Twist Bioscience(TWST) - 2025 Q1 - Quarterly Report

Part I. Financial Information Unaudited Financial Statements This section presents Twist Bioscience Corporation's unaudited condensed consolidated financial statements for the quarter ended December 31, 2024, including balance sheets, statements of operations, stockholders' equity, cash flows, and notes Condensed Consolidated Balance Sheets As of December 31, 2024, total assets were $608.6 million, total liabilities increased to $152.6 million due to a new future revenue liability, and total stockholders' equity decreased to $455.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Dec 31, 2024 (in thousands) | Sep 30, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $221,403 | $226,316 | | Total current assets | $345,309 | $346,776 | | Total assets | $608,580 | $614,323 | | Total current liabilities | $69,646 | $71,006 | | Liability related to the sale of future revenue | $15,000 | $0 | | Total liabilities | $152,639 | $141,634 | | Total stockholders' equity | $455,941 | $472,689 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three months ended December 31, 2024, revenues increased 24% to $88.7 million, loss from operations narrowed to $34.6 million, and net loss improved to $31.6 million or ($0.53) per share Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 FY2025 (ended Dec 31, 2024, in thousands) | Q1 FY2024 (ended Dec 31, 2023, in thousands) | | :--- | :--- | :--- | | Revenues | $88,713 | $71,498 | | Cost of revenues | $45,873 | $42,536 | | Total operating expenses | $123,357 | $118,475 | | Loss from operations | ($34,644) | ($46,977) | | Net loss | ($31,594) | ($43,008) | | Net loss per share, basic and diluted | ($0.53) | ($0.75) | Condensed Consolidated Statements of Cash Flows For the three months ended December 31, 2024, net cash used in operations was $21.4 million, investing activities used $1.5 million, and financing activities provided $17.9 million, resulting in a $5.1 million net decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Three months ended Dec 31, 2024 (in thousands) | Three months ended Dec 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($21,428) | ($22,973) | | Net cash (used in) provided by investing activities | ($1,536) | $4,165 | | Net cash provided by (used in) financing activities | $17,944 | ($1,473) | | Net decrease in cash, cash equivalents, and restricted cash | ($5,073) | ($20,165) | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail accounting policies, financial position, revenue disaggregation, a new future revenue liability, lease obligations, and ongoing legal proceedings, confirming sufficient cash for at least one year of operations - The company believes its current cash, cash equivalents, and short-term investments are sufficient to fund operations for at least one year from the financial statement issuance date[28] - On October 21, 2024, the company received a $15.0 million upfront payment from XOMA Royalty in exchange for half of future potential milestone and royalty payments from certain customer agreements, which was recorded as a liability[94] - The company is involved in a putative securities class action lawsuit and a related shareholder derivative suit, both of which are in preliminary stages, and the company intends to defend itself vigorously[74][77][78] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 FY2025 financial results, highlighting a 24% revenue increase, improved gross margin, and reduced net loss, alongside analysis of operating expenses, liquidity, and capital resources Overview Twist Bioscience, a synthetic biology company, serves approximately 3,562 customers, achieving 24% revenue growth to $88.7 million, a 48.3% gross margin, and an improved net loss of ($0.53) per share in Q1 FY2025 - The company serves approximately 3,562 customers annually across various industries, including healthcare, chemicals/materials, and academic research, using a multi-channel strategy that includes a direct sales force and an e-commerce platform[101] Q1 FY2025 Financial Highlights vs. Q1 FY2024 | Metric | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $88.7M | $71.5M | +24% | | Gross Margin | 48.3% | 40.5% | +7.8 p.p. | | Loss from Operations | ($31.6M) | ($43.0M) | Improved | | Net Loss per Share | ($0.53) | ($0.75) | Improved | Results of Operations Revenue increased 24% driven by NGS tools and synthetic genes, gross margin improved to 48.3%, R&D expenses decreased 8%, and SG&A expenses increased 6% due to personnel and third-party costs - Revenue grew 24% to $88.7 million, primarily due to a $9.2 million increase in NGS tools revenue and a $6.8 million increase in synthetic genes revenue[114] - The number of genes shipped increased by 20% to approximately 205,000 in Q1 FY2025 from 171,000 in Q1 FY2024[113][114] - Gross margin increased by 7.8 percentage points to 48.3%, mainly due to higher revenue and better absorption of fixed costs[115] - R&D expenses decreased by 8% to $21.3 million, driven by lower outside service, lab supply, and personnel costs[116][118] - SG&A expenses increased by 6% to $56.2 million, primarily due to a $1.4 million increase in personnel costs and a $1.9 million increase in third-party spending[119] Liquidity and Capital Resources As of December 31, 2024, the company held $221.4 million in cash and equivalents, received a $15.0 million upfront payment from XOMA, and used $21.4 million in operating cash, with primary capital uses for compensation, manufacturing, and R&D - The company's liquidity is primarily financed through equity raises and commercial revenue, with cash, cash equivalents, and short-term investments totaling $270.8 million as of December 31, 2024[103][123] - A significant financing event in the quarter was a $15.0 million upfront payment from XOMA for the right to receive half of future potential milestone and royalty payments from certain collaborations[124] Cash Flow Summary (in thousands) | Cash Flow Activity | Three months ended Dec 31, 2024 (in thousands) | | :--- | :--- | | Net cash used in operating activities | ($21,428) | | Net cash used in investing activities | ($1,536) | | Net cash provided by financing activities | $17,944 | Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk exposure since the previous fiscal year-end, as detailed in its Annual Report on Form 10-K - There have been no material changes in the company's exposure to market risk since September 30, 2024[140] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of December 31, 2024, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of December 31, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[141] - No changes occurred during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[142] Part II. Other Information Legal Proceedings Material pending legal proceedings are detailed in Note 6 of the financial statements, with management expecting no material adverse effect on the business from their final disposition - Details on material pending legal proceedings are described in Note 6 of the financial statements[145] - Management does not expect the final outcome of current legal matters to have a no material adverse effect on the company's business, financial position, or cash flows[145] Risk Factors No material changes to the company's risk factors have occurred since those disclosed in the Annual Report on Form 10-K - There have been no material changes in risk factors from those described in the Annual Report on Form 10-K[147] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the quarter - The company had no unregistered sales of equity securities during the quarter[148] Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended December 31, 2024 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the quarter ended December 31, 2024[151] Exhibits This section lists exhibits filed with Form 10-Q, including a consulting agreement, CEO and CFO certifications, and iXBRL data files - Exhibits filed include a consulting agreement with James Thorburn, certifications by the CEO and CFO, and iXBRL financial data[153]