Oxford Nanopore

Description

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.

Ask a question about our investment in Oxford Nanopore

Fund exposure
Equity Income Fund 2.57%
Patient Capital Trust 7.15%

As at 30 April 2019

Segmentation
Geography United Kingdom
Industry Health Care
Themes Healthcare innovation

Source: Woodford

Commentary

Grandomics collaboration

Oxford Nanopore has this week announced of major collaboration with GrandOmics, one of the leading sequencing companies in China, to deliver long-read human genomes. The project “dbSV100k” aims to sequence 20,000 human genomes in 2019 and a target of 100,000 by 2021. For context, the entire UK Genomics England national project is also to sequence 100,000 UK patients. The project will explore opportunities for clinical applications and for Grandomics to provide clinical genetic services in the future – this will use Oxford Nanopore’s PromethION device.

Meanwhile, as part of the announcement, Oxford Nanopore has confirmed that it has successfully demonstrated that a single 48-flow cell on PromethION can generate more than 7TB (terabases). That is effectively sequencing one human genome with sufficient depth of coverage to generate high quality data.

This is exactly the type of contract / partnership that Oxford Nanopore requires in order to deliver on its mid-term commercial forecasts. It is significant from a financial perspective and also because its successful execution will help to create the applications market in the mid-term. Meanwhile, this is excellent further validation for Oxford Nanopore’s technology as activity in the long-read human genome sequencing market increases.

Saku Saha
26 April 2019

Investment from Amgen

Oxford Nanopore has today announced an equity investment of £50m from Amgen, a world leader in using strategic human genetics to deliver new medicines to patients. Amgen’s subsidiary deCODE Genetics uses Oxford Nanopore’s sequencing technologies to conduct genome research.

The investment takes place at the same price per share as the primary fundraising announced in March 2018, which valued Oxford Nanopore at around £1.5bn. With a rapidly growing customer base, it is now expanding its commercial and manufacturing operations as well as continuing to invest in innovation. This latest investment represents another positive endorsement of the company’s technology and long-term growth prospects. The founder of deCODE Genetics notes that they, like us, “continue to see the promise of this emerging technology.”

Our video, below, provides more information on the company and its technology.

Saku Saha
18 October 2018

WPCT 2017 annual report case study

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.

Commercially viable

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.

24 April 2018

Read the full report

Fundraising

One of our patient capital ‘unicorns’, Oxford Nanopore, has today announced the completion of a £100m fundraising, which values the business at £1.5bn. This funding provides the business with the capital it needs to move on to the next leg of its commercial journey, supporting the construction of its new manufacturing facility, further commercial expansion and additional research and development.

The funds have been raised from a mix of existing and new global investors, such as GIC (Singapore), CCB International (China) and Hostplus (Australia). It therefore enhances the quality and diversity of the company’s share register and provides further validation of the long-term investment opportunity, which in our view, remains outstanding.

Having worked with the company closely over several years, we have watched it evolve to where it is today and we remain a committed supporter of the business. With a rapidly growing customer base, the company’s focus is now on the commercial execution of its core products, including the MinION and PromethION, and that’s where we believe its future potential value now lies.

Saku Saha
20 March 2018

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

© 2019 Woodford Investment Management Ltd.
All rights reserved.

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