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Oxford Nanopore H1 Revenues More Than Double, Driven by COVID-19 Testing

This story has been updated to include comments from Oxford Nanopore Technologies' investor call following the release of its financial results.

NEW YORK – Oxford Nanopore Technologies reported on Tuesday morning that its revenues in the first half of 2022 more than doubled year over year, driven by COVID-19 testing.

For the six months ended June 30, 2022, Oxford Nanopore had revenues of £122.3 million ($141.3 million) compared to £59.0 million in the prior-year period.

"Oxford Nanopore continues to make significant progress, with another period of strong growth in core revenue," CEO Gordon Sanghera said in a statement. "We are seeing increasing demand around the world for our unique offering and are hugely proud of the new ground that our customers are breaking with the aid of our technology, in areas spanning population genomics, viral surveillance, neurological disorders, cancer, and environmental conservation."

The firm's life science research tools (LSRT) revenues were £70.6 million, up 34 percent from £52.6 million the year before, driven by increasing numbers of customers. COVID-19 testing revenues jumped eightfold to £51.8 million from £6.4 million in the prior year period.

On a conference call with investors following the release of results, Sanghera said that "COVID sequencing revenues did not decline as quickly as expected," and contributed between £15 million and £18 million to LSRT revenues. However, COVID sequencing runs peaked in December and January and the firm is "now seeing a significant decline."

Sequencing consumables revenues were £47.3 million, up 36 percent year-over-year from £34.7 million while revenues from starter packs — which include instruments and consumables to get a lab started with nanopore sequencing — grew 23 percent to £18 million. Other revenues were £5.3 million, including products such as the Voltrax sample preparation instrument, software licenses, and device renewals.

By region, life science research tools revenues in the Americas were £23.3 million, up 56 percent from £14.9 million a year ago; Europe and the UK revenues totaled £21.4 million, up 34 percent from £16.0 million a year ago; China revenues were £8.5 million, more than double the £3.8 million a year ago; United Arab Emirates contributed £6.9 million to revenues, down 33 percent from £10.3 million a year ago; Asia Pacific and Japan revenues were £7.8 million, up 47 percent from £5.3 million a year ago; and revenues from emerging markets came in at £2.7 million, up 17 percent from £2.3 million a year ago.

Oxford Nanopore also broke its customers down into three segments, based on total orders. S1 customers, representing annual orders of less than $25,000, accounted for £14 million in revenues, up 16 percent from the prior-year period. S2 customers, representing orders in the range of $25,000 to $250,000, accounted for revenues of £24.4 million, up 36 percent year over year. S3 customers, representing orders of more than $250,000, accounted for revenues of £18.8 million, nearly double year-over-year. Indirect customers, who purchased through distributors, mainly in China and India, accounted for £7.5 million in revenues, up 150 percent year over year.

CFO Tim Cowper called the S2 segment the company's "sweet spot over the medium term."

The firm added 990 active customer accounts in the period, bringing the total to more than 7,300. It defines these as customers who have been active over a 12-month period.

R&D spending in H1 was down 18 percent to £25.2 million from £30.6 million a year ago, while SG&A spending increased 77 percent to £75.7 million from £42.8 million.

Headcount grew to more than 900, compared to approximately 800 at the end of 2021.

Oxford Nanopore's H1 net loss narrowed to £25.9 million, or £.04 per share, compared to a net loss of £44.9 million, or £.06 per share, in 2021.

The company ended the first half of the year with £471.6 million in cash and cash equivalents and treasury deposits of £131.0 million.

During the Q&A portion of the call, Sanghera noted that China's CDC had adopted the nanopore sequencing platform for infectious disease surveillance work but did not provide additional details.

Oxford Nanopore reiterated its full-year 2022 guidance, predicting life science research tools revenue to be in the range of £145 million to £160 million and "tapering" of COVID-19 sequencing revenue over the second half of the year. The firm expects revenues from the Emirati Genome Program in the range of £15 million to £20 million, lower than previously anticipated. For full-year 2023, life science research tools revenue is expected to range from £190 million to £220 million.

In Tuesday trading on the London Stock Exchange, Oxford Nanopore shares were up 5 percent to £2.85.