Twist Bioscience at Leerink Conference: Strategic Growth Amid Challenges

On Tuesday, 11 March 2025, Twist Bioscience (NASDAQ: TWST) participated in the Leerink Global Healthcare Conference 2025, outlining its strategic initiatives and future outlook. The company demonstrated confidence in navigating market challenges while highlighting growth in diverse segments. However, it also acknowledged potential hurdles, such as NIH IDC cuts and tariffs.

Key Takeaways

• Twist Bioscience is offering academic customers access to Express Genes timelines without premium charges to increase market share.
• The company reported a significant gross margin improvement from 40% in Q1 FY2024 to 48% in the current quarter.
• Twist is optimistic about growth in the NGS, MRD, GMP, RNA, and biopharma segments.
• The leadership aims for a balanced approach to high growth and profitability, with a focus on operational efficiency.
• The company is confident in its guidance despite economic uncertainties.

Financial Results

• Twist Bioscience achieved a gross margin of 48% this quarter, up from 40% in Q1 FY2024.
• The company projects a gross margin of 50% or higher by year-end.
• Revenue capacity at the Portland facility is visible up to $500 million, with potential growth to $700 million through process improvements.
• Operational expenses have remained relatively flat for three years, supporting a focus on prudent investments.

Operational Updates

• The Express Genes offering aims to capture market share and drive long-term growth.
• Twist Bioscience perceives market turbulence as an opportunity due to its diverse product offerings.
• The company competes with Chinese competitors by focusing on product quality and long-term customer relationships.
• There is potential to expand the customer base significantly, from a few thousand to hundreds of thousands.

Future Outlook

• Twist Bioscience plans to continue supporting scientific research amid economic uncertainties.
• The company will pursue outsourcing opportunities for budget-constrained customers.
• GMP grade products and RNA segments are key focus areas for future market expansion.
• Biopharma is seen as a strategic fit, with plans to optimize the sales team for this segment.

Q&A Highlights

• Academic customers are offered Express Gene timelines without premium charges to boost market share.
• The impact of NIH cuts has been factored into the company’s guidance.
• Twist views turbulent market conditions as beneficial, given its diverse offerings.
• The NGS market is transitioning from arrays, and Twist is pleased with its progress.

Readers are encouraged to refer to the full transcript for an in-depth understanding of Twist Bioscience’s strategic insights and financial performance.

Full transcript - Leerink Global Healthcare Conference 2025:

Unidentified speaker: Alright.

Puneeth Souda, Host: Great. Let’s get started. I’m Puneeth Souda. I cover life science tools and diagnostics, and it’s my pleasure to be hosting team Twist Biosciences. Adam Labanis joining us as CFO and Patrick Finn, COO.

Great to have you guys here.

Patrick Finn, COO, Twist Biosciences: Thank you. Great to be here.

Unidentified speaker: Thank you.

Puneeth Souda, Host: Okay. So maybe to just kick off, you know, those are released out this morning. Maybe just let’s touch on that briefly. And then a number of questions here, I’m sure, that you were expecting in terms of NIA, China, and couple of other areas. But let’s talk about the the release this morning briefly.

What does that entail? What does that mean for dynamic pricing?

Unidentified speaker: Sure. Happy to chat through it. So, this morning, we announced that all academic customers temporarily will be offering our Express Jeans timelines with zero premium dollars

Patrick Finn, COO, Twist Biosciences: Mhmm.

Unidentified speaker: On a temporary basis. It really stems from, you know, us seeing this as an opportunity to take share in the marketplace. And I I I hit on the fact that, you know, twists with thousands of customers and hundreds of SKUs, we have a unique moment in time here, where our ability to engage with those customers in a time of need and be there for them, we think it’s an opportunity long term for us to drive some pretty meaningful share growth, similar to what we saw in the and when biotech funding over the last three years has been under a lot of pressure. We use that as an opportunity to gain significant amounts of share in in those customers as well.

Patrick Finn, COO, Twist Biosciences: And it’s good for the customers too in terms of uncertainty. Mhmm. And it just removes doubt, takes any hesitation of their decision making. Quite frankly, we optimize for volume. Volume matters for us.

And I think also isn’t it wonderful to get onto the Twist platform as soon as reasonably possible and leverage our scale. So I think it’s a very nice introductory offer should it be well received.

Puneeth Souda, Host: So just following up on that. I mean, obviously, you had a solid first quarter print. You had across NGS and SynBio. And and then you raised the guide as well. But a lot has happened since you reported on February 3, and I think February 7 has been NIH IDC cuts came out.

A lot of turbulence in the market. You’re taking steps to address some of that from as much as you can from your end. But maybe just help us give give us a sense of what you’re seeing in terms of customer behavior, in in the field, in terms of both the consumables and the way folks order oligos and probes?

Patrick Finn, COO, Twist Biosciences: Yeah. And look, it’s business as usual for us. Yeah. I think we’re tremendously diverse product offering, a diverse customer base. Like, we’re not a one stop shop.

And and quite frankly, until we have a 0% market share Mhmm. Then, you know, we’re gonna we should we should always be able to execute into a market opportunity. And so that that’s the expectation of the sales team. Obviously, I study that every week, quite frankly, I study daily. And right now, it’s to to me, it’s business as usual.

We continue to execute forward. If times are tough, our value proposition resonates even stronger. And quite frankly, we’ve played through some tough markets over the last few years. And simple value of you’re in constrained budget setting, then more shots on goal, better value for for your budget is a very, very strong value proposition. So we’ll we’ll steam into the opportunity as usual.

I think the the turbulence and or the perception of turbulence is good for us for a faster responding team. Our knowledge of customer base, need product starts at top, goes all the way right then into the field, and, you know, we see opportunity in that. I

Unidentified speaker: think you said it well. And I just quantitatively, we’ve been talking about it. You know, the the opportunity the academic business for Twist, we say, is about 19% of our overall business. Okay. US is a little less than half of it.

And really, what we’ve been seeing is stability in that US academic order trend. We have not seen we seem to be robust and stable. And I think, as Patty mentioned it, the nimbleness of the team, it truly does. The the folks on the ground. They do see this, and I I see it as well as an opportunity to take share and be there for our customers.

Puneeth Souda, Host: Got it. And, just given, you know, the rest of the turbulence in the market in terms of, policies around clean energy and whatnot, I’m just wondering if you’re seeing any any impact on the SynBio side of the business, which might not necessarily be academic.

Patrick Finn, COO, Twist Biosciences: Yeah. If you look at the the major health care is a big segment for us. Quite frankly, our our value proposition again into discovery is incredibly strong, so we’re not really feeling any effect of that. I think health care is a major driver. Yeah.

Quite frankly, I expect to see continued growth there.

Puneeth Souda, Host: Got it. Okay. So, when we look at, you know, another factor here is tariffs. There is, you have a competitor that is serving from China. Are you starting to see any share shift there in the market as a result?

Patrick Finn, COO, Twist Biosciences: Yeah. We have a couple of competitors that ship from China. And ultimately, I’ll borrow Emily’s phrase. We’re going to win by winning. And what she’s meaning there is you just have to have the best product to serve your customer effectively and build that long term relationship.

I think the noise and discussion around tariffs, it’s that’s a tailwind for us in our business. I think, you know, turbulence here, maybe we can see a little effect. I think the most pronounced thing that we’re seeing though is the supply chain and the procurement discussions. You know, I think a few months ago, we saw, you know, the strategic thinking shift, and I think we’re starting to see, you know, some of that really starting to radiate out to the business. But it’s definitely front of mind to our customers for sure.

And and

Puneeth Souda, Host: in terms of, you know, obviously, when you said the guide, the news, again, coming back to just briefly about NIH, the question that I’m I’m still getting is, you know, what happens in, you know, 2Q, 3Q? Again, I don’t think it’s it’s very hard to lay off, terminated graduate students and postdocs. But obviously, you know, some university has taken action in terms of not hiring them. So just wondering, you know, if if things, again, we’re hoping that they don’t because they would impact the research leading research position that you US has. But if it was to sort of, maybe just help us, understand if if if some of that is there some prudence in the guide to account for an impact this year?

Unidentified speaker: No. Happy to talk to it. Obviously, when we put the guidance out on February 5, we did have some of the announcements in the administration already coming. So there was some thoughtfulness into it. Obviously, there’s a lot of news coming out every day and filtering the signals and the noise is never trivial.

But we are watching it carefully. I think in terms of the the forecasting of the business and the guidance for we feel very confident in the guidance we gave. And, I’m not gonna reiterate guidance, but I’ll remind it. So, you know, we did see sequential step up in q two, and we expect that to continue throughout the balance of the year. In terms of the tailwinds and headwinds, I think that what we’re seeing is we’re seeing more opportunity.

And I and I think from what the the early phasing of this is is, you know, in a in a turbulent market, you know, folks making economic decisions may not buy cars, but they still buy groceries. A $250,000 box is a lot different than a hundred dollar gene in that regard. The science is continuing and we are gonna continue to support it.

Patrick Finn, COO, Twist Biosciences: Also, I think just just a comment, for example, with students, if you go to a situation where there is budget constraint, like, again, what a wonderful opportunity to outsource. Mhmm. So if there’s fewer people to do or execute on cloning workflows at your lab experiment, that that belongs in a Twist facility and will deliver fast with the right economics with a good yield. So again, you know, the the opportunity that we see is actually quite favorable and fits the the wheelhouse of our of what we’re very strong at and, you know, obviously, the channel to reach that customer base. So again, we do see opportunity.

Puneeth Souda, Host: Shifting gears to just on the, you know, pricing model that emerged out of Express Jeans. Obviously, there’s been a lot of discussion on it. What are some learnings from it and sort of how are you thinking about looking at the rest of the portfolio with those learnings?

Patrick Finn, COO, Twist Biosciences: So just taking the product portfolio to start, maybe, Adam, you can talk about our learnings on pricing. I mean, we’re definitely seeing changes in behavior being fast and four to six, four to seven days for a clonally perfect piece of DNA. It’s absolutely best in class, in particular, its scale. And so that’s been going well. It’s been well received, and we’re we’re well over a year now through launching that product and it’s doing exactly what it says on the label.

We we, you know, we really do deliver on that that commitment to the customer. And we’re seeing changes in behavior. A prior customer that would buy a non clonal genes, buying a clonal gene, someone who was buying a clonal gene will take it further along the workflow through to a prep and perhaps that antibody folks will make the IgG all very, very quickly and at scale. No one else can do it. So that the fundamental unit of speed, if I can frame it that way, for us has been very, very enabling.

And so, you know, the maker to bio transition, it’s tough to enumerate, but you can definitely see the behaviors changing. And from a pricing model standpoint No.

Unidentified speaker: No. I think you if you had it’s not just about the genes. It’s about the whole portfolio. And I think what we’re seeing is a number of learnings along the way, and it’s all been extremely helpful in how we navigate the business. But it’s the we we early on saw the bifurcation that, yes, there’s a demand for speed both in academic and in in in industry customers.

Yes. There’s a difference in price sensitivity, and we’re always gonna be optimizing for gross profit dollars. We know we have some of the lowest, if not the lowest variable cost of anybody in in in the market, and we see the opportunity to take volume, we will. And I think what we’re seeing is this speed is an important element for folks, not just on a product, but also in moving up the value chain in terms of, as Patty mentioned, not just doing a gene, but now I’m doing a prep or an IGG. That shift of is really playing out that former maker of an IGG who was a buyer of a gene is now a buyer of an IGG.

We’re seeing that play out in the marketplace. It’s a it’s an opportunity for us, but it really is coming because of the speed.

Puneeth Souda, Host: Okay. Got it. Since you talked about gross profit, just maybe on the gross margin side, I mean, came in healthy at, I think it was 48% for the quarter. And you’re guiding to projecting for exiting the year at about 50% plus or 50%. Correct me if I’m wrong.

No, that’s correct. Yeah. So maybe just how much of the margin ramp, how should we think about that? How much of that is sort of the pricing lift versus, you know, sort of the operating leverage and the cost control measures that you have?

Unidentified speaker: No. It’s a it’s a great question. I’ll start, and Patty can talk to some of the really exciting initiatives that we’re driving into it. If you go back in time a year ago, we were at a in q one of fiscal twenty four, we were at about 40% gross margin. So it’s about eight margin points of improvement in the last year.

The vast majority of that is on the leverage of the volume growth in the business. We have seen tailwinds from both some of the pricing dynamics, and I’ll talk to that, as well as we’ve also seen improvements from the continuous process improvements that our engineering team has been putting in place, which is really exciting to see that. In terms of the the various factors here and and how each one of them play out into it, again, it’s that the volume growth is is is almost the entire the entirety of it, but it is also we’re also seeing that that that that that that constant process improvement just, play out. And I think we’re still in the early stages of that. So as I look to the the guide and I look to seeing the continuous improvement, we won’t be happy as it starts with the four.

I won’t be happy when it starts with the five either, and so we’ll we’ll keep on marching.

Patrick Finn, COO, Twist Biosciences: Yeah. I’ll vouch for his lack of happiness too. He’s quite he’s quite a tough taskmaster on that one. And so it’s just nice execution from the team. If you think about the evolution of our business, going back in time, we landed a technology.

And the methods that we had surrounding the technology were kind of gold plated. Just don’t take any risk around supply chain, get get the method right. But as we’ve scaled, got product right, start to, you know, obviously go through the whole mix stuff, sell stuff, ship stuff, support the customer, you know, that that’s proceeded well. But but now it’s given us a chance to look at these methods and processes and go back and really turn the dials on them, really trying to optimize the cost of each process. Plastic tips was a good example.

And the last quarter we talked about we talked about improvements to retrochemistry that expands capacity, brings some of the costs down. But that’s been well executed now as we’re growing into a more, slightly more mature company. But then I think the third part that’s very understated, it’s a culture shift. You know, if you think about, again, the technology or landing the technology is a very, very different collection of skills and culture versus driving margin into your business. And just just simple little measurements, the number of yellow, green, black belts we’ve got in the organization now, that we celebrate and work hard on raising awareness when we do get a CPI that works and drive margin.

So So now there’s a thousand twisters and each of the operators are thinking about, okay, what are we doing? How are we doing it? How does it drive top line? But also how are we doing it in a fiscally sensible manner? It’s it’s been a super cultural shift to watch and that that will continue just in the same way we grew top line in the past, we will continue to execute on those CPIs internally.

Puneeth Souda, Host: Got it. Before I get into the NGS part, there’s a number of sort of questions there. But at a high level, if you could, When you look at this market, obviously, you have remarkable growth in ’twenty four. You took share in the market, it appears that way. When we look at your peers, how they were performing, Can you talk a bit about, you know, if I look at the turnaround time, which improved with the Wilson Mill facility and other efforts that you put in, you put in, you have dynamic pricing that you introduced, in terms of quality metrics, the feedback that we’re getting quality has improved over the over the years.

When you look at the top three or four drivers of this market, maybe just talk to us about, like, where which ones, where you had the most impact that helped drive the share and sort of how sustainable is that sort of going forward because your competitors are also trying to introduce fast products now, you know? So first things first,

Patrick Finn, COO, Twist Biosciences: you can’t be in the clonal gene business if you don’t ship a clonally perfect piece of nucleic acid. So I’d like to just make it clear that the product is wrong, you know, the customer doesn’t come back. So to me, the quality thing is is table stakes. We’ve always shipped the clonally perfect piece of DNA that that product has always been right. That’s NGS QC’d.

Customers don’t come back if you get it wrong. I think what’s really helped is speed. So first of all, if I split the market into two and I think about, like, essentially an enterprise account, more turns is good for everybody. Our customers are dependent upon us to deliver in a timely manner. And if you’ve got 20 scientists waiting for your product to fit into your pipeline, then, you know, that’s really helpful in terms of, you know, how quickly they can turn their project around.

We’ve heard where we’ve had large pharma customers essentially bifurcate supply chain, but we may have seen historically half of their business, because they’re a little bit slower. But now that the a little bit slower. But now that the express offering is tight and consistent, then it opens up the serviceable market from an enterprise standpoint. That’s been good, successful, and also allows us to move down chain or along the value chain for the customer. But the second part is by being fast with the maintenance of quality, then that’s allowing us to tap into the tail of the market.

And that to me is a very, very exciting opportunity for us in another axis. If you look at some of the larger organizations, more mature life sciences organizations of 300,000, four hundred thousand, five hundred thousand customers, we’re a few thousand. So we’ve got approximately 300,000, four hundred thousand, five hundred thousand customers to add. And we can effectively serve that customer base now that we have the speed at a point that that really helps them out. And that’s speed at scale.

So that’s one gene, 10 genes, thousand genes at a time. So I think we can actually grow on both axes, if you can think of it that way. If it comes to our competitors, they they can’t compete with our scale. And so, you know, we’ve got a couple I think one that’s renamed their Fast Gene a couple of times. It continues to struggle to take share.

We don’t really see it or feel it in the market. We’ve got another company that was very, very well known for non clonal genes well distributed all across the globe. They made an investment in this acute 25,000 square foot manufacturing facility to deal with our gallons and gallons of reagents and to take the competency in chemistry and come into our cage looking at making clonal DNA. So executing on a clonal workflow, coming in to take Twist, who’s shipping hundreds of thousands of clonal genes per year, that’s a very, very bold decision. And we welcome that competition into this landscape where we’re strong.

That’s a very good matchup for us. And quite frankly, we’re not seeing it in the market. So wrong fight, wrong time, I think.

Puneeth Souda, Host: That’s a good perspective there. So maybe switching gears to NGS and, I would love to understand there in terms of the diagnostic customers, the liquid biopsy customers that you have. You know, it’s been an important driver for you. How much of that opportunity is, you know, share taking where you get into an account and you’re able to, maybe they were using some other probes. You can now they can use Twist.

But or is it more simply a greenfield opportunity as the companies are trying to design their test and and you you’re getting expect into some of those? So maybe just talk talk to us about that.

Unidentified speaker: I’m happy to also. Yeah. So I’d say it’s a bit of both. And so what you see is there’s significant switching costs for the diagnostic companies to revalidate tests. So what we’ve seen historically where, you know, we were not first to marketplace, and we’ve come in, we’ve been in the new diagnostic.

Puneeth Souda, Host: Mhmm.

Unidentified speaker: And then there’s a good examples, and I think, in publicly GeneDx has said, hey. We we have switched the Twist genome, and and it’s been very successful for them both financially as well as in a growth perspective. I think we have a number of other examples of customers where as they focused on the Twist chemistry, they’ve seen improvements in their margin and they’ve seen improvements in their performance, and that’s allowed them to succeed. So it’s not so much as a replacement, but more of an augmentation in the marketplace. We’re also working with customers who are developing new technologies as well.

And as they come to market, we see that that that that that that white space, I’ll call it, of growth. So it’s not one or the other. It’s both, I’d say, is the way I’d articulate it.

Patrick Finn, COO, Twist Biosciences: Okay.

Puneeth Souda, Host: And and just following up on that in in terms of, you know, same store sales or the orders that you’re getting from some of these diagnostic customers, at least, you know, a few quarters back, we were still seeing, you know, bit of lumpiness from these orders depending on how their workflows were, how they were, you know, how much they wanted to stock and whatnot. What’s the latest on that? What are you I mean, should we continue to expect to see some lumpiness here just because the nature of these customers?

Unidentified speaker: I’m gonna steal from my counterpart here is the best way to handle lumpy business, add more lumps. So as our continued now at, you know, you know, pushing 600 total NGS customers, over a 60 have adopted our products commercially. We’re seeing the top 10 customer concentration rotation of those accounts every quarter. So part of what we’re seeing now is we’re oftentimes seen as the adult in the room when it comes to a supply chain perspective. And what I mean by that is is those customer ramps are uncertain.

We are ultimately only as successful as our customers, but we’re able to be there for them with, you know, an end to end solution from everything from sample to sequencer with one throat to choke, if something goes wrong. And what we find is is is a forecast is always wrong, and that the the question is how much in which direction we’re gonna always be there and be ready for to help our customers.

Patrick Finn, COO, Twist Biosciences: That comes back to the earlier question too. Our speed, our turnaround time, and scale, whether it’s a small tube of reagent or if we need to ship you a keg, and that that turnaround time, if you do have a forecasting mishap and they do happen, then the platform really does scale behind the customer. So, you know, beautiful scale up into into commercial activities for partners.

Puneeth Souda, Host: Let me ask briefly on the MRD side. You know, You know, given where the different number of MRD competitor I mean, from our you know, when we talk to diagnostic companies, they’re obviously competitive, but a number of participants are entering this market. You know, maybe just tell us, how do you see your share in that market today? And sort of how do you think that what’s been the sort of growth rate or any metrics that you can provide to sort of get a sense of how should we think about Twist being levered to an important market, which is, you know, dollars 15,000,000,000 to $20,000,000,000 in size from a diagnostic end?

Patrick Finn, COO, Twist Biosciences: Great question. So for the test in our market today underpinned by PCR, but that’s not our play. You know, we see multiple workflows coming in this space for whole genome sequencing, if that’s going to be like a low pass sequencing assay. And we have, you know, we have our own ligase that really performs well in that environment, super sensitivity, it leaves the molecule behind. So we have a nice offering for the whole genome play.

If it’s a fixed panel, and I think our reputation precedes us there, we know that the economics and the the sequencing cost savings from using Twist Enrichment on a fixed panel, like an exome or whatever, is very, very favorable. Then when you go to the tumor informed application where it really truly is RIPA, a panel designed for the patient, which is a smaller number of probes delivered quickly to high quality, that’s what our platform shines and there’s nothing like it from a competitor landscape. So as we look at the next wave and the emerging technologies, methodologies, emerging assays and customers, you know, we have cautious optimism that the platform will sell our flat customer base very, very well. It’s a bet we place for the future when we talked about MRD, Craig. You had that that’s years ago when we talked about MRD.

And so we’re just now starting to see, you know, the customers come on board. It’ll be a wee while before we see revenue ramp, probably looking into next fiscal year before we start to see that lift. The indicators are very favorable.

Puneeth Souda, Host: You also talked about, I mean, there’s a shift from arrays to NGS, but, you know, when you think about that, that’s been going on for a while. And so maybe just tell us what’s new there, you know, and how important is that transition?

Patrick Finn, COO, Twist Biosciences: Yes. That’s an important one. Good question. I mean, we had another conversion that we talked about in our last call. The value proposition, again, continues to resonate, the economics flexibility of the platform, I was actually in the diagnostic space and we’re very, very pleased with the progress there.

There’s a long sales cycle opportunities, you know, that technology conversion always takes a bit of time. And we have a nice very, very elegant product offering with FlexPrep to allow people to do massively multiplex sequencing. The key to massive multiplexing is getting the cost per assay down. And we’re in early stages of testing there. And I think that conversion will continue.

Just it’s lumpy. Yeah. So get more bumps.

Puneeth Souda, Host: On the RNA side, are you seeing, I know initially you focused that product on the academic side. And, again, given the challenges here, just wanted to see what you’re seeing, for the RNA products.

Patrick Finn, COO, Twist Biosciences: Yeah. Just steady progress. We continue to sample well. It’s in the early stages of adoption. It’s a long sales cycle in in the segments you’re describing.

You know, the the product really does hit spec. And so we’ll just continue to push that product port or that part of the product portfolio forward.

Puneeth Souda, Host: Got it. Maybe just talking about the roadmap a bit. At one point, you talked about launching GMP grade. Can you talk a little bit about where you are with that and what’s the timing?

Patrick Finn, COO, Twist Biosciences: Yeah. So our strength today has been in the discovery space, but we’re seeing more and more market pool to bring us towards a GMP grade of product. So it’s on our product roadmap. We continue to study and we’re good students of the market. We have a few customers in mind that are really helping us define what we’re trying to do and then over the coming week while we’ll look to come into that space with an offering that’s better than the competition.

But timing to be determined.

Puneeth Souda, Host: One question that I get is the utilization of the facilities. And I know that was a big question mark when things opened up, but just maybe can you just remind us where that stands?

Unidentified speaker: Yeah. So if you recall, last year, we did a little over just around $313,000,000 in revenue. And what we’ve been saying is when we launched the fact for the future, we we felt like in in the facility in Portland, Oregon, we felt like we had a visibility to half 500,000,000 of revenue capacity. And through some of the continuous process improvements, even the ones Patty just hit hit on are great examples. The re the changing the rider chemistry is a great example that we’ve already seen our path to 700,000,000 of of capacity, with some very minor adjustments and enhancements to our processes and flows and maybe a little bit automation.

The question that I am asking and the challenge that I am giving the team is, where can we go from here? And how much farther can we push that capacity? We have not yet tapped into some underdeveloped space in our, in our, Oregon facility, which we’ve got the opportunity to lean into, but we’ve also got space or capacity within our existing space. So I think we’ve got a lot of headroom. Mhmm.

And I think what we’ll also see is it won’t necessarily be the way it was previously. I expect to have modest capital investments over time until we’ll manage that accordingly so it doesn’t have the same dynamics on margin.

Puneeth Souda, Host: Got it. I know that biopharma doesn’t get much attention, but in just in terms of the feedback, in terms of the, you know, partners, biotech funding situation? What is the latest on that side of the market? And what’s your expectation there?

Patrick Finn, COO, Twist Biosciences: So I’m acting manager for that group right now, so it’s getting quite a lot of attention. Yes. The value proposition again continues to resonate. Mhmm. We continue to optimize the sales team and making sure that the wrong message with with the right skills, competency and support to sell well into that segment.

Quite frankly, we’re seeing green shoots. I’ve seen signs of life in the portfolio. I’m obsessed, you know, revenue is is is bumpy. I’m obsessed with the leading indicators of success, you know, really trying to build the sales funnel, the order book, and, kind of cautious optimism as we look forward. Teams executing a high level, always demand more.

And so, you know, we do see opportunity.

Puneeth Souda, Host: And so, look, as you lead the business, I always had this question of, you know, one is data, the other is biopharma, how core it is to what Twist does.

Patrick Finn, COO, Twist Biosciences: Yeah. Good good one. Biopharma, it’s a very relevant product offering. It bookends really the the SymBio portfolio. Healthcare is our biggest growing segment.

It’s as simple as if you want to buy a gene from us, if you want to do, you know, antibody work through us and we’re shipping you IgGs all the way through. Do you want us to do a full discovery program and supply you data? Then there’s a whole continuum that serves our high growth customer base. So strategically, it’s a very, very strong fit. It’s just a very different sales cycle to, you know, the gene business, if you like.

Puneeth Souda, Host: I see. Adam, just in terms of profitability, you’re making excellent progress on the gross margin side. Maybe just talk to us. I mean, your existing peers that have, you know, been in the market for a long time, I mean, they’re near 30% operating margins, you know, Sort of the so the gap is significant. So is that how you know, is it just maybe help us understand as to what your objectives are on the cash flow I mean, on the operating margin line.

Is that something you wanna continue to drive towards? How are you thinking about targeting cash flow profitability?

Unidentified speaker: No. Thanks, Benita. Great question. It’s one we spend a lot of time talking about as a leadership team. We are very close, and we so close we can practically taste it.

What I will say is it’s it’s about a balancing act of continuing to be high growth and continuing to progress on that path to profitability. And what we’ve seen over the last seven or eight quarters since launching the factory in Oregon is every quarter we’ve had sequential revenue growth. And every quarter, we’re seeing that sequential revenue growth 75 to 80¢ on the dollar of revenue growth dropping the gross margin line. And so that incremental gross margin is really a reflection of that continued revenue growth, and that will continue. And I think that’s that’s the starting point for how we’ll get to the path to profit.

The other one is we’ve had a lot of discipline on the OpEx line. If you go back and look, excluding some noncash items, you go back and look over time, it’s been relatively flat for about three years. And, you know, so we’ve seen significant revenue growth while being able to be very prudent with our investments in OpEx. And as a leadership team, we’ll continue to do that. We’ll continue to make those prudent investment decisions to make sure with the, a, we can continue to drive an accelerated rate of growth and, b, we can march on that path to profitability.

But I I you know, that that 50% exiting this year, that’s not the end. And from the growth margin, I think we can continue to to expand from there as well.

Patrick Finn, COO, Twist Biosciences: Okay.

Puneeth Souda, Host: Alright. Hopeful. That’s all the time we have. Thanks, guys. Thanks for being here.

Thanks, Vinit.

Unidentified speaker: Thank you.

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