Oxford Nanopore: Why a London IPO make sense

No company is better at spotting and tracking coronavirus mutations than Oxford Nanopore. The biotech firm started by Oxford University scientists in 2005 is all set for an IPO that could value it at up to £7 billion.

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DNA sequencing technology start-up Oxford Nanopore has picked London for an initial public offering later this year.

If successful, it could give the UK market a shot in the arm at a time when ministers are looking to reform listing rules in order to attract healthy interest from the tech sector.

The Oxford-based company is likely to be one of the largest floats this year in London, with analysts valuing it at between £4 billion and £7 billion.

Oxford Nanopore is one of the latest tech companies to choose London after Deliveroo, which produced a considerably underwhelming debut on March 31.

In addition, the UK was overlooked by used car seller Cazoo, which has decided to list in New York through a special purchase acquisition company.

What does Oxford Nanopore do?

Unless you have an extensive knowledge of biochemistry, the Wikipedia entry for Oxford Nanopore Technologies may as well be written in Sanskrit.

“Oxford Nanopore Technologies Limited is a UK-based company which is developing and selling nanopore sequencing products (including the portable DNA sequencer, MinION) for the direct, electronic analysis of single molecules,” we are informed.

The company’s own website has some slightly more digestible information. The technology it develops provides “on-demand biological information, to any person, in any environment.”

Further reading suggests much of its work is used in research, in fields as diverse as forensics, space exploration, crop efficiency and food security. Its core operations are in cancer and infectious diseases.

And while Covid-19 has hardly spelt good news for the vast majority of the world's population, it has proved beneficial to a group of Oxford-based scientists.

How much is Oxford Nanopore worth?

Oxford Nanopore was valued at £1.7bn in a funding round last year. It has since risen to a valuation of £2.3 billion according to the books of the IP Group, one of its investors.

Other companies with a stake in the company include three Asia-based names - China’s Tencent, Singaporean sovereign wealth fund GIC and Abu Dhabi tech company G42. Institutional funds including Schroders, Odey Asset Management and Lansdowne have also invested in the biotech firm.

The Hamburg-based investment bank Berenberg believes Oxford Nanopore “could comfortably reach a valuation above £4bn at its next funding event, particularly given the company’s value appreciation and technological progress compared with those of publicly listed peers”.

The company was founded in 2005 by Hagan Bayley, an Oxford University graduate and subsequent employee, alongside Gordon Sanghera and Spike Willcocks, with seed funding from the IP Group.

Does Oxford Nanopore make a profit?

Oxford Nanopore made revenue of £52m in 2019, an increase of 60% compared with the previous year. However, losses hit £72m as the company made investments in research and development, while also upgrading and extending manufacturing facilities.

Between 2014 and 2017, those losses fluctuated between £37m and £59m; obviously anyone investing in shares would want those losses to transform into profits in due course.

It is, therefore, relevant that biotech and life sciences have been earmarked by the conservative government of Boris Johnson as a sector the UK can dominate. To that end, officials are keen to build a nucleus of such companies in the UK.

What is the UK doing to facilitate tech IPOs?

The UK wants companies like Oxford Nanopore to remain with their feet firmly planted on home soil rather than be bought out by larger companies from overseas.

In February, ministers lent their support to a review into rules concerning London listings which can help keep tech companies in the UK. These measures include reforming the process to provide such greater scope for dual share classes, something that is in the interests of start-up founders.

How has the pandemic helped Oxford Nanopore grow?

The COVID-19 pandemic has proved to be a substantial economic benefit to Oxford Nanopore. Few organisations can provide such a powerful solution when it comes to spotting and tracking coronavirus mutations.

It’s been reported that approximately 20% of the Sars-Cov-2 virus genomes were generated on an Oxford Nanopore device by scientists from more than 85 countries.
What has Oxford Nanopore said about its IPO?

In a statement, the company said: “Oxford Nanopore Technologies has today informed its shareholders that it has started the process of preparing for a potential initial public offering.”

When is the Oxford Nanopore IPO?

The group, which is set to name the banks who will advise on the process, expects to float in the second half of 2021 “dependent on market conditions”.

It said access “to deeper, international pools of capital would support our ambitious growth plans, enhancing our ability to innovate and scale our manufacturing and commercial functions”.

There had been reports that the company was tempted to float in the US given the scale of growth within US biotech, but it has publicly insisted it is “rooted in the UK”. 

Gordon Sanghera, chief executive, said 2020 was “a pivotal year for us”. But he clearly expects further growth, noting: “It is clear to us that we are still only in the foothills of what is possible.”

Who are the key leaders at Oxford Nanopore?

The Oxford Nanopore executive team has experience in the development, manufacture and commercialisation DNA sequencing. It is also committed to supporting future fundraising activities.
  • Chief executive officer: Dr Gordon Sanghera
  • Chief business development officer: Dr Spike Willcocks
  • Chief technology officer: Clive Brown
  • Chief scientific officer: Dr John Milton
  • SVP, Corporate development: John Schoellerman
  • Chief financial officer: Tim Cowper
  • VP, Marketing: Zoe McDougall
  • VP, General Counsel: Jordan Herman

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