Twist Bioscience (TWST) risk factors, FY2024 10-K

Risks related to our business

1. 01We have incurred net losses in every period to date, and we expect to continue to incur significant losses as we develop our business and may never achieve profitability
2. 02We may require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product manufacturing and development and other operations
3. 03If we are unable to maintain adequate revenue growth or do not successfully manage such growth, our business and growth prospects will be harmed
4. 04If we are unable to attract new customers and retain and grow sales from our existing customers, our business will be materially and adversely affected
5. 05If we, or our partners or suppliers, experience a significant disruption in, or breach in security of, information technology systems, or fail to implement new systems and software successfully, our business could be adversely affected. Cyberattacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position
6. 06Rapidly changing technology and extensive competition in synthetic biology could make the products we are developing and producing obsolete or non-competitive unless we continue to develop and manufacture new and improved products and pursue new market opportunities
7. 07The continued success of our business relies heavily on our disruptive technologies and products and our position in the market as a leading provider or synthetic DNA using a silicon chip
8. 08Issues relating to the use of artificial intelligence and machine learning could adversely affect our business and operating results
9. 09If we are unable to expand into adjacent addressable markets, our business may be materially and adversely affected
10. 10A significant portion of our sales depends on customers’ budgets that may be subject to significant and unexpected variation, including seasonality
11. 11We generally do not have long-term contracts with our customers requiring them to purchase any specified quantities from us
12. 12We may be unable to successfully recruit and maintain adequate sales, marketing and other support personnel in order to increase our market share and expand our customer base
13. 13If we are unable to expand our DNA synthesis manufacturing capacity, we could lose revenue and our business could be harmed
14. 14We are substantially dependent on the success of our synthetic DNA products
15. 15We depend on one single-source supplier for a critical component for our DNA synthesis process. Although we have a reserve of supplies and alternative suppliers exist, the loss of this supplier or its failure to supply us with the necessary component on a timely basis could cause delays in the future capacity of our DNA synthesis process and adversely affect our business
16. 16We must continue to secure and maintain sufficient and stable supplies of raw materials. Any shortage of raw materials or materials necessary for our production capabilities may adversely affect our business
17. 17We may encounter difficulties in managing our growth, and these difficulties could impair our profitability
18. 18Our revenue, results of operations, cash flows and reputation in the marketplace may suffer upon the loss of a limited number of large customers
19. 19We depend on the continuing efforts of our senior management team and other key personnel. If we lose members of our senior management team or other key personnel or are unable to successfully retain, recruit and train qualified researchers, engineering and other personnel, our ability to develop our products could be harmed, and we may be unable to achieve our goals
20. 20We may engage in strategic transactions, including acquisitions, collaborations, or investments in other companies or technologies, that could disrupt our business, cause dilution to our stockholders, reduce our financial resources, or prove not to be successful
21. 21As we expand our development and commercialization activities outside of the United States, we will be subject to an increased risk of inadvertently conducting activities in a manner that violates the U.S. Foreign Corrupt Practices Act and similar laws. If that occurs, we may be subject to civil or criminal penalties which could have a material adverse effect on our business, financial condition, results of operations and growth prospects
22. 22We could engage in exporting or related activity that contravenes international trade restraints, or regulatory authorities could promulgate more far-reaching international trade restraints, which could give rise to one or more of substantial legal liability, impediments to our business and reputational damage
23. 23We operate in a highly competitive industry and if we are not able to compete effectively, our business and operating results will likely be harmed
24. 24We may be subject to significant pricing pressures and if we are unable to pass on any cost increase to our customers, our business, financial position and results of operations could be adversely affected
25. 25Ethical, legal and social concerns surrounding the use of genetic information could reduce demand for our technology
26. 26We use biological and hazardous materials that require considerable expertise and expense for handling, storage and disposal and may result in claims against us
27. 27We could develop DNA sequences or engage in other activity that contravenes biosecurity requirements, or regulatory authorities could promulgate more far-reaching biosecurity requirements that our standard business practices cannot accommodate, which could give rise to substantial legal liability, impede our business and damage our reputation
28. 28Third parties may use our products in ways that could damage our reputation
29. 29Any damage to our reputation or brand may materially and adversely affect our business, financial condition and results of operations
30. 30Because we are subject to existing and potential additional governmental regulation, the markets for our products may be narrowed
31. 31Our products could in the future be subject to additional regulation by the U.S. Food and Drug Administration or other domestic and international regulatory agencies, which could increase our costs and delay our commercialization efforts, thereby materially and adversely affecting our business and results of operations
32. 32Certain of our potential customers may require that we become certified under the Clinical Laboratory Improvement Amendments of 1988
33. 33We currently manufacture all of our products and multiple sub-assemblies at our manufacturing facilities in Wilsonville, Oregon and South San Francisco, California, and if either of these facilities are destroyed or we experience at either of these facilities any manufacturing difficulties, disruptions, or delays, this could limit supply of our products or adversely affect our ability to sell products or conduct our clinical trials, and our business would be adversely impacted
34. 34Natural disasters, public health crises, political crises, severe weather events, and other catastrophic events or other events outside of our control may damage our facilities or the facilities of third parties on which we depend and could impact our ability to sell products
35. 35Delivery of our products could be delayed or disrupted by factors beyond our control, and we could lose customers as a result
36. 36Doing business internationally creates operational and financial risks for our business
37. 37Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations
38. 38The enactment of legislation implementing changes in taxation of international business activities, the adoption of other corporate tax reform policies, or changes in tax legislation or policies could impact our future financial position and results of operations
39. 39Our inability to collect on our accounts receivable by a significant number of customers may have an adverse effect on our business, financial condition and results of operations

Risks related to being a public company

1. 40If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired, which would adversely affect our business
2. 41The requirements of being a public company may strain our resources and require a substantial amount of management’s attention

Risks related to our intellectual property

1. 42Our ability to protect our intellectual property and proprietary technology through patents and other means is uncertain
2. 43If we are unable to obtain, maintain and enforce intellectual property protection, others may be able to make, use, or sell products and technologies substantially the same as ours, which could adversely affect our ability to compete in the market
3. 44We may not be able to protect our intellectual property rights throughout the world
4. 45If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected
5. 46We may be involved in lawsuits to protect or enforce our patents and proprietary rights, to determine the scope, coverage and validity of others’ proprietary rights, or to defend against third party claims of intellectual property infringement that could require us to spend significant time and money and could prevent us from selling our products or impact our stock price
6. 47We may not be successful in obtaining or maintaining necessary rights to our products and technologies through acquisitions and in-licenses, and our intellectual property agreements with third parties may involve unfavorable terms or be subject to disagreements over contract interpretation
7. 48We have not yet registered some of our trademarks in all of our potential markets, and failure to secure those registrations could adversely affect our business
8. 49We depend on certain technologies that are licensed to us. We do not control these technologies and any loss of our rights to them could prevent us from selling our products

Risks relating to owning our common stock

1. 50We have never paid dividends on our capital stock and we do not intend to pay dividends for the foreseeable future. Consequently, any gains from an investment in our common stock will likely depend on whether the price of our common stock increases
2. 51Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock
3. 52Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees

General risk factors

1. 53The market price of our common stock is likely to be volatile and could fluctuate or decline, resulting in a substantial loss of your investment
2. 54Our quarterly and annual operating results and cash flows have fluctuated in the past and might continue to fluctuate, causing the value of our common stock to decline substantially
3. 55If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume could decline
4. 56Our actual operating results may differ significantly from our guidance
5. 57We have in the past and may in the future be subject to short selling strategies that may drive down the market price of our common stock
6. 58Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause the stock price of our common stock to decline
7. 59Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us
8. 60Evolving expectations around corporate responsibility practices, specifically related to environmental, social and governance (“ESG”) matters, may expose us to reputational and other risks