Twist Bioscience Corp SEC 10-K Report

Twist Bioscience Corporation, a synthetic biology company known for its disruptive DNA synthesis platform, has released its Form 10-K report for the fiscal year 2023. The report highlights significant financial growth, strategic initiatives, and the challenges the company faces as it continues to expand its market presence and product offerings.

Financial Highlights

Twist Bioscience Corp reported a total revenue of $312.974 million for the fiscal year 2023, marking a 28% increase from $245.1 million in the previous year. This growth was primarily driven by order growth in next-generation sequencing (NGS) tools and synthetic genes. The company's gross profit rose to $133.349 million, with a gross margin increase to 42.6% from 36.6%, attributed to higher revenue and the spreading of fixed costs over a larger revenue base. Loss from operations slightly increased to $(220.831) million from $(217.159) million, while the net loss attributable to common stockholders remained relatively stable at $(208.726) million compared to $(204.618) million in the previous year. The net loss per share was $(3.60), unchanged from the previous year.

Business Highlights

Twist Bioscience Corporation continues to innovate in the synthetic biology sector with its proprietary DNA synthesis platform that manufactures synthetic DNA by 'writing' DNA on a silicon chip. The company offers a broad range of synthetic DNA-based products, including synthetic genes, NGS tools, sample preparation, and antibody libraries for drug discovery and development. In fiscal year 2024, the company generated $169.0 million from healthcare, $83.5 million from chemicals/materials, $58.5 million from academic research, and $2.1 million from food/agriculture. Geographically, 62% of revenue came from the Americas, 30% from EMEA, and 8% from APAC.

The number of genes shipped increased to approximately 772,000 in fiscal year 2024, indicating a 22% increase in operational efficiency and market demand. In November 2023, Twist Bioscience introduced Express Genes, offering perfect-quality clonal genes with a turnaround time of 5 business days, and expanded their Express product portfolio to include Multiplexed Gene Fragments. The company also completed the build-out of their second manufacturing facility in Wilsonville, Oregon, which began shipping products in January 2023.

Looking ahead, Twist Bioscience aims to maintain and expand its position as a leading provider of synthetic DNA, become a top supplier of NGS sample preparation products, conduct biopharma services, develop commercial solutions for digital data storage in DNA, and expand its global presence.

Strategic Initiatives

The company has focused on expanding its synthetic biology platform and product offerings. Key initiatives include leveraging its proprietary DNA synthesis technology to manufacture synthetic RNA and antibody proteins, as well as exploring new applications for synthetic DNA such as digital data storage. Twist Bioscience has invested in its manufacturing facility in Wilsonville, Oregon, to support these initiatives. Additionally, the company has entered into discovery partnerships for biologic drugs and has been actively working on improving its e-commerce platform to enhance customer experience and drive commercial productivity.

In terms of capital management, Twist Bioscience has engaged in several activities to support its growth and operational needs, including raising funds through public equity offerings and private placements of convertible preferred stock. The company generated $6.9 million from financing activities in fiscal year 2024 and maintains a balance of $276.4 million in cash, cash equivalents, and short-term investments as of September 30, 2024. The company plans to continue its strategic focus on expanding its product offerings and market reach in the synthetic biology and genomics sectors, leveraging its investment in the Wilsonville manufacturing facility to support these goals.

Challenges and Risks

Twist Bioscience faces several challenges and risks, including:

• Financial Performance and Profitability: The company has incurred net losses in every period to date and expects to continue incurring significant losses as it develops its business. Inflationary pressures could also adversely impact financial results by increasing operating costs.
• Need for Additional Financing: The company may require additional financing to achieve its goals. Failure to obtain necessary capital on acceptable terms could force delays, limitations, reductions, or termination of product manufacturing, development, and other operations.
• Revenue Growth and Management: The company must maintain adequate revenue growth and manage such growth effectively to avoid operational mistakes, loss of customers, and reduced productivity.
• Technological Changes and Competition: Rapidly changing technology and extensive competition in synthetic biology could make the company’s products obsolete or non-competitive unless it continues to develop and manufacture new and improved products.
• Cybersecurity and IT Systems: The company relies on centralized information technology systems and its e-commerce platform. Cyberattacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to the company’s reputation.
• Regulatory Risks: The company’s products could be subject to additional regulation by the U.S. Food and Drug Administration or other domestic and international regulatory agencies, which could increase costs and delay commercialization efforts.
• Supply Chain Risks: The company depends on a single-source supplier for a critical component of its DNA synthesis process. Any disruption in the supply of this component could cause delays in manufacturing and adversely affect the company’s business.
• Operational Risks: The company’s ability to manage growth effectively is critical. Failure to do so could impact shipments to customers, divert resources from other products, and harm business operations.
• Human Resources: The company’s success depends on the continuing efforts of its senior management team and other key personnel. The inability to attract and retain qualified personnel could prevent the company from pursuing collaborations and adversely affect product development and business growth.
• Strategic Transactions: The company may engage in strategic transactions, including acquisitions and collaborations, which could disrupt business, cause dilution to stockholders, reduce financial resources, or prove unsuccessful.
• International Business Risks: Conducting business internationally entails various risks, including longer payment cycles, currency exchange fluctuations, tariffs, and political instability.
• Intellectual Property: The company’s ability to protect its intellectual property and proprietary technology through patents and other means is uncertain.
• Market Risks: The company faces competition from a broad range of providers in the synthetic biology industry. Increased competition could result in pricing pressures, reduced margins, and loss of market share.
• Environmental and Safety Risks: The company uses biological and hazardous materials that require considerable expertise and expense for handling, storage, and disposal.
• Natural Disasters and Catastrophic Events: The company’s facilities are vulnerable to damage from natural disasters, public health crises, political crises, and other catastrophic events.
• Delivery Disruptions: The company relies on third-party carriers for the timely delivery of products. Carrier disruptions and increased costs beyond the company’s control could result in delayed deliveries, damaged reputation, and loss of customers.
• Taxation and Regulatory Changes: Changes in taxation of international business activities, corporate tax reform policies, and other regulatory changes could impact the company’s financial position and results of operations.

SEC Filing: Twist Bioscience Corp [ TWST ] - 10-K - Nov. 18, 2024