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Leases | 12 Months Ended
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Dec. 31, 2020
Leases [Abstract] |
Leases | Leases We have entered into various long-term non-cancelable lease arrangements for our facilities and equipment expiring at various times through 2032. Certain of these arrangements have free rent periods or escalating rent payment provisions, which we recognize lease cost under such arrangements on a straight-line basis over the life of the leases. We have two campuses in Massachusetts, our Cambridge facility and our Moderna Technology Center (MTC), located in Norwood. Operating Leases Cambridge facility We occupy a multi-floor building at Technology Square in Cambridge, Massachusetts with a mix of offices and research laboratory space totaling approximately 175,000 square feet. Our Cambridge facility leases have expiry ranges from 2020 to 2029. In August 2019, we entered into an amendment to our lease agreements to consolidate our Technology Square space in Cambridge, Massachusetts. This included entering into a forward-starting lease agreement starting in January 2020 to acquire approximately 50,000 square feet of additional space at 200 Technology Square. In addition, our current 200 Technology Square lease has been extended for two years to 2029. As part of the lease amendment, we completely exited our leased space of approximately 60,000 square feet at 500 Technology Square by May 2020. We record operating lease cost for each of our operating leases on a straight-line basis from lease commencement date through the end of the lease term. Operating lease cost is recorded in operating expenses in our consolidated statements of operations Finance Leases Moderna Technology Center North (MTC North) In February 2019, we entered into a new lease agreement for office and laboratory space of approximately 200,000 square feet, MTC North, located in Norwood, Massachusetts. The lease commenced in the second quarter of 2019 and had an initial expiration date of 2031. We have the option to extend the lease for up to four additional five-year terms. Contemporaneously, we entered into an agreement to sublease approximately 64 percent of the leased space to a third party. In May 2020, we entered into an amendment to the lease whereby we exercised an option available in the original lease to receive a tenant improvement allowance in the amount of $22.2 million to be paid back over the term of the lease with interest and extend the term of the lease to 2035. In May 2020, we also amended our MTC North sublease agreement. As the result of that amendment, effective June 1, 2020, we obtained an additional, approximately 28,000 square feet, or 12 percent of the leased space in MTC North and the remainder of the space in July 2020 when the sublease expired. The lease modifications to MTC North in the second quarter of 2020 resulted in a change in lease classification, from operating to finance. Moderna Technology Center manufacturing facility (MTC South) In August 2016, we entered into a lease agreement for approximately 200,000 square feet of office, laboratory, and light manufacturing space, MTC South, in Norwood, Massachusetts. The lease will expire in September 2032. We have the option to extend the term for two extension periods of ten years each at market-based rents. The base rent is subject to increases over the term of the lease. Embedded Leases We have entered into multiple contract manufacturing service agreements with third parties which contain embedded leases within the scope of ASC 842. As of December 31, 2020, we had lease liabilities of $24.3 million related to the embedded leases. Certain embedded leases dedicated to our COVID-19 vaccine program prior to the EUA from the FDA were deemed to have no alternative use. The related right-of-use assets of $62.3 million were charged to research and development expense for the year ended December 31, 2020. Operating and financing lease right-of-use assets and lease liabilities as of December 31, 2020 and 2019 were as follows (in thousands):
|  | December 31,
|  | 2020 |  | 2019
Assets: |  |  |  |
Right-of-use assets, operating, net (1) (2) |  | $ | 90,201 |  |  | $ | 86,414 |
Right-of-use assets, financing, net (3) (4) |  | 55,045 |  |  | 9,544 |
Total |  | $ | 145,246 |  |  | $ | 95,958 |
Liabilities: |  |  |  |
Current: |  |  |  |
Operating lease liabilities(5) |  | $ | 5,972 |  |  | $ | 3,583 |
Financing lease liabilities(5) |  | 24,328 |  |  | — |
Total current lease liabilities |  | 30,300 |  |  | 3,583 |
Non-current: |  |  |  |
Operating lease liabilities, non-current |  | 97,421 |  |  | 93,675 |
Financing lease liabilities, non-current |  | 109,874 |  |  | 38,689 |
Total non-current lease liabilities |  | 207,295 |  |  | 132,364 |
Total |  | $ | 237,595 |  |  | $ | 135,947 |
_______ (1) These assets are real estate related assets, which include land, office and laboratory spaces. (2) Net of accumulated depreciation. (3) These assets are real estate assets related to the MTC North and MTC South leases. (4) Included in property and equipment in the consolidated balance sheets, net of accumulated depreciation. (5) Included in other current liabilities in the consolidated balance sheets. The components of the lease costs for the year ended December 31, 2020 and 2019 were as follows (in thousands):
|  | December 31,
|  | 2020 |  | 2019
Operating lease costs |  | $ | 16,939 |  |  | $ | 17,015 |
Financing lease costs: |  |  |  |
Amortization of right-of-use assets, financing leases |  | 1,011 |  |  | 309 |
Interest expense for financing lease liabilities |  | 9,891 |  |  | 6,557 |
Total financing lease costs |  | $ | 10,902 |  |  | $ | 6,866 |
Short term lease costs |  | $ | 13,322 |  |  | $ | — |
Variable lease costs |  | $ | 5,229 |  |  | $ | 4,399 |
Total rent expense for the year ended December 31, 2018 was $19.1 million. Supplemental cash flow information relating to our leases for the year ended December 31, 2020 and 2019 was as follows (in thousands):
|  | December 31,
|  | 2020 |  | 2019
Cash paid for amounts included in measurement of lease liabilities: |  |  |  |
Operating cash flows used in operating leases |  | $ | (15,089) |  |  | $ | (16,121) |
Operating cash flows used in financing leases |  | (8,523) |  |  | (5,585) |
Financing cash flows used in financing leases |  | (7,519) |  |  | — |
Operating lease non-cash items: |  |  |  |
Right-of-use assets reduced through lease modifications and reassessments |  | 6,755 |  |  | 2,717 |
Right-of-use assets obtained in exchange for operating lease liabilities |  | 17,107 |  |  | 34,014 |
Finance lease non-cash items: |  |  |  |
Right-of-use assets obtained through lease modifications and reassessments |  | 46,495 |  |  | — |
Charge to financing lease obligation |  | 1,304 |  |  | 971 |
Weighted average remaining lease terms and discount rates as of December 31, 2020 were as follows:
|  | December 31,
|  | 2020
Remaining lease term: |  |
Operating leases |  | 11 years
Finance leases |  | 25 years
Discount rate: |  |
Operating leases |  | 10.3 | %
Finance leases |  | 13.1 | %
Future minimum lease payments under non-cancelable lease agreements as of December 31, 2020, were as follows (in thousands):
Fiscal Year |  | Operating Leases (1) |  | Financing Leases (1) |
2021 |  | $ | 15,492 |  |  | $ | 36,579 |  |
2022 |  | 15,913 |  |  | 11,848 |  |
2023 |  | 16,008 |  |  | 12,054 |  |
2024 |  | 16,168 |  |  | 12,279 |  |
2025 |  | 16,567 |  |  | 12,493 |  |
Thereafter |  | 93,599 |  |  | 428,059 |  |
Total minimum lease payments |  | 173,747 |  |  | 513,312 |  |
Less amounts representing interest or imputed interest |  | (70,354) |  |  | (379,110) |  | (2)
Present value of lease liabilities |  | $ | 103,393 |  |  | $ | 134,202 |  |
______ (1) Include the optional extensions in the MTC North and MTC South lease terms which represent a total of $338.9 million un-discounted future lease payments. (2) MTC South interest is based on an imputed interest rate of 17.2%. MTC North interest is based upon an incremental borrowing rate of 8.2%.
Leases | Leases We have entered into various long-term non-cancelable lease arrangements for our facilities and equipment expiring at various times through 2032. Certain of these arrangements have free rent periods or escalating rent payment provisions, which we recognize lease cost under such arrangements on a straight-line basis over the life of the leases. We have two campuses in Massachusetts, our Cambridge facility and our Moderna Technology Center (MTC), located in Norwood. Operating Leases Cambridge facility We occupy a multi-floor building at Technology Square in Cambridge, Massachusetts with a mix of offices and research laboratory space totaling approximately 175,000 square feet. Our Cambridge facility leases have expiry ranges from 2020 to 2029. In August 2019, we entered into an amendment to our lease agreements to consolidate our Technology Square space in Cambridge, Massachusetts. This included entering into a forward-starting lease agreement starting in January 2020 to acquire approximately 50,000 square feet of additional space at 200 Technology Square. In addition, our current 200 Technology Square lease has been extended for two years to 2029. As part of the lease amendment, we completely exited our leased space of approximately 60,000 square feet at 500 Technology Square by May 2020. We record operating lease cost for each of our operating leases on a straight-line basis from lease commencement date through the end of the lease term. Operating lease cost is recorded in operating expenses in our consolidated statements of operations Finance Leases Moderna Technology Center North (MTC North) In February 2019, we entered into a new lease agreement for office and laboratory space of approximately 200,000 square feet, MTC North, located in Norwood, Massachusetts. The lease commenced in the second quarter of 2019 and had an initial expiration date of 2031. We have the option to extend the lease for up to four additional five-year terms. Contemporaneously, we entered into an agreement to sublease approximately 64 percent of the leased space to a third party. In May 2020, we entered into an amendment to the lease whereby we exercised an option available in the original lease to receive a tenant improvement allowance in the amount of $22.2 million to be paid back over the term of the lease with interest and extend the term of the lease to 2035. In May 2020, we also amended our MTC North sublease agreement. As the result of that amendment, effective June 1, 2020, we obtained an additional, approximately 28,000 square feet, or 12 percent of the leased space in MTC North and the remainder of the space in July 2020 when the sublease expired. The lease modifications to MTC North in the second quarter of 2020 resulted in a change in lease classification, from operating to finance. Moderna Technology Center manufacturing facility (MTC South) In August 2016, we entered into a lease agreement for approximately 200,000 square feet of office, laboratory, and light manufacturing space, MTC South, in Norwood, Massachusetts. The lease will expire in September 2032. We have the option to extend the term for two extension periods of ten years each at market-based rents. The base rent is subject to increases over the term of the lease. Embedded Leases We have entered into multiple contract manufacturing service agreements with third parties which contain embedded leases within the scope of ASC 842. As of December 31, 2020, we had lease liabilities of $24.3 million related to the embedded leases. Certain embedded leases dedicated to our COVID-19 vaccine program prior to the EUA from the FDA were deemed to have no alternative use. The related right-of-use assets of $62.3 million were charged to research and development expense for the year ended December 31, 2020. Operating and financing lease right-of-use assets and lease liabilities as of December 31, 2020 and 2019 were as follows (in thousands):
|  | December 31,
|  | 2020 |  | 2019
Assets: |  |  |  |
Right-of-use assets, operating, net (1) (2) |  | $ | 90,201 |  |  | $ | 86,414 |
Right-of-use assets, financing, net (3) (4) |  | 55,045 |  |  | 9,544 |
Total |  | $ | 145,246 |  |  | $ | 95,958 |
Liabilities: |  |  |  |
Current: |  |  |  |
Operating lease liabilities(5) |  | $ | 5,972 |  |  | $ | 3,583 |
Financing lease liabilities(5) |  | 24,328 |  |  | — |
Total current lease liabilities |  | 30,300 |  |  | 3,583 |
Non-current: |  |  |  |
Operating lease liabilities, non-current |  | 97,421 |  |  | 93,675 |
Financing lease liabilities, non-current |  | 109,874 |  |  | 38,689 |
Total non-current lease liabilities |  | 207,295 |  |  | 132,364 |
Total |  | $ | 237,595 |  |  | $ | 135,947 |
_______ (1) These assets are real estate related assets, which include land, office and laboratory spaces. (2) Net of accumulated depreciation. (3) These assets are real estate assets related to the MTC North and MTC South leases. (4) Included in property and equipment in the consolidated balance sheets, net of accumulated depreciation. (5) Included in other current liabilities in the consolidated balance sheets. The components of the lease costs for the year ended December 31, 2020 and 2019 were as follows (in thousands):
|  | December 31,
|  | 2020 |  | 2019
Operating lease costs |  | $ | 16,939 |  |  | $ | 17,015 |
Financing lease costs: |  |  |  |
Amortization of right-of-use assets, financing leases |  | 1,011 |  |  | 309 |
Interest expense for financing lease liabilities |  | 9,891 |  |  | 6,557 |
Total financing lease costs |  | $ | 10,902 |  |  | $ | 6,866 |
Short term lease costs |  | $ | 13,322 |  |  | $ | — |
Variable lease costs |  | $ | 5,229 |  |  | $ | 4,399 |
Total rent expense for the year ended December 31, 2018 was $19.1 million. Supplemental cash flow information relating to our leases for the year ended December 31, 2020 and 2019 was as follows (in thousands):
|  | December 31,
|  | 2020 |  | 2019
Cash paid for amounts included in measurement of lease liabilities: |  |  |  |
Operating cash flows used in operating leases |  | $ | (15,089) |  |  | $ | (16,121) |
Operating cash flows used in financing leases |  | (8,523) |  |  | (5,585) |
Financing cash flows used in financing leases |  | (7,519) |  |  | — |
Operating lease non-cash items: |  |  |  |
Right-of-use assets reduced through lease modifications and reassessments |  | 6,755 |  |  | 2,717 |
Right-of-use assets obtained in exchange for operating lease liabilities |  | 17,107 |  |  | 34,014 |
Finance lease non-cash items: |  |  |  |
Right-of-use assets obtained through lease modifications and reassessments |  | 46,495 |  |  | — |
Charge to financing lease obligation |  | 1,304 |  |  | 971 |
Weighted average remaining lease terms and discount rates as of December 31, 2020 were as follows:
|  | December 31,
|  | 2020
Remaining lease term: |  |
Operating leases |  | 11 years
Finance leases |  | 25 years
Discount rate: |  |
Operating leases |  | 10.3 | %
Finance leases |  | 13.1 | %
Future minimum lease payments under non-cancelable lease agreements as of December 31, 2020, were as follows (in thousands):
Fiscal Year |  | Operating Leases (1) |  | Financing Leases (1) |
2021 |  | $ | 15,492 |  |  | $ | 36,579 |  |
2022 |  | 15,913 |  |  | 11,848 |  |
2023 |  | 16,008 |  |  | 12,054 |  |
2024 |  | 16,168 |  |  | 12,279 |  |
2025 |  | 16,567 |  |  | 12,493 |  |
Thereafter |  | 93,599 |  |  | 428,059 |  |
Total minimum lease payments |  | 173,747 |  |  | 513,312 |  |
Less amounts representing interest or imputed interest |  | (70,354) |  |  | (379,110) |  | (2)
Present value of lease liabilities |  | $ | 103,393 |  |  | $ | 134,202 |  |
______ (1) Include the optional extensions in the MTC North and MTC South lease terms which represent a total of $338.9 million un-discounted future lease payments. (2) MTC South interest is based on an imputed interest rate of 17.2%. MTC North interest is based upon an incremental borrowing rate of 8.2%.

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