Welcome to Twist Biosciences Fiscal 2021 First Quarter Financial Results Conference Call. At this time, all participant lines are in listen only mode. After the presentation, there will be a question and answer session. Please be advised that today's conference may be recorded.
I would now
like to turn the conference over to Jim Thorburn, Chief Financial Officer.
All right. Thank you, operator. Good afternoon, everyone. I'd like to thank you all of you for joining us today for Twist Bioscience conference call review our fiscal 2021 Q1 financial results and business progress, we did issue our financial results released this afternoon, which is available at our website at www.twistbioscience.com. With me on today's call It's Doctor.
Emily LaProst, CEO and Co Founder of Twist. Emily will begin with a review of our recent progress, And I will report on our financial and operational performance, and Emily will discuss our upcoming milestones and direction. We will then open the call for questions. As a reminder, this call is being recorded. The audio portion will be archived in the Investors section of our website and will be available for 1 week.
During today's presentation, we will make forward looking statements within the meaning of the U. S. Federal Our expectations and beliefs regarding these matters may not materialize, and actual results in the financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission. The forward looking statements in this presentation are based on information available to us to date hereof, and we cannot at this time predict the full extent of the impact of the COVID-nineteen pandemic and any resulting business or economic impact.
We disclaim any obligation to update any forward looking statements, except as required by law. With that, I will now turn the call over to our Chief Executive Officer and Co Founder, Doctor. Emily LaProst.
Thank you, Jim, and good afternoon, everyone. In the Q1 of fiscal 2021, we continued to innovate We beat our Q1 guidance of $25,000,000 to $26,000,000 with a reported revenue of $28,200,000 And showed significant growth of 64% over the Q1 of fiscal 2020 when we reported $17,200,000 That said, this is the first time in 16th quarters that we have not shown quarter over quarter growth. This is due primarily to a very large $9,000,000 order last quarter. That included about $6,000,000 that came in early According to our expectations, I want to acknowledge that Maestroke is broken, but for a very good reason and the business remains strong. Importantly, with the revenue for the quarter, we hit a significant milestone and now have a trailing 4 quarter run rate of $100,000,000 We also posted strong orders for the quarter of $33,600,000 Now I'd like to dive into the details of Each of our 4 business segments.
Beginning with Scientific Biology, we reported $11,500,000 in revenue, a very strong quarter. We see strength across the board for our jeans and jeans frame. In addition, over the course of fiscal 2020, We amend our product offering specific to 2 groups of customers, pharmaceutical and biotech companies and the long tail of the market, Customers who order a small number of jeans are fine. For Pharma and Dietetics customers, we introduced large preparation of DNA, Something we call TRUX and the commercial launch of these products is ramping nicely. We expect additional customers to add up these products into the drug discovery and optimization pipeline moving forward.
In addition, we have several customers using our early access IgG protein, An extension of our product line that also serves pharma and biotech companies. Initial feedback has been very positive And we are working to increase production and roll this solution out more broadly as we believe it is an innovative and differentiated offering for our customers that are conducting drug discovery and development. We launched our chloro ready gene fragment in December 2020 Initial revenue building for this product line. This product will be used for the long tail, Our revenue growth of synbio is particularly noteworthy in light of Ginkgo being down about $1,000,000 below average. This again showcases the resilience of our diversified product portfolio to deliver financial results.
And equally important, We expect Ginkgo to repair yearly minimum. To further gain market share and help scale our revenue to $500,000,000 We announced that we are building a sector of the future just outside of Portland, Oregon. This state of the art site will be the next evolution of our platform, which we expect to produce sensitive DNA products beginning in 2020. We expect our Factor as a 6 year to bring additional differentiation, including a faster turnaround time for all of our products To double our current capacity and to serve as the secondary manufacturing site outside of the Bay Area. Importantly, when it becomes operational, this factory will allow us to pursue customers that we cannot serve today, those who make their own DNA Due to timing in the comments, in parallel, we are building capabilities with our e commerce system that facilitate business to business interactions.
We believe this will accelerate order placements and enable us as an approved vendor with the purchasing system. We have been working with several to understand the system that they use to generate orders and we have a strategy in place to implement solutions for these systems. While it will take time to develop and deploy within all of our customer institutions, we believe the resulting impact could be substantive. Turning to Genomics and targeted NGS. We reported $16,600,000 in revenue for the quarter With MDS revenue exceeding Syn Bio revenue for the first time, going forward, we expect these businesses to be about equal With lumpiness expected quarter to quarter in NGS.
Revenue in NGS includes customers in the liquid biopsy space, Accounting for a portion of our Thermage revenue and this customer represents significant potential upside Once these products complete clinical trials and are broadly commercialized, this quarter for example, we received and shipped A $4,500,000 order for liquid acid customers conducting studies in preparation for commercial launch. We expect further scaling of their orders when they officially launch their commercial product. We expect the full launch Our formulation solution in the near future, which directly facilitates liquid biopsy customers and we believe this will continue to be an area of growth Liquid biopsy for minimal residual disease detection or MRD in cancer, which we believe will be a large and growing area for the industry as well. We also see significant revenue coming from customers who convert from Nick McCrory To using Twist diagnostic for genotyping, either for direct to consumer or population generative purposes. Last quarter, we shared that we had a $9,000,000 order from a single customer in the SMIC Macquarie conversion.
We can now share that this customer is Regeneron. Using our NGS solution customer feed, Regeneron will be able to move away From the defined set of single nucleotide polymorphisms, a so called SNP, for its genetic center We conduct genotyping by sequencing. Regeneron has put together a comprehensive diverse global set of business, which is more efficient and yet more broadly captured generics that are sitting globally. The traditional listening micron, the conference is fixed and approximately 80% of those missed are specific to the Caucasian population. The change afforded by using phenotyping by sequencing enabled by Twist enables the ability to search for disease targets In diverse population, not just in Caucasian, and could truly change target discovery.
It's critical to remember that while Public Health Meal is dominated by COVID-nineteen right now, there are other diseases that require our attention. And this is an excellent example of how we partner with our customers to improve health. Turning to COVID-nineteen, we announced that the CDC included our fast quality control in their flu SCTF, We screened for influenza A, B and COVID-nineteen in one test. As you know, new trends in the virus have emerged. We continue to monitor the landscape and stay abreast of the science in order to Quickly respond to the needs of researchers and diagnostic test providers.
For instance, on a very short time line, We launched synthetic immune controls, cover the B117 variant with other variant forecast. These controls continue to assist researchers and allow pacemakers to confirm their tests are still accurate I'm capturing all cases of COVID-nineteen. With the emergence of this variant, there's a renewed Focus on sequencing SARS CoV-two, the virus that causes COVID-nineteen. We anticipated that need back in March We will launch our targeted enrichment kit for sarcoidosis. We believe we can be part of the solution to identify variants in the forum And then tracking viral evolution and surveillance will be key to public health globally.
Turning to biopharma, we continue to advance work through our partnership as well as antibodies against internal targets. In addition, we signed 2 technology agreements in January 2021, which we believe would support work for our partners as well as our internal antibody discovery efforts. For ferroginine, we expect to provide custom DNA libraries Accordingly, we engineered and characterized unique cars to screen for receptive designs with improved therapeutic properties That may be applicable to a wide range of solid tumors. We, as Dorensen's technology, resulting from the collaboration. In concert with Applied Stem Cells, we will add the target true cell line to screen, select and characterize neurodevelopmental antibodies We pushed really hard to find partnership agreements by the end of our fiscal year in September 2020, The Q1 of fiscal 2021 was light on orders for biopharma.
However, our funnels remain very full with several agreements beyond the term sheet stage. As you know, some of those partnerships may not be disclosed into partner confrontations, First, we look forward to sharing our progress as we engage in additional collaboration. To complement our work with partners, We pursued the development of several antibodies to specific therapeutic targets to bolster our data package, demonstrating the value of our platform against a wide range of diseases. We shared at a recent conference that we have identified a potent Antibody Antagonist, EB206-1 against ADAIRADS 2A, an immuno oncology target In the adenosine pathway that we believe could be an important complement to checkpoint inhibitor, the adenosine pathway is a master checkpoint in the tumor macro environment An eight way is highly expressed in learning, colorectal and prostate tumor. We believe our antibody candidate has a potential to be highly potent, Pacific offers improved dosing and lower central nervous system permeability compared to the small molecules Currently in clinical trial, we are pursuing outbound sensing opportunities for PD Prosys-1.
While early, we look forward to keeping you apprised of our effort on this front. We have identified Seven key targets for antibody discovery where we believe our biopharma platform can generate differentiated antibodies. We intend to advance development of these targets Moving to data storage. We continue to advance along our engineering and commercial roadmaps. On the engineering side, we are making progress.
But as we have previously disclosed, the chip cycles are locked. And we look forward to providing an update when available. On the DNA Data Storage Alliance side, It continues to gain traction with several more organization joining, including Quantum. On Slide 8 of the presentation, we expect it will be useful to talk through a case study of the total cost of ownership for DataSource. The total cost of tape or cloud storage increases we signed because of required data migration on a 5 to 7 year timeframe.
This is due to media failure and hardware of SULESINT. For data stored in DNA, The total cost of our times remains relatively flat due to its inherent long lifeline. Additionally, any copy of tape or cloud storage Directly multiplies the curve, while additional copies of DNA are almost free due to the TCR litigation process. What you see on the right side of the slide is a graph showing the total cost of storage of 1 petabyte over time Creating using cost information from the Fujifilm and Amazon website. The cost of G and A remains relatively flat over time, while the cost of Safe or cloud storage increases over time, noting that the time set is not in here.
Lowering the price of DNA to $100 per terabyte, are now below $1,000 megabytes with aggressive efforts ongoing. At this time, I'd like to turn the call over to Jim to review our financial results
Okay. Thank you, Emily. As Emily noted, we have delivered another very strong quarter What continues to be an uncertain environment due to the COVID pandemic disruption, we'd like to thank all our investors who supported our recent equity raise as we strengthened our balance sheet to support our growth investments. Revenue for the quarter was $28,200,000 as compared to our guidance $25,000,000 to $26,000,000 Additional highlights for the quarter include $33,600,000 in orders. We had another strong quarter in NGS, including $4,500,000 in revenue from 1 liquid biopsy customer.
Our biopharma business continues to develop strongly with an additional $1,000,000 in revenue generating agreements in the Q1. Gross margin for the Q1 was positive 35.5 percent and we grew our customer base to approximately 1500 customers. We also signed a lease for our Oregon Factory of the Future and stepped up our investment in DNA Storage. We ended the quarter with cash and short term investments of approximately 587,000,000 Now I will provide more details on orders for the Q1. NGS orders for the Q1 were $17,000,000 and that is growth of 44% year over year.
This quarter, we also had $4,500,000 order from liquid biopsy customer and we believe we are very well positioned and excited about the future of population genotyping, liquid biopsy and the MRD opportunities for Twist. During The December 2020 quarter received orders from approximately 570 NGS customers With the top 10 accounts placing orders of approximately $10,000,000 as we noticed in previous calls, The RNA positive controls are not a material component of our revenue. However, they are contributing to our customer growth And we're seeing these customers return to purchase other NGS and Syn Bio products. Our pipeline for our larger opportunities continues to scale And we're now tracking 160 accounts, which is up from 150 accounts we noted in our last earnings call. 59 have adopted our platform and that's an increase from 55 last quarter.
Now turning to synbio. Just as a note, synbio includes ginkgo, our genes, DNA preps, IgG, libraries and oligo pool products. Our synbio orders increased to $15,600,000 in our December 2020 quarter and that's compared to $12,300,000 for the December 2019 quarter. Ginkgo orders increased from about $2,600,000 to approximately $3,500,000 in the Q1 of fiscal 2021. Our jeans business is doing well and total jeans grew from approximately 9,500,000 In quarter 1 fiscal 2020 to $12,200,000 in our current quarter, non GAINCO GENES orders for the quarter were 8,600,000 And the year on year growth was approximately 26% with growth in all segments.
Oligo pool orders rose in the quarter to 1,900,000 with strong demand, largely coming from gene therapy applications. Biopharma orders in the quarter were 1,000,000 for our antibody discovery activities. We now have a total of 10 partnership agreements, which also includes milestones and or royalties, And that's an increase from last quarter. Please note, we provide orders not to directly translate into revenue, We're going to provide a trend line for each product group. We also anticipate both NGS and Gingko orders will fluctuate quarter to quarter.
Now moving from orders to revenue. Revenue for the quarter was $28,200,000 which is growth of 64% Year over year and the quarterly sequential decline of 13%, as Emily noted, last quarter, Regeneron placed a $9,000,000 order with $6,000,000 coming earlier than we anticipated. Having said that, We delivered another outstanding quarter as our NGS products revenue for the quarter climbed to $15,600,000 In the December quarter, we received orders from liquid biopsy customers, including a single $4,500,000 order, which we also billed during the quarter. As we noted in our previous calls, our NGS revenue can fluctuate significantly from quarter to quarter based on timing of customer orders and deliveries. Our synbio product revenue for the Q1 fiscal 2021 was $11,500,000 up sequentially from $11,000,000 last quarter and an increase from 10,100,000 in Q1 fiscal 2020.
This includes Ginkgo, which declined from $2,100,000 to $1,400,000 sequentially, which we believe was mainly due to the timing of the projects. Our outlook for Gingko remains the same as our previous guidance of $11,000,000 to $12,000,000 for the fiscal year. Q1 jeans revenue was $8,100,000 as compared to $7,800,000 in Q1 'twenty, Although Ginkgo revenue was down, we shipped approximately 84,000 genes in the quarter versus 80,000 Genes in the same quarter last year. Our non ginkgo growth highlights we continue to make progress And scaling our gene business in pharma and industrial biotech and less reliance on Gingko, which accounted for approximately 5% for Q1 revenue. Now to biopharma.
Our biopharma revenue for the quarter was $1,000,000 and that's in upfront services on our antibody I'll now briefly talk about the regions. All regions recorded year on year growth in revenue. U. S. Revenue was $17,300,000 versus $10,000,000 in the same period last year.
EMEA revenue grew to $9,100,000 versus $5,900,000 in the same period last year and now accounts for approximately 30 Now for Industrial segment revenue summary. Healthcare is now our largest contributor and accounts for more than 50% of our business was revenue of $15,900,000 and that's up from $5,800,000 same quarter last year. Even though Ginkgo revenue was down this quarter, Our Industrial Biotech revenue rose to $7,100,000 in Q1 'twenty one versus $6,100,000 for the same period last year. Academic revenue in the Q1 was $4,900,000 which is flat with Q1 'twenty. Agricultural revenue was 2,000,000 the same as the prior year.
Now moving down the P and L. Our gross margin for the quarter was $10,000,000 or 35.5 percent of revenue as compared to 20% in quarter 1 of 'twenty. This increase in margin reflects the impact of scaling our revenue, Leveraging our fixed costs and the benefit of higher mix of NGS products earlier in the year than anticipated and also reflects greater execution by our organization. Operating expenses, including cost of revenue for the Q1, increased to approximately $42,800,000 In terms of year on year comparison, R and D for the quarter was $14,000,000 compared to 10,000,000 $10,300,000 in the Q1 FY 2020 due to investments in biopharma, data storage as well as continuing investments and Syn Bio and NGS. Our R and D spend in the quarter is net of $300,000 received from Georgia Institute of Technology related to the DNA synthesis portion of the Mist program and $800,000 build on a confidential project.
SG and A increased $28,800,000 compared to $26,400,000 primarily due to investment in our commercial organization. Our net loss for the quarter was $32,900,000 a decline from $55,600,000 in the Q1 of fiscal 2020. As a reminder, in the Q1 of fiscal 'twenty, we had a one time charge, dollars 22,500,000 for a litigation settlement Expense. Note stock based comp for Q1 was $7,000,000 and depreciation was 2,200,000 CapEx was approximately $3,600,000 in the quarter with major investments in lab equipment at our South San Francisco facility. And although we signed a release for the fact of the future, we have no material expenditures to date.
We ended the quarter with Cash and short term investments are approximately $580,000,000 Now I'll briefly update you for the year. We have a very strong start to our fiscal year and at the same time there's a lot in the circuiting with the pandemic. We're maintaining our 2021 guidance range $110,000,000 to $118,000,000 for revenue. Gainful revenue is estimated to be approximately $11,000,000 to 12,000,000 Non GAINCO Syn Bio is estimated to be in the range $41,000,000 to $44,000,000 NGS revenue is estimated to be in the range of $54,000,000 to 58, Our biopharma revenue is estimated to be approximately $4,000,000 Our gross margin guidance for the year is 32% to 34% As compared to 32% on last guidance, while we had higher gross margins in the 1st fiscal quarter, We do expect subsequent quarters to be a bit lower, which is influenced by mix and impacted by new capacity utilization We also launched new products such as IgG and Scalar DNA preps. Our operating expense, which includes R and D and SG and A, is expected to be approximately $182,000,000 for the year as compared to $174,000,000 in our last projection, which reflects higher stock based comp charges, primarily due to the increase of our stock price.
Our R and D guidance for the year remains approximately 60,000,000 In fiscal 2021, our net loss guidance for the year is now expected to be in the range of $142,000,000 to 147,000,000 Stock based comp is estimated to be $32,000,000 due to the higher stock price and depreciation of 9,000,000 CapEx guidance for the year is $30,000,000 which includes $20,000,000 CapEx for Portland facility, which is $16,000,000 equipment and $4,000,000 for In summary, we had a strong start to fiscal 2021. Our outlook is prudent And our investments at the same time are positioning Twist for very strong growth in fiscal 2022. With that, I'll turn the call back to Emily.
Thank you, Jim. In conclusion, we started our fiscal year strong and look forward to an important year ahead. Looking into fiscal 2021, for Syn Bio, we expect the continued growth and diversification of our revenue stream, A commercial ramp for DNA prep and a production ramp for ITG marketing push for our plenary de infringement Continued focus on B2B solutions to allow us to capture specific multisite institutions And preparing infrastructure and software platform for our Factors of the Future to enable strong growth in 2022 and beyond. For NGS, we expect continued revenue growth and customer ramping production, the full launch of our metallurgical solution, The technical addition of EMI and continued conversion of Smith and Clari to Twist subsequently. For Biopharma, we fully expect opportunity to sign partnerships to expand our technology base and generate revenue, while advancing our own internal pipeline of antibodies and testing out licensing opportunities over the next 18 months.
And for Data Storage, we will continue to drive our engineering roadmap to further miniaturization, execute on the IR side contract and paved the way for market adoption of this new storage medium. With that, let's open up the call for questions.
Our first question comes from the line of Tycho Peterson with JPMorgan.
Hey, thanks. This is Eleni on for Tycho. Thanks for taking our questions today. First, wanted to start with guidance. You've left top line guidance unchanged despite the beat this quarter, but you increased the gross margin guide just to account So the higher margin in the quarter, so essentially leaving the rest of the year the same, is this just typical conservatism or is there something else to call out here?
It's conservative. We are in the middle of pandemic. We got off to a really strong start And we see good strong Syn Bio business. We're seeing experiencing good business in Europe. In the U.
S, we had a $4,500,000 Shipment on liquid biopsy. So our NGS business is going strong. Synbio business is going strong. Regionally, we're doing well. And at the same time, we're being conservative.
We saw our gross margins increase to 36%, and we feel good About improving our gross margins as we increase our revenue, our longer term gross margin targets 55% to 60% And we're on track for that. But just to summarize, we are being conservative and prudent in the middle of the pandemic.
Great. That's helpful. And then another question on something you highlighted, the Regeneron SNP conversion. You talk a bit more about line of sight? You have 2 additional SIMP conversions over the next couple of quarters and sort of the economic value or framework of how to think about that?
Yes. Thank you. This is Emily. It's a great question. So we do know that SMIC microarray conversions take some time because we go after customers That are using microarray and there's a high volume of samples.
And in order to get in the door, We need to show that we can be cheaper than the macro. Nobody will switch if it's more expensive. And so now with Regeneron, with Hey, Rick, with Ancestry, we have multiple data points that it is the case, so it's easier to get in the door. Then the next step is in addition to being cheaper, I see there are some benefits to using Swiss plus sequencing That is that the content can be evolved. With the microarray, you're stuck with the content, They can't do anything.
And so that is another big positive in the case of Waziran around the use that ability to enhance The content to not be just Caucasian specific, but to be global human genetic diversity. And then the next step is once the content is defined is to answer that also takes a little bit of time because people have to Remove the instruments, bring in the new automation and bring up the protocol process at scale. First, once you're in, it's a very sticky solution. So, yes, our intention is to keep converting customers. They may not all be the size of Regeneron, but We think that our solution offer a true differentiation compared to The old technology of Macquarie.
Great. Thanks, Emily. That's really helpful. And then on biopharma, you've had great traction signing revenue generating partnerships. Just wondering if the $4,000,000 you include in guidance is just sort of The initial upfront payments or if there is a component of milestones or royalties that would offer upside to your guide?
That's a great question. So the guidance is only for the upfront payment part. There may be milestones on royalty, but if and when those happen, more like when they happen, that will That's really upside. And so at some point, we anticipate that's really a milestone and royalties from the contract we signed. And most likely, the first one to deliver upside would be the contract that we signed in the past, not just this Knowing that it takes time for us to do the work and then it takes time for the preclinical work to happen to get to the IND and then to go to the next What we report in orders and revenue is Only upfront, Kenneth, and any milestones will be upside.
Great. And if I can ask one last question here. How much of the backlog or orders you saw this quarter are COVID related? And how much revenue contribution from COVID is contemplated in your fiscal year 2021 guide.
In terms of COVID, COVID is not material. We've had a lot of success with the RNA positive control panels that we've released in March time period and That's actually grown into the infectious disease panels. So we are seeing a lot of new customers. We've added about 500, 600 new customers there. They're actually coming back for additional NGS.
It's in Bio Business. But in terms of actual COVID revenue, it's not material. What's particularly interesting for us is the increased number of customers and the increased share of wallet we can go after in those customers.
Our next question comes from Doug Schenkel with Cowen.
Hey, good afternoon, everybody. I actually just want to touch on a few of the important but high level drivers to long term growth. Just starting on next gen sequencing. It's been interesting going back to the IPO seeing You talk about the TAM growing there. I think when you first went public, we talked about the NGS Tim, maybe being $400,000,000 to $600,000,000 call it $500,000,000 I suppose that's a midpoint.
Now we're talking about 700,000,000 I'm just wondering if you could kind of break down what's expanded that. I assume it's things like microarray conversion in other areas, Opportunities in liquid biopsy. I'm just wondering what's driven the expansion of the TAM and Are there other opportunities to take it beyond what we're thinking about today?
Yes. Thank you, Doug. It's a great question. And so first, I'll start by That we are conservative in our TAM estimation and that is the dollar that we could touch If we had 100% of the market, so it's not aspirational. And so the increase The TAM has been mostly driven by the emergence of new application.
You mentioned liquid See, it's definitely a big one. Another one is MRD, minimal residual disease. And so if you think of MRD alone, There are 15,000,000 cancer patients in the U. S. If they get tested once a year and the average Price is $1,000 That's $15,000,000,000 of spend On MRD, of course, we can't touch all of it.
We can only cut the DNA library freight portion of it, But we think that the $700,000,000 that we are estimating today is actually going to increase Further, thanks to the emergence of Sequel Biopsy and MRD. And I will note that snip microarray is not included in that $700,000,000 We believe there is another $500,000,000 available for snip microarray conversion.
That's great, Emily. And maybe just kind of continuing down the line with questions like this, and kind of high level as we just think about the long term. On drug
development, regarding
the drug development candidates you have in house, How are you making the decision on which targets to prioritize? How are they progressing? You noted GPCR previously and adenosine receptors today. There's other ones you've mentioned In the past, I'm just wondering if you could share any details on how those are progressing. And then I guess the third part of this question is, How should we think about the possibility of essentially drug co spinouts over the next 12 to 18 months in the absence of other auto licensing opportunities.
Yes. Those are 2 great questions. So in 2019, we shared another target that we're We found highly functional antibodies against all of them. At the time, we picked those because they were hard to drive. And so we were in the mode of finalizing demonstration.
And so that meant that on purpose we picked 3 hard targets, we wish to the world that we could do it. And basically, We had to do it to build out data package and get the commercial partnerships that we are getting now. This was more of a claim to fame rather than a picking target for because of their business Now things have changed. Last year, we reported that we've done some work internally and externally to identify 7 targets. And those are targets that are business relevant.
And so those are targets that we believe will be able to generates some commercial interest. And so the antibodies that we already have, they're available for licensing if needed. But we believe that the 7 targets we're working against are going to be commercially attractive. In terms of outlook on monetization, we mentioned that our First objective would be to spin them out through out licensing. But if the opportunity is right, There could also be a it's possible.
All the options are open that there could also be It's Pinout of Enuco, where someone else will win the capital, where in a sense we will Indicate the risk of moving the antibody forward in exchange for sharing the economic value. So, Becky, all the options are available either for spin out or licensing us, whichever It's easier, faster and bring the most economic return for Twist.
Okay. And that's great, Emily. And last one on data storage. I mean, it's great to hear about the progress you're making there. I think this Has gone from being something that was viewed as an exciting possibility and a source of for the company now, it seems like you're making enough progress where we can put more confidence in the program actually turning into something, which is great.
I'm wondering if you could talk a little bit about the partnerships with Microsoft, Illumina and Western Digital. What is each partner bringing to the table and are there delineated responsibilities between each of those? And then a second part to the DNA data storage question is, I'm just wondering if some of the improvements That you're making specific to getting to essentially cost targets and speed targets that are associated with making data Storage commercially feasible would be leverageable for other purposes across your business? Thank you.
Thank you, Doug. Great questions. So on the Data Storage Alliance, the so We're the spearhead of the I'm sorry, we're glad that the people joined us. The goal is to create a bigger pie For everybody, in storage, you have so approach 1 is to have a closed technology. So for instance, if you think back to the zip drive of the late 90s, that was Preparatory to one company.
And our analysis is that when you do that, when you look everything in, It's hard to get quick comments and it can be hard to sustain the momentum. So the idea for us was to bring companies together And create a bigger pie, where we don't open stand down. And so the goal of the Alliance is to We're together to define an industry roadmap to create use cases to educate The CIOs of companies such that when products are available, those companies have budget and We're in there to do pilots and start adopting the technology. So the idea of the alliance is to basically grease the wheels of future Commercialization. And for us, it was the right time because we there's still a lot of work ahead, but we have line of sight that it's working and that's what I'm going to So we want to make sure that when we are when the product is ready that the commercialization The go to market has already started.
And then to your second question about potential synergies in speed Of course, there's definitely a synergy that all the learnings that we've done on our silicon chip to date, All the processes, the internal know how, we're applying to the data storage. And so we are doing much better In terms of developing our data storage solution, because we have been spending the last 7 years already doing it. So there's definitely seen us do it that way. And then going back, while we are not doing it for this, that's not the reason why we're doing better storage. I think it's only difficult that one we have seen that pushes the boundary of technology of finance.
There's likely to be some benefit back It's not the main objective, but it is the same thing that I worked on the initial Thanks, Luke.
Our next question comes from the line of Catherine Schulte with Baird.
Hi, thanks for the questions.
I guess first on the liquid biopsy customer placing a large order in the quarter, Can you just talk about the commercial launch timing of that product? I can think of one that's talked about using your product as a potential second quarter launch. And maybe the magnitude of an increase you could see if it does move from its clinical trials to commercialization?
Thank you, Kathleen. Great question. You probably can guess we're not able to comment on who the customer is. Well, I think what we can say is that we have been progressing Quite well in liquid, I've seen a number of companies and it starts with a small order for pilot and then a bigger order for Validation is a big order for Caleb. And now we're in the mode of clinical trials and so we're getting even bigger order.
But our expectation is that, one, since to commercial, the level of need that Yes, they will have, will keep growing. And we are not in charge of the timing. We don't When those commercial launch happen, but what I can say is that, When we have the capacity, so whenever it happens, we can deliver quickly. As a reminder, when the in Before when the original and other came in, we were able to very quickly in the same quarter make it cheaper. So we have capacity.
And so we have confidence in our future And yes, we don't need one. However, because those now are facing a bigger order, that will create some lumpiness. But as there are multiple companies that make monthly order of fleet, it will smooth out over time.
Okay. That's helpful. And just given the calls for increased sequencing when it comes to monitoring the different COVID variants popping up, How much of an opportunity do you see that as? What kind of uptake are you seeing on your offerings? And how are you thinking about that contributing in the balance of
the year. Yes. So in our view, surveillance of the COVID Virus is important beyond just the yes and no. The people like the virus is not I think people want to sequence it through virus. That's why we actually were quite early in launching our products.
In terms of how that analysis is done for the full virus sequencing, There's 2 methods to do it. The first one is what we do, which is through hybridization. And then the second one Is using PCR and then sequencing. In full transparency, the PCR approach next Then sequencing is maybe a little bit easier to implement, but The results are not very good and we had seen now yesterday, which I think the recovery is available where Our customers compared the 2 and the acquisition approach was clearly superior giving a better coverage of the entire team. And so, we don't record exactly we don't record the So I can say that our approach is superior And we have an RU kit out in collaboration with Payvision.
We will report the number as aggregated These 2 are overall core.
Okay, got it. And then last one for me. Just looking at academic and agriculture, you mentioned Both of those were flat in the quarter. Do you think those customers are still being impacted by COVID disruptions? And what kind of growth
do you expect from
Sorry, Kathy, I missed the first part. Did you talk about academic?
Yes, academic and agriculture.
Yes. So academic, I mean, it's interesting in terms of Although, obviously, universities have been slightly impacted by the pandemic, if you look at our revenue Academic has been roughly flat for the last year. And that's good news for us because obviously When the labs actually when the academic institutions actually start to increase activity, We should see upside there. So I'm particularly encouraged by the academic revenue. In terms of agriculture, agricultural has been a small part of our business, being last quarter revenue is 200,000 So we see opportunities in the future in agriculture.
The major opportunities Over the last year, we've actually executed well. In healthcare, we're seeing industrial biotech pickup and I think the labs will ramp up As the pandemic starts to decline in the next year.
Great. Thank you.
Okay.
Our next question comes from Vijay Kumar with Evercore ISI.
Hey, guys. Thanks for taking my question. Jim, maybe one on the orders. I want to make sure I understood the numbers correct. The 4.5 you called out, Is that like a one off or I feel like last quarter you guys had the Regeneron order.
So is this more of a repeatable feature or Should we be thinking of the 4.5% as one off?
So good question. 4.5% Vijay is in liquid biopsy. I think we're very well positioned in liquid biopsy. We had great product, great solution there. We're working with a number of customers in that area.
It does it is lumpy. I think what I would highlight is that we're making great progress Building the NGS pipeline, I mean revenue for NGS last year was $44,000,000 We did almost $16,000,000 in Q1. So we're very optimistic about the growth in NGS. And it's difficult to call when these large orders We'll actually come in when we'll ship them. But we see growth in NGS this year.
I know our guidance is 54% to 58%. We believe that's very prudent. But we get a good product and we keep I mean the pipeline
And one last question from my side on the P and L. The gross margin, I guess, did you say it was mix which is going to drag down margins for the back half? Typically, it looks like Q4 is a pretty big gross margin quarter. OpEx looks like it went up on the SG and A side. Maybe some comments on what's driving SG G and
A? Yes. So on gross margin, our projection It is conservative. We have longer term gross margin targets between 55% 60%. This Q1 gross margin was 36%.
Our last guidance for the year was 32%. So we've increased guidance To a range of $32,000,000 to $34,000,000 As we increase our revenue, we leverage our fixed costs. We are ramping new products, So you have little inefficiency as you ramp the products in terms of underutilized capacity. In terms of OpEx, increase in OpEx This is primarily stock based comp. As you appreciate, the share price has increased a lot during the year.
So the stock based comp Charge is higher and I'm reflecting that in the increase in our operating expense guidance.
And on SG and A, Jim?
That's SG and A. So based comps increased from 20 to 32, so that's driving the bulk of the increase in SG and A. Understood. Thank you, guys.
Okay.
Our next question comes from Puneet Souda with SVB Leerink.
Hey, guys. Thanks. The first question is on just looking at the orders, Just if you could walk us through, I mean, I appreciate the $4,500,000 that you called out, but I believe that was this quarter. Just walk us through, I mean, the step down here, the puts and takes to that. It is Given the sort of one off orders that you are seeing here, just wanted to get a better sense of what The order book, how should we be thinking about the order book for the year?
I mean, obviously, in terms of orders, 1st quarter orders were about 33,600,000 So you take off $4,500,000 looking at $29,000,000 I mean what's notable is Ginkgo. The orders were 3.5 percent, revenue is 1.4 percent. We do expect Ginkgo to pick up Significantly in the rest of the year, that's why we called out revenue 11% to 12% for the year. In terms of our guidance, I think that's where you're getting at, Puneet. Yes, our guidance is conservative.
However, we have taken into account the pandemic. We are seeing very strong bookings as noted in NGS. Our pipeline NGS continues To grow, we'll see Ginkgo come back from the later half of our fiscal year And we continue to make progress on synbio. We are conservative in terms of where we think the academic institutions are at. But in terms of the overall $110,000,000 to $118,000,000 we thought it was prudent to leave the revenue guidance in place And the increase of gross margin, which reflects a higher gross margin in quarter 1.
And Puneet, to build on what Jim said, I'm not sure I would characterize it It's a one off quarter. We highlighted because it's a significant next Step in our liquid biopsy support as this seasonal goes into Clinical trial. So but this is not the 3rd order from the script. I don't expect it to be the last either. So it's just the next step of as we will go through clinical trials, we need more and then once we go To commercial launch, we anticipate that they will need even more than that.
Okay.
That's helpful. So within that context, if you can Just help me understand, last quarter, dollars $13,500,000 this quarter. If we think about the sort of lumpiness continuing through the year, then maybe just walk us through how much of These such orders are baked into the full year guide. If you can just walk us through maybe How much of liquid biopsy are you baking into the full year guide and how much of the sort of the $9,000,000 that order That came last quarter. Are you baking into the guidance for the full year?
So the $9,000,000 Last quarter, we actually shipped in quarter 4. In terms of the way we build up the $54,000,000 to $58,000,000 it didn't include the $4,500,000 for liquid biopsy customer. So we build it up by customer. Don't actually break it out by segment. I mean, as you know, we've got about 160 large customers we're tracking.
They continue to give us their projections. We're working closely with them. So we're pretty conservative in terms of the way we build up the guidance. We don't break it out by segment, I. E, we don't break it out by liquid biopsy as an example.
Okay. But it appears that these orders are becoming I mean, routine rather than as Emily pointed out, they're not really one off. So, I just wanted to get a sense of is that those are the types of orders you are You're continuing to expect through the year and they are are they baked into the guidance or not?
To a certain extent, they're baked into our guidance of 54 to 58. What I'm trying to get across, Puneet, is we do track our key customers and we are conservative in terms of our projections. We've grown the MGS business from 3.21 to 4.24 and we hit almost 16 on the Q1 of this year. Our expectation is we're going to continue to do well. However, it's very difficult to predict quarter to quarter, but year over year, we anticipate good Strong growth in NGS.
Got it. And on biopharma, It appears that obviously you were working on MABS and now you're doing cell therapy products And it's good to see the progress on that front. But just help me understand how should the Sort of the cadence of those new project adds should be through the year, sort of how many projects are you baking into the guide for the full year? And again, also, when should we expect to see the first clinical Phase 1 entry of a product, when is your what's your line of sight on the 10 plus projects that you have so far?
Thank you, Puneet. So we were not guided Timing for when we'll have a first risk antibody in the clinic. Definitely, it's a very important milestone for us, but we are not in control of that by timing Because we ended the preclinical development and then the company takes over, the partner takes over. And so that's Last year, we were focusing on having as many partners as possible because I think more shots on growth get us there sooner. So one of those 13 last year will get there first.
We don't know who, but It's great to have many, many shots on goals. As far as your first question, Thank you, asking about how many new partnerships we are expecting. So we have not guided this year on the number of partnership. We have guided on a actual dollar amount for the upfront payment. And I'm quite encouraged by how full the funnel is.
Those kind of partnerships are not Like selling a kit, you can't close it in a week or in a month. So it has a slightly longer development time, but We have the top sheet page for many of them.
Okay, great. And if I could squeeze in the last one on BNISTOR since this is you've talked about that quite a bit. Is that When do you think that could be a material revenue for Twist? And It appears that there are stability studies that you have to do with DNA and also redundancy has to be built out into the storage And what not in order to do so, such trials, when can we see such trials? When can we see data from such trials?
And potentially, when can we see material revenue for Twist longer term? Thank you so much.
Yes. I mean, we've done many, many demonstration by now. We've done demonstration for years with Microsoft, First of all, with Unity Nation lately in Q4 with Netflix. So I don't think we have much more to demonstrate that DNA is stable. The DNA capsule that we use, they are peer reviewed and where The D and A is stable for the equivalent of 100,000 years or more.
So I don't think there's a lot to demonstrate in terms of stability. That is pretty baked in. So what we have to do for us is go through the technology cycles. We've guided that we will have our 1 Micron chip Working this year and that we will have the next and final chip that we need, the 100 and 15 micron chip in hand in 2022. So it's not a month away, but now we're In terms of quarters to get to a commercial launch, to get to Prototype Production.
That concludes today's question and answer session. I'd like to turn the call back to Doctor. LaBreast for closing remarks.
Thank you very much for staying on a little bit beyond the schedule, but it's a really Exciting time to be empowering our customers to improve health and sustainability. And with healthcare under the Microscope and Elevated through the COVID-nineteen pandemic, we are proud to continue to innovate and execute and Our DNA Synthesis platform to drive the future of healthcare, diagnostics, sustainable chemicals, sustainable materials, ag bio and data search. So With that, we look forward to sharing with you our progress in the months ahead. And thank you so much for your attention.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.