Twist Bioscience’s 'factory of the future' in Oregon could deliver with competitive pricing, SVB Securities says
The synthetic DNA manufacturer Twist Bioscience has given a peek behind the curtain to several analysts into its “factory of the future” as well as insight into the cost structure, workflow and technology at the site.
The 110,000-square-foot manufacturing site in the city of Wilsonville, OR, just south of Portland, which was announced back in 2020, will double Twist’s production capacity and bring around 400 jobs to the area.
In a visit to the site by analysts from SVB Securities, Twist’s senior management shared that the site will not only expand the manufacturing capacity for Twist, but it can also add new product capabilities.
According to SVB’s analysis, the factory currently has four “DNA writers” which can each produce around $50 million in annual revenue, and the facility has the room to add eight more. The factory also provides Twist with the space needed to accelerate production speed more than its other facility in San Francisco, CA.
Management also told SVB that its products can spend up to 50% of their time in storage, but the new factory will address this by “consolidating instrumentation and streamlining in the process.” This will be crucial if Twist plans to launch its “Fast Gene” product in 2023, which is going to accelerate delivery time for its existing products.
The analysis also emphasized that the company is focused on quality control and reducing errors. Because the DNA is written on a silicon chip platform, and these chips are manufactured in-house, it lends more process control. It was also reported that each chip that is made undergoes “extensive” quality control and has been reaching an even lower error rate.
In terms of future revenue, Twist’s management disclosed a $35 to $45 “variable cost per gene,” with “a significant portion” of the company’s costs being fixed, but it will aim to drive more profits through new products and competitive pricing. The new factory also is leveraging learning from its South San Francisco facility to try and improve speed and efficiency.
“In our view, the Factory of the Future visit demonstrates Twist could deliver on gross margins if volume and growth was to materialize. To drive that volume, Twist has to be competitive with pricing in the market, but the demand depends on the spending environment in 2023 which now appears more cautious vs. before,” the analysis said.
In Twist’s fourth-quarter report, it announced the factory is on track to start shipping products in January of next year.