The Agilent Technologies Versus Twist Biosciences Controversy
After taking in just over $253 million from 24 different investors such as Illumina (third-largest shareholder with 7.7percent) and strength-manager Fidelity, Twist Bioscience had registered for an Initial Public Offering (IPO) which you might argue is that the most exciting synthetic biology IPO we have seen up to now.
Let’s dig in the IPO filing and see What’s Twist Biosciences & Its current fight with Agilent.
Twist Bioscience sells and manufactures custom DNA sequences. In and of itself is a 
decades-old capability but churning out quite large quantities of DNA sequences with reduced error rates at a reduced cost is potentially revolutionary. In the first nine months of 2018, the firm generated 73% of earnings from R&D services and industrial biotech customers, 25% from academic clients, and 2% from agricultural biotech customers.
Its tech platform is comprised of a novel approach which uses a silicon chip utilizing tiny wells. The chemical building blocks of DNA are united from the wells, then constructed into exact DNA sequences.
In other words, no company is better at writing DNA today than Twist Bioscience. Case in point: The company sells DNA to four of its rivals.
Table
of ContentsTwist Bioscience – Artificial DNA at Scale
Simply put, Twist Bioscience leverages technology found in the semiconductor sector to make synthetic DNA at a much cheaper price than anybody else in scale.
“Our silicon-based chip technology is able to increase DNA generation by a factor of 9,600 on a footprint similar to that of traditional DNA synthesis methods. In addition, it significantly reduces the volume of required reagents, specifically the most expensive reagent with a factor of 1,000,000, and improves the accuracy of this synthesis procedure relative to legacy procedures. This lets us generate high-quality artificial DNA on a much bigger scale and at a lower cost than rivals.”
That’s the company in Summary. Twist Bioscience provides the picks-and-shovels the business needs to grow. When it comes to competitors, Twist Bioscience actually provides their technology to four of their opponents who additionally create a synthetic DNA:
“We are also an original equipment manufacturer, or OEM, of artificial DNA to four synthetic DNA manufacturers which also compete with us which we believe is a strong demonstration of the superiority of our platform.”
As you would expect, these opponents also cost more for artificial DNA than simply Twist Bioscience does. According to the filing, “publicly available pricing of our competitors for clonal DNA ranged from $0.15–$2.00 per base set” while comparable prices at Twist Bioscience are $0.09 per base set.
Artificial DNA and Product Plans
At the nine months ended June 30, 2018, Twist Bioscience served 539 customers as follows: 50 percent to industrial chemicals, a 47 percent to academic study, a 2 percent to agriculture and 1% to healthcare businesses. Here’s a look at the growth of orders over the period:
The reason they make that differentiation is since as we have discussed earlier, Ginkgo Bioworks includes a contract to buy massive quantities of artificial DNA from Twist Bioscience. According to the submitting:
It’s a huge risk to have a single client make up a majority of your earnings. Twist Bioscience identified this risk as well as notes (as we did in a post last year) that Ginkgo’s buy of Gen9 could lead to a reduction in the amounts of product they purchase from Twist Bioscience as a result. Still, in March 2018, Twist Bioscience signed a new agreement with Ginkgo Bioworks to supply to Ginkgo Bioworks up to approximately 1.3 billion base pairs within a period of four decades, in what they think is the most significant volume supply commitment in the business.
The exterior of producing artificial DNA, Twist Bioscience plans to market their product offering into areas like Next Generation Sequencing kits and DNA for information storage. The under pipeline shows the progress being made from commercialization for each product area:
There is loads of room for growth as Twist Bioscience estimates there are over 100,000 synthetic DNA users. They also aim to open up a manufacturing facility in China in 2019.
The Agilent Lawsuit
The CEO and one of the Co-founders of Twist Bioscience Emily Leproust who previously worked at the post of “Director Software and Chemistry R&D — Genomics” at Agilent. In February 2016, Agilent filed a legal suit against Twist Bioscience and Ms. Leproust alleging “breach of contract” and “misappropriation of trade secrets”.
The lawsuit is a danger because regardless of who’s right or wrong, Agilent is in a significantly better position to fight a legal battle. They’re a company, which employs over 14,000 members and commands $2.6 billion in cash as on date. Twist Bioscience has Only 88 employees and about $178 million in cash, should the IPO go through successfully. Plus it looks like Twist Biosciences is ready to battle, at least according to a statement that they made a few weeks ago concerning the litigation:
“Agilent’s most recent allegations are gamesmanship, not substance. They omit that more than four months before it sought to change its complaint, Twist informed — and supplied to Agilent — that the irrelevant passively retained documents referenced by Agilent in its own proposed amendment. Discovery also afforded an Agilent access to thousands of Twist’s technical records, yet they have been unable to connect an Agilent document or information to Twist’s game-changing acoustic technology. The fact remains that no Agilent data was used in or affected any facet of Twist’s independently-developed technology.”
Even if there aren’t any merits to the suit, it may make sense to settle as quickly as possible to ensure that Twist Bioscience will avoid the distraction of a protracted legal battle with a much larger opponent.
