Oxford Nanopore is a sequencing business that was spun out of the University of Oxford in 2005. We have known the company for a long time, with Neil first investing in the business in 2011. It was introduced into the Woodford Equity Income Fund in August 2014 and, almost a year later, in July 2015, the company joined the portfolio of the Woodford Patient Capital Trust.
DNA sequencing systems have traditionally been costly and bulky but Oxford Nanopore has developed a new generation of sequencers that are small, portable and affordable. They enable direct, quick, cost-effective and in-the-field analysis of DNA and other biological molecules. Crucially, Oxford Nanopore’s products are the world’s only sequencers that can deliver DNA analysis in real-time.
Investment case summary
Initially, we were attracted by the commercial potential of the company’s novel and disruptive nanopore technology, which we continue to believe to be substantial. Our confidence in the investment case has grown over time, as its experienced management team has continued to execute its vision successfully. As with many disruptors, Oxford Nanopore’s journey hasn’t always been completely trouble-free. In 2012-13, it encountered technical challenges around the membrane that held its nanopores, which required extra time and capital to resolve, delaying its introduction to market. Ultimately, however, the business has overcome these developmental challenges and is now commercialising its technology.
Oxford Nanopore has a growing product offering, with devices that range from small, handled-in-the-field technologies to bigger and more powerful machines capable of analysing large numbers of samples. The company’s novel nanopore sequencing technology can be used in a wide range of fields such as diagnostics and precision medicine, agriculture, food and water testing, as well as traditional uses in scientific research.
The pocket-size MinION, introduced in 2014, has been successfully used in labs and in the field, in a variety of projects including sequencing human and crop genomes, real-time tracking of pathogen outbreaks including Zika, Lassa and Ebola, to research cancer genetics, and to understand the complex biological composition of wastewater, seawater and ice. Meanwhile, PromethION – a benchtop, on-demand, very high-throughput device – is designed for very large projects, large numbers of samples and long read sequencing.
With a rapidly growing customer base and increasing global reach, Oxford Nanopore is now expanding its commercial and manufacturing operations as well as continuing to invest in innovation. We are very confident that the company is poised to deliver strong growth in the years ahead.
|Equity Income Fund||2.57%|
|Patient Capital Trust||7.15%|
As at 30 April 2019
A DNA breakthrough
DNA is the source code of life and the ability to sequence this code has become increasingly important for scientific research, including biomedical research in infectious disease and cancer.
The ability to sequence DNA directly, quicker, cost-effectively and on-demand, whether that is in a lab or in the field, creates vast opportunities for diagnostics and precision medicine, agriculture, food and water testing, as well as traditional uses in scientific research. For Oxford Nanopore, this is already a reality.
DNA sequencing systems have traditionally been bulky and costly, but Oxford Nanopore is developing a new generation of DNA sequencers that can – uniquely in the market – scale from tiny and portable to benchtop and high throughput, and sequence in real time.
Its pocket-size DNA sequencer the MinION, introduced in 2014, has been successfully used to sequence human and crop genomes, to track outbreaks of pathogens like salmonella, MRSA, Zika, Lassa and Ebola, to research cancer genetics, and to understand the complex biological composition of seawater and ice.
The MinION is just one of several products on the company’s shelves. The PromethION, recently made available in early access, is already showing promise to compete with the largest traditional devices. GridION X5 is a benchtop sequencer with 5X the power of MinION, the can be used to provide a sequencing service. At the smaller end, the Flongle will adapt MinION for smaller tests like diagnostics, and it is developing the SmidgION, which can be used with a smartphone.
The company is valued at around £1.5bn, with its order book increasing 300% year-on-year. With a rapidly growing customer base, its focus is now on commercial execution of its core products, including the MinION and PromethION, as well as keeping ahead on innovating to expand the market.