Twist Bioscience Corporation — FY2023 Form 10-K
Reporting period: Fiscal year ended September 30, 2023. The filing provides annual results; it does not provide a clear standalone fiscal Q4 income statement or cash-flow summary.
Business context and financial performance
Twist develops and sells synthetic DNA and related products using a silicon-chip synthesis platform. Its offerings include synthetic genes, oligo pools, next-generation sequencing (NGS) tools, DNA libraries, and antibody discovery services. The company reported approximately 3,450 customers and operates as one reportable segment.
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $245.1 million | $203.6 million |
| Gross profit / gross margin | $89.7 million / 36.6% | $84.2 million / 41.4% |
| Operating loss / operating margin | $217.2 million / 88.6% | $234.8 million / 115.3% |
| Net loss attributable to common stockholders | $204.6 million | $217.9 million |
| Net loss per share, basic and diluted | $3.60 | $4.04 |
| Net cash used in operating activities | $142.5 million | $124.4 million |
Revenue grew 20%. NGS tools contributed $123.7 million (51% of revenue), synthetic genes $73.5 million, antibody discovery $23.2 million, oligo pools $14.5 million, and DNA libraries $10.2 million. Healthcare represented $137.1 million, or 56%, of revenue. Gross margin declined as cost of revenue rose 30%, faster than revenue. The operating loss narrowed, while higher interest income helped reduce the net loss.
Cash and cash equivalents were $286.5 million, with $49.9 million of short-term investments, totaling $336.4 million in cash, cash equivalents, and short-term investments. Total current assets were $424.3 million and current liabilities $73.3 million. The company reported total operating lease liabilities of $94.1 million; its prior senior secured term loan had been repaid in December 2021. Cash and cash equivalents plus restricted cash declined by $91.0 million during FY2023.
Material changes versus FY2022
- Revenue increased $41.5 million, driven mainly by NGS tools, synthetic genes, and DNA libraries. Genes shipped rose 14%, to 634,000.
- NGS tools revenue grew to $123.7 million from $99.3 million; synthetic genes to $73.5 million from $61.5 million; DNA libraries to $10.2 million from $6.1 million. Antibody discovery revenue decreased to $23.2 million from $24.2 million.
- Cost of revenue increased to $155.4 million from $119.3 million, including higher materials, payroll, and depreciation associated with expanded manufacturing capacity.
- The company recorded $16.2 million of restructuring and other costs. In May 2023, it announced a workforce reduction affecting about 270 employees, approximately 25% of the workforce, and consolidated synthetic biology production across facilities.
- Operating cash use increased $18.1 million. Investing activities provided $50.6 million, largely reflecting investment maturities, versus $232.9 million of cash used in FY2022, which included substantial capital investment and an equity offering.
Outlook, risks, contingencies, and unusual items
- Management stated that available cash, cash equivalents, and short-term investments were expected to fund planned operating expenses, capital expenditures, and debt service for at least the next 12 months. No quantified revenue or profitability guidance is provided in the filing.
- Management expects continued losses and negative operating cash flow for the foreseeable future; profitability depends on growth in existing products and successful development and commercialization of additional offerings.
- Key risks include intense competition and pricing pressure, customer budget constraints, manufacturing scale-up and dependence on a single-source critical component, reliance on the Wilsonville facility, regulatory changes affecting research-use-only products, and the need for possible additional financing.
- Internal control over financial reporting was deemed ineffective because of a material weakness in IT general controls over user access and program change management. The auditor issued an adverse opinion on internal control, while giving an unqualified opinion on the financial statements. The filing says the weakness did not cause a material misstatement in the periods presented; remediation remained in progress.
- A securities class action and a related derivative action were pending. The company said it could not assess the likelihood or amount of a potential loss and intended to defend the claims.
- Subsequent to year-end, Twist entered an antibody discovery and licensing option agreement with Bayer. Potential clinical and commercial milestone payments could total up to $188 million, plus royalties; these amounts are contingent, not guaranteed revenue.
Important facts for investors to verify
- Whether revenue growth and order value translate into sustained sales, and whether gross margin stabilizes or improves.
- Cash burn, capital spending, and the timing of any need for additional financing relative to management’s stated 12-month liquidity outlook.
- Progress and costs of the restructuring, manufacturing consolidation, and Wilsonville capacity ramp.
- Remediation and independent testing of IT controls, given the continuing material weakness and adverse internal-control opinion.
- Developments in the securities and derivative litigation, as well as any material regulatory or intellectual-property proceedings.
- Whether the Bayer collaboration advances to licensing, milestones, or royalties; the disclosed potential payments are conditional.