8-K: Telesis Bio Reports Record BioXp Kit Sales and Improved Margins in Preliminary Q4 and Full Year 2023 Results

Telesis Bio announced preliminary unaudited financial results for Q4 and full-year 2023, highlighting record BioXp kit sales, increased gross margins, and reduced operating expenses.

Summary

• Telesis Bio released preliminary unaudited financial results for the fourth quarter and full year of 2023.
• BioXp kit revenue reached a record high of over $1.0 million in Q4 2023, a 59.6% increase from the previous quarter and a 25.9% increase year-over-year.
• The growth in BioXp kit sales was driven by a 300% increase in mRNA workflow adoption compared to the same quarter last year.
• Full-year 2023 BioXp kit sales increased by 10% compared to the previous year.
• Total consolidated revenue for 2023 is expected to be $27.5 million, slightly up from $27.4 million in 2022.
• Q4 2023 total revenue is expected to be $7.0 million, a 26.3% decrease from $9.5 million in Q4 2022, due to capital spending weakness and a shift to lower-priced instruments.
• Excluding BioXp instrument sales and discontinued BioFoundry Services, total revenue for 2023 was $20.9 million, a 12.4% increase from $18.6 million in 2022.
• Collaboration revenue for 2023 is expected to be $8.7 million, a 30.7% increase from $6.7 million in 2022.
• Gross margin for 2023 is expected to exceed 60.0%, up from 56.8% in 2022, driven by improved product mix, higher collaboration revenue, and oligo insourcing.
• Operating expenses for Q4 2023 are expected to be approximately $11.5 million, down from $14.3 million in Q4 2022, and $52.8 million for the full year, down from $62.1 million in 2022.
• Net of non-cash and one-time items, operating expenses for 2023 were approximately $42.0 million.
• Cost reductions of $3.7 million in Q4 are expected to lower operating expenses going forward.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong growth in key areas like BioXp kit sales and gross margin, coupled with cost reductions. While there are some challenges, the overall tone is optimistic and suggests a company on a positive trajectory.

Positives

• BioXp kit sales reached a record high in Q4 2023, demonstrating strong product adoption.
• The company experienced significant growth in mRNA workflow adoption, indicating a strong market demand for their technology.
• Gross margins improved significantly in 2023, driven by product mix, collaboration revenue, and oligo insourcing.
• Operating expenses decreased in both Q4 and the full year of 2023, reflecting successful cost-cutting initiatives.
• Collaboration revenue increased substantially, indicating successful partnerships and technology milestones.
• The company's oligo insourcing initiative is expected to fulfill more than 70% of their oligo supply needs.

Negatives

• Total revenue for Q4 2023 decreased by 26.3% compared to the same period in 2022, primarily due to capital spending weakness and a shift to lower-priced instruments.
• The preliminary financial results are unaudited and subject to change upon completion of the company's year-end financial reporting processes and audit.

Risks

• The preliminary financial information is unaudited and subject to change.
• The company's financial results are subject to the completion of year-end financial reporting processes, reviews, and audit.
• The company's future financial performance is subject to risks and uncertainties, including those described in their most recent 10-Q filing.
• The company is not providing forward-looking guidance at this time.

Future Outlook

The company anticipates the use of RNA in drug discovery workflows will continue to grow and intends to focus on expanding the adoption and capabilities of its mRNA and cell-free RNA synthesis workflows. The company will not be issuing forward looking guidance at this time.

Management Comments

• Todd R. Nelson, Ph.D., Founder and CEO of Telesis Bio, stated that he is pleased with the company's operating execution in a challenging macro environment during 2023.
• He highlighted the company's record BioXp kit sales and expanding gross margin against the backdrop of significant cost-cutting initiatives.
• He also noted that their rapid and flexible mRNA synthesis kits are game-changing and unlock tremendous value for customers.

Industry Context

The announcement reflects a growing trend in the biotechnology industry towards advanced, automated solutions for DNA and RNA synthesis, particularly in the areas of cell and gene therapy, vaccine development, and drug discovery. The company's focus on mRNA workflows aligns with the increasing importance of RNA-based therapeutics and research.

Comparison to Industry Standards

• Telesis Bio's 59.6% quarter-over-quarter growth in BioXp kit sales is a strong indicator of market adoption, especially when compared to the more modest growth rates of some competitors in the life sciences tools sector.
• The company's gross margin exceeding 60% is competitive with other companies in the synthetic biology space, such as Twist Bioscience, which has reported gross margins in the 40-50% range, indicating Telesis Bio's strong pricing power and cost management.
• The reduction in operating expenses from $62.1 million to $52.8 million year-over-year demonstrates a commitment to efficiency, which is a key focus for many biotech companies, especially those in the growth phase.
• While companies like Ginkgo Bioworks are focused on broader synthetic biology applications, Telesis Bio's focus on automated DNA and RNA synthesis positions them well in the specific market of therapeutic discovery and development.

Stakeholder Impact

• Shareholders may view the results positively due to the strong growth in BioXp kit sales, improved gross margins, and reduced operating expenses.
• Employees may be impacted by the cost-cutting initiatives, but the company's growth could lead to new opportunities.
• Customers will benefit from the company's focus on expanding the capabilities of its mRNA and cell-free RNA synthesis workflows.
• Suppliers may see increased demand for components used in the company's products.
• Creditors may view the company as a lower risk due to its improved financial performance.

Next Steps

• The company will complete its year-end financial reporting processes, reviews, and audit.
• The company intends to focus significant efforts to expand the adoption and extend the capabilities of its highly differentiated mRNA and cell-free RNA synthesis workflows based on its BioXp and SOLA platforms.

Key Dates

Keywords

BioXp, mRNA, DNA, RNA, synthetic biology, gross margin, operating expenses, collaboration revenue, oligo insourcing, financial results