Good day, ladies and gentlemen, and welcome to the Twist Bioscience Fiscal 2019 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, today's conference is being recorded. I would now like to introduce your host for today's conference call, Mr.
Jim Thorburn, Chief Financial Officer. You may begin.
All right. Thank you, Kevin. Good afternoon, everyone, and thank you for joining us today for Twist Bioscience conference call to review our fiscal 2019 Q3 financial results and our business progress. Please review the press release we issued earlier today, which is available at our website, 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 our overall progress, and I will report on our financial and operation performance. Then Emily will discuss our upcoming milestones and direction. We will then open the call 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 2 weeks. During today's presentation, we will make forward looking statements within the meaning of the federal securities law. 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 gains are subject to risks, 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 Leprost.
Thank you, Jim, and good afternoon, everyone. Over the course of 2019, we have delivered across all areas of our business, running growth in both SIMBAN and NGS and investing in continued technological advancements and cross offering that will establish additional sources of revenue and solidify our leadership position in the space. At the beginning of the fiscal year, we outlined a series of ambitious objectives for each of our verticals. I am pleased to report that we are meeting and, in some cases, exceeding this growth. Overall, we have shipped to 1091 Syn Bio NGS customers in the 1st 3 quarters of the fiscal year compared to 7 17 customers in the full 2018 fiscal year.
And we reported revenues of €13,600,000 for the quarter. While our revenues flat sequentially over the fiscal second quarter, our top line revenues exceed a significant accomplishment. Indeed, last quarter, we had a single customer accounting for almost $3,000,000 Excluding this large B. C. Biopsy related order, our revenues would have increased by close to $3,000,000 sequentially.
For Syn Bio, we have now shipped to almost 1,000 customers this fiscal year, and we continue to see revenue growth in this segment. During the Q3, we prepared the move of our Daiq engine production into a new mega train facility in South San Francisco, and we are pleased to report that the move went smoothly in the 1st weeks of July without any production interruptions and with only minimum delays for chain orders that came in during the period from July 1 through July 2. In Q3, our number of customer orders increased 3.2x year over year, while the average order size decreased by about 60% year over year, indicating that while we're at the beginning of the trajectory, we are reaching smaller customers and DNA makers in the market. We believe this is fueled by our e commerce platform reaching the long tail of the market. Revenue from Ginkgo for the Q3 was $2,200,000 and we continue to expect them to meet or exceed their contractual obligations of $9,000,000 this year, reflecting Ginkgo's continued need for large quantities of DNA from Twist.
During the quarter, we co hosted an event with Arvida, LabSight and Protelogen, showcasing the integration of the respective individual platforms to create a workflow that accelerates the design deal test cycle. And in April, there was an insightful article in The Economist that detailed the value of the growing field of synthetic biologics. What is described in the article, a convergence of emerging and a readiness for the market to embrace the growing benefits of Syn Bio is playing out in integrating different technologies to spur new and exciting research. We continue to play an integral part in the advancement of Cymbial with our pivotal DNA writing capabilities and the products that results from our proprietary technology. As a testament to our continuous innovation, on Monday, announced the introduction of our long oligonucleotide or oligos up to 300 basis in length, which we believe is the longest control oligo offering in the industry.
Historically, it has been difficult to make oligos longer than 200 basis due to chemical reaction inefficiencies. We have identified a proprietary way to make our oligos a record 300 basis at a very low error rate. The release provides us a competitive advantage, not only in our oligo pool product, where longer oligos are useful in drug discovery and development, but also in data storage, where longer pieces of DNA can store more digital data for strength. In addition, we believe long oligos will be very useful for crystal gene editing as well as in protein engineering. Indeed, 300 bases enable the direct synthesis of 2 guide RNAs together to study preparative and synergistic effects of multiple guides.
And for protein engineering, 300 basis corresponds to 100 amino acids or above the length of the protein subunit. As we look forward for synbio as we look for continued synbio revenue growth, we believe we have a significant opportunity in the pharmaceutical segment through enhanced product offering. We are currently targeting several new products late in this calendar year, which we believe will add to our top line similar growth in 2020 and beyond. For Genomics and targeted NGS, in the Q3 of fiscal 2019, we shipped our target enrichment products to more than 150 customers, with 26 of these customers now in production. For NGS, our revenue continues to grow nicely, and our customer base is moving through our pipeline from pilot to production.
As we have said previously, we expect that large orders will be lumpy as this customer purchases a policy of products and then require several quarters to work through their inventory before placing another large order. In addition to growing our base of large and distinct testing companies, which is a source of the majority of our revenue to date, we see 2 additional market opportunities. The first is in the research market. In June, we introduced a milestone, leveraging our strength in generating custom panels rapidly and cost effectively. While sequence data for mouse and model organisms is constantly being collected, the mouse signal offering from our competitor was based on sequence information that is over 5 years old.
Pharmacyclone includes the most up to date consensus genome build, and we expect this to be a significant source of change. In addition, offering a large panel in an entirely different species quickly and cost effectively is an exceptional feat in case of panel design and reflects our capabilities and the value of our technology platform. Moving forward, in addition to broadening our human NGS product line, we intend to offer additional panels specific to non human species for a broad range of 3% to 3%. The second area where we see growth is in the conversion from SNP arrays to NGS. In July, we received $800,000 in orders that are the beginning of the conversion from microarray to NGS.
As we have mentioned previously, several customers have demonstrated that sequencing using Twist for library preparation and target capture with sequencing on the Novasi platform can be less expensive than running DNA microarrays for SNP analysis, and we intend to continue to enable this conversion. While SME arrays are used extensively in the consumer penetration space, they are also used extensively in the agricultural bio tech market to genotype chicken, beef, salmon and other food products. We believe that together, this mid area market segment represents a total market opportunity of $500,000,000 We do expect it to take some time to penetrate this area as the shift in workflow is substantial. That said, the unique combination of our platform with sequencing and novel seats provide richer genotyping data at an attractive price point compared to SMICARE. And it represents a medium- to long term opportunity for Twist to expand the available market for our platform.
During the fiscal Q3, we launched our e commerce platform for several of our NGS products. All NGS customers are now able to track their order status and selected customers can purchase standard NGS products through our e commerce platform. During the current quarter, we intend to launch several additional e commerce features for design and customer implementation. Looking ahead at the cost in Bioengineering Businesses, orders remain strongly ahead of revenues at $18,100,000 in Q3, indicating future revenue growth in the near term as is order turn into revenues. Therefore, we remain on track to meet or exceed our top line guidance for the fiscal year, and I will let Jim provide detailed commentary.
Moving on to verticals. For biopharma, we continue to collaborate with our partners, Pandion Therapeutics and Meck Pharma, as we have continued to internally validate our disease in our library. As previously reported, we have identified initial functional needs against GLP1R, which promotes insulin secretion from pancreatic beta cells and plays an important role in type 2 diabetes and also in Parkinson's and Alzheimer's. I'd like to note that being able to identify several functional antibodies against 1 GDPR target is in and of itself an important scientific demonstration of the power of our platform. In addition, I am pleased to report that last quarter, we identified functional leads against 2 other relevant and important CPFL targets for a total of 3 targets.
Going forward, we are running this lead through the typical characterization workflow in order to build the data packages needed to explore their monetization. We are also continuing to explore other targets to build a pipeline of release against multiple targets. We have also created a series of single domain antibody libraries. Single domain antibodies are antibody fragments that that are much smaller than a whole antibody. While a whole antibody is composed of 2 heavy chains and 2 light chains, single antibodies are engineered from heavy chain antibodies and also called VHS fragments.
These fragments are small and modular antibodies that are both stable and robust for potentially faster discovery and development. The initial characterization of these libraries has started as well as the design of other libraries. Overall, our ability to make such diverse libraries quickly and cost effectively enables us to rapidly manufacture biological content that can be screened for specific functionalities, enabling us to have multiple opportunities to find future leads against difficult targets. With these new tools, we are making good progress towards establishing collaboration and partnership for our discovery and early development capabilities. Turning to data storage.
We are continuing our negotiation for non directed funding through a government contract on DNA data storage. We remain encouraged with the progress on this front, but there are no guarantees that we will receive funding under this contract. We are also excited to announce that in anticipation of this program, we are proceeding forward with the design of our next generation silicon chip, specific to DNA Data Storage. The CMOS driver chip will be designed and fabricated to be compatible with multiple device designs and will be a key part of our methodical development path towards submacron feature density. The CMOS chip will require multiple quarters for design and production, after which we will continue to execute the engineering roadmap dramatically increasing feature density.
The first phase will be to characterize device designs of 1 to 5 microns. As a reminder, as the feature size decreases, the cost per Oligo and the cost per byte store decreased quite drastically. For instance, going from 50 micron to 5 micron, which is 10x smaller, we will decrease the cost by 10 squares or 100x. Also as a reminder, once a CMOS driver chip is obtained, different device designs can be found, fabricated and tested relatively quickly. So this represents a key milestone to future improvement.
Overall, we are encouraged by our progress and the potential to make DNA storage cost competitive with long term storage options. During the quarter, we also added Nelson Chang to our Board of Directors. Nelson has consulted for us for the last year and a half and brings an incredible depth of experience both in semiconductor industry and in the storage market. And importantly, it was instrumental in introducing and building the market of flash storage at Sandisk. Finally, we recently signed a contract with Inogen, a French company that supplies DNA shells, very small stainless steel capsules that store digital data encoded in DNA for thousands of years, user degradation.
This is one more piece of the commercial infrastructure to bring DNA digital data storage to market as a commercial product. Finally, with regard to our China strategy, I'd like to reiterate that we will be keeping all of our advanced proprietary technology in the United States By building a facility in China to assemble the most standout back end process of our NGS products for the Asian markets, we will be able to expedite the time from order to delivery for these customers. In this way, we will be able to protect our intake for property and still meet the needs of the customers who need the NGS products quickly. We still expect the space will be ready with initial shipments from this facility before the end of Canada 2019. At this time, I'd like to turn the call over to Jamie to review our financial results for the quarter.
All right. Thanks, Emily. First of all, we would like to thank all the shareholders who supported our recent follow on offering in May. We raised approximately $84,000,000 in net proceeds, which allowed us to close June quarter with $161,800,000 in cash and short term investments. As Emily noted, the results for this quarter confirm we're executing well and now anticipate our revenue for the year will be in the range of $52,000,000 to 50 $3,000,000 as compared to our previous guidance of $50,000,000 to $52,000,000 I'll quickly touch on some quarterly highlights.
Revenue is $13,600,000 bookings were $18,100,000 That's a record for the company. Our commercial team is executing extremely well and continuing to deliver. Our book to bill ratio is 1.3:one. Our year to date orders were 50,000,000 dollars Our gross margin for the Q3 was positive 16%. Our Ginkgo business is doing well with $2,400,000 in orders and billings of $2,200,000 in the quarter.
And we're doing a good job in terms of expanding our customer base beyond Gingko and extending our synbio reach. We have invoiced over 1,000 customers quarter 3 year to date. I'll now dig into some of the details of orders for the 3rd quarter. $18,100,000 in orders represents year over year growth of 6% to 9% and sequential growth of 8%. Our send buy orders to branded genes, libraries and all of the schools were $11,300,000 for the quarter, including Gingko.
Sequential growth was 7%, non Gingko sequential growth was 10%. I'd like to highlight our genes business doing very, very well with orders of $9,300,000 with strength in EMEA and the U. S. Markets, primarily driven from industrial, biotech, academic and the pharma segments. NGS orders were approximately $6,800,000 for the quarter, which is up sequentially from $6,200,000 in quarter 2.
We received orders from 178 accounts in this quarter, up from 137 in quarter 2 and had broad based ordering with no single large customer dominating the bookings. Our pipeline continues to grow. We have now 58 in pilot and validation and that's up from 42 last quarter. Remember, we tracked the larger accounts and grew a little more than $250,000 in revenue. We're now tracking 84 of them.
In addition, 2 more large customers are now stealing to production volumes, bringing our total customers in production to 26. How are we doing globally? Well, our global expansion is going well. Approximately 41% of our bookings were ex U. S.
EMEA delivered a strong quarter with 6,100,000 orders, which included 2,100,000 from NGS and Syn Bio 4,000,000 dollars with solid orders across industrial biotech, academic and the pharma segments in EMEA. APAC, our orders were stronger $1,400,000 and that includes China bookings of $800,000 America orders for the quarter were $10,600,000 which includes $7,000,000 for synbio. I'd just like to note, we provide orders not to directly translate into revenue for the following quarter, but more to provide a trend line for each product group. Currently, both synbio and NGS are growing strongly, although we anticipate both NGS and Gingko orders to be lumpy quarter to quarter. I'll now comment on revenue.
Q2 revenue is $13,600,000 This is really a terrific quarter for Twist with growth of 108% year over year compared to $6,500,000 Corpus Christi in 2018. Our NGS business is strong with $5,600,000 in revenue and we now billed approximately 15,000,000 dollars year to date in NGS as compared to $1,800,000 year to date same period in 2018. As we noted on our previous earnings calls, NGS orders and revenue can be lumpy. In Q2, we build 1 single
billed 1 single customer 2,700,000
NGS tools, as Emily highlighted earlier. And this customer will use the product over several quarters. Consequently, we did not ship to this customer in Q3. So excluding this $2,700,000 from our 2nd quarter results, our sequential growth in NGS was 97%. With shipments to 153 NGS customers during the quarter, is demonstrating that we're really with a strong product line and the product offering is being adopted.
Please note the prior quarter shipments to NGS customers shipped to about 104. Synbio revenue was nearly 8,000,000 up from $7,100,000 in quarter 2 with Synbio revenue year to date now 23,600,000 dollars which includes Gingko. Excluding Gingko, our synbio revenue was growing by 70% year over year demonstrating we're making great progress. It's also worth noting our genes revenue was $6,200,000 including $2,200,000 from Gingko. Genes grew sequentially 3% for the quarter with revenue from our longer genes 5 kilobytes accounting for $1,000,000 As worth noting, we had 110 customers sampling and buying a 5 kilobytes product.
Jeans year to date were $19,000,000 compared to $11,900,000 and when excluding dental, our genes business has grown by close to 90% year on year. I'd just like to summarize the $13,600,000 for quarter 3 was good because when you back out the 2.7 we've grown, as Emily highlighted, almost $3,000,000 sequentially. And also we're in the middle of our move. So I just want to thank the whole organization for executing. It was a great quarter.
And I am very supportive of the twisters and obviously the delay continues to deliver. It's a good job team. Turning to regional commentary. In fiscal Q3, we continue to expand our global presence. U.
S. Revenue was $9,200,000 which brings U. S. Revenue year to date to $27,400,000 which accounts for approximately 70% of our total revenue and represents 125% year over year growth. As noted earlier, this is an excellent quarter for the U.
S. As the previous quarter reflected the large $2,700,000 NGS shipment. EMEA revenue was $3,500,000 for the quarter, up from $3,300,000 in Q2, representing approximately 6% sequential growth. EMEA revenue for the 1st 9 months of fiscal 2019 is $9,300,000 up from $4,100,000 in the same period of fiscal 2018, representing approximately 125% year over year growth. APAC revenue for the 3rd quarter was $900,000 growing sequentially from 0.7.
For the 1st 9 months of 2019, the revenue in APAC was $2,000,000 up from $700,000 in the same period of fiscal 2018, representing 127% year over year growth. In terms of segment revenue this quarter, academia, which includes synbio and NGS was strong. For the 1st 9 months of fiscal 2019, our 2 largest segments are industrial chemicals, accounting for about $16,100,000 of revenue and healthcare accounting for $12,400,000 Now moving down P and L. Gross margins, as we highlighted, our gross margins for this last half of fiscal year was in the mid teens eventually delivered 16% margin in this last quarter. So that's $2,200,000 margin.
So we're tracking based on our original guidance. Our operating expenses excluding the cost of revenues for the 2019 Q2.
Our SG and A increased to
$2,000,000 compared to
$8,900,000 for the fiscal 2019 Q2. Our SG and A increased to $21,300,000 in the 3rd quarter compared to $19,100,000 in the second, mainly due to some higher legal fees and additional commercial costs associated with our continued investments in our commercial organization. During quarter 3, we added 11 personnel to commercial ops or organization and have over the last year scaled our organization from 57 to 106. Our net loss per quarter was 27.9 percent up from a loss of 25.9 percent in the 2nd quarter primarily due to higher operating expenses. In summary, our revenue for the 1st 9 months of fiscal 2019 was 30 8.6 percent, which is 127% growth compared to the same period of fiscal 2018 with robust demand for our products containing.
Our jeans orders are strong. Our NGS products have good momentum as more customers adopt and begin to scale to production volumes. The result is we're increasing our revenue guidance to a range of $52,000,000 to $53,000,000 in fiscal 2019, which compares to $50,000,000 to $52,000,000 we discussed previously. Genco revenue is estimated to be approximately 9,000,000 dollars Non Genco Syn Bio estimated to be approximately 23,000,000 and NGS is estimated to be approximately 20,000,000 dollars Our net loss guidance for the year is $102,000,000 to $104,000,000 up from previous guidance of $97,000,000 to $99,000,000 We are stepping up our investment in a commercial organization to position us for strong growth in 2020. It takes about 6 months, 6 to 9 months to recruit, onboard and ramp our sales personnel to full capability.
We want to staff to approximately 70 field sales personnel. We anticipate approximately $1,000,000 in move related to the expenses associated with our new facility in San Francisco. And this new facility combined with 4 new writers will give us the ability to scale $200,000,000 in revenue. In summary, over the last year, we have executed ahead of plan We made strategic investments in our business and strengthened our balance sheet. The business is doing extremely well and our organization is executing and repositioning ourselves to deliver strong growth.
I will now turn the call back over to Emily.
Thank you, Jim. As we are now in the final quarter of our fiscal year, we have achieved several key milestones with an aggressive plan to continue to grow our business. For synbio, we expect an uptick in revenue from Ginkgo as well as continued growth from the larger synbio market. We expect contribution from our long verticals as well as our long gene and gene priming. Looking into 2020, we have a solid roadmap to introduce products we believe will drive growth in the pharmaceutical market.
For the genomics market, we continue to move customers along the continuum from pilot to production. And as well, we are encouraged by the early inroads we are making in the large mid direct market. We will continue to focus in both the traditional diagnostic market as well as the AgBio research and direct consumer NGS opportunities. For biopharma, our science continues to progress and we plan to build our capabilities through non dilutive collaborations and partnerships. We also look forward to signing additional revenue generating partnerships moving forward, beginning with smaller agreements which is more on services and moving along the value spectrum into true discovery partnerships.
In data storage, we are forward to continuing the contract negotiation for non dilutive financing and expect it to drive completion. One final note, we did post case updates detailing development in both May June in the ongoing litigation with Acumen, which can be found under the News and Events section within the Investor Relations section of our website. We continue to believe the case is meritless and intend to defend ourselves vigorously. As you can appreciate, we will not be discussing the litigation on the call, so I do encourage you to read the updates on the website. With that, let's open up the call for questions.
Our first question comes from Tycho Peterson with JPMorgan. Hey, guys. This is Tejas on for Tycho. I wanted to start with the NGS business here. Emily, can you just I know you've mentioned 150 plus customers that you shipped to in the quarter, really strong order book as well.
How much of that was driven by the e commerce platform launch? And how has that been shaping up over there?
That's a great question. Thank you very much. Most of my growth has not yet been reflected by the e commerce launch. So we are still looking forward for the benefit of e commerce.
Got it. And then just following up on NGS. I think you mentioned only 2 incremental customers moving to production mode. Was that surprising to you? Or is it just sort of normal quarter to quarter lumpiness?
It sounds like between the first and second quarter, you had 6 or 7 customers who went from validation to production. So anything to read into the cadence there?
No, I mean, it's a timing issue. I think if you look at the number of customers invalidation as well quite a bit. So it's a timing. And at the same time, the people that are already in production picked up the difference in the one time $2,300,000 orders we had last quarter.
Yes. I mean, what I would add, Stedios, is that we have almost 40 customers in Validation Station Act. Most of them are in the late validation stage. So it's going to show the pipeline. And part of that is, therefore, we're having a lot of negotiations, teams tied up in terms, discussions.
And yes, I think in terms of scaling, it wasn't it's not a surprise. What surprised me is how many are actually moved into the late validation stage, which is encouraging.
Got it. And one quick follow-up here on late pharma. I mean, can you talk a little bit about the success you've had so far in terms of penetrating their customer base with your discovery and optimization platforms?
Yes. So we are in it's very useful in getting it in front of people. So in discussion with multiple electronic clients, as you can imagine, those types of busy activities take some time to reach to a conclusion, but it's been quite positive so far. The other thing
I would add on NGS is we didn't move our lab this quarter consolidates at San Francisco. So we've been very cautious in terms of kind of reminding our customer base through that process. And the team have actually executed extremely well.
Got it. That makes sense. On China, was there a slight delay in terms of opening up your facility there? It sounds like it's now going to be end of calendar year. So anything to elaborate on over there?
Or was it just normal course of business?
I think in previous quarter, we had guided to end of fiscal year for the 1st shipment. End of sorry, end of sorry, I misspoke. In previous earnings call, we guided to the end of calendar year.
So next year, we are in
2019.
What's our priority is to get our consolidation in South San Francisco?
Got it.
In the meantime, we can shift to China from here. It would be better when we're in China, but we can still serve from here.
Got it. And then Jim, I know you probably don't want to speak too much specifically in terms of the next fiscal year just yet. But given that you've guided to sort of mid teens gross margins in the back half of this fiscal And obviously, you're ramping up some commercial investments in the back half of the year here. How should we think about the margin progression? I mean, is that sort of mid teens gross margin a good baseline number of which to think of sequential improvement as we move through the next 18 months or so?
Or are there any other sort of like moving parts which might sort of alter that trajectory materially?
So good question. It's one we focus on. So part of consolidating into Saison Francisco is we can leverage the organization of synergies. We are adding 4 new writers towards the back end of this year. That's going to help us scale to approximately 200,000,000 dollars And as we think about the business between $100,000,000 $120,000,000 $130,000,000 we should be targeting roughly around delivering roughly around 50% gross margins.
And our goal is to scale to that sort of level as quickly as possible. And we would anticipate we should be at that run rate towards the end of next calendar year.
Got it. That's very helpful. Thanks so much guys and congrats on the quarter.
Thank you.
The next question comes from Ross Muken with Evercore ISI.
Hi, Ross.
Ross, your line is open. You can ask your question. If your phone line is muted, could you please unmute the phone
line? Hi.
Can you hear me?
Yes.
Hi. It's John on for Ross. Focusing on data storage and the imaging deal, kind of what I was wondering what your vision was for kind of how you're going to commercialize. What does it take to have a full commercial package in the space? And does it require complementary technology such as like throughput reading?
That's a great question. So in order to source service and data storage, you need to be able to data in, data out. So I think that you first need to encode the data into DNA, the software, they need to write the DNA, so that's our silicon chip. They need to store the DNA, so that's the relationship really useful for that. And then when the data is needed, you have to PCR it out, which PCI is well understood.
And then you have to sequence it and decode, which is again software. In terms of go to market strategy, initially, where it makes the most sense is to go for cold data, so data that is not read very often. So I need to continue to be able to read the data when needed, but only a small percentage of the data will ever be read. And what that means is a current sequencing technology, for instance, Novasik, will be perfect for that at this point. As sequencing technology improve over time, there may be even sheet of sequencing technology, which will enable us to go into markets where the dollar is read more often.
But because we don't control the reading side, initially, we would focus on market that where the data is read very infrequently. And FYI, that data is called WORM, which means write once and read never. And the vast majority of the data in the world is WORM data.
Got it. Thank you. So as far as this imaging deal is concerned, how much closer does it get you to an offering in the least warm data? And do you have a general time frame of when we could expect to
see anything along those lines?
So we sell today, right? We have small number of sales in data storage. And but today, what's limiting the ramp is actually the cost, and that's limited by the density in the silicon chip. Today, it's about $1,000 per megabyte. If you're storing bitcoins, it is very inexpensive to store bitcoins, but if you want to store financial data or your personal footy books that could be quite expensive today.
So that's why there's only a limited market. And so the next opportunity for us is when we can significantly lower the cost of writing. And through the theme of frequency that we are developing, we're enabling that transition. And so the next target point would be somewhere around 1 $100 to $1,000 per gigabyte. At that point, once you have that, you can start selling some very interesting market.
So the opportunity will be here. And then the next step after that again will be to go for $100 per terabyte, which is about the price of the hard drive. At that point, you can invest for the entire market. So it should be a gradual, but the next step is the €100,000 to €1000 per gigabyte. Type.
And as we mentioned, it will take a few quarters to design and build that first silicon chip. The good news is we have a road map, we're executing it and we are moving forward. And if I certainly had the number of funding that we expect to get, will accelerate that.
Understood. That's really helpful. Thank you.
Next question comes from Doug Schenkel with Cowen.
Hey, good afternoon. So I want to go back to an earlier question or maybe just frame it a different way. So just recapping some of the numbers that have been covered a couple of times. The number of customer emails jumped from around 100 to over 150, 42 pilots went to 58. And then the number of folks that are in production went from 24 to 26.
So you're getting a lot more evals. The pilots are jumping too and then I think what we're waiting for is a bigger jump in production customers. Is there some rule of thumb that you can share with us on typically how long it takes to move from one stage to another? And then maybe kind of building off of that, kind of what type of dollars we're talking about that second one may be a little bit tougher. But as we look at obviously at this point, we've had 3 quarters of revenue.
We know what your guidance for the NGS segment is for the year. It seems like you don't have a lot baked in, in terms of additional conversion into the Q4, which my guess is just conservatism at this point. But I ask this because it seems like you're clearly building momentum heading into the end of the fiscal year. And if you could give us some rules of thumb on these things, I think it will allow us to at least think a little more intelligently about what could happen in this segment next year.
Yes. I
mean, so yes, we there
is some conservatism. Remember, part of the conservatism that here is because we are consolidating into well, we're conservative. Anyway, consolidating into consolidating in San Francisco. We're still tracking this. What we're finding over the last few months is we have got a lot of negotiations going in terms of the customers.
I think what's interesting is if you take one order that we've had in the microarray, which came in July, the 800,000 We started negotiating that one
in February 2018. February 2018.
So that's taken us, for just over a year and almost 6 months to convert that. And we'll start shipping that when probably September quarter. So in terms of what we would be expecting is this year we're going to do roughly around 20. We would have to step back and you're right, we're getting momentum. There was more sitting in the validation and that's a late validation negotiation.
We should be anticipating that we should be looking at almost doubling that business next year. And it's difficult right now to say when those validations are going to flip into adoption. But my view is once they get into validation, you're probably talking about 3 to 6 months for adoption.
And that's super helpful. And oh, go ahead. Sorry, Jim.
And then that's late validation.
Okay.
And we define late validations, we're actually negotiating the terms. And talking about the pricing and the Ts and Cs.
Okay. And is it I mean, you've got a ton of momentum. It's still early days, too early to comment on any signs that these conversion timelines where you move from one phase to the other are tightening up. I'd imagine that big one that has taken a year, year and a half from day 1 to getting to where we are now. My guess is if there's another one like that out there today, it would presumably take a bit less time.
Is that fair?
Yes. I mean, definitely that now that we've done it several times, we can anticipate better what people want and sort of where it needs less exploration of what the needs are. And a lot of those are already in the funnel. So I don't think there is a lot of people that we are not talking to yet. So I think we are, as Jim said, conservative for this fiscal year.
And I feel like we are very well positioned for what we want to deliver next year in terms of growth.
Yes. And the other point there, Doug, is that we have increased our investment in the commercial organization to support the growth. If you looked at it, we're ramping up to almost 70 salespeople of that, 30 odd that are going to be supporting NGS and we build technical resource around that because there is a technical sale. As we start to segment the business, each segment within NGS, whether it's through clinical or diagnostics, it really requires a different touch and different value proposition. They've got their own idiosyncrasies.
So we're building that knowledge. And so part of the ramp has to be going to get the right people in the right place talking to the right customers as well. We definitely get a good product.
So let me ask one more follow-up on this topic just because I think that last point about of the 70 new folks you're bringing in, 30 are focused on this segment. Do you expect them to help you where I think you've already been strong with basically converting some of the big research and big commercial labs that need good target capture tools at a lower price. You've done really well in dealing with some really big customers. Does the commercial reach help you more with those types of customers and converting more quickly? Or does it actually allow you to go after the bigger part of the market, at least in terms of number of customers who may be spending a little bit less, but there's just a lot more of them?
Yes. I think it's all of the above. I mean, having more people on the ground enables you to have to do more of the high touch account managing that we have to do with the big account. But at the same time, if every time we get into an account and there's a pilot we win, then it behooves us to put more people to knock on more doors early so that we can grow the funnel and move more people from pilot to production. So it's definitely a little bit of both.
It will help with the big bigger accounts as well as the more medium ones.
Got it. Thank you. Thank you, Emily. Just maybe a couple of real quick cleanup ones. Where do you think gene turnaround time will be by year end?
And how important do you think that is in terms of opening up more of the market?
I think it's a critical piece of owl for the for growing our reach. But we clearly in the market, the more flavors of DNA we can add, the more we'd be appealing to more researchers. And faster turnaround time is, in a sense, an additional product feature that enables us to reach more people. So our goal is to be consistently below 12 days turnaround time in the near future and then push that even further. 12 days will be extremely competitive.
And then as you get to 11:10 days, then it's almost really pitch at the price point and the scale that we have.
Okay. And one last one. In the context of discussing your newer growth drivers in your prepared remarks, You mentioned the ability to use Twist enabled SNP RNA tools to drive customers to increasingly migrate from arrays over to NovaSeq. Is it fair to say that a nice validation of that would be on an upcoming call being able to disclose that you're getting the early indications of interest from some of the big ag accounts. Is that really what we should look for next as a validation that you guys are progressing there?
There's a number of segments that do genotyping. And one of them is, like you mentioned, the ag market. Another is the direct consumer unit testing. And any I think any of those would be a proof point. I think we're quite happy with our order of $800,000 in July for one of those early conversions.
So that is, in a sense, the first proof point that we can compete in that market. As we mentioned also in the market, it's going to take some time if there's a big shift in workflow. But once you prove that the price point is there, which is the most important part in general piping, then make sure that you can do it. And if you can do it once with the commercial team that we have, then we can go and repeat it.
Our next question comes from Catherine Schulte with Baird.
Hi, thanks for the question. Going back to NGS, just curious how has the uptake been on the products you launched at AGBT, particularly the FastHyde protocol?
Yes. Thank you. FastHyde has been a great product. It's really enabled us to open some doors where I think as we had mentioned before, what we enable people is a lower cost of sequencing per samples. But for some people, they already have an answer that's already validated.
And the cost saving that we bring may not cover the entire cost of revalidating the new switching product. And that in that case, the FastHive is a fantastic door opener. At that point, we're not going to bring cost savings, but we bring a workflow advantage. And so overall, it's been very well received. And actually, it exceeded my expectation in terms of the customer the positive customer reaction
to it. It's really
been a it's an opener.
Okay. And then you've talked a lot about starting to see that conversion from SNIP arrays to NGS. How many customers are you currently serving in that application today switching from arrays?
So it's a few digits. It's less than 5. It's very small numbers at this point.
Yes. We're very early in that that portal. I mean, we've been obviously working on it for some time. And actually, I mean, we did get the order in July, which was fairly close to what we expected. So I would say we're tracking based on our plan.
So I was tracking probably slightly ahead.
Okay. And then just lastly, on the drug discovery side, what else do you think you need in terms of your data package before you think you can monetize that capability? And how far out do you think we might be from that?
Yes, it's a great question. So right now, we know that we have find the time the time rate slightly, we know that they are functional. I think I think a little bit of in vivo data will go a very long way. So that's mostly the area where we are focused at that point. Once you have Envigo there, then it's a clinical candidate.
TDA.
And I'm not showing any further questions at this time. I'd like to turn the call back over to our host.
Thank you very much, Kevin. So to conclude, it's an exciting time to be at 3.5 times. As we move into the final quarter of our fiscal year, we continue to deliver strong growth across our Syn Bio and Genomics businesses, and we are investing in our long term opportunities of biopharma and data storage. With the growing revenue stream driven by Kiefsner Health truly demonstrating the ability to change the world, long term vertical market opportunities and a great team in place to execute on our equity plan, we are very well on our way towards implementing our mission to provide sensitive DNA to improve health and sustainability. We appreciate your continued support and look forward to keeping you updated on our progress.
Thank you very much.
Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.