Welcome to Twist Biosciences Fiscal 20 2Q3 Financial Results Conference Call. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.
I would now like
to turn the conference call over to Jim Thorburn, Chief Financial Officer.
Thank you, operator. Good afternoon, everyone. I'd like to thank you all for joining us today for Twist Bioscience conference call to review our fiscal 2020 Q3 financial results and business progress. We did issue our financial results earlier today and they're available at our website at www.twistbioscience.com. With me on today's call is Doctor.
Emily Leprost, CEO and Co Founder of Twist. Emily will begin with a review of recent progress in Twist Businesses. I will report on our financial and operational performance, and Emily will discuss our upcoming milestones and direction. We will then open the call up for questions. And 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 federal securities laws. Forward looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize and actual results and 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 as of the 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
LaFrost. Thank you, Jim, and good afternoon, everyone. I am pleased to report that we've had another record quarter with revenue of $21,200,000 resulting from strong synbio and NGS sales as well as initial revenue from biopharma partnerships. Orders for the current quarters are flat, primarily due to NGS customers temporarily pivoting from routine diagnostic testing to full laboratory focus on COVID-nineteen using PCR test. That being said, we continue to have an order run rate of approximately $100,000,000 for the year.
And we see significant progress for biopharma vertical with our first top 10 pharma partnership and several up and coming companies embracing our antibody discovery platform. Turning to specific results for synbio. We reported revenues of $11,800,000 with $2,800,000 of debt coming from Ginkgo. While a large portion of our synbio revenue stream comes from customers in the industrial chemical sector, we see an increasing opportunity with healthcare customers. We are focused on adding products for this market and are beginning to see the results.
In April, we launched an expansion of our clonal genes, which offers larger preparations of DNA. Although it is early days of the launch, the revenue stream is growing. Even more importantly, we see companion orders for genes coming with these bookings. Generally speaking, for every dollar of larger DNA preps order, we receive $3 to $4 of gene orders. The launch of DNA Preps, which is what we call them internally, was a significant effort, taking more than a year of execution across multiple teams.
Indeed, this product line requires automation of laboratory processes as well as the customization of ordering in e commerce. And our team made the investment in infrastructure to support this product line as it allows us to become more of a one stop shop for all synthetic DNA products. As we expected, our gross margin did decrease this quarter, as you'll hear from Jim, largely resulting from this infrastructure investment. We believe that this investment was worthwhile to increase the stickiness of our GYN business by offering a more comprehensive offering as well as providing upside to attract new customers who require this feature and can now move their business to Twist. We expect that revenue will ramp over the course of the next 12 to 24 months, becoming accretive both to the top and the bottom line.
Overall, Syn Bio orders remained strong at $14,900,000 as we are beginning to see academic customers as well as European groups returning to their laboratories. As we announced last quarter, we provided a service to our customers to shop and hold for those who wanted to design DNA while they shut out in place. At this time, the vast majority of those orders have been shipped to their respective labs. We continue to evaluate different market opportunities to pursue DNA makers and support growth in the long term of the market, such as customers that need a few genes at a time rather than massive orders. We remain on track to launch our clonal ready gene fragments towards the end of the calendar year to begin to tap this market opportunity.
Moving to genomics and targeted NGS, we reported revenue of $9,100,000 for the quarter. This includes revenue from our infectious disease products for respiratory diseases as well as COVID-nineteen and we continue to see consistent demand for synthetic viral controls. We currently offer 7 SARS CoV-two controls including 1 with a D614G mutation, which is now the dominant form of FARS CoV-two worldwide. We have also launched 15 additional controls for a wide range of respiratory diseases. During the quarter, we also launched the Twist Respiratory Virus Research Panel to detect in a single assay the most common respiratory diseases with symptoms similar to SARS CoV-two.
This includes several coronaviruses, influenza, rhinoviruses, RSV and pneumonias. As we think about the challenges ahead, we believe it will be critical to differentiate between disease outbreaks given the seniority of the respiratory symptoms. Our panel will help researchers with environmental monitoring and surveillance testing, while also providing insight into full sequence information to track virus evolution and strain origins. Even as revenue for NGS continues to increase, our orders in this area have been down slightly for the last two quarters sequentially. We are facing some near term headwinds as a few key customers have pivoted their operations solely to running PCR based tests for COVID-nineteen.
In addition, our field application specialists who help our customers use our products correctly and efficiently are not able to be on-site. In light of this, we are making other arrangements for our specialists to support our customers in light of the ongoing pandemic. We believe the fundamentals of our business and market are sound and have not changed. The need to diagnose cancer and rare diseases has not gone away. In light of COVID-nineteen, we believe diagnostic tools will become even more important in the medium and long term.
That said, our customers who place large orders on an annual basis have some uncertainty around their business in the near term, which negatively impacts our order volumes in NGS. We absolutely believe this is a temporary situation as routine diagnostic and ongoing surveillance of diseases will remain critically important for global health. Similarly, we continue to see interest from consumer testing companies moving from SNP microarray based test to NGS based test. On Monday, Ancestry announced an exciting new Ancestry Health offering that brings the power of NGS based health information closer to the consumer. This product includes our NGS target enrichment platform and is an exciting validation of the value and benefit we bring to consumer health.
Importantly, we remain responsive to market demands, adapting our platform for COVID-nineteen research, while maintaining our focus on all of our current and future customer needs. Turning to our vertical market opportunities, we announced a partnership with Takeda for access to Twist Biopharma's proprietary Phase 2scale library. We will work together for the discovery, validation and optimization of antibodies in Takeda's pipeline for oncology, rare diseases, neuroscience and gastroenterology. This is a significant partnership for Twist Biopharma as it is our 1st top 20 actually top 10 pharma collaboration. In addition, we signed 2 new agreements with small innovative companies that are driving their field forward.
We are collaborating with Invetex, a pioneer in protein based therapeutics for animal health. The role of the Twist Befari team will be to engineer and optimize antibodies for the treatment of serious diseases in dogs and cats. This is a huge market opportunity. And we announced a collaboration with Sysmig Bio, an emerging preclinical fledged company developing bispecific antibodies that enable controlled activation of the immune system to fight cancer. At the beginning of the year, we said we will complete 5 to 10 partnerships.
Year to date, we have in place 9 revenue generating partnerships, of which 6 have milestones and our royalties included in the terms. Please note that we have not disclosed all of these agreements to date. Focusing on an internal development, last week we launched 2 new SARS CoV-two antibody panels designed for researchers only and available through our e commerce portal. One panel includes 32 competitive antibodies against the SARS CoV-two S1 spike protein. The second panel includes 48 competitive antibodies against the human ACE2 receptor where SARS CoV-two binds to enter human cells.
Each panel contains human antibodies that bind with picomolar2 and the molar affinity to their target and may be useful for the development of diagnostic tests, vaccines or therapeutic antibodies. We made these antibody panels available to the wider scientific community in an effort to expedite and expand the scope of our antibody therapeutics to help combat the global impact of COVID-nineteen. In addition, we have further characterized and tested many of these antibodies and have identified more than 30 that are neutralizing in pseudo viral testing. We also have live virus neutralization assays in process at 3 different sites and are awaiting results. Taken together, our progress in securing partnerships and our rapid discovery of antibodies in response to COVID-nineteen has set up our biopharma team for future success.
Our results going from SARS CoV-two sequence to competitive antibodies and now to pseudovirus neutralization characterization have validated the speed and accuracy of our platform, opening doors to additional partners and growth for this business area. We continue to demonstrate that our cutting edge approach adds value for small and large companies alike. We bring something unique to antibody discovery that is generating a milestone and royalty stream for the future. More broadly, we are evaluating different targets that could benefit from our internal discovery and optimization in view of out licensing or spinning out future assets. Now I'll move to data storage.
Last year, we reported that we were pursuing the fabrication of our
Though we did not expect to have an update on D and A
Though we did not expect to have an update on DNA data storage, we recently made some important technical breakthroughs that we believe will facilitate further miniaturization of our silicon technology. And overall, we remain on track with the internal goals we have set for ourselves. Finally, in June, we completed a follow on financing of our custom of our common stock, adding more than $107,000,000 to our balance sheet. We appreciate our committed and supportive investors who showed overwhelming demand for our stock. At this time, I'd like to turn the call over to Jim to review our financial results for the quarter.
All
right. Thank you, Emily. As Emily highlighted, we had a very strong quarter. I'd like to thank all our employees for delivering again in a challenging environment. I'll now touch on some of the key highlights of the quarter.
Revenue was $21,200,000 dollars That's a sequential growth of 10% and up in excess of 50% year over year. So we have 24,700,000 dollars in orders, which is a slight increase in this challenging environment. Both synbio and NGS revenue grew sequentially. Our Gingko business is doing well with $2,800,000 of revenue in the quarter. And year to date, Gingko revenue is now just under $9,000,000 to $8,900,000 dollars Our results for the quarter also highlight the strength of our platform as our non GECO business scaled from $15,300,000 dollars of revenue in quarter 2 to $18,400,000 due to strong growth in both NGS and synbio as well as revenue from our COVID-nineteen related products and interest in our antibodies.
We're demonstrating the capability of our silicon based DNA synthesis platform to tap into new revenue opportunities and we continue to build our customer base. During the Q3, we served in excess of 1300 customers with more than 1900 customers served year to date. Our biopharma orders were approximately 1,100,000 and we continue to make progress in securing more biopharma partnership deals. Now let's unpack some of the details on the orders. Orders were $24,700,000 in quarter 3 as compared to $24,600,000 in quarter 2.
This represents year on year growth of approximately 36% and is terrific outcome based on the uncertainty in the environment. Now quickly touching synbio. Our synbio product orders defined as genes, libraries and oligo pools were $14,900,000 for the quarter and include Gingko orders of 3.1. Dollars Our gene business is doing extremely well with orders of $12,300,000 showing strength in EMEA and the U. S.
Markets primarily from industrial biotech, academic and the pharma segments. Now quickly covering biopharma. Our biopharma bookings were $1,100,000 for the quarter, which bring our year to date bookings to $2,600,000 The Q3 was our most successful in terms of bookings and formalizing our antibody development partnerships. At the beginning of the fiscal year, we had line of secure between 510 partnerships, as Emily noted, and we are tracking to do exactly that. During the quarter, we signed 3 new antibody discovery partnerships and expanded an agreement with a current customer.
As Emily mentioned, we've now signed a total of 9 agreements with 6 generating milestones under royalties. In general, our antibody development partnerships require Twist to provide rapid, on demand, high affinity antibodies based on 1 or more targets provided by the customer. These agreements have 3 elements to the program. One is we license and we also utilize our library of libraries, which is a panel of synthetic antibody phage display libraries derived only from sequences that exist in the human body. 2, we'll also work to discover, validate and optimize new antibody candidates.
And 3, the customer pays Twist technology licensing fees and increasingly receive project milestones fees for completion of various Twist activities and development milestones as our customers progress and commercialize the products. In many cases, we also receive royalties on any products coming out of the partnership. We're seeing our overall pipeline of biopharma opportunities growing, which is also leading to more opportunities for us to leverage our platform advantage and tap into new revenue streams. These deals demonstrate the quality, flexibility of our platform as validated by the number of COVID hits from our libraries from our own libraries. Our NGS product orders in the quarter were $8,700,000 as compared to $9,800,000 in quarter 2.
As we have highlighted, the orders for NGS can fluctuate quarter to quarter. I'd like to note that our year to date bookings are approximately $30,000,000 for NGS. Our pipeline of opportunities continues to scale. We've seen an increase in the number of customers as well as increased engagement with current and potential customers. We received orders from over 6 20 customers in the 3rd quarter, up from 253 customer accounts in the previous quarter.
So in the quarter, we saw more opportunities with a higher number of lower value purchase orders. And another positive is our pipeline of our larger NGS opportunities continues to scale and we're now tracking 132 opportunities progressing through the pilot, validation and adoption phases with 47 adopting up from 43. As highlighted, we've seen a robust growth in our funnel. Our year to date NGS bookings, as mentioned, are about 30,000,000 with revenue 24,000,000 dollars And we anticipate the revenue will pick up in line with our customer activities and we expect to see additional opportunities with snip microarray conversion to NGS plus NovaSeq as well as new product introductions. Now let me quickly cover the geographies.
Overall, geography performance is great for the Q3 and most regions were flat with previous quarters, which is actually incredible based on the environment. EMEA did well with orders flat, although NGS was down. APAC, we saw orders really flat at $1,000,000 and American orders were just under $15,000,000 So overall, a great geographic performance. As we highlighted on all our other calls, we provide orders not to directly translate into revenue for the following quarter, but more to provide a trend line for each product group. Now progressing on to revenue, I'll give more revenue details.
Quarter 3 revenue was $21,200,000 up sequentially from $19,300,000 NGS product revenue was $9,100,000 as compared to approximately $7,700,000 last quarter. Although there's a lot of uncertainty, we're doing well expanding our NGS customer base. We shipped to almost 600 NGS customers during the quarter as compared to approximately 340 in the previous quarter. And are well positioned to scale the business going forward. In summary, NGS is doing well and we continue to execute on our business plan.
And now turning to synbio, we had a greater quarter, great quarter. Our synbio revenue was $11,800,000 up from $11,000,000 in quarter 2, with gene revenue increasing from $9,100,000 to $9,600,000 Note that the Ginkgo revenue in quarter 2 was very robust, $3,900,000 and declined to $2,800,000 in line with the contract. And this decline was reflected in gene shipments, which fell from approximately 88,000 in quarter 2 to 83,000 in quarter 3. And this highlights we had a very strong quarter with non Gingko customer base as revenue scaled approximately 30% sequentially from $5,200,000 to $6,800,000 As Emily noted earlier, we're seeing the benefit of launching our DNA prep products and approximately 50% of our gene revenue in quarter 3 was from longer genes, I. E.
Genes over 1.8 kilobytes Quickly touching biopharma, revenue for the quarter was $300,000 and reflects the timing of our antibody optimization projects. In terms of global expansion, revenue from Americas in quarter 3 was approximately $13,600,000 as compared to 12,100,000 in the previous quarter. EMEA revenue of 6.4 as compared to 6.2 and APAC revenue actually scaled to 1.2 from 0.9000000 in Q2 highlighting recovery in APAC. In terms of segment revenue healthcare was strong for the quarter with revenue of $8,600,000 up from $5,800,000 in quarter 2, I. E.
Sequential growth of approximately 48%. Academic revenue declined modestly to $4,600,000 from $5,500,000 reflecting the impact of COVID. Industrial Chemicals was flat at $7,700,000 with strong non Gameco customer contribution. Now moving down to the P and L, gross margins. Our gross margin for the Q3 was 22%, which was impacted by a scale up of our DNA preps for clonal genes.
This resulted in unabsorbed capacity. We are very encouraged by the initial market response and will continue to scale and utilize capacity. We believe this will be a very important investment for future growth as we've been able to go after our largest share of pharma wallet with our platform. COVID shelter in place compensation was 900,000 dollars in the cost of revenues in the June quarter and when we normalize for the shelter in place compensation, our gross margin would be approximately 26.4%. Depreciation and stock based comp and cost of revenue was $900,000 in quarter 3.
In terms of our operating expense, R and D was $10,400,000 compared to $10,600,000 in quarter 2. The quarter 3 R and D spend reflects $1,500,000 offset to R and D expenses for the IRCA grant funds received in the June quarter. This is the non dilutive funding we've been talking about previously. Gross R and D spend in quarter 3 was 11,900,000 dollars versus $10,600,000 after the IR plan, and primarily due to the sequential increase in investment in our antibody and NGS product activity as well as $300,000 in shelter in place compensation. SG and A costs for the quarter were $22,500,000 which is a decline from $27,200,000 in quarter 2, reflecting a reduction in legal litigation expense.
We did continue to invest in our commercial organization and have increased to 161 heads up sequentially by 16 as we position ourselves for growth in FY 2021. Our net loss for the quarter was $28,200,000 which includes stock based compensation of $4,100,000 and depreciation of 1,700,000 In summary, we ended the quarter with $311,800,000 in cash and equivalents and invested about $8,000,000 year to date in CapEx. During the quarter, we proved out the power of platform. We launched our DNA products. We launched which allowed us to capture more gene business.
Our NGS pipeline continues to grow and we received our first IRPA funding. Our biopharma investment is starting to pay off as we close more partnerships and responded to the pandemic by releasing controls and infectious disease panels. We invest in expanding our organizational capabilities and supporting our employees through the pandemic challenge by providing additional compensation and PPE, which positions us to scale and continue to leverage our platform, tap into new revenue streams and have a strengthened balance sheet to support our growth investments. And with that, I'll now turn the call back to Emily.
Thank you, Jim. In summary, we delivered stellar third quarter results, particularly in light of the impact of the coronavirus pandemic and we are positioned to finish our fiscal year strong. We continue to pursue new opportunities where our technology platform can deleverage for important research like COVID-nineteen. In addition, we are delivering an increasing number of products for healthcare, industrial chemical, diagnostics, agriculture and academic researchers worldwide. Looking ahead, for synbio, we expect continued revenue growth and diversification of customers.
We anticipate increasing revenue for our DNA prep suffering as well as the companion clonal genes. We intend to launch our IgG offering for healthcare as well as our clonal ready gene fragments for the long tail of the market. For MGS, we will continue to support our customers in COVID-nineteen and respiratory disease research, while providing products for ongoing testing. At the same time, we will continue to pursue longer term conversions of customers currently using Snyk Microarray. For biopharma, we have now signed 9 revenue generating partnerships of our expected 5 to 10, 6 with milestones and our royalties.
We anticipate additional collaborations that showcase our proprietary antibody discovery and optimization technology, while we continue to advance our internally generated competitive antibody candidates for COVID-nineteen as well as several other disease area. In data storage, we continue to execute on our agreement through IARPA and expect to continue the development cycle to drive the cost of DNA data storage down through technology advancement. It has been an exceptionally busy and productive quarter across all areas of our business. Consistent with last quarter, we are not providing financial guidance for the rest of the fiscal year due to the unpredictable impact, both positive and negative, of the ongoing COVID-nineteen global pandemic on our results of operations. We anticipate continued growth, but we do not anticipate dramatic increases or decreases in revenue as a result of COVID-nineteen for our fiscal year Q4.
COVID-nineteen remains a societal challenge worldwide, particularly in the United States, but we have delivered solid growth in all areas of our business. At Twist, a majority of our employees are entering their 5th month of working from home and continue to demonstrate a very high level of commitment and productivity to drive the business forward. For our employees that are working in the labs, we began weekly COVID-nineteen testing to ensure the safety of our employees and the continued supply of DNA products to our customers. These are difficult times. I am proud of our team who continues to embrace the challenges with grit and innovative solutions.
Together, we have made incredible strides and I know this is just the beginning. With that, let's open up the call for questions. Operator?
Our first question comes from Doug Schenkel with Cowen. Your line is now open.
Hey, guys. This is Subbu on for Doug. Seems like things have held up for you pretty well all things considered. How much of this total revenue was COVID related revenue? Any one time dynamics?
And how should we think about sustainability moving forward?
Hey, Subbu, it's Jim. Yes, things held up really well in the quarter. Bookings, as we noted, were almost $25,000,000 We're not we don't break out your COVID direct revenue. But I would note the number of customers have increased. NGS, the number of large customers we're tracking in the funnel and NGS continues to scale.
We're having a lot more customer conversations. That's driven by the value of our platform and the benefits our customers see and more sequencing costs and also in terms of cycle time. On the synbio side, our non Gingko synbio business increased and that's a very healthy sign as well. Overall, company is doing well in terms of COVID and responding to the opportunities.
Okay. And we saw the news on Ancestry and you highlighted it in your presentation as well. Is it reasonable to say that then switching to NGS, a significant role was played by your NGS case? And does this shorten the customer conversion cycle of validation and then production? Additionally, with the surge of liquid biopsy based testing, we are well positioned to offer your NGS customized seats.
So one would hope for a faster ramp. Are we thinking about this right?
So on your first question, we're very excited with the launch of the Ancestry Health products. And we have previously said that Ancestry was one of the 2 macro rate to NGS conversion that we've had so far. And we believe that our platform is especially well suited to enable that transition, where we enable companies to have more genomic information at the cost that is the same or lower. And so this is the 1st NGS consumer base product that I know of in the U. S.
And so we're very excited that we see the platform that enables this. Then you had a question about liquid biopsy. Would you mind repeating what the question was?
Yes. Because the liquid biopsy testing is increasing and is increasingly getting adopted, you are well positioned to offer your NGS kits to these companies. So one would hope for a faster ramp. Are we thinking about this right?
Yes. So liquid biopsy is definitely a target area for our products. And in liquid biopsy, you have to sequence really deep. You have to go sometimes 50,000x coverage or more. And so when you sequence deep, the uniformity of the capture is extremely important, because any small uniformity is amplified 60,000 times.
And so our probes uniformity offer an advantage at low dose of coverage for a rare disease or you needed 30 x coverage for instance. But if you have to sequence deeper, we are even more of an advantage. So our view is that the deeper the sequencing, the more beneficial our platform is. And so some of the companies that Gene tracks and report every quarter on progress from pilot to production, some of those are liquid biopsy companies. And we think that they are switching to us, thanks to the uniformity that you provide, which turns into a lower cost per sample for them.
Got it. And one last one, what other products are you planning to launch for the rest of the year besides IGT?
So for the rest of the fiscal year sorry, for the rest of the calendar year, we talked about clonal ready gene fragment for synbio. And I don't think we've disclosed any product launch yet for NGS.
Great. Thank you, guys.
Thank you.
Thank you. Our next question comes from Catherine Schulte with Baird. Your line is now open.
Hey, guys. This is actually Tom on for Catherine. I was just wondering if you could speak to any particular revenue trends throughout the quarter, if things sort of were slower in April and then ramp throughout the year? And then any insight into July would be appreciated just sort of given some of the regional flare ups we've seen at least here in the States. I was just curious if you guys had seen anything, any sort of pauses in some of
the momentum? No. In fact, I mean, our revenue trends actually during the quarter are fairly consistent. And the in terms of any forward looking statements, we can't make that. But just highlight that our bookings, 24.7 percent was not a good quarter.
Our Syn Bio business, I just could repeat some of the comments made earlier, but Syn Bio business is doing well. There's a lot of positives in the biopharma side. I mean, particularly, we've announced a number of new partnerships. We're seeing a lot of interest in our discovery platform. And we continue to scale our customer base.
I think what's most encouraging for myself, tracking the numbers, the number of larger opportunities we're seeing in NGS and that continues to be a really good strong sign. The DNA preps we launched during the quarter had a positive impact in terms of attracting more gene business. We're offering a broader portfolio for our customers and offering a one stop shop for them, which makes it easier for their supply chain management and a good and we're a terrific partner to work with.
Great. That's appreciated color. Pivoting to the biopharma side of things, if I look back on the original guidance you guys provided, I mean, 5 to 10 pharma partnerships, you guys are already at the high end through that. I think you had spoken to $1,000,000 in revenue on the full year guide. You guys have clipped that as well.
I mean, just sort of if I think to where you guys were thinking coming into the year, I mean, what's driving the outperformance? Is it just the platform validation? Is it on the revenue side? Is it just more of the upfront than you guys were expecting? I'd just love to get some color on sort of where you're sitting relative to those initial expectations.
Yes. No, thank you for the question. So when we said the guidance, we were towards the beginning of the year and this year was a transition year from last year being a year where we gathered the data. And this year, where we turn those data sets into an early business success. So we had some view into the funnel.
And the fact that we are towards the high end shows that we've been quite successful at closing that channel. And the effort that we've done around COVID has really shown a light on the power of a biopharma platform. And we're quite pleased with that.
Great. And one more if I could sneak in. We had seen that Ginkgo had received some funding through an NIH program to develop additional COVID testing capacity.
Are
you guys supporting Ginkgo in this workflow specifically? Do you have any insight there?
So Ginkgo, we can't really share the detail. I'll just highlight we had another good quarter with Ginkgo. Once again, year to date revenue is about 9,000,000 dollars We're on track in terms of our contract and we always work closely with our friends at Ginkgo. We have a great partnership, but we don't disclose the actual details of what we're actually working
on. Understood. Thanks for the color, guys. Okay.
Thank you. Our next question comes from Luke Sergaut with Evercore ISI. Your line is now open.
Hey, guys. How are you?
Good. And you? Great. How are you?
We're all good here. So could we start off on the NGS testing of for COVID? There's been a lot of talk about pulling the samples. Is this something that where you guys could play and actually help drive the cost down or help this test be adopted for COVID testing?
That's a great question. So if you have a human sample and you just sequence that, it's going to be very expensive to read the virus because the virus RNA is going to be diluted with the genetic material of the human host. And so it's 1,000 of dollars per patient. So therefore, you have to do some kind of an enrichment where you pull out the virus material away from the human so that you focus on the human. And so we provide products for that and you have to do a library prep and then you have to do a capture.
In terms of what pooling helps you to do is if you have 1,000 samples, instead of doing 1,000 library prep and then 1,000 capture, if you pull 10 or 100 samples at a time, it limits the number of library prep, meaning pipetting steps that you have to do. So long answer to your question, but the answer is going into the Twist protocol, At the end front, it has to be genetic material. So whether it's 1 sample or 100 samples that have been pulled, the protocol works the same. So our protocols are, I would say, compatible from day 1 for a pooled sample going in. That being said, I will point out that we have a little bit of an advantage over all the protocols because our capture itself is pulled.
So even if you don't pull the sample upfront after the capture, we have a protocol where you can mix the prep libraries together into 1 capture, and we enable up to 16plex. So our capture is always already pooled, and we can do that because of the very nice uniformity. So there's 2 level of pulling available.
Okay. And so I guess just the labs that are looking into doing the pool testing and doing NGS based testing, are you starting to work with them? Or is this something that
you just are having conversations with?
So our kits are available. I think we launched our COVID kit, I believe end of March. And then a couple of weeks ago, we launched our respiratory panel where we have 15 different respiratory viruses that you can extract and sequence. So those kits are available for research. And yes, if you want to pull the sample upfront, you can call us.
But it's actually quite simple. You just blend the sample and extract 50 nanogram and that goes into the protocol. The difficulty is that the workflow is easy, but then you have to deconvolute later if you have one positive, you have to deconvolute later. Okay.
All right. That's great.
And then on the biopharma side, you guys have been landing a lot of these companies on the platform. Any have you guys had any interest on from existing conversations on licensing from those from these new partners? I know
that you're not going to talk about any conversations that you're having outside of those partners.
We try to be diligent in reporting deals. And some of those deals take time. So we probably said as much as we're able to say at this point today.
That's fair enough. Fair enough. And then lastly here, you were talking about the margin dynamics and ex shelter in place payments you had 26% gross margin. Is that kind of the pace we should expect going forward in 4Q, Jim?
Yes. So the non GAAP gross margin is 26.4%. Obviously, not going to give any forward forecast projections. If you step back, we continue to scale the business. As we scale the business, we leverage our fixed costs.
We were impacted last quarter by shelter in place. And also, we had some inefficiencies as we launched our DNA prep business. But our view is as we scale the business leverage our fixed costs continue to launch and particularly NGS and Bioproducts, we're still targeting with 50% to 60% gross margin in the future. This year this year, I think our average gross margin year to date would be non GAAP is about 26%. This is a frame of reference.
Okay. That's helpful. That's all for me. Thanks.
Thank you.
Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Doctor. Emily Will Proust for any closing remarks.
Thank you, operator, and thank you all for joining us today. As we move into the final quarter of our fiscal year, we look forward to keeping you apprised of our progress. We continue to realize the power of our silicon based technology platform to ride the future through synthetic DNA, improving both health and the sustainability of the planet. Please take good care of yourself, stay safe, socially distance and wear a mask. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.