{ "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": 22, "pageCount": 236, "prevPage": 21, "nextPage": 23, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 3, "notes": "The slide uses investigative journalism techniques to link corporate entities to past financial fraud.", "elementsJson": [ "headline_text", "numbered_list", "paragraph" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-4b91788fc785/22", "deckHref": "/decks/019dd923-622c-750b-8b9a-4b91788fc785", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-4b91788fc785.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-4b91788fc785#slide-22", "components": [ { "bbox": null, "kind": "callout", "text": "Box of now-forgotten corruption.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-64d2-7657-bbf2-480bff880a2e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.9, "x": 0.05, "y": 0.17 }, "kind": "paragraph", "text": "3. Ever Alpha L.P., per a search in the Cayman Islands corporate registry. was a de novo entity that had only been formed about only two months prior to Twist’s Series D, and is linked by a daisy chain of offshore Caribbean entities to one in China, which we believe to be Guangfa Securities aka GF Securities. GF was implicated in a $12.7B fraud in China, centered on one of China’s largest public pharma firms, Kangmei Pharmaceutical, which overstated its cash balance by $4.3 billion “using false documents.” The fraud was “unprecedented in China” - with the ex-Chairman of Kangmei sentenced to 12 years. GF executives were sanctioned, banned from securities underwriting, and/or “publicly condemned by the Securities Bureau.” Two of the sanctioned individuals - Lin Zhihai and Qin Li - appear to be listed in Twist’s prospectus as having “voting and dispositive power over the shares held by Ever Alpha Fund L.P.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3e34fe50-3bc8-4206-9721-9b412d15d310", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.9, "x": 0.05, "y": 0.77 }, "kind": "paragraph", "text": "6. We note that GF Securities – the entity that sits at the top of Ever Alpha and was sanctioned for its involvement with the Kangmei fraud – still sits on Twist’s board of directors, via a 35-year old representative named Xiaoying Mai, who conveniently serves on the audit committee, and strikes us as the kind of puppet that’s ideal for this sort of thing. When we asked the ex-Twist employee what she’s doing there, the ex-employee stated that Emily – Twist’s CEO – “wants to be the only channel to talk to her” and that others inside Twist were “instructed directly by the CEO, Emily, that “[redacted] should not disclose...details to her directly.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "478df219-fd92-41a2-93b4-91278f5ab8a1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.2, "w": 0.9, "x": 0.05, "y": 0.55 }, "kind": "paragraph", "text": "5. We spoke with an ex-Twist employee involved with its activities in China, who indicated that “an investment was made,” but “production never really kicked off” and Twist bailed on manufacturing in China. As we asked about the side letter and the $25MM, the ex-employee became instantly uncomfortable: “I didn’t even know the letter was disclosed to the public. Even within Twist, we really downplayed that...I don’t feel comfortable elaborating on that one, unfortunately.” We asked if the side letter was a touchy topic because it reflected something improper, to which the ex-employee chuckled and said “I think you’re a smart guy. You figure it out. I just really don’t want to go on that topic, because even within Twist, [redacted] was not allowed to talk about it to other employees.” Box of now-forgotten corruption.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "53e09409-c971-4c5e-b4b8-a6748c734286", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.43 }, "kind": "paragraph", "text": "4. Given that Kangmei’s ex-Chairman was sentenced to 12 years in prison after it overstated its cash balance by $4.3B “using false documents,” we were tunned to see a 2017 press release from Twist stating that Kangmei Group was actually an investor in the company. We could locate no subsequent disclosures from Twist stating whether $25MM of the Ever Alpha L.P. investment was recycled back – and if so, to whom?", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "67dcb43f-e953-449d-91ac-1749dbbeb1e8", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "I didn't even know the letter was disclosed to the public. Even within Twist, we really downplayed that...I don't feel comfortable elaborating on that one, unfortunately. — Ex-Twist employee", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-64d2-7657-bbf2-4c6eed3017a5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.7, "x": 0.05, "y": 0.11 }, "kind": "title", "text": "Part VII: Striking red flags among Twist's management and largest holders at IPO (cont'd)", "attrs": null, "subkind": "action-title", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d90e5577-baf3-4af7-90e5-9a658713e09b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.25, "x": 0.05, "y": 0.05 }, "kind": "title", "text": "Executive Summary", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "85a3bfa1-ec81-4486-9380-3ed54d785d6b", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "1f7d9bbe-0167-4498-af5c-068837fd6c84", "evidence": "The slide systematically links a public company to a known fraudulent entity through offshore structures and board representation.", "confidence": 0.9 } ], "arcBeats": [ { "to": 35, "from": 21, "beatId": "f585b630-5f5f-463e-9494-cfbea19740c6", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Critique of Twist's management and strategy", "beatSlug": null, "evidence": "Analysis of management's red flags and strategic missteps", "position": 2, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }