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  "documentTitle": "Twist Bioscience (TWST)",
  "authorId": "58_Scorpion_Capital",
  "authorName": "Scorpion Capital",
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  "presentationDate": "2022-11-15 00:00:00",
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  "notes": "The slide uses a red circle to highlight the 2018 data point as a focal point for the argument.",
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      "kind": "callout",
      "text": "Twist had negative gross margins as recently as 2018, despite meaningful revenue of $25MM and a negligible asset base, turning sharply positive immediately after IPO",
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      "text": "gross margin: -27%",
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      "text": "As we studied Twist’s reported gross margin, we noted other anomalies. First, Twist was a negative gross margin business for three years, until 2019, reporting a minus 27% gross margin despite meaningful 2018 revenue of $25MM. Manufacturing companies with negative gross profit are exceptionally rare, indicating a horrific, structural flaw in their business model that rapidly puts them out of business. Moreover, Twist’s asset base at the time - net PP&E - was negligible, ~$12-15MM with barely any D&A – that is, it was basically a variable cost business with little fixed cost to explain the missing gross margin and COGS leverage. Even Tesla, once it released a car, posted only a single year with negative gross profit – 2008, when the roadster shipped, when gross margin was (40%) on $15MM revenue. We further noted how well-timed Twist’s transition to positive gross margins was – a sharp V right after IPO.",
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      "text": "Source: Capital IQ data;",
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      "text": "Financial table showing Revenue, Gross Profit, Gross Margin, and Net PP&E from 2016 to LTM 6/30.",
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