The top brass at Neil Woodford favourite Oxford Nanopore are lining up for a bumper share award, despite the business continuing to lose money.
Accounts published to Companies House last week show that shareholders agreed to award up to 6.5% of the equity in the DNA sequencing unicorn to CEO Gordon Sanghera and three other executives, subject to certain revenue and share price performance conditions being met.
At the company’s current valuation of £2.5bn this works out to a £160m award, which Sanghera will split with chief technology officer Clive Brown, finance director Tim Cowper and chief business development officer Spike Willcocks.
Oxford Nanopore is gearing up to float on the London Stock Exchange later this year in what has been heralded as one of this year’s blockbuster listings. The UK biotech company raised £195m its last funding round in May, with new investor M&G pumping £35m into the business.
However, it has failed to turn a profit, recording a pre-tax loss of £73.2m for 2020, following on from a £80.5m loss in 2019, according to its accounts.
See also: M&G eyes up pre-IPO market by pumping £35m into Woodford favourite Oxford Nanopore
Share award generous considering Oxford Nanopore’s slow progress
One City investment manager told Portfolio Adviser the award struck them as “very high” considering Oxford Nanopore’s “glacially slow gestation period”.
The company’s current valuation pales in comparison to US-listed competitor Illumina, which is currently sitting on a market cap of $72bn, despite launching just a few years before in 1998.
FTSE 250-listed IP Group, which counts Oxford Nanopore among its biggest portfolio companies, has severely lagged the FTSE All Share, with shares losing a quarter of their value in the last five years versus the index’s gains of 9%.
Disgraced stock picker Woodford was one of Oxford Nanopore’s largest backers before the implosion of his investment empire, holding positions in both his Woodford Equity Income fund and Patient Capital trust.
Oxford Nanopore rakes in revenue from government contracts
More recently the company has benefited from the coronavirus pandemic which has drawn attention to the importance of gene sequencing. Last year it saw revenues rise 119% to £113.9m, more than double the previous year, with £48.3m generated from Covid tests sold primarily to governments.
Oxford Nanopore was awarded a £28m contract with the Department of Health and Social Care (DHSC) to supply Covid testing kits, reagents, training and medical support in May.
Six weeks before that, the company had met with health secretary Matt Hancock and former Conservative party chairman Lord Feldman, who was acting for the government as an unpaid adviser on Covid. After the deal was struck, the BBC reported Feldman’s PR firm Tulchan Communications began advising Oxford Nanopore. He told the news outlet he had no involvement in the award of the contract.
The biotech firm went on to win another contract to supply rapid Covid tests as part of the government’s Test and Trace programme, though this was terminated by the DHSC in April, despite only part of the order being filled, according to the company’s latest accounts.
IPO buzz deals another blow to former Woodford investors
The bumper payday for Oxford Nanopore’s execs and buzz surrounding its impending IPO is yet more salt in the wound for investors still trapped in Woodford’s £3.6bn Equity Income fund.
The 6% stake in his open-ended fund was sold by Link Fund Solutions to Acacia Research at a steep discount last summer during the fund’s wind-up. Last month Woodford’s former holding was revealed to form the bulk of the WCM Healthcare Portfolio, his comeback venture with Acacia.
See also: Neil Woodford touts for institutional investors with details of eight-stock biotech portfolio
