All right, thanks. Hi, everybody. My name is Casey Woodring from the Life Science Tools and Diagnostics team here at JPM. I'm pleased to introduce our next company, Twist Bioscience. Joined here by the management team. We'll be doing a brief presentation and then a Q&A afterwards. Now without further ado, CEO, Emily Leproust. Thank you very much for the invitation and the introduction. It's a great pleasure to be here. I'll start by saying that today I'll be making some forward-looking statements. At Twist, as you know, we have a platform to write DNA, and we've enabled a large number of applications shown on the screen. Beyond DNA, once you've made the DNA, you're halfway there to get to the RNA, and then you're almost there to make to the protein. We are expanding our product line into RNA and proteins. Really, there's three things to remember for today's presentation, is that at Twist we're continuing to deliver innovation to create differentiated product. We are deploying commercial excellence to enable fast revenue growth, and that we have a path to profitability as we had been talking a little bit more recently. The platform that we have writes DNA from scratch. On the left here, I'm showing the 96-well plate that everybody else uses to make DNA or oligos. On the 96-well plate, you can make 96 piece of DNA at the same time. Our Twist chip is the same size as the silicon as the 96-well plate, but we can make one million oligos who have much larger scale. We use much lower volume, and that miniaturization is what drives the cost down. As a quick reminder, the customer never sees the silicon. We use it in-house to build our products. All the benefit that we derive in the different product lines come from the silicon chip, and we can make all the products for all the customers at the same time on the same silicon chip. In addition to the silicon, because all the products and all the customers are together on the same chip, we also have built some very sophisticated software infrastructure to be able to keep track of where each product is and to make sure it is chip-shipped to the right address. With this platform, we've been building a business. At the time of when we started from a revenue point of view, we had a bit more than $2 million revenue. Last year we… In our fiscal year ending in September, we had almost $204 million revenue. As we ramp revenue, once we've absorbed the fixed cost from the silicon platform, we're able to drive improvement in gross margin. In the last quarter, we had 45% gross margin. Double-clicking on those numbers or looking at the last, I think, 16 or 18 quarters. At the beginning, most of the revenue was in Synbio, so in green. Then we launched a product suite in NGS in blue. Then we launched in purple our biopharma services. As you can see now, we have three revenue-making, revenue generation rating product line that are all growing nicely. In the next few slides, I'll talk about each of our four businesses. As I said, three are revenue generated. The first two are what we call our core business, Synbio and NGS. The two premium solution businesses that we have are biopharma services and DNA data storage. First, Synbio. In Synbio, we serve a number of markets. One of them is pharma. People use our products to do target discovery, target validation, drug discovery, drug development. We also sell biotech and industrial chemicals companies that are doing enzyme engineering and cell engineering. We serve those customers with a very extended product line of genes that are clonal, non-clonal, Oligo Pools, libraries, and we even sell IgG. If you want a protein for your drug discovery, we can actually make the protein and ship you the protein. In biopharma, Sorry, in Synbio, by and large, why we win is we have a cost differentiation. We also have amazing scale, great quality. In some cases, the quality is perfect, so it's hard to do better than perfect. We focus extremely on the customer experience. We often say that the DNA is free. People pay for the user experience, and we have a very high Net Promoter Score, that, and that helps in our compounding, delivering our compounding plan. Looking at what's coming up, we have a product roadmap that is very fairly robust. As I mentioned earlier, one of the area where we're going into is RNA synthesis. Once you've made the DNA, you're almost there to the RNA. Our customers are actually dragging us into the RNA market since RNA is now a new modality. People that want to do RNA drug discovery need products. In addition, we see a big opportunity in Fast Genes. What those are also perfect genes, but delivered at a higher speed. Obviously, they will have a higher price. But because the cost structure is the same as a slow gene, we have an opportunity to improve our margins. Some of those products are enabled by our investment in the Factory of the Future, which is a very substantial investment in the Portland area near Oregon. This next evolution of the platform is going to enable us to have more capacity, but also to launch new products. We're on track to ship products this month. The second business that I want to detail a little bit is our NGS business. There, the markets as we share that we serve are diagnostic markets where companies use our product to develop a diagnostics test that mostly in cancer or rare disease or genetic diseases. We also start to serve basic and translational research group as well. In NGS, our products are more kit solutions where you get a box with multiple reagents, there is a protocol, there is pre-sale support, post-sale support. It's a little bit higher value product. What we offer is all the reagents that you need to go from the DNA to the sequencer. The adapters, the enzymes, the beads, the buffer, the blockers, everything is available, and it's mix and match. You don't have to, but it's there. The value proposition, not only it's high quality, but with having all the reagents, when you go and run a diagnostic test, if there's something wrong, you only have one neck to choke, and that's mine. It's very. It's a good selling point to our customers. Beside that, the reason we win in NGS is that we actually play a quality game. The quality of our oligos made on the silicon chip is higher, especially the uniformity is higher than if you make them in a 96-well plate. What that means is that when you do the sequencing, you don't have to sequence as much. Typically, our customers report that they need 50% less sequencing once they've used our product than when they use competitor's product. Where we are going is we're making good inroads in oncology applications such as liquid biopsy and MRD. There's a space that we have not explored much, and that is the RNA sequencing space. That's a wide space for us and that one significant opportunity for growth going forward. Some of the questions that we've received recently are around what happens when the cost of sequencing goes down. The cost of sequencing going down is a fact of life, is like gravity or the speed of light. Here we're showing over the last 20 plus years what happened to the cost of sequencing. At the same time, the number of samples that has been processed is going up. What that means for us, we try to put a new slide with some data out today, is really we see the world in two-dimension, mostly. One on the left is for low cost of sequencing applications like rare disease, where you only need 30X coverage. In the past, it used to be $750 total to do a whole genome, which is kind of expensive. If you were to do an exome, it was only $180. That's why exomes have been very popular. With the new sequencing technology, now the whole genome is coming down to $350, and the exome is going down to $146. Yes, the genome is cheaper, but there's still a very substantial saving that you have for doing an exome. We think the exome has some staying power. On the right, in the oncology application, in this case, liquid biopsy, where you have to sequence down to 50,000X coverage. If you were to sequence the entire genome at 50X coverage, you know, it's a $1 million, you will never do it. Even with the new technology, it's $300,000+ per sample. You'll never do it either, at least not at scale. There, the panel have the opportunity to provide a very focused view on maybe 200,000 bases or a little bit more. In this example, it used to be $143 per sample. With the new sequencing technology, it would be $121 per sample, which means that the lower cost enables probably penetration of bigger market and more sample coming onto the platform. As a reminder, in liquid biopsy and MRD, we are not developing our own test. What we do is we sell the reagent to diagnostic companies that are doing the development, the clinical validation, that are taking, frankly, also the reimbursement risk. What we do is provide the tools for them to develop their own test. Those two markets together, the SynBio plus NGS, we see that as a $6 billion TAM. SAM, sorry, serviceable market that we actually can participate in. A few things I'll mention. One is the liquid biopsy market and MRD market, which we think is about $300 million today. Again, that is not the market size of selling MRD or liquid biopsy test. It's the serviceable market, the cost of the reagents that go into those tests. Another area that's very important for us going forward. Sorry, that liquid biopsy MRD, that's $300 million, is poised to grow significantly. As more sample gets processed, that means that more Twist DNA gets utilized, so we can participate in that growth. The second thing I'll mention is the DNA makers market at the bottom, the $1.4 billion. Those are people that do not buy DNA, but once we have the Fast Gene, for instance, product enabled with the Factory of the Future, we think that we'll be able to drive some of that market to us. Moving on, the last point I'll make on those core business together is one that we've been growing the number of customers to more than 3,000. We have publicly disclosed that when we get to $300 million revenue, we will reach adjusted EBITDA breakeven for the core business. The third business that we have is our biopharma solution business. There we sell a service. In the previous two business, we are selling a product, now we sell a service. You give us a target, we use in-house, we'll do the discovery and the optimization of the antibody, and we'll give you a biomolecule that is preclinical ready. There, one of the reason we win is that we have a very comprehensive approach with some in vitro approach, so naïve synthetic libraries, some in vivo approaches. We also have AI/ML. We have been positioning ourself as the drug discoverer of last resort. As you probably know, there are hundreds of companies that do antibody discovery and optimization, we are very unique in the sense that we can do things that others can't. That is shown in the numbers. In the past, I've shown some versions of this slide. As a reminder, this is the first time that we are combining the original Twist biopharma business with the historical number from the Abveris business that we purchased. Some of those numbers are a little bit higher that you may have seen. In the bottom right, what's important is those 59 programs where we are earning milestones and royalties, right? The CRO, they don't get milestone royalties, but because we can do things that others can't in this case, as of September, in 59 cases, we were able to get those milestone royalty, and today we announced an additional one from Astellas. In addition to doing work for our partners, where they give us a target, we give them a biological molecule, we also have our own pipeline of antibodies, where we have chosen targets that we think are interesting, and we use the extra capacity that we have to prosecute them. The goal is to out-license those at the preclinical stage, and accumulate a bit more value. So far, we have NF1. Last year, we sold an option to a license to Astellas. I'll just spend a minute on an additional biomolecule, and it is for the top program around DKK1. For those of you that may not know, DKK1 is very important in cancer. Cancer cells have DKK1 expressed on the cell surface. DKK1 has a double whammy effect. One is that it is tumorigenic to the cell, and in addition, it suppresses the immune system. If you can find anti-DKK1 antibodies, you'll be able to activate the immune system and stop the tumorigenic effect. There are molecules. There's at least one molecule in the clinic. There is some questions around the potency and the dosing frequency. We think this could be a very nice fast follower for a company to license. If I summarize for biopharma, there's multiple ways for us to monetize it. At the bottom is upfront payment, and so we get typically upfront payment with 50%-60% gross margin. In at least 59 cases, we were also able to get milestone royalties. We have our own antibodies that we can out-license. Again, NF1 so far, but once we've done it once, we know to do it again and how to maybe accelerate the cadence. We also have the opportunity to do spin-outs if the opportunity presents itself. We've guided that for the biopharma business we have, we will achieve adjusted EBITDA breakeven at $80 million of revenue. Moving to the last business, which is a non-revenue generating business at Twist yet, is our DNA data storage business. It sounds like science fiction, but I promise it's only science. What you can do is if you have data, zeros and ones, you can convert that into ACGTs in the computer. On the silicon chip, we can make DNA, and that becomes the file. That becomes the data. It has the benefit of being extremely dense, longevity that are really long. If you need the data, you just put it in the sequencer and you can get the zeros and ones back. We've done lots of demonstration. It works great. Now we are on the path to commercialization. To do that, we had to get to the next step of the platform evolution, which is create even more density and to lower the cost. The current chip that we are working on, which is a proof of concept chip, is 24 times smaller, but we have 256 million oligos instead of a million. It's about 6,000 times better. This is the first step towards more and more density on the chip and continued lower cost. With the chip, we've been able to announce that in the later part of calendar 2023, we'll be able to have our first early access product launch. What that means is that we'll actually sell a Century Archive, so it's data that is stored, that is storable, stable for 100 years or more. This is very appealing to people that are doing long-term archiving, which is a big part of the archiving market. The initial target customers will be people that have very high value information, but also that are in an environment that are forgiving. We know that early access there's always something to learn. We are not going to go out on thousands of customers, could be a few customers that are really desperate to get the product and that are forgiving, so that we can do the last mile of product development together. All in all, we'll see growth from all of our businesses and we've guided revenue growth to $261 million-$269 million revenue for next year and $350 million for this year, sorry, and $350 million for the following year. We also provided a two-year guidance on revenue growth margin, OpEx, and year-end cash balance. Last but not least, the way the company is built on the silicon platform where we are miniaturizing the use of chemical, where naturally, you know, it's, excuse my pun, but in our DNA, we are highly sustainable. We use 99.8% less chemicals and we also have a very diverse employee population. In summary, we have a very innovative platform on silicon to write DNA. We're going after a large and growing market. We always go with highly differentiated products, which enable us to grow quickly and sustainably. We have validated business models. Now it's all about executing, delivering those revenue, delivering gross margin and achieving our path for profitability. This is not where we stop. Breakeven is not the goal. The goal is to, after that, keep growing. We have $500 million of capacity with our Factory of the Future investment, and so we intend to leverage it to the full extent. Thank you very much for the attention, and looking forward to the Q&A. Great. Thank you. That was a great overview. Now we'll shift to the Q&A portion. If anybody has questions, please feel free to raise your hand, and we have a mic runner in the room that will help you out. If anybody has a question on the webcast, please feel free to submit your question via the web portal. I guess to start on the NGS business, you noted last quarter that NGS revenue will be down sequentially this quarter, as a number of large customers pushed out orders in December to January and February. You've noted that they should rebound in fiscal second quarter. What gives you confidence that this rebound should occur? Just can you give us some color on what the nature of those pushouts were? Yeah. I can answer that. Excuse me. Oh, can you hear me? Yep. In terms of the way we build up our forecast, we build up our forecast with it by customer. We get pretty clear line of sight in terms of customer expectations and deliveries per quarter. As we announced our results on the 18th of November, a couple of customers had highlighted that they were, instead of taking the shipments in December, they're pushing out to the January, February timeframe. As we look at the NGS business, we get about 600 customers. We track the top 259 right now. Those are customers with revenue above $250,000 a year that we're targeting. About 120 have adopted Twist. That means they've designed them into their tests. We have a really close relationship with those customers, and they give us good line of sight in terms of expectations, in terms of deliveries and understanding if they're having to push out based on what's happening with their business. You also noted that the Chinese New Year will pressure fiscal second quarter results. Can you give us some color on how you are viewing the change in COVID policy there, if that's affecting demand at all in China? We did note in the last earnings call that we were seeing a sequential decline in NGS. Part of that was due to China as well, as a couple of customers pushing out. You know, as a transition in the market, China is about $7 million a year revenue for us. It's not material. However, I mean, like the US, we have fairly close line of sight with our customers, and our job is to support them as they go through this transition. We did see that, you know, when we're going into the fourth quarter, we did see that initial impact, and we'll give an update in terms of what's happening in their next earnings call. Maybe a quick clarification. It was not the Chinese New Year, it was China COVID. Got it. Yeah. Okay. maybe shifting to biopharma, you noted 59 projects that include milestone royalty payments. Wondering how you're targeting higher value relationships in this business, to drive that number higher. It's really a marketing positioning as being a drug discoverer of last resort. When we go to customers, they may know us really well on the Synbio side. They know about discovering drugs. They buy our tools. They buy genes and IgGs and maxiprep. They know us very well as a provider of DNA, but they don't necessarily know us well as a drug discoverer. Frankly, they can be quite surprised. What we found, the best positioning for us was to just ask them to give us their toughest project. You know, literally I say, "Give me the project that you've been failing for 2 years, 5 years." It's a little bit of a risk because those are hard target. So far we've been successful every time where in-house we've been able to discover an antibody. When we go back 6 months later with a fully human-derived, highly potent antibody, it really boosts the credibility that we have as a drug discoverer. At that point, we can see the light bulb open, and then we get the easier project, and then we're able to ask for milestones and royalties. Can you give us an update on how your Twist Boston offering is key to the portfolio here? You know that you have 36 projects on the Beacon platform. Is this becoming a core competency or an area of strategic differentiation that's made a difference in recruiting customers? Yeah, definitely so. When we started BioPharma, we were selling basically an approach where you use naïve synthetic library for drug discovery. You know, it's a great positioning. What you're saying is that you're not dependent on immunization. Basically, you can go after any targets. That, that was very powerful. At the same time, some customers really are tied to immunization. We saw an opportunity with Abveris, where by combining the ability to do in vitro naïve libraries and in vivo immunization, we're actually able to potentially upsell the customer by offering more of a guarantee because now you have more than one option. In addition, what attracted us to Abveris was that they were not doing any immunization. They had access to a hyperimmune mouse, which actually can be better than a humanized mouse, because when you have a hyperimmune mouse, that means that even if you have a target that's really similar to the mouse gene, you still get the immune response, and you get antibodies to more epitopes of the target. That was first attractive point with Abveris, was their hyperimmune mouse. The second attractive point was instead of doing the old way of finding out which was the hits from immunization, they actually had invested not only the capital in Berkeley Lights, in the Beacon machine, but also the knowledge of how to use the machine. So, it's a very powerful machine, but it's a slow. It's kind of like if you're a regular driver, you get put into a Ferrari, you don't necessarily know how to drive it. they had developed the capabilities to how get the best out of the Beacon. those two capabilities were quite unique that were attractive to us. now we have under one roof all of this, plus some AI and machine learning tools that we've bolted on through partnerships, and that means that now when we go to a pharma customer or partner, we have all of the ways to discover antibody under one roof. that gives us some upsell capabilities, some guarantee capabilities. In the past, the Abveris technology had not been able to command milestones and royalties, and we think that we'll be able to change that. That's helpful. I'll pause here if there's any audience questions. All right. Maybe we can talk towards Factory of the Future a little bit. Jim, this one might be for you. Twist's gross margins are expected to be 39%-40% in fiscal 2023 as the Factory of the Future, I'm sorry, starts shipping product this month. Can you just walk us through the puts and takes of the gross margin structure here? How much utilization of the Factory of the Future do you assume in the guide? We came forward with the guidance for this year and next year. This year we highlighted our gross margin will be 39%-40%, and next year, gross margin will be 49%. Couple of drivers. We're coming off Q4, where the Q4 2022, where the gross margin was 45%. As we bring on the fixed cost, we see an impact to our gross margin. There's three major levers when you're looking at gross margin. One is the volume of business. The second is the mix of business. And the third is in terms of efficiency and yield within the factory and how we're managing our cost structure. You look at our NGS business. Our NGS business contribution margin is approximately 80%. Contribution margin is defined as the difference between price and materials. The Synbio products. Synbio products include genes, they include Oligo Pools, include libraries, include IgG and maxiprep. The contribution margin there is 65%-70%. As we launch the Factory of the Future, we have the opportunity of driving efficiency and improving turnaround time. In the fall of this year, we're launching what's called our Fast Genes. The Fast Genes product is targeted at the makers market. As Emily highlighted in the slide, that's a $1.4 billion market that's not available to us today. We're just, you know, scratching the surface. The advantage of the makers market is you get a higher price for genes. What we see as we scale the Factory of the Future, and we are targeting revenue in FY2024, $350 million, $300 million of that revenue is what we call the core business, NGS and Synbio. What we're seeing over time is that the contribution margin combined for the core business is about 78%. The question is why? Why is it 78%? Well, as we scale the Fast Genes, get a higher price, see more efficiencies, and leverage our fixed costs, we're gonna see the contribution margin increase because of the Fast Gene pricing, improved efficiency. As we scale throughput, we're gonna leverage that fixed cost. We see the gross margins in FY2024 increasing to 49%. Our longer term model for gross margin is in the range of 55%-60% for our core business. As Emily highlighted, for the pharma business, we're targeting adjusted EBITDA break even, revenue of about $80 million, and the gross margin for the biopharma business is 60%. Getting back to it, we invest in the Factory of the Future. It's about a $100 million investment. There's a large market for us to go after. We've got to execute, scale, and with that scale and execution, we're gonna see the gross margins improve. That's really helpful. You walked through some of the drivers of that margin expansion, but just curious on timelines, when do you think you would achieve that 55%-60% gross margin? You know, any sort of color around how you think about that? I mean, the goal is always to get there as fast as possible, which means driving revenue faster. I mean, our goal is for the core business to be self-funding. What does that mean? Getting to adjusted EBITDA to break even. Once we get to adjusted EBITDA to break even, which is towards the end of 2024 for the core business, early 2025 on a quarterly basis, I mean, our goal then is to scale the business, in term profitably and, fund the core business based on the economics of that business. Got it. Maybe shifting to DNA data storage here. Can you help us quantify some of the opportunities in this market? What gives you confidence that the market will be ready to adopt this technology? What year do you think your offering could be a meaningful revenue contributor? Just curious if you're embedding any DNA storage revenue in your fiscal 2024 guide. Yeah, that's a great question. Thank you. The archiving market. Mm-hmm. Today is about $35 billion. There are market research independent of us that show that in the storage market, 70% of people want to archive. When you ask in the archiver, what is the number one length of archiving? The number one length of archiving for 40% of the use case is 100 years or more. Archiving is the biggest proportion of storage, and then 100 years is the biggest proportion of archiving. We think that there is a very substantial opportunities there. When you look at archiving, the big differentiator, the differentiator that we have is around total cost of ownership. To store data for 100 years, you have to put it down on a hard drive or tape. Every five-seven years, you move from one hard drive, one tape, to another every five-seven years. As the value of the data goes down over time, the cost goes up because you keep having to put more and more money in. The total cost of ownership becomes a huge drag. Now you have media companies that have very substantial archiving portfolios, and they have to decide which is the one that they're going to keep, meaning they'll put it on the next hard drive, and which are the ones they're gonna have to let go. There's this huge pent-up demand for new archiving opportunity that will have a total cost of ownership that is predictable and paid upfront. In addition to that, actually, if you look at the storage that is being shipped every year, what is estimated is that demand will grow by 10x over the next 12 years. Basically, there's not enough capacity in the world to make hard drive and tapes. There is this area of need where you need a new storage media to be able to absorb the growing amount of data that's being generated. The opportunity is very substantial. I think you had a question around 2024 guide. Yes, the 2024 guide includes. Small sliver. Very small sliver of DNA data storage. You have to start small. If you go back, it's gonna be our 10-year anniversary at Twist this year. The first year was very small. You know, we were able to ramp. It's all about ramping in a way that's orderly. The early access is something that we do for every product. By doing early access, we're able to do, as I said, the last mile of product development with the customer to make sure that when we fully launch, when we fully scale, we are able to basically quickly sell the capacity that we deploy. Got it. We have a few more minutes here. just again, if anybody in the audience has a question, please feel free. yep, go for it. Is there a mic or I? It's coming right there. Thank you. You described the SynBio chip and the next generation one really well, but I didn't get a feel for what underpins the NGS platform. The NGS platform, what underpins it is the same silicon chip as SynBio. Where if you have to make an exome, that's millions of oligos. If you have to make a panel, it can be as low as 100 oligos, it can be as high as a few million oligos. To make panels and exomes, you need to make a lot of different oligos on a particular chip. You can have a panel for, you know, the Broad Institute that's maybe 10,000 oligos. You may have a few genes for Ginkgo that's also part of the chip. We try to run full chips, but we can make NGS product and SynBio products and BioFire products on the same chip. They all benefit from the same benefit of the miniaturization of the chemistry. The same flow cell structure and everything? That's right. Yeah. Yeah. That's the front end. Mm-hmm. The oligo making, and then you have different back-end. The back-end for NGS is very simple. It's a PCR purification, quantification, packaging, and shipping. It's five steps. The back-end for SynBio is a lot more complicated. You have to make the oligo, deprotect, detach from the surface. You have to do PCA, PCR, ECA, ECR, quantification, normalization, transformation, cloning, cross-cloning prep, NGS, QC, miniprep, and ship. There's a lot more step in the back-end for SynBio, but the key differentiator is derived from the front end, making the oligos. Thanks. Just on that point, I mean, From an economic point of view, you look at all the products we launch, including the impact on pharma, it's all leveraging the platform. As we're, we invest heavily in R&D, so what we're doing is building a significant moat around our technology. For example, like IgG, all we're doing is leveraging the platform. NGS, you highlighted we're leveraging the platform. That's what's gonna give us the economics as we move forward. That doesn't extend to data storage too, does it? Data storage with the current sequence chip of one million oligos, we were able to show demonstration that it worked, but the cost per gigabyte was too high to be commercially viable. That's why we had to go to the next level of density where we have to be competitive on the total cost of ownership. That's what we'll get with the first product launch. As we are able to pack more and more density on the chips, we'll be able to lower even more the cost of storage, which will make us more competitive and enable revenue ramp. All right. I guess we'll leave it there. Looks like we're out of time. Thank you for everybody, for coming today. Thank you to Twist. Thanks so much. Enjoy the conference.