Twist Bioscience Corp

NASDAQ:TWST

Earnings Call Transcript 2021-Q2

[Operator]

Welcome to Twist Bioscience Fiscal 2021 Second Quarter Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the conference call over to Jim Thorburn, Chief Financial Officer.

[James Thorburn, executive]

Thank you, operator. Good afternoon, everyone. I'd like to thank all of you for joining us today for Twist Bioscience conference call to review our fiscal 2021 second quarter financial results and business progress. We did issue our financial results earlier this afternoon, which is available at our website at www.twistbioscience.com.

With me on today's call is Dr. Emily Leproust, CEO and Co-Founder of Twist. Emily will begin with a review of our recent progress in Twist businesses. I will report on our financial and operational performance. And Emily will discuss our upcoming milestones and direction. We will then open the call for questions. As a reminder, this call is being recorded. The audio portion will be archived in the Investors section of our website and will be available for 2 weeks.

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 the 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 to risks, 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 cannot, at this time, predict the full extent of the impact of the COVID pandemic and any resulting business or economic impact. 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 and Co-Founder, Dr. Emily Leproust.

[Emily Leproust, executive]

Thank you, Jim, and good afternoon, everyone. During the second quarter of fiscal 2021, we reported strong revenue and a robust order growth with progress across all 4 areas of our business, synbio, NGS, biopharma and data storage. While we remain in the middle of the pandemic and the landscape's evolving, we see customers returning to the lab after receiving vaccination an incredible excitement around new applications of synbio and genomic technologies, including drug discovery, gene editing, liquid biopsy and minimal residual disease, or MRD.

We grew revenue to $31.2 million for the quarter, an increase of 62% over the second quarter of 2020, with trends coming from both synbio and NGS across multiple industries. Of note, no single customer accounted for a significant percentage of our revenue, indicating broad and diversified strength.

In addition, we reported $41.7 million in orders, an increase of 69% over the second quarter of fiscal 2020, a strong signal for the remainder of fiscal 2021. Now I'd like to dive into the details of our 4 business segments. Beginning with synthetic biology, we reported $12.9 million in revenue with orders coming in very strong at over $20 million for the quarter as we continue to expand our footprint in the market.

Across the synbio business, we are diversifying our customer base and product mix. We see more customers ordering Oligo Pools for gene editing, an increase in revenue of Clonal-Ready Gene Fragments and DNA preps as well as happy customer for early access IgGs. We booked revenue of $2.4 million for Gingko in the second quarter, returning to a more [ relevant ] [indiscernible] for their business.

Gingko continues to be an important customer for Twist, and we have 1 year remaining on our contract. As we continue to grow and diversify our business, we expect it will account for less than 10% of our revenues at some point in the near future, not because they are ordering less, but simply because our revenue from the broad base of customers continues to increase quickly.

In fact, year-to-date, they only account for about 6% of our revenue. To support our growth, we are ramping our efforts to make our Factory of the Future in Portland, Oregon, operational in 2022. As the Factory of the Future comes online next year, we believe it will allow us to tap into customers who need their sensitive DNA products very quickly, an important next avenue to convert and DNA makers into DNA buyers.

In addition, to further support our rapid growth, we exercised our right of first refusal to approximately double the Portland facility. Made to plan for space approximately 18 to 24 months in advance. And this additional square footage provides us with optionality to build out manufacturing space for product lines, including [indiscernible] Storage or other emerging applications of our sensitive DNA technology platform.

Looking at the competitive landscape. [ We are ] trying to success in driving sensitive at scale. We are seeing other potential entrants. And some of you have asked about enzymatic synthesis companies specifically. And while enzymatic synthesis also not promise for less expensive [ among the ] genes, there's still a long way to go to make this technology commercially scalable. That's it.

We do believe that it is a matter of if not when. So let me address what I believe an enzymatic company needs in order to be successful in our market segments of gene synthetics and NGS. For gene synthetics and NGS, the method must be high quality and able to make long pieces of DNA beginning with low-cost building blocks and error rates that are significantly lower than [indiscernible] chemistry.

It has to be a high-speed of operational basis and no sequence specific error modes. To be truly green, there should be no organic [ solvent ] in the production of building blocks or their assemblies. It is critical that the method incorporates quality control and even more importantly, biosecurity screening of all sequences.

Indeed, the customer should be able to get a final DNA needed without needing to do the onerous QC themselves. This is a tall order. That's because gene synthesis requires delivering perfect DNA. And so high-cost, low quality DNA just won't cut it. For the near term, we believe that classic phosphide like chemistry remains a solid effort of capability in synthesis for the applications that we serve.

Turning to genomics and targeted NGS. We reported $17 million in revenue and $18.6 million in order for the quarter. We continue to work with an increasing number of customers, adapting our technology into their products with several key customer wins. We announced 3 new customers specific to APAC. A geography we believe holds untapped potential for NGS solutions. We launched our NGS Methylation Detection System in February to detect various methylation patterns that plays a key role in many biological processes, including cancer.

This [ word ] offers customers a complete workflow solution that can be quickly customized for their specific needs. It includes near inland by lab sample preparation together with our Targeted Enrichment system for a robust end-to-end workflow. And already, we are hearing positive results from customers. We are committed to developing the most robust flexible solutions for our customers to ensure that they can run sample they want with the [ sustaining committees ].

In addition to our partnerships with [ NAB ] for methylation system, we announced a collaboration with Watchmaker Genomics, an innovative company applying advanced enzyme engineering to new applications of genomics. By having different partners for [ library ] preparation we can create tailor made solutions for our customers, for wide area applications. While at the same time, mitigating supply chain dependencies.

[ Same ] quarter, together with Biotia, we received emergency use authorization from the FDA for our SARS-CoV-2 Next-Generation Sequencing Assay. Our assay has the ability to analyze the entire RNA viral sequence of SARS-CoV-2 to determine the presence or sense of the virus as well as the researches only reported analyzes the sequence to detect genetic variance early in ages of SARS-CoV-2.

While we are 15 months into the pandemic, we believe SARS-CoV-2 will remain with us for some time. And new variants continue to accumulate, we believe that it would be very important to enable our customers to routine sequence clinical samples and track clients as [ the note ]. Importantly, Twist as an organization learned a great, great deal by applying for and receiving the authorization, validating our [ operating ] management system and building relationships with the FDA that will guide product development across our businesses.

We also launched several new synthetic RNA controls for new variants of COVID, first identified in Brazil and South Africa. Revenue from controls, while not material has been consistent and 70% of them coming to Twist to buy control, return to buy additional products, often are NGS custom panels.

So this is a great source of new customer force. For biopharma, we reported $2.6 million in order and $1.3 million in revenue. Revenue only includes a portion of the upfront or license fees associated with our partnerships as we recognize revenue over the course of each project. We announced partnerships with Stanford's Innovative Medicines Accelerator as well as Kyowa Kirin and Pure Biologics. And we now have 21 partners, many of whom have multiple programs ongoing at Twist.

Thirdly, we are advancing 25 active programs, 17 of which has milestones and royalties associated with them. An additional 9 programs are complete and now in the hands of our customers. We published our first year in the paper on Twist-generated compounds for GLP-1R this quarter. A significant accomplishment for the biopharma team. As many of you know, GLP-1R is a [ hard go target ]. And we identified our compound from our GPCR library. And this was the first internal targets we advance to demonstrate proof of concept for our biopharma vertical.

The publication details our positive preclinical results for a panel of 13 high-affinity GLP-1R targeting antagonist antibodies generated from our GPCR library as well as an agonist antibody, TB59-2. This data demonstrated the power of our antibody libraries to generate potent antibodies in a wide range of clinical indications.

For ADRA2A, our [indiscernible] have been tested in a humanized tumor model. We found that our antibodies increased T cell proliferation in the tumor and as a result, tumor volume decreased. We are eager to see a Twist compound in this clinical trial and are pursuing many paths forward. We're working with multiple partners in multiple programs as well as selecting our own antibodies to advance through preclinical ready stage for out-licensing.

We have many shots ongoing. During the quarter, we exercised our options to purchase all rights to our GPCR library and with antibody optimization software, both developed in collaboration with Distributed Bio. We began working with Distributed Bio back in 2016 before Twist Biopharma existed. We now make 4 to 5 libraries each month using our silicon-based platform and have created a robust library of libraries to benefit both our partners and our internal antibody discovery efforts.

Moving to data storage. We continue to make solid progress on our engineering road map, driving towards $100 per terabyte. We shared last quarter that we had the 1-micron chip in hand. This quarter, our team was able to synthesize 200 days oligonucleotide in 300-nanometer wells on this 1-micron chip. This is a significant engineering accomplishment and further derisk our approach to DNA data storage.

While there is still more work to do on the 1-micron chip, this is truly an exciting event, and we remain encouraged and engaged in the continued drive for increased density. The DNA Data Storage alliance is now 29 members strong. And soon, we'll be releasing a white paper on the state of DNA Data Storage as well as opportunities ahead.

As we talk to potential users of data storage, several factors are here: first, with the growing appreciation for an alternative method of storage. Second, initially, DNA will be used as a supplemental data storage system to augment current storage capabilities. Working through the alliance, we will ensure that all IT leaders nurture the visionary ones are ready to conduct pilot studies when the solutions is available.

And third, we found that cultural preservation, including TV and movie production archives. And industrial data storage required for regulatory reasons will be the first application of DNA data storage. This is a very large market and many other opportunities quickly will be followed. At this time, I'd like to turn the call over to Jim to review our financial results for the quarter.

[James Thorburn, executive]

All right. Thank you, Emily. As Emily noted, we continue to prove out the power platform and had another very robust quarter. Revenue for the quarter was $31.2 million up sequentially 11% and year-over-year 62%. Orders were $41.7 million up sequentially by 24% and year-over-year, 69%. Gross margin for the second quarter was 39%. And we shipped to approximately 1,700 customers in the quarter and 2,100 customers year-to-date. And we concluded the quarter with cash and short-term investments of approximately $555 million.

Now I'll provide more details on orders for the second quarter. NGS orders for the second quarter were $18.6 million as compared to $16.7 million in our quarter ended December 31, 2020, with a 90% year-on-year growth, which reflects the increased adoption and increasing number of NGS applications. During the quarter, we also received orders from approximately 700 NGS customers and customers with the top 10 accounts placed orders of approximately $8 million. As we continue to expand the breadth of our customer footprint, our pipeline for our larger opportunities continues to scale and we're now tracking 170 accounts, up from 160 accounts we noted on our last earnings call. 65 have adopted our platform and that's an increase from 59 last quarter.

Now turning to synbio. Our synbio orders, which includes Ginkgo, genes, DNA preps, IgG, libraries and all the Oliogo Pools increased to $20.4 million in the second quarter, and that's up from $14.1 million in March 2020 quarter. Our synbio non-Ginkgo business continues to scale and orders rose to $16.3 million and that's representing sequential growth of approximately 34% and 46% year-over-year growth, which highlights we continue to make progress in penetrating the market and expanding our portfolio.

Our genes business continues to be strong as total genes orders grew to approximately $15.7 million from $12.2 million in the previous quarter. Non-Ginkgo genes orders for the quarterly $11.5 million and that's up from $8.7 million in the quarter 1, with key segments contributing our growth, including pharma, academic and industrial segments. Oligo Pools rose again in the quarter to $2.4 million, with strong order demand largely coming from a pickup in the academic segment and gene therapy applications.

Biopharma orders in the quarter were $2.6 million for our antibody discovery activities. And as noted earlier, we have 21 partners with 25 active programs with 17 of which have milestones and/or royalties. In summary, we provide orders not to directly translate into revenue, but to provide a trend line for each product group. We anticipate both NGS and Ginkgo orders will fluctuate quarter-to-quarter.

Now let me cover revenue for the quarter. And revenue was $31.2 million, and that's a growth of 62% year-over-year and sequential increase to 11%. NGS product revenue climbed to $17 million for the quarter, as compared to $7.7 million for the same quarter in the prior year. Year-over-year growth is approximately 120%, a sequential growth of 10%. Our synbio product revenue for the quarter was $12.9 million and that's up sequentially from $11.5 million last quarter and an increase from $11 million in Q2 FY '20.

Ginkgo revenue in the quarter was $2.4 million, and our outlook for Ginkgo revenue remains the same as our previous guidance of $11 million to $12 million for the fiscal year. Q2 genes revenue was $9.2 million essentially flat with Q1 and also flat with Q2 FY '20. During the quarter, we shipped approximately 90,000 genes as compared to 84,000 in the previous quarter, with the growth in genes reflecting the success of our clonal-ready gene fragments which were launched in December 2020.

Genes revenue, excluding Ginkgo, was $6.8 million in the quarter as compared to $5.1 million in the same quarter last year. Biopharma, our revenue in the quarter is $1.3 million, and that reflects upfront services on our antibody discovery project activities, including planning, screening and high throughput IgG purification. Now quickly touching on the regions.

Americas revenue was $18.6 million as compared to $12.1 million for the same period last year. EMEA continues to grow strongly with quarter 2 revenue of $10 million versus $6.2 million in the same period last year, and EMEA now accounts for approximately 32% of our worldwide business. APAC revenue was $2.7 million versus $0.9 million, and we're seeing a strong rebound in Asia this year.

In terms of segments. Health care is our -- now our largest segment and accounts for 53% of our business with a revenue of $16.6 million in quarter 2. And that's compared to $5.8 million in Q2 last year. Industrial chemicals was $8.7 million in Q2 versus $7.5 million in Q2 FY '20. Academic revenue in fiscal Q2 was $5.6 million versus $5.5 million. As we noted earlier, we saw strong order pickup in the academic sector this quarter.

Now moving down the P&L. Gross margin was $12.2 million or 39% of revenue as compared to 30% in quarter 2 last year. This increase in margin reflects the impact of scaling our revenue, leveraging our fixed costs and the benefit of higher mix of NGS products. Our operating expenses, excluding the cost of revenues for the second quarter increased to approximately $50.2 million.

R&D for the quarter was $15.8 million, compared to $10.6 million in the second quarter of FY '20 and $14 million in quarter 1 of FY '21. Just a reminder, in quarter 1 of this year, we had $1.1 million of spend offset for IARPA and the confidential program. Major contributors to the year-over-year growth in R&D were $1.4 million investment data storage, $1.4 million investment biopharma and our core R&D increased by $1.1 million. SG&A increased to $34.4 million from $28.8 million in quarter 1, and that's primarily due to higher stock-based comp and increased investment in our commercial organization.

Our loss from operations for the quarter was $38 million, an increase from $32.8 million in the first quarter, and that's primarily due to the growth in stock-based compensation. Note the loss from operations in Q2 includes stock-based comp $11.7 million and $2.4 million depreciation. CapEx was approximately $8.6 million in the quarter, which brings total year-to-date CapEx of approximately $12 million. We ended the quarter with cash and short-term investments of approximately $555 million.

I'll briefly provide an update to our financial guidance for fiscal '21. We had a very robust start to fiscal year and at the same time, there remains uncertainty associated with the pandemic. And although we have successfully navigated many challenges through out the pandemic, we are experiencing headwinds from a key supplier for one of our products. We're working actively to mitigate this, although it does remain a concern.

We've seen strong orders in the quarter. And we're increasing our guidance from the prior guidance of $110 million to $118 million to $121 million to $129 million for fiscal year '21. Ginkgo for revenue is estimated to be approximately $11 million to $12 million; non-Ginkgo synbio $43 million to $46 million; NGS revenue estimated to be $62 million to $66 million; and biopharma estimated to be approximately $5 million.

Our gross margin range for the year is now expects to be 36% to 38% as compared to 32% to 34% in our last guidance. Operating expense which includes R&D and SG&A is expected to be approximately $192 million for the year as compared to $182 million in our prior guidance, which reflects stock -- higher stock-based comp charges and investment in our R&D and sales and marketing organizations to support growth in FY '22. Our R&D guidance for the year is approximately $66 million up from $60 million in our last guidance, and that's due to additional investment in data storage and biopharma investments.

Our net loss for the year is expected to be in the range of $144 million to $150 million. And stock-based comp, which included -- is included -- is approximately $33 million, and depreciation is $10 million. CapEx for the year is $40 million, and that's up from $30 million, which includes $16 million in CapEx for our Portland expansion. Due to equipment lead times being expanded, we're placing orders ahead of original plan.

In summary, with a solid first half to fiscal '21, we increased our guidance for the year. We're enjoying broad demand from our customer base. Our new products are being well received, and we're investing in our platform as we continue to tap into new revenue streams.

And with that, I'll now turn the call back to Emily.

[Emily Leproust, executive]

Thank you, Jim. In conclusion, in the first half of our fiscal year, we reported almost $60 million in revenue with strong momentum heading into the second half of the year. Looking forward, for synbio, we expect continued growth and diversification of our revenue stream, continued commercial ramp for clonal ready gene fragments and DNA prep as well as production ramp for IgG.

We also expect rollout of our B2B solutions to allow us to capture specific multi-site institutions and an ongoing preparation of the infrastructure and software platform for our Factory of the Future to enable strong growth in 2022 and beyond. For NGS, we expect continued revenue growth and customer ramping production. The technical addition of UMI and continued conversion of [ impact] queries to Twist sequencing.

For biopharma, we intend to sign additional partnerships and add programs with the majority generating milestones and royalties. In addition, we will continue to advance our internal pipeline of antibodies and pursue out-licensing opportunities targeting our first out-licensing program at mid-2022. And for data storage, we will continue to drive our engineering road map to our third [ maturization ], execute on the IARPA contract and pave the way for market adoption of this new storage medium.

With that, let's open up the call for questions. Operator?

[Operator]

[Operator Instructions]

And our first question coming from the line of Doug Schenkel with Cowen.

[Elnur Aliyev, analyst]

This is Elnur for Doug. I have one on competitive landscape, and then I will ask a follow-up question. There are a number of companies that seem to be emerging into the market with the concept of taking a more distributed model for oligos and gene synthesis. What is your view on that? And specifically, are they a, competitive, b, complementary or none of the above? At a higher level, is the distributed model attractive? And how are you positioning for it?

[Emily Leproust, executive]

Thank you. That's a great question. Right now, the distributed model is for markets that are adjacent to ours because the quality is just not there enough to be in the market that we serve of gene synthesis and synbio. So for instance, as a comparison, you can buy an Oligo for $0.03 on our website, while the distributed model already goes at $50 per oligo. So it kind of a very different product offering.

And then the quality that we have, we have extremely high quality, we can make Oligo up to 300 [ base scale ]. But at this point with what we see is that we don't have a demand from our customer -- we don't hear demand from our customers to make DNA in the labs. What we hear is people want -- they want high quality, they want very low price, and they want in, and we think we're very well suited to deliver that. But at the same time, we're student of the market. And our platform is agnostic to the chemistry. And if there was a better chemistry, we'd be very happy to deploy it on our platforms.

[Elnur Aliyev, analyst]

That's very helpful. And for my follow-up, I've a question on the guidance. The increase in gross margin, is that due to a higher share of NGS markets like Q2? Or is there something else driving the upside there?

[James Thorburn, executive]

Yes. No, the increase in gross margin guidance is to higher share of NGS plus, we've drawn -- we've increased our overall guidance from $110 million to $118 million up to $121 million to $129 million. So we're leveraging our fixed cost. So it's a combination of increased revenue plus the higher NGS.

[Operator]

And our next question coming from the line of Catherine Schulte with Baird.

[Thomas Peterson, analyst]

This is Tom on for Catherine. First one I touch on the core academic customer. It seems like from order trends rather than activity levels have improved. But just wanted to get a sense for what you saw in the quarter. And then specifically, if there's any geographic dynamics to call out here, given we've heard U.S. has sort of lagged from a recovery standpoint here?

[James Thorburn, executive]

So good question. The dynamics in the quarter were interesting. January started off a little bit weaker. I mean, if we go back to January with the vaccine rollout was just starting. As the quarter progressed, we saw increasing orders, so academic sector recover up significantly from previous trends. We had a good quarter in Asia. Revenue was up by $2.7 million, so almost 3x what we saw last year. Europe is very strong. So we're doing well in all regions.

The products are obviously being well received by customers. So a number of customers actually increased to 1,700. So over the last year, customer base has grown. We've seen steady increase in bookings, I mean bookings were over $41 million which just highlights the strength of the portfolio. Health care was up. Industrial biotech was doing extremely well. And it was noticeable, we're doing well, excluding our Ginkgo business. So we continue to broaden out the platform.

[Thomas Peterson, analyst]

Great. And as a follow-up. I appreciate the color on expectations around some additional biopharma partnership seems like the funnel is strong. Just want to get a sense for expectations as to kind of development timelines and budgets. Just wondering If those are fairly consistent to any sort of COVID uncertainty at this point if biopharma is sort of operating in a new normal, and you would expect those budgets to be fairly locked in at this point?

[Emily Leproust, executive]

You're asking in terms of our spending budget or budget for our customers?

[Thomas Peterson, analyst]

Yes. The customer spending budgets as well as sort of their development timelines.

[Emily Leproust, executive]

Yes. So in biopharma, we made a big push in that area over the last year's few quarters, both with the biopharma team that is covering antibody and optimizing them for partners. You can see that the number of partners been growing, the number of programs is growing so that's going well. And then we also made a push on synbio by launching our IgG product.

So I said we're doing really well in pharma. COVID has been useful to us, in other words, I mean it's pretty bad for society, it's been useful because we did our own discovery program against COVID. And we were able to show that not only we can cover antibodies against hard to drug targets, but also we can do it very fast. And so basically, the offering we have now for biopharma is really strong, and they much in line with what they need. And so we can say the funnel is very strong. And our response to it actually is very more of a tailwind than a headwind.

[Operator]

Our next question coming from the line of Tycho Peterson with JPMorgan.

[Casey Woodring, analyst]

This is Casey on for Tycho. Can you elaborate a little bit on the academic markets rebound given Illumina's commentary? And then maybe how that can serve as upside to NGS numbers? I know you guys raised your NGS guidance for -- during the full year guidance, but is there any upside there from academic recovery?

[James Thorburn, executive]

Yes. The academic sector was up by, I would say, roughly 20% in terms of orders, which is good in terms of positioning us well for second half. The -- not significant in terms of impact on NGS. Most of the academic pickup relates to -- although we don't break it out, is synbio. The good news is it did pick up. We didn't see a significant drop off in academic over the last year. But it's a good early indicator of recovery there.

And in terms of NGS, with very strong first half in NGS. And we've upped our guidance even though we have one supplier that's we're working with who's constrained in terms of providing us a product in the short term. But we feel good in terms of where we're at, strong orders, broad customer base adoption. And we believe that the product -- I mean, the increasing number of large accounts working with us increased again.

And we continue to be very optimistic and bullish in terms of where we can take the business. We are -- as you probably saw, we increased our investment in Portland, and that's in anticipation of positioning us for strong growth in '22, '23.

[Casey Woodring, analyst]

Got you. And then maybe just -- you've talked previously about how COVID isn't really material to the business. So I'm just wondering if anything's changed there regarding the new variants -- research into variant spread and so forth?

[Emily Leproust, executive]

So we're students of the variants. As you may remember, we now a year ago, in March, we launched our first COVID test through NGS in order to enable scientists to read the entire virus sequence, in order to detect variants and they like to understand the [ edges ]. So we had a -- I since anticipated a year ago that the variants will be important. As variants have emerged, we have launched new positive controls against -- and I think now we have more than 15 variants available on our website.

And then on the antibodies side, we've tested the potency of our ability against different variants. So definitely, variant is top of mind. And we're offering the tools to our customers to help in the detection and study of those variants.

[Operator]

Our next question is coming from the line of Vijay Kumar with Evercore.

[Vijay Kumar, analyst]

Congrats [ on a good print ], here. I had 3 questions. Jim, the supply headwind that you mentioned, is that baked in to the guidance? I guess, asking the question another way, without the supply headwind would the revenue guide being even higher?

[James Thorburn, executive]

Vijay, I love your questions. Yes, the supply headwind is baked into the guidance. We're working with the supplier. We have a really good relationship with the supplier. We're working this week to week, and we'll give an update on our next earnings call.

And we had a very strong first half. So I mean, when we're growing as rapidly as we are, we've been anticipating supply issues. We did increase our inventory over the last year. It's just -- we're seeing significant increase in demand, and we'll work it out. And we did include -- bake it into the guidance. And as we work in resolving it, we'll give an update on the next earnings call.

[Vijay Kumar, analyst]

Any, I guess, anyway to quantify it, Jim, I'm looking at your NGS guidance. You guys did about 120% growth for first half. The annual guide at the high end. I think it's baking in a 50% growth. So perhaps, is that where it's hitting you guys on the NGS side and anyway to quantify it?

[James Thorburn, executive]

Yes. I mean on the NGS side, it is impacting us on the NGS side. And although we did increase guidance, it's -- we wanted to note that we do have a headwind there. We will give an update on the next earnings call, I mean we're obviously working to resolve it. And we'll keep you posted.

[Vijay Kumar, analyst]

Got you. And then Emily, one for you. I missed the part. I think you made some comments on data storage, having reached an important milestone. Maybe if you could just simplify it in terms of where we are towards the end goal. I think you guys had to get to certain cost metrics. So where we are in the journey and what was this update? If you could flesh that out, that would be helpful.

[Emily Leproust, executive]

Yes, happy to do it, Vijay. So as you remember the goal is to get to a price point of $100 per terabit. And so to do that, we need to be able to make DNA at the 150-micron dimension on the silicon. And so we started our platform at 50-micron. Last year, we proved that we were able to shrink down to 10-microns. And right now, we're -- we are working on the 1-micron chip. And let me rephrase just one thing I misspoke.

The goal is to get to 150-nanometer. So we want to go to 150-nanometer. So right now, we've gone from 50-micron to 10-micron. We have the 1-micron chip in hand. And the milestone that we achieved this quarter is that we were able to synthesize 200 base pair oligos on that chip. And so maybe a few words on what that chip looks like.

The features are 1-micron away from each other to the pitch is 1-micron. And the dimension of the features is 300-nanometers. So we are -- and so it was quite an achievement to get there. We believe that is the longer DNA made on the smaller feature of silicon ever. So it's definitely a bleeding edge. So we are not finished with our 1-micron chip, there is a few more experiments we have to do. And a few more milestone we need to reach around speed of synthesis, quality and cost. But definitely a huge step for us to be able to make 200 base pair oligos and there are mixed base.

Once we are done with the 1-micron chip, the next would be to design and build the next chip that is going to get us to 150-microns. So we are not at the goal yet for $100 per terabyte, but it's definitely a very -- another very strong step forward.

[Operator]

Our next question coming from the line of Puneet Souda with SVB Leerink.

[Puneet Souda, analyst]

First question, maybe this was covered briefly a little bit. In terms of the guidance raise. Can you just provide contribution that was -- is that NGS largely driven? And anything you can provide there on the type of the customer despite the headwind that you have here, just trying to get a sense of is that in liquid biopsy or in other NGS application?

[James Thorburn, executive]

So just trying to summarize the question here. So in terms of -- compared to guidance, last quarter's guidance, we've increased $110 million -- so let me frame it $110 million to $118 million, up to $121 million to $129 million. We increased NGS from approximately $54 million to $58 million up to $63 million to $67 million.

So In terms of the headwind, we are seeing or experiencing we're working through that. We've included that in the guidance -- recognizing that we have been impacted. We're working on resolving that. And it's a week-to-week issue. We're working on with our partner, and we'll give an update on the next earnings call.

But we've had very strong growth. We don't break it out into liquid biopsy, but I would just highlight the number of large customers we're dealing with, Puneet, has increased again. And we're now at 170 with 65 having adopted. So seeing really good, strong trends in terms of NGS . In fact, we're seeing strong trends across all our businesses. And it's nice to see the academic segment rebound, which is up roughly about 20% in orders.

And we believe we're really well positioned for the second half of this year. In addition to that, you probably saw we increased our CapEx for the year. That's in anticipation of ramping up Portland next year. And we did increase our footprint in Portland, we saw that as a very cost-effective option for expansion in the future.

[Puneet Souda, analyst]

Okay. That's very helpful. In terms of the assays that are used in liquid biopsy. Just wanted to get -- in terms of getting specked into those assays. Any early indications as to sort of where you think those initial trials are headed? How confident are you that you will get -- be getting specked into these assays as they reach into larger trials and potentially commercialized.

And then if I could ask also on the biopharma front. Obviously, generally, the outsourcing trend is increasing here in discovery, what's your expectation here sort of longer term in order to get involved in a larger number of trials? And also, if there is any -- in the near term, do you expect any trial enrolled -- essentially getting into a Phase I trial? Any updates there, that would be super helpful.

[Emily Leproust, executive]

Yes. Thank you, Puneet. So maybe starting by the last question on biopharma. Yes, our funnel is very strong around biopharma there is simply -- it's clear that there is big interest in what we offer on this cover in optimization because our antibodies are fully human and human derived on day one. As far as when will the first Twist antibody go into clinic. We don't have a clear timing on that because our partner's [ filing ] to do that.

And we mentioned on the call that we have many programs that are out of our hands, meaning that now the partners is in charge of the timing. And so it's just a question of time until a Twist antibody is in the clinic. But to be clear, our partners will be doing the work. In terms of the liquid biopsy question, we were definitely in the number of liquid biopsy products.

We can only talk publicly about GRAIL because they mentioned using Twist exclusively. We can't discuss other customers that have not mentioned Twist. But we're -- in the past, we have won more than our fair share of bake-offs. And we can see in the revenues that keep coming quarter-over-quarter after quarter that those liquid biopsy companies are burning -- source burning DNA to do their work of validating product -- valuating their assay in anticipation of a commercial launch.

So that's why we -- we're quite bullish on the long-term prospect of the NGS pipeline because as those products go commercial, that should enable us to get continued revenue ramp.

[Operator]

I'm not showing any further questions at this time. I would now like to turn the call back over to Emily Leproust for any closing remarks.

[Emily Leproust, executive]

Thank you very much, operator. So we've had a very strong first half of our fiscal year with momentum moving into the remainder of the year. We see that our products resonated with our customers. Our addressable markets continue to expand. We have the team in place to drive innovation, and we hold ourselves accountable to execute aggressively. We will look forward to sharing with you our progress in the months ahead. And I'd like to thank you very much for your time today.

[Operator]

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.