Twist Bioscience Corp 10-Q for FY2023 Q1

Twist Bioscience Corp (TWST)

10-Q 2023-02-07 For: 2022-12-31

Added on April 10, 2026

About this 10-Q

Twist Bioscience Corp filed this 10-Q on February 7, 2023, covering the quarter ended December 31, 2022 (FY2023 Q1).

Headline figures

Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $54.24M; up 29.1% from $42.02M a year earlier
Net loss: $41.82M; compared with a net loss of $45.56M a year earlier
Diluted EPS: -$0.74; compared with -$0.91 a year earlier

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Delaware			46-2058888
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification No.)


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


Forward-looking statements		2
PART I. Financial information		4
Item 1.	Unaudited Financial Statements	4
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s discussion and analysis of financial condition and results of operations	24
Item 3.	Quantitative and qualitative disclosures about market risk	30
Item 4.	Controls and procedures	31
PART II. Other information		31
Item 1.	Legal proceedings	32
Item 1A.	Risk factors	32
Item 2.	Unregistered sales of equity securities and use of proceeds	59
Item 3.	Defaults upon senior securities	59
Item 4.	Mine safety disclosures	59
Item 5.	Other information	59
Item 6.	Exhibits	60
Signatures		61


(In thousands)	December 31, 2022		September 30, 2022
Assets
Current assets:
Cash and cash equivalents	$	316,681	$	378,687
Short-term investments	122,029		126,281
Accounts receivable, net	44,437		40,294
Inventories	44,597		39,307
Prepaid expenses and other current assets	14,115		11,914
Total current assets	$	541,859	$	596,483
Property and equipment, net	144,850		139,441
Operating lease right-of-use assets	73,757		74,948
Goodwill	85,811		85,811
Intangible assets, net	58,361		59,738
Restricted cash, non-current	2,410		1,572
Other non-current assets	2,922		3,385
Total assets	$	909,970	$	961,378
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	20,113	$	20,092
Accrued expenses	10,398		10,169
Accrued compensation	23,277		27,023
Current portion of operating lease liability	14,227		13,642

Other current liabilities	15,822		19,737
Total current liabilities	$	83,837	$	90,663
Operating lease liability, net of current portion	79,748		81,270
Other non-current liabilities	60		60
Total liabilities	$	163,645	$	171,993
Commitments and contingencies (Note 6)
Stockholders’ equity
Common stock, $0.00001 par value —100,000 and 100,000 shares authorized at December 31, 2022 and September 30, 2022, respectively; 56,645 and 56,523 shares issued and outstanding at December 31, 2022 and September 30, 2022, respectively	$	—	$	—
Additional paid-in capital	1,617,174		1,619,644
Accumulated other comprehensive income	(609)		(1,843)
Accumulated deficit	(870,240)		(828,416)
Total stockholders’ equity	$	746,325	$	789,385
Total liabilities and stockholders’ equity	$	909,970	$	961,378


	Three months ended December 31,
(In thousands, except per share data)	2022		2021
Revenues	$	54,243	$	42,018
Operating expenses:
Cost of revenues	$	29,442	$	27,056
Research and development	31,242		22,630
Selling, general and administrative	42,324		51,098
Change in fair value of contingent considerations and holdbacks	(4,135)		$	(2,826)
Total operating expenses	$	98,873	$	97,958
Loss from operations	$	(44,630)	$	(55,940)
Interest income	3,040		154
Interest expense	(1)		(26)
Other income (expense), net	(157)		(156)
Loss before income taxes	$	(41,748)	$	(55,968)
Income tax (provision) / benefit	(76)		$	10,405
Net loss attributable to common stockholders	$	(41,824)	$	(45,563)
Other comprehensive loss:
Change in unrealized loss on investments	$	(868)	277
Foreign currency translation adjustment	(366)		(94)
Comprehensive loss	(43,058)		(45,380)
Net loss per share attributable to common stockholders—basic and diluted	$	(0.74)	$	(0.91)
Weighted average shares used in computing net loss per share attributable to common stockholders—basic and diluted	56,444		49,912


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Common stock			Additional paid-in capital		Accumulated Other comprehensive loss		Accumulated deficit		Total stockholders' equity
(In thousands)	Shares	Amount
Balances as of September 30, 2022	56,523	$	—	$	1,619,644	$	(1,843)	$	(828,416)	$	789,385

Vesting of restricted stock units	124	—		—		—		—		—
Exercise of stock options	35	—		603		—		—		603
Issuance of shares associated with a business acquisition	1	—		—		—		—		—
Repurchases of common stock for income tax withholding	(38)	—		(999)		—		—		(999)

Stock-based compensation	—	—		(2,074)		—		—		(2,074)
Other comprehensive income	—	—		—		1,234		—		1,234
Net loss	—	—		—		—		(41,824)		(41,824)
Balances as of December 31, 2022	56,645	$	—	$	1,617,174	$	(609)	$	(870,240)	$	746,325


	Common stock			Additional paid-in capital		Accumulated Other comprehensive income		Accumulated deficit		Total stockholders' equity
(In thousands)	Shares	Amount
Balances as of September 30, 2021	49,499	$	—	$	1,190,828	$	546	$	(610,553)	$	580,821

Vesting of restricted stock units	62	—		—		—		—		—

Exercise of stock options	270	—		3,039		—		—		3,039
Business acquisitions	928	—		72,514		—		—		72,514
Repurchases of common stock for income tax withholding	(24)	—		(2,558)		—		—		(2,558)
Stock-based compensation	—	—		18,108		—		—		18,108
Other comprehensive loss	—	—		—		(183)		—		(183)
Net loss	—	—		—		—		(45,563)		(45,563)
Balances as of December 31, 2021	50,735	$	—	$	1,281,931	$	363	$	(656,116)	$	626,178


(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
Cash and cash equivalents	$	316,681	$	—	$	—	$	316,681
Short-term investments:
Corporate bonds	22,647		—		—		22,647
U.S. government treasury bills	100,108		—		(726)		99,382
Total	$	439,436	$	—	$	(726)	$	438,710


(in thousands)	Level 1		Level 2		Level 3		Fair value
Assets
Money market funds	$	254,196	$	—	$	—	$	254,196
Corporate bonds	—		22,647		—		22,647

U.S. government treasury bills	99,382		—		—		99,382
Total financial assets	$	353,578	$	22,647	$	—	$	376,225

Liabilities
Holdback	$	—	$	7,557	$	—	$	7,557
Total financial liabilities	$	—	$	7,557	$	—	$	7,557


Contingent consideration	September 30, 2022
Stock Price	$	35.42
Equity volatility	93.7		%
Risk-free interest rate	3.9		%
Revenue volatility	30.2		%


(in thousands)	Total
Balance as of September 30, 2022	$	2,100

Change in fair value	(2,100)
Balance as of December 31, 2022	$	—


	December 31,		September 30,
(in thousands)	2022		2022
Laboratory equipment	$	65,393	$	62,285
Furniture, fixtures and other equipment	2,487		2,332
Computer equipment	2,867		2,814
Computer software	1,693		1,693
Leasehold improvements	58,876		14,371
Construction in progress	49,223		87,723
	$	180,539	$	171,218
Less: Accumulated depreciation and amortization	(35,689)		(31,777)
	$	144,850	$	139,441


(in thousands)	December 31, 2022		September 30, 2022
Balance at beginning of period/year	$	85,811	$	22,434
Business acquisition – additions	—		61,768
Remeasurement adjustments to the deferred tax assets	—		1,609
Balance at end of period/year	$	85,811	$	85,811


(in thousands)	December 31, 2022		September 30, 2022
Raw materials	$	33,558	$	28,787
Work-in-process	3,610		2,866
Finished goods	7,429		7,654
	$	44,597	$	39,307


	December 31, 2022
(in thousands, except for years)	Weighted average Amortization period in years	Gross carrying amount		Accumulated amortization		Net book value
Developed Technology	15	$	50,020	$	(5,190)	$	44,830
Customer Relationships	11	15,210		(2,254)		12,956
Tradenames & Trademarks	3	900		(325)		575
Total finite-lived intangible assets		$	66,130	$	(7,769)	$	58,361


	September 30, 2022
(in thousands, except for years)	Weighted average Amortization period in years	Gross carrying amount		Accumulated amortization		Net book value
Developed Technology	15	$	50,020	$	(4,375)	$	45,645
Customer Relationships	11	15,210		(1,767)		13,443
Tradenames & Trademarks	3	$	900	$	(250)	$	650
Total finite-lived intangible assets		$	66,130	$	(6,392)	$	59,738


(in thousands)	Operating leases
Years ending September 30:
Remainder of 2023	$	11,981
2024	14,214
2025	14,066
2026	12,609
2027	7,265
Thereafter	90,968
Total minimum lease payments	$	151,103
Less: imputed interest	(57,128)

Total operating lease liabilities	$	93,975
Less: current portion	(14,227)
Operating lease liabilities, net of current portion	$	79,748


(in thousands)	December 31, 2022
Assets:
Operating lease right-of-use asset	$	73,757
Current liabilities:
Current portion of operating lease liabilities	$	14,227
Noncurrent liabilities:
Operating lease liabilities, net of current portion	$	79,748


(in thousands, except per share data)	Shares	Weighted average grant date fair value per share
Nonvested shares at September 30, 2022	1,566	$	67.66
Granted	589	26.28
Vested/Issued	(102)	66.98
Forfeited	(235)	81.89
Nonvested shares at December 31, 2022	1,818	$	52.41


(in thousands, except per share data)	Shares	Weighted average exercise price per share		Weighted average remaining contractual term (years)	Aggregate intrinsic value
Outstanding at September 30, 2022	2,453	$	24.67	6.33	$	33,447
Granted	—	—		—	—
Forfeited	(37)	42.87		—	—
Exercised	(35)	17.17		—	312

Outstanding at December 31, 2022	2,381	$	24.49	6.06	$	10,715
Nonvested at December 31, 2022	427	33.87		6.92	423
Exercisable	1,954	$	22.44	5.87	$	10,292


(In thousands)						Shares available
Outstanding at September 30, 2022						507
Additional shares authorized						250
Shares issued during the period						—
Outstanding at December 31, 2022						757


	Three months ended
	December 31,
(in thousands)	2022	2021
Shares subject to options to purchase common stock	2,693	2,939

Unvested restricted stock units and performance stock units	2,577	1,605
Unvested shares of common stock issued upon early exercise of stock options	—	1
Shares subject to employee stock purchase plan	137	38
Total	5,407	4,583


(in thousands)	December 1, 2021
Assets acquired
Cash and cash equivalents	$	1,306
Accounts receivable	2,309
Other current assets and prepaid expenses	1,654
Property, plant and equipment	1,078
Other non-current assets	2,970
Intangible assets	46,500
Liabilities assumed
Current liabilities	3,549
Non-current liabilities	846
Deferred tax liability	10,545
Fair value of assets acquired and liabilities assumed	$	40,877
Goodwill	61,768
Total purchase price	$	102,645
Consideration transferred
Cash	$	9,467
Company common stock	72,514
Contingent consideration	8,500
Holdback liabilities	12,838
Net working capital adjustment	(674)
Fair value of purchase consideration	$	102,645


(in thousands except for years)	Estimated Weighted Average Useful Lives in Years	Estimated Fair Value
Developed technology	14	$	30,900
Customer relationships	10	14,700
Trade name	3	900
Estimated fair value of acquired intangible assets		$	46,500


(in thousands)	Contingent consideration		Holdbacks		Total
Balance at December 1, 2021 – acquisition date	$	8,500	$	12,164	$	20,664
Change in fair value during the period	(6,400)		(7,071)		(13,471)
Balance at September 30, 2022	$	2,100	$	5,093	$	7,193
Change in fair value during the period	(2,100)		(1,621)		(3,721)
Balance at December 31, 2022	$	—	$	3,472	$	3,472


	Three months ended December 31,
(in thousands, except percentages)	2022		%		2021		%
Americas	$	33,646	62	%	$	22,611	54	%
EMEA	16,331		30	%	15,365		37	%
APAC	4,266		8	%	4,042		9	%
Total revenues	$	54,243	100	%	$	42,018	100	%


*			Management contract or compensatory plan or arrangement.
†			The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Twist Bioscience Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, regardless of any general incorporation language contained in any filing.


February 7, 2023	Twist Bioscience Corporation

	By:	/s/ James M. Thorburn
		James M. Thorburn
		Chief Financial Officer
		(Authorized officer)


			/s/ Emily M. Leproust
			Emily M. Leproust
			Chief Executive Officer
			(Principal Executive Officer)