Ladies and gentlemen, thank you for standing by, and welcome to the Twist Biosciences Fiscal 20 2Q1 Financial Results Conference Call. At this time, all participants' lines are in a listen only mode. 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 hand the conference over to your speaker today, Jim Thornburn, Chief Financial Officer.
Thank you, and please go ahead, sir.
All right. Thank you, Chris. Good afternoon, everyone, and thank you for joining us today for Twist Bioscience conference call to review our fiscal 20 21st quarter financial results and business progress. Please review our press releases we issued earlier today, which are available at our website, www.twistbioscience.com. With me on today's call are Doctor.
Emily Leprost, CEO and Co Founder of Twist and also Mark Daniels, Chief Legal Officer of Twist. Emily will begin with a review of recent progress in Twist Businesses and Mark is available for Q and A on our litigation. 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 federal securities laws. Forward looking statements generally relate to events or future financial or operating performance. 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 as of the date hereof, and we disclaim any obligation to update any forward looking statements, except as required by law. With that, I'll now turn the call over to our Chief Executive Officer and Co Founder, Doctor. Emily LaProst.
Thank you, Jim, and good afternoon, everyone. I'd like to begin our call with an update announced this afternoon that we have reached a settlement with Agilent in the litigation originally filed on February 3, 2016. Under the terms of the agreement, we obtained a full release of claims made against Twist by Science, myself, C1 Chen and Solange Glade in action for a one time payment of $22,500,000 Settlement agreement contains no admission of liability or wrongdoing because there were none. Agilent launched an all out legal assault on Twist, and in the end, we not only survived, but we thrived through the attack. We are prepared to take this case to trial.
However, we have chosen to settle this litigation to remove the uncertainty and exceptional legal fees associated with the jury trial. In addition, we believe it is in the best interest of all of our stakeholders that we eliminate this distraction and focus on our business at hand. With that, I'd like to turn to our financial results for the Q1 of fiscal 2020. We are off to a solid start with $17,200,000 in revenue resulting from a larger number of orders shipping in the last days of the quarter. We reported impressive growth in Synthetic Biology and NGS revenues year over year.
And looking forward, orders for both synbio and NGS look very strong at almost $25,000,000 for the Q1, which is a yearly run rate of $100,000,000 While we believe our order increase is due to exceptional products and commercial team, we also believe that we had a bit of a bump due to the end of the year from companies that need to spend their budget. We saw this in the Q1 of fiscal 2019 and we saw it again in fiscal 2020. We also reported 700 ks in orders from biopharma. This is incredible growth and we are very excited about the progress of this vertical market opportunity. I do want to caution that we both on our revenues to be exceptionally lumpy moving forward and may not grow quarter over quarter.
Our gross margin was positive $3,400,000 at 20%, essentially flat sequentially. As we have built up capacity for synbio and NGS, we continue to invest in new product launches to fuel additional revenue growth for both businesses. Moving to business segments. Forfin Bio, we shipped about 80,000 genes in the Q1, down a bit from the Q4, primarily due to holiday timing. During the first half of calendar twenty twenty, we are bringing 2 new write offs online, which will allow increased capacity.
In addition, we're investing in additional resources at pinch point in our processes to continue to reduce our turnaround time. An important note, while we have improved turnaround time significantly over the past 2 years, we continue to focus on improving this metric to stay competitive and win additional market share. Continuing our pursuit of the long tail, in the Q1, in comparison to the same period last year, we received about double the number of purchase orders, which were smaller in size by about 30%, resulting in substantial revenue growth overall. We remain on track to introduce product line extensions in mid-twenty 20 that we believe will allow us to meet the need of large pharmaceutical companies that require larger quantities of DNA. In addition, to super growth in the long tail, we are on track to introduce in calendar 2020 our clonal ready gene fragments.
With these products, we will be expanding into 2 very important subsegments that we are not serving today with our map to pursue other markets in the near future. For genomics and targeted MGS, in the Q1, we shipped our targeted enrichment products to 187 customers with 37 of these customers now in production. We continue to show good growth in this market and very strong orders of $11,800,000 in the first quarter. We reported revenues of $7,000,000 which is an increase of 86% year over year. We are currently pursuing a large volume customers within liquid biopsy, cancer diagnostics and rare disease.
As we discussed in December, we are now going after the snip macular market, which has resulted in 2 substantive conversions to Twistless NGS. In addition, we're expanding our scope to improve the research market. We expect continued product launches to serve a growing number of applications in the NGS space. I'd like to take a few minutes to talk about the novel coronavirus. This is an emerging pathogen and proof again that nature is the greatest biosphere risk.
As an emerging virus that we have never seen in human before, there's a tremendous amount of research ongoing worldwide. Many customers have come to Twist as well for products in key areas that enable rapid efficient research into a potential pandemic like the new coronavirus. We are supporting customers by making specific genes and gene mutants, by making custom NGS management panels that monitor outbreak areas, and by making antibody sequences that may work as a potential treatment for those infected. These areas exemplify the reason Twist exists today. Our customers take advantage of our silicon platform which quickly delivers genes, custom panels and antibody fragments.
We do this in a safe and secure manner, leveraging our industry leading biosecurity platforms, protocols and procedures. Importantly, we can support a large number of customers and do it at scale, not just for the coronavirus, but also for a wide range of diseases and clinicians that need advanced diagnostics and personalized therapies. That makes us an important resource and partner, both as we face this emerging threat as a global community and as we provide synthetic DNA based product to improve health and sustainability. A couple of important points. We make all of our DNA in the United States and because of this our market share continues 20 fourseven with no impact to turnaround time from the coronavirus.
And in terms of biosecurity, we routinely screen every single genes origin fragment sequence that is ordered. And we screen every customer against government list and other criteria. We have put in place a very robust biosecurity protocol that flags any sequence that matches a known pathogen of concern. Because what we are doing for our customers around the coronavirus means providing a suite of products we offer regularly, we do not expect to see a significant bump in revenues from customers ordering these sequences. While we do not want to minimize the gravity of the situation, this is what we do each and every day and the orders coming in fit within our workflow.
Turning to our vertical market opportunities for biopharma, we have generated data around our 7 GPCR targets and we are leveraging this data to validate our approach and book business as evidenced by the $700,000 in biopharma orders this quarter. We reported data from TB01-three, a GPCR development candidate at an investor conference in January. TBO1-three is a potent GLP-1R antagonist that in preclinical studies has shown complete inhibition of GLP-1R at higher concentrations and in vivo efficacy in a glucose tolerance mouse study. An antibody like this could have potential applications in rare disease indications such as CD hyperglycemia. In January, we announced a collaboration with Schrodinger, a company focused on transforming the way therapeutics are discovered with a physics based computational platform.
We are bringing our 2 companies' platforms together to discover new antibody therapeutics against GPCR targets and sharing any potential economics. This is an excellent example of the way we may access complementary technologies to develop better therapeutics in a wide range of diseases. We expect continued collaboration opportunities across a wide range of solutions that we offer in biopharma, some of which we expect will generate modest revenue initially. As we generate additional data and validation, we expect to move towards more robust contracts that include milestones and royalties. We do expect this to take some time, but we are encouraged by the progress we are seeing so far.
Turning to data storage. In January, we announced that we were selected as the DNA synthesis provider for DNA data storage projects under the IARPA Molecular Information or MIST program. We are collaborating with Georgia Tech Research Institute or GTRI, Microsoft, the University of Washington and Rosewell Biotechnologies to make long term DNA data storage accessible and commercially viable within the next 3 to 5 years. The total contract is worth $25,000,000 with Twist receiving up to $9,150,000 There is an additional $5,500,000 of this contract that will go to GTRI but benefits the commercial development at Twist. As part of the contract, we are designing a CMOS chip to drive a novel DNA synthesis device array.
GTRI will collaborate with Twist on the device designs and will produce the prototype. The subcontract to IARPA is an important step in securing financial backing for data storage vertical and working with these collaborators with Integral for our efforts to build a commercial offering. Finally, because the next phase of data storage is highly dependent upon chip design, manufacturing and refinement, we expect that the cadence of our updates on data storage will be less frequent as the standard chip design build cycle is 18 months. As we scale up in data storage and as well for our Syn Bio and NGS businesses, we have made some organizational changes to facilitate future growth. Bill Pannier, one of our 3 co founders, will lead our DNA data storage efforts as we develop a new silicon platform specific to this market.
At the same time, Patrick Weiss has become COO. He built our operations from the ground up and he will take on additional responsibilities to build infrastructure and processes to enable our rapid growth into the future. 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. Litigation is settled. We're executing well and we enjoyed a great quarter of sequential growth in orders and revenue. Let me touch on some of the quarterly highlights.
Fiscal Q1 revenue was $17,200,000 and exceeded our guidance. We booked $24,800,000 in orders which is a record for Twist. The quarter one book to bill ratio was approximately 1.4 to 1. Our Ginkgo business is doing well with 2,600,000 orders and revenue of 2,100,000. Synbio Business, Non Gingko and NGS products are growing strongly and we continue to build our customer base and we shipped approximately 1,000 customers this quarter.
Biopharma orders is worth noting, same highlight, were approximately $700,000 Looking at the details of orders for the Q1 fiscal 2020, $24,800,000 in orders represents year on year growth of 63% and sequential growth of 24%. Synbio orders and our synbio products are defined as genes, libraries and oligo pools were $12,300,000 for the quarter and that includes Ginkgo orders of $6,000,000 Although Ginkgo was down from $2,800,000 in the 4th quarter, our Ginkgo business fluctuates based on their project activities and received orders of approximately $3,500,000 in January. Our jeans business is doing very well with orders of $9,500,000 and we're seeing strength in both EMEA and the U. S. Markets, primarily from industrial biotech, academic and health segments.
Our genomics products, which I'll refer to as NGS products continue to perform very well. We booked approximately 11,800,000 orders for NGS products in quarter 1, which is up sequentially from $8,000,000 in quarter 4. We received orders from 253 accounts in the quarter and that's up from approximately 180 in quarter 4, with bookings primarily from healthcare, which includes diagnostics, and academic institutions such as abroad. The pipeline for our larger NGS opportunities continues to scale and we're now tracking 91 large opportunities progressing through the pilot validation adoption phase with 37 customers adopting and that's up from 36 and a total of 54 in the pilot and validation phases. In terms of our progress with global expansion, approximately 40% of our bookings were outside Americas.
EMEA delivered another strong quarter with 7,900,000 orders, including 4,000,000 from NGS, with solid orders across industrial biotech, academic and health segments in Europe. APAC bookings were stronger in quarter 1, with $1,500,000 including bookings of $1,000,000 from China. America orders for quarter 1 were $15,400,000 dollars of which $8,000,000 was Syn Bio, dollars 6,700,000 is NGS and thrilled to announce biopharma at 700,000 dollars Please note, we provide guidance not to directly to revenue for the following quarter, but more to provide a trend line for each product group. Currently, both synbio and NGS are growing strongly. We anticipate both NGS and GEEK orders to be lumpy and fluctuate.
Now moving from orders to revenue, quarter 1 revenue was 17,000,000 dollars Our NGS product revenue was $7,000,000 as compared to approximately $6,100,000 in quarter 4, 2019 and 3 point $8,000,000 in quarter 1 twenty eighteen. We continue to expand our customer base and shipped almost 190 MGS customers during the quarter as compared to approximately 152 customers in the previous quarter. Synbio revenue was 10,000,000 dollars with gene revenue of $7,800,000 in the quarter, and that includes $2,100,000 from Gingko. Our gene business does well is doing really well. And once again, we shipped approximately 80,000 genes in the quarter, with the longer genes over 1.8 kilobytes accounting for over 30% of our gene revenue in the quarter.
Now let me quickly cover our global expansion. In fiscal Q1 'twenty, we continue to expand our global presence and have grown strongly across all regions. The Americas' 1st quarter revenue is approximately $10,000,000 as compared to $8,600,000 in Q1 fiscal 'nineteen. Americas now accounts for approximately 60% of our revenue as compared to 75% in Q1 fiscal 'nineteen and that's due to strong growth in EMEA and APAC and our investments in our commercial organization is paying off. EMEA revenue was $5,900,000 for the quarter as compared to $2,400,000 in Q1 fiscal 'nineteen.
APAC revenue for the Q1 totaled $1,200,000 $400,000 versus $400,000 in Q1 fiscal 'nineteen. So strong really strong growth outside the U. S, both EMEA and APAC doing well. In terms of segment revenue this quarter, the largest segments are industrial chemicals accounting for $6,100,000 and healthcare $5,800,000 Year over year, the 2 largest growth segments, Healthcare and Academic, was driven by NGS and Syn Bio Products. Now moving down the P and L, gross margin.
As we highlighted in our last earnings call, our gross margin is going to be 20% positive in the Q1, and this includes about $400,000 in stock based compensation for the quarter. Our operating expenses, excluding the cost of revenues and litigation settlement for the Q1 increased to approximately $36,700,000 from 34,900,000 in the 4th quarter. R and D was 10,300,000 compared to 10,500,000 dollars SG and A increased to $26,400,000 in the first quarter compared to $24,400,000 in the 4th quarter, reflecting additional commercial costs associated with our continued investment in our commercial organization and higher litigation fees. During quarter 1, we added 19 personnel to our commercial organization and have now scaled the organization to 140. We now have approximately 70 fuel sales personnel with 33 supporting NGS.
Our net loss, excluding litigation settlement for quarter 1, was $33,100,000 up from a loss of $31,200,000 in the 4th quarter and compares to our loss guidance of $31,000,000 to $32,000,000 and that delta is mainly due to higher litigation fees. Our net loss for the Q1, including litigation settlement, was $55,600,000 In summary, the year is off to a very good start with quarter revenue of $17,200,000 $24,800,000 orders, and it's exciting to see the progress we're making. It is early in the year, and we're maintaining our revenue guidance of $80,000,000 to $84,000,000 Ginkgo revenue is estimated to be approximately $10,000,000 Non Ginkgo synbio is estimated to be approximately 32 to 33. NGS revenue is estimated to be 37 to 40 and Pharma 1,000,000. Our net loss guidance for the year, excluding settlement expense, is $107,000,000 to $110,000,000 up from the previous guidance of $103,000,000 to $106,000,000 and that's due to higher litigation expenses associated with defending and settling the case.
In addition, as you saw in our press release, we accrued additional $22,500,000 dollars for our settlement Agilent. So total estimated loss guidance, including litigation settlement, is $129,000,000 $129,500,000 to $132,500,000 Finally, we closed the Q1 with $103,100,000 cash and strengthened our balance sheet and cash position as we completed and at the market offering at the end of January. We issued approximately 2,240,000 shares of common stock at an average price of 22.32 for a total of $48,200,000 net proceeds. This positioned us well to finalize our settlement with Agilent. And with that, I will turn the call back to Emily.
Thank you, Jim. As we move into 2020, we continue to innovate, execute and respond to the market needs. 1st, in Bayer, we expect continued revenue growth and diversification of customers. We expect to produce new products designed to meet the needs of markets we do not currently serve today. And we will continue to enhance our e commerce experience.
For NGS, we will continue our efforts to move customers through the pipeline from pilot to adoption. In parallel, we will introduce new products designed to meet the needs of those developing liquid biopsies and cancer research tools, as well as continued focus on converting organizations that currently use SNP microarray. For biopharma, we expect to leverage the data we have generated to date on our 7 functional antibodies against GPCR targets to sign revenue generating contracts. We announced our first collaboration in January and remain on track to sign between 5 and 10 collaborations, some of which will include both milestones and royalties. And for data storage, we will continue to collaborate with our project team through the MIST program to create a fully integrated commercial offering in 3 to 5 years.
With that, let's open up the call for questions. Operator?
And And our first question comes from the line of Luke Sergut with Evercore ISI. Your line is now open.
Hey guys, a couple of congrats I think are in need. I guess to talk about the litigation, kind of walk through why the timing was now and then deciding because you for a while you were talking about going for the full 9 yards, understandable why not, just kind of how that shook out?
Thank you, Luc. I'll pass it to Mark Dunneas, our Chief Legal Officer. Thank you. Look, we
were prepared to take this case all the way through to trial. As usual, let the case settle. It was the right thing to do for the company, and it was the right thing to do for our stakeholders. We look at this settlement as a victory for Twist. It eliminates uncertainty in legal expenses.
There are no royalties associated with the settlement and the legal claims were resolved.
Thanks. That's yes, we're red like. And I guess back to the business on so when thinking about the margin dynamics, Jim, can you help walk me through how that's going to shake out through the year? And also within also the quarter, right? So you guys did really well.
You placed a lot of or sold a lot of the long jeans, the higher margin business like NGS continue to ramp, but the margins came in a little light. Is that more from the capacity expansions and still not at utilization? Just kind of walk us through that.
Yes. So, good point, Luke. When we set out the projections for this year, we're always ramping our gross margin and targeting to grow it as we scale our revenue from roughly 20% in the 4th quarter to exiting at roughly 40% 20% in Q1 to roughly exiting at 40% in the 4th quarter. Yes, we're adding capacity, bringing some heads in slightly ahead of schedule. In terms of gross margin, actual revenue.
We're comfortable with the forecast, dollars 80,000,000 to $84,000,000 We're comfortable with the average gross margin of about 32%. And I think it's really incredible progress the team has made to move into will give us capacity as we scale through the year. Before we get into the holidays there, we expected to some of our customers to actually be shut down over the Christmas holidays. We actually shipped more than we expected. And we've seen some spike demand, and that's put a little extra cost in ahead than we expected, but we're tracking to what our internal models are looking like.
All right, great. Thanks.
Thank you. Our next question comes from the line of Catherine Schulte with Baird. Your line is now
Congrats on the quarter and the settlement. A few questions from me. I guess first for the new Schrodinger collaboration, what are the next steps and milestones that we should be expecting this coming year? And what's the timeline to potentially reach proof of concept and preclinical development there?
[SPEAKER JEAN FRANCOIS PRUNEAU:] Thank you. So we are not sharing details of the milestones. I think what in terms of news flow on the pharma side, I think we've signed up for 5 to 10 collaborations. And over time, what we expect to see is growing economics of deals and then being able to command some milestones and royalty payments to a contract. So I think those are the milestones to look forward to, number of contracts, size of economics and then milestones on royalties.
Okay. And I know it's early, but any qualitative comments on how the MGI collaboration is going so far and perhaps just your outlook for NGS uptake in Asia more broadly?
I'm surprised it's going well. And as Jim mentioned, the bookings in China are growing. And we anticipate that a portion of the growth that will come in the future quarters will be catalyzed by the collaboration with MGI and the co marketing agreement we have together.
Okay. And then last one, I'll hop back in the queue. But any preview of what we should expect to see from you at the AGBT conference later this month?
So we are a silver sponsor. And so I think the it used to be the first time we went to GBT, it was Twist, standing up saying that we had built a new product line that had substantial advantages in terms of the cost of sequencing per sample in terms of the speed at which we could make custom product and implement in the workflow. So it used to be me and the twisters spreading that story. And what happened last year at HBT, actually our customers took the stage and validated what we had said. And so in a way, it was our customers that were
spreading
the advantages that our platform bring. And so I think the preview for this year will be more of the same of more customer testing and not only in the market we serve today, but in a market that we want to expand into. We have a great franchise and we've been taking market share, but we are not yet serving all of the markets. And for instance, in the conversion of the Steve McCreery towards NGS, we are still in early innings. And so we want to showcase how our products can be transformative into other application spaces as well.
Great. Thank you.
Thank you. And our last question comes from the line of Douglas Tschienkel with Cowen. Your line is now open.
Hi, this is Subbu on for Doug. Congratulations. You continue to have an impressive number of customers in pilot and validating your NCHASE product. How big could this business get for you over the next 2 to 3 years? Could this reach like $100,000,000 in revenue by 2022?
And I have a follow-up.
Well, it's a good question. We're certainly doing well in NGS. I mean, the guidance we've given for this year is between 3740. We are adding more NGS resources in the field to position for ramp up. We get a good strong value proposition in the marketplace and not giving guidance for the following year, but the market is growing 26%, 30% a year.
And we're feeling good about the opportunities. BGI, PerkinElmer collaborations are going well. We're seeing good strong positioning in Europe and good growth opportunities in Europe. So I'm personally excited about it. We've got 33 people in the field.
Their quarter targets are roughly 2,000,000 ahead. And our goal here is to accelerate in that market opportunity and optimistic with the future, but I'm not going to give guidance for over the next couple of years.
Got it. That's helpful. And then some really nice momentum in pharma with 700 ks in orders. What does this translate into revenue and what have you baked into guidance?
So we expect all of the orders to transform into revenue over the next few quarter. We've guided revenue for the year of $1,000,000 to $2,000,000 for pharma. And so it's a great start that in the Q1 we've already booked a substantial portion of that guidance.
Got it. Thank you, guys.
Thank you.
Thank you. And this concludes today's question and answer session. I would now like to turn the call back to Emily Leproch, CEO and Co Founder of Twist for any closing remarks.
Thank you, Chris. Thank you everybody for joining us today. It's been a very eventful and positive day for Twist and we look forward to building on our momentum to drive future growth and business success. Have a great day.
Ladies and gentlemen, today's