Commitments and contingencies

3 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingenciesLegal 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”). The Securities Class Action names the Company and certain of its officers as defendants and asserts claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. 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 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, and seeks unspecified damages on behalf of all persons and entities who purchased or acquired Twist securities during an alleged class period that begins on December 13, 2019 and ends on November 14, 2022 (“class period”), as well as certain other costs.

•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. Twist and the other defendants intend to vigorously defend themselves against the claims asserted against them.

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. The Company has also entered into indemnification agreements with its directors and officers that may require 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 corporate 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 December 31, 2022 is as follows:


(in thousands)	December 31, 2022
Assets:
Operating lease right-of-use asset	$	73,757
Current liabilities:
Current portion of operating lease liabilities	$	14,227
Noncurrent liabilities:
Operating lease liabilities, net of current portion	$	79,748

Future minimum lease payments under all non-cancelable operating leases that have commenced as of December 31, 2022 are as follows:


(in thousands)	Operating leases
Years ending September 30:
Remainder of 2023	$	11,981
2024	14,214
2025	14,066
2026	12,609
2027	7,265
Thereafter	90,968
Total minimum lease payments	$	151,103
Less: imputed interest	(57,128)

Total operating lease liabilities	$	93,975
Less: current portion	(14,227)
Operating lease liabilities, net of current portion	$	79,748

The statement of cash flows for the three months ended December 31, 2022, include changes in right-of-use assets and operating lease liabilities of $1.2 million and $0.9 million, respectively. For the three months ended December 31, 2021, changes in right-of-use assets and operating lease liabilities were $10.4 million and $11.6 million, respectively.

Operating lease expense was $4.1 million and $3.5 million for the three months ended December 31, 2022 and 2021, respectively. Cash payments for amounts included in the measurement of operating lease liabilities were $3.6 million and $2.9 million for the three months ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the weighted-average remaining lease term was 15.9 years and the weighted-average discount rate was 6.4%.