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Missfresh hit by lawsuits from investors and employees

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Laid-off employees and investors are suing collapsed Chinese grocery delivery company Missfresh and the Wall Street underwriters who marketed its shares in a $300mn New York offering last year over unpaid salaries and alleged violation of securities laws.

Missfresh pioneered speedy grocery delivery in China, raising more than $1bn in cash from investors including tech-focused funds run by Tiger Global and Goldman Sachs, to reach a $3bn IPO valuation.

Executives claimed its mini-warehouses and pink-clad riders could make 30-minute grocery delivery profitable, but the company was hobbled by Beijing’s crackdown on the technology sector, slowing economic growth in China and waning investor appetite for funding its losses.

After running out of cash last week and laying off most of its staff, Missfresh’s app was no longer taking orders as of Tuesday in Beijing. The company’s Nasdaq-listed stock has plunged from $13 a share at its listing price last June to 10 cents.

Hundreds of Missfresh employees have filtered into labour arbitration courts in Beijing and Shanghai to sue the company over unpaid salaries and lost severance, which is guaranteed under Chinese labour law.

Missfresh has since May failed to make mandatory health insurance and other social benefit payments for its staff and still owes salaries from June and July, multiple employees told the Financial Times.

“I think chances are extremely slim that I can get my salary back,” said a former administration employee surnamed Hu. “But I will still go to arbitration, it’s my right.”

Hu rushed to Missfresh’s Beijing office last week after hearing of the cash shortage. “They are not paying me, so I’m taking my computer,” Hu told the FT on entering the office. Reached later by phone, Hu said they had decided against taking the company computer.

Investors in the US have sued Missfresh, its executives and Wall Street banks for damages for bringing the company to market just over 12 months ago.

The complaint, filed in US district court in New York last month, alleged Missfresh provided false financial figures in its IPO prospectus and that underwriters, including JPMorgan and Citigroup, promoted and sold its shares based on a “defective prospectus”. 

The suit alleged the underwriters did not do adequate due diligence and reaped millions of dollars in fees from the listing. During the Missfresh roadshow, underwriters “presented highly favourable information about the company”, the suit alleged.

Plaintiff Juan Chen invested $68,000 in Missfresh shares in June and July last year and lost most of his money, the complaint said.

Missfresh said in an SEC filing last month that prior financial statements had overstated revenues, including in the quarter leading up to its IPO, and blamed rogue employees who created “questionable transactions” that bolstered sales figures.

Last week, Missfresh said it intended to pay employees overdue salaries but lacked the cash after a financing deal with a coal mining group fell through.

“I don’t hold out much hope of getting the money,” said a former employee in Missfresh’s fast delivery unit. “I would be satisfied if founder Xu Zheng could share just one square metre of his mansion with me.” 

Unpaid suppliers occupying Missfresh’s Beijing office said they have been unable to locate chief executive Xu for weeks.

Over the weekend, Xu told local media that “in recent days, I’ve been busy dealing with urgent matters” in an effort to refute rumours that he had fled to Hong Kong.

Chen could not be reached for comment. The Rosen Law Firm, representing Chen, declined to comment, as did Citigroup and Xu. JPMorgan did not immediately respond to a request for comment.

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DeepMind spin-off steps up effort to use AI to create new drugs

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Alphabet-owned Isomorphic Labs is ramping up its operations by poaching pharmaceutical talent and opening a new office, as the artificial intelligence drug discovery start-up moves closer to securing its first commercial deal.

The UK-registered group was spun out of its sister company DeepMind, Google’s AI unit, in November last year, to focus on using AI technology to create new drugs to treat and prevent diseases.

Isomorphic is currently in talks with major pharmaceutical companies and is expected to announce a deal in the next few months, according to two people familiar with the plans.

Its work capitalises on DeepMind’s scientific breakthrough of its AlphaFold2 technology, which can be used to predict the shape of every protein in the human body with almost perfect accuracy.

Colin Murdoch, chief business officer at DeepMind, has been put in charge of setting up Isomorphic Labs, working closely with Demis Hassabis, who is chief executive of both DeepMind and Isomorphic Labs.

“It takes about 10 years to take a drug [to market], and often most of them fail sadly, and so inspired by the work we did with AlphaFold, we took a deeper look . . . and basically built conviction that there was a real opportunity here to apply AI to reimagine drugs discovery,” said Murdoch in one of the company’s first interviews on Isomorphic.

Isomorphic’s expansion comes amid a surge in interest in start-ups promising to use AI to transform drug discovery, with funding in the UK and US in this area jumping to more than $1.6bn this year, up from $668.5mn in 2017, according to data from PitchBook.

When the AlphaFold breakthrough was announced in November 2020, DeepMind said it would try to use the technology to find treatments for Chagas disease and Leishmaniasis, two of the most deadly diseases in the world.

Murdoch said Isomorphic had not focused on a specific drug or disease. “The goal is actually to build an underlying platform which is . . . agnostic to those therapeutic areas,” he said.

There are a number of “almost AlphaFold-scale” AI advancements that the team are working on that would provide the underlying engine for the platform, he added.

To lead its work in drug discovery, Isomorphic has hired several executives and staff from both scientific and pharmaceutical backgrounds, as well as in machine learning, developing computer systems that can learn through data.

The company is also expanding beyond its headquarters in London to a second office in Lausanne, Switzerland, home to a host of leading pharma companies including Roche, Novartis and Bayer, and Isomorphic’s chief technology officer Sergei Yakneen.

Yakneen has previously worked at Amazon and Sophia Genetics, a company that uses machine learning to identify tumours and other health conditions.

Other executives at Isomorphic include Miles Congreve, chief scientific officer, who previously worked at Astex Pharmaceuticals and GSK. Several staff have joined from DeepMind, as well as from BenevolentAI, Google and AstraZeneca.

“The goal of Isomorphic is to produce drugs which we can then partner with pharma to get them out into the clinic and to people with clinical need,” Murdoch said.

He added that Isomorphic was “beginning to think about what the right commercial path is. We have an amazing leadership team up and running and making fantastic progress”.

The company said it is in discussions with “many of the world’s leading pharmaceutical companies” without providing further details. It expects to embark upon a number of partnerships as it scales.

Murdoch said Isomorphic would hire more staff next year. Its talent acquisition lead James Girling recently aimed a post on LinkedIn at tech workers fired by Twitter.

While the AI drug discovery market has experienced growing interest in recent years, investment in the sector is not immune to this year’s tech rout. Venture capitalist funding has fallen 15 per cent from $2bn last year, according to data from PitchBook.

Some in the medical sector are sceptical that AI drug discovery will fulfil its hype, pointing to the need to navigate strict regulations and integrate into dated healthcare systems.

A recent Morgan Stanley report noted that investors would need to see “solid evidence for real-world use cases for AI-enabled drug discovery”.

However, it added that this method of drug discovery could lead to an additional 50 novel therapies over the next 10 years, presenting a potential $50bn opportunity.

Isomorphic reported a £2.4mn loss for the 11 months to December 2021, according to filings from the UK’s Companies House. This includes £470,455 in receiving contract research and development services from DeepMind as the company was launching.

Additional reporting by Madhumita Murgia and Hannah Kuchler in London

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World Cup pits football against NFL in battle for eyeballs

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This article is an online version of our Scoreboard newsletter. Sign up here to get the newsletter sent straight to your inbox every Saturday

The rejuvenation of Formula 1 under US group Liberty Media will surely be examined in business schools for years to come. But this week I got a sneak preview of a new series centred on the nonagenarian who turned F1 into a global business and paved the way for private equity to get into the sport. That’s right, Bernie Ecclestone is on screen to relive his experience. More recently in the news for his tax affairs and defending Vladimir Putin, Ecclestone is telling his own story in a sort of video autobiography. Director Manish Pandey, writer of the 2010 film on the life of Brazilian driver Ayrton Senna, spent much of the pandemic sifting through archive footage and piecing together the tale. It was a reminder of how much the sport has changed . ..

Speaking of change, it looks like soccer football is finally cutting through in the United States, where millions of fans are tuning into the World Cup. Keep reading to find out why that’s extra impressive — and what it means for the future. We also dig into the family dynasty that owns Juventus, the Italian football club that’s defending its accounting methods.

By the way, we’ll be discussing the eventual result of the World Cup — and much more — at the next instalment of our Business of Football Summit on 1-2 March, 2023. Scoreboard subscribers can sign up for a complimentary digital pass using promo code PREMIUM23 or save £400 on your in-person pass to join us at The Biltmore Mayfair, on 2 March. Register here.

Do read on — Samuel Agini, sports business reporter

Send us tips and feedback at scoreboard@ft.com. Not already receiving the email newsletter? Sign up here. For everyone else, let’s go.

USA’s Tim Weah: American hero © Patrick Fallon/AFP via Getty Images

The World Cup group stage yielded a mixed bag for North America: Canada and Mexico were eliminated this week, while the United States squeaked through to the Round of 16 on what appeared to be a ball-busting goal (see Final Whistle below) to defeat Iran on Tuesday.

If the on-pitch performance for the next hosts of the quadrennial tournament leaves something to be desired, their television ratings may be making up for it: broadcasts of the Qatar World Cup are smashing records, even as the world’s biggest football fest runs for the first time against the busiest stretch of the North American sports calendar.

Fox, which holds English-language broadcast rights in the US across its cable and news networks in the US, has averaged 3.15mn viewers through the first 10 days of the World Cup, up 44 per cent from the equivalent period in the 2018 tournament, according to Sports Media Watch. NBC’s Telemundo and Peacock, which carry the region’s Spanish-language broadcasts and streaming, posted growth of 24 per cent viewership over the same period.

Critically, ratings for the US team present the most modern portrait of domestic viewer consumption, given it’s the stars and stripes’ first appearance in the World Cup since 2014, before the current rights deal with Fox took effect. (That year’s tournament was broadcast on ESPN and Univision.) Fox ratings for the US team average 11.7mn viewers through the group stage, up 10 per cent from eight years ago.

These ratings are extra impressive given the timezone differential (the US east coast is eight hours behind Qatar) and, most notably, driving against a packed schedule of National Football League and US college football games. The first full week of the World Cup coincided with the US Thanksgiving holiday, a traditional fest for both slices of the American football variety. The NFL calculated that 138mn people watched its games on Thanksgiving — more than 40 per cent of the US population — while that afternoon’s Giants-Cowboys game drew 42mn viewers, the highest-rated regular season NFL match on record.

Gridiron football clearly reigns supreme in the US, but early gains in viewership through the World Cup group stage are an encouraging sign for the global game in its most important growth market. The early match times are also ideal for families with children, who can watch whole games during the afternoons, unlike prime time sports after bedtime. With the Americans set to face the Netherlands today in the knockout round, time will tell if both the on-pitch and on-screen success continues.

You can watch our video on the legacy of the Qatar World Cup here.

Why Juventus is a problem for this family dynasty

Andrea Agnelli and Pavel Nedvěd: out © STRINGER/EPA-EFE/Shutterstock

The billionaire Agnelli family’s loyalty to Juventus football club has come back to bite.

The club’s directors, including chair Andrea Agnelli and vice-chair Pavel Nedvěd, resigned en masse this week, with Italian authorities upping the pressure over its approach to accounting since the coronavirus pandemic smashed revenues.

Turin prosecutors are seeking indictments for a dozen current and former Juventus executives for alleged market manipulation and false accounting. Uefa, European football’s governing body, is investigating the club’s finances.

Juventus said it is “convinced that it has always acted correctly”. 

The debacle raises questions for John Elkann, grandson of Italian statesman-industrialist Gianni Agnelli, the modern-day family leader. The New York-born tycoon has been unafraid to make radical changes at Exor, the vehicle through which the Agnellis control Juve, having already shifted its headquarters from Italy to the Netherlands.

The history of the family and the club are deeply intertwined, going back around a century, but will trouble at Juve raise questions about the future? A person close to Exor insisted Juve isn’t up for sale.

Despite the financial woes and clashes with authorities, Juve barely registers in the Exor empire. Through the holding company, the family holds investments in Ferrari, The Economist magazine, and fashion brand Christian Louboutin.

With a net asset value of €29bn, Exor can afford to ride out short-term pain at a football club valued at €710mn on the stock market, even if the headlines in the short-term are unhelpful at best.

But European clubs are in high demand. There could be options if Exor is up for a discussion, particularly after Gerry Cardinale’s RedBird Capital Partners acquired AC Milan for €1.2bn earlier this year. We put together this video explainer of that deal.

There should be upside to improve performance at Juve, which has lost more than €550mn in the last three seasons. In a letter to shareholders in October, Andrea Agnelli said the annual loss of €254mn in the 2021-22 campaign was “certainly the gloomiest moment” from an “economic-financial point of view”.

Perhaps Exor wouldn’t relinquish control, but what would it say to a pitch from a strategic investor with a vision?

The best of the FT’s World Cup coverage this week

Lionel Messi: main man © Catherine Ivill/Getty Images
  • In blue and white, Lionel Messi has always operated in the shadow of Diego Maradona, who led Argentina to World Cup glory in 1986. Now that Argentina have emerged from the scare of losing to Saudi Arabia, Messi has another chance at the biggest prize on the international stage.

  • Gas-rich Qatar has been put under scrutiny for its human rights record, treatment of migrants and LGBTQ+ people. But its hosting of the World Cup has also been a rare source of unity in the Arab world.

  • The Qatari official in charge of delivering the 2022 World Cup has said that around 400 people died during the construction work associated with preparations for the tournament, a far higher figure than previously given.

  • What does it mean to support a football team, really? Increasingly flexible allegiances are coming to define international football, with fans happy to wear the colours of another nation than their own.

Highlights

  • The Qatari owners of Paris Saint-Germain are targeting a valuation of more than €4bn in talks with potential investors that would set a new benchmark for a football club and boost expectations for others currently on the market.

  • The National Basketball Association will allow sovereign wealth and pension funds to buy into teams, according to Sportico, broadening the range of investors that can enter the sport. The move comes after the NBA previously relaxed its bylaws to permit private equity firms to take minority stakes in teams.

Final Whistle

Christian Pulisic: ouch © @MenInBlazers

Christian Pulisic has been the face of US football for the better part of a decade, after star turns at Borussia Dortmund and currently as a midfielder at Chelsea. He finally got his chance to cement his status with his first goal in a World Cup on Tuesday, the eventual winning score that sent the Americans to the knockout round — but not before Pulisic himself was knocked out on the very point itself. Iran goalkeeper Alireza Beiranvand inadvertently collided with Pulisic directly between his legs, sending the Hershey, Pennsylvania native crumbling to the ground and out for the rest of the match.

With a must-win match against the Netherlands today, and Pulisic’s status throughout the week still tentative, the burning question on every American’s mind has been: how long, uh, does it take to recover from, you know, getting kicked between the legs? Pulisic himself gave a breakdown on Thursday.

Scoreboard is written by Josh Noble, Samuel Agini and Arash Massoudi in London, Sara Germano, James Fontanella-Khan, and Anna Nicolaou in New York, with contributions from the team that produce the Due Diligence newsletter, the FT’s global network of correspondents and data visualisation team

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Opec+ tipped to hold oil output levels steady

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Opec and its allies are expected to keep the group’s oil output targets unchanged when it meets this weekend, with one eye on the impact of European sanctions targeting Russia’s oil that come into force next week.

The Opec+ group, which includes Saudi Arabia and Russia as its two largest producers, could still decide to make a small production cut, according to people familiar with the group’s discussions, but are leaning towards rolling over production targets.

The group was due to meet at Opec’s headquarters on Sunday but this week changed course to hold the meeting online, in a sign many have interpreted as the group not planning any dramatic shifts in policy.

“It means that they’ve already taken a decision,” said Jorge León, a former Opec official now at energy consultants Rystad.

“Normally, if there’s no agreement ahead of the meeting then it makes sense to bring 23 ministers to the table.”

At Opec+’s last meeting in October, the first held face to face since the start of the coronavirus pandemic, the group agreed a cut to production quotas of 2mn barrels a day, but faced fierce pushback from the US and other consumer countries.

While Saudi Arabia argued Opec+ was reducing output because of concerns about a slowing world economy, the White House accused its longtime ally of effectively siding with Russia.

Russia has slashed gas supplies to Europe since its invasion of Ukraine, sparking off an energy-led cost of living crisis that has left many countries grappling with inflation.

The oil price reaction since the Opec+ cuts has been limited, however, with Brent crude, the international benchmark, trading at $87 a barrel on Friday — near where it was when it became clear in October Saudi Arabia was leading a push to lower production.

Oil prices had jumped immediately after Russia’s invasion of Ukraine and were trading at $120 a barrel as recently as June.

But they have cooled to roughly where they were trading at the beginning of the year, with Russian oil exports having only slipped slightly since the invasion and China’s zero-Covid policy crimping demand.

That may change in the coming weeks, however, as European sanctions barring seaborne imports of Russian crude come into effect on Monday, with restrictions on refined fuels to follow in February.

The G7 is also launching a so-called price cap that aims to keep Russian oil flowing to other countries like India and China — by granting waivers to sanctions targeting shipping Russian crude — but at a price point set by western powers. The EU agreed on Friday to set the price at $60 a barrel.

Russia has repeatedly said it will not deal with any country utilising the price cap, stoking concerns it could retaliate by severing oil pipeline flows to Europe that were exempt from sanctions.

Amrita Sen, at consultancy Energy Aspects said there were “huge unknowns”.

“It is prudent for Opec+ to hold steady rather than adding to the volatility.”

Officially the next Opec+ meeting after Sunday is not scheduled until June. But Sen said the cartel could take action later in December or early next year to boost or cut supply if required.

“We believe that if the market warrants it, they would meet at a short notice,” she said.

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