Q1 2021 Twist Bioscience Corp Earnings Call
Welcome to twist Bioscience fiscal 2021 first quarter financial results Conference call.
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After the presentation, there will be a question and answer session.
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Please be advised for today's conference maybe recorded.
I would now like to turn the conference over to Jim Thorburn, Chief Financial Officer.
Alright. Thank you operator, good afternoon, everyone I'd like to thank you all of you for joining us today for twist Bioscience Conference call to review, our fiscal 2021 first quarter financial results and business progress.
We did issue our financial results released this afternoon, which is available at our website at www Dot twist Bioscience Dot com.
With me on today's call is Dr. Emily the Prost CEO and co founder of twist.
Emily will begin with a review of our recent progress and I will report on our financial and operational performance and Emily will discuss our upcoming milestones and direction.
We will then open the call for questions.
As a reminder, this call is being recorded.
The audio portion of will be archived and the investors section of our website and will be available for one week.
During today's presentation, we'll make forward looking statements within the meaning of the U S. Federal Securities laws forward looking statements generally relate to future events or future financial or operating performance.
Expectations and beliefs regarding these matters may not materialize and actual results and the financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected.
These risks include those set forth and the press release, we issued earlier today as well as low as more fully described in our filings with the Securities and Exchange Commission the.
The forward looking statements for this presentation are based on information available to us to date hereof, and we kind of enter this time to predict the full extent of the impact of the COVID-19 pandemic and many of the resulting business for economic impact.
We disclaim any obligation to update any forward looking statements, except as required by law with that I will now turn the call of our Chief Executive Officer, and cofounder Doctor of Emily low cost.
Thank you Jim and good afternoon, everyone in the third.
First quarter of two.
2021.
The need to innovate and execute across each of her business and yet including <unk> and.
And for your Biopharma and the best search.
And we beat our first quarter guidance of 'twenty five 'twenty six.
The reported revenue of $28 to me and and <unk>.
So the significant growth of 64% over the first quarter of fiscal 'twenty and 'twenty. When we reported 17 point to me and up.
That said this is the from quarter.
We have not shown quarter the quote unquote.
And you can already to a very low finding and that although in the quarter.
And that included about 600 of it Ken.
And according to expectation I want to wait and the names of the trick is broken but for.
And they could be done and the business school.
The gold Lucky.
And the revenue for the quarter, we eat the significant milestone and now at the trailing full quarter of run rate of the hundreds Humberto.
And it was super strong for the quarter of $33 6 million.
No.
Now I'd like to dive into theirs.
Each of all four business segments.
Beginning with synthetic biology, we reported 11 5 million and there aren't revenue and then.
Every quarter.
We see strength across the board for jeans and in Prime.
In addition, although the growth of fiscal 'twenty and 'twenty and then.
Our personal for me.
And the two groups of kids.
Pharmaceutical and biotech company and.
The long and kind of the market.
Although most of the lodging offering.
For pharma and they think of some of them we introduced loss preparation of.
And we could cut and the commercial launch of the product breadth of them right.
We expect additional interest and that's where the product into the drug and school arena and the.
The addition of pipeline moving forward and a niche.
We are simple.
Oh yeah.
Thank you.
And the extension of the pulp Brooklyn, the physical.
The following items I think of them.
The initial feedback and very positive and the.
The working interest production and the all the solution of out more broadly.
We believe you'd be thinking of it.
Differentiated operating pool, because some of them without conducting the drug.
And the government.
We launched and then already just five months and December 2020 initial revenue building for the Portland.
One of it could be used for the long term.
The sneak it would be for dose gives them.
And at the time zone I couldn't get you know who make the old team.
And the thing.
Our revenue growth and value each day.
And noteworthy and lie.
Eight of ginkgo being down about $1 million average.
And we began showcasing the resilience of.
The slide political for the U D. Ville eventually go.
And equally important we expect income suite there.
The.
To fill the gain market share and hips cannot revenue to 500 million. The we announced that we are building a heck of the teacher just outside of Portland.
And of the outside what would be the next evolution of our platform, which we expect the cookies.
And as many of products beginning in 2020.
We think though.
Sure.
And the additional differentiation and keeping it simple.
For the whole time for all of our products.
The double outgrown the tip of that.
And to serve as the secondary manufacturing outside of the Bay area.
And both of the when it becomes operational.
<unk> allows it does suggest that the candidates yesterday the.
Those will make their own.
Due to the printing of the climate.
And Collyn, we're building capabilities with the E Commerce and Stamford facility business.
Business and direction.
But I suppose of placement and the.
And maybe less of them who've been deal with them.
Got you.
We have and working with simple Linda.
One of the assembly.
And they use the older and.
The strategy for me please.
And our solution for you.
Well it will take time to develop and deploy all of them.
And we would need the I'm good thank you.
Cynthia.
Yeah.
I think the genetics and target to the NDA.
And part of it.
Revenue for the quarter.
And yes revenue exceeding revenue put itself.
I think for what we expect EBITDA.
The above equal the blend.
And the executive quarter to quarter.
Revenue in the NGL and crude system of in the liquid biopsy space.
Accounting for a portion of all of the onto the U and the system now represent significant potential upside once these products complete clinical trial and our goal would be kind of shot.
One of them for example.
We received and shipped a full point by the end of the all the for liquid biopsy.
Conducting the Sydney and preparation for commercial loans.
We expect two of the kidney available windows can share in non stepping on for Paul.
We expect the full launch of <unk>.
And so there shouldn't be the near future, which the hurricanes facilitates uniquely both the Gibson.
And will be needed.
And we are cool and district wide and.
In addition, some of all get the mills.
I mean liquid biopsy from the mall.
The Dixon all of MRV.
And it should be the would be the Love's and green area for the industry.
We also see significant approach coming from kitchen of the convert from Macquarie.
Twist system as the coach and either for direct to consumer for Coopervision and <unk>.
The quarter.
Share that we had the 90 and then I'll call them from us.
Single system.
And from a business.
And can now share the.
And the genome.
And you all engineered solution for us.
The Geronimo.
The way from.
The decline of <unk>.
And to put.
For the most of them that's simple.
Net.
For domestic Cynthia the conflict.
And the 13 by sequencing.
General and put together a comprehensive diverse global citizens, which is more efficient and.
And yet most of all the kept true yeah.
Nobody.
And the traditional distinct Macquarie. The competency is fixed and approximately 80 to 100 of the.
Yes.
The contingent consideration.
The change of 40 basis.
And by sequencing and they don't like.
And it was the ability.
So for the target that gives us the condition, not just and good kitchen and Cook.
Truly chains dug into Colombia.
The critical.
And remember that one pretty close maybe the magnitude.
And by COVID-19, and why now.
What was the decision.
And our attention and this is a Nick.
The net exemplar and <unk>.
And we don't.
The improved.
Turning to COVID-19, we announced that the CDC and could be the El Pas quality control and bill.
Okay.
Screens for the eight.
And COVID-19.
The.
And as you know neutrolin and borrowers.
Yes.
We continue to anchor the landscape and the breadth of the client and other.
Quickly respond to them and still true.
And diagnostic test for wider.
For instance, foundational bluntly, the lumps and thickness.
Pools and the one one for the environment.
All of the volume for.
And you're comfortable with <unk> and other.
All of Pacemakers confirmed and so we'd like to range and capturing all the pieces of equipment.
With the amendment of the volume ease of renewed focus on sequencing sounds good evening the virus that could go from Nike.
The anticipated that need back in March when we launch of targeted enrichment Corp.
And we believe we can be part of the solution.
And that's why volume from Colombia, and then tracking of our evolution and civilians.
And globally.
Thank you by the pharma, we continue to advance work through our partnership as well of the antibody.
In addition, we signed two agreements and January 2021.
And he would support work for path now as well and zone.
And April.
Well the look any.
We expect to provide custom DNA libraries to and good chimeric antigen receptor of all com.
And the intent to explore novel combination of.
With the demand.
Luckily and the engine you on characterizing the call whose clinical with the design.
True therapeutic properties that may be peaking the wide range of COVID-19.
We added the ranks and the technology, we have going for.
Of the collaboration.
And consult with Adelaide Centre moving.
And the target true cell line and screen.
That makes them.
The other one antibody.
And I'll pass out and.
And Portland, bolstering, our evo tip of the.
We pushed really hard to find partnerships given by the end of it though.
It depends on 'twenty and 'twenty.
The quarter equaled 21 was like automobile for Biopharma.
And though all of who knows.
And then very soon.
The agreement beyond the two of them cheap.
As you know some of those partnerships and there've been closely to garner from Sydney.
Let's go to pull off of sharing up for growth as we engage and.
And then on the collaboration.
Complement of all work, we stop notes interest.
And use the development of several antibodies.
Therapeutic targets, both for all of the deposits demonstrating the value of for platform against the wide range of <unk>.
And she had the there'll be some component that's been identified the Clifton antibody and the good to be towards the best one again of the rights of way.
And then immuno includes the target.
Yeah.
Lastly, the PBT and important complement.
<unk> and EBITDA.
Yes, and Thats really the message checkpoints and the tumor.
Microenvironment and eight.
And the highly expressed in lung colorectal and prostate simple.
We believe the antibody candidate has the potential to be 80%.
Perfect.
The improved dosing and the little central nervous system.
Compared to the small molecule.
And going from.
We are pursuing out licensing opportunities.
What's the Sichuan and.
And one early would you call out the keeping you apprised of all simple on this one.
We have identified seven kikongo for antibody discovery, where we believe our biopharma platform and generally neutral and should be the antibodies.
In terms of the advanced development of new pocket true.
And the simulation platform.
The teams moving of the value chain.
And we'll be testing out of.
Okay.
And I believe over the next day.
Moving to the storage income.
Continued to advance along the engineering and commercial and that.
On the engineering side, we're making progress.
And with for this.
For the cheap cycle.
And we look for a while to put my D and updates when available.
And the DNA of that surge of alliance fight it.
And it continues to gain traction and several more organization going into the.
Quantum.
On slide eight of the presentation with basically the useful books for city of the total cost of ownership for the Doctor.
The total cost of sales of cloud storage, increasing we sign because of the required that the migration on the fines to Sydney and Samsung.
Is the to meet yesterday, and you know and hardware of citizens.
For that is causing the DNA. The tour of course of the times remain relatively flat due to the.
And the last time.
Additionally, any of you pay for cloud storage and directly with declines the curve, while additional copies of the P&L.
Each of the TCR and quota.
What you see on the right side of the slide the graph showing the pool of class of storage of one think of by the time, creating created using current information from the UGC and Amazon website.
The cost of D&A remains ready to accept the decline while the book.
Hey, all clouds, the wage increases of the claim nothing of the twin cities.
Lowering the prices.
The the topics which of the light.
And like Greenland.
Yeah, and it's a clear choice for months and storage.
Currently we are working through these declines and we are matters.
And that would be the 1000 megabyte.
And for longer.
And this time I'd like to turn the corner of oxygen two of your financial result for the quarter.
Okay. Thank you Emily as Emily noted, we have delivered another very strong quarter, and what continues to be and uncertain environment due to the COVID-19 pandemic disruption.
Like to thank all our investors and supporters of the recent equity raise as we strengthened our balance sheet to support our growth investments.
Revenue for the quarter was $28 2 million as compared to the guidance of $25 million to $26 million.
Additional highlights for the QUADRA and quote.
The $3 6 million and orders.
We had another strong quarter, and Ngls, including four and 5 million and revenue from one of liquid biopsy customer.
Our Biopharma business continues to develop strongly within the additional $1 million and revenue in January generating agreements and the first quarter.
Gross margin for the first quarter was positive 35, 5%.
And we grew our customer base to approximately 500 customers.
We also signed a lease for Oregon and factory of the future instead of top of our investment and DNA storage.
We ended the quarter with cash and short term investments of approximately $587 million.
Now I will provide more details on the orders for the first quarter.
And J S orders for the first quarter for $17 million.
And that is growth of 44% year over year.
This quarter, we also had for 5 million order from liquid biopsy customer.
And we believe we're very well positioned and excited about the future of pop of population genotype being liquid biopsy and the MLP opportunities for twist.
During the December 2020 quarter received the Argos from approximately 570, and Jeff's customers, where the top 10 accounts, placing orders of approximately $10 million.
As we noticed as we noted in previous calls.
The irony positive controls or not and material components of our revenue.
However, the of contributes to our customer growth and.
And we're seeing these customers return to purchase other N G assets and bio products.
And our pipeline for our larger opportunities continues to scale and we're now tracking 160 accounts, which is up from 150 accounts, we noted and our last earnings call.
59 have adopted our platform and less of an increase from 55 last quarter.
Now turning to send and bile.
Just for the notes and bio includes ginkgo and.
Our genes.
And perhaps agg libraries, and I'll, let go of pool products.
So and by orders increased to $15 6 million and our December 2000, and trying to quarter and.
And as compared to $12 3 million for the December 2019 quarter.
Ginkgo orders increase from about $2 6 million to approximately $3 5 million and the first quarter of fiscal 2021.
Our genes business is doing well and total of genes grew from approximately $9 5 million and quarter, one fiscal 'twenty to $12 2 million and our current quarter.
Non gainful of genes orders for the quarter were $8 6 million and the year on year of growth was approximately 26% with growth and all segments.
All of the good pool of orders rose in the quarter to $1 9 million with strong demand largely coming from gene therapy applications.
Biopharma orders in the quarter for $1 million for antibody discovery activities.
We know of a total of 10 partnership agreements, which also includes milestones and royalties and less of an increase from eight last quarter.
Please note, we provide orders not to directly translate into revenue, but want to provide the trend line for each product group.
We also anticipate both Ngls and ginkgo orders will fluctuate quarter to quarter.
And I'm moving from orders to revenue.
Revenue for the quarter was $28 2 million, which is growth of 64% year over year and the quarterly sequential decline of 13%.
And we noted last quarter, the general and placed 9 million dollar order with 6 million coming earlier than we anticipated.
Having said that we delivered another outstanding quarter is the range of products revenue for the quarter climbed to $15 6 million.
And the December quarter, we received orders from liquid biopsy customers, including a single for 5 million order, which we also built during the quarter.
As we noted in our previous calls for Ags revenue and <unk>.
Fluctuates significantly from quarter to quarter based on timing of customer orders and deliveries.
Our son and bio product revenue for the first quarter of fiscal 'twenty. One was the 11 5 million up sequentially from the $11 million last quarter, and an increase from $10 1 million and quarter one fiscal 'twenty.
This includes ginkgo, which declined from $2 1 million to $1 4 million sequentially.
Which we believe is mainly juice the timing of the projects.
Alright, Luke for Ginkgo remains the same as our previous guidance of $11 million to $12 million for the fiscal year.
Q1, <unk> revenue was $8 1 million as compared to $7 eight moving Q1 'twenty.
The ginkgo revenue was was down and we shipped approximately.
Approximately 84000 genes and the quarter versus the 80000 genes and the same quarter last year.
Our non ginkgo growth highlights, we continued to make progress and scaling of our gene business and pharma and industrial biotech and less reliance from ginkgo, which accounted for approximately 5% for Q1 revenue.
Now to Biopharma, our biopharma revenue and for the quarter of 1 million.
And that's in the upfront services on our antibody discovery projects, including planning screening and high throughput of IGT purification.
I will now briefly talk about the regions.
All regions recorded year on year of growth and revenue.
U S revenue of $17 three versus 10 million and the same period last year.
EMEA revenue grew to $9, one moving versus $5 9 million and the same period last year and now accounts for approximately 30% of our worldwide business APAC.
The APAC Q1 revenue was $1 8 million versus $1 2 million the same period last year.
And sorry for industrial segment revenue summary, health care is narrow and largest contributor from the accounts for more than 50% of of business with revenue of $15 9 million and that's up from $5 8 million in the same quarter last year.
Even though the ginkgo revenue is down this quarter.
Our industrial biotech revenue rose to $7 1 million and Q1, 'twenty, one versus $6 1 million and for the same period last year.
Academic revenue in the first quarter was $4 9 million, which is flat with Q1 'twenty agricultural revenue was $2 million the same as the prior year.
Now moving down the P&L gross margin for the quarter was 10 million of types of five five percentage of revenue as compared to 20% and quarter one of 'twenty.
The increase in margin reflects the impact of scaling of revenue leveraging of fixed costs and the benefit of higher mix of and <unk> products early in the year and anticipated and also reflects great execution by our organization.
Operating expenses, including cost of revenue for the first quarter increased to approximately $42 8 million.
In terms of year on year comparison, R&D for the quarter was $14 million compared to $10 million $10 3 million and the first quarter FY 'twenty two to investments the biopharma data storage as well continuing investments and sent by oil and Ngls.
Our R&D spend and the quarter is net of <unk> 3 million received from Georgia and should the technology related to the DNA synthesis portion of the Miss program and <unk> 8 million builds upon the confidential project.
SG&A increased to $28 8 million compared to $26 formula and primarily due to investments and the commercial organization.
Our net loss for the quarter and steps $2 9 million of declining from $35 6 million and the first quarter of fiscal 'twenty. The as a reminder, and the first quarter fiscal 'twenty, we had a onetime charge of $22 5 million for the litigation settlement.
Expense.
Stock based comp for Q1, the $7 billion and depreciation was $2 2 million cash.
Capex was approximately $3 6 million in the quarter with major investments and lab equipment at our South San Francisco facility.
And the Louise science or at least for the factory of the future we have no material expenditures the date.
We ended the quarter was the cash and short term investments of approximately 500 and needs to $7 million.
Now I'll briefly update you for the year.
We have a very strong start for fiscal year and the same time, there's lots of and starts to of the pandemic.
We're maintaining our 'twenty 'twenty one guidance range of 110 to 118 for revenue Kimco.
Ginkgo revenue is estimated to be approximately $11 million to $12 million non Gainesville send violin is estimated to be in the range of parts of 144.
And yes revenue is estimated to be and the range of $54 58.
Our biopharma revenue is estimated to be approximately $4 million.
Our gross margin guidance for the year of statutes that 4%.
As compared to 32% on the last guidance.
While we had higher gross margins and the first fiscal quarter, we do expect subsequent quarters to be a bit lower which is influenced by mix.
And impacted by new class of utilization is low.
Launched new products, such as the agg and scale, our DNA price.
Our operating expense, which includes R&D and SG&A.
<unk> to be approximately $182 million for the year as compared to $174 million and all.
Our loss projection.
Which reflects the higher stock based comp charges, primarily due to the increase of our stock price.
Around the guidance for the year remains of approximately $60 million and fiscal 'twenty one.
Net loss guidance for the year and I expect to be and the range of 142 to one for $7 million.
Stock based comp is estimated to be 32 million.
True to the higher stock price and depreciation of $9 million.
Capex guidance for the year is $30 million, which includes $20 million Capex for Portland facility, which is $16 million equipment and 4 million for facility construction.
In summary, we had a strong start to fiscal 'twenty one.
Alright, Luke is prudent and.
And our investments at the same time or position of twist for very strong growth in fiscal 2020 true.
With that I'll turn the call back to Emily.
Thank you Jim.
Conclusion, we started our fiscal year from and look for auto and important.
Looking into fiscal 'twenty 'twenty one for somebody.
We expect the continued growth and diversification of our revenue stream and <unk>.
A short ramp up unit and the production.
And for IGT.
And you can push crop yields and frame.
Simon.
Can you focus on this income solutions to allow us to capture and fiscal 'twenty Titan.
Mission.
And preparing and principal and such a platform for Quaker.
For the future, so we enabled Congo, and 2022 and beyond.
And yes, we expect continued revenue growth and just the ramping production.
Who launch of for mutation solution.
The technical of addition of Shanghai and continued core growth.
The sequence.
Okay.
Goodbye from them.
And we fully expect for take the same partnerships and that helped.
The current debate and generic revenue, while advancing our own internal pipeline of antibodies and sort of thing.
The thing out licensing opportunities over the next day.
And so that's the storage.
Continue to drive our engineering will net to them some of them and hedge position.
The coupons com and.
And paved the way for market adoption of this new storage media.
Of that.
And it's about the call for questions for Perrigo.
Ladies and gentlemen, if you'd like to ask a question at this time. Please press the star and the number one key on your Touchtone telephone to withdraw.
And your question press the pound key.
Our first question comes from the line of Tycho Peterson with Jpmorgan.
Yeah.
Hey, Craig this is the lightning on for Tycho. Thanks for taking our question could I first wanted to start with guidance.
And that top line guidance unchanged. Despite the beat this quarter, but you increased the gross margin side just to account for the higher margin and the quarter. So essentially leaving the rest of the year at the same.
For critical conservatism or is there something else to call out there.
Okay.
It's a conservative.
And we are and the middle of the pandemic was off to a really strong start.
And we.
We see good strong sym bio business.
And we're seeing experience and good business in Europe.
And and the U S. We had a.
For $5 million.
Shipments on the liquid biopsy.
So our NGL business is going strong and buy.
The business going strong recently, we're doing well and at the <unk>.
Same time of being conservative.
And we saw gross margins increased to 36%.
And we feel good about.
Improving the gross margins as we increase our revenue of our longer term gross margin targets for two 6% and we're on track for that.
Just to summarize we are we are being conservative and prudent and the middle of the pandemic.
Great that's helpful.
And then another question on.
Something you highlighted the return of our own net conversion can you talk a bit more of bottom line of price you have two additional conversion over the next couple of quarters and sort of.
Of the economic value our framework.
How to think about that.
And thank you this is and we need to.
It's a great question, but we do know that the.
And Macquarie promotions.
And some time.
Because of where your growth. So it gives the most of it though.
And so using micro read the.
And the high volume of simple and let's get into do we need to show that we can be cheap low band of macro and nobody will switch, it's more expensive and so now with regeneron with helix and fifth Street, we have multiple that the points.
It is the case.
Israel to get in the door.
And then the next step is in addition to being cheaper items some benefit.
And two to using twist, the sequencing and that is that the.
The content can be evolved.
For the micro you're stuck with the content and you can't do anything.
And and so.
And those are big liquidity and the case of goods in the around the use that the ability to and then the the content and to not be just caucasians typically what's the.
And.
Global and global demand.
And I think the lesson.
And then the next step is one of the contents of this decline is two one and so that the suite.
So it takes a little bit the plan.
Because people have to.
The reboot the instruments to bring in the new automation and and and bring up the.
For two clubs.
Yes.
And once you win the base.
It is the key.
The solution.
So we.
Our intention is to keep converting kissed the room.
The main those all the the size of Puds and the wrong, but and <unk>.
Think that the.
And our solution.
The.
The true differentiation compared to two kind of the.
Old technology of my credit.
Great. Thanks, Emily that's really helpful.
And then on Biopharma, you've had great traction.
And revenue generating partnerships.
Wondering if the $4 million you include and guidance that's true part of the initial upfront payments or is there is the component of milestones and royalties that would offer upside to your guide.
No that's of Great question. So the the guidance is only for the.
Upfront payment and talk.
And there may be milestones and royalty, but the.
And the Windows happens.
More of like when death and the.
And that would be.
And that would be upside and so at some point.
We anticipate that we'd get the milestone and royalties from the contract we sign and most likely the first one to who deliver the upside would be the contract that we signed in the past the adjusted this quarter 90 day.
Next time, we'll have to do the work and then the tons for the.
And the preclinical work to happen to get to the I D.
And then to go to the next steps, but what we quote and order and revenue.
The only.
On the upfront and with them and.
And the microphone.
Right.
Great and if I can ask one last question here.
How much of the backlog or order at the start this quarter.
The COVID-19 related and how much revenue contribution from Covid and contemplated in your fiscal year 'twenty One guide.
In terms of the Covid Covid is not material was that a lot of of success for the RNA positive control panels that we've released and.
And the March time period and the.
That's actually growing into the infectious disease panels. So we are seeing a lot of new customers. We've added about 500, 600, and new customers there and they are actually coming back for additional NGL assets and bio business.
In terms of actual Covid revenue is not material.
What's the what's the what's particularly interesting for US is the increased number of customers and the increased share of wallet with and go after and those customers.
That's helpful. Thanks, Jan Thanks, and then.
Our next question comes from Doug Schenkel with Cowen.
Hey, good afternoon everybody.
And I actually just wanted to touch on a few of the important but high level drivers for long term growth just starting on Nextgen sequencing.
It's been interesting going back to the IPO.
And.
You talk about the Tam growing there I think when the first went public we talked about the Ngls Tam maybe being 4% to 600 call. It 500 million net at the mid point now now we're talking about $700 million.
And.
I'm just wondering if you could kind of break down what's expanded that I assume thats things like micro array of conversion and other areas.
The opportunities and liquid biopsy.
I'm just wondering what's driven the expansion of the Tam and.
And.
Are there other opportunities to take it beyond what we're thinking about today.
Yes. Thank you Doug it's the great question and so first of all.
Some of I assume that we are conservative in.
I'll turn the mission and that is.
Is the the the the.
The allow that we can touch if we had kind of of some of the market.
So it's not.
The aspirational.
And so the the increase in the time has been.
Mostly driven by.
The emergence of new application.
You mentioned liquid biopsy is this and see a big one and another one is the MLB minimal residual disease.
And so if you think of him on the alone.
The $15 million.
The cancer patient in the U S. If they get the speed the once a year and.
And the average price is a is the problem.
Below the $50 billion.
And.
Of the spend on MLB and of course, we accomplished all of it we can't only because the.
The DNA library of clip portion of it but the.
We think that the the 700 million that all of that's where all of it.
Limiting todays actually moving to increase.
And though.
Thanks to the emergence of liquid biopsy and stuff.
And lumpy and I would note that the SNP microarray is not included in.
And the 700 million the alone we believe there is the nose, though 500 and below our video.
Of.
For the micro array of conversion.
That's great Emily and maybe just kind of continuing down the line with questions like this.
And kind of high level, what do we just think about the long term.
And drug development.
Regarding.
The drug development candidates you have in house.
How are you, making the decision on which targets the prioritize.
How are they progressing.
<unk> previously.
And and.
And Dennis <unk> receptors today Theres other ones you've mentioned in the past I'm. Just wondering if you could share any details on all of those are progressing and then I guess the third part of this question is.
How should we think about the possibility of.
Essentially drug co spin outs over the next 12 to 18 months and the absence of other out licensing opportunities.
And the two quick questions.
So in 2019, we shed another kind of gives us good working again and we from the.
The highly functional antibodies against all of them at the time, we pick those because of the west talk to drug and for.
And we will in the mode of scientific demonstration.
And so that's meant that the on purpose, we picked we target between the for the world of people do it and and <unk>.
We had to do it to build out that the package and get.
And the commercial partnerships, that's where all of getting now this was more of the.
Claim to fame rather than than the.
And then.
And the peaking and targets.
Of the business with them.
And now things have changed last year when reported that the we've.
We've done some some work internally and externally to identify seven targets and.
And those are probably good.
The business weighted them and.
And so those of I guess, but do you believe.
And we'll be able to.
Generates from commercial interest and.
So the antibodies that we already have the they'll available for licensing if needed.
But the we'd be the the seven targets we're working against.
And to be.
Commercially attractive.
In terms of.
Our outlook of monetization.
You mentioned that the.
Oh so.
The objective would be to.
And the spin them out two of them.
Okay and sensing.
But if the opportunity is right.
The coolest would be.
Exclusive of squishy, but all the options of the opened the growth will be.
And it's peanuts the nuc.
Where from.
Some of them to win the capital well and as such.
And student seem to get the risk of moving the answer would be full of and in exchange for Exxon.
Thanks for sharing the kind of event.
So the.
And all the options that are available and ease of Philips P node.
Oh licensing.
Which of those.
Is.
Thanks to them and bring.
<unk> the most of.
If you Couldnt make return for the twist.
Okay, and and that's great Emily and last one on data storage I mean, it's great to hear about the progress youre, making there.
That has gone from being something that was viewed as sort of exciting.
Possibility and a source of Optionality for the company now it seems like Youre, making enough progress, where we can put more confidence and the program actually churning and kept for something which is great and I'm wondering if you could talk a little bit about the partnerships with Microsoft alumina.
And western digital.
What is each partner, bringing for the table and are there delineated responsibilities between each of those and then the second part to the to the to the DNA data storage question is I'm just wondering if some of the improvements that youre, making specific to.
Getting to essentially cost targets and speed targets that are associated with making data storage and commercially feasible.
And would be leverage of all for other purposes across your business. Thank you.
Thank you Doug great questions on the on the the other stores Alliance.
And.
The the.
So we will.
We.
Whereas some.
So it would be where the spearhead.
Of the thought I am told me what level of the people who joined us on the go.
<unk> is is.
To to create a bigger pie for everybody.
And in store ratio of two.
For 'twenty to have a closed technology.
And so for instance, the if you think back to the ZIP drive of the.
And the late nineties.
It was.
No.
Corporate salary to one company and Elena and she.
He says that the when you do that when you look at everything in.
The hot to get less and it can be hard to assist and the momentum.
So the idea of pose for us to bringing companies together and create the deal price.
Well with an open.
Send down.
The goal of Yeah, hi, and too soon for.
Once we get low to be finance industry the industry roadmap.
And to create use cases.
And to indicate the.
Yeah, I always of companies.
So step one protocol of available.
The companies of budget and <unk>.
The two new pilots and stuff.
And the component.
For the idea of the ally and.
So basically grease the wheels of.
The Q2.
Commercialization and.
Policy towards the right side of it because we.
It's still a lot of work ahead, but we have line of sight that it's working and that's working for them too.
To get there and so we want to make sure the pool.
And when will one of course is and that the.
Commercialization.
And.
And the go to market.
Okay.
Got it.
And then for your second question of the potential sales in the low well costs.
The.
The synergy.
All the learnings that we've done on the citic and cheap to date.
All of the processes the internal Knowhow, we are applying for the third and so we are doing much better.
In terms of developing all of that that.
That's sort of a solution and because we've been spending the last for.
And when you're doing it.
Thank you for Nancy.
That's the way.
And then going back.
And we're not doing it for that.
The reason why we think that the fluids.
I think it's only logical that's when you have a team that pushes the boundaries of.
The color to your plan.
There's likely to be.
Some of.
Benefit back to the main business, but it's not the main objective, but it is the same team.
Does the.
The work on the initial peak and platform.
Quite a logical the there'll be some benefits of a thing.
Fantastic. Thank you again.
Thanks, Doug.
Our next question comes from the line of Catherine Schulte with Baird.
Hi, Thanks for the questions I guess first on the liquid biopsy customers, placing the large order and the quarter and can.
Can you just talk about the commercial launch timing of that product and I can think of one that's talked about using your product at the potential second quarter launch and.
And maybe the magnitude of the net Chris you could see ex if it does move some of the clinical trials to commercialization.
Thank you Catherine good question.
And you probably can get when the able to comment on who the customer is.
And what I think what's the can say is that.
We have been progressing quite quite well and the degree, but I've seen the number of companies and it sounds we won all of the pile.
And then the buildup for.
Validation of the buildup for Caleb and and now right and the mode of clinical trials and and so you can't even big old though.
But the expectation is that one since the Codell Sean.
The.
The level of of needs that they need.
It would have.
The growing.
And the we're not and child of the timing, we don't control the timing and the window.
Commercial loans have been.
And I can say is that the.
One way of the capacity.
And whenever it happens we can we can deliver quickly.
As a reminder, when the pool when the original and all the and then we will.
We're able to.
Very quickly and the same quarter make it cheaper.
So we have to basically.
And and.
And so we yes.
We are confident.
And Oh shoot.
True.
And she is revenue.
Right.
However, because those non weapons of a big all the debt.
Create some lumpiness.
But as the multiple companies that make them for yoga.
For the claim.
Okay, that's helpful and.
Just given the the calls for increased sequencing when it comes to monitoring and the different COVID-19 variants popping up how much of an opportunity do you see that as you know what kind of uptake are you seeing on your offerings and how are you thinking about that contributing and the balance of the year.
Yeah. So so.
So you know all of you surveillance of the Covid.
Barbara is important and beyond just the yes. The the people of this is obviously some of the things we put onto the sequence of flu virus and that's why we're actually we're quite early.
And launching.
All of our products.
And <unk>.
In terms of Oh that and that is done for the Pilbara sequencing.
And there's two methods.
And to do it the.
The first one is what we do which is to have the vision.
The second one.
And using PCR and then sequencing.
And.
And full transparency of the the PCI pool.
The sequencing is maybe a little bit yields and feeling.
But.
The result.
And then we had the.
And all yesterday and was that some of that.
For clothing, and definitive one way of allocating those compare the two and on the obligations of Corp for tier two tier you're moving a better coverage of the entitled the human and so.
So we.
We don't report.
Exactly.
And we don't report to the extra.
The number that I can say that.
All the.
Our approach is superior.
And the and we haven't.
And our kids Oh.
And in collaboration with Bioshock and so.
When you are trying to make it does yes.
And so we report the number of aggregate the stuff for the NDA.
By itself.
Okay.
Not material, but the.
And number of non might be of course.
The together.
Once it is too out of the although of course.
Okay got it and then.
Last one from me and just looking at academic and and Agriculture, you mentioned Bill for gross were flat and the quarter do you think those customers are still being impacted by Covid disruptions and what kind of growth do you expect from those markets claim for work.
Sorry, and Kathy I missed the first party did you talk about academic.
Yeah.
And I.
Yeah, academic and and agriculture.
So I <unk>.
It's interesting in terms of academic.
Low, obviously universities sort of being slightly impacted by the pandemic and <unk>.
If you look at it.
Revenue in academic as being roughly flat for the last year.
And that's good news.
For us because of obviously.
When when the the labs actually when the the academic institutions actually start change because the activity, we should see upside there.
Sites, particularly I'm, particularly encouraged by the the academic revenue.
In terms of agriculture agricultural as being a small part of our business.
And last quarter revenue was <unk> 2 million.
So we see opportunities and the future of agriculture, but the the major opportunities.
And over the last year, we've actually executed well and health care, we're seeing industrial biotech pick up and I think the labs of ramp up.
As the pandemic starts to decline and the next year.
Great. Thank you.
Okay.
Our next question comes from Vijay Kumar with Evercore ISI.
Hey, guys. Thanks for taking my question and Jim maybe one on the quarter, So I want to make sure.
And you said the numbers correct the for and a half of what you called out is that like a one off for I feel like in the last quarter and you guys had the leach and run at or is this more for repeatable feature or.
Should we be thinking of for four and a half as one off.
So good question on the floor and a half bj's and liquid biopsy I think we're very well positioned and liquid biopsy.
We have great product, great great solution, there and we're working with the number of customers and Nigeria.
It does it is lumpy.
I think I would highlight is that it.
And we're making great progress in the building the NGL pipeline.
And revenue for Ngls last year's 44, we did almost 16 million and Q1.
The weird.
We're very optimistic about the growth and Ngls and.
And it's difficult to call when these large charges largely come in when when and when we ship them.
But we see growth and Angie asked this year and.
No our guidance of $54 50, and we believe that's very prudent.
So we've got a good product and we keep.
And the pipeline of customers keeps increasing.
Understood and one.
Last question from my side on the P&L the gross margin.
I guess.
Did you say it was mix, which is gonna dragged down margins for the back half and typically it looks like Q4 is a pretty big gross margin quarter and.
Opex looks like it went up on the SG&A side, maybe some comments on what's driving SG&A.
Yes, so on the gross margin.
Projection is.
As a conservative and longer term gross margin targets came true and.
And 60%.
The first quarter gross margin was 36%.
Our last guidance for the year was 32%. So we've increased guidance to a range of starting to starting for as we increase of revenue and leverage our fixed costs. We are ramping new products. So you see you have little inefficiency as you as you ramp the products in terms of underutilized capacity in terms of Opex.
The increase in Opex is primarily stock based comp.
The as you appreciate the share price has increased a lot during the year. So the stock based comp charges higher number of selecting matson and the increase of.
Our operating expense guidance.
And on SG&A Jim.
And that's it.
SG&A.
Stock based comps increased from 22.
The 32, so so that's driving the bulk of the increase in SG&A.
And Seth Thank you guys.
Okay.
Our next question comes from Puneet suitor with SCB Leerink.
Hey, guys.
Thanks. So first question is on <unk>.
Looking at the orders.
Just if you could walk us through I mean, I appreciate the the $4 5 billion that you've called out but I believe that was this quarter just walk us through I mean, the step down here the.
Puts and takes to that it is.
And you know given the sort of one off.
Orders that Youre seeing here is just wanted to get a better sense of what the.
The order book.
Should we be thinking about the order book.
For the year.
I mean, obviously in terms of orders.
First quarter of arguments for about 30.
$33 6 million.
So you take off the floor and a half million and looking at $29 million and whats.
What's notable is the ginkgo the orange.
As for three and the highest revenue was one point for.
We do expect <unk> to pick up significantly and the rest of the year and that's why we called out revenue of 11 to 12.
For the year in terms of our guidance I think that's where you're getting up from neat yes, our guidance is conservative.
However, we are taking into accounts the pandemic.
We are seeing.
Seeing very credit.
The strong bookings and as noted and Ngls pipeline and gas continues to grow.
We will seek and cool come back and the alleged later half of the.
Our fiscal year.
And we continue to make progress on the <unk> bio.
We are conservative in terms of where we think the academic institutions are at.
But in terms of the overall 110 and 118, we thought it was prudent and leave the revenue guidance in place and.
Increase the gross margin, which reflects the higher gross margin and quarter one.
And puneet to build on what James said, the I'm not sure I would characterize it as the one of Colbert.
And we I liked it because it does seem as he can.
The next step and you know liquid biopsy.
C pulse.
As it sits and all goes into the.
The clinical trial.
But this is not the other from the.
Description of that and all the thinking to be the last email.
So is it just as the next step of and he will go through clinical trials and email and then once we go to two commercial launch with the speed that they can.
And maybe even more than that.
Okay. That's that's helpful. So other than that context, if you can just.
And just to help me understand.
You know last quarter, and a $9 million for and a half million dollars for this quarter. If we you know.
If we think about the sort of lumpiness continuing through the through the year, then maybe just walk us through how much of these such orders are and.
Are baked into the full year guide if you can just walk us through maybe.
How much of liquid biopsy or are you baking into the full year guide and how much of the sort of of the $9 million of that order that came last quarter of you're baking into the guide for the full year.
So the.
The $9 million dollars for last quarter, we actually shipped and quarter four.
The terms of the way, we build up the 54 to 58 days.
It includes the four and a half million for liquid biopsy customer.
So we build the top by customer who don't do actually break it out by segment.
And as you know we've got about 160 of large customers we're tracking.
The continued to give us their projections were working closely with them. So we're pretty conservative and challenge the way, we build up the guidance, but we don't break it out by segment.
And I E. We don't break it out by the liquid biopsy as an example.
Okay, but it just appears that the these for.
Orders are becoming sort of.
Routine rather than as Emily pointed out there and not really one off so.
I just wanted to get a sense of is that those are the types of orders you are you're continuing to expect through the through the year and they are.
Are the baked into the guidance or not.
Just start to make sense, the baked into sort of baked into our guidance of $54 58.
And what I'm trying to get across for Natus, We do track our key customers and we are conservative and channels of our projections.
And we've withdrawn the NGL business from treats for 'twenty, one to 44, and we had to almost 16 and the first quarter of this year. Our expectation is we're going to continue to do well.
However, it is very difficult to predict corp quarter, but year over year, we anticipate good strong growth and the Ngls.
Got it.
And on Biopharma and.
You know could it is it appears that obviously youre working on maps and now Youre doing.
Our cell therapy products.
And it's good to see the progress on that front, but and.
Just.
Help me understand how should the you.
Sort of the cadence of those new project ads should be through the year sort of how many projects are you baking into the guide for the full year and and again also you know.
When should we when should we expect to see.
The first clinical phase one entry of a of a product when does your what's your line of sight on the 10 plus projects that you have so far.
Thank you puneet and so we.
We went and the guided on the timing for.
So when we love the fifth streets and type of D. A.
In the clinic.
And it leads to the very important.
And my son force, but the wellness and control of the timing of big because one because we ended the preclinical development and then the company picks of the department of the crude oil and so that's why last year, we were producing on I think as many partners that's possible and it.
Of course, Marshalls Homegoods kit get get the Sunil.
And so one of those 13 last year, we would get the first we don't know.
But the but.
Wait for the many.
And then your shots on goals.
As far as the you'll for question.
Uh Huh. Thank you asked me about the.
I mean, the new partnerships, we were expecting.
Good.
So with no guided this year and the number of other ship what we've.
Guidance on the on the high school and the alarm and for the upfront payment.
And.
I'm quite encouraged by all of whom the the front of it.
And those kind of partnerships.
Like sitting a kid you.
And you concluded and the.
And the weaker.
In the months for it.
For the slides and your long ago.
And the development.
Fine.
The well has the tilt to the states and so.
So for many of them.
Okay great.
And if I could squeeze and the last one on D&A started since this is the you talked about that quite a bit is that of <unk>.
And when we think when do you think that could be a material revenue for twist and and you know it appears that there of stability studies that you have to do with DNA.
And and also redundancy has to be built out into the storage systems and whatnot in order to do so so such trials when can we see such trials when can we see data from such trials and potentially win can be you know of see material revenue for twist longer term. Thank you so much.
And we've done many many of the demonstration day now we've done demonstration for years with Microsoft for the demand for the system.
And in the nation lately.
In Q4, with Netflix and so I don't I don't think Lee with much more to demonstrate the DNA of Sterling.
The team and it kept suite that we use the peer reviewed and where the DNA of stable for the equivalent of the 100000 hundreds of carbon domo.
So and so.
The.
I don't think that the.
Low to demonstrate and terms of stability that is pretty pretty big sort of whats.
We have to do for US is go through the.
The technology cycles, we've guided that we would have the one micron chip working this year and.
We will have the next one ton of true between need the <unk>.
And the 15 Micron chip and.
In 2022.
So it's not amongst the way but.
And in terms of of.
The.
Quarter.
To get to.
Our commercial loans to get to them.
The pipe.
And the production.
Okay. Thanks, guys.
That concludes today's question and answer session I'd like to turn the call back to Dr and Nebraska for closing remarks.
Thank you and and that's where it would be helpful thing on the Covid beyond the scheduled but the really neat and exciting claim to be empowering our customers to improve health and sustainability.
And when and with health care under the microscope microscope and eliminated through the COVID-19 pandemic, we are proud to continue to innovate and execute.
Applying DNA synthesis platform to write the future of health care diagnostics sustaining growth can be called sustainable materials and by you and the the search.
And that's where you want to share with you our progress and the month of head and thank you so much for your attention.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
For example.
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