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Ladies and gentlemen, thank you for standing by, and welcome to the Twist Bioscience Fiscal 2020 First Quarter Financial Results Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Jim Thorburn, Chief Financial Officer. Thank you, and please go ahead, sir.
All right. Thank you, Chris. Good afternoon, everyone, and thank you for joining us today for Twist Bioscience conference call to review our fiscal 2020 first quarter financial results and business progress. Please review our press releases we issued earlier today, which are available at our website, www.twistbioscience.com.
With me on today's call are Dr. Emily Leproust, CEO and Co-Founder of Twist; and also Mark Daniels, Chief Legal Officer of Twist. Emily will begin with a review of recent progress in Twist businesses and Mark is available for Q&A on our litigation.
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 1 week.
During today's presentation, we will make forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize and actual results in the financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements, except as required by law.
With that, I'll now turn the call over to our Chief Executive Officer and Co-Founder, Dr. Emily Leproust.
Thank you, Jim, and good afternoon, everyone. I'd like to begin our call with an update announced this afternoon that we have reached a settlement with Agilent in the litigation originally filed on February 3, 2016. Under the terms of the agreement, we obtained a full release of claims made against Twist Bioscience, myself, Siyuan Chen and Solange Glaize in exchange for onetime payment of $22.5 million. The settlement agreement contains no admission of liability or wrongdoing because there were none.
Agilent launched an all-out legal assault on Twist, and in the end, we not only survived but we thrived through the attack. We were prepared to take this case to trial. However, we have chosen to settle this litigation to remove the uncertainty and exceptional legal fees associated with the jury trial.
In addition, we believe it is in the best interest of all of our stakeholders that we eliminate this distraction and focus on our business at hand. With that, I'd like to turn to our financial results for the first quarter of fiscal 2020.
We are off to a solid start, with $17.2 million in revenues resulting from a larger number of orders shipping in the last days of the quarter. We reported impressive growth in synthetic biology and NGS revenues year-over-year. And looking forward, orders for both synbio and NGS look very strong at almost $25 million for the first quarter, which is a yearly run rate of $100 million. While we believe our order increase is due to exceptional products and commercial team, we still believe we had a bit of a bump due to the end of the calendar year from companies that need to spend their budget. We saw this in the first quarter of fiscal 2019, and we see it again in fiscal 2020. We also reported $700,000 in orders from biopharma. This is incredible growth. And we are very excited about the progress of this vertical market opportunity. I do want to caution that we expect biopharma revenues to be exceptionally lumpy moving forward and may not grow quarter-by-quarter. Our gross margin was positive $3.4 million at 20%, essentially flat sequentially.
As we have built up capacity for synbio and NGS, we continue to invest in new product launches to fuel additional revenue growth for both businesses. Moving to business segments. For synbio, we shipped about 80,000 genes in the first quarter, down a bit from the fourth quarter, primarily due to holiday timing.
During the first half of calendar 2020, we are bringing 2 new writers online, which will allow increased capacity. In addition, we're investing in additional resources at pinch point in our processes to continue to reduce our turnaround time.
An important note, while we have improved turnaround time significantly over the past 2 years, we continue to focus on improving this metric to stay competitive and win additional market share. Continuing our pursuit of the long tail, in the first quarter, in comparison to the same period last year, we received about double the number of purchase orders, which were smaller in size by about 30%, resulting in substantial revenue growth overall.
We remain on track to introduce product line extensions in mid-2020 that, we believe, will allow us to meet the need of large pharmaceutical companies that require larger quantities of DNA. In addition, to support growth in the long tail, we are on track to introduce in calendar 2020 our clonal-ready gene fragments. With these products, we will be expanding into 2 very important subsegment that we are not serving today. These are meant to pursue other markets in the near future. For genomics and targeted NGS, in the first quarter, we shipped our targeted enrichment products to 187 customers, with 37 of these customers now in production.
We continue to show good growth in this market and very strong orders of $11.8 million in the first quarter. We reported revenues of $7 million, which is an increase of 86% year-over-year. We are currently pursuing a large volume customers within liquid biopsy, cancer diagnostics and rare disease.
As we discussed [indiscernible] we are now going after the SNP microarray market, which has resulted in 2 substantive conversions to Twist's NGS. In addition, we're expanding our scope to include the retail market. We expect continued product launches to serve a growing number of applications in the NGS space. I'd like to take a few minutes to talk about the novel coronavirus. This is an emerging pathogen and proof again that nature is the greatest bioterrorist. As an emerging virus, that we have never seen an event before, there's a tremendous amount of research ongoing worldwide. Many customers have come to Twist as we work on products in key areas that enable rapid, efficient research into a potential pandemic, like the new coronavirus. We are supporting customers by making specific genes and gene mutants, by making custom NGS nourishment panels that monitor outbreak areas and by making antibody sequences that may work as a potential treatment for those infected. These areas exemplifying the reason Twist exists today. Our customers take advantage of our silicon platform, which quickly delivers genes, custom panels and antibody fragments. We do this in a safe and secure manner, leveraging our industry-leading biosecurity platform, protocols and procedures.
Importantly, we can support a large number of customers and do it at scale, not just for the coronavirus, but also for a wide range of diseases and conditions that need advanced diagnostics and personalized therapies. That makes us an important resource and partner, both as we face this emerging threat as a global committee and that we provide synthetic DNA-based product to improve health and sustainability. A couple of important points. We make all of our DNA in the United States. Because of this, our manufacturing continues 24/7 with no impact to turnaround time from the coronavirus. And in terms of biosecurity, we routinely screen every single genes, all gene fragment sequence that is ordered. And we screen every customers against government list and other criteria. We have put in place a very robust biosecurity protocol that flags any sequence that matches a known pathogen of concern. Because what we are doing for our customers around the coronavirus means providing a suite of products we offer regularly, we do not expect to see a significant dip in revenues from customers ordering the sequences. While we do not want to minimize the gravity of the situation, this is what we do each and every day and the others coming in fit within our regular outflow.
Turning to our vertical market opportunities. For biopharma, we have are generated data around our 7 GPCR targets and we are leveraging this data to validate our approach and book business, as evidenced by the $700,000 in biopharma orders this quarter. We reported data from TB01-3, a GPCR development candidate at an investor conference in January. TB01-3 is a potent GLP-1R antagonist that, in preclinical studies, has shown complete inhibition of GLP-1R at higher concentrations, and in vivo efficacy in a glucose tolerance mouse study. An antibody like this could have potential applications in rare disease indications such as severe hypoglycemia. In January, we announced the collaboration with Schrödinger, a company focused on transforming the way therapeutics are discovered with a physics-based computational platform. We are bringing our 2 companies' platforms together to recover new antibody therapeutics against GPCR targets and sharing any potential economics.
This is an excellent example of the way we may access complementary technologies to develop better therapeutics in a wide range of diseases. We expect continued collaboration opportunities across a wide range of solutions that we offer in biopharma, some of which we expect will generate modest revenue initially.
As we generate additional data and validation, we expect to move towards more robust contracts that include milestones and royalties. We do expect this to take some time, but we are encouraged by the progress we are seeing so far. Turning to data storage. In January, we announced that we were selected as the DNA synthesis provider for DNA data storage projects under the IARPA Molecular Information Storage or MIST program. We are collaborating with Georgia Tech Research Institute, or GTRI, Microsoft, the University of Washington and Roswell Biotechnologies to make long-term DNA that are storage accessible and commercially viable within the next 3 to 5 years. The total contract is worth $25 million with Twist receiving up to $9.15 million, with an additional $5.5 million of this contract that will go to GTRI would benefit the commercial development at Twist.
As start of the contract, we are designing a seamless chip to drive a novel DNA synthesis device array. GTRI will collaborate with Twist on the device design and we produce the prototypes. The subcontract to IARPA is an important step in securing financial backing for our data storage vertical and working with its collaborators will be integral for our efforts to build a commercial offering.
Finally, because the next phase of data storage is highly dependent upon chip design, manufacturing and refinement, we expect that the cadence of our updates on data storage will be less frequent as a standard chip design build cycle is 18 months. As we scale up in data storage [indiscernible] and a slow for all synbio and NGS businesses, we have made some organizational changes to facilitate future growth. Bill Banyai, one of our 3 cofounders will lead our DNA data storage efforts, as we develop a new silicon platform specific to this market. Bill's expertise in silicon is extensive, and we look forward to him leading this important vertical forward. At the same time, Patrick Weiss has become COO. He built our operations from the ground up, and he will take on additional responsibilities to build the infrastructure and processes to enable our rapid growth into the future.
At this time, I'd like to turn the call over to Jim to review our financial results for the quarter.
All right. Thank you, Emily. Litigation is settled. We're executing well, and we enjoyed a great quarter of sequential growth in orders and revenue. Let me touch on some of the quarterly highlights. Fiscal Q1 revenue was $17.2 million and exceeded our guidance. We billed $24.8 million in orders, which is a record for Twist. The quarter one book-to-bill ratio was approximately 1.4:1. Our Ginkgo business is doing well with $2.6 million in orders and revenue of $2.1 million. Synbio business, non-Ginkgo and NGS products are growing strongly, and we continue to build our customer base, and we shipped to approximately 1,000 customers this quarter. Biopharma orders is worth noting, as Emily highlighted, were approximately $700,000.
Looking at the details of orders for the first quarter fiscal 2020, $24.8 million in orders represents year-on-year growth of 63% and sequential growth of 24%. Synbio orders and our synbio products are defined as genes, libraries and oligo pools, were $12.3 million for the quarter, and that includes Ginkgo orders of $2.6 million. Although Ginkgo was down from $2.8 million in the fourth quarter, our Ginkgo business fluctuates based on their project activities and received orders of approximately $3.5 million in January.
Our genes business is doing very well, with orders of $9.5 million, and we're seeing strength in both EMEA and the U.S. markets, primarily from industrial biotech, academic and health segments. Our genomics products, which I'll refer to as NGS products, continue to perform very well. We booked approximately $11.8 million in orders for NGS products in quarter one, which is up sequentially from $8 million in quarter four. We received orders from 253 accounts in the quarter, and that's up from approximately 180 in quarter four, with bookings primarily from health care, which includes diagnostics, and academic institutions such as abroad. The pipeline for our larger NGS opportunities continues to scale. And we're now tracking 91 larger opportunities progressing through the pilot, validation and adoption phase with 37 customers adopting, and that's up from 36, and a total of 54 in the pilots and validation phases.
In terms of our progress with global expansion, approximately 40% of our bookings were outside Americas. EMEA delivered another strong quarter with $7.9 million in orders, including $4 million from NGS, with solid orders across industrial biotech, academic and health segments in Europe. APAC bookings were stronger in quarter one with $1.5 million, including bookings of $1 million from China. America orders for quarter one were $15.4 million of which $8 million was synbio, $6.7 million was NGS and thrilled to announce biopharma at $0.7 million.
Please note, we provide orders not to directly translate into revenue for the following quarter, but more to provide a trend line for each product group. Currently, both synbio and NGS are growing strongly, although we anticipate both NGS and Ginkgo to be lumpy and fluctuate from quarter to quarter.
Now moving from orders to revenue. Quarter one revenue was $17.2 million and as compared to our guidance of $15 million to $16.5 million. Our NGS product revenue was $7 million as compared to approximately $6.1 million in quarter four 2019, and $3.8 million in quarter one 2018. We continue to expand our customer base and shipped to almost 190 NGS customers during the quarter as compared to approximately 152 customers in the previous quarter. Synbio revenue was $10 million, with gene revenue of $7.8 million in the quarter, and that includes $2.1 million from Ginkgo. Our gene business does well -- is doing really well. And once again, we shipped approximately 80,000 genes in the quarter, with the longer genes over 1.8 kb, accounting for over 30% of our gene revenue in the quarter.
Now let me quickly cover our global expansion. In fiscal first quarter '20, we continue to expand our global presence and are growing strongly across all regions. The Americas first quarter revenue is approximately $10 million as compared to $8.6 million in Q1 fiscal '19. The Americas now accounts for approximately 60% of our revenue as compared to 75% in Q1 of fiscal '19. And that's due to strong growth in EMEA and APAC, and our investments in our commercial organization is paying off. EMEA revenue was $5.9 million for the quarter as compared to $2.4 million in Q1 fiscal '19. APAC revenue for the first quarter totaled $1.2 million and $0.4 million versus $0.4 million in Q1 fiscal '19. So strong -- really strong growth outside the U.S., both EMEA and APAC doing well. In terms of segment revenue this quarter, the largest segments are industrial chemicals, accounting for $6.1 million and health care $5.8 million. Year-over-year, the 2 largest growth segments, health care and academic was driven by NGS and synbio products. Now moving down the P&L.
Gross margin. As we highlighted in our last earnings call, our gross margin is going to be 20%, positive in the first quarter, and this includes about $0.4 million stock-based compensation for the quarter. Our operating expenses, excluding the cost of revenues and litigation settlement for the first quarter increased to approximately $36.7 million from $34.9 million in the fourth quarter. R&D was $10.3 million compared to $10.5 million. SG&A increased to $26.4 million in the first quarter compared to $24.4 million in the fourth quarter, reflecting additional commercial costs associated with our continued investment in our commercial organization and higher litigation fees.
During quarter one, we added 19 personnel to our commercial organization, and have now scaled the organization to 140. We now have approximately 70 full sales personnel with 33 supporting NGS. Our net loss, excluding the litigation settlement for quarter one, was $33.1 million, up from a loss of $31.2 million in the fourth quarter and compares to our loss guidance of $31 million to $32 million, and that delta is mainly due to higher litigation fees.
Our net loss for the first quarter, including litigation settlement, was $55.6 million. In summary, the year is off to a very good start with quarter revenue of $17.2 million and $24.8 million in orders, and it's exciting to see the progress we're making. It is early in the year, and we're maintaining our revenue guidance of $80 million to $84 million. Ginkgo revenue is estimated to be approximately $10 million; non-Ginkgo, synbio is estimated to be approximately $32 million to $33 million; NGS revenue is estimated to be $37 million to $40 million; and pharma, $1 million. Our net loss guidance for the year, excluding settlement expense is $107 million to $110 million, up from the previous guidance of $103 million to $106 million, and that's due to higher litigation expenses associated with defending and settling the case.
In addition, as you saw in our press release, we accrued additional $22.5 million for our settlement with Agilent. So total estimated loss guidance, including litigation settlement, is $129 million -- $129.5 million to $132.5 million. Finally, we closed the first quarter with $103.1 million cash and strengthened our balance sheet and cash position as we completed at the market offering at the end of January.
We issued approximately 2.24 million shares of common stock at an average price of $22.32 for a total of $48.2 million in net proceeds. This positioned us well to finalize our settlement with Agilent. And with that, I'll turn the call back to Emily.
Thank you, Jim. As we move into 2020, we continue to innovate, execute and respond to the market needs. For synbio, we expect continued revenue growth and diversification of customers. We expect to introduce new products in line to meet the needs of markets we do not currently serve today. And we will continue to enhance our e-commerce experience. For NGS, we will continue our efforts to move customers through the pipeline from pilot to adoption. In parallel, we will introduce new products designed to meet the needs of those developing liquid biopsies and cancer research tools as well as continued focus on converting organizations that currently use SNP microarray. For biopharma, we expect to leverage the data we have generated to date on our 7 functional antibodies against GPCR targets to sign revenue-generating contracts.
We announced our first collaboration in January, and remain on track to sign between 5 and 10 collaborations, some of which will include both milestones and royalties. And for data storage, we will continue to collaborate with our product team through the MIST program to create a fully integrated commercial offering in 3 to 5 years.
With that, let's open up the call for questions. Operator?
[Operator Instructions]. And our first question comes from the line of Luke Sergott with Evercore ISI.
Couple of congrats, I think, are needed. I guess, to talk about the litigation, kind of walk us through why the timing is now and then deciding because you -- for a while, you're talking about willing to go through the full 9 yards, understandable why not, just kind of how that shook out?
Thank you, Luke. I'll pass it to Mark Daniels, our Chief Legal Officer.
Thank you. Look, we were prepared to take this case all the way through the trial. But you have to understand almost all cases settle, 97% of cases that are brought settled. So it's not unusual that the case settled. It was the right thing to do for the company, and it was the right thing to do for our stakeholders. We look at this settlement as a victory for Twist. It eliminates uncertainty and legal expenses. There are no royalties associated with the settlement and the legal claims were resolved.
And I guess, back to the business on -- so when thinking about the margin dynamics, Jim, can you walk me through how that's going to shake out through the year? And also within -- and also the quarter, right? So you guys did really well. You placed a lot of -- or sold a lot of the long genes. The higher-margin business like NGS continue to ramp. But the margins came in a little light. Is that more from the capacity expansions and still not at utilization? Just kind of walk us through that.
Yes. So good point, Luke. When we set up the projections for this year, we were always ramping our gross margin and targeting to grow it as we scale our revenue from roughly 20% in the fourth quarter to exiting at roughly 40% -- 20% in the first quarter to roughly exiting at 40% in the fourth quarter. Yes, we're adding capacity, bringing some heads in slightly ahead of schedule in terms of preparing for the ramp-up in the next couple of quarters. I think in terms of the way we look at it, we're directionally heading towards the 40% gross margin as we scale our revenue. We're comfortable to forecast it $80 million to $84 million. We're comfortable with the average gross margin of about 32%. And I think it's really incredible progress the team has made to move into our 60,000 square foot facility here. And as Emily highlighted, we are commissioning 2 new synthesizers, which will give us capacity as we scale through the year. Before we get into the holidays there, we expected to -- some of our customers to actually be shut down all the Christmas holidays. We actually shipped more than we expected. And we've seen some spike demand, and that's put a little extra cost and ahead than we expected, but we're tracking to what our internal models are looking like.
And our next question comes from the line of Catherine Schulte with Baird.
Congrats on the quarter and the settlement. A few questions from me. I guess, first, for the new Schrödinger collaboration, what are the next steps, milestones that we should be expecting this coming year? And what's the time line to potentially reach proof-of-concept in preclinical development there?
Thank you. So we are not sharing details of the milestones. I think what -- in terms of news flow on the pharma side, I think we've signed up for 5 to 10 collaborations. And over time, what we expect to see is growing economics of deals, and then being able to command some milestones and royalty payments per contract. So I think those are the milestones to look forward to, number of contracts, size of economics and then milestones and royalties.
Okay. And I know it's early, but any qualitative comments on how the MGI collaboration is going so far? And perhaps just your outlook for NGS uptake in Asia more broadly?
So far it's going well. And as Jim mentioned, the bookings in China are growing. And we anticipate that a portion of the growth that will come in the future quarters will be catalyzed by the collaboration with MGI and the co-marketing agreement we have together.
Okay. And then last one, I'll hop back in the queue. But any preview of what we should expect to see from you at the AGBT Conference later this month?
So we are still the sponsor. And so I think the -- it used to be -- the first time we went to AGBT, it was Twist standing up saying that we had built a new product line that had substantial advantages in terms of the cost of sequencing the sample in terms of the speed at which we could make custom product and improvement in the workflow. So it used to be me and the Twisters spreading that story. And what happened last year at AGBT, actually our customers took the stage and validated what we had said. And so in a way it was our customers that were spreading the advantages that our platform brings. And so I think the preview for this year would be more of the same, of more customer testimonial, and not only in the markets we serve today, but in the markets that we want to expand into. We have a great franchise and we've been taking market share, but we are not yet serving all of the markets. And for instance, in the conversion of the SNP microarray towards NGS, we are still in early innings. And so we'd want to showcase how our products can be transformative into other application spaces as well.
And our last question comes from the line of Doug Schenkel with Cowen.
This is Subbu on for Doug. Congratulations. You continue to have an impressive number of customers in pilot and validating your NGS product. How big could this business get for you over the next 2 to 3 years? Could this reach like $100 million in revenue by 2022? And I have a follow-up.
Well, it's a good question. We're certainly doing well in NGS. I mean, the guidance we've given for this year is between 37 and 40. We are adding more NGS resources in the field to position for ramp up. We'll get a good, strong value proposition in the market place. And not giving guidance for the following year, but the market is growing 26%, 30% a year. And we're feeling good about the opportunities. BGI, PerkinElmer collaborations are going well. We're seeing good, strong positioning in Europe and good growth opportunities in Europe. So I'm personally excited about it. We've got 33 people in the field. Their quarter targets are roughly $2 million a head. And our goal here is to accelerate in that market opportunity and optimistic about the future, but I'm not going to give guidance for -- over the next couple of years.
Got it. That's helpful. And then some really nice momentum in pharma with $700,000 in orders. What does this translate into revenue, and what have you baked into guidance?
So we expect all of the orders to transform into revenue over the next few quarters. We've guided revenue for the year of $1 million to $2 million for pharma. And so it's a great start that, in first quarter, we've already booked a substantial portion of that guidance.
And this concludes today's question-and-answer session. I would now like to turn the call back Emily Leproust, CEO and Co-Founder of Twist for any closing remarks.
Thank you, Chris. Thank you, everybody, for joining us today. It's been a very eventful and positive day for Twist, and we look forward to building on our momentum to drive future growth and business success. Have a great day.
Ladies and gentlemen, today's conference concludes today. Thank you for participating. You may now disconnect.