments and pre-orders, provisions for sales returns, and other related deductions. These provisions are recorded based on contractual terms and our estimate of returns for product sold during the period, using the expected value method or the most likely amount method. Estimates are assessed each period and adjusted as required to revise information or actual experience. Please refer to Note 2 to our consolidated financial statements for further discussion and analysis of each significant category of product sales provisions and the accounting policy.

The application of our critical accounting policies necessitates substantial management judgment and estimation, particularly when determining the amount of variable consideration to recognize. The subjectivity of this process is heightened when assessing factors outside our direct control such as lack of pertinent historical data and limited third-party information. Among all variables, estimating returns presents the most significant judgment due to the broad range of potential outcomes and the current lack of return history with our customers. As we receive more historical data on our product returns, we will integrate this information to refine our estimates and enhance the precision of our financial projections. The actual results could differ from our estimates, and such differences could have a material impact to our financial statements.

Inventory

Inventory is recorded at the lower of cost or net realizable value, with cost determined using first-in, first-out and average cost methods for different inventory components. 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 process of determining whether inventory cost will be realizable requires significant judgment and estimates by management. If actual market conditions prove less favorable than projected by management, additional write-downs of inventory may be required. On a quarterly basis, 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 significant judgment, including consideration of many factors, such as estimates of future product demand, current and future market conditions, potential product obsolescence, expiration and utilization of raw materials under firm purchase commitments and contractual minimums, among others. In 2023, the significant judgment included the write-down of raw materials due to our revised long-range plan, reflecting lower expected future demand for our COVID-19 vaccine. In prior years, this significant judgement was related to excess raw material purchase commitments from firm, non-cancelable purchase contracts with third-party vendors.

We maintain 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. The classification and valuation of these materials involve significant

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judgment and estimates. While we consider the assumptions used in estimating inventory write-downs to be reasonable, any significant future changes in these assumptions or shifts in future events and market conditions could lead to different estimates. Please refer to Note 7 to our consolidated financial statements for further discussion and analysis of these inventory related charges.

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 events that have been included in the financial statements or tax returns. We determine our deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Significant management judgment is required in assessing the realizability of our deferred tax assets. In performing this assessment, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In making this determination, we consider the scheduled reversal of deferred tax liabilities, uncertain tax positions, projected future taxable income and the effects of tax planning strategies in assessing the need for a valuation allowance.

During 2023, our assessment included consideration of a full-year pre-tax loss and a projected three-year cumulative loss as determined by our long-range financial planning process. This process indicated a significant decrease in expected sales of our COVID-19 vaccine as we transition to a seasonal market and substantial research and development expenses for ongoing Phase 3 clinical trials and the advancement of product candidates into later-stage development. These factors were considered as negative evidence in the realizability of our deferred tax assets. Furthermore, in assessing the need for a valuation allowance, we evaluated other sources of taxable income, such as taxable income in carryback years, available tax planning strategies, and the future reversals of taxable temporary differences. After a thorough evaluation of all available evidence, we determined it was more likely than not that we would not realize the majority of our deferred tax assets, leading us to maintain a valuation allowance of $2.2 billion against our deferred tax assets as of December 31, 2023. In the event that actual results differ from our estimates, or if future changes in estimates occur, the adjustments to the valuation allowance could materially impact our financial results. Such changes 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.

Recently issued accounting pronouncements

See Note 2 - Summary of Significant Accounting Policies, to the consolidated financial statements, under the caption “Recently Issued Accounting Standards Not Yet Adopted”.

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Results of operations

A discussion regarding our results of operations for the year ended December 31, 2023 compared to 2022 is presented below. A discussion regarding our results of operations for the year ended December 31, 2022 compared to 2021 can be found under Part II -Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission (SEC) on February 24, 2023.

The following table summarizes our consolidated statements of operations for the periods presented (in millions):

Revenue:

Operating expenses:

Revenue

Total revenue decreased by $12.4 billion, or 64%, in 2023, primarily attributable to a significant reduction in net product sales of our COVID-19 vaccine. Net product sales decreased by $11.8 billion, or 64%, in 2023, mainly due to lower sales volume across all regions in 2023, reflecting the market's transition to a seasonal commercial market for COVID-19 vaccine. The decline was partially offset by a higher average selling price, particularly in the United States, where commercial market sales commenced in the third quarter of 2023. Other revenue decreased by $651 million, or 79%, in 2023, mainly due to a decrease in grant revenue under our agreement with BARDA for the development of our COVID-19 vaccine, and lower collaboration revenue following the recognition of Merck's $250 million participation payment related to our INT collaboration in 2022.

Operating expenses

Cost of sales

In the third quarter 2023, we launched a strategic initiative aimed at optimizing the cost structure of our COVID-19 business, with an emphasis on resizing our manufacturing cost structure. This initiative was triggered by the completion of our long-range planning within the third quarter of 2023, which incorporated revised forecasts of vaccination rates reflecting the market's transition from COVID-19 pandemic conditions to an endemic seasonal market. The initiative involved scaling down our capacity and commitments with our third-party CMOs, reevaluating our raw material inventory levels, and reducing our purchase commitments related to raw materials not anticipated to be consumed before expiration. As a result of this initiative, we incurred inventory write-downs of $903 million related to raw materials, and CMO wind down costs and cancellation fees of $513 million. Furthermore, as a continuation of this strategic initiative during the fourth quarter of 2023, we incurred $153 million in CMO wind down costs and $16 million in inventory write-downs. We believe that this strategic initiative will enhance the efficiency of our manufacturing operations and provide us with the flexibility to better scale according to future market needs.

Our cost of sales was $4.7 billion, or 70% of our net product sales, in 2023, including third-party royalties of $301 million, inventory write-downs of $2.2 billion, unutilized manufacturing capacity and wind down costs of $981 million, and losses on firm purchase

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commitments and cancellation fees of $205 million. Our cost of sales was $5.4 billion, or 29% of our net product sales, in 2022, including third-party royalties of $1.1 billion, inventory write-downs of $1.3 billion, unutilized manufacturing capacity and wind down costs of $677 million, and losses on firm purchase commitments and cancellation fees of $725 million. These charges, other than royalties, were largely attributable to a shift in product demand to the latest variant-targeted COVID-19 vaccine and a decline in customer demand, which ultimately led to our strategic initiative implemented in the third quarter of 2023.

Cost of sales for 2023 decreased by $723 million, or 13%, compared to 2022. The decrease in cost of sales was primarily driven by lower sales volume, partially offset by an increase in inventory write-downs. Cost of sales as a percentage of net product sales for 2023 increased by 41 percentage points to 70% from 29% in 2022. The increase in cost of sales as a percentage of net product sales was mainly due to the strategic initiative described above, and other aforementioned charges (excluding royalties) over lower net product sales, driven by a decline in product demand and increased product seasonality. In light of our recent strategic initiative implemented in the third quarter of 2023, we expect a reduction in our cost of sales as a percentage of net product sales for the full year 2024, compared to the full year 2023.

Research and development expenses

Research and development expenses increased by $1.6 billion, or 47%, in 2023. The increase was primarily attributable to increases in clinical trial expenses of $411 million, clinical manufacturing expenses of $335 million, personnel-related costs of $286 million, and consulting and outside services of $267 million. The increase in 2023 was largely attributable to the late-stage clinical development associated with our RSV vaccine, CMV vaccine and combination vaccine against seasonal influenza and COVID-19, as well as our INT program. The increase in personnel-related costs was mainly driven by an increase in the number of employees supporting our increased research and development programs and activities.

We anticipate a modest reduction in research and development expenses in 2024 compared to the current levels of 2023, as we continue to advance the development of variant-specific and next-generation COVID-19 vaccine candidates and continue to develop our pipeline and advance our product candidates into later-stage development, in particular those in ongoing Phase 3 studies, including our RSV, CMV, seasonal flu and combination vaccine programs, as well as our INT program.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $417 million, or 37%, in 2023. The increase was mainly due to increases in personnel-related costs of $188 million, consulting and outside services of $148 million, and marketing expense of $118 million, partially offset by an endowment to the Moderna Charitable Foundation of $50 million contributed in 2022 that did not recur in 2023. The increase in 2023 was primarily driven by increased headcount and spend in digital, medical affairs and commercial functions to support our digital initiatives, marketed product and Company expansion.

We anticipate that selling, general and administrative expenses in 2024 will be slightly lower than the levels experienced in 2023. This reflects our ongoing commitment to efficiency as we expand our global commercial, regulatory, sales and marketing infrastructure. Moreover, it aligns with our strategic focus on advancing our program development and enhancing our overall business processes.

Interest income

Interest income generated from our investments in marketable securities increased by $221 million in 2023, mainly attributable to an overall higher interest rate environment, partially offset by lower average investment balances.

Other expense, net

The following table summarizes other expense, net for the periods presented (in millions):

Loss on investments $ (72) $ (20) $ (52) 260 %

Other (expense) income, net (14) 4 (18) (450) %

Total other expense, net $ (124) $ (45) $ (79) 176 %

Total other expense, net increased by $79 million, or 176%, in 2023. The increase was primarily due to losses on equity investments and a net realized loss on available-for-sale debt securities as well as an increase in interest expense. Our interest expense is primarily

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related to our finance leases. The increase in interest expense was driven by new finance leases that commenced in 2023. Please refer to Note 10 to our consolidated financial statements.

Provision for income taxes

Provision for income taxes decreased by $441 million, or 36%, in 2023, primarily due to a significant decrease in pre-tax income, partially offset by an increase in valuation allowance on deferred tax assets of $2.1 billion. Our effective tax rate for the year ended December 31, 2023 was (19.6)%, which is higher than the statutory rate. It is mainly driven by an increase in valuation allowances on deferred tax assets, partially offset by tax benefits from research and development credits and stock-based compensation. As a result of the significant reduction in pre-tax income and the valuation allowance, the 2023 effective tax rate is not comparable to the prior year. Please refer to Note 13 to our consolidated financial statements.

Liquidity and capital resources

The following table summarizes our cash, cash equivalents, investments and working capital for each period presented (in millions):

December 31,

Financial assets:

Cash and cash equivalents $ 2,907 $ 3,205

Working capital:

Our cash, cash equivalents and investments are invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Our investments, consisting primarily of government and corporate debt securities, are stated at fair value. Cash, cash equivalents and investments as of December 31, 2023 decreased by $4.9 billion, or 27%, compared to December 31, 2022. For the year ended December 31, 2023, we had a net cash outflow from operations of $3.1 billion, repurchases of our common stock of $1.2 billion, and purchases of property, plant and equipment of $707 million.

Working capital, which is current assets less current liabilities, as of December 31, 2023 decreased by $1.2 billion, or 14%, compared to December 31, 2022, primarily due to a decrease in cash, cash equivalents and short-term investments of $1.3 billion, primarily to fund our operating activities and repurchases of our common stock, a decrease in inventory of $747 million, a decrease in prepaid and other current assets of $568 million, and a decrease in accounts receivable, net of $493 million. This was partially offset by a decrease in short-term deferred revenue of $1.5 billion, mainly driven by revenue recognized from deferred revenue in excess of customer deposits received.

Cash flow

The following table summarizes the primary sources and uses of cash for the periods presented (in millions):

Years Ended December 31,

Net cash (used in) provided by:

Net decrease in cash and cash equivalents $ (289) $ (3,643)

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Operating activities

We derive cash flows from operations primarily from cash collected from customer deposits and accounts receivable, net related to our COVID-19 vaccine product sales, as well as certain government-sponsored and private organizations and strategic alliances. Our cash flows from operating activities are significantly affected by our use of cash for operating expenses and working capital to support the business. Beginning in the third quarter of 2020, we entered into supply agreements with the U.S. Government and foreign governments and organizations for the supply of our COVID-19 vaccine and received upfront deposits. In the third quarter of 2023, we commenced sales of our COVID-19 vaccine to the U.S. commercial market, in addition to continuing sales to foreign governments and organizations. In the U.S., our COVID-19 vaccine is 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. As of December 31, 2023, we had $613 million in deferred revenue related to customer deposits received or billable.

Net cash used by operating activities in 2023 was $3.1 billion and consisted of net loss of $4.7 billion and non-cash adjustments of $1.7 billion, plus a net change in assets and liabilities of $139 million. Non-cash items primarily included deferred income taxes of $828 million, depreciation and amortization of $621 million, and stock-based compensation of $305 million. The net change in assets and liabilities was primarily due to a decrease in deferred revenue of $2.1 billion due to revenue recognized upon shipments of our COVID-19 vaccine, partially offset by a decrease in prepaid expenses and other assets of $1.0 billion, primarily driven by write-downs of long term inventory, decrease in income tax receivable due to receipt of tax refunds and decrease in pre-tax income, and reductions in vendor prepayments and down payments as well as a decrease in inventory of $747 million due to inventory write-downs.

Net operating cash flows decreased by $8.1 billion, or 163%, in 2023 compared to 2022, primarily attributable to a decrease in net income of $13.1 billion, a $1.3 billion change in accounts receivable due to lower product sales and timing of collection, and a $1.2 billion change in accounts payable and accrued liabilities driven by higher vendor spend and timing of payments. This was partially offset by a change in prepaid expenses and other assets of $2.7 billion primarily driven by inventory write-downs and reductions in vendor down payments, a change in deferred revenue of $2.1 billion due to less revenue recognized from deferred revenue in excess of customer deposits received, and a decrease in deferred income tax assets of $1.4 billion due to an increase in valuation allowance.

Investing activities

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

Net cash provided by investing activities in 2023 was $4.2 billion, which primarily included proceeds from maturities of marketable securities of $5.6 billion and proceeds from sales of marketable securities of $3.2 billion, partially offset by purchases of marketable securities of $3.8 billion, and purchases of property, plant and equipment of $707 million.

Net investing cash flows increased by $9.4 billion, or 181%, in 2023 compared to 2022, primarily due to a decrease in purchases of marketable securities of $7.7 billion and an increase in proceeds from maturities of marketable securities of $2.4 billion.

Financing activities

Our primary financing activities consist of repurchases of common stock, issuance of common stock related to our equity plans, and finance leases.

Net cash used in financing activities in 2023 was $1.4 billion, primarily from repurchases of common stock of $1.2 billion and changes in financing lease liabilities of $270 million, partially offset by net proceeds from the issuance of common stock in connection with the exercise of stock options and employee stock purchases under our equity plans of $46 million.

Net cash used in financing activities decreased by $2.1 billion, or 60%, in 2023 compared to 2022, mainly due to a decrease in repurchases of common stock.

Operation and funding requirements

Our principal sources of funding as of December 31, 2023 consisted of cash and cash equivalents, investments, and cash we may generate from operations. We generated net income of $8.4 billion and $12.2 billion for the years ended 2022 and 2021, respectively,

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following the authorization of our first commercial product in December 2020. We also incurred a net loss of $4.7 billion for the year ended December 31, 2023. We have retained earnings of $13.6 billion as of December 31, 2023.

We have significant future capital requirements including expected operating expenses to conduct research and development activities, operate our organization, and meet capital expenditure needs. We anticipate maintaining substantial expenses across all areas of our ongoing activities, particularly as we continue research and development of our development candidates and clinical activities for our investigational medicines. This also extends to our manufacturing costs, including our arrangements with our supply and manufacturing partners. Our ongoing work on our RSV, seasonal flu and CMV vaccine candidates, individualized neoantigen therapy, COVID-19 vaccines, including development of any new vaccines against variants of SARS-CoV-2, combination vaccines, late-stage clinical development, and buildout of global commercial, regulatory, sales and marketing infrastructure and manufacturing facilities will require significant cash outflows in future periods, most of which may not be reimbursed or otherwise paid for by our partners or collaborators. In addition, we have substantial facility, lease and purchase obligations. We have also entered into certain collaboration agreements with third parties that include the funding of certain research and development activities and potential future milestone and royalty payments by us.

We believe that our cash, cash equivalents, and investments as of December 31, 2023, together with cash expected to be generated from product sales, will be sufficient to enable us to fund our projected operations and capital expenditures through at least the next 12 months from the issuance of the financial statementsincluded in this Annual Report on Form 10-K. We are subject to all the risks related to the development and commercialization of novel medicines, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors, which may adversely affect our business. For example, we have experienced a decline in customer demand for our COVID-19 vaccine, reflecting the market's ongoing transition to a seasonal model in an endemic market in 2023. We foresee that our commitment to investing in our business for future product launches may lead to continued negative cash flows from operations in upcoming periods. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

Contractual obligations and commitments

The following table summarizes our contractual obligations as of December 31, 2023 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods (in millions):

Payments Due by Period

Total Less than 1year 1 - 3 years 3 - 5 years More than 5years

_______

(1)The amounts in the table include a total payment of $668 million associated with our MTC leases for the optional lease extension periods. For accounting purposes, a 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. Please refer to Note 10 to our consolidated financial statements.

(2)The amounts represent non-cancelable fixed payment obligations related to purchases of raw materials, contract manufacturing services, clinical services and other goods or services in the normal course of business. As of December 31, 2023, $79 million of the purchase commitments related to raw materials was recorded as an accrued liability for loss on future firm purchase commitments.

We have agreements with certain vendors for various services, including services related to clinical operations, and support and contract manufacturing, which we are not contractually able to terminate for convenience. 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. The exact amounts of such obligations are dependent on the timing of termination, and the exact terms of the relevant agreement and cannot be reasonably estimated. At December 31, 2023, we had cancelable open purchase orders of $3.0 billion in total under such agreements for our clinical operations and support and contract manufacturing. These amounts represent only our estimate of those items for which we

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had a contractual commitment to pay at December 31, 2023, 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 cancelable open purchase order amounts of $3.0 billion.

In addition to the above obligations, we enter into a variety of agreements and financial commitments in the normal course of business. The terms generally allow us the option to cancel, reschedule, and adjust our requirements based on our business needs, prior to the delivery of goods or performance of services. It is not possible to predict the maximum potential amount of future payments under these agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement.

As of December 31, 2023, we did not have any off-balance sheet arrangements that were material or reasonably likely to become material to our financial condition or results of operations.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

As of December 31, 2023 and 2022, we had cash, cash equivalents, restricted cash, and investments in marketable securities of $13.3 billion and $18.2 billion, respectively. 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), which are classified as available-for-sale securities. Our primary investment objectives are the preservation of capital and the maintenance of liquidity, and our investment policy defines allowable investments based on quality of the institutions and financial instruments designed to minimize risk exposure. Our exposure to interest rate sensitivity is affected by changes in the general level of U.S. interest rates.

Our marketable securities are subject to interest rate risk and will fall in value if market interest rates increase. Due to the short-term maturities and low risk profiles of our investments, we do not anticipate a significant exposure to interest rate risk. If market interest rates were to increase immediately and uniformly by one percentage point from levels at December 31, 2023, the net fair value of our marketable securities would decrease by approximately $83 million.

Foreign Currency Risk

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. For the year ended December 31, 2023, our revenue generating activities and operations continued to be primarily denominated in U.S. dollars. However, we maintained a significant exposure to foreign currency risk, particularly in the Euro, Japanese Yen and Swiss Franc markets, Our significant foreign currency revenue exposure was the equivalent of $1.4 billion in Japanese Yen and $518 million in Euros for 2023. As we pursue our international expansion strategy, our results of operations and cash flows remain subject to fluctuations in foreign currency exchange rates. To manage the exposure to foreign currency exchange rate fluctuations, we have implemented cash flow hedging and balance sheet hedging programs.

Cash Flow Hedging Activities

We mitigate the foreign exchange risk arising from the fluctuations in foreign currency denominated product sales in Euro and Japanese Yen 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 prepaid expenses and other current assets or other current liabilities, respectively, in our consolidated balance sheets. The gains or losses resulting from changes in the fair value of these hedges are initially recorded as a component of accumulated other comprehensive (loss) income (AOCI) in stockholders’ equity and subsequently reclassified to product sales in the period during which the hedged transaction affects earnings. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, within the defined hedge period, we reclassify the gains or losses on the related cash flow hedge from AOCI to other expense, net, in our consolidated statements of operations. We evaluate hedge effectiveness at the inception of the hedge prospectively, and on an on-going basis both retrospectively and prospectively. If we do not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded as a component of other expense, net, in our consolidated statements of operations. We had no outstanding foreign currency forward contracts or foreign currency options as of December 31, 2023. Foreign currency hedging activities were immaterial during 2023.

Balance Sheet Hedging Activities

We enter into foreign currency forward contracts to hedge fluctuations associated with foreign currency denominated monetary assets and liabilities, primarily cash, accounts receivable, accounts payable and lease liabilities in Euro, Swiss Franc and Japanese Yen, 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 prepaid expenses and other current assets or other current liabilities in our consolidated balance sheets, and gains and losses resulting from changes in the fair value are recorded as a component of other expense, net, in our consolidated statements of operations. The gains and losses on these foreign currency forward contracts generally offset the gains and losses in the underlying foreign currency denominated assets and liabilities, which are also recorded to other expense, net, in our consolidated statements of operations. As of December 31, 2023, our outstanding balance sheet hedging derivatives, carried at fair value, had maturities of less than three months.

We enter into these foreign exchange contracts to hedge our forecasted revenue and monetary assets and liabilities denominated in foreign currency in the normal course of business and accordingly, they are not speculative in nature. We believe the counterparties to

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our foreign currency forward contracts are creditworthy multinational commercial banks. While we believe the risk of counterparty nonperformance is not material, a sustained decline in the financial stability of financial institutions as a result of disruption in the financial markets could affect our ability to secure creditworthy counterparties for our foreign currency hedging programs.

Notwithstanding our efforts to mitigate some foreign currency exchange risks, there can be no assurance that our hedging activities will adequately protect us against the risks associated with foreign currency fluctuations. As of December 31, 2023, a hypothetical adverse movement of 10 percent in foreign currency exchange rates compared to the U.S. dollars across all maturities would have resulted in potential declines in the fair value on our foreign currency forward contracts used in balance sheet hedging of approximately $23 million. We expect that any increase or decrease in the fair value of the portfolio would be substantially offset by increases or decreases in the underlying exposures being hedged.

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Item 8. Financial Statements and Supplementary Data

MODERNA, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm 102

Notes to Consolidated Financial Statements 110

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Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Moderna, Inc. (the Company) as of December 31, 2023 and 2022, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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, 2023, 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 23, 2024, 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 Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Reserves for returns on product revenue

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Raw Material Inventory Write-downs

/s/ Ernst & Young LLP

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

Boston, Massachusetts

February 23, 2024

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MODERNA, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)

December 31,

Assets

Current assets:

Cash and cash equivalents $ 2,907 $ 3,205

Prepaid expenses and other current assets 627 1,195

Property, plant and equipment, net 1,945 2,018

Right-of-use assets, operating leases 713 121

Deferred tax assets 81 982

Other non-current assets 685 988

Liabilities and Stockholders’ Equity

Current liabilities:

Income taxes payable 63 48

Other current liabilities 66 249

Deferred revenue, non-current 83 673

Operating lease liabilities, non-current 643 92

Financing lease liabilities, non-current 575 912

Other non-current liabilities 256 135

Commitments and contingencies (Note 11)

Stockholders’ equity:

Additional paid-in capital 371 1,173

Accumulated other comprehensive loss (123) (370)

Total liabilities and stockholders’ equity $ 18,426 $ 25,858

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

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MODERNA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

Years Ended December 31,

Revenue:

Operating expenses:

(Loss) earnings per share:

Weighted average common shares used in calculation of (loss) earnings per share:

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

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MODERNA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

Years Ended December 31,

Other comprehensive income (loss), net of tax:

Available-for-sale securities:

Unrealized gains (losses) on available-for-sale debt securities 210 (348) (42)

Net increase (decrease) from available-for-sale debt securities 248 (322) (43)

Cash flow hedges:

Unrealized gains on derivative instruments — 130 74

Pension and postretirement benefit plans:

Pension and postretirement obligation adjustments (9) — —

Total other comprehensive income (loss) 247 (346) (27)

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

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MODERNA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In millions)

Shares Amount

Exercise of options to purchase common stock 7 — 112 — — 112

Issuance of common stock under employee stock purchase plan — — 12 — — 12

Stock-based compensation — — 142 — — 142

Other comprehensive loss, net of tax — — — (27) — (27)

Repurchase of common stock (3) — (857) — — (857)

Shares Amount

Vesting of restricted common stock 1 — — — — —

Exercise of options to purchase common stock 4 — 50 — — 50

Issuance of common stock under employee stock purchase plan — — 15 — — 15

Stock-based compensation — — 226 — — 226

Other comprehensive loss, net of tax — — — (346) — (346)

Repurchase of common stock (23) — (3,329) — — (3,329)

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Shares Amount

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)

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

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MODERNA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Years Ended December 31,

Operating activities

Amortization/accretion of investments (61) 31 54

Loss on equity investments, net 35 — —

Other non-cash items 7 28 —

Changes in assets and liabilities, net of acquisition of business:

Prepaid expenses and other assets 974 (1,699) (489)

Right-of-use assets, operating leases (605) 21 (58)

Operating lease liabilities 551 (14) 17

Net cash (used in) provided by operating activities (3,118) 4,981 13,620

Investing activities

Proceeds from maturities of marketable securities 5,575 3,151 1,338

Proceeds from sales of marketable securities 3,206 3,548 3,105

Purchases of property, plant and equipment (707) (400) (284)

Acquisition of business, net of cash acquired (85) — —

Investment in convertible notes and equity securities (23) (40) (30)

Net cash provided by (used in) investing activities 4,206 (5,176) (8,523)

Financing activities

Proceeds from issuance of common stock through equity plans 46 65 124

Repurchase of common stock, including excise tax (1,153) (3,329) (857)

Changes in financing lease liabilities (270) (184) (140)

Net cash used in financing activities (1,377) (3,448) (873)

Cash, cash equivalents and restricted cash, beginning of year 3,217 6,860 2,636

Cash, cash equivalents and restricted cash, end of year $ 2,928 $ 3,217 $ 6,860

Supplemental cash flow information

Cash (received) paid for income taxes $ (357) $ 2,729 $ 480

Cash paid for interest $ 39 $ 25 $ 14

Non-cash investing and financing activities

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

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MODERNA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of 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 therapeutics and vaccines for infectious diseases, immuno-oncology, rare diseases and autoimmune diseases, independently and with our strategic collaborators.

Our COVID-19 vaccine is our first commercial product and is marketed, where approved, under the name Spikevax®. Our original vaccine, mRNA-1273, targeted the SARS-CoV-2 ancestral strain, and we have leveraged our mRNA platform to rapidly adapt our vaccine to emerging SARS-CoV-2 strains to provide protection as the virus evolves and regulatory guidance is updated.

We have a diverse and extensive development pipeline of 42 development candidates across our 45 development programs, of which 40 are in clinical studies currently.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative accounting principles generally accepted in the United States as found in the Accounting Standard Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB).

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

Other revenue in the consolidated statements of operations comprises grant revenue and collaboration revenue that were previously presented as separate line items in our consolidated statements of operations in our 2022 Form 10-K. The associated prior period amounts in the consolidated financial statements, as well as in the notes thereto, have been reclassified to conform to the current presentation.

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

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

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Revenue Recognition

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

Prior to the third quarter of 2023, we sold our COVID-19 vaccine to the U.S. Government, foreign governments and organizations. The agreements and related amendments with these entities generally do not include variable consideration, such as discounts, rebates or returns. Certain of these agreements entitle us to upfront deposits for our COVID-19 vaccine supply, initially recorded as deferred revenue. In the third quarter of 2023, we commenced sales of our latest COVID-19 vaccine to the U.S. commercial market, in addition to continuing sales to international governments and organizations. In the U.S., our COVID-19 vaccine is 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.

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, and other related deductions. These provisions are recorded based on contractual terms and our estimate of returns for product sold during the period, 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 COVID-19 vaccine are determined considering available return rates for similar products, estimated levels of inventory in the distribution channel, and projected market demand. 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.

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.

Determining the amount of variable consideration to recognize necessitates substantial judgment, especially when assessing factors outside our direct control such as lack of pertinent historical data and limited third-party information. Among all variables, estimating returns presents the most significant judgment due to the broad range of potential outcomes and the current lack of return history with our customers. As we receive more historical data on our product returns, we will integrate this information to refine our estimates and enhance the precision of our financial projections. The actual results could differ from our estimates, and such differences could have a material impact to our financial statements.

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Other Revenue

Other revenue consists primarily of grant revenue and collaboration 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.

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.

Restricted Cash

Restricted cash is composed of amounts held on deposit related to our lease arrangements and funds held in an escrow account related to a business acquisition in 2023. The funds are maintained in money market accounts and are recorded at fair value. Restricted cash is classified as either current or non-current based on the terms of the underlying arrangement and is included in either prepaid expenses and other current assets or other non-current assets in our consolidated balance sheets.

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,

Restricted cash(1) 17 — —

Restricted cash, non-current(2) 4 12 12

_______

(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 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

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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 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 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 (please refer to 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. There was no allowance for doubtful accounts at December 31, 2023 or 2022. Additionally, bad debt expenses were immaterial for the years ended December 31, 2023, 2022 and 2021.

Concentrations of Credit Risk

Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, 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. Bank accounts in the United States are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Our primary operating accounts significantly exceed the FDIC limits.

We are also subject to credit risk from our accounts receivable, net related to our net product sales and strategic alliances. 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, grants made by government-sponsored and private organizations, and collaboration revenue from our strategic alliances.

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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:

FFF Enterprises * * * 39 % *

European Commission * 28 % 32 % * 29 %

U.S. Government (excluding BARDA) * 23 % 29 % * *

Takeda Pharmaceutical Company * 10 % * * *

Ministry of Health, Labor, and Welfare of Japan 21 % * * * 30 %

UK Health Security Agency * * * 35 % 11 %

________

* - 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. We do not have any non-financial assets or liabilities that should be recognized or disclosed at fair value on a recurring basis at December 31, 2023 and 2022.

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Inventory

Inventory is recorded at the lower of cost or net realizable value, with cost determined using first-in, first-out and average cost methods for different components of inventory. We periodically review the composition of inventory in order to identify excess, obsolete, slow-moving or otherwise unsaleable items. If unsaleable items are observed and there are no alternate uses for the inventory, we will record a write-down to net realizable value in the period that the decline in value is first recognized through a charge to cost of sales. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required. We also assess whether we have any excess firm, non-cancelable, purchase commitment liabilities, resulting from our supply agreements with third-party vendors, on a quarterly basis. 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, 2023, 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 land improvements Not depreciated

Manufacturing and laboratory equipment 5 years

Computer equipment and software 3 to 5 years

Furniture and fixtures 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, including leasehold improvements, 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.

Acquisitions

We account for acquisitions either as business combinations or asset acquisitions, based on whether the set of assets acquired meets the definition of a business. When an acquisition is determined to be a business combination, we apply the acquisition method of accounting. This method requires that the assets acquired and liabilities assumed be recorded at their fair values as of the acquisition date on our consolidated balance sheets. Any excess of the consideration transferred over the fair value of the net identifiable assets acquired is recognized as goodwill. The process of determining the fair value of assets and liabilities involves significant estimates and assumptions. During the measurement period, which may extend up to one year from the acquisition date, we may record adjustments to these fair values. Any such adjustments are recorded with a corresponding change to goodwill. Transaction costs incurred in connection with business combinations are expensed as incurred.

On January 31, 2023, we completed a business combination by acquiring all outstanding shares of OriCiro Genomics K.K. for a cash consideration of $86 million. As a result of this acquisition, we recognized $52 million in goodwill and an intangible asset related to acquired technology valued at $48 million, which are included within other non-current assets in our consolidated balance sheets. This acquisition provided us with tools for cell-free synthesis and amplification of plasmid DNA, a key building block in mRNA

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manufacturing. OriCiro’s technology strategically complements our manufacturing process and further accelerates our research and development efforts.

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.

The fair value of acquired intangible assets is determined by applying the income-based approach, which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. To estimate the expected cash flows attributable to an intangible asset, it requires the use of Level 3 fair value measurements and inputs. Finite-lived intangible assets are 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, 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, 2023, 2022 and 2021 were immaterial.

Leases

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

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

We do not separate non-lease components from lease components for all classes of underlying assets. We do not recognize right-of-use assets and lease liabilities for leases with a lease term of 12 months or less. Instead, these lease payments are recognized in 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 collaboration partner are within the scope of other accounting literature. If we conclude that some or all aspects of the arrangement represent a transaction with a customer, we account for those aspects of the arrangement within the scope of ASC 606 (Revenue from Contracts with Customers). Please refer to 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 collaboration partner, to the extent the underlying capital costs qualify for capitalization, any reimbursements received will offset the capitalized cost of the asset.

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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 $204 million in 2023, $121 million in 2022, and immaterial in 2021.

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. We estimate the expected term of our stock options granted to employees and non-employees using the simplified method, whereby, the expected term equals the average of the vesting term and the original contractual term of the option. We utilize this method as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term, and because significant changes in our business over the past few years have rendered historical experience less relevant. The expected volatility is based on a blended average of average historical stock volatilities of selected guideline companies over the expected term of the stock options, historical volatility of our stock price, and implied stock price volatility derived from the price of exchange traded options on our stock. Given the transformative changes in our business, we believe that a blended volatility rate is more indicative of future volatility than our historical volatility alone. We will continue to apply this process until a sufficient amount of historical information regarding the expected term and historical volatility of our own stock price becomes available, and until we believe that historical experience is relevant to our expectations for current grants. 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

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to these tax reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of any reserves for uncertain tax positions, as well as the related net interest and penalties.

Earnings (Loss) per Share

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

Comprehensive Income (Loss)

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

The components of accumulated other comprehensive loss for the years ended December 31, 2023 and 2022 were as follows (in millions):

Other comprehensive loss (322) (24) — (346)

Other comprehensive income (loss) 248 8 (9) 247

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 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. 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 November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU broadens the disclosure requirements by requiring disclosures of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss. The standard also requires entities to disclose, on an interim and annual basis, the amount and description, including the nature and type, of the other segment items. Additionally, entities are required to disclose the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. These enhanced disclosure obligations apply to entities that operate with one reportable segment as well. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. Early adoption is permitted. We are currently assessing the impact that this new accounting standard will have 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

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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. Early adoption is permitted. This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted.

3. Net Product Sales

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

Years Ended December 31,

As of December 31, 2023, 2022 and 2021, our COVID-19 vaccine was our only commercial product authorized for use.

Prior to the third quarter of 2023, we sold our COVID-19 vaccine to the U.S. Government, foreign governments and organizations. The agreements and related amendments with these entities generally do not include variable consideration, such as discounts, rebates or returns. Certain of these agreements entitle us to upfront deposits for our COVID-19 vaccine supply, initially recorded as deferred revenue.

As of December 31, 2023 and 2022, we had deferred revenue of $613 million and $2.6 billion, respectively, related to customer deposits. We expect $554 million of our deferred revenue related to customer deposits as of December 31, 2023 to be realized in less than one year. Timing of product delivery and manufacturing, and receipt of marketing approval for the applicable COVID-19 vaccine will determine the period in which net product sales are recognized.

In the third quarter of 2023, we commenced sales of our latest COVID-19 vaccine to the U.S. commercial market, in addition to continuing sales to foreign governments and organizations. In the U.S., our COVID-19 vaccine is 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 other related deductions.

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

Years Ended December 31,

Product sales provision:

Wholesaler chargebacks, discounts and fees (976) — —

Returns and other fees (556) — —

Total product sales provision $ (1,532) $ — $ —

The following table summarizes the activities related to product sales provision recorded as accrued liabilities for the year ended December 31, 2023 (in millions):

Returns and other fees

Balance at December 31, 2022 $ —

Provision related to sales made in current period (556)

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4. Other Revenue

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

Years Ended December 31,

Grant Revenue

In April 2020, we entered into an agreement with Biomedical Advanced Research and Development Authority (BARDA), a division of the Office of the Assistant Secretary for Preparedness and Response (ASPR) within the U.S. Department of Health and Human Services (HHS), for an award of up to $483 million to accelerate development of mRNA-1273, our original vaccine candidate against COVID-19. The agreement has been subsequently amended to provide for additional commitments to support various late-stage clinical development efforts of mRNA-1273, 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. As of December 31, 2023, the remaining available funding, net of revenue earned was $97 million.

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

Years Ended December 31,

Other grant revenue 6 16 22

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, 2023, 2022 and 2021, we had collaboration agreements with Merck & Co., Inc (Merck), Vertex Pharmaceuticals Incorporated and Vertex Pharmaceuticals (Europe) Limited (together, Vertex), AstraZeneca plc (AstraZeneca) and others. Please refer to 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: 2023 2022 2021

AstraZeneca — 80 7

Total collaboration revenue $ 83 $ 440 $ 61

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5. Collaboration Agreements

Merck – Personalized mRNA Cancer Vaccines (Individualized Neoantigen Therapy)

In June 2016, we entered into a Collaboration and License Agreement for the development and commercialization of personalized mRNA cancer vaccines (also known as individualized neoantigen therapy (INT)) with Merck, to develop and commercialize INTs for individual patients using our mRNA and formulation technology. This agreement was subsequently amended and restated in 2018 (INT Agreement). Our role in this strategic alliance involves identifying genetic mutations in a particular patient’s tumor cells, synthesizing mRNA for these mutations, encapsulating the mRNA in one of our proprietary lipid nanoparticles (LNPs), and administering a unique mRNA INT to each patient. Each INT is designed to specifically activate the patient’s immune system against her or his own cancer cells.

Pursuant to the INT Agreement, we received an upfront payment of $200 million from Merck and we were responsible for designing and researching INTs, providing manufacturing capacity and manufacturing INTs and conducting Phase 1 and Phase 2 clinical trials for INTs, 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 INT, including mRNA-4157, pursuant to the terms of the agreement and in October 2022 paid us an option exercise fee of $250 million. Pursuant to the agreement, we and Merck have agreed to collaborate on further development and commercialization of INT, with costs and any profits or losses to be shared equally on a worldwide basis. We concluded that the collaboration arrangement under the Merck Participation Term is within the scope of ASC 808. For the years ended December 31, 2023 and 2022, we recognized expense of $184 million and $6 million, net of Merck's reimbursements, related to the INT collaboration under the Merck Participation Term. Additionally, the net cost recovery for capital expenditures during the same periods were $102 million and $3 million, respectively, which were applied to reduce the capitalized cost of the asset.

Vertex – Strategic Alliance in Cystic Fibrosis

2016 Strategic Alliance in Cystic Fibrosis

In July 2016, we entered into a Strategic Collaboration and License Agreement (Vertex Agreement), with Vertex Pharmaceuticals Incorporated, and Vertex Pharmaceuticals (Europe) Limited, together, Vertex. The Vertex Agreement, which was amended in July 2019 (2019 Vertex Amendment), is aimed at the discovery and development of potential mRNA medicines for the treatment of cystic fibrosis (CF) by enabling cells in the lungs of people with CF to produce functional cystic fibrosis transmembrane conductance regulator (CFTR) proteins. Pursuant to the Vertex Agreement, we lead discovery efforts during an initial research period, 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.

2020 Strategic Alliance in Cystic Fibrosis

In September 2020, we entered into a Strategic Collaboration and License Agreement with Vertex (Vertex 2020 Agreement). The Vertex 2020 Agreement was aimed at the discovery and development of potential medicines to treat CF by delivering gene-editing therapies to lung cells to facilitate production of functional CFTR proteins. The three-year research period of the Vertex 2020 Agreement was initially focus on the identification and optimization of novel LNPs and mRNAs that can deliver gene-editing therapies to cells in the lungs. Following the initial three-year period, Vertex was responsible for conducting development and commercialization activities for candidates and products that arise from the strategic alliance, including the costs associated with such activities. Vertex was also obligated to pay us for research services in connection with our performance of certain activities in accordance with a jointly agreed research plan. This collaboration was concluded and terminated in the fourth quarter of 2023 in accordance with the terms of the Vertex 2020 Agreement.

AstraZeneca – Strategic Alliances in Cardiovascular and Oncology

We entered into collaboration agreements with AstraZeneca in 2013 and 2016, aimed at developing mRNA medicines for treatments in cardiovascular, cardiometabolic diseases, and cancer. These agreements provided AstraZeneca with exclusive development and commercialization rights for specific programs, including the VEGF-A product AZD8601 and an immuno-oncology program for IL-12, with upfront payments to us totaling $240 million.

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In the third quarter of 2022, AstraZeneca terminated our collaborations with them, including the development of VEGF-A and IL-12 programs, for which termination became effective on November 21, 2022. All rights to these two programs reverted to us. As a result of the termination, we recognized the remaining deferred revenue of $76 million as collaboration revenue in the period.

Immatics – Strategic Multi-Platform Collaboration to Develop Oncology Therapeutics

In September 2023, we entered into a strategic research and development collaboration agreement with Immatics, a clinical-stage biopharmaceutical company active in the discovery and development of T cell-redirecting cancer immunotherapies. We will lead the clinical development and commercialization of cancer vaccines and TCER® therapeutics resulting from the collaboration. Immatics will be responsible for conducting the preclinical studies and a potential Phase 1 clinical trial investigating IMA203 TCR-T in combination with the PRAME mRNA vaccine to further enhance IMA203 T cell responses. Each party will retain full ownership of its investigational PRAME compound, and the parties will fund the clinical study on a cost sharing basis.

Upon effectiveness of the agreement in October 2023, we made an upfront payment of $120 million to Immatics. The payment was recognized as research and development expense in the same period. Immatics will also receive research funding and is eligible to receive development, regulatory, and commercial milestone payments. Immatics is also eligible to receive tiered royalties on global net sales of TCER® products and certain vaccine products that are commercialized under the agreement. Under the agreement, 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.

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6. Financial Instruments and Fair Value Measurements

Cash and Cash Equivalents and Investments

The following tables summarize our cash and available-for-sale securities by significant investment category at December 31, 2023 and 2022 (in millions):

Cash and cash equivalents $ 2,907 $ — $ — $ 2,907 $ 2,907 $ — $ —

Available-for-sale:

Certificates of deposit 27 — — 27 — 27 —

Cash and cash equivalents $ 3,205 $ — $ — $ 3,205 $ 3,205 $ — $ —

Available-for-sale:

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The amortized cost and estimated fair value of available-for-sale securities, by contractual maturity at December 31, 2023 and 2022 were as follows (in millions):

AmortizedCost EstimatedFair Value

Due after one year through five years 4,768 4,677

AmortizedCost EstimatedFair Value

Due after one year through five years 8,687 8,318

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, 2023, 2022, and 2021. We did not recognize any credit-related allowance to available-for-sale securities as of December 31, 2023 and 2022.

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, 2023 and 2022 (in millions):

Less than 12 Months 12 Months or More Total

U.S. treasury bills $ — $ 25 $ — $ — $ — $ 25

Government debt securities — 8 (4) 143 (4) 151

U.S. treasury securities $ — $ 128 $ — $ — $ — $ 128

At December 31, 2023 and 2022, we held 392 and 582 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.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize our financial assets measured at fair value on a recurring basis as of December 31, 2023 and 2022 (in millions):

Fair value at December 31, 2023 Fair Value Measurement Using

Level 1 Level 2

Assets:

Certificates of deposit 27 — 27

Government debt securities 208 — 208

Equity investments(1) 24 24 —

Derivative instruments 4 — 4

Liabilities:

Derivative instruments $ 9 $ — $ 9

Fair value at December 31, 2022 Fair Value Measurement Using

Level 1 Level 2

Assets:

Certificates of deposit 188 — 188

Government debt securities 139 — 139

Derivative instruments 6 — 6

Liabilities:

Derivative instruments $ 32 $ — $ 32

_______

(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, 2023 and 2022, we did not have non-financial assets or liabilities measured at fair value on a recurring basis.

For the year ended December 31, 2023, we recognized net losses of $35 million on equity investments from changes in fair value of the securities. We did not have equity investments in publicly traded securities with readily determinable fair values during 2022 and 2021.

In addition, as of December 31, 2023 and 2022, we had $42 million, at each balance sheet date, in equity investments without readily determinable fair values, which are recorded within other non-current assets in our consolidated balance sheets and excluded from the fair value measurement tables above.

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7. Inventory

Inventory, as of December 31, 2023 and 2022 consisted of the following (in millions):

December 31,

Inventory, non-current(1) $ 170 $ 910

_______

(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, 2023 and 2022, inventory write-downs were $2.2 billion and $1.3 billion, respectively. Inventory write-downs were immaterial for the year ended December 31, 2021. For the years ended December 31, 2023 and 2022, losses on firm purchase commitments were $141 million and $617 million, respectively. There were no such charges in 2021. Inventory write-downs were mainly related to obsolete inventory due to shelf-life expiration and inventory in excess of expected demand. 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 2023 were primarily driven by a continued shift in product demand to the latest variant-targeted COVID-19 vaccine and a decline in customer demand as the COVID-19 vaccine market continues to transition to an endemic seasonal market in 2023.

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-19 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, 2023 and December 31, 2022, the accrued liability for losses on firm future purchase commitments in our consolidated balance sheets was $79 million and $268 million, respectively. As of December 31, 2023 and December 31, 2022, we had inventory on hand of $372 million and $1.9 billion, respectively. Our raw materials and work-in-progress inventory had variable shelf lives. We expect that the majority of this inventory will be consumed over the next three years. The shelf life of our COVID-19 vaccine product ranges from nine to twelve months.

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8. Property, Plant and Equipment, Net

Property, plant and equipment, net as of December 31, 2023 and 2022 consisted of the following (in millions):

December 31,

Land and land improvements $ 22 $ 11

Manufacturing and laboratory equipment 345 284