Q4 2023 Twist Bioscience Corp Earnings Call

Participants

Angela Bitting; Chief ESG Officer & Senior VP of Corporate Affairs; Twist Bioscience Corporation

Emily Marine Leproust; Co-Founder, Chairman & CEO; Twist Bioscience Corporation

James M. Thorburn; CFO & Principal Accounting Officer; Twist Bioscience Corporation

Catherine Walden Ramsey Schulte; Senior Research Analyst ; Robert W. Baird & Co. Incorporated, Research Division

Luke England Sergott; Research Analyst; Barclays Bank PLC, Research Division

Matthew Carlisle Sykes; Research Analyst; Goldman Sachs Group, Inc., Research Division

Poon Mah; MD & Senior Analyst; TD Cowen, Research Division

Puneet Souda; Senior MD of Life Science Tools and Diagnostics & Senior Research Analyst; Leerink Partners LLC, Research Division

Sung Ji Nam; Analyst; Scotiabank Global Banking and Markets, Research Division

Unidentified Analyst

Vijay Muniyappa Kumar; Senior MD and Head of Medical Supplies & Devices and Life Science Tools & Diagnostics Team; Evercore ISI Institutional Equities, Research Division

Presentation

Operator

Welcome to Twist Bioscience's Fiscal 2023 Fourth Quarter Financial Results Conference Call. (Operator Instructions) Please be advised that this call is being recorded. I would now like to turn the conference call over to Angela Bitting Senior Vice President of Corporate Affairs and Chief ESG Officer.

Angela Bitting

Thank you, operator. Good morning, everyone. I'd like to thank all of you for joining us today for Twist Bioscience's Conference Call to review our fiscal 2023 Fourth Quarter and Full Year Financial Results and Business Progress. We issued our initial results release this morning, which is available at our website at www.twistbioscience.com.
With me on today's call are Dr. Emily Leproust, CEO and Co-Founder of Twist; and Jim Thorburn, acting CFO of Twist. Emily will begin with a review of our recent progress, and Jim will report on our financial and operational performance. Emily will come back to discuss our upcoming milestones and direction. We will then open the call for questions.
(Operator Instructions) During today's presentation, we will make forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize, and actual results in financial periods are subject 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 Securities and Exchange Commission. The forward-looking statements in this presentation are based on information available to us as of the date hereof, 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, Dr. Emily Leproust.

Emily Marine Leproust

Thank you, Angela and good morning, everyone. Fiscal 2023, while the year growth and strong execution for Twist. We grew our business with revenue increasing 20% year-over-year. We completed internal integration of our Biopharma group, and we implemented strategic actions to align our cost structure aimed at optimizing our operations, with a clear focus on increasing gross margin along our accelerated [past] profitability.
We invested in our best-in-class innovation to set the stage for the near- and long-term success. And now we are focused on profitable and [favorable] growth, moving into fiscal 2024 and beyond. Getting into the specifics for the fourth quarter, we grew revenue to $66.9 million and $245.1 million for the full year, exceeding our updated guidance in the -- for the quarter and the year.
Our gross margin was approximately 37% for both the quarter and the year, and we ended the year with approximately 336 million of cash, cash equivalents and investments. Across the business, our efforts over the last 24 months in building the Wilsonville facility, expanding our production line and streamlining workflows are now benefiting both our SynBio and NGS product lines to allow us to deliver what our customers' need.
Within our factory in Wilsonville, we have analyzed each process in SynBio workflow to remove excess time and our production data shows that are able to turn genes around in 6 business days consistently. This is an incredible feat and one that requires all hands on deck to optimize every process and procedure. This robust workflow now allows us to make more SynBio products in less than half time we could even 1 year ago.
On Tuesday, we launched Express Genes, what we previously called Fast Genes. This is the first product that we will directly benefit from and has been made possible by the time and infrastructure investments in our Wilsonville facility. With Express Genes, we have the opportunity to increase contribution margin for the SynBio product group as well as our [overarching] gross margin.
Let's note four important things about how the launch of Express Genes impacts our business: First, this is our [clonal] gene service, our bread and butter of the SynBio products that [as of] our clonal order qualify for this Express Gene service today, with an eye towards expanding to the majority of clonal genes orders, moving forward. Genes that do not qualify for Express service will continue to be ordered at standard speed and will be priced starting at $0.09 per base payer.
For Express Genes, it is the same great product delivered faster. And so we charge a premium price for that speed. The price will be dynamic, based on how full the fab is.
Second, all genes, whether standard or Express, will be manufactured on the same manufacturing line. This is a streamlined, highly automated process, where all genes goes through the same steps. Standard genes will either wait before or after synthesis as we'll use [standard genes] to maximize cheap utilization. This is similar to an [airline system by] passengers to run planes that are as full as possible.
Third, with higher revenues through premium pricing for Express Genes, we expect to see margin improve. Our objective with pricing is to expand our market opportunities significantly into the makers market as well as capturing additional customers within the buyers market. This means that our offering must resonate as a cost-effective alternative to customers making and cloning the genes themselves.
Working with pricing experts, our initial direct price range is designed to optimize our pricing in a way that will not eliminate existing customers. At the same time, we expect to increase our margin from this differentiated product line while serving a large unmet need for our current and future customers.
Fourth, because we are making all genes at extra speed, our genes capacity for our recent [site] is now close to double compared to the 10 days [turn-on] time production timeline. That's a strategic and key point that allows us to continue to scale. As for note, but we've implemented the improvement in turn-on time throughout the SynBio product line to our gene [fragment] can now be delivered in as few as 2 business days and Oligo Pools in as few as 3 business days.
For fragment and Oligo Pools, we are pleased to offer this product at competitive pricing without a premium. The enhanced speed and efficiency of our operations has allowed us to gain a stronger foothold in the market while maintaining healthy contribution margins for this product line.
With the successful launch of Express Genes, our aim is twofold: To scale up our gene volume with existing customers and to attract new customers, thereby expanding our market reach. In the initial phase of launch, we are directing our efforts towards our current customer base.
Once we know the workflow is tried and true, we will enter on marketing efforts, targeting customers conversions from competitors as well as new customers who have not yet used Twist for their clonal gene needs. As we run Express Genes, we expect the book-to-bill ratio will essentially approach 1 as there are so few days between order and delivery. As such, others for SynBio becomes less informative. The trend to watch will be revenue growth in SynBio.
Importantly, the speed of Express Genes unlocks additional applications, including long genes, complexes genes, additional IgG antibodies as well as [mRNA] production. So not only are Express Genes an opportunity to increase margin and take market share but a [very] solid foundation for growth into the future.
Moving to [ADS] over the course of the year and particularly in the fourth quarter, we saw the work we have done with customers to optimize their workflow over time beginning to pay off. Several key customers are now scaling production for validation and commercialization.
In addition, we see strength driving into the middle of the market. We see an increasing number of customers within our [RNA-seq] workflow, and several customers are implementing our minimal residual disease or MRD workflow. We believe both of these product groups validate our innovative approach to develop and commercialize products that our customers need.
At a high level, our Life Sciences buyers in NGS products grew at more than 23% year-over-year. Production is reaping. As we think about our trajectory to profitability, we believe we have set ourselves up for success.
We have momentum going into fiscal year with the launch of Express Genes and the ability to unlock future product lines. We have NGS tractions with the top and middle of the market as well as initial RNA [seek] and MRD uptake and an energized team that is committed to driving the business forward towards profitability and scale the growth.
As a management team, we have a strong track record for executing against our strategy, growing our customer base and driving best-in-class product innovation. We are now laser focused on increasing our gross margin and driving towards profitability.
Turning to Biopharma. We have effectively addressed our internal integration challenges. And as of early October, our commercial team was fully staffed with all territories covered. We'll share that it typically takes about 6 months for a new representative to come up to speed and orders for Biopharma directly translate into revenues in a 3- to 6-month time frame.
For the fourth quarter, orders increased quarter-over-quarter for the first time in fiscal year. We see this uptick as a positive sign of health for the overarching Biopharma services business.
Of note, the majority of our orders came from large pharma. In the last few months, we announced agreements with [Ono Pharmaceuticals], Bayer and more, and we are cautiously optimistic that the fourth quarter of 2023 will represent a low point for Biopharma revenue. And the spectrum for SynBio all the way through Biopharma services is gaining traction.
The Biopharma group continues to provide strategic advantage, allowing us to utilize our SynBio products, including genes, [fragments], Oligo Pools, libraries and IgG antibodies all the way through to antibody discovery optimization and [immunization] services, differentiating us from our competition and driving upside through potential milestones and royalties.
Acquisition of Abveris broadened our offering beyond synthetic libraries and enabled in vivo discoveries through animal models. This has been integral in extending our comprehensive offering. Now fully integrated, Biopharma provides a full menu of in vivo, in vitro and in silico services to our customers.
This means that they have a powerful comprehensive offering that is able to meet varying customer needs under one roof. For example, our large pharma and biotech customers often pick and choose from a broad menu based on their needs, while our smaller companies often benefit from a full end-to-end offering.
Finally, our [NCO] services enable us to provide more sequences and hit for our customers in vivo, [in vitro] projects, which maximizes their chances of success.
For data storage, we have made progress in our approach to enzymatic synthesis for this application. We're working to implement an industrial-grade codec, the encoding and decoding algorithm with a large industry partner. We remain on track with our plan to demonstrate an end-to-end gigabyte Century Archive workflow by the end of December, with the early-access launch of a terabyte Century Archive solution expected in calendar 2025.
On the corporate side, we added a key operational leader in Mark Buck as our SVP of Operations. He brings a [major] background as well as deep expertise in supply chain, quality and production. At his prior company, he was responsible for 21 production facilities. And we look forward to the perspective he brings with respect to optimizing our operations further for scale and improving gross margin. With that, I'll turn it over to Jim.

James M. Thorburn

All right. Thank you, Emily. We're happy to report we had another record in orders and revenues for our fourth quarter and full fiscal year 2023. I want to thank all our Twister's customers and partners who made this possible.
Revenue for quarter 4 grew to $66.9 million, which brings our revenue for fiscal year ending September 30 to 245.1 million as compared to $203.6 million in fiscal '22, and that's year-over-year growth of approximately 20%.
Orders increased to $71.1 million for the quarter, bringing orders for the year to approximately $264 million, and that's year-over-year growth of 17%. And gross margin for the quarter increased press [36.6%] and was up 36.6% for the year. We also increased our customer base to approximately 3,450, and that's up from 3,300 in fiscal '22. And we ended the year with cash and investments of approximately $336.4 million.
Now I'll provide a deeper dive, starting with NGS. NGS revenue for the fourth quarter grew to approximately $37.1 million compared to $29.2 million in the fourth quarter of fiscal '22, and that's an increase of 27% year-over-year. And for the full year, revenue increased to $123.7 million for fiscal '23 as compared to $99.3 million for fiscal '22, and that year-over-year growth of 25%.
The record revenue for fiscal '23 was due primarily to an increase in revenue from our top 10 customers, which accounted for approximately [37%] of revenue for the year. We served approximately 1,020 NGS customers in fiscal '23.
And we believe our NGS products [offer] compelling competitive advantage and save our customers downstream sequencing costs. And this advantage is reflected in our orders for the fourth quarter of [39.1 million] and [131.5 million] for the year, and that's 26% year-over-year growth.
As we've noted in our previous calls, we track the larger account opportunities, that is accounts we believe have potential to be largely a $250,000 per year and the overall count remains at 279 with 131 dotted, which is the same as last quarter. In this stage, we believe we identified the vast majority of players in this market, and we will be focused on landing and expanding these accounts.
Turning to SynBio products, which includes genes, DNA preps, IgG, DNA libraries and Oligo Pools. We had another strong year and excited about leveraging our investment in our Wilsonville facility. SynBio revenue for the quarter was $26.5 million, bringing revenue from fiscal '23 to $98.2 million, up from $80 million in fiscal '22 as we continue to expand our customer base and product offering.
SynBio orders for quarter 4 were 26.2 million, which brings our fiscal '23 orders to 110.9 million, up from 90.7 million in fiscal '22, and that's 22% year-over-year growth. Some of the highlights include growing our customer base to approximately 2,700 SynBio customers in fiscal '23 as compared to 2,300 in fiscal '22. We increased our genes revenue to $72.5 million versus $61.5 million, which is year-over-year of approximately 20%. And we shipped 634,000 gene in fiscal '23 as compared to 558,000 in fiscal '22.
Oligo Pools revenue grew to [$14.5 million], and that's up from $12.4 million in fiscal '22, mainly due to strong growth in academic and large pharma customers. And [libraries] revenue was $10.2 million, and that's up from $6.1 million, predominantly due to growth in large pharma and industrial biotech.
For Biopharma revenue for the fourth Quarter, it was $3.4 million, bringing with total revenue from Biopharma to $23.2 million in fiscal '23, and that's a decline from $24.2 million in fiscal '22. Importantly, orders for the quarter rose sequentially to 5.8 million to 3.5 million in Quarter 3, and the number of active programs declined from [82] to 69.
Our new projects started in the quarter increased from 34 in quarter 3 to 44 in the fourth quarter, and that's associated with the recovery in orders, and the total number of completed programs as of September 30 was [806] with 6 to 8 including milestones and/or royalties.
I'll now briefly cover our revenue breakdown by industry and give you -- provide a regional update. Healthcare revenue rose to $137.1 million for fiscal '23 compared to $106.4 million in fiscal '22. Industrial Chemical revenue rose to [$59.3 million], and that's up from $57.9 million in fiscal '22. And Academic revenue was $45.8 million, and that's up from $37.1 million in fiscal '22.
On regional basis, EMEA revenue rose to $71 4 million versus $62.1 million in fiscal '22. APAC increased to $22.5 million compared to $19.1 million in fiscal '22, including China revenue of [$7 million], which is flat to the previous fiscal year. U.S., including Americas, revenue increased to $151.3 million in fiscal '23 versus $122.5 million for fiscal '22.
And moving down the P&L. Our gross margin for the fourth quarter increased to 36.6%, bringing our overall gross margin to 36.6% for the year. Cost of revenues increased from $119.3 million in the prior year to $155.4 million in the year ended September 30, 2023.
The major factors contributing to the increase in cost of sales were a [$14.7 million] increase in material costs due to higher volume, $9.9 million in payroll and approximately $12 million in depreciation and amortization costs.
Our operating expenses for fiscal '23, which includes R&D, SG&A and change in fair value and mark-to-market adjustments of acquisitions, decreased to approximately $306.8 million as compared to approximately $319 million of fiscal '22.
To break it down, R&D for the year was $106.9 million, a decline from $120.3 million in the previous fiscal year, primarily due to the conclusion of Revelar. Depreciation included in R&D was $4 million for fiscal '23. SG&A for the year was $190 million, and that's a decline from $212.9 million, which includes a $43 million reduction in stock-based compensation expense offset by increases in pre-commercialization costs, facilities, payroll and IT-related service costs.
OpEx includes approximately $38 million for data storage spend in FY '23. Change in fair value of contingent considerations and [identity] holdbacks for the year resulted in a gain of $6 million versus a gain of 14 million in fiscal '22.
For restructuring and other costs, we've invested approximately $16.2 million for the strategic initiatives we announced in May, with $9.4 million to support our valued employees in severance packages as well as asset impairment charges of $6.8 million.
Stock-based compensation for the year was approximately [30.3] million as compared to 80 million in fiscal '22. Depreciation and amortization costs were $29 million for fiscal '23. And loss from operations was approximately $217.2 million in fiscal '23 as compared to $234.8 million in fiscal '22.
Other income and expense was a gain of $14.3 million, associated with interest income. CapEx for the year declined significantly to approximately $28 million from $101.9 million in fiscal '22, and we exited the year with $32.1 million, [down] from $39 million at the end of fiscal '22 and concluded the year with cash and investments of approximately 336 million.
I will now provide updated financial guidance for fiscal '24. We enjoyed record bookings in quarter 4 and are excited about the launch of our Express Genes. Our Wilsonville facility is doing well, and we took actions during the year to manage our cost structure as we transition SynBio activities to Wilsonville.
For fiscal '24, we expect total revenue to increase in the range of approximately $285 million to $290 million, SynBio revenue of approximately $113 million to $116 million, NGS revenue of $147 million to $149 million and Biopharma revenue approximately $25 million, gross margin of approximately 39% to 40%, operating expense of approximately $294 million to $298 million, which includes $100 million to $102 million in R&D expenses; $194 million to $196 million SG&A expenses.
Loss from operations guidance before tax is approximately $180 million to $188 million, which includes stock-based compensation of $58 million to $60 million. Depreciation and amortization of approximately $40 million, data storage operating expense of approximately $37 million to $39 million.
CapEx for FY '24 is projected to be approximately $20 million, ending cash of approximately $245 million. For the First Quarter of fiscal '24, we expect overall revenue of $67 million to $68 million, SynBio revenue of $27 million, NGS revenue of $36 million to $37 million, Biopharma revenue of $4 million, gross margin 38% to 39%, OpEx of $73 million and loss from operations of $47 million to $48 million.
In summary, we continue to maintain financial discipline throughout the organization, make progress in reducing our operating losses. We expect to exit the fourth quarter of fiscal '24 close to $78 million in revenue and estimated loss from operations to be $38 million to $40 million, which excludes any one-time adjustments and include stock-based compensation of $15 million, depreciation $10 million and data storage cash operating expense of $8 million.
We continue to make decisive and proactive actions to achieve profitable growth. To achieve this, we focus on scaling Express Genes, offering and leveraging our investments in the Wilsonville facility, managing our costs and continue to execute by growing revenue, expanding our gross margin. We're incredibly excited about the future and confident that the year ahead will bring many exciting milestones, achievements.
With that, I'll turn the call back to Emily.

Emily Marine Leproust

Thank you, Jim. I'd like to take a minute to thank all of the Twisters for their dedication, commitment and excellence through the last fiscal year. The year requires perseverance and discipline across the board, and our financial results reflect the hard work of the team.
Our SynBio and NGS groups are stronger than ever, demonstrating consistent and sustained growth in revenue, customers and market share. We expect our strategic investments in these areas will fuel our next leg of growth and path to profitability.
In the months ahead, we look forward to reporting on the uptake of our Express Genes launch and the resulting impact on gross margin. We've given guidance for fiscal 2024. And in that guidance, we assume that Express Genes will grow over time with some current customer transitioning to the new product but primarily, new opportunities, moving forward, as we leverage our digital marketing infrastructure and tools to reach new customers and a long [list] of DNA makers.
The Biopharma services groups booked increasing orders in the fourth quarter, and we expect the positive momentum to continue. In addition, we continue to advance our solutions for DNA data storage that has the potential to be a valuable asset longer term.
In summary, we exited fiscal 2023 with a solid cash position, growing revenues, reduced cost structure and incredible opportunities ahead. We have built a diversified and [complementary] portfolio of products, services and future opportunities that puts the company in a strong position to achieve consistent and sustained growth while minimizing risk.
Our gross margin for fiscal 2023 was just under 37%, and this is an area of our current and future focus. In May, we implemented strategic adjustments aimed at optimizing our operations, with a clear focus on enhancing gross margins. Our objective is to set a positive trajectory to our financial performance, moving towards profitability as a business.
Looking at the financials, we can exceed this target if we grow at the same rate as the market. And we believe we are positioned to take market share, exceeding market CAGRs. We look forward to delivering increasing value to each of our shareholders as we continue to work in service of our customers, who inspire us each and every day to go faster, run harder and truly make a difference in the world.
With that, let on the call for questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Our first question comes from Luke Sergott with Barclays.

Luke England Sergott

I guess when I look at the guide, can you talk about how much of the guidance implies or bakes in Fast Genes. You see the margin step up here from 38 in 1Q and ending the year at 39, 40. Kind of give us a sense of the cadence there. And how the Fast Genes -- or how much of your guide bakes in this business in the revenue, in margins?

Emily Marine Leproust

Do you want to take it, Jim? .

James M. Thorburn

Yes, I'll start. Thanks for the question. Yes, so in terms of Fast -- Express Genes, excited with the launch this week. As Emily highlighted in the call, we're going through the price discovery. [Factory, the future] is going well. I think we're excited about the endpoint in terms of exiting this year margins. Revenue increased sequentially from quarter 3 to quarter 4 by roughly $3 million, and gross margin dollars increased by $3 million. So that highlights the leverage in Q3 to Q4.
As we're thinking about next year, fiscal year '24, which we're now in, we've got some macroeconomic environment issues that we're taking into account. We're seeing, and Emily can talk about the early days of Express Genes, we're seeing good feedback from the marketplace. And as usual, as we look out into the future, we were prudent in terms of forecast.
NGS is doing well. SynBio is doing well, the added bits from Express Genes. And we want to be thoughtful in terms of the guidance we're giving. So Biopharma, last quarter, we saw pickup in Biopharma. So we feel that as we look next year, good solid growth in gross margin as we continue to scale the factory. We're going to see upside in terms of that gross margin as we execute.
We're very focused on having a strong cash position and very focused on operational excellence, and I'll turn it across to Emily to talk a little bit more about the Express Genes.

Emily Marine Leproust

Thank you, Jim. So we are 1 week in for Express Genes. We have nice orders. And so far, we've tested premium pricing of, starting Monday, 50%; Tuesday, 60%, and then we drop to 40%, going back to 40. And then today, we are at 20%.
So we are in that exploration of the price range. And it's great to see that we are getting orders. And on Monday, we should have the first shipment of Express Genes. So it's early days, but quite optimistic in the uptake.

Luke England Sergott

Great. And then can you talk about the feedback you're getting for Express Genes, I guess? And where this is coming from? And from the makers market, are you getting most interest from pharma? Or is it pretty broad-based?
And then like within that maker's market, a lot of the people -- a lot of these companies and businesses had internal teams there. So talk about like the conversations that you're having with them and what their plans are and some of the -- how they're thinking about [revamping] on the Express Genes platform?

Emily Marine Leproust

Yes. So maybe a quick clarification. So far, we've done on-site gene on the website, and we can go and look at it. And then we only did a press release. So it's a little bit of a muted launch, on purpose. We -- right now, we want to focus on existing customers. We want to give existing customers a choice when they order to upgrade too fast.
Right now, we are not yet trying to beat up all the drums and send the balloons and do the marketing launch that will happen early in calendar year 2025. And the reason is, again, we want to make sure that the process is fully baked. And for any net new customer, we wanted to be undeniably an amazing performer the first time. So we want to bake it in a little bit.
So far, the process is going great, but we've learned that it's always better to try new products with existing customers. And so we were not yet trying to reach out to the net new DNA buyer. That being said, in the orders so far we have a great mix of the spectrum of the customers we expect from big pharma, small pharma, even academic, we [need double the speed].

Operator

Our next question comes from Matt Sykes with Goldman Sachs.

Matthew Carlisle Sykes

Maybe just to follow up on the Express Genes. Just one point of clarification. You said that you're going to do the marketing launch in calendar year '25. Did you mean '24?
And then just a -- and then just on your current penetration of the makers market with your standard genes, can you give us a reminder of where you are today? And what's potential white space is to expand into that market? I think just giving that context of sizing would be helpful in terms of what the opportunity is.

Emily Marine Leproust

Yes. Thank you, and thank you for doing the proofreading on the [flyer], I appreciate it. So our analysis shows that the makers market for people that do cloning themselves, that is a $1.4 billion market of people that buy enzymes and PCR primers and mutation kits and [competent] cells and agar plates and so on. And so that is the bogey that we think we can convert to the DNA buyer side.
So far, we have a very, very tiny slice of the DNA makers. So the one slice we have are people that need to make very long genes, so they are makers of very long genes. And what they do is they buy shorter genes, so 1.8, 3, 5 kb from us. So they are a buyer of those genes -- small genes, and then they assemble the small ones into bigger ones themselves.
So that is the small slice of the pie we have. And the opportunity is to really go after the bulk of the DNA makers market, and that bulk are people that do need [tall] genes. They need a 5 kb, 3kb, 1 kb gene, but they need them fast. And right now, the only choice is to go clone it yourself. And with our Express Gene launch, I think we have an opportunity to go after them.

Matthew Carlisle Sykes

Got it. And then just to follow up on Express Genes, I think it would be helpful just for us to understand how you are going to communicate the Express Gene, either revenue or margin contribution over the course of next year, just to give us a sense of how that's going?
I think following up on Luke's question about the gross margins, I guess, I would have expected there to be a little bit more gross margin expansion, given the premium pricing. How should we kind of think about tracking that? And what's your kind of level of disclosure on a quarterly basis for that business specifically?

James M. Thorburn

Yes, Matt, I could touch on that. If you look at our Q and you look at the K, you'll see that we do cover the gene revenue and gene shipments. And if you look over the last few years, you've seen that our gene pricing has, in fact, increased over the last 2 or 3 years.
And so every quarter, you will see, right, what's the gene revenue, how many genes we shipped and what's the average price per gene, so you'll be able to track it that way. We'll start giving more insight on that in our earnings call as we go forward.

Operator

Our next question comes from Vijay Kumar with Evercore ISI.

Vijay Muniyappa Kumar

I had two, both related on guidance here. Q1, pretty solid front-loaded guidance. I think guide implies mid-20s kind of growth. But if you look at the components here, I think NGS is up like 50%, implied by the guide; SynBio, perhaps a little bit softer. And I think the guide -- the annual guide implies like SynBio to -- growth rates to further decel.
So maybe if you can just talk about the assumptions here between those segments, and what you're seeing from end markets?

James M. Thorburn

Yes. I mean, I can start, Vijay. Thanks for the question. So NGS, we're doing extremely well. We ended the year with very strong NGS orders, just under $40 million, making great progress on NGS. Obviously, some of that's driven by some of our liquid biopsy customers, MRD customers. So we feel well positioned.
In terms of SynBio, we've another strong year of growth. The overall business, if you step back and look at it, excluding Biopharma, I think everybody's familiar with our Biopharma issues, and it's good to see Biopharma recurring, year-over-year, NGS products, SynBio products, I mean orders and revenues are at 24%, 25%.
We feel good about with our Express Genes. The guide for this quarter reflects the fact that we get vacation this year-end for some of our customers.
So we ended the year, good solid position to [roll in] terms of both NGS and SynBio. And at the same time, we were looking at the guide as in the previous years, there's always some macroeconomic environment issues that we need to comprehend. Thrilled to see that in terms of margins, as we look sequentially, it's gone from low 30s up towards 37%.
You look at the revenue growth last quarter, almost 100% of that fell through the margins. So that gets back to the declines in terms of the leverage we talked about. We're going to manage our cost structure, going forward. We're very focused on profitability. We're excited about the opportunity Express Genes brings to frame in terms of margin enrichment.
As I highlighted to Matt, we'll be giving an update on a quarterly basis in terms of pricing foe genes. So factory is doing well, we're well positioned. And at the same time while we were building our forecast, we want to take -- comprehend any potential macroeconomic impact.

Vijay Muniyappa Kumar

Understood. And one, Jim, maybe on the operating leverage you brought up, if you look at the cadence, your gross margin, it seems like a more modest ramp, put your Q1 versus Q4 exit rate, I think implied numbers, your OpEx is going to step down while your revenues were up from Q1 to Q2 -- Q4, I think, are up like $10 million, OpEx is down.
So just is there some incremental cost actions coming in? What is driving that OpEx? And why are we assuming a more muted gross margin ramp?

James M. Thorburn

Yes. So in terms of gross margin ramp, if you look at the revenue on a go-forward basis, the revenues were almost flat in Q4. The gross margin ramp come later in the year as we continue to leverage the fixed cost factor of the future.
I think what's interesting is if you do take a look at our forward guidance, the loss from operations, this coming quarter, is with $47 million, $48 million and revenue 67 to 68. If you look at the guidance we gave to Q4, we're projecting revenue of roughly $78 million, the loss from operations is [$38 million] to $40 million. So revenue is up by roughly $10 million, loss from operations is down by roughly $8 million to $9 million.
So our focus is, as we scale, reduce the loss -- and that loss from operations also includes stock-based comp with 15 and depreciation of 10. And as we continue to scale, you'll see the loss from operations declined, so cash loss declines.
This year, the numbers are fairly noisy, but there's a step-up in stock-based comp. So the thing to focus on next year is what is our cash operating loss as we go forward, and that's been a decline sequentially throughout the year.

Operator

Our next question comes from Puneet Souda with Leerink Partners.

Puneet Souda

Maybe Emily, I'll start with one sort of high-level question for you. I mean you're seeing NGS growth here, your orders are up on NGS, your top end of your fiscal '24 guide is just sort of slightly shy of where Street was in revenue. And you just delivered 20% growth, you're expecting what implies is somewhere around 17% to 18% next year, mid-20% for 4Q December ending quarter.
So again, all of this looks like either you're doing better versus what the backdrop is, you're expecting significant pickup from Express Genes. I mean, it seems like you're production-ready. So I think the question is really the demand in the market, which according to most of the life science tools peers, is weak, to put it briefly.
So maybe just help us understand how Twist is seeing the market sort of differently versus other NGS, Oligo peers. And overall, what we're hearing from the broader market? Just help us conceptualize where you think you're going to continue to win and -- despite the market backdrop.

Emily Marine Leproust

Yes, thank you. That's a very thoughtful question. And I think at the end of the day, it all comes down to the platform. We've always said that the success that we have comes from two things: One is the innovation in the silicon technology that we have. And the second is the violent commercial execution that we have. And I think you see it in our guide for next year. .
I can see that -- I agree with you that when you look at our peers, it seems like the demand is weak. However, we just have very, very differentiated product. And I think, in a difficult environment, our platform just shines.
If you think about NGS, our big customers in NGS are [diagnostic] customers. What they need, as their own funding environment is difficult, as their own reimbursement is difficult, they need really improved margin, and that's what we said in NGS'.
If you switch to Twist because of the quality of the product that we provide, because we have all the [reagents] from A to Z, we're able to provide a comprehensive solution that expands margins for our customers, because of the lower cost of sequencing. And so that resonates really well now. And as some of our customers that we've been working with for years finally going to commercialization as those panels and tests start to run commercially, we benefit because we -- for the patient, there's some [DNA] that is being burned in pharma.
On the SynBio side, there's definitely some funding pressure. And at the same time, that means that researchers, they are under pressure to get the latest and greatest technologies to get to discover and develop their therapies. And that is exactly what we provide, is more short-term goal. And now with our huge investment in improving the speed, we're able to enable them to, again, do that work not only better because they can get access to margins, but this a little faster, which is very useful for them.
So I think what you're seeing is just a combination of the great work that the Twisters have done and leveraging the technology where it's a real differentiated or -- based on technology. We've heard competitors trying to emulate our marketing. But at the end of day, it's not about marketing. It's about real product capabilities. And I think we will just shine, thanks to the platform.

Puneet Souda

Got it. That's helpful. And then if I can touch on Biopharma, I mean, you're implying a high single-digit growth here. Could you maybe outline how much of that is from services or any other sort of milestone payments that you are expecting here? Because when we look at some of the antibody discovery peers, obviously, the market is pressured by the emerging biotechs that pulled back meaningfully.
Maybe can you talk a little bit about how much of the mix is large pharma versus those emerging biotechs? And what does that mean for the source of new projects that you expect to receive in Biopharma in 2024, I mean, fiscal '24?

Emily Marine Leproust

The guide implies no margins or royalties. It's all a fee-for-service guide. And I agree with you that if you look year-over-year, the growth looks not very big. However, actually, if you look at the low point of Biopharma in '23 compared to the higher point to Q4 2024, we're going to see some substantial growth, we had with a [standard] in commercial application. And so we had a few quarters of Biopharma services going down. .
But now we've rebuilt the commercial team. We had a sequential growth in our orders. As we say inside the company, we've done it 1 quarter in a row, and now we have to just go do it again. And I expect to see some significant growth when you look from the low point to Q4, and that's the direction we want to see.

Puneet Souda

Okay. Got it. And then if I could ask one brief one to Jim. Jim, what are you expecting for -- to spend on data storage in fiscal '24? And then maybe if you can provide -- how should we think about the cash burn as we go into sort of for the next 2 years?

James M. Thorburn

Yes. So overall operating expense for to data storage is going to be in the range of $37 million to $39 million for this year. In terms of cash burn, approximately about [$30 million, $32 million], in terms of cash burn.

Operator

Our next question comes from Catherine Schulte with Baird.

Catherine Walden Ramsey Schulte

Maybe first, it looks like you are, but can you just confirm that you're still to achieve adjusted EBITDA breakeven for NGS and SynBio in the fourth quarter? And thanks for [parsing] out the DNA data storage spend, but how should we be thinking about adjusted EBITDA loss for Biopharma for the year?

James M. Thorburn

Yes. So the -- as we highlighted, our focus is getting to adjusted EBITDA breakeven for Biopharma, NGS and SynBio as quickly as possible. You look at the guidance we've given, loss from operations in Q4 next year, roughly $30 million to $40 million; comprehensive stock-based comp, 15; depreciation, 10; and the data storage cash costs in Q4 of approximately $8 million.
So you can see from those numbers that we're within striking point of getting to breakeven from a cash position. And as we continue to scale, I mean, our focus is, as Emily highlighted, to get to profitability as fast as possible and having a very solid balance sheet for growth, going into '25.

Catherine Walden Ramsey Schulte

Okay. And then Emily, just to your point on the ramp for BioPharma throughout fiscal '24, I guess, just how much visibility do you have in that $25 million number? Maybe how much is already accounted for in current programs versus assumptions around winning new products because it does imply a pretty steep ramp throughout the year? And is there any way to quantify the impact of the new Bayer partnership?

Emily Marine Leproust

Yes. So great question. As we've mentioned previously, in Biopharma for services, we get orders, and we can convert those orders into revenue in 2 to 3 quarters. And so the great quarter that we had in Q4 will be converted -- from an other front of view will be converted in revenue in the coming 2 quarters. .
So in terms of visibility, we have the visibility of the order. This is pretty much as much as we have. And then to get to that other number, we have definitely a funnel, and so we do measure the strength of the funnel. And now that we have a commercial team in every territory we can track and push each of those business managers to make sure that they achieve their quarter.

Operator

Our next question comes from Steven Mah with TD Cowen.

Poon Mah

Great. I've got a three-part follow-up question on Express Genes. One, on the existing customers, are you doing a dynamic pricing model with them? And then if so, what's been the early reaction to that pricing model? Is that something that's new to them?
And then second, how long do you expect to be in this early launch mode? And then third, given that Express Genes, the turnaround time seems to be a little bit faster, is there a new annual revenue capacity for the factor of the future we should keep in mind?

Emily Marine Leproust

So the way the dynamic pricing work, we've designed our e-commerce to be -- to have two characteristic. One is very subtle, but at the same time -- which means that as people order the genes the regular way, it's subtle that there is an option to get Fast Gene. However, at the point of ordering, it is a very strong in your face and very clear differentiation in terms of -- for that extra dollar, you can get that extra benefit, and customers have to make a yes or no decision.
And so on the one hand, yes, we've done it [steeply], but the customers have to make a decision. And so the -- as far as the early reaction that you were asking, we can look at any percent of customers chose the Express Gene option as a function of different prices, so that's ongoing.
In terms of your second question, how long would we be in that early launch phase, it would be until early calendar 2024. Matt won't have to correct me this time. So early '24, that's when we'll do the full launch to all the customers.
And then what was your third question? I think that was the third question that I don't remember.

Poon Mah

Capacity factor in the future, given the turnaround time is faster for Express Genes.

Emily Marine Leproust

Yes, in terms of capacity, yes, we -- because now if all the orders were ordered fast, there we basically double the capacity that we have in our fab. So we have not quantified that with the dollar at this point, but we will over time.

Operator

Our next question comes from Sung Ji Nam with Scotiabank.

Sung Ji Nam

Just to pile on one more question on Biopharma. Just for that customer base, kind of curious whether you're seeing any signs of improvement? Obviously, there are definitely macro factors that everyone was talking about. But do you think the growth next year is largely due to Twist on integration efforts and restructuring efforts that are bearing fruit? Or are you kind of seeing any signs of improvement, whether, from a (inaudible) standpoint, from large pharma or even a smaller biotech at this point?

Emily Marine Leproust

I know that definitely there is a funding pressure in Biopharma. The few quarters that we add on, it was a self-inflicting wound, it was we were not suffering from market headwinds. It was more from a commercial execution headwinds. And we have a very, very strong offering with in vivo, in vitro and in silico.
We are, I think, the only company that offers that very wide breadth of opportunity. And so we think that we can -- if we execute commercially, we can be very successful in the current market. And lately, we've been focusing on larger companies, and that has been working quite well.
So of course, we are open for business for all customers, but we have especially focused effort on larger pharma companies.

Operator

Our next question comes from Matthew Larew with William Blair.

Unidentified Analyst

It's just Madeline on for Matt. Just a quick one for me on the Express Genes. I know it's early stages now, but I was just wondering if there was sort of an optimum proportional breakdown between Express Genes and the more standard clonal genes, that you're targeting long term or that allows the factory of the future to be at its maximum efficiency, if there is sort of an ideal breakdown between the 2 pricing points?

Emily Marine Leproust

No, Madeline, it's a great question. So as a point of clarification, what we have with [Sage] is something that is actually quite unique because it has the same production line for Express and standard, meaning that if all our customers decided to pick Express Genes, we will be able to make them all Express.
And that is very different from what other competitors can do. Maybe they can do a few gene fast by cutting the queue and skipping ahead and managing their backlog. But for us, we don't have to do that. We've built something that is intrinsically fast for 100% of the genes. And so to go back to your question around optimum pricing, for us, our goal will be to maximize our gross margin dollars.
And so making sure that the fab is fully utilized and find the pricing that maximize the penetration into the DNA makers and ultimately, really delight our customers, enable them to do their science faster. And I think that would be a win-win because they'll get faster science and we'll get [models], and we think we'll be able to take very significant market share.
So the intrinsic technology really enables us to be very flexible on what the ultimate price is going to be, if need be, we can make all of orders Express, and that is hugely differentiating.

Operator

There are no further questions at this time. I'd like to turn the call back over to Emily for any closing remarks.

Emily Marine Leproust

As we've shared today, it is a very exciting time for Twist. We've launched Express Genes this week that is further differentiating our SynBio product offering, and we have taken steps to position the company for enduring and consistent growth. In fiscal 2024, we have the opportunity for expanding margin, and we look forward to keeping you appraised of our progress. Thank you.

Operator

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a great day.