Weekend Update #152
Thank you for your continued support and engagement. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
Following last week’s strong gains after what was perceived as a firmly dovish Federal Open Market Committee speech by Jerome Powell, this week served as a period of digestion and contemplation – with a relatively quiet week of economic and financial news as we approach the end of the earnings period. On Tuesday, the Federal Reserve Bank of New York published an article detailing the broad-based increases in credit card delinquencies – which now exceed pre-pandemic levels – and disaggregated the data across demographics, which showed that those at the lowest end of the wealth-spectrum are struggling the most. On Wednesday, RockStar Games, a division of Take-Two Interactive, announced the trailer for the widely-anticipated Grand Theft Auto VI – the sequel to the second-highest grossing video game of all time – after roughly a decade of development. On Thursday, the FDA approved Eli Lilly’s GLP-1 medication for chronic weight management, which is expected to be available in the U.S. under the name Zepbound.
Friday saw the release of the University of Michigan Consumer Sentiment Index along with inflation expectations. The 1-year inflation expectation increased to 4.4% – well above the expectation of 4.0%. Further, the 5-10 year inflation expectation increased to 3.2% – the highest level since 2011. While this is not immediately a cause of concern for the Federal Reserve as the root cause of the increase is hard to discern – for instance, growing consumer concerns surrounding the Middle East could have increased their expectations for gasoline. If this trend continues, the Federal Reserve will have to respond.
Turning to commodities, crude oil continues its slide as macroeconomic fears in the United States and internationally continue to worry oil traders. Despite the fact that inventories continue to hover near record-lows, expected oil demand – as opposed to the balance of supply and demand – continues to drive the price of crude lower due to economic uncertainty. It is noteworthy that the price of crude has erased the increases that took place when Hamas attacked Israel more than a month ago, arguably removing the war-premium from the current price.
With respect to large thematic trends, union leadership for SAG-AFTRA declared an end to their strike at 12:01 a.m. on Thursday, putting an end to the longest ever strike for film and television actors. This marks the latest union victory in a year that saw widespread labor disputes. Public support for unions hit 71% last year – the highest level since 1965 –slipping only slightly this year. While the most notable union disputes have for the most part been resolved, including that by the United Auto Workers, Kaiser Permanente, the Writer’s Guild and United Postal Service. Labor market conditions – which remain tight but continue to show signs of easing – will be a significant determinant in whether or not labor unions maintain a strong hand in contract negotiations going forward. But for now, the power continues to rest with the workers.
Weekly Performance
S&P 500 4,415.24 +1.17%
Nasdaq 13,798.11 +2.10%
Dow Jones 34,283.10 +0.56%
Thank you Blue Room Analyst SPENCER WOOTTEN
Consumer sentiment slipped for the fourth straight month, falling 5% to 60.4 in November.
While current and expected personal finances both improved modestly this month, the long-run economic outlook slid 12%, in part due to growing concerns about the negative effects of high interest rates. Ongoing wars in Gaza and Ukraine weighed on many consumers as well.
Overall, lower-income consumers and younger consumers exhibited the strongest declines in sentiment. In contrast, sentiment of the top tercile of stock holders improved 10%, reflecting the recent strengthening in equity markets.
Year-ahead inflation expectations inched up to 4.4% — indicating that the large increase between September’s 3.2% reading and October’s 4.2% reading was no fluke. The current reading is the highest since November 2022 and remains well above the 2.3-3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations also rose, from 3.0% last month to 3.2% this month — the highest reading since 2011. Gas price expectations, both over the short and long run, rose to their highest readings this year.
Home buying conditions plummeted 25% this month — tying the all-time low last reached a year ago. Buying conditions for large durable goods plunged 16%. For vehicles, buying conditions reached their worst since December 2022. High interest rates are a major factor for all three types of purchases, as seen in the chart, for low- and high-income consumers alike. About 36% of consumers spontaneously blamed high interest rates or tight credit for poor buying conditions for vehicles — This is the highest share on record. Similarly, the share of consumers blaming similar factors for poor homes and durables buying conditions are both at their highest since 1982. Given that 54% of consumers expect interest rates to rise even further in the year ahead with an additional 32% expecting rates to remain unchanged, these credit concerns are unlikely to abate anytime soon.
Key Third Quarter Financial Highlights
Revenue of $1,852 million (down -10.70% y/y, flat +0.38% q/q)
Gross margin of 28.6% (last quarter: 28.8%; last year: 29.4%) and adjusted gross margin of 29.2%
Operating margin of 14.1% and adjusted operating margin of 17.4%
Net income of $249 million and adjusted net income of $308 million
Adjusted EBITDA of $667 million
Cash, cash equivalents and marketable securities of $3.4 billion
"In the third quarter, GF's dedicated teams across the world delivered financial results at the upper end of the guidance ranges we provided in our August earnings release," said Dr. Thomas Caulfield, president and CEO of GF. "Although the global economic and geopolitical landscape remains uncertain, we are collaborating closely with our customers to support their efforts to reduce inventory levels, while growing long-term partnerships to drive foundry innovation and differentiation across essential end-markets."
Recent Business Highlights
The U.S. Department of Defense awarded GF a new 10-year contract for a supply of securely manufactured, U.S.-made semiconductors for use across a wide range of critical aerospace and defense applications.
GF expanded its world-class global operations with official openings at its fabrication plant in Singapore and new operations support facility in Penang, Malaysia, creating a total of 1,300 high-value jobs.
GF announced its most advanced RF technology, 9SW RFSOI, that will offer significant improvements in performance and integration for 5G and wireless communication applications.
Hi, everyone, and welcome to our table for our very first public earnings call. I hope you all had a chance to read our shareholder letter, which includes lots of information about our third quarter results. For more than 10 years, we have been investing in purpose-built technologies that can solve a wide array of complex challenges in groceries. We are the clear leader among digital-first platforms in online grocery with a winning combination of selection, quality, value, and convenience. Our strengths are evident across our business, the breadth and depth of our retailer integrations, the quality of the experience and accuracy of our orders, the size of our baskets, the increased order frequency, and spend from our customers over time, not to mention our healthy unit economics. We have a massive headstart and we're getting better every single day with every order.
A significant advantage is our unmatched selection and deep integration with retail partners. We partner out with more than 1,400 retail banners across more than 80,000 locations that collectively represent more than 85% of the U.S. grocery market. For us it's about more than just putting our partner's catalog online, it's about becoming their strategic partner across their entire digital transformation. For example, we built and powered many retailers' e-commerce storefronts and pickup businesses. We support operations at their brick-and-mortar stores and so much more. Another advantage is our highly engaged customer base. Instacart has become an important part of our customer's lives, to the point where people count on us for their weekly grocery shop and many other use cases.
RJ Scaringe — Founder and Chief Executive Officer
Hello, everyone, and thanks for joining us today. During our call, I will highlight key developments during the third quarter, and provide an update on the progress we're making against our core value drivers. Importantly, I want to take this opportunity to provide some broader perspective on the EV space. There's been a lot of noise and a lot of dialog recently around EV adoption. And I want to emphatically state just how deeply convicted we are that the entire automotive industry will be transitioning to electric over the next one to two decades.
We built and designed our business around this transition, we designed our team structure, our technology stack the way we've approached vertical integration to not only help our business scale profitably but to ensure we're positioned to be a leader in this generational opportunity.
We believe a substantial competitive advantage is our approach to vertically integrating our in-vehicle computers, software stack and propulsion platform along with our efficient direct-to-consumer, go-to-market strategy. Our core benefit from investments we've made in R1 and will represent our first global platform. Additionally, within the production ramp and introduction of multiple vehicle platforms in our Illinois plant, has provided significant learnings in a compressed time frame. Our team will apply this experience to our new manufacturing facility in Georgia with the goal of achieving a considerably lower cost structure.
Q3 2023 Earnings Press Release
Completed Strategic Transaction with Imugene for Azer-Cel in Cancer
In August 2023, the company completed a strategic transaction with Imugene Limited for the company’s lead allogeneic chimeric antigen receptor (CAR) T candidate for cancer, azercabtagene zapreleucel (azer-cel). In exchange for global rights to azer-cel for cancer, as well as Precision’s CAR T infrastructure and experienced cell therapy teams, Precision received upfront cash and equity consideration valued at $21 million. In addition, Precision is eligible for a potential $8 million near-term milestone payment, up to $198 million in additional milestone payments and double-digit royalties on net sales of azer-cel, as well as $145 million in milestone payments and tiered royalties for up to three additional research programs to be potentially developed by Imugene. Imugene has assumed ongoing clinical execution for azer-cel in the large B-cell lymphoma population who have relapsed following autologous CAR T treatment.
Advancing as a Single Platform Company Focused on ARCUS In Vivo Gene Editing
Precision is now solely focused on leveraging its proprietary ARCUS genome editing platform to advance in vivo gene editing programs that go beyond gene knockouts in the liver and carry out more sophisticated edits such as gene insertions, gene excision, and gene elimination unlocking a broader potential for ARCUS in vivo gene editing in human therapeutics.
In support of the go-forward strategy, Precision presented two poster presentations at the European Society of Gene & Cell Therapy congress on October 25 and 26, 2023, in Brussels, Belgium, “Unique features of ARCUS nucleases enable high efficiency, targeted gene insertion in vivo” and “ARCUS-mediated excision of the “hot spot” region of the human dystrophin gene results in functional improvement in a mouse model of Duchenne muscular dystrophy (DMD).”
Quarterly Highlights
Revenue increased 28% year-over-year, topping $800 million for the first time, reinforcing that our diversified business strategy is showing real results.
The better than expected revenue was driven by multiple high-value long-term license agreements signed with industry leading technology companies, and royalty revenue benefiting from market share gains and higher royalty rates.
The immediate need for companies to increase investment in Artificial Intelligence (AI) across all end markets helped drive license revenue up 106% year-over-year.
The ongoing requirement for power efficient solutions in infrastructure and automotive continued to drive double digit royalty growth in those markets.
Non-GAAP operating profit increased 92% year-over-year to $381 million resulting in a 47.3% non-GAAP operating margin.
Addressing the demand for reduced development time and decreased time to market, Arm announced the Arm Neoverse Compute Subsystems, for companies developing differentiated chips for cloud compute.
7.1 billion Arm-based chips were reported as shipped, taking the cumulative total to 272.5 billion.
New Arm-based energy-efficient AI capable products were announced by Google, Meta, Nvidia, Renesas, Xiaomi, and many more, as Arm takes AI everywhere
Recent Highlights in Large Market Ophthalmology Portfolio
Rapidly advanced intravitreal 4D-150 for wet AMD
Completed target enrollment of 50 patients in the randomized Phase 2 Dose Expansion stage of the PRISM clinical trial, nearly two quarters ahead of initial projections
Enrolled patients with high anti-VEGF need (annualized mean anti-VEGF injection frequency in preceding 12 months was approximately 10)
No reported treatment-emergent Grade ≥1 inflammatory cells or required deviations from protocol-specified topical corticosteroid taper with maximum follow-up through 20 weeks (best available data as of July 3, 2023)
Presented positive interim data from Dose Exploration stage with three dose cohorts (3E10, 1E10, and 6E9 vg/eye; n=5 each) at ASRS 2023 Annual Meeting
Dosed first patient in Population Extension cohort (n=up to 45) of the Phase 2 PRISM clinical trial including broader wet AMD patient population with lower anti-VEGF need (1-6 anti-VEGF injections in preceding 12 months)
Granted PRIME designation by the European Medicines Agency
Enrolled first patient in the Dose Confirmation stage (n=18-24) of the Phase 2 SPECTRA clinical trial evaluating intravitreal 4D-150 in patients with DME
Recent Highlights in Pulmonary Portfolio
Presented positive interim data from aerosolized 4D-710 Phase 1/2 AEROW clinical trial:
Generally well-tolerated across Cohorts 1 and 2 (1E15 and 2E15 vg; n=7) with up to 17 months follow-up
Promising, reproducible, CFTR expression significantly above normal across all participants and all lung tissue samples collected (n=34), substantially exceeding target profile
Durable clinical activity through 12 months in Cohort 1
No pulmonary exacerbations reported beyond 3 months and through up to 17 months of follow-up in all 3 participants
Cohort 1 dose level (1E15 vg) selected to continue into Phase 2
Dose ranging continues (5E14 – 2E15 vg) with lung biopsy CFTR expression profile demonstrating feasibility of effective treatment at lower doses; first patient dosed in lower dose Cohort 3 (5E14 vg)
In August 2023, the Company executed an amendment to the Cystic Fibrosis Foundation Agreement increasing the funding commitment under that agreement by $2.8 million to a total of $6.3 million, which covers anticipated spend for further development of our aerosolized lung epithelium gene delivery vectors. This amendment brings the total historical commitment to over $20 million.
Recent Press Releases and Business Updates
Oct. 3, 2023 – Regeneron and Intellia announced an expanded research collaboration to develop additional in vivo CRISPR-based gene editing therapies focused on neurological and muscular diseases. This builds on the success of the companies’ existing collaboration and continues to combine both companies’ deep biology and technology expertise. The collaboration will leverage Regeneron’s proprietary antibody-targeted AAV vectors and delivery systems and Intellia’s proprietary Nme2 CRISPR/Cas9 (Nme2Cas9) systems adapted for viral vector delivery and designed to precisely modify a target gene.
Oct. 13, 2023 – Intellia announced that the European Medicines Agency (EMA) has granted Priority Medicine (PRIME) designation to NTLA-2002 for the treatment of hereditary angioedema (HAE). NTLA-2002 is an in vivo CRISPR-based investigational therapy designed to prevent potentially life-threatening swelling attacks in people with HAE.
Oct. 18, 2023 – Intellia announced that the U.S. FDA has cleared the company’s IND application for NLTA-2001 for the treatment of transthyretin (ATTR) amyloidosis with cardiomyopathy. The global Phase 3 study of NTLA-2001, an in vivo CRISPR-based gene editing candidate, is expected to initiate by year-end 2023.
Oct. 26, 2023 – Intellia announced two upcoming events in October: the presentation of updated data from the ongoing NTLA-2001 Phase 1 study for the treatment of ATTR at the 4th International ATTR Amyloidosis Meeting, taking place November 2-3 in Madrid, Spain; and Third Quarter 2023 earnings on November 9, 2023.
Nov. 2, 2023 – Intellia presented additional interim results from its ongoing Phase 1 study of NTLA-2001, an investigational, in vivo CRISPR/Cas9 genome editing therapy in development as a single-dose treatment for ATTR amyloidosis in an oral presentation at the 4th International ATTR Amyloidosis Meeting, held Nov. 2-3 in Madrid, Spain. The readout showed updated data from over 60 patients and pointed to consistent, deep and durable serum TTR reduction with a single dose of NTLA-2001, including 29 patients who have now reached 12 months or more of follow-up. NTLA-2001 was generally well-tolerated across both polyneuropathy and cardiomyopathy arms at all dose levels tested.
Gillian Munson — Chief Financial Officer
Hello, and thank you for joining Vimeo's Q3 '23 earnings Q&A session. I am Gillian Munson, CFO of Vimeo, and I'm happy to be joined by Adam Gross, our Interim CEO.
You can find our Q3 '23 shareholder letter on our Investor Relations website, which has further details and financial information about the quarter, as well as additional commentary on the results and our outlook.
Before we jump into Q&A, a few points on how we are thinking about this quarter. We believe our team delivered a solid Q3 result that shows what Vimeo's model can do, in particular showing that our model can deliver healthy operating leverage, thanks to our disciplined focus on cost.
A couple key points. We were able to grow bookings. Total bookings were up 4% year-over-year, driven by a reduction in the rate of decline in Self-Serve & Add-Ons, strong growth in Vimeo Enterprise, and a shift in timing of a large OTT renewal from Q4 into Q3 in our Other category. Taking Other out of the math, we grew bookings 5%, a nice acceleration from Q2. We also continued to sign premier clients to our platform, including Oxford University, Tory Burch, and Alarm.com. Cost discipline helped us deliver adjusted EBITDA of $13 million in the quarter. Finally, we ended the quarter with cash of $291 million and generated $17 million of free cash flow.
Helmy Eltoukhy — Co-Chief Executive Officer
Good afternoon and thank you for joining our third quarter 2023 earnings call. I will start off our call today with our top-line results for the third quarter and then go into more detail on our progress in therapy selection and MRD. I will then turn the call over to AmirAli for an update on screening. And finally, Mike will provide a more detailed look at our financials and outlook for the remainder of 2023.
Starting on slide 3. Guardant is the liquid biopsy leader in therapy selection with his strong pipeline of opportunities in MRD and screening. With our comprehensive suite of tests. She was un-screened for colorectal cancer and was resistant to receiving a colonoscopy. In early September, we hosted our inaugural Investor Day where we shared our long-term business for Guardant. I encourage anyone who wasn't able to attend our Investor Day to access the replay on the Investors section of our website.
It was a great opportunity to reflect on how far we've come over the past decade and look ahead to where we are going. We are just scratching the surface of what we believe is a massive opportunity in front of us. Our commitment to patients has always been at the heart of what we do. We look forward to continuing to grow our reach to impact more patient lives across the globe.
To demonstrate the impact of our tests, I will start our call off today by sharing a patient story for our newest product, Shield. Earlier this year a woman in her late 50s visited her primary care physician. She was unscreened for colorectal cancer and was resistant to receiving a colonoscopy. Her physician proposed a Shield LDT test which was added to our annual blood work. The Shield test results reflected an abnormality which letter positioned to order a colonoscopy. Though she had been hesitant of a colonoscopy at our initial visit with this result from Shield she prioritized getting the procedure done. The colonoscopy determined that she had stage 2 colorectal cancer. She started receiving chemotherapy right away followed by surgery to remove a portion of her colon. After surgery and just a few months of treatment she was healthy again.
Trung Huynh — UBS
We've got Lilly on a momentous day today with the approval of Zepbound. So I appreciate there's going to be a lot of interest in diabetes and the obesity space, but I will be touching later on in immunology, which is Patrik's current day job at the moment. But I think it'll be wrong if I didn't start off with obesity and the approval today. We see in the press release the price is 20% less than Wegovy so on par with Mounjaro today. It's a surprise to me that you've come in lower than a competitor. You don't often see that. Perhaps why can you — you know, why did you price at this price point?
Patrik Jonsson — EVP, President, Lilly Immunology & Lilly USA, Chief Customer Officer
First and foremost, let me say I think it's quite natural to start with questions on obesity today, having the approval of Zepbound. I think it's a game-changing day for people with obesity, and it's definitely a historic day for the efforts that we have been putting into R&D in this space. So the press release came out a couple of hours ago and we announced a price of $1,059 for Zepbound very close to Mounjaro. I think we have been listening to the key players in this space for quite some time. Getting access for obesity is going to be very different compared to Type 2 diabetes.
So, of course, we need to get the access through the PBM, but we have also the employer opt-in, and I think currently 50 million patients opted in through their employers for obesity treatments that are in the marketplace. I think we are aiming for more than that over time. That's the only price that is visible to the employers of a list price.
So that's just a signal from our side that we are taking that feedback and that concern seriously. So that's why we're pricing it pretty much at parity with Mounjaro. So that's just taking into account the feedback we hear from employers and improving access and increasing employer opt-in. That's rational for the pricing we have decided to go for.
Despite the quarterly sales beat, we consider the fourth quarter outlook and implications for the Mi300 ramp in the data center to be underwhelming relative to our expectations. Breaking down the guide, we estimate that Data Center revenue will be $2.350 billion in the fourth quarter versus our $2.450 billion estimates. While the forecast is within our expected range of outcomes, the unit sales momentum is not at the same level as higher volume peers. Based on an initial four-quarter run rate of $1.6 billion ($400 million x 4 quarters) worth of Mi300 sales in the fourth quarter, and AMD’s forecast of $2 billion of full year Mi300 sales in 2024, growth in the product segment would be +25.0% Y/Y. Although this is strong growth for regular normal product launch, we see competitors scaling their data center GPUs at rates in the high 50% from CY23 to CY24. Additionally, we see additional supply coming online in the North American markets after the announcement of expedited export bans against China-specific GPUs.
Quarterly revenue beat consensus estimates ($5.800 billion actual versus $5.703 billion expected), led by stronger-than-expected growth in the client segment as inventory levels in the PC market normalized and returned to typical seasonal trends. With continued sell-in of Ryzen 7000 series processors and the Windows refresh on October 14, 2025, client-focused semiconductors are forecasted to resume growth in CY2024. The Gaming and Embedded segments were weaker-than-expected (as detailed in our quarterly earnings graphic) and are expected to remain weak for several quarters. In Gaming, the lifecycle of semi-custom consoles are reaching maturity and in the Embedded segment, customer inventories are being rebalanced after a three-year period of high lead times.
On a GAAP basis, operating expenses for the quarter came in 11.45% higher ($2.523 billion actual versus $2.264 billion expected), mostly led by investments in R&D and go-to-market of EPYC fourth generation processors and the ramp of Mi300 for the fourth quarter. This led to EPS coming short by 9c ($0.18 reported versus $0.27 expected). On a non-GAAP basis the company reported 70c EPS versus the 68c expected.
AAV Cardiovascular Portfolio
Danon Disease
Initiated Phase 2 pivotal trial of RP-A501 for Danon Disease following FDA alignment.
The global Phase 2 multi-center trial is a single arm study with an external comparator arm and includes 12 male patients with Danon Disease. The trial is evaluating the safety and efficacy of RP-A501 at a dose level of 6.7x10^13 GC/kg and includes a pediatric safety run-in (n=2). The co-primary endpoint is composed of LAMP2 protein expression and left ventricular (LV) mass index and will be assessed at 12 months for accelerated approval.
Supported peer-reviewed expert consensus paper to increase awareness of diagnosis and clinical management of patients with Danon Disease.
“International Consensus on Differential Diagnosis and Management of Patients with Danon Disease: JACC State-of-the-Art Review” was published in the Journal of the American College of Cardiology. Highlights of the publication include a review of diagnosing Danon Disease emphasizing the importance of genetic testing upon clinical suspicion, natural history, management recommendations, and recent advances in potential gene therapy treatment.
Bob Iger — Chief Executive Officer
Before we begin, this week we announced that Hugh Johnston will be joining the Walt Disney Company, as Senior Executive Vice President and Chief Financial Officer after 34 years with PepsiCo. It's great to have Hugh joining Disney at this important moment for our company. I'd also like to thank Kevin Lansberry, who stepped into the CFO role on an interim basis earlier this year and has provided strong leadership in the month since. Kevin is returning to his role as CFO of our Disney Experiences segment and you'll hear more from him in just a bit.
Now let's turn to the quarter. Our results this quarter speak volumes about the underlying strength of our company and the remarkable amount of work we have accomplished this past year. Q4 adjusted earnings per share nearly tripled over the prior year. And all three of our businesses; Entertainment, Experiences, and Sports saw significant increases in fourth quarter operating income compared to Q4 of fiscal '22.
The thorough restructuring of our company has enabled tremendous efficiencies and we're on track to achieve roughly $7.5 billion in cost reductions, which is approximately $2 billion more than we targeted earlier this year. Our new structure also enabled us to greatly enhance our effectiveness, particularly in streaming, where we've created a more unified, cohesive and highly coordinated approach to marketing, pricing and programming. This has helped us to improve operating results of our combined streaming businesses by approximately $1.4 billion from fiscal 2022 to fiscal 2023. And we remain confident that we will achieve profitability in Q4 of fiscal 2024.
Financial Highlights for Third Quarter 2023:
Gross Bookings grew 21% year-over-year (“YoY”) to $35.3 billion, or 20% on a constant currency basis, with Mobility Gross Bookings of $17.9 billion (+31% YoY or +30% YoY constant currency) and Delivery Gross Bookings of $16.1 billion (+18% YoY or +16% YoY constant currency). Trips during the quarter grew 25% YoY to 2.4 billion, or approximately 27 million trips per day on average.
Revenue grew 11% YoY to $9.3 billion, or 10% on a constant currency basis. Combined Mobility and Delivery revenue grew 21% YoY to $8.0 billion, or 20% on a constant currency basis.
Income from operations was $394 million, up $889 million YoY and $68 million quarter-over-quarter (“QoQ”).
Net income attributable to Uber Technologies, Inc. was $221 million, which includes a $96 million headwind (pre-tax) primarily due to net unrealized losses related to the revaluation of Uber’s equity investments.
Adjusted EBITDA of $1.1 billion, up $576 million YoY. Adjusted EBITDA margin as a percentage of Gross Bookings was 3.1%, up from 1.8% in Q3 2022. Incremental margin as a percentage of Gross Bookings was 9.3% YoY.
Net cash provided by operating activities was $966 million and free cash flow, defined as net cash flows from operating activities less capital expenditures, was $905 million, which includes a $622 million cash outflow related to the payment of an HMRC VAT assessment.
Unrestricted cash, cash equivalents, and short-term investments were $5.2 billion at the end of the third quarter.
Business Updates
Cystic Fibrosis (CF) Marketed Products
Health Canada granted market authorization for the use of TRIKAFTA in children with CF 2 to 5 years of age who have at least one F508del mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene. With this approval, approximately 330 patients are now eligible for the first time for a medicine that treats the underlying cause of their disease. Vertex is currently working with government and private payers in Canada to support access for this new patient population as soon as possible.
The European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for the label extension of KAFTRIO in children with CF 2 to 5 years of age who have at least one F508del mutation in the CFTR gene. If this label extension is approved by the European Commission, more than 1,200 children would be newly eligible for treatment.
Potential Near-Term Launch Opportunities
Exagamglogene autotemcel (exa-cel) in SCD and TDT
The FDA has assigned exa-cel Prescription Drug User Fee Act (PDUFA) action dates of December 8, 2023, for SCD and March 30, 2024, for TDT. Exa-cel's BLA for SCD was granted Priority Review by the FDA.
Reviews of the filings for exa-cel with the EMA in the E.U. and the MHRA in the U.K. are well underway, with regulatory decisions expected in the coming months.
Vertex submitted a marketing authorization application for exa-cel to the Saudi Food and Drug Authority (SFDA). Exa-cel is the first investigational medicine to receive Breakthrough Designation from the SFDA, reflecting the high unmet need for patients with SCD and TDT in the Kingdom of Saudi Arabia.
Clinical data from the CLIMB-111 and CLIMB-121 Phase 1/2/3 studies in TDT and SCD, respectively, were accepted for oral presentation at the upcoming American Society of Hematology (ASH) Annual Meeting and Exposition. Additionally, five abstracts were accepted for poster presentation.
Strauss Zelnick — Chairman and Chief Executive Officer
Good afternoon and thank you for joining us today.
We delivered another consecutive quarter of excellent results, highlighted by net bookings of $1.44 billion, which was at the high end of our guidance and management results that exceeded our plans. While we expect continued macroeconomic uncertainty, we believe that we're well positioned for the holiday season and are reiterating our fiscal 2024 net bookings guidance of $5.45 billion to $5.55 billion.
Looking ahead, I'm exceedingly optimistic about our company's multi-year growth trajectory and our ability to deliver long-term value to our shareholders. Our development pipeline is robust and diverse and we're getting closer to delivering the groundbreaking titles that our audiences throughout the world have been anticipating eagerly. Our unwavering commitment to being the most creative, the most innovative, and the most efficient entertainment company gives us great confidence that our offerings will surpass our players' expectations and set new standards of creative excellence in our industry.
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