(Updates with closing price of shares in eighth paragraph.)
By Andrea Gerlin
March 7 (Bloomberg) -- Oxford Nanopore Technologies Ltd., the U.K. company in a race with Illumina Inc. and Life Technologies Corp. to develop smaller, cheaper and quicker gene-sequencing devices, is facing technical setbacks.
Oxford Nanopore, based in Oxford, England, has had to redesign components of a custom sensor because it wasn’t performing satisfactorily, and that has lengthened development and testing periods, according to a post yesterday on the blog Pathogens: Genes and Genomes. The blog is found on the University of Birmingham’s website and written by Nick Loman, a doctor who is a bioinformatics specialist at the English university.
“That put us back about five months, but it was the right thing to do,” Loman quoted Oxford Nanopore Chief Technology Officer Clive Brown as saying at the Advances in Genome Biology and Technology conference last month.
The closely held company said more than a year ago that it expected to begin selling its products by the end of 2012. Yesterday, it didn’t deny Loman’s account of his conversation with Brown when contacted by Bloomberg News.
“We should have made it clear that was off the record,” Chief Executive Officer Gordon Sanghera said of Loman’s report. “We aren’t giving any further comment on it.”
The company has also had to address chemistry in its devices degrading and has been striving to reduce the error rate to 1 percent from 4 percent, according to Loman’s account of his conversation with Brown, which took place during the Feb. 20-23 AGBT meeting in Marco Island, Florida.
IP Group Plc owns about 20 percent of Oxford Nanopore. Competitor Illumina owns about 15 percent, and the company’s other shareholders include hedge-fund manager Lansdowne Partners LP and Invesco Perpetual, the U.K. group of mutual funds.
Shares of IP Group closed down 1.8 percent at 137 pence each in London, giving the company a market value of 501.1 million pounds ($753.4 million). Oxford Nanopore accounted for 66.5 million pounds or 37 percent of its 181.8 million-pound portfolio as of Dec. 31, IP Group said on March 5.
Numis Securities’ London-based analyst Charles Weston reduced his estimate of Oxford Nanopore’s value by 25 percent to $1.5 billion from $2 billion in a Feb. 20 note to clients, citing technical-development risks.
Loman wrote that Brown told him the device wouldn’t be “a year, two years late” and that the company would release data from its early-access program for its products this year.
Oxford Nanopore was spun out of Oxford University in 2005 and its technology was initially based on research by Hagan Bayley, a professor of chemical biology at the university. Its instruments use a novel technique known as strand sequencing, in which an entire string of DNA is guided by an enzyme and passes intact through a tiny hole in a cell membrane one-billionth of a meter wide.
After whetting researchers’ appetites with data about the instruments at the 2012 AGBT conference and raising 31.4 million pounds in additional financing in May, Oxford Nanopore kept quiet about its plans, to the disappointment of some of its would-be customers.
In November, the company showed the MinION pocket-sized gene-sequencer and GridION desktop model to doctors and scientists attending the American Society of Human Genetics conference in San Francisco. The MinION is expected to sell for less than $1,000.
Some scientists who would like to use its machines have expressed frustration to the company and in Internet forums that they haven’t been told more about the instruments. At last month’s AGBT conference, one scientist thumped on the door of the company’s hotel suite and demanded to see data on the performance of its devices, Loman wrote on his blog.
Another person who said he met with Oxford Nanopore officials in their suite at the AGBT meeting last month was Vladimir Benes, head of the genomics core facility at the European Molecular Biology Laboratory in Heidelberg, Germany.
“After the meeting, I would say I am cautiously optimistic that they corrected critical parts and will start moving along,” Benes said in a telephone interview. “There’s a disconnect between last year’s buzzing about this and then nothing happened.”