This article has been updated with additional information from Oxford Nanopore's earnings call.
NEW YORK – Oxford Nanopore Technologies reported on Tuesday morning that its revenues for the first half of 2024 dipped 2 percent year over year and were almost flat on a constant currency basis, in line with expectations announced in July.
For the six months ended June 30, the UK nanopore sequencing firm booked £84.1 million ($110.5 million) in revenues, almost all from life sciences research tools, compared to £86.0 million in H1 2023. Of the company's total revenues, 74 percent, or about £62.2 million, came from consumables, compared to £64.3 million, or about 75 percent, in H1 2023. All other revenues came from sales of devices and services, totaling approximately £21.9 million, compared to £21.7 million a year ago.
Excluding revenues from COVID sequencing and the Emirati Genome Program (EGP), Oxford Nanopore’s so-called underlying revenues totaled £82.6 million, up 9 percent from £75.6 million in the year-ago period.
Meanwhile, the company's EGP revenues almost dried up, dropping from £4.9 million in H1 2023 to £300,000. COVID sequencing revenues were £1.2 million in H1 2024, down 79 percent from £5.5 million in the same period last year.
During a conference call discussing the company’s H1 2024 financial results, Oxford Nanopore's new CFO Nick Keher told investors that the company anticipates its COVID sequencing revenues in the second half of the year to be “broadly consistent” with the first half, and the “rolling off” of EGP revenues moving forward.
On the basis of underlying revenues, consumables revenues increased 10 percent year over year, driven by PromethIon flow cell and associated kits, partially offset by a decline in MinIon flow cell sales. Underlying device revenues grew 7 percent, also driven by PromethIon products.
Looking at product lines, underlying revenues for PromethIon grew 39 percent during the period to £31.9 million versus £23.0 million in H1 2023, while MinIon underlying revenue declined by 11 percent year over year from £31.1 million to £27.8 million.
By region, Oxford Nanopore booked £34.1 million of revenue in Europe, the Middle East, Africa, and India during the first half of the year, down 4.3 percent from £35.6 million in H1 2023. Excluding COVID sequencing and EGP, revenues increased 16.4 percent from the same period last year, primarily driven by the placement of new devices and increased utilization of existing devices, Keher said.
Revenues in Asia-Pacific increased 5 percent year over year from £17.6 million to £18.4 million, and 11 percent without COVID sequencing. Within the region, revenues in China were down 2 percent year over year but grew 8 percent without COVID sequencing.
“As we look forward, though, there is no mistake that it is difficult to operate and get product into China, given the trade restrictions in place,” Keher said. “Whilst we're doing very well there, we are cognizant of the risk profile.”
Revenues in the Americas were £31.6 million, down 4 percent from £32.8 million in H1 2023. Excluding COVID sequencing, revenues increased by 2 percent, reflectingdelays seen in funding for major projects, lower MinIon sales, and the timing impact of hiring for the commercial teams, Keher noted. For the second half of the year, Oxford Nanopore anticipates revenues in the region to increase more than 30 percent year over year, according to Keher.
Unlike the previous reporting periods, Oxford Nanopore did not break down its customersinto segments based on total orders. Instead, Keher said about 70 percent, or £59.0 million, of the firm H1 revenues were generated by basic research customers; 12 percent, or £10.0 million, were from applied industrial customers; 9 percent, or £8.0 million, came from customers in the clinical space; and the remainder, about £7.0 million, were from biopharma customers.
According to Keher, Oxford Nanopore has entered an agreement with a third-party firm to help customers finance the purchase of Oxford Nanopore devices rather the leasing them. “This could open up new customers [to the company] who want to own the device at the end of the term but also minimizes the cash investment by ourselves in placing devices with customers,” he noted.
The firm's H1 R&D spending stayed almost flat at £48.0 million compared to £48.2 million in the year-ago period, while SG&A spending grew 3 percent to £78.5 million from £76.1 million.
During the reporting period, Oxford Nanopore increased its total workforce by 22 percent from 1,049 employees in H1 2023 to 1,281 at the end of June. Specifically, headcount for R&D grew 13 percent from 445 to 504, production personnel increased 4 percent from 150 to 156, and headcount in SG&A climbed 37 percent from 455 to 621.
Oxford Nanopore's H1 net loss swelled to £74.7 million, or £.09 per share, compared to a net loss of £70.1 million, or £.08 per share, in H1 2023.
The company ended the first half of the year with £162.0 million in cash and cash equivalents as well as £235.1 million in other liquid investments.
For full-year 2024, Oxford Nanopore slightly raised its guidance to 7 percent to 16 percent revenue growth on a constant currency basis from a previous range of 6 percent to 15 percent. Excluding revenue from the Emirati Genome Program and COVID-19 sequencing, revenues are expected to grow 20 percent to 30 percent on a constant currency basis.
In Tuesday afternoon trading on the London Stock Exchange, Oxford Nanopore shares were up more than 7 percent to £1.31.