NEW YORK – Twist Bioscience said on Wednesday that it has acquired iGenomX, a developer of multiplex library preparation tools for next-generation sequencing workflows, for $35 million.
Twist said the acquisition will enhance its abilities to support multiplex sequencing preparations across multiple markets and will accelerate its conversion of customers from static microarray platforms to genotyping-by-sequencing workflows. iGenomX, which was founded in 2012 to develop and commercialize a high-throughput rapid library prep technology, sells commercial library construction for many applications including population genetics, agrigenomics, microbiomics, and synthetic biology.
The deal included an initial $500,000 cash payment and $29.5 million in Twist stock, as well as a contingency consideration of $5 million in Twist shares upon completion of certain milestones, no sooner than six months after the close of the deal, Twist said.
The company noted that it expects the financial impact of the acquisition on its burn rate to be minimal for both fiscal years 2021 and 2022 and expects revenues of approximately $4 million to $6 million to materialize in 2023.
"The iGenomX team built a robust PCR-like workflow for ultra-high throughput library construction that will further enable customers to convert from SNP microarray to an NGS-based approach," Twist CEO and cofounder Emily Leproust said in a statement. "We anticipate this technology, together with our leading NGS product line and worldwide commercial infrastructure, will drive adoption of Twist NGS workflow solutions into fields that run large volumes of samples with shallow sequencing."
In a note to investors, Evercore ISI analyst Vijay Kumar wrote that Twist's premise of acquiring an NGS library prep company to enable the switch from arrays to NGS may seem to run counter to current industry practice, but that there are three reasons why the deal makes sense.
First, he said, Twist believes that using an NGS-based approach will be cheaper than microarrays for high-content or -throughput applications. Second, the content on microarrays is generally fixed, but Twist believes the content could be customized with an automated library prep system such as iGenomX's combined with its own oligos. And third, Kumar noted, the complexity of library prep has generally been a barrier to NGS — by making the prep as easy as PCR, Twist is expecting to remove the barrier to adoption to NGS.
"All in, this seems to be a nice, differentiated tuck-in for Twist that could become a more meaningful revenue opportunity over the longer term [that] leverages Twist's channel presence within NGS," Kumar wrote.