Commitments and contingencies

9 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Legal proceedings

The Company may be subject to litigation, claims and disputes in the ordinary course of business. There is an inherent risk in any litigation or dispute and no assurance can be given as to the outcome of any claims.

Securities Class Action

On December 12, 2022, a putative securities class action lawsuit captioned Peters v. Twist Bioscience Corporation, et al., Case No. 22-cv-08168 (N.D. Cal.) (“Securities Class Action”) was filed in federal court in the Northern District of California (“Court”) against the Company, its Chief Executive Officer, and its Chief Financial Officer (the “Defendants”) alleging violations of federal securities laws. The Securities Class Action’s claims are based in large part on allegations made in a report issued on November 15, 2022 by Scorpion Capital (“Scorpion Report”) concerning, among other things, the Company’s DNA chip technology and accounting practices. The initial complaint filed in the Securities Class Action alleges that various statements that the defendants made between December 13, 2019 and November 14, 2022 were materially false and misleading in light of the allegations in the Scorpion Report. The plaintiff who initiated the lawsuit sought to represent a class of shareholders who acquired shares of the Company’s common stock between December 13, 2019 and November 14, 2022 and sought damages as well as certain other costs. On July 28, 2023, the Court appointed a new plaintiff, not the original plaintiff who filed the case, as lead plaintiff in the case and appointed a new law firm as lead counsel. On October 11, 2023, the lead plaintiff filed an amended complaint. The amended complaint is purportedly brought on behalf of all persons other than the Defendants who acquired the Company’s securities between December 20, 2018 and November 15, 2022. The amended complaint alleges that certain statements regarding, among other things, the Company’s DNA products and accounting practices were false and misleading.

This case remains in the preliminary stage. Given the inherent uncertainty of litigation and the legal standards that must be met, including class certification and success on the merits, the Company cannot express an opinion on the likelihood of an unfavorable outcome or on the amount or range of any potential loss. The Company and the other defendants intend to vigorously defend themselves against the claims asserted against them and filed a motion to dismiss the amended complaint on December 6, 2023, which the Court has taken under submission.

Derivative Action

On September 25, 2023, a shareholder derivative suit captioned Shumacher vs. Leproust et al., No. 1:23-cv-01048-UNA, was filed in the United States District Court for the District of Delaware against directors of the Company and an employee (the “Derivative Action”). The suit is based on substantially the same allegations in the Securities Class Action and seeks to recover, on behalf of the Company, damages to the Company arising from, among other things, the Securities Class Action. On November 13, 2023, the parties to the Derivative Action entered into a stipulation staying the Derivative Action pending resolution of the anticipated motion to dismiss the defendants have filed in the Securities Class Action.

Indemnifications

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend the indemnified parties for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. To date, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. From time to time, the Company has entered into indemnification agreements with its directors and officers that requires it to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by law. The Company also has directors’ and officers’ insurance.

Leases

The Company leases certain of its facilities under non-cancellable operating leases expiring at various dates through 2044. The Company is also responsible for utilities, maintenance, insurance, and property taxes under these leases. The Company's lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms, as well as payments for common-area-maintenance and administrative services. The Company often receives customary incentives from its landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases. Leases are classified as operating or financing at commencement. The Company does not have any material financing leases.

Certain leases include options to renew or terminate at the Company’s discretion. The lease terms include periods covered by these options if it is reasonably certain the Company will renew or not terminate. The Company’s lease agreements do not contain any material residual value guarantees or restrictive covenants.

Supplemental balance sheet information related to the Company’s operating leases as of June 30, 2024 is as follows:


(in thousands)	June 30, 2024
Assets:
Operating lease right-of-use asset	$	61,277
Current liabilities:
Current portion of operating lease liabilities	$	14,555
Noncurrent liabilities:
Operating lease liabilities, net of current portion	$	72,625

Future minimum lease payments under all non-cancelable operating leases that have commenced as of June 30, 2024 are as follows:


(in thousands)	Operating leases
Years ending September 30:
Remainder of 2024	$	3,636
2025	14,814
2026	13,885
2027	8,371
2028	8,471
Thereafter	88,014
Total minimum lease payments	$	137,191
Less: imputed interest	(50,011)

Total operating lease liabilities	$	87,180
Less: current portion	(14,555)
Operating lease liabilities, net of current portion	$	72,625

The statement of cash flows for the nine months ended June 30, 2024 include changes in right-of-use assets and operating lease liabilities of $7.5 million and $6.9 million, respectively. For the nine months ended June 30, 2023, changes in right-of-use assets and operating lease liabilities were $2.9 million and $1.9 million, respectively.

During the three and nine months ended June 30, 2024, operating lease expense was $3.8 million and $11.8 million, respectively. Cash payments for amounts included in the measurement of operating lease liabilities were $3.7 million and $11.1 million for the three and nine months ended June 30, 2024, respectively. During the three and nine months ended June 30, 2023, operating lease expense was $3.9 million and $12.2 million, respectively. Cash payments for amounts included in the measurement of operating lease liabilities were $3.6 million and $11.1 million for the three and nine months ended June 30, 2023, respectively. As of June 30, 2024, the weighted-average remaining lease term was 15.2 years and the weighted-average discount rate was 6.5%.