Why Investors are Pouring Billions into This Miniature DNA Chip
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Most Innovative Companies is presented to you by Invesco QQQ, Invesco Distributors, Inc. I'm Amy Farley, and this is Most Innovative Companies, where we're talking to business leaders about how they found creative ways to confront some of today's biggest challenges and to point the way forward for both their industries and society at large. Today, we're going to talk about biotech and health.

If the past year and a half is any indication, investment in these sectors is critical. We've seen how we can confront a global pandemic with fast-tracked RNA-based vaccines. We've harnessed genomics to track and diagnose illness as it spreads. And the rise of telemedicine has made healthcare more accessible to all. I'm featuring one company today that's on the leading edge of all of this. Twist Bioscience, an MIC winner that has pioneered what's known as synthetic DNA.

It's used in therapeutics and precision medicine, but as applications across agriculture, biomaterials, and even data storage. I'll be speaking with CEO and co-founder Emily LaPruce. But before we focus on Twist, let's take a look at the larger context of biotech and health as it stands today. Fastco Works contributor Ted Brown spoke with Ryan McCormick, an equity product strategist at Invesco QQQ, to get his take for a special custom segment called Inside the Industry. ♪

I'm Ted Brown. Joining me again is Ryan McCormick. Ryan, thanks so much for joining us. It's great to be here. Thanks, Ted. So, Ryan, do you expect any big shifts in health and biotech in the next 12 months? Are these developments going to really change the way we think about the sector?

I think given the last 12 months, we could all use a break in the seismic shifts. But I think this theme of kind of partnerships and developing drugs, right, we've started to see a pretty significant use of collaboration across the spectrum, use of data, use of technological tools across healthcare delivery broadly. And I think we're starting to see the beginnings of it. And I think the power of that collaboration across the world of healthcare will be very significant over the next number of years.

And of course, collaboration isn't necessarily a traditional way of doing business for a lot of companies. So how do you think that that collaborative spirit is going to impact the wider economy outside of health and biotech? You see spillover down a variety of roads. The ability, of course, to research other diseases

but we're seeing things like the evolution of robotics for surgery, telehealth. These all, I think, kind of increase the efficiency of the healthcare ecosystem and maybe not directly in terms of collaboration of developing drugs, which I do think will be here to stay.

But beyond that, I think that sharing of data, the ability to use telehealth to our advantages really just increases the efficiency broadly of the healthcare system. You know, surgeons, doctors, the job is just going to be easier when they have the opportunity to lean on other stakeholders. And I think the same could be said for biotech companies and those that are developing drugs. And obviously telehealth is

been thrust into the spotlight over the last 18 months or so. What do you think that the industry has learned from the last year and how it does business? And how is it applying those lessons to future innovation, to things they want to do going forward? When you look at the last year, I mean, I like to joke, I'm so tired of using the word unprecedented. And I'm sure most of you are sick and tired of hearing it. But I think over the last year, what we learned is the speed at which we could deliver treatments to the marketplace. We've seen a very large reduction in drug deliveries

times. And obviously, you know, specific to COVID, it was a sprint to develop vaccines to try to move past the pandemic. And of course, these treatments receive fast track approval, you know, specifically, you have your first two messenger RNA approved vaccines, you know, that's kind of showing that there is a little bit more leeway as you know, these novel kind of treatments are being developed, that there doesn't have to be that certainty that maybe there was in the past.

the accelerated approval program does afford for maybe, I guess you would categorize these treatments as more quote unquote experimental. It's not really the right word, but you kind of get that feeling there. So we talked a little bit about the innovation around medicine, around telehealth, around the innovations that a lot of

health and biotech companies are making based on new technologies, on new opportunities. And I wanted to ask about how that plays into the business case for a lot of these companies, how you see the market growing for a lot of these companies as they continue to develop new and innovative approaches to what they're doing.

you've seen just a ton of technological applications in healthcare. And I think with that, it sort of morphs the underlying business and identifies the importance of patient data. To give an example, like I'm a board member of the organization called Team Telomere, which is a nonprofit that supports those that are affected by telomere biology disorders.

really rare diseases. Within the scope of that and through some of our bioscience partners, I mean, it's very apparent that patient data is of paramount importance when you're trying to combat something like a rare disease, and particularly one that just isn't really widely understood. So you're seeing, you know, the sharing of information, not only from biotech companies or data between companies, but sharing of information between a

patient population and those companies that are working towards finding a cure or enhanced treatments. What's one thing you wish everyone knew about biotech and health, about the industry generally? It's very data driven. These companies need to synthesize tremendous sets of data for this next level of disease prevention, diagnoses and treatment.

If you look at comments from places like the Human Genome Project, they note that half of the genes that they've identified, they have no known function. So collecting, synthesizing these large sets of data, it's critical to understanding and arming the immune system. So continuing to go and identifying genes and their functions to understand each individual through gene mapping and eventually develop gene-based strategies for disease prevention, you know, that's kind of the first step. From there, it's enhanced diagnoses, eventually differentiated ways to treat these diseases and

I think there needs to be an understanding and a comfortability with the fact that healthcare is widely driven by the use of technology. We've obviously had a massive breakthrough with mRNA vaccines. What's another breakthrough that's sort of rapidly approaching that you wish people understood better?

I think when you look at where we are today, we're moving very quickly beyond monitoring with only wearable technologies. Digitally connected devices can increase the efficiency from a healthcare provider standpoint. They know what's going on inside a patient's body without them having to go to the office. I mean, it saves time and effort in leaving the house if

particularly if that's made harder by a chronic condition or a specific ailment. I think along with that, you have increased early detection as warning signs can be triggered. They can be alerted directly to your healthcare provider. And instead of kind of waiting to see that for a scheduled appointment, again, it's happening in real time. It's a huge help for those in the elderly community, those that are less mobile and those that are facing a tremendous amount of chronic disease. So, you know, I'm really excited about this next level of patient monitoring.

Ryan, thanks so much for the time and for being here. Really enjoyed the conversation. Thanks so much, Ted. It was great. Inside the Industry is produced by Fasco Works in partnership with Invesco QQQ. I'm Ted Brown. And now, back to Most Innovative Companies.

So one of the keys to combatting COVID-19 and all of its emerging variants is the ability to study its genome and conduct tests on it at scale. And key to this effort is synthetic DNA. Founded in 2013, Twist Bioscience is a pioneer in this field. It has developed a method of affordably writing DNA on silicon chips, which can be used in therapeutics and precision medicine, agriculture, biomaterials, and even data storage.

When COVID-19 hit last year, Twist adapted its technology to develop a synthetic control version of the virus, which has been used by numerous labs to create and validate tests for COVID-19 and its emerging variants. All that to say, Twist's work has been vital in tracking and containing the virus. But at the same time, the company is empowering an entire ecosystem of synthetic biology, which is booming. Last year, investors poured nearly $8 billion into this field.

Here to explain how synthetic DNA works and all of its world-changing applications from fighting cancer to storing episodes of your favorite Netflix show is Twist Bioscience co-founder and CEO, Emily Leproust. Emily, thank you so much for being here. Thank you for having me, Amy.

So, Emily, I did my best to give listeners a one-sentence definition of synthetic DNA in that intro, but I'd love to hear you expand on it or correct me if necessary. How do you explain to a layperson what synthetic DNA is and what products Twist creates? Yeah, so DNA is the...

building blocks of lives and it's a form of four letters A, C, G and T and you can buy a bottle of A, a bottle of C, a bottle of G and a bottle of T and you can stitch DNA together and what we have done is we've taken that chemistry and we miniaturize it and so that means we can make way more DNA than anybody else but if you order a

gene of hemoglobin for instance from twist and you get the hemoglobin gene from your own body you can't tell the difference you know you can't tell that it's synthetic or not you can't tell which comes from twist and which comes from you so it's exactly the same DNA but because it

synthetic, we can make any DNA that you will want. So for instance, a researcher may say, you know what, I really want the hemoglobin of polar bears. You don't have to go to the Arctic and put the polar bear to sleep and extract blood from the polar bear. You don't need to. You go on a database and you take the gene sequence of a polar bear. You go onto the TWIST website and it's nine cents a base. And a few weeks later, you get the hemoglobin gene from polar

So I'm assuming your company is not built on creating hemoglobin genetic materials for polar bears. What are the products that you're creating? What are your core products that all of these other customers are jumping on? Yeah, so actually our core products, one of them is synthetic genes. So companies that are engineering bacteria to produce fertilizer instead of using fertilizer.

companies that develop antibody drugs, companies that produce chemicals by fermentation of sugar instead of from oil. They all need genes to engineer the organism. And so they go on our website and sometimes they order some very fancy

funky, weird genes because they need to explore the sequence space. So that's one part of our product portfolio. Our companies that are doing diagnostic assays to try to understand the genetics of someone. So for instance, there is something that's hot on you and it's liquid biopsy, and that is used to detect cancer. So instead of waiting until you have a tumor where you can feel the bump in your body, where you can see it on an x-ray, you can do a blood test

And you can find that you have a tumor at stage one or two instead of stage three or four. And again, that needs DNA to read the sequence of your own body.

So that's a second part of what we do. A third part is we also discover drugs for pharma companies. They come to us and they say, you know what, there's this target and we really need an antibody against this target because we know that target is causing diseases. And so we do the discovery of antibodies for them. And then the last thing we do is we also store data in DNA. So as you can see, we have a pretty broad range of what we can do with synthetic DNA. But at the foundation of everything we do,

is again that bottle of ACGT, and we print ACGT on top of each other to make DNA from scratch. And what differentiates Twist products from other synthetic DNA makers right now? So everybody uses the same chemistry, but the main difference of Twist is that we have miniaturized it. And so everybody else, they do DNA synthesis at the scale of 50 macroliters. So

For those of you who don't know, it's about the size of a teardrop when you cry. That's about 50 macroliters. And we do synthesis at 10 picoliters. So macroliters, nanoliters, and then picoliters. So the volume of reaction is orders of magnitude down. The drop is so small that you...

You basically can't see it with the human eye. It's just too small. And because it's a tiny drop, we can pack a lot of those on a piece of silicon that's about the size of a big iPhone. And we can put a million drops on that piece of silicon. And then we build a million different sequences of DNA at the same time on the silicon chip.

So as I mentioned, investors are rushing into synthetic biology and a recent report that estimates that the market for synthetic biology right now is $9.5 billion. Within five years, it will surpass $30 billion. Is it fair to say that your company and its synthetic tools are really the foundation on which other companies and technologies are built? Exactly. That's what we want. We are

the DNA provider and all the synthetic biology companies, they use our DNA to do cool stuff with it. We provide the picks and shovels and our customers are digging for gold. So in some ways, we want to be the enabler. We see our customers as the heroes, right? Our customers are the badmins and we're the robins to their badmins. We enable them to do things that they couldn't do before.

So a lot of the investment in synthetic biology is flowing into healthcare and therapeutics right now. I talked a little in my intro about how twist products are being used in COVID-19 research, but how else are your DNA tools being used in medicine? We used to have drugs that were blockbuster drugs. Everybody gets the same drug. You're tall, you're short, you're old, you're young, you're French, you're Japanese, male, female, everybody gets the same drug. And it was fine, but it's not quite precise.

And then we moved into precision medicine. And the next phase that is going to be enabled by synthetic DNA is personalized medicine. You're all mutation. You're the only one to have that mutation. And you're going to be the only one to get that drug that's going to make you better. As your cancer gets cured, you will have a recurrence. It will be a different mutation. You get a different drug. It will be kind of a game of whack-a-mole. As a new mutation comes in, you get the personalized drug just for you.

to explore some of the other, beyond medicine and healthcare, what other uses there are for your products. And you said that one of your core products is data storage. And as I mentioned last year, there was that episode of Netflix that was stored using synthetic DNA. How does that work? And why is this so meaningful? What's the potential for this? Yeah, I mean, you know, storing data in DNA sounds like science fiction, but actually it's just science.

Your DNA is your hard drive. The idea is that there's so much data that are being stored on hard drive and tape, you need to archive the data for a long time because hard drive and tapes are magnetic media and magnetization goes away over time.

And so what that means is that if you need to store data for 5, 10, 20 years, you have to move that data from one hard drive to the next hard drive every five years. And that becomes very costly, very tedious, and it's super hard to keep track. The one opportunity with DNA is to say, you know what? I'm going to make my file into a DNA sample, and that is going to be stable for a million years. So now you don't have to, every few years, to constantly move the data again and again. You have your DNA, it's stable forever.

What needs to happen for DNA storage to be widely adopted? And is the tech community around you in Silicon Valley, especially on board with this idea and pursuing it with you? Yes, there are a lot of people that are on board. We have a DNA Data Storage Alliance. We have 30 companies with Twist and Waster Digital and Seagate and Microsoft and Illumina. Again, more than 30 companies working on it.

And what needs to happen is we need to lower the price to make it competitive with a hard drive. Right now, we have the equivalent of an amazing TV. It's flat, it's thin, it's flexible, amazing contrast, amazing sound, amazing video quality, but it's a $5 million TV. And so it's great, but it's too expensive. And so we're working on lowering that price down to the $500 amazing TV, and then everybody will want it. So another big application is creating new bio-derived materials.

Can you tell us how synthetic biology can help tackle the plastic problem? Yeah, I don't know about you, but I just hate plastic. But I do realize that all the good stuff that we use in life, frankly, is plastic-based. But it's super unsustainable. You have to pump oil from the ground. The waste is terrible. But I think we have a huge opportunity with synthetic biology to move away from the last hundred years of plastic into a new era of protein as material.

One example that I like to often take is spider silk. Spider silk is a protein and it's amazing. It's super resistant. It's stronger than steel, but it's very light. The problem is that you can't make spider silk. You can't farm spider. You take a million spider, put them into a room, and a week later you have one spider. They eat each other.

But you can take the gene of spider silk and then you put it into yeast and you ferment sugar and you make spider silk at scale very inexpensively. And you avoid spider on spider violence, which is a good thing. And so now you can produce spider silk almost at industrial scale. That's just one example. I think over the next decades, we'll have every piece of plastic we use is going to be replaced with protein.

I'm curious, do you have a sense of your customers, how much they're using your products in applications for things right now and how much they are in the R&D and experimental phase? I'm going to name some of the twist customers. For instance, you have a company like Amary's, they ferment cane sugar and they produce squalene. Squalene is an amazing chemical. It's actually the oil that

human body makes. So if you take olive oil on your skin, yeah, it's kind of oily. It doesn't feel right. But if you put squalene on your skin, it's not oily because that's the natural chemical that your skin makes. Again, it's done by fermentation of sugar, right? There is no petroleum that comes in it. You have a company like Z-Biotic, anti-hangover. So

If you know you're going to have a big party, you drink that probiotic. And then the next day you have no hangover, right? It's amazing. You have a company like Neoplants. They have a plant that filters the harmful chemicals from your bedroom. And so it's a natural breathing of the plant. It's a much more healthy lifestyle. There are many companies like that.

When you're describing some of the companies that are already making products that seem like science fiction, but they're here now, it makes me wonder, where are we? I mean, when we think about synthetic biology as having world-changing potential, are we just on the cusp of that world-changing trajectory or are we already in it? We just, most people don't know it yet.

It's just so, so, so early. We still have the mainframe revolution. We still have the desktop revolution. We still have the mobile revolution. We still have the internet revolution in front of us. It's just at the very, very, very beginning. But the potential is huge. And I think it's going to be a huge economic driver. And it gives me hope for the planet that we're just not going to destroy the one we have.

I know that everybody wants to go to Mars, but there was a t-shirt a while ago that said, you know, a good planet is hard to find. And I agree with it. Like we have a great planet, you know, let's fix this one. And I think synthetic biology is going to be a great tool to get there. So switching gears a little bit, what are the biosecurity risks around synthetic biology? Can this be weaponized? And are there ethical issues to handling modified genetic code?

I mean, do you need to be mindful of not just which companies you're working with and where they're located, but also what kind of products they're creating and deploying? Yeah, absolutely. We're absolutely at the bleeding edge of this sphere of biosecurity because we realize that DNA is a dual use technology.

Like dynamite. Dynamite is amazing. You can build tunnels, but you can kill people. And it's the same potentially with DNA. We do two things. For every orders we get, we look at who is ordering and what are they ordering. So for instance, if we get an order for Ebola from the CDC in Atlanta, we will make it, right? Because they are developing a vaccine or diagnostic test. But if we get an order for Ebola from North Korea, we will not make it.

And so we screen and there's an industry standard and most of the DNA synthesis companies are part of that organization. And we're trying to shame the ones that are not doing the screening to participate. And so definitely we want to raise the bar on biosecurity and make sure that everybody does it.

At the same time, we also want to be careful not to be overly alarmist because frankly, if you look back over the last forever, all the bad things that have happened in terms of disease creation, they all come from nature, right? Ebola, Zika, SARS. And so we have to, again, by reading the evolution of what happens in the wildlife, when there's an outbreak, we can catch it early.

I'd like to talk to you briefly about corporate culture, because I know a lot of startups like to describe their culture as a family. And I was speaking to you a couple of weeks ago, and you were very clear that you did not want Twist to be a family. You use the analogy of a sports team. Can you explain why you think that family is the wrong way to set up that corporate culture? We are not a family because frankly, in a family, you tolerate bad behavior.

And we don't. We are a sports team. We expect three things. Number one, we expect to hire the best for the position. The best means different thing. In R&D, I want the most innovative R&D. In accounting, I don't want an innovative accountant. I want an accountant that makes no mistakes. So we want the best for the position. And then we want people that are team players because we can't do anything alone. R&D needs to work with marketing and quality and production and sales and legal and HR. We all have to work together.

And then the third thing is we expect performance. And you can be a great athlete. You can be a great team player, but it doesn't work. And so if it doesn't work, you know, you get cut. And everybody gets a nice save runs. Nobody's homeless. Everybody finds a job. But if we don't see the performance, we just let the person go.

I think that that creates an organization where we expect high level performance. And if we look back at Twist, what we have done, frankly, is impossible. The science advancement that we've done, the commercial execution and the revenue that we've had is kind of unique, I'll say, in our field. And that is because we run as a sports team. But how do you create an atmosphere where people can take risks and presumably make some mistakes?

while also building in, obviously, that emphasis on performance and accountability? Well, what's super important is to absolutely not create a culture where a failure is not an option, right? Because if you say, look, failure is not an option, well, people, they're going to guarantee not fail. They're going to be super conservative. They're not going to take risks and they're not going to push the envelope and they'll never fail, but they'll never do anything that's great either.

And so, you know, we don't want to fail on purpose, but we're failing all the time. You know, some of our projects are late all the time. Some don't work. But, you know, more often than not, it does work. We reward when there's success. And when there's a failure, the outcome of failure is it's on me. Right.

If something failed, it's not marketing, it's not R&D, it's not legal, it's me. I'm the CEO. I failed. Everybody else did not fail. So if it's good, a twist is the team. If it's bad, it's me. So I take responsibility personally for the failure and then we move on. And how do you balance creating products that customers want right now? I mean, obviously you spent a fair amount of time over the past year creating products to address the COVID-19 crisis.

But then also working on these more long-term projects like DNA for storage. How do you find that balance? Capital allocation between the short term and the long term. And so we need to deliver next quarter. And it needs to be growth compared to last quarter. So we are aggressively executing to deliver next quarter.

But if there's only focus of next quarter, eventually you're going to make decisions where you're going to paint yourself into a corner. And so as a management team, we always ask ourselves, what do I have to do today so I don't hate my life in two years? Instead, what do I have to do today so I love my life in two years? And so we try to be very careful in allocating capital between short term and long term to make sure that two years from now, we love where we are.

You can only play the long term if you absolutely crush the short term. So you have to do both. And it's easy to say, you know what, I'm going to forget the long term. I'll get there when I get there. But if you do it, it's not sustainable. So it's hard. But if it was easy, everybody else would be doing it. And so that's why we have a short term. So you founded Twist Bioscience eight years ago. I wonder if you can just tell me what your original mission was and if that has changed.

evolved or changed as a company has grown, as it's gone public, and as this entire field around you has evolved and matured? We knew it would be expensive. We knew that we'd have to raise a lot of money to make it happen. And so we had to raise more than a billion dollars of capital. We still have 500 in the bank, but we haven't spent everything, but we had to raise a lot of money.

It was a big bet and either it was going to work or there was no pivot available to us. It was either it was going to work or it was not. It was the right vision. We had the right people. We were able to get the capital. We worked hard and it worked out. But yeah, there was no pivot at Twist. The vision eight years ago is exactly the same. If you look at our deck way back then in 2012, 2013,

We made everything happen. But frankly, we probably are two to three years late in the evolution. Like everybody else, we're over-enthusiastic of what we could achieve in the short term. And we are wrong. We've been late. But what I find is that a lot of people, they underestimate what they can do in the long term.

And in that deck, there is no data storage because our investor said, I don't want to hear about data storage, but we did it anyway. And so we over accomplished. On top of everything, we are also delivering on data storage. What's your next data storage? What's your next 10-year project? We have four businesses at Waste. And if I add one more, people will think that I am unfocused. And so I'm not unfocused. I'm very focused. We are very disciplined. And so we are not adding data.

anymore until a few of those businesses are just so successful they can run on their own that then our investors will demand that we add more pillars but there's more to come we have lots of ideas there's you know DNA is like a hammer and everything looks like a nail

And so we can add more, but we have to absolutely crush and deliver those four businesses first, then we'll add. But the goal of Twist is to build a conglomerate. And so we are leveraging the citizenship to go to market that are big and growing. And then we come in with a highly differentiated product. We never do a me too. I'd rather chew glass than doing a me too.

So we come in highly differentiated, take over. And then once we've done that on those four businesses, then we'll add. That will be in a few years. Wonderful. Well, watch this space then. Emily, thank you so much for your time. It was a pleasure hearing more about how your products are being used and also how you are running this company and avoiding chewing glass. Thank you so much. I'm a huge fan of Fast Company and you absolutely made my day.

It is extraordinary to realize the fact that we can basically print DNA on silicon chips.

What's all the more extraordinary is realizing how this is being used to change our world in ways that are maybe obvious through medicine and also much more surprising, like DNA storage and making biomaterials that are pulling pollutants out of the air around you. And these things are happening here and now. So it's fascinating to have Emily on the podcast to show us

her perspective on the way synthetic biology is changing our world. That's it for this episode of Most Innovative Companies. Subscribe on iTunes, Spotify, or wherever you get your podcasts. If you like the show, please leave us a rating or a review. I'm Amy Farley. Our producer is Avery Miles.