Despite the hard-hitting effects of the pandemic, the London Stock Exchange has hosted 70 initial public offerings (IPOs) in 2021 so far, a 40% increase from the year prior and 94% increase from a record low of 36 in 2019 due to possible uncertainties caused by Brexit and the UK general election.
However, much of the hype generated amongst investor and biotechnology circles this past week was focused on Oxford Nanopore Technologies (LSE: ONT) and the rapid ascent of its stock price following its London IPO the previous week. Initially set to trade at 425p a share, its value increased 45% in its first hour of trading; it closed at 612p on 30 September 2021.
This propelled its valuation to approximately £5 billion and raised £350 million for the company. Most major British pharmaceutical and life sciences publicly list their shares on New York’s NASDAQ exchange. London’s last major biotechnology listing was that of the allergy treatment specialist Circassia in 2014. The share price has, on average, remained above 570p in the week following the IPO. According to Refinitiv, this accounts for the eighth biggest listing in London this year and the third largest biotechnology float in the world this year.
Along with Oxford alums Gordon Sanghera and Spike Willcocks, Professor Hagan Bayley, FRS, co-founded Oxford Nanopore in 2005 as a spinout that licensed the stochastic sensing nanopore technology developed by his research group at the Department of Chemistry. “Nanopore”, as the name suggests, are pore-forming proteins or pores fabricated from synthetic materials with an aperture of nanometer scale diameter. Stochastic sensing measures the changes in ionic current to generate sequence readouts as strands of nucleic acids are passed through multiple nanopores embedded on a thin film membrane. The company believed that this method could enable DNA sequencing to become cheaper and more rapid by eliminating the need for multiple reagents and expensive equipment based in a centralized lab, making it also relevant for deployment in low-income countries. As a first step in that direction Nanopore released MinION, the world’s first portable DNA sequencing device, in 2014. The company has since expanded its product line to also include desktop nanopore sequencers and upcoming devices capable of analyzing proteins and small molecules, to varying extents.
In a 2012 interview with the journal, Nanomedicine Bayley mentioned that he spends at most 20% of his time in an advisory capacity at Nanopore. He is not listed on the company’s management board as of 2021, but he still leads an active 25-member research group at the university that considers engineered nanopores amongst its current research themes. In 2014, Bayley founded OxSyBio, another startup which aims to make a synthetic 3D tissue printer for use by surgeons in operating rooms.
Seed funding to develop Nanopore’s technology to a commercially viable state came from the IP Group, which owned a 14.5% stake in the business. Other notable investors include Oxford Sciences Enterprise, American-based Wellington Management, and the Singapore-based Temasek Holdings. Before being ousted from his funds, Neil Woodford also happened to be one of Nanopore’s early investors. Nanopore had raised £613 million in total funding from multiple institutional investors since 2005, prior to its listing.
During the pandemic Nanopore became a provider of rapid COVID-19 tests for the NHS. In October 2020, the Evening Standard reported that Nanopore secured a £112.6 million contract from the Department of Health and Social Care for 450,000 units of its portable LamPORE test, which produces results in 90 minutes. Analysts at Berenberg reported that this contract produced the equivalent of “circa 10 million tests”. In August 2021, the UK government ended this contract early as 90% of UK adults have received their first vaccine shot and the demand for rapid tests is expected to fall in the coming months.
The sustainability of Nanopore’s future growth may depend on how well it expands its revenue streams. Its primary customer base consists of universities and laboratories, but it has yet to generate a profit. Whilst receiving the UK government contract for COVID-19 tests doubled the revenue from the previous year, it is yet to be seen whether there may be similar contracts of comparable value.
Published peer-reviewed papers have shown that this method could be used to accurately study cancer, crop science, and perform environmental analysis, which underscores its credibility in the research community. However, it has not moved into serving all these markets yet.
In a future phase of its development Nanopore is probably interested in forging inroads into clinical markets, especially given the recent announcement of its partnership with the U.S. database software giant, Oracle. Specifically, Nanopore will add its DNA/RNA sequencing tools and genomic data into Oracle Cloud Infrastructure’s suite of life science applications to enable pharmaceutical firms to simply integrate Nanopore sequencing into their workflows.
Image Credit: DataBase Center for Life Science (DBCLS)/CC By 4.0