01—Abstract
Summary
Summary of the 10-Q filed November 6, 2019. Cited figures are marked; the original filing is the authoritative source.
Moderna, Inc. (MRNA) filed its Form 10-Q for the quarterly period ended September 30, 2019.
The company is transitioning from an Emerging Growth Company (EGC) status to a large accelerated filer by year-end 2019. A significant accounting change adopted in 2019 was ASC Topic 606, Revenue from Contracts with Customers, which involved a cumulative-effect adjustment of $28.0 milliona to accumulated deficit due to changes in revenue recognition for collaboration agreements. This adoption led to a decrease in reported revenue and net loss for the periods presented compared to prior accounting standards.
The company continues to invest heavily in research and development, with R&D expenses increasing 10%b and 25% for the three and nine months ended September 30, 2019, respectively, compared to the prior year. This investment is fueling a diverse pipeline of 21 development candidates across six modalities, with 13 candidates in clinical studies.
Collaboration revenue, a key source of funding, saw a significant decrease of 59% and 54% for the three and nine month periods, respectively, largely due to the ASC 606 adoption's impact on revenue timing. Despite ongoing operating losses and a substantial accumulated deficit, Moderna reported a healthy cash, cash equivalents, and investments balance of approximately $1.34 billionc as of September 30, 2019, providing runway for future development.
02—Key points
Key Highlights
- Moderna is transitioning from Emerging Growth Company (EGC) status to a large accelerated filer by the end of 2019.
- Adoption of ASC 606 (Revenue Recognition) in 2019 resulted in a $28.0 million adjustment to accumulated deficit and impacted reported revenue timing.
- Research and Development (R&D) expenses increased by 10% and 25% for the three and nine months ended September 30, 2019, respectively, reflecting continued investment in its mRNA platform and pipeline.
- The company's pipeline includes 21 development candidates across 6 modalities, with 13 currently in clinical trials.
- Collaboration revenue decreased significantly (59% and 54% for the three and nine months, respectively), primarily due to ASC 606 adoption impacting revenue recognition timing.
- As of September 30, 2019, Moderna held approximately $1.34 billion in cash, cash equivalents, and investments, providing substantial liquidity.
- Moderna continues to incur significant operating losses and has an accumulated deficit of $1.37 billion as of September 30, 2019.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed November 6, 2019Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $17.05M$41.76M | −59.2% |
| R&D Expenses | $119.64M$109.05M | +9.7% |
| Operating Expenses | $147.81M$127.58M | +15.9% |
| Operating Income | -$130.76M-$85.82M | −52.4% |
| Net Income | -$123.22M-$80.33M | −53.4% |
| EPS (Basic) | $-0.37$-1.32 | +72.0% |
| Shares Outstanding (Basic) | 330.77M66.28M | +399.0% |
05—Questions
Frequently Asked Questions
How has the adoption of ASC 606 impacted Moderna's financial reporting?
The adoption of ASC 606, 'Revenue from Contracts with Customers,' on January 1, 2019, resulted in a cumulative-effect adjustment of $28.0 million to Moderna's accumulated deficit. It also changed the timing of revenue recognition for collaboration agreements, leading to a reported decrease in collaboration revenue for the periods presented compared to prior accounting methods (ASC 605). This means that while the overall value of contracts may remain, the reported revenue in any given period can fluctuate based on the new recognition criteria.
What is the status of Moderna's pipeline and its R&D investment?
Moderna maintains a diverse pipeline with 21 development candidates across six modalities, with 13 currently in clinical trials. To support this pipeline, the company significantly increased its Research and Development (R&D) expenses. For the nine months ended September 30, 2019, R&D expenses rose by 25% year-over-year, indicating a strong commitment to advancing its mRNA technology and drug candidates.
What is Moderna's current financial position and liquidity?
As of September 30, 2019, Moderna reported approximately $1.34 billion in cash, cash equivalents, and investments. This strong liquidity position is crucial given the company's ongoing significant operating losses and an accumulated deficit of $1.37 billion. The company expects to continue incurring losses and significant expenses as it advances its pipeline and anticipates needing substantial additional funding in the future, likely through equity or debt offerings, and strategic alliances.
What are the main drivers of the decrease in collaboration revenue?
The substantial decrease in collaboration revenue, particularly with partners like AstraZeneca and Merck, is primarily attributed to the adoption of ASC 606. This new revenue recognition standard altered how and when revenue from long-term collaborations is recognized, often deferring recognition until specific performance obligations are met or services are rendered, impacting the comparability of current period revenue to prior periods reported under ASC 605.
06—Continue