REG - Oxford Nanopore Tech - FY23 trading update

Oxford Nanopore TechnologiesAnnouncement

09/01/2024 07:00

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RNS Number : 0754Z  Oxford Nanopore Technologies plc  09 January 2024

 

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Oxford Nanopore Technologies plc

FY23 trading update

 

09 January 2024

 

Oxford Nanopore Technologies plc (LSE: ONT) ("Oxford Nanopore" or the
"Group"), the company delivering a new generation of nanopore-based molecular
sensing technology, today provides a trading update ahead of reporting its
full-year 2023 results on 6 March.

FY23 financial performance

The Group expects to report LSRT revenue for the 12 months ended 31 December
2023 of approximately £169 million (FY22: £146.8 million), representing
year-on-year growth of approximately 15% on a reported basis and 15% on a
constant currency basis. Underlying LSRT revenue growth, excluding revenue
from Emirati Genome Program ("EGP") and COVID-19 sequencing, is expected to be
approximately 39% on a constant currency basis. Strong performance across the
broader customer base in FY23 was driven by consumables 1  (#_ftn1) sales,
which accounted for approximately 75% of revenue.

Underlying revenue growth in the second half is expected to be approximately
32%, impacted by slower than expected ramp up of certain new S3 customers.
Expected revenue from these customers in FY23 will now fall into FY24. In
addition, there was some slow-down in growth in China and in the Middle East
following issuance of the recent US semiconductor trade rule further
regulating sales of advanced AI semiconductors. Product development plans
within 2024 include updates that are expected to mitigate this headwind.

In addition to financial reporting, there was other evidence of market
traction and disruption. For example, the Group leased or sold more than 700
PromethION 2 Solos (P2 Solo) in FY23; Oxford Nanopore's most recently launched
product represents a new market area of affordable, accessible and high output
sequencing. Material associated revenue is anticipated to pull through with
consumables sales in FY24 and future periods.

 

Emirati Genome Program update

The Group has signed an agreement to replace and supersede the existing
purchase agreement it has with G42 Laboratories LLC ("G42") in support of the
EGP. The new agreement will provide greater flexibility to achieve the
programme objectives and reflects the parties' desire to refocus on clinical
uses of the platform, that can utilise the platform's unique benefits of
richer and faster data. G42 and Oxford Nanopore have agreed to collaborate to
leverage the richer data and speed of Oxford Nanopore's technology in areas of
unmet clinical need such as developmental disorders, rare human genetic
diseases and neonatal intensive care.

The EGP contract, originally announced on 9 November 2021 with a total value
of approximately $68 million over a three-year period, has generated revenues
of approximately $43.5 million to date, including amounts payable in relation
to the amended contract. The new agreement will remove the outstanding
purchase commitment from the original agreement and extends the expiration
date until 31 December 2026.  EGP revenue in 2024 and beyond is not
anticipated to be a material portion of revenue and as such, the Group will
cease reporting EGP revenue separately following FY23 results.

Revenue related to the EGP in 2023 (under the original and revised agreement)
was approximately £12 million, in-line with guidance.

Excluding EGP, the Group's gross margin in FY23 would have been expected to be
more than 57%, in-line with guidance. However, as a result of the agreement
with G42, the Group's FY23 gross margin is expected to be in the range 53 to
55%. Gross margin in future periods is not expected to be affected by this
amendment.

Medium-term Outlook

All medium-term (FY26) targets are unchanged:

 

The Group continues to expect underlying revenue growth of more than 30% per
annum on a constant currency basis, consistent with the Group's recent
performance.

 

The Group's medium-term gross margin target of greater than 65% for FY26 is
also unchanged. Margin expansion is expected to be driven primarily by
operational improvements already underway and/or planned including improved
manufacturing processes, recycling of electrical components and automation.

 

The Group continues to target adjusted EBITDA breakeven by the end of 2026.
This will be achieved through revenue growth and margin expansion, detailed
above, and disciplined operating expenditure.

 

 

 ENDS 

 

This announcement contains inside information for the purposes of
the UK version of the market abuse regulation (EU no. 596/2014), which forms
part of English law by virtue of the European Union (Withdrawal) Act 2018. The
person responsible for arranging the release of this announcement on behalf of
the Company is Hannah Coote, Company Secretary of Oxford Nanopore Technologies
plc.

 

For further information, please contact:

Oxford Nanopore Technologies plc

Investors:          ir@nanoporetech.com (mailto:ir@nanoporetech.com)

Media:              media@nanoporetech.com
(mailto:media@nanoporetech.com)

 

Teneo (communications adviser to the Company)

Tom Murray, Olivia Peters

+44 (0) 20 7353 4200

OxfordNanoporeTechnologies@teneo.com
(mailto:OxfordNanoporeTechnologies@teneo.com)

 

About Oxford Nanopore Technologies plc:

Oxford Nanopore Technologies' goal is to bring the widest benefits to society
through enabling the analysis of anything, by anyone, anywhere. The company
has developed a new generation of nanopore-based sensing technology that is
currently used for real-time, high-performance, accessible, and scalable
analysis of DNA and RNA.  The technology is used in more than 120 countries,
to understand the biology of humans, plants, animals, bacteria, viruses and
environments as well as to understand diseases such as cancer.  Oxford
Nanopore's technology also has the potential to provide broad, high impact,
rapid insights in a number of areas including healthcare, food and
agriculture.

For more information please visit: www.nanoporetech.com
(http://www.nanoporetech.com)

 

Forward-looking statements

This announcement contains certain forward-looking statements. For example,
statements regarding expected revenue growth and profit margins are
forward-looking statements. Phrases such as "aim", "plan", "expect", "intend",
"anticipate", "believe", "estimate", "target", and similar expressions of a
future or forward-looking nature should also be considered forward-looking
statements. Forward-looking statements address our expected future business
and financial performance and financial condition, and by definition address
matters that are, to different degrees, uncertain. Our results could be
affected by macroeconomic conditions, the COVID-19 pandemic, delays in our
receipt of components or our delivery of products to our customers,
suspensions of large projects and/or acceleration of large products or
accelerated adoption of pathogen surveillance. These or other uncertainties
may cause our actual future results to be materially different than those
expressed in our forward-looking statements.

 

 

 

 

 

 

 1  (#_ftnref1) Consumables revenue includes the consumables included in
starter pack revenue

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