Fiery Flash: Oxford Nanopore rebounds as investors look at the stars

 

Our Fiery Flash of the week is Oxford Nanopore Technologies, whose stock has shown a remarkable recovery over the past week. Now trading at 114 pence, the stock has climbed approximately 14% compared to its closing price at the end of last week. This rebound comes after a long period of decline since the company’s IPO in 2021, during which the stock lost up to 85% of its value. Oxford Nanopore is trading at a market capitalization of approximately £1,1 billion, well below its IPO valuation of £3.4 billion. The company trades at a forward price-to-sales ratio of around 5x based on expected 2025 revenue. This compares to roughly 6x for high-growth genomics and life sciences technology companies such as Grail and Danaher, and around 3–4x for players like Illumina and Thermo Fisher.

Founded in 2005 as a spin-out from the University of Oxford, Oxford Nanopore Technologies develops innovative nanopore-based DNA and RNA sequencing technologies. Its portable sequencing devices are used worldwide, supporting applications ranging from academic research to real-time pathogen monitoring, particularly during the COVID-19 pandemic. The company boasts a unique technology platform and an intellectual property portfolio comprising over 2,000 issued patents and applications.

In early March, the company reported financial results that were largely in line with market expectations. For the year ahead, Oxford Nanopore expects revenue growth of 20–23%, reflecting strong ongoing demand across its business. However, this outlook also factors in risks related to potential cuts in U.S. federal funding, as well as tightening export control restrictions. Despite a gross margin of 59%, the company does not expect to cover operational costs in 2025 and is forecasting a net loss. Management aims to break even on an adjusted profit basis by 2027 and to reach positive cash flow by 2028.

In the current market environment, unprofitable technology growth companies that lack positive free cash flow receive little support from investors. An impressive technology is one thing, revenue growth another but ultimately, profitability and especially free cash flow remain critical. This helps explain the dramatic 85% decline since the IPO.

In recent weeks, there has been notable news regarding the company’s shareholder structure. It was reported that tech tycoon Larry Ellison has increased his stake in Oxford Nanopore to over 9%, making him one of its largest investors. Ellison, the billionaire founder of Oracle and the fourth wealthiest person in the world, recently announced the ambitious Stargate project at the White House alongside President Donald Trump, Masayoshi Son of SoftBank, and Sam Altman of OpenAI. This joint venture aims to build an AI infrastructure system in partnership with the U.S. government, with an estimated price tag of $500 billion. Ellison highlighted healthcare applications, such as early cancer detection and DNA sequencing for personalized vaccines, as among the most important use cases for the Stargate data centers. “This is the promise of AI and the promise of the future,” he said. In addition to Ellison, Novo Nordisk, maker of the popular drug Ozempic, is also a shareholder in Oxford Nanopore Technologies.

Earlier this year, it was reported that an anti-takeover share held by co-founder Gordon Sanghera had lapsed toward the end of last year. Perhaps because that news went largely unnoticed at the time, Sanghera stated in a Financial Times article published today that the company is now “exposed” to a potential takeover. He added that the business is not afraid of being acquired by the “right person”.