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What changed in Moderna's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Moderna's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+943 added−1147 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in Moderna's 2023 10-K

943 paragraphs added · 1147 removed · 686 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

289 edited+125 added−296 removed165 unchanged
Biggest changeCompetition for the sale of our COVID-19 vaccines can be impacted by a number of factors, including: the efficacy of our vaccine in preventing COVID-19 (particularly in the prevention of severe cases of COVID-19); the ability of our vaccines, and boosters to protect effectively against variants of the SARS-CoV-2 virus; perceptions of the efficacy of our vaccine; concerns about potential side effects from the vaccine, its safety or tolerability; the novelty of mRNA technology; storage and handling conditions for our vaccines and the ease or difficulty with which they can be distributed; the timing and scope of regulatory approvals; reimbursement coverage; our costs to produce and distribute our vaccines; and our ability to scale our manufacturing and distribution effectively as we continue to expand shipments internationally.
Biggest changeCompetition for the sale of our COVID-19 vaccine is impacted by many factors, including, among others, actual and perceived vaccine efficacy (including against emerging SARS-CoV-2 variants), safety and tolerability, perceptions of mRNA technology, storage and handling conditions and the relative ease of distribution and administration, the timing and scope of regulatory approvals, reimbursement coverage and production and distribution costs.
EBV is the major cause of infectious mononucleosis in the U.S., accounting for over 90% of the approximately one to two million cases of infectious mononucleosis in the U.S. each year. Infectious mononucleosis can debilitate patients for weeks to months and, in some cases, can lead to hospitalization due to complications such as splenic rupture.
EBV is the major cause of infectious mononucleosis, accounting for over 90% of the approximately one to two million cases in the U.S. each year. Infectious mononucleosis can debilitate patients for weeks to months and, in some cases, can lead to hospitalization due to complications such as splenic rupture.
The GDPR also imposes strict rules on the transfer of personal data out of the EU, provides an enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20.0 million or 4.0% of the annual global revenues of the infringer, whichever is greater.
The GDPR also imposes strict rules on the transfer of personal data out of the EU, provides an enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20.0 million or 4% of the annual global revenues of the infringer, whichever is greater.
For example, the California Consumer Protection Act (CCPA) established a new privacy framework for covered businesses by creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
For example, the California Consumer Protection Act (CCPA) established a comprehensive privacy framework for covered businesses by creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
If the FDA approves a drug product that contains an active ingredient not previously approved, the product is typically entitled to five years of non-patent regulatory exclusivity. Other products may be entitled to three years of exclusivity if approval was based on the FDA’s reliance on new clinical studies essential to approval submitted by the NDA applicant.
If the FDA approves a drug product that contains an active ingredient not previously approved, the product is typically entitled to five years of non-patent regulatory data exclusivity. Other products may be entitled to three years of regulatory data exclusivity if approval was based on the FDA’s reliance on new clinical studies essential to approval submitted by the NDA applicant.
PD-L1 (mRNA-6981) PD-L1 is a co-inhibitory receptor that can induce anergy in programmed cell death protein 1 (PD-1)-expressing T cells and we intend to induce expression of PD-L1 on myeloid cells to send a tolerizing signal to immune cells in their environment in order to treat autoimmune diseases.
PD-L1 (mRNA-6981) PD-L1 is a co-inhibitory receptor that can induce anergy in programmed cell death protein 1 (PD-1)-expressing T cells. We intend to induce expression of PD-L1 on myeloid cells to send a tolerizing signal to immune cells in their environment in order to treat autoimmune diseases.
Together, the Cellscript-MRT Agreements grant us a worldwide, sublicensable sublicense to the Penn Modified mRNA Patents to research, develop, make, and commercialize products covered by the Penn Modified mRNA Patents, or licensed products, for all in vivo uses in humans and animals, including therapeutic, prophylactic, and diagnostic applications.
Together, the Cellscript-MRT Agreements grant us a worldwide, sublicensable sublicense to the Penn Modified mRNA Patents to research, develop, make, and commercialize products covered by the Penn Modified mRNA Patents (licensed products), for all in vivo uses in humans and animals, including therapeutic, prophylactic, and diagnostic applications.
In the United States, these laws include, among others: • The Anti-Kickback Statute, which makes it illegal for any person to knowingly and willfully solicit, receive, offer, or pay any remuneration, directly or indirectly, in cash or in kind, that is intended to induce or reward referrals, including the purchase, recommendation, order or prescription of a particular drug or any other good or service, for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. • The federal False Claims Act, which imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing, or concealing an obligation to pay money to the federal government. • Health Insurance Portability and Accountability Act of 1996 (HIPAA), which imposes criminal and civil liability for, among other things, knowingly and willfully executing a scheme, or attempting to execute a scheme, to defraud any healthcare benefit program, including private payors, or falsifying, concealing, or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services. • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), and their respective implementing regulations, which impose, among other things, requirements on covered entities and their business associates relating to the privacy and security of individually identifiable health information. 56 Table of Content • The Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act, the ACA, which requires certain pharmaceutical manufacturers with products reimbursed under certain government programs to disclose annually to the federal government (for re-disclosure to the public) certain payments and other transfers of value provided to physicians, teaching hospitals and certain non-physician practitioners. • Federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs. • Federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers. • Analogous state fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, which may be broader in scope and apply regardless of payor.
In the United States, these laws include, among others: • The Anti-Kickback Statute, which makes it illegal for any person to knowingly and willfully solicit, receive, offer, or pay any remuneration, directly or indirectly, in cash or in kind, that is intended to induce or reward referrals, including the purchase, recommendation, order or prescription of a particular drug or any other good or service, for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. • The federal False Claims Act, which imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing, or concealing an obligation to pay money to the federal government. • Health Insurance Portability and Accountability Act of 1996 (HIPAA), which imposes criminal and civil liability for, among other things, knowingly and willfully executing a scheme, or attempting to execute a scheme, to defraud any healthcare benefit program, including private payors, or falsifying, concealing, or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services. • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), and their respective implementing regulations, which impose, among other things, requirements on covered entities and their business associates relating to the privacy and security of individually identifiable health information. 43 Table of Contents • The Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act (ACA), which requires certain pharmaceutical manufacturers with products reimbursed under certain government programs to disclose annually to the federal government (for re-disclosure to the public) certain payments and other transfers of value provided to physicians, teaching hospitals and certain other licensed health care practitioners. • Federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs. • Federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers. • Analogous state fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, which may be broader in scope and apply regardless of payor.
Patent sublicense agreements with Cellscript and mRNA RiboTherapeutics The Trustees of the University of Pennsylvania owns several issued U.S. patents, granted European patents and pending U.S. patent applications directed, in part, to nucleoside-modified mRNAs and their uses, or the Penn Modified mRNA Patents. mRNA RiboTherapeutics, Inc.
Patent sublicense agreements with Cellscript and mRNA RiboTherapeutics The Trustees of the University of Pennsylvania owns several issued U.S. patents, granted European patents and pending U.S. patent applications directed, in part, to nucleoside-modified mRNAs and their uses (the Penn Modified mRNA Patents). mRNA RiboTherapeutics, Inc.
We have developed proprietary bioinformatics designed algorithms linked to an automated manufacturing process for rapid production of formulated mRNA, with a typical turnaround time of a few weeks. We have operationalized PCV manufacturing at the MTC campus to meet our Phase 1 and 2 pipeline supply needs by using single-use systems with fast “needle-to-needle” turnaround times.
We have developed proprietary bioinformatics designed algorithms linked to an automated manufacturing process for rapid production of formulated mRNA, with a typical turnaround time of a few weeks. We have operationalized INT manufacturing at the MTC campus to meet our Phase 1 and 2 pipeline supply needs by using single-use systems with fast “needle-to-needle” turnaround times.
On March 17, 2020, the Secretary of HHS issued a declaration under the PREP Act and has issued subsequent amendments thereto to provide liability immunity for activities related to certain countermeasures against the ongoing COVID-19 pandemic. While we believe our products sold to the U.S. Government would be covered under the provisions of the PREP Act, this cannot be assured.
On March 17, 2020, the Secretary of HHS issued a declaration under the PREP Act and has issued subsequent amendments thereto to provide liability immunity for activities related to certain countermeasures against COVID-19. While we believe our products sold to the U.S. Government would be covered under the provisions of the PREP Act, this cannot be assured.
Unlike traditional process development, each PCV batch is manufactured for a single patient and thus scaled-out (in parallel) with extensive use of automation and robotics to account for the larger number of patients involved in later phases of development and commercialization. We have shown consistent quality in our production of many patient batches, each with unique mRNA sequences.
Unlike traditional process development, each INT batch is manufactured for a single patient and thus scaled-out (in parallel) with extensive use of automation and robotics to account for the larger number of patients involved in later phases of development and commercialization. We have shown consistent quality in our production of many patient batches, each with unique mRNA sequences.
European orphan designation and exclusivity Orphan drug designation is available in the EU to promote the development of products that are intended for the diagnosis, prevention, or treatment of life threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the EU community, or where it is unlikely that the development of the medicine would generate sufficient return to justify the necessary investment in its development, and in each case for which no satisfactory method of diagnosis, prevention, or treatment has been authorized (or, if a method exists, the product would be a significant benefit to those affected).
European orphan designation and exclusivity Orphan drug designation is available in the EU to promote the development of products that are intended for the diagnosis, prevention, or treatment of life threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the EU community, or where it is unlikely that the development of the medicine would generate sufficient return to justify the necessary investment in its development, and in each case for which no satisfactory method of diagnosis, prevention, or treatment has been 41 Table of Contents authorized (or, if a method exists, the product would be a significant benefit to those affected).
Based on our insights into these mechanisms, we have engineered our LNP systems to reduce or eliminate undesirable surface features. In clinical studies for our systemic therapeutic development candidates that use our novel LNP systems, we have been able to repeat dose with negligible or undetectable loss in potency, liver damage, and immune system activation.
Based on our insights into these mechanisms, we have engineered our LNP systems to reduce or eliminate undesirable surface features. In clinical studies for our systemic therapeutic product candidates that use our novel LNP systems, we have been able to repeat dose with negligible or undetectable loss in potency, liver damage, and immune system activation.
Our cancer vaccines modality is focused on the use of mRNA to express neoantigens found in a particular tumor in order to elicit an immune response via T cells that recognize those neoantigens, and therefore the tumor. These neoantigens can either be unique to a patient or can be related to a driver oncogene found across subsets of patients.
Our cancer therapies modality is focused on the use of mRNA to express neoantigens found in a particular tumor in order to elicit an immune response via T cells that recognize those neoantigens, and therefore the tumor. These neoantigens can either be unique to a patient or can be related to a driver oncogene found across subsets of patients.
Under the strategic alliance, we identify genetic mutations present in a particular patient’s tumor cells, synthesize mRNA for these mutations, encapsulate the mRNA in one of our proprietary LNPs and administer to each patient a unique mRNA cancer vaccine designed to specifically activate the patient’s immune system against her or his own cancer cells.
Under the strategic alliance, we identify genetic mutations present in a particular patient’s tumor cells, synthesize mRNA for these mutations, encapsulate the mRNA in one of our proprietary LNPs and administer to each patient a unique INT designed to specifically activate the patient’s immune system against her or his own cancer cells.
EU drug marketing Similar to the Anti-Kickback Statute prohibition in the United States discussed below, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of medicinal products is prohibited in the EU. Infringement of relevant EU laws could result in substantial fines and imprisonment.
Marketing of medicines in the EU Similar to the Anti-Kickback Statute prohibition in the United States discussed below, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of medicinal products is prohibited in the EU. Infringement of relevant EU laws could result in substantial fines and imprisonment.
We believe mRNA vaccines have several advantages, including the ability to mimic many aspects of various infections, the ability to combine antigens for compelling product profiles, the rapid discovery and advancement of programs into the clinic and the capital efficiency and speed from shared manufacturing processes and infrastructure. • Cancer vaccines: The goal of a cancer vaccine is to safely expose the patient’s immune system to tumor related antigens, known as neoantigens, to enable the immune system to elicit a more effective antitumor response.
We believe mRNA vaccines have several advantages, including the ability to mimic many aspects of various infections, the ability to combine antigens for compelling product profiles, the rapid discovery and advancement of programs into the clinic and the capital efficiency and speed from shared manufacturing processes and infrastructure. • Cancer vaccines and therapeutics: The goal of a cancer therapy is to safely expose the patient’s immune system to tumor-related antigens, known as neoantigens, to enable the immune system to elicit a more effective antitumor response.
Forward-looking references to our COVID-19 vaccine in this Annual Report on Form 10-K may include future modifications to mRNA-1273 or other development candidates that are designed to provide protection against variants of the SARS-CoV-2 virus.
Forward-looking references to our COVID-19 vaccine in this Annual Report on Form 10-K may include future modifications to mRNA-1273 or other product candidates that are designed to provide protection against variants of the SARS-CoV-2 virus.
Our estate also includes IP covering certain LNP-encapsulated mRNAs coding for infectious disease antigens for use in preventing or treating infectious diseases, including those caused by respiratory and latent viruses, as well as bacterial, viral and parasitical diseases known to threaten public health.
Our estate also includes IP covering certain LNP-encapsulated mRNAs coding for infectious disease antigens for use in preventing or treating infectious diseases, including those caused by respiratory and latent viruses, as well as bacterial, viral and parasitic diseases known to threaten public health.
These applications also relate to various vaccine design formats, in particular, polyepitopic vaccine formats, and methods of treating cancer with such PCVs. We also possess substantial know-how and trade secrets relating to the development and commercialization of our cancer vaccine programs, including related manufacturing process and technology.
These applications also relate to various vaccine design formats, in particular, polyepitopic vaccine formats, and methods of treating cancer with such INTs. We also possess substantial know-how and trade secrets relating to the development and commercialization of our cancer vaccine programs, including related manufacturing process and technology.
Priority review designation means the FDA’s goal is to take action on an application within six months of filing. The FDA may grant priority review designation to a drug that would provide significant improvement in the safety or effectiveness of a treatment, diagnosis or prevention of a serious condition.
Priority review designation means the FDA’s goal is to take action on an application within six months of filing. The FDA may grant priority review designation to a medicine that would provide significant improvement in the safety or effectiveness of a treatment, diagnosis or prevention of a serious condition.
All programs, with the exception of PCV, require that we progressively scale up supply to meet clinical demand requirements across development phases, in addition to the necessary preparation for regulatory approval and commercial production, which demand larger batch sizes.
All programs, with the exception of INT, require that we progressively scale up supply to meet clinical demand requirements across development phases, in addition to the necessary preparation for regulatory approval and commercial production, which demand larger batch sizes.
We believe that our employees are highly engaged, and our company and team have been publicly recognized for our leadership, innovation and good corporate citizenship. Science magazine ranked us as a top employer for each of the last eight years.
We believe that our employees are highly engaged, and our company and team have been publicly recognized for our leadership, innovation and good corporate citizenship. Science magazine ranked us as a top employer for each of the last nine years.
Fast track designation is designed to facilitate the development and review of a drug that treats a serious condition and fills an unmet medical need. Breakthrough therapy designation is designed to expedite the development and review of a drug that treats a serious condition and preliminary clinical evidence demonstrates substantial improvement over available therapies.
Fast track designation is designed to facilitate the development and review of a medicine that treats a serious condition and fills an unmet medical need. Breakthrough therapy designation is designed to expedite the development and review of a medicine that treats a serious condition and preliminary clinical evidence demonstrates substantial improvement over available therapies.
We invest substantially through Moderna University in the development of our people. • Well-being : We are committed to the health and well-being of our employees and their families and provide numerous family-friendly benefits and opportunities to be healthy, including monthly contributions to employee lifestyle spending accounts. • Inclusion : We believe in the benefits of bringing together a diverse set of perspectives and backgrounds, and creating an environment where differences are celebrated and leveraged.
We invest substantially in the development of our people. • Well-being : We are committed to the health and well-being of our employees and their families and provide numerous family-friendly benefits and opportunities to be healthy, including monthly contributions to employee lifestyle spending accounts. • Inclusion : We believe in the benefits of bringing together a diverse set of perspectives and backgrounds, and creating an environment where differences are celebrated and leveraged.
The 5’ cap and 3’ poly-A tail enhance ribosome engagement and protect the mRNA from attack by intracellular enzymes that digest mRNA from its ends. 8 Table of Content The intrinsic advantages of using mRNA as a medicine mRNA possesses inherent characteristics that we believe position it to have a profound impact on human health: • mRNA is used by every cell to produce all proteins: mRNA is used to make every type of protein, including secreted, membrane, and intracellular proteins, in varying quantities over time, in different locations and in various combinations.
The 5’ cap and 3’ poly-A tail enhance ribosome engagement and protect the mRNA from attack by intracellular enzymes that digest mRNA from its ends. 7 Table of Contents The intrinsic advantages of using mRNA as a medicine mRNA possesses inherent characteristics that we believe position it to have a profound impact on human health: • mRNA is used by every cell to produce all proteins: mRNA is used to make every type of protein, including secreted, membrane and intracellular proteins, in varying quantities over time, in different locations and in various combinations.
For our Crigler-Najjar Syndrome Type 1 (CN-1) development candidate, we have patent applications pending in the U.S., Europe, Australia, Canada and Japan. Our ornithine transcarbamylase deficiency (OTC) development candidate is covered by a pending PCT application.
For our Crigler-Najjar Syndrome Type 1 (CN-1) development candidate, we have patent applications pending in the U.S., Europe and Japan. Our ornithine transcarbamylase deficiency (OTC) development candidate is covered by a pending PCT application.
Our Relaxin development candidate is covered by several patent families, including granted patents in Japan, China and the U.S., and by additional applications in the U.S. and additional foreign jurisdictions and a pending PCT application. Our PD-L1 development candidate is covered in pending patent applications filed in the U.S., Japan, Europe, Canada and Australia.
Our Relaxin development candidate is covered by several patent families, including granted patents in Japan, China and the U.S., and by additional applications in the U.S. and additional foreign jurisdictions and a pending PCT application. Our PD-L1 development candidate is covered in pending patent applications filed in the U.S., Japan and Europe.
The outlook for any patients with advanced cancer remains poor, especially in patients with tumors that have little immune system engagement, sometimes termed immunologically “cold”. In conjunction with a checkpoint inhibitor, we aim to activate the immune system against these otherwise immunologically cold tumors. Intratumoral administration allows for localized effect of these therapeutics that could be toxic if administered systemically.
The outlook for any patients with advanced cancer remains poor, especially in patients with tumors that have little immune system engagement, sometimes termed immunologically “cold.” In conjunction with a checkpoint inhibitor, we aim to activate the immune system against these otherwise immunologically cold tumors. Intratumoral administration allows for localized effect of these therapeutics that could be toxic if administered systemically.
Our mRNA medicines aim to increase levels of intracellular proteins to achieve a therapeutic effect in one or more tissues or cell types and our initial focus is on rare genetic diseases. Intracellular therapeutics are not currently addressable with recombinant proteins, which are typically administered systematically and cannot reach inside of the cell.
Our mRNA medicines aim to increase levels of intracellular proteins to achieve a therapeutic effect in one or more tissues or cell types and our initial focus is on rare genetic diseases. Intracellular therapeutics are not currently addressable with recombinant proteins, which are typically 11 Table of Contents administered systematically and cannot reach inside of the cell.
(including granted European patents that have been validated in numerous European countries) covering certain of our proprietary platform technology, inventions and improvements, and covering key aspects of our clinical and most advanced development candidates. We have over 1,050 additional pending patent applications that, in many cases, are counterparts to the foregoing U.S. and foreign patents.
(including granted European patents that have been validated in numerous European countries) covering certain of our proprietary platform technology, inventions and improvements, and covering key aspects of our clinical and most advanced development candidates. We have over 400 additional pending patent applications that, in many cases, are counterparts to the foregoing U.S. and foreign patents.
During the additional two-year period of market exclusivity, a generic or biosimilar marketing authorization application can be submitted, and the innovator’s data may be referenced, but no generic or biosimilar product can be marketed until the expiration of the market exclusivity period.
During the additional two-year period of market protection, a generic or biosimilar marketing authorization application can be submitted, and the innovator’s data may be referenced, but no generic or biosimilar product can be marketed until the expiration of the market protection period.
The GDPR imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of the personal data.
The GDPR imposes strict requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of the personal data.
In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. 50 Table of Content Clinical trials The clinical stage of development involves the administration of the investigational medicine to healthy volunteers or patients under the supervision of qualified investigators and in accordance with GCP requirements.
In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical trials The clinical stage of development involves the administration of the investigational medicine to healthy volunteers or patients under the supervision of qualified investigators and in accordance with GCP requirements.
We measure and hold management accountable to creating an environment of psychological safety. • Compelling rewards : To attract and retain the best talent, we provide competitive rewards that help to drive groundbreaking work and allow employees to share in the value we will create together, including through our equity programs. • Giving and volunteering: Our people have the opportunity to give back to their communities and directly support causes that they are passionate about through volunteer and employee matching donation programs. 47 Table of Content To help promote alignment between our employees and our shareholders, all employees participate in our corporate equity programs through the receipt of equity grants, and the percentage of equity as a component of overall pay mix increases with seniority.
We measure and hold management accountable to creating an environment of psychological safety. • Compelling rewards : To attract and retain the best talent, we provide competitive rewards that help to drive groundbreaking work and allow employees to share in the value we will create together, including through our equity programs. • Giving and volunteering: Our people have the opportunity to give back to their communities and directly support causes that they are passionate about through volunteer and employee matching donation programs. 34 Table of Contents To help promote alignment between our employees and our shareholders, all employees participate in our corporate equity programs through the receipt of equity awards, and the percentage of equity as a component of overall pay mix increases with seniority.
Expedited development and review programs The FDA may employ one of several tools to facilitate and expedite the development and review of a drug, including fast track designation, breakthrough therapy designation, accelerated approval and priority review designation.
Expedited development and review programs The FDA may employ one of several tools to facilitate and expedite the development and review of a medicine, including fast track designation, breakthrough therapy designation, accelerated approval and priority review designation.
There is no guarantee that a product will be considered by the EU’s regulatory authorities to be an innovative medicinal product, and products may not qualify for data exclusivity.
There is no guarantee that a product will be considered by the EU’s regulatory authorities to be an innovative medicinal product, and products may not qualify for regulatory data protection.
Applying our understanding of the basic science underlying each step in the manufacturing process, we have designed proprietary manufacturing processes to impart desirable pharmacologic features, for example increasing potency in a vaccine. LNP manufacturing process: Improving pharmacology: Our platform technology includes synthetic processes to produce LNPs.
Applying our understanding of the basic science underlying each step in the manufacturing process, we have designed proprietary manufacturing processes to impart desirable pharmacologic features, for example increasing potency in a vaccine. 10 Table of Contents LNP manufacturing process: Improving pharmacology: Our platform technology includes synthetic processes to produce LNPs.
In addition, we have at least 925 pending trademark applications in more than 95 jurisdictions, including in the aforementioned locations and additional countries throughout Africa, Asia, and South America.
In addition, we have at least 600 pending trademark applications in more than 95 jurisdictions, including in the aforementioned locations and additional countries throughout Africa, Asia, and South America.
Please refer to our 2021 ESG Report under the “Responsibility—Corporate policies” section of our website, which can be found at www.modernatx.com/responsibility/corporate-policies, as well as our proxy statement related to our 2023 Annual Meeting of Stockholders that we will file with the SEC, for a description of some of the measures we have taken to progress our commitment to corporate social responsibility.
Please refer to our 2022 ESG Report under the “Responsibility—Corporate policies” section of our website, which can be found at www.modernatx.com/responsibility/corporate-policies, as well as our proxy statement related to our 2024 Annual Meeting of Stockholders that we will file with the SEC, for a description of some of the measures we have taken to progress our commitment to corporate social responsibility.
However, we face competition from others developing mRNA vaccines and therapeutics, as well as other medicines that compete or could compete with our mRNA products, development candidates and investigational medicines. We face competition from various sources, including large pharmaceutical companies, biotechnology companies, academic institutions, government agencies and public and private research institutions.
However, we face competition from others developing mRNA vaccines and therapeutics, as well as other medicines that compete or could compete with our products. We face competition from various sources, including large pharmaceutical companies, biotechnology companies, academic institutions, government agencies and public and private research institutions.
The PD-L1/PD-1 pathway has a critical function in immune regulation and promotes development and function of Tregs. PD-L1 is a transmembrane protein expressed on antigen presenting cells, such as dendritic cells and macrophages, activated T cells, B cells, and monocytes as well as peripheral tissues.
The PD-L1/PD-1 pathway has a critical function in immune regulation and promotes development and function of regulatory T (Treg) cells. PD-L1 is a transmembrane protein expressed on antigen presenting cells, such as dendritic cells and macrophages, activated T cells, B cells and monocytes, as well as peripheral tissues.
During the research stage of product development, manufacturing provides mRNA drug substance and drug product for platform research and therapeutic area drug discovery. During early development of our investigational medicines, we manufacture mRNA and drug product for IND-enabling GLP toxicology studies and initial human clinical studies. For late clinical development, we produce mRNA and drug product for Phase 3 trials.
During the research stage of product development, manufacturing provides mRNA drug substance and drug product for platform research and therapeutic area drug discovery. During early development of our product candidates, we manufacture mRNA and drug product for IND-enabling GLP toxicology studies and initial human clinical studies. For late clinical development, we produce mRNA and drug product for Phase 3 trials.
An EUA is not a long-term alternative to obtaining FDA approval, licensure, or clearance for a product. The FDA may revoke an EUA for a variety of reasons, including if the underlying health emergency no longer exists or warrants such authorization.
An EUA terminates when the emergency determination underlying the EUA terminates. An EUA is not a long-term alternative to obtaining FDA approval, licensure, or clearance for a product. The FDA may revoke an EUA for a variety of reasons, including if the underlying health emergency no longer exists or warrants such authorization.
The MTC has been designed to allow us to continue to optimize our mRNA products as we explore new pharmaceutical delivery forms in our manufacturing network such as prefilled syringes and lyophilized products. 32 Table of Content The MTC campus has been designed with a high level of automation and state-of-the-art digital integration to handle manufacturing execution, product testing and release and regulatory filings.
The MTC has been designed to allow us to continue to optimize our mRNA products as we explore new pharmaceutical delivery forms in our manufacturing network such as prefilled syringes. The MTC campus has been designed with a high level of automation and state-of-the-art digital integration to handle manufacturing execution, product testing and release, and regulatory filings.
Our commercial teams also work in conjunction with third-party distributors and other partners in countries where we do not have a presence. Our commercial activities are dependent on regulatory approvals and on agreements that we have made or may make in the future with strategic collaborators. Before 2023, we sold our COVID-19 vaccines to the U.S.
Our commercial teams also work with third-party distributors and other partners in countries where we do not have a direct presence. Our commercial activities are dependent on regulatory approvals and on agreements that we have made or may make in the future with strategic collaborators. Before 2023, we sold our COVID-19 vaccine to the U.S.
Vertex (Nasdaq: VRTX)—2016 Strategic Alliance in Cystic Fibrosis In July 2016, we entered into a Strategic Collaboration and License Agreement (Vertex Agreement) with Vertex Pharmaceuticals Incorporated, and Vertex Pharmaceuticals (Europe) Limited (together, Vertex).
Vertex—2016 Strategic Alliance in Cystic Fibrosis In July 2016, we entered into a Strategic Collaboration and License Agreement (Vertex Agreement) with Vertex Pharmaceuticals Incorporated, and Vertex Pharmaceuticals (Europe) Limited (together, Vertex).
Pursuant to the agreement, we have agreed to pay low single-digit royalties on future net sales, a minimum annual royalty payment and certain contingent development, regulatory and commercial milestone payments on a licensed product-by-licensed product basis. 46 Table of Content Formulation technology in-licenses Our development candidates use internally developed formulation technology that we own.
Pursuant to the agreement, we have agreed to pay low single-digit royalties on future net sales, a minimum annual royalty payment and certain contingent development, regulatory and commercial milestone payments on a licensed product-by-licensed product basis. Formulation technology in-licenses Our development candidates use internally developed formulation technology that we own.
The centralized procedure, which is compulsory for medicines produced by biotechnology, advanced therapy medicinal products (ATMPs), orphan medicinal products, or those medicines containing a new active substance and intended to treat HIV/AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune and other immune dysfunctions and viral diseases, and optional for those medicines that are highly innovative or contain a new active substance, provides for the grant of a single marketing authorization that is valid throughout the EEA.
The centralized procedure, which is compulsory for medicines produced by certain biotechnological processes, advanced therapy medicinal products (ATMPs), orphan medicinal products, or those medicines containing a new active substance and intended to treat specific diseases (HIV/AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune and other immune dysfunctions and viral diseases), and optional for those medicines that are highly innovative or contain a new active substance, provides for the grant of a single marketing authorization that is valid throughout the EEA.
We design microRNA binding sites into the 3’-UTR of our potential mRNA medicines so that if our mRNA is delivered to cells with such microRNAs, it will be minimally translated and rapidly degraded.
We design microRNA binding sites into 9 Table of Contents the 3’-UTR of our potential mRNA medicines so that if our mRNA is delivered to cells with such microRNAs, it will be minimally translated and rapidly degraded.
None of our employees are represented by a labor union or works councils, and none of our employees have entered into a collective bargaining agreement with us. A small number of employees in Belgium, France, Italy and Spain are covered by statutory collective bargaining agreements governing certain benefits and working conditions. We consider our employee relations to be go od.
None of our employees are represented by a labor union or works councils, and none of our employees have entered into a collective bargaining agreement with us. A small number of employees in France, Italy and Spain are covered by statutory collective bargaining agreements governing certain benefits and working conditions. We consider our employee relations to be good.
CF is a rare genetic disease, which is progressive from birth and leads to multi-organ damage and early death due to lung dysfunction. It is caused by the mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene which results in the loss of CFTR chloride ion channel function.
Cystic Fibrosis (CF) (mRNA-3692/VX-522) CF is a rare genetic disease, which is progressive from birth and leads to multi-organ damage and early death due to lung dysfunction. It is caused by the mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene, which results in the loss of CFTR chloride ion channel function.
These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, and amendments to those reports. The SEC also maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding us and other issuers that file electronically with the SEC. 58 Table of Content
These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, and amendments to those reports. The SEC also maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding us and other issuers that file electronically with the SEC. 45 Table of Contents
In addition, the federal government, state legislatures, and foreign governments have shown significant interest in implementing cost containment programs, including price-controls, restrictions on reimbursement, and requirements for substitution of generic products for branded prescription drugs to limit the growth of government paid health care costs.
In addition, the federal government, state legislatures, and foreign governments have shown significant interest in implementing cost containment programs, including price-controls and price transparency, 44 Table of Contents restrictions on reimbursement, and requirements for substitution of generic products for branded prescription drugs to limit the growth of government paid health care costs.
Pursuant to the PCV Agreement, we and Merck will collaborate on further development and commercialization of mRNA-4157, and we will share costs and any profits and losses worldwide related to mRNA-4157 equally. Latest data and next steps In December 2022, we announced that the randomized Phase 2 trial of mRNA-4157 had met its primary endpoint.
Pursuant to the PCV Agreement, we and Merck will collaborate on further development and commercialization of mRNA-4157, and we will share costs and any profits and losses worldwide related to mRNA-4157 equally . In December 2022, we announced that the randomized Phase 2 trial of mRNA-4157 had met its primary endpoint.
Biomedical Advanced Research and Development Authority (BARDA) In September 2016, we received an award of up to approximately $126 million , subsequently adjusted to $117 million in 2021, under Agreement No. HHSO100201600029C from BARDA, a component of the Office of the Assistant Secretary for Preparedness and Response (ASPR), within the U.S.
Biomedical Advanced Research and Development Authority (BARDA) In September 2016, we received an award of up to approximately $126 million , subsequently adjusted to $117 million in 2021, from BARDA, a component of the Office of the Assistant Secretary for Preparedness and Response (ASPR), within the U.S.
Our mRNA chemistry, formulation and manufacturing patent applications and related know-how, along with trade secrets, may also provide us with additional IP protection relating to our development candidates. Respiratory vaccines For our respiratory vaccines programs, we typically pursue patent protection featuring composition of matter and method of use claims.
Our mRNA chemistry, formulation and manufacturing patent applications and related know-how, along with trade secrets, may also provide us with additional IP protection relating to our development candidates. Respiratory vaccines For our respiratory vaccines programs, we have pursued patent protection featuring composition of matter and method of use claims.
In the United States, it is estimated that over two million children younger than five receive medical attention and more than 86,000 are hospitalized due to RSV infection annually. RSV also causes a substantial burden of respiratory illness in older adults.
In the United States, it is estimated that over two million children younger than five receive medical attention and up to 80,000 are hospitalized due to RSV infection annually. RSV also causes a substantial burden of respiratory illness in older adults.
To maintain the integrity of our platform, the terms of our agreements with our strategic collaborators generally provide that either we receive rights to develop and commercialize potential mRNA medicines that we design and manufacture or our strategic collaborators receive rights to develop and commercialize potential mRNA medicines that we design and manufacture, as opposed to granting rights to our strategic collaborators to use our platform to generate new mRNA technologies, and that we generally own mRNA-related intellectual property arising from research activities performed under the strategic alliance.
To maintain the integrity of our platform, the terms of our strategic collaboration agreements generally provide that either we receive rights to develop and commercialize potential mRNA medicines that we design and manufacture or our strategic collaborators receive rights to develop and commercialize potential mRNA medicines that we design and manufacture, as opposed to granting rights to our strategic collaborators to use our platform to generate new mRNA technologies, and that we generally own intellectual property related to our platform arising from research activities performed under 27 Table of Contents the strategic alliance.
These sanctions could include, among other actions, the FDA’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, untitled or warning letters, voluntary or mandatory product recalls, market withdrawals, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement and civil or criminal penalties.
These sanctions could include, among other actions, the FDA’s refusal to approve pending applications, license revocation, a clinical hold, untitled or warning letters, product recalls, market withdrawals, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement and civil or criminal penalties.
U.S. patent term restoration and marketing exclusivity In certain circumstances, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch Waxman Amendments.
U.S. patent term restoration and regulatory data exclusivity In certain circumstances, some U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch Waxman Amendments.
A reference biological product is granted 12 years of data exclusivity from the time of first licensure of the product and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product.
A reference biological product is granted 12 years of regulatory data exclusivity from the time of first licensure of the product 40 Table of Contents and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product.
Our platform: Delivery science Our mRNA can, in specific instances, such as our VEGF therapeutic, be delivered by direct injection to a tissue in a simple saline formulation without lipid nanoparticles (LNPs) to locally produce small amounts of pharmacologically active protein.
Our platform: Delivery science Our mRNA can, in specific instances, be delivered by direct injection to a tissue in a simple saline formulation without lipid nanoparticles (LNPs) to locally produce small amounts of pharmacologically active protein.
Secondary endpoints include incidence and severity of adverse events (AEs) and change in plasma biomarkers: methylcitric acid (2-MC) and 3-Hydroxypropionic acid (3-HP). We have received Rare Pediatric Disease Designation, Orphan Drug Designation and Fast Track Designation from the FDA and Orphan Designation from the European Commission for the PA program.
The primary endpoints are safety and pharmacokinetics and pharmacodynamics. Secondary endpoints include incidence and severity of adverse events (AEs) and change in plasma biomarkers: methylcitric acid (2-MC) and 3-Hydroxypropionic acid (3-HP). We have received Rare Pediatric Disease Designation, Orphan Drug Designation and Fast Track Designation from the FDA and Orphan Designation from the European Commission for the PA program.
Product approvals may be withdrawn for non-compliance with regulatory standards, or if problems occur following initial marketing. 53 Table of Content FDA regulations require that products be manufactured in specific approved facilities and in accordance with cGMP regulations.
Product approvals may be withdrawn for non-compliance with regulatory standards, or if problems occur following initial marketing. FDA regulations require that products be manufactured in specific approved facilities and in accordance with cGMP regulations.
Although developing a new modality is difficult, time-consuming and expensive, we believe our experience and technology provide us with unique advantages in the development of mRNA medicines. Over the last decade, we have developed seven modalities, each with one or many investigational medicines in the clinic.
Although developing a new modality is difficult, time-consuming and expensive, we believe our experience and technology provide us with unique advantages in the development of mRNA medicines. Over the last decade, we have developed a number of modalities, each with one or many product candidates in the clinic.
Our mRNA program that includes mRNAs that encode OX40L, IL-23 and IL-36γ are covered by two granted European patents, by twelve issued U.S. patents, by several pending U.S. and European patent applications and by several pending patent applications in other foreign jurisdictions.
Our mRNA program that includes mRNAs that encode OX40L, IL-23 and IL-36γ are covered by two granted European patents, by more than 10 issued U.S. patents, by several pending U.S. and European patent applications and by several pending patent applications in other foreign jurisdictions.
Each time we add a modality and a new investigational medicine to our portfolio, we create a network effect because each incremental program can help us gain additional insight into the other programs in our pipeline.
Each time we add a modality and a new product candidate to our portfolio, we create a network effect because each incremental program can help us gain additional insight into the other programs in our pipeline.
Our substantial investments in recent years in technical development has enabled the breadth and depth of our pipeline, and laid the foundation to help meet the needs and requirements associated with late stage development and the commercialization of our COVID-19 vaccines.
Our substantial investments in recent years in technical development has enabled the breadth and depth of our pipeline, and laid the foundation to help meet the needs and requirements associated with late-stage development and the commercialization of our products.
Quality Unit Quality is core to the way we operate. We seek to ensure quality at Moderna through a combination of a robust Quality Management System (QMS), our quality culture and our people. In accordance with applicable regulations, we have established, documented and implemented a QMS to assure continued compliance with the requirements therein.
We seek to ensure quality at Moderna through a combination of a robust Quality Management System (QMS), our quality culture and our people. In accordance with applicable regulations, we have established, documented and implemented a QMS to assure continued compliance with the requirements therein.
Microcephaly is a birth defect characterized by an abnormally small head and brain, associated with lifelong neurodevelopmental delay, seizures, intellectual disability, balance problems and dwarfism / short stature, resulting in significant disability and requiring lifelong support. In 2007, a Zika infection outbreak progressed across the Pacific islands. An outbreak observed in Brazil in 2015 soon spread across the Americas.
Microcephaly is a birth defect characterized by an abnormally small head and brain, associated with lifelong neurodevelopmental delay, seizures, intellectual disability, balance problems and dwarfism/short stature, resulting in significant disability and requiring lifelong support. In 2007, a Zika infection outbreak progressed across the Pacific islands.
In September 2022, Merck exercised its option for PCVs, including mRNA-4157, pursuant to the terms of the PCV Agreement and in October 2022 paid us an option exercise fee of $250 million.
In September 2022, Merck exercised its option for INTs, including mRNA-4157, pursuant to the terms of the INT Agreement and in October 2022 paid us an option exercise fee of $250 million.
For our Glycogen Storage Disorder, Type 1a (GSD1a) development candidate, we have filed several patent families, including pending U.S. and European patent applications, as well as applications pending in Australia, Canada, China, Japan, Israel and several Middle Eastern jurisdictions covering mRNA encoding glucose 6-phosphatase (G6Pase) for the treatment of this disorder.
For our Glycogen Storage Disorder, Type 1a (GSD1a) development candidate, we have filed several patent families, including pending U.S. and European patent applications, as well as applications pending in China and Japan covering mRNA encoding glucose 6-phosphatase (G6Pase) for the treatment of this disorder.
In contrast, the PCV program seeks to develop a cancer vaccine that is designed and manufactured for a specific patient, thus increasing the number of unique batches. As we scale manufacturing output for each program, we plan to continuously improve yield, purity and the pharmaceutical properties of our development candidates.
In contrast, the INT program seeks to develop a cancer therapeutic that is designed and manufactured for a specific patient, thus increasing the number of unique batches. As we scale manufacturing output for each program, we plan to continuously improve yield, purity and the pharmaceutical properties of our product candidates.
This was codified as the central dogma of molecular biology over 50 years ago, and is exemplified in the schematic below. 7 Table of Content The structure of mRNA mRNA is a linear polymer comprising four monomers called nucleotides: adenosine (A), guanosine (G), cytosine (C) and uridine (U).
This was codified as the central dogma of molecular biology over 60 years ago, and is exemplified in the schematic below. 6 Table of Contents The structure of mRNA mRNA is a linear polymer comprising four monomers called nucleotides: adenosine (A), guanosine (G), cytosine (C) and uridine (U).
Due to the specialized nature of personalized medicine (i.e., where a batch is specifically designed and manufactured for a single patient), the manufacturing Personalized Vaccine Unit (PVU) has unique requirements. We digitally integrate patient-specific data from sequencing tumor samples to automatically design PCVs for patients.
Due to the specialized nature of personalized medicine (i.e., where a batch is specifically designed and manufactured for a single patient), the manufacturing process for INTs has unique requirements. We digitally integrate patient-specific data from sequencing tumor samples to automatically design INTs for patients.
Pursuant to the PCV Agreement, we and Merck have agreed to collaborate on further development and commercialization of PCVs, and we will share costs and any profits or losses worldwide equally.
Pursuant to the INT Agreement, we and Merck have agreed to collaborate on further development and commercialization of INTs, and we will share costs and any profits or losses worldwide equally.
Effective since January 2022, the European Commission adopted a new Clinical Trials Regulation (No. 536/2014) to streamline and harmonize the procedures for assessment and governance of clinical trials throughout the EU and to require that information on the authorization, conduct and results of each clinical trial conducted in the EU be publicly available.
Effective since January 2022, the Clinical Trials Regulation (No. 536/2014) aims to streamline and harmonize the procedures for assessment and governance of clinical trials throughout the EU and to require that information on the authorization, conduct and results of each clinical trial conducted in the EU be publicly available.
Government, other international governments, Gavi, on behalf of the COVAX Facility and other supranational organizations. During the pandemic, these sales were characterized by a relatively limited number of customers who purchased multi-dose vials for distribution through mass vaccination campaigns.
Government, foreign governments and health ministries, Gavi, on behalf of the COVAX Facility, and other international organizations. During the pandemic, these sales were characterized by a relatively limited number of customers that purchased multi-dose vials for distribution through mass vaccination campaigns.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur existing and any future strategic alliances may pose a number of risks, including: • strategic collaborators may not perform their obligations as expected; • the clinical trials conducted as part of such strategic alliance may not be successful; • strategic collaborators may not pursue development and commercialization of any investigational medicines that achieve regulatory approval or may elect not to continue or renew development or commercialization of programs based on clinical trial results, changes in the strategic collaborators’ focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities; • strategic collaborators may delay clinical trials, provide insufficient funding for clinical trials, stop a clinical trial, abandon an investigational medicine, repeat or conduct new clinical trials or require a new formulation of an investigational medicine for clinical testing; • strategic collaborators could develop, independently or with third parties, products that compete with our products or investigational medicines if such collaborators believe that competitive products are more likely to be successfully developed or can be commercialized on more economically attractive terms than ours; • products or investigational medicines developed in strategic alliances with us may be viewed by our collaborators as competitive with their own investigational medicines or products, which may cause them to cease to devote resources to development or commercialization; • a strategic collaborator with marketing and distribution rights to one or more of our products may commit insufficient resources to the marketing and distribution of any such product; • disagreements with strategic collaborators, including over proprietary rights, contract interpretation or the course of development of any investigational medicines, may cause delays or termination of the research, development or commercialization of such investigational medicines, lead to additional responsibilities for us with respect to such investigational medicines or result in litigation or arbitration, any of which would be time-consuming and expensive; • strategic collaborators may not properly maintain or defend our IP rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our IP or proprietary information; • disputes may arise with respect to the ownership of IP developed pursuant to our strategic alliances; • strategic collaborators may infringe the IP rights of third parties, exposing us to potential litigation and liability; • future relationships may require us to incur non-recurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business; and • our international operations through any future collaborations, acquisitions or joint ventures may expose us to certain operating, legal and other risks not encountered in the United States.
Biggest changeOur existing and any future strategic alliances may pose a number of risks, including: • strategic collaborators may not perform their obligations as expected; • strategic collaborators may not pursue development and commercialization of any products that achieve regulatory approval or may elect not to continue or renew development or commercialization of programs based on clinical trial results, changes in the strategic collaborators’ focus or available funding or external factors that divert resources or create competing priorities; • strategic collaborators may delay clinical trials, provide insufficient funding or resources for clinical trials (whether as a result of a business decision or necessitated by financial difficulties of such collaborator), stop a clinical trial, abandon a product candidate or repeat or conduct new clinical trials; • products or product candidates developed in strategic alliances with us may be viewed by our collaborators as competitive with their own products or product candidates, which may cause them to cease to devote resources to development or commercialization; • a strategic collaborator with marketing and distribution rights to one or more of our products may commit insufficient resources to the marketing and distribution of any such product; • disagreements with strategic collaborators, including over proprietary rights, contract interpretation or the course of development of any product candidates, may cause delays or termination of the research, development or commercialization of such product candidates, lead to additional responsibilities for us with respect to such product candidates or result in litigation or arbitration, any of which would be time-consuming and expensive; • strategic collaborators may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our IP or proprietary information; • disputes may arise with respect to the ownership of IP developed pursuant to our strategic alliances; • strategic collaborators may infringe the IP rights of third parties, exposing us to potential litigation and liability; • future relationships may require us to incur non-recurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business; • any equity investments we make in collaborators could decrease in value or become worthless; and • our international operations through any future collaborations, acquisitions or joint ventures may expose us to certain operating, legal and other risks not encountered in the United States.
We cannot be certain of the timely completion or outcome of our preclinical testing and studies, whether the FDA or other regulators will accept the results or if the outcome of our preclinical testing, studies and CMC activities will ultimately support further development of our programs.
We cannot be certain of the timely completion of our preclinical testing and studies, whether the FDA or other regulators will accept the results or if the outcome of our preclinical testing, studies and CMC activities will ultimately support further development of our programs.
Our quarterly and annual operating results may fluctuate. As a result, we may fail to meet or exceed the expectations of research analysts or investors, which could cause our stock price to decline and negatively impact our financing or funding ability, as well as negatively impact our ability to exist as a standalone company.
Our quarterly and annual operating results may fluctuate. As a result, we may fail to meet or exceed the expectations of research analysts or investors, which could cause our stock price to decline and negatively impact our financing or funding ability, as well as our ability to exist as a standalone company.
A weak or declining economy could strain our suppliers, possibly resulting in supply disruption, or cause delays in payments for our services by third-party payors or our collaborators. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
A weak or declining economy could strain our suppliers, possibly resulting in supply disruption, or cause delays in payments for our services by third-party payors or our collaborators. Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business.
Our business may be adversely affected by many factors associated with our expanding global business, including: • efforts to develop an international commercial sales, marketing and supply chain and distribution organization, including efforts to mitigate longer accounts receivable collection times, longer lead times for shipping and potential language barriers; • our customers’ ability to obtain reimbursement for our products in foreign markets; • our inability to directly control commercial activities because we rely on third parties; • different medical practices and customs in foreign countries affecting acceptance in the marketplace; • changes in a specific country’s or region’s political and cultural climate or economic condition; • an increased legal and compliance burden to establish, maintain and operate legal entities in foreign countries; • the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements, including the European General Data Protection Regulation 2016/679 (GDPR); • the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute, and the difficulty of effective enforcement of contractual provisions in local jurisdictions; • inadequate IP protection in foreign countries, and the existence of potentially relevant third-party IP rights; • trade-protection measures including trade restrictions, import or export licensing requirements such as Export Administration Regulations promulgated by the U.S.
Our business may be adversely affected by many factors associated with our expanding global business, including: • efforts to develop an international commercial sales, marketing and supply chain and distribution organization, including efforts to mitigate longer accounts receivable collection times, longer lead times for shipping and potential language barriers; • our customers’ ability to obtain reimbursement for our products in foreign markets; • our inability to directly control commercial activities because we rely on third parties; • different medical practices and customs in foreign countries affecting acceptance in the marketplace; • changes in a specific country’s or region’s political and cultural climate or economic condition; • an increased legal and compliance burden to establish, maintain and operate legal entities in foreign countries; • the burden of complying with complex and changing foreign regulatory, tax, accounting, reporting and legal requirements, including the European General Data Protection Regulation 2016/679 (GDPR); • the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute, and the difficulty of effective enforcement of contractual provisions in local jurisdictions; • inadequate IP protection in foreign countries and the existence of potentially relevant third-party IP rights; • trade-protection measures including trade restrictions, import or export licensing requirements such as Export Administration Regulations promulgated by the U.S.
Contracts and grants funded by the U.S. government and its agencies, including our agreements funded by BARDA and DARPA and our collaboration with NIAID, include provisions that reflect the government’s substantial rights and remedies, many of which are not typically found in commercial contracts, including powers of the government to: • terminate agreements, in whole or in part, for any reason or no reason; • reduce or modify the government’s obligations under such agreements without the consent of the other party; • claim rights, including IP rights, in products and data developed under such agreements; • audit contract-related costs and fees, including allocated indirect costs; • suspend the contractor or grantee from receiving new contracts pending resolution of alleged violations of procurement laws or regulations; • impose U.S. manufacturing requirements for products that embody inventions conceived or first reduced to practice under such agreements; • suspend or debar the contractor or grantee from doing future business with the government; • control and potentially prohibit the export of products; • pursue criminal or civil remedies under the False Claims Act, False Statements Act and similar remedy provisions specific to government agreements; and • limit the government’s financial liability to amounts appropriated by the U.S.
Contracts and grants funded by the U.S. government and its agencies, including our agreements funded by BARDA and DARPA and our collaboration with NIAID, include provisions that reflect the government’s substantial rights and remedies, many of which are not typically found in commercial contracts, including powers of the government to: • terminate agreements, in whole or in part, for any reason or no reason; • reduce or modify the government’s obligations under such agreements without the consent of the other party; • claim rights, including IP rights, in products and data developed under such agreements; • audit contract-related costs and fees, including allocated indirect costs; • suspend the contractor or grantee from receiving new contracts pending resolution of alleged violations of procurement laws or regulations; • impose U.S. manufacturing requirements for products that embody inventions conceived or first reduced to practice under such agreements; • suspend or debar the contractor or grantee from doing future business with the government; 65 • control and potentially prohibit the export of products; • pursue criminal or civil remedies under the False Claims Act, False Statements Act and similar remedy provisions specific to government agreements; and • limit the government’s financial liability to amounts appropriated by the U.S.
Any data breach, security incident or compromise of confidential, protected or personal information, including any clinical trial participant personal data, may also subject us to civil fines and penalties, litigation, regulatory investigations or enforcement actions, or claims for damages under the GDPR and relevant member state law in the EU, other foreign laws, and the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), and other relevant state and federal privacy laws in the United States including the California Consumer Privacy Act, as amended by the California Privacy Rights Act (the CCPA).
Any data breach, security incident or compromise of confidential, protected or personal information, including any clinical trial participant personal data, may also subject us to civil fines and penalties, litigation, regulatory investigations or enforcement actions, or claims for damages under the GDPR and UK GDPR and relevant member state law in the EU, other foreign laws, and the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), and other relevant state and federal privacy laws in the United States including the California Consumer Privacy Act, as amended by the California Privacy Rights Act (the CCPA).
Uncertainties resulting from the initiation and continuation of any litigation could delay our research, development and commercialization efforts and limit our ability to continue our operations. If third-party owners of any patent rights that we license do not properly or successfully obtain, maintain or enforce the patents underlying such licenses, our competitive position and business prospects may be harmed.
Uncertainties resulting from the initiation and continuation of any litigation could delay our research, development and commercialization efforts and limit our ability to continue our operations. 63 If third-party owners of any patent rights that we license do not properly or successfully obtain, maintain or enforce the patents underlying such licenses, our competitive position and business prospects may be harmed.
Each law is also subject to various interpretations by courts and regulatory agencies, creating additional uncertainty, and we may fail to comply with the evolving data protection laws, which may expose us to risk of enforcement actions taken by authorities, private rights of action in some jurisdictions and potential significant penalties if we are found to be non-compliant.
Each law is also subject to various interpretations by courts and regulatory agencies, creating additional uncertainty, and we may fail to comply with the evolving data protection laws, which may expose us to risk of enforcement actions taken by authorities, private rights of action in some jurisdictions and potential significant 73 penalties if we are found to be non-compliant.
Our ability to set the price for any product we develop will vary significantly from country to country. Our inability to obtain and maintain adequate prices in a particular country may limit the revenues from our products within that country and adversely affect our ability to secure acceptable prices in existing and potential new markets, which may limit market growth.
Our ability to set the price for any product we develop will vary significantly by country. Our inability to obtain and maintain adequate prices in a particular country may limit the revenues from our products within that country and adversely affect our ability to secure acceptable prices in existing and potential new markets, which may limit market growth.
With respect to our COVID-19 vaccines, although the U.S. and certain foreign governments have contractually agreed to indemnify us or make statutory immunity available to us, such indemnification or statutory immunity may be unavailable to cover potential claims or liabilities resulting from the research, development, manufacture, distribution or commercialization of the vaccine.
With respect to our COVID-19 vaccine, although the U.S. and certain foreign governments have contractually agreed to indemnify us or make statutory immunity available to us, such indemnification or statutory immunity may be unavailable to cover potential claims or liabilities resulting from the research, development, manufacture, distribution or commercialization of the vaccine.
Additionally, other foreign governments that we contract with in the future may not provide us with similar contractual indemnity or statutory immunity, and we will not have the benefit of such indemnities or immunities in the future as the COVID-19 market transitions to a commercial market in the United States and elsewhere.
Additionally, other foreign governments that we contract with may not provide us with similar contractual indemnity or statutory immunity, and we will not have the benefit of such indemnities or immunities in the future as the COVID-19 vaccine market transitions to a commercial market in the United States and elsewhere.
The Delaware Forum Provision will not apply to any causes of action arising under the Securities Act or the Exchange Act. Our by-laws further provide that the U.S. District Court for the District of Massachusetts is the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (the Federal Forum Provision).
The Delaware Forum Provision will not apply to any causes of action arising under the Securities Act or the Exchange Act. Our by-laws further provide that the U.S. District Court for the District of Massachusetts is the exclusive forum for resolving any complaint asserting a cause of action arising 77 under the Securities Act (the Federal Forum Provision).
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable IP rights, including exclusive ownership of, or right to use, valuable IP. Such an outcome could have a material adverse impact on our business.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable IP 64 rights, including exclusive ownership of, or right to use, valuable IP. Such an outcome could have a material adverse impact on our business.
If our management is unable to effectively manage our development and expansion, our financial performance and ability to commercialize our products may be affected negatively, and we may not be able to implement our business strategy. We are subject to the risks of doing business outside of the United States.
If our management is unable to effectively manage our development and expansion, our financial performance and ability to commercialize our products may be affected negatively, and we may not be able to implement our business strategy. 67 We are subject to the risks of doing business outside of the United States.
Our charter and by-laws include provisions that: • authorize “blank check” preferred stock, which could be authorized for issuance by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • create a classified board of directors whose members serve staggered three-year terms; • specify that special meetings of our stockholders can be called only by our board of directors; • prohibit stockholder action by written consent; • establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors; 90 Table of Content • provide that our directors may be removed only for cause; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; • specify that no stockholder is permitted to cumulate votes at any election of directors; • expressly authorize our board of directors to modify, alter or repeal our by-laws; and • require supermajority votes of the holders of our common stock to amend specified provisions of our charter and by-laws.
Our charter and by-laws include provisions that: • authorize “blank check” preferred stock, which could be authorized for issuance by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • create a classified board of directors whose members serve staggered three-year terms; • specify that special meetings of our stockholders can be called only by our board of directors; • prohibit stockholder action by written consent; • establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors; • provide that our directors may be removed only for cause; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; • specify that no stockholder is permitted to cumulate votes at any election of directors; • expressly authorize our board of directors to modify, alter or repeal our by-laws; and • require supermajority votes of the holders of our common stock to amend specified provisions of our charter and by-laws.
If we are unable to institute necessary controls related to product development, manufacturing and quality, we may encounter difficulties producing our products on the timelines and in the quantities set forth in our supply agreements or to meet potential future demand.
If we are unable to institute 56 necessary controls related to product development, manufacturing and quality, we may encounter difficulties producing our products on the timelines and in the quantities set forth in our supply agreements or to meet potential future demand.
We have limited experience at larger scale production necessary to support large-scale clinical trials and commercial sales. Completion of our trials and commercialization of our vaccine candidates require access to, or development of, facilities to manufacture our vaccine candidates at sufficient yields and at commercial scale.
We have limited experience at larger scale production necessary to support large-scale clinical trials and commercial sales. Completion of our trials and commercialization of our product candidates require access to, or development of, facilities to manufacture our vaccine candidates at sufficient yields and at commercial scale.
Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, is time- and resource-consuming and can divert a company’s attention from the business.
Ensuring business arrangements comply with applicable 72 healthcare laws, as well as responding to possible investigations by government authorities, is time- and resource-consuming and can divert a company’s attention from the business.
This has in the past and may in the future result in our having to resupply batches for preclinical or clinical activities when there is insufficient product stability during storage and insufficient supply.
This has in the past and may in the future result in our having to resupply 55 batches for preclinical or clinical activities when there is insufficient product stability during storage and insufficient supply.
The use of service providers and suppliers could expose us to risks, including: • termination or non-renewal of supply and service agreements with third parties in a manner or at a time that is costly or damaging to us; • disruptions to the operations of these suppliers and service providers caused by conditions unrelated to our business or operations, including the bankruptcy of the supplier or service provider; and • inspections of third-party facilities by regulatory authorities that could have a negative outcome and result in delays to or termination of their ability to supply our requirements.
The use of service providers and suppliers could expose us to risks, including: • termination or non-renewal of supply and service agreements in a manner or at a time that is costly or damaging to us; • disruptions to the operations of these suppliers and service providers caused by conditions unrelated to our business or operations, including the bankruptcy of the supplier or service provider; and • inspections of third-party facilities by regulatory authorities that could have a negative outcome and result in delays to or termination of their ability to supply our requirements.
We may slow enrollment in a trial to focus on achieving greater diversity in the subject population, as we did in our Phase 3 clinical trial of our COVID-19 vaccine.
We may slow enrollment in a trial to focus on achieving greater diversity in the subject population, as we did in the Phase 3 clinical trial of our original COVID-19 vaccine.
Our facilities and infrastructure or those of our contract manufacturers or other third-party providers may also be subject to intentional attacks or acts of sabotage by outside actors, contractors or employees.
Our facilities and infrastructure or those of our contract manufacturers or other third-party providers may also be subject to attacks or acts of sabotage by outside actors, contractors or employees.
Our cybersecurity liability insurance may not cover all damages we would sustain based on any breach or compromise of our computer security protocols or cybersecurity attack.
Further, our cybersecurity liability insurance may not cover all damages we would sustain based on any breach or compromise of our computer security protocols or cybersecurity attack.
There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions or incur other harm to our business.
There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions or incur other harm to our business. Item 1B.
In the United States, federal and state legislatures, health agencies and third-party payors continue to focus on containing the cost of health care. Legislative and regulatory proposals, enactments to reform health care insurance programs and increasing pressure from social sources could significantly influence the manner in which our products, if approved, are prescribed and purchased.
In the United States, federal and state legislatures, health agencies and third-party payors continue to focus on containing the cost of health care. Legislative and regulatory proposals, enactments to reform health care insurance programs and increasing pressure from social sources could significantly influence the manner in which our products are prescribed and purchased.
A government-mandated or voluntary recall by us or our strategic collaborators could occur as a result of manufacturing errors, design or labeling defects or other deficiencies and issues, as occurred with the recall of certain batches of our COVID-19 vaccine shipped to Japan that were found to contain foreign particulate.
A government-mandated or voluntary recall by us or our strategic collaborators could occur as a result of manufacturing errors, design or labeling defects or other deficiencies and issues, as occurred with the recall in 2021 of certain batches of our COVID-19 vaccine shipped to Japan that were found to contain foreign particulate.
The process of obtaining patent protection is expensive and time-consuming and our pending patent applications may not result in issued patents.
The process of obtaining and enforcing patent protection is expensive and time-consuming and our pending patent applications may not result in issued patents.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable IP rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
If we fail to defend such claims, in addition to paying monetary damages, we may lose valuable IP rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
If our operations are found to violate any of these laws or any other regulations that apply to us, we may be subject to significant sanctions, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, reputational harm, exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance.
If our operations are found to violate any of these laws or any other regulations, we may be subject to significant sanctions, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, reputational harm, exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance.
Privacy and data security have become significant issues in the United States, Europe and many other jurisdictions where we operate or collect personal information. We are subject to data privacy and security laws and regulations in various jurisdictions that apply to the collection, storage, use, sharing and security of personal data, including health information, and impose significant compliance obligations.
Privacy and data security are significant issues in the United States, Europe and many other jurisdictions where we operate or collect personal information. We are subject to data privacy and security laws and regulations in various jurisdictions that apply to the collection, storage, use, sharing and security of personal data, including health information, and impose significant compliance obligations.
The timing and outcome of these and other proceedings is uncertain and may adversely affect our business if we are not successful in defending the patentability and scope of our pending and issued patent claims. We cannot be certain that such patent will survive or that the claims will remain in the current form.
The timing and outcome of these and other proceedings is uncertain and may adversely affect our business if we are not successful in defending the patentability and scope of our pending and issued patent claims. We cannot be certain that any patent will survive or that the claims will remain in the current form.
If we cannot maintain our corporate culture, we could lose the innovation, teamwork and passion that we believe contribute to our success, and our business may be harmed. We invest substantial time and resources in building and maintaining our culture and developing our personnel; however, as we continue to expand, it may be increasingly difficult to maintain our culture.
If we cannot maintain our corporate culture, we could lose the innovation, teamwork and passion that we believe contribute to our success. We invest substantial time and resources in building and maintaining our culture and developing our personnel; however, as we continue to expand, it may be increasingly difficult to maintain our culture.
In addition to extracting sensitive information, such attacks could include the deployment of harmful malware, ransomware, digital extortion, business email compromise and denial-of-service attacks, social engineering and other means to affect serve reliability and threaten the confidentiality, integrity and availability of information, systems or infrastructure.
In addition to extracting sensitive information, such attacks could include the deployment of harmful malware, ransomware, digital extortion, business email compromise and denial-of-service attacks, social engineering and other means to affect server reliability and threaten the confidentiality, integrity and availability of information, systems or infrastructure.
Although our mRNA development candidates and investigational medicines are designed not to make any permanent changes to cell DNA, regulatory agencies or others could believe that adverse effects of gene therapies caused by introducing new DNA and irreversibly changing the DNA in a cell could also be a risk for our mRNA investigational therapies, and as a result may delay one or more of our clinical trials or impose additional testing for long-term side effects.
Although our mRNA product candidates are designed not to make any permanent changes to cell DNA, regulatory agencies or others could believe that adverse effects of gene therapies caused by introducing new DNA and irreversibly changing the DNA in a cell could also be a risk for our mRNA investigational therapies, and as a result may delay one or more of our clinical trials or impose additional testing for long-term side effects.
If we, our contract manufacturers or other strategic collaborators fail to comply with applicable post-approval regulatory requirements, a regulatory agency may issue a warning letter asserting that we are in violation of the law, seek an injunction or impose civil or criminal penalties or monetary fines, suspend or withdraw regulatory approval or revoke a license, suspend any ongoing clinical trials, refuse to approve a pending BLA or supplements to a BLA submitted by us, seize or recall investigational medicines or products, or require field alerts to physicians, pharmacists and hospitals or refuse to allow us to enter into supply contracts.
If we, our contract manufacturers or other strategic collaborators fail to comply with applicable post-approval regulatory requirements, a regulatory agency may issue a warning letter asserting that we are in violation of the law, seek an injunction or impose civil or criminal penalties or monetary fines, suspend or withdraw regulatory approval or revoke a license, suspend any ongoing clinical trials, refuse to approve a pending BLA or supplements to a BLA submitted by us, seize or recall products or product candidates, or require field alerts to physicians, pharmacists and hospitals or refuse to allow us to enter into supply contracts.
Manufacturing unique lots of PCVs is susceptible to product loss or failure due to issues with: • logistics associated with the collection of a patient’s tumor, blood or other tissue sample; • shipping such samples to a facility for genetic sequencing; • next generation sequencing of the tumor mRNA; • identification of appropriate tumor-specific mutations; • the use of a software program, including proprietary and open source components, which is hosted in the cloud and a part of our investigational medicine, to assist with the design of the patient-specific mRNA, which software must be maintained and secured; • effective design of the patient-specific mRNA that encodes for the required neoantigens; • batch specific manufacturing failures or issues that arise due to the uniqueness of each patient-specific batch; • quality control testing failures; • unexpected failures of batches placed on stability; • shortages or quality control issues with single-use assemblies, consumables or critical parts sourced from third-party vendors that must be changed out for each patient-specific batch; • significant costs associated with individualized manufacturing that may adversely affect our ability to continue development; • successful and timely manufacture and release of the patient-specific batch; • shipment issues encountered during transport of the batch to the patient site of care; and • the ability to define a consistent safety profile at a given dose when each participant receives a unique vaccine.
Manufacturing unique lots of INTs is susceptible to product loss or failure due to issues with: • logistics associated with the collection of a patient’s tumor, blood or other tissue sample; • shipping such samples to a facility for genetic sequencing; • next-generation sequencing of the tumor mRNA; • identification of appropriate tumor-specific mutations; • the use of a software program, including proprietary and open source components, which is hosted in the cloud and a part of our product candidate, to assist with the design of the patient-specific mRNA, which software must be maintained and secured; • effective design of the patient-specific mRNA that encodes for the required neoantigens; • batch specific manufacturing failures or issues that arise due to the uniqueness of each patient-specific batch; • quality control testing failures; • unexpected failures of batches placed on stability; • shortages or quality control issues with single-use assemblies, consumables or critical parts sourced from third-party vendors that must be changed out for each patient-specific batch; • significant costs associated with individualized manufacturing that may adversely affect our ability to continue development; • successful and timely manufacture and release of the patient-specific batch; • shipment issues encountered during transport of the batch to the patient site of care; and • the ability to define a consistent safety profile at a given dose when each participant receives a unique therapy.
Pricing and reimbursement for any product we develop may be adversely affected by a number of factors, including: • changes in, and implementation of, federal, state or foreign government regulations or private third-party payors’ reimbursement policies; 61 Table of Content • pressure by employers on private health insurance plans to reduce costs; and • consolidation and increasing assertiveness of payors seeking price discounts or rebates in connection with the placement of our products on their formularies and, in some cases, the imposition of restrictions on access or coverage of particular drugs or pricing determined based on perceived value.
Additionally, pricing and reimbursement for any product we develop may be adversely affected by a number of factors, including: • changes in, and implementation of, federal, state or foreign government regulations or private third-party payors’ reimbursement policies; • pressure by employers on private health insurance plans to reduce costs; and • consolidation and increasing assertiveness of payors seeking price discounts or rebates in connection with the placement of our products on their formularies and, in some cases, the imposition of restrictions on access or coverage of particular drugs or pricing determined based on perceived value.
Any delay or interruption could adversely affect our business, financial condition or results of operations. We are subject to operational risks associated with the physical and digital infrastructure at both our internal manufacturing facilities and at those of our external service providers.
Any delay or interruption could adversely affect our business, financial condition or results of operations. We are subject to operational risks associated with the physical and digital infrastructure at our manufacturing facilities and those of our external service providers.
Because our PCVs are manufactured for each individual patient, we are required to maintain a chain of identity with respect to each patient’s tissue sample, sequence data derived from such tissue sample, results of analysis of such patient’s genomic analysis and the custom manufactured product for each patient.
Because our INTs are manufactured for each individual patient, we are required to maintain a chain of identity with respect to each patient’s tissue sample, sequence data derived from such tissue sample, results of analysis of such patient’s genomic analysis and the custom manufactured product for each patient.
Our mRNA investigational medicines that appear promising in the early phases of development may fail to advance, experience delays in the clinic, experience clinical holds or fail to reach the market for many reasons, including: • nonclinical or preclinical study, or clinical trial, results may show potential mRNA medicines to be less effective than desired or to have harmful or problematic side effects or toxicities; • adverse results in our clinical trials, or in those of others developing similar products, or adverse effects relating to mRNA, or our LNPs, may lead to negative publicity or delays in or termination of our programs; • adverse events related to products that are perceived to be similar to mRNA medicines, such as those related to gene therapy or gene editing, could result in a decrease in the perceived benefit of one or more of our programs, increased regulatory scrutiny, decreased confidence by patients and clinical trial collaborators in our investigational medicines and less demand for any product that we may develop; • the insufficient ability of our translational models to reduce risk or predict outcomes in humans, particularly given that each component of our investigational medicines and development candidates may have a dependent or independent effect on safety, tolerability and efficacy, which may be species-dependent; • manufacturing failures or insufficient supply of cGMP materials for clinical trials, or higher than expected cost could delay or set back clinical trials, or make mRNA medicines commercially unattractive; • changes that we make to optimize our manufacturing, testing or formulating of cGMP materials could impact the safety, tolerability and efficacy profile of our investigational medicines and development candidates; • pricing or reimbursement issues or other factors that delay clinical trials or make any mRNA medicine uneconomical or noncompetitive with other therapies; • our large pipeline of development candidates and investigational medicines could result in a greater quantity of reportable adverse events, including suspected unexpected serious adverse reactions, other reportable negative clinical outcomes, manufacturing reportable events or material clinical events that could lead to clinical delay or hold by the FDA or applicable regulatory authority or other clinical delays, any of which could negatively impact the perception of one or more of our programs, as well as our business as a whole; 66 Table of Content • failure to timely advance our programs or a failure or delay in receiving necessary regulatory approvals due to, among other factors, slow or failure to complete enrollment in clinical trials, withdrawal by trial participants from trials, failure to achieve trial endpoints, additional time requirements for data analysis, data integrity issues, preparation of a BLA, or the equivalent application, discussions with the FDA or EMA, a regulatory request for additional nonclinical or clinical data or safety formulation or manufacturing issues may lead to our inability to obtain sufficient funding; • new legislation or regulations passed by U.S., state, or foreign governments in response to negative public perception of mRNA medicines; and • the proprietary rights of others and their competing products and technologies that may prevent our mRNA medicines from being commercialized.
Our product candidates that appear promising in the early phases of development may fail to advance, experience delays in the clinic, experience clinical holds or fail to reach the market for many reasons, including: • nonclinical or preclinical study, or clinical trial, results may show potential mRNA medicines to be less effective than desired or to have harmful or problematic side effects or toxicities; • adverse results in our clinical trials, or in those of others developing similar products, or adverse effects relating to mRNA, or our LNPs, may lead to negative publicity or delays in or termination of our programs; • the efficacy or safety of a combination vaccine product candidate could be less than that seen with the administration of the vaccine s separately, which could prevent the combination product from obtaining regulatory approval; • adverse events related to products that are perceived to be similar to mRNA medicines, such as those related to gene therapy or gene editing, could result in a decrease in the perceived benefit of one or more of our programs, increased regulatory scrutiny, decreased confidence by patients and clinical trial collaborators in our product candidates and less demand for any product that we may develop; • the insufficient ability of our translational models to reduce risk or predict outcomes in humans, particularly given that each component of our product candidates may have a dependent or independent effect on safety, tolerability and efficacy, which may be species-dependent; • manufacturing failures or insufficient supply of cGMP materials for clinical trials, or higher than expected cost could delay or set back clinical trials, or make mRNA medicines commercially unattractive; • changes that we make to optimize our manufacturing, testing or formulating of cGMP materials could impact the safety, tolerability and efficacy profile of our product candidates; • pricing or reimbursement issues or other factors that delay clinical trials or make any mRNA medicine uneconomical or noncompetitive with other therapies; • our large pipeline of product candidates could result in a greater quantity of reportable adverse events, including suspected unexpected serious adverse reactions, other reportable negative clinical outcomes, manufacturing reportable events or material clinical events that could lead to clinical delay or hold by the FDA or applicable regulatory authority or other clinical delays, any of which could negatively impact the perception of one or more of our programs, as well as our business as a whole; • failure to timely advance our programs or a failure or delay in receiving necessary regulatory approvals due to, among other factors, slow or failure to complete enrollment in clinical trials, withdrawal by trial participants from trials, failure to achieve trial endpoints, additional time requirements for data analysis, data integrity issues, preparation of a BLA, or the equivalent application, discussions with the FDA or EMA, a regulatory request for additional nonclinical or clinical data or safety formulation or manufacturing issues may lead to our inability to obtain sufficient funding; • new legislation or regulations passed by U.S., state or foreign governments in response to negative public perception of mRNA medicines; and 52 • the proprietary rights of others and their competing products and technologies that may prevent our mRNA medicines from being commercialized.
Ownership disputes may arise, for example, from conflicting obligations of consultants or others who are involved in developing our development candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership.
Ownership disputes may arise, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership.
The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA that are not considered to provide “adequate” protection to personal data , including the United States, and permits data protection authorities to impose large penalties for violations.
The GDPR and UK GDPR also impose strict rules on the transfer of personal data to countries outside the EEA that are not considered to provide “adequate” protection to personal data , including the United States, and permits data protection authorities to impose large penalties for violations.
Such misconduct also could involve the improper use of information obtained in the course of clinical trials or interactions with the FDA or other regulatory authorities, which could result in regulatory sanctions and serious harm to our reputation.
Such misconduct also could involve improper use of information obtained during clinical trials or interactions with the FDA or other regulatory authorities, which could result in regulatory sanctions and serious harm to our reputation.
We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers. 78 Table of Content We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers. We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
If any such medicines prove to be sufficiently beneficial, we would expect to seek approval in earlier lines of treatment and potentially as a first line therapy. There is no guarantee that our investigational medicines, even if approved, would be approved for earlier lines of therapy, and, prior to any such approvals, we may have to conduct additional clinical trials.
If any such medicines prove to be sufficiently beneficial, we would expect to seek approval in earlier lines of treatment and potentially as a first-line therapy. There is no guarantee that our products, if approved, would be approved for earlier lines of therapy and, prior to any such approvals, we may have to conduct additional clinical trials.
As we grow as a commercial company and our drug development pipeline increases and matures, the increased demand for clinical and commercial supplies from our facilities and third parties may impact our ability to operate. We rely on many service third-party providers, all of whom have inherent risks in their operations that may adversely impact our operations.
As we grow as a commercial company and our drug development pipeline increases and matures, the increased demand for clinical and commercial supplies from our facilities and third parties may impact our ability to operate. We rely on third-party service providers, all of whom have inherent risks in their operations.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commissions, certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials.
Unfavorable U.S. or global economic conditions, including as a result of disease outbreak, war, conflict or other political instability, could adversely affect our business, financial condition or results of operations.
Unfavorable U.S. or global economic conditions, including as a result of disease outbreak, war, conflict or other political instability, or geopolitical risks, could adversely affect our business, financial condition or results of operations.
As we scale the manufacturing output for commercial production and particular programs, we plan to continuously improve yield, purity and the pharmaceutical properties of our commercial products, development candidates and investigational medicines from IND-enabling studies through commercial launch, including shelf life stability, and solubility properties of drug product and drug substance.
As we scale the manufacturing output for commercial production and particular programs, we plan to continuously improve yield, purity and the pharmaceutical properties of our products and product candidates from IND-enabling studies through commercial launch, including shelf-life stability, and solubility properties of drug product and drug substance.
We are rapidly expanding our global operations, establishing commercial subsidiaries and entering into arrangements to support the worldwide manufacture and distribution of our products, which is a complex task. For example, we are building regional manufacturing facilities and investing in research and development in several countries.
We have rapidly expanded our global operations, establishing commercial subsidiaries and entering into arrangements to support the worldwide manufacture and distribution of our products, which is a complex task. For example, we are building regional manufacturing facilities and investing in research and development in several countries.
For example, we may be sued if any product or investigational medicine allegedly causes injury or is found to be otherwise unsuitable during clinical trials, manufacturing or, if approved, marketing, sale or commercial use. If we cannot successfully defend ourselves against such claims, we could incur substantial liabilities.
For example, we may be sued if any product or product candidate allegedly causes injury or is found to be otherwise unsuitable during clinical trials, manufacturing or, if approved, marketing, sale or commercial use. If we cannot successfully defend ourselves against such claims, we could incur substantial liabilities.
These changes may not achieve the intended objectives, and any of these changes could cause our PCVs to perform differently than we expect, potentially affecting the results of clinical trials.
These changes may not achieve the intended objectives, and any of these changes could cause our INTs to perform differently than we expect, potentially affecting the results of clinical trials.
Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment. We are subject to various and evolving laws and regulations governing the privacy and security of personal data, and our failure to comply could adversely affect our business, result in fines or criminal penalties and damage our reputation.
Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment. We are subject to various and evolving laws and regulations governing the privacy and security of personal data, and our failure to comply could result in fines or criminal penalties and damage our reputation.
General risk factors Our employees, principal investigators and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading. 91 Table of Content We are exposed to the risk of fraud or other misconduct by our employees, principal investigators leading our clinical trials and consultants.
General risk factors Our employees, principal investigators and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading. We are exposed to the risk of fraud or other misconduct by our employees, principal investigators leading our clinical trials and consultants.
To the extent that any disruption or security compromise incident or breach were to result in a loss of, or damage to, our data, systems, infrastructure or applications, or inappropriate use or disclosure of confidential or proprietary information, including information related to the research and manufacturing of our products, we could incur liability, our competitive and reputational position could be harmed and the further development and commercialization of our investigational medicines could be delayed.
To the extent that any disruption or security compromise incident or breach were to result in a loss of, or damage to, our data, systems, infrastructure or applications, or inappropriate use or disclosure of confidential or proprietary information, including information related to the research and manufacturing of our products, we could incur liability, our competitive and reputational position could be harmed and the further development and commercialization of our product candidates could be delayed.
Events that might prevent us from proceeding with clinical trials could include: • regulators, Institutional Review Boards (IRBs) or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may experience delays in reaching, or fail to reach, agreement on favorable terms with prospective trial sites and prospective contract research organizations (CROs); • changes to the scale or site of our manufacturing could cause significant delays or changes in our clinical trial designs; 63 Table of Content • the outcome of our preclinical studies and our early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results; • we may be unable to establish or achieve clinically meaningful endpoints for our studies; • if we make changes to our investigational medicines after clinical trials have commenced (which we have done in the past), we may be required to repeat earlier stages or delay later stages of clinical testing; • clinical trials of any investigational medicines may fail to show safety or efficacy, or may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional nonclinical studies or clinical trials, or we may decide to abandon product development programs; • our investigational medicines, or other medicines in the same class as ours, may have undesirable side effects, such as the immunogenicity of the LNPs or their components, the immunogenicity of the protein made by the mRNA or degradation products, any of which could lead to serious adverse events, or other effects; • administration of our LNPs could lead to systemic side effects related to the components of the LNPs and could contribute to immune reactions, infusion reactions, complement reactions, opsonization reactions, antibody reactions or reactions to PEG-lipids; • significant adverse events or other side effects could be observed in our clinical trials, including those involving dosing young, human subjects; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the applicable clinical trial protocol or withdraw from the applicable clinical trial, which may require that we add new clinical trial sites; • regulators may impose a complete or partial clinical hold on a clinical trial, or we or our investigators, IRBs or ethics committees may suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that participants are being exposed to an unacceptable benefit-risk ratio; • regulators may impose a complete or partial clinical hold on clinical trials of other companies working on mRNA medicines; • the cost of preclinical or nonclinical testing and studies and clinical trials of any investigational medicines may be greater than we anticipate; • the supply or quality of our investigational medicines or other materials necessary to conduct clinical trials may be insufficient or inadequate; • safety and efficacy concerns regarding our investigational medicines will be considered by us and by the FDA and other global regulators as we pursue clinical trials of new investigational medicines, develop effective informed consent documentation and work with IRBs and scientific review committees (SRCs); • safety or efficacy concerns could arise from nonclinical or clinical testing of other therapies targeting a similar disease state or other therapies, such as gene therapy, that are perceived as similar to ours; • adverse side effects could be observed in future clinical trials where our investigational medicines are administered in combination with other therapies (such as the co-administration of our PCV investigational medicine, mRNA-4157 ); and • a lack of adequate funding to continue a particular clinical trial.
Events that might prevent us from proceeding with clinical trials could include: • regulators, Institutional Review Boards (IRBs) or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may experience delays in reaching, or fail to reach, agreement on favorable terms with prospective trial sites and prospective contract research organizations (CROs); • changes to the scale or site of our manufacturing could cause significant delays or changes in our clinical trial designs; • the outcome of our preclinical studies and our early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results; • we may be unable to establish or achieve clinically meaningful endpoints for our studies; • if we make changes to our product candidates after clinical trials have commenced (which we have done in the past), we may be required to repeat earlier stages or delay later stages of clinical testing; • clinical trials of any product candidates may fail to show safety or efficacy, or may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional nonclinical studies or clinical trials, or we may decide to abandon product development programs; 49 • our product candidates, or other medicines in the same class as ours, may have undesirable side effects, such as the immunogenicity of the LNPs or their components, the immunogenicity of the protein made by the mRNA or degradation products, any of which could lead to serious adverse events, or other effects; • administration of our LNPs could lead to systemic side effects related to the components of the LNPs and could contribute to immune reactions, infusion reactions, complement reactions, opsonization reactions, antibody reactions or reactions to PEG-lipids; • significant adverse events or other side effects could be observed in our clinical trials; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the applicable clinical trial protocol or withdraw from the applicable clinical trial, which may require that we add new clinical trial sites; • regulators may impose a complete or partial clinical hold on a clinical trial, or we or our investigators, IRBs or ethics committees may suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that participants are being exposed to an unacceptable benefit-risk ratio; • regulators may impose a complete or partial clinical hold on clinical trials of other companies working on mRNA medicines; • the cost of preclinical or nonclinical testing and studies and clinical trials of product candidates may be greater than anticipated; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials may be insufficient or inadequate; • safety and efficacy concerns regarding our product candidates will be considered by us and by the FDA and other regulators as we pursue clinical trials of new product candidates, develop effective informed consent documentation and work with IRBs and scientific review committees (SRCs); • safety or efficacy concerns could arise from nonclinical or clinical testing of other therapies targeting a similar disease state or other therapies, such as gene therapy, that are perceived as similar to ours; • adverse side effects could be observed in future clinical trials where our product candidates are administered in combination with other therapies (such as the co-administration of our INT product candidate, mRNA-4157 ); and • a lack of adequate funding to continue a particular clinical trial.
Further, we have entered and may in the future enter into significant non-cancellable or take-or-pay purchase commitments for raw materials that require a long lead time to procure, which increases our commitment exposure. If we cannot effectively manage evolving demand dynamics, our business, financial condition, results of operations and prospects may suffer.
Further, we have entered, and may in the future enter, into non-cancellable or take-or-pay purchase commitments for raw materials that require a long lead time to procure, increasing our commitment exposure. If we cannot effectively manage evolving demand dynamics, our business, financial condition, results of operations and prospects may suffer.
Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the applicable investigational medicine unless we obtained a license or until such patent expires.
Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product or product candidate unless we obtained a license or until such patent expires.
We pursue and fund the development of selected research programs or investigational medicines and may choose to forego or delay pursuit of other opportunities that could later prove to have greater commercial potential. For example, we have focused a significant amount of resources on our COVID-19 vaccines and other respiratory programs, for which preparations are underway for multiple vaccine launches.
We pursue and fund the development of selected research programs or product candidates and may choose to forego or delay pursuit of other opportunities that could later prove to have greater commercial potential. For example, we have focused a significant amount of resources on our COVID-19 vaccines and other respiratory programs, for which preparations are underway for multiple vaccine launches.
Any new requirements and guidelines promulgated by regulatory agencies may negatively affect our business by lengthening the regulatory review process, requiring us to perform additional or larger studies or increasing our development costs, any of which could lead to changes in regulatory positions and interpretations, delay or prevent advancement or approval and commercialization of our investigational medicines, or lead to significant post-approval studies, limitations or restrictions.
Any new requirements and guidelines promulgated by regulatory agencies may negatively affect our business by lengthening the regulatory review process, requiring us to perform additional or larger studies or increasing our development costs, any of which could lead to changes in regulatory positions and interpretations, delay or prevent advancement or approval and commercialization of our product candidates, or lead to significant post-approval studies, limitations or restrictions.
A similar severe or prolonged economic downturn could create a variety of risks to our business, including weakened demand for our medicines, and negatively impacting our ability to raise additional capital when needed on favorable terms, if at all.
Any severe or prolonged economic downturn could create a variety of risks to our business, including weakened demand for our medicines, and negatively impacting our ability to raise additional capital or financing when needed on favorable terms, if at all.
Our mRNA investigational medicines may prove to have a stability profile that leads to a lower than desired shelf life of the final approved medicine. This poses risk in supply requirements, wasted stock and higher cost of goods. We are dependent on a number of equipment providers who are also implementing novel technology.
Our mRNA product candidates may prove to have a stability profile that leads to a lower than desired shelf life of the final approved medicine. This poses risk in supply requirements, wasted stock and higher cost of goods. We are dependent on a number of equipment providers who are also implementing novel technology.
We also will face competition from products that have already been approved and accepted by the medical community for the treatment of certain conditions we target. For example, we are developing a seasonal flu vaccine, for which there is a well-developed market, and we may be unsuccessful in developing a product or achieving market share.
We also will face competition from products that have already been approved and accepted by the medical community to treat certain conditions we target. For example, we are developing a seasonal flu vaccine, for which there is a well-developed market, and we may be unsuccessful in developing a product or achieving market share.
These risks include: a rapid production turn-around time that is measured in weeks in order to supply patients in our clinical trials before further progression and mutation of their tumors, the significant costs incurred in making individualized vaccines, and potential lack of immune responses due to the biology of the tumor or immune status of the patient.
These risks include a rapid production turn-around time measured in weeks in order to supply patients in our clinical trials before further progression and mutation of their tumors, the significant costs incurred in making individualized medicines and potential lack of immune responses due to the biology of the tumor or immune status of the patient.
Demand for third-party manufacturing or testing facilities may grow at a faster rate than their existing capacity, which could disrupt our ability to find and retain third-party manufacturers capable of producing sufficient quantities of such raw materials, components, parts and consumables required to manufacture our mRNA investigational medicines.
Demand for third-party manufacturing or testing facilities may grow at a faster rate than their existing capacity, which could disrupt our ability to find and retain third-party manufacturers capable of producing sufficient quantities of such raw materials, components, parts and consumables required to manufacture our mRNA product candidates.
Our business is subject to risks associated with doing business outside of the United States, and we have limited experience operating internationally. We are not permitted to market or promote any of our developmental candidates or investigational medicines before we receive regulatory approval or other authorization from an applicable authority, and we may never receive such approval.
Our business is subject to risks associated with doing business outside of the United States, and we have limited experience operating internationally. We are not permitted to market or promote any of our product candidates before we receive regulatory approval or other authorization from an applicable authority, and we may never receive such approval.
Any of these challenges could delay completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our investigational medicines, impair commercialization efforts or increase our cost of goods, which, in turn, could have an adverse effect on our business, financial condition, results of operations and prospects.
Any of these challenges could delay completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidates, impair commercialization efforts or increase our cost of goods, which, in turn, could have an adverse effect on our business, financial condition, results of operations and prospects.
When such disclosures occur, we may fail to monitor and comply with applicable adverse event reporting obligations or we may be unable to defend our business in the face of political and market pressures generated by social media due to restrictions on what we may say about our development candidates and investigational medicines.
When such disclosures occur, we may fail to monitor and comply with applicable adverse event reporting obligations or we may be unable to defend our business in the face of political and market pressures generated by social media due to restrictions on what we may say about our product candidates.
If we cannot negotiate and enter into new strategic alliances on a timely basis, on favorable terms, or at all, we may need to curtail the development of the investigational medicine for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.
If we cannot enter into new strategic alliances on a timely basis, on favorable terms or at all, we may need to curtail the development of the product candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.
Even if we or our strategic collaborators are able to enroll clinical trial participants, there is no guarantee that such participants will ultimately be dosed as part of, or complete, a clinical trial. mRNA drug development has substantial clinical development and regulatory risks due to the novel nature of this new class of medicines, and the negative perception of the efficacy, safety or tolerability profile of any investigational medicines that we or others develop could adversely affect our ability to conduct our business, advance our investigational medicines or obtain regulatory approvals.
Even if we or our strategic collaborators can enroll clinical trial participants, there is no guarantee that such participants will ultimately be dosed as part of, or complete, a clinical trial. mRNA drug development has substantial clinical development and regulatory risks due to the novel nature of this new class of medicines, and the negative perception of the efficacy, safety or tolerability profile of any product candidates that we or others develop could adversely affect our ability to conduct our business, advance our product candidates or obtain regulatory approvals.
For example, we may discover new impurities that have an impact on product safety, efficacy or stability. This may lead to an inability to release mRNA investigational medicines until the manufacturing or testing process is rectified.
For example, we may discover new impurities that have an impact on product safety, efficacy or stability. This may lead to an inability to release mRNA product candidates until the manufacturing or testing process is rectified.
Any such action could cause us to experience delays in the development, production, distribution or export of our products and development candidates and increased expenses. Engaging in acquisitions, joint ventures or strategic collaborations may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities and subject us to other risks.
Any such action could cause us to experience delays in the development, production, distribution or export of our products and product candidates and increased expenses. Engaging in acquisitions, joint ventures or strategic collaborations may increase our capital requirements, dilute our stockholders and cause us to incur debt or assume contingent liabilities.
Significant preclinical or nonclinical testing and studies or clinical trial delays for our investigational medicines could allow our competitors to bring products to market before we do and could harm our business, financial condition and prospects significantly. There are risks that are unique to each of our programs and modalities and risks that are applicable across programs and modalities.
Significant preclinical or nonclinical testing and studies or clinical trial delays for our product candidates could allow our competitors to bring products to market before we do and could harm our business, financial condition and prospects significantly. There are risks that are unique to each of our programs and modalities and risks that are applicable across programs and modalities.
Because we are developing some of our development candidates or investigational medicines for the treatment of diseases in which there is little clinical experience and, in some cases, using new endpoints or methodologies, the FDA or other regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results.
Because we are developing some of our product candidates for the treatment of diseases in which there is little clinical experience and, in some cases, using new endpoints or methodologies, the FDA or other regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results.
In recent years, such changes have been made and changes are likely to occur in the future, which could have a material adverse effect on our business, cash flow, financial condition and results of operations. 92 Table of Content The increasing use of social media platforms presents new risks and challenges.
In recent years, such changes have been made and changes are likely to occur in the future, which could have a material adverse effect on our business, cash flow, financial condition and results of operations. The increasing use of social media platforms presents risks and challenges.
Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
Consequently, we may be unable to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our investigational medicines, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may obtain injunctive or other equitable relief, which could effectively block our ability to commercialize such investigational medicine unless we obtained a license under the applicable patents, or until such patents expire.
If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our products or product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may obtain injunctive or other equitable relief, which could effectively block our ability to commercialize such product unless we obtained a license under the applicable patents, or until such patents expire.
Risks related to ownership of our common stock The price of our common stock has been volatile, which could result in substantial losses for stockholders. 89 Table of Content Our stock price has been, and is expected to continue to be, subject to substantial volatility.
Risks related to ownership of our common stock The price of our common stock has been volatile, which could result in substantial losses for stockholders. Our stock price has been, and is expected to continue to be, subject to substantial volatility.
Before commencing later-stage clinical trials for our programs, we must develop assays to measure and predict the potency of a given dose of our investigational medicines. Any delay in developing assays that are acceptable to the FDA or other regulators could delay the start of future clinical trials.
Before commencing later-stage clinical trials for our programs, we must develop assays to measure and predict the potency of a given dose of our product candidates. Any delay in developing assays that are acceptable to the FDA or other regulators could delay the start of future clinical trials.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe MTC campus is approximately 686,000 square feet which includes lab and office space, directly supporting improvement in our manufacturing capabilities and expansion of our commercial and clinical activities. The MTC campus is leased through 2042 and we have the option to extend it for three five-year terms.
Biggest changeThe Moderna Technology Center (MTC) is located in Norwood, Massachusetts and is primarily comprised of three buildings (MTC South, MTC North and MTC East). The MTC campus is approximately 686,000 square feet which includes lab and office space, directly supporting our manufacturing capabilities and commercial and clinical activities.
Item 2. Properties We have two campuses in Massachusetts. We occupy a multi-building campus in Cambridge, Massachusetts (Cambridge campus), consisting of a mix of offices and research laboratory space totaling approximately 292,000 square feet. The Cambridge campus is the location of our corporate headquarters, platform, drug discovery and clinical development.
Additionally, we occupy a multi-building campus at Technology Square in Cambridge, Massachusetts, consisting of a mix of offices and research laboratory space, totaling approximately 292,000 square feet. The lease will expire in early 2025. The Cambridge campus is the location of our corporate headquarters, platform, drug discovery and clinical development.
Following completion of the building project, the lease term is 15 years, subject to our right to extend the lease for up to two seven-year terms.
The lease has a term of 15 years, with options for us to extend the lease for up to two additional seven-year terms. We expect to begin a phased move-in process starting in early 2024.
We also own and lease land, office and lab spaces globally for our business operations. We are also investing in a new Moderna Science Center (MSC) in Cambridge, Massachusetts, totaling approximately 462,000 square feet of leased space.
We also own and lease various parcels of land, office and lab spaces across the globe for our business operations.
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The Cambridge campus is leased with the majority of the space being leased through 2029. The Moderna Technology Center (MTC campus) is located in Norwood, Massachusetts and is primarily comprised of three buildings (MTC South, MTC North and MTC East).
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Item 2. Properties We have two main campuses in Massachusetts. During the third quarter of 2023, we commenced a lease for a property in Cambridge, Massachusetts. This building, spanning approximately 462,000 square feet, is designated as our new Moderna Science Center (MSC). The MSC will accommodate a combination of scientific and office spaces, including our principal executive offices.
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The MSC is expected to house scientific and non-scientific spaces, including our principal executive offices, and is built to support our growth as we continue to advance our pipeline of mRNA medicines. The building construction is currently on-going. We expect to begin a phased move-in process in the fourth quarter of 2023.
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The MTC campus is leased through 2042 and we have the option to extend it for three additional five-year terms. In the second quarter of 2023, we acquired a newly constructed biomanufacturing facility, encompassing 140,000 square feet, in Marlborough, Massachusetts. This facility is undergoing enhancements, including the addition of 60,000 square feet to the existing structure.
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Upon completion, the facility will feature office and mRNA manufacturing areas, including a full manufacturing clean room, quality control laboratories, a just-in-time satellite warehouse, and additional office spaces. We expect the facility to be operational in 2025. This new site is strategically intended to support our INT program.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs in the U.S. action, we seek a judgment of infringement of the asserted patents and monetary damages. Pfizer Inc. and BioNTech SE have also filed an action seeking revocation of certain Moderna patents in the UK.
Biggest changeIn May 2023, we initiated patent infringement proceedings in Ireland (in the High Court) and Belgium (Brussels Business Court) against Pfizer, BioNTech and related entities with respect to the same European patents. As in the U.S. action, we seek a judgment of infringement of the asserted patents and monetary damages.
Item 3. Legal Proceedings We are involved in various claims and legal proceedings of a nature considered ordinary course in our business, including the intellectual property litigation described below. Most of the issues raised by these claims are highly complex and subject to substantial uncertainties.
Item 3. Legal Proceedings We are involved in various claims and legal proceedings of a nature considered ordinary course in our business, including the 80 intellectual property litigation described below. Most of the issues raised by these claims are highly complex and subject to substantial uncertainties.
The complaint seeks a judgment of infringement of the asserted patents and monetary damages, but does not seek to prevent or stop the marketing or sales of our COVID-19 vaccines. Proceedings Related to Patents Owned by Alnylam In March 2022, Alnylam Pharmaceuticals, Inc. (Alnylam) filed a complaint against us in the U.S.
The complaint seeks a judgment of infringement of the asserted patents and monetary damages, but does not seek to prevent or stop the marketing or sales of our COVID-19 vaccines. Proceedings Related to Patents Owned by Alnylam In March 2022 and July 2022, Alnylam Pharmaceuticals, Inc. (Alnylam) filed two complaints against us in the U.S.
For a description of risks relating to these and other legal proceedings we face, see Part I, Item 1A, “Risk Factors,” including the discussion under the headings entitled “Risks related to our intellectual property” and “Risks related to the manufacturing of our commercial products, development candidates, investigational medicines and our future pipeline.” The outcome of any such proceedings, regardless of the merits, is inherently uncertain; therefore, assessing the likelihood of loss and any estimated damages is difficult and subject to considerable judgment.
For a description of risks relating to these and other legal proceedings we face, see Part I, Item 1A, “Risk Factors,” including the discussion under the headings entitled “Risks related to our intellectual property” and “Risks related to the manufacturing of our commercial products and product candidates.” The outcome of any such proceedings, regardless of the merits, is inherently uncertain; therefore, assessing the likelihood of loss and any estimated damages is difficult and subject to considerable judgment.
The complaint seeks a judgment of infringement of the asserted patents and monetary damages. 93 Table of Content Also in August 2022, we initiated patent infringement proceedings in Germany (in the Dusseldorf Regional Court), the Netherlands (in the District Court of The Hague) and the UK (in the High Court of Justice of England & Wales) against Pfizer, BioNTech and related entities with respect to certain European patents that also concern our mRNA platform technology and disease-specific vaccine designs, including coronaviruses.
Also in August 2022, we initiated patent infringement proceedings in Germany (in the Dusseldorf Regional Court), the Netherlands (in the District Court of The Hague) and the UK (in the High Court of Justice of England & Wales) against Pfizer, BioNTech and related entities with respect to certain European patents that also concern our mRNA platform technology and disease-specific vaccine designs, including coronaviruses.
In addition, the Moderna patents being asserted in the European actions are subject to notices of opposition, including by Pfizer and BioNTech SE and others. These actions seek to revoke the patents, which have been filed at the European Patent Office.
Pfizer Inc. and BioNTech SE have also filed an action seeking revocation of certain Moderna patents in the UK. In addition, the Moderna patents being asserted in the European actions are subject to notices of opposition, including by Pfizer and BioNTech SE and others. These actions seek to revoke the patents, which have been filed at the European Patent Office.
(collectively, BioNTech), asserting infringement of certain U.S. patents concerning our mRNA platform technology and disease-specific vaccine designs in Pfizer and BioNTech’s manufacture and sale of their mRNA COVID-19 vaccines.
(collectively, BioNTech), asserting infringement of certain U.S. patents concerning our mRNA platform technology and disease-specific vaccine designs in Pfizer and BioNTech’s manufacture and sale of their mRNA COVID-19 vaccines. The complaint seeks a judgment of infringement of the asserted patents and monetary damages.
District Court for the District of Delaware asserting that our manufacture and sale of our COVID-19 vaccine infringes a U.S. patent concerning cationic lipids. The complaint seeks a judgment of infringement of the asserted patent and monetary damages, but does not seek to prevent or stop the marketing or sales of our COVID-19 vaccines. Item 4.
In May 2023, Alnylam filed a third complaint against us in the U.S. District Court for the District of Delaware asserting three additional U.S. patents concerning cationic lipids. The complaints seek judgments of infringement of the asserted patents and monetary damages, but do not seek to prevent or stop the marketing or sales of our COVID-19 vaccines. Item 4.
Mine Safety Disclosures Not applicable. 94 Table of Content PART II
Mine Safety Disclosures Not applicable. 81 PART II
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District Court for the District of Delaware asserting that our manufacture and sale of our COVID-19 vaccine infringes certain U.S. patents concerning cationic lipids. On August 25, 2023, the Court entered a Final Judgment of non-infringement of all asserted patents in these lawsuits. Alnylam has appealed this judgment to the Federal Circuit Court of Appeals.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFinancial Statements and Supplementary Data 111 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 149 Item 9A. Controls and Procedures 149 Item 9B. Other Information 152 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 152 PART III . Item 10. Directors, Executive Officers and Corporate Governance 153 Item 11. Executive Compensation 153 Item 12.
Biggest changeFinancial Statements and Supplementary Data 101 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 140 Item 9A. Controls and Procedures 141 Item 9B. Other Information 143 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 143 PART III . Item 10. Directors, Executive Officers and Corporate Governance 144 Item 11. Executive Compensation 144 Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 153 Item 13. Certain Relationships and Related Transactions, and Director Independence 153 Item 14. Principal Accountant Fees and Services 153 PART IV . Item 15. Exhibits, Financial Statement Schedules 154
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 144 Item 13. Certain Relationships and Related Transactions, and Director Independence 144 Item 14. Principal Accountant Fees and Services 144 PART IV . Item 15. Exhibits, Financial Statement Schedules 145
Item 4. Mine Safety Disclosures 94 PART II . Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 95 Item 6. [Reserved] 96 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 97 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 109 Item 8.
Item 4. Mine Safety Disclosures 81 PART II . Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 82 Item 6. [Reserved] 83 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 84 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 99 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(2) On February 22, 2022, our Board of Directors authorized a share repurchase program for our common stock of up to $3.0 billion, with no expiration date. This share repurchase program was increased by the Board of Directors by an additional $3.0 billion on August 1, 2022, also with no expiration date.
Biggest changeInvestors should not purchase our common stock with the expectation of receiving cash dividends. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities On August 1, 2022, our Board of Directors authorized a share repurchase program for our common stock of up to $3.0 billion, with no expiration date.
Dividend Policy We have never declared or paid cash dividends on our common stock and do not expect to pay dividends on our common stock for the foreseeable future. 95 Table of Content Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans in Item 12 of Part III of this Annual Report on Form 10-K is incorporated herein by reference.
Dividend Policy We have never declared or paid cash dividends on our common stock and do not expect to pay dividends on our common stock for the foreseeable future. 82 Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans in Item 12 of Part III of this Annual Report on Form 10-K is incorporated herein by reference.
Stockholders We had approximately 79 stockholders of record as of February 17, 2023. Because many of our outstanding shares are held in accounts with brokers and other institutions, the number of beneficial owners is significantly greater than the number of record holders.
Stockholders We had approximately 75 stockholders of record as of February 16, 2024. Because many of our outstanding shares are held in accounts with brokers and other institutions, the number of beneficial owners is significantly greater than the number of record holders.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Our Common Stock Our common stock began trading on the Nasdaq Global Select Market under the symbol “MRNA” on December 7, 2018. Prior to that time, there was no public market for our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Our Common Stock Our common stock trades on the Nasdaq Global Select Market under the symbol “MRNA”.
The following graph shows a comparison from December 7, 2018, the date on which our common stock first began trading on the Nasdaq Global Select Market, through December 31, 2022 of the cumulative total return for our common stock, the Nasdaq Biotechnology Index, and the Standard & Poor’s 500 Stock Index (the “S&P 500”) each of which assumes an initial investment of $100 and reinvestment of all dividends.
The following graph illustrates a comparison for the five years ended December 31, 2023 of the cumulative total return for our common stock, the Nasdaq Biotechnology Index, and the Standard & Poor’s 500 Stock Index (the S&P 500) each of which assumes an initial investment of $100 and reinvestment of all dividends.
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Investors should not purchase our common stock with the expectation of receiving cash dividends. Recent Sales of Unregistered Securities None.
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During the three months ended December 31, 2023, there were no shares repurchased. As of December 31, 2023, $1.7 billion of our Board of Directors’ authorization for repurchases of our common stock remains outstanding, with no expiration date. Refer to Note 12 to consolidated financial statements for information regarding our share repurchase programs.
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Issuer Purchases of Equity Securities The following table provides information with respect to the shares of common stock repurchased by us during the three months ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) (2) October 1 - October 31, 2022 3,024,505 $ 124.27 22,523,999 $ 2,840 November 1 - November 30, 2022 177,169 $ 147.77 22,701,168 $ 2,814 December 1 - December 31, 2022 — $ — 22,701,168 $ 2,814 Total 3,201,674 _______ (1) Average price paid per share includes related expenses.
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Refer to Note 14 to consolidated financial statements for information regarding our share repurchase programs.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther than product sales, our revenue in 2022, 2021, and 2020 was derived from government-sponsored and private organizations including BARDA, DARPA and the Bill & Melinda Gates Foundation and from strategic alliances with AstraZeneca, Merck and Vertex to discover, develop, and commercialize potential mRNA medicines. 99 Table of Content The following table summarizes grant revenue for the periods presented (in millions): Years Ended December 31, 2022 2021 2020 BARDA $ 372 $ 713 $ 522 Other grant revenue 16 22 7 Total grant revenue $ 388 $ 735 $ 529 The following table summarizes collaboration revenue for the periods presented (in millions): Years Ended December 31, 2022 2021 2020 Collaboration revenue: Merck $ 309 $ 23 $ 26 AstraZeneca 80 7 33 Vertex 48 26 15 Other 3 5 — Total collaboration revenue $ 440 $ 61 $ 74 In the third quarter of 2022, AstraZeneca elected to terminate our collaborations, effective on November 21, 2022.
Biggest changeOther revenue Other than net product sales, our revenue has been primarily derived from government-sponsored and private organizations including the Biomedical Advanced Research and Development Authority (BARDA), the Defense Advanced Research Projects Agency (DARPA) and the Bill & Melinda Gates Foundation and from strategic alliances with Merck & Co., Inc (Merck), Vertex Pharmaceuticals Incorporated and Vertex Pharmaceuticals (Europe) Limited (together, Vertex) and others to discover, develop, and commercialize potential mRNA medicines. 87 The following table summarizes other revenue for the periods presented (in millions): Years Ended December 31, 2023 2022 2021 Grant revenue $ 94 $ 388 $ 735 Collaboration revenue 83 440 61 Total other revenue $ 177 $ 828 $ 796 Cost of sales Cost of sales includes raw materials, personnel and facility and other costs associated with manufacturing our commercial products.
Our platform builds on continuous advances in basic and applied mRNA science, delivery technology and manufacturing, providing us the capability to pursue in parallel a robust pipeline of new development candidates. We are developing therapeutics and vaccines for infectious diseases, immuno-oncology, rare diseases, autoimmune diseases and cardiovascular diseases, independently and with our strategic collaborators.
Our platform builds on continuous advances in basic and applied mRNA science, delivery technology and manufacturing, providing us the capability to pursue in parallel a robust pipeline of new development candidates. We are developing therapeutics and vaccines for infectious diseases, immuno-oncology, rare diseases and autoimmune diseases, independently and with our strategic collaborators.
Since our founding in 2010, we have transformed from a research-stage company advancing programs in the field of mRNA to a commercial enterprise with a diverse clinical portfolio of vaccines and therapeutics across seven modalities, a broad intellectual property portfolio and integrated manufacturing capabilities that allow for rapid clinical and commercial production at scale.
Since our founding in 2010, we have transformed from a research-stage company advancing programs in the field of mRNA to a commercial enterprise with a diverse clinical portfolio of vaccines and therapeutics across six modalities, a broad intellectual property portfolio and integrated manufacturing capabilities that allow for rapid clinical and commercial production at scale.
Overview We are a biotechnology company pioneering 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.
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.
Cost of sales also includes shipping costs, indirect overhead costs associated with our product sales during the period, third-party royalties on net sales of our products, and charges for inventory valuation and losses on firm purchase commitments.
Cost of sales also includes shipping costs, indirect overhead costs associated with our product sales during the period, third-party royalties on net sales of our products, and charges for inventory valuation, excess and obsolete inventory and losses on firm purchase commitments.
Discovery program expenses are costs associated with research activities for our programs in the preclinical discovery stage, and primarily consist of external costs for CROs and lab services, and allocated manufacturing cost of preclinical mRNA supply and consumables. 101 Table of Content Platform research expenses are mainly costs to develop technical advances in mRNA science, delivery science, and manufacturing process design.
Discovery program expenses are costs associated with research activities for our programs in the preclinical discovery stage, and primarily consist of external costs for CROs and lab services, and allocated manufacturing cost of preclinical mRNA supply and consumables. Platform research expenses are mainly costs to develop technical advances in mRNA science, delivery science, and manufacturing process design.
Selling, general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for executives, finance, legal, human resources, business development and other administrative and operational functions, professional fees, accounting and legal services, information technology and facility-related costs, and expenses associated with obtaining and maintaining intellectual property, or IP.
Selling, general and administrative expenses Selling, general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for executives, finance, legal, human resources, business development, commercial, marketing, and other administrative and operational functions, professional fees, accounting and legal services, information technology and facility-related costs, and expenses associated with obtaining and maintaining intellectual property (IP).
Investing activities Our primary investing activities consist of purchases, sales, and maturities of our investments and capital expenditures for land, leasehold improvements, manufacturing, laboratory, computer equipment, and software.
Investing activities Our primary investing activities consist of purchases, sales, and maturities of our investments, capital expenditures for land, leasehold improvements, manufacturing, laboratory, computer equipment and software, and business development.
A discussion regarding our results of operations for the year ended December 31, 2021 compared to 2020 can be found under Part II -Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission (SEC) on February 25, 2022.
A discussion regarding our results of operations for the year ended December 31, 2022 compared to 2021 can be found under Part II -Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission (SEC) on February 24, 2023.
As of December 31, 2022, we did not have any off-balance sheet arrangements that were material or reasonably likely to become material to our financial condition or results of operations.
As of December 31, 2023, we did not have any off-balance sheet arrangements that were material or reasonably likely to become material to our financial condition or results of operations. 98
The actual amounts we pay in the future to the vendors under such agreements may differ from the cancelable open purchase order amounts of $2.5 billion. In addition to the above obligations, we enter into a variety of agreements and financial commitments in the normal course of business.
The actual amounts we pay in the future to the vendors under such agreements may differ from the cancelable open purchase order amounts of $3.0 billion. In addition to the above obligations, we enter into a variety of agreements and financial commitments in the normal course of business.
Our cash flows from operating activities are significantly affected by our use of cash for operating expenses and working capital to support the business. Beginning in the third quarter of 2020, we entered into supply agreements with the U.S. Government, other international governments and organizations for the supply of our COVID-19 vaccines and received upfront deposits.
Our cash flows from operating activities are significantly affected by our use of cash for operating expenses and working capital to support the business. Beginning in the third quarter of 2020, we entered into supply agreements with the U.S. Government and foreign governments and organizations for the supply of our COVID-19 vaccine and received upfront deposits.
Investigational medicines in later stages of clinical development, such as our RSV vaccine, seasonal flu vaccine, CMV vaccine and our COVID-19 vaccines, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.
Investigational medicines in later stages of clinical development, such as our RSV vaccine, seasonal flu vaccine, CMV vaccine, new generations of COVID-19 vaccines, combination vaccines, and our INT program, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.
(3) The amounts represent non-cancelable fixed payment obligations related to purchases of raw materials, contract manufacturing services, clinical services and other goods or services in the normal course of business. As of December 31, 2022, $268 million of the purchase commitments related to raw materials was recorded as an accrued liability for loss on future firm purchase commitments.
(2) The amounts represent non-cancelable fixed payment obligations related to purchases of raw materials, contract manufacturing services, clinical services and other goods or services in the normal course of business. As of December 31, 2023, $79 million of the purchase commitments related to raw materials was recorded as an accrued liability for loss on future firm purchase commitments.
At December 31, 2022, we had cancelable open purchase orders of $2.5 billion in total under such agreements for our clinical operations and support and contract manufacturing. These amounts represent only our estimate of those items for which we had a contractual commitment to pay at December 31, 2022, assuming we would not cancel these agreements.
At December 31, 2023, we had cancelable open purchase orders of $3.0 billion in total under such agreements for our clinical operations and support and contract manufacturing. These amounts represent only our estimate of those items for which we 97 had a contractual commitment to pay at December 31, 2023, assuming we would not cancel these agreements.
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, or CROs, that conduct our preclinical studies and clinical trials, and in-licensing arrangements; 100 Table of Content • expenses associated with developing manufacturing capabilities and acquiring materials for preclinical studies, clinical trials and pre-launch inventory, including both internal manufacturing and third-party contract manufacturing organizations, or 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.
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.
Our ongoing work on our RSV, seasonal flu, CMV vaccine candidates, and COVID-19 vaccines, including development of any new generations of boosters and vaccines against variants of SARS-CoV-2, late-stage clinical development, and buildout of global commercial, regulatory, sales and marketing infrastructure will require significant cash outflows, most of which may not be reimbursed or otherwise paid for by our partners or collaborators.
Our ongoing work on our RSV, seasonal flu and CMV vaccine candidates, individualized neoantigen therapy, COVID-19 vaccines, including development of any new vaccines against variants of SARS-CoV-2, combination vaccines, late-stage clinical development, and buildout of global commercial, regulatory, sales and marketing infrastructure and manufacturing facilities will require significant cash outflows in future periods, most of which may not be reimbursed or otherwise paid for by our partners or collaborators.
We believe that our cash, cash equivalents, and investments as of December 31, 2022, will be sufficient to enable us to fund our projected operations, capital expenditures and share repurchases through at least the next 12 months from the issuance of the financial statements included in this Annual Report on Form 10-K.
We believe that our cash, cash equivalents, and investments as of December 31, 2023, together with cash expected to be generated from product sales, will be sufficient to enable us to fund our projected operations and capital expenditures through at least the next 12 months from the issuance of the financial statements included in this Annual Report on Form 10-K.
For accounting purposes, a lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised.
For accounting purposes, a lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised. Please refer to Note 10 to our consolidated financial statements.
For the year ended 2022, we recognized product sales of $18.4 billion from sales of our COVID-19 vaccines, compared to $17.7 billion and $200 million for the years ended 2021 and 2020, respectively.
For the year ended December 31, 2023, we recognized net product sales of $6.7 billion from sales of our COVID-19 vaccines, compared to $18.4 billion and $17.7 billion for the years ended December 31, 2022 and 2021, respectively.
Our investments, consisting primarily of government and corporate debt securities, are stated at fair value. Cash, cash equivalents and investments as of December 31, 2022 increased by $650 million, or 4%, compared to December 31, 2021.
Our investments, consisting primarily of government and corporate debt securities, are stated at fair value. Cash, cash equivalents and investments as of December 31, 2023 decreased by $4.9 billion, or 27%, compared to December 31, 2022.
Interest income Interest income generated from our investments in marketable securities increased by $182 million in 2022, mainly attributable to an overall higher interest rate environment and increased investment balances.
Interest income Interest income generated from our investments in marketable securities increased by $221 million in 2023, mainly attributable to an overall higher interest rate environment, partially offset by lower average investment balances.
Liquidity and capital resources The following table summarizes our cash, cash equivalents, investments and working capital for each period presented (in millions): December 31, December 31, 2022 2021 Financial assets: Cash and cash equivalents $ 3,205 $ 6,848 Investments 6,697 3,879 Investments, non-current 8,318 6,843 Total $ 18,220 $ 17,570 Working capital: Current assets $ 13,431 $ 16,071 Current liabilities 4,923 9,128 Total $ 8,508 $ 6,943 Our cash, cash equivalents and investments are invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.
Liquidity and capital resources The following table summarizes our cash, cash equivalents, investments and working capital for each period presented (in millions): December 31, 2023 2022 Financial assets: Cash and cash equivalents $ 2,907 $ 3,205 Investments 5,697 6,697 Investments, non-current 4,677 8,318 Total $ 13,281 $ 18,220 Working capital: Current assets $ 10,325 $ 13,431 Current liabilities 3,015 4,923 Total $ 7,310 $ 8,508 Our cash, cash equivalents and investments are invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.
The increase in 2022 was largely attributable to the late-stage clinical development associated with our RSV, seasonal flu and CMV vaccine programs. The increase in personnel-related costs was primarily driven by an increase in the number of employees supporting our increased research and development programs and activities.
The increase in 2023 was largely attributable to the late-stage clinical development associated with our RSV vaccine, CMV vaccine and combination vaccine against seasonal influenza and COVID-19, as well as our INT program. The increase in personnel-related costs was mainly driven by an increase in the number of employees supporting our increased research and development programs and activities.
Shared discovery and development expenses are research and development costs such as personnel-related costs and other costs, which are not otherwise included in development programs, discovery programs, platform research, technical development, certain collaborative and licensing arrangements, and unallocated manufacturing expenses, stock-based compensation, and other expenses.
Shared discovery and development expenses are research and development costs such as personnel-related costs and other costs, which are not otherwise included in development programs, discovery programs, platform research, technical development, certain collaborative and licensing arrangements, and unallocated manufacturing expenses, stock-based compensation, and other expenses. 89 Historically, we have made substantial investments in research and development activities, including development of our platform, mRNA technologies, and manufacturing technologies.
Cash flow The following table summarizes the primary sources and uses of cash for the periods presented (in millions): Years Ended December 31, 2022 2021 2020 Net cash provided by (used in): Operating activities $ 4,981 $ 13,620 $ 2,027 Investing activities (5,176) (8,523) (1,672) Financing activities (3,448) (873) 2,033 Net (decrease) increase in cash and cash equivalents $ (3,643) $ 4,224 $ 2,388 106 Table of Content Operating activities We derive cash flows from operations primarily from cash collected from customer deposits related to our COVID-19 vaccine supply agreements as well as certain government-sponsored and private organizations and strategic alliances.
Cash flow The following table summarizes the primary sources and uses of cash for the periods presented (in millions): Years Ended December 31, 2023 2022 Net cash (used in) provided by: Operating activities $ (3,118) $ 4,981 Investing activities 4,206 (5,176) Financing activities (1,377) (3,448) Net decrease in cash and cash equivalents $ (289) $ (3,643) 95 Operating activities We derive cash flows from operations primarily from cash collected from customer deposits and accounts receivable, net related to our COVID-19 vaccine product sales, as well as certain government-sponsored and private organizations and strategic alliances.
Net cash used in financing activities in 2022 was $3.4 billion, primarily from repurchases of common stock of $3.3 billion and changes in financing lease liabilities of $184 million, partially offset by net proceeds from the issuance of common stock in connection with the exercise of stock options and employee stock purchases under our equity plans of $65 million. 107 Table of Content Net cash used in financing activities in 2021 was $873 million, primarily from repurchases of common stock of $857 million and changes in financing lease liabilities of $140 million, partially offset by net proceeds from the issuance of common stock in connection with the exercise of stock options and employee stock purchases under our equity plans of $124 million.
Net cash used in financing activities in 2023 was $1.4 billion, primarily from repurchases of common stock of $1.2 billion and changes in financing lease liabilities of $270 million, partially offset by net proceeds from the issuance of common stock in connection with the exercise of stock options and employee stock purchases under our equity plans of $46 million.
The following table reflects our research and development expenses, including direct program specific expenses summarized by modality and indirect or shared operating costs summarized under other research and development expenses during the years ended December 31, 2022, 2021, and 2020 (in millions): Years Ended December 31, 2022 2021 2020 Program expenses by modality: Infectious disease vaccines $ 1,734 $ 1,099 $ 707 Systemic secreted and cell surface therapeutics 23 3 2 Cancer vaccines 14 47 29 Intratumoral immuno-oncology 10 20 9 Systemic intracellular therapeutics 42 26 21 Inhaled pulmonary therapeutics 18 1 — Total program-specific expenses by modality (1) $ 1,841 $ 1,196 $ 768 Other research and development expenses: Discovery programs $ 69 $ 85 $ 56 Platform research 169 125 93 Technical development and unallocated manufacturing expenses 464 275 279 Shared discovery and development expenses 658 242 118 Stock-based compensation 94 68 56 Total research and development expenses $ 3,295 $ 1,991 $ 1,370 __________ (1) Includes a total of 45 development candidates at December 31, 2022, 37 development candidates at December 31, 2021, and 21 development candidates at December 31, 2020.
Due to the number of ongoing programs and our ability to use resources across several projects, indirect or shared operating costs incurred for our research and development programs are generally not recorded or maintained on a program- or modality-specific basis. 88 The following table reflects our research and development expenses, including direct program specific expenses summarized by modality and indirect or shared operating costs summarized under other research and development expenses during the years ended December 31, 2023, 2022, and 2021 (in millions): Years Ended December 31, 2023 2022 2021 Program expenses by modality: Infectious disease vaccines $ 2,344 $ 1,734 $ 1,099 Cancer vaccines & therapeutics 70 14 47 Rare disease intracellular therapeutics 75 42 26 Intratumoral immuno-oncology 23 10 20 Inhaled pulmonary therapeutics 17 18 1 Systemic secreted and cell surface therapeutics 33 23 3 Total program-specific expenses by modality (1) $ 2,562 $ 1,841 $ 1,196 Other research and development expenses: Discovery programs $ 106 $ 69 $ 85 Platform research 254 169 125 Technical development and unallocated manufacturing expenses 821 464 275 Shared discovery and development expenses 945 658 242 Stock-based compensation 157 94 68 Total research and development expenses $ 4,845 $ 3,295 $ 1,991 __________ (1) Includes a total of 42 development candidates at December 31, 2023, 45 development candidates at December 31, 2022, and 37 development candidates at December 31, 2021.
Net cash used in investing activities in 2022 was $5.2 billion, which included purchases of marketable securities of $11.4 billion, purchases of property, plant and equipment of $400 million, and investment in convertible notes and equity securities of $40 million, partially offset by proceeds from sales of marketable securities of $3.5 billion and proceeds from maturities of marketable securities of $3.2 billion.
Net cash provided by investing activities in 2023 was $4.2 billion, which primarily included proceeds from maturities of marketable securities of $5.6 billion and proceeds from sales of marketable securities of $3.2 billion, partially offset by purchases of marketable securities of $3.8 billion, and purchases of property, plant and equipment of $707 million.
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.
Interest expense is primarily derived from our finance leases related to our Moderna Technology Center and certain contract manufacturing service agreements. 90 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.
These costs relate to the operation of the business, unrelated to the research and development function, or any individual program. We anticipate selling, general and administrative expenses will increase as we continue to expand the number of programs in development and prepare for the establishment of commercial activities both within and outside the United States.
These costs relate to the operation of the business, unrelated to the research and development function, or any individual program. We anticipate selling, general and administrative expenses to decrease marginally in 2024 compared to 2023. This is due to the continued development of our programs and preparations for commercial activities both within and outside the United States.
Other expense, net Other expense, net consists of interest expense, gains (losses) from the sale of investments in marketable securities, gains (losses) related to changes in fair value of investments in equity securities, and other income and expense unrelated to our core operations. 102 Table of Content Interest expense is primarily derived from our finance leases related to our Moderna Technology Center and certain contract manufacturing service agreements.
Other expense, net Other expense, net consists of interest expense, gains (losses) from the sale of investments in marketable securities, gains (losses) related to changes in fair value of investments in equity securities, and other income and expense unrelated to our core operations.
Selling, general and administrative expenses Selling, general and administrative expenses increased by $565 million, or 100%, in 2022.
Selling, general and administrative expenses Selling, general and administrative expenses increased by $417 million, or 37%, in 2023.
The increase was primarily due to a net realized loss on available-for-sale debt securities as well as an increase in interest expense, partially offset by a gain on equity securities and a net gain related to our foreign currency balance sheet hedging activities, foreign currency transactions, and remeasurements. Our interest expense is primarily related to our finance leases.
The increase was primarily due to losses on equity investments and a net realized loss on available-for-sale debt securities as well as an increase in interest expense. Our interest expense is primarily 94 related to our finance leases. The increase in interest expense was driven by new finance leases that commenced in 2023.
Costs to secure and defend our IP are expensed as incurred, and are classified as selling, general and administrative expenses. Interest income Interest income consists of interest generated from our investments in cash and cash equivalents, money market funds, and high-quality fixed income securities.
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 The following table summarizes other expense, net for the periods presented (in millions): Years Ended December 31, Change 2022 vs. 2021 2022 2021 Change % (Loss) gain on investments $ (20) $ 1 $ (21) (2,100) % Interest expense (29) (17) (12) 71 % Other income (expense), net 4 (13) 17 (131) % Total other expense, net $ (45) $ (29) $ (16) 55 % Total other expense, net increased by $16 million, or 55%, in 2022.
Other expense, net The following table summarizes other expense, net for the periods presented (in millions): Years Ended December 31, Change 2023 vs. 2022 2023 2022 Change % Loss on investments $ (72) $ (20) $ (52) 260 % Interest expense (38) (29) (9) 31 % Other (expense) income, net (14) 4 (18) (450) % Total other expense, net $ (124) $ (45) $ (79) 176 % Total other expense, net increased by $79 million, or 176%, in 2023.
In making this determination, we consider the scheduled reversal of deferred tax liabilities, projected future taxable income and the effects of tax planning strategies in assessing the need for a valuation allowance.
In making this determination, we consider the scheduled reversal of deferred tax liabilities, uncertain tax positions, projected future taxable income and the effects of tax planning strategies in assessing the need for a valuation allowance. During 2023, our assessment included consideration of a full-year pre-tax loss and a projected three-year cumulative loss as determined by our long-range financial planning process.
As of December 31, 2022, we had deferred revenue of $2.6 billion associated with customer deposits received or billable under supply agreements of which we expect $2.0 billion of our COVID-19 vaccines to be delivered in 2023.
As of December 31, 2023, we had deferred revenue of $613 million associated with customer deposits received or billable under supply agreements for delivery of our COVID-19 vaccine primarily in 2024.
Cost of sales Cost of sales includes raw materials, personnel and facility and other costs associated with manufacturing our commercial products. These costs include production materials, production costs at our manufacturing facilities, third-party manufacturing costs, and final formulation and packaging costs.
These costs include production materials, production costs at our manufacturing facilities, third-party manufacturing costs, and final formulation and packaging costs.
The increase was mainly due to an increase in consulting and outside services of $169 million, an increase in personnel-related costs of $108 million, an increase in marketing expense of $89 million, an increase in technology- and facilities-related costs of $51 million, and an endowment to the Moderna Charitable Foundation of $50 million.
The increase was mainly due to increases in personnel-related costs of $188 million, consulting and outside services of $148 million, and marketing expense of $118 million, partially offset by an endowment to the Moderna Charitable Foundation of $50 million contributed in 2022 that did not recur in 2023.
Contractual obligations and commitments The following table summarizes our contractual obligations as of December 31, 2022 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 1 year 1 - 3 years 3 - 5 years More than 5 years Operating leases $ 162 $ 43 $ 41 $ 36 $ 42 Financing leases ( 1) 1,665 195 253 129 1,088 MSC lease (2) 1,019 — 112 118 789 Purchase obligations (3) 2,318 1,642 666 10 — Total contractual cash obligations $ 5,164 $ 1,880 $ 1,072 $ 293 $ 1,919 _______ (1) The amounts in the table include a total payment of $662 million associated with our MTC leases for the optional lease extension periods.
Contractual obligations and commitments The following table summarizes our contractual obligations as of December 31, 2023 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods (in millions): Payments Due by Period Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years Operating leases $ 1,133 $ 72 $ 134 $ 142 $ 785 Financing leases ( 1) 1,184 20 44 46 1,074 Purchase obligations (2) 2,103 1,002 685 272 144 Total contractual cash obligations $ 4,420 $ 1,094 $ 863 $ 460 $ 2,003 _______ (1) The amounts in the table include a total payment of $668 million associated with our MTC leases for the optional lease extension periods.
The increase was primarily attributable to an increase in clinical trial expenses of $690 million, an increase in clinical manufacturing expenses of $173 million, an increase in personnel-related costs of $156 million, acquisition of a Priority Review Voucher for $101 million, and an increase in consulting and outside services of $71 million.
The increase was primarily attributable to increases in clinical trial expenses of $411 million, clinical manufacturing expenses of $335 million, personnel-related costs of $286 million, and consulting and outside services of $267 million.
We expect our research and development costs to continue to increase for the foreseeable future as our investigational medicines progress through the development phases and as we identify and develop additional programs.
We expect our research and development costs to be substantial in the near term as our investigational medicines advance through development phases and as we identify and develop additional programs. We expect a modest reduction in research and development costs in 2024.
We have a diverse and extensive development pipeline of 45 development candidates across our 48 development programs, of which 38 are in clinical studies currently.
We have a diverse and extensive development pipeline of 42 development candidates across our 45 development programs, of which 40 are in clinical studies currently. Our COVID-19 vaccine is our first commercial product and is marketed, where approved, under the name Spikevax®.
For the year ended December 31, 2022, we generated cash from operations of $5.0 billion, partially offset by repurchases of our common stock of $3.3 billion; purchases of property, plant and equipment of $400 million; and unrealized losses on available-for-sale debt securities of $412 million.
For the year ended December 31, 2023, we had a net cash outflow from operations of $3.1 billion, repurchases of our common stock of $1.2 billion, and purchases of property, plant and equipment of $707 million.
We expect that research and development expenses will increase in 2023 as we continue to progress our Phase 3 studies for our RSV, seasonal flu and CMV vaccine programs, and continue to develop our pipeline and advance our product candidates into later-stage development.
We anticipate a modest reduction in research and development expenses in 2024 compared to the current levels of 2023, as we continue to advance the development of variant-specific and next-generation COVID-19 vaccine candidates and continue to develop our pipeline and advance our product candidates into later-stage development, in particular those in ongoing Phase 3 studies, including our RSV, CMV, seasonal flu and combination vaccine programs, as well as our INT program.
We have retained earnings of $18.3 billion as of December 31, 2022. We have significant future capital requirements including expected operating expenses to conduct research and development activities, operate our organization, meet capital expenditure needs, and fund our share repurchase program.
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.
The net change in assets and liabilities was primarily due to a decrease in deferred revenue of $4.2 billion, an increase in prepaid expenses and other assets of $1.7 billion, and a decrease in income taxes payable of $828 million, partially offset by a decrease in accounts receivable of $1.8 billion, an increase in accrued liabilities of $612 million, a decrease in inventory of $492 million, and an increase in accounts payable of $240 million.
This was partially offset by a change in prepaid expenses and other assets of $2.7 billion primarily driven by inventory write-downs and reductions in vendor down payments, a change in deferred revenue of $2.1 billion due to less revenue recognized from deferred revenue in excess of customer deposits received, and a decrease in deferred income tax assets of $1.4 billion due to an increase in valuation allowance.
Grant revenue decreased by $347 million, or 47%, in 2022, mainly due to a decrease in grant revenue from BARDA related to our COVID-19 vaccine development in 2022.
Other revenue decreased by $651 million, or 79%, in 2023, mainly due to a decrease in grant revenue under our agreement with BARDA for the development of our COVID-19 vaccine, and lower collaboration revenue following the recognition of Merck's $250 million participation payment related to our INT collaboration in 2022.
Net cash provided by operating activities in 2021 was $13.6 billion and consisted of net income of $12.2 billion and non-cash adjustments of $110 million, plus a net change in assets and liabilities of $1.3 billion.
Net cash used by operating activities in 2023 was $3.1 billion and consisted of net loss of $4.7 billion and non-cash adjustments of $1.7 billion, plus a net change in assets and liabilities of $139 million. Non-cash items primarily included deferred income taxes of $828 million, depreciation and amortization of $621 million, and stock-based compensation of $305 million.
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. As of December 31, 2022, we maintained a valuation allowance against a portion of the state deferred tax assets based on management’s evaluation of all available evidence.
In the event that actual results differ from our estimates, or if future changes in estimates occur, the adjustments to the valuation allowance could materially impact our financial results. Such changes may result in significant increases or decreases to our tax provision in a period in which such estimates are changed, which in turn would affect net income or loss.
We have a broad IP portfolio covering our development and commercialization of mRNA vaccine and therapeutic programs, including those related to mRNA design, formulation, and manufacturing platform technologies. We regularly file patent applications to protect innovations arising from our research and development. We also hold trademarks and trademark applications in the United States and foreign jurisdictions.
We regularly file patent applications to protect innovations arising from our research and development. We also hold trademarks and trademark applications in the United States and foreign jurisdictions. Costs to secure and defend our IP are expensed as incurred, and are classified as selling, general and administrative expenses.
Please refer to Note 11 to our consolidated financial statements. 105 Table of Content Provision for income taxes Provision for income taxes increased by $130 million, or 12%, in 2022, primarily due to the tax benefit recorded in 2021 related to the release of the valuation allowance on the majority of our deferred tax assets.
Please refer to Note 10 to our consolidated financial statements. Provision for income taxes Provision for income taxes decreased by $441 million, or 36%, in 2023, primarily due to a significant decrease in pre-tax income, partially offset by an increase in valuation allowance on deferred tax assets of $2.1 billion.
We generated net income of $12.2 billion for the year ended 2021, following the authorization of our first commercial product in December 2020. From our inception to the end of 2020, prior to the authorization of our first commercial product in December 2020, we incurred significant losses from operations due to our significant research and development expenses.
We generated net income of $8.4 billion and $12.2 billion for the years ended 2022 and 2021, respectively, 96 following the authorization of our first commercial product in December 2020. We also incurred a net loss of $4.7 billion for the year ended December 31, 2023. We have retained earnings of $13.6 billion as of December 31, 2023.
Recently issued accounting pronouncements We have reviewed all recently issued standards and have determined that such standards will not have a material impact on our financial statements or do not otherwise apply to our operations. 103 Table of Content Results of operations A discussion regarding our results of operations for the year ended December 31, 2022 compared to 2021 is presented below.
Recently issued accounting pronouncements See Note 2 - Summary of Significant Accounting Policies, to the consolidated financial statements, under the caption “Recently Issued Accounting Standards Not Yet Adopted”. 92 Results of operations A discussion regarding our results of operations for the year ended December 31, 2023 compared to 2022 is presented below.
Operation and funding requirements Our principal sources of funding as of December 31, 2022 consisted of cash and cash equivalents, investments, and cash we expect to generate from operations. We generated net income of $8.4 billion for the year ended December 31, 2022.
Net cash used in financing activities decreased by $2.1 billion, or 60%, in 2023 compared to 2022, mainly due to a decrease in repurchases of common stock. Operation and funding requirements Our principal sources of funding as of December 31, 2023 consisted of cash and cash equivalents, investments, and cash we may generate from operations.
We expect our cost of sales as a percentage of product sales to increase in 2023 as we likely move from a pandemic to an endemic seasonal market environment for our COVID-19 vaccines. Research and development expenses Research and development expenses increased by $1.3 billion, or 65%, in 2022.
In light of our recent strategic initiative implemented in the third quarter of 2023, we expect a reduction in our cost of sales as a percentage of net product sales for the full year 2024, compared to the full year 2023. Research and development expenses Research and development expenses increased by $1.6 billion, or 47%, in 2023.
We have already incurred additional expenses related to building out a regulatory, sales and marketing team to support the sale, marketing and distribution of our COVID-19 vaccines and the expansion of our footprint across the globe, with active subsidiaries in more than 17 countries.
Our global expansion has already led to increased expenses, particularly as we build our regulatory, sales and marketing teams to support the commercialization of our COVID-19 vaccines and extend our global presence, with active subsidiaries in 19 countries as of December 31, 2023.
The following tables summarize our consolidated statements of operations for the periods presented (in millions): Years Ended December 31, Change 2022 vs. 2021 2022 2021 Change % Revenue: Product sales $ 18,435 $ 17,675 $ 760 4 % Grant revenue 388 735 (347) (47) % Collaboration revenue 440 61 379 621 % Total revenue 19,263 18,471 792 4 % Operating Expenses: Cost of sales 5,416 2,617 2,799 107 % Research and development 3,295 1,991 1,304 65 % Selling, general and administrative 1,132 567 565 100 % Total operating expenses 9,843 5,175 4,668 90 % Income from operations 9,420 13,296 (3,876) (29) % Interest income 200 18 182 1,011 % Other expense, net (45) (29) (16) 55 % Income before income taxes 9,575 13,285 (3,710) (28) % Provision for income taxes 1,213 1,083 130 12 % Net income $ 8,362 $ 12,202 $ (3,840) (31) % Revenue Total revenue increased by $792 million, or 4%, in 2022, primarily due to an increase in product sales.
The following table summarizes our consolidated statements of operations for the periods presented (in millions): Years Ended December 31, Change 2023 vs. 2022 2023 2022 Change % Revenue: Net product sales $ 6,671 $ 18,435 $ (11,764) (64) % Other revenue 177 828 (651) (79) % Total revenue 6,848 19,263 (12,415) (64) % Operating expenses: Cost of sales 4,693 5,416 (723) (13) % Research and development 4,845 3,295 1,550 47 % Selling, general and administrative 1,549 1,132 417 37 % Total operating expenses 11,087 9,843 1,244 13 % (Loss) income from operations (4,239) 9,420 (13,659) (145) % Interest income 421 200 221 111 % Other expense, net (124) (45) (79) 176 % (Loss) income before income taxes (3,942) 9,575 (13,517) (141) % Provision for income taxes 772 1,213 (441) (36) % Net (loss) income $ (4,714) $ 8,362 $ (13,076) (156) % Revenue Total revenue decreased by $12.4 billion, or 64%, in 2023, primarily attributable to a significant reduction in net product sales of our COVID-19 vaccine.
The net change in assets and liabilities was primarily due to an increase in deferred revenue of $2.8 billion, an increase in accrued liabilities of $989 million, an increase in income taxes payable of $876 million, and an increase in accounts payable of $204 million, partially offset by an increase in accounts receivable of $1.8 billion, an increase in inventory of $1.4 billion, and an increase in prepaid expenses and other assets of $489 million.
The net change in assets and liabilities was primarily due to a decrease in deferred revenue of $2.1 billion due to revenue recognized upon shipments of our COVID-19 vaccine, partially offset by a decrease in prepaid expenses and other assets of $1.0 billion, primarily driven by write-downs of long term inventory, decrease in income tax receivable due to receipt of tax refunds and decrease in pre-tax income, and reductions in vendor prepayments and down payments as well as a decrease in inventory of $747 million due to inventory write-downs.
Working capital, which is current assets less current liabilities, as of December 31, 2022 increased by $1.6 billion, or 23%, compared to December 31, 2021, primarily due to a decrease in short-term deferred revenue of $4.2 billion, mainly driven by revenue recognized from deferred revenue in excess of customer deposits received, and a decrease in income taxes payable of $828 million.
Working capital, which is current assets less current liabilities, as of December 31, 2023 decreased by $1.2 billion, or 14%, compared to December 31, 2022, primarily due to a decrease in cash, cash equivalents and short-term investments of $1.3 billion, primarily to fund our operating activities and repurchases of our common stock, a decrease in inventory of $747 million, a decrease in prepaid and other current assets of $568 million, and a decrease in accounts receivable, net of $493 million.
Operating expenses Cost of sales Our cost of sales was $5.4 billion, or 29% of our product sales, in 2022, including third-party royalties of $1.1 billion. Our cost of sales was $2.6 billion, or 15% of our product sales, in 2021, including third-party royalties of $641 million.
Our cost of sales was $5.4 billion, or 29% of our net product sales, in 2022, including third-party royalties of $1.1 billion, inventory write-downs of $1.3 billion, unutilized manufacturing capacity and wind down costs of $677 million, and losses on firm purchase commitments and cancellation fees of $725 million.
Our effective tax rate for the year ended December 31, 2021 was 8.1%, which included tax benefits related to the release of the valuation allowance on most of our deferred tax assets, foreign-derived intangible income deduction and stock based compensation.
Our effective tax rate for the year ended December 31, 2023 was (19.6)%, which is higher than the statutory rate. It is mainly driven by an increase in valuation allowances on deferred tax assets, partially offset by tax benefits from research and development credits and stock-based compensation.
We use our employee and infrastructure resources for the advancement of our platform, and for discovering and developing programs. Due to the number of ongoing programs and our ability to use resources across several projects, indirect or shared operating costs incurred for our research and development programs are generally not recorded or maintained on a program- or modality-specific basis.
We use our employee and infrastructure resources for the advancement of our platform, and for discovering and developing programs.
We are also conducting a Phase 3 efficacy trial of mRNA-1010 in the Northern Hemisphere to test the vaccine’s efficacy compared to a currently licensed seasonal influenza vaccine. We are also progressing several combination respiratory vaccine candidates. A Phase 1/2 study of our combination vaccine candidate targeting SARS-CoV-2 and influenza is fully enrolled and ongoing.
We are in discussions with regulators and intend to file in 2024. • Seasonal flu + COVID-19 vaccine: The Phase 3 trial of our combination vaccine candidate against seasonal flu and COVID-19 (mRNA-1083) is fully enrolled. We anticipate data from the study in 2024.
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We have three authorized marketed products: (1) Spikevax, the Moderna COVID-19 vaccine (mRNA-1273), (2) our bivalent vaccine targeting the BA.1 Omicron variant, combined with Spikevax (mRNA-1273.214), and (3) our bivalent vaccine targeting the BA.4/BA.5 Omicron variants combined with Spikevax (mRNA-1273.222). 2022 Business Highlights Moderna COVID-19 Vaccines In January 2022, the U.S.
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Our original vaccine, mRNA-1273, targeted the SARS-CoV-2 ancestral strain, and we have leveraged our mRNA platform to rapidly adapt our vaccine to emerging SARS-CoV-2 strains to provide protection as the virus evolves and regulatory guidance is updated. 2023 Business Highlights On September 11, 2023, we received approval of the supplemental Biologics License Application from the U.S.
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Food and Drug Administration (FDA) approved the Biologics License Application (BLA) for our COVID-19 vaccine, Spikevax. Prior to that approval, our COVID-19 Vaccine was marketed in the U.S. subject to an Emergency Use Authorization (EUA) that was first granted in December 2020 and similar authorizations in other markets.
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Food and Drug Administration (FDA) for our updated COVID-19 vaccine, which targets the Omicron XBB.1.5 sublineage of SARS-CoV-2 (mRNA-1273.815), for individuals 12 years and older. The FDA also issued an Emergency Use Authorization for mRNA-1273.815 for children aged 6 months to 11 years old.
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Spikevax is our first product to achieve licensure in the U.S., and it has been authorized for use or approved by regulators in more than 70 countries.
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We subsequently received authorization from regulatory authorities around the globe for mRNA-1273.815 and initiated the shipment of doses both in the U.S. and internationally.
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In August 2022, we received an EUA from the FDA for our Omicron BA.4/BA.5 targeting bivalent booster vaccine, mRNA-1273.222, for individuals 18 years and older, followed later by adolescent and pediatric approvals. mRNA-1273.222 has been authorized as a booster vaccine for individuals 18 years and older in key markets, including the European Union, Canada and Japan, with the European Union, Japan and several other countries also authorizing boosters for adolescent populations.
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In January 2023, we announced positive data from the interim analysis of our pivotal ConquerRSV study of our vaccine candidate against respiratory syncytial virus (RSV) (mRNA-1345). In the study, mRNA-1345 met primary efficacy endpoints, demonstrating vaccine efficacy of 83.7% against RSV lower respiratory tract disease in older adults.
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During the third quarter of 2022, we also received authorizations for the use of our Omicron BA.1 targeting bivalent COVID-19 booster vaccine, mRNA-1273.214, in the European Union, Japan, United Kingdom, Canada, Australia, and other markets globally.
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We have filed for a Biologics License Application to the FDA for our RSV vaccine for adults aged 60 years or older, and used a Priority Review Voucher to accelerate review. We have also submitted marketing authorization applications for the vaccine for adults aged 60 years or older to medical authorities in several countries beyond the U.S.
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Program Development Respiratory Vaccines As we build our respiratory franchise, we are applying our experience and using our mRNA platform to develop medicines that can help prevent hospitalizations and deaths from those respiratory viruses that impose the greatest burden on patients and healthcare systems.
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We have initiated the manufacturing of mRNA-1345 and are preparing for a marketing launch in 2024, subject to approval. During the third quarter of 2023, we embarked on a strategic initiative to optimize the cost structure of our COVID-19 business, with a focus on resizing our manufacturing cost structure.
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By pursuing combination products to protect against a range of diseases, we can potentially help decrease morbidity and mortality from respiratory disease, lower healthcare costs and increase health security globally. 97 Table of Content Our late-stage respiratory vaccine pipeline continues to progress.
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The launch of this initiative was prompted by the completion of our long-range planning within the third quarter of 2023, which incorporated revised forecasts of vaccination rates. These projections accounted for the market’s transition from COVID-19 pandemic conditions towards an endemic seasonal market. Consequently, this strategic shift resulted in charges of $1.4 billion for the quarter.
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The Phase 3 study of our respiratory syncytial virus (RSV) vaccine candidate (mRNA-1345) in adults 60 years of age and older is fully enrolled, with more than 36,000 trial participants.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeTo help manage the exposure to foreign currency exchange rate fluctuations, we have implemented cash flow hedging and balance sheet hedging programs. Cash Flow Hedging Activities We hedge foreign currency product sales denominated in Euros and Japanese Yen, including the use of foreign exchange forward contracts or purchased options.
Biggest changeAs we pursue our international expansion strategy, our results of operations and cash flows remain subject to fluctuations in foreign currency exchange rates. To manage the exposure to foreign currency exchange rate fluctuations, we have implemented cash flow hedging and balance sheet hedging programs.
As of December 31, 2022, 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 $51 million.
As of December 31, 2023, a hypothetical adverse movement of 10 percent in foreign currency exchange rates compared to the U.S. dollars across all maturities would have resulted in potential declines in the fair value on our foreign currency forward contracts used in balance sheet hedging of approximately $23 million.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk As of December 31, 2022 and 2021, we had cash, cash equivalents, restricted cash, and investments in marketable securities of $18.2 billion and $17.6 billion, respectively. Our investment portfolio comprises money market funds and marketable debt securities (including U.S.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk As of December 31, 2023 and 2022, we had cash, cash equivalents, restricted cash, and investments in marketable securities of $13.3 billion and $18.2 billion, respectively. Our investment portfolio comprises money market funds and marketable debt securities (including U.S.
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. 110 Table of Content
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. 100
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.
We believe the counterparties to 99 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.
If market interest rates were to increase immediately and uniformly by one percentage point from levels at December 31, 2022, the net fair value of our marketable securities would decrease by approximately $169 million. Foreign Currency Risk Our revenue generating activities and operations have been primarily denominated in U.S. dollars.
If market interest rates were to increase immediately and uniformly by one percentage point from levels at December 31, 2023, the net fair value of our marketable securities would decrease by approximately $83 million. Foreign Currency Risk We transact business in various foreign currencies and have international sales and expenses denominated in foreign currencies.
We hedge our cash flow exposures to reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates. These transactions are designated and qualify as cash flow hedges.
We hedge these cash flow exposures to reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions.
We enter into these foreign exchange contracts to hedge our forecasted revenue and monetary assets and liabilities denominated in foreign currency in the normal course of business and accordingly, they are not speculative in nature. We believe the counterparties to our foreign currency forward contracts are creditworthy multinational commercial banks.
As of December 31, 2023, our outstanding balance sheet hedging derivatives, carried at fair value, had maturities of less than three months. We enter into these foreign exchange contracts to hedge our forecasted revenue and monetary assets and liabilities denominated in foreign currency in the normal course of business and accordingly, they are not speculative in nature.
Our significant foreign currency revenue exposure for the year ended December 31, 2022 was the equivalent of $5.4 billion in Euros and $1.0 billion in Japanese Yen. As we expand internationally our results of operations and cash flows become increasingly subject to fluctuations due to changes in foreign currency exchange rates.
However, we maintained a significant exposure to foreign currency risk, particularly in the Euro, Japanese Yen and Swiss Franc markets, Our significant foreign currency revenue exposure was the equivalent of $1.4 billion in Japanese Yen and $518 million in Euros for 2023.
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Our foreign exchange contracts as of December 31, 2022, carried at fair value, had maturities of up to one month. 109 Table of Content Balance Sheet Hedging Activities We use foreign currency forward contracts to mitigate foreign currency exchange risk associated with foreign currency-denominated monetary assets and liabilities.
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Therefore, we are exposed to certain risks arising from both our business operations and economic conditions. For the year ended December 31, 2023, our revenue generating activities and operations continued to be primarily denominated in U.S. dollars.
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These contracts reduce the impact of currency exchange rate movements on our assets and liabilities. As of December 31, 2022, our outstanding balance sheet hedging derivatives, carried at fair value, had maturities of less than one month.
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Cash Flow Hedging Activities We mitigate the foreign exchange risk arising from the fluctuations in foreign currency denominated product sales in Euro and Japanese Yen through a foreign currency cash flow hedging program, using forward contracts and foreign currency options that do not exceed 15 months in duration.
Removed
As of December 31, 2022, 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 cash flow hedging of approximately $13 million.
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The derivative assets or liabilities associated with our hedging activities are recorded at fair value in prepaid expenses and other current assets or other current liabilities, respectively, in our consolidated balance sheets.
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The gains or losses resulting from changes in the fair value of these hedges are initially recorded as a component of accumulated other comprehensive (loss) income (AOCI) in stockholders’ equity and subsequently reclassified to product sales in the period during which the hedged transaction affects earnings.
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In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, within the defined hedge period, we reclassify the gains or losses on the related cash flow hedge from AOCI to other expense, net, in our consolidated statements of operations.
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We evaluate hedge effectiveness at the inception of the hedge prospectively, and on an on-going basis both retrospectively and prospectively.
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If we do not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded as a component of other expense, net, in our consolidated statements of operations. We had no outstanding foreign currency forward contracts or foreign currency options as of December 31, 2023.
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Foreign currency hedging activities were immaterial during 2023. Balance Sheet Hedging Activities We enter into foreign currency forward contracts to hedge fluctuations associated with foreign currency denominated monetary assets and liabilities, primarily cash, accounts receivable, accounts payable and lease liabilities in Euro, Swiss Franc and Japanese Yen, that are not designated for hedge accounting treatment.
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Therefore, these forward contracts are accounted for as derivatives whereby the fair value of the contracts are reported as prepaid expenses and other current assets or other current liabilities in our consolidated balance sheets, and gains and losses resulting from changes in the fair value are recorded as a component of other expense, net, in our consolidated statements of operations.
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The gains and losses on these foreign currency forward contracts generally offset the gains and losses in the underlying foreign currency denominated assets and liabilities, which are also recorded to other expense, net, in our consolidated statements of operations.

Other MRNA 10-K year-over-year comparisons