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Leases | 12 Months Ended
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Dec. 31, 2023
Leases [Abstract] |
Leases | Leases The Company has embedded leases related to multiple manufacturing supply agreements with CMOs and CMOS to manufacture COVID-19 Vaccine, as well as operating and finance leases for its research and development and manufacturing facilities, corporate headquarters and offices. During the year ended December 31, 2023, the Company continued to align its global manufacturing footprint as a result of its ongoing assessment of manufacturing needs consistent with its contractual obligations related to the supply, and anticipated demand for, its COVID-19 Vaccine. During the years ended December 31, 2023 and 2022, the Company modified certain of its CMO and CDMO agreements that had previously been determined to represent embedded leases and, in accordance with its policy, the Company remeasured and reallocated the remaining consideration under the contracts and reassessed the lease classification as of the effective dates of the respective modifications. During the year ended December 31, 2023 and 2022, as a result of new or modified leases, the Company recognized ROU assets, net of credits on modifications, and a corresponding lease liability of $6.8 million and $18.6 million, respectively, for its long-term finance and operating leases embedded in CMO and CDMO manufacturing supply agreements. Also, during the year ended December 31, 2023, the Company recorded an impairment charge of $6.1 million in Cost of sales related to an embedded lease agreement with a CMO for production capacity in excess of production needs. During 2020, the Company entered into a lease agreement for the premises located at 700 Quince Orchard Road, Gaithersburg, Maryland ("700QO"). The lease is for approximately 170,000 square feet of space that the Company is using for manufacturing, research and development, and offices. The term of the lease expires in 2035 with options to extend the lease. The lease provides for an annual base rent of $5.8 million that is subject to future rent increases and obligates the Company to pay building operating costs. During the year ended December 31, 2022, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, certain floors located at the premises and recognized an ROU asset and related lease obligation of $73.2 million as lease commencement for accounting purposes occurred in 2022. During the year ended December 31, 2023, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, the remaining floors located at the premises and recognized a ROU asset and related lease obligation of $96.5 million as the lease commencement dates for accounting purposes had occurred for such remaining floors. The lease obligation was reduced by $73.4 million for prepaid rent and prior costs incurred on behalf of the landlord during 2023. As of December 31, 2023, facility leases, including the 700QO lease, have expirations that range from approximately two to thirteen years, some of which include options to extend the lease term. The facility leases contain provisions for future rent increases and obligate the Company to pay building operating costs. During the year ended December 31, 2023, the Company recorded an impairment charge of $5.9 million related to ROU facility leases used for research and development, manufacturing and offices space that are impacted by the Restructuring Plan (see Note 17). Supplemental balance sheet information related to leases as of December 31, 2023 and 2022 was as follows (in thousands, except weighted-average remaining lease term and discount rate):
|  |  |  | December 31,
Lease Assets and Liabilities |  | Classification |  | 2023 |  | 2022
Assets: |  |  |  |  |  |
ROU assets, operating, net |  | Right of use asset, net |  | $ | 24,985 |  | $ | 36,384
ROU assets, finance, net |  | Right of use asset, net |  | 160,233 |  | 69,857
Total non-current ROU assets |  |  |  | $ | 185,218 |  | $ | 106,241
Liabilities: |  |  |  |  |  |
Current portion of operating lease liabilities |  | Other current liabilities |  | $ | 22,977 |  | $ | 16,867
Current portion of finance lease liabilities |  | Current portion of finance lease liabilities |  | 5,142 |  | 27,196
Total current lease liabilities |  |  |  | $ | 28,119 |  | $ | 44,063
Non-current portion of operating lease liabilities |  | Other non-current liabilities |  | $ | 28,577 |  | $ | 50,085
Non-current portion of finance lease liabilities |  | Non-current finance lease liabilities |  | 55,923 |  | 31,238
Total non-current lease liabilities |  |  |  | $ | 84,500 |  | $ | 81,323
Weighted-average remaining lease term (years): |  |  |  |  |  |
Operating leases |  |  |  | 3.9 |  | 4.6
Finance leases |  |  |  | 11.6 |  | 8.3
Weighted-average discount rate: |  |  |  |  |  |
Operating leases |  |  |  | 6.0% |  | 6.4%
Finance leases |  |  |  | 8.9% |  | 5.4%
Lease expense for the operating and short-term leases for the years ended December 31, 2023, 2022, and 2021 was as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Operating lease expense | $ | 6,929 |  |  | $ | 6,903 |  |  | $ | 37,027 |
Short-term lease expense (benefit(1)) | (48,009) |  |  | 94,726 |  |  | 468,210 |
Variable lease expense | 10,292 |  |  | 6,836 |  |  | 116,435 |
Finance lease expense: |  |  |  |  |
ROU assets expensed | $ | 12,876 |  |  | $ | 7,759 |  |  | $ | 112,528 |
Interest expense | 2,605 |  |  | 1,472 |  |  | 7,241 |
Total finance lease expense | $ | 15,481 |  |  | $ | 9,231 |  |  | $ | 119,769 |
(1) During the year ended December 31, 2023, the Company recognized a short-term lease benefit of $48.0 million due to gains on the settlement of manufacturing supply agreements with CMOs and CDMOs that included embedded leases. Supplemental cash flow information related to leases for the year ended December 31, 2023, 2022, and 2021 was as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash flows used in operating leases | $ | 101,297 |  |  | $ | 190,158 |  |  | $ | 203,991 |
Operating cash flows used in finance leases | 2,605 |  |  | 1,472 |  |  | 7,241 |
Financing cash flows used in finance leases | 27,345 |  |  | 93,595 |  |  | 127,907 |
ROU assets obtained in exchange for operating lease obligations | $ | — |  |  | $ | 30,675 |  |  | $ | 66,682 |
ROU assets obtained in exchange for finance lease obligations | 103,299 |  |  | 73,240 |  |  | 112,528 |
As of December 31, 2023, maturities of lease liabilities were as follows (in thousands):
Year | Amount
2024 | $ | 34,353 |
2025 | 17,192 |
2026 | 13,616 |
2027 | 14,000 |
2028 | 14,375 |
Thereafter | 67,296 |
Total minimum lease payments | 160,832 |
Less: imputed interest | 48,213 |
Total lease liabilities | $ | 112,619 |
Leases | Leases The Company has embedded leases related to multiple manufacturing supply agreements with CMOs and CMOS to manufacture COVID-19 Vaccine, as well as operating and finance leases for its research and development and manufacturing facilities, corporate headquarters and offices. During the year ended December 31, 2023, the Company continued to align its global manufacturing footprint as a result of its ongoing assessment of manufacturing needs consistent with its contractual obligations related to the supply, and anticipated demand for, its COVID-19 Vaccine. During the years ended December 31, 2023 and 2022, the Company modified certain of its CMO and CDMO agreements that had previously been determined to represent embedded leases and, in accordance with its policy, the Company remeasured and reallocated the remaining consideration under the contracts and reassessed the lease classification as of the effective dates of the respective modifications. During the year ended December 31, 2023 and 2022, as a result of new or modified leases, the Company recognized ROU assets, net of credits on modifications, and a corresponding lease liability of $6.8 million and $18.6 million, respectively, for its long-term finance and operating leases embedded in CMO and CDMO manufacturing supply agreements. Also, during the year ended December 31, 2023, the Company recorded an impairment charge of $6.1 million in Cost of sales related to an embedded lease agreement with a CMO for production capacity in excess of production needs. During 2020, the Company entered into a lease agreement for the premises located at 700 Quince Orchard Road, Gaithersburg, Maryland ("700QO"). The lease is for approximately 170,000 square feet of space that the Company is using for manufacturing, research and development, and offices. The term of the lease expires in 2035 with options to extend the lease. The lease provides for an annual base rent of $5.8 million that is subject to future rent increases and obligates the Company to pay building operating costs. During the year ended December 31, 2022, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, certain floors located at the premises and recognized an ROU asset and related lease obligation of $73.2 million as lease commencement for accounting purposes occurred in 2022. During the year ended December 31, 2023, the Company obtained the right to direct the use of, and obtain substantially all of the benefit from, the remaining floors located at the premises and recognized a ROU asset and related lease obligation of $96.5 million as the lease commencement dates for accounting purposes had occurred for such remaining floors. The lease obligation was reduced by $73.4 million for prepaid rent and prior costs incurred on behalf of the landlord during 2023. As of December 31, 2023, facility leases, including the 700QO lease, have expirations that range from approximately two to thirteen years, some of which include options to extend the lease term. The facility leases contain provisions for future rent increases and obligate the Company to pay building operating costs. During the year ended December 31, 2023, the Company recorded an impairment charge of $5.9 million related to ROU facility leases used for research and development, manufacturing and offices space that are impacted by the Restructuring Plan (see Note 17). Supplemental balance sheet information related to leases as of December 31, 2023 and 2022 was as follows (in thousands, except weighted-average remaining lease term and discount rate):
|  |  |  | December 31,
Lease Assets and Liabilities |  | Classification |  | 2023 |  | 2022
Assets: |  |  |  |  |  |
ROU assets, operating, net |  | Right of use asset, net |  | $ | 24,985 |  | $ | 36,384
ROU assets, finance, net |  | Right of use asset, net |  | 160,233 |  | 69,857
Total non-current ROU assets |  |  |  | $ | 185,218 |  | $ | 106,241
Liabilities: |  |  |  |  |  |
Current portion of operating lease liabilities |  | Other current liabilities |  | $ | 22,977 |  | $ | 16,867
Current portion of finance lease liabilities |  | Current portion of finance lease liabilities |  | 5,142 |  | 27,196
Total current lease liabilities |  |  |  | $ | 28,119 |  | $ | 44,063
Non-current portion of operating lease liabilities |  | Other non-current liabilities |  | $ | 28,577 |  | $ | 50,085
Non-current portion of finance lease liabilities |  | Non-current finance lease liabilities |  | 55,923 |  | 31,238
Total non-current lease liabilities |  |  |  | $ | 84,500 |  | $ | 81,323
Weighted-average remaining lease term (years): |  |  |  |  |  |
Operating leases |  |  |  | 3.9 |  | 4.6
Finance leases |  |  |  | 11.6 |  | 8.3
Weighted-average discount rate: |  |  |  |  |  |
Operating leases |  |  |  | 6.0% |  | 6.4%
Finance leases |  |  |  | 8.9% |  | 5.4%
Lease expense for the operating and short-term leases for the years ended December 31, 2023, 2022, and 2021 was as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Operating lease expense | $ | 6,929 |  |  | $ | 6,903 |  |  | $ | 37,027 |
Short-term lease expense (benefit(1)) | (48,009) |  |  | 94,726 |  |  | 468,210 |
Variable lease expense | 10,292 |  |  | 6,836 |  |  | 116,435 |
Finance lease expense: |  |  |  |  |
ROU assets expensed | $ | 12,876 |  |  | $ | 7,759 |  |  | $ | 112,528 |
Interest expense | 2,605 |  |  | 1,472 |  |  | 7,241 |
Total finance lease expense | $ | 15,481 |  |  | $ | 9,231 |  |  | $ | 119,769 |
(1) During the year ended December 31, 2023, the Company recognized a short-term lease benefit of $48.0 million due to gains on the settlement of manufacturing supply agreements with CMOs and CDMOs that included embedded leases. Supplemental cash flow information related to leases for the year ended December 31, 2023, 2022, and 2021 was as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash flows used in operating leases | $ | 101,297 |  |  | $ | 190,158 |  |  | $ | 203,991 |
Operating cash flows used in finance leases | 2,605 |  |  | 1,472 |  |  | 7,241 |
Financing cash flows used in finance leases | 27,345 |  |  | 93,595 |  |  | 127,907 |
ROU assets obtained in exchange for operating lease obligations | $ | — |  |  | $ | 30,675 |  |  | $ | 66,682 |
ROU assets obtained in exchange for finance lease obligations | 103,299 |  |  | 73,240 |  |  | 112,528 |
As of December 31, 2023, maturities of lease liabilities were as follows (in thousands):
Year | Amount
2024 | $ | 34,353 |
2025 | 17,192 |
2026 | 13,616 |
2027 | 14,000 |
2028 | 14,375 |
Thereafter | 67,296 |
Total minimum lease payments | 160,832 |
Less: imputed interest | 48,213 |
Total lease liabilities | $ | 112,619 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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