Third-Generation DNA Sequencing Shines with Oxford Nanopore’s IPO

Oxford Nanopore Technologies, until recently one of very few unicorns in the European biotech industry, had a stellar IPO on the London Stock Exchange late last month. This is ushering in a whole new generation of DNA sequencing, genetics research, and diagnostics.

During the first day of the IPO, which bagged the firm over €400M (£330M), the company’s market capitalization rose from €4B (£3.4B) to over €5.7B (£4.8B). The success for the company came on the heels of a €230M (£195M) fundraise earlier this year. 

Many analysts saw the company’s successful listing as the rise of a European alternative to US-based Illumina, which provides one of the most popular platforms for genetic sequencing on the market today. 

“I was very encouraged by the first-day performance of Oxford Nanopore as it listed in London up 50% on the day, with the majority of the issue being taken by UK and European institutions,” said Thomas Burt, an Investment Partner at the VC company Sofinnova, at Endpoints’ European Biopharma Summit this week. “The European and UK institutions were valuing Oxford Nanopore as US specialists and generalists would value Illumina.”

Oxford Nanopore, which did not respond to a request for comments, has previously said that it intends to use the funds from the IPO for research and development, manufacturing automation, and commercialization, as well as for potential acquisitions. Some anonymous industry insiders expressed the opinion that the company is overvalued, but others, especially smaller biotech companies using Oxford Nanopore’s tools, are raving.

“The wave of third-generation sequencing has only started, with nanopore sequencing as one of its main players in the field,” said Gerben Menschaert, the CSO and co-founder of Belgium-based Ohmx Bio, which develops tools for genome mapping and automated data processing. “This IPO will further accelerate the transition from second- to third-generation sequencing applications.”

The first generation of sequencing was introduced in the 1970s, and could only sequence one piece of DNA at a time. Second- and third-generation genome sequencing refers to techniques that allow the sequencing of multiple pieces of DNA at once. For example, Illumina’s next-generation sequencing (NGS) revolutionized sequencing by allowing millions of DNA pieces to be decoded simultaneously from a pool of genetic material. In the past two decades, multiple tweaks to DNA sequencing have allowed the first sequencing of the human genome and made the procedure thousands of times cheaper and faster, allowing it to be introduced on the consumer medical market.

While earlier tools could read sequences of up to 1,000 base pairs or ‘letters,’ NGS can only read even shorter sequences of a few hundred base pairs each. The next wave or generation of DNA sequencing involves ‘long reads’ or the decoding of much longer sequences of some 10,000-100,000 base pairs.

Oxford Nanopore is one of the most successful companies championing long-read sequencing. The technology that allows this, known as nanopore sequencing, consists of forcing DNA strands through myriads of nano-sized ‘pores’ and measuring the electric signal that each base produces when crossing the pore. Once fully commercialized, the technology is expected to eliminate issues with the detection of repetitive sequences in the genome and to give scientists a much clearer perspective into how genes function. 

The firm touts its nanopore technology as being able to read RNA sequences more reliably than with traditional techniques, an application of which is the study of RNA viruses, including the virus causing Covid-19.

Oxford Nanopore’s sequencing tools could also open up possibilities to advance the study of epigenetics — how different parts of the genome are activated or silenced during an individual’s lifetime. This additional layer of genetic information makes the genome dynamic despite having a fixed sequence.

“Oxford Nanopore has made DNA sequencing accessible to scientists in almost any setting,” said Gordon Hamilton, CEO of the UK-French Depixus, which builds tools for the study of the interactions between DNA, RNA, and proteins. “This opens up the possibility to take the next steps into the largely untapped wealth of the dynamic genome using new disruptive technologies.”

There are challenges ahead, including improving the accuracy of sequencing as well as interpreting and storing the data, but the future looks bright. European companies improving gene sequencing could revolutionize critical niches including pandemic monitoring, antibiotic resistance, cancer diagnostics and treatment, and gene therapy.

“Applications such as routine surveillance screening for emerging pathogens and antimicrobial resistance genes require a combination of rapid automation and multiplexing with long reads,” Pieter Haitsma Mulier, the CEO of UK-based company RevoluGen, told me. The firm specializes in nucleic acid isolation and purification in preparation for sequencing on Oxford Nanopore’s or other platforms.

“In the future, we will live in a world where everyone’s genome will probably be sequenced more than once, and healthcare may then be based on precision medicine, tailored to personal genomic information,” Mulier added. “With eight billion people on the planet at present, this is clearly a big potential opportunity for the market growth of genomics.”