Oxford Nanopore raises $140M to set up sequencing showdown with Illumina

Oxford Nanopore Technologies (ONT) has tapped a global syndicate of investors for $140 million to fuel its attempts to upend the genome sequencing market. The financing equips ONT to scale up its operation as it moves deeper into territory currently colonized by Illumina and Pacific Biosciences.

The company made its name with a handheld device that sequences DNA by passing it through protein pores and measuring the resulting electrical changes. That device, MinION, remains a key part of ONT’s business. But the company has since applied some of the same underlying technology and principles to a series of other devices designed to capture a bigger slice of the genome sequencing market.

That means going toe to toe with companies such long-read specialist PacBio and the 800-pound gorilla of the sequencing world, Illumina, a daunting challenge that will require considerable sums of money.

Oxford Nanopore has cast its net wide to raise the cash. Singapore’s GIC, China’s CCB International and Australia’s Hostplus joined with ONT’s existing investors to funnel the cash into the business. ONT will use the money to establish a high-volume manufacturing facility in Oxford, U.K., and scale up its commercial operation, while continuing to invest in R&D.

The round values ONT at about $2.0 billion, 12% more than when it last raised cash late in 2016. The valuation reflects both the promise of ONT’s technology and the fact it is still a long way from giving Illumina a bloody nose, let alone dethroning it. How ONT fares as it expands over the next few years will dictate whether it can grow its valuation and realize its CEO’s vision of creating an independent British tech powerhouse. 

Those years will cover the period in which PromethION, a high-throughput benchtop sequencing device dubbed the “Illumina killer,” becomes available beyond the handful of labs in an early access scheme. Those labs have achieved progressively better yields in recent months—and are still a long way from hitting the 150Gb per flowcell ONT claims it clears internally—but it remains to be seen whether the device can establish itself as a genuine rival to Illumina’s sequencers. 

RELATED: Oxford Nanopore raises $126M to expand DNA sequencing reach

That prospect has attracted scepticism from day one. And, while early data on PromethION has begun to quell some doubts, ONT is a long way from winning over all the sceptics. 

“We do not dispute that Nanopore has good technology; we dispute the size of the market and the company’s valuation,” short seller J Capital wrote in a report into IP Group, which owns an 18% stake in ONT.

Oxford Nanopore could have avoided such criticism by ducking the fight against Illumina, opting instead to remain a niche business focused on enabling researchers in the field and students to sequence DNA using MinION, the Flongle adapter and smartphone-based SmidgION. But instead it gambled by moving into larger, more competitive markets further from the technological niche in which it made its mark.

With $140 million in the bank, ONT is now equipped to find out if its gamble will pay off.