Twist Bioscience Corporation

Good day. Welcome to TWIS Biosciences' fiscal 2021 fourth quarter and full year financial results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your touchstone telephone. If anyone should require assistance during the conference, please press star then zero to reach an operator. As a reminder, this call is being recorded. I would now like to turn the call over to Angela Binning, SVP of Corporate Affairs and Chief ESG Officer. You may begin.

Thank you, Michelle. Good morning, everyone. I would like to thank all of you for joining us today for TWIS Biosciences conference call to review our fiscal 2021 fourth quarter and full year financial results and business progress. We issued our financial results release as well as the press release announcing we entered into an agreement to acquire at Barris this morning. both of which are 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. Emily will come back to discuss our upcoming milestones and direction, and then we'll 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 make 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 the press release we issued earlier today, as well as those more fully described in 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 ongoing impact of the COVID-19 pandemic and any resulting business or economic impacts. We disclaim any obligation to update any forward-looking statements, except as required by law. With that, I'll now turn the call over to our chief executive officer and co-founder, Dr. Emily Leproust.

Thank you, Angela, and good morning, everyone. Fiscal 2021 was a defining year for Twist. We diversified our synthetic energy business and expanded our customer base while accelerating our NGS revenue. In parallel, We leaned into Biopharma, evolving the company from solely a service provider in this business segment to a partner of choice. In data storage, we continued our engineering progress and are working within the DNA Data Storage Alliance to build market awareness of this novel storage solution. Overall, we've moved from a product-specific focus towards enabling applications across large and growing end markets. We have made some important announcements over the last two weeks And we'll take some time today to talk through the strategic directions of the company, as well as how the individual pieces fit within our overarching plan. Against the backdrop of a global pandemic, we reported record revenue of $132.3 million for the year, an increase of 47% over fiscal 2020. And we reported $159.5 million in orders, an increase of 37% over fiscal 2020. For the first quarter, with a tough count against last year where we had a single large order of $9 million, we reported revenue of $38 million and orders of $45.2 million, an increase of 17.6% respectively. Diving into the specific businesses, Alsace is by a farmer, as we announced a definitive agreement to acquire at Veris this morning. Adveris is a privately held antibody design and discovery company focused on in vivo discovery using a novel mouse platform. They have conducted many discovery campaigns for partners with about a 70% rate of return. They currently have 90 customers operating today on a fee-for-service model. We see Adveris complementing our synthetic antibody discovery capabilities very nicely. Following the acquisition, Their animal-based antibody discovery method and antibody screening technologies will augment our own antibody discovery and optimization capabilities. Importantly, they have an established customer base with six of their discovered antibodies in clinical trials. The company has 35 employees and will continue to operate in their headquarters in Boston following the acquisition. And we believe that in fiscal 2023, the average business will be cash flow positive. Taking a step back to look at our overarching biopharma capabilities, following the integration of Adveris, we will have three complementary discovery approaches under one umbrella. In the first approach, we have synthetic discovery libraries where Twist has a competitive advantage throughout DNA synthesis platform technology. We synthesize every sequence desired, including only those found in the human repertoire. And screening targets against these libraries can generate robust antibody leads. Second, another approach is to generate antibodies from an animal immunized with a target and then harvesting and sequencing the resulting antibodies. That is the specialty of adverse platforms. Third, we have entered into technology collaborations with several companies to leverage artificial intelligence and machine learning technologies to screen through antibody leads and to refine antibody libraries. With the acquisition, Twist will have all three approaches, offering a unique and comprehensive antibody discovery and optimization capability to our partners, as well as for our internal antibody generation. In addition, we have products that support the total discovery process. Our oligo pools can be used to identify targets, and our NGS tools can be used to monitor our laboratory diversity during panning. Once a customer has an antibody lead, TWIST provides tools to develop the lead further through our FinBio offerings, starting with genes and gene fragments and moving all the way through the resulting IgG proteins. Also in biopharma, as you know, we've been working to advance our COVID-19 sensitive assets discovered through our proprietary biopharma process. We've been working hard to put together a team with clinical development and commercialization expertise. And last week, we launched Revela Biotherapeutics, an independent biopharmaceutical company. We license our lead by specific antibody to treat COVID-19 to Revela, and have committed to provide up to $10 million in initial funding. In addition, Revela can license up to five additional targets over the course of the next four years, each program subject to additional milestones, payments, and royalties for TRIS. While the COVID antibody will not be first in class, do see the opportunity for decision template that one, neutralizes all variants of concern, and two, could be delivered subcutaneously, which may offer an overall best-in-class molecule. We know there remains a need for therapeutics that effectively treat long COVID, as well as antibiotics that have broad neutralizing capabilities among the emerging variants. As global vaccination is far from complete and vaccine effectiveness, unfortunately, appears to be declining over time. The recent data on oral therapeutics over promise, though they typically need to be taken within five days of onset and could have safety concerns that may not be seen until more widely taken. And a peer-reviewed publication recently noted that antibody therapeutics also promise to provide long-term protection for immunocompromised patients who don't generate a robust immune response to the vaccine. We believe this leaves space for antibody therapeutics in the treatment regimen. We expect COVID will become an endemic disease and, sadly, that it is here to stay. We believe the best path forward for our COVID antibodies is to put it in the hands of a team experienced in clinical development and commercialization, and to participate in the upside through equity appreciation, potential milestone payments of over $100 million, and mid-single-digit royalties on any commercial sales. Reveal our aspects to begin clinical trials for this antibody in 2022. subject to receiving regulatory approvals and clearing other development hurdles. These pins-offs fit our internal biopharma philosophy of minimizing biology risk and quickly developing an antibody with an improved pharmacological profile that hits a validated target. We expect that Prevela would be a vehicle for development of up to five additional non-COVID targets emerging from our biopharma platform, each of which come with additional upfront milestones and royalty payments. This allows TWIS to participate in the upside of any of the five additional licensed antibodies, whilst mitigating the risk of development through external funding and an experienced management team. Strategically, for Biopharma, we have a vision of what our DNA synthesis platform can add to this industry. We have now built a base of 34 partners with 41 active and 32 completed programs. Of the 73 total programs, 35 have milestones and priorities associated with them. By completing the acquisition of Averis, we will have more customers and programs coming on board. And through Revela, we expect to have a twist on the clinic in 2022, pending the required approvals. Turning to synthetic biology, we reported $14 million in revenues and $20.1 million in orders for the first quarter. Over the course of fiscal 21 and looking into fiscal 22, we have evolved our program to enable us to capture more pharmaceutical and biotech customer needs and address the requirements for the large number of customers who make their own DNA. We believe the largest and most impactful application of synthetic biology from both a financial and environmental perspective will be in healthcare, and we are seeing that play out in our customer base. We have a growing number of customers using our genes, oligopools, and laboratories, Our customers used these products to link phenotype and genotype, and ultimately to gain a deeper understanding of biology for the development of new diagnostics and therapeutics. During the quarter, we saw some impact from an extraordinary event where we needed to shut down production for a short period of time. During QC, we determined that unwanted DNA sequences were included in our genes. None of these genes were shipped to customers, but we did experience a delay in some gene orders. We were able to successfully troubleshoot this issue, clear the resulting backlog within three weeks, and still reported robust order for Symbio in the quarter. We did experience a brief recurrence in October that we were able to resolve much more quickly, and we believe we have now identified the root cause and do not expect further interruptions in production. This event highlighted our need for additional capacity and dedicated machines. which we are building currently in the factor of the future outside of Portland. At the same time, we have a path to significantly increase capacity at our headquarters in the Bay Area to ensure we can make the increasing demand from our customers for the next 12 to 18 months. We recognize that we not only need to meet the ongoing increasing demand, but to slow any surges in demand when large in orders arrive. Today, We have capacity to make approximately 45,000 jeans per month plus fragments and NGS products. And we are building capacity in South San Francisco of 80,000 clonal jeans per month by December and 90,000 jeans per month by April of 2022 to ensure that we continue to meet the needs of our customers while we bring the factory of the future online in 2022. Turning to NGS. We reported revenues of $21.4 million, a record quarter even against a comp in 2020, where we shipped a single $9 million order. We launched several products to bolster our offering, including the Exome 2.0, the most comprehensive Exome offering with best in-class performance. In addition, we introduced our Alliance Panel products, which are kits with curated content from key opinion leaders in their respective fields, sold through Twist. This quarter, We also launched a robust clinical exome from the broad and a pan-cancer panel from Accord EX, building on our first alliance panel, the SNP diversity panel with content from the Regeneron Genetics Center. We also announced plans to launch panels with center genes focused on rare diseases. For data storage, we achieved a significant milestone under IARPA's molecular information storage, or MIST, program. IARPA's evaluation team came to TWIST in October and provided us with a set of DNA sequences to be synthesized on the one-micron proof-of-concept chip in a single day. The sequences were not shared in advance, and we passed the test with flying colors. In addition, we confirmed that we can synthesize DNA at individual sites on the one-micron proof-of-concept chip with no crosstalk or spillover into adjacent sites. This was a critical technology demonstration that validates our ability to achieve smaller dimensions. We are currently in the design phase for the Alpha chip, which will be our first full commercial release chip. In the meantime, we will lay the groundwork to sign early access customers. To that end, in October, we hired Stefan Helmold, previously at Western Digital. With the significant technology advances that we have made in data storage, we are now focused on preparing for early access product launch, laying the foundation for commercialization of this disruptive and important storage solution. Stefan will help define our commercial strategy and leverage relationship build over a carrier in storage to ensure we offer the right products for customers in this space. At this time, I'd like to turn the call over to Jim to review our financial results for the quarter.