Twist Bioscience Corp (TWST) 2020 Q2 法說會逐字稿

Welcome to Twist Bioscience Fiscal 2020 Second Quarter Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

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

All right. Thank you. Good afternoon, everyone. First and foremost, we hope each of you is safe and healthy, wherever you are during this time. I'd like to thank all of you for joining us today for Twist Bioscience Conference Call to review our fiscal 2020 second quarter financial results and business progress. We did issue our financial results earlier today, 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 recent progress in Twist's businesses, and I will report on our financial and operational performance. Then Emily will discuss our upcoming milestones and direction. We will then open the call up for questions. And 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, our 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 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 cannot, at this time, predict the full extent of the impact of the COVID-19 pandemic, and any results, the business or economic impact. 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 add my wishes that we find you safe and healthy at this time. The global pandemic has changed our life substantially since our last call in February. And at Twist, even before the state of California called for a shelter-in-place, we quickly transitioned a majority of our employees to working from home. We wanted to ensure that our production workers, who do not have the option of working from home, stayed safe and healthy, that way we'll be able to continue to deliver our products to customers, collecting important research.

Despite the challenges caused by COVID-19, we reported record revenues of $19.3 million for the second quarter of fiscal 2020, resulting from strong NGS sales, significant revenue from Ginkgo, initial revenue from biopharma collaboration as well as the addition of 2 new COVID-19 products. Orders for the current quarter came in strong, approximately on par with the previous quarter at $24.6 million and resulting in a booking rate of about $50 million for the first 6 months of fiscal 2020.

For the first time, we reported gross margins of approximately 30%, confirming that as we scale our products and revenue, building on our established infrastructure, we're able to increase our margin. Turning to specific results for Synbio. We shipped more than 88,000 genes during the second quarter. Also, we added 2 new writers to [motor] our capacity and continue reducing our turnaround time. Our Synbio revenue includes genes and primers for customers who are developing vaccines and therapeutics against COVID-19, so we cannot accurately break that revenue out specifically at this time. We reported a total of $11 million in Synbio revenues, $4 million of that from Ginkgo, which has made a substantial commitment in the fight against COVID-19 and is fairly facilitating substantive research. This is a very strong quarter for Synbio, but we do see the shelter-in-place order impacting our academic customers substantially. We have launched a e-campaign where our customers can order DNA now, as they are able to conduct the design portion of the design-build-test cycle from home. And when their lab reopen, we will ship the products to them immediately.

Balancing out the reduction in academic revenue, we see an escalation in orders from biotechnology and pharmaceutical companies ramping up their efforts to fight COVID-19, through vaccine and therapeutic development. And overall, Synbio orders remain strong at $14.4 million as those larger customers remain open for essential research. While we are optimistic about the future, we are closely monitoring the situation as well as across our customer base and in all regions so that we're in the best position to react to any change in market condition.

Importantly, on schedule and as planned, which was much more challenging during the pandemic, in mid-April, we launched a new product to bring larger mass of DNA to customers who need those options. This product an extended -- an expanded offering of our Twist clonal genes, is the preferred format for pharma and biotech company, and therefore expands our serviceable market. This extension of our clonal genes offering enables Twist to become more of a one-stop shop for pharmaceuticals and biotechnology research companies.

In addition, we are looking at different market opportunities to pursue DNA makers and simple growth in the long tail of the market, such as customers that needs a few genes at a time rather than massive order. And we remain on track to launch our clonal ready gene fragment in the second half of calendar 2020. Both the new preparation and the clonal ready gene fragment target 2 very different and important sub segment that we do not serve well today. And we believe that over time, they will represent substantive areas of growth for our Synbio segment.

For Genomics and targeted NGS, at the end of the second quarter, we introduced 2 new products to facilitate COVID-19 testing and monitoring of viral evolution. We introduced SARS-CoV-2 synthetic RNA reference sequences, which can be used as positive controls for development, validation and verification of diagnostic assets as well as in routine testing. These reference sequences are also posted on the FDA's website within their reference materials for SARS-CoV-2. We also launched a target enrichment panel for viral detection and characterization of samples for SARS-CoV-2, which can be used for environmental monitoring and surveillance testing, while providing insight into full sequence information to track viral evolution and strain origin. These new product offerings are perfect illustration of what Twist does well. We are presented with a new challenge like this global pandemic, and we look at how our core strengths can address this problem.

We were able to launch this product in just a few weeks, serving our existing customer needs and accommodating the emerging global concern. These products were only available for 2 weeks at the end of the quarter. And in that time, we recorded approximately $400,000 in revenue, and we shipped to 231 customers. We are grateful to be in a position where we are able to help in the global effort to combat this virus while the business remains healthy. This is a tremendous testament to the hard work and dedication of our employees across the organization.

For overall NGS products, we reported revenues of $7.7 million, an increase of 38% year-over-year, as well as strong orders of $9.8 million. And we had another 6 customers adopt our products this quarter for a total of 43. During the quarter, 1 of our customers published results of their liquid biopsy product, which includes our customized target enrichment panel. The data demonstrated that their technology is able to detect more than 50 types of cancers across all stages, with a false positive rate of less than 1% through a single blood draw. This data from more than 15,000 participants are extremely impressive and the most robust asset on liquid biopsy to-date. As we all know, the ability to identify cancer early remains critical to effective treatment. We are thrilled to play a role in this potential pivotal shift in cancer diagnosis.

More broadly, to address the large liquid biopsy market, we introduced a Targeted Methylation Sequencing solution during the 2020 AGBT in February. This product is ideal for customer focused on liquid biopsy as it can be used to study methylation pattern changes in a wide range of research fields. For those of you not familiar with methylation, the addition and subtraction of the methyl group changes which proteins are made in the cells, which, in turn, has deep implication for cancer, epigenetics and noninvasive clinical testing. We are working with initial customers and believe it should represent an important area of growth for NGS solutions.

Turning to our vertical market opportunities. In addition to our collaboration to supply sensitive genes and antibodies for Vanderbilt, Twist Biopharma is working with them to provide custom antibody drug discovery libraries and is creating these libraries for potential antibody therapeutics that will treat patients with COVID-19.

And in March, as the global pandemic was gaining traction rapidly, we leveraged our robust laboratory synthetic antibody discovery libraries, each containing more than 10 billion antibody sequences to identify antibody candidates for the treatment of SARS-CoV-2. We have identified key competitive antibodies with potent binding to the receptor binding domain of the ACE1 protein on the SARS-CoV-2 virus. In addition, we have identified a series of antibodies that bind to the extracellular domain of ACE2 in human cell. As a reminder, ACE2 is a receptor that SARS-CoV-2 binds to in order to enter and corrupt human cells. The final who ever to go from publicly available reference sequences to competitive antibodies for 2 different targets in a matter of 6 weeks, demonstrate the power of our biopharma platform and something that we believe we can repeat for other targets, even ones which are hard to develop.

Apart from our biopharma work against COVID-19, we continue our discussions with a large number of potential partners. I am very pleased to report that we have signed 1 partnership with an undisclosed party which includes milestones and royalties and look forward to announcing additional deals. As a result, we reported $600,000 in revenue for our biopharma division this quarter. And while we expect the order and revenues to be lumpy, we look forward to seeing that number increase as we continue to derive value from this growing market opportunity despite near-term uncertainty posed by the COVID-19 pandemic. As we generate additional data and validation for our internally generated target, we expect to move along the spectrum towards being a value-added pharma partner rather than just a reagent provider. We do expect this to take time, but we are encouraged by the progress we are seeing today.

As we shared last quarter, we will not give an update on data storage, due to the length of time it takes for the silicon design-build-test cycle. However, we can share that we have added an additional [point of view] to drive this important product for all. We're extremely fortunate at Twist that we've attracted and retained dedicated and resilient employees who are inspired by our mission to improve health and sustainability. We have been put to the test in the last 3 months, and the challenge continues. I am pleased to lead a company that is rising to address the global pandemic and also serve our customers working in many other important areas of research.

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. Our results for quarter 2 were strong and proved out our business model in an extremely challenging environment. Our revenue was $19.3 million, and that's 42% growth year-over-year, and 12% sequential growth from the $17.2 million in the previous quarter. Our gross margin for the quarter was 29.7% as compared to approximately 13% in the same quarter last year, and up from 20% in quarter 1. This reflects the benefit of scaling our revenue and leveraging our fixed costs.

Before I cover the detailed financials, we would like to thank all of our investors for their continued support in the last quarter as we continue to strengthen our balance sheet with approximately $190 million in a follow-on offering plus our at-the-market offering. In addition, we'd like to thank our customers, suppliers and their incredible Twisters for their loyalty, dedication and commitment during these challenging times. Our operations, R&D, logistics and supply chain teams have been adjusting to this challenging environment while launching new products aimed at combating the virus.

The commercial team executed well and we booked $24.6 million in orders in the quarter, which includes approximately $10 million of orders in March, a very challenging month as many of the geographies implemented shelter-in-place. Our Ginkgo business is going well with $4 million of revenue in the quarter, and we continue to build our broader customer base, and we built to approximately 1,160 customers during the quarter and 1,440 year-to-date. Our COVID products launched in the middle of March are doing well. In fact, they contributed approximately $400,000 in revenue. And our biopharma antibody products continue to gain traction with orders of approximately $700,000 and revenue of $600,000.

Now I'll give you some more detail on our orders in the quarter. Just breaking down our orders, the $24.6 million, for the year, we've now booked almost $50 million, actually $49.4 million, and that's approximately 55% year-over-year growth over the first 6 months of 2019. Our Synbio orders, which are defined as genes, libraries, oligo pools in quarter 2, were $14.1 million, and this includes Ginkgo orders of $3 million. Our genes business is doing extremely well, with orders of $11.3 million in the quarter and year-to-date orders of almost $21 million, actually $20.8 million, which is 42% year-over-year growth primarily from EMEA and the U.S. markets.

NGS orders, or genomics products, which I'll refer to as our NGS products, continue to perform well. We booked approximately $9.8 million in orders in the quarter, which brings year-to-date orders to $21.6 million for NGS. Although Q2 was lower than Q1, and we anticipate fluctuations quarter-to-quarter. We received orders from 357 accounts in the quarter, and that's up from approximately 250 in quarter 1. Even in these uncertain times, the pipeline for our largest NGS opportunities continues to scale, and we're now tracking 113 customers progressing through the pilot, validation and adoption phases with 43 adopting, up from 37, and a total of 17 pilot and validation. We're very encouraged by what we're seeing in these uncertain challenging times. Our biopharma antibody discovery products are also scaling, and we continue to build the pipeline with bookings of approximately $700,000.

In terms of our progress with a global expansion, EMEA is doing well with bookings of almost $9 million. And that includes approximately $4.4 million from NGS, with solid orders across industrial biotech, academic and pharma segments in EMEA. In fact, we've almost got about 600 customers in EMEA now. APAC bookings were $1 million. And as we expected to be impacted by COVID, we saw a weak January, weak February and a very strong recovery in March. Americas orders for quarter 2 were approximately $15 million, of which $9 million was Synbio, and $5 million was NGS and biopharma was about $700,000. 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.

Additionally, in an uncertain business and economic environment like the one we are in today, it is possible that these orders will not convert into revenue. While we feel our orders are firm, we're closely monitoring the situation to ensure we're poised to react to any changing market conditions.

Now let me cover revenue. NGS product revenue for the quarter was $7.7 million. That's a 10% sequential growth and year-over-year growth of approximately 38%. This brings our year-to-date NGS revenue to $14.7 million, which is a 57% growth in last year. As noted, we continue to expand our customer base and shipped to approximately 340 customers versus 119 in the previous quarter. Our Synbio product revenue was $11 million, up from approximately $10 million in the first quarter. And for the first 6 months of our fiscal 2020, Synbio revenue grew to $21 million compared to $15.7 million in the same period of fiscal 2019, which is about 33% year-over-year growth.

Our genes business continues to do very well with quarter revenue of $9.1 million. This is 50% growth year-over-year and 16% sequential growth. Although March was challenging for us all, we shipped 32,000 genes in the month, and for the quarter, we shipped 88,000 genes, up from 80,000 in the previous quarter. And it's worth noting that longer genes accounted for approximately 50% of our revenue -- gene revenue in the quarter. Our biopharma antibody product revenue was $600,000 for the quarter, and we continue to make progress in building the pipeline.

I'll quickly touch on the geographies. EMEA revenue of $6 million, and that brings EMEA revenue for the first half to $12 million compared to just under $6 million in the same period last year. APAC revenue for the quarter -- second quarter declined as expected to 0.9 and that's compared to -- $0.9 million, and that's compared to $1.2 million in the first quarter. It's worth noting that APAC revenue for the first half of this year is double what it was last year, i.e., $2.2 million for the first half of 2019 -- 2020 versus $1.1 million for the first half of 2019. In terms of segment revenue, our largest segments were industrial chemicals, $7.5 million, followed by health care at $5.8 million and academic at $5.5 million.

Now moving down the P&L, gross margins continue to grow as we scale their business. And very excited to announce that we actually hit the 29.7% or nearly 30% gross margin in quarter 2. And that includes about $300,000 stock-based comp for the quarter and approximately $100,000 in shelter-in-place compensation for our operations employees. Our operating expense, excluding the cost of revenue for the second quarter, increased to approximately $37.8 million compared to $36.9 million in the first quarter. R&D was $10.6 million compared to $10.3 million in the first quarter. SG&A increased to $27.2 million in the second quarter, reflecting additional commercial costs, mainly marketing and stock-based comp of $600,000. Our net loss for the second quarter was $31.8 million.

In summary, the quarter ended with $230 million in cash. We've proven out our business model, strong revenue growth, gross margin nearly 30%, and we're focused on growing aggressively. However, due to the evolving environment, we believe it is prudent to withdraw our fiscal 2020 financial guidance.

And with that, I will now turn the call back over to Emily.

Thank you, Jim. As Jim said, we had a strong first half. And now we are monitoring business conditions and the impact of COVID-19 on our customers. While COVID-19 has impacted in our business, it has never been a bust nor boon to operations. We see a positive impact of COVID-19 in the resilience of our employees, and our new and innovative products to meet market needs. Overall, orders remain strong, our team continues to innovate in a challenging environment, and we continue to execute our business plan.

Looking ahead for Synbio, we expect continued revenue growth and diversification of customers. We expect to expand our offering for both pharmaceutical companies and for the long tail of the market. For NGS, we expect to build our customer base by offering new products that expand our infectious disease offering over time. We remain focused on pursuing new market opportunities, including liquid biopsy and converting organizations currently using SNP [microarray].

For biopharma, we expect to continue to advance our internally generated competitive antibody candidates, and sign additional revenue-generating partnerships. We remain on track to sign between 5 and 10 collaborations, some of which will include both milestones and royalties. With that, let's open the call for questions. Operator?

(Operator Instructions) And our first question will come from the line of Doug Schenkel from Cowen.

This is Subbu on for Doug. It seems like things have held up for you pretty well, all things considered. And fair to assume that customer activity was most resilient amongst traditional clinical activities and in COVID-related application, maybe less so in Synbio customers? How has this evolved over the past few weeks? And was there any stocking behavior late in Q2?

Jimmy, you want to take this question?

Yes. Obviously, I can't comment on what's happened in April. All I can say is that over the last quarter, we're actually very surprised. I mean our bookings were very strong as we exited March. We had large, large orders from some of the diagnostic companies, and we're shipping to them. The -- overall, in Asia, we saw a bounce back in China. Right now, I mean, our view is, although the business is very strong, there's a lot of uncertainty about how customers are going to ramp in the next 6 to 8 weeks as they start to come back to work. But I would say a lot of the large pharma companies are still working. I mean if you take a look at Twist, we implemented shelter-in-place policies. The operation staff are working, R&D staff are working. We're receiving sequences from our customers.

We thought it was prudent to pull the guidance. At the same time, the business has been very strong, performing really well, which always goes back to our platform, strength in our platform, that we're able to scale the business, to be able to innovate and launch COVID products. So we're seeing a lot of demand for the COVID products. We saw a revenue of about $400,000, and we launched those products in the middle of March. So overall, we're very encouraged by the business and the opportunity.

So along those lines, are you a key supplier of primers, probes for any big COVID diagnostic companies? And assuming that's the case, how much of a tailwind would that be in this quarter?

So if you're asking about a primer for the RT-PCR test, we are not. However, we are supplying our synthetic RNA control for a number of people that are developing those RT-PCR test and for the users that are running RT-PCR test in routine mode. And that's a very innovative product that we launched, like Jim said, in the second half of March, with only a few weeks, but it came at the right moment. We're -- I think we're the only companies that sell the full synthetic RNA control. And so therefore, we are participating with RT-PCR test. There are some people that are using sequencing, NGS sequencing. In order not only to get a yes/no answer, but to actually sequence a full viral genome and understand how the virus is evolving. We are selling a kit to do that. And so some people are using our kit for NGS at this time.

I think the NGS portion is not as prevalent as on RT-PCR, mostly because NGS takes a bit more time. But I think over time, there will be a need to track how the virus is evolving from month-to-month from regions to regions, because the various evolution may inform the types of vaccines that will work, the types of antibodies that will work, the types of primers that are needed for RT-PCR test. It may even inform how fast people can get out of shelter-in-place and/or if people have to go back in.

Got it. That's helpful. And it is pretty commendable that you have successfully launched a number of COVID-related products and you're helping the wider community, and I fully appreciate that. My next question was on gross margin. They were great this quarter. Any one-time dynamics that we should be mindful of? And how should we think about sustainability? Considering there was some fixed cost leverage and probably the volumes might go down. So any color you provide would be helpful. And I have 1 follow-up, and that's the last 1, I promise.

Obviously, we can't comment on the future. All I can say is we've -- over the last 1.5 years, we've talked about the leverage in our business model. And it's really, really satisfying to see in this last quarter that on $19.3 million revenue, our gross margin is approximately 30%, which is consistent with our long-term discussions on where the business is going, i.e., the higher the revenue, we're going to leverage our fixed costs. We brought 2 new synthesizers on in the quarter that allowed us to really scale the business. And we delivered 32,000 genes in the last month, and we're going to bring another 2 synthesizers on in -- for the next 4, 5 months.

I mean our goal is to position ourselves to be very strong for next year. And I think if we go back to the model, $19.3 million revenue, 30% gross margin. I mean that's almost 100% fall-through in terms of revenue from the previous quarter. There wasn't a huge mix change, NGS business and the gene margins came in as we expected, and it's good to deliver the 30% gross margin.

Got it. A patent was issued as recent as, I think, day before yesterday related to the genome synthesized gene libraries. Any color you could provide on the issued claim? And more specifically, if this patent in itself provides any material competitive moat?

Yes. I mean we continue to invest in our patent portfolio. We strongly believe in patent as 1 of the moats that we have. Our software that enables to get some synthesis, our innovation spirit, also other moats so that if you want to compete with Twist because we are moving you don't want to compete where we are today, but you'll have to compete where we are going to be in 3 years. And so that -- this particular patent is quite broad, and it's 1 more in our protection. And I think there was more than 1 coming out this year. I thought there was 4 coming out yesterday.

Yes. I mean we have 180 patents pending so we've been -- the team's been very, very innovative, and we've been very focused on building the patent portfolio to protect our position. And we got a lot of innovative engineers and we're going to keep building our patent portfolio.

And our next question will come from the line of Luke Sergott from Evercore ISI.

Start off on the biopharma customer that you guys signed with the $600 million -- or $600,000 in revenues. How much of the $600,000 was from that new sign? Or was this -- part of it come from the existing biopharma customers?

It comes from the existing biopharma customers. We have had about -- I think it was 4 -- roughly about 4, 5 that we had recognized revenue on this last quarter. We keep building the portfolio; obviously don't release names, but we get some exciting opportunities in the pipeline.

Yes. That's helpful. I'll come back to that one. I just want to get into the COVID antibodies before it slips my mind. The -- so the 2 antibodies that you talked about yesterday and everybody got up, really excited about it. And either used for diagnostic use or in an antigen testing mode or used for maybe even a therapeutic. Can you give us an update on where you are in the development stage? What kind of partners -- are you looking for partners? And how far along is that project? And when can we expect some type of benefit?

Thank you, Luke, for the question. We are quite excited about the development. And so we actually started late. We started end of March into the foray against COVID-19, when we thought it was becoming a big issue for the country. As you know, we have libraries that are human derived and that are fully human. And what that means is that, coupled with our high throughput synthesis and high throughput screening abilities, in just 6 weeks, we were able to find very strong binders, nanomolar/picomolar range against 2 targets. One is the ACE1 protein of the coronavirus itself as well as antibodies against the human receptor ACE2. And so it kind of shows the platform that what we can do is very quickly discover a strong binder. And again, because it's human derived and fully human, those should behave well in the clinic.

And so now we are at a point where we have leads. And I should say that it's -- we have dozens of leads in each category, it's not just 1 antibody of each, we have many antibodies. And so we are open for business, either for people that want to license it and move it on their own or partner with us. The -- and in the area of either research or diagnostics or therapeutics, and we're in discussion with a number of groups. And then ourselves, will also do a bit more characterization. For instance, we don't yet have a -- the results of a virus neutralization assay. We know it binds well, we know it completes with its natural ligand, but we don't have yet the various neutralization data, which we'll seek. So achieving that in 6 weeks is just great.

I should say -- I should add that the coronavirus is not particularly a hard-to-drug target. And so our platform is especially strong for hard drug, where we have a huge advantage over others. In a case like this where other platform can also discover antibody, our advantage are twofold. One is that it's very quick, so are faster, we think, than others. And then second is, again, it's a human derived and fully human sequences that comes out of the pipeline. Does that answer your question?

Yes, it does. It's helpful. And I guess we can look for the neutralization data coming out in the next couple of weeks, just to keep you guys moving forward?

Yes. I think it's more -- in the June time frame.

Okay. That's helpful. And then -- so I mean, on the -- turning to the NGS side, you guys added 6 more customers in production. And can you give us a sense of the applications here, any of the regions change? And then I guess another offshoot of that would be with BGI. And can you give us a sense of how the orders and the revenue trended from BGI as corona shut down and through China, and then it came back online? Just to give us a sense of how we could think about how it could return here.

I can't talk specifically about BGI. I can share with you what happened in overall Asia, particularly China. Other order patterns are very weak -- our orders were very weak in January and February; we saw great bounce back in March. And overall, in terms of, yes, we expanded the pipeline. We saw a number of additional customers coming from Asia, actually. And we saw a number of additional customers coming from the U.S. In fact, it was across all regions, but I'd say it's mostly biased towards Asia. We've got some very interesting developments here in the U.S. I can't go into. But what's very encouraging is the pipeline continues to build, we're adding more adopted. And of those that have adopted, the revenue in the first half for the customer adopted was roughly about $8 million. So we're tracking in terms of the growth. And obviously, as we scale the revenue with NGS as well, you see our gross margin came to approximately 30% in the quarter.

And our next question will come from the line of Tycho Peterson from JPMorgan.

This is Eleni on for Tycho. So firstly, in light of the pandemic and just thinking about the possible impact to conversion of your order book or backlog, wondering if you could talk a little about how the backlog looks today, the current mix? And which pieces may be quicker to burn and which may lag?

First of all, thanks for the question. Yes, the backlog, we come into this quarter with a strong backlog, which is extremely encouraging for us. We're seeing -- in terms of the business, we're seeing strong demand from larger customers. So pharma, large diagnostic on our NGS. And where we're seeing weakness tends to be academic and some of the smaller customers. Although the volume of orders has been down in the smaller customers, that's been sort of offset by strong, broad demand from the larger customers. And obviously, I mean, we're going to continue to evaluate this over the next 6, 12, 15 weeks because it's very difficult to predict how other -- how customers are going to reengage in terms of production. We go through the design-test-build cycle. So even though a lot of the designers, a lot of our customers' R&D teams are at home, they are actually still designing and sending in sequences.

And by the end of last quarter, we did have some customers who we actually put us on hold because they'd shut down their operations. And that was about $400,000 or $500,000, if I recall, in terms of product was still shipping in our -- sitting on our shelves at the end of the quarter. So we're very encouraged because, well, we had a lot of customers, a lot of large customers that placed orders in March time period. Very strong backlog coming into this quarter. However, we're really uncertain about how the -- they're going to ramp back up in terms of production over the next 3, 4 months.

That's helpful. And then just getting into some of the trends from the academic end market. Just wondering sort of -- you've already given some color, but what you've seen so far? And if you can talk about April? And can you also remind us of your exposure to academic customers?

Yes, academic customers is about 25% of our revenue. I can't share what's going on in April. I can only say again that the end of March is very, very strong. We're encouraged with what we've seen. I think in terms of academic, it's really broad. Some may describe -- I mean, Emily, maybe you can jump in here, but we would class binder growth as part of that. And we've seen ourselves in terms of -- you've seen the public release on Vanderbilt. We've got a lot of interesting programs in the pipeline, particularly on the COVID side.

What I can add is, I think, like Jim really said it perfectly, which is in academic, you may have big projects, and those big projects by and large seems to be going forward. And then we also have a lot of very small orders. And those are affected significantly, but they are a small fraction of our revenue base. So the number for those may be down, but the dollar from all those is not as affected because we -- at the end of the day, we don't have a lot of exposure from those -- from the long tail yet. And the long tail is what we want to get to in the future because it's a big number. But because we have not yet done a lot of penetration in the long tail, we are somewhat less exposed. And what we saw this quarter is the launch of our positive control and COVID products, it somewhat balanced the outcome.

Yes. Can I just add a couple? Can I add a couple of comments? I mean what was interesting for us is we quickly adopted shelter-in-place. We have a tremendous team in operations, supply and logistics and R&D. And what we did at the end of last quarter was we actually tracked our shipments from the 15th of March to the end of the quarter because what we were concerned about was disruption in supply chain. And we made sure that all our shipments got to the customers' destination. And we're very vigorously looking at making sure we continue to monitor our supply chain. We did increase our inventory at the end of the quarter. We do have a lot of raw materials in place, we've built that over time strategically. So -- and combined with the great work our logistics and operations team done, we managed to deliver all the products to the customers they wanted in time. So we're -- from an operational point of view and a market point of view, we're feeling that we're in a strong position.

That's helpful. And then lastly, just going back to the COVID antibodies, just wondering if you could help us frame the diagnostic and therapeutic opportunity here. Could you be partnering with several different bodies? Or how should we be thinking about the potential opportunity?

Yes. So we have multiple antibodies with strong binding affinity, strong competitive affinity against the natural ligand. So we have multiple shots on goal. I think we -- those -- we look for partnerships that could or could not be exclusive. And yes, we will see if we ultimately end up into something that goes broadly from a diagnostic or therapeutic point of view. However, if eventually does not, the fact that we are able to generate such great antibodies so quickly is data that we add to our data package. And that data package is what we need to generate more business in general. And so at the minimum, we -- we're getting fantastic data that we can leverage for our marketing purposes. And in addition, we have multiple shots on goal to participate in a diagnostic or therapeutic application and could potentially participate in the upside.

And 1 last one. Here, I see that you're planning to scale up those compounds for in vitro functional testing. Just wondering how your supply chain looks like? And if you've seen any disruption this quarter?

Do you mean for the biopharma antibodies?

Yes.

No, I think like Jim said, we -- we're one of -- we were early in sheltering in place. We actually moved to working from home before there was a mandate from California. And so we anticipated that there could be disruption and our supply chain team has been really proactive in making sure that we had all the supplies that we need, so at this point we are not seeing any issue in supply chain. Either for the biopharma or actually the business broadly.

And our next question will come from the line of Catherine Schulte from Baird.

This is actually [Tom] on for Catherine. A fair amount of my questions have been covered already. I just want to cover a few more things. One, just want to confirm I heard you correctly, still expecting 5 to 10 pharma collaborations by the end of the fiscal year. I think you had mentioned that earlier in the call?

Yes, that's right. And we're really excited that this quarter, we reported our first royalty and milestone bearing contract. It's with an unnamed party at this time. But over time, there probably will be a public release of who they are, when that partner is ready. So now we have proof-point that we can get milestones and royalty based on the data package that we've had so far. As I mentioned, data package is only enhanced by our work on COVID-19. And so we may get more partnerships around COVID-19, but even outside of the COVID-19 fight, we are still on track for 5 to 10 contract and partnership this year. Again, some of them -- some more of them will have milestones or royalty in addition to the 1 we already disclosed.

Great. That's great color. And then on some of the COVID work you had done around vaccines and therapeutics, kind of pre the antibody announcement, things like Inovio or Vanderbilt, I was just kind of curious if you could speak to some of the structure on these partnerships. Anything around time frames or monetization? Just wanted to get your sense or get a sense of how set in stone these things are.

So when we started Twist, initially, we were only a vendor, where -- it's a great business. Someone comes to us, they have a sequence, we make it. We give the DNA to them and we get paid. And that's where our Synbio and NGS market or business started. And so there is a number of customers that are now in the fight against COVID-19 that needs access to DNA. So you mentioned Vanderbilt, COVID, Ginkgo is another 1 that's public, and there are others. And they come to us, they purchase, and we're a vendor to them.

In addition, we have opportunities to do some of the work. And that's what our pharma team has done. And when we do some of the work, at that point, we're able to discover antibodies that then we can attempt to monetize for a higher economic return. Some of those are done on our own, some of those are done in partnership with Vanderbilt. And so if we do some work, we have an opportunity to get potential enhanced monetization. And if we are "a vendor", that's the nature of the business model where it's an exchange of payment for a reagent. And so now that we are -- that we have a pharma business on top of our core business, we have the ability to participate in some upside potential, which we did not have earlier in the development of Twist as a company.

(Operator Instructions) And I'm not showing any questions at this time.

Thank you, Victor, and thank you all for joining us today. As you heard from our remarks and from the Q&A, Twist had a very strong first half. We are open for business, and we continue to innovate and execute. This last quarter has provided all of the Twisters with an important opportunity to do well by doing good. And we remain committed to continuing to doing so moving forward, no matter the uncertainty or challenges placed in our path. We wish you all well and hope you remain safe and healthy in the days and months ahead. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.