Twist Bioscience Corp 10-Q for FY2023 Q2

Twist Bioscience Corp (TWST)

10-Q 2023-05-08 For: 2023-03-31

Added on April 10, 2026

About this 10-Q

Twist Bioscience Corp filed this 10-Q on May 8, 2023, covering the quarter ended March 31, 2023 (FY2023 Q2).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $60.18M; up 25.0% from $48.13M a year earlier
Net loss: $59.16M; compared with a net loss of $60.67M a year earlier
Diluted EPS: -$1.04; compared with -$1.13 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)	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s discussion and analysis of financial condition and results of operations	25
Item 3.	Quantitative and qualitative disclosures about market risk	33
Item 4.	Controls and procedures	34
PART II. Other information		35
Item 1.	Legal proceedings	35
Item 1A.	Risk factors	35
Item 2.	Unregistered sales of equity securities and use of proceeds	63
Item 3.	Defaults upon senior securities	63
Item 4.	Mine safety disclosures	63
Item 5.	Other information	63
Item 6.	Exhibits	64
Signatures		65


(In thousands)	March 31, 2023		September 30, 2022
Assets
Current assets:
Cash and cash equivalents	$	315,196	$	378,687
Short-term investments	72,462		126,281
Accounts receivable, net	48,187		40,294
Inventories	39,923		39,307
Prepaid expenses and other current assets	13,503		11,914
Total current assets	$	489,271	$	596,483
Property and equipment, net	146,539		139,441
Operating lease right-of-use assets	70,669		74,948
Goodwill	85,811		85,811
Intangible assets, net	57,068		59,738
Restricted cash, non-current	2,365		1,572
Other non-current assets	2,201		3,385
Total assets	$	853,924	$	961,378
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	13,236	$	20,092
Accrued expenses	11,156		10,169
Accrued compensation	24,280		27,023
Current portion of operating lease liability	13,396		13,642

Other current liabilities	10,040		19,737
Total current liabilities	$	72,108	$	90,663
Operating lease liability, net of current portion	77,824		81,270
Other non-current liabilities	60		60
Total liabilities	$	149,992	$	171,993
Commitments and contingencies (Note 6)
Stockholders’ equity
Common stock, $0.00001 par value —100,000 and 100,000 shares authorized at March 31, 2023 and September 30, 2022, respectively; 57,105 and 56,523 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively	$	—	$	—
Additional paid-in capital	1,633,217		1,619,644
Accumulated other comprehensive income (loss)	111		(1,843)
Accumulated deficit	(929,396)		(828,416)
Total stockholders’ equity	$	703,932	$	789,385
Total liabilities and stockholders’ equity	$	853,924	$	961,378


	Three months ended March 31,				Six months ended March 31,
(In thousands, except per share data)	2023		2022		2023		2022
Revenues	$	60,180	$	48,127	$	114,423	$	90,145
Operating expenses:
Cost of revenues	$	41,669	$	29,714	$	71,111	$	56,770
Research and development	27,379		31,231		58,621		53,861
Selling, general and administrative	53,965		53,998		96,289		105,096
Change in fair value of contingent considerations and holdbacks	(1,196)		(6,014)		(5,331)		(8,840)
Total operating expenses	$	121,817	$	108,929	$	220,690	$	206,887
Loss from operations	$	(61,637)	$	(60,802)	$	(106,267)	$	(116,742)
Interest income	$	3,464	$	259	$	6,504	$	412
Interest expense	(2)		(29)		(3)		(54)
Other expense, net	(305)		(245)		(462)		(401)
Loss before income taxes	$	(58,480)	$	(60,817)	$	(100,228)	$	(116,785)
Income tax (provision) / benefit	(676)		149		(752)		10,554
Net loss attributable to common stockholders	$	(59,156)	$	(60,668)	$	(100,980)	$	(106,231)
Other comprehensive loss:
Change in unrealized gain (loss) on investments	$	647	$	(1,113)	$	1,516	$	(1,389)
Foreign currency translation adjustment	73		275		438		368
Comprehensive loss	$	(58,436)	$	(61,506)	$	(99,026)	$	(107,252)
Net loss per share attributable to common stockholders—basic and diluted	$	(1.04)	$	(1.13)	$	(1.78)	$	(2.06)
Weighted average shares used in computing net loss per share attributable to common stockholders —basic and diluted	56,777		53,472		56,608		51,673


☒			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 income (loss)		Accumulated deficit		Total stockholders' equity
(In thousands)	Shares	Amount
Balances as of December 31, 2022	56,645	$	—	$	1,617,174	$	(609)	$	(870,240)	$	746,325

Vesting of restricted stock units	198	—		—		—		—		—
Exercise of stock options	22	—		250		—		—		250
Issuance of shares under the employee stock purchase plan	132	—		2,537		—		—		2,537
Repurchases of common stock for income tax withholding	(64)	—		(1,262)		—		—		(1,262)
Issuance of shares from business acquisition	172			4,092		—		—		4,092
Stock-based compensation	—	—		10,426		—		—		10,426
Other comprehensive income	—	—		—		720		—		720
Net loss	—	—		—		—		(59,156)		(59,156)
Balances as of March 31, 2023	57,105	$	—	$	1,633,217	$	111	$	(929,396)	$	703,932


	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	322	—		—		—		—		—
Exercise of stock options	58	—		853		—		—		853
Issuance of shares under the employee stock purchase plan	132	—		2,537		—		—		2,537
Repurchases of common stock for income tax withholding	(102)	—		(2,261)		—		—		(2,261)
Issuance of shares from business acquisition	172	—		4,092		—		—		4,092
Stock-based compensation	—	—		8,352		—		—		8,352
Other comprehensive income	—	—		—		1,954		—		1,954
Net loss	—	—		—		—		(100,980)		(100,980)
Balances as of March 31, 2023	57,105	$	—	$	1,633,217	$	111	$	(929,396)	$	703,932


	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
Issuance of common stock in public offering, net of underwriting discounts and commissions and offering expenses of $17,682	5,227	—		269,818		—		—		269,818
Vesting of restricted stock units	163	—		—		—		—		—
Exercise of stock options	368	—		3,934		—		—		3,934
Issuance of shares under the employee stock purchase plan	50	—		2,395		—		—		2,395
Repurchases of common stock for income tax withholding	(62)	—		(4,050)		—		—		(4,050)
Issuance of shares from business acquisition	989			77,122						77,122
Stock-based compensation	—	—		40,573		—		—		40,573
Other comprehensive loss	—	—		—		(1,021)		—		(1,021)
Net loss	—	—		—		—		(106,231)		(106,231)
Balances as of March 31, 2022	56,234	$	—	$	1,580,620	$	(475)	$	(716,784)	$	863,361


(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
Cash and cash equivalents	$	315,196	$	—	$	—	$	315,196
Short-term investments:
Corporate bonds	33,359		—		(23)		33,336
U.S. government treasury bills	38,992		134		—		39,126
Total	$	387,547	$	134	$	(23)	$	387,658


(in thousands)	Level 1		Level 2		Level 3		Fair value
Assets
Money market funds	$	217,513	$	—	$	—	$	217,513
Corporate bonds	—		33,336		—		33,336

U.S. government treasury bills	39,126		—		—		39,126
Total financial assets	$	256,639	$	33,336	$	—	$	289,975

Liabilities
Indemnity holdback	$	—	$	2,172	$	—	$	2,172
Total financial liabilities	$	—	$	2,172	$	—	$	2,172


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 March 31, 2023	$	—


	March 31, 2023
(in thousands, except for years)	Weighted average Amortization period in years	Gross carrying amount		Accumulated amortization		Net book value
Developed Technology	15	$	50,020	$	(6,005)	$	44,015
Customer Relationships	11	15,210		(2,657)		12,553
Tradenames & Trademarks	3	900		(400)		500
Total finite-lived intangible assets		$	66,130	$	(9,062)	$	57,068


(in thousands)	March 31, 2023		September 30, 2022
Raw materials	$	33,628	$	28,787
Work-in-process	1,006		2,866
Finished goods	5,289		7,654
	$	39,923	$	39,307



(in thousands)	March 31, 2023		September 30, 2022
Laboratory equipment	$	98,149	$	62,285
Furniture, fixtures and other equipment	2,480		2,332
Computer equipment	2,922		2,814
Computer software	2,854		1,693
Leasehold improvements	59,356		14,371
Construction in progress	22,151		87,723
	$	187,912	$	171,218
Less: Accumulated depreciation and amortization	(41,373)		(31,777)
	$	146,539	$	139,441


(in thousands)	Operating leases
Years ending September 30:
Remainder of 2023	$	7,480
2024	14,194
2025	14,066
2026	12,609
2027	7,265
Thereafter	90,968
Total minimum lease payments	$	146,582
Less: imputed interest	(55,362)

Total operating lease liabilities	$	91,220
Less: current portion	(13,396)
Operating lease liabilities, net of current portion	$	77,824


(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	(71)	35.15		—	—
Exercised	(58)	14.86		—	639

Outstanding at March 31, 2023	2,324	$	24.59	5.78	$	4,250
Nonvested at March 31, 2023	290	36.46		6.74	100
Exercisable	2,034	$	22.90	5.65	$	4,150


(in thousands)	March 31, 2023
Assets:
Operating lease right-of-use asset	$	70,669
Current liabilities:
Current portion of operating lease liabilities	$	13,396
Noncurrent liabilities:
Operating lease liabilities, net of current portion	$	77,824


(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	851	27.36
Vested/Issued	(290)	59.99
Forfeited	(290)	77.74
Nonvested shares at March 31, 2023	1,837	$	48.58


(In thousands)						Shares available
Reserved at September 30, 2022						507
Additional shares authorized						249
Shares issued during the period						(132)
Reserved at March 31, 2023						624


	Three and six months ended
	March 31,
(in thousands)	2023	2022
Shares subject to options to purchase common stock	2,636	3,145

Unvested restricted stock units and performance stock units	2,632	1,626
Unvested shares of common stock issued upon early exercise of stock options	—	694
Shares subject to employee stock purchase plan	135	50
Total	5,403	5,515


(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		Holdback		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)		(2,921)		(5,021)
Balance at March 31, 2023	$	—	$	2,172	$	2,172


	Three months ended March 31,								Six months ended March 31,
(in thousands, except percentages)	2023		%		2022		%		2023		%		2022		%
Americas	$	34,925	58	%	$	28,458	59	%	$	68,571	60	%	$	51,839	57	%
EMEA	18,780		31	%	15,204		32	%	35,111		31	%	29,725		33	%
APAC	6,475		11	%	4,465		9	%	10,741		9	%	8,581		10	%
Total revenues	$	60,180	100	%	$	48,127	100	%	$	114,423	100	%	$	90,145	100	%


	Three months ended
	March 31,	December 31,	September 30,	June 30,	March 31,	December 31,	September 30,	June 30,
(in thousands)	2023	2022	2022	2022	2022	2021	2021	2021
Number of genes shipped	152	134	146	163	124	125	91	107
Number of shipments	15	14	20	15	14	13	12	14



†			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.


May 8, 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)