Twist Bioscience Corp

Previous wording

We have grown rapidly and generated revenues of $75.3 million and $60.2 million in the three months ended March 31, 2024 and 2023, respectively, while incurring net losses of $45.5 million and $59.2 million for the three months ended March 31, 2024 and 2023, respectively. Since our inception, we have incurred significant operating losses and have accumulated net deficit of $1,121.7 million. To support our growth, we have resized our number of employees and increased investment in our manufacturing capabilities. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the success of our existing products and the development and commercialization of additional products in the synthetic biology, biologic drug and data storage industries, including our Express Genes which we launched in the fall of 2023, as well as leveraging our investment in our manufacturing facility in Wilsonville, Oregon.

Current wording

We have grown rapidly and generated revenues of $81.5 million and $63.7 million in the three months ended June 30, 2024 and 2023, respectively, while incurring net losses of $85.6 million and $57.4 million for the three months ended June 30, 2024 and 2023, respectively. Since our inception, we have incurred significant operating losses and have accumulated net deficit of $1,207.3 million. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the success of our existing products and the development and commercialization of additional products in the synthetic biology, biologic drug and data storage industries, including our Express Genes which we launched in the fall of 2023, as well as leveraging our investment in our manufacturing facility in Wilsonville, Oregon.

Previous wording

For the three months ended March 31, 2024 and 2023, the number of customers who purchased products from us were approximately 2,253 and 2,100 customers, respectively.

Current wording

For the three months ended June 30, 2024 and 2023, the number of customers who purchased products from us were approximately 2,300 and 2,200 customers, respectively.

Previous wording

•Revenue growth of 25% to $75.3 million from $60.2 million, primarily due to order growth in NGS tools and synthetic genes;

Current wording

•Revenue growth of 28% to $81.5 million from $63.7 million, primarily due to order growth in NGS tools and synthetic genes;

Previous wording

•The number of our genes shipped increased to 193,000 from 152,000; and

Current wording

•Number of our genes shipped increased to 212,000 from 171,000;

Previous wording

For the six months ended March 31, 2024, the net cash used in operating activities decreased to $42.4 million from $98.4 million for the six months ended March 31, 2023.

Current wording

In addition, for the nine months ended June 30, 2024, the net cash used in operating activities decreased to $48.8 million from $121.8 million for the nine months ended June 30, 2023.

Previous wording

We have built a scalable commercial platform that enables us to reach a diverse customer base in a variety of industries including industrial chemicals/materials, academic research, healthcare, food, agriculture and data storage. To address this diverse customer base, we have employed a multichannel strategy comprised of a direct sales force targeting synthetic DNA customers, international distributors, and an e-commerce platform. Launched in fiscal 2018, our e-commerce platform allows customers to design, validate and place on-demand orders of customized DNA online. This is a key component of our strategy to address and support our diverse and growing customer base, as well as support commercial productivity, enhance the customer experience, and promote loyalty.

Current wording

We have built a scalable commercial platform that enables us to serve a diverse customer base in a variety of industries including healthcare, industrial chemicals/materials, academic research, food/agriculture and data storage. To address this diverse customer base, we have employed a multichannel strategy comprised of a direct sales force targeting synthetic DNA customers, international distributors, and an e-commerce platform. Launched in fiscal 2018, our e-commerce platform allows customers to design, validate and place on-demand orders of customized DNA online. This is a key component of our strategy to address and support our diverse and growing customer base, as well as support commercial productivity, enhance the customer experience, and promote loyalty.

Previous wording

In the three months ended March 31, 2024, revenues increased to $75.3 million from $60.2 million in the three months ended March 31, 2023. The increase in revenue reflects growth in NGS tools revenue of $11.8 million, growth in synthetic genes revenue of $4.3 million, growth in oligo pools of $0.6 million and growth in DNA libraries revenue of $0.7 million. This increase was partially offset by a decrease in revenue from antibody discovery of $2.3 million. The growth in NGS tools revenue is primarily attributable to an increase in revenue from our top customers in the healthcare,industrial chemicals/materials and academic research industries. Our synthetic genes revenue grew mainly due to an increase in revenue from our top customers and an increase in customers in the industrial chemicals/materials, academic research and healthcare industries as well as an improved turnaround time inclusive of the full launch of Express Genes. In the three months ended March 31, 2024, we shipped approximately 193,000 genes compared to approximately 152,000 genes in the three months ended March 31, 2023, an increase of 27%. Our oligo pools revenue grew mainly due to an increase in revenue from our top customers in the industrial chemicals/materials industries. Our DNA libraries revenue grew mainly due to an increase in revenue from our top customers in the healthcare and academic research industries.

Current wording

Revenues increased 28% to $81.5 million for the three months ended June 30, 2024, as compared to $63.7 million for the three months ended June 30, 2023. The increase in revenue reflects growth in NGS tools revenue of $10.2 million and growth in synthetic genes revenue of $5.6 million, including Express Genes product line. The increase in revenue is primarily attributable to our top customers in the healthcare, industrial chemicals/materials, and academic research industries and an increase in customers. The number of our genes shipped in the three months ended June 30, 2024 increased to approximately 212,000 genes compared to approximately 171,000 genes in the three months ended June 30, 2023, an increase of 24%.

Previous wording

In the six months ended March 31, 2024, research and development expenses decreased to $47.2 million from $58.6 million in the six months ended March 31, 2023. The decrease is primarily due to decreases in personnel costs of $7.0 million, including stock-based compensation of $1.3 million, due to the reduction of headcount related to the 2023 restructuring plan, lab supplies of $4.9 million, depreciation expense of $0.4 million, facilities costs of $0.2 million and traveling expenses of $0.2 million. The decrease was partially offset by a lack of grant reimbursement in 2024 where we received $1.9 million in 2023, which are netted against the research and development expenses.

Current wording

Research and development expenses decreased 8% to $22.5 million for the three months ended June 30, 2024, as compared to $24.5 million for the three months ended June 30, 2023. The decrease is primarily due to decreases in personnel costs of $1.2 million, including stock-based compensation expense of $0.9 million due to the reduction of headcount related to the 2023 restructuring plan, outside services costs of $1.3 million and lab supplies costs of $0.4 million. These decreases are partially offset by a lack of grant reimbursement in 2024 where we received $0.8 million in 2023, which are netted against the research and development expenses.

Previous wording

In the three months ended March 31, 2024, selling, general and administrative expenses increased to $55.6 million from $54.0 million in the three months ended March 31, 2023. The increase is primarily due to increases in personnel costs of $6.1 million, including stock-based compensation of $3.8 million, IT services costs of $1.5 million, facilities costs of $1.1 million and marketing expenses of $1.7 million. These increases were partially offset by the decrease in the Wilsonville manufacturing facility pre-commercialization costs of $6.2 million, which was completed when the Wilsonville facility began shipping product in the three months ended March 31, 2023, and a decrease in outside services costs of $2.7 million.

Current wording

Selling, general and administrative expenses increased 23% to $56.8 million for the three months ended June 30, 2024, as compared to $46.1 million for the three months ended June 30, 2023. The increase is primarily due to increases in personnel costs of $8.4 million, including stock-based compensation expense of $4.2 million, outside service costs $2.7 million, and IT services costs of $0.8 million. These increases are partially offset by the decrease in the Wilsonville manufacturing facility pre-commercialization costs of $1.1 million, which was completed when the Wilsonville manufacturing facility began shipping product in January 2023.

Previous wording

There was no change in fair value of contingent consideration and holdbacks for the three months ended March 31, 2024 as the contingent consideration and holdbacks liabilities were settled in the prior year. In the three months ended March 31, 2023, we recognized a change in fair value of holdbacks of $1.2 million related to the acquisition of Abveris primarily as a result of the change in fair value of our stock price as of March 31, 2023.

Current wording

There was no change in fair value of contingent consideration and holdbacks for the three months ended June 30, 2024 as the contingent consideration and holdbacks liabilities were settled in the prior year. During the three months ended June 30, 2023, we recognized a change in fair value of holdbacks of $0.6 million related to the acquisition of AbX Biologics, Inc. ("Abveris') primarily as a result of the change in fair value of our stock price as of June 30, 2023.

Previous wording

We recorded an income tax provision of $0.3 million and $0.7 million in the three months ended March 31, 2024 and March 31, 2023, respectively.

Current wording

We recorded an income tax provision of $0.2 million and $0.6 million for the three months ended June 30, 2024 and June 30, 2023, respectively.

Previous wording

In the six months ended March 31, 2024, cost of revenues increased to $87.0 million from $71.1 million in the six months ended March 31, 2023. The increase is primarily attributable to an increase in material costs of $9.8 million, due to higher sales volume, and an increase in depreciation and amortization expense of $4.1 million primarily due to the ongoing capital investment to increase capacity. The remaining increase is attributable to an increase in personnel costs, including stock-based compensation of $0.9 million and an increase in outside services of $0.8 million.

Current wording

Cost of revenues increased 18% to $133.1 million for the nine months ended June 30, 2024, as compared to $113.0 million for the nine months ended June 30, 2023. The increase is primarily attributable to an increase in material costs of $14.9 million, due to higher sales volume, and an increase in depreciation and amortization expense of $4.4 million primarily due to the capital investment to increase manufacturing capacity in prior years. The remaining increase is attributable to an increase in lab supplies. Gross margin increased 507 basis points to 41.7% for the nine months ended June 30, 2024 as compared to 36.6% for the nine months ended June 30, 2023 mainly due to increase in revenue and the fixed costs being spread over larger revenue base resulting in an increase in gross margin.

Previous wording

In the three months ended March 31, 2024, research and development expenses decreased to $24.1 million from $27.4 million in the three months ended March 31, 2023. The decrease is primarily due to decreases in personnel costs of $1.7 million due to the reduction of headcount related to the 2023 restructuring plan and lab supplies of $2.8 million. The decrease was partially offset by a lack of grant reimbursement in 2024 where we received $1.4 million in 2023, which are netted against the research and development expenses.

Current wording

Research and development expenses decreased 16% to $69.7 million for the nine months ended June 30, 2024, as compared to $83.1 million for the nine months ended June 30, 2023. The decrease is primarily due to decreases in personnel costs of $8.2 million, including stock-based compensation expense of $2.2 million, due to the reduction of headcount related to the 2023 restructuring plan, lab supplies of $5.3 million, depreciation and amortization expense of $0.7 million, and outside service costs of $1.5 million. These decreases are partially offset by a lack of grant reimbursement in 2024 where we received $2.7 million in 2023, which are netted against the research and development expenses.

Previous wording

In the six months ended March 31, 2024, selling, general and administrative expenses increased to $108.5 million from $96.3 million in the six months ended March 31, 2023. The increase is attributable to higher stock-based compensation of $19.2 million, primarily due to the reversal of stock-based compensation expense of $15.9 million in the first quarter of 2023 because of employee stock forfeitures related to an acquisition performance condition not being met and the remaining increase due to stock base awards to existing and new employees . Further, the increase is attributable to an increase in personnel costs of $4.4 million, facilities costs of $2.8 million, IT-related service costs of $2.5 million, marketing costs of $1.9 million and depreciation of $0.8 million. These increases were partially offset by the decrease in the Wilsonville manufacturing facility pre-commercialization costs of $17.4 million, which was completed when the Wilsonville facility began shipping product in the three months ended March 31, 2023, and a decrease in outside services costs of $1.9 million.

Current wording

Selling, general and administrative expenses increased 16% to $165.3 million for the nine months ended June 30, 2024, as compared to $142.3 million for the nine months ended June 30, 2023. The increase is primarily due to an increase in personnel costs of $32.1 million, including an increase in stock-based compensation expense of $23.4 million. The increase in stock-based compensation expense is due to a reversal of $15.9 million in the first quarter 2023 because of employee stock forfeitures related to an acquisition performance condition not being met and the remaining increase is due to stock based awards granted to existing and new employees. Further, the increase is attributable to increases in facilities costs of $3.3 million, IT-related service costs of $3.2 million, marketing costs of $2.2 million and depreciation and amortization expense of $0.8 million. These increases are partially offset by the decrease in the Wilsonville manufacturing facility pre-commercialization costs of $18.5 million, which was completed when the Wilsonville manufacturing facility began shipping product in January 2023.

Previous wording

There was no change in fair value of contingent consideration and holdbacks for the six months ended March 31, 2024 as the contingent consideration and holdbacks liabilities were settled in the prior year. In the six months ended March 31, 2023, we recognized a change in fair value of the contingent consideration and holdbacks of $4.9 million and $0.4 million related to the acquisitions of Abveris and iGenomX, as a result of not achieving the Abveris revenue target for calendar year 2022 and a change in fair value of our stock price as of March 31, 2023.

Current wording

There was no change in fair value of contingent consideration and holdbacks for the nine months ended June 30, 2024 as the contingent consideration and holdbacks liabilities were settled in the prior year. During the nine months ended June 30, 2023, we recognized a change in fair value of the contingent consideration and holdbacks of $5.5 million and $0.4 million related to the acquisitions of Abveris and iGenomX, as a result of not achieving the Abveris revenue target for calendar year 2022 and a change in fair value of our stock price as of June 30, 2023.

Previous wording

We recorded an income tax provision of $0.5 million and $0.8 million in the six months ended March 31, 2024 and March 31, 2023, respectively.

Current wording

We recorded an income tax provision of $0.7 million and $1.4 million during the nine months ended June 30, 2024 and June 30, 2023, respectively.

Previous wording

Since our inception on February 4, 2013 and through March 31, 2024, we have received an aggregate of $1,333.7 million in net proceeds from the issuance of equity securities in public offerings and an aggregate of $13.8 million from debt issuances. At March 31, 2024, we had a balance of $243.3 million of cash and cash equivalents and $50.0 million in short-term investments.

Current wording

Since our inception on February 4, 2013 and through June 30, 2024, we have received an aggregate of $1,333.7 million in net proceeds from the issuance of equity securities in public offerings and an aggregate of $13.8 million from debt issuances. At June 30, 2024, we had a balance of $239.1 million of cash and cash equivalents and $50.3 million in short-term investments.

Previous wording

Our primary uses of capital are, and we expect will continue to be for the near future, compensation and related expenses, manufacturing costs, laboratory and related supplies, legal and other regulatory expenses and general overhead costs and the capital expenditures for our facility expansion including our manufacturing facility located in Wilsonville, Oregon. We had $1.0 million million in commitments for capital expenditures as of March 31, 2024.

Current wording

Our primary uses of capital are, and we expect will continue to be for the near future, compensation and related expenses, manufacturing costs, laboratory and related supplies, legal and other regulatory expenses and general overhead costs and capital expenditures. We had $1.1 million in commitments for capital expenditures as of June 30, 2024.

Previous wording

Net cash used in operating activities was $98.4 million in the six months ended March 31, 2023 and consisted primarily of a net loss of $101.0 million adjusted for non-cash items including depreciation and amortization expenses of $12.3 million, stock-based compensation expense of $7.9 million, non-cash lease expense of $0.6 million, change in fair value of contingent consideration and holdbacks of $5.3 million, and a net change in operating assets and liabilities of $13.5 million. The change in operating assets and liabilities was mainly due to an increase in accounts receivable of $8.1 million, inventories of $0.6 million, prepaid expenses of $1.6 million and accrued expenses of $2.9 million offset by a decrease in accounts payable of $4.2 million, other non-current assets of $1.2 million and accrued compensation of $2.7 million.

Current wording

Net cash used in operating activities was $48.8 million during the nine months ended June 30, 2024 and consisted primarily of a net loss of $174.1 million adjusted for non-cash items including depreciation and amortization expense of $24.8 million, stock-based compensation expense of $38.6 million, impairment of long-lived assets of $44.9 million and a net change in operating assets and liabilities of $16.6 million. The change in operating assets and liabilities was mainly due to decreases in accounts receivable of $11.4 million, inventories of $3.6 million, other non-current assets of $0.5 million, accounts payable of $6.9 million and other liabilities of $1.8 million offset by increases in prepaid expenses of $0.2 million, accrued compensation of $5.9 million and accrued expenses of $4.1 million.

Previous wording

Net cash used in operating activities was $42.4 million in the six months ended March 31, 2024 and consisted primarily of a net loss of $88.5 million adjusted for non-cash items including depreciation and amortization expenses of $16.5 million, stock-based compensation expense of $24.8 million, non-cash lease expense of $0.5 million and a net change in operating assets and liabilities of $4.0 million. The change in operating assets and liabilities was mainly due to decreases in accounts receivable of $7.4 million, inventories of $1.7 million, other non-current assets of $0.3 million, accounts payable of $5.7 million, accrued compensation of $0.5 million and other liabilities of $2.6 million offset by an increase in prepaid expenses of $0.4 million and accrued expenses of $3.9 million.

Current wording

Net cash used in operating activities was $121.8 million during the nine months ended June 30, 2023 and consisted primarily of a net loss of $158.4 million adjusted for non-cash items including depreciation and amortization expenses of $20.8 million, stock-based compensation expense of $18.5 million, non-cash lease expense of $1.0 million, change in fair value of contingent consideration of $5.9 million, and a net change in operating assets and liabilities of $1.5 million. The change in operating assets and liabilities was mainly due to increases in inventories of $2.9 million, other non-current assets of $1.1 million and accounts payable of $4.4 million offset by decreases in accounts receivable of $2.5 million, prepaid expenses of $1.9 million, accrued compensation of $0.3 million, accrued expenses of $1.3 million and other liabilities of $1.8 million.

Previous wording

In the six months ended March 31, 2024, our investing activities used net cash of $1.1 million, which was comprised of the purchases of laboratory property, equipment and computers of $2.1 million offset by the proceeds from the net impact of purchases and maturity of investments of $1.0 million.

Current wording

Net cash used in investing activities was $1.8 million during the nine months ended June 30, 2024, which consisted of the purchases of laboratory property, equipment and computers of $3.1 million offset by the proceeds from the net impact of purchases and maturity of investments of $1.3 million.

Previous wording

In the six months ended March 31, 2023, our investing activities generated net cash of $34.2 million. The net cash was generated primarily from the net impact of purchases, sale and maturity of investments of $55.1 million and purchases of laboratory property, equipment and computers of $20.9 million.

Current wording

In the nine months ended June 30, 2023, our investing activities generated net cash of $52.9 million. The net cash was generated primarily from the net impact of purchases, sale and maturity of investments of $78.2 million and purchases of laboratory property, equipment and computers of $25.4 million.

Previous wording

Net cash provided by financing activities was $0.4 million in the six months ended March 31, 2024, which consisted of $2.3 million from the exercise of stock options and $2.0 million proceeds from issuance of shares under the 2018 ESPP offset by $4.0 million in repurchases of common stock for income tax withholdings.

Current wording

Net cash provided by financing activities was $3.3 million in the nine months ended June 30, 2024, which consisted of $5.2 million from the exercise of stock options and $2.0 million proceeds from issuance of shares under the 2018 ESPP offset by $4.0 million in repurchases of common stock for income tax withholdings.

Previous wording

Net cash provided by financing activities was $1.1 million in the six months ended March 31, 2023, which consisted of $0.9 million from the exercise of stock options and $2.5 million of proceeds from issuance of shares under the 2018 ESPP, offset by $2.3 million in repurchases of common stock for income tax withholdings.

Current wording

Net cash provided by financing activities was $0.5 million in the nine months ended June 30, 2023, which consisted of $2.5 million from proceeds from issuance of shares under the 2018 ESPP and $1.2 million from the exercise of stock options, offset by $3.3 million in repurchases of common stock for income tax withholdings.

Previous wording

The preparation of our Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States of America requires management to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures. On an ongoing basis, we evaluate our significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information. Actual results may differ significantly from these estimates. A summary of our critical accounting policies and estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended September 30, 2023. There were no material changes to our critical accounting policies and estimates during the six months ended March 31, 2024.

Current wording

The preparation of our Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States of America requires management to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures. On an ongoing basis, we evaluate our significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information. Actual results may differ significantly from these estimates. A summary of our critical accounting policies and estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended September 30, 2023. There were no other material changes to our critical accounting policies and estimates during the nine months ended June 30, 2024 other than the updates to the critical accounting policies and estimates set forth below.