MODERNA, INC. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited financial information and related notes included in this Form 10-Q and our consolidated financial statements and related notes and other financial information in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , which was filed with theSecurities and Exchange Commission (theSEC ) onFebruary 25, 2022 (the 2021 Form 10-K). Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in Part II, Item 1A - Risk Factors in this Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a biotechnology company pioneering messenger RNA (mRNA) therapeutics and vaccines to create a new generation of transformative medicines to improve the lives of patients. 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. Within our platform, we develop technologies that enable the development of mRNA medicines for diverse applications. When we identify technologies that we believe could enable a new group of potential mRNA medicines with shared product features, we call that group a "modality." We have created seven modalities to date: •prophylactic vaccines; •systemic secreted and cell surface therapeutics; •cancer vaccines; •intratumoral immuno-oncology; •localized regenerative therapeutics; •systemic intracellular therapeutics; and •inhaled pulmonary therapeutics. OnDecember 18, 2020 , we received an Emergency Use Authorization (EUA) from theU.S. Food and Drug Administration (FDA) for the emergency use of theModerna COVID-19 Vaccine (also referred to as mRNA-1273 and marketed under the brand name Spikevax) at the 100 µg dose level in individuals 18 years of age or older. Subsequently, we have also received authorization for our COVID-19 vaccine from health agencies in more than 70 countries and from theWorld Health Organization (WHO ). In addition, we have received authorization for a two-dose 100 µg primary series of our COVID-19 vaccine in adolescents aged 12-17 years in more than 40 countries. We have received authorization for a two-dose 50 µg primary series of our COVID-19 vaccine in children ages 6 to 11 in more than 35 countries. The FDA,European Medicines Agency (EMA),Swissmedic and other health agencies around the world have authorized a booster dose of our COVID-19 vaccine at the 50 µg dose level for adults ages 18 years and older.
Business Highlights and
Moderna COVID-19 Vaccine
•Moderna COVID-19 Vaccine (mRNA-1273, Spikevax): InJanuary 2022 , we received full commercial approval for Spikevax to prevent COVID-19 in individuals 18 years of age and older inthe United States . Spikevax also has full commercial approval in individuals 18 years of age and older inCanada and theUnited Kingdom , and is approved or authorized in individuals 18 years and older in more than 70 countries (100 µg dose). InMarch 2022 , we received approval from the FDA to amend our EUA to allow for a second booster dose of our COVID-19 vaccine at the 50 µg dose level in adults 50 years of age and olderwho have received an initial booster of any of the authorized or approved COVID-19 vaccines and adults 18 years of age and older with certain kinds of immunocompromise. •For the first quarter of 2022, we recognized product sales of$5.9 billion from sales of our COVID-19 vaccine, compared to$1.7 billion in the first quarter of 2021. •Moderna COVID-19 Vaccine for adolescents and children: In adolescents aged 12-17 years, the primary series (2 dose, 100 µg) of our COVID-19 vaccine is authorized in more than 40 countries. We made the decision to evaluate the potential of a two-dose 50 µg primary series to meet regulatory guidance for immunogenicity in adolescents. We are preparing to submit data for 50 µg COVID-19 boosters in this age group. 27
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In children aged 6-11 years, the primary series (2 dose series, 50 µg) of our COVID-19 vaccine is authorized in more than 35 countries, includingAustralia ,Canada and the EU. We are evaluating a 25 µg dose as a primary series and a booster dose in this age group. InMarch 2022 , we announced the Phase 2/3 KidCOVE study in children 6 months to under 6 years successfully met its primary endpoint. This interim analysis showed a robust neutralizing antibody response in both age groups after a two-dose 25 µg primary series of mRNA-1273 along with a favorable safety profile. Based on these data, inApril 2022 , we submitted an EUA request to the FDA for authorization of a two-dose 25 ?g primary series of mRNA-1273 for children 6 months to under 6 years of age. Similar requests are underway with international regulatory authorities.
Additional Moderna COVID-19 Vaccine Clinical Studies
•Omicron-specific booster candidate (mRNA-1273.529): Our Omicron-specific booster candidate is being studied to evaluate the immunogenicity, safety and reactogenicity of mRNA-1273.529 as a single booster dose in adults aged 18 years and older in two cohorts: individualswho previously received the two-dose primary series of mRNA-1273 with the second dose being at least six months ago (cohort 1), or individualswho have received the two-dose primary series and a 50 µg booster dose of mRNA-1273 with the booster dose being at least three months ago (cohort 2). Participants in both cohorts will receive a single booster dose of mRNA-1273.529. In theU.S. , a Phase 2 study of the Omicron-specific booster candidate (mRNA-1273.529) as a third or fourth dose is fully enrolled. •Beta-specific bivalent booster (mRNA-1273.211): mRNA-1273.211 includes mutations found in the Beta variant of concern, several of which have been persistent in more recent variants of concern, including Omicron. A 50 µg booster dose of mRNA-1273.211 demonstrated superiority compared to a 50 µg booster dose of mRNA-1273 against Beta, Delta and Omicron variants of concern one month after administration. Superiority continued six months after administration for Beta and Omicron variants of concern as well. A 50 µg booster dose of mRNA-1273.211 was generally well tolerated with a reactogenicity profile comparable to a booster dose of mRNA-1273 at the 50 µg dose level. •Omicron-specific bivalent booster candidate (mRNA-1273.214): mRNA-1273.214 is a bivalent candidate that combinesModerna's Omicron-specific candidate (mRNA-1273.529) and mRNA-1273. mRNA-1273.214 is being evaluated in a Phase 2/3 study, and the first participant was dosed inMarch 2022 . We expect initial data on mRNA-1273.214 inJune 2022 to inform selection of our candidate for the Northern Hemisphere fall 2022 booster.
In the
•Next-generation vaccine candidate against COVID-19 (mRNA-1283): mRNA-1283 is a next-generation vaccine candidate against COVID-19 and is being developed as a potential refrigerator-stable mRNA vaccine that will facilitate easier distribution and administration by healthcare providers. In a Phase 1 study of mRNA-1283, preliminary results indicate that when administered as primary series at lower dose levels (10 µg, 30 µg), mRNA-1283 elicits a robust anti-SARS-CoV-2 neutralizing antibody response comparable to the 100 µg mRNA-1273 primary series. The frequency of local and systemic solicited adverse reactions of the mRNA-1283 primary series administered at lower dose levels (10 µg, 30 µg) was overall comparable to mRNA-1273. Enrollment is complete in a Phase 2 study evaluating booster doses of mRNA-1283, mRNA-1283.211 (SARS-CoV-2/Beta bivalent), and mRNA-1283.529 (Omicron monovalent).
Other Business Updates
InMarch 2022 , we announced an expansion of our mRNA pipeline with two new development programs. This announcement reflects our commitment to expanding our portfolio by building on our experience with our COVID-19 vaccine. The first development program is a new combination respiratory vaccine candidate (mRNA-1230) to target three of the most significant viruses causing respiratory disease in older adults-SARS-CoV-2, influenza and respiratory syncytial virus (RSV). The second is a program to develop a vaccine candidate (mRNA-1287) against endemic human coronaviruses (HCoVs). While less-well known than other coronaviruses, HCoVs are a significant cause of respiratory disease worldwide. Four HCoVs (HCoV-229E, -NL63, -OC43, and -HKU1) are endemic globally, accounting for approximately 10% to 30% of upper respiratory tract infections in adults. InMarch 2022 , we entered into a Memorandum of Understanding with the Government of theRepublic of Kenya to establishKenya as the location for our mRNA manufacturing facility, with the assistance of theU.S. Government . We expect to build a state-of-the-art mRNA facility inKenya with the goal of producing up to 500 million doses of vaccines each year. We anticipate investing up to$500 million in this new facility which will focus on drug substance manufacturing on the continent ofAfrica for the continent ofAfrica , 28 -------------------------------------------------------------------------------- Table of Contents and could also be expanded to include fill/finish and packaging capabilities at the site. In parallel, we are also working on plans to allow us to fill doses of our COVID-19 vaccine inAfrica as early as 2023, subject to demand. InMarch 2022 , we executed a strategic partnership agreement with the Australian Federal Government to establish a state-of-the-art, mRNA vaccine manufacturing facility inAustralia . The facility, when constructed, is expected to provide people inAustralia with access to a domestically manufactured portfolio of mRNA vaccines against respiratory viruses, including COVID-19, seasonal influenza, RSV, and other potential respiratory viruses, pending licensure. As part of this strategic partnership, we expect to supportAustralia's mRNA research, development, and industry ecosystem, including engagement with collaborative research partnerships with Australian institutions and establishing aRegional Research Center for respiratory medicines and tropical diseases. InApril 2022 , we announced plans for a long-term strategic collaboration with theGovernment of Canada to establish a state-of-the-art mRNA vaccine manufacturing facility inCanada . The collaboration is expected to be finalized following approval of the final agreement by theGovernment of Canada . The facility, when constructed, is expected to provide people inCanada with access to a domestically manufactured portfolio of mRNA vaccines against respiratory viruses, including COVID-19, seasonal influenza, RSV, and other potential respiratory viruses, pending licensure. As part of this strategic collaboration, we expect to support research and development and other commercial collaborations inCanada . InMarch 2022 , we announced our global public health strategy through three new initiatives aimed at advancing mRNA vaccines for the prevention of infectious diseases. First, we announced a commitment to advance vaccines targeting 15 priority pathogens into clinical studies by 2025. We expect to prioritize HIV, tuberculosis (TB), malaria, neglected tropical diseases, and priority pathogens of theWHO and theCoalition for Epidemic Preparedness Innovations (CEPI). Second, to accelerate research with the aim of advancing additional vaccines, we are launching a new program, mRNA Access, that will offer researchers use of our mRNA technology to explore new vaccines against emerging or neglected infectious disease. Third, we have expanded our pledge to never enforce our patents for COVID-19 vaccines against manufacturers in 92 low- and middle-income countries in the Gavi COVAX Advance Market Commitment (AMC), provided that these vaccines are manufactured solely for use in these countries. We remain willing to license our technology for COVID-19 vaccines to manufacturers in countries outside of the AMC 92 on commercially reasonable terms.
Key Updates for our Other Development Candidates
•Seasonal influenza (flu) (mRNA-1010, mRNA-1011, mRNA-1012, mRNA-1020 and mRNA-1030): As part of our influenza vaccine development strategy, we are developing five different influenza vaccines. mRNA-1010 is a single investigational vaccine consisting of four distinct mRNA sequences that encode the A H1N1, H3N2 and influenza B Yamagata andVictoria lineages in our proprietary LNP. mRNA-1011 and mRNA-1012 are investigational vaccines that will include the fourWHO -recommended strains and aim to add additional hemagglutinin (HA) antigens (e.g. H3N2, H1N1). mRNA-1020 and mRNA-1030 are investigational vaccines that will aim to add neuraminidase (NA) antigens. InMarch 2022 , an interim analysis of a Phase 2 study of mRNA-1010 identified no significant safety concerns, and the immunogenicity data is consistent with a potential for superiority to standard dose vaccine for influenza A strains (which drives the majority of disease in adults). The interim data is consistent with potential for non-inferiority to standard dose vaccine in influenza B strains (primarily a concern in pediatrics). We plan on starting a Phase 3 safety and immunogenicity study of mRNA-1010 in the Southern Hemisphere in in 2022, and are preparing for a Phase 3 efficacy study in fall 2022 if needed. In April, we announced that the Phase 1 trial of mRNA-1020 and mRNA-1030 dosed its first participants. The Phase 1/2 randomized, observer-blind, dose-ranging study will evaluate the safety, reactogenicity and immunogenicity of a single dose of mRNA-1020 or mRNA-1030 in healthy adults 18 years and older in theU.S. mRNA-1020 and mRNA-1030 candidates each include eight mRNAs, targeting both hemagglutinin and neuraminidase at different doses and ratios. •Respiratory syncytial virus (RSV) vaccine (mRNA-1345): mRNA-1345 is a vaccine against RSV encoding for a prefusion F glycoprotein, which elicits a superior neutralizing antibody response compared to the postfusion state. The Phase 1 study of mRNA-1345 to evaluate the tolerability, reactogenicity and immunogenicity of mRNA-1345 in younger adults, older adults, women of child-bearing age, older adults of Japanese descent and children is ongoing. All cohorts are fully enrolled except the RSV seropositive children cohort, which is ongoing. Dosing in the older adults of Japanese descent (? 60 years) and children cohorts are ongoing. Phase 1 interim data from the older adult cohort showed that a single mRNA-1345 vaccination at 50 µg, 100 µg or 200 µg boosted neutralizing antibody titers against RSV-A by approximately 14-fold and against RSV-B by approximately 10-fold. The Phase 3 portion of the pivotal global Phase 2/3 study of mRNA-1345 with approximately 34,000 participants is currently enrolling. The FDA has granted Fast Track designation for mRNA-1345 in adults older than 60 years of age. 29 -------------------------------------------------------------------------------- Table of Contents •HIV vaccines (mRNA-1644 & mRNA-1574): We are currently advancing two HIV preventative vaccine strategies based on germline targeting and immune-focusing approaches. Our mRNA-1644 program is designed to test the hypothesis that sequential administration of priming and boosting HIV immunogens delivered by mRNA can induce specific classes of B-cell responses and guide their early maturation toward broadly neutralizing antibody (bnAb) development. The induction of bnAbs is widely considered to be a goal of HIV vaccination, and this is the first step in that process. The immunogens being tested in IAVI G002 were developed by scientific teams atIAVI and Scripps Research and will be delivered viaModerna's mRNA technology. The Phase 1 trial sponsored by IAVI and supported by theGates Foundation is ongoing. In addition, we are also advancing an HIV trimer mRNA vaccine trial of mRNA-1574. The primary hypothesis is that the soluble and membrane-bound HIV envelope trimer mRNA vaccines will be safe and well-tolerated by HIV-uninfected individuals and will elicit autologous neutralizing antibodies. The Phase 1 trial is ongoing and is sponsored and funded by theDivision of AIDS (DAIDS) of theNational Institute of Allergy and Infectious Diseases (NIAID) within theNational Institutes of Health (NIH). •Nipah vaccine (mRNA-1215): We received a safe to proceed from the FDA for a Phase 1 study of mRNA-1215, our vaccine candidate against the Nipah virus (NiV). mRNA-1215 was co-developed along with theNIH's Vaccine Research Center and the Phase 1 clinical testing will be focused on pandemic preparedness. •Propionic acidemia (PA) (mRNA-3927): The Phase 1/2 clinical trial for mRNA-3927, our therapy for the treatment of propionic acidemia, or PA, is ongoing and the first cohort is fully enrolled. We are enrolling other patients into additional cohorts. All five patients eligible for the Open Label Extension (OLE) study have elected to participate. The Phase 1/2 study is designed to evaluate the safety and tolerability of mRNA-3927 in patients with PA. PA, is a rare, life-threatening, inherited metabolic disorder due to a defect in the mitochondrial enzyme propionyl-CoA carboxylase (PCC). It primarily affects the pediatric population. There is no approved therapy for PA, including no approved enzyme replacement therapy. We have received Rare Pediatric Disease Designation and Orphan Drug Designation from the FDA and Orphan Drug Designation from theEuropean Commission for the PA program. The FDA has also granted Fast Track designation to mRNA-3927. This is the first development candidate to enter the clinic in our intracellular therapeutics modality. •Methylmalonic acidemia (MMA) (mRNA-3705): The Phase 1/2 clinical trial for mRNA-3705, our therapy for the treatment of methylmalonic acidemia, or MMA, is ongoing and the first cohort has been fully enrolled. The study is now open in theUK ,Canada and theU.S. Moderna is enrolling patients into additional cohorts. The one patient eligible to participate in the OLE study has elected to participate. The Phase 1/2 study is designed to evaluate the safety and tolerability of mRNA-3705 in patients with MMA. MMA is a rare, life-threatening, inherited metabolic disorder that is primarily caused by a defect in the mitochondrial enzyme methylmalonyl-coenzyme A mutase, or MUT. It primarily affects the pediatric population. There is no approved therapy that addresses the underlying disorder, including no approved enzyme replacement therapy, due to the complexity of the protein and its mitochondrial localization. •Glycogen storage disease type 1a (GSD1a) (mRNA-3745): The FDA has granted mRNA-3745 Orphan Drug Designation and completed its review of the IND application allowing it to proceed to clinic. Individuals with GSD1a have a deficiency in glucose-6-phosphatase resulting in pathological blood glucose imbalance. mRNA-3745 is an IV-administered mRNA encoding human G6Pase enzyme, designed to restore the deficient or defective intracellular enzyme activity in patients with GSD1a. •IL-12 (MEDI1191): AstraZeneca is leading the early clinical development and an ongoing, open-label multicenter Phase 1 clinical trial of intratumoral injections of MEDI1191 alone and in combination with the checkpoint inhibitor, durvalumab. InApril 2022 , AstraZeneca presented updated Phase 1 data at theAmerican Association for Cancer Research (AACR) conference. Intratumoral MEDI1191 combined with durvalumab was safe and the combination showed preliminary evidence of clinical benefit, with 29% of patients exhibiting partial responses or stable disease ?12 weeks as best overall response. •Personalized cancer vaccine (mRNA-4157): Our personalized cancer vaccine, or PCV, is currently being evaluated in a Phase 1 and Phase 2 study. The randomized, placebo-controlled Phase 2 study investigating a 1 mg dose of mRNA-4157 in combination with Merck's pembrolizumab (KEYTRUDA®), compared to pembrolizumab alone, for the adjuvant treatment of high-risk resected melanoma is fully enrolled (n=150). The primary endpoint of the Phase 2 study is recurrence-free survival at 12 months. The Phase 1 in multiple cohorts is ongoing and the expanded head and neck cohort is recruiting additional patients.Moderna shares worldwide commercial rights to mRNA-4157 with Merck. 30 -------------------------------------------------------------------------------- Table of Contents Our Pipeline
The following chart shows our current pipeline of 46 development programs, grouped by respiratory vaccines, latent & public health vaccines and therapeutics.
[[Image Removed: mrna-20220331_g2.jpg]]
Abbreviations: AZ, AstraZeneca; BARDA, Biomedical Advanced Research and
Development Authority ; CMV, Cytomegalovirus; DARPA , Defense Advanced Research
Projects Agency ; EBV, Epstein-Barr virus; HIV, human immunodeficiency virus;
hMPV, human metapneumovirus; ILCM, Institute for Life Changing Medicines ; IL-2,
interleukin 2; IL-12, interleukin 12; IL-23, interleukin 23; IL-36?,
interleukin-36 gamma; NIH , National Institutes of Health ; OX40L, wildtype OX40
ligand; RSV, respiratory syncytial virus; VEGF-A, vascular endothelial growth
factor A.
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We have developed seven modalities, which are summarized as follows:
•Prophylactic vaccines: Our prophylactic vaccines modality currently includes 31 development programs, 21 of which have entered into clinical trials. We have ongoing Phase 1 trials for our RSV vaccine in pediatrics, flu vaccines (mRNA-1020 and mRNA-1030), hMPV/PIV3 vaccine (mRNA-1653), EBV vaccine (mRNA-1189) and HIV vaccines (mRNA-1644 and mRNA-1574). We have ongoing Phase 2 studies for our flu vaccine (mRNA-1010) and Zika vaccine (mRNA-1893). We have ongoing Phase 3 studies for our RSV vaccine in older adults (mRNA-1345) and CMV vaccine (mRNA-1647). Our COVID-19 vaccine (mRNA-1273) is described in detail above. Our ten preclinical programs within our prophylactic vaccines modality are for a combined COVID-19 and flu vaccine (mRNA-1073), combined COVID-19, flu and RSV vaccine (mRNA-1230), combined pediatric RSV and hMPV vaccine (mRNA-1365), pan-HCoV vaccine (mRNA-1278), seasonal flu vaccines (mRNA-1011 and mRNA-1012), EBV vaccine to prevent long-term sequelae (mRNA-1195), VZV vaccine (mRNA-1468), HSV vaccine (mRNA-1608) and Nipah vaccine (mRNA-1215). Three other vaccines as part of public health programs have had positive Phase 1 readouts - H10N8 vaccine (mRNA-1440), H7N9 flu vaccine (mRNA-1851), and Chikungunya vaccine (mRNA-1388) - but are not being further developed without government or other funding. •Systemic secreted and cell surface therapeutics: We have three systemic secreted and cell surface therapeutics development candidates in our pipeline. Our secreted programs include Relaxin (mRNA-0184) for cardiac disorders, PD-L1 (mRNA-6981) for autoimmune hepatitis and IL-2 (mRNA-6231) for autoimmune disorders. Our IL-2 program (mRNA-6231) is currently in a Phase 1 study, and is our first autoimmune therapeutic candidate to enter the clinic. The remaining programs for Relaxin (mRNA-0184) and PD-L1 (mRNA-6981) are currently in preclinical development. We previously announced positive data from our Chikungunya Antibody program (mRNA-1944) within this modality; however, we do not expect to advance our Chikungunya Antibody program without outside funding, and we are not currently pursuing further development of it at this time. •Cancer vaccines: We are currently developing three programs within our cancer vaccines modality. Our personalized cancer vaccine program mRNA-4157 is being developed in collaboration with Merck and is in a multiple-arm Phase 1 trial and a randomized Phase 2 trial, which is fully enrolled. Our second program within this modality, mRNA-5671, is a KRAS vaccine. We have retained all rights to our KRAS vaccine from Merck and we are evaluating next steps for the program. Our third program is our checkpoint vaccine (mRNA-4359), which is in preclinical studies. •Intratumoral immuno-oncology: We have two programs in this modality. Our first program, OX40L/IL-23/IL-36? (Triplet) (mRNA-2752), is currently in a Phase 1 study that is designed as an open-label, multicenter study of intratumoral injections of Triplet (mRNA-2752) alone or in combination with durvalumab (anti-PD-L1). Our second program, IL-12 (MEDI1191), is being developed in collaboration with AstraZeneca. AstraZeneca is currently enrolling an open-label multicenter Phase 1 clinical trial of intratumoral injections of MEDI1191 alone and in combination with the checkpoint inhibitor, durvalumab. •Localized regenerative therapeutics: Our localized VEGF-A program, AZD8601, which is being developed by AstraZeneca, has completed a Phase 1a/b trial to describe its safety, tolerability, protein production, and activity in diabetic patients. The study has met its primary objectives of describing safety and tolerability and secondary objectives of demonstrating protein production and changes in blood flow post AZD8601 administration. We believe these data provide clinical proof of mechanism for our mRNA technology outside of the vaccine setting. In 2021, the Phase 2 study met the primary endpoint of safety and tolerability of AZD8601 for the 3 mg dose. In the study of 11 patients, seven were treated with AZD8601 VEGF-A mRNA and four received placebo injections. Numerical trends were observed in endpoints in the heart failure efficacy domains compared with placebo, including increase in left ventricular ejection fraction (LVEF) and patient reported outcomes. In addition, all seven patients treated with AZD8601 had NT-proBNP (a biomarker that measures the level of a hormone that is elevated in patients with heart failure) levels below heart failure limit at 6 months follow-up compared to one of four patients treated with placebo. AstraZeneca has announced that they intend to move AZD8601 into further studies.Moderna has licensed worldwide commercial rights to AZD8601 to AstraZeneca. •Systemic intracellular therapeutics: We have five systemic intracellular therapeutics development candidates in our pipeline. Our intracellular programs address propionic acidemia, or PA (mRNA-3927), methylmalonic acidemia (MMA) (mRNA-3705), phenylketonuria (PKU) (mRNA-3283), glycogen storage disorder type 1a (GSD1a) (mRNA-3745) and Crigler-Najjar Syndrome Type 1 (CN-1) (mRNA-3351). We have an ongoing Phase 1 clinical trials for PA (mRNA-3927) and MMA (mRNA-3705). PKU (mRNA-3283), GSD1a (mRNA-3745) and CN-1 (mRNA-3351) are currently in preclinical development. The FDA has granted Orphan Drug Designation for mRNA-3745 and has completed its review of the IND application allowing it to proceed to clinic. We have entered into a collaboration agreement with theInstitute for Life Changing Medicines (ILCM) to license mRNA-3351 to ILCM with no upfront fees, and without any downstream payments. ILCM will be responsible for the clinical development of mRNA-3351. 32 -------------------------------------------------------------------------------- Table of Contents •Inhaled pulmonary therapeutics: We have one inhaled pulmonary therapeutic development candidate in our pipeline. Our program addresses cystic fibrosis, or CF (VXc-522), in collaboration partnership with Vertex Pharmaceuticals. VXc-522 is an mRNA therapeutic designed to treat the underlying cause of CF by enabling cells in the lungs to produce functional cystic fibrosis transmembrane conductance regulator (CFTR) protein for the treatment of the 10% of patientswho do not produce any CFTR protein. IND-enabling studies are underway and Vertex expects to submit an IND for this program in 2022.Moderna has licensed worldwide commercial rights to VXc-522 to Vertex.
Financial Operations Overview
Revenue
The following table summarizes revenue for the periods presented (in millions):
Three Months Ended March 31,
2022 2021
Revenue:
Product sales $ 5,925 $ 1,733
Grant revenue 126 194
Collaboration revenue 15 10
Total revenue $ 6,066 $ 1,937
For the three months ended March 31, 2022 , we recognized $5.9 billion of product
sales from our COVID-19 vaccine, of which $0.9 billion was generated in the
United States and $5.0 billion was generated from the rest of the world. For the
three months ended March 31, 2021 , we recognized $1.7 billion of product sales
from our COVID-19 vaccine, of which $1.4 billion was generated in the United
States and $375 million was generated from the rest of the world.
As of March 31, 2022 , we had signed supply agreements of approximately
$17.5 billion for the future supply of our COVID-19 vaccine through 2023, based
on the confirmed volume, subject to modifications, and had deferred revenue of
$5.9 billion associated with customer deposits received or billable under these
agreements. In addition, we believe that the SARS-CoV-2 virus will become
endemic in 2022 and as a result, we expect greater seasonality in our product
sales, with sales slightly larger in the second half of 2022 than in the first
half as the Northern Hemisphere enters the fall and winter in connection with
booster sales.
Other than product sales, our revenue has been primarily derived from
government-sponsored and private organizations including BARDA, DARPA and the
Gates Foundation and from strategic alliances with AstraZeneca, Merck and Vertex
to discover, develop, and commercialize potential mRNA medicines.
Grant revenue was comprised as follows for the periods presented (in millions):
Three Months Ended March 31,
2022 2021
Grant revenue:
BARDA (1) $ 122 $ 192
Other 4 2
Total grant revenue $ 126 $ 194
_______
(1) For the three months ended March 31, 2022 , $120 million of BARDA grant
revenue was related to our mRNA-1273 program and $2 million was related to our
Zika vaccine program. For the three months ended March 31, 2021 , $190 million of
BARDA grant revenue was related to our mRNA-1273 program and $2 million was
related to our Zika vaccine program.
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Collaboration revenue from our strategic alliances was comprised as follows for
the periods presented (in millions):
Three Months Ended March 31,
2022 2021
Collaboration revenue:
Merck 10 -
Vertex 4 9
Other 1 1
Total collaboration revenue $ 15 $ 10
We expect to continue to receive funding from our contract with BARDA. As of
March 31, 2022 , the remaining available funding, net of revenue earned under our
agreement with BARDA for the development of our mRNA-1273 vaccine was
$378 million . To the extent that existing or potential future products generate
revenue, our revenue may vary due to many uncertainties in the future product
demand, the development of our mRNA medicines and other factors.
Research and development expenses
We use our employee and infrastructure resources for the advancement of our platform, and for discovering and developing programs. Due to the number of ongoing programs and our ability to use resources across several projects, indirect or shared operating costs incurred for our research and development programs are generally not recorded or maintained on a program- or modality-specific basis. The following table reflects our research and development expenses, including direct program-specific expenses summarized by modality and indirect or shared operating costs summarized under other research and development expenses during the three months endedMarch 31, 2022 and 2021 (in millions): Three Months Ended March 31, 2022 2021 Program expenses by modality: Prophylactic vaccines$ 190 $ 248 Systemic secreted and cell surface therapeutics 1 1 Cancer vaccines 3 17 Intratumoral immuno-oncology 6 6 Systemic intracellular therapeutics 4 5 Inhaled pulmonary therapeutics (1) 2 - Total program-specific expenses by modality (2)$ 206 $ 277 Other research and development expenses: Discovery programs 30 13 Platform research 34 25 Technical development and unallocated manufacturing expenses 134 33 Shared discovery and development expenses 130 39 Stock-based compensation 20 14 Total research and development expenses
__________
(1)Inhaled pulmonary therapeutics modality was added in the fourth quarter of 2021. (2)Includes a total of 43 and 30 development candidates atMarch 31, 2022 and 2021, respectively. Program-specific expenses include external costs and allocated manufacturing costs of pre-launch inventory, mRNA supply and consumables, and are reflected as of the beginning of the period in which the program was internally advanced to development or removed if development was ceased. A "modality" refers to a group of programs with common product features and the associated combination of enabling mRNA technologies, delivery technologies, and manufacturing processes. The program-specific expenses by modality summarized in the table above include expenses we directly attribute to our programs, which consist primarily of external costs, such as fees paid to outside consultants, central laboratories, investigative sites, and contract research organizations (CROs) in connection with our preclinical studies and clinical trials, CMOs, and allocated manufacturing costs of pre-launch inventory, mRNA supply and consumables. Costs to acquire and manufacture pre-launch inventory, mRNA supply for preclinical studies and clinical trials are recognized and included in unallocated manufacturing expenses when incurred, and subsequently allocated to program-specific manufacturing costs after completion of the program-specific production. The timing of allocating manufacturing costs to the specific program varies depending on the program development and production schedule. We generally do not allocate personnel-related costs, 34 -------------------------------------------------------------------------------- Table of Contents including stock-based compensation, costs associated with our general platform research, technical development, and other shared costs on a program-specific basis. These costs were therefore excluded from the summary of program-specific expenses by modality. Discovery program expenses are costs associated with research activities for our programs in the preclinical discovery stage, and primarily consist of external costs for CROs and lab services, and allocated manufacturing cost of preclinical mRNA supply and consumables. Platform research expenses are mainly costs to develop technical advances in mRNA science, delivery science, and manufacturing process design. These costs include personnel-related costs, computer equipment, facilities, preclinical mRNA supply and consumables, and other administrative costs to support our platform research. Technology development and unallocated manufacturing expenses are primarily related to non-program-specific manufacturing process development and manufacturing costs.
Shared discovery and development expenses are research and development costs such as personnel-related costs and other costs, which are not otherwise included in development programs, discovery programs, platform research, technical development and unallocated manufacturing expenses, stock-based compensation, and other expenses.
The largest component of our total operating expenses has historically been our investment in research and development activities, including preclinical and clinical development of our product candidates, development of our platform, mRNA technologies, and manufacturing technologies. As we continue to pursue our indication expansion of mRNA-1273, and continue to develop variant-specific COVID-19 vaccine candidates and our next-generation COVID-19 vaccine candidate, we expect to continue to incur significant additional expenses. In connection with the BARDA agreement to accelerate development of mRNA-1273, significant grant revenue and expenses within the committed funding scope are expected to continue in 2022. BARDA's funding is expected to offset those expenses that are covered under the BARDA agreement, subject to our obtaining reimbursement from BARDA. As ofMarch 31, 2022 , the remaining available funding, net of revenue earned was$378 million . Changes in expectations or outcomes of any of the known or unknown risks and uncertainties may materially impact our expected research and development expenditures. Continued research and development is central to the ongoing activities of our business. Investigational medicines in later stages of clinical development, such as our CMV vaccine, RSV vaccine, flu vaccine and our COVID-19 vaccine, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development costs to continue to increase in the foreseeable future as our investigational medicines progress through the development phases and identify and develop additional programs. There are numerous factors associated with the successful commercialization of any of our investigational medicines, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time due to the early stage of development of our investigational medicines. Moreover, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans.
Critical accounting policies and significant judgments and estimates
There have been no material changes in our critical accounting policies and estimates in the preparation of our condensed consolidated financial statements during the three months endedMarch 31, 2022 compared to those disclosed in our 2021 Form 10-K. 35
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Results of operations
The following table summarizes our condensed consolidated statements of income for each period presented (in millions):
Three Months Ended March 31, Change 2022 vs. 2021
2022 2021 $ %
Revenue:
Product revenue $ 5,925 $ 1,733 $ 4,192 242%
Grant revenue 126 194 (68) (35)%
Collaboration revenue 15 10 5 50%
Total revenue 6,066 1,937 4,129 213%
Operating Expenses:
Cost of sales 1,017 193 824 427%
Research and development 554 401 153 38%
Selling, general and administrative 268 77 191 248%
Total operating expenses 1,839 671 1,168 174%
Income from operations 4,227 1,266 2,961 234%
Interest income 15 4 11 275%
Other expense, net (13) (10) (3) 30%
Income before income taxes 4,229 1,260 2,969 236%
Provision for income taxes 572 39 533 1,367%
Net income $ 3,657 $ 1,221 $ 2,436 200%
Revenue
Total revenue increased by $4.1 billion , or 213%, for the three months ended
March 31, 2022 , compared to the same period in 2021, mainly due to an increase
in product sales from sales of our COVID-19 vaccine. Product revenue increased
by $4.2 billion , or 242%, for the three months ended March 31, 2022 , compared to
the same period in 2021, largely driven by our manufacturing capacity ramp-up.
Grant revenue decreased by $68 million , or 35%, for the three months ended March
31, 2022 , compared to the same period in 2021, primarily driven by a decrease in
revenue from BARDA related to our mRNA-1273 vaccine development.
Operating expenses
Cost of sales
Cost of sales for the three months endedMarch 31, 2022 was$1.0 billion , including third-party royalties of$207 million . Cost of sales for the three months endedMarch 31, 2022 increased by$824 million , or 427%, compared to the same period in 2021, primarily driven by higher product sales, and consequently higher third-party royalties and manufacturing costs. Cost of sales as a percentage of product sales for the three months endedMarch 31, 2022 was 17%, compared to 11% for the same period in 2021. The increase was mainly driven by the lack of the pre-launch inventory benefit (that impacted the first quarter of 2021), coupled with inventory write-downs and a loss on firm purchase commitments. The increase was partially offset by a favorable customer mix and the scale up of our manufacturing processes. If inventory sold for the three months endedMarch 31, 2021 was valued at cost, our cost of sales for the period would have been$377 million , or 22%, of our product sales. We expect our manufacturing costs to increase as we move from a pandemic to a seasonal market environment for our COVID-19 vaccine. We expect that this shift will cause our cost of sales for the full year of 2022 to represent a higher percentage of our product sales. 36 -------------------------------------------------------------------------------- Table of Contents Research and development expenses Research and development expenses increased by$153 million , or 38%, for the three months endedMarch 31, 2022 , compared to the same period in 2021. The increase was primarily attributable to an increase in personnel-related costs of$39 million , an increase in clinical trial expenses of$38 million , an increase in technology and facility-related costs of$24 million , and an increase in consulting and outside services of$23 million . These increases for the three-month period in 2022 were largely driven by increased mRNA-1273 clinical development and headcount. We expect that research and development expenses will increase in 2022 as we continue to progress our indication expansion of mRNA-1273, and continue to develop our pipeline and advance our product candidates into later-stage development, in particular our RSV and flu vaccine programs. In addition, we also expect to incur significant costs related to the development of variant-specific COVID-19 candidates and our next-generation COVID-19 vaccine candidate.
Selling, general and administrative expenses
Selling, general and administrative expenses increased by$191 million , or 248%, for the three months endedMarch 31, 2022 , compared to the same period in 2021. The increase was mainly due to an endowment to theModerna Charitable Foundation (the Foundation) of$50 million , an increase in distributor fees of$47 million , an increase in personnel-related costs of$31 million , an increase in consulting and outside services of$29 million , and an increase in marketing expenses of$15 million . These increases for the three-month period in 2022 were primarily driven by our COVID-19 vaccine commercialization-related activities, increased headcount, and the launch of the Foundation. We expect that selling, general and administrative expenses will increase in 2022, as we continue to build out our global commercial, regulatory, sales and marketing infrastructure to support the commercialization of our COVID-19 vaccine, and continue to expand the number of programs and our business operations.
Interest income
Interest income increased by$11 million , or 275%, for the three months endedMarch 31, 2022 , compared to the same period in 2021. The increase in interest income from our investments in marketable securities for the three-month period in 2022 were mainly driven by increased investment balances and an overall higher interest rate environment.
Other expense, net
The following table summarizes other expense, net for each period presented (in
millions):
Three Months Ended March 31, Change 2022 vs. 2021
2022 2021 $ %
Loss on investments $ (6) $ - $ (6) 100%
Interest expense (6) (3) (3) 100%
Other expense, net (1) (7) 6 (86)%
Total other expense, net $ (13) $ (10) $ (3) 30%
Total other expense, net increased by $3 million , or 30%, for the three months
ended March 31, 2022 , compared to the same period in 2021. The increase in other
expense, net for the three-month period in 2022 was primarily due to realized
losses on available-for-sale debt securities, partially offset by a net gain
related to our balance sheet hedging activities, and foreign currency
transactions and remeasurements. Our interest expense is primarily related to
our finance leases. Please refer to Note 11 to our condensed consolidated
financial statements.
Income taxes
Provision for income taxes increased by $533 million for the three months ended
March 31, 2022 , compared to the same period in 2021, primarily due to an
increase in pre-tax income and a higher effective tax rate in 2022, as 2021
included tax benefit related to the release of the valuation allowance on the
majority of our deferred tax assets. We expect that our effective tax rate will
increase for the full year 2022 compared to 2021, mainly driven by the release
of the valuation allowance on the majority of the deferred tax assets in 2021.
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Liquidity and capital resources
The following table summarizes our cash, cash equivalents, investments and working capital for each period presented (in millions):
March 31, December 31,
2022 2021
Financial assets:
Cash and cash equivalents $ 5,048 $ 6,848
Investments 5,067 3,879
Investments, non-current 9,171 6,843
Total $ 19,286 $ 17,570
Working capital:
Current assets $ 16,350 $ 16,071
Current liabilities 9,238 9,128
Total $ 7,112 $ 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.
Investments, consisting primarily of government and corporate debt securities,
are stated at fair value. Cash, cash equivalents and investments as of March 31,
2022 increased by $1.7 billion , or 10%, compared to December 31, 2021 . During
the three months ended March 31, 2022 , we generated cash from operations of $2.8
billion , partially offset by repurchases of our common stock of $623 million ,
purchases of property and equipment of $132 million , and unrealized losses on
available-for-sale debt securities of $220 million .
Working capital, which is current assets less current liabilities, as of March
31, 2022 increased by $169 million , or 2%, compared to December 31, 2021 ,
primarily due to a decrease in deferred revenue of $654 million and an increase
in inventory of $501 million , mainly driven by revenue recognized from deferred
revenue in excess of customer deposits received and our increased inventory
levels. The increase was partially offset by a decrease in cash, cash
equivalents and short-term investments of $612 million , primarily due to
purchases of long-term marketable securities.
As of
Cash flow
The following table summarizes the primary sources and uses of cash for each period presented (in millions):
Three
Months Ended
2022 2021
Net cash provided by (used in):
Operating activities $ 2,763 $ 2,971
Investing activities (3,921) (180)
Financing activities (642) 26
Net (decrease) increase in cash, cash equivalents and restricted
cash $ (1,800) $ 2,817
Operating activities
We derive cash flows from operations primarily from cash collected from customer
deposits and accounts receivable related to our COVID-19 vaccine supply
agreements, as well as certain government-sponsored and private organizations
and strategic alliances. Our cash flows from operating activities are
significantly affected by our use of cash for operating expenses and working
capital to support the business.
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In the third quarter of 2020, we entered into supply agreements with the U.S.
Government , other international governments, and Gavi for the supply of our
COVID-19 vaccine and received upfront deposits. As of March 31, 2022 , we had
$5.9 billion in deferred revenue related to customer deposits received or
billable. In addition, we expect to continue to receive funding from our
contract with BARDA related to our mRNA-1273 program. As of March 31, 2022 , the
remaining available funding from BARDA, net of revenue earned was $378 million .
Net cash provided by operating activities for the three months ended March 31,
2022 was $2.8 billion and consisted of net income of $3.7 billion and non-cash
adjustments of $5 million , partially offset by a net change in assets and
liabilities of $0.9 billion . Non-cash items included deferred income taxes of
$146 million , depreciation and amortization of $79 million , stock-based
compensation of $44 million , and amortization of investment premium and discount
of $18 million . The net change in assets and liabilities was mainly due to a
decrease in deferred revenue of $805 million , an increase in inventory of $501
million , and an increase in prepaid expenses and other assets of $414 million ,
partially offset by an increase in income taxes payable of $716 million .
Net cash provided by operating activities decreased by
Investing activities
Our primary investing activities consist of purchases, sales, and maturities of our investments and capital expenditures for leasehold improvements, manufacturing, laboratory, computer equipment and software.
Net cash used in investing activities for the three months ended
Net cash used in investing activities increased by$3.7 billion during the three months endedMarch 31, 2022 , compared to the same period in 2021, primarily reflecting timing differences related to purchases, sales, and maturities of marketable debt securities and changes in our portfolio-mix.
Financing activities
Net cash used by financing activities for the three months ended
Net cash used in financing activities increased by$668 million during the three months endedMarch 31, 2022 , compared to the same period in 2021, mainly due to repurchases of common stock.
Operation and funding requirements
Our principal sources of funding as ofMarch 31, 2022 consisted of cash and cash equivalents, investments, and cash we expect to generate from operations. We generated net income of$12.2 billion for the year ended 2021, following the authorization of our first commercial product inDecember 2020 . From our inception to the end of 2020, we incurred significant losses from operations due to our significant research and development expenses. We have retained earnings of$13.6 billion as ofMarch 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 (refer to Note 13 to our condensed consolidated financial statements). We expect our expenses to increase in connection with our ongoing activities, particularly as we continue research and development of our development candidates and clinical activities for our investigational medicines. We also expect our expenses to increase associated with manufacturing costs, including our arrangements with our international supply and manufacturing partners. Our ongoing work on mRNA-1273, including development of any new generations of boosters and vaccines against variants of SARS-CoV-2, and buildout of global commercial, regulatory, sales and marketing infrastructure to support the commercialization of our COVID-19 will require significant cash outflows during 2022, most of which may not be reimbursed or otherwise paid for by our partners or collaborators. In addition, we have substantial facility, lease and purchase obligations (refer to Note 11 and Note 12 to our condensed consolidated financial statements). We have entered into certain collaboration agreements with third parties that include the funding of certain research and development activities and potential future milestone and royalty payments by us.
We believe that our cash, cash equivalents, and investments as of
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the next 12 months from the issuance of these financial statements included in
this Form 10-Q. We are subject to all the risks related to the development and
commercialization of novel medicines, and we may encounter unforeseen expenses,
difficulties, complications, delays, and other unknown factors including
expenses related to the ongoing COVID-19 pandemic, which may adversely affect
our business. Our forecast of the period of time through which our financial
resources will be adequate to support our operations is a forward-looking
statement and involves risks and uncertainties, and actual results could vary as
a result of a number of factors. We have based this estimate on assumptions that
may prove to be wrong, and we could utilize our available capital resources
sooner than we currently expect.
If we fail to sustain profitability on a continuing basis, we may be required to
finance future cash needs through a combination of public or private equity
offerings, structured financings and debt financings, government funding
arrangements, potential future strategic alliances from which we receive upfront
fees, milestone payments, and other forms of consideration, and marketing,
manufacturing, distribution and licensing arrangements. If we are required to
finance future cash needs, additional capital may not be available on reasonable
terms, if at all. If we are unable to raise additional capital in sufficient
amounts or on terms acceptable to us, we may have to significantly delay, scale
back, or discontinue the development or commercialization of one or more of our
investigational medicines, or slow down or cease work on one or more of our
programs. If we raise additional funds through the issuance of additional equity
or debt securities, it could result in dilution to our existing stockholders or
increased fixed payment obligations, and any such securities may have rights
senior to those of our common stock. If we incur indebtedness, we could become
subject to covenants that would restrict our operations and potentially impair
our competitiveness, such as limitations on our ability to incur additional
debt, limitations on our ability to acquire, sell or license intellectual
property rights and other operating restrictions that could adversely impact our
ability to conduct our business. If we raise funds through strategic alliances
or marketing, distribution, or licensing arrangements with third parties, we may
have to relinquish valuable rights to our technologies, future revenue streams,
research programs, or investigational medicines or grant licenses on terms that
may not be favorable to us. Any of these events could significantly harm our
business, financial condition, and prospects.
Contractual Obligations
As of
to
our condensed consolidated financial statements, there have been no material changes to our contractual obligations and commitments from those described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2021 Form 10-K.
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