Twist Bioscience(TWST) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, for the period ended March 31, 2025 Condensed Consolidated Balance Sheet Highlights (unaudited) | (In thousands) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $210,437 | $226,316 | | Total current assets | $338,442 | $346,776 | | Total assets | $595,615 | $614,323 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $74,976 | $71,006 | | Total liabilities | $155,507 | $141,634 | | Total stockholders' equity | $440,108 | $472,689 | Condensed Consolidated Statements of Operations Highlights (unaudited) | (In thousands, except per share data) | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenues | $181,506 | $146,800 | | Loss from operations | $(76,205) | $(95,866) | | Net loss | $(70,922) | $(88,500) | | Net loss per share, basic and diluted | $(1.19) | $(1.54) | Condensed Consolidated Statements of Cash Flows Highlights (unaudited) | (In thousands) | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(34,414) | $(42,396) | | Net cash used in investing activities | $(2,962) | $(1,075) | | Net cash provided by financing activities | $21,140 | $355 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail accounting policies, revenue disaggregation, financial instrument valuations, stock-based compensation, legal proceedings, and a significant subsequent spin-off event - As of March 31, 2025, the company had an accumulated deficit of $1,312.8 million, with management believing current cash, cash equivalents, and short-term investments are sufficient to fund operations for at least one year[31] Revenue by Product (Six Months Ended March 31) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Synthetic genes | $54,708 | $42,083 | | NGS tools | $99,788 | $80,191 | | Other | $26,910 | $24,526 | | Total | $181,506 | $146,800 | - On October 21, 2024, the company received an upfront payment of $15.0 million from XOMA Royalty for half of future potential milestone and royalty payments, recorded as a liability related to the sale of future revenue[98] - On May 2, 2025, the company sold its DNA digital data storage assets to Atlas Data Storage, Inc. for equity, cash, promissory notes, and potential future milestone and royalty payments[101] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, highlighting a 23% revenue increase and improved gross margin for the three months ended March 31, 2025, alongside reduced net loss and improved operating cash flow, with sufficient capital for near-term operations Overview This overview describes the company's synthetic biology business and highlights key financial improvements for the three months ended March 31, 2025, including a 23% revenue increase and improved gross margin Q2 FY2025 Financial Highlights (vs. Q2 FY2024) | Metric | Q2 FY2025 | Q2 FY2024 | | :--- | :--- | :--- | | Revenues | $92.8 million | $75.3 million | | Gross Margin | 49.6% | 41.0% | | Loss from Operations | $(41.6) million | $(48.9) million | | Net Loss | $(39.3) million | $(45.5) million | | Net Loss per Share | $(0.66) | $(0.79) | - The company serves approximately 3,562 customers annually across healthcare, chemicals/materials, food/agriculture, and academic research industries[106] Results of Operations This section details financial results for the three and six months ended March 31, 2025, showing 23% revenue growth, significant gross margin expansion, and mixed trends in operating expenses Revenue Comparison (Three Months Ended March 31) | (in thousands) | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $92,793 | $75,302 | $17,491 | 23% | - For the three months ended March 31, 2025, the increase in revenues was primarily driven by a $10.4 million growth in NGS tools and a $5.9 million growth in synthetic genes[118] Operating Expenses Comparison (Three Months Ended March 31) | (in thousands) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Cost of Revenues | $46,765 | $44,420 | 5% | | Research & Development | $23,917 | $24,149 | (1)% | | Selling, General & Administrative | $63,671 | $55,622 | 14% | Liquidity and Capital Resources As of March 31, 2025, the company held $210.4 million in cash and equivalents, with operations financed through equity, debt, and revenue, and improved operating cash flow usage for the six-month period - As of March 31, 2025, the company held $210.4 million in cash and cash equivalents and $46.7 million in short-term investments[138] - Net cash used in operating activities decreased to $34.4 million for the six months ended March 31, 2025, compared to $42.4 million for the same period in 2024[143][144] - Financing activities provided $21.1 million in cash, primarily from a $15.0 million upfront payment from XOMA for the sale of future revenue, alongside proceeds from stock option exercises and the ESPP[148] Quantitative and Qualitative Disclosures About Market Risk The company's exposure to market risk has not materially changed since September 30, 2024, with further details available in the Annual Report on Form 10-K - The company's exposure to market risk has not materially changed since September 30, 2024[155] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[156] - No changes occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[157] PART II. OTHER INFORMATION Legal Proceedings The company is defending against a securities class action lawsuit and a related shareholder derivative suit, both stemming from a November 2022 short-seller report, with potential loss currently inestimable - The company is defending against a securities class action lawsuit (Peters v. Twist Bioscience Corporation, et al.) filed in December 2022, based on allegations from a Scorpion Capital report[75] - A shareholder derivative suit (Shumacher vs. Leproust et al.) was filed in September 2023 based on substantially the same allegations as the securities class action, currently stayed pending a motion to dismiss in the class action case[79] Risk Factors Key risk factors include adverse global economic conditions, geopolitical tensions, U.S. policy changes, and the potential failure to realize anticipated benefits from the DNA data storage business spin-out - Adverse global economic conditions, geopolitical tensions, and U.S. policy changes like new tariffs and halts on federal research grants could negatively affect the company's business and financial condition[163] - The company may not achieve the anticipated benefits from the May 2025 spin-out of its DNA data storage business to Atlas Data Storage, and the divestiture reduces business diversification[164] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[165] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[166] Mine Safety Disclosures This section is not applicable to the company - Not applicable[167] 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 March 31, 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025[168] Exhibits This section lists exhibits filed with the Form 10-Q, including amendments to the Certificate of Incorporation, the 2018 Equity Incentive Plan, and CEO/CFO certifications - Key exhibits filed include the Certificate of Amendment to Amended and Restated Certificate of Incorporation, the Amended and Restated 2018 Equity Incentive Plan, and certifications by the CEO and CFO[170]