Company Overview

Twist Bioscience Corporation (TWST) is a pioneering synthetic biology and genomics company that has developed a disruptive DNA synthesis platform, revolutionizing the way genetic materials are manufactured. Founded in 2013, Twist has rapidly emerged as a leader in the industry, leveraging its proprietary technology to deliver high-quality, customized DNA products to customers across a diverse range of industries.

History and Technology

The company's journey began on February 4, 2013, when it was incorporated in the state of Delaware. Twist's co-founders, led by Dr. Emily Leproust, recognized the immense potential of synthetic biology and set out to create a platform that would democratize access to DNA synthesis. By developing a novel method of manufacturing synthetic DNA on a silicon chip, Twist was able to achieve unparalleled levels of quality, precision, and cost-efficiency compared to traditional DNA synthesis methods. The core of Twist's platform is this proprietary technology that miniaturizes traditional chemical DNA synthesis reactions to write over one million short pieces of DNA on each silicon chip.

Product Development

In April 2016, Twist launched its first application, synthetic genes and oligo pools, in an effort to disrupt the gene synthesis market and make legacy DNA synthesis methods obsolete. This initial offering quickly gained traction, catering to customers in the industrial chemicals and materials, academic research, and healthcare sectors. The company's ability to deliver high-quality, customized DNA products at a lower cost than its competitors drove rapid growth in its customer base.

As the company's reputation grew, Twist expanded its product portfolio, introducing innovative offerings such as NGS tools, DNA libraries, and antibody discovery solutions. These new products leveraged the company's core DNA synthesis capabilities to address the evolving needs of its customers, further solidifying Twist's position as a trusted partner in the synthetic biology ecosystem.

Product Segments and Performance

Twist Bioscience's product portfolio is divided into two main segments: Synthetic Biology and Next-Generation Sequencing (NGS) Tools. The Synthetic Biology segment includes synthetic genes, oligo pools, DNA libraries, and antibody discovery services. In the third quarter of fiscal year 2024, synthetic genes generated revenue of $24.95 million, oligo pools $4.17 million, DNA libraries $3.85 million, and antibody discovery services $5.10 million. The NGS Tools segment, which provides products for sample preparation in DNA sequencing, has become the largest revenue contributor, generating $43.40 million in the same quarter.

Financials

Twist's financial performance has demonstrated strong growth and improving profitability metrics. In fiscal year 2023, the company reported revenues of $245.11 million, a significant increase from the $203.56 million generated in fiscal year 2022. For the most recent quarter (Q3 2024), revenue reached $81.46 million, representing a 28% year-over-year growth. This strong performance was driven by growth in the synthetic biology product line, including Express Genes, along with robust growth in NGS tools.

Despite the impressive revenue growth, Twist has continued to invest heavily in research and development, as well as in expanding its manufacturing capabilities, leading to net losses over the past several years. In fiscal year 2023, Twist reported a net loss of $204.62 million, compared to a net loss of $217.86 million in fiscal year 2022. For Q3 2024, the net loss was $85.57 million. These losses have contributed to an accumulated net deficit of $1.03 billion as of September 30, 2023.

Liquidity

Despite the ongoing investments and accumulated losses, Twist has maintained a strong liquidity position. As of June 30, 2024, the company had $289.40 million in cash, cash equivalents, and short-term investments. Twist's financial strength is further evidenced by its debt-to-equity ratio of 0.15, current ratio of 4.91, and quick ratio of 4.52. The company has no outstanding credit facilities or credit lines, providing it with significant financial flexibility to pursue strategic initiatives and weather potential challenges.

Geographic Performance

Twist Bioscience generates revenue from three main geographic markets. In Q3 2024, the Americas remained the largest market, contributing $51.39 million (61% of total revenue) and growing 32% year-over-year. The EMEA region generated $23.58 million (30% of total revenue), up 24% year-over-year, while APAC contributed $6.49 million (9% of total revenue), growing 15% year-over-year.

Challenges and Milestones

Throughout its history, Twist has faced various challenges and milestones. In 2018, the company held a successful initial public offering, raising significant capital to fund its growth initiatives. To address its ongoing losses, Twist has had to navigate various restructuring efforts, including a reduction in force affecting approximately 25% of its total workforce in May 2023.

The company has also had to contend with intellectual property disputes and regulatory scrutiny. On December 12, 2022, a securities class action lawsuit was filed against the company, its CEO, and CFO, alleging violations of federal securities laws. The lawsuit is based largely on allegations made in a report issued by Scorpion Capital on November 15, 2022, concerning the company's DNA chip technology and accounting practices. The case remains in the preliminary stage, and its potential impact on the company's operations and reputation is yet to be determined.

Regulatory Environment

Twist's synthetic DNA platform has also attracted significant attention from industry players and regulatory bodies. In 2022, the U.S. Congress passed the "BioSecure" legislation, which raised concerns about the potential geopolitical risks associated with DNA synthesis. While this legislation has not directly impacted Twist's operations, the company's focus on manufacturing DNA in the United States has been seen as a competitive advantage, as customers may be wary of outsourcing this sensitive work to international providers.

Future Outlook and Guidance

Looking ahead, Twist remains focused on driving further innovation and expanding its reach across multiple industries. The company has set its sights on the burgeoning field of data storage, where its DNA synthesis capabilities could play a pivotal role in the development of high-density, long-term data storage solutions. Additionally, Twist continues to invest in its biopharma solutions, leveraging its synthetic antibody libraries to support drug discovery and development efforts for its partners.

Twist has provided updated guidance for fiscal year 2024, increasing its total revenue expectations to $310 million to $311 million, up from the previous guidance of $302 million to $308 million. Within this, SynBio revenue is expected to reach approximately $121 million, NGS revenue is projected to be $169 million to $170 million, and Biopharma revenue is anticipated to be around $20 million. The company also expects its full-year gross margin to be at the high end of the range, around 42%.

For the fourth quarter of fiscal 2024, Twist has raised its revenue guidance to $82 million to $83 million, with an expected gross margin of approximately 44%. Looking further ahead to fiscal 2025, the company anticipates its gross margin to reach 50% by the end of the year, signaling continued operational improvements and scaling efficiencies.

Despite the challenges of navigating a dynamic market and regulatory landscape, Twist Bioscience has demonstrated its ability to adapt and thrive. The company's commitment to technological innovation, customer-centric approach, and strong financial position position it well to capitalize on the vast opportunities presented by the rapidly evolving synthetic biology and genomics industries. With a diverse product portfolio, growing customer base of approximately 3,450 customers annually, and improving financial metrics, Twist Bioscience appears well-positioned to continue its growth trajectory and maintain its leadership in the synthetic biology space.