Twist Bioscience Corporation — FY2022 Form 10-K
Reporting period: Fiscal year ended September 30, 2022. Although the request identifies 2022 Q4, this filing reports full-year results; standalone fourth-quarter financial results are not provided in the supplied filing text.
Business context
Twist sells synthetic DNA products, next-generation sequencing (NGS) tools, DNA libraries, and antibody discovery services using its silicon-chip DNA synthesis platform. It reported approximately 3,300 customers and operates as one reportable segment. Revenue is concentrated in healthcare and NGS tools, while the company is investing in manufacturing capacity, antibody discovery, and DNA data storage.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $203.6 million | $132.3 million |
| Gross profit / margin | Approximately $84.2 million / 41% | Approximately $51.7 million / 39% |
| Operating loss | $234.8 million | $152.7 million |
| Net loss attributable to common stockholders | $217.9 million | $152.1 million |
| Net loss per share, basic and diluted | $4.04 | $3.15 |
| Cash used in operating activities | $124.4 million | $112.2 million |
| Cash, cash equivalents and short-term investments at year-end | $505.0 million | $477.9 million |
| Long-term debt | None outstanding | $1.6 million current portion |
Revenue by product was $99.3 million from NGS tools, $61.5 million from synthetic genes, $24.2 million from antibody discovery, $12.4 million from oligo pools, and $6.1 million from DNA libraries. Healthcare generated $106.4 million, or 52%, of revenue. The company reported $232.9 million of net cash used in investing activities, including $101.9 million of property and equipment purchases, and $270.5 million of net cash from financing activities, principally from a $269.8 million net public offering. It had $94.9 million of operating lease liabilities at year-end.
Changes versus FY2021
- Revenue increased 54%, driven by NGS tools, synthetic genes, and antibody discovery. Antibody discovery revenue rose to $24.2 million from $7.0 million, including the contribution of acquired Abveris.
- Gross margin improved to 41% from 39%, reflecting volume and product mix, while the operating loss widened by $82.1 million.
- Research and development expense rose 74% to $120.3 million; selling, general and administrative expense rose 57% to $212.9 million. Higher headcount, stock-based compensation, research activity, and expansion costs contributed.
- Cash used in operations increased by $12.1 million. Capital spending rose to $101.9 million from $27.1 million, largely supporting the Wilsonville facility.
- Twist shipped approximately 558,000 genes, up 50% from approximately 372,000. Orders received totaled $226.4 million, versus $159.5 million.
Outlook, risks and unusual items
- Management said year-end cash and investments were expected to fund planned operating expenses, capital expenditures, and debt service for at least 12 months. The company nevertheless expects continued losses and negative operating cash flow and may need further financing beyond that period.
- Management expected Wilsonville to begin manufacturing revenue-generating products in January 2023. The facility expansion and broader capacity ramp carry execution, cost, and utilization risks.
- A material weakness in IT general controls over user access and program change management made internal control over financial reporting ineffective at September 30, 2022. The auditor issued an adverse opinion on internal control; the financial statement audit opinion was unqualified. Management said the weakness caused no misstatement in the periods presented and described remediation plans.
- Key risks include dependence on a single-source critical component, substantial ongoing losses, competitive and pricing pressure, customer research-budget uncertainty, regulatory and biosecurity exposure, and reliance on its South San Francisco manufacturing site while Wilsonville ramps.
- FY2022 included the Abveris acquisition, with $102.6 million of acquisition-date consideration, including stock, contingent consideration, and holdbacks. A $13.5 million gain from remeasurement of acquisition-related consideration and a $4.6 million gain on deconsolidating Revelar benefited reported results. The $269.8 million public offering provided significant financing but diluted shareholders.
Important facts for investors to verify
- Whether Wilsonville started production on schedule and achieved expected capacity, yield, cost, and customer shipment performance.
- Whether revenue growth and orders convert into sustainable sales, particularly in NGS tools and antibody discovery, and whether gross-margin improvement continues.
- Cash burn, capital expenditure needs, and the period for which available liquidity can fund operations without additional financing.
- Progress and independent confirmation of remediation of the IT-control material weakness, including whether new weaknesses emerge.
- Abveris milestone and contingent-payment outcomes, related stock dilution, and the commercial progress of antibody programs and partnerships.
- Exposure to the critical single-source supplier, customer funding changes, and any material regulatory, litigation, or intellectual-property developments.