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 medicines across infectious disease vaccines, oncology therapeutics and rare disease therapeutics.
Since our founding in 2010, we have transformed from a research-stage company advancing programs in the field of mRNA to a commercial enterprise with a diverse clinical portfolio of vaccines and therapeutics across several modalities, a broad intellectual property portfolio and integrated manufacturing capabilities that allow for rapid clinical and commercial production at scale. We currently have three commercial products—Spikevax® and mNEXSPIKE®, our COVID vaccines, and mRESVIA®, our vaccine against respiratory syncytial virus (RSV). We also have a diverse development pipeline of 25 development candidates across our 35 development programs currently in clinical studies.
2025 Business Highlights
U.S. Manufacturing Capabilities Expansion
In November 2025, we announced the expansion of our U.S. manufacturing capabilities through the onshoring of drug product manufacturing to our existing Moderna Technology Center in Norwood, Massachusetts. Upon completion, this expansion will enable end-to-end mRNA manufacturing in the United States, supporting both commercial and clinical supply needs. This expansion is part of our continued investment in U.S.-based manufacturing infrastructure to support our mRNA vaccine and therapeutic pipeline. Construction for the new drug product manufacturing capability has commenced, with completion targeted in the first half of 2027.
$1.5 Billion Five-Year Credit Facility
In November 2025, we entered into a five-year term loan facility providing for up to $1.5 billion of capital to enhance our balance sheet and provide increased financial flexibility. The facility includes a $600 million initial term loan funded at closing, a $400 million delayed draw term loan facility available through November 2027, and an additional $500 million delayed draw term loan facility available through November 2028, subject to the achievement of specified regulatory milestones.
Total Revenue and Loss Per Share
For the year ended December 31, 2025, we recognized total revenue of $1.9 billion compared to $3.2 billion and $6.8 billion for the years ended December 31, 2024 and 2023, respectively. Loss per share was $(7.26) for the year ended December 31, 2025, compared to loss per share of $(9.28) and $(12.33) for the years ended December 31, 2024 and 2023, respectively.
Program Developments
Infectious Disease Vaccines
•COVID vaccines: We have received approval in 40 countries for our 2025-2026 formula for Spikevax. We have also received U.S. Food and Drug Administration (FDA) approval of our 2025-2026 formula for mNEXSPIKE, our second COVID vaccine, in all adults aged 65 and older, as well as individuals aged 12 to 64 years with at least one underlying risk factor. mNEXSPIKE is also approved in Europe, Canada and Australia and we have filed and are targeting 2026 approvals in Japan and Taiwan.
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•mRESVIA: Our RSV vaccine has been approved for adults aged 60 years and older in 40 countries. It is also approved in 31 of those countries for individuals 18 to 59 years of age who are at increased risk for disease.
•Seasonal flu vaccine: Our mRNA-1010 regulatory filings are under review in the United States, Europe, Canada and Australia. In February 2026, in response to a prior Refusal-to-File letter, we engaged with the FDA in a Type A meeting and submitted an amended biologics license application (BLA) outlining a revised regulatory pathway based on age, seeking full approval for adults 50 to 64 years of age and accelerated approval for adults 65 and older, along with a post-marketing requirement to conduct an additional study in older adults. Following the meeting and submission of the amended application, the FDA accepted our BLA for review and assigned a Prescription Drug User Fee Act (PDUFA) goal date of August 5, 2026.
•Seasonal flu + COVID vaccine: Our mRNA-1083 regulatory filing is under review in Europe and Canada. We are awaiting further guidance from the FDA on refiling.
•Norovirus vaccine: We recently completed enrollment of a second Northern Hemisphere season (2025-2026) cohort in our ongoing Phase 3 study for our norovirus vaccine candidate (mRNA-1403).
Oncology Therapeutics
•Intismeran autogene: We are advancing intismeran (mRNA-4157), our mRNA-based individualized neoantigen therapy, in collaboration with Merck, with eight total Phase 2 and Phase 3 clinical trials underway across multiple tumor types including melanoma, non-small cell lung cancer (NSCLC), bladder cancer and renal cell carcinoma. In January 2026, we and Merck announced five-year data from the Phase 2b study of intismeran in combination with KEYTRUDA, which demonstrated sustained improvement in recurrence-free survival in patients with high-risk melanoma (stage III/IV) following complete resection.
•mRNA-4359: Our Phase 1/2 study of mRNA-4359, an investigational wholly-owned cancer antigen therapy, is ongoing. The Phase 2 portion of the study includes cohorts in first-line metastatic melanoma, second-line+ metastatic melanoma and first-line metastatic NSCLC, and we expect a potential Phase 2 data readout in 2026.
Rare Disease Therapeutics
•Propionic acidemia (PA) therapeutic: mRNA-3927 is in a registrational study and target enrollment has been reached. In January 2026, we entered into a strategic collaboration with Recordati, an international pharmaceutical group, to advance mRNA-3927 through the final stages of clinical development and, if approved, global commercialization.
•Methylmalonic acidemia (MMA) therapeutic: mRNA-3705 has been selected by the FDA for the Support for Clinical Trials Advancing Rare Disease Therapeutics (START) pilot program, with a registrational study expected to begin in 2026.
Other Business Updates
During the third quarter of 2025, our mRNA manufacturing facilities in Australia and the United Kingdom were licensed and became operational. These facilities were established under long-term strategic agreements with the respective governments to support domestic mRNA manufacturing and pandemic preparedness. The facilities will enable local supply of our mRNA vaccines and provide rapid response capabilities in the event of future public health emergencies.
In September 2025, we delivered the first mRNA vaccines fully manufactured in Canada from our facility in Laval, Quebec, marking a significant milestone in our collaboration with the Government of Canada. The site, which received its Drug Establishment License from Health Canada in 2024, now produces the drug substance for our updated Spikevax targeting the LP.8.1 variant. Fill-and-finish of the vaccine, including the new single-use pre-filled syringes, is completed by Novocol Pharma in Cambridge, Ontario. This milestone demonstrates the execution of our end-to-end manufacturing strategy and our ability to provide timely access to locally manufactured mRNA vaccines through collaboration with government and industry.
In December 2025, we entered into an agreement with the Coalition for Epidemic Preparedness Innovations (CEPI) under which CEPI will provide up to $54 million in funding to support a pivotal Phase 3 clinical trial for our investigational mRNA-based H5 pandemic influenza vaccine candidate, mRNA-1018, which is expected to begin in early 2026. If licensure is granted and in the event of an influenza pandemic, Moderna is committed to working to provide people around the world with rapid, equitable access to the resulting H5 vaccine, including, as part of this agreement, allocating 20% of its H5 pandemic vaccine manufacturing capacity for timely supply to low- and middle-income countries at affordable pricing.
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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,
Net product sales by product were as follows (in millions):
Years Ended December 31,
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(1)Includes sales of Spikevax and mNEXSPIKE.
As of December 31, 2025, we have three commercial products, our COVID vaccines, Spikevax and mNEXSPIKE, and our RSV vaccine, mRESVIA. mRESVIA was approved by the FDA in May 2024 for adults aged 60 years and older, and in June 2025, the approved use was expanded to include adults aged 18 through 59 years who are at increased risk for lower respiratory tract disease (LRTD) caused by RSV. We launched commercial sales of mRESVIA in the third quarter of 2024. In May 2025, mNEXSPIKE was approved for use in adults aged 65 years and older, as well as individuals aged 12 through 64 years with at least one underlying risk factor. We launched commercial sales of mNEXSPIKE in the third quarter of 2025.
We sell our COVID and RSV vaccines to the commercial market as well as to foreign governments and international organizations. In the U.S., our COVID and RSV vaccines are sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers. Net product sales are recognized net of estimated wholesaler chargebacks, invoice discounts for prompt payments and pre-orders, provisions for sales returns and government rebates, and other related deductions.
The following table summarizes product sales provision for the periods presented (in millions):
Years Ended December 31,
Product sales provision:
Wholesaler chargebacks, discounts and fees (1,037) (1,141) (976)
Returns, rebates and other fees (449) (267) (556)
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(1)Includes an adjustment of approximately $216 million in 2024, reflecting a reduction in prior year provision estimates, primarily related to returns and chargebacks for the previous COVID vaccine season. Adjustments recorded in 2025 related to prior year provision estimates were not material.
Certain agreements may include upfront payments for our vaccine supply, initially recorded as deferred revenue. As of December 31, 2025, we had deferred revenue of $107 million related to product sales, of which $42 million is expected to be realized in less than one year.
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Other revenue
Other revenue comprises grant revenue, collaboration revenue, licensing and royalty revenue and stand-ready manufacturing revenue. Grant and collaboration revenues have 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 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. Licensing and royalty revenue is related to our out-licensing agreement for mRNA COVID related intellectual property in Japan, executed in 2024. Stand-ready manufacturing revenue relates to long-term strategic agreements with certain government entities to maintain manufacturing readiness, while the remaining consideration under these agreements is related to product sales.
The following table summarizes other revenue for the periods presented (in millions):
Years Ended December 31,
Licensing and royalty revenue 11 42 —
Stand-ready manufacturing revenue 80 $ — $ —
Cost of sales
Cost of sales includes raw materials, personnel, facility and other indirect overhead 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, 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.
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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 therapeutic area-specific basis.
The following table reflects our research and development expenses, including direct program specific expenses summarized by therapeutic area and indirect or shared operating costs summarized under other research and development expenses during the years ended December 31, 2025, 2024, and 2023 (in millions):
Years Ended December 31,
Program-specific expenses by therapeutic area:
Rare disease therapeutics 43 82 67
Total program-specific expenses by therapeutic area(1) $ 896 $ 1,533 $ 2,032
Other research and development expenses:
Discovery and platform research $ 356 $ 520 $ 751
Technical development and manufacturing expenses 792 1,081 1,116
Shared discovery and development expenses 797 1,145 789
Total research and development expenses $ 3,132 $ 4,543 $ 4,845
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(1)Includes a total of 25 development candidates at December 31, 2025, 34 development candidates at December 31, 2024, and 42 development candidates at December 31, 2023. Program-specific expenses are reflected as of the beginning of the period in which the program was internally advanced to development.
The program-specific expenses by therapeutic area summarized in the table above include external development costs, such as fees paid to outside consultants, central laboratories, investigative sites, and CROs in connection with our preclinical studies and clinical trials. 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 therapeutic area.
Discovery and platform research expenses include costs associated with early-stage research activities for preclinical programs and the development of technical advances in mRNA science, delivery science, and manufacturing process design. These costs include external CRO and lab services, personnel-related costs, technology and digital, facilities, and other directly attributable research support costs.
Technology development and manufacturing expenses are primarily related to manufacturing process development and manufacturing costs, including expenses for acquiring and manufacturing pre-launch inventory, mRNA supply for preclinical studies and clinical trials.
Shared discovery and development expenses are research and development costs such as personnel-related costs and other costs, such as the purchase of priority review vouchers. These expenses are not otherwise included in development programs, discovery and platform research, technical development, manufacturing expenses, or stock-based compensation.
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 intismeran autogene, norovirus, and flu+COVID combination vaccine candidates, and development of any new COVID vaccines against variants of SARS-CoV-2, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-
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stage clinical trials. In addition, we may incur research and development costs related to postmarketing commitments, though the timing and scope of such commitments remain uncertain. 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.
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, technology and digital and facility-related costs, and expenses associated with obtaining, maintaining, and defending intellectual property (IP). These costs relate to the operation of the business, unrelated to the research and development function, or any individual program.
Prior to 2024, selling, general and administrative expenses increased annually as we expanded our commercial infrastructure to support the global commercialization of our COVID vaccine. These increases were driven by investments in building regulatory, sales, and marketing teams, establishing subsidiaries in multiple countries, and supporting operational growth. In 2025 and 2024, selling, general and administrative expenses decreased significantly year over year by $156 million and $375 million, or 13% and 24%, respectively. This decline reflects our focus on productivity improvements, cost-saving initiatives, and targeted investments that strengthen our overall efficiency.
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 or losses related to the sale of investments in marketable securities, changes in fair value of investments in equity securities, foreign currency transactions, remeasurements and hedges, 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 prior to its acquisition in December 2024, certain contract manufacturing service agreements, and, beginning in November 2025, interest associated with our long-term debt (seeNote 10 and Note 11 to the consolidated financial statements).
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 policy used in the preparation of our
consolidated financial statements requires the most significant judgments and estimates.
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Net product sales
Prior to the third quarter of 2023, we sold our COVID 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 Spikevax to the U.S. commercial market, in addition to continuing sales to foreign governments and organizations, and subsequently expanded our commercial COVID vaccine portfolio with the launch of mNEXSPIKE in the third quarter of 2025. We also commenced sales of our RSV vaccine in the third quarter of 2024. In the U.S., our COVID and RSV vaccines are sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers.
We recognize net product sales when control of the product transfers to the customer, typically upon delivery. Net product sales are recognized net of estimated wholesaler chargebacks, invoice discounts for prompt payments and pre-orders, provisions for sales returns, government rebates, and other related deductions. These provisions are recorded based on contractual terms, our estimate of returns for product sold, and other relevant considerations, 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. See 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 the limited historical data, constrained third-party information, and evolving market dynamics. Among all variables, estimating returns presents the most significant judgment due to the broad range of potential outcomes and the current lack of established return trends. While we now have two years of data on our product returns, this remains limited and subject significant variability given current market conditions. We will continue to refine our projections as additional information becomes available. The actual results could differ from our estimates, and such differences could have a material impact to our financial statements.
Recently issued accounting pronouncements
See Note 2 - Summary of Significant Accounting Policies, to the consolidated financial statements, under the caption “Recently Issued Accounting Standards”.
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Results of operations
A discussion regarding our results of operations for the year ended December 31, 2025 compared to 2024 is presented below. A discussion regarding our results of operations for the year ended December 31, 2024 compared to 2023 can be found under Part II -Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission (SEC) on February 21, 2025.
The following table summarizes our consolidated statements of operations for the periods presented (in millions):
Revenue:
Operating expenses:
Other expense, net (8) (87) 79 (91) %
Provision for (benefit from) tax provision 54 (46) 100 (217) %
Revenue
Total revenue decreased by $1.3 billion, or 40%, in 2025, primarily driven by a decline in net product sales. Net product sales decreased by $1.3 billion, or 42%, in 2025, largely due to lower sales volumes of our COVID vaccine across all regions. In the U.S., net product sales declined compared to 2024, reflecting a year-over-year decline in overall COVID vaccine demand. This decrease was partially offset by increased market share in the retail channel, supported by the successful launch and performance of mNEXSPIKE during the 2025/2026 respiratory vaccination season. In Europe and the rest of the world, net product sales declined compared to 2024, driven largely by the completion of advance purchase agreements related to COVID vaccines with government customers that contributed to revenue in the prior year, as well as lower overall demand in these markets. These impacts were partially offset by product sales generated under long-term strategic partnerships with government entities through our in-country manufacturing arrangements. Other revenue was relatively consistent compared to 2024, as lower grant revenue, collaboration revenue, and licensing and royalty revenue were largely offset by higher stand-ready manufacturing revenue.
Product sales are expected to return to growth in 2026, supported by the full-year impact of long-term strategic partnerships with government entities, as well as continued uptake of mNEXSPIKE in the U.S.
Operating expenses
Cost of sales
Our cost of sales was $868 million, or 48% of our net product sales, in 2025, including third-party royalties of $88 million, inventory write-downs of $291 million, primarily for raw materials and our finished and semi-finished COVID vaccine inventory, and unutilized manufacturing capacity and wind-down costs of $93 million. Our cost of sales was $1.5 billion, or 47% of our net product sales, in 2024, including third-party royalties of $155 million, inventory write-downs of $495 million, unutilized manufacturing capacity and wind down costs of $368 million, and losses on firm purchase commitments and cancellation fees of $60 million. These charges in both 2025 and 2024, other than royalties, were largely driven by customer demand forecast adjustments related to the seasonal nature of the COVID vaccine market, termination of third-party contract manufacturing service agreements, and commitments for
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manufacturing capacity and raw material purchase agreements. Forecasting demand for COVID vaccines requires advance production planning ahead of each season, including production of multiple COVID vaccine products, which resulted in excess inventory and capacity as actual demand differed from forecasted demand. See Note 7 to our consolidated financial statements for further details on inventory related charges and this initiative.
Cost of sales for 2025 decreased by $596 million, or 41%, compared to 2024. As a percentage of net product sales, cost of sales was 48% in 2025 compared to 47% in 2024, remaining relatively consistent year over year. The decrease in cost of sales was primarily driven by reduced inventory write-downs, reduced unutilized manufacturing capacity and wind-down costs, lower losses on purchase commitments, and lower sales volume. In 2024, cost of sales included $238 million of wind-down costs related to the termination of a contract manufacturing agreement, whereas wind-down costs incurred in 2025 were significantly lower. As a result, the cost of sales as a percentage of net product sales remained relatively consistent year over year, as the benefit of a more efficient manufacturing cost structure was largely offset by lower product sales.
In 2026, we anticipate that cost of sales will remain at a relatively consistent level compared to 2025, reflecting continued manufacturing productivity improvements and operational efficiencies. To the extent net product sales increase, cost of sales as a percentage of net product sales may decrease modestly.
Research and development expenses
Research and development expenses decreased by $1.4 billion, or 31%, in 2025. The decrease was primarily attributable to lower clinical trial expenses of $578 million and lower clinical manufacturing expenses of $239 million, reflecting the wind-down of large Phase 3 respiratory programs and the timing of certain clinical trial activities shifting into 2026, partially offset by increased investment in our norovirus vaccine and oncology program. In addition, preclinical research expenses decreased by $107 million due to continued portfolio prioritization across the organization, and consulting and outside service costs declined by $175 million, consistent with the lower level of clinical and manufacturing activities. Separately, the prior-year period included an expense related to the purchase of two priority review vouchers, which did not recur in 2025.
We anticipate a modest reduction in research and development expenses in 2026 compared to 2025, driven by continued portfolio prioritization, disciplined cost management, and a focused approach to pipeline execution. These reductions are expected to be partially offset by certain clinical trial activities shifting into 2026 and additional costs related to post-marketing commitments. We remain committed to advancing our pipeline and late-stage programs, including intismeran autogene and norovirus vaccine programs, while continuing to manage research and development investment levels in line with our long-term objectives.
Selling, general and administrative expenses
Selling, general and administrative expenses decreased by $156 million, or 13%, in 2025. The decrease was mainly due to a $57 million broad-based reduction in consulting and outside services, along with a $59 million reduction in commercial, marketing and distribution costs. These decreases were attributable to continued cost discipline and ongoing efforts to streamline operations.
We expect selling, general and administrative expenses in 2026 to remain at a level relatively consistent with 2025, reflecting an efficient and scalable operating structure. While we will continue to make selective investments to support our key priorities, including our global commercial and regulatory activities, we expect these investments to be largely offset by ongoing efficiency initiatives and disciplined resource allocation.
Interest income
Interest income generated from our investments in marketable securities decreased by $111 million in 2025, mainly due to lower average investment balances.
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Other expense, net
The following table summarizes other expense, net for the periods presented (in millions):
Loss on investments $ (5) $ (56) $ 51 (91) %
Other income (expense), net 7 (7) 14 (200) %
Total other expense, net $ (8) $ (87) $ 79 (91) %
Total other expense, net decreased by $79 million, or 91%, in 2025. The decrease was primarily driven by lower equity investment losses and lower interest expense. Interest expense is primarily related to our finance leases related to our Moderna Technology Center prior to its acquisition in December 2024, certain contract manufacturing service agreements, and, beginning in November 2025, interest associated with our long-term debt. See Note 10 and Note 11 to our consolidated financial statements for additional information.
Provision for income taxes
Provision for income taxes for 2025 remained immaterial and consistent with 2024 and 2023, reflecting the valuation allowance established on deferred tax assets in 2023, which has been applied consistently since its initial recognition. Provision for income taxes increased by $100 million, or 217%, in 2025, mainly driven by the absence of a discrete tax benefit related to research and development credits that was recognized in 2024, as well as taxable income in certain of our foreign subsidiaries, while we incurred a consolidated pre-tax loss. See Note 14 to our consolidated financial statements for additional details.
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 $ 2,595 $ 1,927
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, 2025 decreased by $1.4 billion, or 15%, compared to December 31, 2024. For the year ended December 31, 2025, we had a net cash outflow from operations of $1.9 billion, and purchases of property, plant and equipment of $192 million, partially offset by $578 million of net proceeds from our credit facility.
Working capital, defined as current assets less current liabilities, as of December 31, 2025 decreased by $1.3 billion, or 23%, compared to December 31, 2024. This was primarily due to a $1.2 billion decrease in cash, cash equivalents and short-term investments, mainly used to fund our operating activities, a $191 million decrease in prepaid expenses and other current assets driven by reduced manufacturing and capital spend, and a $174 million decrease in accounts receivable, primarily driven by lower revenue and invoice volumes as well as timing of collections. These decreases were partially offset by a $129 million reduction in accounts payable and accrued liabilities, reflecting an overall reduction in operating expenses, and a $54 million reduction in short-term deferred revenue, mainly resulting from revenue recognized from deferred revenue in excess of customer advance payments received.
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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:
Financing activities 593 56
Operating activities
We derive cash flows from operations primarily from cash collected from customer advance payments and accounts receivable related to our product sales, as well as other revenue and funding arrangements. Our cash flows from operating activities are significantly affected by our use of cash for operating expenses and working capital to support the business. We sell our COVID and RSV vaccines to the commercial market as well as to foreign governments and international organizations. Certain supply agreements include upfront payments, which are initially recorded as deferred revenue. In the U.S., our COVID and RSV vaccines are sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers, which typically do not make upfront payments. In addition, we receive customer advance payments related to certain other revenue arrangements. As of December 31, 2025, we had $252 million in deferred revenue related to customer advance payments received or billable.
Net cash used by operating activities in 2025 was $1.9 billion and consisted of net loss of $2.8 billion and non-cash adjustments of $716 million, plus a net change in assets and liabilities of $233 million. Non-cash items primarily included stock-based compensation of $483 million and depreciation and amortization of $215 million. The net change in assets and liabilities was primarily due to a decrease in accounts receivable of $156 million, mainly due to lower invoice volumes and timing of collections, a $153 million decrease in prepaid expenses and other current assets, primarily due to reduced manufacturing and capital spend, and a $41 million decrease in deferred revenue due to revenue recognized from deferred revenue in excess of customer advance payments received. This was partially offset by a decrease in accounts payable and accrued liabilities of $94 million resulting from overall lower operating expenses in the period.
Net cash used by operating activities decreased by $1.1 billion, or 38%, in 2025 compared to 2024. This decrease was primarily driven by a decrease in net loss of $739 million, a change in deferred revenue of $480 million, reflecting less revenue recognized from deferred revenue in excess of customer advance payments received in 2025, and a change in accounts payable and accrued liabilities of $360 million, driven by decreased clinical and manufacturing spend. This was partially offset by a change in accounts receivable of $378 million, driven by lower invoice volumes and timing of collections, and a change in inventory of $117 million, driven by a smaller reduction in inventory write-downs.
Investing activities
Our primary investing activities consist of purchases, sales, and maturities of our investments, capital expenditures for land, building, leasehold improvements, manufacturing, laboratory, computer equipment and software, and business development.
Net cash provided by investing activities in 2025 was $1.9 billion, which primarily included proceeds from maturities of marketable securities of $5.6 billion and proceeds from sales of marketable securities of $2.4 billion, partially offset by purchases of marketable securities of $5.8 billion, and purchases of property, plant and equipment of $192 million.
Net cash flows provided by investing activities were relatively consistent in 2025 compared to 2024, primarily due to a decrease in proceeds from sale of marketable securities of $1.6 billion, which was partially offset by a decrease of $859 million in purchases of property, plant, and equipment, and a $761 million decrease in purchases of marketable securities.
Financing activities
Our primary financing activities consist of issuance of common stock related to our equity plans, repurchases of common stock, borrowings under our credit facility, and finance leases.
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Net cash provided by financing activities in 2025 was $593 million, consisting of $578 million of net proceeds from our credit facility and 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 $35 million.
Net cash provided by financing activities increased by $537 million, or 959%, in 2025 compared to 2024, mainly due to the net proceeds from our credit facility.
Operation and funding requirements
Our principal sources of funding as of December 31, 2025 consisted of cash and cash equivalents, investments, and cash we may generate from operations. We reported a net loss of $2.8 billion, $3.6 billion and $4.7 billion for the years ended December 31, 2025, 2024 and 2023, respectively. In contrast, we generated net income of $8.4 billion and $12.2 billion for the years ended December 31, 2022 and 2021, respectively, following the authorization of our first commercial product in December 2020. From our inception to the end of 2020, we incurred significant losses from operations due to our significant research and development expenses. We have retained earnings of $7.2 billion as of December 31, 2025.
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 manufacturers and suppliers. Our ongoing work on our intismeran autogene, norovirus, and flu+COVID combination vaccine candidates, development of any new COVID vaccines against variants of SARS-CoV-2, late-stage clinical development, investments in digital capabilities and artificial intelligence technologies, 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 collaborators or alliances. We may also incur additional costs related to postmarketing commitments, though the timing and scope of such commitments remain uncertain. In addition, we have substantial facility, lease and purchase obligations. We have also entered into various collaboration and licensing agreements, as well as a research and development funding arrangement with a third party. These arrangements collectively encompass the funding of specific research and development activities, with the distinction that under the research and development funding arrangements, we receive funding. However, for all these arrangements, we may be obligated to make potential future milestone and royalty payments.
In November 2025, we entered into a Credit Agreement providing for a term loan facility with aggregate commitments of $1.5 billion. As of December 31, 2025, we had drawn $600 million under the initial term loan. The Credit Agreement also provides for $900 million of delayed draw term loan commitments, consisting of $400 million available, subject to applicable conditions, through November 2027 and $500 million available, subject to applicable conditions and specified regulatory approval milestones, through November 2028. Borrowings under the Credit Agreement bear interest at a variable rate based on Term SOFR or a base rate, at our option, plus an applicable margin, with interest payable periodically and the principal amount due in full at maturity in November 2030. The Credit Agreement includes customary affirmative and negative covenants, with which we were in compliance as of December 31, 2025. See Note 11 to our consolidated financial statements for additional information.
We believe that our cash, cash equivalents, and investments as of December 31, 2025, together with cash expected to be generated from product sales and available borrowings under our credit facility, 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 experienced a decline in customer demand for our COVID vaccine in 2023 and 2024, and this trend has continued into 2025 as the market transitions to a more competitive and commercially driven environment. 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.
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Contractual obligations and commitments
The following table summarizes our contractual obligations as of December 31, 2025, 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 represent non-cancelable fixed payment obligations related to purchases of raw materials, contract manufacturing services, research and development and other goods or services in the normal course of business. As of December 31, 2025, $5 million of the purchase commitments related to raw materials was recorded as an accrued liability for loss on future firm purchase commitments and is included in the purchase obligations line above.
(2)In November 2025, we entered into the Credit Agreement providing for a senior secured term loan facility with aggregate commitments of $1.5 billion, consisting of a $600 million initial term loan and $900 million of delayed draw term loan commitments. As of December 31, 2025, the $600 million initial term loan was outstanding and matures on November 24, 2030. Borrowings under the Credit Agreement bear interest at a variable rate. Interest amounts preset in the table are based on the applicable interest rate in effect as of December 31, 2025. The principal amount of $600 million is due in full at maturity, and no principal payments are required prior to that date. See Note 11 to the consolidated financial statements for additional details.
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, 2025, we had cancelable open purchase orders of approximately $1.8 billion, reflecting amounts associated with our significant vendor arrangements, under such agreements for our clinical operations and support and contract manufacturing. These amounts represent only our estimate of those items for which we had a contractual commitment to pay at December 31, 2025, assuming we would not cancel these agreements. The actual amounts we pay in the future to the vendors under such agreements may differ from purchase order amounts.
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, 2025, we did not have any off-balance sheet arrangements, other than those obligations and commitments disclosed herein, 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, 2025 and 2024, we had cash, cash equivalents, restricted cash, and investments in marketable securities of $8.1 billion and $9.5 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, 2025, the net fair value of our marketable securities would decrease by approximately $47 million.
In November 2025, we entered into a variable-rate Credit Agreement providing for borrowings of up to $1.5 billion, under which outstanding amounts bear interest at rates based on Term SOFR plus a margin of 5.50% or a base rate plus a margin of 4.50%, at our option. As a result, our interest expense is exposed to changes in market interest rates. As of December 31, 2025, we had $600 million outstanding under this facility. See Note 11 to the consolidated financial statements for additional details.
Foreign Currency Risk
We transact business in various foreign currencies and have international sales and expenses denominated in foreign currencies. As a result, we are exposed to risks arising from changes in foreign currency exchange rates driven by both our business operations and economic conditions. For the year ended December 31, 2025, approximately 27% of our revenue was denominated in foreign currencies, although our revenue generating activities and operations continued to be primarily denominated in U.S. dollars. Our foreign currency revenue exposure in 2025 was primarily associated with the Canadian dollar, Euro, Korean won, and Mexican peso markets.
As our business evolves, we have transitioned to receiving payments in local currencies rather than U.S. dollars. In addition, during 2025 we established and expanded manufacturing operations in the United Kingdom, Canada and Australia, where we also transact in foreign currencies. These developments are expected to result in higher levels of foreign currency denominated revenues and expenses on an annualized basis in the future, which may increase our exposure to fluctuations in foreign currency exchange rates and could impact our results of operations and cash flows. To manage this exposure, we have focused on balance sheet hedging activities as part of our strategy to address foreign currency fluctuations. While cash flow hedging programs are in place, there were no foreign currency cash flow hedging activities during 2025.
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, receivables, payables and lease liabilities in the Australian dollar, British pound, Canadian dollar, and Euro 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 income (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 income (expense), net, in our consolidated statements of operations. As of December 31, 2025, 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 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 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.
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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, 2025, 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 $58 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 100
Notes to Consolidated Financial Statements 108
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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, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 20, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
100
Provisions for returns on product sales
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2014.
Boston, Massachusetts
February 20, 2026
101
MODERNA, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
December 31,
Assets
Current assets:
Cash and cash equivalents $ 2,595 $ 1,927
Accounts receivable, net 184 358
Prepaid expenses and other current assets 408 599
Property, plant and equipment, net 2,134 2,196
Right-of-use assets, operating leases 719 759
Other non-current assets 605 594
Liabilities and Stockholders’ Equity
Current liabilities:
Other current liabilities 185 221
Deferred revenue, non-current 153 58
Operating lease liabilities, non-current 653 671
Financing lease liabilities, non-current 20 39
Long-term debt 590 —
Other non-current liabilities 285 267
Commitments and contingencies (Note 12)
Stockholders’ equity:
Additional paid-in capital 1,382 866
Accumulated other comprehensive income (loss) 45 (10)
Total liabilities and stockholders’ equity $ 12,338 $ 14,142
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:
Other expense, net (8) (87) (124)
Provision for (benefit from) tax provision 54 (46) 772
Net loss per share
Weighted average common shares used in calculation of loss 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, net of tax:
Available-for-sale securities:
Unrealized gains on available-for-sale securities 31 120 210
Net increase from available-for-sale securities 28 124 248
Cash flow hedges:
Net realized losses on derivative instruments reclassified in net loss — — 8
Net increase from derivatives designated as hedging instruments — — 8
Gains (losses) on foreign currency translation 11 (8) —
Pension and postretirement obligation adjustments 16 (3) (9)
Total other comprehensive income 55 113 247
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
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)
Shares Amount
Vesting of restricted common stock 2 — — — — —
Exercise of options to purchase common stock 1 — 42 — — 42
Issuance of common stock under employee stock purchase plan 1 — 24 — — 24
Stock-based compensation — — 429 — — 429
Other comprehensive income, net of tax — — — 113 — 113
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Shares Amount
Vesting of restricted common stock 7 — — — — —
Exercise of options to purchase common stock 1 — 17 — — 17
Tax payments related to net share settlements on equity awards — — (2) — — (2)
Issuance of common stock under employee stock purchase plan — — 18 — — 18
Stock-based compensation — — 483 — — 483
Other comprehensive income, net of tax — — — 55 — 55
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
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization/accretion of investments (67) (95) (61)
Loss on equity investments, net 8 52 35
Other non-cash items 77 60 7
Changes in assets and liabilities:
Right-of-use assets, operating leases 38 (53) (605)
Operating lease liabilities (21) 28 551
Other liabilities (6) 78 88
Net cash used in operating activities (1,873) (3,004) (3,118)
Investing activities
Proceeds from maturities of marketable securities 5,563 5,562 5,575
Proceeds from sales of marketable securities 2,353 3,967 3,206
Purchases of property, plant and equipment (192) (1,051) (707)
Acquisition of business, net of cash acquired — — (85)
Purchase of intangible asset (10) — —
Investment in convertible notes and equity securities — — (23)
Financing activities
Proceeds from credit facility 600 — —
Payment of credit facility issuance costs (22) — —
Proceeds from issuance of common stock through equity plans 35 66 46
Tax payments related to net share settlements on equity awards (2) — (1,153)
Changes in financing lease liabilities (18) (10) (270)
Net cash provided by (used in) financing activities 593 56 (1,377)
Effect of changes in exchange rates on cash and cash equivalents 2 — —
Cash, cash equivalents and restricted cash, beginning of year 1,929 2,928 3,217
Cash, cash equivalents and restricted cash, end of year $ 2,597 $ 1,929 $ 2,928
Supplemental cash flow information
Cash paid (received) for income taxes $ 26 $ 197 $ (357)
Cash paid for interest $ 10 $ 24 $ 39
Non-cash investing and financing activities
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 medicines across infectious disease vaccines, oncology therapeutics and rare disease therapeutics.
Since our founding in 2010, we have transformed from a research-stage company advancing programs in the field of mRNA to a commercial enterprise with a diverse clinical portfolio of vaccines and therapeutics across several modalities, a broad intellectual property portfolio and integrated manufacturing capabilities that allow for rapid clinical and commercial production at scale. We currently have three commercial products—Spikevax® and mNEXSPIKE®, our COVID vaccines, and mRESVIA®, our vaccine against respiratory syncytial virus (RSV). Additionally, we also have a diverse development pipeline of 25 development candidates across our 35 development programs currently in clinical studies.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative accounting principles generally accepted in the United States as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB).
The consolidated financial statements include the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
We have made estimates and judgments affecting the amounts reported in our consolidated financial statements and the accompanying notes. We base our estimates on historical experience and various relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods that are not readily apparent from other sources. Changes in our estimates are recorded in the financial results of the period in which the new information becomes available. The actual results that we experience may differ materially from our estimates.
Segment Information
The Company operates as a single operating and reportable segment, reflecting the integrated nature of our business focused on the research, development, and commercialization of mRNA-based medicines. Our Chief Executive Officer serves as the Chief Operating Decision Maker (CODM), responsible for assessing the Company's performance and making resource allocation decisions. The CODM evaluates financial information on a consolidated basis, focusing on key metrics such as total revenue, operating expenses, and net income or loss, which is our reported measure of segment profit or loss. The CODM allocates resources based on the Company's available cash resources, forecasted cash flow, and expenditures on a consolidated basis, as well as an assessment of the probability of success of its research and development activities. Resource allocation decisions are informed by budgeted and forecasted expense information, along with actual expenses incurred to date. Disaggregated profit or loss information at the program or functional level is not regularly provided to or relied upon by the CODM, as our integrated operating model emphasizes shared resources and centralized decision-making. The interdependent nature of our research, development, and commercialization activities, supported by common infrastructure such as our mRNA platform, makes further disaggregation of expenses less meaningful for assessing performance. Additionally, there are no segment managers accountable for operations, operating results, and planning for levels or components below the consolidated unit level.
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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
We sell our COVID and RSV vaccines to the commercial market as well as to foreign governments and international organizations. In the U.S., our COVID vaccine and RSV vaccine are sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers.
We recognize net product sales when control of the product transfers to the customer, typically upon delivery. Payment terms generally range from 30 to 60 days, in line with customary practices in each country. Net product sales are recognized net of estimated wholesaler chargebacks, invoice discounts for prompt payments and pre-orders, provisions for sales returns, government rebates, and other related deductions. These provisions are recorded based on contractual terms, our estimate of returns for product sold during the period, and other relevant considerations, using the expected value method or the most likely amount method. We update our estimates quarterly and record necessary adjustments in the period when we identify the adjustments. Product sales, net of provisions, are recorded only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable when the uncertainty associated with the provisions is subsequently resolved. Shipping and handling activities are considered fulfillment activities and not a separate performance obligation. Taxes assessed by governmental authorities that are imposed on and collected from our product sales are excluded from net product sales.
Wholesaler chargebacks, discounts and fees
We contract with retailers, healthcare providers, and group purchasing organizations (GPO) to broaden our customer reach and offer contractual discounts. The chargeback represents the difference between the invoice price billed to the wholesaler and the negotiated price charged to the retailers, healthcare providers and GPO members. For distribution and related services, such as stocking and cold chain storage, we provide compensation to our wholesalers and distributors. We typically offer our customers invoice discounts on product sales for prompt payments and pre-orders. The estimation of these discounts and fees is based on contractual terms and our expectations regarding future customer payment behaviors. Wholesaler fees and invoice discounts are deducted from our gross product sales and accounts receivable at the time such product sales are recognized.
Product returns
We typically offer customers in the U.S. the right to return products, up to a certain limit as stipulated in our contracts. Estimated returns for our vaccines are determined considering available return rates for similar products, estimated levels of inventory in the distribution channel, projected market demand, and our historical experience with returns. The estimated amount for product returns is presented within accrued liabilities on our consolidated balance sheets and is deducted from our gross product sales in the period the related product sales are recognized.
Government rebates and other fees
Fees payable to third party payers and healthcare providers, along with fees to our direct customers that are settled via cash payments, including certain patient assistance programs, are recorded as accrued liabilities on our consolidated balance sheets. In 2024, we began recognizing Medicare rebates associated with our RSV product. The estimation of Medicare rebates requires judgment and is based on historical utilization trends, and the mix of customers and payers. The estimated liability for unpaid or unbilled rebates is presented as accrued liabilities on our consolidated balance sheets. For 2024 and 2025, the product sales subject to Medicare rebates were immaterial.
Determining the amount of variable consideration to recognize necessitates substantial judgment, especially when assessing factors outside our direct control, such as the limited historical data, constrained third-party information, and evolving market dynamics. Among all variables, estimating returns continues to present the most significant judgment due to the broad range of potential outcomes and the lack of established return trends. While we now have two years of data on our product returns, this remains limited and subject to significant variability given current market conditions. We will continue to refine our projections as additional information becomes available. The actual results could differ from our estimates, and such differences could have a material impact to our financial statements.
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Other Revenue
Other revenue consists primarily of grant revenue, collaboration revenue, licensing and royalty revenue, and stand-ready manufacturing revenue.
Grant revenue
We have contracts with government-sponsored and private organizations for research and development related activities that provide for payments for reimbursed costs, which may include overhead and general and administrative costs as well as a related profit margin. We recognize grant revenue from these contracts as we perform services under these arrangements when the funding is committed. Associated expenses are recognized when incurred as research and development expense. Grant revenue and related expenses are presented gross in the consolidated statements of operations as we have determined we are the primary obligor under the arrangements relative to the research and development services we perform as lead technical expert.
Collaboration Revenue
We have entered into strategic collaborations and other similar arrangements with third parties for research and other licenses, development and commercialization of certain products and product candidates. Such arrangements provide for various types of payments to us, including upfront fees, funding of research and development services and preclinical and clinical material, technical, development, regulatory, and commercial milestone payments, licensing fees, option exercise fees, and royalty and earnout payments on product sales. Such payments are often not commensurate with the timing of revenue recognition and therefore result in deferral of revenue recognition. We recognize revenue based on the amount of the transaction price that is allocated to each respective performance obligation when or as the performance obligation is satisfied by transferring a promised good or service to the customer.
Licensing and Royalty Revenue
License revenue is recognized when the license is granted to the licensee, provided no significant performance obligations remain. Royalty revenue is recognized based on sales by licensees when the underlying sales occur, in accordance with the terms of the licensing agreement and when collectibility is reasonably assured.
Stand-Ready Manufacturing Revenue
We have entered into long-term strategic agreements with government entities to establish domestic mRNA manufacturing capabilities and support pandemic readiness. Under these agreements, we are required to build and maintain manufacturing facilities and to supply vaccines in accordance with minimum spend commitments or annual demand forecasts established by the respective governments. A portion of the total consideration under each agreement is allocated to a stand-ready obligation to maintain manufacturing readiness and is recognized as other revenue on a straight-line basis over the contractual period. The remaining consideration is related to our obligation to supply vaccines and will be recognized as product sales when control of the vaccines transfers upon delivery.
Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of 90 days or less from the date of purchase to be cash equivalents.
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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, non-current(2) 1 1 4
_______
(1)Included in prepaid expenses and other current assets in the consolidated balance sheets.
(2)Included in other non-current assets in the consolidated balance sheets.
Investments
We invest our excess cash balances in marketable debt securities. We classify our investments in marketable debt securities as available-for-sale. We report our available-for-sale securities at fair value at each balance sheet date, and include any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive income (loss), a component of stockholders’ equity. Realized gains and losses are determined using the specific-identification method, and are included in other income (expense), net in our consolidated statements of operations. We classify our available-for-sale securities as current or non-current based on each instrument’s underlying effective maturity date and for which we have the intent and ability to hold the investment for a period of greater than 12 months. Available-for-sale securities with maturities of less than 12 months are classified as current and are included in investments in the consolidated balance sheets. Available-for-sale securities with maturities greater than 12 months for which we have the intent and ability to hold the investment for greater than 12 months are classified as non-current and are included in investments, non-current in the consolidated balance sheets.
We evaluate securities for impairment at the end of each reporting period. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include whether a decline in fair value below the amortized cost basis is due to credit-related factors or non-credit-related factors, the financial condition and near-term prospects of the issuer, and our intent and ability to hold the investment to allow for an anticipated recovery in fair value. A credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. Any impairment that is not credit- related is recognized in other comprehensive income (loss), net of applicable taxes.
Investments in publicly traded equity securities with readily determinable fair values are recorded at quoted market prices for identical securities, with changes in fair value recorded in other income (expense), net, in our consolidated statements of operations. Investments in equity securities without readily determinable fair values are recorded at cost minus impairment, if any, adjusted for changes resulting from observable price changes in orderly transactions for identical or similar securities. Such adjustments are recorded in other income (expense), net, in our consolidated statements of operations.
Accounts Receivable, net
Accounts receivable, net represent amounts due from customers less wholesalers chargebacks, discounts and fees (see our “Revenue Recognition” policy within Note 2 for product sales provision) and allowance for expected credit losses. Amounts payable to us are recorded as accounts receivable when our right to consideration is unconditional. To estimate the allowance for credit losses, we determine the allowance based on ongoing credit evaluation, historical experience and the aging of such receivables, among other factors. The allowance for doubtful accounts was immaterial at December 31, 2025 and 2024. Additionally, bad debt expenses were immaterial for the years ended December 31, 2025, 2024 and 2023.
Concentrations of Credit Risk
Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable debt securities, and accounts receivable, net. Our investment portfolio comprises money market funds and marketable debt securities, including U.S. Treasury securities, debt securities of U.S. government agencies and corporate entities and commercial paper. Our cash management and investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds can be used in business operations. We invest in a variety of financial instruments and limit the amount of credit exposure with any individual financial institution.
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We are also subject to credit risk from our accounts receivable, net related to our net product sales and other revenue. We sell our products primarily to wholesalers and distributors and other governments and organizations. We do not require collateral or other security to support accounts receivable. To date, we have not experienced material losses with respect to the collection of our accounts receivable.
Significant Customers
Our accounts receivable, net are generally unsecured and are from customers in different countries. We generated revenue from product sales to wholesalers and distributors and other governments and organizations, and to a lesser extent, stand-ready manufacturing revenue from international government entities, grants made by government-sponsored and private organizations, and collaboration revenue from our strategic alliances.
A significant portion of our revenue to date has been generated from the following entities that accounted for more than 10% of total revenue and accounts receivable for the periods presented:
FFF Enterprises 15 % 13 % * * *
Public Works and Government Services Canada 13 % * * 33 % *
Cardinal Health 11 % * * * *
United Kingdom Health Security Agency * 16 % * * 65 %
Mexico Medistik * * * 29 % *
Boryung Biopharma Korea * * * 17 % *
Taiwan Food and Drug Administration * * * * 10 %
Ministry of Health, Labor, and Welfare of Japan * * 21 % * *
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* - 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.
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Inventory
Inventory is recorded at the lower of cost or net realizable value, with cost determined principally using first-in, first-out method. We periodically review the composition of inventory in order to identify excess, obsolete, slow-moving or otherwise unsaleable items. If unsaleable items are observed and there are no alternate uses for the inventory, we will record a write-down to net realizable value in the period that the decline in value is first recognized through a charge to cost of sales. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required. We also assess whether we have any excess firm, non-cancelable, purchase commitment liabilities, resulting from our supply agreements with third-party vendors. The determination of net realizable value and firm purchase commitment liabilities requires judgment, including consideration of many factors, such as estimates of future product demand, product net selling prices, current and future market conditions, potential product obsolescence, expiration and utilization of raw materials under firm purchase commitments and contractual minimums, among others. We hold raw materials beyond our one year forecasted production plan, which were classified as non-current and included in other non-current assets in our consolidated balance sheets.
Pre-launch Inventory
Costs relating to raw materials and production of inventory in preparation for product launch prior to regulatory approval are capitalized when future commercialization is considered probable, the future economic benefit is expected to be realized, and we believe that material uncertainties related to the ultimate regulatory approval have been significantly reduced. For pre-launch inventory that is capitalized, we consider a number of factors based on the information available at the time, including the product candidate’s current status in the drug development and regulatory approval process, results from the related clinical trials, results from meetings with relevant regulatory agencies prior to the filing of regulatory applications, potential impediments to the approval process such as product safety or efficacy, historical experience, viability of commercialization and market trends. As of December 31, 2025 and 2024, we did not have any capitalized pre-launch inventory on our consolidated balance sheets.
Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of property, plant and equipment are described below:
Estimated Useful Life
Land and permanent land improvements Not depreciated
Limited-life land improvements Determined on a project-by-project basis
Buildings and building improvements Up to 40 years
Manufacturing and laboratory equipment 5-12 years
Computer equipment and software 3 to 5 years
Furniture, fixtures and other 5 years
Right-of-use asset, financing Lease term
Construction in progress includes direct costs related to the construction of various property, plant and equipment, and is stated at original cost. Once the asset is placed into service, these capitalized costs will be allocated to certain property, plant and equipment categories and will be depreciated over the estimated useful life of the underlying assets.
Goodwill and Intangible Assets
Goodwill represents the excess of purchase price over the fair value of net assets acquired and is carried at cost. Goodwill is tested at least annually for impairment by assessing qualitative factors in determining whether it is more likely than not that the fair value of net assets is below their carrying amounts. To date, an impairment of goodwill has not been recorded.
Finite-lived intangible assets primarily consist of acquired intellectual property and regulatory approval and commercial sales milestone payments. These assets are recorded at cost, net of accumulated amortization, and amortized on a straight-line basis over their estimated useful lives.
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Impairment of Long-Lived Assets, including Intangibles and Lease Right-of-Use Assets
We evaluate our long-lived assets, which consist of property, plant and equipment, finite-lived intangibles and right-of-use assets to determine if facts and circumstances indicate that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, we assess the recoverability of the long-lived assets by comparing the projected future undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. If such review indicates that such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets or based on appraisals. Impairment expenses for the years ended December 31, 2025, 2024 and 2023 were immaterial.
Leases
Leases are classified at their commencement date, which is defined as the date on which the lessor makes the underlying asset available for use by the lessee, as either operating or finance leases based on the economic substance of the agreement. We recognize lease right-of-use assets and related liabilities in our consolidated balance sheets for both operating and finance leases. Lease liabilities are measured at the lease commencement date as the present value of the future lease payments using the interest rate implicit in the lease. If the rate implicit is not readily determinable, we will utilize our incremental borrowing rate as of the lease commencement date. Lease right-of-use assets are initially measured as the lease liability plus direct costs and prepaid lease payments less lease incentives. The lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised.
We recognize operating lease cost in operating expenses in our consolidated statements of operations, inclusive of rent escalation provisions and rent holidays, on a straight-line basis over the respective lease term. For our finance leases, we recognize depreciation expense associated with the leased asset acquired and recognize interest expense related to the portion of the financing in our consolidated statements of operations.
We do not separate non-lease components from lease components for all classes of underlying assets. We do not recognize right-of-use assets and lease liabilities for leases with a lease term of 12 months or less. Instead, these lease payments are recognized in the statements of operations on a straight-line basis over the lease term.
Collaboration Arrangements
We analyze our collaboration arrangements to assess whether they are within the scope of ASC 808 (Collaborative Arrangements) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. To the extent the arrangement is within the scope of ASC 808, we assess whether aspects of the arrangement between us and our collaborator are within the scope of other accounting literature. If we conclude that some or all aspects of the arrangement represent a transaction with a customer, we account for those aspects of the arrangement within the scope of ASC 606 (Revenue from Contracts with Customers). See our "Revenue Recognition" policy within Note 2 for additional discussion of revenue recognition under these types of arrangements. If we conclude that some or all aspects of the arrangement are within the scope of ASC 808 and do not represent a transaction with a customer, we recognize our allocation of the shared costs incurred with respect to the jointly conducted activities as a component of the related expense in the period incurred. Additionally, for any payments related to capital expenditures that are partially reimbursed by a collaborator, to the extent the underlying capital costs qualify for capitalization, any reimbursements received will offset the capitalized cost of the asset.
Research and Development Funding Arrangements
We have entered into research and development funding arrangements to support a targeted programs, under which a third party has committed to fund us up to a specified amount. Contingent upon the regulatory approval of the program, we are obligated to pay certain milestones and royalties as outlined in the respective agreements. We account for funding received under research and development arrangements as a reduction to expenses when substantive financial risk is transferred to the funding party. These arrangements are accounted for as an obligation to conduct research and development activities. The funding is recognized proportionally as the related costs are incurred, using an input method. Contingent payments, such as milestones or royalties, will be recognized separately upon achievement of the related conditions.
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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 $133 million in 2025, $146 million in 2024, and $204 million in 2023.
Stock-Based Compensation
We issue stock-based awards to employees and non-employees, generally in the form of stock options, restricted stock units (RSUs), and performance stock units (PSUs). We account for our stock-based compensation awards in accordance with ASC 718 (Compensation—Stock Compensation). Most of our stock-based awards have been made to employees. We measure compensation cost for equity awards at their grant-date fair value and recognize compensation expense over the requisite service period, which is generally the vesting period, on a straight-line basis. The grant date fair value of stock options is estimated using the Black-Scholes option pricing model, which requires management to make assumptions with respect to the fair value of our common stock on the grant date, including the expected term of the award, the expected volatility of our stock, calculated based on a period of time generally commensurate with the expected term of the award, risk-free interest rates and expected dividend yields of our stock.
Prior to 2025, we estimated the expected term of our stock options using the simplified method, whereby, the expected term equals the average of the vesting term and the original contractual term of the option. During 2025, we used historical exercise data in estimating the expected term of stock options, utilizing a methodology that combines historical settlement data with a hypothetical settlement pattern for outstanding options, based on estimated time to arrival at-the-money and adjusted for employee departure rates. The change in methodology used during 2025 did not have a material impact on stock-based compensation and our financial statements. However, during the fourth quarter of 2025, in connection with our stock option exchange program (see Note 13), which resulted in changes to our stock option population, we determined that we no longer have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term, as such data is no longer indicative of future exercise patterns. Accordingly, beginning in 2026, we will estimate the expected term of stock options using the simplified method. We will continue to apply this process until a sufficient amount of historical information regarding the expected term becomes available and we believe that historical experience is relevant to our expectations for current grants. The expected volatility is based on our stock price volatility and incorporates both historical volatility of our stock price and implied volatility derived from the price of exchange traded options on our stock.
The grant date fair value of RSUs is estimated based on the fair value of our underlying common stock. For performance-based stock awards, we recognize stock-based compensation expense over the requisite service period using the accelerated attribution method when achievement is probable. We classify stock-based compensation expense in our consolidated statements of operations in the same manner in which the award recipient’s salary and related costs are classified or in which the award recipient’s service payments are classified. We made an accounting policy election to recognize forfeitures of stock-based awards as they occur.
Income Taxes
We account for income taxes based on an asset and liability approach. We recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. These differences are measured using the enacted statutory tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided when the expected realization of deferred tax assets does not meet a “more likely than not” criterion. We periodically reassess the need for valuation allowances on our deferred tax assets, considering both positive and negative
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evidence to evaluate whether it is more likely than not that all or a portion of such assets will not be realized. We make estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance could be materially impacted. Changes in these estimates may result in significant increases or decreases to our tax provision in a period in which such estimates are changed, which in turn would affect net income or loss. We recognize tax benefits from uncertain tax positions if we believe the position is more likely than not to be sustained on examination by the taxing authorities based on the technical merits of the position. We make adjustments to these tax reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of any reserves for uncertain tax positions, as well as the related net interest and penalties.
Earnings (Loss) per Share
We calculate diluted net earnings (loss) per share attributable to common stockholders by dividing net earnings (loss) by the weighted average number of common shares outstanding after giving consideration to the dilutive effect of restricted stock units, performance stock units, stock options, and shares under the employee stock purchase plan that are outstanding during the period. For periods in which we have generated a net loss, the basic and diluted net loss per share attributable to common stockholders are the same, as the inclusion of the potentially dilutive securities would be anti-dilutive.
Comprehensive Income (Loss)
Comprehensive income (loss) includes net income (loss) and other comprehensive income (loss) for the period. Other comprehensive income (loss) consists of unrealized gains and losses on our investments, derivatives designated as hedging instruments, and foreign currency translation, as well as, pension and postretirement obligation adjustments. Total comprehensive income (loss) for all periods presented has been disclosed in the consolidated statements of comprehensive income (loss).
The components of accumulated other comprehensive loss for the years ended December 31, 2025 and 2024 were as follows (in millions):
Other comprehensive income 124 (3) (8) 113
Share Repurchases
Shares of our common stock repurchased pursuant to our repurchase programs are retired. The purchase price of such repurchased shares of common stock is recorded as a reduction to additional paid-in-capital. If the balance in additional paid-in-capital is exhausted, the excess is recorded as a reduction to retained earnings.
Recently Issued Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by us as of the specified effective date. Except as noted below, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The standard requires entities to disclose federal, state, and foreign income taxes in their rate reconciliation tables and elaborate on reconciling items that exceed a quantitative threshold. Additionally, it requires an annual disclosure of income taxes paid, net of refunds, categorized by jurisdiction based on a quantitative threshold. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, and early adoption is permitted. We adopted this ASU prospectively in the fourth quarter of 2025, and the required disclosures are included in Note 14, Income Taxes.
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In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires entities to disclose, on an annual and interim basis, disaggregated information in the footnotes related to certain expense categories included in income statement line items. Specifically, entities are expected to provide tabular disclosures for prescribed categories such as inventory purchases, employee compensation, depreciation, and intangible asset amortization for each relevant expense caption. The standard also requires disclosure of total selling expenses and a definition of those expenses in annual filings. Any remaining amounts not quantitatively disclosed are expected to be described qualitatively. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption permitted, and the standard may be applied on a prospective or retrospective basis. We are currently assessing the impact that this new accounting standard will have on our consolidated financial statement disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU makes targeted amendments to the accounting for and disclosure of software costs under ASC 350-40. The amendments modernize the guidance to reflect current software development practices, including nonlinear development approaches, and remove references to “development stages.” Under the ASU, the following two criteria must be met for entities to begin capitalizing software costs: (1) management, with the relevant authority, implicitly or explicitly authorizes and commits to funding a computer software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). The ASU clarifies that this threshold would not be met when there is “significant uncertainty associated with the development activities of the software (referred to as ‘significant development uncertainty’).” The ASU is effective for all entities for annual reporting periods beginning after December 15, 2027, and for interim reporting periods within those fiscal years. Early adoption is permitted, and entities may apply the amendments prospectively, retrospectively, or using a modified prospective transition approach. We are currently evaluating the impact that this new accounting standard will have on our consolidated financial statements and disclosures.
In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration From a Customer in a Revenue Contract. This ASU expands the scope exceptions in the derivatives guidance to exclude certain non-exchange-traded contracts with underlyings based on the operations or activities of one of the parties to the contract, including the occurrence or nonoccurrence of an event specific to those operations or activities. The ASU also clarifies that share-based noncash consideration received from a customer in exchange for goods or services should be accounted for as noncash consideration under ASC 606 unless and until the entity’s right to receive or retain such consideration becomes unconditional. The ASU is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods. Early adoption is permitted. We are currently evaluating the impact that adoption of this new accounting standard will have on our consolidated financial statements and disclosures.
In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. This ASU establishes guidance on the recognition, measurement, presentation, and disclosure of government grants received by business entities. The guidance defines a government grant as a transfer of a monetary asset or a tangible nonmonetary asset from a government to a business entity other than in an exchange transaction and excludes transactions within the scope of other U.S. GAAP. Under the ASU, government grants are classified as either grants related to an asset or grants related to income, and recognition is permitted only when it is probable that the entity will comply with the conditions attached to the grant and that the grant will be received. The ASU permits alternative presentation approaches depending on the nature of the grant and requires disclosures regarding the nature of the grant, affected financial statement line items, and significant terms and conditions. The ASU is effective for public business entities for annual reporting periods beginning after December 15, 2028, including interim periods within those annual reporting periods. Early adoption is permitted, and the standard may be applied on a modified prospective, modified retrospective, or full retrospective basis. We are currently evaluating the impact of this new accounting standard and do not expect its adoption to have a material impact on our consolidated financial statements and disclosures.
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3. Net Product Sales
Net product sales by customer geographic location were as follows for the periods presented (in millions):
Years Ended December 31,
Net product sales by product were as follows (in millions):
Years Ended December 31,
_______
(1)Includes sales of Spikevax and mNEXSPIKE.
As of December 31, 2025, we have three commercial products, our COVID vaccines, Spikevax and mNEXSPIKE, and our RSV vaccine, mRESVIA. mRESVIA was approved by the FDA in May 2024 for adults aged 60 years and older, and in June 2025, the approved use was expanded to include adults aged 18 through 59 years who are at increased risk for lower respiratory tract disease (LRTD) caused byRSV. We launched commercial sales of mRESVIA in the third quarter of 2024. In May 2025, mNEXSPIKE was approved for use in adults aged 65 years and older, as well as individuals aged 12 through 64 years with at least one underlying risk factor. We launched commercial sales of mNEXSPIKE in the third quarter of 2025.
We sell our COVID and RSV vaccines to the commercial market as well as to foreign governments and international organizations. In the U.S., our COVID and RSV vaccines are sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers. Wholesalers and distributors typically do not make upfront payments to us. Net product sales are recognized net of estimated wholesaler chargebacks, invoice discounts for prompt payments and pre-orders, provisions for sales returns and government rebates, and other related deductions.
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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 (1,037) (1,141) (976)
Returns, rebates and other fees (1) (449) (267) (556)
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(1)Includes an adjustment of approximately $216 million in 2024, reflecting a reduction in prior year provision estimates, primarily related to returns and chargebacks for the previous COVID vaccine season. Adjustments recorded in 2025 related to prior year provision estimates were not material.
The following table summarizes the activities related to product sales provision recorded as accrued liabilities for the year ended December 31, 2025 (in millions):
Returns, rebates and other fees
Provision related to sales made in current period (436)
Provision related to sales made in prior periods (13)
Payments and returns related to sales made in current period 28
Payments and returns related to sales made in prior periods 282
4. Other Revenue
The following table summarizes other revenue for the periods presented (in millions):
Years Ended December 31,
Collaboration revenue (Note 5) 13 48 83
Licensing and royalty revenue 11 42 —
Stand-ready manufacturing revenue 80 $ — $ —
Grant Revenue
In April 2020, we entered into an agreement with the Biomedical Advanced Research and Development Authority (BARDA), a division of the Administration for Strategic Preparedness and Response (ASPR) within the U.S. Department of Health and Human Services (HHS), for an award of up to $483 million to accelerate development of our original COVID vaccine, mRNA-1273. The agreement has been subsequently amended to provide for additional commitments to support various late-stage clinical development efforts of our original COVID vaccine, including a 30,000 participant Phase 3 study, pediatric clinical trials, adolescent clinical trials and pharmacovigilance studies. The maximum award from BARDA, inclusive of all amendments, was approximately $1.8 billion. All contract options have been exercised. The BARDA contract concluded on June 15, 2025, upon completion of all contractual deliverables. We accrued and recognized revenue through that date for eligible costs incurred in accordance with the agreement. As of December 31, 2025, the remaining available funding, net of revenue earned, was approximately $62 million. While this funding remains available, we do not expect to recognize material additional revenue, as the contract has concluded and all obligations have been fulfilled. Final billing and closeout activities are ongoing and may result in immaterial adjustments to the recognized revenue amount.
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The following table summarizes grant revenue for the periods presented (in millions):
Years Ended December 31,
Other grant revenue 13 3 6
Total grant revenue $ 22 $ 37 $ 94
Collaboration Revenue
We have entered into collaboration agreements with strategic collaborators to accelerate the discovery and advancement of potential mRNA medicines across therapeutic areas. As of December 31, 2025, 2024 and 2023, we had collaboration agreements with Merck & Co., Inc (Merck), Vertex Pharmaceuticals Incorporated and Vertex Pharmaceuticals (Europe) Limited (together, Vertex), and others. See Note 5 to for further description of these collaboration agreements.
The following table summarizes our total consolidated net revenue from our strategic collaborators for the periods presented (in millions):
Years Ended December 31,
Collaboration Revenue by Strategic Collaborator: 2025 2024 2023
Total collaboration revenue $ 13 $ 48 $ 83
Licensing and Royalty Revenue
In April 2024, we entered a non-exclusive out-licensing agreement with a pharmaceutical company based in Japan for mRNA COVID-related intellectual property for the territory of Japan. Under the terms of the agreement, we received an upfront payment of $50 million, which included a $20 million prepayment creditable against future royalties. Additionally, we are entitled to receive low double-digit royalties on the net sales of the company’s COVID product. Upon execution of the agreement, we recognized $30 million of the upfront payment as other revenue in our consolidated statements of operations. The remaining $20 million was recorded as deferred revenue in our consolidated balance sheets and recognized as royalty revenue as the underlying sales occurred. In accordance with the terms of the agreement, the $20 million was fully recognized by the end of the first quarter of 2025.
Stand-Ready Manufacturing Revenue
Stand-ready manufacturing revenue relates to amounts recognized under long-term strategic agreements with government entities for maintaining mRNA manufacturing capacities and support pandemic readiness.
5. Collaboration Agreements and Research and Development Funding Arrangement
Merck – Personalized mRNA Cancer Vaccines (Intismeran Autogene)
In June 2016, we entered into a Collaboration and License Agreement, which was subsequently amended in 2018, with Merck for the development and commercialization of personalized mRNA cancer vaccines (PCV), also known as Individualized Neoantigen Therapy (INT), which has been assigned the generic name intismeran autogene. This agreement was subsequently amended in 2018. Under the PCV Agreement, we received an upfront payment of $200 million from Merck and we were responsible for designing and researching intismeran, providing manufacturing capacity and manufacturing intismeran and conducting Phase 1 and Phase 2 clinical trials for intismeran, alone and in combination with KEYTRUDA (pembrolizumab), Merck’s anti-PD-1 therapy, all in accordance with an agreed upon development plan and budget. We concluded that the collaboration arrangement was governed by the revenue recognition standard ASC 606.
In September 2022, Merck exercised its option for intismeran, including mRNA-4157, under the terms of the agreement and in October 2022 paid us an option exercise fee of $250 million. Following this exercise, the Merck Participation Term commenced, under which we and Merck collaborate on development and potential commercialization of PCV, with costs and any profits or losses generally shared equally on a worldwide basis, subject to certain exceptions as outlined in the agreement. During the development phase, we are primarily responsible for process development and the manufacture of intismeran materials, while Merck generally leads clinical trials. We concluded that the collaboration arrangement under the Merck Participation Term is within the scope of ASC 808. For the years ended December 31, 2025, 2024 and 2023, we recognized expenses, net of Merck's reimbursements, of$407 million,
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$390 million, and $184 million, respectively, related to the PCV collaboration under the Merck Participation Term. Additionally, the net cost recovery for capital expenditures during the same periods were $24 million, $109 million, and $102 million, respectively, which were applied to reduce the capitalized cost of the assets.
Development and Commercialization Funding Arrangement with Blackstone Life Sciences (Blackstone)
In March 2024, we entered into a development and commercialization funding arrangement with Blackstone, under which Blackstone has committed to providing up to $750 million in funding to us. This funding supports the development of our investigational mRNA-based influenza vaccine. Contingent upon regulatory approval in the U.S. and only if the approval is dependent on data from the funded activities, Blackstone will be entitled to receive low single-digit percentage royalties and up to $750 million in sales milestone payments. These payments are based on net sales of our future influenza and combination vaccines, with sales milestone payments contingent upon achieving specified cumulative net sales targets.
Given the substantive transfer of financial risk to Blackstone, we account for this arrangement as an obligation to conduct research and development activities. The funding is recognized as a reduction to the expenses of our mRNA-based influenza program. This reduction is recognized proportionally as the related costs are incurred, based on an input method. For the year ended December 31, 2025 and 2024, we recorded research and development expense reductions of $340 million and $267 million, respectively. As of December 31, 2025 and 2024, we had a research and development funding liability of $43 million and $58 million, respectively, related to the advance funding received from Blackstone.
Vertex – Strategic Alliance in Cystic Fibrosis
In July 2016, we entered into a Strategic Collaboration and License Agreement (Vertex Agreement), with Vertex Pharmaceuticals Incorporated, and Vertex Pharmaceuticals (Europe) Limited, together, Vertex. The Vertex Agreement, which was amended in July 2019 (2019 Vertex Amendment), is aimed at the discovery and development of potential mRNA medicines for the treatment of cystic fibrosis (CF) by enabling cells in the lungs of people with CF to produce functional cystic fibrosis transmembrane conductance regulator (CFTR) proteins. Pursuant to the Vertex Agreement, we lead discovery efforts during an initial research period, leveraging our platform technology and mRNA delivery expertise along with Vertex’s scientific experience in CF biology and the functional understanding of CFTR. Vertex is responsible for conducting development and commercialization activities for candidates and products that arise from the strategic alliance, including the costs associated with such activities. Subject to customary “back-up” supply rights granted to Vertex, we exclusively manufacture (or have manufactured) mRNA for preclinical, clinical and commercialization purposes. This collaboration arrangement is accounted for under ASC 606 and currently ongoing.
Immatics – Strategic Multi-Platform Collaboration to Develop Oncology Therapeutics
In September 2023, we entered into a strategic collaboration with Immatics to jointly discover and develop T cell-redirecting cancer immunotherapies. Upon effectiveness of the agreement in October 2023, we made an upfront payment of $120 million, recognized as research and development expense. Immatics is also eligible for research funding, milestone payments, tiered royalties on global net sales of TCER® products and certain vaccine products that are commercialized under the agreement. Additionally, Immatics has an option to enter into a global profit and loss share arrangement for the most advanced TCER®.
In addition to the collaborative arrangements mentioned above, we have other collaborative and licensing arrangements that we do not consider to be individually significant to our business at this time. Pursuant to these agreements, we may be required to make upfront payments and payments upon achievement of various development, regulatory and commercial milestones, which in the aggregate could be significant. Future milestone payments, if any, will be reflected in our consolidated financial statements when the corresponding events become probable. In addition, we may be required to pay significant royalties on future sales if products related to these arrangements are commercialized.
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6. Financial Instruments and Fair Value Measurements
Cash and Cash Equivalents and Investments
The following tables summarize our cash, cash equivalents, and available-for-sale securities by significant investment category at December 31, 2025 and 2024 (in millions):
Cash and cash equivalents $ 2,595 $ — $ — $ 2,595 $ 2,595 $ — $ —
Available-for-sale:
Certificates of deposit 91 — — 91 — 86 5
Government debt securities 66 — — 66 — 30 36
Cash and cash equivalents $ 1,927 $ — $ — $ 1,927 $ 1,927 $ — $ —
Available-for-sale:
Certificates of deposit 52 — — 52 — 52 —
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The amortized cost and estimated fair value of available-for-sale securities, by contractual maturity at December 31, 2025 and 2024 were as follows (in millions):
AmortizedCost EstimatedFair Value
Due after one year through five years 2,334 2,336
AmortizedCost EstimatedFair Value
Due after one year through five years 2,508 2,494
In accordance with our investment policy, we place investments in investment grade securities with high credit quality issuers, and generally limit the amount of credit exposure to any one issuer. We evaluate securities for impairment at the end of each reporting period. We did not record any impairment charges related to our available-for-sale securities during the years ended December 31, 2025, 2024, and 2023. We did not recognize any credit-related allowance to available-for-sale securities as of December 31, 2025 and 2024.
The following table summarizes the amount of gross unrealized losses and the estimated fair value for our available-for-sale securities in an unrealized loss position by length of time the securities have been in an unrealized loss position at December 31, 2025 and 2024 (in millions):
Less than 12 Months 12 Months or More Total
U.S. treasury bills $ — $ 111 $ — $ — $ — $ 111
Government debt securities — 36 — 8 — 44
U.S. treasury bills $ — $ 101 $ — $ — $ — $ 101
Government debt securities — — — 37 — 37
At December 31, 2025 and 2024, we held 108 and 252 available-for-sale securities, respectively, out of our total investment portfolio that were in a continuous unrealized loss position. We neither intend to sell these investments nor conclude that we are more-likely-than-not that we will have to sell them before recovery of their carrying values. We also believe that we will be able to collect both principal and interest amounts due to us at maturity.
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Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 (in millions):
Fair value at December 31, 2025 Fair Value Measurement Using
Level 1 Level 2
Assets:
Money market funds $ 963 $ 963 $ —
Certificates of deposit 91 — 91
Government debt securities 66 — 66
Equity investments(1) 6 6 —
Derivative instruments 1 — 1
Liabilities:
Derivative instruments $ 4 $ — $ 4
Fair value at December 31, 2024 Fair Value Measurement Using
Level 1 Level 2
Assets:
Certificates of deposit 52 — 52
Government debt securities 138 — 138
Equity investments(1) 14 14 —
Derivative instruments 10 — 10
Liabilities:
Derivative instruments $ 2 $ — $ 2
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(1)Investments in publicly traded equity securities with readily determinable fair values are recorded at quoted market prices for identical securities, with changes in fair value recorded in other expense net, in our consolidated statements of operations.
As of December 31, 2025 and 2024, we did not have non-financial assets or liabilities measured at fair value on a recurring basis.
For the years ended December 31, 2025, 2024 and 2023, we recognized net losses of $8 million, $52 million and $35 million, respectively, on equity investments from changes in fair value of the securities.
Fair Value of Other Financial Instruments
We estimate the fair value of our term loan using Level 2 inputs. The fair value of the term loan approximates its carrying value as of December 31, 2025, because the instrument bears interest at a variable rate that reflects current market rates. See Note 11 for additional information.
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