Good day ladies and gentlemen. And welcome to the Fiscal 2018 Fourth Quarter and Year End Financial Results. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference may be recorded. I now like to turn the call over to Jim Thorburn, CFO. Sir, you may begin.

All right. Thank you, Victor. Good afternoon, everyone. Thank you for joining us on our first public earnings call. We're going to review our fiscal 2018 results and business progress and we'll also cover 2019 guidance. Please review the press release we issued earlier today which is available at our website. With me today on the call is Dr. Emily Leproust, CEO and Co-Founder of Twist. Emily will begin with a review of overall progress on Twist business, I will report on our financial performance and Emily will discuss our upcoming milestones and direction. We will then open up the call for questions. As a reminder, this call is being recorded. The audio portion will be archived in the Investor section of our website and will be available for two weeks. During today's presentation we will make forward-looking statements within the meaning of the Federal Securities Law. Forward-looking statements generally to future events or future financial or operating performance, our expectations and beliefs regarding these matters may not materialize and actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today, as well as those more fully described in our filings with the SEC. The forward-looking statements in this presentation are based on information available to us as of the date here off and we disclaim any obligation to update any forward-looking statements except as required by law. With that, I will now turn the call over to our Chief Executive Officer and Co-Founder, Dr. Emily Leproust.

Thank you, Jim, and good afternoon, everyone. I'd like to take a moment to welcome our new investors to Twist. This is our first earnings announcement as a public company, and we are pleased to have you with us. Fiscal 2018 was a year of exceptional growth for Twist with progress across every area of our business. For those of you who are new to Twist, we have developed a disruptive DNA synthesis platform that pioneers a new method of manufacturing synthetic DNA by writing DNA on a silicon chip. Well, other companies make about a hundred oligos and one gene at a time, we make a million oligos and thousands of genes at the same time. That improvement in scale is driven by miniaturization, which leverages development of the semiconductor industry. We combine our platform with proprietary software and a scaleable commercial infrastructure to create a world-class operation that allows us to first market differentiated products; second, take market share of existing markets; and third, expand in adjacent markets for short-term and long-term value creation. The overall vision of Twist is to leverage our ability to manufacture DNA at an unprecedented scale to disrupt existing and emerging applications of biology. Thanks to our products, while improving the productivity of our customers which enables them to improve health and sustainability. We manufacture a broad range of products based on synthetic DNA for multiple industries. For the synthetic biology industry, these include genes, oligonucleotide pools, and DNA libraries. Some examples of the way our customers use our synthetic products, include discovery and production of new therapeutics, the sustainable production of specialty chemicals and biomaterials, the production of drought tolerant or disease resistant crops, and in academia for a broad range of applications to advance the understanding of biology and drive future…

All right. Thanks, Emily. Great news. We're making terrific progress. We're growing strongly. We got very strong technology. With great team at Twist and like I’d say we have our mojo. Our revenues for the year was $25.4 million, 136% year-over-year growth. We're seeing strong demand for our products. Overall our orders for the year were $39.4 million with sequential growth every quarter you will see that on the chart. Year-on-year growth 124% percent. We had a very strong book-to-bill in Q4 1.5 to 1 and we exited the year with strong momentum which sets us up for strong growth in ‘19 and we're very bullish on our NGS growth plans. For fiscal ‘18 our synbio revenue which includes genes, oligo pools and library products was 22.7 – excuse me I’ve got cold compared to $10.8 million in fiscal 2017, representing year-on-year growth of approximately $12 million or 113%. Our gene business is doing well. We delivered revenue in 2018 of $18 million, which is 122% growth. Ginkgo Bioworks, our largest customer for genes accounted for $8.7 million revenue in 2018 or approximately 34% of revenue. It was a great customer and as we continue to grow the business we see that customer growing as well, as a percent of overall business it will decline as we continue to expand our NGS and other gene business. In ‘18 we continue to make significant progress in expanding our customer base due to competitive turnaround time. Our pricing strategy expansion, our sales organization adding customer support and the launch of our e-commerce platform, consequently the ’18 revenue from genes excluding Ginkgo set a record of $9.3 million, an increase of 144%. We’re also executing extremely well on our NGS products. We launched these products early this year with now sampled more on…

Thank you, Jim. Building on our market earlier of growth and accomplishment, I’ll go through the list of milestones that we expect to accomplish in the next 12 months. First, we expect continued growth in revenue across all product categories and all geographic regions and we expect continue the momentum in our synbio business as we service our current account and take market shares in the synbio area leveraging our e-commerce. We will also introduce genes up to 5kb at a disruptive price, as well as our customers the opportunity to use our Twist API. We expect to implement and execute as well our new product introduction roadmap. On the NGS we expect to convert NGS pilot account into production customers. In addition, we expect to launch our e-commerce solutions for NGS. And finally in NGS we expect to achieve ISO 13485 certification of our quality management system. Overall, these initiatives will continue to drive our topline growth and improve our gross margin. Initial indications for the fiscal Q1, ‘19 show there is some progress for the business, with unaudited revenues through December of 13 of over $9 million. We launched back-end production in China for NGS and other products. In addition to our revenue generated in 4Q [ph] we will generate proof-of-concept data for our wholly-owned GPCR library and our antibody optimization solution and we will seek non-dilutive partnerships and/or out-licensing of therapeutic assets. And finally, we will execute on our roadmap to increase synthesis density on our silicon platform which will reduce the cost of DNA for data storage, while we pursue non-dilutive sources of funding for the ethical [ph] opportunities. With that, let’s open the call for questions. Victor?

[Operator Instructions] And our first question comes from the line of Tycho Peterson from JPMorgan. You may begin.

Hey, thanks. First question, I guess on just the current revenue split, I'm wondering if you could talk on clonal versus non-clonal, you know, what the underlying trends are and I guess as we think ahead for clonal genes, can you talk about how you think about the mix evolving between 1800, 3000, and 5000 kb orders as we think about you know, that mix evolution for 2019?

Hi, Tycho. This is Jim. Yeah, I mean, we're seeing move towards the 5kb, 3.2. In this last quarter, we actually shipped close to 0.5 million of the 5 kb. Over time, we see that the 70% of our clonal business was about 1.8, that's going to drop to 60% and then down to 50%. So we're seeing that progression from 2-2 [ph] longer genes. And the first quarter was really driven by or the last quarter was driven by Ginkgo as Emily highlighted, one of our action items is to get that to broaden out the customer penetration for 5kb.

And then maybe I guess, a similar question on NGS, you know, everything about the breakdown between commercial late stage validation and early - early validation customers, can you maybe just touch on how you think about that evolving over the coming years as well?

Yeah, that’s evolving very nicely. We have built out the pipeline there. So, in terms of pilots and discussions, we've got about 22, we're dealing with in terms of late [ph] and validation and validation, we're dealing with about 20 - 20 odd, and then we have actually increased the number of adopted to in excess of 10. So that pipeline is filling out very strongly and that's why we are bullish in terms of revenue projection from 46 to 48 for this year, and as Emily highlighted, already delivered $9 million this quarter. So, we've had a good strong performance on NGS and that's complementing the gains we're making on synbio.

And then with the sequential decline in NGS, was that order you know, revenue timing or…?

I mean, it's getting towards the end of the quarter. It means it was just a minor decline. We're always debating whether it’s going to go at by end of September, early October, or total October, and that’s why you saw our inventory bump up a little bit.

And then I guess as we think about orders for NGS for ’19, any kind of framework you can put on that and how important is kind of e-commerce in terms of kind of driving incremental business for the NGS business?

In terms of NGS, we introduced [ph] that batch. I mean we’re really going to be looking at NGS, that high teens, and potentially I mean, we've got a lot of momentum. So, it’s [indiscernible] in terms of conversion from the validation - late validation through to adoption. And sorry what was your other question Tycho, I forgot?

Yeah, the question was around the - inside of e-commerce, so e-commerce will be very beneficial in the first phase of the kits [ph] journey in the pilot, kits must come in and I think in e-commerce, it accelerates the time it takes to design and order that first experiment. So, you may not see the full revenue benefit until a few quarters later when the scale ups which we’ve see an acceleration of the time from the first contract with the customer to the first order.

Okay. And then just last one for me on the grant – the grant for DNA storage, when do you expect to hear on that? And can you elaborate you – I guess, you’re pursuing alternative channels there too for financing?

So we – well, nothing in control of that timing, so we are in a wait and see at this point, and on the other sources, there's a number of partnerships that is possible. However, we want to make sure that we don't find these too early as we don't want to give away the upside.

Understood. Thanks.

Thank you.

Thank you. And our next question comes from the line of Catherine Scholl [ph] from Baird. You may begin.

Hey, guys congrats on the quarter. And thanks for the questions. First on NGS, what is your win rate then for customers who has piloted your product and if a customer doesn't choose to move forward what has the main reason of that?

I am not aware of any loss. I think what we can see is a delay between winning a pilot and a scale-up, and that may be due to the customer having material on-hand from other suppliers that they have to burn through before they can switch to us. And so, I think that’s the main aspect that we do see. And as I think we had discussed previously, we don't anticipate that we'll be able to shift all the assets or some assets that the costs of revalidating will be too high compared to the sequencing savings that we provide. But in terms of new assays, I'm not aware of anyone that we’d lost.

Great, that's helpful. And then I believe you had nearly $4.5 million of NGS orders in the fourth quarter and that was more than a third of your orders. How should we think about the time it takes for those to turn into revenue and how do you expect that order mix to trend over the next several quarters? You know, does NGS become 50% of orders by the end of the year? Or how should we think about that?

Yes, so interesting question. So the 4.4 that will trend - will be $0.5 million, that’s for vendor management trade. So that will trend into revenue this quarter. And as we go forward I mean, we're obviously targeting - I mean, its very interesting because we're trying over 100 customers and our win rate is extremely high. So now a just a matter of that ramp to adoption. So I mean, that's why we've upped the forecast 46 to 48. That's why we feel good about that. We're going to see as this year unfolds you're going to see expansion of NGS, particularly as build at our Asian operation. We're seeing expansion in Europe. So I think as the year goes forward we're going to see more upside on the NGS bookings.

Okay. And then last one for me, for your guide you touched on your assumptions for NGS, so what are your assumptions for Ginkgo versus non- Ginkgo revenue?

For Emily we’re – in last year we did about $8.7 million for Ginkgo, we’re going to be roughly around the same number this year. So if you look at the overall sort of numbers, say you’re at $48 million and NGS is $18 million to $20 million. Therefore you're at 28 to 30, if you take off Ginkgo is 8 [ph] or $22 million for your - the rest of your synbio. So if you look at this year you had $25 million roughly total revenue take off 3 for NGS, you at 22, take off 8, 9, you are then to 13. So that highlights the growth of synbio.

Very helpful. Thank you.

Okay. Thank you for the question.

Thank you. And our next question comes from the line of Doug Sinko from Cantlin [ph] You may begin.

Hi, good afternoon. You beat expectations for the fourth quarter. You’re ahead of consensus expectations for the first quarter, at least for the topline with a couple of weeks ago. How much of this is Ginkgo versus other customers? And I'm curious if the IPO is having any beneficial impact even in the early going on existing customer behavior and your ability to add even more customers?

Yes. So – hi, Doug, its Jim. So in terms of Ginkgo it's not - it's not really a Ginkgo story. Ginkgo is a great customer. When we have our four year contract with Ginkgo very involved with partners, so we are estimating around $8 million for Ginkgo. NGS is going really well a number. A number of key customers of NGS are very happy with the IPO and have given us positive feedback, because that that gives them real good security. In terms of other customers, we are broadening at synbio. We had 719 total customers last year, up from 200 and just under 300. So the synbio business is doing well. I mean, we're having a - as Emily highlighted, its being already great, doing real well this quarter in terms of shipments and in fact bookings. So it's all good positive wins in our sales right now. That goes back to the product and the value propositions we have where we just have cycle time [ph] or turnaround time. Strong feedback on the technical advantages of NGS and I really think I mean, even the feedback we're getting from Europe on our products there the opportunity is growing for NGS and we're seeing where our initial steps in Asia and we're seeing strong positive feedback from the customers that we’re engaging with there.

Okay, that's great. And in terms of backlog, if we define revenue backlog as revenue that's essentially contracted to be generated within the current fiscal year, meaning in fiscal ‘19 in this case. Could you could you share that number and just based on what I'm trying to do is figure out how much of guidance is de-risked at this point. I think we can determine that NGS backlog is probably 3 million to 3.5 million in dollars I think. But I was wondering if you'd be willing to share a broader number?

Well, this is interesting. We know - I mean I mean, if you step back and look at the business, we know we're got the Ginkgo business by $8 million. The synbio business turns business actually. So you don't have a lot of backlog there in terms of your number 4 NGS is a pretty good number. So we are building that backlog in terms of NGS. And in terms of the shipment time we have one or two vendor manage them and trades. So that's over probably six months, the rest are I would say six to eight weeks Emily?

Yeah. And then Doug, if you if you go back to Q4 – I am sorry for the 3Q, we booked $39 million of orders that we only shipped $25 million - loss of revenue, so the delta of $14 million those are blanket appeal [ph] although we anticipate will be coming into next year. And those will come orders by orders, customers go through the design build cycle. So they order 100 genes or 1000 genes. We get it. They test them to get the results. Then they go back order the next set, so that is requiring on a flow of revenues that rolls down the blanket appeals.

Okay…

Through the year you anticipate that $14 million, plus the $8 million from Ginkgo, plus some of the early NGS order.

Okay. That's really helpful. And then if I could just close by taking a shot at trying to ask just a couple of guidance clean up questions. Actually three and I'm not sure if you'll answer these but I'll just take a shot. The first is what's budgeted for, you know, I guess what I would call litigation and legal spend next year and I assume that's captured in your net loss guidance. So that's the first one. And the second is do you expect to go gross margin positive, say the middle of fiscal ’19? And the third one is, are you factoring in any pharmaceutical revenue into guidance? My guess is no, but I figured I'd ask just to make sure. Thank you.

All right. So in terms of gross margin positive, we are focused on gross margin positive and we have - as we continue to grow our revenue, we will get to gross margin positive middle of this year, even sooner. But we're obviously making good progress there. In terms of pharma, I’ll let Emily answer the pharma question.

Yeah, there's no pharma revenues in the guidance.

And in terms of litigation, I mean, our litigation and legal fees are part of our SG&A and we don't break that out and our belief is actually the case lacked any merit - I'm going to reserve for it when we we're going to intend to fight vigorously and defend ourselves against the claims so the trial manage subsequent appeal and necessary. Our focus is to build the business. We're doing well in NGS assets and we've got a methodology in place where we're tracking all our customers and we're making good performance improvement progress in terms of operations changes or just cycle time on it. We're going to hit and our goal is to have a really good year.

Okay. That's great. Thanks, Jim. Thanks, Emily.

All right, thank you.

Thank you.

Thank you. And I am actually showing no further questions at this time. I’d like to turn the call over back to Emily Leproust for closing remarks.

Thank you, Victor. Looking back on the year, we have a great achievements and those are unprecedented in our history. But you can be sure that we will not rest on our laurels and none of this would have been possible without the hard work and dedication of our employees, as well as without the support of our shareholders. So we intend to carry – look forward into fiscal 2019 and continue to execute our vision of factoring synthetic DNA for health and sustainability. And with that, we are look forward to talking to you in the months ahead. Thank you.

Ladies and gentlemen, thank you for participating today's conference. This does conclude the program. And you may all disconnect. Everyone have a wonderful day.