Q3 2023 Twist Bioscience Corp Earnings Call

August 4, 2023

Yeah.

Welcome to the twist Biosciences fiscal 2020 Street third quarter financial results Conference call.

At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you'll need to press star one on your telephone you will then hear an automated message advisory you. Your hand is raised to withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

I would now like to turn the conference over to Angela Biding S. P. P of corporate Affairs, and Chief ESG Officer. Please go ahead.

Thank you operator, good morning, everyone I would like to thank all of you for joining us today for twist Biosciences Conference call to review, our fiscal 2023 third quarter financial results and business progress.

We issued our financial results released this morning, which is available at our website at Www Dot twist Bioscience dotcom.

With me on today's call are Dr. Emily, let Bruce CEO and co founder of twist and Jim Thorburn CFO worked with.

Emily will begin with a review of our recent progress on twist businesses.

Jim will report on our financial and operational performance and then we will come back to discuss our upcoming milestones and direction and then we'll open the call for questions.

We would ask that you limit your questions to a maximum of two and then requeue as a courtesy to others on the call.

As a reminder, this call is being recorded the audio portion will be archived in the investors section of our website and will be available for two weeks.

During today's presentation, we will make forward looking statements within the meaning of the U S Federal Securities laws.

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 in financial periods are subject to risks and uncertainty.

They could cause actual results to differ materially from those projected.

These risks include those set forth in the press release, we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission.

The forward looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward looking statements, except as required by law.

Well also discuss financial measures that do not conform with generally accepted accounting principles, including adjusted EBITDA information may be calculated differently than similar non-GAAP data presented by other companies.

When we reported a reconciliation between these GAAP and non-GAAP financial measures will be included in our earnings documents, which can be found on our investor relations website at www Dot twist Bioscience dotcom.

With that I will now turn the call over to our Chief Executive Officer, and co founder Dr. Emily the roost.

Thank you Angela and good morning, everyone. The third quarter of fiscal 2023 highlights continued management of our business with a particularly strong quarter for the core business.

Record revenue of $63 7 million exceeding our guidance of 60 to 61 million.

Orders of 63.8.

And at this stage for future growth.

In April we shipped the vast majority of the products out of the effects of the future as we shifted production for these biggest nine and today, we're celebrating record revenue driven if you can tell from FX shrink.

Taking a step back in December 2020, we signed a 10 year lease agreement for the state.

The pandemic, we made the investments to build out a site, which we knew would be instrumental in a mixed set of goals for Brooks in bio per plane.

Oh Jeez Anshan framework.

Our team completed the factory of the future on time and on budget, even amidst global supply chain challenges since he can distribution. So it depends on mix and macroeconomic pressure.

The successful completion and operation of a second manufacturing site in Australia ability.

To plan and execute on them, if you can projects and lays the groundwork for future growth.

We shipped about 169000 genes Hooker for instance.

In this quarter and that number will continue to extend that.

A lot of compression, we should lessen twist assumptions, so someone who's going to sit and tell you.

And these weird choppy.

Buffy production before we began push up this deemed effective.

Neutral.

For the core business, we continue to expand our customer base and take market share.

In some value are consistent around the time of 10 to 14 business dysfunctional Jameson to fund this whole gene framework with the next look at the mill.

In addition to scale in the past price was a primary differentiating feature but today, we see almost every system I'll review highlights faster all the time as a key benefit.

We will continue to drive speed as we move throughout the planning trips in a first gene in the fall timeframe.

Between today and the launch in the fall we're working on four key activities.

Reducing the symptoms of internal manufacturing distribution system to minimize the time that gene to idle and then pushing the implementation of that soft with chicken refunding the military budget processes to reduce processing time, where we can see if you'd be done.

So the return metrics my associates to readjust to the new cadence of the streamlined peripheral protos and <unk>.

<unk>, Hi, e-commerce platform to be able to transact without any pricing.

In addition, we are working on the marketing side to prepare a robust long strike it in current and future customers.

I'd like to note that when we launch we believe this will be a disruptive product and we also believe there will still be efficiencies to get into future further improving our turnaround time forgings and pregnant.

Well the first of the future is producing the vast majority of all the products are so similar Cisco side continues to manufacture all of <unk> panels delivering excellent results for the quarter.

We continue to receive positive feedback from customers or somebody like that using our chemistry full time to get the enrichment system, approximately 60% of downstream sequencing cost reducing the customer overall.

My career economic environment that value proposition resonates.

We continue to win pilots and trials against our competitors.

We were pleased to see several positive proof points with the liquid biopsy field over the last quarter.

We are substantially tied to the commercial success of our customers in Brazil, and we believe these important tests, we continue to demonstrate their value and detecting cancer.

It is early as far as guiding treatment decisions.

Expanding our market opportunity during the quarter, we launched a robust portfolio and the initial feedback is very positive with many customers trialing the product and have received initial orders as we believe this product portfolio opens up the R&D research markets with workflows.

Really excited about this launch.

If our products. It takes time to drive revenue growth products. We introduced today do not produce immediate revenue to grow over the next one to four years through the introduction of innovative products that meet industry needs. We have called out the niche for the core business that we expect to be putting into it yet and extent within the markets we serve.

Overall, the Cob business continues on its growth trajectory and we have delivered very good results again this quarter.

Turning to Biopharma revenue growth came in below expectations with Xiaomi meant that we were experiencing in terms of integration challenges and those issues have arisen.

For the quarter.

Our lagging indicators or those that we see today underscore our headwinds which includes E timing open head count for the sales team.

Taylor integration challenges.

We have seen some market impact from the restricted biotech funding environment. We also see strong interest from pharma.

All my companies throughout the world, particularly in APAC and EMEA.

These relationships take time to first to include impacting deal timing category for the quarter.

We have key open head count for Biopharma business development managers, which have been opened longer than we anticipated.

On the positive side, we know that where we have commercial tenants we secured deals.

We are looking to roughly double our current associates from Biopharma from five to 10. It does take time to onboard and ramp up. So this is not an immediate fix old revenue, but we play the long game.

We continue to see interest in our robust platform of services, particularly the newly launched <unk> gold standard offering which combines in vivo in vitro and into liquid discovery approaches.

To make progress on internal processes that we believe will set us up for a personal success as the deals increase.

Moving from a both from a service offering to our internal asset monetization, we have focused our efforts on prioritized five programs and we're in discussions around <unk>.

As you know equivalent next we expect to fall short of our previous guidance of Biopharma for the year, but I want to reiterate that we will continue to evaluate analyze and manage the business to ensure video Christians, although the short medium and long term.

Although the storage, we expect to demonstrate them and 20 gigabytes century archive workflow by the end of calendar 2023.

This in Canada, 2025, we expect to launch the televised country archive solution.

Moving to corporate development, well have three months beyond our substantive action to accelerate our path to profitability through the shift in my picturing and resizing of the company.

While the food cost saving will not be array license in the fiscal first quarter of 2020 full the organization has adapted to the changes.

With the reductions we have made across the business. We wanted to ensure that we also have the ability to hire key positions.

Well now joined US as our Chief Accounting officer in late May, bringing a wealth of technical like continuing expertise and global are continuing exchange said Gandy joined us in late June as our Chief information officer, bringing expertise and a range of areas, including application solution architecture as well as data analytics, we're looking forward to our growth.

We could use will accelerate our transition into the next phase of skilled profitable.

Is that okay.

<unk>.

Alright, Thanks, a mine with a truly outstanding quarter with a record number of customer service, despite the more difficult macroeconomic environment.

Quarter, three was $63 7 million.

Which is year over year growth for proxy.

Approximately 14% and a sequential increase of 6% and ahead of our guidance of $60 million to $61 million.

Orders were $62 8 million for the quarter, an increase of approximately 7% year over year and declined sequentially by 1%.

Gross margin for the quarter was 34, 3%.

Our customer base continues to grow and we shipped approximately 200 customers as compared to 19 100 in the third quarter of fiscal 'twenty two.

We achieved this growth in the quarter, when we transitioned to the factory in future.

We are truly proud of the organization's ability to execute those major transition.

And we concluded quarter, three with cash and investments of $357 million.

Turning to Ngls are ngf's revenue for quarter, three was a record $33 2 million, representing 14% sequential and 19% year over year growth.

Our third quarter orders with $33 2 million, a sequential increase of 19% our Ngls orders year to date grew to approximately $92 million.

92% growth over the same period in fiscal 'twenty, two with the revenue for the top 10 customers accounting for approximately 99% of our NGL revenue and was down approximately 560, <unk> customers' fiscal quarter three.

Our pipeline for larger opportunities continues to scale and we're now tracking 270 million accounts.

$2 17 noted in our last earnings call.

74 have adopted twist as compared to 131 last quarter.

Now, let me turn to <unk>.

Which includes genes DNA, perhaps IGT libraries, all labor pools revenue rose $25 9 million another record representing sequential growth of 7% and year over year increase of approximately 17%.

Or just for the quarter were $27 million.

And Thats, a sequential decline from $30 9 million and.

And is consistent with annual trends, where syn <unk> customers place blanket purchase orders in the March quarter as they set up their new budgets.

By orders year to date have grown to approximately $85 million up from 66 million. The same period in fiscal 'twenty, two which is 28% growth as we continued to take market share.

In Q3, we shipped approximately eight hundreds and by our customers, which has grown from approximately 500 in the third quarter of fiscal 'twenty two.

Of note our customer base for <unk> borrowings with large pharma and biotech companies as well as academia.

Our genes revenue increased to $19 3 million as compared to $17 4 million in the third quarter of fiscal 'twenty, two which is year over year growth of approximately 11%.

As we highlighted we transitioned our gene production to the factory of the future this quarter and shipped approximately 171000 genes in fiscal quarter, three an increase of approximately 5% year over year, and we want to recognize our offer team operations team for a terrific execution.

All of the pools and library business continues to do well.

And now moving to Biopharma Biopharma revenue for the third quarter fiscal 2003 was $4 6 million down sequentially from $7 million or just for the quarter were $3 5 million down sequentially from $5 3 million in the second quarter. This decline was primarily due to challenges. Emily described is also reflected in <unk>.

Number of active programs, which declined from <unk> 93 to 78.

We are addressing these short term challenges and they are actively rebuilding the commercial team.

I'll now cover our revenue breakdown by industry.

Healthcare revenue for the third quarter of fiscal 'twenty, three was $34 million as compared to $29 four in the same period of fiscal 'twenty to <unk>.

Industrial chemical revenue was $16 8 million in the third quarter of fiscal 2003 as compared to $16 7 million in the third quarter of fiscal 'twenty, two and academic revenue was $12 four.

$4 million in the third quarter fiscal 2003 compared to $9 5 million in the same period of fiscal 'twenty two.

Moving to a regional program for Q3 fiscal 'twenty three EMEA revenue rose to $19 1 million in Q3 fiscal 'twenty three versus $15 5 million in Q3 fiscal 'twenty two.

For APAC overall revenue increased to $5 7 million compared to $4 8 million for the same periods of 2002.

In the U S revenue increased to $39 million in the third quarter versus $35 8 million for the same period.

Fiscal 'twenty, two and moving down the P&L.

Our gross margin for quarter, three was 34, 3% as compared to 38% in quarter, two which reflects a sequential revenue growth leveraging our fixed costs and the initial impact of our cost reduction in that scenario.

Our cost of revenue for the third quarter was $41 8 million as compared to $41 7 million in the previous quarter.

And as we continue to transition some of our operations from San Francisco.

Actually in future.

In the current quarter, we expect to see the full benefits of our cost management in the first quarter of fiscal 'twenty four.

Our operating expenses for the fiscal quarter, including R&D SG&A change in fair value Mark to market on restructuring costs was approximately $82 7 million as compared to $86 3 million in quarter three fiscal 'twenty two.

To break it down R&D for fiscal quarter was $24 5 million declined from $36 8 million in same period of fiscal 'twenty two from outage due to a decrease in <unk> spending as railroads seek consolidated as of September 32022.

<unk>. The decrease was driven by $3 8 million cost reduction activities as well as decrease of $2 3 million in stock based compensation expense R&D doesn't include DNA storage R&D spend of $6 million and Biopharma R&D spend.

$6 million in the third quarter fiscal 'twenty three.

<unk> Q3 was approximately $46 1 million as compared to $53 7 million in Q3 FY 'twenty. Two this decline is primarily due to a reduction in stock based comp of $7 million.

The future of pre commercialization cost included in SG&A.

$1 1 million associated with a number of labs that are in pre commercialization phase and we anticipate they will be operational by the end of fiscal year.

Restructuring costs for the quarter were approximately $13 million, including $9 million for employee severance. In addition, we incurred non cash restructuring costs of approximately $4 million for assets and leasehold impairments associated with the transition of our sin bio activities from San Francisco to the factor of the future.

Stock based compensation for the third quarter was approximately $10 $8 million depreciation and amortization for the quarter was $8 $3 million associated with the commercialization of the factory picture, an increase from $7 1 million in previous quarter.

Capex investments.

In quarter, three was approximately $4 million, which brings our total capex cash spend for the first nine months of fiscal year to $25 million.

I will now cover our outlook for the year.

As we've highlighted the launch of the factory features going well, we had a strong quarter of operational performance and violent and <unk> businesses are doing well and we are addressing the challenges with our biopharma antibody.

Business.

By 'twenty three.

Year to date revenue.

The third quarter was approximately $178 million.

The fourth quarter, we are increasing our guidance to the revenue in the range of $63 $64 million and that's up from the previous guidance of 62 to six 3 million and therefore, increasing our fiscal year 'twenty three guidance to 241 million to $242 million range, and that's up from 235% to $38 million.

For FY2023 we are projecting some by our revenue approximately $98 million at the top end of our previous guidance range of 96 to 98.

Projected NGL revenue for FY2023 to be approximately $120 million, which is an increase from $113 million to $114 million in our previous guidance range and reflects the stronger orders we've discussed earlier.

Biopharma revenue of $23 million to $24 million and Thats, a downward revision from $206 million, reflecting our previous comments of Biopharma challenges for Q4 Cross margin, we're projecting approximately 36% which includes cost in San Francisco associated with operations that we're migrating to Portland normally.

These costs will be.

Projecting 2% margin increased from 36.

38% for the fourth quarter.

On the expense side, we are projecting research and development expense of approximately $26 million.

G&A expense of approximately $47 million for the quarter and restructure expense approximately $1 million.

For full fiscal 'twenty three for gross margin, we expect approximately 36% for fiscal 'twenty three.

Our operating expense guidance for the year was approximately $308 million as compared to the previous guidance Street <unk> 19 for <unk>.

Now projected R&D expense of approximately $190 million as compared to $112 million to $114 million from our previous guidance.

SG&A of $189 million as compared to the previous guidance of $197 million to $200 million, primarily due to the impact of lower stock based compensation.

Mark to market is projected to be a credit of $6 million, one time restructuring costs of $14 million, including both severance and noncash other income and expense is projected to be approximately 12 months.

Depreciation and amortization is projected to be approximately $29 million and that's unchanged from our previous guidance and our projections were stock based comp.

<unk> declined to <unk> 2 million from $43 million.

Operating expense for DNA storage.

We expect to be approximately $40 million and thats consistent with our previous guidance and for fiscal 'twenty. Four we also expect $40 million operating expense for data storage.

Net operating loss of the year is projected to be approximately $220 million inclusive of a one time charges of approximately $14 million for restructuring.

Next of the year is projected to be $35 million and Thats a decrease from $40 million previously and then in cash is projected to be approximately $325 million compared to previous guidance for 'twenty.

Before concluding I wanted to briefly recap the impact of restructuring activities, we announced in May.

We estimate the overall savings to be approximately $40 million, including $23 million from operations due to the transition of our sin Bayou operations to the factory future approximately $17 million in R&D and we have built these savings into the guidance we provided.

In summary, with Masters shipping from factory future, we continue to gain market share.

Our customer base and our focus on managing our cost structure as we scale, we anticipate exiting the fourth quarter of fiscal 'twenty, four and adjusted EBITDA breakeven for the core business with adjusted EBIT.

Breakeven for Biopharma and delaying.

So we continue to manage all of our businesses areas absolutely.

We define adjusted.

Adjusted EBITDA as EBITDA, excluding stock based compensation.

Finish my remarks today I'm sure that many of you read our 8-K filed concurrently these earnings I want to say that after five years as CFO at twist.

Slice it supply my operating and semi structured background and a new way to facilitate our next phase of growth.

And a big believer in the opportunities that lay ahead for twist and look forward to continuing to contribute to our success.

I will turn the call back to Emily.

Thank you Jim as many of you know Jim joined US when our revenue was approximately $5 per quarter.

Strategic financial accretive has been integral to get this to where we are today I mean, we bought it over $63 million in revenue for the fiscal third quarter, having spent the last five years in the CFO role I am pleased that Jim will continue to provide guidance for commercial scaling and operational leverage.

As well as using a semiconductor background as we advance development for the storage.

I'd like to pass on these thing Jim fully has done to date and look forward to his contributions to other areas of the business.

We will conduct a search for the CFO position and as soon as this is Phil.

When we transition into the new rule.

Including the core business is reaping with growth opportunity for profitable and scalable growth ahead.

We have made good progress towards the launch of <unk>, which will be available to customers in the fall of this year.

For this important growth driver we are targeting a 1.4, we ended up in amicus market. This is a market made up of scientist and.

Researchers and large pharmaceutical companies and academia that can make their own DNA, they make DNA instead of buying it as they need it faster and more specific to you. Then we believe it can be delivered from this really any source today and returns for the building Celgene, we will charge a premium price.

Optimizing our current clonal genes and <unk> workflow through software operational efficiencies, we will be able to make all of our SaaS genes at the same Cogs standup speed gene with incremental pricing power from Hudson dropping directly to the bottom line. We expect to begin seeing revenue for <unk> in the first quarter of fiscal 2024.

And it will be a gradual build as we leverage our digital marketing interest shows and tools to reach the long tail of the <unk>.

And yes, I'll workflows continued to be included in more and more assays and we believe the growth of our engineers opportunity would be sustainable for the foreseeable future.

Thanks to a robust RNA workflow for a research scientist an area, where we have a significantly smaller footprint today, but believe we can grow and extend.

And by pharma, where we.

Work to do to turn that business around.

Interest in the offering both our services are now out licensing opportunities and were working to scale the commercial team.

But does the storage we are working towards delivering an end to end gigabyte since we archive workflow and subsequently the terabyte that the stores traditionally early released to key customers in calendar 2025.

With that let's open the call for questions.

Thank you.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Please standby, while we compile the Q&A roster.

And our first question will come from Vijay Kumar with Evercore ISI. Your line is open.

Hey, guys. Thanks for taking my question.

<unk> gross margin execution care.

Emily or Jim maybe my first question on the quarter share.

Down sequentially on a dollar basis.

It looks like Biopharma down <unk> slow down.

When you look at those orders can you maybe talk about customer conversations you're having with cross sym bio biopharma diagnostic end markets.

As you are exiting.

Fiscal <unk>.

How are those conversations progressing and given Kevin.

High single sort of trajectory here in orders is that an indication for how we should be thinking of revenues for fiscal 'twenty four.

Yes.

Jim Thanks for the question.

Yes, I would just stand back and look at the business in terms of orders.

<unk>.

Your point is correct.

In orders did decline sequentially.

We saw that pattern last year.

And the previous year. So we saw a decline from the March to June quarter. So there's a couple of reasons for that one is we're making progress in terms of penetrating large pharma.

And what we see with a number of customers as they have their budget is allocated for the year.

The secure blanket purchase orders with us to give us an indication of their business for the year I think if you step back and you look at our growth.

I need to look at.

We are of course, a date orders versus the same situation last year.

Rob.

Roughly about 20 odd percent.

We are.

They are seeing a strong customer growth.

The types of the future is going well and we are continuing to gain market share.

As we look forward for next year, we see the launch of this fast genes.

We see the growth in terms of Ngls.

So she is going to be about $120 million, which is in line with our original November protections.

Although we issued.

Last year, so overall business has really highlighted.

Highlights of business roofing.

Yes, we have a short term issue in Biopharma, which already.

Pricing.

We've got a great integrated offerings. So so overall feel good about the business feel good about where our position was fast genes and we continue to gain share.

Understood.

I did see you had a slide on our fiscal 'twenty four assumption Jim.

It looks like your cash burn.

Projects are for first quarter 'twenty three it's about $180 million, that's stepping down close to 100 $105 million for next year.

And when you think about that step down in cash burn how.

How much of this is being driven by our assumptions on revenue growth or gross margin improvements versus shop.

Opex coming down for fiscal 'twenty for some.

Some qualitative comments I think it will be helpful.

Yeah, So you've got a combination of the three.

The three areas one is we're managing.

Our costs.

As you look at the numbers in terms of exiting this year in terms of R&D and SG&A.

We brought that down.

Originally for the year were anticipating R&D of about $170 million.

Down significantly below that.

G&A or managing.

In terms of overall cost.

We announced actions in May this year, we estimate that sales of about $40 million a year as we exit this year it was about $325 million cash.

So next year, a key focus and this is why I'm transitioning to two menu wrong is we're going to manage our cost structure as we go forward.

<unk> top line growth and we're going to get to adjusted EBIT breakeven for the for the <unk>.

Core business in Q4 and next year.

Feel good about the opportunities and feel good about executing to that plan.

Jim are you seeing opex on a dollar basis will be down next year versus stuff. That's gone to 24 is that the assumption.

What what the assumption is really going to be managing opex as we go forward.

And we're going to be leveraging our cost structure.

So the goal is as we increase our revenue next year.

See improvement in terms of gross margin.

And we're going to get to adjusted EBIT breakeven.

<unk>.

For the core business of the annualized revenue of 285 by calling for next year.

So essentially even.

Takeaway is you can take a look at our Q4 cost structure.

We're going to manage roughly two.

A number that gets us to that adjusted EBIT breakeven for DNA storage, we're gonna be managing good DNA storage to four 2 million Opex next year.

Same as this year.

Thank you.

And one moment for our next question.

We have a question from Matt <unk> with Goldman Sachs. Your line is open.

Hey, good morning, Thanks for taking my questions.

Just firstly on the Biopharma business I know you took some restructuring actions last quarter.

Jim referenced.

Some sequential slowdown in orders.

And I think you've pushed out the EBITDA breakeven for the guide next year, just how are you thinking about the business today I know, we're dealing with a lot of cyclical pressures from a structural standpoint from a competitive positioning standpoint, how are you, saying that business and what are you looking to in terms of committed investment in that business over over the next year or two.

Yes. Thank you. Thank you Matt So as you know we serve the biopharma industry in two ways. One we sell products in that we will be calling us and by segment and then we sell service that we recorded <unk> pharma.

Solution.

And.

<unk>.

In the C&I side win.

Products.

It's going fine so our view of the market is that.

That.

It's all going well and so we have a particular issue in our Biopharma services.

And.

And when we analyze and look at us to Dr. Territories. If we have commercial tenants in a territory, we win business essentially surprised because to your point around competition and we have a very competitive offering the combination of our in vivo in vitro.

<unk>.

Our solution is extremely competitive when we have commercial tenants and so the execution issue that we have in both of them a solution right now is that we do.

We do not have enough coming.

Commercial tenant to cover all our territories and we have five currently.

And the most important thing for me is the one that are put on the most is making sure that we higher tenant in all the territories.

And.

If we can replicate what's happening in the <unk> territories.

Quite confident that the business will grow the way we expect it so in terms of.

Milestones I'm looking for is first hiring of the talent training them.

Then getting orders done getting revenue.

That's the sequence of.

Event.

In which we're going to turn the business around them as Jim mentioned, we are managing it very actively and we continue to do so.

Great. Thanks for that and just for my follow up just on the <unk> and Jim just on the transition and Jim your transition maybe.

Maybe just talk about the timing why now.

And in terms of.

I know you hired a search firm, but are there thoughts on internal versus external exploring all possibilities.

Just kind of want to get a sense for one timing why today and then kind of what your thoughts are in terms of replacement.

Yes in terms of timing business is in good shape.

The key issue a challenge over the last year was bringing up actually future.

Doing well.

We're seeing a lot of interest.

And we have line of sight to get to adjusted EBIT breakeven Q4 next year. So the timing from an overall commercial and business point of view is good in terms of line of sight.

And Emily movie you can answer the rest of the question, yes, yes.

In terms of.

The search.

It would be an external.

Recruit that at this point.

We're just starting the process of until 'twenty one yet.

It would be it would be external.

Yeah.

Thank you.

Our next question.

Will come from.

Puneet <unk> from Leerink partners. Your line is open.

Yeah, Hi, guys. Thanks here.

So first of all Jim.

<unk> in the new role.

Couple of questions I would say first one on biopharma.

Hum.

Emily if you could step back a little bit about this business and talk about I mean look you had meaningful cuts here Youre re platforming.

You're not reaching breakeven in that business in 2024 as you expected.

You are lowering your guide again.

The Biopharma discovery <unk> Pierce our.

Calling out benefit from rationalizing of trials, so that's ongoing out there.

So it appears that a high level that you are losing share as well so I'm.

I'm wondering when you look at the business overall.

How does this fit into the twist growth profile and outlook in the longer run Youre, obviously doing well in the mgs core business of serving customers on the research side and the growth side, but.

Just trying to understand how biopharma fits into the overall strategy.

And picture for the company longer term, yes. Thanks, Thanks for the question.

As a reminder.

In our Biopharma services, what we sell.

Discovery services and so the discovery of antibodies.

Specific niches adcs.

Some tcl some engineering so.

Well sitting services for the early stage of the of the drug.

Pipeline sort of drug discovery.

Some optimization some developments.

Typically.

We stopped at.

At the preclinical stage.

And.

And actually on the <unk> side, when we set out a framework of genes oligo pools.

Sam just to mill.

Listening to those give some thus fold that the discovery development optimization and so the benefit to twist of having both the product and the service because that's when we get in front of a pharma customer small biotech last fall.

Pharma, we're able to sell the full menu.

Thank you Sir.

Krishna.

If you're going to do the work yourself.

By using <unk> in fragrance.

<unk> from <unk>.

We're going to.

Be more effective more productive in U S hotspots in Chicago.

<unk> and drugs and that is working that message resonates with and then what we are saying staying at a symptom is and by the way. If you have a target for which you are notable on your own too fine.

A therapy.

Too many targets in and you're not able to prosecute all of those internally outsource those target to us.

You'll discover the antibodies for you as a service and then goes into the Biopharma service.

Business and so we are serving the same customer and having both menu of products and services.

Is synergistic.

Right now.

It's benefiting modest in both side.

As I mentioned with some commercial execution issues.

In some territories.

On the Biopharm Us service.

Adding the two together, we see it as a net net positive and.

Well I'm quite.

Domestic as I see the territories, where we have commercial talent it works so.

If it works once we begin and of course with most of the can.

You bet.

We're quite optimistic for the future.

Okay.

Got it.

Then just a brief one on the riders can you just remind us how many writers who have currently operational in both single and.

What do you expect that number to be by year end.

So right now.

Now we have a full right to gain subsequent Cisco as well as full right in.

In Wilsonville now all operational.

In Wilsonville, we have space for 12 additional right Bill.

Points, we do not have.

We don't have right those on although so.

For the foreseeable future.

Those focus holes are going to serve them.

Got it thanks.

Thank you.

We have a question from.

Luke <unk> with Barclays. Your line is open.

Alright, good morning, everybody. Thank you for the questions.

Jim at noon lockers, neither man Youre going to.

Youre going to be missed.

So quickly here on the liquid biopsy partnerships.

Can you tell us how to think about.

When we should start seeing if you guys are on the MLR D. But is that MRV ramps across that space. How do you think about the growth and the NGL side and can you just remind us or give us some type of directionality on the.

The economics that you guys achieved per sample.

You want to take that generally I'll make you take it.

Or you can take care of MRI.

Yes. Thank you for the question so.

As a reminder, as you know we get we get baked into.

Liquid biopsy amount.

Dave.

And as we mean the spirit as it gets and those get get.

Validated and as legal commercial we are tied into their commercial success.

Uh huh.

The way I see it is.

They use our reagents in their production.

And so every time, there and then Ais a patient.

They use some reagents from Twiston so.

We participate.

As a.

Function of the revenue ramp in terms of the <unk> that we are trying to get.

Typically we we've seen that around 10% of their Cogs.

The sale is a fair value.

Times, we get more.

And it also depends on the extent of the chemistry, the useful from us some some casinos they only use the DNA.

So the capture and.

And so that's how we win from the win based on liquidity for DNA.

Than you.

In many cases were able to extend the <unk>.

Components of the chemistry, we and sometimes it's the full solution all the regions from sample to sequencer. So the bank goes to beat the adaptive the enzymes.

Everything at that point, we're able to expand that.

The percent of Av.

The code that we can we can come in.

Yeah.

That's fine.

And then as a factory future starts coming online when when can we expect you guys to start taking orders there is that <unk> is that next quarter.

And then as the initial demand and interest is coming online. There. How are you guys are you seeing more interest for the genes the pools like which.

Products are you guys getting most interim or initial interest on right now.

Well.

All the all the.

Segment ongoing well elaborate please.

Euros and in any case, our libraries are going really well our fragrance as we are.

We started to accelerate the speed at which we can we can ship framing right now is fragrance.

So doing really well and.

My expectation is as we launch has genes.

In the fall.

Sure.

Good try though of course, so I would say depending on the customers we touch.

Something for everybody to Tonight.

And as the system into the <unk>.

Quality team.

The product.

Oh.

Priced right.

And the user experience that they get from twist suite I, often said the units three people pay for the user experience and from the time to get on the websites of the time to get the invoice it is vague.

Friction is beautiful and into expense and bad debt.

The key element.

Awesome Awesome this of our success.

And on the SaaS gene just a quick quick one are you guys starting to take orders next next quarter four.

The fast genes.

You're getting me in trouble business I mean, two questions Bill.

And as soon as soon as Lance will win.

Wow.

Alright, thank you.

Thanks.

Thank you.

One moment for our next question.

It comes from Steven Mah with TD Cowen Your line is open.

Okay, great. Thanks for the questions.

Just a follow up question on the Biopharma business.

I think you guys said that the number of active programs have dropped.

Those dropped program are they mostly from emerging biotech partners or was the program loss across the board from from some of your partners just trying to get a sense of.

Where we're seeing most of the.

The weakness in your Biopharma business.

Maybe maybe maybe we should clarify that as we finish a program.

Hum.

We we are done and so we dropped we drop it from the list of active programs.

<unk>.

And then we get paid within the invoices and so the fact that the IV program dropped means that we finish more programs than we started.

And thats the that is.

A reflection of all the being.

All of those right now decelerating and so the revenues.

We will decelerate following those orders.

But as I mentioned, we are highly focused on hiring.

Commercial tenants, because where we ask tenants.

We win deals.

Okay. Thanks for the clarification.

And maybe then on like the new partnership front and I appreciate that you haven't been youre not fully.

Resource, but have you seen a push for more partnerships with less upfront and more backend economics.

Is that impacting your calculus on new partners and programs.

Yes.

Great question.

<unk>.

We as a guiding principle we have.

Not subsidizing the researcher for customers and so we.

We always want to too.

At the.

The fee for service to.

To pay for work with.

Good margin.

And.

And if we can get a tail in with milestones and royalties that that's a great benefit.

But we are highly focused on making sure that the upfront payment.

These effects change for that.

And that can provide.

So.

Yeah.

Im not.

Hearing of a pressure on that on that upfront fee I think once we're able to.

The commercial tenants.

The value of what we bring I think the the FIFA service is very much in line with the value that at all.

Customers.

We provide them.

Thank you Steve.

Yeah.

Thank you.

Our next question comes from.

Catherine Schulte.

With Baird. Your line is open.

Alright, thanks for the questions I guess first going back to <unk>. I think you said you talked about seeing revenue from those in the fiscal first quarter at 24.

Based on your conversations with customers what kind of premium do you think that would be willing to pay for a faster turnaround time.

Thank you Catherine.

Question.

So what we are which we have seen is definitely there.

<unk>.

The PSU value of the faster gene is going to be different for academic customers compared to industrial kept their mills and so.

Probably actually I think for the first time in <unk> history, there'll be different price, so I could India as there would be for industry.

Is that just because industry is willing to pay more.

For those of us faster genes and then in terms of.

The.

What that premium is going to be.

Hum.

We have set up.

What we call dynamic pricing.

<unk> will enable us to do price discovery with those customers to be able to get the optimal price that maximizes the volume and the gross margin that we can extract so.

We.

Quite willing to guide it hit that we've put in place the commercial and mechanics to be able to make sure that we do not keep them on the table.

All of those markets.

That's what the dining question is going to bring us.

Okay, Great. Thanks, and then you had a nice step up in gross margin. This quarter are you still confident in that 49% gross margin for fiscal 'twenty four.

So a good question in terms of step up in gross margin.

But that reflects.

Things one is the initial impact of.

Cost reductions second is as we leverage the.

Cost structure.

So you saw a sequential revenue growth in terms of outlook for fiscal 2004.

Our focus on getting to adjusted EBITDA breakeven.

The.

Terms of man, it's a good question in terms of fast genes.

I'm, particularly excited about fast change launching.

It demonstrates the capability the fact that future.

B, we get premium pricing and as we get premium pricing, that's going to reassure our margins our long term focus to over $500 million.

Okay.

Potential.

Annualized revenue based on our capacity at both San Francisco and.

This factory of the future and then as we approach leaves us $500 million, we're targeting gross margins in the range of 55% to 60%.

Thank you and our next question will come from.

Rachel.

That stall with J P. Morgan your line is open.

Hey, guys. Thanks for taking the questions just one for me today I wanted to follow up on APAC and China. The last quarter. You guys had flagged that you were starting to see a rebound in the region, but then it looks like revenue step down sequentially. This quarter and we've heard some concerning updates across the industry out of China. So I was wondering if you could just walk us through.

What are you seeing in China, and broader APAC and then holidays orders really try next quarter. Thank you.

Yes.

So good question overall.

Overall.

In terms of I mean year over year, we're growing in APAC.

In China.

Revenue did step down from our timber quarter last year to our December quarter went down to one four.

We saw a pickup in revenue to approximately $2 million in the March quarter.

So our revenue about $2 million.

Clearly there are issues in China.

Demand. However, overall, we're predicting about $7 million.

And for China, This year, which was flat with last year is coming in slightly below what we had estimated.

Overall, we had anticipated targeting umbrella roughly $9 million this year.

But we have seen pick up from Q1.

We are we are seeing opportunities and thats driven by the volume of our portfolio.

I mean, the major major products, we're shipping in China.

Yes, and I'll, let the pools.

We're also seeing some other opportunities emerging so.

We have a great facility there.

We've got great sales team and you know.

Although other people are seeing a sequential decline.

Revenue was approximately flat from March quarter to June quarter.

Okay.

Thank you.

Our next question will come from <unk>.

Matt Larew with William Blair. Your line is open.

Hi, Good morning. The first question would just be a follow up to Luke's around preparation for progress Jane launched Emily you walked through four key activities.

That are in play here to get ready for the launch.

To think about.

Progress to launch and potential.

Upside are key factors to ramp in Q4, maybe stack, Greg confidence level on the progress on those items.

That youre targeting and should we expect contribution.

The fourth quarter, given a fall launch, which I think according to my Google search starting September 23.

Okay.

Thank you. Thank you.

Great question.

This myself.

Even if even if we launch on therefore.

It ships in five days it is possible that there could be some contribution.

It's been a little bit.

Which we are looking for I think the main contribution will start in Q1.

In terms of the the stacked.

If all that we still have to continue.

What we've told the team is that.

We do not want the ecommerce to be the long pole in the tent and so to the extent that the.

The work in the lab.

Get them sooner.

<unk>.

Is going to be really before that.

And so it's purely.

What happens in the lab that will that will drive.

The timing of the launch.

Sure.

Product many many products that that's one of the strengths of twist is we have many different flavors of DNA and we have a good sense of what needs to be done we are on track.

Optimistically.

There were things are going in.

It would be driven by actions in the lab.

<unk> e-commerce.

Okay.

Yes, it's faster and it's sort of the nexium product, but.

And May you launched <unk> RNA portfolio and last name.

You launched ITG.

So just curious.

What kind of traction.

Thank you Ian perhaps initial feedback or are opportunities that youre seeing with the RNA portfolio.

Yes.

So.

Vinicius.

The initial feedback from our own portfolio is.

You were seeing.

Although for people to test.

And then.

From there we.

We expect.

We all do and ramp.

Stepping back to the <unk> launch.

It frankly has been average.

The product for <unk> not quite.

Highly differentiated and so we expect that.

The differentiation from Fas gene is going to be.

Greatly influencing the ramp.

As you know the more differentiate you are the first of your Rems. So.

We think we run faster and as we make genes fast we'll be able to bring that benefit to <unk> and so we think that we can get the double benefit of Minto nearing SaaS jeans business, though being able to improve the differentiation of older products that are derived from genes.

Our <unk> are also going to accelerate and speed.

Thank you and our last question will come from.

Sung <unk> Nam with Scotiabank Your line is open.

Hi, Thanks for taking the questions and congrats on the quarter and to Jan on the next chapter.

So maybe on the other question on the RNA sequencing portfolio. Congratulations on launching that could you talk about kind of what the.

The market potential there is relative to the DNA sequencing market and kind of what the current competitive landscape looks like.

Yeah, Great question, so within the market is probably about.

<unk>.

But assuming that <unk>.

Very different customers on the DNA side, we're targeting diagnostic companies that are using our DNA to analyze samples and probably the pimco report on the RNA, we are mostly going after academic.

I guess the mills.

Yes.

Although over time, I think RNA seek to go into the clinic, but right now, it's mostly academic thats, where well targeting the differentiation that we bring the product on RNA seek is one and much faster workflow.

You can go from sample to sequencer.

<unk> faster with less hands on time, and so in academia that is very useful.

In a setting where maybe.

It's an automated.

Set up it doesn't really matter all the matters listed in academia.

Time is key.

And then we also.

And with our RNA exhume.

But to enable customers to <unk>.

<unk> used a number of freeze that are wasted on part of the bulk of the.

RNA.

Sequence space.

Net debt that is not in testing that.

A housekeeping genes and trna is and so on and so therefore, it lowers the cost per sample and again.

The strong.

Resonance with academia to lower the cost per sample.

So those are the two differentiation and.

We have a very late entrant in our NSE.

Mike.

Number two I guess on in the market, but in truth recession, we came in with them.

<unk> and <unk>.

I think that's going to enable us to take market share.

Great that's super helpful and then.

Thank you for all the color on the Biopharma end market, just curious where your liquid biopsy MRV customers are you seeing relative stability.

From the funding or spending perspective for that segment of the market.

You want to take that.

Yeah, Yeah. So I mean, this is going well.

Building, the pipeline and <unk> customers.

In terms of overall <unk>.

<unk>.

<unk> saves in terms of sequencing cost significantly.

So we continue to win.

And gain share so.

Overall, we give our customers I mean, we've got a great value proposition.

And we haven't seen.

I haven't seen any any significant issues will.

We will continue to look forward to draw from that business, driven by increasing test volume and increasing adoption of liquid biopsy.

Like a number.

Customers adopters continues to increase so.

I'm I'm bullish on on where we are with.

Ngls.

And we just reflect in my role as CFO for Sierra and Ngls are revenue $3 million.

Sure.

$20 million and there is more and more applications emerging.

And as cost of sequencing comes down.

Okay.

It's going to end up to be a huge huge opportunity for twist and benefits the world as well and.

Im excited about where we're going to go.

Okay.

Thank you.

Okay.

I am showing no further questions in the queue I would like to turn it back to Emily <unk> for closing remarks.

Thank you very much for joining us today.

We are driving towards adjusted EBITDA breakeven for the core business and <unk> opportunities.

Go ahead I am very its very exciting time at <unk> and I look forward to reporting our progress in the months ahead. Thank you very much for joining.

Okay.

It concludes today's conference call. Thank you for participating you may now disconnect.

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[music].

Welcome to the twist Biosciences fiscal 2023 third quarter financial results Conference call.

At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone you will then hear an automated message advisory. Your hand is raised to withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

I would now like to turn the conference over to Angela <unk> SVP of corporate Affairs, and Chief ESG Officer. Please go ahead.

We issued our financial results released this morning, which is available at our website at Www Dot twist Bioscience Dot com.

With me on today's call are Dr. Emily, let Bruce CEO and co founder of twist and Jim Thorburn CFO .

Emily will begin with a review of our recent progress on twist businesses.

Jim will report on our financial and operational performance and we will come back to discuss our upcoming milestones and direction and then we'll open the call for questions.

We would ask that you limit your questions to a maximum of two and then re queue as a courtesy to others on the call.

As a reminder, this call is being recorded the audio portion will be archived in the investors section of our website and will be available for two weeks.

During today's presentation, we will make forward looking statements within the meaning of the U S Federal Securities laws.

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 in financial periods are subject to risks and uncertainty.

That could cause actual results to differ materially from those projected.

These risks include those set forth in the press release, we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission.

I'll also discuss financial measures that do not conform with generally accepted accounting principles, including adjusted EBITDA.

Information may be calculated differently than similar non-GAAP data presented by other companies when.

With that I will now turn the call over to our Chief Executive Officer, and co founder Dr. Emily <unk>.

Thank you Angela and good morning, everyone. The third quarter of fiscal 2023 highlights continued management of our business with a particularly strong quarter for the core business. We reported record revenue of $63 7 million exceeding our guidance of $60 million to $61 million.

Orders of $63 8 million that are setting the stage for future growth.

In April 1st we shipped the vast majority of the products out of the effects of the future as we shifted production for these <unk> and today, we are celebrating record revenue driven in significant Paul from FX during at least in the sector.

Taking a step back in December 2020, we signed a 10 year lease agreement for the states in the height of the pandemic, we made the 100 and the other investment to build out the site, which we knew would be instrumental in a mixed set of goals for <unk> product line specific any criminal jeans engine framework.

Our team completed the factory of the future on time and on budget, even amidst global supply chain challenges since he can distributions of the pandemic and macroeconomic pressure.

The successful completion and operation of a second manufacturing site demonstrates the ability of our team.

To plan and execute on a difficult projects and lays the ground work for future growth.

We shipped about 169000 genes wilsons in this quarter and that number will continue to extend that.

A point of comparison, we shipped less in twist is unchanged.

Vince is going to sit and tell you and this we are stopping production before we began pressure testing the factory of the future in April .

For the core business, we continue to expand our customer base and take market share.

Insulin value our consistent turnaround time of 10 to 14 business days for clonal genes in situ five default gene framework with the next Lucas to mill.

In addition to scale in the past.

<unk> was our primary differentiating feature but today, we see almost every system I'll review highlights faster on time as a key benefit.

We will continue to drive speed as we move throughout the planned introduction of <unk> in the fall timeframe.

Between today and the launch before we are working on four key activities first reducing the Cisco module of the internal manufacturing execution system to minimize the time that gene to idle and then testing the implementation of that software second refunding, the Medicare budget processes to reduce processing time, where we can see if you'd be done.

Third retraining the metrics for our associates to readjust to the new cadence of the streamline production profile.

And fourth.

Our e-commerce platform to be able to transact with dynamic pricing.

<unk>, we are working on the marketing side to prepay, our robust launch targeting current and future customers.

I'd like to note that when we launched we believe this will be a disruptive product and we also believe there will still be efficiencies beginning to future further improving our turnaround time for jeans and fragrance.

When the center of the future is producing the vast majority of hospital products are first time Cisco side continues to manufacture all of <unk> panels delivering excellent figures for the quarter. We continued to receive positive feedback from customers.

Using our Q4, but I get the enrichment saved them approximately 60% of downstream sequencing cost reducing the customer overall.

This is my quick economic environment that value proposition resonates, we continue to win pilots in head to head trials against our competitors. In addition, we were pleased to see several positive proof points for the liquid biopsy field over the last quarter. We are substantially tied to the commercial success of our customers in Brazil, and we believe these important tests will continue.

Demonstrated their value in detecting cancer.

Early.

As far as guiding treatment decisions.

Expanding our market opportunity during the quarter, we launched a robust R&D portfolio and the initial feedback is very positive with many just trialing the product and have received initial orders as we believe this product portfolio opens the RNA research markets with workflows.

Really excited about this launch a qualified products it takes time to drive revenue growth.

Products, we introduced today I do not produce immediate revenue grow over the next one to four years through the introduction of innovative products that meet industry needs. We have called out the niche for the core business that we expect will continue into it yet and extent within the markets we serve overall.

Overall, the core business continues on its growth trajectory and we have delivered very good results again this quarter.

Turning to Biopharma revenue growth came in below expectations. We shared in May that we were experiencing internal integration challenges and those issues have resulted in the lower numbers for the quarter.

Our lagging indicators, although that we see today underscore our headwinds which includes deal timing open head count for the sales team.

In terms of integration challenges.

We have seen some market impact from the restricted biotech funding environment.

We also see strong interest from pharma companies throughout the world, particularly in APAC and EMEA.

These relationships take time to fulfill include impacting deal timing category for the quarter.

In addition, we have key open head count for Biopharma business development managers, which have been opened longer than we anticipated.

On the positive side, we know that where we have commercial tenants. We secured deals we're looking to roughly double our current associates from Biopharma from five to 10.

I'll take them to onboard and ramp up. So this is not an immediate fix or revenue, but we play the long game.

We continue to see interest in our robust platform of services.

Kelly the newly launched <unk> standard offering which combines in vivo in vitro and into liquid discovery approaches.

Continue to make progress on internal processes that we believe will set us up for operational success as the deals increase.

Moving from our Biopharma service offering to our internal asset monetization, we have focused our efforts on prioritized five programs and we're in discussions around all the lines.

Yes.

As you know an equivalent next we expect to fall short of our previous guidance for Biopharma for the year, but I want to reiterate that we will continue to analyze and manage the business to ensure video Christians, although the short medium and long term.

How does the storage we expect to demonstrate them end to end gigabytes century archive workflow by the end of calendar 2023.

In Canada 2025, we expect to launch a terabyte century archive solutions.

Moving to corporate development, well have three months beyond our substantive action to accelerate our path to profitability through those shifting manufacturing and resizing the company well.

Foucault saving will not be realized until fiscal first quarter of 2020 for the organization has adapted to the changes.

With the reductions we have made across the business. We wanted to ensure that we also have the ability to hire key positions.

I'll now joined US as our Chief Accounting officer in late May, bringing a wealth of technical accounting expertise and global economy and exchange said Gandy join us in late June as our Chief information officer, bringing expertise and a range of areas, including application solution architecture as well as data analytics.

Looking forward to a gross executives will accelerate our transition into the next phase of skill to profitable growth.

Does that ultimate devoted gene.

Alright, Thanks des Moines, with a truly outstanding quarter with a record number of customer service, despite the more difficult macroeconomic environment.

Revenue for quarter, three was $63 7 million.

Which is year over year growth of approximately 14% and a sequential increase of 6% and ahead of our guidance of $60 million to $61 million.

Orders were $63 8 million for the quarter, an increase of approximately 7% year over year and declined sequentially by 1%.

Gross margin for the quarter was 34, 3%.

Our customer base continues to grow and we shipped approximately 200 customers as compared to 9800 in the third quarter of fiscal 'twenty two.

We achieved this growth in the quarter, when we transitioned to the factory of the future.

We are truly proud of the organization's ability to execute those major transition.

And we concluded quarter, three with cash and investments of $357 million.

Turning to Ngls are ngf's revenue for quarter, three was a record $33 2 million, representing 14% sequential and 19% year over year growth.

Our third quarter orders were $33 2 million, a sequential increase of 19% our Ngls orders year to date grew to approximately $92 million.

92% growth over the same period in fiscal 'twenty, two with the revenue for the top 10 customers accounting for approximately 39% of our Ngls revenue and was down approximately 560 <unk> customers fiscal quarter three.

Our pipeline for larger opportunities continues to scale and we're now tracking 270 million accounts.

$2 17 noted in our last earnings call.

34 of adopted twist as compared to 131 last quarter.

Now, let me turn to <unk>, which includes genes DNA, perhaps IGT libraries, all labor pools revenue rose $25 9 million another record representing sequential growth of 7% and year over year increase of approximately 17%.

Orders for the quarter were $27 million and.

And Thats, a sequential decline from $30 9 million and.

And is consistent with annual trends, where syn <unk> customers place blanket purchase orders in the March quarter as they set up their new budgets.

Bio orders year to date have grown to approximately $85 million up from 66 million. The same period in fiscal 'twenty, two which is 28% growth as we continued to take market share.

In Q3, we shipped approximately eight hundreds and by our customers, which has grown from approximately 500 in the third quarter of fiscal 'twenty two.

Of note our customer base for Syn <unk> with large pharma and biotech companies as well in academia.

Our genes revenue increased to $19 3 million as compared to $17 $4 million in third quarter of fiscal 'twenty, two which is year over year growth of approximately 11%.

All of the pools and library business continues to do well.

Number of active programs, which declined from $93 78.

We are addressing these short term challenges and are actively rebuilding the commercial team.

I'll now cover our revenue breakdown by industry.

Healthcare revenue for the third quarter of fiscal 'twenty, three was $34 million as compared to $29 four in the same period of fiscal 'twenty to <unk>.

Industrial chemical revenue was $16 8 million in third quarter of fiscal 2003, as compared to $16 7 million in the third quarter of fiscal 'twenty, two and academic revenue was $12 four.

$4 million in the third quarter fiscal 2003 compared to $9 5 million in the same period of fiscal 'twenty two.

Moving to a regional program for Q3 fiscal 'twenty three EMEA revenue rose to $19 1 million in Q3 fiscal 'twenty three versus $15 5 million in Q3 fiscal 'twenty two.

For APAC overall revenue increased to $5 7 million compared to $4 8 million for the same period of 'twenty two.

In the U S revenue increased to $39 million in the third quarter versus $35 8 million for the same period.

Fiscal 'twenty, two and moving down the P&L.

Our gross margin for quarter, three was 34, 3% as compared to 38% in quarter, two which reflects a sequential revenue growth leveraging our fixed cogs and the initial impact of our cost reduction in that scenario.

Our cost of revenue for the third quarter was 41 8 million as compared to $41 7 million in the previous quarter.

And as we continue to transition some of our operations from San Francisco to the factory in future.

In the current quarter, we expect to see the full benefits of our cost management in the first quarter of fiscal 'twenty four.

Our operating expenses for the fiscal quarter, including R&D SG&A change in fair value Mark to market and restructuring costs was approximately $82 7 million as compared to $86 3 million in quarter three fiscal 'twenty two.

To break it down R&D for fiscal quarter was $24 5 million declined from $36 8 million in same period of fiscal 'twenty two from outage due to a decrease in <unk> spending as railroads the consolidated as of September 32022.

$6 million in the third quarter fiscal 'twenty three.

<unk> Q3 was approximately $46 1 million as compared to $53 7 million in Q3 FY 'twenty. Two this decline is primarily due to a reduction in stock based comp of $7 million.

So the future of pre commercialization costs included in SG&A.

$1 1 million associated with a number of labs that are in pre commercialization phase and we anticipate they will be operational by the end of fiscal year.

Capex investments.

In quarter, three was approximately $4 million, which brings our total capex cash spend for the first nine months of fiscal year to $25 million.

I will now cover our outlook for the year.

As we've highlighted the launch of the factory features going well, we had a strong quarter of operational performance and violent NGF businesses are doing well and we are addressing the challenges with our biopharma antibody.

Business.

'twenty three.

Year to date revenue.

Third quarter was approximately $178 million.

The fourth quarter, we are increasing our guidance to the revenue in the range of 6300 $64 million and that's up from the previous guidance of $62 3 million and therefore, increasing our fiscal year 'twenty three guidance to 241 million to $242 million range, and that's up from 235% to $38 million.

For FY2023 we are projecting some by our revenue approximately $98 million at the top end of our previous guidance range of 96 to 98.

We expect biopharma revenue of $23 million to $24 million and Thats, a downward revision from $206 million, reflecting our previous comments of Biopharma challenges for Q4 gross margin were projecting approximately 6% which includes cost in San Francisco associated with operations that we're migrating to Portland.

As a note these costs, we've been projecting 2% margin increased from 36% to 38% for the fourth quarter.

On the expense side, we're projecting research and development expense of approximately $2 6 million.

SG&A expense of approximately $47 million per quarter, and restructure expense of approximately $1 million.

For full fiscal 'twenty three for gross margin, we expect approximately 36% for fiscal 'twenty three are.

Our operating expense guidance for the year was approximately $308 million as compared to the previous guidance Street <unk> team. We're now projecting R&D expense of approximately $190 million as compared to $112 million to $114 million from our previous guidance, we expect SG&A of $189 million.

Here too.

<unk> guidance of $197 million to $200 million, primarily due to the impact of lower stock based compensation.

Mark to market is projected to be a credit of 6 million, one time restructuring costs of $14 million, including both severance and noncash other income and expense is projected to be approximately 12.

Depreciation and amortization is projected to be approximately $29 million and that's unchanged from our previous guidance and our projections were stock based comp.

<unk> declined to <unk> 2 million from $43 million.

Operating expense for DNA storage.

We expect to be approximately $40 million and thats consistent with our previous guidance and for fiscal 'twenty. Four we also expect $40 million operating expense for data storage.

Net operating loss of the year is projected to be approximately $220 million inclusive of one time charges of approximately $14 million of restructuring capex for the year is projected to be $35 million unless a decrease from $40 million previously and then in cash is projected to be approximately $395 million compared to previous guidance.

Yes.

Before concluding I wanted to briefly recap the impact of restructuring activities, we announced in May.

We estimate the Orion savings to be approximately $40 million.

<unk> $23 million from operations due to the transition my wrists and Bayou operations to the factory future.

Approximately $17 million in R&D and we have built these savings into the guidance we provided.

In summary, with Masters shipping from factor to the future we continue to gain market share.

Breakeven for Biopharma and no delay.

So we continue to manage all of our businesses areas absolutely.

We define adjusted.

Adjusted EBITDA as EBITDA, excluding stock based compensation.

Finish my remarks today I'm sure that many of you read our 8-K concurrent with these earnings I want to say that after five years as CFO at twist.

Slice it supply my operating and semiconductor background and a new way to facilitate our next phase of growth.

And a big believer in the opportunities that lay ahead for twist and look forward to continuing to contribute to our success.

I will turn the call back to Emily.

Thank you Jim as many of you know Jim joined US when our revenue was approximately 5 million of the ask a quarter and it's.

Strategic financial liquidity has been integral to get this to where we are today I mean, we bought it over $63 million in revenue for the fiscal third quarter I think Stan the last five years in the CFO role I am pleased that Jim will continue to provide guidance for commercial scaling and operational leverage.

As well as using a semiconductor background as we advance development for the storage.

I'd like to personally thank Jim for what he has done to date and look forward to his contributions to other areas of the business.

We will conduct a search for the CFO position and as soon as this is Phil.

When we transition into the new role.

Including the core business is reaping with growth opportunity for profitable and scalable growth ahead.

We have made good progress towards the launch of <unk>, which will be available to customers in the fall of this year.

For this important growth driver we are targeting the $1. Four we ended up making us market is a market made up of scientist and researchers and large pharmaceutical companies and academia that can make their own DNA.

They make DNA instead of buying it as they need it faster and more specific to you. Then we believe it can be delivered from virtually any source today and returns for the <unk>, we will charge a premium price.

Optimizing our current clonal genes in fragrance workflow through software operational efficiencies, we will be able to make all of our SaaS genes at the same Cogs standup speed gene with incremental price power from Celgene dropping directly to the bottom line. We expect to begin seeing revenue for questions and the first quarter of fiscal 2024.

And it will be a gradual build as we leverage our digital marketing interest shows and tools to reach the long tail of the <unk>.

And yes, I'll workflows continued to be included in more and more assays and we believe the growth of our NGL opportunity would be sustainable for the foreseeable future.

After a robust RNA workflow for a research scientist an area, where we have a significantly smaller footprint today, but believe we can grow and expand.

And by pharma, where we.

I have to do to turn that business around.

Interest in the offering both our services are now out licensing opportunities and were working to scale the commercial team.

What does the storage we're working towards delivering an end to end you get license, we archive workflows and subsequently the terabyte that the stores traditionally early released to <unk> and <unk>.

2025.

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

Thank you.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Please standby, while we compile the Q&A roster.

And our first question will come from Vijay Kumar with Evercore ISI. Your line is open.

Okay.

Hey, guys. Thanks for taking my question.

Congrats on good gross margin execution care.

Emily or Jim maybe my first question on the orders here.

Down sequentially on a dollar basis.

It looks like Biopharma down <unk> slow down.

When you look at those orders can you maybe talk about customer conversations you are having a cross sym bio biopharma diagnostic end markets.

As you are exiting.

Fiscal <unk>.

How are those conversations progressing and given Kevin.

High single sort of trajectory here in orders is that an indication for how we should be thinking of revenues for fiscal 'twenty four.

Yes.

P J, it's Jim Thanks for the question.

As you stand back and look at the business in terms of orders.

<unk>.

Your point is correct.

In orders did decline sequentially.

And we saw that pattern last year.

The previous year. So we saw a decline from the March to June quarter. So there's a couple of reasons for that one is we're making progress in terms of penetrating large pharma.

What we see with a number of customers as they have their budget is allocated for the year.

The secure blanket purchase orders with us to give us an indication of their business for the year I think if you step back and you look at.

Gross I mean, you look at.

Where we are of course, a date orders versus same situation last year.

We're up.

Roughly about 20 odd percent.

We are.

<unk>.

Seeing a strong customer growth.

The future is going well and we are continuing to gain market share.

So as we look forward for next year, we see the launch of the SaaS genes.

See the growth in terms of Ngls.

So she is going to be about $120 million, which is in line with our original.

The projections that.

We issued at the end of last year. So overall business has really highlighted.

Highlights of business roofing.

Yes, we have a short term issue in Biopharma, which we're addressing.

We've got a great integrated offerings. So so overall feel good about the business feel good about where we're positioned with fast genes and we continue to gain share.

Understood.

I did see you had a slide on our fiscal 'twenty four assumption Jim.

It looks like your cash burn.

Projects are for first quarter 'twenty three it's about $180 million, that's stepping down close to 100 $105 million for next year.

And when you think about that step down in cash burn how.

How much of this is being driven by our assumptions on revenue growth or gross margin improvements versus shop.

Opex coming down for fiscal 'twenty for some.

Some qualitative comments I think will be helpful.

Yes, so you've got a combination of the three.

The three areas one is we're managing our <unk>.

Our costs.

As you look at the numbers in terms of exiting this year in terms of R&D and SG&A.

We brought that down.

Originally for the year were anticipating R&D of about $170 million.

And that is down significantly below that.

G&A or managing.

In terms of overall cost.

We announced actions in May this year, we estimate thats going to sales of about $40 million a year as we exit this year with over $325 million cash.

In terms of next year Q.

A key focus.

And this is why I'm transitioning to.

To my new role as we're going to manage our cost structure as we go forward.

To drive topline growth and we're going to get to adjusted EBIT breakeven for the for the core business in Q4, and next year and we feel good about the opportunities.

Feel good about it.

Executing to that plan.

Jim are you seeing opex on a dollar basis will be down next year versus fiscal 'twenty four is that the assumption.

What what the assumption is really going to be managing opex as we go forward.

And we're gonna be elaborating our cost structure.

So the goal is as we increase our revenue next year.

To see improvement in terms of gross margin.

We're going to get to adjusted EBIT breakeven.

For the core business of the annualized revenue of 285 by quarter for next year.

So essentially.

The takeaway is.

You can take a look at our Q4 cost structure.

We're going to manage roughly two.

Number that gets us to that adjusted EBIT breakeven for DNA storage, we're going to be managing DNA storage to four 2 million Opex next year, which is the same as this year.

Thank you.

And one moment for our next question.

We have a question from Matt <unk> with Goldman Sachs. Your line is open.

Hey, good morning, Thanks for taking my questions maybe.

Maybe just first suddenly on on the Biopharma business I know you took some restructuring actions last quarter.

Jim referenced.

Some sequential slowdown in orders.

Solution.

And.

In the C&I side win.

Our products.

It's going fine so our view of the market is that.

That.

It's all going well and so we have a particular issue in our Biopharma services.

And.

And when we analyze and look at particular territories. If we have commercial tenants in a territory, we win business essentially surprised because to your point around competition and we have a very competitive offering the combination of our in vivo in vitro.

<unk>.

Our solution is extremely competitive when we have commercial tenant and so the execution issue that we have in both of them a solution right now is that we do.

We do not have enough color.

Commercial tenant to cover all our territories and we have five currently.

And the most important thing for me the one that are put on the most is making sure that we hire talent in all the territories.

And.

If we can replicate what's happening in the <unk> territories.

Quite confident that the business will grow the way we expect it so in terms of.

Milestones I'm looking for is first hiring of the talent training them.

Then getting orders done getting revenue.

That's the sequence of.

Event.

In which we're going to turn the business around them as Jim mentioned, we are managing it very actively and we continue to do so.

Great. Thanks for that and just for my follow up just on the for Emily and Jim just on the transition and Jim Your transition maybe.

Maybe just talk about the timing why now.

And in terms of.

I know you hired a search firm, but are there thoughts on internal versus external exploring all possibilities.

Just kind of want to get a sense for one timing why today and then kind of what your thoughts are in terms of replacement.

Yes in terms of timing business is in good shape.

The key issue a challenge over the last year was bringing up actually future that's.

That's going well.

Seeing a lot of interest.

And we have line of sight to get to adjusted EBIT to breakeven Q4 next year. So the timing from an overall commercial and business point of view is good in terms of line of sight.

<unk>.

And Mike maybe you can answer the rest of the question, yes, yes.

In terms of.

The search.

It would be an external.

Recruited at this point, where we are.

We're just starting the process I haven't talked to anybody yet.

It would be it would be external.

Yeah.

Thank you.

Our next question.

Will come from.

Puneet <unk> from Leerink partners. Your line is open.

Yeah, Hi, guys. Thanks here.

So first of all Jim.

<unk> in the new role.

Couple of questions I would say first one on biopharma.

Hum.

Emily if you could step back a little bit about this business and talk about I mean look you had meaningful cuts here Youre re platforming.

You're not reaching breakeven in that business in 2024 as you expected.

You are lowering your guide again.

The Biopharma discovery <unk> Pierce our.

Calling out benefit from rationalizing a trial that's ongoing out there.

So it appears that a high level that you are losing share as well so I'm.

I'm wondering when you look at the business overall.

How does this fit into the twist growth profile and outlook in the longer run Youre, obviously doing well in the mgs core business of serving customers on the research side and the growth side, but.

Just trying to understand how biopharma fits into the overall strategy.

And picture for the company longer term, yes, no. Thanks, thanks for the question.

As a reminder.

In our Biopharma services, what we sell.

Discovery services and so the discovery of antibodies.

Specific niches adcs.

Some tcl some engineering so.

Well sitting services for the early stage of the of the drug.

Pipeline sort of drug discovery.

Some optimization some developments.

Typically.

We stopped at.

Uh huh.

At the preclinical stage.

And.

And actually on the <unk> side, when we set out a framework of genes oligo pools.

Sam just a mill.

Listening to those Gibson, thus fold that the discovery development optimization and so the benefit to twist of having both the product and the service because that's when we get in front of a pharma customer small biotech last fall.

Pharma, we're able to sell before.

Thank you Sir.

Chris No.

If you're going to do the work yourself.

Using <unk> in fragrance.

<unk> from <unk>, you are going to.

To be more effective more productive in U S hotspots in Chicago.

I believe and drugs and that is working that message resonates with and then what we are saying staying at a symptom is and by the way if you have.

Targets for which you are notable on your own too fine.

Therapy.

Too many targets in and you're not able to prosecute all of those internally outsource those target to us.

Discover the antibodies for you as a service and then goes into the Biopharma service.

Business and so we are serving the same customer and having both menu of products and services.

Is synergistic.

Right now.

It's benefiting modest in both side.

As I mentioned with some commercial execution issues.

In some territories.

On the Biopharma service.

Adding the two together, we see it as a net net positive and.

Well I'm quite.

Domestic as I see the territories, where we have commercial talent it works so.

If it works once do it again.

And.

Of course with most of the <unk>.

You bet.

We're quite optimistic for the future.

Okay.

Got it.

Then just a brief one on the riders can you just remind us how many writers who have currently operational in both single and.

What do you expect that number to be by year end.

Right now we have the full right to in subsequent Cisco as well as full right, though in.

In Wilsonville now all operational.

In Wilsonville, we have space for 12 additional right Bill.

Once we do not have.

We don't have right on although so.

For the foreseeable future.

Those focus holes are going to serve them.

Got it thanks.

Thank you.

We have a question from.

Luke Sergey <unk> with Barclays. Your line is open.

Alright, good morning, everybody. Thank you for the questions.

Jim <unk> as needed man Youre going to.

Youre going to be on the so quickly here on the liquid biopsy partnerships.

Can you tell us how to think about.

When we should start seeing.

If you guys are on the MLR D, but is that MRV ramps across that space. How do you think about the growth and the NGL side and can you just remind us or give us some type of directionality on the.

The economics that you guys achieved per sample.

You want to take that generally you want me to take it.

Or you can take care of MRI.

And thank you for the question so.

As a reminder, as you know we get we get baked into.

Liquid biopsy amount the assays.

And as we mean, despite some of those get get.

Validated and as legal commercial we are tied into their commercial success.

The way I see it is.

They use our reagents in their production.

And so every time, there and then Ais a patient.

<unk>.

They use some regions from twist and so.

We participate.

As a.

Function of revenue.

<unk> and.

Terms of the <unk>.

And that we try to get.

Typically we we think that around 10% of their Cogs.

If there is a fair value.

We get more.

And it also depends on the extent of the chemistry, the useful from us some some casinos they only use the DNA.

So the capture and.

And so that's how we win from the weak based on liquidity for DNA and then.

In many cases were able to extend the overdue.

Components of the chemistry, we and sometimes it's the full solution all the regions from sample to sequencer. So Banco beat the adaptive the enzymes to Brazil.

Everything at that point, we're able to expand that.

The percent of Av.

The code that we can we can comment.

Yeah.

That's fine.

And then as a factory future starts coming online when when can we expect you guys to start taking orders there is that <unk> is that next quarter.

And then as the initial demand and interest is coming online. There. How are you guys are you seeing more interest for the genes the pools like which.

Products are you guys getting most interim or initial interest on right now.

Well.

All the all the.

Segment ongoing well libraries.

Euros in any case, our libraries are going really well our fragrance as we are.

We.

Started to accelerate the speed at which we can we can ship frame and right now is fragrance.

Doing really well and.

And what my expectation is as we launch has genes.

In the fall.

Sure.

Have a great driver of cool so I'll say this.

Depending on the customers we touch.

Something for everybody to Tonight.

And as the system into the <unk>.

Quality team.

Most of the product.

Oh.

Priced right they are.

And the user experience that they get from twist suite I, often say to the DNA is free people pay for the user experience and from the time to get on the websites of the time to get the invoice it is.

Friction is beautiful and into expense and bad debt.

The key element.

Awesome Awesome this of our success.

And on the SaaS gene just a quick quick one are you guys starting to take orders next next quarter four.

The SaaS genes.

Yeah.

You're getting me in trouble business I mean, two questions Bill.

Yeah.

As soon as Lance will win win win.

Wow.

Alright, thank you.

Thanks.

Thank you.

One moment for our next question.

It comes from Steven Mah with TD Cowen Your line is open.

Okay, great. Thanks for the questions.

Just a follow up question on the Biopharma business.

You said that the number of active programs have dropped.

Those dropped program are they mostly from emerging biotech partners or was the program loss across the board from from from your partners just trying to get a sense of.

Where we're seeing most of the.

The weakness in your Biopharma business.

Maybe maybe maybe we should clarify that as we finish a program.

<unk>.

We have done and so we dropped we drop it from the list of active programs.

<unk>.

And then we get paid within the invoices and so the fact that the IQ program dropped means that we finish more programs than we started.

And thats the that is the.

A reflection of.

Although being.

All of those right now.

And so the revenues will.

Will decelerate following those orders.

But as I mentioned, we are highly focused on hiring.

Commercial tenants, because where we ask tenants.

We win deals.

Okay. Thanks for the clarification.

And maybe then on like the new partnership front and I appreciate that you haven't been youre not fully.

Resource, but have you seen a push for more partnerships with less upfront and more backend economics.

Is that impacting your calculus.

New partners and programs.

Yes.

Great question.

We.

As a guiding principle, we are not subsidizing the research in four of our customers and so we.

We always want to too.

The fee for service to.

To pay for work with.

Good margin.

And.

And if we can get a tail in with milestones and royalties that that's a great benefit.

But we are highly focused on making sure that the upfront payment.

These effects change for that.

And that can provide.

So.

Yeah.

Im not.

Hearing of a pressure on that on that front upfront fee I think once we're able to.

The commercial tenants.

The value of what we bring I think the the FIFA service is very much in line with the value that debt.

Customers.

We provide them.

Thank you Steve.

Yeah.

Thank you.

Our next question comes from.

Catherine Schulte.

With Baird. Your line is open.

Alright, thanks for the questions I guess first going back to <unk>. I think you said you talked about seeing revenue from those in the fiscal first quarter at 24.

Based on your conversations with customers what kind of premium do you think you'll be willing to pay for a faster turnaround time.

Thank you Catherine.

Question.

So what we are.

We have seen is definitely there.

Then.

<unk>.

The PSU value of the faster gene is going to be different for academic customers compared to industrial kept their mills and so.

Probably actually I think for the first time in <unk> history, there'll be a different price so I could India as there would be for industry.

Is that just because industry is willing to pay more.

For those faster genes and then in terms of.

The.

What that premium is going to be.

Hum.

We have set up.

What we call dynamic pricing.

Will enable us to do a price discovery with the system must be able to get the optimal price that maximizes the volume and the gross margin that we can extract so.

We.

Quite willing to guide you to hit that we've put in place the commercial mechanics to be able to make sure that we keep many of the table.

Those markets.

That's what the dining question is going to bring us.

Okay, Great. Thanks, and then you had a nice step up in gross margin. This quarter are you still confident in that 49% gross margin for fiscal 'twenty four.

So good question in terms of step up in gross margin.

But that reflects.

Couple of things one is the initial impact of.

Cost reductions second is as we leverage the.

Cost structure.

So you saw a sequential revenue growth in terms of outlook for fiscal 'twenty four.

Our focus on getting to adjusted EBIT breakeven.

The.

Terms of man, it's a good question in terms of fast genes.

I'm, particularly excited about fast change launching.

It demonstrates the capability of essentially future.

B, we get premium pricing and as we get premium pricing thats going to reassure our margins our long term focus I mean with the over $500 million.

Okay.

Potential.

Annualized revenue based on our capacity at both San Francisco and a.

This factory of the future and then as we approach the the $500 million, we're targeting gross margins that range of 55% to 60%.

Thank you and our next question will come from.

Rachel.

That stall with Jpmorgan your line is open.

Perfect Hey, guys. Thanks for taking the question just one for me today I wanted to follow up on APAC and China. The last quarter. You guys had flagged that you were starting to see a rebound in the region, but then it looks like revenue step down sequentially. This quarter and we've heard some concerning updates across the industry out of China. So I was wondering if you could just walk us through.

What are you seeing in China, and broader APAC and then holidays orders really trying next quarter. Thank you.

Yes.

So good question.

We're all in terms of I.

I mean year over year, we're growing in APAC.

In China.

Revenue did step down from our September quarter last year to our December quarter went down to one four.

A pickup in revenue to approximately $2 million in the March quarter.

We saw a revenue of about $2 million.

It's clear that there are issues in China in terms of demand. However, overall, we're predicting about $7 million.

And for China, This year, which was flat with last year is coming in slightly below what we had estimated.

We're all we had anticipated targeting umbrella roughly $9 million this year.

But we have seen pick up from Q1.

We are we are seeing opportunities and thats driven by the volume of our portfolio.

I mean, the major major products, we're shipping in China, our NTS and all of the pools.

We're also seeing some other opportunities emerging so.

We have a great facility there.

We've got great sales team and.

Although other people are seeing sequential decline.

Revenue was approximately flat from March quarter to June quarter.

Oh.

Yes.

Thank you.

Our next question will come from <unk>.

Matt Larew.

With William Blair. Your line is open.

Hi, Good morning. The first question would just be a follow up to Luke's around preparation for <unk> launch and when you walk through four key activities.

Our in play here to get ready for the launch.

About.

Progress to launch and potential.

Upside are key factors to ramp in Q4, maybe stacked Greg competence level of progress on those items.

You are targeting.

And should we expect contribution in the fourth quarter, given a fall launch, which I think according to my Google search starting September 23.

Thank you. Thank you. Thank you.

Great question.

Yourself.

Even if even if we launched on this is therefore.

And it ships and five days it is possible that there could be some contribution.

Then a little bit.

What we are looking for I think the main contribution will start in Q1.

In terms of the the stacked.

If all that we still have to continue.

What we've told the team is that.

We do not want the ecommerce to be the long pole in the tent and so to the extent that the.

The work in the lab.

Get them sooner.

The <unk>.

He is going to be really before that.

And so it's purely.

What happens in the lab that will that will drive the.

The timing of the launch.

Sure.

Many many products that that's one of the strengths of twist is with many different levels of DNA and we have a good sense of what needs to be done we are on track.

Optimistically.

There were things are going in.

It would be driven by actions in the lab.

By E Commerce.

Okay.

Yes faster than sort of the nexium product, but.

In May <unk> launched <unk> RNA portfolio and last May.

Launched ITG.

So just curious what kind of traction.

Thank you.

Perhaps initial feedback or are opportunities that youre seeing with the.

The R&D portfolio.

Yes.

So.

The initial feedback from our own portfolio is.

Ben could you were seeing.

Although for people to test.

And then.

From there we.

Really expect.

We will do an interim.

Stepping back to the <unk> launch.

It's been a frankly has been average.

The product for <unk> not quite.

Highly differentiated and so we expect that the differentiation from Fas gene is going to be greatly influencing the ramp.

As you know the more differentiated you are the first of your Rems. So.

We think we run faster and as we make gene fast, we'll be able to bring that benefit to <unk>.

So we think that we can get the double benefit of not only having SaaS jeans business slow being able to improve the differentiation of the.

Products that are derived from jeans, and so our <unk> are also going to accelerate and speed.

Okay.

Thank you and our last question will come from.

Sung <unk> Nam with Scotiabank Your line is open.

Hi, Thanks for taking the question and congrats on the quarter and to Jan on the next chapter.

So maybe on the the other question on the RNA sequencing portfolio. Congratulations on launching that could you talk about kind of what the.

The market potential there is relative to the DNA sequencing market and kind of what the current competitive landscape looks like.

Yeah, Great question, so within the market is probably about <unk>.

Assuming a five.

Very different customers on the D&A side, we're probably getting diagnostic companies that are using our DNA to analyze samples and probably the pinnacle report on the RNA, we are mostly going I still academic.

Customers.

Although over time, I think RNA seek will go into the clinic, but right.

Right now, it's mostly academic thats, where were targeting the differentiation that we bring with our product on RNA seek is one of much faster workflow. So you can go from sample to sequencer.

TNT faster with less hands on time, and so in academia that is very useful.

In a setting where maybe if it's if it's an automated.

Set up it doesn't really matter all the matters listed in academia and on time is key.

And then we also.

And with all the RNA exhume.

We're able to enable customers to significantly.

Read used a number of freeze that are wasted.

Part of the bulk of the.

Yeah.

R&D.

Sequence space.

That that is nothing testing that.

Keeping genes and <unk> and so on and so therefore, it lowers the cost per sample and again.

The strong.

Resonance with academia to lower the cost of simple.

So those are the two differentiation and.

We are very late entrant in NSE.

Mike.

Number two I guess on in the market, but in truth recession, we came in with some differentiation and.

I think that's going to enable us to take market share.

Great. That's super helpful. And then thank you for all the color on the Biopharma end market just curious for your liquid biopsy MRV customers are you seeing relative stability from from the funding or spending perspective.

That segment of the market.

You want to take that.

Yes, so I mean, this is going well.

Building, the pipeline and Jay as customers.

In terms of overall.

<unk>, our customer saves in terms of sequencing cost significantly.

So we continue to win.

And gain share so.

Overall, we give our customers a I mean, we've got a great value proposition.

We haven't seen a.

I haven't seen any any significant issues.

Continue to look forward to draw from that business, driven by increasing test volume and increasing adoption of liquid biopsy.

Like a number of customers that adopt as continues to increase so.

I'm I'm bullish on on where we are with.

Ngls.

And we just reflect in my role as CFO first year, and Ngls are revenue $3 million.

Sure.

$20 million and there is more and more applications emerging.

The cost of sequencing comes down.

Okay.

It's going to end up to be a huge.

Huge huge opportunity for twist and benefits the world as well.

And.

Im excited about where we're going to go.

Okay.

Thank you.

Okay.

I'm showing no further questions in the queue I'd like to turn it back to M&A Lewis for closing remarks.

Thank you very much for joining us today.

We are driving towards adjusted EBITDA breakeven for the core business and see significant opportunities.

Go ahead I am very its very exciting time at <unk> and I look forward to reporting our progress in the months ahead. Thank you very much for joining.

This concludes today's conference call. Thank you for participating you may now disconnect.

Q3 2023 Twist Bioscience Corp Earnings Call

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Twist Bioscience

Earnings