Conference Transcript - TWST 2026-06-02

Matt LaRue, Analyst — William Blair

as for the management presentation for twist biosciences my name is matt larue i cover the company here at william blair pleased to be joined this morning by dr emily leproust and who's the ceo and cfo adam lapanis as well as angela abiding from ir and many other things at the company before we get to the presentation i want to mention two things first the breakout is in jenny b upstairs you can follow us and second i have to inform you for a complete list of research disclosures or potential conflicts of interest please visit williamblair.com so again thanks to twist for being here today and i'll turn it over to emily thank you very much matt

Emily Leproust, CEO

for the invitation the instructions and my great pleasure to tell you more about twist and start by saying that i'll be making some forward-looking statements so at twist we are a company that builds DNA from scratch and provides customized solutions to companies on the basic continuum. We are a real company. We had almost $100 million of revenue last quarter in Q2. We have 1,000 employees and we are serving a number of markets throughout the world. But the key advantage, the key technology differentiation that we have is that we're using a silicon-based technology to do what we do. We are grouped into two product groups. One is our DNA synthesis and protein solution and the other is our NGS applications. They both use the same silicon platform and the The main market that we are serving is the drug discovery or therapeutics area, the production of chemicals in a sustainable way, the diagnosis of diseases where we provide reagents and kits to our customers that are providing that diagnostics, mostly in oncology, and then our products and services are being used for the development of trade to improve food security. We are trusted by some of the biggest diagnostic, therapeutics, biotech and universities in the world. And as I mentioned earlier, the foundation is in the center. It's our silicon chip. our silicon chip, we can synthesize, we can print one million oligos. So an oligo is a small piece of DNA. And in the same footprint, that one million oligosynthesis, our competition can synthesize 96 oligos. So we have about a 10,000 times advantage compared to other technologies. and it's a center of our strategy which is we want to if you think of the silicon chip as a plane we want to run full planes and so we are launching more products that start serving more and more applications that are serving more customers and enabling more markets that that has been our strategy over the years and when we get to the financial slides and you see things going up into the right, that is that strategy of loading more on the chip. This is a very important slide from us, and that on the bottom left you have the silicon chip, right, so these oligos, and then from those oligos we can assemble them, we can amplify them, we can use enzymes to make a large number of products out of those oligos. goes. And that picture has evolved over time. A few years ago, we only had a few products, but we have been adding products after products. And this slide is really a key piece of our strategy which is the new product introduction strategy. In addition to that we've also kept improving on the silicon chip and in the middle here you can see that it used to take us 51 liters of reagents to make 1 million oligos and right there that was 99.8 percent less than the competition but even though we're already great in 2023 actually we've reduced the amount of reagents that we need down to 14.4 liters so that's 70 percent reduction in reagents that has led to a 60 reduction in cost and at the bottom right we've also accelerated the speed it used to take us 26 hours to build 100 bases of DNA and now it takes us four hours sorry seven seven hours which means that on the same machine on a capex that have already been deployed we've been able to increase the capacity by a factor of four so not only we launch new product externally but internally we keep improving another example of that is this is an example of the back end if the picture looks blurry it's on purpose we don't want our competition to be able to see it but you're welcome to come see it by yourself this is an example of from the oligos that we released from the chip and the top left we can assemble them into fragment if you go to the right we can clone them if you go then to the bottom we can sequence them to make sure we to find which one is perfect and then moving to the right we can do mini prep to send the exact flavor of the DNA that customers wanted. And that is fully automated, and you can see at the bottom right that we keep adding more and more automation to support more and more of the products. And not only we can automate, we can also automate the automation. And so this is a schematic of one lab, we created GeneLab1, where it used to be, used to have capacity to make three million fragments a year in two times 950 square feet. And we've automated the automation to integrate them together. And now we can do double the capacity in one fifth of the space. So we increase the capacity, we increase productivity, we reduce headcount um and and we have more space available for the next generation of products so it shows you um the the kind of innovations that we're putting in place to be able to serve more and more customers at the same time as we had capacity we're slowly lowering this the turn around time because our customers have a need for speed and we are very happy to provide to to them and so when we launch a product over time we're able to take time away from the production to provide those products and services faster and faster to our customers. All of that innovation has enabled us to grow our markets. In 2020 our markets were at the sum of two billion dollars and by 2030 we We think the SAM for the NGS application on the left will be $6 billion and for DNA synthesis and protein solution on the right will be $7 billion. So as we launch new products, as we improve our capabilities, we extend our SAM and we're going to be able to grow faster than the overall market rates. Of particular note, two things we are particularly excited on the left with the oncology diagnostic market. We think that there's going to be a great source of growth for us. And then on the right, we think that AI driven drug discovery will add a billion dollars to the markets that we served. In addition to that, we think that there's another billion dollars in nucleic acid therapeutics where every patient gets their own drug, so truly personalized medicine through gene and cell therapy, for instance, or for personalized mRNA therapeutics, and we think that we'll add another billion dollars

Matt LaRue, Analyst — William Blair

to our opportunity.

Emily Leproust, CEO

And this is just a few examples of some of the products that we serve, and some of them are growing very very fast in this case from the first half of 2025 to the first half of 2026 at the JP Morgan conference I provided different numbers from other products and all of that to say is that we are not a one trick pony we have thousands of skews and the combination of all those skews not only gives us not top-line growth but durable top-line growth because our business is very resilient. From our customers' point of view, we are in the business of making happy customers and in the top-level, we provide them solutions that they can't find from other providers with a customer experience that is exceptional and it's not only a question of selling. You have to deliver what they want. And we have invested in operational excellence, we have invested in deploying automations to be able to serve more for customers at great quality without adding headcount. And that drives into the bottom right in our financial discipline. You see that over the last few years we've increased revenue, we've increased our gross margin at a pretty flat OPEX, which means that by September of this year we have a very strong commitment that we will reach Adjacent Vita breakeven. So that Adjacent Vita breakeven is really our North Star at this point and it's in sight for us just a few months from being there and it's really driven by all of the work that we have done to leverage that semiconductor model that we have. The fixed cost is high, but the viable cost is low, and so as we add more and more products, as we are able to sell more seats on the plane, the top line grows, the gross margin gets improved and we get the profitability. So we're looking at those numbers more in more details in terms of a yearly view. Over the last six years, we had a KG of 33%. Last year we grew 20% as a business and we've been able over the last few years to go from a 32% gross margin to a 52% or more this year. And that comes, again, from a very diversified revenue base, and as you can imagine, if you ramp revenue, you ramp gross margin, and you are fairly disciplined on your OPEX line, as you can see. That is what gives us the strong confidence that we'll achieve CBTA breakeven, and then we can deliver profitable growth beyond that. on and looking by quarters. Two big categories of revenue growth from us. One is the NGS application and the other is the DNA synthesis and protein solution. Both of them contributing very strongly to the growth and we are now in 13 constitutive quarter of sequential revenue growth and we want to keep it that way in terms of our industry segments and we we've in january we've introduced a new way of splitting the different industries that we served to better reflect or to give more visibility to our investor base in previous years at the top healthcare was the dominant industry. However it didn't show how good we are doing in both diagnostic and therapeutics and so we've now split and you can see that last year diagnostic and therapeutics were the two biggest industry and looking at the last quarter that we recently reported therapeutics was almost $41 million of revenue, growing 55% year-over-year, so a very significant growth, and diagnostics was $40 million of revenue, only growing 14%, but we've also seen that the diagnostic growth is going to get back to 20% growth by Q4. All the way to the right, there's a global supply partner segment. is sometimes a little bit misunderstood, so I have a slide on that. What we do is we enable sometimes our competitor to resell DNA that we make under our brand, sorry, under their brand. So we make it, they sell it, and that is a really great source of revenue growth for us at a very attractive financial results for us and then on the right we also have distributors. We are direct in many countries but in APAC distributors are actually very useful to us. So now maybe digging in a little bit in the two different product groups that we have. So the The first one is DNA synthesis and protein solution. Last quarter had a 28% year-over-year growth. And there we mostly serve companies that are doing drug discovery. And it's either drug discovery where we sell products and they do the work themselves or drug discovery where we sell a service to them. And we have made a very strong effort in drug discovery to have a full menu. What we know is drug discovery customers, they all want to do something different. And our strategy and approach of having a very broad menu where no matter how they do discovery, we'll be able to serve them has been very successful. give you a sense of the type of financial partnership that we have with our customers. Here we are showing two different customers who are at the top a large biotech and at the bottom a large pharma customers and we won't go to the details but what's important to show is that the colors are different from one customer to the other so they are both discovering drug and yet they are purchasing different products and then those colors change over time. So at the top the customers were using gene fragments in purple and then over time added in green clonal genes and then at the bottom another customer doing kind of the same thing was mostly doing the opposite which is using clonal genes and then moving to fragments over time and then you can see in yellow when we launched our IGG product line which is instead of selling DNA we are selling protein that customer embraced the switching to twist to purchase protein and so those are two examples of customers at our investor day a couple weeks ago we providing more data for five additional customers that are in that case only doing AI enabled drug discovery and again you can see that every customer has a different approach to engaging with us and that's key to us is we're able to meet customers where they are And we're not telling people how to do science. Instead, we're asking people, how do you want to do science? And then we enable that. And that is a great reflection on the platform that we have built, where no matter what, no matter how you're doing your science, no matter how you want to engage with us. All of those orders they end up on the same silicon chip and we can serve you at scale and serve you your customized solution. AI and AI enabled drug discovery has been a great wind in our sails. In 2025 out of the 66 million dollars all the growth that we had 25 million and the last came from AI drug discovery. We are very happy with AI drug discovery. In the next few slides, I'll give you more details, but I also want to say that we're doing really well in traditional drug discovery, and actually are becoming a market leader in drug discovery. So digging a little bit more into AI, what our customers are doing is, the bottom is the cycle of design, build, test, learn. They design some sequence, someone has to build a sequence, someone has to test them and then from the results from the data they can learn, build a model and then go back through that cycle to either improve the model over time or Or turn the crank, say, I have enough, I've built enough, now I want to declare a new target, go through that process of discovering drugs through AI. There's a number of workflows at the top, from workflow one to workflow four. I won't go through all the details, but again, it's important that it's not a one size fits all for all customers. In general, I'll use the example of Workflow 1 on the left and the example of Workflow 4 on the right. In Workflow 1, customers want a pooled discovery. So the AI algorithm that they use comes out with hundreds of thousands, sometimes millions of different sequence, and on the silicon chip, those sequence get synthesized as pooled, And then they get expressed in a protein as a pool. And then they get tested, either through phage display or yeast display. And then on the other right, on the right with workflow four, it's kind of the opposite of how to do it. That is an approach where every sequence is studied one at a time. And there they give us a sequence and we provide to them an end-to-end where for every sequence we give them a full characterization of the functionality, the affinity, the developability and there's pros and cons to both. We're happy to serve again customers either way they want to do their data science. The key though is that for the building on the test, for the wet lab part of either way you want to discover drugs, we are that partner to do the building and the testing for them. Moving on to the second product group, our NGS application, it grew 20%, sorry, 12% year-over-year last quarter. Again, we single that we get back to 20% year-over-year growth by Q4. There we also have a full suite of products and services and all the regions that you need from the sample to the sequencer we're able to provide to you and mostly we are serving the oncology diagnostic market with either screening, therapy selection, MRD and the typical workflow to win one of those big diagnostic partner is to either start with a pilot, an R&D pilot, or even sometimes a service lab where they have samples but they don't even have time in-house to try the technology so they send the samples. We do the work for them just to show you what the data could be like and once they're convinced with the quality of the data they can move up to validation and verification, they can do commercial studies, that can be a very substantial source of revenue for us. And then once they get the sensitivity and the specificity that they want, once they get approval, then they can go launch commercially. And for every patient that gets tested, there is some reagents from twist that is being used and so therefore it's a very lasting relationship and those customers are pretty much locked in because once they've done the clinical studies with us it's very hard for them to move to a different supplier. The types of relationship that we have varies over time and by customers in terms of the flow of revenue. So here showing you four different customers from a tumor-informed MRD customers in the top left to an oncology diagnostic customer that has multiple tests on the top right to to a rare disease customers in the bottom left to an oncology diagnostic customers in the bottom right, you can see that a slow in this case, some of those customers buy different things from us. Some buy a fixed panel, some buy custom panels, some buy more library prep, some buy less. And again, it's very important for us to meet customers where they are because even in the area of cancer diagnostics, actually customers do things differently. In general, we do like to celebrate PrEP with panels, but sometimes it's the case, sometimes it's not, but we're always there for the customers. And what we are able to do is to support our customers in the continuum of cancer care that they are providing. And so, if you follow the patient journey, starting from the left, there is a screening and then there may be an early detection and profiling, there may be a therapy selection. After the initial treatment, when the tumor load goes back down, MRD becomes very important to decide whether that person needs chemotherapy after surgery. And then there may be a therapy during that time as well, and you need more minimal residual disease to detect whether there is a relapse. And so during the patient journey, there's going to be many different needs, and that is why we have a large number of products to support all of that, both in the diagnostic side, but also in the therapeutic side. I mentioned that new drug modalities, such as cell engine therapy, mRNA, are going to be key personalized therapies to patients, and TWIST will benefit because we'll be the payload in each of those patients. So looking forward, what are we going to do? Well, we're going to continue what has been working for us, which is continuing our strategy of loading more on the chips. There's new products that we are launching, such as mRNA, such as more complex genes, MRDE Express also more products to support the discovery of anti-sensor oligonucleotide or siRNA, which are new modalities. We will apply those products to enable more applications, reach out to more customers and enter more markets. But again, it's all leveraging the investment that we've made in the silicon chip. And the second thing that we'll do is really the three pillars of our success and the first pillar I mentioned in the past previously in my talk was the launch of new products. That NPR machine has been key and we'll keep exercising that machine. The second thing is our operational excellence, being able to deliver the customized solution that our customers want and ramp and grow with our customers at the same time, do the R&D to improve the speed, improve the capacity, lower the cost internally. And then the third is our commercial execution. I often like to call it our commercial violence to make sure that all the potential customers get access to the twist technology. And with that, I think this is my last slide. I think we we have a very compelling upside ahead of us. We have a highly differentiated platform. We are launching very differentiated products to serve a growing market. We are taking market shares in in that market. We are extending into new market opportunities. We have existing customers but we are lending more and more customers thanks to our commercialization approach. We've been able to deliver so far revenue growth but we want that revenue growth to be durable and that is happening with everything we've been doing at more than 50% growth margin and with a pass to get to 60%. We have a line of sight for Adressivita break-even in Q4, so just a few months from now. And we'll keep doing it. We will keep doing that NPI execution, that NPI launch operational execution and commercial execution to have our numbers going up into the right. And so with that, I think I'm out of time. and ready to walk to the first floor to answer some questions. Thank you very much.