Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

LeasesWe have entered into various long-term non-cancelable lease arrangements for our facilities and equipment expiring at various times through 2042. Certain of these arrangements have free rent periods or escalating rent payment provisions. We recognize lease cost under such arrangements on a straight-line basis over the life of the lease. We have two main campuses in Massachusetts, our Cambridge campus and our Moderna Technology Center (MTC), an industrial technology center located in Norwood. We also lease other office and lab spaces globally for our business operations.

Cambridge Campus

We occupy a multi-building campus in Technology Square in Cambridge, Massachusetts with a mix of offices and research laboratory space totaling approximately 292,000 square feet. Our Cambridge campus leases have expiry ranges from 2024 to 2029. All our Cambridge leases are classified as operating leases.

We are also investing in a new Moderna Science Center (MSC) in Cambridge, Massachusetts to create a purpose-built space to support our next chapter of discovery (see Note 13). As of March 31, 2023, we did not gain control of the underlying leased asset at the MSC, and therefore, we did not recognize the related right-of-use asset and lease liability on our condensed consolidated balance sheets. In connection with our MSC investment, in September 2021, we entered into amendments to our lease agreements to allow for an option for early termination of the leases, either in part or full. Notification of the intent to exercise the option must be provided by August 2023. We have not elected to exercise this option.

Moderna Technology Center

Our MTC is comprised of three buildings, MTC South, MTC North and MTC East, totaling approximately 686,000 square feet. Our MTC leases expire in 2042 and we have the option to extend the term for three extension periods of five years each. All of our MTC leases are classified as finance leases.

Embedded Leases

We have entered into multiple contract manufacturing service agreements with third parties which contain embedded leases within the scope of ASC 842. These leases expire from 2023 through 2026. As of March 31, 2023 and December 31, 2022, we had lease liabilities of $410 million and $440 million, respectively, related to the embedded leases. As of March 31, 2023 and December 31, 2022, we had right-of-use assets of $587 million and $639 million, respectively, related to the embedded leases. All our embedded leases are classified as finance leases.

Operating and financing lease right-of-use assets and lease liabilities as of March 31, 2023 and December 31, 2022 were as follows (in millions):

	March 31,		December 31,
	2023		2022
Assets:
Right-of-use assets, operating, net(1) (2)	$	117	$	121
Right-of-use assets, financing, net(3) (4)	1,033		1,150
Total	$	1,150	$	1,271
Liabilities:
Current:
Operating lease liabilities(5)	$	28	$	35
Financing lease liabilities(5)	153		161
Total current lease liabilities	181		196
Non-current:
Operating lease liabilities, non-current	96		92
Financing lease liabilities, non-current	831		912
Total non-current lease liabilities	$	927	$	1,004
Total	$	1,108	$	1,200

_______

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

(2) Net of accumulated amortization.

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

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

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

Future minimum lease payments under our non-cancelable lease agreements as of March 31, 2023, were as follows (in millions):

Fiscal Year		Operating Leases		Financing Leases(1)
2023	(remainder of the year)	$	31	$	154
2024		23		128
2025		20		128
2026		18		107
2027		19		23
Thereafter		48		1,097
Total minimum lease payments		159		1,637
Less amounts representing interest or imputed interest		(35)		(653)
Present value of lease liabilities		$	124	$	984

______

(1) Includes certain optional lease term extensions, predominantly related to the MTC leases, which represent a total of $668 million of undiscounted future lease payments.

Leases

LeasesWe have entered into various long-term non-cancelable lease arrangements for our facilities and equipment expiring at various times through 2042. Certain of these arrangements have free rent periods or escalating rent payment provisions. We recognize lease cost under such arrangements on a straight-line basis over the life of the lease. We have two main campuses in Massachusetts, our Cambridge campus and our Moderna Technology Center (MTC), an industrial technology center located in Norwood. We also lease other office and lab spaces globally for our business operations.

Cambridge Campus

We occupy a multi-building campus in Technology Square in Cambridge, Massachusetts with a mix of offices and research laboratory space totaling approximately 292,000 square feet. Our Cambridge campus leases have expiry ranges from 2024 to 2029. All our Cambridge leases are classified as operating leases.

We are also investing in a new Moderna Science Center (MSC) in Cambridge, Massachusetts to create a purpose-built space to support our next chapter of discovery (see Note 13). As of March 31, 2023, we did not gain control of the underlying leased asset at the MSC, and therefore, we did not recognize the related right-of-use asset and lease liability on our condensed consolidated balance sheets. In connection with our MSC investment, in September 2021, we entered into amendments to our lease agreements to allow for an option for early termination of the leases, either in part or full. Notification of the intent to exercise the option must be provided by August 2023. We have not elected to exercise this option.

Moderna Technology Center

Our MTC is comprised of three buildings, MTC South, MTC North and MTC East, totaling approximately 686,000 square feet. Our MTC leases expire in 2042 and we have the option to extend the term for three extension periods of five years each. All of our MTC leases are classified as finance leases.

Embedded Leases

We have entered into multiple contract manufacturing service agreements with third parties which contain embedded leases within the scope of ASC 842. These leases expire from 2023 through 2026. As of March 31, 2023 and December 31, 2022, we had lease liabilities of $410 million and $440 million, respectively, related to the embedded leases. As of March 31, 2023 and December 31, 2022, we had right-of-use assets of $587 million and $639 million, respectively, related to the embedded leases. All our embedded leases are classified as finance leases.

Operating and financing lease right-of-use assets and lease liabilities as of March 31, 2023 and December 31, 2022 were as follows (in millions):

	March 31,		December 31,
	2023		2022
Assets:
Right-of-use assets, operating, net(1) (2)	$	117	$	121
Right-of-use assets, financing, net(3) (4)	1,033		1,150
Total	$	1,150	$	1,271
Liabilities:
Current:
Operating lease liabilities(5)	$	28	$	35
Financing lease liabilities(5)	153		161
Total current lease liabilities	181		196
Non-current:
Operating lease liabilities, non-current	96		92
Financing lease liabilities, non-current	831		912
Total non-current lease liabilities	$	927	$	1,004
Total	$	1,108	$	1,200

_______

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

(2) Net of accumulated amortization.

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

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

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

Future minimum lease payments under our non-cancelable lease agreements as of March 31, 2023, were as follows (in millions):

Fiscal Year		Operating Leases		Financing Leases(1)
2023	(remainder of the year)	$	31	$	154
2024		23		128
2025		20		128
2026		18		107
2027		19		23
Thereafter		48		1,097
Total minimum lease payments		159		1,637
Less amounts representing interest or imputed interest		(35)		(653)
Present value of lease liabilities		$	124	$	984

______

(1) Includes certain optional lease term extensions, predominantly related to the MTC leases, which represent a total of $668 million of undiscounted future lease payments.