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Mail Stop 3030
March 9, 2018
Emily M. Leproust, Ph.D.
President and Chief Executive Officer
Twist Bioscience Corporation
455 Mission Bay Boulevard South, Suite 545
San Francisco, CA 94158
Re: Twist Bioscience Corporation
Draft Registration Statement on Form S-1
Submitted February 8, 2018
CIK No. 0001581280
Dear Dr. Leproust:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we
may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Overview, page 1
1. We note the disclosure regarding customers in the last paragraph.
Please expand to
disclose the amount of revenue attributable to the nine of the top
20 pharmaceutical
companies, four of the largest agricultural biotechnology companies
and the "innovative
customers" referenced on page 2.
2. We note the disclosure on page 106 that your products are marketed
and labeled as for
"Research Use Only" and how this label limits their use. Please
disclose this limitation
here and the impact on how your products may be marketed and sold.
Also revise to
clarify how this limitation is reflected in the market data you
present in this submission,
such as the $1.8 billion synthetic DNA market referenced on page 2
and the $4.0 billion
synthetic biology products market referenced on page 1.
Emily M. Leproust, Ph.D.
Twist Bioscience Corporation
March 9, 2018
Page 2
Implications of the Being an Emerging Growth Company, page 10
3. Supplementally provide us with copies of all written communications, as
defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communication.
Our revenue, results of operations, cash flows and reputation . . ., page 27
4. We note the disclosure regarding the acquisition of a competing DNA
synthesis
manufacturer by your largest customer and the possibility that it may
reduce purchases
from you. Please revise to clarify how this relates to your largest
customer's obligations
under the long-term contract mentioned on page 81. For example, can your
customer
terminate the contract with no penalty? Also, if your largest customer
has informed you
it will reduce or has actually reduced purchases from you or started
manufacturing
synthetic DNA internally, please revise to disclose that information.
Use of proceeds, page 55
5. Please quantify the amounts you intend to devote to each use referenced
in the third
paragraph. Please also revise to clarify the uses referenced in (1), (3)
and (4) and what
the amounts you intend to devote to that use will accomplish For
example, what
improvements and updates do you intend to make? Into what geographies do
you intend
to expand? What do you mean by the disclosure regarding "expand into new
business
verticals?" Will you require additional funds to achieve the desired
goals?
Dilution, page 59
6. Please expand the table on page 60 to disclose how the numbers and
percentages would
change assuming the exercise of all outstanding options and warrants.
Value of orders received, page 66
7. We note the disclosure that the value of orders received has increased
by seven times
over the period you mention. Please revise to clarify the amount of
sequential growth for
each quarter during that period.
8. Please revise to disclose the value of orders received from Ginkgo
Bioworks.
Number of customers, page 66
9. Please clarify what you mean by the terms "separate person or legal
entity" and "separate
legal entity," as disclosed here and on page 67, as those terms relate
to your customers.
For example, would purchases by two subsidiaries of the same parent
company qualify as
Emily M. Leproust, Ph.D.
Twist Bioscience Corporation
March 9, 2018
Page 3
purchases by two customers? If so, please revise to clarify how the data
you present
would change if such purchases were considered to be made by only one
customer.
Results of operations, page 69
10. Please revise to clarify and quantify the effect of changes in price,
volume and new
products on the results you disclose, and the reasons underlying those
changes, and how
the 2017 agreement with Ginkgo Bioworks impacted your results. Please
also revise to
quantify the changes in revenues of each of the products to which you
refer. In this
regard, please revise to disclose the information required by Regulation
S-K Item
101(c)(1)(i).
Research and development expenses, page 70
11. We note the quantitative disclosure regarding changes to the components
of research and
development expenses. Please revise to explain the reasons for those
changes. Please
also provide similar disclosure regarding the components of selling,
general and
administrative expenses.
Debt Financings, page 72
12. Please revise to clarify your ability to access amounts available under
the second and
third advances of your loan and security agreement, including any
material conditions
you have to satisfy.
Critical accounting policies and estimates
Stock-based compensation, page 77
13. Please revise your filing to explain in more detail the methodologies
and material
assumptions that your board of directors utilized in determining the
fair value of your
common stock underlying your equity instruments granted during the
periods presented.
14. Additionally, provide us with the share price of your common stock
determined by your
board of director's at the date of each option grant since January 1,
2017 and
progressively bridge for us the fair value per share determinations used
for each option
grant to the estimated IPO price per share. We will delay our assessment
of your
response pending inclusion of the estimated IPO price in the filing.
Overview, page 80
15. Please revise to clarify each party's obligations under Ginkgo Bioworks'
2017 agreement
with you. For example, clarify how the amount of base pairs is allocated
over each year
Emily M. Leproust, Ph.D.
Twist Bioscience Corporation
March 9, 2018
Page 4
of the three-year period and the purchase price. Also clarify any
material termination
rights held by each party.
Suppliers, page 101
16. Please revise to clarify the nature of your arrangements with the
suppliers of the two
critical components mentioned here. For example, do you obtain materials
on a purchase
order basis at a fixed price? Are you guaranteed a minimum amount each
year? What is
the duration of each agreement? Also, given your disclosure on page 25
regarding the
material risks related to these agreements, please file these agreements
as exhibits.
17. Please clarify what you mean by "substantial stockpile," as disclosed on
page 25. Also
revise to clarify the impact on you if you had to rely on alternative
suppliers. For
example, describe the duration and extent to which your manufacturing
process would be
interrupted, given your disclosure that such process was designed based
on the materials
provided by these suppliers.
Legal proceedings, page 104
18. Please revise to clarify the factual basis alleged to underlie the
proceeding referenced
here and the relief sought.
Principal stockholders, page 137
19. Please identify the natural persons who have or share voting and/or
dispositive powers
over the shares held by Tao Invest and Paladin Capital Group.
Directed shares, page 155
20. From your disclosure here, it appears that shares purchased by your
directors and officers
in the directed share program will be subject to a lock-up restriction,
but shares purchased
by "certain employees and other parties related to [you]" will not be
subject to that
restriction. If that is correct, please revise for clarity. Ensure your
revisions are
consistent with the disclosure on page 152 that "all of our
stockholders" have entered into
lock-up agreements.
Note 2. Summary of significant accounting policies
Accounts Receivable, page F-10
21. Please revise your filing to disclose the allowance for doubtful
accounts for each
reporting period presented as required by ASC 310-10-50-4.
Emily M. Leproust, Ph.D.
Twist Bioscience Corporation
March 9, 2018
Page 5
Revenue Recognition, page F-12
22. We note disclosure of the combination of technology related to the
manufacturing of
synthetic DNA with proprietary software to create an integrated
platform. Please
describe the promises to transfer goods or services in your customer
contracts and how
you considered those promises in determining your performance
obligations. Include
how you evaluate whether the technology and software represent separate
promises.
23. On page 66, you disclose the value of orders received. Please also
disclose the aggregate
amount of transaction price allocated to unsatisfied purchase orders.
Refer to ASC 606-
10-50-13.
24. We note from page F-14 that you receive payments from DARPA pursuant to
a research
and development agreement. Please tell us how you determined that the
agreement
should not be included within the scope of ASC 606.
Note 17. Geographic Information, page F-38
25. We note your disclosure on page 91 that you offer four different
products comprised of
synthetic genes, oligo pools, next generation sequencing tools and DNA
libraries. Please
tell us how you considered the product line disclosure required by ASC
280-10-50-40.
You may contact Tara Harkins at (202) 551-3639 or Kevin Kuhar,
Accounting Branch
Chief, at (202) 551-3662 if you have questions regarding comments on the
financial statements
and related matters. Please contact Geoff Kruczek at (202) 551-3641 or me at
(202) 551-3528
with any other questions.
Sincerely,
/s/ Amanda Ravitz
Amanda Ravitz
Assistant Director
Office of
Electronics and Machinery
cc: John V. Bautista, Esq.
Christopher J. Austin, Esq.
Peter M. Lamb, Esq.