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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": "Uses a 'Worldcom-esque' comparison to allege accounting fraud.",
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      "kind": "callout",
      "text": "Twist Bioscience Bringing the Gross to the Margin Party",
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      "text": "If one simply adds back to COGS the direct manufacturing costs we believe it is misclassifying via a Worldcom-esque accounting scheme, its gross margin is negative – consistent with color from ex-employees, competitors, and manufacturing experts.",
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      "text": "Revenue growth chart showing increasing gross margins from 2016 to 2021",
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      "text": "gross margin: $74MM",
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      "text": "Twist losses are rapidly accelerating, with cash burn of $74MM in the March 2022 quarter and $75MM in June – roughly double what they were four quarters prior, a $300MM annualized rate with net cash of $450MM. We think Twist is attempting to conceal the true extent of its meltdown by misclassifying COGS as R&D expense and capex – under the guise of a vaporous “Factory of the Future” and “DNA Storage” initiative - in order to concoct a gross margin narrative that gives investors some hope that all is not lost. If one simply adds back to COGS the direct manufacturing costs we believe it is misclassifying via a Worldcom-esque accounting scheme, its gross margin is negative – consistent with color from ex-employees, competitors, and manufacturing experts. If Twist reported negative gross margins – given their centrality to the narrative – it would never raise another dime, with Chapter 7 liquidation around the corner.",
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      "text": "Source: https://investors.twistbioscience.com/static-files/30d2bd1e-4725-4a9a-93bf-3f74486673c0; Barclays equity research report, Aug 5, 2022",
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