TWST - Earnings call transcript Q1 2020 | Twist Bioscience Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Twist Bioscience Fiscal 2020 First Quarter Financial Results Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Jim Thorburn, Chief Financial Officer. Thank you, and please go ahead, sir.

James Thorburn

All right. Chris. you, Thank and Twist everyone, XXXX for us joining quarter Good conference thank call for progress. business Bioscience results fiscal to today financial afternoon, and you review first our website, issued our review which at press we www.twistbioscience.com. Please earlier releases are today, available our

With Twist. Dr. Leproust, available Emily recent with review Co-Founder call will CEO Daniels, Chief progress are also our litigation. on of businesses Q&A is Twist; begin for and Mark today's and in Legal me and on Emily of Officer Mark Twist of a

I Emily will milestones report performance, on our financial will and and operational and upcoming discuss our direction.

then questions. will the We call open for

X reminder, this a section audio the recorded. The Investors portion for will of our As will week. is archived and in call be website being available be

we within the statements presentation, today's the forward-looking make securities federal will of laws. meaning During

relate Forward-looking future operating future performance. financial or or events statements generally to

more our the and in date uncertainties financial results in any projected. in statements, hereof, filings Commission. beliefs include forth any subject to the to Our described actual as as and expectations those earlier we disclaim These Securities matters obligation press available statements fully and except based today update results could materialize law. and this may from issued periods forward-looking The as with forward-looking set on those are of by the are differ well Exchange presentation as not information materially those us in to that regarding cause the risks and these release risks to required we actual

Emily Co-Founder, Chief turn Executive that, to and over now our I'll With Leproust. Dr. the call Officer

Emily Leproust

The X, our that settlement payment Twist in I'd made million. an wrongdoing agreement reached everyone. settlement Siyuan there or the Glaize Solange admission we of a for agreement, call February originally exchange with XXXX. onetime afternoon Agilent announced claims we of no release of you, Thank update Bioscience, Under liability the in and obtained against of Jim, myself, because afternoon, full none. litigation on terms with $XX.X and like a Chen were filed have this the to good begin contains

legal We through assault to end, survived prepared the in case take only attack. thrived the but trial. this all-out on Twist, an were we we launched Agilent and not to

However, this we to chosen to and jury settle associated the legal have with remove fees uncertainty litigation trial. exceptional the

on is believe all addition, In I'd With in eliminate of best at that, hand. for results to we it first financial to that fiscal of like focus quarter we XXXX. of our our our interest the this the distraction stakeholders business and turn

strong a the a We growth in solid days million in NGS very and are $XXX orders off to synthetic at revenues year-over-year. start, synbio last orders $XX shipping forward, first of And for number yearly in NGS revenues We quarter. which and quarter, reported from the for look the with of both $XX.X rate impressive is million. of a almost million biology looking larger run resulting

to we of quarter we in again see a is the of a fiscal fiscal XXXX, companies that this end the products spend believe need still believe order budget. due exceptional and due our the we We saw to from had team, XXXX. bump it and While we first year bit of their calendar increase to commercial in

not and market to want about incredible $XXX,XXX biopharma. moving vertical are growth. opportunity. reported do I to forward revenues caution And biopharma is This quarter-by-quarter. lumpy excited orders may this the progress be from exceptionally we expect that of grow also We we in very

gross positive Our at essentially XX%, million was flat $X.X margin sequentially.

additional product revenue to to both continue fuel up and As launches for we invest have businesses. synbio new built for capacity we growth NGS, in

Moving to business segments.

quarter, genes shipped XX,XXX primarily from down fourth a the first we quarter, bit holiday in the synbio, about due timing. For to

new which X bringing are will we increased XXXX, capacity. allow calendar of writers half online, first the During

we're processes our turnaround to addition, to continue in resources reduce time. In our in additional point pinch at investing

in improved turnaround stay improving we competitive tail, revenue in double the about our resulting additional year, over to the the market of number on in about first purchase and size while win same the in past to to note, overall. important quarter, time which share. An the X significantly comparison have were smaller Continuing received continue we metric last period years, of orders, XX%, long pursuit this substantial we focus by growth

in to to the we that, track will extensions quantities on product of require We need larger believe, meet allow remain companies large that mid-XXXX us introduce of DNA. line pharmaceutical

on in growth we support clonal-ready our are fragments. introduce long in tail, to to addition, In track the gene calendar XXXX

these will not important serving we to today. near other we subsegment expanding future. products, are X markets meant are very in that be These the With pursue into

For of targeted XX with customers we NGS, first quarter, genomics products the to these our targeted in and enrichment in XXX customers, production. shipped now

of orders first We in of of million, continue good the is in to revenues market reported We year-over-year. $XX.X and which an this increase show quarter. XX% very $X million strong growth

We are rare customers liquid currently diagnostics biopsy, and cancer volume pursuing a within disease. large

[indiscernible] now which conversions X in the Twist's we substantive are after resulted we to going discussed NGS. has As market, SNP microarray

In market. addition, to scope retail include we're expanding our the

few in a emerging NGS is to novel the We like product to to expect again growing take is an greatest that about launches applications proof space. number serve a and continued minutes bioterrorist. talk nature This the the pathogen coronavirus. of I'd

into virus, coronavirus. efficient there's ongoing as amount we As pandemic, worldwide. event before, an enable products have never in a a on Twist to come new work areas an potential of the that emerging seen research key have tremendous customers rapid, Many research like we that

antibody making exists for monitor potential that outbreak NGS the customers making by and exemplifying sequences areas by and work gene specific genes nourishment mutants, are as making custom panels those supporting areas a reason may These today. by that Twist infected. We treatment

secure manner, of protocols take leveraging and our safe delivers fragments. our quickly platform, this procedures. custom customers platform, industry-leading in and which antibody biosecurity Our advantage silicon a genes, do We and panels

health it diagnostics and number just that ordered. in personalized and our we do genes, the resource and our we time large that conditions wide but we not partner, impact and screen coronavirus. makes And government for sustainability. turnaround to Because advanced committee criteria. with product other the support A routinely couple no this, need range and points. of continues of at important every important screen emerging for of synthetic we provide diseases threat in list make United of every XX/X the customers to both therapies. is can fragment sequence all also improve against biosecurity, That and DNA from And terms of that global customers coronavirus, as a all this gene us We single an and of face DNA-based States. as scale, a manufacturing we Importantly, a

customers in to are Because providing ordering very have our biosecurity we doing flags for protocol see we what that known a the of put place regularly, coronavirus We of robust in concern. matches a means dip significant we any sequences. suite the do sequence not a that expect pathogen around a customers revenues offer products from

outflow. this do every not coming of fit do others the situation, and each is day we we our the what in minimize the regular gravity within and want While to

Turning to vertical our market opportunities.

evidenced in a we GPCR efficacy potent leveraging GPCR around shown at on quarter. targets orders this TBXX-X concentrations, we candidate physics-based biopharma, by the a data In conference approach in inhibition way glucose $XXX,XXX We tolerance X discovered in TBXX-X, disease are vivo For antagonist investor and reported rare as and in January, higher of at potential to have company this such this biopharma transforming are is collaboration we therapeutics our the studies, An with a applications are generated business, antibody from severe announced with an like in have a data computational our and the a validate data indications GLP-XR January. complete that, in development platform. as GLP-XR Schrödinger, book mouse study. has hypoglycemia. focused preclinical could

We companies' and any antibody new together potential bringing sharing recover our against are economics. targets X platforms GPCR therapeutics to

complementary excellent diseases. of may therapeutics range the we in an wide of is to example develop This better a way access technologies

a range modest initially. collaboration of that of continued in will opportunities across revenue biopharma, offer expect We generate solutions some wide which expect we we

contracts move take robust time, and encouraged we expect to some by As far. to do and milestones this we royalties. the more expect are We we validation, generate so additional but data include that seeing progress towards are we

we or In data January, DNA selected storage. data as that DNA Molecular projects announced we the Information synthesis Turning the under storage to MIST program. were provider for IARPA Storage

Washington or Microsoft, accessible GTRI, Georgia are of long-term University go Twist. will million, $X.XX make with Roswell $X.X viable years. the contract are X collaborating at to commercial receiving storage additional DNA We X The that is Biotechnologies this next and within the that $XX and to Research commercially the Tech Institute, GTRI to total million million development Twist contract with an would benefit of worth up to with

we a securing working The build its the for design designing our vertical contract, an storage seamless offering. to Twist in commercial the a important subcontract a with our integral to step will be of and are on financial start backing chip is array. DNA produce device with to will we novel IARPA prototypes. synthesis and device data collaborators for efforts collaborate GTRI the As drive

build frequent on cycle the dependent be chip we Finally, data the as cadence next refinement, highly manufacturing is of phase that expect is XX because standard will updates months. chip data our a design, and less design storage upon of storage

the we build As data expertise built Weiss vertical cofounders market. future additional changes leading to specific a responsibilities our infrastructure this and Patrick Banyai, we X NGS will same up, efforts, processes to scale made operations into up COO. growth our this we storage to storage one He enable some in from take [indiscernible] as and businesses, have our our a slow the forward DNA forward. At silicon growth. on Bill the to silicon we him organizational synbio extensive, is ground develop and important time, rapid all to and data future. has become in Bill's and he lead new for platform will of the facilitate look

Jim At our this financial call time, quarter. for over I'd results the like to to review turn the to

James Thorburn

Litigation Thank quarter a We're and sequential is of settled. orders well, enjoyed right. and you, growth revenue. great executing All Emily. we in

The Fiscal quarter million and exceeded record $XX.X for our Let the of one was was book-to-bill a highlights. $XX.X approximately revenue is Twist. which We quarterly guidance. X.X:X. touch orders, in ratio million me QX some billed on

Our approximately Ginkgo strongly, worth to million continue and products Biopharma this growing $X.X business, as of quarter. customer and doing customers our to orders is and revenue Emily base, in business highlighted, were we X,XXX NGS $X.X shipped $XXX,XXX. million. is build Synbio non-Ginkgo approximately with noting, are orders we well and

are for XX% XX%. and defined as represents year-on-year growth orders of orders in $XX.X of details of Ginkgo million Synbio first the the products at $X.X of our the orders orders $XX.X growth and million. for were million sequential fiscal libraries quarter, XXXX, pools, genes, Looking includes and synbio oligo quarter and that

from fourth million Although their Ginkgo of and on the business down approximately Ginkgo January. based $X.X our quarter, fluctuates received in was $X.X project orders million activities in

seeing orders we're genes the EMEA very biotech, Our $X.X is from strength doing and well, markets, and in of primarily industrial both business academic health million, with U.S. segments. and

such well. which We care, Our as for refer progressing XX, with quarter, $XX.X we're health from approximately continues to received institutions continue XX which pilots up a in The with accounts up scale. NGS opportunities and And that's and XXX validation in orders from million approximately phases. We the booked customers pilot, as to the that's in in in products, $X sequentially primarily XXX and quarter includes and XX million bookings through validation quarter in I'll now larger genomics from diagnostics, which opportunities four, four. is our larger abroad. adoption very from total NGS and academic products quarter one, phase XX up products, adopting, NGS and orders to for of tracking from pipeline perform the

$X.X and expansion, $X including million million $X China. synbio, terms of from In $XX.X biopharma were APAC with NGS Europe. orders including million another million. thrilled bookings million orders academic across $X.X America segments million were progress outside at global quarter in of announce biotech, were one solid $X.X in was quarter bookings and million, was which of bookings our stronger with industrial Americas. of NGS, $X.X one XX% $X for strong to health from quarter approximately with million with in orders, delivered our EMEA

Ginkgo from following and the Please to not translate directly strongly, note, for quarter, product for orders we to provide growing revenue to although fluctuate provide each and quarter trend line and lumpy more NGS Currently, anticipate are NGS but be into to we both group. both a synbio quarter.

one and to Now guidance orders $XX compared million. to of was our million to from revenue revenue. $XX.X million moving Quarter $XX.X as

$X.X was million as Our quarter XXXX. to compared million $X quarter NGS product approximately $X.X in four one revenue and in XXXX, million

XXX $XX from million, of to continue the $X.X compared approximately customer Ginkgo. expand during shipped XXX and the previous quarter. base to our the as includes revenue was in quarter NGS and customers We with million to in quarter, almost million $X.X gene revenue Synbio that customers

Our business doing really XX% revenue quarter. -- well. accounting in once with we gene the the approximately for X.X again, does And longer genes in over well genes is XX,XXX gene over kb, the shipped of our quarter,

'XX. of approximately fiscal million in Americas strong our $XX across that's me fiscal of The our first expansion. QX paying to to for In compared totaled EMEA revenue in $X.X in million APAC quickly to all our commercial and as XX% And cover accounts let in revenue Now $X.X EMEA $X.X are quarter approximately versus 'XX. The 'XX, as fiscal $X.X APAC, first continue fiscal million presence fiscal million 'XX. in $X.X revenue growth QX QX global for quarter quarter the quarter to now in regions. Americas million organization the we for to expand off. $X.X QX million compared due strongly as our compared growing and 'XX. investments million is was our and first global revenue is and XX%

and the So U.S., EMEA really well. strong strong doing -- growth outside both APAC

largest segments accounting $X.X chemicals, for are revenue academic segment and X segments, million. care health was NGS terms industrial largest synbio and of $X.X million the and quarter, health the by growth this driven care Year-over-year, In products.

moving Now down P&L. the

Gross margin.

compensation our and call, to first in positive margin stock-based includes last quarter. is highlighted for $X.X quarter, gross million about this the going earnings XX%, in we our As be the

fourth R&D excluding settlement compared to our the increased the higher cost million million. first fourth of first in compared SG&A investment commercial in $XX.X quarter, the in $XX.X to in organization commercial to operating million to increased for was litigation litigation million approximately the reflecting our quarter and million Our and quarter. with fees. $XX.X expenses, associated $XX.X revenues additional the quarter continued from $XX.X $XX.X million costs

personnel have XX we personnel commercial XX quarter scaled one, organization full approximately and the organization, NGS. our We supporting have During added XX now to XXX. sales now to with

up the mainly for guidance $XX one, fourth Our net quarter loss, excluding million, the and loss to our a to litigation of settlement compares is quarter delta in $XX.X million, of was and higher litigation million $XX.X from due fees. to loss $XX that million

quarter net the is of $XX to $XX.X and very is million. making. the estimated and In in $XX.X the million Our to $XX $XX million start is synbio litigation non-Ginkgo, to approximately year with it's progress million; and guidance pharma, to be for exciting revenue was to loss $XX summary, year, first a early in million; and million. including estimated settlement, is be estimated $XX revenue million we're million to good our off see orders, $XX.X be It NGS Ginkgo the $XX quarter, of revenue to million to million; $X million. is $XX revenue we're maintaining approximately

litigation case. net Our with $XXX guidance million, and guidance million due $XXX $XXX settling up to year, settlement to higher for the expense expenses million that's excluding previous million, and loss defending from of $XXX is the to the associated

as additional you for Agilent. settlement addition, release, we In press saw with accrued million our $XX.X our in

$XXX.X million. estimated million litigation So is loss guidance, $XXX.X million settlement, -- including total $XXX to

we January. balance with Finally, our the and $XXX.X completed cash quarter offering and position the of at the at we million end market closed as first sheet cash strengthened

And million proceeds. to $XX.XX a common X.XX turn approximately price of our I'll to for in million of of stock Emily. an positioned well issued average at back Agilent. total We call that, settlement $XX.X finalize shares net This us with the with

Emily Leproust

Jim. you, Thank

market needs. As we to continue to the move into XXXX, execute respond and we innovate,

growth and revenue expect of we synbio, customers. For continued diversification

to will our markets needs serve introduce enhance not the today. new of continue we meet experience. line we do currently We in to e-commerce to expect And products

to those customers the biopsies the developing from cancer converting microarray. continued that organizations research and well SNP products our continue For NGS, use move new through will adoption. to focus will as as liquid designed pipeline tools parallel, pilot to we meet introduce we currently of In efforts on needs

expect biopharma, For generated X data we to leverage we the have functional sign GPCR to on antibodies contracts. our against date to revenue-generating targets

XX we will between and our sign product collaborations, the and of through our for on announced remain collaboration storage, collaborate X first offering data will to January, some fully integrated which commercial a X with to team royalties. continue MIST milestones to years. in program include We and to in both create And track X

for open let's that, call the questions. With up Operator?

Operator

And the Instructions]. ISI. Luke Sergott [Operator line Evercore with of from comes first our question

Luke Sergott

litigation, think, why through of needed. you because how that to then willing kind you're and understandable guess, for out? are to Couple congrats, deciding go I a the us is full kind through I just the talking walk talk yards, while, the about about shook of -- not, X now timing why of

James Thorburn

I'll you, Daniels, Thank pass Luke. Officer. to Chief it Mark Legal our

Mark Daniels

Look, to trial. take were cases the to you brought settle, case way settled. prepared through of this are cases understand XX% the almost you. that Thank have But all all we

do thing to unusual and uncertainty the at the with victory legal not associated look settlement settlement We It were stakeholders. claims our Twist. the eliminates for and it's settled. royalties So expenses. company, to resolved. for was that for no this legal was and There it a do case It the right the as the thing are right

Luke Sergott

margin me through how the the also about also Jim, so you going quarter, to on right? So And dynamics, back walk I guys and well. guess, -- year? that's did the thinking you really out And within through to business the shake -- when can

You business that. -- the kind lot Just in little of placed walk still lot a or a through higher-margin light. the from a expansions But ramp. margins the genes. like The utilization? NGS of capacity at us sold came not of more to continue that long Is and

James Thorburn

Yes.

scale Luke. quarter point, as our some of at this and good we're in grow from XX% ramping quarters. in roughly -- XX% roughly the roughly When the we So in were targeting set in revenue of for always quarter. fourth couple quarter up gross ramp-up preparing we the exiting for margin it to projections schedule to XX% we Yes, XX% terms year, ahead fourth the bringing to next in the at in first exiting capacity, slightly adding the heads our of

think XX%. margin facility I highlighted, $XX I gross move the really margin team think X the we're into to And comfortable in to revenue. And our towards year. are foot with comfortable terms new which synthesizers, the capacity heading we million. XX,XXX of as here. look it's made our incredible as gross the commissioning through average has as scale about give of will directionally we it way it, square to progress we Emily we us $XX scale We're XX% the million at We're forecast

tracking And spike we looking models customers all into holidays the the expected. like. some down actually our a more expected, internal We ahead put but holidays. get our Before than to that's we be to and what there, and of we've little shut seen we shipped we cost we're extra some expected demand, actually are than to Christmas --

Operator

with And the line Baird. question Catherine next Schulte our of comes from

Catherine Schulte

settlement. in collaboration, line steps, what's this coming that and questions potentially time the development from should me. guess, And next milestones year? be Schrödinger I proof-of-concept there? expecting the preclinical the the new we reach are for few the to on A first, what quarter Congrats

Emily Leproust

Thank you.

details of So milestones. the we are sharing not

contract. the up is growing collaborations. to side, terms I think what on milestones And some of flow and able news signed XX to we've to of pharma in for expect I X over time, we royalty and what deals, think -- economics payments then per being command see

milestones look of number those to, and So of then royalties. milestones the are I forward economics to and contracts, think size

Catherine Schulte

so uptake And far? the I in qualitative comments your but Asia on more any outlook collaboration And Okay. is perhaps it's for just broadly? NGS going early, MGI know how

Emily Leproust

it's are by in the come we So mentioned, growth of anticipate in the future that we and will well. as quarters MGI And be And going bookings the the catalyzed a agreement far will the collaboration Jim China growing. with have co-marketing that together. portion

Catherine Schulte

hop I'll we expect what the see the But from And this to month? preview of Okay. queue. AGBT at back then Conference last in one, should you later any

Emily Leproust

the So we are sponsor. still

be And we the -- of in it terms product had built so product line had I time Twist that speed at up the advantages we in the saying which went the sample to of a workflow. think the substantial new -- make cost the was it could AGBT, standing and terms to of first improvement custom that in used sequencing we

stage So and actually story. it what we at that what used customers Twisters me the last validated happened spreading our to year AGBT, and the And said. be took had

a it platform advantages And our in our customers spreading so that that the way brings. were was

more And of we same, today, customer in only not markets the we so preview to of expand would and I markets want in the but the this serve think that the into. testimonial, be year for more

the but and the SNP we the in of We share, serving And great microarray all for conversion of are have not market early NGS, innings. still taking towards a we are we've been yet instance, markets. franchise in

transformative want application And can showcase spaces as to into be how products we'd other well. so our

Operator

And Schenkel line Doug our from Cowen. question last with the of comes

Subhalaxmi Nambi

Subbu on is This for Doug. Congratulations.

validating impressive big of continue your and business you customers to $XXX revenue get product. next NGS this to number by follow-up. million an years? Could reach You the in X this in over like XXXX? pilot I for could X a have And have How

James Thorburn

I mean, XX guidance is given NGS. this good XX. certainly well Well, the and it's between a for doing We're year question. we've in

We'll for get guidance the growth the well. and market are but And in opportunities. giving in We're strong BGI, positioning Europe. position not adding year. feeling XX%, NGS more resources about a value growing ramp are is in proposition strong collaborations good, year, the We the good opportunities place. field for going in seeing to following good a Europe the PerkinElmer XX% we're market good, And up.

got about the the in next the about are -- over excited roughly but couple years. million personally market future, of to goal We've head. opportunity going to our in XX $X quarter for optimistic not And a I'm accelerate give people I'm targets here that So is and it. guidance field. Their

Subhalaxmi Nambi

Got it. in helpful. translate And orders. nice with That's you really what baked guidance? then some pharma this revenue, into into does What momentum have and in $XXX,XXX

Emily Leproust

revenue orders So we of all expect to $X few over the of next year We've quarters. transform pharma. the million into million guided revenue for the for $X to

it's great portion quarter, that a in already of a that, we've so And booked start substantial first guidance.

Operator

Emily this today's like concludes Twist call of session. remarks. CEO Co-Founder to and now And the question-and-answer closing Leproust, for turn I would any back

Emily Leproust

you, forward very positive day. a to joining growth to and day success. building great Thank and Thank a momentum look today. been eventful Twist, Have for business you, us everybody, on our It's for we Chris. future drive and

Operator

Thank today. you participating. gentlemen, concludes conference and for today's Ladies

may now disconnect. You

Twist Bioscience (TWST) 7 Feb 202020 Q1 Earnings call transcript