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What changed in Twist Bioscience Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Twist Bioscience Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+317 added−309 removedSource: 10-K (2023-11-21) vs 10-K (2022-11-28)

Top changes in Twist Bioscience Corp's 2023 10-K

317 paragraphs added · 309 removed · 255 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

76 edited+13 added−10 removed97 unchanged
Biggest changeWe believe it is imperative that the board of directors and senior management strongly support a no-tolerance stance for workplace harassment, biases and unethical behavior. All employees are required to abide by, review and confirm compliance to the company’s Code of Business Conduct and Ethics Policy, our Anti-Money Laundering Policy, our Anti-Corruption Policy.
Biggest changeConduct and ethics Our Board of Directors adopted and regularly reviews the Code of Business Conduct and Ethics Policy (the “Code of Ethics”), which applies to all of our employees, directors and officers. We believe it is imperative that the board of directors and senior management strongly support a no-tolerance stance for workplace harassment, biases and unethical behavior.
Item 1. Business At Twist Bioscience Corporation, we work in service of customers who are changing the world for the better. In fields such as health care, food/agriculture, industrial chemicals/materials, academic research and data storage, by using our products, our customers are developing ways to better lives and improve the sustainability of the planet.
Item 1. Business At Twist Bioscience Corporation, we work in service of our customers who are changing the world for the better. In fields such as health care, food/agriculture, industrial chemicals/materials, academic research and data storage, by using our products, our customers are developing ways to better lives and improve the sustainability of the planet.
We intend to accomplish this objective by executing on the following: • maintain and expand our position as the provider of choice for high-quality, affordable synthetic genes and DNA, RNA and proteins to customers across multiple industries; • become a leading supplier of NGS sample preparation products; • conduct antibody therapeutic discovery and optimization for our current customers and future partners; • continue to explore development of DNA as a digital data storage medium through internal research and government and industry partnerships; and • expand our global presence.
We intend to accomplish this objective by executing on the following: • maintain and expand our position as the provider of choice for high-quality, affordable synthetic DNA, RNA and proteins to customers across multiple industries; • become a leading supplier of NGS sample preparation products; • conduct antibody therapeutic discovery and optimization for our current customers and future partners; • continue to explore development of DNA as a digital data storage medium through internal research and government and industry partnerships; and • expand our global presence.
These controls can be used to provide quality control for the development, verification and ongoing validation of diagnostic tests and allow researchers to develop tests safely and effectively, without working with live virus samples. We also offer SARS-CoV-2 Research Panels, the Twist Respiratory Virus Panel and the Pan-Viral Research Panel, for the detection of disease in a research setting.
Importantly, these controls can be used to provide quality control for the development, verification and ongoing validation of diagnostic tests and allow researchers to develop tests safely and effectively, without working with live virus samples. We also offer SARS-CoV-2 Research Panels, the Twist Respiratory Virus Panel and the Pan-Viral Research Panel, for the detection of disease in a research setting.
Our policy is to file patent applications to protect technology, inventions and improvements that are important to our business. Individual patent terms extend for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained.
Our policy is to file patent applications to protect technology, inventions and add improvements that are important to our business. Individual patent terms extend for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained.
In addition, we have provided internships through the Gloucester Biotechnology Academy, a hands-on training program prepares students for careers as entry-level technicians in cutting-edge laboratories; and Eastside Preparatory Academy, a high school dedicated to serving students historically underrepresented in higher education.
In addition, we have provided internships through the Gloucester Biotechnology Academy, a hands-on training program that prepares students for careers as entry-level technicians in cutting-edge laboratories; and Eastside Preparatory Academy, a high school dedicated to serving students historically underrepresented in higher education.
The pooling process has been fully automated through a mixture of custom proprietary and over-the-counter liquid handling equipment. We have the capacity to make many millions of high-quality oligos per month that can be used to make genes and gene fragments of various lengths, oligo pools of various sizes, DNA libraries and NGS tools products.
The pooling process has been fully automated through a mixture of custom proprietary and over-the-counter liquid handling equipment. We have the capacity to make many millions of high-quality oligos per day that can be used to make genes and gene fragments of various lengths, oligo pools of various sizes, DNA libraries and NGS tools products.
Failure to meet these requirements could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements. FSAP The Federal Centers for Disease Control and Prevention (CDC) and the Animal and Plant Health Inspection Service (APHIS) administer requirements of the Federal Select Agent Program, or FSAP.
Failure to meet these requirements could adversely impact our economic operator's business in the EU and other regions that tie their product registrations to the EU requirements. FSAP The Federal Centers for Disease Control and Prevention (CDC) and the Animal and Plant Health Inspection Service (APHIS) administer requirements of the Federal Select Agent Program, or FSAP.
To attract develop and motivate our employees, we offer a challenging work environment, ongoing skills development initiatives, attractive career advancement, opportunities and a culture that rewards entrepreneurial initiative and exceptional execution. Guiding Principles and Business Ethics Our guiding principles of grit, impact, service and trust serve as our guiding principles.
To attract, develop and motivate our employees, we offer a challenging work environment, ongoing skills development initiatives, attractive career advancement, opportunities and a culture that rewards entrepreneurial initiative and exceptional execution. Guiding Principles and Business Ethics Our guiding principles of grit, impact, service and trust serve as the foundation of our culture.
None of our employees is represented by a labor union, and we consider our employee relations to be good. Board of Directors Board Member Gender Nicolas Barthelemy Male Nelson C. Chan Male Robert Chess Male Keith Crandell Male Jan Johannessen Male Xiaoying Mai Female Robert Ragusa Male Melissa A.
None of our employees is represented by a labor union, and we consider our employee relations to be good. Board of Directors Board Member Gender Nelson C. Chan Male Robert Chess Male Keith Crandell Male Jan Johannessen Male Xiaoying Mai Female Robert Ragusa Male Melissa A.
We sell a diverse, customizable set of oligo pools, ranging from a few hundred oligos to over one million, and offer oligonucleotides of up to 300 nucleotides in length, with an error rate of 1:2000 nucleotides.
We sell a diverse, customizable set of oligo pools, ranging from a few hundred oligos to over one million, and offer oligonucleotides of up to 300 nucleotides in length, with an error rate of 1:3000 nucleotides.
Our direct NGS sales representatives are focused on 7 Table of Contents supporting our early adopters and providing a high level of service in order to familiarize customers with our product offerings. We sell our products through a worldwide commercial organization that includes direct sales personnel, commercial consultants in Europe and Asia, an e-commerce platform and distributors.
Our direct NGS sales representatives are focused on supporting our early adopters and providing a high level of service in order to familiarize customers with our product offerings. We sell our products through a worldwide commercial organization that includes direct sales personnel, commercial consultants in Europe and Asia, an e-commerce platform and distributors.
We consider our long-lived assets to be ready for their intended use when they are first capable of producing a unit of product that is saleable or internally usable, at which point depreciation of the asset commences. We also outsource some of our sub-assemblies to third party manufacturers.
We consider our long-lived assets to be ready for their intended use when they are first capable of producing a unit of product that is saleable at which point depreciation of the asset commences. We also outsource some of our sub-assemblies to third party manufacturers.
(owned by Danaher Corporation), DNA 2.0 Inc. d/b/a/ ATUM, GeneArt (owned by Thermo Fisher Scientific Inc.), Eurofins Genomics LLC, 9 Table of Contents Sigma-Aldrich Corporation (owned by Charles River Laboratories, Inc.) (an indirect wholly owned subsidiary of Merck & Company), Promega Corporation, OriGene Technologies, Inc., Blue Heron Biotech, LLC and others.
(owned by Danaher Corporation), DNA 2.0 Inc. d/b/a/ ATUM, GeneArt (owned by Thermo Fisher Scientific Inc.), Eurofins Genomics LLC, Sigma-Aldrich Corporation (owned by Charles River Laboratories, Inc.) (an indirect wholly owned subsidiary of Merck & Company), Promega Corporation, OriGene Technologies, Inc., Blue Heron Biotech, LLC and others.
We believe our company is stronger because of the variety of experiences and backgrounds our employees bring to their work every day. 63% of our employees identify as people of color. We are committed to creating and maintaining a diverse, inclusive and safe work environment where our employees can bring their best selves to work each day.
We believe our company is stronger because of the variety of experiences and backgrounds our employees bring to their work every day. Among our employees, 61% identify as people of color. We are committed to creating and maintaining a diverse, inclusive and safe work environment where our employees can bring their best selves to work each day.
In order to address this diverse customer base, we have employed a multi-channel strategy comprised of a direct sales force targeting synthetic DNA customers, a direct sales force focusing on the NGS market and an e-commerce platform that serves both commercial channels.
In order to address this diverse customer base, we employ a multi-channel strategy comprised of a direct sales force targeting synthetic DNA customers, a direct sales force focusing on the NGS market and an e-commerce platform that serves both commercial channels.
In the emerging field of DNA digital data storage, we compete with Catalog Technologies, Inc., Helixworks, Iridia, Inc., Roswell, Seagate, Microsoft, Genscript, Molecular Assemblies, Ansa Biotechnologies, various academic institutions, and other emerging competitors.
In the emerging field of DNA digital data storage, we compete with Catalog Technologies, Inc., Helixworks, Iridia, Inc., Roswell, 9 Table of Contents Seagate, Microsoft, GenScript, Molecular Assemblies, Ansa Biotechnologies, various academic institutions, and other emerging competitors.
When a 510(k) is required, the manufacturer must submit to the FDA a premarket notification submission demonstrating that the device is “substantially equivalent” to: (i) a device that was legally marketed prior to May 28, 1976, for which PMA approval is not required, (ii) a legally marketed device that has been reclassified from Class III to Class II or Class I, or (iii) another legally marketed, similar device that has been cleared through the 510(k) process.
For devices requiring special controls, and when a 510(k) is required, the manufacturer must submit to the FDA a premarket notification submission demonstrating that the device is “substantially equivalent” to: (i) a device that was legally marketed prior to May 28, 1976, for which PMA approval is not required, (ii) a legally marketed device that has been reclassified from Class III to Class II or Class I, or (iii) another legally marketed, similar device that has been cleared through the 510(k) process.
We sell our products to a global customer base of approximately 3,300 customers across a broad range of industries.
We sell our products to a global customer base of approximately 3,450 customers across a broad range of industries.
Currently, we are pursuing research and development projects with respect to the following: • process development for highest quality oligos; • optimizing our massively parallel fast turnaround time SynBio pipeline; • silicon process and chemistry development for our data storage initiative; • buildout of a massively parallel screening facility for our biopharma initiatives that allows us to screen thousands of antibodies per week; • expansion of our product offerings for oligo, gene, synthetic controls, NGS library preparation and target enrichment, and DNA Libraries products; and, • develop new products including mRNA and proteins.
Currently, we are pursuing research and development projects with respect to the following: • process development for highest quality oligos; • optimizing our massively parallel fast turnaround time SynBio pipeline; • silicon process and chemistry development for our data storage initiative; • buildout of a massively parallel screening facility for our biopharma initiatives that allows us to screen thousands of antibodies per week; • evaluate and implement AI applications to potentially optimize services for our customers; • expansion of our product offerings for oligo, gene, synthetic controls, NGS library preparation and target enrichment, and DNA Libraries products; and, • develop new products including mRNA and proteins.
The FDA regulates, among other things, the research, testing, manufacturing, safety, labeling, storage, recordkeeping, premarket clearance or approval, marketing and promotion and sales and distribution of medical devices in the United States to ensure that medical products distributed domestically are safe and effective for their intended uses. In addition, the FDA regulates the import and export of medical devices.
The FDA regulates, among other things, the research, testing, manufacturing, safety, labeling, storage, recordkeeping, premarket clearance or approval, marketing and promotion and sales and distribution of medical devices in the United States to ensure that medical products distributed domestically are not adulterated and are safe and effective for their intended uses.
The course equips leaders and employees with the tools they need to identify and address unwelcome conduct in non-adversarial, respectful terms. 10 Table of Contents Recruiting We believe that our employees are our most important asset.
The course equips leaders and employees with the tools they need to identify and address unwelcome conduct in non-adversarial, respectful terms. Recruiting We believe that our employees are our most important asset.
FSAP requirements govern possession, use, and transfer of select agents and toxins consisting of biological materials that have the potential to pose a severe threat to public, animal or plant health or to animal or plant products.
FSAP requirements govern possession, use, and transfer of select agents and toxins consisting of biological materials that have the potential to pose a severe threat to public, animal or plant health or to animal or plant products. The FSAP currently lists approximately 68 select agents and toxins.
Based on the most recent survey conducted in May 2022 where 87% of our employees responded: • 93% of employees understand Twist’s mission • 92% understand how they contribute to the mission of the company • 94% understand how their goals contribute to Twist We hold All Hands meetings twice per month as well as a monthly managers meeting for all people managers.
Based on the most recent survey conducted in March 2023 where 87% of our employees responded: • 92% of employees understand Twist’s mission • 90% understand how they contribute to the mission of the company • 93% understand how their goals contribute to Twist We hold All Hands meetings twice per month as well as a monthly managers meeting for all people managers.
All clinical studies of investigational medical devices to determine safety and effectiveness must be conducted in accordance with FDA’s investigational device exemption (IDE) regulations, including the requirement for the study sponsor to submit an IDE application to FDA, unless exempt, which must become effective prior to commencing human clinical studies.
Both Class II and III devices may require clinical studies. All clinical studies of investigational medical devices to determine safety and effectiveness must be conducted in accordance with FDA’s investigational device exemption (IDE) regulations, including the requirement for the study sponsor to submit an IDE application to FDA, unless exempt, which must become effective prior to commencing human clinical studies.
For synthetic genes, we have built a highly scalable gene production process with what we believe is industry-leading capacity to address the growing demand of scalable, high-quality, affordable synthetic genes. As of September 30, 2022, we employed 331 people in our manufacturing and operations team. 8 Table of Contents In addition to synthetic genes, we manufacture oligo pools.
For synthetic genes, we have built a highly scalable gene production process with what we believe is industry-leading capacity to address the growing demand of scalable, high-quality, affordable synthetic genes. As of September 30, 2023, we employed 370 people in our manufacturing and operations team. In addition to synthetic genes, we manufacture oligo pools.
In addition, we offer every full-time employee, both exempt and non-exempt, the benefit of equity ownership in the company through stock option grants and our employee stock purchase plan.
In addition, we offer every full-time employee, both exempt and non-exempt, the benefit of equity ownership in the company through restricted stock units (RSU) grants and our employee stock purchase plan.
Medical device regulation in general The FDC Act classifies medical devices into one of three categories based on the risks associated with the device and the level of control necessary to provide reasonable assurance of safety and effectiveness.
In addition, the FDA regulates the import and export of medical devices. Medical device regulation in general The FDC Act classifies medical devices into one of three categories based on the risks associated with the device and the level of control necessary to provide reasonable assurance of safety and effectiveness.
Such RUO products do not require premarket clearance or approval from the FDA, provided that they be labeled “For Research Use Only. Not For Use In Diagnostic Procedures” pursuant to FDA regulations.
Such RUO products do not require premarket clearance or approval from the FDA, provided that they be labeled “For Research Use Only. Not For Use In Diagnostic Procedures” pursuant to FDA regulations or else they are considered to be adulterated (mislabeled).
While the promise of enzymatic synthesis to deliver longer genes in a shorter timeframe provides excitement for the industry, this technology is at the proof-of-concept stage and has not yet been proven to be scalable or commercially viable.
While the promise of enzymatic synthesis to deliver longer genes in a shorter timeframe provides excitement for the industry, this technology has not yet been proven to be scalable or commercially viable.
However, FDA can reclassify or use “de novo classification” for a device that meets the FDC Act standards for a class II device, permitting the device to be marketed without PMA approval. Devices deemed to pose lower risk are categorized as either Class I or II.
However, FDA can reclassify or use “de novo classification” for a device that meets the FDC Act standards for a class II or III device, which still requires PMA approval. Devices deemed to pose lower risk are categorized as either Class I or II.
Background We currently generate revenue through our synthetic biology and NGS tools product lines. In addition, we are leveraging our platform to expand our portfolio to include other products and address additional market opportunities, including vertical market opportunities in biological drug discovery and development and digital data storage.
Background We currently generate revenue through our synthetic biology and NGS tools product lines as well as biopharma services for antibody discovery, optimization and development. In addition, we are leveraging our platform to expand our portfolio to include other products and address additional market opportunities, including vertical market opportunities in digital data storage.
To date, we have generated antibody leads to multiple biological targets and these antibody leads are in various stages of early discovery and development. As of September 30, 2022, we had signed 59 revenue-generating partnerships.
To date, we have generated antibody leads to multiple biological targets and these antibody leads are in various stages of early discovery and development. 6 Table of Contents As of September 30, 2023, we had signed 314 revenue-generating partnerships.
ISO has standard bodies in 163 countries. ISO Surveillance Audits are carried out twice within a three-year period by the registrar (certification body) to ensure we maintain our system in compliance with ISO standards. Recertification is required every three years and we have been successfully recertified since obtaining our original ISO certification.
ISO Surveillance Audits are carried out twice within a three-year period by the registrar (certification body) to ensure we maintain our system in compliance with ISO standards. Recertification is required every three years and we have been successfully recertified since obtaining our original ISO certification. Additionally, we were registered with the U.S.
We require all U.S. employees to be vaccinated. As a benefit for all employees, we provide COVID and flu vaccines for the employee and their family. Employee health and safety We remain steadfast in our commitment to promote the health and safety of our employees.
We require all U.S. employees to be vaccinated. As a benefit for all employees, we provide COVID and flu vaccines for the employee and their family. Employee health and safety We remain steadfast in our commitment to promote the health and safety of our employees and have implemented a robust Injury and Illness Prevention Program (IIPP).
Through these partnerships, we had 83 completed programs and 50 active programs with 59 of the programs including milestones and/or royalties as of September 30, 2022. Some of our partners include Boehringer Ingelheim GmbH, Takeda Pharmaceutical Company Limited, Adicet Bio, Kyowa Kirin, Invetx, Inc., Astellas Pharma Inc. and Neogene Therapeutics, Inc.
Through these partnerships, we had 806 completed programs and 69 active programs with 68 of the programs including milestones and/or royalties as of September 30, 2023. Some of our partners include Bayer, Boehringer Ingelheim GmbH, Takeda Pharmaceutical Company Limited, Adicet Bio, Ono Pharmaceutical Ltd., Kyowa Kirin, Invetx, Inc., Astellas Pharma Inc. and Neogene Therapeutics, Inc.
In fiscal year 2022 we served approximately 3,300 customers and reported $203.6 million in revenue, including $106.4 million in revenue from the healthcare sector, $57.9 million in revenue from the chemicals/materials sector, $37.1 million in revenue from the academic research sector and $2.2 million in revenue from the food/agriculture sector. 3 Table of Contents Our Markets Synthetic Biology Our synthetic biology products serve life sciences researchers across a variety of healthcare applications including drug discovery, disease detection, enzyme engineering, gene editing and basic academic research.
In fiscal year 2023, we served approximately 3,450 customers and reported $245.1 million in revenue, including $137.1 million in revenue from the healthcare sector, $59.3 million in revenue from the chemicals/materials sector, $45.8 million in revenue from the academic research sector and $2.8 million in revenue from the food/agriculture sector. 3 Table of Contents Our Markets Synthetic Biology Our synthetic biology products serve life sciences researchers across a variety of healthcare applications including drug discovery, disease detection, enzyme engineering, gene editing and basic academic research.
We have worked closely with our suppliers to develop contingency plans to assure continuity of supply while maintaining high quality and reliability, and in some cases, we have established long-term supply contracts with our suppliers.
We have worked closely with our suppliers to develop contingency plans to assure continuity of supply while maintaining high quality and reliability, and in some cases, we have established long-term supply contracts with our suppliers. We qualify additional suppliers for key materials in an effort to ensure continuity of supply for our operations.
We provide all employees with eight fully paid hours each year to give back to the community at an organization of their choice. We are working to engage with the local community organizations to provide volunteer opportunities for our employees. As we grow our employee base, we will extend our efforts in these areas.
We provide all employees with eight fully paid hours each year to give back to the community at an organization of their choice. We are working to engage with the local community organizations to provide volunteer opportunities for our employees.
Class II classification usually requires the manufacturer to submit to the FDA a premarket notification submission requesting clearance of the device for commercial distribution in the United States pursuant to Section 510(k) of the FDC Act, referred to as 510(k) clearance. Most Class I devices are exempt from this requirement, as are some lower risk Class II devices.
Class II classification usually requires the manufacturer to submit to the FDA a premarket notification submission requesting clearance of the device for commercial distribution in the United States pursuant to Section 510(k) of the FDC Act, referred to as 510(k) clearance.
We have built dedicated production capabilities for our NGS products. ISO certification In 2018, we certified our Quality Management System (QMS) to the ISO 9001:2015 (Quality Management Systems—Requirements) standard and ISO 13485:2016 standard (Medical devices—Quality management systems—Requirements for regulatory purposes). ISO is a global network of national standards with over 18,000 standards for nearly every aspect of technology and business.
We certified our QMS to the ISO 9001:2015 (Quality Management Systems—Requirements) standard and ISO 13485:2016 standard (Medical devices—Quality management systems—Requirements for regulatory purposes). ISO is a global network of national standards with over 18,000 standards for nearly every aspect of technology and business. ISO has standard bodies in 163 countries.
Alliance panels are customer-curated content sold through Twist. In addition, we offer specific workflow solutions including a methylation detection kit for cancer, rare and inherited disease study, as well as a fast hybridization solution (FastHyb), which allows researchers to go from sample to sequencer in a single day.
In addition, we 5 Table of Contents offer specific workflow solutions including a methylation detection kit for cancer, rare and inherited disease study, as well as a fast hybridization solution (FastHyb), which allows researchers to go from sample to sequencer in a single day.
Manufacturing and facilities The production of our products is a highly complex and precise process. We currently manufacture all of our products and multiple sub-assemblies at our manufacturing facility in South San Francisco, California. We expect to begin manufacturing products for revenue generation in our Wilsonville facility as of January 2023.
Manufacturing and facilities The production of our products is a highly complex and precise process. We currently manufacture all of our products and multiple sub-assemblies at our manufacturing facilities in South San Francisco, California and Wilsonville, Oregon.
Our success in the market depends on employees understanding and embracing how their job contributes to the company’s overall strategy. We encourage cross team communication as well as integrated departmental communication. We believe this broadens our employee’s skill set and provides opportunity for growth and advancement.
Our success in the market depends on employees understanding and embracing how their job contributes to the company’s overall strategy. We encourage cross team communication as well as integrated departmental communication.
In addition, we have developed a specialized way to screen immune system B cells to enable the discovery of large, diverse sets of monoclonal antibodies (mAbs) for our partners. As of September 30, 2022, the Boston team had 62 active programs underway.
In addition, we have developed a specialized way to screen immune system B cells to enable the discovery of large, diverse sets of monoclonal antibodies (mAbs) for our partners.
Employees have the opportunity to refine or develop professional skills, learn new software, and explore as they plan their career growth. The platform also offers tremendous potential for managers and employees to create development plans as part of the performance review process.
We have made a significant investment in an online learning platform with on-demand, video-based content. Employees have the opportunity to refine or develop professional skills, learn new software, and explore as they plan their career growth. The platform also offers tremendous potential for managers and employees to create development plans as part of the performance review process.
Sales and marketing We have built a versatile and scalable commercial platform that enables us to reach a diverse customer base that we estimate consists of over 100,000 synthetic DNA users, and many additional potential customers of our NGS library preparation products today.
Sales and marketing We have built a versatile and scalable commercial platform that enables us to reach a diverse customer base that we estimate consists of over 100,000 synthetic DNA users, potential customers of our NGS tools products and partners who may use our services for antibody discovery.
Starovasnik Female Emily Leproust Female William Banyai Male Female 30 % Male 70 % Total 10 Executives Executive Team Member Gender Emily Leproust Female Jim Thorburn Male Bill Banyai Male Angela Bitting Female Siyuan Chen Male Dennis Cho Male Patrick Finn Male Paula Green Female Steffen Hellmold Male Tracey Mullen Female Nimisha Srivastava Female Aaron Sato Male Erin Smith Female Female 46 % Male 54 % Total 13 13 Table of Contents All Twisters (inclusive of executives) Gender Percent of all Twisters Female 41 % Male 59 % Total 989 Region Percent of all Twisters Americas 85 % EMEA 10 % APAC 5 % Total 989 14 Table of Contents Environmental management Many gene synthesis companies rely on oligonucleotide, or oligo (short pieces of DNA) synthesis on a plastic 96-well plate format.
Starovasnik Female Emily Leproust Female William Banyai Male Female 33 % Male 67 % Total 9 Executives Executive Team Member Gender Emily Leproust Female Jim Thorburn Male Bill Banyai Male Angela Bitting Female Siyuan Chen Male Dennis Cho Male Patrick Finn Male Paula Green Female Tracey Mullen Female Nimisha Srivastava Female Aaron Sato Male Chet Gandhi Male Female 42 % Male 58 % Total 12 13 Table of Contents All Twisters (inclusive of executives) Gender Percent of all Twisters Female 42 % Non-Binary 0.4 % Male 57 % Total 919 Region Percent of all Twisters Americas 88 % EMEA 7 % APAC 5 % Total 919 14 Table of Contents Environmental management Many gene synthesis companies rely on oligonucleotide, or oligo (short pieces of DNA) synthesis on a plastic 96-well plate format.
As of September 30, 2022, we employed 224 people in sales, marketing and customer support. Research and development We are engaged in ongoing research and development efforts focused on enhancements to existing products and the development of new products.
As of September 30, 2023, we employed 215 employees and dedicated commercial consultants in sales, marketing and customer support. 7 Table of Contents Research and development We are engaged in ongoing research and development efforts focused on enhancements to existing products and the development of new products.
Overall, Twist’s process to synthesize DNA significantly reduces the quantity of chemicals used, overproduced product and waste, for a more sustainable production process. Government regulation Our synthetic DNA products are intended for “Research Use Only” (RUO). We sell and promote these products for non-diagnostic and non-clinical purposes to academic institutions, life sciences and research laboratories, and biopharmaceutical and biotechnology companies.
Overall, Twist’s process to synthesize DNA significantly reduces the quantity of chemicals used, overproduced product and waste, for a more sustainable production process. Government regulation Currently, our synthetic DNA products are intended for “Research Use Only” (RUO).
Our NGS target enrichment and library preparation products are used in a more comprehensive workflow for next generation sequencing for research purposes only.
It is intended to restrict use of the kits to non-in vitro diagnostic purposes. Our NGS target enrichment and library preparation products are used in a more comprehensive workflow for next generation sequencing for research purposes only.
We have established a reporting hotline and email address that enables employees to anonymously report any suspected violations of the Code of Conduct. In addition, because synthetic DNA is considered to be a dual use technology, we invest substantial financial and human resources in biosecurity to help ensure that our products are used for responsible research.
In addition, because synthetic DNA is considered to be a dual use technology, we invest substantial financial and human resources in biosecurity to help ensure that our products are used for responsible research.
Of these employees, 303 were primarily engaged in engineering as well as research and development activities; 224 were primarily engaged in marketing, sales and customer support; 131 were primarily engaged in general and administrative activities; and 331 were primarily engaged in operations and manufacturing, of which there are 318 full-time employees 12 Table of Contents dedicated to manufacturing our synthetic genes, oligo pools, NGS tools and DNA libraries.
Of these employees, 203 were primarily engaged in research and development activities; 215 were primarily engaged in marketing, sales and customer support; 131 were primarily engaged in general and administrative activities; and 370 were primarily engaged in operations and manufacturing, dedicated to manufacturing our synthetic genes, oligo pools, NGS tools and DNA libraries.
PMA reviews generally last between one and two years, although they can take longer. Both the 510(k) and the PMA processes can be expensive and lengthy and may not result in clearance or approval.
PMA reviews generally last between three months and two years, although they can take longer. The PMA process can be expensive and lengthy and may not result in clearance (for Class I and II devices) or approval (for Class III devices).
As part of our efforts, all employees and managers complete workplace harassment and sexual harassment training that includes details on how to report any violation of these policies. 11 Table of Contents Conduct and ethics Our Board of Directors adopted and regularly reviews the Code of Conduct, which applies to all of our employees, directors and officers.
As part of our efforts, all employees and managers complete workplace harassment and sexual harassment training that includes details on how to report any violation of these policies.
We offer two primary categories of synthetic genes: genes of perfect quality, clonal genes, in a vehicle also called a vector to carry the DNA, and genes, that customers can place in their own vector, such as near-perfect quality and non-clonal genes or fragments.
We offer two primary categories of synthetic genes: clonal genes of perfect quality delivered to the customer in a vehicle called a vector; and genes that customers can place in their own vector, non-clonal genes or fragments. Within these two categories, customers can order different lengths of DNA depending on their required final gene construct.
In general, partnerships for our antibody development platform require us to provide rapid, on-demand (high affinity) antibodies based on one or more targets provided by the customer.
In general, partnerships for our antibody development platform require us to provide rapid, on-demand (high affinity) antibodies based on one or more targets provided by the customer. Customers can design and purchase libraries, and we work with partners that bring us a target, to discover antibody leads against that target.
We are not a registered entity under FSAP and it is our policy generally not to produce or otherwise work with any biological material that is subject to FSAP license requirements.
The registered entities primarily consist of academic, federal and non-federal government, commercial, and private facilities that conduct research studies or diagnostic activities. We are not a registered entity under FSAP and it is our policy generally not to produce or otherwise work with any biological material that is subject to FSAP license requirements.
In addition, many of our partnerships include success-based milestones for key clinical, regulatory and commercial achievements and/or royalties on any product sales resulting from our collaboration. In addition, for our internal development efforts, we have selected several promising targets and have identified antibody leads to these targets.
These partnerships generate revenue in up-front fees, through the license of libraries and service revenue. In addition, many of our partnerships include success-based milestones for key clinical, regulatory and commercial achievements and/or royalties on any product sales resulting from our collaboration. We used our proprietary antibody discovery technologies to identify antibody leads to several promising biological targets.
We implemented a remote work policy which has resulted in a broader applicant pool because they aren’t limited to geographic location. We actively engage with future scientists through organizations including the International Genetically Engineered Machine (iGEM), a non-profit organization dedicated to furthering the field of synthetic biology.
We actively engage with future scientists through organizations including the International Genetically Engineered Machine (iGEM), a non-profit organization dedicated to furthering the field of synthetic biology.
With an active program in place for our employees, we are striving to further support our female and underrepresented employees in advancing their careers while continuing to focus on hiring diverse talent, particularly at more senior positions.
We have engaged with several organizations in the Portland area including Portland Community College, Partnerships in Diversity, Oregon State University, Oregon Biosciences Association and others. 10 Table of Contents With an active program in place for our employees, we are striving to further support our female and underrepresented employees in advancing their careers while continuing to focus on hiring diverse talent, particularly at more senior positions.
The Presidential Commission also recommended that the federal government lead an ongoing review of developments in the synthetic biology field and that the federal government conduct a reasonable risk assessment before the field release of synthetic organisms. Aside from certain labeling requirements, we believe that our products, as currently marketed, are largely unregulated by governmental bodies, including the FDA.
The Presidential Commission also recommended that the federal government lead an ongoing review of developments in the synthetic biology field and that the federal government conduct a reasonable risk assessment before the field release of synthetic organisms.
In the future, we may develop this larger workflow as an in vitro diagnostic, for which we will obtain prior authorization from FDA or other applicable regulatory authorities before commercialization. 15 Table of Contents FDA Pursuant to its authority under the Federal Food, Drug, and Cosmetic Act, or the FDC Act, the FDA has jurisdiction over medical devices.
In the future, we may develop this larger workflow as an in vitro diagnostic, for which we will obtain prior authorization from FDA or other applicable regulatory authorities before commercialization.
Currently, we manufacture genes of up to 5,000 base pairs in length, yielding a clonally perfect piece of DNA that our customers can immediately use for their research. We offer non-clonal genes of up to 1,800 base pairs in length, which we believe addresses the vast majority of demand for non-clonal genes.
Customers can order longer genes or shorter genes and can stitch genes together to create longer or shorter constructs if desired. Currently, we manufacture genes of up to 5,000 base pairs in length, yielding a clonally perfect piece of DNA that our customers can immediately use for their research.
In addition, customers use our NGS tools for population genetics research and biomarker discovery, translational research, microbiology and applied markets research.
In addition, customers use our NGS tools for population genetics research and biomarker discovery, translational research, microbiology and applied markets research. Our customers are primarily diagnostic companies and hospitals, research institutions, agricultural biotechnology companies, and consumer genetics companies conducting diagnostic tests for a wide range of applications.
Our customers are primarily diagnostic companies and hospitals, research institutions, agricultural biotechnology companies, and consumer genetics companies conducting diagnostic tests for a wide range of applications. 5 Table of Contents We offer a wide variety of NGS tools for our customers including library preparation kits, human exome kits, fixed and custom panels as well as Alliance panels.
We offer a wide variety of NGS tools for our customers including library preparation kits, human exome kits, fixed and custom panels as well as Alliance panels. Alliance panels are customer-curated content sold through Twist.
We invest in our next generation of leaders through a one-year leadership program for mid-level managers. In addition, we offer tuition reimbursement aimed at growth and career development. We have made a significant investment in an online learning platform with on-demand, video-based content.
We believe this broadens our employee’s skill set and provides opportunity for growth and advancement. 11 Table of Contents We invest in our next generation of leaders through a one-year leadership program for mid-level managers. In addition, we offer tuition reimbursement aimed at growth and career development.
Most recently, we were registered with the FDA as a manufacturer of “Reagents, 2019-novel coronavirus nucleic acid”. In 2020, our quality management systems for manufacturing our NGS Target Enrichment Panels in our South San Francisco offices were certified to ISO 13485:2016.
Food and Drug Administration (“FDA") as a manufacturer of “Reagents, 2019-novel coronavirus nucleic acid” under the FDA's Emergency Use Authorization. In 2020, our QMS for manufacturing our NGS Target Enrichment Panels in our South San Francisco, and subsequently in 2023 our Wilsonville manufacturing facilities was certified to ISO 13485:2016.
Synthetic viral controls, infectious disease research tools Leveraging our DNA synthesis platform, we launched a new product line of synthetic viral controls in response to the rapid spread of COVID-19. We offer fully synthetic SARS-CoV-2 RNA reference sequences as positive controls for the development of both NGS and reverse transcription-polymerase chain reaction (RT-PCR) assays.
In May 2023, we introduced a full RNA sequencing workflow, expanding our NGS product line to support RNA sequencing. Synthetic viral controls, infectious disease research tools Leveraging our DNA synthesis platform, we launched a new product line of synthetic viral controls in response to the rapid spread of COVID-19.
For example, in December 2010, the Presidential Commission for the Study of Bioethical Issues recommended that the federal government oversee, but not regulate, synthetic biology research.
However, in the future we may be subject to a variety of specialized regulatory requirements, including potential regulation by the U.S. Food and Drug Administration, or the FDA. For example, in December 2010, the Presidential Commission for the Study of Bioethical Issues recommended that the federal government oversee, but not regulate, synthetic biology research.
Employee population As of September 30, 2022, we had 989 employees, which includes our team of 39 dedicated commercial consultants.
As we grow our employee base, we will extend our efforts in these areas. 12 Table of Contents Employee population As of September 30, 2023, we had 919 employees, which includes our team of 17 dedicated commercial consultants.
In response to the COVID-19 pandemic, we increased our supply of several materials and sourced additional suppliers for key materials to mitigate supply chain disruptions and ensure ongoing operations. Competition The synthetic biology industry is intensely competitive and is characterized by price competition, technological change, international competition, product turnaround time and manufacturing yield problems.
Competition The synthetic biology industry is intensely competitive and is characterized by price competition, technological change, international competition, product turnaround time and manufacturing yield problems.
RUO is a term applicable to our target enrichment products for the next-generation sequencing (NGS) market and is applied to kits sold to this market segment. It is intended to restrict use of the kits to non-in vitro diagnostic purposes.
In the future, we expect to support compliance with current Good Manufacturing Practices (cGMP) and to support the required regulatory requirements as future regulations are updated by the FDA. RUO is a term applicable to our target enrichment products for the next-generation sequencing (NGS) market and is applied to kits sold to this market segment.
Our SARS-CoV-2 controls are now included on the U.S. Food and Drug Administration website as reference materials. In July, we launched synthetic monkeypox controls. In addition, we offer a wide range of respiratory viral controls, including for influenzas, respiratory syncytial virus (RSV), rhinoviruses, SARS, MERS and coronaviruses.
We expanded this product line to include synthetic monkeypox controls as well as a wide range of respiratory viral controls, including for influenzas, respiratory syncytial virus (RSV), rhinoviruses, SARS, MERS and coronaviruses.
We also offer larger quantities of DNA for customers who require it for their development efforts.
We offer non-clonal genes of up to 1,800 base pairs in length, which we believe addresses the vast majority of demand for non-clonal genes. We also offer larger quantities of DNA for customers who require it for their development efforts. Our error rate for gene fragments is 1:7500 nucleotides.
As of September 30, 2022, we employed 303 people in our research and development team.
As of September 30, 2023, we employed 203 people in our research and development team. Patents and other intellectual property rights Worldwide, we own or exclusively in-license over 50 issued or allowed patents and more than 400 pending patent applications as of September 30, 2023.
Removed
Within these two categories, customers can order different lengths of DNA depending on their required final gene construct. Customers can order longer genes or shorter genes and can stitch genes together to create longer or shorter constructs if desired.
Added
We offer fully synthetic SARS-CoV-2 RNA reference sequences as positive controls for the development of both NGS and reverse transcription-polymerase chain reaction (RT-PCR) assays. Our SARS-CoV-2 controls are now included on the U.S. Food and Drug Administration website as reference materials. In May 2023, we introduced a full RNA sequencing workflow, expanding our NGS product line to support RNA sequencing.
Removed
These agreements typically have three elements with respect to the program: • We license and also utilize our “Library of Libraries,” a panel of synthetic antibody phage display libraries derived only from sequences that exist in the human body. • We work to discover, validate and optimize new antibody candidates against a specific target. • The customers pay Twist annual technology licensing fees, and increasingly, we expect to receive contractually obligated project milestones for completion of various Twist activities and development milestones as our customers progress and commercialize the products.
Added
While we have more than 20 identified, we prioritized the five most advanced antibody leads and intend to out-license these antibody leads in various stages of early discovery and development to experts in development and commercialization of biotechnology products.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDue to these impacts and measures, we may experience significant and unpredictable reductions in demand for our products and our customers may postpone or cancel their existing orders. • The effectiveness of our sales teams may be negatively impacted by the lack of or reduction in travel resulting in their reduced ability to engage with decision-makers. • In addition to travel restrictions, while countries in general have re-opened their borders to U.S. travelers, some countries still have quarantine requirements, and, in the future, countries may again impose or expand travel restrictions and impose or resume prolonged quarantines if there is a resurgence of COVID-19 cases, which would significantly impact our ability to support our business operations and customers in those locations and the ability of our employees to access their places of work to produce products, or significantly hamper our products from moving through the supply chain.
Biggest changeSome of the risks we have experienced and/or may experience in the future as a result of impacts from COVID-19 include: • A decline in sales activities and customer orders or cancellations of existing orders, depending on the severity and duration of any future COVID-19 outbreaks and the extent of mitigation and containment measures that may be undertaken by governments and businesses. 34 Table of Contents • In addition to travel restrictions, while countries in general have re-opened their borders to U.S. travelers, and, in the future countries may again impose or expand travel restrictions and impose or resume prolonged quarantines if there is a resurgence of COVID-19 cases, which would significantly impact our ability to support our business operations and customers in those locations and the ability of our employees to access their places of work to produce products, or significantly hamper our products from moving through the supply chain.
The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Annual Report on Form 10-K.
Risk factors The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Annual Report on Form 10-K.
Their research and development budgets are based on a wide variety of factors, including factors beyond our control, such as: • the allocation of available resources to make purchases; • funding from government sources; • funding from research grants; • changes in government programs that provide funding to research institutions and companies; • the spending priorities among various types of research equipment; • policies regarding capital expenditures during recessionary periods; • political climate or macroeconomic conditions, including economic downturns or market uncertainty or reduced spending in response to emergency situations, such as the outbreak of COVID-19; • inability to raise sufficient funds in the capital markets; • changes in the regulatory environment; • healthcare legislative reform measures, such as the Inflation Reduction Act of 2022; • differences in budgetary cycles; • inflationary pressures; and 24 Table of Contents • market acceptance of relatively new technologies, such as ours.
Their research and development budgets are based on a wide variety of factors, including factors beyond our control, such as: • the allocation of available resources to make purchases; • funding from government sources; • funding from research grants; • changes in government programs that provide funding to research institutions and companies; • the spending priorities among various types of research equipment; • policies regarding capital expenditures during recessionary periods; • political climate or macroeconomic conditions, including economic downturns or market uncertainty or reduced spending in response to emergency situations, such as the outbreak of COVID-19; • inability to raise sufficient funds in the capital markets; • changes in the regulatory environment; • healthcare legislative reform measures, such as the Inflation Reduction Act of 2022; • differences in budgetary cycles; 24 Table of Contents • inflationary pressures; and • market acceptance of relatively new technologies, such as ours.
Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could harm our business. 43 Table of Contents If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume could decline.
Securities 43 Table of Contents litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could harm our business. If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume could decline.
In addition, as permitted by Section 145 of the DGCL, our amended and restated bylaws and our indemnification agreements that we have entered into with our directors and officers provide that: • we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law, which provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; • we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; • we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; 44 Table of Contents • we will not be obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to enforce a right to indemnification; • the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and • we may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
In addition, as permitted by Section 145 of the DGCL, our amended and restated bylaws and our indemnification agreements that we have entered into with our directors and officers provide that: • we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law, which provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; • we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; 44 Table of Contents • we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; • we will not be obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to enforce a right to indemnification; • the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and • we may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
Additionally, while the Delaware Supreme Court recently determined that choice of forum provisions for actions arising under the Securities Act are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against us, our directors, officers, or other employees in a venue other than in the federal district courts of the United States of America.
Additionally, while the Delaware Supreme Court recently determined that choice of forum provisions for actions arising under the Securities Act are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against us, our directors, officers, or other employees in a venue other than in the federal district courts of the United States.
Accordingly, unexpected revenue shortfalls might decrease our gross margins and could cause significant changes in our operating results from quarter to quarter. If this occurs, the trading price of our common stock could fall substantially. If we are unable to attract new customers and retain and grow sales from our existing customers, our business will be materially and adversely affected.
Accordingly, unexpected revenue shortfalls will decrease our gross margins and could cause significant changes in our operating results from quarter to quarter. If this occurs, the trading price of our common stock could fall substantially. If we are unable to attract new customers and retain and grow sales from our existing customers, our business will be materially and adversely affected.
We have established a comprehensive, biosecurity program under which we follow biosafety and biosecurity best practices and avoid DNA synthesis activities that implicate FSAP rules; however, we could err in our observance of compliance program requirements in a manner that leaves us in noncompliance with FSAP or other biosecurity rules.
We have established a comprehensive, biosecurity program under which we follow biosafety and biosecurity best practices and avoid DNA synthesis activities that implicate FSAP rules; however, we could inadvertently err in our observance of compliance program requirements in a manner that leaves us in noncompliance with FSAP or other biosecurity rules.
If we are unable to expand our DNA synthesis manufacturing capacity, we could lose revenue and our business could be harmed. In order to expand our manufacturing capacity of new and existing products, we need to either build additional internal manufacturing capacity, contract with one or more partners, or both.
If we are unable to expand our DNA synthesis manufacturing capacity, we could lose revenue and our business could be harmed. In order to expand our manufacturing capacity of new and existing products, we may need to either build additional internal manufacturing capacity, contract with one or more partners, or both.
Our future capital requirements depend on many factors, including: • the number and characteristics of any additional products or manufacturing processes we develop or acquire to serve new or existing markets; • the scope, progress, results and costs of researching and developing future products or improvements to existing products or manufacturing processes, including increasing our manufacturing capabilities; • the cost of manufacturing our DNA synthesis equipment and tools, our NGS sample preparation kits, and any future products we successfully commercialize; • our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements; • the costs of expanding our sales and marketing capabilities in the United States and in other geographies; • any lawsuits related to our products or commenced against us or any regulatory actions or proceedings commenced; • the expenses needed to attract and retain skilled personnel; • the costs associated with being a public company; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and • the timing, receipt and amount of sales of, or royalties on, any future approved products, if any.
Our future capital requirements depend on many factors, including: • the number and characteristics of any additional products or manufacturing processes we develop or acquire to serve new or existing markets; • the scope, progress, results and costs of researching and developing future products or improvements to existing products or manufacturing processes, including increasing our manufacturing capabilities; • the cost of manufacturing our DNA synthesis equipment and tools, our NGS sample preparation kits, and any future products we successfully commercialize; 19 Table of Contents • our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements; • the costs of expanding our sales and marketing capabilities in the United States and in other geographies; • any lawsuits related to our products or commenced against us or any regulatory actions or proceedings commenced; • the expenses needed to attract and retain skilled personnel; • the costs associated with being a public company; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and • the timing, receipt and amount of sales of, or royalties on, any future approved products, if any.
IVDs are intended for use in the collection, preparation, and examination of specimens taken from the human body. A RUO IVD product is an IVD product that is in the laboratory research phase of development. As such, an RUO IVD is not intended for use in clinical investigations or in clinical practice.
IVDs are intended for use in the collection, preparation, and examination of specimens taken from the human body. An RUO IVD product is an IVD product that is in the laboratory research phase of development. As such, an RUO IVD is not intended for use in clinical investigations or in clinical practice.
We expect to continue to incur increasing costs as we grow our business. We cannot be certain if or when we will produce sufficient revenue from our operations to support our costs. Even if profitability is achieved, we may not be able to sustain profitability.
We expect to incur increasing costs as we grow our business. We cannot be certain if or when we will produce sufficient revenue from our operations to support our costs. Even if profitability is achieved, we may not be able to sustain profitability.
These provisions include: • providing for a classified board of directors with staggered, three-year terms; • authorizing our board of directors to issue preferred stock with voting or other rights or preferences that could discourage a takeover attempt or delay changes in control; • prohibiting cumulative voting in the election of directors; • providing that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; 41 Table of Contents • prohibiting the adoption, amendment or repeal of our amended and restated bylaws or the repeal of the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors without the required approval of at least 66.67% of the shares entitled to vote at an election of directors; • prohibiting stockholder action by written consent; • limiting the persons who may call special meetings of stockholders; and • requiring advance notification of stockholder nominations and proposals.
These provisions include: • providing for a classified board of directors with staggered, three-year terms; • authorizing our board of directors to issue preferred stock with voting or other rights or preferences that could discourage a takeover attempt or delay changes in control; • prohibiting cumulative voting in the election of directors; • providing that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; • prohibiting the adoption, amendment or repeal of our amended and restated bylaws or the repeal of the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors without the required approval of at least 66.67% of the shares entitled to vote at an election of directors; • prohibiting stockholder action by written consent; • limiting the persons who may call special meetings of stockholders; and • requiring advance notification of stockholder nominations and proposals.
Factors that could cause the market price of our common stock to fluctuate significantly include: • actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results; • announcements of technological innovations by us or our competitors; • overall conditions in our industry and the markets in which we operate; • addition or loss of significant customers, or other developments with respect to significant customers; • changes in laws or regulations applicable to our products; • actual or anticipated changes in our growth rate relative to our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • additions or departures of key personnel; • competition from existing products or new products that may emerge; • issuance of new or updated research or reports by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • disputes or other developments related to proprietary rights, including patents, litigation matters and our ability to obtain intellectual property protection for our technologies; • announcement or expectation of additional financing efforts; • sales of our common stock by us or our stockholders; • the addition or removal of our stock to or from a stock index fund; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • the expiration of contractual lock-up agreements with our executive officers, directors and stockholders, which we may enter into in the future from time to time; • general economic and market conditions, including economic downturns or uncertainty in financial markets; and • other factors beyond our control, such as terrorism, war, natural disasters and pandemics.
Factors that could cause the market price of our common stock to fluctuate significantly include: • actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results; • announcements of technological innovations by us or our competitors; • overall conditions in our industry and the markets in which we operate; • addition or loss of significant customers, or other developments with respect to significant customers; • changes in laws or regulations applicable to our products; • actual or anticipated changes in our growth rate relative to our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • additions or departures of key personnel; • operational impacts resulting from a reduction in force; • competition from existing products or new products that may emerge; • issuance of new or updated research or reports by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • disputes or other developments related to proprietary rights, including patents, litigation matters and our ability to obtain intellectual property protection for our technologies; • announcement or expectation of additional financing efforts; • sales of our common stock by us or our stockholders; • the addition or removal of our stock to or from a stock index fund; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • the expiration of contractual lock-up agreements with our executive officers, directors and stockholders, which we may enter into in the future from time to time; • general economic and market conditions, including economic downturns or uncertainty in financial markets; and • other factors beyond our control, such as terrorism, war, natural disasters and pandemics.
Further, this increased focus on ESG issues may result in new regulations and/or third-party requirements that could adversely impact our business, or certain shareholders reducing or eliminating their holdings of our stock. Additionally, an allegation or perception that we have not taken sufficient action in these areas could negatively harm our reputation. Item 1B. Unresolved staff comments None.
Further, this increased focus on ESG issues may result in new regulations and/or third-party requirements that could adversely impact our business, or certain stockholders reducing or eliminating their holdings of our stock. Additionally, an allegation or perception that we have not taken sufficient action in these areas could negatively harm our reputation. Item 1B. Unresolved staff comments None.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, any action asserting a claim against us arising pursuant to any provisions of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws, any action or proceeding asserting a claim as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery of the State of Delaware or any action asserting a claim against us that is governed by the internal affairs doctrine, subject in each case to the Court of Chancery having personal jurisdiction over the parties named as defendants therein.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, any action asserting a 41 Table of Contents claim against us arising pursuant to any provisions of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws, any action or proceeding asserting a claim as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery of the State of Delaware or any action asserting a claim against us that is governed by the internal affairs doctrine, subject in each case to the Court of Chancery having personal jurisdiction over the parties named as defendants therein.
If our customers require a CLIA certification, we will have to continually expend time, money and effort to ensure that we meet the applicable quality and safety requirements, which may divert the attention of management and disrupt our core business operations. Our manufacturing operations in the United States currently depend primarily on one facility.
If our customers require a CLIA certification, we will have to continually expend time, money and effort to ensure that we meet the applicable quality and safety requirements, which may divert the attention of management and disrupt our core business operations. Our manufacturing operations in the United States currently depend primarily on our Wilsonville facility.
We have incurred net losses in every period to date, and we expect to continue to incur significant losses as we develop our business and may never achieve profitability. We have incurred net losses each year since inception and have generated limited revenue from product sales to date.
Risks related to our business We have incurred net losses in every period to date, and we expect to continue to incur significant losses as we develop our business and may never achieve profitability. We have incurred net losses each year since inception and have generated limited revenue from product sales to date.
If we are unable to convert sufficient number of current manufacturers of synthetic DNA to buyers of our synthetic DNA, surpass our competitors regarding certain industry-related data points, and effectively implement our e-commerce platform which facilitates efficient order entry and fulfillment for our customers, our business, prospects, financial condition and results of operation will be adversely affected.
If we are unable to convert sufficient number of current 23 Table of Contents manufacturers of synthetic DNA to buyers of our synthetic DNA, surpass our competitors regarding certain industry-related data points, and effectively implement our e-commerce platform which facilitates efficient order entry and fulfillment for our customers, our business, prospects, financial condition and results of operation will be adversely affected.
If we were to experience a prolonged system disruption in the information technology systems that involve our interactions with customers or suppliers, including negatively impacting our order fulfillment and order entry on our e-commerce platform, it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business.
If we were to experience a prolonged system disruption in the 21 Table of Contents information technology systems that involve our interactions with customers or suppliers, including negatively impacting our order fulfillment and order entry on our e-commerce platform, it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business.
This guidance is not prepared with a view toward compliance with published guidelines of the American Institute of Certified Public Accountants (AICPA) regarding projections or the SEC regarding forward-looking statements, and neither our independent registered public accounting firm nor any other independent expert or outside party compiles or examines the projections.
This guidance is not prepared with a view toward compliance with published guidelines of the American Institute of Certified Public 22 Table of Contents Accountants (AICPA) regarding projections or the SEC regarding forward-looking statements, and neither our independent registered public accounting firm nor any other independent expert or outside party compiles or examines the projections.
In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be 39 Table of Contents negative, it could have a substantial adverse effect on the price of our common stock.
In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
While historically we have not completed many acquisitions, we closed a business acquisition in the first quarter of 2022 and we are continuing to pursue opportunities in the life sciences industry that complement and expand our synthetic DNA product and our other products in both local and international markets.
While historically we have not completed many acquisitions, we closed a business acquisition in the first quarter of 2022 and we are continuing to pursue opportunities in the life sciences industry that complement and 28 Table of Contents expand our synthetic DNA product and our other products in both local and international markets.
There are, for example, laws in several jurisdictions restricting research in genetic engineering, which can operate to narrow our markets. Given the 31 Table of Contents evolving nature of this industry, legislative bodies or regulatory authorities may adopt additional regulation that adversely affects our market opportunities.
There are, for example, laws in several jurisdictions restricting research in genetic engineering, which can operate to narrow our markets. Given the evolving nature of this industry, legislative bodies or regulatory authorities may adopt additional regulation that adversely affects our market opportunities.
In addition, the quality of our products may suffer, which could negatively affect our reputation and harm our ability to retain and attract customers. Our quarterly and annual operating results and cash flows have fluctuated in the past and might continue to fluctuate, causing the value of our common stock to decline substantially.
In 20 Table of Contents addition, the quality of our products may suffer, which could negatively affect our reputation and harm our ability to retain and attract customers. Our quarterly and annual operating results and cash flows have fluctuated in the past and might continue to fluctuate, causing the value of our common stock to decline substantially.
The failure to satisfy export control criteria or obtain necessary clearances could delay or prevent the shipment of products, which could adversely affect our revenues and profitability. Moreover, the life sciences industry, which is currently the primary market for our technology, has historically been heavily regulated.
The failure to satisfy export control criteria or obtain necessary clearances could delay or prevent the shipment of products, which could adversely affect our revenues and profitability. Moreover, the life sciences industry, 31 Table of Contents which is currently the primary market for our technology, has historically been heavily regulated.
Our rights to use the technology we license are subject to the negotiation of, continuation of and compliance with the terms of those licenses. In some cases, we do not or will not control the prosecution, maintenance, or filing of the patents to which we hold licenses, or the 40 Table of Contents enforcement of these patents against third parties.
Our rights to use the technology we license are subject to the negotiation of, continuation of and compliance with the terms of those licenses. In some cases, we do not or will not control the prosecution, maintenance, or filing of the patents to which we hold licenses, or the enforcement of these patents against third parties.
International sales entail a variety of risks, including longer payment cycles and difficulties in collecting accounts receivable outside of the United States, currency exchange fluctuations, challenges in staffing and managing foreign operations, tariffs and other trade barriers (including tariffs enacted and proposed by the U.S. government on various imports from China and by the Chinese government on certain U.S. goods), unexpected changes in legislative or regulatory requirements of foreign countries into which we sell our products, difficulties in obtaining export licenses or in overcoming other trade barriers, laws and business practices favoring local companies, political and economic instability, difficulties protecting or procuring intellectual property rights, and restrictions resulting in delivery delays and significant taxes or other burdens of complying with a variety of foreign laws.
International sales entail a variety of risks, including longer payment cycles and difficulties in collecting accounts receivable outside of the United States, currency exchange fluctuations, challenges in staffing and managing foreign operations, tariffs and other trade barriers (including tariffs enacted and proposed by the U.S. government on various imports from China and by the Chinese government on certain U.S. goods), unexpected changes in legislative or regulatory requirements of foreign countries into which we sell our products, difficulties in obtaining export licenses or in overcoming other trade barriers, laws and business practices favoring local companies, political instability, including conflicts and tensions involving Russia and China and the Israel-Hamas war, economic instability, difficulties protecting or procuring intellectual property rights, and restrictions resulting in delivery delays and significant taxes or other burdens of complying with a variety of foreign laws.
Given that our proprietary position is based, in part, on our know-how and trade secrets, a 38 Table of Contents competitor’s discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have an adverse effect on our business and results of operations.
Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have an adverse effect on our business and results of operations.
An unfavorable resolution of such a dispute could lead to an increase in the royalties payable pursuant to the license. If a licensor believed we were not paying the royalties due under the license or were otherwise not in compliance with the terms of the license, the licensor might attempt to revoke the license.
An unfavorable resolution of such a dispute could lead to an increase in the royalties payable pursuant to the license. If a 40 Table of Contents licensor believed we were not paying the royalties due under the license or were otherwise not in compliance with the terms of the license, the licensor might attempt to revoke the license.
A material weakness is a deficiency, or a combination of deficiencies, in internal 34 Table of Contents control over financial reporting, such that there is a reasonable possibility that a material misstatement in a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Our 36 Table of Contents determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our product candidates.
Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our product candidates.
The time and effort to qualify a new supplier could result in additional costs, diversion of resources or reduced manufacturing yields, any of which would negatively impact our operating results.
The time and effort to qualify a new supplier 26 Table of Contents could result in additional costs, diversion of resources or reduced manufacturing yields, any of which would negatively impact our operating results.
In the past, many companies that have experienced volatility in the market price of their stock have become subject to securities class action litigation. We may be the target of this type of litigation in the future.
In the past, many companies that have experienced volatility in the market price of their stock have become subject to securities class action litigation. We are now and may in the future be the target of this type of litigation.
During our fiscal years ended September 30, 2022, 2021 and 2020, 41% , 42%, and 36%, respectively, of our revenue was generated from customers located outside of the United States. In connection with our growth strategy, we intend to further expand in international markets.
During our fiscal years ended September 30, 2023, 2022 and 2021, 40%, 41% and 42%, respectively, of our revenue was generated from customers located outside of the United States. In connection with our growth strategy, we intend to further expand in international markets.
If we are unable to successfully settle claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in marketing our technologies and products.
If we are unable to successfully settle 38 Table of Contents claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in marketing our technologies and products.
If we identify suitable 28 Table of Contents opportunities, we may not be able to make such acquisitions on favorable terms or at all. Any acquisitions we make may not strengthen our competitive position, and these transactions may be viewed negatively by customers or investors.
If we identify suitable opportunities, we may not be able to make such acquisitions on favorable terms or at all. Any acquisitions we make may not strengthen our competitive position, and these transactions may be viewed negatively by customers or investors.
We are continuing to evaluate our own risks and uncertainty related to ascertain what financial, trade, regulatory and legal implications this new Brexit trade deal could have on our U.K. and European business operations.
We are continuing to evaluate our own risks and uncertainty related to ascertain what financial, trade, 25 Table of Contents regulatory and legal implications this new Brexit trade deal could have on our U.K. and European business operations.
Our revenue from international customers may be negatively impacted as increases in the U.S. dollar relative to our international customers’ local currency could make our products more expensive, impacting our ability to compete.
Our 33 Table of Contents revenue from international customers may be negatively impacted as increases in the U.S. dollar relative to our international customers’ local currency could make our products more expensive, impacting our ability to compete.
If regulatory, manufacturing, or other problems require us to discontinue production at this facility, we will not be able to manufacture our synthetic genes, oligo pools or NGS tool or create our DNA libraries, which would adversely impact our business.
If regulatory, manufacturing, or other problems require us to discontinue production at our Wilsonville facility, we will not be able to manufacture our synthetic genes, oligo pools or selected NGS products or create our DNA libraries, which would adversely impact our business.
We may in the future be the subject of shareholder suits that we believe were prompted by allegations made by short sellers.
We have been and may in the future be the subject of shareholder suits that we believe were prompted by allegations made by short sellers.
Further, we may be unable to enter into agreements with a new supplier on commercially 26 Table of Contents reasonable terms, which could have a material adverse impact on our business.
Further, we may be unable to enter into agreements with a new supplier on commercially reasonable terms, which could have a material adverse impact on our business.
The loss of this supplier or its failure to supply us with the necessary component on a timely basis, could cause delays in the future capacity of our DNA synthesis process and adversely affect our business; • We depend on the continuing efforts of our senior management team and other key personnel.
Although we have a reserve of supplies and alternative suppliers exist, the loss of this supplier or its failure to supply us with the necessary component on a timely basis could cause delays in the future capacity of our DNA synthesis process and adversely affect our business; • We depend on the continuing efforts of our senior management team and other key personnel.
In those countries, we may have limited remedies if any of our patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities.
In those countries, we may have limited remedies if any of our patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of those patents.
This uncertainty also includes the impact on our customers’ business operations and capital planning as well as the overall 25 Table of Contents impact on the biotechnology industry in the U.K.
This uncertainty also includes the impact on our customers’ business operations and capital planning as well as the overall impact on the biotechnology industry in the U.K.
As a result, we could be exposed to a certain level of credit risk. If a major customer experiences, or a significant number of customers experience, financial difficulties, the effect on us could be material and have an adverse effect on our business, financial condition and results of operations.
As a result, we could be exposed to a certain level of credit risk. If a major customer experiences, or a significant number of customers experience, financial difficulties, the effect on us could be material and have an adverse effect on our business, financial condition and results of operations. We are subject to risks associated with COVID-19.
These risks are discussed more fully in the section titled “Risk Factors.” These risks and uncertainties include, but are not limited to, the following: • We are subject to risks associated with COVID-19; • We have incurred net losses in every period to date, and we expect to continue to incur significant losses as we develop our business and may never achieve profitability; 17 Table of Contents • We may require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product manufacturing and development and other operations; • If we are unable to maintain adequate revenue growth or do not successfully manage such growth, our business and growth prospects will be harmed; • Rapidly changing technology and extensive competition in synthetic biology could make the products we are developing and producing obsolete or non-competitive unless we continue to develop and manufacture new and improved products and pursue new market opportunities; • The continued success of our business relies heavily on our disruptive technologies and products and our position in the market as a leading provider of synthetic DNA using a silicon chip; • If we are unable to expand our DNA synthesis manufacturing capacity, we could lose revenue and our business could be harmed. • We depend on one single-source supplier for a critical component for our DNA synthesis process.
These risks are discussed more fully in the section titled “Risk factors.” These risks and uncertainties include, but are not limited to, the following: • We have incurred net losses in every period to date, and we expect to continue to incur significant losses as we develop our business and may never achieve profitability; 17 Table of Contents • We may require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product manufacturing and development and other operations; • If we are unable to maintain adequate revenue growth or do not successfully manage such growth, our business and growth prospects will be harmed; • Our initiatives to re-balance our cost structure and the associated workforce reductions, publicly announced on May 5, 2023, may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business; • Rapidly changing technology and extensive competition in synthetic biology could make the products we are developing and producing obsolete or non-competitive unless we continue to develop and manufacture new and improved products and pursue new market opportunities; • The continued success of our business relies heavily on our disruptive technologies and products and our position in the market as a leading provider of synthetic DNA using a silicon chip; • If we are unable to expand our DNA synthesis manufacturing capacity, we could lose revenue and our business could be harmed. • We depend on one single-source supplier for a critical component for our DNA synthesis process.
This 22 Table of Contents includes attacks which could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our products and services.
This includes attacks which could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our products and services.
Investors should not rely on our operating results for any prior periods as an indication of our future 20 Table of Contents operating performance. To effectively manage our anticipated future growth, we must continue to maintain and enhance our manufacturing, sales, financial and customer support administration systems, processes and controls.
We may not achieve similar growth rates in future periods. Investors should not rely on our operating results for any prior periods as an indication of our future operating performance. To effectively manage our anticipated future growth, we must continue to maintain and enhance our manufacturing, sales, financial and customer support administration systems, processes and controls.
As a result, given the uncertainty of the evolving nature of the virus and how quickly mitigation measures, such as vaccines, will be widely available and adopted by the public, the COVID-19 outbreaks may continue and may negatively affect our revenue growth, and it is uncertain how materially COVID-19 will affect our global operations if we experience any one or a combination of these impacts over an extended period of time.
As a result, given the uncertainty of the evolving nature of the virus, the COVID-19 outbreaks may continue and may negatively affect our revenue growth, and it is uncertain how materially COVID-19 will affect our global operations if we experience any one or a combination of these impacts over an extended period of time.
We incurred net losses of $217.9 million, $152.1 million and $139.9 million for the years ended September 30, 2022, 2021 and 2020, respectively. As of September 30, 2022, we had an accumulated deficit of $828.4 million. We expect to incur substantial losses and negative cash flow for the foreseeable future.
We incurred net losses of $204.6 million, $217.9 million and $152.1 million for the years ended September 30, 2023, 2022 and 2021, respectively. As of September 30, 2023, we had an accumulated deficit of $1,033.0 million. We expect to incur substantial losses and negative cash flow for the foreseeable future.
While our financial results for the fiscal year 2022 have not been significantly affected by COVID-19 outbreaks due to variants of the virus that continue to appear, impacts from COVID-19 may, in the future, adversely affect our operations, supply chains, distribution systems and customer demand, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments have taken and may take in the future.
While our financial results for the year ended September 30, 2023 have not been significantly affected by continuing COVID-19 outbreaks, impacts from COVID-19 may, in the future, adversely affect our operations, supply chains, distribution systems and customer demand, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments have taken and may take.
As disclosed in Part II—Item 9A, “Controls and Procedures”, of this Annual Report on Form 10-K, we identified a material weakness in our internal control over financial reporting related to controls surrounding our information technology general controls. As a result, management concluded that our internal control over financial reporting was not effective as of September 30, 2022.
As disclosed in Part II—Item 9A, “Controls and Procedures”, of this Annual Report on Form 10-K, we identified a material weakness in our internal control over financial reporting related to controls surrounding our information technology general controls.
In addition, we currently generate a growing portion of our revenue through sales on our e-commerce platform. We manage our website and e-commerce platform internally and as a result any compromise of our security or misappropriation of proprietary information could have a material adverse effect on our business, financial condition and results of operations.
We manage our website and e-commerce platform internally and as a result any compromise of our security or misappropriation of proprietary information could have a material adverse effect on our business, financial condition and results of operations.
Further, our clients may choose to reduce their business with us if we increase our pricing. 19 Table of Contents We may require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product manufacturing and development and other operations.
We may require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product manufacturing and development and other operations.
In addition, inflationary pressure could adversely impact our financial results by increasing operating costs. We may not fully offset these cost increases by raising prices for our products and services, which could result in downward pressure on our margins.
In addition, inflationary pressure could adversely impact our financial results by increasing operating costs. We may not fully offset these cost increases by raising prices for our products and services, which could result in downward pressure on our margins. Further, our clients may choose to reduce their business with us if we increase our pricing.
In these countries, the patent owner may have limited remedies, which could materially diminish the value of any patents. We cannot be certain that the steps we have taken will prevent unauthorized use or unauthorized reverse engineering of our technology. In addition, competitors may be able to design alternative methods or devices that avoid infringement of our patents.
In these countries, the patent owner may have limited remedies, which could materially diminish the value of any patents. 36 Table of Contents We cannot be certain that the steps we have taken will prevent unauthorized use or unauthorized reverse engineering of our technology.
In addition, we work to renew our ISO certifications from time to time. These diversified operations and activities place significant demands on our limited resources and require us to substantially expand the capabilities of our technical, administrative and operational resources.
These diversified operations and activities place significant demands on our limited resources and require us to substantially expand the capabilities of our technical, administrative and operational resources.
We depend on one single-source supplier for a critical component for our DNA synthesis process. The loss of this supplier or its failure to supply us with the necessary component on a timely basis, could cause delays in the future capacity of our DNA synthesis process and adversely affect our business.
Although we have a reserve of supplies and alternative suppliers exist, the loss of this supplier or its failure to supply us with the necessary component on a timely basis could cause delays in the future capacity of our DNA synthesis process and adversely affect our business.
Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price. 18 Table of Contents Because of the following factors, as well as other factors affecting our financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
Because of the following factors, as well as other factors affecting our financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results.
In that event, the market price of our common stock could decline, and you could lose part or all of your investment. 18 Table of Contents Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results.
If we, or our partners or suppliers, experience a significant disruption in, or breach in security of, information technology systems, or fail to implement new systems and software successfully, our business could be adversely affected.
If we, or our partners or suppliers, experience a significant disruption in, or breach in security of, information technology systems, or fail to implement new systems and software successfully, our business could be adversely affected. Cyberattacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position.
Declines and uncertainties in these markets have severely restricted raising new capital and have affected companies’ ability to fund existing research and development efforts which may lead them to delay project starts, reduce orders and or cancel projects. For example, in the third quarter of fiscal year 2022, we believe two customers cancelled orders due to funding concerns.
Declines and uncertainties in these markets have severely restricted raising new capital and have affected companies’ ability to fund existing research and development efforts which may lead them to delay project starts, reduce or cancel orders and or cancel projects. In the past, we experienced some cancellations of customer orders that we believe were due to customers' funding concerns.
Our, or our partners’ or suppliers’ information technology systems also may experience interruptions, delays or cessations of service or produce errors in connection with system integration, software upgrades or system migration work that takes place from time to time.
Additionally, some actors are using artificial intelligence (“AI”) technology to launch more automated, targeted and coordinated attacks. Our, or our partners’ or suppliers’ information technology systems also may experience interruptions, delays or cessations of service or produce errors in connection with system integration, software upgrades or system migration work that takes place from time to time.
However, the steps we have taken to protect our proprietary rights may not be adequate to prevent misappropriation of our intellectual property. We may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights.
We may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights.
Filing, prosecuting and defending patents on our technologies and products in all countries throughout the world would be prohibitively expensive.
We may not be able to protect our intellectual property rights throughout the world. Filing, prosecuting and defending patents on our technologies and products in all countries throughout the world would be prohibitively expensive.
Natural disasters, public health crises, political crises, and other catastrophic events or other events outside of our control may damage our facilities or the facilities of third parties on which we depend and could impact our ability to sell products. Our headquarters in South San Francisco is located near known earthquake fault zones and is vulnerable to damage from earthquakes.
Natural disasters, public health crises, political crises, and other catastrophic events or other events outside of our control may damage our facilities or the facilities of third parties on which we depend and could impact our ability to sell products.
There can be no assurance that these discussions will lead to the execution of commercial license or cross-license agreements or that such agreements will be on terms that are favorable to us.
We engage in discussions regarding other possible commercial and cross-licensing agreements with third parties from time to time. There can be no assurance that these discussions will lead to the execution of commercial license or cross-license agreements or that such agreements will be on terms that are favorable to us.
Our costs of materials from international suppliers may increase if in order to continue doing business with us they raise their prices as the value of the U.S. dollar decreases relative to their local currency.
Our costs of materials from international suppliers may increase if in order to continue doing business with us they raise their prices as the value of the U.S. dollar decreases relative to their local currency. Foreign policies and actions regarding currency valuation could result in actions by the United States and other countries to offset the effects of such fluctuations.
Even where a product is not subject to FDA clearance or approval requirements, the FDA may impose restrictions as to the types of customers to which we can market and sell our products. Such regulation and restrictions may materially and adversely affect our business, financial condition and results of operations.
In the future, certain of our products or related applications could be subject to additional FDA regulation. Even where a product is not subject to FDA clearance or approval requirements or deemed exempt, the FDA may impose restrictions as to the types of customers to which we can market and sell our products.
If this facility is destroyed or we experience any manufacturing difficulties, disruptions, or delays, this could limit supply of our product or adversely affect our ability to sell products or conduct our clinical trials, and our business would be adversely impacted.
If this facility is destroyed or we experience any manufacturing difficulties, disruptions, or delays, this could limit supply of our product or adversely affect our ability to sell products or conduct our clinical trials, and our business would be adversely impacted. 32 Table of Contents Although a portion of our manufacturing still takes place at our headquarters in South San Francisco, California, we depend primarily on our manufacturing facility in Wilsonville, Oregon.
Our competitors may be able to 23 Table of Contents develop competing and/or superior technologies and processes and compete more aggressively and sustain that competition over a longer period of time.
Our ability to compete successfully will depend on our ability to develop proprietary technologies and products that are technologically superior to and/or are less expensive than our competitors’ technologies and products. Our competitors may be able to develop competing and/or superior technologies and processes and compete more aggressively and sustain that competition over a longer period of time.
If we are unable to maintain adequate revenue growth or do not successfully manage such growth, our business and growth prospects will be harmed. We have experienced significant revenue growth in a short period of time. We may not achieve similar growth rates in future periods.
Our workforce reduction could also harm our ability to attract and retain qualified management, scientific, and manufacturing personnel who are critical to our business. If we are unable to maintain adequate revenue growth or do not successfully manage such growth, our business and growth prospects will be harmed. We have experienced significant revenue growth in a short period of time.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. Moreover, collaboration arrangements are complex and time-consuming to negotiate, document, implement and maintain. We may not be successful in our efforts to establish and implement collaborations or other alternative arrangements should we so choose to enter into such arrangements.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. Moreover, collaboration arrangements are complex and 39 Table of Contents time-consuming to negotiate, document, implement and maintain.
As a result, a price increase for our raw materials may negatively impact our business, financial position and results of operations.
As a result, a price increase for our raw materials may negatively impact our business, financial position and results of operations. 27 Table of Contents We may encounter difficulties in managing our growth, and these difficulties could impair our profitability.
If we are unable to expand into adjacent addressable markets, our business may be materially and adversely affected.
Further, market demand and acceptance of AI technologies are uncertain, and we may be unsuccessful in our product development efforts. If we are unable to expand into adjacent addressable markets, our business may be materially and adversely affected.
We may encounter difficulties in managing our growth, and these difficulties could impair our profitability. 27 Table of Contents Currently, we are working simultaneously on multiple projects, expanding our capacity as well as targeting several market sectors, including activities in the chemicals/materials, diagnostics, therapeutics, food and data storage sectors.
Currently, we are working simultaneously on multiple projects, expanding our capacity as well as targeting several market sectors, including activities in the chemicals/materials, diagnostics, therapeutics, food and data storage sectors. In addition, we work to renew our ISO certifications from time to time.
If we do not comply with applicable regulations, we may be subject to fines and penalties.
Compliance with applicable environmental laws and regulations is expensive, and current or future environmental laws and regulations may restrict our operations. If we do not comply with applicable regulations, we may be subject to fines and penalties.
Risks related to our business We are subject to risks associated with COVID-19. As discussed below, our global operations expose us to risks associated with COVID-19.
As discussed in further detail above, our global operations expose us to risks associated with COVID-19.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected.
This could limit our potential revenue opportunities. 37 Table of Contents Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties Our principal facilities are described below: Principal Facilities Approximate Square Footage Lease Expiration Use Owned or Leased Wilsonville, Oregon 211,995 2044 General & Administration and Manufacturing Leased South San Francisco, CA 91,791 2028 General & Administration, R&D and Manufacturing Leased Brisbane, CA 24,786 2026 Warehouse facility Leased Quincy, Massachusetts 21,657 2032 General & Administration, R&D and Manufacturing Leased Canton, Massachusetts 12,158 2025 R&D and Manufacturing Leased Guangzhou, China 11,583 2024 Office Space & Biopharma Services facility Leased Tel Aviv, Israel 9,332 2024 R&D (software development ) Leased Carlsbad, CA 4,710 2023 Sales & Marketing Leased Shanghai, China 2,067 2022 Sales & Marketing Leased Singapore 1,353 2025 Sales & Marketing Leased The Company believes its existing facilities are in good operating condition and are suitable for the conduct of its business.
Biggest changeProperties Our principal facilities are described below: Principal Facilities Approximate Square Footage Lease Expiration Use Owned or Leased Wilsonville, OR 211,995 2044 General & Administration and Manufacturing Leased South San Francisco, CA 91,791 2028 General & Administration, R&D and Manufacturing Leased Brisbane, CA 24,786 2026 Warehouse facility Leased Quincy, MA 38,853 2032 General & Administration, R&D and Manufacturing Leased Canton, MA 12,158 2025 R&D and Manufacturing Leased Guangzhou, China 11,583 2024 Office Space & Biopharma Services facility Leased Tel Aviv, Israel 9,332 2024 R&D (software development) Leased Carlsbad, CA 8,772 2026 Sales & Marketing Leased Shanghai, China 2,067 Monthly Sales & Marketing Leased Singapore 1,353 2025 Sales & Marketing Leased The Company believes its existing facilities are in good operating condition and are suitable for the conduct of its business.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal proceedings We are subject to various legal proceedings and claims arising in the ordinary course of business. Although occasional adverse decisions or settlements may occur, management believes that the final disposition of such matters will not have a material adverse effect on our business, financial position, results of operations or cash flows. Item 4.
Biggest changeIn addition, we are subject to various legal proceedings and claims arising in the ordinary course of business. Although occasional adverse decisions or settlements may occur, 45 Table of Contents management believes that the final disposition of such matters will not have a material adverse effect on our business, financial position, results of operations or cash flows. Item 4.
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Mine safety disclosures Not applicable. PART II 45 Table of Contents
Added
Item 3. Legal proceedings For a description of material pending legal proceedings, see Note 6 “Commitments and Contingencies - Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe stockholder returns shown on the graph below are based on historical results and are not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. * $100.00 invested on October 31, 2018 in stock or index, including reinvestment of dividends. 12/31/2018 3/29/2019 6/28/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 9/30/2020 Twist Bioscience Corporation $ 165.00 $ 166.00 $ 207.00 $ 171.00 $ 150.00 $ 218.00 $ 324.00 $ 400.00 Nasdaq Composite Index 91.00 106.00 110.00 109.00 123.00 105.00 138.00 153.00 Nasdaq Biotechnology Index 93.00 107.00 105.00 95.00 116.00 104.00 131.00 130.00 46 Table of Contents 12/31/2020 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 Twist Bioscience Corporation $ 1,009.00 $ 885.00 $ 952.00 $ 879.00 $ 553.00 $ 353.00 $ 250.00 $ 252.00 Nasdaq Composite Index 176.00 181.00 199.00 198.00 214.00 195.00 151.00 145.00 Nasdaq Biotechnology Index 145.00 144.00 157.00 155.00 144.00 127.00 114.00 115.00 Holders of Record As of November 23, 2022, there were approximately 55 holders of record of our common stock.
Biggest changeThe stockholder returns shown on the graph below are based on historical results and are not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 46 Table of Contents * $100.00 invested on October 31, 2018 in stock or index, including reinvestment of dividends. 12/31/2018 3/29/2019 6/28/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 9/30/2020 Twist Bioscience Corporation $ 165.00 $ 166.00 $ 207.00 $ 171.00 $ 150.00 $ 218.00 $ 324.00 $ 400.00 Nasdaq Composite Index 91.00 106.00 110.00 109.00 123.00 105.00 138.00 153.00 Nasdaq Biotechnology Index 93.00 107.00 105.00 95.00 116.00 104.00 131.00 130.00 12/31/2020 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 Twist Bioscience Corporation $ 1,009.00 $ 885.00 $ 952.00 $ 879.00 $ 553.00 $ 353.00 $ 250.00 $ 252.00 Nasdaq Composite Index 176.00 181.00 199.00 198.00 214.00 195.00 151.00 145.00 Nasdaq Biotechnology Index 145.00 144.00 157.00 155.00 144.00 127.00 114.00 115.00 12/31/2022 3/31/2023 6/30/2023 9/30/2023 Twist Bioscience Corporation $ 170.00 $ 108.00 $ 146.00 $ 145.00 Nasdaq Composite Index 143.00 167.00 189.00 181.00 Nasdaq Biotechnology Index 129.00 126.00 124.00 121.00 Holders of Record As of November 17, 2023, there were approximately 58 holders of record of our common stock.
An investment of $100 is assumed to have been made in our common stock and each index on October 31, 2018 (the first day of trading of our common stock) and its relative performance is tracked through September 30, 2022.
An investment of $100 is assumed to have been made in our common stock and each index on October 31, 2018 (the first day of trading of our common stock) and its relative performance is tracked through September 30, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeChange in the fair value was $0.5 million for the year ended September 30, 2021 associated with the contingent consideration and indemnity holdback related to the acquisition of iGenomX as a result of the change in fair value of our stock price as of September 30, 2021. 55 Table of Contents Interest, and other income (expense), net Year ended September 30, Change (in thousands, except percentages) 2022 2021 2020 2022-2021 2021-2020 Interest income $ 3,062 $ 435 $ 1,499 $ 2,627 604 % $ (1,064) (71) % Interest expense (80) (367) (787) 287 (78) % 420 (53) % Other income (expense) (1,087) (1,370) (182) 283 (21)% (1,188) 653 % Total interest, and other income (expense), net $ 1,895 $ (1,302) $ 530 $ 3,197 505 % $ (1,832) 528 % Interest income was $3.1 million in the year ended September 30, 2022, $0.4 million in the year ended September 30, 2021 and $1.5 million in the year ended September 30, 2020, resulting from our short-term investments.
Biggest changeInterest, and other income (expense), net Year ended September 30, Change (in thousands, except percentages) 2023 2022 2021 2023-2022 2022-2021 Interest income $ 14,365 $ 3,062 $ 435 $ 11,303 369 % $ 2,627 604 % Interest expense (5) (80) (367) 75 (94) % 287 (78) % Other income (expense) (667) (1,087) (1,370) 420 (39)% 283 (21) % Total interest, and other income (expense), net $ 13,693 $ 1,895 $ (1,302) $ 11,798 237 % $ 3,197 505 % Interest income was $14.4 million in the year ended September 30, 2023, $3.1 million for the year ended September 30, 2022 and $0.4 million for the year ended September 30, 2021, resulting from our short-term investments.
The following table shows our revenues by geography, based on our customers’ shipping addresses. Americas consists of United States of America, Canada, Mexico and South America; EMEA consists of Europe, Middle East and Africa; and APAC consists of Japan, China, South Korea, India, Singapore, Malaysia and Australia.
The following table shows our revenues by geography, based on our customers’ shipping addresses. Americas consists of United States, Canada, Mexico and South America; EMEA consists of Europe, Middle East and Africa; and APAC consists of Japan, China, South Korea, India, Singapore, Malaysia and Australia.
The favorable change in cost of revenues as a percentage to total revenues was mainly due to an increase in volume of product sold and change in the mix of products sold during the current year.
The favorable change in cost of revenues as a percentage of total revenues was mainly due to an increase in volume of product sold and change in the mix of products sold during the current year.
Investing activities In fiscal year 2022, our net cash used in the investing activities was $232.9 million primarily as a result of net impact of purchases and maturity of investments of $117.2 million, purchases of laboratory property, equipment and computers of $101.9 million, new business acquired of $8.2 million and deconsolidation of Revelar of $5.8 million.
In fiscal year 2022, our net cash used in the investing activities was $232.9 million primarily as a result of net impact of purchases and maturity of investments of $117.2 million, purchases of laboratory property, equipment and computers of $101.9 million, new business acquired of $8.2 million and deconsolidation of Revelar of $5.8 million.
Financing activities Net cash provided by financing activities was $270.5 million in fiscal year 2022, which consisted of $269.8 million in proceeds from a public offering of our common stock, net of underwriting discounts and commissions and offering expenses, $4.0 million from proceeds from issuance of shares under the 2018 ESPP and $6.0 million from the exercise of stock options, offset by $1.6 million in principal payments on long term debt and $7.8 million in repurchases of common stock for income tax withholdings.
Net cash provided by financing activities was $270.5 million in fiscal year 2022, which consisted of $269.8 million in proceeds from a public offering of our common stock, net of underwriting discounts and commissions and offering expenses, $4.0 million from proceeds from issuance of shares under the 2018 ESPP and $6.0 million from the exercise of stock options, offset by $1.6 million in principal payments on long term debt and $7.8 million in repurchases of common stock for income tax withholdings.
Intangible assets we have recognized from such transactions includes goodwill, developed technology and customer relationships. Significant judgment was exercised in estimating the fair value of the developed technology and customer relationships, which included estimates and assumptions related to the projected revenues (specifically forecasted selling prices and unit volume of sales), and discount rates.
Intangible assets we have recognized from such transactions include goodwill, developed technology and customer relationships. Significant judgment was exercised in estimating the fair value of the developed technology and customer relationships, which included estimates and assumptions related to the projected revenues (specifically forecasted selling prices and unit volume of sales), and discount rates.
(“Revelar”). 52 Table of Contents Other income (expense), net Other income (expense), net consists of realized foreign exchange gains and losses and loss on disposal of property and equipment. Results of operations The following table sets forth selected consolidated statements of operations data for the fiscal years indicated and the percentage change in such data from year to year.
Other income (expense), net Other income (expense), net consists of realized foreign exchange gains and losses and loss on disposal of property and equipment. Results of operations The following table sets forth selected consolidated statements of operations data for the fiscal years indicated and the percentage change in such data from year to year.
Contracts with customers are in the written form of a purchase order or a quotation, which outline the promised goods and the agreed upon price. Such orders are often accompanied by a Master Supply or Distribution Agreement that establishes the terms and conditions, rights of the parties, delivery terms, and pricing.
Contracts with customers are in the written form of a purchase order or a quotation, which outline the promised goods and the agreed upon price. Such orders may be accompanied by a Master Supply or Distribution Agreement that establishes the terms and conditions, rights of the parties, delivery terms, and pricing.
Product shipments including synthetic genes Shipments of number of genes in years ended September 30, 2022, 2021 and 2020 were as follows: Year ended September 30, (in thousands) 2022 2021 2020 Number of genes shipped 558 372 339 Cost of revenues Cost of revenues reflects the aggregate cost incurred in the production and delivery of our products and consists of production materials, personnel costs, cost of expensed equipment and consumables, laboratory supplies, consulting costs, depreciation, production overhead costs, information technology (“IT”), maintenance and facility costs.
Product shipments including synthetic genes Shipments of number of genes in years ended September 30, 2023, 2022 and 2021 were as follows: Year ended September 30, (in thousands) 2023 2022 2021 Number of genes shipped 634 558 372 Cost of revenues Cost of revenues reflects the aggregate cost incurred in the production and delivery of our products and consists of production materials, personnel costs, cost of expensed equipment and consumables, laboratory supplies, consulting costs, depreciation, production overhead costs, information technology (“IT”), maintenance and facility costs.
The last day of our fiscal year is September 30, and we refer to our fiscal year ended September 30, 2020 as fiscal year 2020 or 2020, September 30, 2021 as fiscal year 2021 or 2021 and our fiscal year ended September 30, 2022 as fiscal year 2022 or 2022.
The last day of our fiscal year is September 30, and we refer to our fiscal year ended September 30, 2021 as fiscal year 2021 or 2021, September 30, 2022 as fiscal year 2022 or 2022 and our fiscal year ended September 30, 2023 as fiscal year 2023 or 2023.
The following table lists the value of orders received during the periods indicated: Year ended September 30, 2022 2021 2020 Order value $ 226,435 $ 159,545 $ 116,717 Number of customers We believe that the number of customers who have purchased from us since inception is representative of our ability to drive adoption of our products.
The following table lists the value of orders received during the periods indicated: Year ended September 30, 2023 2022 2021 Order value $ 263,887 $ 226,435 $ 159,545 Number of customers We believe that the number of customers who have purchased from us since inception is representative of our ability to drive adoption of our products.
A discussion of our net cash provided by financing activities for the fiscal year 2020 can be found on page 59 of our 2021 Annual Report. 58 Table of Contents Off-balance sheet arrangements We do not have any off-balance sheet arrangements other than our indemnification agreements as described in Note 7 of the consolidated financial statements included elsewhere in this Form 10-K.
A discussion of net cash provided by financing activities for the fiscal year 2021 can be found on page 58 of our 2022 Annual Report. Off-balance sheet arrangements We do not have any off-balance sheet arrangements other than our indemnification agreements as described in Note 6 of the consolidated financial statements included elsewhere in this Form 10-K.
Other expense was $1.1 million in fiscal year 2022, $1.4 million in fiscal year 2021 and $0.2 million in fiscal year 2020, mainly due to one-time costs not related to our normal business activities.
Other expense was $0.7 million in fiscal year 2023, $1.1 million in fiscal year 2022 and $1.4 million in fiscal year 2021, mainly due to one-time costs not related to our normal business activities.
Our sales are primarily subject to Ex Works (as defined in 59 Table of Contents Incoterms 2010) delivery terms and revenue is recorded at the point in time when products are picked up by the customer’s freight forwarder, as we have determined that this is the point in time that product control transfers to the customer.
Our sales are primarily subject to Ex Works (as defined in Incoterms 2010) delivery terms and revenue, other than Biopharma revenue, is recorded at the point in time when products are picked up by the customer’s freight forwarder, as we have determined that this is the point in time that product control transfers to the customer.
A discussion of our net cash used in operating activities for the fiscal year 2020 can be found on page 59 of our 2021 Annual Report.
A discussion of net cash used in operating activities for the fiscal year 2021 can be found on page 58 of our 2022 Annual Report.
A discussion of our net cash used in investing activities for the fiscal year 2020 can be found on page 59 of our 2021 Annual Report.
A discussion of net cash used in investing activities for the fiscal year 2021 can be found on page 58 of our 2022 Annual Report.
We have grown rapidly and generated revenues of $203.6 million in the year ended September 30, 2022, $132.3 million in the year ended September 30, 2021 and $90.1 million in the year ended September 30, 2020, while incurring net losses of $217.9 million, $152.1 million and $139.9 million in the years ended September 30, 2022, 2021 and 2020, respectively.
We have grown rapidly and generated revenues of $245.1 million in the year ended September 30, 2023, $203.6 million in the year ended September 30, 2022 and $132.3 million in the year ended September 30, 2021, while incurring net losses of $204.6 million, $217.9 million and $152.1 million in the years ended September 30, 2023, 2022 and 2021, respectively.
Refer to Note 15 to the consolidated financial statements for further details.
Refer to Note 14 to the consolidated financial statements for further details.
A discussion of our revenues for the year ended September 30, 2020 can be found on page 54 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2021 filed with the SEC on November 23, 2021, or our 2021 Annual Report.
A discussion of our revenues for the year ended September 30, 2021 can be found on page 53 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 filed with the SEC on November 28, 2022, or our 2022 Annual Report.
Since our inception on February 4, 2013 and through September 30, 2022, we have received an aggregate of $1,333.7 million in net proceeds from the issuance of equity securities and an aggregate of $13.8 million from debt. As of September 30, 2022, we had a balance of $378.7 million of cash and cash equivalents and $126.3 million in short-term investments.
Since our inception on February 4, 2013 and through September 30, 2023, we have received an aggregate of $1,333.7 million in net proceeds from the issuance of equity securities and an aggregate of $13.8 million from debt. As of September 30, 2023, we had a balance of $286.5 million of cash and cash equivalents and $49.9 million in short-term investments.
Since our inception, we have incurred significant operating losses and have accumulated net deficit of $828.4 million. To support our growth, we have increased our number of employees and increased investment in our manufacturing capabilities.
Since our inception, we have incurred significant operating losses and have accumulated net deficit of $1,033.0 million. To support our growth, we have resized our number of employees and increased investment in our manufacturing capabilities.
We expense our research and development expenses in the period in which they are incurred. We expect to increase our research and development expenses as we continue to invest in new product development. Selling, general and administrative Selling expenses consist of personnel costs, customer service expenses, direct marketing expenses, educational and promotional expense, market research and analysis.
We expense our research and development expenses in the period in which they are incurred. Selling, general and administrative Selling expenses consist of personnel costs, customer service expenses, direct marketing expenses, educational and promotional expense, market research and analysis.
We had $10.1 million and $67.4 million in commitments for capital expenditures as of September 30, 2022 and 2021, respectively.
We had $1.6 million and $10.1 million in commitments for capital expenditures as of September 30, 2023 and 2022, respectively.
Interest expense was $0.1 million in fiscal year 2022, $0.4 million in fiscal year 2021 and $0.8 million in fiscal year 2020 mainly due to the reduction in the amount of debt outstanding under our credit facility with Silicon Valley Bank.
Interest expense was $0.1 million in fiscal year 2022 and $0.4 million in fiscal year 2021 mainly due to the reduction in the amount of debt outstanding under a credit facility.
As of September 30, 2022, we had cash, cash equivalents and short-term investments of $505.0 million. We believe that our existing cash, cash equivalents and short-term investments are sufficient to fund our operating expenses, capital expenditure requirements and debt service payments for the next 12 months.
We believe that our existing cash, cash equivalents and short-term investments are sufficient to fund our operating expenses, capital expenditure requirements and debt service payments for the next 12 months.
Year ended September 30, (in thousands, except percentages) 2022 % 2021 % 2020 % Americas $ 122,473 61% $ 77,909 59% $ 59,164 65% EMEA 62,078 30% 44,124 33% 25,821 29% APAC 19,014 9% 10,300 8% 5,115 6% Total revenues $ 203,565 100% $ 132,333 100% $ 90,100 100% Revenues by products The table below sets forth revenues by products: Year ended September 30, (in thousands, except percentages) 2022 % 2021 % 2020 % Synthetic genes $ 61,509 30% $ 38,964 30% $ 35,192 39% Oligo pools 12,424 6% 8,039 6% 4,545 5% DNA libraries 6,149 3% 5,678 4% 3,965 4% Antibody discovery 24,171 12% 6,985 5% 2,383 3% NGS tools 99,312 49% 72,667 55% 44,015 49% Total revenues $ 203,565 100% $ 132,333 100% $ 90,100 100% Revenues by industry Revenues by industry were as follows: Year ended September 30, (in thousands, except percentages) 2022 % 2021 % 2020 % Industrial chemicals/materials $ 57,940 28% $ 34,475 26% $ 29,054 32% Academic research 37,097 18% 25,299 19% 19,642 22% Healthcare 106,363 52% 71,241 54% 40,036 44% Food/agriculture 2,165 1% 1,318 1% 1,368 2% Total revenues $ 203,565 100% $ 132,333 100% $ 90,100 100% 51 Table of Contents Revenues and accounts receivable concentration There are no major customers who accounted for 10% or more of our revenue for the fiscal year ended September 30, 2022 and 2021.
Year ended September 30, (in thousands, except percentages) 2023 % 2022 % 2021 % Americas $ 151,263 62% $ 122,473 61% $ 77,909 59% EMEA 71,389 29% 62,078 30% 44,124 33% APAC 22,457 9% 19,014 9% 10,300 8% Total revenues $ 245,109 100% $ 203,565 101% $ 132,333 100% Revenues by products The table below sets forth revenues by products: Year ended September 30, (in thousands, except percentages) 2023 % 2022 % 2021 % Synthetic genes $ 73,541 30% $ 61,509 30% $ 38,964 30% Oligo pools 14,489 6% 12,424 6% 8,039 6% DNA libraries 10,201 4% 6,149 3% 5,678 4% Antibody discovery 23,172 9% 24,171 12% 6,985 5% NGS tools 123,706 51% 99,312 49% 72,667 55% Total revenues $ 245,109 100% $ 203,565 100% $ 132,333 100% 51 Table of Contents Revenues by industry Revenues by industry were as follows: Year ended September 30, (in thousands, except percentages) 2023 % 2022 % 2021 % Industrial chemicals/materials $ 59,321 24% $ 57,940 29% $ 34,475 26% Academic research 45,847 19% 37,097 18% 25,299 19% Healthcare 137,148 56% 106,363 52% 71,241 54% Food/agriculture 2,793 1% 2,165 1% 1,318 1% Total revenues $ 245,109 100% $ 203,565 100% $ 132,333 100% Revenues and accounts receivable concentration There are no major customers who accounted for 10% or more of our revenues for the fiscal year ended September 30, 2023, 2022, and 2021.
Included in total selling, general and administrative expenses for the year ended September 30, 2022 are Wilsonville costs, comprised of personnel costs of $6.0 million, facilities costs of $4.6 million, outside services of $2.2 million, laboratory supplies of $1.3 million and other costs of $1.8 million.
For the year ended September 30, 2022, selling, general and administrative expenses included costs associated our Wilsonville, Oregon manufacturing facility. These costs included personnel costs of $6.0 million, facility costs of $4.6 million, outside services of $2.2 million, laboratory supplies of $1.3 million and other costs of $1.8 million.
We value PSUs using a grant date fair value equal to the closing share price of our common stock on the date of grant and the probability of the achievement of the performance condition. 60 Table of Contents We estimate the fair value of stock options granted to our employees, directors and non-employee consultants on the grant date, and rights to acquire stock granted under our Employee Stock Purchase Plan, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model.
We estimate the fair value of stock options granted to our employees, directors and non-employee consultants on the grant date, and rights to acquire stock granted under our Employee Stock Purchase Plan, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model.
A discussion of our selling, general and administrative expenses for the year ended September 30, 2020 can be found on page 56 of our 2021 Annual Report.
A discussion of our research and development expenses for the year ended September 30, 2021 can be found on page 54 of our 2022 Annual Report.
Change in fair value of contingent considerations and holdbacks Year ended September 30, Change (in thousands, except percentages) 2022 2021 2020 2022-2021 2021-2020 Change in fair value of contingent considerations and holdbacks $ (14,245) $ (534) $ — $ (13,711) 2568 % $ (534) 100 % During the year ended September 30, 2022, we recognized the change in the fair value of the contingent consideration and holdbacks of $13.4 million and $0.8 million related to the acquisitions of Abveris and iGenomX, respectively, primarily as a result of the change in fair value of our stock price as of September 30, 2022 and a change in the probability of the attainment of the calendar year 2022 revenue target.
Change in fair value of contingent considerations and holdbacks Year ended September 30, Change (in thousands, except percentages) 2023 2022 2021 2023-2022 2022-2021 Change in fair value of contingent considerations and holdbacks $ (5,913) $ (14,245) $ (534) $ 8,332 (58) % $ (13,711) 2568 % During the year ended September 30, 2023, we recognized a change in the fair value of contingent consideration and holdbacks of $5.5 million and $0.4 million related to the acquisitions of Abveris and iGenomX, respectively.
We define a new customer as a customer who, as a separate legal entity or person, has not had multiple purchases in the current fiscal year. We define a repeat customer as any customer who, as a separate legal entity or person, has purchased products or services from us more than once in the current fiscal year.
We define a new customer as a customer who, as a separate legal entity or person, has not had multiple purchases in the current fiscal year.
Research and development costs increased by $26.1 million to $69.1 million for the year ended September 30, 2021, as compared to the same period 2020.
Research and development costs increased by $51.2 million to $120.3 million for the year ended September 30, 2022, as compared to the same period 2021.
Cash flows The following table summarizes our sources and uses of cash and cash equivalents: 57 Table of Contents Year ended September 30, (in thousands) 2022 2021 2020 Net cash used in operating activities $ (124,385) $ (112,244) $ (142,255) Net cash provided by (used in) investing activities (232,930) 156,155 (114,650) Net cash provided by financing activities 270,534 329,182 303,732 Operating activities Net cash used in operating activities was $124.4 million in fiscal year 2022 and consisted primarily of a net loss of $217.9 million adjusted for non-cash items including depreciation and amortization expenses of $16.5 million, stock-based compensation expense of $79.7 million, a tenant improvement allowance net of operating lease expense of $20.1 million, gain on deconsolidation of subsidiary of $4.6 million, change in fair value of contingent consideration and holdbacks of $14.2 million, a change in operating assets and liabilities of $5.4 million, and a net total of other non-cash items of $1.4 million.
Cash flows The following table summarizes our sources and uses of cash and cash equivalents: Year ended September 30, (in thousands) 2023 2022 2021 Net cash used in operating activities $ (142,474) $ (124,385) $ (112,244) Net cash provided by (used in) investing activities 50,612 (232,930) 156,155 Net cash provided by financing activities 911 270,534 329,182 Operating activities Net cash used in operating activities was $142.5 million in fiscal year 2023 and consisted primarily of a net loss of $204.6 million adjusted for non-cash items including depreciation and amortization expenses of $29.3 million, stock-based compensation expense of $30.3 million, impairment of property and equipment and other assets of $6.8 million, non-cash lease expense of $2.6 million, change in fair value of contingent consideration and holdbacks of $5.9 million and a change 58 Table of Contents in operating assets and liabilities of $1.0 million.
Year ended September 30, (in thousands) 2022 2021 2020 Revenues $ 203,565 $ 132,333 $ 90,100 Operating expenses: Cost of revenues 119,330 80,620 61,406 Research and development 120,307 69,072 43,006 Selling, general and administrative 212,949 135,901 103,267 Change in fair value of contingent considerations and holdbacks (14,245) (534) — Litigation settlement — — 22,500 Total operating expenses $ 438,341 $ 285,059 $ 230,179 Loss from operations $ (234,776) $ (152,726) $ (140,079) Interest income 3,062 435 1,499 Interest expense (80) (367) (787) Gain on deconsolidation of a subsidiary 4,607 — — Other income (expense), net (1,087) (1,370) (182) Benefit from (provision for) income taxes 10,411 1,930 (382) Net loss attributable to common stockholders $ (217,863) $ (152,098) $ (139,931) Comparison of the years ended September 30, 2022, 2021 and 2020 Revenues Year ended September 30, Change (in thousands, except percentages) 2022 2021 2020 2022-2021 2021-2020 Revenues $ 203,565 $ 132,333 $ 90,100 $ 71,232 54% $ 42,233 47% Revenues increased from $132.3 million to $203.6 million in the year ended September 30, 2022, which was an increase of $71.2 million, or 54%, as compared to the same period in 2021.
Year ended September 30, (in thousands) 2023 2022 2021 Revenues $ 245,109 $ 203,565 $ 132,333 Operating expenses: Cost of revenues $ 155,380 $ 119,330 $ 80,620 Research and development 106,894 120,307 69,072 Selling, general and administrative 189,738 212,949 135,901 Restructuring and other costs 16,169 — — Change in fair value of contingent considerations and holdbacks (5,913) (14,245) (534) Total operating expenses $ 462,268 $ 438,341 $ 285,059 Loss from operations $ (217,159) $ (234,776) $ (152,726) Interest income 14,365 3,062 435 Interest expense (5) (80) (367) Gain on deconsolidation of a subsidiary — 4,607 — Other income (expense), net (667) (1,087) (1,370) (Provision for) benefit from income taxes (1,152) 10,411 1,930 Net loss attributable to common stockholders $ (204,618) $ (217,863) $ (152,098) Comparison of the years ended September 30, 2023, 2022 and 2021 Revenues Year ended September 30, Change (in thousands, except percentages) 2023 2022 2021 2023-2022 2022-2021 Revenues $ 245,109 $ 203,565 $ 132,333 $ 41,544 20% $ 71,232 54% 53 Table of Contents Revenues increased from $203.6 million to $245.1 million in the year ended September 30, 2023, which was an increase of $41.5 million, or 20%, as compared to the same period in 2022.
Selling, general and administrative expenses Year ended September 30, Change (in thousands, except percentages) 2022 2021 2020 2022-2021 2021-2020 Selling, general and administrative $ 212,949 $ 135,901 $ 103,267 $ 77,048 57% $ 32,634 32% Total selling, general and administrative expenses increased by $77.0 million to $212.9 million for the year ended September 30, 2022, compared to the same period for 2021.
Selling, general and administrative expenses Year ended September 30, Change (in thousands, except percentages) 2023 2022 2021 2023-2022 2022-2021 Selling, general and administrative $ 189,738 $ 212,949 $ 135,901 $ (23,211) (11)% $ 77,048 57% Total selling, general and administrative expenses decreased by $23.2 million to $189.7 million for the year ended September 30, 2023, compared to the same period for 2022.
The change in operating assets and liabilities was mainly due to increase in inventory of $19.5 million, other non-current assets of $4.7 million, accounts receivable of $2.2 million and decrease in accounts payable of $8.5 million and accrued compensation of $7.4 million.
The change in operating assets and liabilities was mainly due to increases in accounts receivable of $4.3 million, prepaid and other current assets of $4.2 million and accrued expenses of $2.6 million, offset by decreases in inventory of $7.2 million, other non-current assets of $1.4 million, accounts payable of $2.5 million, accrued compensation of $1.1 million and other liabilities $0.1 million.
For the year ended September 30, 2022, we recognized revenue of $1.1 million from the amount that was included in the contract liability balance at the beginning of the year. For September 30, 2021 and 2020 the Company did not recognize revenue from amounts that were included in the contract liability balance at the beginning of each period.
For the years ended September 30, 2023 and 2022, we recognized revenue of $2.8 million and $1.1 million, respectively, from the amount that was included in the contract liability balance at the beginning of each year.
This is a key component of our strategy to address and support our diverse and growing customer base, as well as support commercial productivity, enhance the customer experience, and promote loyalty. 49 Table of Contents Seasonality Over the years, we have experienced a pattern, although not consistently, of our third-quarter revenue growth being lower than revenue growth in other quarters due to a decrease in demand from certain potentially significant customers during such quarter and periodic revenue fluctuations in our NGS tools.
Seasonality Over the years, we have experienced a pattern, although not consistently, of our third-quarter revenue growth being lower than revenue growth in other quarters due to a decrease in demand from certain potentially significant customers during such quarter and periodic revenue fluctuations in our NGS tools.
Year ended September 30, 2022 2021 2020 Number of customers 3,300 2,900 2,200 Revenue from repeat customers 98 % 98 % 97 % Financial overview 50 Table of Contents The following table summarizes certain selected historical financial results: Year ended September 30, (in thousands) 2022 2021 2020 Revenues $ 203,565 $ 132,333 $ 90,100 Loss from operations (234,776) (152,726) (140,079) Net loss attributable to common stockholders (217,863) (152,098) (139,931) Revenues We generate revenue from sales of synthetic genes, oligo pools, NGS tools, DNA libraries and antibody discovery services.
We define a repeat customer as any customer who, as a separate legal entity or person, has purchased products or services from us more than once in the current fiscal year. 50 Table of Contents Year ended September 30, 2023 2022 2021 Number of customers 3,450 3,300 2,900 Revenue from repeat customers 98 % 98 % 98 % Financial overview The following table summarizes certain selected historical financial results: Year ended September 30, (in thousands) 2023 2022 2021 Revenues $ 245,109 $ 203,565 $ 132,333 Loss from operations (217,159) (234,776) (152,726) Net loss attributable to common stockholders (204,618) (217,863) (152,098) Revenues We generate revenue from sales of synthetic genes, oligo pools, NGS tools, DNA libraries and antibody discovery services.
Cost of revenues Year ended September 30, Change (in thousands, except percentages) 2022 2021 2020 2022-2021 2021-2020 Cost of revenues $ 119,330 $ 80,620 $ 61,406 $ 38,710 48% $ 19,214 31% Cost of revenue increased from $80.6 million in the prior year to $119.3 million in the year ended September 30, 2022, which was an increase of $38.7 million, or 48%.
Cost of revenues increased from $80.6 million in the prior year to $119.3 million in the year ended September 30, 2022, which was an increase of $38.7 million, or 48%.
Critical accounting policies and estimates The discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
As of the lease commencement dates, the total future minimum lease payments under the agreement were $8.6 million. 59 Table of Contents Critical accounting policies and estimates The discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
We are leveraging our unique technology to manufacture a broad range of synthetic DNA-based products, including synthetic genes, tools for next generation sample preparation, and antibody libraries for drug discovery and development. Additionally, we believe our platform enables new value-added opportunities, such as discovery partnerships for biologic drugs, and enables new applications for synthetic DNA, such as digital data storage.
We are leveraging our unique technology to manufacture a broad range of synthetic DNA based products, including synthetic genes, tools for next-generation sample preparation, and antibody libraries for drug discovery and development.
In fiscal year 2021, our net cash provided by the investing activities was $156.2 million primarily as a result of net impact of purchases and maturity of investments of $183.7 million and purchases of laboratory property, equipment and computers of $27.1 million.
Investing activities In fiscal year 2023, our net cash used in the investing activities was $50.6 million primarily as a result of the net result of purchases and maturity of investments of $78.4 million and purchases of laboratory property, equipment and computers of $27.8 million.
Goodwill Determining when to test for impairment, the reporting unit, the assets and liabilities of the reporting unit, and the fair value of the reporting unit requires significant judgment and involves the use of significant estimates and assumptions.
Unanticipated events and circumstances may occur that could affect either the accuracy or validity of such assumptions, estimates or actual results. Goodwill Determining when to test for impairment, the reporting unit, the assets and liabilities of the reporting unit, and the fair value of the reporting unit requires significant judgment and involves the use of significant estimates and assumptions.
We sell our synthetic DNA and synthetic DNA-based products to a customer base of approximately 3,300 customers in fiscal year 2022 across a broad range of industries. We launched the first application of our platform, synthetic genes and oligo pools, in April 2016 to disrupt the gene synthesis market and make legacy DNA synthesis methods obsolete.
We launched the first application of our platform, synthetic genes and oligo pools, in April 2016 to disrupt the gene synthesis market and make legacy DNA synthesis methods obsolete.
We recorded provision for income taxes of $0.4 million in 2020. 56 Table of Contents Liquidity and capital resources Sources of liquidity To date, we have financed our operations principally through public equity raises, private placements of our convertible preferred stock, borrowings from credit facilities and revenue from our commercial operations.
We recorded income tax benefit of $10.4 million and $1.9 million in 2022 and 2021 respectively, mainly as a result of the business acquisition of Abveris and iGenomX respectively. 57 Table of Contents Liquidity and capital resources Sources of liquidity To date, we have financed our operations principally through public equity raises, private placements of our convertible preferred stock, borrowings from credit facilities and revenue from our commercial operations.
Net cash provided by financing activities was $329.2 million in fiscal year 2021, which consisted of $323.9 million in proceeds from a public offering of our common stock, net of underwriting discounts and commissions and offering expenses, $4.9 million from proceeds from issuance of shares under the 2018 ESPP and $14.6 million from the exercise of stock options, offset by $3.3 million in principal payments on long term debt and $10.8 million in repurchases of common stock for income tax withholdings.
Financing activities Net cash provided by financing activities was $0.9 million in fiscal year 2023, which consisted of $3.9 million from proceeds from issuance of shares under the 2018 ESPP and $1.4 million from the exercise of stock options, offset by $4.4 million in repurchases of common stock for income tax withholdings.
Interest expense Interest expense is attributable to borrowing under our senior secured term loan which was paid in December 2021. Interest income Interest income consists primarily of interest earned on our cash, cash equivalents, and short-term investments. Gain on deconsolidation of a subsidiary Gain on deconsolidation of a subsidiary represents gain on deconsolidation of Revelar Biotherapeutics, Inc.
Interest income Interest income consists primarily of interest earned on our cash, cash equivalents, and short-term investments. Gain on deconsolidation of a subsidiary Gain on deconsolidation of a subsidiary represents gain on deconsolidation of Revelar Biotherapeutics, Inc. (“Revelar”).
Net cash used in operating activities was $112.2 million in fiscal year 2021 and consisted primarily of a net loss of $152.1 million adjusted for non-cash items including depreciation and amortization expenses of $9.8 million, stock-based compensation expense of $37.0 million, a change in operating assets and liabilities of $9.4 million, and a net total of other non-cash items of $2.5 million.
Net cash used in operating activities was $124.4 million in fiscal year 2022 and consisted primarily of a net loss of $217.9 million adjusted for non-cash items including depreciation and amortization expenses of $16.5 million, stock-based compensation expense of $79.7 million, a tenant improvement allowance net of operating lease expense of $20.1 million, gain on deconsolidation of subsidiary of $4.6 million, change in fair value of contingent consideration and holdbacks of $14.2 million, a change in operating assets and liabilities of $5.4 million, and a net total of other non-cash items of $1.4 million.
There were two major customers who accounted for 12% and 10% of our revenue for the fiscal year ended September 30, 2020. There are no major customers who accounted for 10% or more of the net accounts receivable as of September 30, 2022 and 2021.
There is one customer who accounted for 10% or more of the net accounts receivable as of September 30, 2023. There were no major customers who accounted for 10% or more of the net accounts receivable as of September 30, 2022.
Our antibody services revenue grew year over year as a result of Abveris acquisition and an increase in the Twist Antibody discovery project revenue. Revenues increased from $90.1 million to $132.3 million in the year ended September 30, 2021, which was an increase of $42.2 million, or 47%, as compared to the same period in 2020.
Our DNA libraries revenue grew year over year as a result of increased customers, mainly in the healthcare and academic research industries. Revenues increased from $132.3 million to $203.6 million in the year ended September 30, 2022, which was an increase of $71.2 million, or 54%, as compared to the same period in 2021.
Launched in fiscal 2018, our e-commerce platform allows customers to design, validate and place on-demand orders of customized DNA online.
To address this diverse customer base, we have employed a multichannel strategy comprised of a direct sales force targeting synthetic DNA customers, international distributors, and an e-commerce platform. Launched in fiscal 2018, our e-commerce platform allows customers to design, validate and place on-demand orders of customized DNA online.
We recognize revenue from functional license agreements when the license is transferred to the customer and the customer is able to use and benefit from the license. A functional license has significant standalone functionality because it can be used “as is” for performing a specific task.
We recognize revenue from functional license agreements when the license is transferred to the customer and the customer is able to use and benefit from the license.
The transaction price is determined based on the agreed upon rates in the purchase order or master supply agreements applied to the quantity of synthetic DNA that was manufactured and shipped to the customer. Our contracts include only one performance obligation— the shipment of the product to the customer.
We assess collectability based on a number of factors, including past transaction history and creditworthiness of the customer. The transaction price is determined based on the agreed upon rates in the purchase order or master supply agreements applied to the quantity of all the products that were manufactured and shipped to the customer.
Gain on deconsolidation of a subsidiary Year ended September 30, Change (in thousands, except percentages) 2022 2021 2020 2022-2021 2021-2020 Gain on deconsolidation of a subsidiary 4,607 — — $ 4,607 100 % $ — — % Gain on deconsolidation of a subsidiary represents the gain associated with the deconsolidation of a variable interest entity, Revelar, on September 30, 2022.
Gain on deconsolidation of a subsidiary Year ended September 30, Change (in thousands, except percentages) 2023 2022 2021 2023-2022 2022-2021 Gain on deconsolidation of a subsidiary — 4,607 — $ (4,607) (100) % $ 4,607 100 % Gain on deconsolidation of a subsidiary represents the gain associated with the deconsolidation of a variable interest entity, Revelar, on September 30, 2022. 56 Table of Contents (Provision for) benefit from income taxes Year ended September 30, Change (in thousands, except percentages) 2023 2022 2021 2023-2022 2022-2021 (Provision for) benefit from income taxes $ (1,152) $ 10,411 $ 1,930 $ (11,563) (111) % $ 8,481 439% We recorded income tax provision of $1.2 million in 2023.
Accordingly, all of the transaction price, net of any discounts, is allocated to the one performance obligation.
Our contracts may include one or more ordered products, and the shipment of these products comprises the performance obligation(s) under the contract. Accordingly, all of the transaction price, net of any discounts, is allocated to the one performance obligation.
Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the success of our existing products and development and commercialization of additional products in the synthetic biology industry, biologic drug industry or the data storage industry. In 2022, 2021 and 2020 we served approximately 3,300, 2,900 and 2,200 customers, respectively.
Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the success of our existing products and the development and commercialization of additional products in the synthetic biology, biologic drug and data storage industries, including our Express Genes product which we launched in the fall of 2023 as well as leveraging our investment in our manufacturing facility near Portland, Oregon.
We have granted performance-based stock units (PSUs) and performance stock options (PSOs) to executive officers and senior level employees.
We have granted performance-based stock units (PSUs) and performance stock options (PSOs) to executive officers and senior level employees. We value PSUs using a grant date fair value equal to the closing share price of our common stock on the date of grant and the probability of the achievement of the performance condition.
We test goodwill for impairment in our fourth quarter each year, or more frequently if indicators of an impairment exist, to determine whether it is more likely than not that the fair value of the reporting unit with goodwill is less than its carrying value.
We test goodwill for impairment in our fourth quarter each year, or more frequently if indicators of an impairment exist. Evaluating goodwill for impairment involves the determination of the fair value of our reporting unit in which goodwill and indefinite-lived intangible assets is recorded using a qualitative or quantitative analysis.
In addition, for all periods presented, there was no revenue recognized in a reporting period from performance obligations satisfied in previous periods. The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied as of September 30, 2022 was $4.5 million.
For the year ended September 30, 2021, the Company did not recognize revenue from amounts that was included in the contract liability balance at the beginning of the period. In addition, for all periods presented, there was no revenue recognized in a reporting period from performance obligations satisfied in previous periods.
Similarly, significant judgment was exercised in estimating the contingent consideration which included key assumptions related to the forecasted calendar year 2022 revenue and the Company's share price for Abveris and progress toward completion of transition milestones for iGenomX.
Similarly, significant judgment was exercised in estimating the contingent consideration which included key assumptions related to the forecasted revenue and the Company's share price and progress toward completion of transition milestones. 61 Table of Contents The rates used to discount expected future cash flows to present value are typically derived from a weighted-average cost of capital analysis and adjusted to reflect inherent risks.
Research and development expenses Year ended September 30, Change (in thousands, except percentages) 2022 2021 2020 2022-2021 2021-2020 Research and development $ 120,307 $ 69,072 $ 43,006 $ 51,235 74% $ 26,066 61% Research and development expenses increased by $51.2 million to $120.3 million for the year ended September 30, 2022, as compared to the same period 2021, including increased expense related to Revelar and Abveris.
A discussion of our cost of revenues for the year ended September 30, 2021 can be found on page 54 of our 2022 Annual Report. 54 Table of Contents Research and development expenses Year ended September 30, Change (in thousands, except percentages) 2023 2022 2021 2023-2022 2022-2021 Research and development $ 106,894 $ 120,307 $ 69,072 $ (13,413) (11)% $ 51,235 74% Research and development expenses decreased by $13.4 million to $106.9 million for the year ended September 30, 2023, as compared to the same period 2022.
We did not make any borrowings under the revolving loan facility which expired on December 31, 2021. We had no amounts outstanding under the loan facility at September 30, 2022 . Capital resources Our primary cash needs are for operating expenses, working capital and capital expenditures to support the growth in our business.
Capital resources Our primary cash needs are for operating expenses, working capital and capital expenditures to support the growth in our business. As of September 30, 2023, we had cash, cash equivalents and short-term investments of $336.4 million.
We have built a scalable commercial platform that enables us to reach a diverse customer base in a variety of industries including industrial chemicals/materials, academic research, healthcare, food, agriculture and data storage. To address this diverse customer base, we have employed a multi-channel strategy comprised of a direct sales force targeting synthetic DNA customers, international distributors, and an e-commerce platform.
Restructuring and other costs included employee severance and related benefit costs of $8.6 million, restructuring and non-restructuring related impairment of property and equipment of $6.8 million, and other costs associated with restructuring of $0.9 million. 49 Table of Contents We have built a scalable commercial platform that enables us to reach a diverse customer base in a variety of industries including industrial chemicals/materials, academic research, healthcare, food, agriculture and data storage.
Selling, general and administrative expenses increased by $32.6 million to $135.9 million for the year ended September 30, 2021, compared to the same period for 2020.
The decrease was partially offset by increases in pre-commercialization Factory of the Future costs of $4.4 million, facility costs of $6.5 million, payroll costs of $5.3 million and IT-related services costs of $5.1 million. For the year ended September 30, 2022, selling, general and administrative expenses increased by $77.0 million to $212.9 million, compared to the same period for 2021.
We expect general and administrative expenses will increase as well as we scale our operations. Change in fair value of contingent considerations and holdbacks Change in fair value of contingent considerations and holdbacks consists of remeasurement of contingent consideration and indemnity holdbacks related to the acquisitions of Abveris and iGenomX.
Change in fair value of contingent considerations and holdbacks Change in fair value of contingent considerations and holdbacks consists of remeasurement of contingent consideration and indemnity holdbacks related to the acquisitions of Abveris and iGenomX. 52 Table of Contents Interest expense Interest expense is attributable to borrowing under our senior secured term loan which was paid in December 2021.
We had contract assets of $3.4 million and contract liabilities of $3.5 million as of September 30, 2022. We had contract assets of $2.0 million and contract liabilities of $1.1 million as of September 30, 2021.
A functional license has significant standalone functionality because it can be used “as is” for performing a specific task. 60 Table of Contents We had contract assets of $2.8 million and contract liabilities of $3.0 million as of September 30, 2023. We had contract assets of $3.4 million and contract liabilities of $3.5 million as of September 30, 2022.
A discussion of our cost of revenues for the year ended September 30, 2020 can be found on page 55 of our 2021 Annual Report.
A discussion of our selling, general and administrative expenses for the year ended September 30, 2021 can be found on page 55 of our 2022 Annual Report. 55 Table of Contents Restructuring and other costs Year ended September 30, Change (in thousands, except percentages) 2023 2022 2021 2023-2022 2022-2021 Restructuring and other costs $ 16,169 $ — $ — $ 16,169 100% $ — —% During the year ended September 30, 2023, we recognized restructuring and other costs of $16.2 million.
Highlights from fiscal year 2022 compared with fiscal year 2021 included • Revenue growth of 54% to $203.6 million from $132.3 million in 2021, primarily due to order growth in NGS tools, synthetic genes and antibody discovery; and • Our gross margin increased to 41% in 2022 from 39% in 2021.
Highlights from fiscal year 2023 compared with fiscal year 2022 included: • revenue growth of 20% to $245.1 million from $203.6 million in 2022, primarily due to order growth in NGS tools, synthetic genes and DNA libraries; • the number of our genes shipped increasing from 558,000 in 2022 to 634,000; and • implementing a strategic restructuring plan to reduce costs, build a leaner organization and increase operating efficiencies.
In the year ended September 30, 2021, we shipped approximately 372,000 genes, including approximately 28,000 adapters-off non-clonal genes that were introduced in December 2020 compared to approximately 339,000 genes in the year ended September 30, 2020, an increase of 10%. Synthetic gene pricing to our customers was relatively constant period-over-period.
In the year ended September 30, 2023, we shipped approximately 634,000 genes compared to approximately 558,000 genes in the year ended September 30, 2022, an increase of 14%. Changes in our synthetic gene pricing, while favorable, had a minimal impact on our results of operations period-over-period.
Upon execution of the lease agreement, Abveris provided the landlord an approximate $0.6 million irrevocable letter of credit as a security deposit. Abveris will pay an initial annual base rent of approximately $1.2 million, which is subject to scheduled 2% annual increases, plus certain operating expenses. We have the right to sublease the facility, subject to landlord consent.
We have two options to extend the term for five years. We do not have reasonable certainty that these options will be exercised. Upon execution of the lease agreement, Abveris provided the landlord an additional approximate $0.5 million irrevocable letter of credit as a security deposit.
For 2022, our qualitative assessment indicated that the fair value of our reporting unit substantially exceeded the carrying value and that a quantitative assessment was unnecessary.
We have an unconditional option to bypass the qualitative assessment in any period and proceed directly to performing the first step of the goodwill impairment test. For 2023, we elected to proceed directly to the step-one assessment which indicated that the fair value of our reporting unit substantially exceeded the carrying value.
The increase in revenue was primarily due to an increase in revenue from NGS tools which grew from $44.0 million in 2020 to $72.7 million in 2021, and an increase from antibody 53 Table of Contents discovery, which grew from $2.4 million to $7.0 million primarily due to growth in our revenues from antibody discovery project services.
The increase in revenue was primarily due to increase in revenue from NGS tools, which grew from $99.3 million in 2022 to $123.7 million in 2023, an increase in revenue from synthetic genes, which grew from $61.5 million in 2022 to $73.5 million and an increase in revenue from DNA libraries revenue, which grew from $6.1 million in 2022 to $10.2 million.
Removed
Our synthetic genes revenue grew from $35.2 million in 2020 to $39.0 million in 2021, mainly due to growth in the pharma industry.
Added
Additionally, we believe our platform will enable new value-added opportunities, such as discovery partnerships for biologic drugs, and will enable new applications for synthetic DNA, such as digital data storage. We sell our synthetic DNA and synthetic DNA-based products to a customer base of approximately 3,450 customers across a broad range of industries.
Removed
NGS tools revenue growth was primarily attributable to the adoption of our product by a larger customer base. We do not believe that pricing changes had a meaningful impact on revenue from NGS tools period-over-period.
Added
In 2023, 2022 and 2021 we served approximately 3,450, 3,300 and 2,900 customers, respectively.
Removed
Cost of revenue increased from $61.4 million in the prior year to $80.6 million in the year ended September 30, 2021, which was an increase of $19.2 million, or 31%. The increase was primarily due to an increase in the cost of consumption of reagents and production materials costs of $9.6 million associated with increased product shipments.
Added
The restructuring plan includes a reduction in force which affected approximately 270 employees worldwide, representing approximately 25% of the Company’s total workforce. Furthermore, as part of the plan we removed the duplication of synthetic biology production across our South San Francisco, California and Wilsonville, Oregon facilities.
Removed
The increase in personnel costs of $5.3 million was due to increased expenses related to supporting new product portfolio launches and an increase in volume of products shipped. Outside services increased by $1.5 million, depreciation increased by $1.1 million and information technology costs increased by $1.6 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−1 removed3 unchanged
Biggest changeWe had cash, cash equivalents and marketable securities of $505.0 million as of September 30, 2022, which consisted primarily of money market funds and marketable securities, largely composed of investment grade, short to intermediate term fixed income securities. The primary objective of our investment activities is to preserve capital to fund our operations.
Biggest changeItem 7A. Quantitative and qualitative disclosures about market risk Interest rate sensitivity We are exposed to market risk related to changes in interest rates. We had cash, cash equivalents and marketable securities of $336.4 million as of September 30, 2023, which consisted primarily of money market funds and marketable securities, largely composed of investment grade, short term fixed income securities.
For example, a hypothetical 10% relative change in interest rates during any of the periods presented would not have a material impact on our consolidated financial statements. Foreign currency sensitivity The majority of our transactions occur in U.S. dollars.
For example, a hypothetical 10% relative change in interest rates during any of the periods presented would not have a material impact on our consolidated financial statements. 62 Table of Contents Foreign currency sensitivity The majority of our transactions occur in U.S. dollars.
We regularly review our exposure and may, as part of this review, make changes to it. 62 Table of Contents
We regularly review our exposure and may, as part of this review, make changes to it. 63 Table of Contents
However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our financial condition or results of operations.
Our investments are subject to interest rate risk and could fall in value if market interest rates increase. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our financial condition or results of operations.
We also seek to maximize income from our investments without assuming significant risk. To achieve our objectives, we maintain a portfolio of investments in a variety of securities of high credit quality and short-term duration, according to our board-approved investment policy. Our investments are subject to interest rate risk and could fall in value if market interest rates increase.
The primary objective of our investment activities is to preserve capital to fund our operations. We also seek to maximize income from our investments without assuming significant risk. To achieve our objectives, we maintain a portfolio of investments in a variety of securities of high credit quality and short-term duration, according to our board-approved investment policy.
Removed
Item 7A. Quantitative and qualitative disclosures about market risk Interest rate sensitivity 61 Table of Contents We are exposed to market risk related to changes in interest rates.

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