Twist Bioscience Corporation

05/04/2026 | Press release | Distributed by Public on 05/04/2026 14:29

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Form 10-Q and our Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in the section entitled "Risk Factors" and elsewhere in this Form 10-Q. In preparing this MD&A, we presume that readers have access to and have read the MD&A in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K.
Overview
We provide customizable solutions across the biological continuum that enable scientific discovery and development across therapeutics, diagnostics, and other high-growth markets. Our proprietary silicon-based platform delivers precision, scale, and speed, supporting consistent, high-quality performance across a broad range of applications.
At the core of our platform is a differentiated method of manufacturing synthetic DNA by "writing" DNA on a silicon chip. By integrating proprietary hardware, software, and scalable infrastructure, including our e-commerce platform, we achieve high levels of precision, automation, and throughput at a lower cost relative to legacy methods.
We have extended this platform beyond DNA synthesis to offer an integrated portfolio that includes synthetic genes, next-generation sequencing, or NGS, applications, sample preparation tools, antibody libraries, and biologics discovery services. These solutions are designed to improve research efficiency, accelerate development timelines, and deliver reproducible, high-quality data. Leveraging the same platform, we also manufacture synthetic RNA, express antibody proteins, perform characterization assays and deliver data to customers and partners.
Our solutions support a wide range of applications, including traditional and AI-enabled therapeutics discovery, diagnostic development, industrial and applied research, agricultural biotechnology, and academic research. By increasing efficiency and scalability in research and development, we support efforts to improve human health and sustainability.
We serve more than 3,800 customers annually across therapeutics, diagnostics, industrial and applied markets, academia, government, and global supply partners. Our multi-channel commercial strategy includes direct sales teams aligned to key markets and an e-commerce platform that enables customers to design, validate, and order customized products on demand, with real-time pricing and order tracking.
We generate revenue primarily from DNA synthesis and protein solutions and NGS applications. As we have expanded from DNA fragments to genes, sample preparation, protein expression, and biologics discovery, the integration of our offerings has strengthened. Beginning in fiscal 2026, we combined synthetic biology tools and biopharma services into a single category, DNA synthesis and protein solutions, and renamed NGS tools to NGS applications to reflect their role in sequencing workflows.
In February 2026, we entered into a license agreement with Invenra Inc. for its proprietary B-Body bispecific antibody discovery platform and simultaneously acquired a 6.24% ownership interest on a fully-diluted basis in Invenra through the purchase of Series B Preferred Stock. Together, these transactions represent a total commitment of $33.8 million, settled through a combination of cash and common stock.
Since our inception, we have incurred net losses each year. Our net loss for the three and six months ended March 31, 2026 was $44.0 million and $74.5 million, respectively. As of March 31, 2026, we have an accumulated net deficit of $1,394.1 million and cash, cash equivalents and short-term investments of $171.7 million. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the success of our existing products and the development and commercialization of additional products in the therapeutics, diagnostics, industry and applied, academic research and government, and global supply partners revenue industries as well as leveraging our investment in our manufacturing infrastructure.
Financial highlights compared to the same periods in the prior fiscal year:
•For the three and six months ended March 31, 2026, revenues increased 19.3% to $110.7 million and 18.1% to $214.4 million, respectively, driven by strong performance in DNA synthesis and protein solutions and NGS applications.
•For the three and six months ended March 31, 2026, gross margin increased to 51.6% from 49.6% and to 51.8% from 49.0%, respectively, primarily due to increases in revenues and driving additional cost savings through continuous process improvement initiatives.
•For the three and six months ended March 31, 2026, loss from operations increased 10.4% to $45.9 million and 3.4% to $78.8 million primarily due to an increase in selling, general and administrative expenses and litigation settlement costs, net of recoveries, offset by increases in both revenues and gross profit and a decrease in research and development expenses.
•For the six months ended March 31, 2026, net cash used in operating activities increased 23.1% to $42.4 million from $34.4 million.
Results of Operations
Comparison of the Three and Six Months Ended March 31, 2026 and 2025
Revenues
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 2025 Change % 2026 2025 Change %
Revenues $ 110,715 $ 92,793 $ 17,922 19 % $ 214,413 $ 181,506 $ 32,907 18 %
Revenues by Geography
We have one reportable segment from the manufacturing of DNA synthesis and protein solutions and NGS applications products. The following table shows our revenues by geography, based on our customers' shipping addresses. Americas consists of United States, Canada, Mexico and South America; EMEA consists of Europe, Middle East and Africa; and APAC primarily consists of Japan, China, South Korea, India, Singapore, Malaysia, Australia, New Zealand, Thailand and Taiwan.
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 % 2025 % 2026 % 2025 %
Americas $ 64,307 58 % $ 55,189 59 % $ 122,688 57 % $ 108,899 60 %
EMEA 37,347 34 % 30,642 33 % 75,712 35 % 58,945 32 %
APAC 9,061 8 % 6,962 8 % 16,013 8 % 13,662 8 %
Total revenues $ 110,715 100 % $ 92,793 100 % $ 214,413 100 % $ 181,506 100 %
Revenues by Products
We historically reported our revenue by the following products: synthetic genes, oligo pools and DNA libraries (collectively, synthetic biology), antibody discovery, and NGS tools. Beginning fiscal 2026, we combined revenue from synthetic genes, oligo pools, DNA libraries, and biopharma services for antibody discovery into DNA synthesis and protein solutions. We also changed the name of NGS tools to NGS applications, as these products and services facilitate DNA reading and sequencing workflows. The table below summarizes revenues by the new products:
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 % 2025 % 2026 % 2025 %
DNA synthesis and protein solutions 53,274 48 % 41,647 45 % 104,334 49 % 81,718 45 %
NGS applications 57,441 52 % 51,146 55 % 110,079 51 % 99,788 55 %
Total revenues $ 110,715 100 % $ 92,793 100 % $ 214,413 100 % $ 181,506 100 %
Revenues by Industry
We historically reported revenue by industrial chemicals/materials, academic research, healthcare, and food/agriculture. Beginning fiscal 2026, we disclose revenue by therapeutics, diagnostics, industry and applied, academic research and government, and global supply partners revenue. These updated categories better align with our operations and increase clarity around our key customer groups. The table below summarizes revenues by industry:
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 % 2025 % 2026 % 2025 %
Therapeutics $ 40,766 37 % $ 26,250 28 % $ 77,991 36 % $ 53,022 29 %
Diagnostics 39,960 36 % 35,030 38 % 75,275 35 % 70,513 39 %
Industry and applied 5,797 5 % 7,043 8 % 11,918 6 % 12,570 7 %
Academic research and government 12,816 12 % 12,469 13 % 25,033 12 % 24,865 14 %
Global supply partners 11,376 10 % 12,001 13 % 24,196 11 % 20,536 11 %
Total revenues $ 110,715 100 % $ 92,793 100 % $ 214,413 100 % $ 181,506 100 %
Product Shipments
The table below summarizes product shipments:
Three months ended March 31, Six months ended March 31,
(in thousands) 2026 2025 2026 2025
Number of genes shipped 300 227 571 432
The number of customers who purchased products from us was approximately 2,583 and 2,431 customers for the three months ended March 31, 2026 and March 31, 2025, respectively.
Revenues increased 19% to $110.7 million for the three months ended March 31, 2026, as compared to $92.8 million for the three months ended March 31, 2025. The increase in revenues primarily reflects growth in DNA synthesis and protein solutions revenue of 28% and growth in NGS applications revenue of 12%, both of which are primarily attributable to an increase in revenues from our customers in therapeutics, diagnostics, academic research and government industries, as well as an increase in the number of customers. The number of genes shipped in the three months ended March 31, 2026, increased to approximately 300,000 genes, compared to approximately 227,000 genes in the three months ended March 31, 2025, an increase of 32%.
Revenues increased 18% to $214.4 million for the six months ended March 31, 2026, as compared to $181.5 million for the six months ended March 31, 2025. The increase in revenues primarily reflects growth in DNA synthesis and protein solutions revenue of 28% and growth in NGS applications revenue of 10%, both of which are primarily attributable to an increase in revenues from our customers in therapeutics, diagnostics, academic research and government and global supply partners industries, as well as an increase in the number of customers. The number of genes shipped in the six months ended March 31, 2026, increased to approximately 571,000 genes, compared to approximately 432,000 genes in the six months ended March 31, 2025, an increase of 32%.
Cost of Revenues
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 2025 Change % 2026 2025 Change %
Cost of revenues $ 53,593 $ 46,765 $ 6,828 15 % $ 103,319 $ 92,638 $ 10,681 12 %
Gross profit $ 57,122 $ 46,028 $ 11,094 24 % $ 111,094 $ 88,868 $ 22,226 25 %
Gross margin 51.6 % 49.6 % 2.0 % 51.8 % 49.0 % 2.8 %
Cost of revenues increased 15% to $53.6 million for the three months ended March 31, 2026, as compared to $46.8 million for the three months ended March 31, 2025. The increase is primarily attributable to an increase in material costs of $6.3 million driven by increased sales and a $0.7 million increase in personnel costs. Gross margin increased 2.0% to 51.6% for the three months ended March 31, 2026, as compared to 49.6% in the same period of the prior year, mainly due to an increase in revenues and driving additional cost savings through continuous process improvement initiatives.
Cost of revenues increased 12% to $103.3 million for the six months ended March 31, 2026, as compared to $92.6 million for the six months ended March 31, 2025. The increase is primarily attributable to an increase in material costs of $9.0 million driven by increased sales and a $2.1 million increase in personnel costs. Gross margin increased 2.8% to 51.8% for the six months ended March 31, 2026, as compared to 49.0% in the same period of the prior year, mainly due to an increase in revenues and driving additional cost savings through continuous process improvement initiatives.
Research and Development Expenses
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 2025 Change % 2026 2025 Change %
Research and development $ 19,695 $ 23,917 $ (4,222) (18) % $ 36,825 $ 45,224 $ (8,399) (19) %
Research and development expenses decreased 18% to $19.7 million for the three months ended March 31, 2026, as compared to $23.9 million for the three months ended March 31, 2025. The decrease is primarily driven by a $2.0 million decrease in personnel costs, including a $1.4 million decrease in stock-based compensation expenses, a $1.2 million decrease in professional services costs, and a $0.9 million decrease in
costs for facilities and depreciation and amortization. These decreases are largely attributable to the sale of our DNA data storage business in fiscal year 2025.
Research and development expenses decreased 19% to $36.8 million for the six months ended March 31, 2026, as compared to $45.2 million for the six months ended March 31, 2025. The decrease is primarily driven by a $4.6 million decrease in personnel costs, including a $2.5 million decrease in stock-based compensation expenses, a $2.0 million decrease in professional services costs, and a $1.6 million decrease in costs for facilities and depreciation and amortization. These decreases are largely attributable to the sale of our DNA data storage business in fiscal year 2025.
Selling, General and Administrative Expenses
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 2025 Change % 2026 2025 Change %
Selling, general and administrative $ 76,085 $ 63,671 $ 12,414 19 % $ 145,827 $ 119,849 $ 25,978 22 %
Selling, general and administrative expenses increased 19% to $76.1 million for the three months ended March 31, 2026, as compared to $63.7 million for the three months ended March 31, 2025. The increase is primarily attributable to an $8.2 million increase in personnel costs, including a $0.4 million increase in stock-based compensation expense, a $2.4 million increase in IT services costs, an $0.8 million increase in marketing costs, and a $1.9 million increase in other costs. These increases were partially offset by a $0.9 million decrease in professional services costs. The increase in selling, general and administrative expenses reflect headcount additions and investments in our commercial organization and corporate infrastructure to support the continued growth of the business.
Selling, general and administrative expenses increased 22% to $145.8 million for the six months ended March 31, 2026, as compared to $119.8 million for the six months ended March 31, 2025. The increase is primarily attributable to a $15.9 million increase in personnel costs, including a $2.7 million increase in stock-based compensation expense, and a $5.0 million increase in IT services, a $2.3 million increase in marketing costs, and a $4.6 million increase in other costs. These increases were partially offset by a $1.8 million decrease in professional services costs. The increase in selling, general and administrative expenses reflect headcount additions and investments in our commercial organization and corporate infrastructure to support the continued growth of the business.
We expect selling, general and administrative expense to moderate in the second half of fiscal 2026 resulting from a number of cost saving initiatives.
Litigation settlement costs, net of recoveries
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 2025 Change % 2026 2025 Change %
Litigation settlement costs, net of recoveries $ 7,205 $ - $ 7,205 NA $ 7,205 $ - $ 7,205 NA
We recorded litigation settlement costs, net of recoveries of $7.2 million for the three and six months ended March 31, 2026.
Interest and Other Income (Expense), net
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 2025 Change % 2026 2025 Change %
Interest income $ 1,710 $ 2,801 $ (1,091) (39) % $ 3,885 $ 6,041 $ (2,156) (36) %
Other income (expense), net 175 (394) 569 (144) % 646 (487) 1,133 (233) %
Total interest and other income (expense), net $ 1,885 $ 2,407 $ (522) (22) % $ 4,531 $ 5,554 $ (1,023) (18) %
Interest income decreased 39% to $1.7 million for the three months ended March 31, 2026, as compared to $2.8 million for the three months ended March 31, 2025, due to lower cash equivalents and short-term investments balances and lower interest rates.
Interest income decreased 36% to $3.9 million for the six months ended March 31, 2026, as compared to $6.0 million for the six months ended March 31, 2025, due to lower cash equivalents and short-term investments balances and lower interest rates.
Income Tax Expense
Three months ended March 31, Six months ended March 31,
(in thousands, except percentages) 2026 2025 Change % 2026 2025 Change %
Income tax expense $ (43) $ (175) $ 132 (75) % $ (296) $ (271) $ (25) 9 %
We recorded an income tax provision of less than $0.1 million and $0.2 million for the three months ended March 31, 2026 and March 31, 2025, respectively. We recorded an income tax provision of $0.3 million and $0.3 million for the six months ended March 31, 2026 and March 31, 2025, respectively.
Liquidity and Capital Resources
Liquidity
As of March 31, 2026, we had a balance of $122.7 million of cash and cash equivalents and $49.0 million in short-term investments. We have incurred losses and negative cash flows from operations since our inception, and as of March 31, 2026, we had an accumulated deficit of $1,394.1 million.
Since our inception, we have financed our operations and capital expenditures principally through public equity raises, private placements of our convertible preferred stock, borrowings from credit facilities, proceeds from the royalty purchase agreement, sale of DNA data storage assets and revenue from our commercial operations.
Based on our current business plan, we believe our current cash, cash equivalents and short-term investments and anticipated cash flow from operations will be sufficient to meet our anticipated cash requirements for more than 12 months from the date of this Quarterly Report on Form 10-Q. However, if we need to obtain additional financing to fund operations beyond this period, there can be no assurance that we will be successful in raising additional financing on terms that are acceptable to us.
Capital Requirements and Allocation
Our primary uses of capital are, and we expect will continue to be for the near future, compensation and related expenses, manufacturing costs, laboratory and related supplies, legal and other regulatory expenses and general overhead costs, including facilities costs and capital expenditures. We had $15.7 million in commitments for capital expenditures as of March 31, 2026.
Our future capital requirements will depend on many factors including our revenue growth rate, research and development efforts, investments in or acquisitions of complementary or enhancing technologies or businesses, the timing and extent of additional capital expenditures to invest in existing and new facilities, the expansion of
sales and marketing and international activities, legal costs associated with defending and enforcing intellectual property rights and the introduction of new products and new versions of existing products.
We take a long-term view in growing and scaling our business and we regularly review acquisition and investment opportunities, and we may in the future enter into arrangements to acquire or invest in businesses, services and technologies, including intellectual property rights, and any such acquisitions or investments could significantly increase our capital needs. We regularly review opportunities that meet our long-term growth objectives.
Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to providing liquidity while ensuring capital preservation.
Our contractual obligations have not materially changed from those reported in our Annual Report on Form 10-K except for lease commitments. As of March 31, 2026, our operating lease liability was $95.8 million. See Note 10, Leases of the notes to our condensed consolidated financial statements included elsewhere in this Form 10-Q for information on our operating lease commitments.
On November 13, 2025, we entered into a lease amendment for our facilities in South San Francisco, California. This amendment increases the leased premises by approximately 33,000 square feet in order to consolidate other offices in South San Francisco into a single location and extends the termination date of the lease until June 30, 2036. The lease for the additional space is expected to commence on September 1, 2026. As the lease term for the additional space has not yet commenced, we have not yet recorded a right-of-use asset and a corresponding operating lease liability nor have we recognized rent expense for the additional space. These will be recognized on the commencement date of the additional space. We expect future cash commitments related to this lease of the additional space to total $11.6 million through June 30, 2036.
Invenra License Agreement and Investment in Equity Securities
In February 2026, we entered into a co-exclusive license agreement with Invenra Inc. ("Invenra") for its proprietary B-Body bispecific antibody discovery platform and simultaneously acquired a 6.24% ownership interest in Invenra through the purchase of Series B Preferred Stock. Together, these transactions represent a total commitment of $33.8 million, settled through a combination of cash and our common stock. Under the terms of the license agreement, we will also pay royalties to Invenra based on gross sales received from third-party license sales.
The license was acquired for total consideration of $20.0 million, of which $5.0 million was paid in cash at closing, $10.0 million settled through the issuance of common stock at closing, and $5.0 million in common stock remains contingently issuable upon the successful completion of technology transfer. The equity investment was acquired for $13.8 million, settled entirely through the issuance of common stock, comprising $10.0 million issued at initial closing and $3.8 million issued in a subsequent closing on April 7, 2026.
Of the total $33.8 million commitment, $5.0 million represented an outflow of cash, with the remaining $28.8 million was settled or to be settled through the issuance of the Company's common stock, thereby limiting the cash impact on liquidity. The contingent issuance of common stock, which is dependent on the completion of the technology transfer, as well as the common stock issuance for the subsequent closing related to acquiring ownership interests in Invenra, are both recorded as other current liabilities in the consolidated balance sheet as of March 31, 2026.
We filed a prospectus supplement under our existing shelf registration statement on Form S-3 to register the resale of up to 632,328 shares of common stock issued or issuable in connection with these transactions, which will not provide any proceeds to us and will have no material impact on our liquidity or capital resources.
See note 7, Investment in Equity Securities of the notes to our condensed consolidated financial statements included elsewhere in this Form 10-Q.
Cash Flows
The following table summarizes our sources and uses of cash and cash equivalents:
Six months ended March 31,
(in thousands) 2026 2025
Net cash used in operating activities $ (42,373) $ (34,414)
Net cash provided by (used in) investing activities (22,639) (2,962)
Net cash provided by financing activities 4,436 21,140
Operating Activities
Net cash used in operating activities was $42.4 million during the six months ended March 31, 2026, which was primarily due to a net loss of $74.5 million, adjusted for non-cash items, including depreciation and amortization of $12.6 million, stock-based compensation expense of $32.2 million, and a net cash outflow from operating assets and liabilities of $11.8 million. The net cash outflow from operating assets and liabilities was mainly due to increases in inventories of $5.2 million, accounts receivable of $7.4 million due to the increase in revenues and the timing of collections, and prepaid and other current assets of $18.9 million, and a decrease in accrued compensation of $4.3 million, partially offset by an increase in accrued and other liabilities of $22.8 million. The changes in accrued compensation, accrued expenses and other liabilities, and accounts payable are due to timing of payments to vendors and employees.
Net cash used in operating activities was $34.4 million during the six months ended March 31, 2025 primarily due to a net loss of $70.9 million adjusted for non-cash items including depreciation and amortization expense of $12.8 million, stock-based compensation expense of $32.3 million and a net cash outflow from operating assets and liabilities of $9.4 million. The net cash outflow from operating assets and liabilities was mainly due to an increase in accounts receivable of $15.3 million due to timing of collections, a decrease in accrued compensation of $8.7 million offset by decreases in inventories of $3.2 million, increases in accrued expenses of $3.3 million, accounts payable of $6.4 million and other liabilities of $1.3 million. The changes in accrued compensation, accrued expenses, and accounts payable are due to timing of payments to vendors and employees.
Investing Activities
Net cash used in investing activities was $22.6 million during the six months ended March 31, 2026, which consisted of the purchases of property and equipment of $17.9 million and cash paid for asset acquisition of $5.0 million.
Net cash used in investing activities was $3.0 million during the six months ended March 31, 2025, which consisted of the purchases of property and equipment of $6.4 million offset by the proceeds from the net impact of purchases and maturity of investments of $3.5 million.
Financing Activities
Net cash provided by financing activities was $4.4 million in the six months ended March 31, 2026, which consisted of $2.1 million from the exercise of stock options and $2.4 million proceeds from issuance of shares under the ESPP.
Net cash provided by financing activities was $21.1 million in the six months ended March 31, 2025, which consisted of $15.0 million from XOMA for the sale of future revenue, $3.7 million from the exercise of stock options and $2.4 million proceeds from issuance of shares under the ESPP.
Critical Accounting Policies and Significant Management Estimates
The preparation of our Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States of America requires management to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures. On an ongoing basis, we evaluate our significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information. Actual results may differ significantly from these estimates. A summary of our critical accounting policies and estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K. There were no changes to our critical accounting policies and estimates during the six months ended March 31, 2026.
Recently Issued Accounting Pronouncements
For a description of accounting changes and recently issued accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our condensed consolidated financial statements, see Note 2, "Summary of Significant Accounting Policies" in Item 1 of Part I of this Form 10-Q.
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