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What changed in Twist Bioscience Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Twist Bioscience Corp's 2023 and 2024 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 2024 report.

+363 added−389 removedSource: 10-K (2024-11-18) vs 10-K (2023-11-21)

Top changes in Twist Bioscience Corp's 2024 10-K

363 paragraphs added · 389 removed · 280 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

87 edited+28 added−26 removed73 unchanged
Biggest changeIt 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.
Biggest changeCurrently, our quality management system adheres to ISO 13485:2016 to ensure the quality and reliability of our products. 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.
Communications and engagement We employ a variety of tools to facilitate open and direct communication including open forums with executives, employee surveys and engagement through focus groups, forums and committees. We endeavor to further refine our employee programs through our employee engagement survey as well as follow up quarterly pulse surveys.
Employee communications and engagement We employ a variety of tools to facilitate open and direct communication including open forums with executives, employee surveys and engagement through focus groups, forums and committees. We endeavor to further refine our employee programs through our employee engagement survey as well as follow up quarterly pulse surveys.
All medical devices, including in vitro diagnostics, or IVDs, that are regulated by the FDA are also subject to the Quality System Regulation. Obtaining the requisite regulatory approvals, including the FDA quality system inspections that are required for PMA approval, can be expensive, may involve delay, and could conclude without such products being approved by the FDA.
All medical devices, including in vitro diagnostics, or IVDs, that are regulated by the FDA are also subject to the Quality System Regulation. Obtaining the requisite regulatory approvals, including the FDA quality system inspections that are required for PMA approval, can be expensive, may involve delay, and could conclude without products being approved by the FDA.
We have combined our silicon-based DNA writing technology with proprietary software, scalable commercial infrastructure and an e-commerce platform to create an integrated technology platform that enables us to achieve high levels of quality, precision, automation, and manufacturing throughput at a significantly lower cost than our competitors.
We have combined our silicon-based DNA writing technology with proprietary software, scalable commercial infrastructure and an e-commerce platform to create an integrated technology platform that enables us to achieve high levels of quality, precision, automation, and manufacturing throughput at a significantly lower cost and quicker than our competitors.
As noted above, although our products are currently intended for research purposes only, the regulatory requirements related to marketing, selling, and supporting such products could be uncertain and depend on the totality of circumstances. This uncertainty exists even if such use by our customers occurs without our consent.
As noted above, although our products are currently intended for research purposes only, the regulatory requirements related to marketing, selling, and supporting such products could be uncertain and depend on the totality of circumstances. This uncertainty exists even if a use by our customers occurs without our consent.
According to the FDA, merely including the RUO labeling statement will not necessarily render the device exempt from FDA premarket clearance, approval, or other regulatory requirements if the totality of circumstances surrounding the distribution of the product indicate that the manufacturer intended its IVDs for diagnostic use.
According to the FDA, including the RUO labeling statement will not necessarily render the device exempt from FDA premarket clearance, approval, or other regulatory requirements if the totality of circumstances surrounding the distribution of the product indicate that the manufacturer intended its IVDs for diagnostic use.
We intend to increase our shipments to leverage our production capacity through our e-commerce platform, which we believe will expand both our market opportunity and our customer base. The manufacturing process for our NGS tools is highly flexible given the efficiency of our production capability. We have automated the entire workflow using proprietary and over-the-counter laboratory equipment.
We intend to increase our shipments to leverage our production capacity through our e-commerce platform, and express offerings, which we believe will expand both our market opportunity and our customer base. The manufacturing process for our NGS tools is highly flexible given the efficiency of our production capability. We have automated the entire workflow using proprietary and over-the-counter laboratory equipment.
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.
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. Our guiding principles of grit, impact, service and trust serve as the foundation of our culture.
Beginning with the pre-recruitment process, we provide internship opportunities for students interested in biotechnology and the science, technology, engineering and mathematics (STEM) fields in both scientific and non-scientific departments. We engage with local communities to provide expert speakers sharing nontraditional career pathways for the biotechnology field.
Beginning with the pre-recruitment process, we provide internship opportunities in both scientific and non-scientific fields for students interested in biotechnology and the science, technology, engineering and mathematics (STEM) careers. We engage with local communities to provide expert speakers sharing nontraditional career pathways for the biotechnology field.
In the target enrichment process, our synthetic DNA probes bind to the sequence of interest within the sample, acting like a magnet to isolate and physically extract the targeted segment of DNA. Our NGS products are primarily used within diagnostic tests for various indications including rare disease, SARS-CoV-2 and cancer through liquid biopsy.
In the target enrichment process, our synthetic DNA probes bind to the sequence of interest within the sample, acting like a magnet to isolate and physically extract the targeted segment of DNA. Our NGS products are primarily used within diagnostic tests for various indications including rare disease, SARS-CoV-2 and cancer through liquid biopsy and minimal residual disease (MRD).
We endeavor to abide by all local, national and international regulations as well as trade compliance requirements and are an active member of the International Gene Synthesis Consortium and the Australia Group. We maintain an active relationship with the governing body for synthetic DNA within the U.S. Department of Homeland Security.
We endeavor to abide by all local, national and international regulations as well as trade compliance requirements and are an active member of the 11 Table of Contents International Gene Synthesis Consortium and the Australia Group. We maintain an active relationship with the governing body for synthetic DNA within the U.S. Department of Homeland Security.
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.
We offer non-clonal genes of up to 5,000 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.
We have an expert-built educational platform to assist employee’s fertility & family building needs with the help of treatment, fostering or adopting, plus dedicated resources for egg freezers, egg donation, LGBTQIA+ families, and solo parents. We have increased our well-being benefits, by offering programs that help workers monitor and reduce their stress levels, providing apps to support sleep and relaxation.
We have an expert-built educational platform to assist employee’s fertility & family building needs with information about treatment, fostering or adopting, plus dedicated resources for egg freezers, egg donation, LGBTQIA+ families, and solo parents. We have increased our well-being benefits, by offering programs that help workers monitor and reduce their stress levels, providing apps to support sleep and relaxation.
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.
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, 2024, we employed 357 people in our manufacturing and operations team. In addition to synthetic genes, we manufacture oligo pools.
In the antibody discovery market, we compete with clinical research organizations, such as Curia, GenScript, and Genovac (formerly part of Aldevron, LLC), and antibody discovery biotechnology companies, such as Fair Journey/Iontas, Adimab, Zymeworks, Distributed Bio (owned by Charles River), Ablexis, Specifica, OmniAb and AbCellera Biologics Inc.
In the antibody discovery market, we compete with contract research organizations including Curia, GenScript, and Genovac (formerly part of Aldevron, LLC), and antibody discovery biotechnology companies, such as Fair Journey/Iontas, Adimab, Distributed Bio (owned by Charles River), Ablexis, Specifica, OmniAb and AbCellera Biologics Inc.
If we are required to submit our products for pre-market review by the FDA, we may be required to delay marketing and commercialization while we obtain premarket clearance or approval from the FDA. There would be no assurance that we could ever obtain such clearance or approval.
If we are required to submit our products for pre-market review by the FDA, we may be required to delay marketing and commercialization while we 13 Table of Contents obtain premarket clearance or approval from the FDA. There would be no assurance that we could ever obtain such clearance or approval.
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.
In addition, we offer full-time employees, both exempt and non-exempt, the benefit of equity ownership in the Company through restricted stock units (RSU) grants and/or our employee stock purchase plan.
We sell our products to a global customer base of approximately 3,450 customers across a broad range of industries.
We sell our products to a global customer base of approximately 3,562 customers across a broad range of industries.
We have built dedicated production capabilities for our NGS products. 8 Table of Contents ISO certification Medical device manufacturers implement a Quality Management System (QMS) for medical devices to ensure that their products consistently meet regulatory requirements and customer expectations.
We have built dedicated production capabilities for our NGS products. ISO certification Medical device manufacturers implement a Quality Management System (QMS) for medical devices to ensure that their products consistently meet regulatory requirements and customer expectations.
Additionally, we compete with both large and emerging providers in the life sciences tools and diagnostics industries focused on sample preparation for NGS such as Thermo Fisher Scientific Inc., Illumina, Inc., Integrated DNA Technologies, Inc., and Agilent.
Additionally, we compete with both large and emerging providers in the life sciences tools and diagnostics industries focused on sample preparation for NGS such as Thermo Fisher Scientific Inc., Illumina, Inc., Integrated DNA Technologies, Inc., Roche, New England Biolabs and Agilent.
Our sales force is focused on customer acquisition, support, and management across industries, and is highly trained on both the technical aspects of our platform and how synthetic DNA can be used in a wide range of industries.
Our sales force is focused on customer acquisition, support, and management across industries, and is highly trained on both the technical aspects of our platform and how our product and services can be used in a wide range of industries.
We partner with community colleges, historically black colleges and universities and Hispanic-focused institutions to build our brand within diverse communities as a source of diverse, high-quality candidates for every role with the goal of identifying the best possible candidate to fill open positions within the company.
We partner with community colleges and Hispanic Serving Institutions to build our brand within diverse communities as a source of diverse, high-quality candidates for every role with the goal of identifying the best possible candidate to fill open positions within the Company.
Compensation and benefits, health and wellness We strive to provide pay, comprehensive benefits and services that help meet the varying needs of our employees.
Compensation and benefits, health and wellness 10 Table of Contents We strive to provide pay, comprehensive benefits and services that help meet the varying needs of our employees.
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).
PMA reviews generally last between three months and two years, although they can take longer. The PMA and 510(k) review processes can be expensive and lengthy and may not result in clearance (for Class I and II devices) or approval (for Class III devices).
Our generous total rewards package includes above-market pay; fully covered healthcare benefits for employees, with family member healthcare benefits covered at 90%; a health savings account that is fully funded for individuals and their families; approximately four weeks of paid vacation; a minimum of sixteen weeks of parental leave for all employees globally; flexible work schedules; and onsite services.
Our generous total rewards package includes above-market pay; fully covered healthcare benefits for employees, with family member healthcare benefits covered at 90%; a health savings account for individuals and their families; approximately four weeks of paid vacation; a minimum of sixteen weeks of parental leave for all employees globally; flexible work schedules; and onsite services including gym and one meal daily.
Available information Our corporate website address is www.twistbioscience.com . We use the investor relations page of our website for purposes of compliance with Regulation FD and as a routine channel for distribution of important information, including news releases, analyst presentations, financial information and corporate governance practices.
We use the investor relations page of our website for purposes of compliance with Regulation FD and as a routine channel for distribution of important information, including news releases, analyst presentations, financial information and corporate governance practices.
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.
As of September 30, 2024, we employed 236 employees and dedicated commercial consultants 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.
In particular, we are focused on addressing the demand for better sample preparation products that improve sequencing workflow, increase sequencing accuracy, and reduce downstream sequencing costs. Using our silicon-based DNA synthesis platform, we are able to synthesize exact sequences of interest.
Our products work on multiple sequencing platforms as we are sequencer agnostic. In particular, we are focused on addressing the demand for better sample preparation products that improve sequencing workflow, increase sequencing accuracy, and reduce downstream sequencing costs. Using our silicon-based DNA synthesis platform, we are able to synthesize exact 5 Table of Contents sequences of interest.
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 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. We employ business development and sales representatives for our biopharma solutions as well.
Our guiding principles set the tone for how we work together, provide a framework for giving feedback and increase the power of our brand. Service is at the core of our business and our interactions with one another. We relentlessly focus on exceeding internal and external customer needs.
Our guiding principles set the tone for how we work together, provide a framework for giving feedback and increase the power of our brand. Service is at the core of our business and our interactions with one another. We relentlessly focus on exceeding internal and external customer needs. Employee population As of September 30, 2024, we had 923 employees.
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.
As of September 30, 2024, we employed 182 people in our research and development team. Patents and other intellectual property rights Worldwide, we own or exclusively in-license over 150 issued or allowed patents and more than 250 pending patent applications as of September 30, 2024.
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.
Of these employees, 182 were primarily engaged in research and development activities; 236 were primarily engaged in marketing, sales and customer support; 148 were primarily engaged in general and administrative activities; and 357 were primarily engaged in operations and manufacturing, dedicated to manufacturing our synthetic genes, oligo pools, NGS tools and DNA libraries.
We have miniaturized traditional chemical DNA synthesis reactions to write over one million short pieces of DNA on each silicon chip, approximately the size of a large mobile phone, reducing by 99.8% the amount of chemicals we estimate would be used per gene as compared to plate-based synthesis.
We have miniaturized traditional chemical DNA synthesis reactions to write over 1,000,000 pieces of DNA (oligonucleotides) up to 500 bases through direct synthesis on each silicon chip, approximately the size of a large mobile phone, reducing by 99.8% the amount of chemicals we estimate would be used per gene as compared to plate-based synthesis.
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.
In fiscal year 2024, we served approximately 3,562 customers and reported $313.0 million in revenue, including $169.0 million in revenue from the healthcare sector, $83.5 million in revenue from the chemicals/materials sector, $58.5 million in revenue from the academic research sector and $2.1 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 likely will be impacted by this new regulation, either directly as a manufacturer of IVDs, or indirectly as a supplier to customers who are placing IVDs in the EU market for clinical or diagnostic use. Complying with the IVDR requirements may require us to incur significant expenditures.
We likely will be impacted by this new regulation, either directly as a manufacturer of IVDs, or indirectly as a supplier to customers who are placing IVDs in the EU market for clinical or diagnostic use.
Environmental, social, governance (ESG) and human capital We are at the forefront of the synthetic biology revolution, and our products are increasingly being used to empower our customers, which consist of diagnostic, therapeutic and healthcare companies, agricultural biotech companies, chemical companies, academic institutions and government entities, around the world to address large societal challenges.
Corporate Responsibility We are at the forefront of the bioeconomy revolution, and our products are increasingly being used to empower our customers, which consist of diagnostic, therapeutic and healthcare companies, agricultural biotech companies, chemical companies, academic institutions and government entities, around the world to address large societal challenges.
The reagent consumption levels vary depending on the DNA synthesizer and its setup. At Twist, we developed an ultra-high-throughput DNA synthesis platform to address the limitations of throughput, scalability, and cost inherent in legacy DNA synthesis methods like that described above.
At Twist, we developed an ultra-high-throughput DNA synthesis platform to address the limitations of throughput, scalability, and cost inherent in legacy DNA synthesis methods like that described above.
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 or is intended for use in the conduct of nonclinical laboratory research and not intended to produce results for clinical use.
Leveraging our silicon-based synthesis platform, we provide customers with a high throughput IgG capability, removing this bottleneck from the antibody discovery process. NGS tools Building from our DNA synthesis platform, we have developed products to enable next-generation sequencing.
Leveraging our silicon-based synthesis platform, we provide customers with a high throughput IgG capability, removing this bottleneck from the antibody discovery process. We offer standard and Express turnaround times in both CHO and HEK293 cell lines. NGS tools Building from our DNA synthesis platform, we have developed products to enable next-generation sequencing.
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.
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, (iii) another legally marketed, similar device that has been cleared through the 510(k) process, or (iv) a device that was granted marketing authorization via the De Novo classification process under section 513(f)(2) of the FDC Act that is not exempt from premarket notification requirements.
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.
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 500 nucleotides in length, with an error rate of 1:3000 nucleotides. In fiscal year 2024 we added an offering of cloned oligo pools to further enable researchers.
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.
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.
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.
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.
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.
Based on a recent survey conducted in February 2024 where 91% of our employees responded: • 89% of employees understand Twist’s mission • 86% understand how they contribute to the mission of the Company • 88% understand how their goals contribute to Twist We hold All Employee meetings twice per month as well as a monthly managers meeting for all people managers.
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.
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 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.
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 biopharma services for our current customers and future partners; • continue to develop commercial solution for storing digital data in DNA; and • expand our global presence.
We have initiated monthly Culture Conversations where we explore identities and systems of power using an intersectional lens each month. Past topics include: disability, LGBTQIA+, ageism, Latin identity, and more. Our objective is to appreciate each other as individuals with unique lived experiences, rather than define one another by a single trait such as race, sexual orientation or geographical location.
Past topics include: disability, LGBTQIA+, ageism, Latin identity, and more. Our objective is to appreciate each other as individuals with unique lived experiences, rather than define one another by a single trait such as race, sexual orientation or geographical location.
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).
As such, an RUO IVD is not intended for use in clinical investigations or in clinical practice. 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 they may be considered to be adulterated and misbranded.
All employees are required to abide by, review and confirm compliance to the company’s Code of Ethics, our Anti-Money Laundering Policy, our Anti-Corruption Policy, our Modern Slavery Act Statement and our Supplier Code of Conduct. We have established a reporting hotline and email address that enables employees to anonymously report any suspected violations of the Code of Ethics.
All employees are required to abide by, review and confirm compliance to the Company’s Code of Ethics, our Anti-Money Laundering Policy, our Anti-Corruption Policy. We also maintain a Modern Slavery Act Statement and our Supplier Code of Conduct.
If the FDA or other regulatory authorities assert that any of our 16 Table of Contents RUO products are subject to regulatory clearance or approval, our business, financial condition, or results of operations could be adversely affected.
If the FDA or other regulatory authorities assert that any of our RUO products are subject to regulatory clearance or approval, our business, financial condition, or results of operations could be adversely affected. Some of our customers may use our products in their own laboratory-developed tests, or LDTs.
The 96-well plate allows researchers to create 96 oligos in parallel, one in each well. While this process can successfully achieve DNA synthesis, it requires high volumes of phosphoramidites, an expensive raw material, as well as other ancillary chemical reagents such as activator, wash, deblock, oxidizer and capping reagents, many of which are toxic and environmentally harmful.
While this process can successfully achieve DNA synthesis, it requires high volumes of phosphoramidites, an expensive raw material, as well as other ancillary chemical reagents such as activator, wash, deblock, oxidizer and capping reagents, many of which are toxic and environmentally harmful. The reagent consumption levels vary depending on the DNA synthesizer and its setup.
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 who then integrate our products into their workflows for further commercialization . Our products are intended to be used as research tools that enable our customers to develop a wide spectrum of commercial products.
Our RUO 12 Table of Contents products are sold and promoted for non-diagnostic and non-clinical purposes to academic institutions, life sciences and research laboratories, and biopharmaceutical and biotechnology companies who then integrate our products into their workflows for further commercialization. These products serve as vital research tools, enabling our customers to develop a diverse spectrum of commercial products.
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.
We have established a reporting hotline and email address that enables employees to anonymously report any suspected violations of the Code of Ethics. 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 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.
In the emerging field of DNA digital data storage, we compete with Biomemory, Catalog Technologies, Inc., GenScript, various academic institutions, and other emerging competitors.
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.
Currently, we are pursuing research and development projects with respect to the following: • process development for highest quality oligos; • develop proprietary enzymes to optimize SynBio and NGS products and workflows; • silicon process and enzymatic chemistry development for our data storage initiative; • evaluate and implement AI applications to potentially optimize services for our customers; 7 Table of Contents • expansion of our product offerings for oligo, gene, synthetic controls, NGS library preparation and target enrichment, and DNA Libraries products; • continuous process improvements across the business to facilitate speed, efficiency and automation; and, • develop new products including mRNA and proteins.
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.
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.
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.
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.
Diversity, equity, inclusion and belonging Diversity is in our DNA all the way from the top of the organization down to the individual employee. Our board adopted a Board Diversity Statement in January 2022 to provide informed decisions on diversity, equity and inclusion. Our employees come from numerous countries and bring diversity to our workplace across many critical categories.
Our board adopted a Board Diversity Statement in January 2022 to provide informed decisions on diversity, equity and inclusion. Our employees come from numerous countries and bring diversity to our workplace across many critical categories. We believe our Company is stronger because of the variety of experiences and backgrounds our employees bring to their work every day.
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.
Our NGS target enrichment and library preparation products are used in a more comprehensive workflow for next generation sequencing for research purposes only. 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.
Traditionally, the lack of options for oligonucleotide production forced researchers to choose between using less precise methods or reducing the number of samples in their study. The ability of the Twist DNA synthesis platform to precisely manufacture target enrichment probes at large scale has dramatically increased the types of projects that can now be addressed using NGS technologies.
The ability of the Twist DNA synthesis platform to precisely manufacture target enrichment probes at large scale has dramatically increased the types of projects that can now be addressed using NGS technologies.
All of our work supports our mission to provide synthetic DNA and DNA products to improve health and sustainability. Our employees are a key factor in our ability to serve our customers. The ability to hire and retain highly skilled professionals remains key to our success in the marketplace.
Human Capital 9 Table of Contents Our employees are a key factor in our ability to serve our customers. The ability to hire and retain highly skilled professionals remains key to our success in the marketplace.
Our commitment to diversity extends through our recruitment, retention, learning and engagement and community partnerships. As part of our diversity, equity, inclusion and belonging strategy, we made an active decision to pursue opportunities for learning and engagement that bring people from different backgrounds together into conversation.
As part of our diversity, equity, inclusion and belonging strategy, we made an active decision to pursue opportunities for learning and engagement that bring people from different backgrounds together into conversation. We have initiated monthly Culture Conversations where we explore identities and systems of power using an intersectional lens each month.
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.
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. To date, we have generated antibody leads to multiple biological targets and these antibody leads are in various stages of early discovery and development.
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.
Among our employees, 55% 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. Our commitment to diversity extends through our recruitment, retention, learning and engagement and community partnerships.
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).
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 Twist Bioscience is a leading provider of synthetic DNA products, serving customers across research, development, and commercial applications.
All products can be used for environmental monitoring and surveillance testing, while also providing insight into the full sequence information to monitor viral evolution and strain origin. Drug and Target Discovery Solutions Precision DNA libraries Our platform allows customers to customize every antibody sequence variation and construct a precise library systematically to target the entire region of interest.
Drug and Target Discovery Solutions Precision DNA libraries Our platform allows customers to customize every antibody sequence variation and construct a precise library systematically to target the entire region of interest.
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.
Community engagement, social and relationship capital We are endeavoring to develop relationships, give back to our communities and engage in corporate social responsibility and sustainability initiatives. We provide all employees with eight fully paid hours each year to give back to the community at an organization of their choice.
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.
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.
We face competition from a broad range of providers of core synthetic biology products such as GenScript Biotech Corporation, DNA Script, Inc., GENEWIZ (owned by Azenta), Integrated DNA Technologies, Inc.
We face competition from a broad range of providers of synthetic biology products such as GenScript Biotech Corporation, DNA Script, Inc., GENEWIZ (owned by Azenta), Integrated DNA Technologies, Inc. (owned by Danaher Corporation), DNA 2.0 Inc. d/b/a/ ATUM, GeneArt (owned by Thermo Fisher Scientific Inc.), Eurofins Genomics LLC, Promega Corporation, OriGene Technologies, Inc., Blue Heron Biotech, LLC, Elegen and others.
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.
Partnerships with leading companies We believe we have several avenues available to monetize our antibody discovery program. 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.
Our Platform We developed the Twist Bioscience DNA synthesis platform to address the limitations of throughput, scalability, and cost inherent in legacy DNA synthesis methods. Our platform stems from extensive analyses and improvements to the existing gene synthesis and assembly workflows.
Our platform stems from extensive analyses and improvements to the existing gene synthesis and assembly workflows.
This is a critical part of our strategy to address our large market and diverse customer base, as well as drive commercial productivity, enhance the customer experience, and promote loyalty. We target customers of our NGS products through a direct sales team focused on the NGS tools market, which is separate from our synthetic DNA sales force.
This is a critical part of our strategy to address our large markets and diverse customer base, as well as drive commercial productivity, enhance the customer experience, and promote loyalty. 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.
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.
FSAP 14 Table of Contents The 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.
Our core technologies combine expertise in silicon, software, fluidics, chemistry, and motion and vision control to miniaturize thousands of parallel chemical reactions on silicon and write thousands of strands of DNA in parallel. Enzymatic Synthesis Several companies are pursuing an emerging gene synthesis process that uses enzymatic chemistry rather than phosphoramidite chemistry.
Our core technologies combine expertise in silicon, software, fluidics, chemistry, and motion and vision control to miniaturize thousands of parallel chemical reactions on silicon and write thousands of strands of DNA in parallel. 4 Table of Contents Our Products We have developed multiple products derived from synthetic DNA and our versatile DNA synthesis technology.
Aside from certain labeling requirements, we believe that some of our products, as currently marketed, are largely unregulated by governmental bodies, including the FDA.
Aside from certain labeling requirements, we believe that most of our products, as currently marketed, are largely unregulated by governmental bodies, including the FDA. Even so, we recognize that the applications of synthetic biology are rapidly evolving and we are actively involved in supporting our customers who are developing regulated products, including through contract manufacturing and specialized packaging solutions.
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.
The course equips leaders and employees with the tools they need to identify and address unwelcome conduct in non-adversarial, respectful terms. 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).
We have also begun investigating how to support the In-Vitro Diagnostic Regulations (IVDR) of the European Union so that our regulated products could be available across Europe. 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.
For example, we launched a limited line of IVDs that are CE-marked and IVDR compliant to support our European customers who are in the in vitro diagnostic medical device market. FDA Pursuant to its authority under the Federal Food, Drug, and Cosmetic Act, or the FDC Act, the FDA has jurisdiction over medical devices.
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.
In fiscal year 2024, we added several innovative library preparation products for specific applications, leveraging our unique ability to develop proprietary enzymes for use within the workflows. 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.
Our libraries are explicitly developed for a specific area of the genome or tailored to a specific disease, with antibody compounds evenly represented across all desired areas of the genome. We have also developed a comprehensive antibody optimization solution to enable simultaneous optimization of multiple characteristics of a given antibody.
Our libraries are explicitly developed for a specific area of the genome or tailored to a specific disease, with antibody compounds evenly represented across all desired areas of the genome. Biopharma Services Modern therapeutic targets are increasing in complexity and traditional, single modality platforms are no longer sufficient on their own.
Our platform has unlocked new applications, improved data quality, and dramatically expanded the types of scientific questions that can be answered using NGS. In addition, the speed of our DNA synthesis platform enables customers to quickly deploy NGS technologies to applications where the time to answer is critical.
In addition, the speed of our DNA synthesis platform enables customers to quickly deploy NGS technologies to applications where the time to answer is critical. Our Platform We developed the Twist Bioscience DNA synthesis platform to address the limitations of throughput, scalability, and cost inherent in legacy DNA synthesis methods.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
Biggest changeThese and other provisions in our amended and restated certificate of incorporation and our amended and restated bylaws and under Delaware law could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions. 37 Table of Contents Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
Threats involving the misuse of access our network, systems, and information by our current or former employees, contractors, vendors, or partners, whether intentional or unintentional, also pose a risk to the security of our network, systems, and information and data.
Threats involving the misuse of access to our network, systems, and information by our current or former employees, contractors, vendors, or partners, whether intentional or unintentional, also pose a risk to the security of our network, systems, and information and data.
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.
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; • 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 41 Table of Contents • we may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
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.
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; 17 Table of Contents • 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.
In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation, and this may require significant additional costs associated with resolving such action in other jurisdictions. 42 Table of Contents General risk factors The market price of our common stock is likely to be volatile and could fluctuate or decline, resulting in a substantial loss of your investment.
In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation, and this may require significant additional costs associated with resolving such action in other jurisdictions. 38 Table of Contents General risk factors The market price of our common stock is likely to be volatile and could fluctuate or decline, resulting in a substantial loss of your investment.
Even though our information security management system received ISO 27001:2013 certification, our, and our partners’ or suppliers’, information technology systems have been and may still be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, computer viruses, cyberattacks such as phishing, social engineering, ransomware, denial-of-service and other malware attacks, telecommunication failures, user errors, catastrophes or other unforeseen events.
Even though our information security management system received ISO 27001:2022 certification, our, and our partners’ or suppliers’, information technology systems have been and may still be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, computer viruses, cyberattacks such as phishing, social engineering, ransomware, denial-of-service and other malware attacks, telecommunication failures, user errors, catastrophes or other unforeseen events.
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.
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 inability to continue these initiatives and initiate new research and development efforts could result in a failure to develop new products, improve upon existing products such that sectors such as pharmaceutical biologics drug discovery, DNA library creation and data storage may never be fully developed, and expand our addressable market, which could have a material and adverse impact on our sales, business, financial position and results of operations.
Our inability to continue these initiatives and initiate new research and development efforts could result in a failure to develop or delay in developing new products, improve upon existing products such that sectors such as pharmaceutical biologics drug discovery, DNA library creation and data storage may never be fully developed, and expand our addressable market, which could have a material and adverse impact on our sales, business, financial position and results of operations.
To do this, we aim to attract new and existing buyers of synthetic DNA and NGS tool kits, convert makers of synthetic DNA into buyers of synthetic DNA, monetize our antibody discovery platform by entering into partnerships and achieve widespread market acceptance by delivering both our current product offerings and new products and technologies at low cost, with high-quality, reliable turn around times and throughput, superior e-commerce services and effective technical support.
To do this, we aim to attract new and existing buyers of synthetic DNA and NGS tool kits, convert makers of synthetic DNA into buyers of synthetic DNA, monetize our antibody discovery platform by entering into partnerships and achieve widespread market acceptance by delivering both our current product offerings and new products and technologies at low cost, with high-quality, reliable turnaround times and throughput, superior e-commerce services and effective technical support.
In addition, access to capital markets is critical to many of our customers’ ability to fund their operations, including purchase our products and services. Traditionally, biotechnology and life sciences companies have funded their research and development expenditures by raising capital in the equity markets.
In addition, access to capital markets is critical to many of our customers’ ability to fund their operations, including purchasing our products and services. Traditionally, biotechnology and life sciences companies have funded their research and development expenditures by raising capital in the equity markets.
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 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.
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.
Natural disasters, public health crises, political crises, severe weather events, 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.
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.
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.
We could engage in exporting or related activity that contravenes international trade restraints, or regulatory authorities could promulgate more far-reaching international trade restraints, which could give rise to one or more of substantial legal liability, impediments to our business and reputational damage. 29 Table of Contents Our international business activities must comport with U.S. export controls and other international trade restraints, including the U.S.
We could engage in exporting or related activity that contravenes international trade restraints, or regulatory authorities could promulgate more far-reaching international trade restraints, which could give rise to one or more of substantial legal liability, impediments to our business and reputational damage. Our international business activities must comport with U.S. export controls and other international trade restraints, including the U.S.
Some of our current competitors, as well as many of our potential competitors, have significant name recognition, substantial intellectual property portfolios, longer operating histories, greater resources to invest in new technologies, substantial experience in new product development and manufacturing capabilities and more established distribution channels to deliver products to customers than we do.
Some of our current competitors, as well as many of our 26 Table of Contents potential competitors, have significant name recognition, substantial intellectual property portfolios, longer operating histories, greater resources to invest in new technologies, substantial experience in new product development and manufacturing capabilities and more established distribution channels to deliver products to customers than we do.
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.
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 18 Table of Contents affected. Cyberattacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position.
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.
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.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business, put our own patents at risk of being invalidated or interpreted narrowly, put our patent applications at risk of not being issued, and provoke third parties to assert claims against us.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business, put our 33 Table of Contents own patents at risk of being invalidated or interpreted narrowly, put our patent applications at risk of not being issued, and provoke third parties to assert claims against us.
Legal action could be initiated against the owners of the intellectual property that we license. Even if we are not a party to these legal actions, an adverse outcome could harm our business because it might prevent these other companies or institutions from continuing to license intellectual property that we may need to operate our business.
Legal action could be initiated against the owners of the intellectual property that we license. Even if we are not a party to these legal actions, an adverse outcome could harm our business because it might 36 Table of Contents prevent these other companies or institutions from continuing to license intellectual property that we may need to operate our business.
Accordingly, although there can be no assurance that we will undertake or successfully complete any collaborations, any transactions that we do complete may be subject to the foregoing or other risks and have a material and adverse effect on our business, financial condition, results of operations and prospects.
Accordingly, although there can be no 25 Table of Contents assurance that we will undertake or successfully complete any collaborations, any transactions that we do complete may be subject to the foregoing or other risks and have a material and adverse effect on our business, financial condition, results of operations and prospects.
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.
See "Business-Government regulation-FDA" . 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.
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.
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.
As we move into new markets and applications for our products and processes, incumbent participants in such markets may assert their patents and other proprietary rights against us as a means of slowing our entry into such markets or as a means to extract substantial license and royalty payments from us.
As we move into new markets and applications for our products and processes, incumbent participants in such 34 Table of Contents markets may assert their patents and other proprietary rights against us as a means of slowing our entry into such markets or as a means to extract substantial license and royalty payments from us.
Stockholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways we cannot currently anticipate, the manner in which we operate our business.
Stockholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to 31 Table of Contents substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways we cannot currently anticipate, the manner in which we operate 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.
With respect to our Wilsonville facility, if regulatory, manufacturing, or other problems require us to discontinue production at the 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.
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.
During our fiscal years ended September 30, 2024, 2023 and 2022, 40%, 40% and 41%, 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.
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.
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.
Moreover, we have no control over the timing and volume of purchases by these customers and potential customers, and as a result, revenue from these sources may vary significantly due to factors that can be difficult to forecast.
Moreover, we have no control over the timing and volume of purchases by these customers and potential customers, and as 21 Table of Contents a result, revenue from these sources may vary significantly due to factors that can be difficult to forecast.
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.
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 offering and our other products in both local and international markets.
We, our suppliers, third-party service providers and customers are vulnerable to damage from natural disasters, including fire, floods or monsoons, power loss, communications failures, public health crises, such as pandemics and epidemics, political crises, such as terrorism, war, political instability or other conflict and similar events.
We, our suppliers, third-party service providers and customers are vulnerable to damage from natural disasters, including fire, floods or monsoons, power loss, communications failures, public health crises, such as pandemics and epidemics, political crises, such as 29 Table of Contents terrorism, war, political instability or other conflict and similar events.
In the antibody discovery market, we compete with clinical research organizations, such as Curia, GenScript, and Genovac (formerly part of Aldevron, LLC), and antibody discovery biotechnology companies, such as Fair Journey/Iontas, Adimab, Zymeworks, Distributed Bio (owned by Charles River), Ablexis, Specifica, OmniAb and AbCellera Biologics Inc.
In the antibody discovery market, we compete with contract research organizations including Curia, GenScript, and Genovac (formerly part of Aldevron, LLC), and antibody discovery biotechnology companies, such as Fair Journey/Iontas, Adimab, Distributed Bio (owned by Charles River), Ablexis, Specifica, OmniAb and AbCellera Biologics Inc.
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.
As a result, a price increase for our raw materials may negatively impact our business, financial position and results of operations. We may encounter difficulties in managing our growth, and these difficulties could impair our profitability.
Patent terms may be shortened or lengthened by, for example, terminal disclaimers, patent term adjustments, supplemental protection certificates, and patent term extensions. Although extensions may be available, the life of a patent, and the protection it affords, is limited.
Patent terms may be shortened or lengthened by, for example, terminal disclaimers, patent term adjustments, supplemental protection certificates, and patent term extensions. Although extensions may be available, 32 Table of Contents the life of a patent, and the protection it affords, is limited.
The loss of any significant customer or a significant reduction in the amount of product ordered by Ginkgo or any other significant customer would adversely affect our revenue, results of operations, cash flows and reputation in the marketplace. We depend on the continuing efforts of our senior management team and other key personnel.
The loss of any significant customer or a significant reduction in the amount of product ordered by any significant customer would adversely affect our revenue, results of operations, cash flows and reputation in the marketplace. 24 Table of Contents We depend on the continuing efforts of our senior management team and other key personnel.
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.
Risks related to our business 16 Table of Contents 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.
These concerns could result in increased expenses, regulatory scrutiny, delays or other impediments to our programs. 30 Table of Contents We use biological and hazardous materials that require considerable expertise and expense for handling, storage and disposal and may result in claims against us.
These concerns could result in increased expenses, regulatory scrutiny, delays or other impediments to our programs. We use biological and hazardous materials that require considerable expertise and expense for handling, storage and disposal and may result in claims against us.
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 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.
Additionally, we compete with both large and emerging providers in the life sciences tools and diagnostics industries focused on sample preparation for NGS such as Thermo Fisher Scientific Inc., Illumina, Inc., Integrated DNA Technologies, Inc. and Agilent.
Additionally, we compete with both large and emerging providers in the life sciences tools and diagnostics industries focused on sample preparation for NGS such as Thermo Fisher Scientific Inc., Illumina, Inc., Integrated DNA Technologies, Inc., Roche, New England Bioloabs and Agilent.
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.
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.
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.
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.
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.
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 public health situations; • inability to raise sufficient funds in the capital markets; • changes in the regulatory environment; • healthcare legislative reform measures, • differences in budgetary cycles; • inflationary pressures; and • market acceptance of relatively new technologies, such as ours.
While we have experienced increased operating costs in recent periods, which we believe are due in part to the recent growth in inflation, we do not believe that inflation has had a material effect on our business, financial condition or results of operations.
While we have experienced increased operating costs in recent periods, which we believe were due in part to a rise in inflation, we do not believe that inflation has had a material effect on our business, financial condition or results of operations.
There can be no assurance that we can continue to utilize our antibody libraries to accelerate the lead identification and lead optimization steps of antibody discovery or to discover more effective antibody drugs.
There can be no assurance that we can continue to utilize our biopharma services offerings to accelerate the lead identification and lead optimization steps of antibody discovery or to discover more effective antibody drugs.
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.
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.
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.
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.
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.
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; • 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; 15 Table of Contents • 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 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 19 Table of Contents chain, and ability to produce, sell and distribute our products and services.
Although historically we have not experienced price increases due to unexpected shortages in raw materials or other materials and other unanticipated events, there is no assurance that our supply of raw materials or other materials will not be significantly adversely affected in the future, which may in turn adversely affect our business, prospects, financial condition and results of operation.
Any shortage of raw materials or materials necessary for our production capabilities may adversely affect our business. 23 Table of Contents Although historically we have not experienced price increases due to unexpected shortages in raw materials or other materials and other unanticipated events, there is no assurance that our supply of raw materials or other materials will not be significantly adversely affected in the future, which may in turn adversely affect our business, prospects, financial condition and results of operation.
Any failure to maintain performance, reliability, security and availability of our systems and networks may result in accidental or unlawful destruction, damage, loss, unavailability, alteration, impairment, misuse, unauthorized disclosure of, or unauthorized access to our data, including personal or proprietary information. Our actual operating results may differ significantly from our guidance.
Any failure to maintain performance, reliability, security and availability of our systems and networks may result in accidental or unlawful destruction, damage, loss, unavailability, alteration, impairment, misuse, unauthorized disclosure of, or unauthorized access to our data, including personal or proprietary information.
Neither we nor our supplier may successfully complete any required increase to existing manufacturing capacity in a timely manner, or at all. We must continue to secure and maintain sufficient and stable supplies of raw materials. Any shortage of raw materials or materials necessary for our production capabilities may adversely affect our business.
Neither we nor our supplier may successfully complete any required increase to existing manufacturing capacity in a timely manner, or at all. We must continue to secure and maintain sufficient and stable supplies of raw materials.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. Our actual operating results may differ significantly from our guidance.
In addition, due to political uncertainty and military actions associated with Russia’s invasion of Ukraine, we and our third-party providers are at heightened risk of theft or cyber attack of technology, data, and intellectual property through direct intrusion by private parties or foreign actors, including those affiliated with or controlled by nation-state actors.
In addition, we and our third-party providers are at heightened risk of theft or cyber attack of technology, data, and intellectual property through direct intrusion by private parties or foreign actors, including those affiliated with or controlled by nation-state actors.
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.
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.
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. We may not be successful in maintaining our competitive position for a number of reasons.
In the emerging field of DNA digital data storage, we compete with Biomemory, Catalog Technologies, Inc., GenScript, various academic institutions, and other emerging competitors. We may not be successful in maintaining our competitive position for a number of reasons.
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.
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 or is intended for use in the conduct of nonclinical laboratory research and not intended to produce results for clinical use.
Such RUO products do not require premarket clearance or approval from the FDA, provided that they are labeled “For Research Use Only. Not For Use In Diagnostic Procedures” pursuant to FDA regulations. Our IVD products are not intended for clinical or diagnostic use, and we market and label them as RUO.
As such, an RUO IVD is not intended for use in clinical investigations or in clinical practice. Such RUO products do not require premarket clearance or approval from the FDA, provided that they are labeled “For Research Use Only. Not For Use In Diagnostic Procedures” pursuant to FDA regulations.
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.
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.
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 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.
An initial decision to revoke the patent was issued on November 29, 2022, which will not become final until all appeals are exhausted. We believe the EPO's decision relating to the original claims is erroneous and we appealed the EPO’s decision on January 27, 2023 while continuing to prosecute related pending European applications.
An initial decision to revoke the patent was issued on November 29, 2022, which will not become final until all appeals are exhausted. We believe the EPO's decision relating to the original claims is erroneous and we appealed the EPO’s decision on January 27, 2023. The opponent filed a reply to the appeal on August 2, 2023.
If our sales and marketing efforts, or those of any third-party sales and distribution partners, are not successful, our new technologies and products may not gain market acceptance, which could materially impact our business operations.
If our sales and marketing efforts, or those of any third-party sales and distribution partners, are not successful, our new technologies and products may not gain market acceptance, which could materially impact our business operations. If we are unable to expand our DNA synthesis manufacturing capacity, we could lose revenue and our business could be harmed.
If this facility or the equipment in it is significantly damaged or destroyed by fire, flood, power loss, or similar events, or is shut down for health and safety or other reasons, we may not be able to quickly or inexpensively replace our manufacturing capacity or replace the facility at all.
In addition, if either of our facilities or the equipment therein is significantly damaged, destroyed, or affected by fire, flood, power loss, or similar events, or is shut down for health and safety reasons, including public health emergencies, severe weather, or other reasons, we may not be able to quickly or inexpensively replace our manufacturing capacity or replace the facility.
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.
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.
Our customers, however, may use our products in their own laboratory-developed tests, or LDTs. The FDA has historically taken the position that LDTs are considered to be IVDs, but has generally exercised enforcement discretion.
Our IVD products are not intended for clinical or diagnostic use, and we market and label them as RUO. Our customers, however, may use our products in their own laboratory-developed tests, or LDTs. The FDA has historically taken the position that LDTs are considered to be IVDs, but has generally exercised enforcement discretion.
We may incur significant losses in the future for a number of reasons, many of which are beyond our control, including the other risks described in this Form 10-K, market acceptance of our products, business and economic conditions resulting from the COVID-19 outbreaks, future product development, and our market penetration and margins.
We expect to incur substantial losses and negative cash flow for the foreseeable future. We may incur significant losses in the future for a number of reasons, many of which are beyond our control, including the other risks described in this Form 10-K, market acceptance of our products, future product development, and our market penetration and margins.
Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in the “Risk factors” section in this Form 10-K could result in the actual operating results being different from our guidance, and the differences may be adverse and material.
Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in the “Risk factors” section in this Form 10-K could result in the actual operating results being different from our guidance, and the differences may be adverse and material. 40 Table of Contents We have in the past and may in the future be subject to short selling strategies that may drive down the market price of our common stock.
We may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights.
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.
(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.
(owned by Danaher Corporation), DNA 2.0 Inc. d/b/a/ ATUM, GeneArt (owned by Thermo Fisher Scientific Inc.), Eurofins Genomics LLC, Promega Corporation, OriGene Technologies, Inc., Blue Heron Biotech, LLC, Elegen and others.
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.
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.
Our headquarters in South San Francisco, California is located near known earthquake fault zones and is vulnerable to damage from earthquakes. Our primary manufacturing facility in Wilsonville, Oregon is vulnerable to extreme heat and wildfires, as well as damage from earthquakes.
Our headquarters in South San Francisco, California is located near known earthquake fault zones and is vulnerable to damage from earthquakes. Our primary manufacturing facility in Wilsonville, Oregon is vulnerable to extreme heat, wildfires, and severe weather events, all of which may be further exacerbated by the effects of climate change, as well as damage from earthquakes.
In the event of a temporary or protracted loss of this facility or equipment, we might not be able to transfer manufacturing to another third party. Even if we could transfer manufacturing from one facility to another, the shift would likely be expensive and time-consuming, particularly if we were to maintain the current manufacturing standards procedures at such alternative facility.
Even if we could transfer manufacturing from one facility to another, the shift would likely be expensive and time-consuming, particularly if we were to maintain the current manufacturing standards procedures at such alternative facility.
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.
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.
To date, we have invested a substantial portion of our efforts and financial resources towards the research and development and commercialization of our synthetic DNA products. The DNA synthesis business is very capital intensive, particularly for early-stage companies that do not have significant off-setting revenues and which are making significant investments in the commercialization and marketing of their products.
The DNA synthesis business is very capital intensive, particularly 22 Table of Contents for early-stage companies that do not have significant off-setting revenues and which are making significant investments in the commercialization and marketing of their products. Substantially all of our revenue generated to date is from our synthetic DNA products.
We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by U.S. and international legislative bodies.
Similarly, international courts have made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted. We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by U.S. and international legislative bodies.
However, our remediation efforts may be inadequate, and we may in the future discover other areas of our internal controls that require remediation. We cannot be certain that we will be able to maintain adequate controls over our financial processes and reporting in the future.
We cannot be certain that we will be able to maintain adequate controls over our financial processes and reporting in the future.
Substantially all of our revenue generated to date is from our synthetic DNA products. Our financial results are dependent on strengthening our core business while diversifying into other developing sectors such as pharmaceutical biologics drug discovery, creating useful DNA libraries and data storage.
Our financial results are dependent on strengthening our synthetic biology and NGS product groups while diversifying into other developing sectors such as pharmaceutical biologics drug discovery, creating useful DNA libraries and data storage.
Supreme Court and the Court of Appeals for the Federal Circuit have made, and will likely continue to make, changes in how the patent laws of the United States are interpreted. Similarly, international courts have made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted.
In the United States and in many international jurisdictions, policy regarding the breadth of claims allowed in patents can be inconsistent. The U.S. Supreme Court and the Court of Appeals for the Federal Circuit have made, and will likely continue to make, changes in how the patent laws of the United States are interpreted.
We cannot guarantee that our efforts to provide these key requirements will be consistently acceptable to, and meet the performance expectations of, our customers and potential customers. If we are unable to successfully attract and retain customers, our business, financial position and results of operations would be negatively impacted.
We cannot guarantee that our efforts to provide these key requirements will be consistently acceptable to, and meet the performance expectations of, our customers and potential customers.
In addition to these owned and exclusively licensed patents and pending patent applications, we also license patents on a non-exclusive and/or territory restricted basis. Our intellectual property portfolio includes important patents and patent applications directed to DNA synthesis, Next Generation Sequencing, antibody libraries, and DNA data storage. Several patent applications covering our technologies have been filed recently.
Our intellectual property portfolio includes important patents and patent applications directed to DNA synthesis, Next Generation Sequencing, antibody libraries, and DNA data storage. Several patent applications covering our technologies have been filed recently.
Our production facility in Wilsonville, Oregon has increased our manufacturing capacity, but if customer demand increases, we may need to expand manufacturing capacity further, which could impact our revenue growth.
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 production facility in Wilsonville, Oregon has increased our manufacturing capacity, but if customer demand increases, we may need to expand manufacturing capacity further, which could impact our revenue growth.
We announced on February 12, 2020 that our information security management system received ISO 27001:2013 certification, an information security standard published by the International Organization for Standardization (ISO), the world’s largest developer of voluntary international standards, and the International Electrotechnical Commission.
In 2024, we received ISO 27001:2022 certification, the most advanced information security standard published by the International Organization for Standardization (ISO), the world’s largest developer of voluntary international standards, and the International Electrotechnical Commission.

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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, 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.
Biggest changeProperties Our principal facilities are described below: 43 Table of Contents 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 Guangzhou, China 9,956 2026 General & Administration, Sales & Marketing and Supply Chain activities Leased Carlsbad, CA 8,772 2026 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 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.
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, 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. Mine safety disclosures Not applicable.
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 3. Legal proceedings For a description of material pending legal proceedings, see Note 9 “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. 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.
Biggest changeThe 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 returns. 44 Table of Contents * $100.00 invested on October 1, 2019 in stock or index, including reinvestment of dividends. 9/30/2019 9/30/2020 9/30/2021 9/30/2022 9/30/2023 9/30/2024 Twist Bioscience Corporation $ 100.00 $ 318.13 $ 447.95 $ 147.57 $ 84.84 $ 189.20 Nasdaq Composite Index $ 100.00 $ 140.96 $ 183.61 $ 135.41 $ 170.76 $ 236.74 Nasdaq Biotechnology Index $ 100.00 $ 136.90 $ 164.57 $ 123.00 $ 130.12 $ 158.21 Holders of Record As of November 13, 2024, there were approximately 50 holders of record of our common stock.
Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant. 47 Table of Contents Sales of unregistered securities None.
Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant. 45 Table of Contents Sales of unregistered securities None.
The following graph compares the cumulative total return to stockholder return on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
The following graph compares the cumulative total shareholder return on our common stock to the cumulative total returns of the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
Issuer Purchases of Equity Securities None. Item 6. [Reserved] 48 Table of Contents
Issuer Purchases of Equity Securities None. Item 6. [Reserved] 46 Table of Contents
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.
An investment of $100 is assumed to have been made in our common stock and each index on September 30, 2019 and its performance is presented as of the end of each our fiscal years through September 30, 2024.

Item 7. Management's Discussion & Analysis

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

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Biggest changeNet 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.
Biggest changeThe change in operating assets and liabilities was mainly due to decreases in accounts receivable of $8.4 million, inventory of $8.0 million, prepaid and other current assets of $0.4 million, other non-current assets of $0.4 million, accounts payable of $11.8 million and other liabilities $2.3 million, offset by increases in accrued expenses of $4.4 million and accrued compensation of $7.9 million. 54 Table of Contents 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 in operating assets and liabilities of $1.0 million.
Percentage of revenue from new and repeat customers We believe that the percentage of revenue that we generate from both new and repeat customers is an indicator of our ability to drive adoption of our products amongst existing customers while also generating a robust pipeline of new customers.
Percentage of revenue from repeat customers We believe that the percentage of revenue that we generate from both new and repeat customers is an indicator of our ability to drive adoption of our products amongst existing customers while also generating a robust pipeline of new customers.
Research and development Research and development expenses consist primarily of costs incurred for the development of our products, which include personnel costs, laboratory equipment and supplies, consulting costs, depreciation, rent, IT, maintenance and facility costs. Personnel costs consist of salaries, employee benefit costs, bonuses, and stock-based compensation expenses.
Research and development expenses Research and development expenses consist primarily of costs incurred for the development of our products, which include personnel costs, laboratory equipment and supplies, consulting costs, depreciation, rent, IT, maintenance and facility costs. Personnel costs consist of salaries, employee benefit costs, bonuses, and stock-based compensation expenses.
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.
The increase in revenue was primarily due to the 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.
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.
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.
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.
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.
The amount of taxes collected from customers and payable to governmental entities is included on the balance sheet as part of “Accrued expenses and other current liabilities.” Stock-based compensation We have granted stock-based awards, consisting of stock options and restricted stock, to our employees, certain non-employee consultants and certain members of our board of directors.
The amount of taxes collected from customers and payable to governmental entities is included on the balance sheet as part of “Accrued expenses and other current liabilities.” Stock-based compensation We have granted stock-based awards, consisting of restricted stock and stock options, to our employees, certain non-employee consultants and certain members of our board of directors.
Our Biopharma revenue currently primarily consists of research and development agreements with third parties that provide for up-front and milestone-based payments. We also enter into research and development agreements that do not include up-front or milestone-based payments and recognize revenue on these types of agreements based on the timing of development activities.
Our Biopharma revenue primarily consists of research and development agreements with third parties that provide for up-front and milestone-based payments. We also enter into research and development agreements that do not include up-front or milestone-based payments and recognize revenue on these types of agreements based on the timing of development activities.
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.
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 2024, 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.
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 net cash used in operating activities for the fiscal year 2022 can be found on page 58 of our 2023 Annual Report.
The changes are the result of not achieving the Abveris revenue target for calendar year 2022 and a change in fair value of our stock price.
The changes were the result of not achieving the Abveris revenue target for calendar year 2022 and a change in fair value of our stock price.
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 last day of our fiscal year is September 30, and we refer to our fiscal year ended September 30, 2022 as fiscal year 2022 or 2022, September 30, 2023 as fiscal year 2023 or 2023 and our fiscal year ended September 30, 2024 as fiscal year 2024 or 2024.
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.
A discussion of net cash provided by financing activities for the fiscal year 2022 can be found on page 59 of our 2023 Annual Report. Off-balance sheet arrangements We do not have any off-balance sheet arrangements other than our indemnification agreements as described in Note 9 of the consolidated financial statements included elsewhere in this Form 10-K.
We recognize revenue when control of the products is transferred to the customer and at a transaction price that is determined based on the agreed upon rates in the applicable order or master supply agreement applied to the quantity of synthetic DNA that was manufactured and shipped to the customer.
We recognize revenue for synthetic biology tools, NGS tools, and DNA libraries when control of the products is transferred to the customer and at a transaction price that is determined based on the agreed upon rates in the applicable order or master supply agreement applied to the quantity of synthetic DNA that was manufactured and shipped to the customer.
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.
For the years ended September 30, 2024, 2023 and 2022 the Company recognized revenue of $1.7 million, $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.
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.
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 is recorded using a qualitative or quantitative analysis.
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.
We recorded income tax benefit of $10.4 million in 2022 mainly as a result of the business acquisition of Abveris. 53 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.
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.
A discussion of net cash used in investing activities for the fiscal year 2022 can be found on page 59 of our 2023 Annual Report.
We define an order as a contract with a customer or purchase order from a customer, which outlines the promised goods at an agreed upon-price.
We define an order as a contract with a 48 Table of Contents customer or purchase order from a customer, which outlines the promised goods at an agreed upon-price.
Refer to Note 14 to the consolidated financial statements for further details.
Refer to Note 16 to the consolidated financial statements for further details.
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.
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 believe the following critical accounting policies require that we make significant judgments and estimates in preparing our consolidated financial statements. Revenue recognition Our revenue is generated through the sale of synthetic biology tools, such as synthetic genes, or clonal genes and fragments, oligonucleotide pools, or oligo pools, NGS tools and DNA libraries.
We believe the following critical accounting policies require that we make significant judgments and estimates in preparing our consolidated financial statements. 55 Table of Contents Revenue recognition Our revenue is generated through the sale of synthetic biology tools, such as synthetic genes, or clonal genes and fragments, oligonucleotide pools, or oligo pools, NGS tools, DNA libraries, and biopharma services for antibody discovery, optimization and development ("Biopharma") .
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.
A discussion of our revenues for the year ended September 30, 2022 as compared to the year ended September 30, 2021 can be found on page 54 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 filed with the SEC on November 21, 2023, or our 2023 Annual Report.
Overview We are an innovative synthetic biology and genomics company that has developed a scalable DNA synthesis platform to industrialize the engineering of biology. The core of our platform is a proprietary technology that pioneers a new method of manufacturing synthetic DNA by “writing” DNA on a silicon chip.
Overview We are a leading, rapidly growing synthetic biology company that has developed a disruptive DNA synthesis platform to industrialize the engineering of biology. The core of our platform is a proprietary technology that pioneers a new method of manufacturing synthetic DNA by “writing” DNA on a silicon chip.
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.
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 as well as leveraging our investment in our manufacturing facility in Wilsonville, Oregon.
Our ability to increase our revenues will depend on our ability to further penetrate the domestic and international markets, generate sales through our direct sales force, distributors and over time from our e-commerce digital platform and launch new products. Revenues by geography We have one reportable segment from the sale of synthetic DNA products.
Our ability to increase our revenues will depend on our ability to further penetrate the domestic and international markets, generate sales through our direct sales force, distributors, and over time, from our e-commerce digital platform and the launch of new products.
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.
As of September 30, 2024, we had cash, cash equivalents and short-term investments of $276.4 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.
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.
As of September 30, 2024, we had a balance of $226.3 million of cash and cash equivalents and $50.1 million in short-term investments. Capital resources Our primary cash needs are for operating expenses, working capital and capital expenditures to support the growth in our business.
Operating capital requirements Our primary uses of capital are, and we expect will continue to be for the near future, compensation and related expenses, manufacturing costs, laboratory and related supplies, legal and other regulatory expenses, and general overhead costs and the capital expenditures for the Wilsonville, Oregon facility expansion.
Operating capital requirements Our primary uses of capital are, and we expect will continue to be for the near future, compensation and related expenses, manufacturing costs, laboratory and related supplies, legal and other regulatory expenses, and general overhead costs and the capital expenditures. We had $1.6 million in commitments for capital expenditures as of September 30, 2024.
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.
We generated revenues of $313.0 million in the year ended September 30, 2024, $245.1 million in the year ended September 30, 2023 and $203.6 million in the year ended September 30, 2022, while incurring net losses of $208.7 million, $204.6 million and $217.9 million in the years ended September 30, 2024, 2023 and 2022, respectively.
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.
A discussion of our cost of revenues for the year ended September 30, 2022 as compared to the year ended September 30, 2021 can be found on page 54 of our 2023 Annual Report.
Based on the nature of our contracts with customers which are recognized over a term of less than 12 months, we have elected to use the practical expedient whereby costs to obtain a contract are expensed as they are incurred.
Based on the nature of our contracts with customers which are recognized over a term of less than 12 months, we have elected to use the practical expedient whereby costs to obtain a contract are expensed as they are incurred. 56 Table of Contents We state our revenues net of any taxes collected from customers that are required to be remitted to various government agencies.
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.
Cash flows The following table summarizes our sources and uses of cash and cash equivalents: Year ended September 30, (in thousands) 2024 2023 2022 Net cash used in operating activities $ (64,094) $ (142,474) $ (124,385) Net cash provided by (used in) investing activities (3,071) 50,612 (232,930) Net cash provided by financing activities 6,890 911 270,534 Operating activities Net cash used in operating activities was $64.1 million in fiscal year 2024 and consisted primarily of a net loss of $208.7 million adjusted for non-cash items including depreciation and amortization expenses of $31.4 million, stock-based compensation expense of $50.9 million, impairment of long-lived assets of $44.9 million, non-cash lease expense of $0.9 million, and a change in operating assets and liabilities of $15.4 million.
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.
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.
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.
Financing activities Net cash provided by financing activities was $6.9 million in fiscal year 2024, which consisted of $3.8 million from proceeds from issuance of shares under the 2018 ESPP and $7.1 million from the exercise of stock options, offset by $4.0 million in repurchases of common stock for income tax withholdings.
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.
Investing activities In fiscal year 2024, our net cash used in the investing activities was $3.1 million primarily as a result of the net result of purchases and maturity of investments of $2.0 million and purchases of laboratory property, equipment and computers of $5.1 million.
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.
Year ended September 30, (in thousands, except percentages) 2024 % 2023 % 2022 % Americas $ 193,884 62% $ 151,263 62% $ 122,473 61% EMEA 92,567 30% 71,389 29% 62,078 30% APAC 26,523 8% 22,457 9% 19,014 9% Total revenues $ 312,974 100% $ 245,109 100% $ 203,565 100% Revenues by products The table below sets forth revenues by products: Year ended September 30, (in thousands, except percentages) 2024 % 2023 % 2022 % Synthetic genes $ 92,679 30% $ 73,541 30% $ 61,509 30% Oligo pools 16,906 5% 14,489 6% 12,424 6% DNA libraries 13,933 4% 10,201 4% 6,149 3% Antibody discovery 20,328 7% 23,172 9% 24,171 12% NGS tools 169,128 54% 123,706 51% 99,312 49% Total revenues $ 312,974 100% $ 245,109 100% $ 203,565 100% 49 Table of Contents Revenues by industry The table below sets forth revenues by industry: Year ended September 30, (in thousands, except percentages) 2024 % 2023 % 2022 % Industrial chemicals/materials $ 83,472 26% $ 59,321 24% $ 57,940 29% Academic research 58,452 19% 45,847 19% 37,097 18% Healthcare 168,959 54% 137,148 56% 106,363 52% Food/agriculture 2,091 1% 2,793 1% 2,165 1% Total revenues $ 312,974 100% $ 245,109 100% $ 203,565 100% Revenues increased 28% to $313.0 million in the year ended September 30, 2024, as compared to $245.1 million in the year ended September 30, 2023.
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied as of September 30, 2023 was $5.3 million. We expect to recognize revenue over the next twelve months relating to performance obligations unsatisfied as of September 30, 2023.
We expect to recognize revenue over the next twelve months relating to performance obligations unsatisfied as of September 30, 2024.
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.
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, Australia, New Zealand, Thailand and Taiwan.
Interest, 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.
Year ended September 30, Change (in thousands, except percentages) 2024 2023 2022 2024-2023 2023-2022 Interest income $ 15,344 $ 14,365 $ 3,062 $ 979 7 % $ 11,303 369 % Interest expense (29) (5) (80) (24) 480 % 75 (94) % Other income (expense) (2,650) (667) (1,087) (1,983) 297% 420 (39) % Total interest, and other income (expense), net $ 12,665 $ 13,693 $ 1,895 $ (1,028) 784 % $ 11,798 237 % Interest income increased 7%, to $15.3 million in the year ended September 30, 2024, as compared to $14.4 million for the year ended September 30, 2023, resulting from our cash and cash equivalents and short-term investments balance.
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.
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.
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.
Year ended September 30, Change (in thousands, except percentages) 2024 2023 2022 2024-2023 2023-2022 Selling, general and administrative $ 218,398 $ 189,738 $ 212,949 $ 28,660 15% $ (23,211) (11)% 51 Table of Contents Total selling, general and administrative expenses increased 15% to $218.4 million for the year ended September 30, 2024, as compared to $189.7 million for the year ended September 30, 2023.
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.
A discussion of our selling, general and administrative expenses for the year ended September 30, 2022 as compared to the year ended September 30, 2021 can be found on page 55 of our 2023 Annual Report.
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.
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. Our contracts may include one or more ordered products, and the shipment of these products comprises the performance obligation(s) under the contract.
The $14.7 million increase in material costs is due to higher volume. The increase in payroll and depreciation expenses was primarily due to the build out of the Factory of the Future, which is a second manufacturing facility located in Wilsonville, Oregon.
Depreciation and amortization increased by $11.9 million associated with the capital investment to increase capacity. The increase in payroll costs and depreciation expenses was primarily due to the build out of the second manufacturing facility located in Wilsonville, Oregon.
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.
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.
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.
Gain on deconsolidation of a subsidiary Year ended September 30, Change (in thousands, except percentages) 2024 2023 2022 2024-2023 2023-2022 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.
We have combined this technology with proprietary software, scalable commercial infrastructure, and an e-commerce platform to create an integrated technology platform that enables us to achieve high levels of quality, precision, automation, and manufacturing throughput at a significantly lower cost than our competitors.
We have combined our silicon-based DNA writing technology with proprietary software, scalable commercial infrastructure and an e-commerce platform to create an integrated technology platform that enables us to achieve high levels of quality, precision, automation, and manufacturing throughput at a significantly lower cost than our competitors We have applied our unique technology to manufacture a broad range of synthetic DNA-based products, including synthetic genes, tools for next generation sequencing, or NGS, sample preparation, and antibody libraries for drug discovery and development, all designed to enable our customers to conduct research more efficiently and effectively.
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.
Since our inception, we have incurred significant operating losses and have accumulated a net deficit of $1,241.9 million.
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%.
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.
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.
Accordingly, all of the transaction price, net of any discounts, is allocated to the performance obligation (s).
However, we anticipate these will change or may be substituted for additional or different metrics as our business grows. Value of orders received We believe that the value of orders we receive is a leading indicator of our ability to generate revenue in subsequent quarters, although there can be no assurance orders will translate into revenue.
Year ended September 30, 2024 2023 2022 Number of customers 3,562 3,450 3,300 Revenue from repeat customers 99 % 98 % 98 % Value of orders received We believe that the value of orders we receive is a leading indicator of our ability to generate revenue in subsequent quarters, although there can be no assurance orders will translate into revenue.
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.
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. Personnel costs consist of salaries, employee benefit costs, bonuses, and stock-based compensation expenses.
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.
Year ended September 30, Change (in thousands, except percentages) 2024 2023 2022 2024-2023 2023-2022 Research and development $ 90,852 $ 106,894 $ 120,307 $ (16,042) (15)% $ (13,413) (11)% Research and development expenses decreased 15% to $90.9 million for the year ended September 30, 2024, as compared to the $106.9 million for the year ended September 30, 2023.
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 expense our research and development expenses in the period in which they are incurred.
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.
Change in fair value of contingent considerations and holdbacks Year ended September 30, Change (in thousands, except percentages) 2024 2023 2022 2024-2023 2023-2022 Change in fair value of contingent considerations and holdbacks $ — $ (5,913) $ (14,245) $ 5,913 (100) % $ 8,332 (58) % There was no change in fair value of contingent consideration and holdbacks for the year ended September 30, 2024, as the contingent consideration and holdbacks liabilities were settled in the prior year.
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.
Shipments of number of genes in years ended September 30, 2024, 2023 and 2022 were as follows: Year ended September 30, (in thousands) 2024 2023 2022 Number of genes shipped 772 634 558 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.
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.
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, 2024 was $8.6 million.
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.
Our DNA libraries revenue grew year over year as a result of increased customers, mainly in the healthcare and academic research industries.
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 did not grant any options during the years ended September 30, 2024 and 2023. 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.
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.
This is a critical part of our strategy to address our large markets and diverse customer base, as well as drive commercial productivity, enhance the customer experience, and promote loyalty. We currently generate revenue through our synthetic biology and NGS tools product lines as well as biopharma services for antibody discovery, optimization and development.
Payroll, including stock-based compensation, increased $9.9 million, which included $7.4 million of savings related to the 2023 restructuring plan. Depreciation and amortization increased by $11.9 million associated with the capital investment to increase capacity.
Cost of revenues increased from $119.3 million in the prior year to $155.4 million in the year ended September 30, 2023, an increase of $36.1 million, or 30%. The material costs increase by $14.7 million due to higher volume. Payroll, including stock-based compensation, increased $9.9 million, which included $7.4 million of savings related to the 2023 restructuring plan.
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.
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 We employ business development and sales representatives for our biopharma solutions as well.
Cost of revenues Year ended September 30, Change (in thousands, except percentages) 2023 2022 2021 2023-2022 2022-2021 Cost of revenues $ 155,380 $ 119,330 $ 80,620 $ 36,050 30% $ 38,710 48% Cost of revenues increased from $119.3 million in the prior year to $155.4 million in the year ended September 30, 2023, an increase of $36.1 million, or 30%.
Year ended September 30, Change (in thousands, except percentages) 2024 2023 2022 2024-2023 2023-2022 Cost of revenues $ 179,625 $ 155,380 $ 119,330 $ 24,245 16% $ 36,050 30% Gross profit $ 133,349 $ 89,729 $ 84,235 $ 43,620 49% $ 5,494 7% Gross margin 42.6 % 36.6 % 41.4 % 6% (5)% Cost of revenues increased 16% to $179.6 million in the year ended September 30, 2024, as compared to $155.4 million in the year ended September 30, 2023.
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 has purchased products or services from us more than once in the current fiscal year.
The increase in expenses was primarily due to an increase in personnel costs by $50.9 million, as a result of an increase in headcount in the commercial organization and included $30.8 million higher stock-based compensation expense.
The increase is primarily due to an increase in personnel costs of $37.7 million, including an increase in stock-based compensation expense of $24.2 million.
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.
Interest and other income (expense), net 52 Table of Contents Other income (expense), net consists of realized foreign exchange gains and losses, loss on disposal of property and equipment and impairment of equity investments.
Personnel costs consist of salaries, employee benefit costs, bonuses, and stock-based compensation expenses. We expect that our cost of revenues will vary with changes in our revenues and our revenue mix.
In addition, cost of revenue includes royalty costs for licensed technologies included in the Company’s products and provisions for slow-moving and obsolete inventory. We expect that our cost of revenues will vary with changes in our revenues and our revenue mix.
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.
We had contract assets of $2.0 million and contract liabilities of $2.1 million as of September 30, 2024. We had contract assets of $2.8 million and contract liabilities of $3.0 million as of September 30, 2023.
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.
We believe our products enable a broad range of applications that may ultimately improve health and the sustainability of the planet across multiple industries including healthcare, chemicals/materials, food/agriculture, academic research, and technology. We sell our synthetic DNA and synthetic DNA-based products to a customer base of approximately 3,562 customers annually across a broad range of industries.
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.
These decreases are partially offset by a lack of grant reimbursement in 2024 where we received $2.7 million in 2023, which are netted against the research and development expenses. 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.
Removed
We have miniaturized traditional chemical DNA synthesis reactions to write over one million short pieces of DNA on each silicon chip, approximately the size of a large mobile phone.
Added
Leveraging our same technology, we have expanded our footprint beyond DNA synthesis to manufacture synthetic RNA as well as antibody proteins to disrupt and innovate within larger market opportunities, in addition to discovery partnerships for biologic drugs and developing completely new applications for synthetic DNA, such as digital data storage.
Removed
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.
Added
Our easy-to-use e-commerce platform allows customers to design, validate, and place on-demand orders of customized DNA online, and enables them to receive real-time customized quotes for their products and track their order status through the manufacturing and delivery process.
Removed
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.
Added
Highlights from fiscal year 2024 compared with fiscal year 2023 include: • Revenue growth of 28% to $313.0 million from $245.1 million, primarily due to order growth in NGS tools and synthetic genes; • Gross margin increased to 42.6% from 36.6%; • Net cash used in operating activities for the year ended September 30, 2024 decreased to $64.1 million from $142.5 million for the year ended September 30, 2023. 47 Table of Contents Financial highlights The following table summarizes certain selected historical financial results: Year ended September 30, (in thousands) 2024 2023 2022 Revenues $ 312,974 $ 245,109 $ 203,565 Gross margin 42.6 % 36.6 % 41.4 % Loss from operations $ (220,831) $ (217,159) $ (234,776) Net loss attributable to common stockholders $ (208,726) $ (204,618) $ (217,863) Net cash used in operating activities $ (64,094) $ (142,474) $ (124,385) Net loss per share attributable to common stockholders—basic and diluted $ (3.60) $ (3.60) $ (4.04) See “Results of Operations” below for discussion of our results for the periods presented.
Removed
In 2023, 2022 and 2021 we served approximately 3,450, 3,300 and 2,900 customers, respectively.
Added
However, we anticipate these will change or may be substituted for additional or different metrics as our business grows. Product shipments including synthetic genes We believe that the number of genes shipped serves as a direct indicator of our operational efficiency and market demand. This metric is crucial for assessing our performance in meeting customer demand and generating revenues.
Removed
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor 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.
Biggest changeFor example, a hypothetical 10% relative change in interest rates during any of the periods presented would not have a material impact on future interest income, fair values of portfolio of investments and related cash flows. Foreign currency sensitivity The majority of our transactions occur in U.S. dollars.
We do not use derivative financial instruments for speculative trading purposes, nor do we hedge foreign currency exchange rate exposure in a manner that entirely offsets the effects of changes in foreign currency exchange rates. The counterparties to these forward foreign currency exchange contracts are creditworthy multinational commercial banks, which minimizes the risk of counterparty nonperformance.
We currently do not use derivative financial instruments for speculative trading purposes, nor do we hedge foreign currency exchange rate exposure in a manner that entirely offsets the effects of changes in foreign currency exchange rates. The counterparties to these forward foreign currency exchange contracts are creditworthy multinational commercial banks, which minimizes the risk of counterparty nonperformance.
Item 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.
Item 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 $276.4 million as of September 30, 2024, which consisted primarily of money market funds and marketable securities, largely composed of investment grade, short term fixed income securities.
We regularly review our exposure and may, as part of this review, make changes to it. 63 Table of Contents
We regularly review our exposure and may, as part of this review, make changes to it. 58 Table of Contents

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