Twist Bioscience Reports First Quarter Fiscal 2019 Financial Results and Highlights Commercial and Operational Progress

— Reports Record Revenue of $11.5 Million for First Quarter of Fiscal
2019 —

— Increasing Orders Show Substantial Growth in Next-Generation
Sequencing Products —

— Diversified Revenue from Genes Products —

— Updates Fiscal 2019 Financial Guidance —

SAN FRANCISCO–(BUSINESS WIRE)–lt;a href=”https://twitter.com/hashtag/DNA?src=hash” target=”_blank”gt;#DNAlt;/agt;–Twist Bioscience Corporation (NASDAQ: TWST), a company enabling
customers to succeed through its offering of high-quality synthetic DNA
using its silicon platform, today reported financial results and
business highlights for the first quarter of fiscal 2019 ended December
31, 2018.

“We accomplished several significant objectives during the first quarter
of fiscal 2019 focused on expanding our product portfolio, diversifying
our customer base and continuing to deliver on our mission to supply DNA
for improved health and sustainability,” said Emily M. Leproust, Ph.D.,
CEO and co-founder of Twist. “Our NGS products are resonating with the
market and drove top-line growth in the quarter. We received much larger
orders more quickly than we anticipated, requiring increased staffing
and resulting in higher fixed cost in the near- and medium-term.”

“Moving forward, we intend to maintain a strong top line, work to drive
our margin up, and continue to invest strategically in our vertical
market opportunities focused on antibody discovery and DNA data storage.”

FISCAL 2019 FIRST QUARTER FINANCIAL RESULTS

  • Orders: Total orders received for the three months ended
    December 31, 2018 were $15.2 million, compared to $7.4 million for the
    same period of fiscal 2018.
  • Revenue: Total revenues were $11.5 million for the three months
    ended December 31, 2018 compared to $4.3 million for the same period
    of fiscal 2018.
  • Cost of Revenues: Cost of revenues for the three months ended
    December 31, 2018 $11.9 million compared to $7.5 million for the
    similar period of fiscal 2018.
  • Research and Development Expenses: Research and development
    expenses for the three months ended December 31, 2018 were $7.3
    million compared to $4.3 million for the same period of fiscal 2018.
  • Selling, General and Administrative Expenses: Selling, general
    and administrative expenses for the three months ended December 31,
    2018 were $15.3 million compared to $9.3 million for the same period
    of fiscal 2018.
  • Net Loss: Net loss for the fiscal 2019 first quarter was $22.6
    million, or $1.18 per share, compared to $16.9 million, or $6.42 per
    share, for the fiscal 2018 first quarter.
  • Cash Position: As of December 31, 2018, the company had $130.2
    million in cash, cash equivalents and short term investments.

“We delivered significant revenue and order growth in the first quarter
– both indicators that our products are gaining traction, and we have
scaled our internal infrastructure and resources to position Twist for
rapid growth, particularly from our NGS products,” commented Jim
Thorburn, CFO of Twist.

Fiscal First Quarter 2019 and Recent Highlights

  • Shipped approximately 71,000 genes in the first quarter of 2019,
    compared to approximately 44,800 in the first quarter of fiscal 2018.
    Current turnaround time for 1.8 kb genes is 14 days
  • Continued progress in NGS product line, having shipped to 115
    customers in the first quarter of fiscal 2019 with eighteen customers
    now in production mode
  • Expanded the availability of genes five kilobases (5 kb) in length to
    all customers
  • Introduced Twist Application Programming Interface (TAPI)
  • Received International Organization for Standardization (ISO)
    9001:2015 and 13485:2016 certification for its quality management
    systems for manufacturing its next-generation sequencing (NGS) Target
    Enrichment Panels1, the latter for medical device
    applications
  • Generated early proof-of-concept data from the GPCR library and
    antibody optimization software for Twist Biopharma

Fiscal 2019 Milestones

SynBio

  • Offer customers 5kb genes at disruptive price – Complete
  • Introduce Twist Application Programmable Interface (TAPI) for gene
    ordering – Complete
  • Implement and execute new product introductions roadmap

Genomics and Targeted NGS

  • Achieve ISO 13485:2016 certification for quality management systems
    (NGS TE Panels) – Complete
  • Convert pilot NGS customers to full production
  • Launch e-commerce platform for NGS products in the first half of 2019
  • Leverage growth in top line to improve variable and gross margin
  • Launch back-end production in China for NGS and other products

Biopharma

  • Generate early proof-of-concept data from the GPCR library and
    antibody optimization software for Twist Biopharma – Complete
  • Expand proof of concept data packages for the GPCR antibody library
    and the bio-better programs
  • Advance the antibody discovery and optimization programs through
    non-dilutive collaborations
  • Longer-term: seek revenue-generating partnerships

DNA Data Storage

  • Execute roadmap to increase synthesis density on silicon platform and
    reduce DNA writing cost for DNA digital data storage
  • Pursue non-dilutive funding for the continued development of DNA
    digital data storage

Financial Guidance

For the full fiscal year 2019, Twist continues to expect to report:

  • Revenue in the range of $47 million to $49 million
  • Net loss in the range of $92 million to $94 million due to:

    • Increased stock-based compensation costs of approximately $7
      million, a non-cash item
    • $1.4 million associated with one-time public company readiness and
      NGS ramp costs incurred in the first quarter of fiscal 2019
    • Increased investment in NGS operations of approximately $0.6
      million per quarter driven by staffing increases associated with
      the increased NGS market opportunity
    • $1.5 million investment in biopharma as we increase our projected
      investment from $5.0 million

Litigation Update

On January 29, 2019, Twist Bioscience and Emily Leproust filed a
demurrer and motion to strike Agilent’s second amended complaint,
challenging each of Agilent’s legal claims, as well as a cross-complaint
asserting six new counterclaims against Agilent. They filed their answer
and affirmative defenses to Agilent’s second amended complaint. A full
statement is available at: https://investors.twistbioscience.com/news-releases/news-release-details/case-update-agilent-v-twist-litigation.

Conference Call Information

The company plans to hold a conference call and live audio webcast for
analysts and investors at 4:30 p.m. Eastern Time to discuss its
financial results and provide an update on the company’s business. The
call can be accessed by dialing (866) 688-0947 (domestic) or (409)
217-8781 (international) and refer to the conference ID 7382069. A
telephonic replay of the conference call will be available beginning
approximately four hours after the call through February 14, 2019, and
may be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406
(international). The replay conference ID is 7382069. The webcast replay
will be available for two weeks.

1Both ISO 13485:2016 and 9001:2015 certifications are for
Twist’s San Francisco offices, located in Mission Bay.

About Twist Bioscience Corporation

Twist Bioscience is a leading and rapidly growing synthetic biology
company that has developed a disruptive DNA synthesis platform to
industrialize the engineering of biology. The core of the platform is a
proprietary technology that pioneers a new method of manufacturing
synthetic DNA by “writing” DNA on a silicon chip. Twist is leveraging
its unique technology to manufacture a broad range of synthetic
DNA-based products, including synthetic genes, tools for next-generation
sequencing (NGS) preparation, and antibody libraries for drug discovery
and development. Twist is also pursuing longer-term opportunities in
digital data storage in DNA and biologics drug discovery. Twist make
products for use across many industries including healthcare, industrial
chemicals, agriculture and academic research.

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Investor Relations Information

Twist uses the investor relations section on its website as a means of
complying with its disclosure obligations under Regulation FD.
Accordingly, investors should monitor Twist’s investor relations website
in addition to following Twist’s press releases, SEC filings, and public
conference calls and webcasts.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements. All statements
other than statements of historical facts contained herein are
forward-looking statements reflecting the current beliefs and
expectations of management made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995, including, but
not limited to, Twist Bioscience’s anticipated fiscal 2019 milestones,
conversion of pilot customers , revenue growth across all product
categories and geographic regions, validation of Twist’s GPCR and
antibody optimization software for Twist Biopharma and delivery on
Twist’s mission to improve healthcare and sustainability through
synthetic DNA. Such forward-looking statements involve known and unknown
risks, uncertainties, and other important factors that may cause Twist
Bioscience’s actual results, performance, or achievements to be
materially different from any future results, performance, or
achievements expressed or implied by the forward-looking statements.
Such risks and uncertainties include, among others, the risks and
uncertainties of the ability to attract new customers and retain and
grow sales from existing customers; risks and uncertainties of rapidly
changing technologies and extensive competition in synthetic biology
could make the products Twist Bioscience is developing obsolete or
non-competitive; uncertainties of the retention of a significant
customer; risks of third party claims alleging infringement of patents
and proprietary rights or seeking to invalidate Twist Bioscience’s
patents or proprietary rights; and the risk that Twist Bioscience’s
proprietary rights may be insufficient to protect its technologies. For
a further description of the risks and uncertainties that could cause
actual results to differ from those expressed in these forward-looking
statements, as well as risks relating to Twist Bioscience’s business in
general, see Twist Bioscience’s risk factors set forth in Twist
Bioscience’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission on December 20, 2018 relating to its initial public
offering of common stock. Any forward-looking statements contained in
this press release speak only as of the date hereof, and Twist
Bioscience specifically disclaims any obligation to update any
forward-looking statement, whether as a result of new information,
future events or otherwise.

   
Twist Bioscience Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
 
 
Three Months Ended December 31,
  2018     2017  
Revenues $ 11,492 $ 4,313
Operating expenses:
Cost of revenues 11,857 7,498
Research and development 7,273 4,303
Selling, general and administrative   15,259     9,263  
Total operating expenses   34,389     21,064  
Loss from operations (22,897 ) (16,751 )
Interest income 664 158
Interest expense (348 ) (273 )
Other income (expense), net (15 ) (19 )
Provision for income taxes   (43 )   (52 )
Net loss attributable to common stockholders $ (22,639 ) $ (16,937 )
Net loss per common share, basic and diluted $ (1.18 ) $ (6.42 )
Shares used to compute net loss per common share, basic and diluted   19,187,533     2,638,068  
 
   
Twist Bioscience Corporation
Condensed Consolidated Balance Sheet
(in thousands)
 
December 31, 2018 September 30, 2018
(Unaudited)

(1)

 

Assets
Cash and cash equivalents $ 66,459 $ 80,757
Short-term investments 63,707
Accounts receivable, net 6,978 5,419
Inventory 5,561 6,028
Prepaid expenses and other current assets   3,958   3,467  
Total current assets 146,663 95,671
Property and equipment, net 13,596 12,331
Other assets   4,194   7,789  
Total assets   164,453   115,791  
Current liabilities
Accounts payable $ 6,725 $ 7,531
Accrued liabilities 7,867 7,567
Current portion of long-term debt 3,333 2,500
Other current liabilities   1,073   939  
Total current liabilities 18,998 18,537
Redeemable convertible preferred stock warrant liability 631
Long-term debt, net of current portion 6,526 7,218
Other non-current liabilities   333   344  
Total liabilities 25,857 26,730
Redeemable convertible preferred stock 290,483
Total stockholders’ equity (deficit)   138,596   (201,422 )
Total liabilities, redeemable convertible preferred stock and
stockholders’ equity (deficit)
$ 164,453 $ 115,791  
 
 
(1) The condensed balance sheet as of September 30, 2018 has been
derived from the audited financial statements at that date included
in the Company’s Form 10-K filed with the Securities and Exchange
Commission dated December 20, 2018.

Contacts

Investor Contact:
Argot Partners
Maeve Conneighton
212-600-1902
[email protected]

Media Contact:
Angela Bitting
925- 202-6211
[email protected]

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