NEW YORK – Twist Bioscience will lay off around 270 employees, or about 25 percent of its workforce, despite recording record revenues in its second quarter of fiscal year 2023, the firm said before the opening of the market on Friday.
The move is part of cost-cutting measures to "accelerate our path to profitability," Twist CEO and Cofounder Emily Leproust said on a call with investors following the release of the financial results.
"The sales force will remain largely intact to drive top-line growth. We removed the duplication of synbio production across South San Francisco and Portland, significantly lowering our fixed cost structure," Leproust said, noting that the new Oregon facility now produces all genes and gene fragments and most oligo pools. "In addition, we resized the biopharma team to focus on revenue-generating partnerships, deprioritizing a majority of our internal assets. Throughout the organization, we streamlined teams including R&D, to focus on programs where Twist has a clear competitive advantage and to selectively deploy our platform in areas where we see the greatest potential for long-term value creation."
The timeline for the cuts is not clear. "It will take some time to digest that reduction," CFO Jim Thorburn said during the call.
While Q2 revenues were up, Twist forecast a downturn in its synbio, NGS, and biopharma businesses over the second half of the year, lowering its full-year 2023 revenue guidance to approximately $235 million to $238 million, compared to previous guidance of $261 million to $269 million.
Leproust noted that the company is facing challenges in integrating Boston-based antibody discovery firm Abveris, which Twist acquired in November 2021 for up to $190 million in cash and stock. In synbio and NGS, the reduced guidance is due to the risks of managing the workforce reduction, Thorburn said.
In fiscal Q3, Twist expects revenue of approximately $60 million to $61 million, and in fiscal Q4, $62 million to $63 million.
The firm also withdrew all of its fiscal-year 2024 financial guidance.
During the call, Twist also updated investors on its plans for the NGS, biopharma, and DNA-based data storage businesses.
"In the near term, we plan to add RNA workflow tools to our NGS portfolio," Leproust said. RNA assays can be run multiple times on the same sample, offering a large and complementary market to DNA panels. "RNA workflows are used primarily within the research market, an area where we have a significantly smaller footprint to date but believe we can grow and expand," she said.
In biopharma, Twist will "focus on selling services that drive top-line revenue," Leproust said. "The largest shift will be away from R&D on our internal assets until we see some momentum in out-licensing antibody leads where we've done the most work."
In addition, Twist will slow its investment in DNA-based data storage due to a perceived lack of competition. "We will focus our efforts on the storage-as-a-service business model and plan to delay the distributed on-premise approach until after the service business has proven to be a success," Leproust said. "We expect to demonstrate an end-to-end Gigabyte Century Archive service by the end of calendar [year] 2023. Following on this, in early calendar 2025, we expect to launch a Terabyte Century Archive solution."
For the three months ended March 31, Twist's revenues jumped 25 percent year over year to $60.2 million, from $48.1 million a year ago, driven by strength in its core business, especially next-generation sequencing panels. The quarter was well above the firm's guidance of $56.5 million issued at the end of fiscal Q1 and beat the consensus Wall Street estimate of $56.7 million.
Next-generation sequencing revenues were $29.0 million, up from $23.1 million a year ago. Synthetic biology revenues were $24.1 million, up from $18.4 million, and biopharma revenues were $7.0 million, up from $6.6 million a year ago.
By end market, revenues from healthcare were $33.8 million, up from $24.1 million a year ago; industrial chemicals revenues were $14.4 million, up from $14.1 million a year ago; and revenues from academia totaled $11.1 million, up from $9.5 million a year ago.
Revenues from the Americas were $34.9 million, up from $28.5 million a year ago; revenues from Europe, the Middle East, and Africa were $18.8 million, up from $15.2 million; and Asia-Pacific revenues were $6.5 million, up from $4.5 million.
Twist said total orders for the quarter were $64.2 million versus $55 million for the second fiscal quarter of 2022. It shipped products to around 2,100 customers in fiscal Q2, up from around 2,000 in the prior-year period, while the number of genes shipped to customers increased from 124,000 to 150,000 year over year. Around 600 NGS customers placed orders in fiscal Q2, Thorburn noted, with the top 10 NGS accounts worth approximately $10.9 million combined.
Twist's net loss attributable to shareholders was $59.2 million, or $1.04 per share, compared to a net loss of $60.7 million, or $1.13 per share, for fiscal Q2 2022, beating the consensus Wall Street estimate of a $1.12 loss per share.
The firm's R&D costs fell to $27.4 million from $31.2 million in the prior-year period. SG&A expenses were flat at $54.0 million.
Twist finished the quarter with $315.2 million in cash and cash equivalents and $72.5 million in short-term investments.
In Friday morning trading on the Nasdaq, shares of Twist were down 5 percent at $12.31.