{ "docId": "019dd923-622c-750b-8b9a-4b91788fc785", "docSlug": "5fadb686cc03", "documentTitle": "Twist Bioscience (TWST)", "authorId": "58_Scorpion_Capital", "authorName": "Scorpion Capital", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2022-11-15 00:00:00", "orientation": "landscape", "aspectRatio": 1.2941177, "pageNumber": 108, "pageCount": 236, "prevPage": 107, "nextPage": 109, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 4, "notes": "The slide uses a Q&A transcript format to validate the thesis of negative gross margins.", "elementsJson": [ "paragraph", "quote_block", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-4b91788fc785/108", "deckHref": "/decks/019dd923-622c-750b-8b9a-4b91788fc785", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-4b91788fc785.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-4b91788fc785#slide-108", "components": [ { "bbox": null, "kind": "callout", "text": "We estimate that Twist sells to Ginkgo at 1.5 cents per base pair, and experts indicate that the cost to manufacture is “probably 9-10 cents at this point,” which by our math comes out to a gross margin of negative 533%.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0932-77cf-bfec-cc58971e8273", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.9, "x": 0.05, "y": 0.45 }, "kind": "list", "text": "Ginkgo uses Twist for ultra-cheap, bottom-of-the-barrel, commodity product; basically giving away product to Ginkgo at prices that are a fraction of its cost of goods", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "22d8e3e1-4de0-490f-8c23-1db7a26df865", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "gross margin: -533%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-0932-77cf-bfec-d6389eca724b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.4, "w": 0.9, "x": 0.05, "y": 0.52 }, "kind": "paragraph", "text": "Q: “This Ginkgo deal that they have - what does Ginkgo think of Twist? Are they bending over a barrel with pricing?”\nA: “Yes, they love it. At the beginning, Ginkgo wanted to shave and reuse oligos DNA. Now it’s so cheap. It’s cheaper than storing it in their freezer. They just reorder it from Twist. Then they used the Gen9, what we called the assembly technology, to build up their organisms. But, yeah, they buy really cheap what I’ll call semi-high-quality DNA from Twist at next to nothing. I think it’s a cent-and-a-half a base pair.”\nQ: “And what do you think it costs Twist to make the stuff that they’re giving them at a cent-and-a-half?”\nA: “For that particular product, which are mainly 500 pairs, probably 9-10 cents at this point.”\nQ: “So, they’re running a negative 70-80% gross margin on this stuff to Ginkgo?”\nA: “On the Ginkgo deal, yeah.”\nQ: “Is Ginkgo just laughing at them?”\nA: “Ginkgo loves them because it allows them to be sloppy with their work, too. What’s Ginkgo have for revenue? $177 million or something like that. They have similar operational challenges, we’ll call it. Both companies. But Ginkgo loves them because it’s so cheap. It allows them to cut out a whole big part of their business that they don’t have to worry about.” —Ex-senior executive of a key Twist competitor and longtime expert in Twist’s space", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9d7a2e7e-67a3-47c1-b06d-051155f1fca0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.9, "x": 0.05, "y": 0.08 }, "kind": "paragraph", "text": "As further evidence that Twist’s gross margin is negative, we highlight its signature, much-hyped deal with Ginkgo Bioworks. We estimate that Twist sells to Ginkgo at 1.5 cents per base pair, and experts indicate that the cost to manufacture is “probably 9-10 cents at this point,” which by our math comes out to a gross margin of negative 533% (minus 8 cents of gross profit divided by 1.5 cents of revenue). When we asked how Ginkgo views the deal, an expert who we believe to be on friendly terms stated that “they love it...it’s so cheap” and that buying from Twist costs them “next to nothing.” We asked if Ginkgo is laughing at Twist, and the expert stated that “Ginkgo loves them because it allows them to be sloppy with their work too.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bbae9df6-5292-491f-a53f-03351655be5b", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“Ginkgo loves them because it allows them to be sloppy with their work, too.” — Ex-senior executive of a key Twist competitor and longtime expert in Twist’s space", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0932-77cf-bfec-d2c5eb8ce1f8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.3, "x": 0.05, "y": 0.95 }, "kind": "source-note", "text": "Source: Scorpion Capital consultation calls with experts", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "030c1a75-05d9-46d2-8b96-8d2b85292fd7", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "561adc74-2e8a-4879-8a75-48e8d86c6128", "evidence": "Uses expert testimony to expose negative margins and business model flaws.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }