Twist Bioscience Corporation — FY2021 Form 10-K
Business context and reporting period. The filing covers the fiscal year ended September 30, 2021—not a standalone fourth quarter. Twist sells synthetic DNA products, next-generation sequencing (NGS) tools, and DNA and biopharma libraries, using a silicon-based DNA synthesis platform. It served approximately 2,900 customers and operates as one reportable segment.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $132.3 million | $90.1 million |
| Gross margin | 39.1% | 31.8% |
| Operating loss | $152.7 million | $140.1 million |
| Net loss | $152.1 million | $139.9 million |
| Net loss per share, basic and diluted | $3.15 | $3.57 |
| Cash used in operating activities | $112.2 million | $142.3 million |
- Revenue grew 47%; management attributed the increase mainly to NGS tools and biopharma library services. Healthcare represented $71.2 million, or 54%, of revenue.
- NGS tools revenue rose to $72.7 million from $44.0 million; DNA and biopharma libraries increased to $12.7 million from $6.3 million. Synthetic genes revenue was $39.0 million, up from $35.2 million.
- Cost of revenue was $80.6 million, or 61% of revenue, versus 68% in FY2020. The filing attributes the margin improvement mainly to increased volume and product mix.
- Research and development expense increased 61% to $69.1 million; selling, general and administrative expense increased 32% to $135.9 million. The operating loss widened despite higher revenue and improved gross margin.
- Cash, cash equivalents and short-term investments totaled $477.9 million at year-end, versus $290.0 million a year earlier. Current assets were $546.5 million and current liabilities $63.1 million.
- Investing activities provided $156.2 million, chiefly reflecting investment maturities exceeding purchases; capital expenditures were $27.1 million. Financing activities provided $329.2 million, including $323.9 million of net public-offering proceeds.
- Long-term debt was $1.6 million on the balance sheet, with $0.8 million principal scheduled for FY2022; the $10 million revolving facility was undrawn. Operating lease liabilities totaled $61.4 million; undiscounted future lease payments were $134.2 million.
- Management said available cash and investments were expected to fund planned operating expenses, capital expenditures and debt service for at least one year from issuance of the financial statements. No specific FY2022 revenue or profit guidance is provided in the filing text.
Material changes, outlook and risks
- Revenue increased from $90.1 million in FY2020 and $54.4 million in FY2019; customer count rose from approximately 2,200 to 2,900 year over year. The share of revenue from healthcare increased to 54% from 44%.
- Twist acquired iGenomX in June 2021. The estimated purchase consideration was $37.7 million, including common stock, cash, contingent consideration and an indemnity holdback. The acquired business’s FY2021 results were not material to consolidated results.
- The company expanded its Wilsonville, Oregon facility through leases covering approximately 212,000 square feet in total. Phase 1 was expected to begin operations in the third quarter of FY2022; the expansion entails substantial capital, lease and execution commitments.
- After year-end, Twist announced a Revelar Biotherapeutics arrangement involving an antibody license, potential milestone payments exceeding $100 million and mid-single-digit royalties, subject to successful development and commercialization. It also agreed to acquire Abveris for stock and cash, with additional stock consideration contingent on performance; closing was expected in December 2021.
- COVID-19 had not significantly affected FY2021 revenue, but management said future effects remained uncertain, including potential impacts on demand, supply chains, shipping and operations.
- Key risks include ongoing losses, negative operating cash flow, need for eventual additional financing, dependence on a single-source supplier for a critical component, manufacturing concentration and scale-up, competition, and regulatory uncertainty for research-use products and potential clinical applications.
- Management and the auditor reported material weaknesses in internal control over financial reporting involving journal-entry segregation of duties, revenue order-entry accuracy and segregation of duties, and IT general controls. The weaknesses did not result in a reported financial-statement misstatement; remediation was underway, but the controls were not yet considered remediated.
- The Agilent litigation was settled in FY2020 for $22.5 million; the case was dismissed in February 2020. Management stated ordinary-course legal matters were not expected to have a material adverse effect.
Most important facts for investors to verify
- Whether revenue growth and NGS adoption continue, and whether improved gross margin can offset rising operating expenses and losses.
- Progress, cost and utilization of the Wilsonville expansion, including the timing of production and the return on significant lease and capital commitments.
- Whether the disclosed control remediation is completed and independently tested as effective, especially for revenue processing and IT access controls.
- Cash burn, future financing needs, dilution and the company’s ability to fund growth while remaining within the stated liquidity runway.
- Acquisition and antibody-program execution, including Abveris closing and performance conditions, and whether Revelar can achieve development milestones and potential royalties.