Welcome to Twist Biosciences, Fiscal 2021, Third Quarter Financial results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session. [Operators instructions] As reminder, today's conference call is being recorded.

I would now like to turn the conference over to Angela Bitting SVP of Corporate Affairs..

Thank you, Valerie. Good morning everyone. I would like to thank all of you for joining us today for Twist Biosciences Conference call to review our Fiscal 2021 Third Quarter financial results and business progress. We did issue our financial results released this morning, which is available at our website at www.twistbioscience.com.

With me on today's call are Dr. Emily Leproust, CEO and Co-Founder of Twist, and Jim Thorburn, CFO of Twist. Emily will begin with a review of our recent progress on Twist Businesses. Jim will report on our financial and operational performance, and Emily will come back to discuss our upcoming milestones and direction.

We'll then open the call for questions. As a reminder, this call is being recorded. The audio portion will be archived in the Investors section of our website and will be available for two weeks. During today's presentation, we will be making forward-looking statements within the meaning of the U.S federal securities laws.

Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize and actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks include those set forth in our press release we issued earlier today as well as those more fully described in our financials and our filings with the Securities and Exchange Commission.

The forward-looking statements in this presentation are based on information available to us as of the date hereof and we cannot at this time predict the full extent of the impact of the COVID-19 pandemic and any resulting business or economic impact. We disclaim any obligations to update any forward-looking statements except as required by law.

With that, I will now turn the call over to Chief Executive Officer and Co-Founder, Emily Leproust..

Thank you, Angela and good morning, everyone. We continued our [Indiscernible] the Third Quarter of Fiscal 2021, reporting increased revenue across our businesses and solid all those moving into our final Quarter of the year.

We remain focused on expanding our customer base and driving increased revenue day-by-day across these businesses, while advancing our DNA Data Storage commercialization plans. We reported record revenue of $35 million for the Quarter. An increase of 65% year-over-year.

For the Second Quarter in a row, we have no single customer accounting for a significant percentage of our revenue. This again, indicate broaden diversified strength across our businesses. And we recorded $39.1 million in order.

This is an increase of 58% over the Third Quarter of Fiscal 2020, a strong signal for the remainder of Fiscal 2021, particularly, as of First -- sorry, Fiscal First Quarter 7 months which are slower for European business.

Zooming out a bit to put into context both our current results and our future opportunities, we continue to remain in the promise of synthetic biology. The ecosystem of companies working on diversification of Synbio provide not only validation of the industry today but of incredible opportunity for the future.

There will be setbacks within the industry and not every applications of Synbio will work or resonate with customers. However, wherever the science and the commercial application go, Twist provides a sensitive DNA for the research discovery and development, as well as even production.

Essentially, we provide a picks and shovel for our customers who are Whether on a defined goal, we sell the tools that enable their success. There will always be a market for picks and shovels. Specifically for healthcare, we see rich opportunities.

At every stage of the healthcare system, from diagnosis to treatment to surveillance and prevention, Synbio has a role to play. New test available for a wide range of inherited diseases. We can use Gene Drive to eliminate mosquito-borne illnesses like Malaria and Dengue and Gene Editing can be used to treat specific diseases.

Comprehensively, we can use Synthetic DNA to [Indiscernible] to that cancer mutation and then right DNA to deliver personalized treatment. And this is just the tip of the iceberg of what is possible by combining synthetic bio gene technology to improve healthcare.

In addition to healthcare, we see our growing customer base pursuing unique applications in a wide variety of industries, including materials, chemicals, food farming, and more. With a vision 8 years ago, when we founded the Company, that synthetic DNA will change the world, driving industries, and disrupt existing market.

We are delivering on the promise by building a robust and dynamic business with solid revenue growth quarter-over-quarter. Now, to drive into our results for the Third Quarter, starting with Synbio, we reported record revenue of $14.3 million, with orders coming in at $15.7 million.

We shipped a 107,000 genes in the Quarter as we continue to expand our customer base. We are actively preparing for the opening of our Factory of the Future with early production expected in Mid-Canada 2022.

As the Factory of the Future comes online next year, we believe it will allow us to tap into new customer products very quickly, an important next avenue to convert DNA makers into DNA buyers. Turning to Genomics and targeted NGS, we reported $18.7 million in revenue. Orders were $18.6 million for the quarter.

We closed our acquisition of IGN mix, bringing multiplex library preparation tools for NGS workflow into our full term. We believe this acquisition will accelerate the conversion from Steve Macquarie to Twist plus sequencing. We're working to twistify the product and expect to relaunch it before the end of the calendar year.

In addition, we launched a panel, the regeneron design product that leverages Twist [Indiscernible] platform to cover over a million [Indiscernible]. It can be used alone of serving our larger exam panel.

This is an important panel for Twist that it provides researcher an ethnicity-neutral, goal standard, rather than a typical buyers of 80% Western European coverage. We have taken multiple steps to mitigate the [Indiscernible] generous we discussed last quarter, including the introduction of our [Indiscernible].

This is an all-in-one solution designed to maximize accuracy and efficiency in library construction and amplification and a nice addition to our Portfolio. We launched 4 new positives synthetic Allen Controls for new variant of COVID, including Delta and Kappa. Apparently, we continuously evolve this product line in.

We see that ourselves 4 controls are relatively constant over time, though sales of the controls introduced early in the pandemic have been replaced by the new controls for the latest variants. Importantly, the [Indiscernible] and escalating cases worldwide remind us that COVID remains a public health crisis.

This is likely to be the case for quite some time. We need to learn to live with COVID, which requires both diagnostic tools and effective therapeutics that addresses a wide trends of volumes.

To several variants, the lack of worldwide vaccination, and school-age population that is not eligible for vaccines, makes survey very important tool to meet our spread and evolution of the virus. For Biopharma, we reported $4.8 million in orders and $2 million in revenue. This was a great Quarter for Biopharma.

We saw a continuing increase in repeat business with many of our longstanding partners. As a reminder, our Biopharma revenue Earnings include a portion of the upfront license fee associated with our partnerships as we recognize revenue over the course of each project.

In addition, all those directly convert one-to-one into revenue most often in the following few quarters, depending on the timeline of the project. Milestones and royalties represent additional potential financial aside and are not calculated in orders of revenue.

During the quarter, we signed several new partners for our Twist NW optimization solution that utilizes a fully human antibody sequences. This collaborations showcase our capabilities to improve the qualities of a particular molecule.

As we expand our data package with additional examples of our successful partners, we see an increased interest in this particular platform for both humanization and affinity maturation.

We do not typically get milestones or royalties for these collaborations and yet, we believe they're too critically important as an entry to larger partnerships with key pharma and biotech companies. And I'm very glad to report that we now have 31 partners and 43 active programs, 26 of which have milestones and royalties associated with them.

In addition, 19 programs are complete and now in the hands of our partner. In addition to the partner program, we continue to add our internal compounds generating additional preclinical data. Concurrently, we continue to pursue many other news to expedite the path for our Twist antibodies to reach the clinic.

Moving to data storage, we continue to make solid progress as we drive towards commercialization, working with the proof-of-principle chip at one-micron pitch. We're building an integrated chip that includes both the CMOs and MEMS components needed to commercialize the product for data storage.

Once the integrated chip is working, our next step is to create an integrated [Indiscernible] chip, miniaturizing the feature size even further. We expect that to one Delta chip, right in it consistently, this chip will support our first early access commercial offering.

The target customers will be those, we preserve, control irritates, as well as media and entertainment organization. The DNAs at the stores alliance is now three, four months strong. There is an active website and the group released its first white paper on the status unit data storage engine.

They meet monthly and are making great progress educating the larger storage community on the benefit of DNA as a storage medium. At this time, I'd like to turn the call over to Jim to review our financial results for the quarter..

Biopharma orders in Quarter 3 were record $4,800,000, as we continue to build our pipeline of customers, projects, and opportunities. And as noticed earlier, we now have 31 partners with 43 active programs and 26 of which have milestones and /or royalties.

Please note that we provide orders not to directly translates into revenue to provide a trend line for each product group. Now moving from orders to revenue. As noted earlier, revenue for the Quarter was 35 million and brings our cumulative revenue for our 3 Quarters to 94.4 million, which compares to 57.7 million for the same period in FY '20.

And that's approximately 64% year-over-year growth. NGS products continue to scale and incline to 18.7 million for the Quarter as compared to 9.1 million for the same quarter in the prior year.

Year-over-year growth has more than doubled and with sequential growth of 10%, this reflects expansion of our pipeline, and increasing number of applications such as liquid biopsy scaling up.

Our Synbio product revenue for the Quarter was 14.3 million, and that's up sequentially from 12.9 million last quarter, and an increase from 11.8 million in Quarter 3 FY '20. Some of the highlights include shipping to approximately 1707 Bio customers in Quarter 3 and that's up from 1300 in the previous Quarter.

Our Q3 Gene's revenue was 11.2 million sequentially up from 9.2 million and up from 9.6 million in Quarter 3 FY '20. We shipped a record number of genes in the Quarter of approximately 107, 000 and an increase from 90,000 genes shipped in Quarter 2.

Please note as Ginkgo is now less than 10% of our revenue, we're no longer breaking out Ginkgo activity. And this also highlights our growth and continued success in expanding our customer base. Biopharma revenue for the Quarter was approximately 2 million and upfront services on our antibody projected activities.

Now, I will briefly cover our regional progress. Our investment in building out our international commercial organization capabilities is reflected in strong international growth this Quarter. IMEA had another terrific Quarter with Q3 revenue of 12.7 million versus 6.4 million in the same period last year.

And now it trends for 36% of our worldwide business. APAC had a strong Quarter as well. Q3 revenue was 3.1 million versus 1.2 million for the same period last year. And U.S. revenue was 19.2 million versus 13.6 million for the same period last year. I will now quickly give an update on our segment revenue. All segments showed strong growth.

Healthcare is now our largest segment and accounts for approximately 50% of our business with revenue of 17.4 million in Q3 versus 8.5 million in Q3, Fiscal '20. And that's reflecting strength in our NGS. Industrial chemicals was 9.4 million in Quarter 3 as compared to 7.5 million in Q3, FY '20.

Academic revenue in Q3 '20 was 7.7 million versus 4.6 million in Q3 FY '20. We noted in the call of last Quarter, our academic was continuing to recover. Our increased agriculture revenue was 0.5 million.

Now moving down to P&L, our Gross margin for the Quarter is approximately 14 million or 40% of revenue, up from 39% in the prior Quarter, and up from 22% in Quarter 3 of Fiscal '20. Our operating expenses for the Quarter, which includes R&D and SG&A was 54.2 million.

R&D for the Quarter was 19.8 million as compared to 10.4 million in the Third Quarter of FY '20 and 15.8 million in Quarter 2 of FY '21. Over the last year, we have invested in our R&D resources and capabilities, and our headcount has increased to 189 from 125 in Quarter 3 of Fiscal '20.

We're seeing the benefit of this investment in our product launches and our innovation. And consequently, the major increase in spend was compensation and also outside services, primarily, our data storage technology development activities.

It's worth highlighting in Q3, FY '20, this included $1.4 million of drug reimbursement as compared to $0.3 million in Q3 FY '21. Both are netted against our R&D spent.

Just quickly on the sequential growth, the increase in spend was primarily compensation and an increase in outside services of $2.3 million and that's for our data storage technology and development activities. Our SG&A in Quarter 3 was $34.5 million as compared to $34.3 million in Quarter 2 and $22.5 million in Quarter 3, FY '20.

year-over-year SG&A expense increased by approximately 12 million due to higher compensation of approximately 7 million, which includes Stock-based comp of approximately 2.7 million. And that's primarily associated with increased investment contained to build that commercial organization.

And the headcount has increased in a commercial organization to 195 and that's up from 161 in Quarter 3 FY '20. And this includes our expansion in both Asia and IMEA.

In addition, the Quarter we incurred higher outside professional services of approximately 3 million due to its audit and SOX fees, as we've been continuing to invest in enhancing our control environment. Also, during the third quarter, we hired Kevin Yankton as our Chief Accounting Officer.

Kevin brings significant industry experience and depth of knowledge of technical accounting matters. And I am thrilled to have Kevin as part of our finance team. Our loss from operations before interest and taxes for the quarter was 40.2 million, which includes stock-based comp of 9.2 million and 2.7 million depreciation.

Capex quarter was approximately 7 million, which brings total year-to-date Capex to approximately 19 million. And we concluded the quarter with cash and short-term investments, posting 519 million.

As Emily highlighted, we closed our acquisition of iGenomX in June and this reflected in our balance sheet with an additional intangible assets of approximately $17 million and the balance has goodwill offset by a deferred tax liability.

In April this year, we extended the lease of our Portland Facility and started to record the amortization lease payments total amount in the Quarter was $0.7 million and future quarterly expenses were approximately $1 million for lease payments. I'll provide an update to our financial guidance for Fiscal 2021.

As Emily noted, we're seeing strong growth in our customer base, strong market growth and the same time there remains inceptions associated with pandemic. And we also approaching a time of year where we have seasonality in Europe. As noted earlier, Europe is now larger parts of our revenue.

However, we are increasing our revenue guidance for the year and now expect revenue in the range of 129 to 132. This is up from our prior guidance of 121 to 139. And we're estimating Quarter 4 revenue within the range of 35 million to 37.5 million. Synbio is estimated to be in the range of $54 million to $56 million and this comprehends Ginkgo revenue.

NGS revenue is estimated to be in the range of $69 million to $70 million. And biopharma revenue is estimated to be approximately $6 million. Our gross margin range for the year is expected to be between 38% and 40% as compared to 36% to 38% in our last statements.

Operating expenses, which includes R&D and SG&A, are expected to be approximately $200 million for the year as compared to $192 million in our prior guidance and this reflects higher stock-based comp charges, rental expenses for the Factory in the Future, investments in R&D, and sales and marketing organizations to support growth in FY 22 and beyond.

R&D investments for the year is approximately 70 million up from 66 million due to outside services primarily associated with Data Storage technology investments. Our net loss guidance for the year, expected to be approximately 150 million as compared to 144 million to 150 million in the previous guidance.

Stock-based comp is expected to be approximate 37 million and depreciation expect to be 10 million. And we anticipate CapEx to be approximately 40 million for the year. In summary, we'd like to thank all Twisters for delivering another Quarter of record growth, for executing our strategy, and joining broad demand from our customer base.

Our new products are being well received and we're investing in our platform as we continue to tap into new revenue streams. With that, I will now turn the call back over to Emily (ph)..

Thank you, Jim. In conclusion, we continue to build our business, our customer base, and revenue stream. This quarter, we have accomplished a lot even more than envisioned at the beginning of the year in the midst of COVID-19.

As we move into the final quarter of our fiscal year, we expect to continue to take market share in Synbio, growing more appealing in the markets while we prepare our Factory of the Future for production in 2022 to position us to accelerate Acro.

For our NGS tools, we'll continue to grow revenue and increase adoption, as well as in the goal of large accounts, we funnel into the pipeline. In addition, we plan to relaunch [Indiscernible] prep kit to drive snip Acro Rick conversions moving into 2022.

For Biopharma, we intend to sign additional partnerships in that programs as well as pursue opportunities to participate in the greater and rapid clinical advancement.

For DNA data storage, we will drive towards Alpha commercial product offering, execute on our IFI contract and actively advanced market adoption of these new storage medium in concert with the. With that, let's return the call for questions.

Operator?.

Thank you. [Operator instructions]. Please stand by while we compile the Q&A roster. Our first question comes from the line of Doug Schenkel with Cowen. Your line is now open..

Good morning, everybody. And thank you for taking my question.

So on Alumina's call last night and in talking to them, I think a little bit after the call, they talked about a lot of progress they're seeing with asset development in the industry combined with the fact that guidelines and the reimbursement environment coming out of the pandemic, at least we hope coming out of the pandemic is driving increased demand for sequencing consumables within the clinical-end market, especially in oncology.

Based on your results in the quarter and what you talk about in terms of backlog, it sure sounds like you're seeing the same thing in your business. I just want to make sure that's the case.

And if so, as we think about the implied fiscal Q4 guide, when you say the bias, especially when it comes to this part of the clinical business, is to the upside and then by extension, how should we be thinking about momentum as we start to look ahead to Fiscal '22?.

Thanks and Doug, maybe I'll start and Jim can again continue. So first of all, I agree with what you say. We see something similar. But as a reminder, there is 2 stages when we work with customers in the clinical space. The first stage is in the development of the [Indiscernible].

And so in that stage, customers want many different panels to try different content and that's where frankly, we shine because we can make a panel very quickly and very cost-effectively. And then once the customer has finalized the content that we need, then we go into more of scale-up, where the revenues can run.

And so depending on where they are in their asset development and validation, some customers are still early in the trying different content and some customers are more in that more skilled diversion. And we are seeing strength in both areas.

Jim, is there anything else you'd like to add?.

Yeah. So Doug, it's definitely an area we're seeing strength and if you look at the backlog of the large NGS customers, we're tracking or the pipeline. We're now tracking a 182. So there's this split back in perspective that's twice the number we were tracking approximately this time last year.

Number of adopted, adopted means Twist's been signed into our assay. That's now increased to 79 and I mean, as opposed to about 50 this time last year. So we are seeing momentum in the bank and the pipeline. Overall, we had another strong bookings Quarter. The number of larger accounts is increasing.

So that all the signs are we're going to have a very strong momentum building up in this area. If you look at our guidance for the year for NGS, we've upped our guidance again. We continue to have a very strong showing, and we expect to continue to deliver strong growth in the NGS space.

Hello?.

Yep. Thank you. No, that's really helpful. Thanks. Thanks to both of you for all that. I mean, I think importantly right there. When you run through all those metrics, Jim, I mean, there's not a single thing trending in the wrong direction.

And I say that not to be a cheerleader, I say that because as I'm thinking about the outlook for Fiscal '22, there's nothing you're seeing that would suggest the building momentum is going to slow..

And what's interesting is if you look at the breadth of coverage or the breadth of adoption tends to increase. I mean, it has been lumpy as we've scaled for the last two quarters in the top 10, the transit were roughly about 40% of our orders.

And that's a really good sign, that shows the number of customers increasing, the volumes we're placing is also increasing..

Okay. That's great. And if I could ask, I guess -- if I could ask or I could just really talk a little bit more about something else on the Biopharma side. And specifically on cell lines and antibodies. Libraries of libraries is a great capability.

But there does seem to be a movement towards increasingly sophisticated cell engineering efforts for antibody development and targeting.

Is there any change in how you feel about your positioning in this context? If so, how does that impact existing and future partnership development efforts and of course, embedded in this question, is really just a question about how you're thinking about your efforts to increasingly advance internal sophistication in this context.

It'd be great to hear about your thoughts on the competitive environment and your efforts..

Thank you Doug. Again, I definitely agree with your assessment of the market. But with the great thing around cell engineering, is that you need a lot of DNA and you'll still need custom DNA in production and should go to a mode where every patient gets a different engineered sale. Then there's payload that needs to be made for each patient.

And so what that means is that typically in Synbio, we only participate in the Research and development. And typically we don't participate in the production because once you have the one genetic material, we can propagate it by amplification.

Where as in cell engineering, again if every patient gets their own payload, then we can participate in the production mode. And so, at that point, we have the chance to not only move the R&D budgets to be in preference, so definitely that is an opportunity for us, especially since we have a great systems of genticmenterial payload production system.

I think that's the first thing. The second thing, I'll say, is around the fact that our Biopharma team is kind of like the leading edge of science, and we sell to our customers on the scientific prowess that we have.

And what that means is that as our Biopharma team gets dragged into cell engineering, there's a very great there to cycle, because the Biopharma team creates a tool that solve the customer problem. And then that tool to get, I'll say, productized and skilled up and then becomes a tune that the Synbio team sells.

And so for instance, we've seen that with IgG high-throughput IgG protein, as well as initially a capability that our Biopharma team develops on their own because they needed it.

And then when we thought it could be applicable to many other customers, we protest it could be moved into [Indiscernible] bioproduction and now Twist Biopharma is a customer of the two. Remember they were the original developer of it, but we can win customers and we can sell that product to many other customers.

I think something similar could happen with cell engineering. As about some of the team gets involved in that business, tools are going to get developed and one of the great thing we do is really scale up. Industry allies those tools. I think we have those two good things going forward.

One is we have a great platform and two is we have, with Biopharma, almost an applied science team that is a great developer of future tools that could drive future growth..

Okay, thanks again, have a great weekend..

Thank you..

Thank you. Our next question comes from the line of Matt Sykes with Goldman Sachs. Your line is now open..

Hi, good morning, Emily and Jim. Angela, thanks for taking my questions. Similar along the lines of Doug's question just on the NGS business, Jimmy, mentioned 182 customers you are tracking and 79 adopted customers.

But I was wondering if we can get any more color on the mix between existing versus new customers, and what you're seeing in NGS and maybe the frequency and quantity at which they're ordering..

Yeah. So, the mix in terms of new customers, don't break that, the mix, in terms of new customers over the last few years, has certainly expanded in terms of volume. I think the thing that is very encouraging for us is the pipeline keeps increasing, but also the breadth of customer ordering keeps increasing.

As you go back maybe a year ago, it tended to be rather lumpy where the top 10 was about 60% of the orders. Now, the top 10 is about 40% of that. over last. That's an encouraging sign. The number that keep adopting is increasing as well. We've now got 79 of the adopted that's up from 65 last Quarter, and those assets are obviously going into production.

So as we talked about earlier all those signs are positive. We continue to see the overall pipeline increase. The new applications such liquid biopsy are starting to take off. Well, we don't break that out. We see a number of large liquid biopsy customers working with us, and it's certainly an exciting product for us..

Great. Thanks for that color, Jim. And then just on EMEA, you had a good Quarter, it sounds like momentum is building there. Just maybe any of the drivers that are driving growth in that region for IMEA..

Yeah. I mean we saw Synbio's doing well. Yeah, it was interesting as we had a record number of gene shipments, genes business doing well. In terms of IMEA, we're seeing good strong NGS. We're seeing good strong Synbio orders, particularly in genes with Pharma. Usual suspects of large Pharma in Europe.

They come in with some larger orders at the end of the March Quarter. So that pick up in our revenue was interesting and good to bill in Synbio score above 1 for this Quarter. So good encouraging sign. As we enter the summer period, I believe we've got lots of strong momentum in the business..

Great. Thanks, I appreciate the color..

Okay..

Thanks. Our next question comes from the line of Catherine Schulte with Baird. Your line is now open..

Hi. Congrats on the quarter and thanks for the questions. This first last quarter you mentioned you are experiencing some headwinds as a key supplier for NGS.

Have those issues have been resolved or are they still a bit constraint?.

Thank you, Catherine, for the question. We've made very good progress on that front. We have launched an additional kit that is actually an improved kit which enables us to move new customers to that kit with very little constraints for new customers.

For existing customers, we've moved some existing customers to the new kit, which relieves some of the pressure. So, we're not completely out of the woods yet, but it seems we've done a great job to mitigate and we anticipate that we will be able to get more material from our supplier to accommodate more growth of existing customers.

So we're cautiously optimistic, but that's definitely something that we keep a close watch on..

Okay, great.

And how do you feel about your cost Synbio pricing as we stand here today? Is there a turf to lowering price to unlock incremental demand or the potential for dynamic pricing based on premium turnaround times?.

Is the latter, as you know we're making a big investment in our Factory of the Future in Portland. And what that does is give us not any more capacity, but Earth flow is going to give us the opportunity to add attractive features to our product, including stream.

And so we believe that we will have the opportunity to add more dynamic pricing where there is a premium component available. And will be about the same. Today, there is definitely an opportunity to improve margins for the, the segment that will get faster speed..

Great, thank you..

Thank you. Our next question comes from the line of Vijay Kumar with Evercore ISI. Your line is now open..

Hey guys, thanks for taking my question. Maybe first one on the order trends here. It looks like Synbio orders were down sequentially. Is that just timing sequentially, flattish NGS orders? I was curious. I know last year in a Q4, we had some timing elements.

Is there something like timing element that happened in this Quarter?.

Yeah, Vijay. What is interesting is that last Quarter, your point is noted on the orders for Synbio. One of our industrial Biotech customers orders were done sequentially. Also at the end of the March Quarter, we have a number of large orders from large Pharma that come in the end of March.

Those orders didn't come in in June, but that's just a timing issue because of the way of it fell at the end of March. In terms of NGS, we continue to build on the NGS business, we observed our revenue forecast. We feel good about both Synbio and NGS and with all the orders are worth talking about.

The highest -- I would highlight that last Quarter was highest gene shipments ever. A 107,000 genes, there was a lot of momentum in genes, number of Synbio customers expanding. Gene customers increased by roughly 200. We shipped to almost 1200 gene customers as last quarter. So, we're seeing good demand from our Synbio customers.

And it was a little bit lumpy from the March to the June Quarter..

Understood. And Jim, maybe one related on the updated guidance of your for the Q4 revenues, The headline, the optics looks like it's 10% growth year-on-year. No, I know last year you had the pull forward of NGS customer. I think adjusting for that, I'm getting to perhaps maybe mid-30s growth for Q4.

Given we've been tracking at north of 60% growth year-to-date.

Any reason why, on an underlying basis, except that One-off order, our growth would slowdown here in Q4?.

The only comment I would make is that we've got a lot of momentum. Europe is now a larger part of our business. So we've got to take that into account. We do also felt the impacts the pandemic. If we do go back to revenue this time last year, our revenue in Q4, last year was 32.4 million.

If you take out the 9 million for the Regeneron order, you can see there further we're down to 23 million. So if you look at that versus our forecast of 35 to 37.5. We're up substantially. And I mean, the only calibration I would say is that we're accommodating higher European revenue this year.

We got broader customer base, the number of customers keep increasing, and we're looking at the potential impact of seasonal implications in Europe. So, I think it's just a matter of working through the summer period and the impact of the Delta variant right now..

Just to clarify, Jim, the Regeneron, was that a 6 or a 9. I thought for some reason I heard a 6 as being above ahead..

Yeah. So the overall Regeneron was 9 million on the Quarter. I was just clarifying how much is Regeneron last year. So, 3 would have come in last year, correct, but 6 would come in this year. So I just took it out, 32.4 less 9, just to give you a frame of reference from Q4 last year to Q4 this year..

Understood. Thanks, guys..

Okay..

Thank you. Our next question comes from the line of Matt Larew (ph) with William Blair (ph). Your line is now open..

Hi. Good morning. On Synbio side, number of customers is up about 30%.

Maybe just talk about where you're seeing the most interest from your customers and any of the impact from the recent launch products like DNA preps, Clonal-Ready Gene Fragments, [Indiscernible], could you just give more color there?.

Yes. It was a strong Quarter for us. Gene is a strong business. Had another strong Quarter looking at the number of genes we shipped, 107,000 was a record for us. For Synbio, just take a look at the orders. Industrial chemicals was down, sequentially, and that's driven by one large customer.

But overall, industrial chemicals is a very strong business for us. Healthcare was strong in the quarter, we saw pickup in academic and although pharma was down sequentially, that was due to a number of customers that had large orders ended the March quarter. We had strong pharma quarter for Synbio.

So our focus on expanding customer base, targeting large Pharma is working and you can see with record Gene shipments this last quarter..

Okay.

And then in terms of Biopharma partners, there 's a big step-up, I think he's at the numbers 31 here and it seems like maybe you're seeing an inflection point, so just curious if there's anything to call -out in terms of some sort of network effect or the way the products being received in the market?.

Yeah. Thanks for taking it. A couple of things. Number 1, as we get more and more paid project that gets completion, we have more data that we can share in an anonymized manner globally to have more proof point and that definitely helps to get new business. Another point is, we have increased a little bit, the commercial team.

And so now we have boots on the ground in each regions of U.S. and APAC. So more people with great data..

Okay. And then speaking of data --.

[Indiscernible] Sorry?.

I apologize, I cut you off there..

Yeah. Where we're seeing repeat business. And so in a way you get that's just the flywheel effect of the repeat business is almost for free. And so you can compound that repeat business with new customer. And so that's the results of and that's what we see..

Okay, great. Sorry, the last one was asking in terms of the white paper that was up in June on terms of DNA data storage. Just curious if there's any feedback reaction you've gotten from potential customers or potential partners..

And so I think on the potential partners, the number of people, of groups, companies in the alliances keeps growing. Where I'm losing track, but that needs as more and more partner available. So that's one aspect of it. We don't necessarily need partners. We should be able to be self-sufficient, but we expect our partners to accelerate.

We're definitely keeping our options open.

And then we're going to go with partners and growing and with the whitepaper as the first step, there is, I think the outcome that we're looking for is working, which is as more and more realization in the minds of our customers that DNA data storage is -- really data storage is coming then so, the growing mindshare that the end of that data storage is something to be on the lookout for.

So I think our strategy of being a leader in getting that alliance style started is working. I expect acceleration. We're still early in the game, but I think things are definitely going into the right direction..

That's all. Thanks, Emily..

Thank you. Our last question comes from the line of Tycho Peterson (ph) with JP Morgan. Your line is now open..

Hey, thanks. Want to start with maybe a higher-level question just around the competitive environment. There's a wave of companies, better than us around. Some are leveraging semiconductors, some are leveraging informatics, some have a decentralized bench top approach.

So as you look across the landscape, can you maybe just talk about how you think about competitive dynamics, how you think about pricing going forward, to what degree maybe you're evaluating some of these technologies, that might be helpful. And customer stickiness as well. I think this is a question we can get a lot to..

Yeah. Thank you, Tycho for the question I think we were in a technology Company in a high-tech field. And so, I think we have a healthy dose of paranoia or felt over our shoulder and make sure that we don't miss anything. So from that point of view, we are definitely a student of the market and we look very carefully.

As you pointed out different ways to slice and dice. One way is centralized versus de-centralized. And there is a Company that's sitting now with codec decentralized offer. Frankly, we will never see them in the market, so I think there's plenty of fish in the water, there's plenty of needs.

And I'm sure there is a need for a decentralized approach, but we don't see it at all impacting our customer base. Our customer base are interested in the high throughput -- in the dynamics throughput. And then in the low-cost. another aspect is enzymatic synthesis.

And I think we've said in the past that our technology is compatible with, with enzymatic synthesis. And when it's better. I think all of those methods, they'll never be cheaper. And so, I think we'll always have the cost advantage.

And so we were sent to the market, but at this point, we don't see a competitive pressure and frankly we're focused on [Indiscernible] what we're doing. I think -- I think it's ours to lose. We have -- our future is in our hands. And our investments in the sector of the future is a key one for us to shoot the growth and move us to the next stage..

Okay, that's helpful. And then thinking a little bit on the near-term, we get a number of investor questions around just to covert opportunity. I know you're launching the RNA referenced controls.

Are you able to just kind of think about how you're sizing that opportunity in the near term?.

Yes, so, we've said that it's non-material, so less than 10% of our revenues. But it's great revenue. We love it and it's amazing margin. And we will keep launching rNA controls, one because it's useful to the scientist and the health care system that do testing.

And that's what we have seen is, frankly, the revenues of our early controls by and large disappeared, but the revenues from the new control has kept the momentum. And so it's a pretty stable revenue stream for us. Again, not material, but I'm very glad that we have it both for the contribution we will provide and the revenues it brings.

We have also opportunities as antibodies, we contribute to the development of antibodies.

And I think as COVID is going to be with us for a long time, I think there is opportunity in the therapy area where there will always be people that are not vaccinated and that need therapies, and then they'll always be the antibodies that are needed for testing.

So we will keep pushing on the diagnostic and therapy axis as well as we think we have opportunity to out-license some of the antibodies that we've found..

Okay. That's helpful. Lastly, maybe two quick ones unrelated, but I'll put them together in the interest of time.

The I Genomics deal, can you just talk little bit about what that brings to the NGS workflow for you guys? And then separately on the Factory of the Future, I'm wondering, to what degree you can start to pre-sell some of that capacity ahead of that coming online? Thanks..

Thanks. So on iGenomX, as you know, we've put a target that we want to convert the steep macro market into sequencing. We think we have a unique solution there. Our proof points that it is possible. Regeneron would not have moved if it was not cheaper to use NGS at the same time.

So the proof-point is there, that it is cheaper at a same time we recognize that there is, there is some buyers to switching. One is the content, which contents were used. Because with Twist, it can be anything you want which can be a bit daunting.

And so, in that area, we have licensed out the Regeneron content which available for sale, and then the second friction to switching is around automation and being able to process thousands of samples a day.

As you know, the the ligation base process of doing, sharing and replay on per-retail and litigation, it's a very heavy process to automate with the engineering process, we have a PCR workflow. That's next year automation. I don't see trivial but a lot easier.

And so what Jimmy brings us is a very easy to automate workflow that's based on PCR that will help us in that snip tumor micro reconversion. And then on your second comment around preselling of the Factory of the Future capacity. I'll say probably not.

We know that the demand is there, but it will initially be a Synbio product line, and so in that FERC line, they give us a sequence, they want the DNA now. And so, there's not a lot of to be done.

But at the same time, it's not a "let's build it and they will come." We are pretty certain that there is a demand for it, so we're not too concerned about dimentionization once the capacity is there..

Okay. Thank you. That's helpful..

Thank you..

Thank you. There are no further questions at this time. I would now return the call back to Dr. Emily Leproust for closing remarks..

Thank you very much. And thank you for joining us today. We are, as you know, a Twist; we're bridging the promise of Sensity Biogen's genomics with the reality of building an exciting business. We maintain our momentum moving into the remainder of the year.

We have the team in place to foster innovation, and we call ourselves are comfortable executing aggressively. We look forward to sharing our progress with you in the months ahead, and with that, this concludes today's call. Thank you very much..

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect..