Revolutionary DNA Biotech Oxford Nanopore Considers IPO

Revolutionary DNA Biotech Oxford Nanopore Considers IPO

In the not too distant future small devices are likely to be able to read or DNA and instantaneously tell us if we have the beginnings as any disease. It will be as easy as monitoring our heartrate through a smartwatch is today. That’s the belief of Dr Gordon Sanghera, the chief executive of Oxford Nanopore, one of the UK’s most exciting biotech start-ups.

Oxford Nanopore produces small, cheap, handheld devices that are able to sequence DNA, detecting diseases instantly. The technology and the biotech knowledge behind it has already been used in Guinea to help track and control different strains of the Ebola virus. The devices work by feeding a single strand of DNA through the tiniest of holes – a nanopore. The reading is then sent back to the lab where the genome is quickly sequenced.

Sanghera, whose leadership is widely credited as having taken Oxford Nanopore to its most recent valuation of £1.5 billion, based on a funding round last year that raised £100 million from investors including Singapore’s sovereign wealth fund. Other backers include U.S. biotech giant Amgen, life sciences-specialist healthcare fund GT Healthcare and the UK fund run by Neil Woodford – The Equity Income Fund.

The chief executive is hugely enthusiastic about DNA reading technology, which he believes is reaching ‘tipping point’. He is convinced it could have the same kind of impact on humanity as the invention of the computer.

Before Oxford Nanopopre, Dr Sanghera led the R&D of Medisense Inc., another successful biotechnology company sold in 1996 to Abbott Laboratories. There he was a key figure in the launch of several generations of blood glucose biosensor systems for the consumer and medical markets. Oxford Nanopore’s other two co-founders are Hagan Bayley and Spike Willcocks, Oxford University professors of chemistry Sanghera convinced to leave academia to work on the further development and commercialisation of nanopore technology.

It now looks as though that proved an astute decision. The company is reported to have now told investors that it plans an IPO within the next 12 months. Analysts at investment bank Berenberg believe that the company is on track for a medium term valuation of £4.5 billion to £7 billion. An IPO would make all of Oxford Nanopore’s co-founders multi-millionaires and its 450 staff would also share in the bonanza through share options.

However, the company is not without competition in its sector. Its former investor Illumina, who sold its stake in 2013 and with whom relations soured to the extent the U.S. giant sued Oxford Nanopore in both the UK and USA for an alleged IP infraction is a major threat. It acquired competitor Pacific Biosciences last year for $1.2 billion, ramping up the rivalry again.

Oxford’s market strategy is based on minimising the cost of its DNA reader hardware to get it into as many hands as possible, profiting on pay-as-you-go and subscriptions for analysis of the readings taken. Two recent deals concluded include with the Guy’s and St Thomas’ NHS Foundation Trust for the diagnosis of Huntington’s disease and U.S. company Clear Labs. The latter will use the technology for food testing done to avoid recalls. The global food and water testing market is forecast to reach a value of $24 billion by 2023 and represents a huge commercialisation opportunity.

Another recent development has been the launch last month of a new technology the company says can sequence a small genome to 99.999pc accuracy. Some analysts believe Oxford Nanopore is just currently too small to be able to make the leap to genuinely challenge the ‘big pharma’ Illumina as a potential market leader. But the scepticism is not uniform. One investor is quoted in The Telegraph newspaper as saying:

“[Sanghera] has experienced it before,” one investor says. “We have every confidence in the management.”

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