Moderna Inc

Previous wording

Since our founding in 2010, we have transformed from a research-stage company advancing programs in the field of mRNA to a commercial enterprise with a diverse clinical portfolio of vaccines and therapeutics across six modalities, a broad intellectual property portfolio and integrated manufacturing capabilities that allow for rapid clinical and commercial production at scale. We have a diverse and extensive development pipeline of 40 development candidates across our 47 development programs, of which 43 are in clinical studies currently.

Current wording

Since our founding in 2010, we have transformed from a research-stage company advancing programs in the field of mRNA to a commercial enterprise with a diverse clinical portfolio of vaccines and therapeutics across several modalities, a broad intellectual property portfolio and integrated manufacturing capabilities that allow for rapid clinical and commercial production at scale. We have a diverse and extensive development pipeline of 36 development candidates across our 45 development programs, of which 42 are in clinical studies currently.

Previous wording

In May 2024, the FDA approved mRESVIA to protect adults aged 60 years and older from lower respiratory tract disease caused by RSV infection. The approval was granted under a breakthrough therapy designation and marks our second approved mRNA product. Subsequently, the Advisory Committee on Immunization Practices (ACIP) issued a recommendation for all unvaccinated people 75 years of age and older and unvaccinated people ages 60-74 who are at increased risk for RSV to receive the vaccine for the prevention of RSV-associated lower respiratory tract disease (RSV-LRTD) and acute respiratory disease (ARD).

Current wording

In May 2024, the FDA approved mRESVIA to protect adults aged 60 years and older from lower respiratory tract disease caused by RSV infection. The approval was granted under a breakthrough therapy designation. Subsequently, the Advisory Committee on Immunization Practices (ACIP) issued a recommendation for all unvaccinated people 75 years of age and older and unvaccinated people ages 60-74 who are at increased risk. In August 2024, the European Commission (EC) granted marketing authorization for mRESVIA to protect adults aged 60 years and older from lower respiratory tract disease caused by RSV infection. The authorization is valid in all 27 EU member states, as well as Iceland, Liechtenstein and Norway. We have also filed for mRNA-1345 approval with regulators in multiple markets worldwide and commenced sales in the U.S. in the third quarter of 2024.

Previous wording

For the second quarter of 2024, we recognized net product sales of $184 million from sales of our COVID-19 vaccine, compared to $293 million for the second quarter of 2023. Net loss per share was $(3.33) for the second quarter of 2024, compared to $(3.62) for the second quarter of 2023.

Current wording

For the third quarter of 2024, we recognized net product sales of $1.8 billion from sales of our COVID-19 and RSV vaccines, compared to $1.8 billion for the third quarter of 2023. Earnings per share was $0.03 for the third quarter of 2024, compared to loss per share of $(9.53) for the third quarter of 2023.

Previous wording

The following chart shows our current pipeline of 47 development programs across our six modalities.

Current wording

The following chart shows our current pipeline of 45 development programs across our several modalities.

Previous wording

Abbreviations: BARDA, Biomedical Advanced Research and Development Authority; CMV, cytomegalovirus; cSCC, cutaneous squamous cell carcinoma; EBV, Epstein-Barr virus; HCoV, human coronaviruses; HIV, human immunodeficiency virus; hMPV, human metapneumovirus; HSV, herpes simplex virus; IAVI, International AIDS Vaccine Initiative; ILCM, Institute for Life Changing Medicines; IL-23, interleukin 23; IL-36γ, interleukin-36 gamma; IM, infectious mononucleosis; NIH, National Institutes of Health; NSCLC, non-small cell lung cancer; OX40L, wildtype OX40 ligand; RCC, renal cell carcinoma; RSV, respiratory syncytial virus; VZV, varicella-zoster virus.

Current wording

Abbreviations: BARDA, Biomedical Advanced Research and Development Authority; CMV, cytomegalovirus; cSCC, cutaneous squamous cell carcinoma; EBV, Epstein-Barr virus; HIV, human immunodeficiency virus; hMPV, human metapneumovirus; HSV, herpes simplex virus; IAVI, International AIDS Vaccine Initiative; ILCM, Institute for Life Changing Medicines; IM, infectious mononucleosis; NIH, National Institutes of Health; NSCLC, non-small cell lung cancer; RCC, renal cell carcinoma; RSV, respiratory syncytial virus; VZV, varicella-zoster virus.

Previous wording

As of June 30, 2024, we have two commercial products authorized for use: our COVID-19 vaccine and our RSV vaccine. Our RSV vaccine was approved by the FDA in May 2024 for adults aged 60 years and older. As of June 30, 2024, we had not commenced sales of our RSV vaccine.

Current wording

As of September 30, 2024, we have two commercial products authorized for use, our COVID-19 vaccine and our RSV vaccine. The RSV vaccine was approved by the FDA in May 2024 for adults aged 60 years and older.

Previous wording

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

Current wording

In the third quarter of 2023, we commenced sales of our COVID-19 vaccine to the U.S. commercial market, in addition to continuing sales to foreign governments and international organizations. We also commenced sales of our RSV vaccine in the third quarter of 2024. In the U.S., our COVID-19 and RSV vaccines are sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers. Net product sales are recognized net of estimated wholesaler chargebacks, invoice discounts for prompt payments and pre-orders, provisions for sales returns and government rebates, and other related deductions.

Previous wording

As of June 30, 2024, we had deferred revenue of $740 million associated with customer deposits received or billable under supply agreements, with the majority of our COVID-19 vaccine deliveries scheduled in 2024.

Current wording

Prior to the third quarter of 2023, we sold our COVID-19 vaccine to the U.S. Government, foreign governments and international organizations. The agreements and related amendments with these entities generally do not include variable consideration, such as discounts, rebates or returns. Certain of these agreements entitle us to upfront deposits for our COVID-19 vaccine supply, initially recorded as deferred revenue. As of September 30, 2024, we had deferred revenue of $443 million associated with customer deposits received or billable under supply agreements, with the majority of our COVID-19 vaccine deliveries scheduled in 2024.

Previous wording

Total revenue decreased by $103 million and $1.8 billion, or 30% and 82%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, mainly due to a reduction in net product sales of our COVID-19 vaccine.

Current wording

Total revenue for the three months ended September 30, 2024 remained relatively flat compared to the same period in 2023. For the nine months ended September 30, 2024, total revenue decreased by $1.8 billion, or 44%, compared to the same period in 2023, mainly due to lower net product sales of our COVID-19 vaccine.

Previous wording

Our net product sales for the first quarter and first half of 2024 declined significantly as compared to the same periods in 2023. This decline is indicative of the evolving nature of the endemic COVID-19 vaccine market, which has transitioned toward a seasonal commercial pattern. The sales in these periods reflect this greater seasonality, with reduced demand observed during the first half of the year. We anticipate that the demand for our COVID-19 vaccine will be higher in the fall and winter seasons across both hemispheres, as countries prepare for seasonal vaccination campaigns. For the full year of 2024, we expect the progression toward a seasonal commercial market to persist, resulting in further projected reductions in net product sales for our COVID-19 vaccine relative to 2023.

Current wording

We expect higher demand for our COVID-19 and RSV vaccines in the fall and winter seasons each year across both hemispheres, as countries prepare for seasonal vaccination campaigns. For the full year of 2024, we anticipate further reductions in net product sales for our COVID-19 vaccine compared to 2023 as the market continues to evolve into a seasonal commercial model. Although we commenced sales of our RSV vaccine in the third quarter of 2024, these sales are not expected to have a significant impact on our overall product sales for the year.

Previous wording

Other revenue increased by $6 million, or 12%, and decreased by $28 million, or 33%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. The increase for the three months ended was driven by the licensing and royalty revenue in the current period. The decrease for the six months ended was mainly due to a reduction in grant revenue under our agreement with BARDA for the development of our COVID-19 vaccine, partially offset by an increase in licensing and royalty revenue.

Current wording

Other revenue decreased by $32 million, or 43%, and $60 million, or 38%, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. The decrease for the three and nine months ended was mainly due to a reduction in grant revenue under our agreement with Biomedical Advanced Research and Development Authority (BARDA) for the development of our COVID-19 vaccine, partially offset by an increase in licensing and royalty revenue.

Previous wording

Cost of sales for the three months ended June 30, 2024 was $115 million, which included third-party royalties of $10 million, unutilized manufacturing capacity and wind-down costs of $55 million, and inventory write-downs of $14 million. Cost of sales for the six months ended June 30, 2024 was $211 million, which included third-party royalties of $18 million, unutilized manufacturing capacity and wind-down costs of $82 million, and inventory write-downs of $44 million, primarily related to our finished and semi-finished COVID-19 vaccine inventory. Cost of sales for the three months ended June 30, 2023 was $731 million, including third-party royalties of $12 million, inventory write-downs of $464 million, unutilized manufacturing capacity of $135 million, and losses on firm purchase commitments of $75 million. Cost of sales for the six months ended June 30, 2023 was $1.5 billion, including third-party royalties of $98 million, inventory write-downs of $612 million, unutilized manufacturing capacity of $270 million, and losses on firm purchase commitments and related cancellation fees of $117 million. Please refer to Note 7 to our condensed consolidated financial statements for inventory related charges. These charges in 2024, other than royalties, were largely attributable to end-of-season demand adjustments and commitments related to manufacturing capacity.

Current wording

Cost of sales for the three months ended September 30, 2024 was $514 million, which included third-party royalties of $92 million, inventory write-downs of $214 million, unutilized manufacturing capacity and wind-down costs of $27 million. Cost of sales for the nine months ended September 30, 2024 was $725 million, which included third-party royalties of $110 million, inventory write-downs of $302 million, primarily related to our finished and semi-finished COVID-19 vaccine inventory and certain raw materials, unutilized manufacturing capacity and wind-down costs of $109 million, and a $57 million benefit from the sale of previously written-down zero-cost inventory. Please refer to Note 7 to our condensed consolidated financial statements for inventory related charges. These charges in 2024, other than royalties, were largely driven by customer demand forecast adjustments and commitments related to manufacturing capacity.

Previous wording

Cost of sales for the three months ended June 30, 2024 decreased by $616 million, or 84%, compared to the same period in 2023. Cost of sales as a percentage of net product sales for the three months ended June 30, 2024 was 62%, compared to 249% for the same period in 2023. Cost of sales for the six months ended June 30, 2024 decreased by $1.3 billion, or 86%, compared to the same period in 2023. Cost of sales as a percentage of net product sales for the six months ended June 30, 2024 was 60%, compared to 72% for the same period in 2023. The decrease in cost of sales for both the three and six month periods in 2024 was primarily driven by a lower sales volume, coupled with reduced inventory write-downs, unutilized manufacturing capacity, and losses on firm purchase commitments and related cancellation fees. The decrease in cost of sales as a percentage of net product sales for both the three and six month periods in 2024 was mainly driven by reduced costs, partially offset by the decreased sales volume, reflecting a decline in product demand and increased product seasonality.

Current wording

Cost of sales for the three months ended September 30, 2024 decreased by $1.7 billion, or 77%, compared to the same period in 2023. Cost of sales as a percentage of net product sales for the three months ended September 30, 2024 was 28%, compared to 128% for the same period in 2023. Cost of sales for the nine months ended September 30, 2024 decreased by $3.0 billion, or 81%, compared to the same period in 2023. Cost of sales as a percentage of net product sales for the nine months ended September 30, 2024 was 33%, compared to 97% for the same period in 2023. The decrease in cost of sales for both the three- and nine-month periods in 2024 was primarily driven by reduced inventory write-downs, unutilized manufacturing capacity, and purchase commitment related cancellation fees. In addition, the reduction reflects the impact of a strategic cost initiative launched in the third quarter of 2023 to optimize our COVID-19 business by resizing manufacturing operations in response to the shift toward an endemic seasonal market. This initiative, which incurred $1.4 billion in charges during the third quarter of 2023, helped drive improved manufacturing efficiency and cost reductions in 2024. The decrease in cost of sales as a percentage of net product sales for both the three- and nine-month periods in 2024 was mainly driven by reduced costs, while the decrease for the nine-month period was partially offset by the lower sales volume, reflecting a decline in product demand and increased seasonality.

Previous wording

We anticipate that the full year cost of sales as a percentage of net product sales for 2024 will be lower than the 70% experienced in 2023. This expectation is based on projected improvements in our manufacturing efficiency and expected reductions in inventory write-downs. However, due to the strong seasonality of our business, we expect this percentage to be higher in the first half of the year than the second half of the year.

Current wording

We anticipate that the full year cost of sales as a percentage of net product sales for 2024 will be lower than the 70% experienced in 2023. This expectation is based on projected improvements in our manufacturing efficiency and expected reductions in inventory write-downs. However, due to the strong seasonality of our business, we expect this percentage to be higher in the first half of the year than the second half of the year, with the fourth quarter anticipated to be higher than the third quarter.

Previous wording

Research and development expenses increased by $73 million, or 6%, for the three months ended June 30, 2024, compared to the same period in 2023. The increase was primarily attributable to the purchase of a priority review voucher, and an increase in personnel-related costs and stock-based compensation of $101 million. The increase was partially offset by a decrease in clinical trial expenses of $159 million. Research and development expenses for the six months ended June 30, 2024 remained consistent with the same period in 2023. This reflects a $155 million increase in personnel-related costs and stock-based compensation, and the purchase of a priority review voucher, offset by a $194 million reduction in clinical trial expenses and an $85 million reduction in upfront license payments. The increase in personnel-related costs and stock-based compensation for both periods was driven by higher headcount to support our continued research and development efforts. The decrease in clinical trial expenses for both periods was due to reduced spending on our COVID-19 and seasonal flu programs, aligning with our planned trial schedules.

Current wording

Research and development expenses decreased by $23 million, or 2%, for the three months ended September 30, 2024, compared to the same period in 2023. This reduction was primarily due to decreases in clinical trial expenses of $182 million and clinical manufacturing expenses of $92 million. These decreases were partially offset by the purchase of a priority review voucher, along with a $38 million increase in personnel-related costs and stock-based compensation. For the nine months ended September 30, 2024, research and development expenses decreased by $18 million, or 1%, compared to the same period in 2023. This reflects a $332 million reduction in clinical trial expenses, a $150 million reduction in clinical manufacturing expenses, and an $85 million reduction in upfront license payments. These reductions were offset by a $193 million increase in personnel-related costs and stock-based compensation, as well as the purchase of two priority review vouchers. The increase in personnel-related costs and stock-based compensation for both periods was driven by higher headcount to support our continued research and development efforts. The decrease in clinical trial expenses for the three months ended September 30, 2024, was mainly due to reduced spending on our COVID-19 and RSV programs. For the nine-month period, the decrease was largely attributable to reduced spending on our COVID-19, RSV and seasonal flu programs, in line with our planned trial schedules.

Previous wording

We anticipate a modest reduction in research and development expenses in 2024 compared to 2023 levels. We continue to develop our pipeline and advance our product candidates into later-stage development, particularly our ongoing Phase 3 studies. These include our next-generation COVID-19, seasonal flu, CMV and combination vaccine programs, as well as our INT program.

Current wording

We anticipate a modest reduction in research and development expenses in 2024 compared to 2023 levels. We continue to develop our pipeline and advance our product candidates into later-stage development, particularly our ongoing Phase 3 studies. These include our next-generation COVID-19, seasonal flu, CMV, norovirus and combination vaccine programs, as well as our INT program.

Previous wording

Selling, general and administrative expenses decreased by $64 million, or 19%, for the three months ended June 30, 2024, compared to the same period in 2023, mainly due to a decrease in consulting and outside services across all functions of $65 million. Selling, general and administrative expenses decreased by $95 million, or 15%, for the six months ended June 30, 2024, compared to the same period in 2023. The decrease for the six months ended June 30, 2024 was mainly due to a $145 million reduction in consulting and outside services across all functions, partially offset by an increase in personnel-related costs and stock-based compensation of $54 million, primarily driven by an expanded headcount in digital, medical affairs and commercial functions to support our digital and artificial intelligence initiatives and marketed products. The decrease in both periods reflects cost discipline and efficiencies gained by reducing reliance on external consultants and bringing functions in-house.

Current wording

Selling, general and administrative expenses decreased by $161 million, or 36%, for the three months ended September 30, 2024, compared to the same period in 2023. This decrease was primarily due to a reduction of $105 million in consulting and outside services across all functions, as well as a $36 million reduction in commercial and marketing related expenses. For the nine months ended September 30, 2024, selling, general and administrative expenses decreased by $256 million, or 24%, compared to the same period in 2023. The decline for the nine-month period was mainly due to a $250 million reduction in consulting and outside services across all functions, along with a $51 million reduction in commercial and marketing related expenses. These decreases were partially offset by a $48 million increase in personnel-related costs and stock-based compensation, primarily driven by an expanded headcount in digital, medical affairs and commercial functions to support our digital and artificial intelligence initiatives, as well as our marketed products. The decrease in both periods reflects cost discipline and efficiencies gained by reducing reliance on external consultants and bringing more functions in-house.

Previous wording

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

Current wording

We anticipate that selling, general and administrative expenses in 2024 will be lower than the levels experienced in 2023. This reflects our ongoing commitment to efficiency as we expand our global commercial, regulatory, sales and marketing infrastructure, while continuing to invest in digital capabilities and leverage artificial intelligence technologies. These efforts align with our strategic focus on advancing our program development and enhancing our overall business processes.

Previous wording

For the three and six months ended June 30, 2024, interest income increased by $7 million and $18 million, or 7% and 8%, respectively, compared to the same periods in 2023. The increase in interest income from our investments in marketable securities for the three and six month periods in 2024 was mainly attributable to an overall higher interest rate environment, partially offset by lower average investment balances.

Current wording

For the three months ended September 30, 2024, interest income decreased by $2 million, or 2%, compared to the same period in 2023. For the nine months ended September 30, 2024, interest income increased by $16 million, or 5%, compared to the same period in 2023. Overall, interest income from our investments in marketable securities remained relatively flat across both periods. The decrease in the three-month period was primarily due to lower average investment balances, while the increase for the nine-month period was driven by the overall higher interest rate environment.

Previous wording

The following tables summarize other (expense) income, net for the periods presented (in millions):

Current wording

The following tables summarize other expense, net for the periods presented (in millions):

Previous wording

For the three and six months ended June 30, 2024, total other expense, net increased by $41 million and $12 million, or 293% and 35%, respectively, compared to the same periods in 2023. The increase in other expense, net for the three and six months ended June 30, 2024 was primarily due to the increases in losses on equity investments and available-for-sale debt securities. Our interest expense is primarily related to our finance leases. Please refer to Note 10 to our condensed consolidated financial statements.

Current wording

For the three and nine months ended September 30, 2024, total other expense, net decreased by $39 million and $27 million, or 76% and 32%, respectively, compared to the same periods in 2023. The decrease in total other expense, net for the three-month period was primarily driven by a reduction in losses on equity investments. For the nine-month period, the decrease was mainly due to lower losses on available-for-sale debt securities and reduced interest expense, partially offset by an increase in losses on equity investments. Our interest expense is primarily related to our finance leases. Please refer to Note 10 to our condensed consolidated financial statements.

Previous wording

Provision for income taxes increased by $369 million and $763 million, or 100% and 101%, for the three and six months ended June 30, 2024, compared to the same periods in 2023. The increase in both periods was primarily due to certain of our foreign subsidiaries that have taxable income, while we incurred a net loss before income taxes on a consolidated basis. We cannot recognize tax benefits from the loss due to our global valuation allowance, which we continue to maintain against the majority of our global deferred tax assets. As a result of the valuation allowance, the effective tax rates for the three and six months ended June 30, 2024 are not comparable to the same periods in the prior year. Please refer to Note 13 to our condensed consolidated financial statements.

Current wording

Provision for income taxes decreased by $1.7 billion and $901 million, or 100% and 98%, for the three and nine months ended September 30, 2024, compared to the same periods in 2023. The decrease in both periods was primarily due to the establishment of a $1.7 billion valuation allowance on deferred tax assets in the third quarter of 2023. This valuation allowance has been applied consistently since its initial recognition in the third quarter of 2023. As a result, we are unable to recognize tax benefits from the loss due to our global valuation allowance. Consequently, the effective tax rates for the three and nine months ended September 30, 2024 are not comparable to the same periods in the prior year. Please refer to Note 13 to our condensed consolidated financial statements.

Previous wording

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 June 30, 2024 decreased by $2.5 billion, or 19%, compared to December 31, 2023. The decrease in cash, cash equivalents and investments was primarily due to a net cash outflow from operating activities of $2.3 billion and purchases of property and equipment of $378 million during the six months ended June 30, 2024.

Current wording

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 September 30, 2024 decreased by $4.1 billion, or 31%, compared to December 31, 2023. The decrease in cash, cash equivalents and investments was primarily due to a net cash outflow from operating activities of $3.8 billion and purchases of property and equipment of $529 million during the nine months ended September 30, 2024.

Previous wording

Working capital, which is current assets less current liabilities, as of June 30, 2024 decreased by $12 million, compared to December 31, 2023, primarily due to a decrease in accounts receivable of $729 million, mainly due to timing of collections and decline in product sales. This was partially offset by a decrease in accrued liabilities of $465 million and a decrease in accounts payable of $241 million, both of which were driven by lower spend during the period.

Current wording

Working capital, which is current assets less current liabilities, as of September 30, 2024 increased by $155 million, compared to December 31, 2023, primarily due to an increase in accounts receivable of $672 million, mainly due to timing of collections, a decrease in accrued liabilities and accounts payable of $569 million, driven by lower spend during the period, and an increase in inventory of $210 million, driven by manufacturing of COVID-19 product, partially offset by a decrease in cash and cash equivalents of $1.3 billion.

Previous wording

We derive cash flows from operations primarily from cash collected from customer deposits and accounts receivable related to our COVID-19 vaccine product sales, as well as certain government-sponsored and private organizations, strategic alliances and funding arrangements. Our cash flows from operating activities are significantly affected by our use of cash for operating expenses and working capital to support the business.

Current wording

We derive cash flows from operations primarily from cash collected from customer deposits and accounts receivable related to our product sales, as well as certain government-sponsored and private organizations, strategic alliances and funding arrangements. Our cash flows from operating activities are significantly affected by our use of cash for operating expenses and working capital to support the business.

Previous wording

Beginning in the third quarter of 2020, we entered into supply agreements with the U.S. Government, foreign governments and international organizations for the supply of our COVID-19 vaccine and received upfront deposits. In the third quarter of 2023, we commenced sales of our COVID-19 vaccine to the U.S. commercial market, in addition to continuing sales to foreign governments and international organizations. In the U.S., our COVID-19 vaccine is sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers. Wholesalers and distributors typically do not make upfront payments to us. As of June 30, 2024, we had $740 million in deferred revenue related to customer deposits received or billable.

Current wording

Beginning in the third quarter of 2020, we entered into supply agreements with the U.S. Government, foreign governments and international organizations for the supply of our COVID-19 vaccine and received upfront deposits. In the third quarter of 2023, we commenced sales of our COVID-19 vaccine to the U.S. commercial market, in addition to continuing sales to foreign governments and international organizations. In the U.S., our COVID-19 vaccine is sold primarily to wholesalers and distributors, and to a lesser extent, directly to retailers and healthcare providers. We also commenced sales of our RSV vaccine in the third quarter of 2024. Wholesalers and distributors typically do not make upfront payments to us. As of September 30, 2024, we had $443 million in deferred revenue related to customer deposits received or billable.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 was $2.3 billion and consisted of net loss of $2.5 billion, non-cash adjustments of $277 million and a net change in assets and liabilities of $86 million. Non-cash items primarily included stock-based compensation of $213 million, and depreciation and amortization of $77 million. The net change in assets and liabilities was mainly due to an increase in inventory of $197 million, driven by increased raw material purchases and manufacturing of COVID products, and decreases in accrued liabilities of $464 million and accounts payable of $199 million, driven by overall lower spend in the period. This was partially offset by a decrease in accounts receivable of $729 million driven by timing of collections and decline in product sales, and an increase in deferred revenue of $146 million due to customer deposits received in excess of revenue recognized.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 was $3.8 billion and consisted of net loss of $2.4 billion, non-cash adjustments of $427 million and a net change in assets and liabilities of $1.8 billion. Non-cash items primarily included stock-based compensation of $325 million, and depreciation and amortization of $129 million. The net change in assets and liabilities was mainly due to an increase in accounts receivable of $672 million driven by timing of invoicing, a decrease in accrued liabilities and accounts payable of $518 million, driven by overall lower spend in the period, an increase in inventory of $208 million, driven by manufacturing of COVID-19 products, and a decrease in deferred revenue of $177 million due to revenue recognized in excess of customer deposits received.

Previous wording

Net cash used in operating activities increased by $123 million, or 6%, during the six months ended June 30, 2024, compared to the same period in 2023, primarily attributable to an increase in net loss of $1.2 billion, a change in inventory of $431 million, driven by less inventory write-downs, and a decrease in accounts receivable of $424 million related to timing of collections and decline in product sales, partially offset by a change in deferred revenue of $1.1 billion due to customer deposits received in excess of revenue recognized, and deferred income taxes of $530 million driven by an increase in valuation allowance.

Current wording

Net cash used in operating activities increased by $89 million, or 2%, during the nine months ended September 30, 2024, compared to the same period in 2023, primarily attributable to a change in deferred income taxes of $934 million driven by an increase in valuation allowance, a change in prepaid expense and other assets of $919 million mainly related to prepayment of clinical studies and contract manufacturing organization activities, a change in inventory of $670 million driven by less inventory write-downs, partially offset by a decrease in net loss of $2.5 billion.

Previous wording

Net cash provided by investing activities for the six months ended June 30, 2024 was $1.8 billion, which primarily included proceeds from maturities and sales of marketable securities of $5.5 billion, partially offset by purchases of marketable securities of $3.4 billion, and purchases of property and equipment of $378 million.

Current wording

Net cash provided by investing activities for the nine months ended September 30, 2024 was $2.5 billion, which primarily included proceeds from maturities and sales of marketable securities of $7.7 billion, partially offset by purchases of marketable securities of $4.6 billion, and purchases of property and equipment of $529 million.

Previous wording

Net investing cash flows decreased by $2.2 billion, or 55%, during the six months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase in purchases of marketable securities of $2.1 billion.

Current wording

Net investing cash flows decreased by $2.3 billion, or 48%, during the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase in purchases of marketable securities of $2.5 billion.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2024 was $48 million, primarily due to proceeds from issuance of common stock through equity plans of $47 million.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2024 was $59 million, primarily due to proceeds from issuance of common stock through equity plans of $55 million.

Previous wording

Net cash provided by financing activities increased by $1.3 billion, or 104%, during the six months ended June 30, 2024, compared to the same period in 2023, mainly due to a decrease in repurchases of common stock of $1.2 billion.

Current wording

Net cash provided by financing activities increased by $1.3 billion, or 105%, during the nine months ended September 30, 2024, compared to the same period in 2023, mainly due to a decrease in repurchases of common stock of $1.2 billion.

Previous wording

Our principal sources of funding as of June 30, 2024 consisted of cash and cash equivalents, investments, and cash we may generate from operations. We generated net income of $8.4 billion and $12.2 billion for the years ended in 2022 and 2021, respectively, following the authorization of our first commercial product in December 2020. From our inception to the end of 2020, we incurred significant losses from operations due to our significant research and development expenses. We also incurred a net loss of $2.5 billion for the six months ended June 30, 2024 and a net loss of $4.7 billion for the year ended 2023. We have retained earnings of $11.2 billion as of June 30, 2024.

Current wording

Our principal sources of funding as of September 30, 2024 consisted of cash and cash equivalents, investments, and cash we may generate from operations. We generated net income of $8.4 billion and $12.2 billion for the years ended in 2022 and 2021, respectively, following the authorization of our first commercial product in December 2020. From our inception to the end of 2020, we incurred significant losses from operations due to our significant research and development expenses. We also incurred a net loss of $2.4 billion for the nine months ended September 30, 2024 and a net loss of $4.7 billion for the year ended 2023. We have retained earnings of $11.2 billion as of September 30, 2024.

Previous wording

We have significant future capital requirements including expected operating expenses to conduct research and development activities, operate our organization, and meet capital expenditure needs. We anticipate maintaining substantial expenses across all areas of our ongoing activities, particularly as we continue research and development of our development candidates and clinical activities for our investigational medicines. This also extends to our manufacturing costs, including our arrangements with our supply and manufacturing partners. Our ongoing work on our RSV, seasonal flu and CMV vaccine candidates, individualized neoantigen therapy, next generation COVID-19 vaccine, 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 will 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 10 and Note 11 to our condensed consolidated financial statements). We have entered into various collaboration and licensing agreements, as well as a research and development funding arrangement with third parties. These arrangements collectively encompass the funding of specific research and development activities, with the distinction that under the research and development funding arrangement, we receive funding. However, for all these arrangements, we may be obligated to make potential future milestone and royalty payments.

Current wording

We have significant future capital requirements including expected operating expenses to conduct research and development activities, operate our organization, and meet capital expenditure needs. We anticipate maintaining substantial expenses across all areas of our ongoing activities, particularly as we continue research and development of our development candidates and clinical activities for our investigational medicines. This also extends to our manufacturing costs, including our arrangements with our supply and manufacturing partners. Our ongoing work on our RSV, seasonal flu, CMV and norovirus vaccine candidates, individualized neoantigen therapy, next generation COVID-19 vaccine, combination vaccines, late-stage clinical development, investments in digital capabilities and artificial intelligence technologies, and buildout of global commercial, regulatory, sales and marketing infrastructure and manufacturing facilities will require significant cash outflows in future periods, most of which will 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 10 and Note 11 to our condensed consolidated financial statements). We have entered into various collaboration and licensing agreements, as well as a research and development funding arrangement with third parties. These arrangements collectively encompass the funding of specific research and development activities, with the distinction that under the research and development funding arrangement, we receive funding. However, for all these arrangements, we may be obligated to make potential future milestone and royalty payments.

Previous wording

We believe that our cash, cash equivalents, and investments as of June 30, 2024, 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 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, which may adversely affect our business. For example, we experienced a decline in customer demand for our COVID-19 vaccine in 2023, and this trend continued into the first half of 2024, reflecting the market's ongoing transition to a seasonal commercial pattern in the endemic COVID-19 vaccine market. We foresee that our commitment to investing in our business for future product launches may lead to continued negative cash flows from operations in upcoming periods. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

Current wording

We believe that our cash, cash equivalents, and investments as of September 30, 2024, 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 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, which may adversely affect our business. For example, we experienced a decline in customer demand for our COVID-19 vaccine in 2023, and this trend continued into 2024, reflecting the market's ongoing transition to a seasonal commercial pattern in the endemic COVID-19 vaccine market. We foresee that our commitment to investing in our business for future product launches may lead to continued negative cash flows from operations in upcoming periods. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.