10-K: Twist Bioscience Narrows Losses, Boosts Revenue 20% in FY25

Twist Bioscience reported a 20% revenue increase to $376.6 million and significantly reduced its net loss to $77.7 million in fiscal year 2025, driven by strong growth in NGS tools and synthetic genes.

Summary

• Revenue increased 20% to $376.6 million for the fiscal year ended September 30, 2025, up from $313.0 million in FY2024.
• Net loss significantly decreased to $77.7 million in FY2025, compared to $208.7 million in FY2024 and $204.6 million in FY2023.
• Gross margin improved to 50.7% in FY2025 from 42.6% in FY2024, attributed to higher revenues, stable fixed manufacturing costs, and process improvements.
• The company shipped approximately 938,000 genes in FY2025, a 22% increase from 772,000 genes in FY2024.
• Served over 3,800 customers in FY2025, with 99% of revenue from repeat customers.
• Completed the spin-out of its DNA digital data storage business to Atlas Data Storage, Inc. on May 2, 2025, recognizing a $48.8 million gain on sale.
• Entered into a Royalty Purchase Agreement with XOMA Royalty on October 21, 2024, receiving $15.0 million cash for 50% of future milestone and royalty payments from existing antibody discovery collaborations.
• Research and development expenses decreased by 12% to $80.3 million in FY2025, partly due to the DNA digital data storage business sale.
• Selling, general and administrative expenses increased by 13% to $247.0 million in FY2025, driven by higher stock-based compensation, personnel, IT services, and marketing costs.
• Cash and cash equivalents stood at $183.0 million, with short-term investments of $49.4 million, totaling $232.4 million as of September 30, 2025.

Sentiment

Score: 7

Explanation: The company demonstrated strong operational improvements with significant revenue growth and a substantial reduction in net losses and cash burn from operations. The gross margin expansion is particularly positive. However, it remains unprofitable with a large accumulated deficit, and its stock has underperformed market benchmarks. The spin-out of the data storage business and the XOMA agreement provide strategic focus and liquidity, but the need for future financing and intense competition remain key considerations.

Positives

• Significant revenue growth of 20% year-over-year to $376.6 million.
• Substantial improvement in net loss, reducing from $208.7 million to $77.7 million.
• Strong gross margin expansion to 50.7% from 42.6%, indicating improved operational efficiency and cost control.
• Increased number of genes shipped by 22% to 938,000, demonstrating growing market demand and production capacity.
• High customer retention with 99% of revenue from repeat customers.
• Successful spin-out of DNA digital data storage business generated a $48.8 million gain and allows for strategic focus.
• Secured $15.0 million upfront payment from XOMA Royalty, enhancing liquidity.
• Reduced net cash used in operating activities to $47.6 million from $64.1 million, indicating improved cash management.
• Maintained ISO 13485:2016 QMS certification and achieved ISO 27001:2022 information security certification.

Negatives

• Continued to incur a net loss of $77.7 million in FY2025, and an accumulated deficit of $1,319.6 million since inception.
• Selling, general and administrative expenses increased by 13% to $247.0 million, outpacing revenue growth in absolute terms.
• Interest income decreased by 26% due to lower cash balances and interest rates.
• Stock performance significantly underperformed both the Nasdaq Composite Index and the Nasdaq Biotechnology Index over the past five years (Sept 2020 Sept 2025), with a decline from $100 to $37.04.
• Reliance on a single-source supplier for a critical DNA synthesis component poses supply chain risk.
• The company has never paid dividends and does not intend to in the foreseeable future.

Risks

• Incurred net losses in every period to date and expects to continue incurring significant losses, may never achieve profitability.
• Inability to maintain adequate revenue growth or successfully manage growth could harm business and prospects.
• Business relies heavily on disruptive technologies; new competitive technologies (e.g., silicon chip DNA synthesis by competitors) could disrupt the business model.
• Substantial dependence on synthetic DNA products, with financial results tied to strengthening synthetic biology and NGS product groups.
• Operates in a highly competitive industry with competitors having significant name recognition, IP, resources, and experience.
• Inability to attract new customers and retain/grow sales from existing customers, especially if liquid biopsy/MRD applications prove to have less clinical value or fail to receive adequate reimbursement.
• Loss of a limited number of large customers could significantly impact revenue, operations, and reputation.
• Significant disruption in, or breach of security of, information technology systems or other cybersecurity incidents (including AI-powered attacks) could adversely affect the business.
• Failure to successfully implement new systems and software, including integrating AI and machine learning technologies, could adversely affect operations.
• Rapidly changing technology and extensive competition in synthetic biology could render products obsolete or non-competitive, especially with AI's potential disruptive impact.
• Dependence on one single-source supplier for a critical DNA synthesis component, with potential for delays, increased costs, and reputational harm if supply is interrupted.
• Loss of senior management team or other key personnel, or inability to attract/retain qualified employees, could harm product development and goals.
• Strategic transactions (acquisitions, collaborations, investments) could disrupt business, dilute stockholders, reduce financial resources, or fail.
• Failure to achieve anticipated benefits from the spin-out of the DNA data storage application to Atlas Data Storage.
• Significant pricing pressures and inability to pass on cost increases to customers could adversely affect margins and profits.
• Use of biological and hazardous materials requires expertise and expense, with potential for claims and regulatory non-compliance.
• Potential for developing DNA sequences or engaging in activities that contravene biosecurity requirements, leading to legal liability and reputational damage.
• Third parties may use products in ways that damage the company's reputation, despite biosecurity and export control screening.
• Violation of data privacy or data protection laws (e.g., GDPR, AI-related privacy issues) could harm operating results, financial condition, and reputation.
• Existing and potential future government regulation (FDA, IVDR, CLIA, export controls) could narrow markets, increase costs, and delay commercialization.
• Manufacturing difficulties, disruptions, or delays at facilities in Wilsonville, OR, and South San Francisco, CA, including from natural disasters, public health crises, or animal activist actions.
• Inability to scale manufacturing capacity to meet future demand.
• Delivery of products could be delayed or disrupted by factors beyond control, leading to customer loss.
• May require additional financing, which may not be available on acceptable terms or at all, potentially leading to delays or termination of activities.
• Increased risk of violating U.S. Foreign Corrupt Practices Act (FCPA) and similar laws with international expansion.
• International trade restraints could impede business and cause reputational damage.
• Ability to use net operating loss carryforwards may be limited by Section 382 of the Internal Revenue Code.
• Changes in tax legislation or policies (e.g., The One Big Beautiful Bill Act) could impact financial position.
• Ethical, legal, and social concerns surrounding the use of genetic information could reduce demand for technology.
• Market price of common stock is likely to be volatile and could fluctuate or decline substantially.
• Quarterly and annual operating results and cash flows have fluctuated and may continue to fluctuate, causing stock value to decline.
• Risk of short selling strategies driving down the market price of common stock.
• Future sales and issuances of common stock or rights to purchase common stock could result in additional dilution.
• Claims for indemnification by directors and officers may reduce available funds.
• Increasing scrutiny and evolving expectations around corporate responsibility (ESG) matters may impose additional costs and expose to reputational risks.

Future Outlook

The company expects to continue incurring net losses and negative operating cash flows in the near future, despite anticipating sufficient liquidity for at least the next 12 months. Future capital requirements will depend on various factors including product development, market penetration, and strategic collaborations. The company aims to be a leading provider of synthetic DNA, RNA, and proteins, expand antibody and protein production, become a leading supplier of NGS sample preparation products, conduct biopharma services, and expand its global presence.

Management Comments

• "We work in service of our customers who are changing the world for the better."
• "Twist Bioscience is uniquely positioned to help accelerate their efforts and the faster our customers succeed, the better for all of us."
• "This growing convergence highlights the power of our integrated platform and reinforces Twists unique position to serve the full spectrum of innovation in discovery."
• "We believe that our existing cash, cash equivalents and short-term investments and anticipated cash flows from operations, will be sufficient to meet our anticipated cash requirements for more than 12 months from the date of this Form 10-K."
• "Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met."

Industry Context

The synthetic biology industry is characterized by rapid technological change and intense competition, with a projected global impact of $2-4 trillion by 2030-2040. Twist Bioscience's silicon-chip DNA synthesis platform offers a competitive advantage in quality, precision, automation, and cost. The NGS market is expanding into new applications like liquid biopsy and MRD testing, which are critical areas of interest and investment. The biopharma sector is increasingly complex, driving demand for integrated discovery services. The company's focus on leveraging AI and machine learning aligns with broader industry trends for optimizing efficiency and product development, though it also introduces new regulatory and ethical considerations.

Comparison to Industry Standards

• Twist Bioscience's silicon-based DNA synthesis platform is presented as a disruptive technology, offering a 99.8% reduction in chemical usage per gene compared to plate-based synthesis, which is a significant efficiency and cost advantage over traditional methods used by competitors like GenScript Biotech Corporation and Thermo Fisher Scientific Inc. (GeneArt).
• The company's ability to provide "Express Genes" with a 5-business-day turnaround time for perfect-quality clonal genes differentiates it from competitors in the synthetic gene market.
• In the NGS tools market, Twist's platform enables high-quality target enrichment data with high uniformity and accuracy, reducing downstream sequencing costs, which is a competitive factor against major players like Illumina, Inc. and Roche Holding AG.
• The biopharma services group offers an "in vivo, in vitro and in silico antibody discovery trifecta," aiming for ultra-fast lead selection and engineering, which positions it against contract research organizations such as Curia Global, Inc. and specialized antibody discovery companies like Adimab, LLC and AbCellera Biologics Inc.
• Despite technological advantages, the company's stock performance has significantly lagged the broader Nasdaq Composite and Nasdaq Biotechnology Index over the past five years, suggesting that market perception or financial performance has not matched the perceived technological superiority or industry growth.

Corporate Governance

Legal Proceedings

• Securities Class Action: Peters v. Twist Bioscience Corporation, et al., Case No. 22-cv-08168 (N.D. Cal.), filed December 12, 2022, alleging federal securities law violations based on a Scorpion Capital report. An amended complaint was filed on October 11, 2023. The court granted in part and denied in part the motion to dismiss on September 3, 2025, and the plaintiff did not file a second amended complaint. The company is engaged in discovery and intends to vigorously defend the remaining claims.
• Derivative Action: Shumacher vs. Leproust et al., No. 1:23-cv-01048-UNA, filed September 25, 2023, based on similar allegations as the Securities Class Action. This action was stayed on November 13, 2023, pending resolution of the motion to dismiss in the Securities Class Action.

Related Party Transactions

• Purchased raw materials from related parties: $0 million in FY2025 (down from $4.4 million in FY2024 and $6.8 million in FY2023).
• Recognized revenues from related parties: $12.2 million in FY2025 (up from $12.1 million in FY2024 and $5.9 million in FY2023).
• Atlas Data Storage, Inc. became a related party on May 2, 2025, following the spin-out of the DNA digital data storage business.
• Revenue from Atlas: less than $0.1 million in FY2025.
• Sublease income from Atlas: $1.1 million in FY2025.
• Investment in Atlas equity: $53.9 million as of September 30, 2025.
• Other receivable from Atlas (primarily sublease income): $0.3 million as of September 30, 2025.
• Promissory note receivable from Atlas: $1.8 million as of September 30, 2025.
• Sublease security deposit balance from Atlas: $0.2 million as of September 30, 2025.

Stakeholder Impact

• Shareholders: Potential for future dilution from additional financing or equity incentive plans. Stock price volatility and underperformance relative to market indices are concerns. Legal proceedings (class action, derivative suit) pose risks of substantial costs and potential negative impact on stock price. No dividends are expected.
• Employees: Benefit from improved product quality, faster turnaround times (Express Genes), and expanded product offerings (NGS tools, antibody discovery services). Risks include potential delays due to supply chain issues or manufacturing disruptions.
• Customers: Benefit from improved product quality, faster turnaround times (Express Genes), and expanded product offerings (NGS tools, antibody discovery services). Risks include potential delays due to supply chain issues or manufacturing disruptions.
• Suppliers: Dependence on a single-source supplier for a critical component creates risk for both the company and the supplier.
• Creditors: The company's accumulated deficit and ongoing net losses indicate a reliance on external financing, though current liquidity is deemed sufficient for the next 12 months. The XOMA Royalty agreement provides some non-dilutive financing.

Next Steps

• Continue efforts to increase revenue and revenue growth rate.
• Develop and commercialize additional products in synthetic biology and biologic drug industries.
• Leverage investment in the manufacturing facility in Wilsonville, Oregon.
• Expand antibody and protein production and array of characterization assays.
• Become a leading supplier of NGS sample preparation products for liquid biopsy, MRD, agricultural genomics, and population genomics.
• Conduct biopharma services for current customers and future partners.
• Expand global presence.
• Evaluate and implement AI applications to optimize services.
• Develop new products including mRNA and proteins.
• Continue to vigorously defend remaining claims in the Securities Class Action lawsuit.
• Address the South San Francisco lease amendment, including expanding premises and utilizing tenant improvement allowance.
• Consider exercising the right to expand the South San Francisco premises to include the entire fourth floor by December 31, 2026.

Key Dates

Recommendation

Twist Bioscience demonstrated strong operational improvements in FY2025, with a 20% revenue increase and a significant reduction in net loss, alongside impressive gross margin expansion. The strategic spin-out of the DNA data storage business and the XOMA royalty agreement provide capital and focus. However, the company continues to incur net losses and has a substantial accumulated deficit, indicating it is not yet profitable. The stock has also significantly underperformed broader market and biotech indices over the past five years. While the operational trajectory is positive, the company faces intense competition, reliance on a single-source supplier, and ongoing legal challenges. The need for future financing and the inherent volatility of the biotech sector suggest a 'hold' recommendation, advising investors to monitor continued progress towards profitability and resolution of risks before making further investment decisions.

Keywords

synthetic biology, DNA synthesis, NGS tools, antibody discovery, biopharma services, genomics, biotechnology, gene synthesis, liquid biopsy, MRD testing, Twist Bioscience, SEC filing, 10-K, financial results, biosecurity, intellectual property, corporate governance, AI in biotech