Oxford Nanopore raises £195 million at £2.5 billion valuation ahead of expected IPO

by Jonathan Adams
IPOs

Oxford Nanopore, the gene-sequencing biotech considered one of the UK’s most promising companies, has raised £195 million in fresh capital ahead of an anticipated 2021 IPO. The investment round valued the company, spun out of a University of Oxford research lab, at £2.5 billion.

£125 million of the £195 million total came from new investors who are backing the biotech for the first time. They include some high profile names including Singapore’s sovereign wealth fund Temasek, fund manager M&G Investments and Japanese company Nikon. The latter is best known for manufacturing cameras but has recently been diversifying its interests.

Oxford Nanopore earlier this year announced its expectation for an IPO at some point during the second half of 2021, presumably during the autumn months. That target does come with the condition that it is dependent on market conditions but the company yesterday reiterated that it “remains focused on its previously announced strategic plans”.

If analysts at investment bank Jefferies prove accurate in their estimate of Oxford Nanopore’s probably IPO valuation, which they set at around £3.9 billion, even the most recent investors in the biotech stand to achieve significant returns. An IPO would also see major payouts for early employees including chief executive Gordon Sanghera, who has held the role since the company was spun out of the university in 2005.

The Oxford Nanopore IPO is also expected to opt for the London Stock Exchange and prove a boost for the City, which in recent years has lost out to Wall Street for the listings of other high profile UK biotech and life sciences companies. Vaccitech, another Oxford spinout and the company behind AstraZenica’s Covid-19 vaccine, recently listed on the Nasdaq exchange, as did Immunocore.

The government this year introduced several high-profile changes to the rules and regulations around premium listings on the London Stock Exchange to make it more attractive to high growth tech and life sciences companies. Securing the Oxford Nanopore IPO will offer a level of vindication for those adjustments after recent defections.

The biotech, based at the Oxford Science Park, now employs around 640 people across its offices in the UK, San Francisco, Beijing and Shanghai. 500 of them are based in Britain. Having been spun out as company in 2005, it wasn’t until 2015 that Oxford Nanopore launched its first commercial product – a portable DNA and RNA sequencer.

Oxford Nanopore’s technology has been relied upon to track mutations in the Covid-19 virus, which saw 2020 become a “pivotal year”, for the company’s finances after it was awarded government testing contracts worth over £140 million. 2019 revenues of £52.1 million were almost three times less.

There has been some scrutiny of whether the company might have been unfairly favoured by the UK government but the company’s technology has also been used around the world to sequence the coronavirus that causes Covid-19.

Jack Daniels, chief investment officer at M&G, which contributed £35 million to the recent investment round, commented that the decision was made based on Oxford Nanopore’s technology

“being used in a broad range of scientific research applications, including to further biomedical science, to characterise pathogens in microbiology and public health”.



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