Twist extends rally as Wall Street sees opportunity amid GenScript scrutiny

Shares of Twist Bioscience (TWST) are on the rise again on Wednesday as U.S. lawmakers scrutinize competitor GenScript Biotech’s (GNNSF) alleged ties with the Chinese Government. Evercore ISI believes the lawmakers’ briefing request on the role of the Chinese in GenScript’s business activities could have some bearing on Twist Biosciences, as well as Danaher (DHR) and Thermo Fisher (TMO). GenScript competes against Twist’s SynBio segment, and against Danahers IDT and oligo services from Thermo Fisher.

BRIEFING REQUEST: In a letter dated May 30, U.S. House Select Committee on the Chinese Communist Party members John Moolenaar and Raja Krishnamoorthi asked the directors of the Federal Bureau of Investigation and the Office of the Director of National Intelligence to seek information on GenScript and the company’s three subsidiaries’ connections to the Communist Party.

“We write to request a briefing on a People’s Republic of China biotech firm GenScript Biotechnology Co., Ltd. and its three main business segments — Bestzyme, Legend Biotech, and ProBio — for their ties to the Chinese Communist Party and the implications these connections may have for U.S. national security. GenScript’s role as a Contract Development and Manufacturing Organization, including services such as the production of custom gene synthesis for companies and U.S. Government entities, raises concerns about potential risks to the intellectual property of U.S. firms and GenScript’s broader role in advancing the PRC’s biotech capabilities. Public reporting reveals tight links between GenScript and the CCP,” the letter reads.

SHARE GAIN OPPORTUNITY: Commenting on the request, Evercore ISI said in a research note that it believes the development could have some bearing on Twist Biosciences, Danaher and Thermo Fisher. Twist’s shares have been strong the past few days and this could partly explain the move, the firm adds. Evercore highlights that GenScript offers genes/gene fragments, oligos and pools, variant libraries, RNA, antibody services and is significantly larger than Twist. While GenScript is still able to sell its products, the House Request does raise questions on how customers could react, from a supply chain resiliency standpoint. If some customers do attempt to derisk their supply chain, this will benefit Twist, Danaher’s IDT and Thermo, Evercore adds.

PRICE ACTION: In afternoon trading, shares of Twist have jumped almost 12% to $52.42, making for a fifth straight day of gains. Also higher are Danaher, up almost 2%, and Thermo Fisher, up about 1%.