# Twist Bioscience Corp: Form 10-Q for the period ended Jun 30, 2025

- Company: [Twist Bioscience Corp](/companies/twst.md) (CIK 1581280)
- Form: 10-Q
- Filed: 2025-08-04
- Accepted by EDGAR: Aug 4, 2025, 16:24 ET
- Period: 2025-06-30
- Accession: 0001581280-25-000009
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1581280/000158128025000009/twst-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1581280/000158128025000009/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $96.1m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 9 months, 2024-10-01 to 2025-06-30 | $277.6m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $44.8m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2024-10-01 to 2025-06-30 | $137.4m | us-gaap:CostOfRevenue |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $18.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-10-01 to 2025-06-30 | $63.3m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $63.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-10-01 to 2025-06-30 | $183.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | −$30.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-10-01 to 2025-06-30 | −$106.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $191.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-10-01 to 2025-06-30 | $462.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | $20.4m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-10-01 to 2025-06-30 | −$50.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.33 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-10-01 to 2025-06-30 | −$0.85 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.34 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-10-01 to 2025-06-30 | −$0.85 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 61,164,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-10-01 to 2025-06-30 | 59,600,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-10-01 to 2025-06-30 | −$35.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-10-01 to 2025-06-30 | $15.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-06-30 | $201.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $339.8m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $643.6m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $87.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $165.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-06-30 | $478.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 30,265 characters.

*You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Form 10-Q and our Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in the section entitled “Risk Factors” and elsewhere in this Form 10-Q. In preparing this MD&A, we presume that readers have access to and have read the MD&A in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K.*

### Overview

We are a leading, rapidly growing synthetic biology company that has developed a disruptive DNA synthesis platform to industrialize the engineering of biology. The core of our platform is a proprietary technology that pioneers a new method of manufacturing synthetic DNA by “writing” DNA on a silicon chip. We have combined our silicon-based DNA writing technology with proprietary software, scalable commercial infrastructure and an e-commerce platform to create an integrated technology platform that enables us to achieve high levels of quality, precision, automation, and manufacturing throughput at a significantly lower cost than our competitors. We have applied our unique technology to manufacture a broad range of synthetic DNA-based products, including synthetic genes, tools for next generation sequencing, or NGS, sample preparation, and antibody libraries for drug discovery and development, all designed to enable our customers to conduct research more efficiently and effectively. Leveraging our same technology, we have expanded our footprint beyond DNA synthesis to manufacture synthetic RNA as well as antibody proteins to disrupt and innovate within larger market opportunities, in addition to discovery partnerships for biologic drugs.

We believe our products enable a broad range of applications that may ultimately improve health and the sustainability of the planet across multiple industries including healthcare, chemicals/materials, food/agriculture, and academic research. We sell our synthetic DNA and synthetic DNA-based products to a customer base of approximately 3,562 customers annually across a broad range of industries. In order to address this diverse customer base, we employ a multi-channel strategy comprised of a direct sales force targeting synthetic DNA customers, a direct sales force focusing on the NGS market and an e-commerce platform that serves both commercial channels. We employ business development and sales representatives for our biopharma solutions as well. Our easy-to-use e-commerce platform allows customers to design, validate and place on-demand orders of customized DNA online, and enables them to receive real-time customized quotes for their products and track their order status through the manufacturing and delivery process. This is a critical part of our strategy to address our large markets and diverse customer base, as well as drive commercial productivity, enhance the customer experience, and promote loyalty.

We currently generate revenue through our synthetic biology and NGS tools product lines as well as biopharma services for antibody discovery, optimization and development.

Since our inception, we have incurred net losses each year. Our net income for the three months ended June 30, 2025 was $20.4 million due to sale of DNA Data Storage business compared to net loss of $85.6 million, which included impairment of long-lived assets of $44.9 million for the three months ended June 30, 2024. As of June 30, 2025, we have accumulated net deficit of $1,292.4 million and cash, cash equivalents and short-term investments of $250.8 million. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the success of our existing products and the development and commercialization of additional products in the synthetic biology and biologic drug industries as well as leveraging our investment in our manufacturing facility in Wilsonville, Oregon.

We sold our DNA Data Storage business to Atlas Data Storage, Inc. ("Atlas"), a newly formed company, that will focus solely on DNA data storage technology and commercialization, with $155.0 million in seed financing round from third-party investors. The purpose of the transaction is to unlock value by accelerating data storage technology development and allowing each company to focus strategically on its unique products, customers and investors. Under the terms of the contribution agreement executed with Atlas, we assigned and licensed our DNA data storage technology to Atlas in exchange of receiving a minority ownership interest upon close, an upfront cash payment and a secured promissory note. We retain an ownership stake in Atlas and may participate in the upside of DNA data storage through future technology and commercial milestone payments, and a revenue share through royalties on future sales of Atlas’ products and services.

Financial highlights from three months ended June 30, 2025, compared to the three months ended June 30, 2024, include the following:

- Increase in revenues of 18% to $96.1 million from $81.5 million, primarily due to growth in NGS tools and synthetic genes revenues;
- Gross margin increased to 53.4% from 43.3% mainly due to increase in revenues and holding manufacturing costs relatively flat;
- Loss from operations decreased to $30.1 million from $88.9 million primarily due to impairment of long-lived assets recorded in the three months ended June 30, 2024 and increases in revenues and gross profit in the three months ended June 30, 2025;
- Net cash used in operating activities decreased to $1.4 million from $6.4 million.
- Gain on the sale of DNA digital data storage business of $48.8 million.

### Results of Operations

### Comparison of the Three Months Ended June 30, 2025 and 2024

### Revenues

*(in thousands, except percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $96,057 | $81,464 | $14,593 | 18% |

### Revenues by Geography

We have one reportable segment from the manufacturing of synthetic DNA products. The following table shows our revenues by geography, based on our customers’ shipping addresses. Americas consists of United States, Canada, Mexico and South America; EMEA consists of Europe, Middle East and Africa; and APAC consists of Japan, China, South Korea, India, Singapore, Malaysia, Australia, New Zealand, Thailand and Taiwan.

|  | Three Months Ended June 30, |  |
| --- | ---: | ---: |
| **(in thousands, except percentages)** | **2025%** | **2024%** |
| Americas | $59,387 62% | $51,389 61% |
| EMEA | 30,742 32% | 23,581 30% |
| APAC | 5,928 6% | 6,494 9% |
| Total revenues | $96,057 100% | $81,464 100% |

### Revenues by Product

The table below summarized revenues by product:

|  | Three Months Ended June 30, |  |
| --- | ---: | ---: |
| **(in thousands, except percentages)** | **2025%** | **2024%** |
| Synthetic genes | $27,680 29% | $24,948 29% |
| Oligo pools | 5,423 6% | 4,166 6% |
| DNA libraries | 2,056 2% | 3,848 5% |
| Antibody discovery | 5,614 6% | 5,102 6% |
| NGS tools | 55,284 57% | 43,400 54% |
| Total revenues | $96,057 100% | $81,464 100% |

### Revenues by Industry

The table below summarized revenues by industry:

|  | Three Months Ended June 30, |  |
| --- | ---: | ---: |
| **(in thousands, except percentages)** | **2025%** | **2024%** |
| Industrial chemicals/materials | $23,103 24% | $23,188 27% |
| Academic research | 15,931 17% | 14,892 18% |
| Healthcare | 56,375 58% | 42,823 54% |
| Food/agriculture | 648 1% | 561 1% |
| Total revenues | $96,057 100% | $81,464 100% |

### Product Shipments Including Synthetic Genes

The table below summarized product shipments including synthetic genes:

*(in thousands)*

|  | Three Months Ended June 30, June 30, 2025 | March 31 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Number of genes shipped | 237 | 227 | 205 | 196 | 212 | 193 | 171 | 177 |

The number of customers who purchased products from us were approximately 2,484 and 2,300 customers for the three months ended June 30, 2025 and 2024, respectively.

Revenues increased 18% to $96.1 million for the three months ended June 30, 2025, as compared to $81.5 million for the three months ended June 30, 2024. The increase in revenues primarily reflects growth in NGS tools revenue of $11.9 million and growth in synthetic genes revenue of $2.7 million, which is primarily attributable to increase in revenues from our customers in the healthcare and academic research industries and an increase in the number of customers. The number of our genes shipped in the three months ended June 30, 2025 increased to approximately 237,000 genes compared to approximately 212,000 genes in the three months ended June 30, 2024, an increase of 12%.

### Cost of Revenues

*(in thousands, except percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Cost of revenues | $44,760 | $46,193 | $(1,433) | (3)% |
| Gross profit | $51,297 | $35,271 | $16,026 | 45% |
| Gross margin | 53.4% | 43.3% | 10.1% |  |

29

Cost of revenues decreased 3% to $44.8 million for the three months ended June 30, 2025, as compared to $46.2 million for the three months ended June 30, 2024. The decrease is primarily attributable to a decrease in depreciation and amortization expense of $1.7 million due to impairment of long-lived assets in fiscal year 2024, a decrease in production overheads including facilities, IT services, and laboratory supplies of $0.5 million and a decrease in material costs of $0.3 million. This decrease was partially offset by an increase in stock-based compensation expense of $1.0 million. Gross margin increased 10.1% to 53.4% for the three months ended June 30, 2025, as compared to 43.3% for the three months ended June 30, 2024, mainly due to increase in revenues and holding manufacturing costs relatively flat and driving additional cost savings through continuous process improvement.

### Research and Development Expenses

*(in thousands, except percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $18,047 | $22,469 | $(4,422) | (20)% |

Research and development expenses decreased 20% to $18.0 million for the three months ended June 30, 2025, as compared to $22.5 million for the three months ended June 30, 2024. The decrease is primarily due to decreases in personnel costs of $2.4 million, stock-based compensation expenses of $1.5 million and depreciation expense of $0.6 million. The reduction in personnel expense and stock-based compensation expense is mainly due to the transition of the DNA digital data storage employees related to the sale of DNA digital data storage business during three months ended June 30, 2025.

### Selling, General and Administrative Expenses

*(in thousands, except percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Selling, general and administrative | $63,370 | $56,794 | $6,576 | 12% |

Selling, general and administrative expenses increased 12% to $63.4 million for the three months ended June 30, 2025, as compared to $56.8 million for the three months ended June 30, 2024. The increase is primarily due to increases in stock-based compensation expense of $2.8 million, personnel costs of $1.9 million, marketing costs of $1.3 million, and IT services costs of $1.0 million. This increase was offset by decrease in other third party spending of $1.0 million.

### Impairment of long-lived assets

*(in thousands, except percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Impairment of long-lived assets | $— | $44,930 | $(44,930) | (100)% |

We recognized impairment of intangible assets and property and equipment of $44.9 million related to the Biopharma asset group during the three months ended June 30, 2024.

### Gain on Sale of business

*(in thousands, except percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | --- |
| Gain on sale of business | $48,847 | $— | $48,847 | N/A |

We recognized gain on sale of business of $48.8 million related to the sale of our DNA digital data storage business during three months ended June 30, 2025.

### Interest and Other Income (Expense), net

*(in thousands, except percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Interest income | $2,690 | $3,663 | $(973) | (27)% |
| Other income (expense), net | (836) | (121) | (715) | 591% |
| Total interest and other income (expense), net | $1,854 | $3,542 | $(1,688) | (48)% |

Interest income decreased 27% to $2.7 million for the three months ended June 30, 2025, as compared to $3.7 million for the three months ended June 30, 2024, due to lower cash equivalents and short-term investments balance.

### Income Tax Expense

*(in thousands, except percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Income tax expense | $(191) | $(191) | $— | —% |

We recorded an income tax provision of $0.2 million and $0.2 million for the three months ended June 30, 2025 and June 30, 2024, respectively.

### Comparison of the Nine Months Ended June 30, 2025 and 2024

### Revenues

*(in thousands, except percentages)*

|  | Nine Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $277,563 | $228,264 | $49,299 | 22% |

### Revenues by Geography

We have one reportable segment from the manufacturing of synthetic DNA products. The following table shows our revenues by geography, based on our customers’ shipping addresses. Americas consists of United States, Canada, Mexico and South America; EMEA consists of Europe, Middle East and Africa; and APAC consists of Japan, China, South Korea, India, Singapore, Malaysia, Australia, New Zealand, Thailand and Taiwan.

|  | Nine Months Ended June 30, |  |
| --- | ---: | ---: |
| **(in thousands, except percentages)** | **2025%** | **2024%** |
| Americas | $168,285 61% | $141,221 62% |
| EMEA | 89,688 32% | 67,064 29% |
| APAC | 19,590 7% | 19,979 9% |
| Total revenues | $277,563 100% | $228,264 100% |

### Revenues by Product

The table below summarized revenues by product:

|  | Nine Months Ended June 30, |  |
| --- | ---: | ---: |
| **(in thousands, except percentages)** | **2025%** | **2024%** |
| Synthetic genes | $82,387 30% | $67,031 28% |
| Oligo pools | 15,228 6% | 12,295 6% |
| DNA libraries | 7,867 3% | 10,318 4% |
| Antibody discovery | 17,009 6% | 15,029 7% |
| NGS tools | 155,072 55% | 123,591 55% |
| Total revenues | $277,563 100% | $228,264 100% |

### Revenues by Industry

The table below summarized revenues by industry:

|  | Nine Months Ended June 30, |  |
| --- | ---: | ---: |
| **(in thousands, except percentages)** | **2025%** | **2024%** |
| Industrial chemicals/materials | $67,101 24% | $59,730 25% |
| Academic research | 50,004 18% | 42,387 18% |
| Healthcare | 158,510 57% | 124,637 56% |
| Food/agriculture | 1,948 1% | 1,510 1% |
| Total revenues | $277,563 100% | $228,264 100% |

Revenues increased 22% to $277.6 million for the nine months ended June 30, 2025, as compared to $228.3 million for the nine months ended June 30, 2024. The increase in revenues primarily reflects growth in NGS tools revenue of $31.5 million and growth in synthetic genes revenue of $15.4 million, which is primarily attributable to an increase in revenues from our customers in the healthcare, industrial chemicals/materials and academic research industries and an increase in the number of customers. The number of our genes shipped in the nine months ended June 30, 2025 increased to approximately 669,000 genes compared to approximately 576,000 genes in the nine months ended June 30, 2024, an increase of 16%.

### Cost of Revenues

*(in thousands, except percentages)*

|  | Nine Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Cost of revenues | $137,398 | $133,148 | $4,250 | 3% |
| Gross profit | $140,165 | $95,116 | $45,049 | 47% |
| Gross margin | 50.5% | 41.7% | 8.8% |  |

Cost of revenues increased 3% to $137.4 million for the nine months ended June 30, 2025, as compared to $133.1 million for the nine months ended June 30, 2024. The increase is primarily attributable to increases in material costs of $7.3 million due to higher sales volume, stock-based compensation expense of $2.3 million and production overheads costs including facilities, IT services, and laboratory supplies of $0.8 million. The increase was partially offset by decreases in depreciation and amortization expense of $4.4 million due to impairment of long-lived assets in fiscal year 2024 and outside services costs of $1.7 million. Gross margin increased 8.8% to 50.5% for the nine months ended June 30, 2025, as compared to 41.7% for the nine months ended June 30, 2024, mainly due to increase in revenues and holding manufacturing costs relatively flat and driving additional cost savings through continuous process improvement..

### Research and Development Expenses

*(in thousands, except percentages)*

|  | Nine Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $63,271 | $69,718 | $(6,447) | (9)% |

Research and development expenses decreased 9% to $63.3 million for the nine months ended June 30, 2025, as compared to $69.7 million for the nine months ended June 30, 2024. The decrease is primarily due to a decrease in personnel costs of $3.3 million, stock-based compensation expense of $1.4 million and depreciation expense of $1.5 million. The reduction in personnel expense and stock-based compensation expense is mainly due to the transition of the DNA digital data storage employees related to the sale of DNA digital data storage business during nine months ended June 30, 2025.

### Selling, General and Administrative Expenses

*(in thousands, except percentages)*

|  | Nine Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Selling, general and administrative | $183,219 | $165,256 | $17,963 | 11% |

Selling, general and administrative expenses increased 11% to $183.2 million for the nine months ended June 30, 2025, as compared to $165.3 million for the nine months ended June 30, 2024. The increase is primarily due to an increase in stock-based compensation expense of $8.9 million, personnel costs of $3.8 million, marketing costs of $1.2 million and other third party spending of $2.5 million.

### Impairment of long-lived assets

*(in thousands, except percentages)*

|  | Nine Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Impairment of long-lived assets | $— | $44,930 | $(44,930) | (100)% |

We recognized impairment of intangible assets and property and equipment of $44.9 million related to the Biopharma asset group during the nine months ended June 30, 2024.

### Gain on Sale of business

*(in thousands, except percentages)*

|  | Nine Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | --- |
| Gain on sale of business | $48,847 | $— | $48,847 | N/A |

We recognized gain on sale of business of $48.8 million related to sale of DNA digital data storage business during nine months ended June 30, 2025.

### Interest and Other Income (Expense), net

*(in thousands, except percentages)*

|  | Nine Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Interest income | $8,731 | $11,724 | $(2,993) | (26)% |
| Other expense | (1,323) | (351) | (972) | 277% |
| Total interest and other income (expense), net | $7,408 | $11,373 | $(3,965) | (35)% |

Interest income decreased 26% to $8.7 million for the nine months ended June 30, 2025, as compared to $11.7 million for the nine months ended June 30, 2024, due to lower cash equivalents and short-term investments balance.

### Income Tax Expense

*(in thousands, except percentages)*

|  | Nine Months Ended June 30, 2025 | 2024 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Income tax expense | $(462) | $(656) | $194 | (30)% |

We recorded an income tax provision of $0.5 million and $0.7 million for the nine months ended June 30, 2025 and June 30, 2024, respectively.

### Liquidity and Capital Resources

### Sources of Liquidity

To date, we have financed our operations principally through public equity raises, private placements of our convertible preferred stock, borrowings from credit facilities and revenue from our commercial operations. At June 30, 2025, we had a balance of $201.4 million of cash and cash equivalents and $49.4 million in short-term investments.

During the nine months ended June 30, 2025, we received an upfront payment of $15.0 million from XOMA (US) LLC ("XOMA") in cash in exchange for XOMA's right to receive half of the future potential milestone and royalty payments resulting from existing antibody discovery and biopharma services collaborations with the Company’s partners. We accounted for the transaction as liability for the sale of future revenue under the accounting guidance for sale of future revenues (see note 15 of the condensed consolidated financial statements included elsewhere in this Form 10-Q).

On May 2, 2025, the Company executed the Contribution Agreement with Atlas for the sale and transfer of its DNA digital data storage assets including the related intellectual property, equipment and contracts and the license of certain other intellectual property and the license of certain other intellectual property for a consideration of 73.0 million shares of Series Seed-1 Preferred Shares of Atlas, upfront cash consideration of $2.5 million, promissory notes of $2.0 million issued by Atlas, contingent manufacturing and commercial milestone payments of up to $75.0 million, and royalty payments based on a percentage of Atlas sales of the DNA data storage products (see note 15 of the condensed consolidated financial statements included elsewhere in this Form 10-Q).

### Operating Capital Requirements

Our primary uses of capital are, and we expect will continue to be for the near future, compensation and related expenses, manufacturing costs, laboratory and related supplies, legal and other regulatory expenses and general overhead costs and capital expenditures. We had $10.3 million in commitments for capital expenditures as of June 30, 2025.

### Cash Flows

The following table summarizes our sources and uses of cash and cash equivalents:

*(in thousands)*

|  | Nine Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(35,814) | $(48,774) |
| Net cash provided by (used in) investing activities | (12,359) | (1,786) |
| Net cash provided by financing activities | 22,966 | 3,263 |

### Operating Activities

Net cash used in operating activities was $35.8 million during the nine months ended June 30, 2025 primarily due to a net loss of $50.5 million adjusted for non-cash items including depreciation and amortization expense of $18.8 million, stock-based compensation expense of $48.4 million, gain on sale of business of $48.8 million and a net cash outflow from operating assets and liabilities of $5.6 million. The net cash outflow from operating assets and liabilities was mainly due to an increase in accounts receivable of $15.2 million due to the increase in revenues and the timing of collections, increases in inventories of $1.9 million and prepaid and other current assets of $1.8 million, a decrease in accrued compensation of $4.7 million offset by increases in accounts payable of $9.6 million, other liabilities of $5.5 million and accrued expenses of $3.4 million. The changes in accrued compensation, accrued expenses, and accounts payable are due to timing of payments to vendors and employees.

Net cash used in operating activities was $48.8 million during the nine months ended June 30, 2024 and consisted primarily of a net loss of $174.1 million adjusted for non-cash items including depreciation and amortization expense of $24.8 million, stock-based compensation expense of $38.6 million, impairment of long-lived assets of $44.9 million and a net change in operating assets and liabilities of $16.6 million. The change in operating assets and liabilities was mainly due to decreases in accounts receivable of $11.4 million due to the timing of collections, inventories of $3.6 million, other non-current assets of $0.5 million, accounts payable of $6.9 million and other liabilities of $1.8 million offset by increases in prepaid expenses of $0.2 million, accrued compensation of $5.9 million and accrued expenses of $4.1 million.

### Investing Activities

Net cash used in investing activities was $12.4 million during the nine months ended June 30, 2025, which consisted of the purchases of property and equipment of $15.6 million offset by the proceeds from the sale of our data storage business of $2.5 million and the net impact of purchases and maturity of investments of $0.7 million.

Net cash used in investing activities was $1.8 million during the nine months ended June 30, 2024, which consisted of the purchases of laboratory property, equipment and computers of $3.1 million offset by the proceeds from the net impact of purchases and maturity of investments of $1.3 million.

### Financing Activities

Net cash provided by financing activities was $23.0 million in the nine months ended June 30, 2025, which consisted of $15.0 million from XOMA for the sale of future revenue, $5.6 million from the exercise of stock options and $2.4 million proceeds from issuance of shares under the ESPP.

Net cash provided by financing activities was $3.3 million in the nine months ended June 30, 2024, which consisted of $5.2 million from the exercise of stock options and $2.0 million proceeds from issuance of shares under the 2018 ESPP offset by $4.0 million in repurchases of common stock for income tax withholdings.

### Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

### Contractual Obligations and Other Commitments

Our contractual obligations have not materially changed from those reported in our Annual Report on Form 10-K.

### Critical Accounting Policies and Significant Management Estimates

The preparation of our Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States of America requires management to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures. On an ongoing basis, we evaluate our significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information. Actual results may differ significantly from these estimates. A summary of our critical accounting policies and estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K. There were no changes to our critical accounting policies and estimates during the nine months ended June 30, 2025 other than the updates to the critical accounting policies and estimates set forth below.

### Calculation of Gain on Sale of business

On May 2, 2025, we measured the fair value of our investment in Series Seed-1 Preferred Stock of Atlas using the backsolve method with consideration for a lack of marketability. The backsolve method was used to solve for the implied total equity value based on the recent Series Seed financing round by Atlas to third-party investors. Consideration was given to the rights and preferences of each of the classes of equity of Atlas and the expected time to a liquidity event. An option pricing allocation method, or OPM, was selected to allocate the total equity value. The OPM treats ordinary shares and preferred shares as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the Series Seed-1 Preferred Stock held by the Company will have value only if the funds available for distribution to shareholders exceeded the value of the Preferred Shares’ liquidation preference at the time of the liquidity event, such as a strategic sale or a merger.

Equity investments held by the Company lack readily determinable fair values and therefore the securities are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar equity securities of the same issuer. The Company reviews the carrying value of its equity investments for impairment whenever events or changes in business circumstances indicate the carrying amount of such asset may not be fully recoverable. Impairments, if any, are based on the excess of the carrying amount over the recoverable amount of the asset.

### Recent Accounting Pronouncements

For a description of accounting changes and recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our condensed consolidated financial statements, see Note 2, “Summary of significant accounting policies” in Item 1 of Part I of this Form 10-Q.

## Market risk

As filed, 243 characters.

Information about our market risk is presented in Part II, Item 7A “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K. Our exposure to market risk has not changed materially since September 30, 2024.

## Controls and procedures

As filed, 1,899 characters.

### Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2025, which is the end of the period covered by this Form 10-Q. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures to ensure that information required to be disclosed by the Company in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures were effective as of June 30, 2025.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Limitations on Effectiveness of Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, as specified above. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met.

## Risk factors

As filed, 950 characters.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in our Annual Report on Form 10-K filed with the SEC on November 18, 2024, as updated and supplemented in Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q filed with the SEC on May 5, 2025, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or future results. There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K. We may disclose changes to risk factors or additional risk factors from time to time in our future filings with the SEC.

Filed Aug 4, 2025.
Source: SEC EDGAR, the filing index for accession 0001581280-25-000009. Last ingested by Listed: Nov 10, 2026, 17:32 ET. No prices; not investment advice.