Oxford Nanopore Technologies H1 2026 Earnings Report

Oxford Nanopore Technologies EPS Results

• Actual EPS: -GBX 4.90
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Oxford Nanopore Technologies Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Oxford Nanopore Technologies Announcement Details

• Quarter: H1 2026
• Date: 8/19/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 19, 2026
• Conference Call Time: 7:00AM ET

Oxford Nanopore Technologies (LON:ONT)' goal is to bring the widest benefits to society through enabling the analysis of anything, by anyone, anywhere. The Group 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 125 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.

Oxford Nanopore Technologies H1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: First-half revenue was £116.7 million, up 12.3% at constant currency but below expectations, with China revenue down approximately 16% and the Middle East down approximately 14%. Management said lost first-half revenue in the Americas will not be recovered in the second half.
• Positive Sentiment: Profitability improved substantially: gross margin rose 400 basis points to 62.2%, adjusted operating expenses fell 7%, and the adjusted EBITDA loss narrowed 54% to £22.1 million. The company maintained its targets for adjusted EBITDA breakeven in 2027 and positive free cash flow in 2028.
• Positive Sentiment: Oxford Nanopore signed a cross-licensing agreement with a global diagnostics company that includes a $20 million upfront payment in the second half of 2026, $50 million of committed product purchases through 2028, and low- to mid-single-digit royalties over the life of the patents. The upfront payment is excluded from core guidance and will be recognized at 100% gross margin.
• Neutral Sentiment: The company is refocusing its strategy on research whole-genome sequencing, biopharma workflows, and selected clinical applications, while simplifying its portfolio and aligning R&D more closely with customer needs. Management is targeting more than £700 million of revenue and adjusted EBITDA margins above 15% by 2030, though it acknowledged that adoption and execution must improve.
• Positive Sentiment: Device revenue grew 32.6%, led by PromethION and particularly the P2i, while clinical revenue rose 35.4% and biopharma revenue increased 25%. Management expects new device placements and easier comparisons after lapping prior-year research programs to support stronger consumable growth in the second half.

Presentation

[Francis Van Parys, CEO at Oxford Nanopore]

Welcome, and thank you for joining us. Let me briefly set out how we will structure today. I will start with some opening remarks and set out our near-term outlook. I will then hand over to Nick to take you through the first half performance and 2026 guidance in more detail. I will come back after that to take you through our strategy, the priorities we have set, and our longer-term outlook. I will then close with the key takeaways before Nick and I take your questions. This is my first results presentation as CEO of Oxford Nanopore, so let me take you through how I have spent the last six months. I joined Oxford Nanopore because I strongly believe it can become an extraordinary company, and I have seen enough in my time here to know that it is true.

[Francis Van Parys, CEO at Oxford Nanopore]

It combines a highly differentiated technology platform, a strong research foundation, and global reach, with the opportunity to unlock significantly more value than the business delivers today. Alongside working with the leadership team to manage the business, my initial focus has been on listening, learning, and setting priorities. I have spent significant time with our customers and partners to understand where we are creating value today, where adoption is accelerating, and where barriers remain. I have spent time across the organization understanding our R&D capabilities, manufacturing operations, commercial execution, and the processes that will enable us to scale. I have also spoken to investors, governments, and other key stakeholders. During the last five months, we have undertaken a comprehensive review of the business, including our markets, applications, innovation priorities, and capital allocation. I have been assessing how the organization needs to evolve to support the next phase of growth.

[Francis Van Parys, CEO at Oxford Nanopore]

That work has reinforced my confidence in the company, but it has also highlighted areas where we need greater focus, prioritization, and cleaner execution. I will come back to those themes later. Before Nick takes you through the first half performance, I want to set out our near-term outlook and the longer-term ambition behind the strategy. Our 2026 guidance remains unchanged. We continue to expect constant currency revenue growth of 16%-20% and a gross margin of approximately 62%. This guidance excludes the $20 million upfront payment from the cross-licensing agreement announced today. Nick will explain the agreement and its financial treatment later in the presentation. We also remain on track to reach adjusted EBITDA breakeven in 2027, and positive free cash flow in 2028. Importantly, this is not the endpoint, but merely a stepping stone in our longer-term ambition to build a $1 billion+ annual revenue business and beyond.

[Francis Van Parys, CEO at Oxford Nanopore]

We made strong progress against that path in the first half, particularly on gross margin, cost discipline and adjusted EBITDA. Nick will take you through that performance in more detail shortly. While there is clearly more work to do, particularly on top line execution, the trajectory towards profitability and cash generation remains intact. With that, I will hand over to Nick to take you through the first half performance in detail.

[Nick Keher, CFO at Oxford Nanopore]

Thank you, Francis. Good afternoon, everyone. My name is Nick Keher, and I am the CFO of Oxford Nanopore. Turning to the first half financials, we delivered revenues of GBP 116.7 million, representing 12.3% growth at constant currency. As we set out in the July trading update, the first half growth was below our expectations. This is primarily due to the material decline in China, where revenues were down approximately 16% year-on-year, reflecting enhanced export control restrictions and changes to commercial operations in the region. The ongoing geopolitical situation in the Middle East also led to revenue decline of approximately 14% in that region.

[Nick Keher, CFO at Oxford Nanopore]

Outside China and the Middle East, group revenue growth was approximately 16% at constant currency, which gives a better indication of the underlying performance across the rest of the business. The timing of both customer orders and contract wins in the Americas also affected first half growth.

[Nick Keher, CFO at Oxford Nanopore]

As we stated previously, we do not expect to recapture those lost revenues in H2. EMEAI delivered strong growth of 23.8% at constant currency, despite disruption in the Middle East and known headwinds within the research space. Whilst revenue growth was below our expectations, we delivered a gross margin of 62.2%, in line with guidance, representing a 400 basis point improvement year-on-year. Coupled with a strong gross margin, we saw the benefits of the restructuring and efficiency actions taken in FY 2025. Adjusted operating expenses were down 7% year-on-year, contributing to a 54% improvement in adjusted EBITDA loss to GBP 22.1 million. This is meaningful progress on our path to breakeven. On cash, we finished with GBP 234.5 million of net cash, down by roughly GBP 70 million versus December 2025.

[Nick Keher, CFO at Oxford Nanopore]

This reflects the normal working capital seasonality we've seen in prior years, alongside specific one-offs, and we expect a meaningful improvement in our cash performance in H2. As we look forward, we continue to expect our net cash bottoming out above GBP 100 million as we pass through breakeven in 2028. Turning to the further details on revenue mix. Device sales grew strongly, up 32.6%, which reflects strong growth across the PromethION range, with each product line growing in the period. The P2i performance was particularly strong, with revenues and device placements more than doubling. Over time, we expect this strong increase in device sales to support further consumable pull-through. Reported consumable growth was 2.7%. As a reminder, this represents a mix of PromethION and MinION flow cells and kits. This growth rate is lower than anticipated, but we believe this is largely temporary in nature for three main reasons.

[Nick Keher, CFO at Oxford Nanopore]

First of all, we had a number of large research programs that contributed significant consumables revenue in H1 2025 that did not repeat in the first half of this year. Second, PromethION flow cell volumes grew by over 20%, but this was partially offset by lower average selling prices as customers moved into higher volume discount tiers. Third, we saw some expected normalization in the revenue mix as we moved to the CapEx pricing model, as customers adjusted to buying differing volumes of consumable products when they're now paying for devices outright. Given the strong growth in devices, particularly the P2i, we believe this will drive higher consumable sales as those customers set up their new devices and begin ordering.

[Nick Keher, CFO at Oxford Nanopore]

Together, with continued underlying flow cell volume growth, we are demonstrating and the comparison becoming easier as we lap the large programs that rolled off, we expect stronger consumable growth in the second half. At the product range level, PromethION continued to be the growth driver for the group, again driven by the devices and in particular the P2i. Turning to end market demand, our revenue mix continues to move towards the applied markets, a gradual shift toward commercially funded demand that is more stable in nature and an important part of where we intend to focus growth over time. Research revenue grew 5.4% to GBP 76 million, despite the impact of NIHR, GEL 2.0 and PRECISE II that ended last year. Together, these contracts represented an approximate GBP 8.3 million or 11.5% headwind to revenues for the segment.

[Nick Keher, CFO at Oxford Nanopore]

Growth was supported in particular by the winning of the SequenceME program in EMEAI. Clinical was the fastest growing end market in the period, with revenue of GBP 17.6 million, up 35.4% on a reported basis. Growth was driven by reimbursement funded labs running assays or developing new clinical methods. I would also note the high profile contract win with MyOme, a Natera company, announced today in the rare disease space that will be a growth driver going forwards. We continue to deliver strong growth across biopharma, with revenues reaching GBP 9.5 million, up 25% from the prior year, with more to come as we see continued uptake across both R&D and QC customers. Industrial revenue grew modestly up to GBP 30.7 million, up 6.2% year-on-year, driven by continued adoption of our plasmid sequencing capabilities.

[Nick Keher, CFO at Oxford Nanopore]

Turning to our gross margin bridge, we have delivered another period of strong underlying margin progression, with gross margin reaching 62.2%, in line with FY 2026 guidance. As expected, the non-recurrence of the GBP 3.3 million one-off non-cash inventory charge recorded last year contributed 315 basis points to the year-on-year improvement. Product and customer mix was 160 basis points headwind, which we expect to moderate over time as the mix of consumables and devices evolves and as PromethION margins continue to improve.

[Nick Keher, CFO at Oxford Nanopore]

Importantly, the move to the CapEx pricing model initiated last year alongside yield improvements and consumable recycling, drove significant underlying margin improvement of 305 basis points. There is further opportunity for PromethION flow cell recycling and additional yield improvements, which should support higher margins over time. Against this, FX was a further 60 basis points headwind in the period which we expect to moderate in the second half at current rates.

[Nick Keher, CFO at Oxford Nanopore]

The next slide gives some additional context on how our gross margin profile has developed and where we see further potential over time. As a reminder, our consumable sales represent revenues of MinION and PromethION flow cells and kits. Across consumables, gross margins have increased from 64% in 2023 to around about 75% today. Over the longer term, we believe there is potential to move above 80%, which is a level we are already achieving across specific product lines. Across devices and services, gross margin has improved from approximately 23% to around 34% today, and we see a path towards approximately 40% over the longer term. The improvement to date has come from the new pricing model, which has structurally improved product economics together with better flow cell yields, MinION flow cell recycling and greater scale.

[Nick Keher, CFO at Oxford Nanopore]

Looking forward, further upside is expected from yield improvement and flow cell recycling, particularly across the PromethION flow cell range, as well as SKU optimization and greater scale in services. None of this assumes any contribution from business development activity. There are also known headwinds to manage, particularly inflationary pressures in compute and memory costs. We are addressing these through product development changes, forward purchasing and pricing. Turning to adjusted EBITDA, the combination of revenue growth, gross margin expansion and cost discipline translated to a 54% improvement in our adjusted EBITDA GBP -48.3 million-GBP -22.1 million in the period. There is also a sequential improvement around GBP 16 million in the second half of 2025.

[Nick Keher, CFO at Oxford Nanopore]

Our adjusted EBITDA losses have narrowed materially since the end of 2023, reflecting a mix of strong revenue growth, improving gross margin and stronger cost discipline, including the efficiency and strategic realignment programs executed in 2025. In the first half of 2026, adjusted operating expenses were down 7% year-on-year. We expect the year-on-year reduction to narrow towards flat in the second half, while continuing to see further efficiency opportunities going into 2027. Most importantly, our adjusted EBITDA breakeven target for 2027 remains intact, underpinned by revenue growth, further gross margin expansion initiatives, and continued cost control. Turning to cash, we ended the period with $234.5 million in net cash equivalents, and other liquid investments, with no debt. This was $68.3 million lower than at year-end, reflecting the normal seasonality to our cash flows and one-offs.

[Nick Keher, CFO at Oxford Nanopore]

Operating cash flow outflow before working capital movements improved sharply to $17.6 million, around $27.2 million better than the first half in 2025, and broadly in line with our adjusted EBITDA performance. Working capital absorbed $21.6 million compared to an outflow of only $6.2 million last year, and this was the main reason for the cash performance being softer in the first half than the second half. The largest movement was $18.2 million in payables, which included $25.7 million related to 2025 bonus payments that will, of course, reverse in the second half. CapEx and capitalized development costs totaled $30.1 million, for which the lion's share, or $24 million, represented R&D capitalization, which is up from $20 million in the prior year. We also spent $4 million on license and patents and $2.1 million on PPE.

[Nick Keher, CFO at Oxford Nanopore]

The remaining movements were smaller, such as tax, which was a $1 million outflow, but noting that we expect to receive our R&D tax credit in the second half of around GBP 10 million. Cash outflow and assets at customers has also improved to $2.6 million, which is materially lower than the $14.4 million recorded two years ago in the first half of 2024 before we changed the pricing model to CapEx first. Other investing and financing items contributed a small net inflow of $4.6 million. During the period, we entered into a material cross-licensing agreement with a global diagnostics company. The agreement brings together specific intellectual property from Oxford Nanopore and the counterparty, providing it freedom to operate under existing IP and a strengthening of our overall IP position. On the economics, we will receive $20 million of upfront revenue in 2026, recognized at 100% gross margin.

[Nick Keher, CFO at Oxford Nanopore]

We are then set to receive a further $15 million of revenue across 2027 and 2028 related to product purchases. On top of this, we will receive an ongoing royalty in the low to mid-single-digit level related to the counterparty's platform revenue that will run for the life of the patents. Based upon analyst expectations for the counterparty's product sales, we believe the vast majority of the economic value, or around 90% of the arrangement, sits in that longer-term royalty stream. As a reminder, our FY 2026 guidance of 16%-20% constant currency revenue growth excludes the $20 million upfront. Royalties will also be additive as earned to the guidance and are not included in FY 2026 or medium term at all because we cannot reliably forecast the counterparty's future revenue from the platform at this time.

[Nick Keher, CFO at Oxford Nanopore]

Today, we have also entered into a new cross-licensing agreement with a global diagnostics company, which we believe is potentially transformational for the group's outlook. On the economics, we are set to receive a $20 million licensing fee, which will be recognized during the second half of 2026 at 100% gross margin. There will also be an additional $50 million in committed product purchases to be recognized over 2027 and 2028 that analysts and investors should model at our current group margin. On top of this, we will also receive a net royalty calculated as a low to mid-single-digit percentage of revenues generated by certain life science and diagnostic products incorporating the licensed intellectual property for the life of the license patents. Based on market expectations for the products outlined in this agreement, we believe the vast majority of the economic value, around 90%, sits in that long-term royalty stream.

[Nick Keher, CFO at Oxford Nanopore]

As a reminder, our FY 2026 guidance of 16%-20% constant currency growth excludes the $20 million upfront. Royalties will also be additive as earned and are not included in our 2026 or medium-term guidance, given these are not our products. From our position, on top of the financial benefits, we see a strong strategic rationale for the deal, which also enhances our IP position. Turning to FY 2026 guidance. Guidance on our core business remains 16%-20% constant currency revenue growth in line with the trading update. We continue to expect to deliver approximately 62% gross margins in line with the original guidance and first-half performance. Adjusted operating expenses are now expected to be negative 2% to flat year-on-year, compared to the original guidance of 0%-5% growth that we set out in March.

[Nick Keher, CFO at Oxford Nanopore]

Looking to the second half, we have significant revenue coverage that underpins our 16%-20% guidance range from already confirmed business before adding on pipeline opportunities. Proportionally, this equates to the same level of coverage as we had going into the second half of 2025, providing confidence in the full-year outlook. Including the $20 million upfront payment from the global diagnostics company, which equates to a 680 basis points improvement of incremental constant currency revenue growth for 2026. This lifts top-line constant currency growth expectations from 21%-25%-23%-27%, respectively. Because that $20 million upfront payment is recognized at 100% gross margin, it will add 200 basis points to gross margins, lifting the 62% reported number to 64% overall. Taken together, these deliver a material improvement in the adjusted EBITDA loss for 2026, with efficiency work continuing beyond.

[Nick Keher, CFO at Oxford Nanopore]

I will now pass over to Francis Van Parys to talk through our updated strategy.

[Francis Van Parys, CEO at Oxford Nanopore]

Thank you, Nick. There are four reasons why I am confident about the opportunity at Oxford Nanopore. First, I have seen this type of opportunity before. I have spent more than 20 years in life sciences at GE HealthCare, Cytiva, and Radiometer. One lesson from those businesses is that great technology creates the opportunity, but customer adoption and execution determine how much of that opportunity you ultimately capture. Biacore is particularly relevant. This was a highly respected research platform with excellent science. We preserved that strength in discovery research while expanding into adjacent regulated markets such as biomanufacturing and quality control by aligning the offering much more closely with customer needs. I see a similar opportunity at Oxford Nanopore. We have a differentiated sensing platform, a strong position in research, and significant potential to broaden adoption in markets such as biopharma and clinical. Second, we have global reach.

[Francis Van Parys, CEO at Oxford Nanopore]

I have led businesses across Europe, Asia, and North America, and Oxford Nanopore already has a customer base and commercial presence across those markets. Third, much of the difficult technology work has already been done. The platform exists, the science is proven, and the customers are using it today. Finally, I believe there is significant headroom between what the technology can do and the value the business captures today. I do not see a company that needs to reinvent itself. I see strong foundations and a significant opportunity to turn more of that technology advantage into customer value and durable growth. The last chapter of Oxford Nanopore was about proving the extraordinary breadth of what this technology can do. The next is about choosing where we can create the greatest value for customers and winning there. That is the opportunity.

[Francis Van Parys, CEO at Oxford Nanopore]

But to realize it, we also need to be clear about where we are today and what must change. Over my first few months at Oxford Nanopore, I have conducted a detailed assessment of the business. My conclusion is straightforward. Our foundations are strong, but we are not yet converting those strengths into adoption and growth at the level we should. Customer interest in the platform is strong, but adoption remains below its potential, and the customer experience has not always been as consistent as it needs to be. Our technology is highly differentiated, but our product roadmaps have at times been driven more by what is scientifically possible than by customer problems we are trying to solve. We have a broad set of opportunities, but that breadth has not always been matched by sufficient portfolio focus, clear choices, and operating discipline.

[Francis Van Parys, CEO at Oxford Nanopore]

While we have talented and highly committed teams, we need greater leadership depth and capabilities to scale sufficiently. None of that requires us to reinvent Oxford Nanopore. It requires us to be much clearer about where we focus, more deliberate about how innovation translates into customer values, and more consistent in how we execute. Those conclusions have shaped the strategy that I will take you through now. Our objective is sustainable, profitable growth, and our approach is built around four mutually reinforcing pillars to drive shareholder value. The first is customer-centric growth. We will focus our resources on the high-value applications where our technology has a clear right to win. We will strengthen our understanding of customer needs, develop clearer value propositions, and work with customers and third parties to accelerate and broaden adoption. The second is focused innovation.

[Francis Van Parys, CEO at Oxford Nanopore]

We will continue to invest in our differentiated technology platform, but with a clearer commercial purpose. Our product and technology roadmaps will be aligned more closely with the needs of our priority customer segments, with a stronger focus on dependable, robust, and easy-to-use products and workflows. In the near term, this is focused more on delivering product performance and workflow enhancements than on entirely new product development. The third is disciplined execution. We will simplify the portfolio, strengthen our operating model, and introduce clearer ownership, standardized processes, and more consistent performance measures aligned with our strategy. Portfolio simplification is already underway, and we are already changing the way we work. This is about making execution more predictable and building a business that can scale efficiently. The fourth is a high-performance culture, which underpins the other three pillars.

[Francis Van Parys, CEO at Oxford Nanopore]

We will continue to build leadership depth, add talent, strengthen the commercial, operational, regulatory, and GMP-ready capabilities required to scale while retaining the ambition, agility, and innovation that makes Oxford Nanopore distinctive. These are not separate programs. Our market choices determine where we focus innovation. Focused innovation creates products and workflows that address priority customer needs. Disciplined execution allows us to deliver consistently and at scale. Our culture and capabilities determine how effectively we bring the strategy together. The strategic direction is now clear. We are now in the process of operationalizing it, translating these priorities into specific portfolio choices, refining our go-to-market approach, product roadmaps, operating plans, milestones, and measures of progress. Today, I will go into more detail on the first and fourth pillars, customer-centric growth and high-performance culture. The first sets out where we will focus and how we intend to win.

[Francis Van Parys, CEO at Oxford Nanopore]

The fourth sets out the organization, leadership, and capabilities we need to deliver. For focused innovation and disciplined execution, the direction is also clear and the work is underway. We are now translating those priorities into detailed operating plans and are putting appropriate governance processes in place. We will return to those pillars once that operationalization is further advanced, and we can explain the outputs, milestones, and measures against which investors should assess our progress. Let me begin with customer-centric growth, where we will focus, why we believe we can win, and how those choices support our long-term growth ambitions. Let me start with how we decide where to participate. For each application, we assess two things: how differentiated the value of our technology is and how readily the opportunity can be realized. Differentiation without a credible route to adoption is not enough.

[Francis Van Parys, CEO at Oxford Nanopore]

Equally, an attractive market where we add little differentiated value is not a strategic priority. Our right to win is strongest where richer biological insight, speed, flexible deployment, and greater ease of adoption materially change the customer decision. The research market sits firmly in our current sweet spot, where end users value new insights in biology for discovery purposes. In selected biopharma workflows, we also see strong differentiation and a credible path to adoption. Clinical offers significant opportunity, but many workflows carry a heavier evidence, regulatory, reimbursement, and market-building burden, so the appropriate participation model is often different. This slide is a simplified representation, grouped into broader end markets of detailed analysis that sits behind every application area, including customer needs, adoption requirements, competitive dynamics, and expected returns. The principle is straightforward: Invest most where we can create distinctive customer value and a credible return.

[Francis Van Parys, CEO at Oxford Nanopore]

Use collaborations where they can accelerate access or reduce the burden of adoption and remain selective elsewhere. That assessment then determines how we participate. We do not need to build and own every element of every solution. At one end of the spectrum, we can enable others through licensing, technology transfer, or off-the-shelf compatibility with relatively limited capital. Further along, we can use OEM co-development or commercialization arrangements. Where our differentiation is strongest and where we have the capabilities to do so, we can own the full solution and capture the product economics directly. The level of investments, control, and value capture rises as we move across the spectrum. For research and core biopharma QC workflows, the case for a fuller Oxford Nanopore solution is strongest. In clinical, partner-led routes are often more appropriate because validation, regulated deployment, and channel access are significant parts of the solution.

[Francis Van Parys, CEO at Oxford Nanopore]

This approach allows us to scale intelligently, retaining control where it matters, while using external capabilities where they improve speed, reach, or returns. The same logic applies across the customer workflow. Our differentiated core includes library preparation, sequencing, and base calling. Around that core, customers need sample collection, extraction, preparation, automation, analysis, interpretation, and integration into their existing systems. We will build where Oxford Nanopore has a clear advantage, but we will not recreate capabilities that others already deliver well. Across research, biopharma, and clinical markets, specialist third parties can make workflows easier to deploy and extend our reach into customers and channels. The objective is not collaboration for its own sake. It is a more complete, dependable customer solution with clear accountability for the end-to-end experience.

[Francis Van Parys, CEO at Oxford Nanopore]

This allows us to focus our own investment on the platform and the priority workflows where we create the most value while using specialist capabilities to remove adoption barriers. Bringing those choices together gives us a focused path to 2030. The total market is very large, but our strategy is not to pursue all of it. We have identified a serviceable market of approximately GBP 14 billion-GBP 16 billion, and within that, three priority areas where we can target organically now: research whole genome sequencing, biopharma, and selected clinical. Today, research accounts for about two-thirds of group revenue. It is our largest market, a core strength, and an important contributor to growth. Over time, we expect the mix to become more balanced. Clinical and biopharma start from smaller bases, but are expected to grow faster and become approximately two-thirds of group revenue by 2030.

[Francis Van Parys, CEO at Oxford Nanopore]

The chart shows the direction of travel rather than precise end market guidance. The important point is that we are not relying on one market. We are maintaining and growing the research franchise while building scale in the higher growth areas where our technology has a clear right to win. That changing mix supports our path to more than GBP 700 million of organic revenue by 2030. Business development, licensing, and royalties could provide additional upside. The next slides explain where we will focus within research, biopharma, and clinical, and what needs to be true for adoption. Research is our strongest position today and remains a central part of the growth plan. We are focusing on applications where long reads and native methylation materially change the biological answer. Large genome centers, biobanks, core laboratories, and disease research programs dealing with structural variation, phasing, difficult loci, and complex genomes.

[Francis Van Parys, CEO at Oxford Nanopore]

Our advantage is not simply read length. It is the ability to combine long and ultra-long reads, phasing, and methylation in one flexible workflow from exploratory studies through to larger production-scale cohorts. The route to scale is clear: a stable, production-ready PromethION workflow, prioritized bioinformatics, strong support, and visible roadmaps for priority customers. We also need to continue improving output and cost per genome while building evidence that demonstrates the added utility of long reads and methylation. Methylation is one of the clearest example of Oxford Nanopore's differentiated product utility. DNA sequence tells us the underlying code. Methylation helps reveal how that code is being expressed and can distinguish healthy from diseased biology. Oxford Nanopore can capture sequence and native methylation in the same run without a separate assay or consumable.

[Francis Van Parys, CEO at Oxford Nanopore]

That matters commercially because it allows us to create products and workflows that are harder for legacy approaches to replicate. We already have four panels shipping, including methylation, pharmacogenomics, and cancer digital panels, with tumor profiling expected from the second half. The Prader-Willi example illustrates the potential clinical value. Sequence alone did not provide the answer, while methylation phasing identified the hidden cause. This is what we mean by converting technology leadership into product leadership, creating distinctive, saleable applications that deliver more information without adding another workflow or consumable. Biopharma is the fastest-growing of our priority end markets and represents a significant long-term opportunity. We are focusing on controlled R&D and QC workflows where current approaches rely on multiple assays, vendors and handoffs. That fragmentation creates long turnaround times, significant labor, and a substantial integration burden for customers.

[Francis Van Parys, CEO at Oxford Nanopore]

Native long reads can provide richer context around constructs, reduce reconstruction in complex libraries, deliver results faster, and in selected workflows, consolidate identity, integrity, purity, and contaminant readouts into one test. Our participation model will be selective. We intend to build and support core QC workflows directly while using channel and service provider routes for broader R&D applications. The work required is clear: kits, productized bioinformatics, a CFR-ready instrument path, strong comparative evidence, and a focused go-to-market plan. This slide brings the biopharma opportunity to life through a specific mRNA quality control case study. Today, manufacturers often use a series of separate instruments and assays to assess the critical quality attributes of an mRNA product. Identity, integrity, and purity may each require different methods, different data systems, and multiple handoffs.

[Francis Van Parys, CEO at Oxford Nanopore]

What we have demonstrated is that a single Oxford Nanopore run can consolidate multiple quality control measurements, providing a comprehensive view across a range of attributes with the outputs brought together in a single report. That demonstrates the potential customer value very clearly. A simpler workflow, faster results, fewer methods to maintain, and a more complete picture of product quality. The next step is to productize that demonstrated capability into a dependable, validated, and audit-ready workflow that biopharma customers can adopt with confidence. This is a good example of focused innovation in practice, starting with a customer problem where our technology can do something distinctive, demonstrating its capability, and then turning it into a product and workflow that can be adopted at scale. Clinical is a significant opportunity, but we will approach it with discipline.

[Francis Van Parys, CEO at Oxford Nanopore]

We will focus on selected workflows where richer information or speed can change a clinical decision. Rare disease and rapid whole genome sequencing, tumor profiling, and selected acute infectious disease applications. The technology has a clear role. Long reads can resolve structural variants, repeats, phasing, and difficult genes. Native methylation can support tumor classification, and adaptive sampling and flexible devices can improve speeds and deployment. But clinical adoption is gated. It requires locked workflows, clinical-grade reporting, laboratory integration, evidence, health economic utility, and trust. Our model will therefore combine Oxford Nanopore-led enablement in specialist centers and reference laboratories with partner-led IVD and channel routes where broader deployment requires capabilities beyond our core. This is a targeted enablement strategy, not an attempt to build every clinical solution ourselves. This is another example of what the platform can already do when applied to a specific customer workflow.

[Francis Van Parys, CEO at Oxford Nanopore]

In this acute leukemia study, eight separate conventional pathology assays were consolidated into a single Oxford Nanopore adaptive sampling run. That single run generated nine categories of outputs, including copy number variants, methylation, and pharmacogenomics at an indicative cost around $350-$450 per sample, compared to approximately $1,650-$2,050 across the conventional assays. The study demonstrate the ability of the platform to consolidate multiple tests into one workflow while providing richer information and potentially significantly lower costs. The opportunity from here is to take demonstrated capabilities like this and develop them into validated, reliable, and integrated workflows that can be adopted more broadly. That is exactly the type of application we want to prioritize, where the differentiation of our technology translates into a clear and tangible benefit for the customer. That sets out where we will focus and how customer-centric growth will be delivered.

[Francis Van Parys, CEO at Oxford Nanopore]

Making the right market choices is only part of the answer. We also need the leadership, capabilities, and culture to execute those choices consistently and at scale. That is why high-performance culture is the fourth pillar of our strategy and why strengthening the leadership team has been an early priority. We have already made notable progress. We are building from an experienced leadership core, including Nick leading finance and operations, and Lakmal, who has the longest tenure with the company, leading science. In the last few months, we have added significant capability across the executive team, including new leadership across people, medical, and information technology. Tina St. Leger has joined as Chief People Officer, Andrew Watson as Chief Information Officer, and Davide Manissero as Chief Medical Officer. Conor McKechnie will join in October as Chief Marketing and Communications Officer.

[Francis Van Parys, CEO at Oxford Nanopore]

Together, the existing team and these new appointments strengthen the leadership depth and functional experience needed for the next phase of Oxford Nanopore's development. This is not simply about who sits on the executive team. It is about how the whole organization operates, how clearly we set priorities, how close customers and markets are to our decisions, how quickly decisions are made, and how effectively teams work together. That is why, alongside strengthening the leadership team, we have reviewed our culture and listened directly to employees across the organization. That broader view, together with feedback from our employees, has reinforced the same themes that came through the strategy process. There is strong alignment across the organization around the priorities we have identified. First is focus.

[Francis Van Parys, CEO at Oxford Nanopore]

We need to align the organization behind a smaller number of strategic priorities so people are clear on what matters most and where we are choosing to invest our time and resources. Second, we need to bring our customers closer to decision-making and product development so that customer needs play a stronger role in setting priorities across the organization. Third, we need to clarify accountability and speed up decision-making. As we scale, clear ownership should help us to make decisions faster and execute more consistently. Fourth, we need stronger collaboration across teams. Many of the outcomes our customers need cut across R&D, product, commercial, and operational teams. So we need those teams to work together more effectively. Finally, we need to simplify the way we work, creating a more agile and responsive organization without adding unnecessary bureaucracy. The employee survey results gave us a useful baseline.

[Francis Van Parys, CEO at Oxford Nanopore]

We had 67% participation, 75% positive engagement, and 73% of employees said they would recommend Oxford Nanopore. So there is a strong foundation to build on, but also a clear agenda for change. Our focus now is to translate these themes into action, aligning the organization behind a strategy, strengthening accountability and collaboration, and making it easier for teams to deliver for customers. That is an important part of building the high-performance culture we need to support the next phase of growth. Let me now connect the strategic choices to the financial framework. FY 2026 guidance is 16%-20% constant currency growth, which equates to approximately GBP 260 million-GBP 269 million, or $345 million-$355 million of revenue.

[Francis Van Parys, CEO at Oxford Nanopore]

We have now provided a view on the priority applications where we see the greatest opportunity across research, biopharma, and clinical, and the potential to build towards greater than $700 million of revenue by 2030. Research is our largest market today and will remain a significant contributor through 2030. It is expected to grow more slowly than clinical and biopharma, but from a much larger base. Clinical and biopharma are expected to grow faster and become a greater share of group revenue, while industrial continues to provide steady single-digit growth. That changing mix supports group organic revenue growth above the mid-teens from FY 2026, with the rate rising over time as the higher growth markets increase in weighting. By 2030, we are targeting more than $700 million of revenue. This does not rely on future business development, licensing, or royalty opportunities, which could provide additional upside.

[Francis Van Parys, CEO at Oxford Nanopore]

Importantly, the $20 million upfront payment from the cross-licensing agreement is excluded from this organic framework and from the FY 2026 guidance. By FY 2030, we see adjusted EBITDA margins above 15% and positive growing free cash flow from FY 2028. That financial framework is supported by a disciplined approach to capital allocation. Our first priority is organic investment in the core business, funding the innovation engine, the product and workflow roadmaps that support our priority applications, and the manufacturing capacity required to scale. Investment will be directed to programs with clear customer value and commercial potential. Second, partnerships will be used as strategic enablers. We will invest where collaboration can expand the serviceable addressable market, remove a workflow or adoption barrier, or accelerate access to customers and channels. These opportunities will be assessed against clear strategic and financial criteria, including a target return on invested capital above 15%.

[Francis Van Parys, CEO at Oxford Nanopore]

Third, we will consider selective M&A where it can accelerate adoption or strengthen our position in a priority application. This will help us improve our ability to grow faster and increase the strategic capabilities of Oxford Nanopore. All three priorities are underpinned by a strong balance sheet. Maintaining financial flexibility is important given our variability in our markets and the investments required to deliver the strategy. The principle is simple: allocate capital behind the areas where Oxford Nanopore has the clearest right to win, apply discipline to every investment decision, and protect the balance sheet as we build towards our 2030 targets. Let me leave you with three key takeaways. First, Oxford Nanopore has strong foundations and a significant opportunity ahead. We have a differentiated technology platform, a global customer base, and clear areas where that technology can create distinctive value for customers across research, biopharma, and clinical markets.

[Francis Van Parys, CEO at Oxford Nanopore]

Second, we now have much greater clarity about how to turn that opportunity into sustainable, profitable growth. We are making clearer choices about where we compete, focusing innovation more closely on customer needs, strengthening execution, and building the leadership and capabilities required to scale. The direction is clear, and we are now operationalizing the strategy across the business. I look forward to updating you in due course on the progress we are making, particularly on focused innovation and disciplined execution. Third, we have set clear financial milestones. By 2030, we are targeting more than GBP 700 million of revenue and adjusted EBITDA margin above 15% and positive and growing free cash flow. Those targets do not rely on future business development, licensing, or royalty opportunities, which could provide additional upside. 2030 is not the endpoint.

[Francis Van Parys, CEO at Oxford Nanopore]

It's an important milestone towards a longer-term ambition I set out at the beginning, building Oxford Nanopore into a GBP 1 billion+ revenue business. I'm an operator at heart. I'm competitive, pragmatic, and focused on execution. There is significant work ahead, and I will be transparent about where performance needs to improve and decisive about the changes required. But we have strong foundations, clearer priorities, and an organization we are strengthening to deliver against them. My confidence comes from that combination, the quality of the technology and the opportunity in front of us, but also much greater clarity about where we will focus, how we will win, and what we need to do differently to create sustainable value for customers, partners, and shareholders. Thank you. Nick and I will now take your questions.

[Operator]

Thank you very much, sir. Ladies and gentlemen, if you wish to ask an audio question, please press star one on your telephone keypad and just make sure that your line is unmuted to allow your signal through to your equipment. So once again, star one for questions. Our very first question today is coming from Zain Ebrahim from JPMorgan. Please go ahead, Zain. Your line is open.

[Zain Ebrahim, Analyst at JPMorgan]

Hi, everyone. Thanks for taking the questions. Zain Ebrahim, JPMorgan, and I will try and stick to two. My first question is on the royalties on the diagnostics agreement you signed today. Can you just walk us through that agreement in more detail, and how we should think about the durability of the royalties tied to the agreement? You mentioned it is over the course of the IP, so should we assume 10 years or even longer than that for modeling? And how meaningful could the royalties be to your 2030 outlook? I know you mentioned it is about 90% of the NPV, but any further color there would be helpful. My second question is on the clinical biopharma strategy, which was helpful to understand more from the presentation. You mentioned it will be about 2/3 of revenues by 2030.

[Zain Ebrahim, Analyst at JPMorgan]

Just to clarify, how much of that expectation is de-risked by collaborations that you have already signed so far? You are already delivering strong biopharma revenue growth now, but the guidance or target in 2030 seems to imply an inflection in revenue growth for biopharma. So when can we expect to see that inflection?

[Francis Van Parys, CEO at Oxford Nanopore]

Okay. Thanks, Zain, for the question. I will briefly comment on the first question and then leave Nick to give you a little bit more detail. It is an important agreement for us. It is a sign that we have a strong IP portfolio. It is one of the participation models that we feel is very relevant to our participation in the market. We are pleased with its potential impact, and we think this can be quite instrumental for us as a company. Nick?

[Nick Keher, CFO at Oxford Nanopore]

Yeah. Thank you, Francis, and thanks for the question, Zain. We are limited by the amount of detail we can talk to and want to honor the confidentiality of the agreement that we've signed. At the same time, we absolutely recognize that we've got to balance this with ensuring that we give investors and yourselves the necessary information to be able to model this out going forward. On the royalties themselves, low to mid-single digit. Market expectations is all we can point to for significant growth for the products that this covers to 2030. As a result, quite a large contributor, kind of transformational actually, for potentially our P&L as well, with the drop-through being 100% gross margin. On the length and duration of the patents within, clearly, we can't give you firm dates on this. We don't think that would be appropriate.

[Nick Keher, CFO at Oxford Nanopore]

But thinking beyond the usual forecast horizon that you've talked to, so beyond that 10-year period, I believe we should be looking at that, and quite a long duration indeed. Clearly, as everybody knows, the patents usually have a 20-year life. It won't be that long, but it is towards that end rather than the 10. You're absolutely right. When we put all of that together, we see 90% of the economic value of this belonging in the royalty stream versus the upfront and product purchases.

[Francis Van Parys, CEO at Oxford Nanopore]

Thanks, Nick. On the second question, I think it's important to state that high-value applications that we're targeting and those that we talked about, which includes clinical and biopharma, as we estimate, they currently represent about 40%-45% of the group revenue and will grow into probably more like 65% of group revenue by 2030. The growth rates of the biopharma and clinical opportunities are in the high-single-digit range. As they grow in importance, they're already growing at a high rate. As they grow in importance and proportionally become a bigger part of that group revenue, we expect to see our overall growth rate to accelerate. In terms of collaborations that have already been announced and signed, we have publicly spoken about a number in the clinical space.

[Francis Van Parys, CEO at Oxford Nanopore]

There's a number of others underway, and we are being validated by about 20 biopharma customers at the moment. We cannot name those, but they are actively evaluating our technology and adopting them in their workflows. We estimate that it is a pretty, we're pretty confident in the execution of that activity and the proportion it will be of the more than GBP 700 million we target by 2030.

[Nick Keher, CFO at Oxford Nanopore]

Just to kind of add.

[Zain Ebrahim, Analyst at JPMorgan]

Thanks very much.

[Nick Keher, CFO at Oxford Nanopore]

Oh, sorry, Zain. Just to kind of add as well on that kind of revenue split. Today 35% is the applied markets, switching to 65% by that 2030 timeframe. The biopharma piece, there are clearly two elements here. There are the QC elements that we have with the evaluators, but we see a very significant opportunity within the R&D space as well.

[Zain Ebrahim, Analyst at JPMorgan]

Understood. Thanks a lot.

[Operator]

Thank you very much, sir. Next question will be coming from Kyle Mikson of Canaccord. Please go ahead, Kyle.

[Kyle Mikson, Analyst at Canaccord]

Hey, guys. Thanks for the questions. Congrats on the margins and profitability in the quarter, and all this color in the deck is great. My first question, I wanted to ask about the near-term outlook. Underlying growth in this kind of medium-term guidance is high teens, it looks like. Is that a good way to think about FY 2027 growth? On the street, consensus is at 20%, so I'm just curious, given probably a more favorable comparison to 2026. On this note, when you think about maybe beyond 2030, it looks like clinical, you're being a little maybe conservative. How does clinical sort of expand meaningfully beyond this medium-term forecast as well? Thanks. Then follow up.

[Francis Van Parys, CEO at Oxford Nanopore]

Well, thank you, Nick.

[Nick Keher, CFO at Oxford Nanopore]

Yeah, thank you. On the first one, near-term outlook. Mid-teens and accelerating, I think, is a key point here. Absolutely right. There's a few moving pieces, so bear with us. We've got 2026, where we've got 16%-20% almost like core business underlying growth. Then we've got this GBP 20 million non-recurring revenue that'll come on top, which takes us to that 23%-27% for this year. As we go into 2027, we've got that core growth rate of, let's say, 16%-20%. From that, we expect to grow mid-teens in 2027, and then to accelerate as we go to a greater than GBP 700 million revenue, that is, by 2030. Consensus being at 20% today for next year.

[Nick Keher, CFO at Oxford Nanopore]

I would just also flag that our guidance does not assume anything for royalties from the global diagnostics company that we have signed the agreement with, or any other future business development activities that we are looking at. I just want to make sure that people kind of capture that in their models, that this will be additive overall. Beyond 2030, I know Francis will add to this, but just from the shape of the model, you are absolutely right. There is a lot for us to do in the clinical space, and we have got very high confidence in the adoption that we can see coming through. But in terms of some of these development opportunities, particularly with peers, they will be perhaps beyond 2030 for some of them when the traction really starts to get going.

[Nick Keher, CFO at Oxford Nanopore]

I think it is very fair to say that, yes, the biopharma piece being absolutely critical to that 2030 horizon. Clinical is a larger opportunity over the longer term, so it is more that the growth rate will continue to accelerate beyond 2030 and what our model expectations are. Francis?

[Francis Van Parys, CEO at Oxford Nanopore]

Yeah, I think the way to look at it from now till 2030, the biggest proportion of our growth will come from biopharma because it is a nearer-term opportunity. Clinical is the larger opportunity, and as you think about market segments like infectious disease, where we are likely to move towards an IVD-type play through partnership. Those developments, products, and regulatory requirements for that to really drive meaningful revenue, they are in the outer years, and so will accelerate beyond 2030 quite significantly.

[Kyle Mikson, Analyst at Canaccord]

Perfect. Thanks for that. For my follow-up, just looking at R&D expense that has declined meaningfully recently, particularly in the first half of 2026. Obviously, that is getting you towards your adjusted EBITDA to cash flow target, so that is great. But I am curious how critical to the medium term, I guess the 2030 targets, the pipeline efforts are, such as the PromethION Q-Line, that is probably more near term, and then even protein sequencing. Obviously, that is more longer term. Curious about those efforts and how you might invest maybe in terms of investment going forward.

[Francis Van Parys, CEO at Oxford Nanopore]

Yeah. So near term, we expect R&D expenses pretty much where they are at the moment. Obviously within the prioritization of our research and development products prioritization, or project prioritization, we will make some changes. We will make some adjustments, but that doesn't affect the total spend on the near term. We expect the spend to then beyond from 2020 to 2028 on to evolve as we grow revenues. We are committed to our protein program as an example. So we expect that that will then continue to be an important part of our investments as we continue to invest in the platform. Nick, you want to share more details on that?

[Nick Keher, CFO at Oxford Nanopore]

Yeah, absolutely. So, I mean, pivotal innovation is fundamental to the company and our success, and so we're always going to continue to invest in it. In terms of the key things that you've talked to there, absolutely. Part of the planning as we're going through. As Francis has alluded to, we're going to come back with more details on pillar two and pillar three, which will kind of feed into this as well, Kyle. But in terms of what we've delivered to date, as you know, we went through quite a significant strategic realignment exercise last year where we decided to stop certain activities, and that you're seeing the benefit of that now. As we go and just complete the operationalization now of the strategic plans that have been outlined, we'll come back with further details again.

[Nick Keher, CFO at Oxford Nanopore]

Before our full-year results for sure, where we'll detail a bit more. But we're not saving our way to greatness here. We're actually just focusing and reallocating capital to the higher ROI activities, and the things you've talked to are clearly on the roadmap.

[Kyle Mikson, Analyst at Canaccord]

Excellent. Thanks, guys. Appreciate it.

[Francis Van Parys, CEO at Oxford Nanopore]

Thank you much, sir.

[Nick Keher, CFO at Oxford Nanopore]

Thank you.

[Operator]

Our next question will be coming from Jon Unwin of Barclays. Please go ahead. Your line is open.

[Jon Unwin, Analyst at Barclays]

Hi, guys, it's Jon from Barclays. Thanks for taking my questions. One on 2027 revenue and then on gross margin, please. Just on 2027, given you're forecasting to grow 16%-20% constant currency this year, if you grow mid-teens in 2027, what would be causing that year-on-year deceleration in growth? The GBP 15 million of committed product revenue that you have over the next couple of years, just to confirm, that is included in your growth expectations for next year in 2028, but that you might also see on top of that some royalty income, which is not included. Then on the gross margin, where do you think gross margin can get to in 2027, given your lowered revenue expectation, but recommitment to the adjusted EBITDA breakeven?

[Jon Unwin, Analyst at Barclays]

And would you have been able to achieve that adjusted EBITDA breakeven next year without this new licensing contract and the committed product revenues that you have got? Thank you.

[Nick Keher, CFO at Oxford Nanopore]

Yeah. I think there are about five questions there, Jon, but I will just try and pick them off one by one. So 2027 revenue and gross margins. First of all, the $15 million of product revenue from the cross-licensing arrangement, that is included in that mid-teens revenue expectation, and then accelerating. Royalties are not. Royalties are on top of both the 2027 or the medium-term outlook, and even the 2026 numbers that we are talking to. And the reason for that is because it would be really inappropriate for us to try and predict the revenue expectations for this, and the market would have already done that anyway. In terms of where the gross margin can get to in 2027, it is why we did put this slide in around the progress we have made so far. So on consumables, we have seen gross margins reach, roughly speaking, 75%.

[Nick Keher, CFO at Oxford Nanopore]

As you can imagine, that is a mix across both MinION, PromethION, and kits. On MinION, the teams have done an incredible job of essentially the recycling efforts, and we are above that medium-term target of 80% already. On PromethION, the teams are answering this one as well, and essentially are kind of moving towards recycling at higher amounts on the PromethION flow cell, which will have a significant benefit to the gross margin. And we are already achieving recycling in certain percentages now already. On devices and services, it is about scale and services. And in devices, we clearly got, as the industry does, we can see the headwinds on compute costs. We can see the headwinds on things like memory costs. We are helping to offset some of these through development activities to reduce our cost of goods, so we do not have to think about pricing.

[Nick Keher, CFO at Oxford Nanopore]

In certain instances, we may have to think about pricing as well. But we would still believe we can achieve that 40% gross margin over time. And it is then a linear equation now about what the mix will look like next year. But in terms of where we are at the moment, 62% this year, we see meaningful improvement is available for next year as well. So yeah, we saw a 400 BPS improvement in this year alone. Maybe not unreasonable to think about that sort of improvement going forward as well. Do we need this royalty agreement to hit adjusted EBITDA breakeven? No. Is it going to help? Well, yes. Is it going to be additive to this? Yes. And we really hope the market and investors understand what this deal could be for us, which is transformational to the profitability of the company.

[Nick Keher, CFO at Oxford Nanopore]

Is that everything, Jon, or did I miss one?

[Jon Unwin, Analyst at Barclays]

There was one slide, one that I wanted to ask you that I think I did ask in the original seven questions that I asked. Just if you are seeing mid-teens growth next year, but you're doing 16-20 this year, is it fair to assume we could see a deceleration in growth next year, X, the royalties and is there a reason for that?

[Nick Keher, CFO at Oxford Nanopore]

Yeah. Sorry, John, I did miss that one. The reason why, when we've gone through this work, what we've done is look at fundamentally all of the applications our customers are doing today on the platform to understand exactly what they're doing today. We've also got our pipeline, which is very material, of opportunities we looked at, and it's also split the same way the applications people are working on. What we've done when we've looked at that is we've got around 40%-45% of our business that's within those target applications that is growing very quickly, and then we've got this, if you like, all the other application areas that we're being prudent about what could happen there in terms of growth rate.

[Nick Keher, CFO at Oxford Nanopore]

Because if we end up assuming the halo effect from these efforts that we're doing leads to a significantly above-market growth rate for these other application areas where we're not going to have the same level of focus, then we could end up getting caught out. What we're really doing is being prudent on that 55%, 60% of the business, and also we recognize that it could take a bit of time before refocusing the company, the organization on those target applications starts to generate the results that we want. So we're just being cautious at this moment in time. We certainly hope not to see a deceleration to that mid-teens level, but it would be inappropriate for us to kind of put anything out there at this moment in time otherwise.

[Nick Keher, CFO at Oxford Nanopore]

We will, of course, come back at the full-year results and provide detailed in-year guidance as well.

[Jon Unwin, Analyst at Barclays]

Thank you very much.

[Operator]

Thanks very much. Next, we will be going to Veronika Dubajova of Citi. Please go ahead, Veronika. Your line is open.

[Veronika Dubajova, Analyst at Citi]

Hi. Good afternoon, guys, and thank you for taking my questions. I have two, please. My first one is for you, Francis. Just kind of bigger picture R&D, what do you see as priorities as you kind of fast-forward for the business over the midterm? Where would you like to spend those R&D GBP, and what are the big opportunities in your mind? And I guess maybe just related to that, we have had already some pruning of the portfolio, any further opportunities that you see related to the future developmental projects that you think could be discontinued or axed? And then my second question is for you, Nick, on the very impressive OpEx control we saw this half year.

[Veronika Dubajova, Analyst at Citi]

Maybe give us a little bit of flavor of what's enabling you to bring that guidance down in terms of the OpEx growth and any other big opportunities that you see for further reduction on operating costs. Thanks, guys.

[Francis Van Parys, CEO at Oxford Nanopore]

Thank you, Veronika. Coming back to the first question on R&D, thank you for that. As I mentioned earlier, we believe our spend in R&D is pretty much at the right level, but the priorities need to be closer aligned with the customer needs that we identified in our targets high value applications. That's the work we are going through now and where we will come with additional detail towards full-year results. That's our ambition, to come back with a finalized plan and clarity on our product roadmap, portfolio simplification initiatives, et cetera. Just to give you a flavor, how I look at it in the near term, as we go through the needs of our customers in those high value target applications, they're not driven by new products.

[Francis Van Parys, CEO at Oxford Nanopore]

They are driven by product enhancements, workflow completions, ensuring we have a consistent, robust, easy-to-use workflow on our current platform. That will drive a number of enhancements, and refocusing our efforts on making sure we make those happen first. Medium term, I also do not see the need to develop new platforms to execute on this strategy. We are pretty happy with where we are with the technology. Customers are adopting. We've just not seen the full potential of that, and I think in order to realize that, we need to ensure we develop the capabilities that those markets and market segments require. Longer term, we are committed to ensuring the capabilities of the platform continue to evolve. We've spoken earlier in the call on protein. That will become an important opportunity at some point, and we're committed to continue our investment in that space.

[Francis Van Parys, CEO at Oxford Nanopore]

I think what you're hearing and what you'll see, and when we report out more specifically on our future R&D spend, is that it's more of pruning, focusing towards the right customer segments. Then from a portfolio simplification standpoint, this work was started last year. We've already made a couple of announcements there. I don't think it's a material wholesome change. We are happy with the portfolio we have today, some of which needs further investment in terms of future upgrades. But we don't expect a wholesome change versus where we are today with our platform. There's a couple of further adjustments of smaller programs that we'll communicate, but the majority of the work in the portfolio simplification that started last year is underway and is soon to be finalized.

[Nick Keher, CFO at Oxford Nanopore]

And just on your second question about OpEx control. So what's enabling us here to do this? Last year, we went through two quite painful exercises within the company, and the second of which was this strategic realignment exercise to sharpen the focus on the portfolio and within the R&D projects that we were doing. We're seeing the benefits of that now. We also did the same, it wasn't just R&D, it was across SG&A as well, and we've seen the benefits there, and it's allowed us to reallocate capital internally. We've absolutely, with investors and the market, tried to have a say/do and build trust, and I think we're showing that. That's why we're kind of disappointed with what happened with the top line in the first half, in all honesty. But on the OpEx piece, we said we were going to be cost disciplined.

[Nick Keher, CFO at Oxford Nanopore]

We've demonstrated that ahead of expectations. When we look forward into next year, or the second half of this year and the year ahead, we've got buy-in, I believe, internally, for actually how we're going to continue to drive, be more efficient internally with our capital. The big things are looking like logistics costs, where we can recover more than what we are doing at the moment, and that's reported within that sales and distribution line. Then on things like overall IT expenditure, software, et cetera, we've been doing things internally to look at this already. We can already see that we've got duplication here of programs that we've got in-house. It's a big number. We're going to execute on that over the next six months, and you're going to see the benefits of that next year in the numbers as well.

[Nick Keher, CFO at Oxford Nanopore]

These things are going to allow us to reallocate capital and essentially focus on the higher growth ROI activities, essentially as we're doing in R&D as well. So we're pleased with how we've gone. We'll continue to try and do better than what we're guiding to on the OpEx line as well.

[Veronika Dubajova, Analyst at Citi]

Got it. Thank you, guys.

[Operator]

Thank you for your questions, ma'am. Our next question will be coming from Sam England, an analyst from Berenberg. Please go ahead.

[Sam England, Analyst at Berenberg]

Hey, guys. Thanks for taking the questions. First one, you commented on the acceleration you are expecting in the second half of this year, and that will come from a mix of confirmed business and pipeline. Can you just give us a sense for how H2 has kicked off and how reliant you are on that pipeline conversion piece to hit the full-year number, just to give us a sense of current visibility? Then a longer-term one, can you talk a bit about your assumptions for the research market within that 2030 revenue target? I suppose, how much conservatism do you think you have baked in given the various uncertainties at the moment? Could it actually surprise to the upside if the underlying markets improve, particularly around areas like China? Thanks.

[Francis Van Parys, CEO at Oxford Nanopore]

Sure. Second half, we have pretty good visibility to already scheduled orders that we expect to ship in the second half. Those underpin the acceleration of the growth quite well. In addition, our pipeline is looking pretty healthy. We have not assumed a material improvement in China or the Middle East, given that these are unknowns at the moment, and they did negatively impact us in the first half. Actually, the pipeline gives us pretty good confidence of how the second half is going to unfold. We also expect a number of contracts in the Americas, which delayed from first half into second half to materialize. Overall, that gives us pretty good confidence going into 2026 for second half.

[Nick Keher, CFO at Oxford Nanopore]

Yeah. Just to add to that as well. We have got the exact same coverage that we can see in terms of invoice ships or scheduled, that we had at this point last year, when we delivered 24% growth for the full-year. From a relative basis, we have got that same level of coverage and hence, confidence. In terms of how the second half started, we have only really had July, and it is in line with the numbers that we expected. There is a lot more to be done, but as you can imagine, the summer months are always the quiet ones.

[Nick Keher, CFO at Oxford Nanopore]

We have always talked to the fact that Q2 is seasonally Q3, sorry, is always seasonally a little bit weaker than Q2 and Q4. But we have already got that underpinning from the coverage we have got today and the size of the pipeline, which continues to grow.

[Nick Keher, CFO at Oxford Nanopore]

We have considerable pipeline coverage in places like the Americas as well.

[Nick Keher, CFO at Oxford Nanopore]

On the second question around research, we assume mid-single digit. Yes, we have seen pressures, especially around National Institutes of Health. Europe is still quite healthy, from a research growth rates perspective. Is there opportunity to do better? That would assume the external environment needing to improve. It's not something we've built in at the moment. Mid-single-digits is our assumption, and that's what we're planning on. If we can do better, we certainly will do.

[Nick Keher, CFO at Oxford Nanopore]

Just in case that was more of a medium term or this year, because that single digit, yes, for sure for this year. For the medium term, we think it'll be stronger because of the target application focus. I think it also gives us an opportunity to talk about, hopefully people see that greater than GBP 700 million, there is some prudence built in here about the haircuts we've taken. So we've not assumed actually material improvements in the end market. We've assumed quite a significant headwind for China, actually, in that number as well, given the market dynamics we can't control. So, yeah, absolutely, it could be something that does better in the medium term, for sure.

[Sam England, Analyst at Berenberg]

Great. Thanks very much.

[Operator]

Thank you very much, sir. Our next question will be coming from Kane Slutzkin calling from Deutsche Bank. Please go ahead. Your line is open.

[Kane Slutzkin, Analyst at Deutsche Bank]

Morning, guys. You mentioned in the release that no new platform or commercial infrastructure is required. Does it mean the existing manufacturing and commercial footprint can support revenue above that GBP 700 million without a major step up in CapEx? How should we think about that capital intensity through to 2030? Just maybe the last one would be just, any assessment on Roche's launch. What is your assessment essentially, or how has that evolved now that it is launched? Has that changed the growth or pricing assumptions embedded in any of your medium-term targets? Thank you.

[Francis Van Parys, CEO at Oxford Nanopore]

Yeah. Thanks for the question. On the commercial infrastructure, R&D, we feel it is pretty much at the right level at the moment. From 2028, we assume that we will continue to invest in both of those at the rate that is appropriate for the growth that we will see. That doesn't mean that everything will need to stay the same. In order to execute on the strategy, we need to refocus our projects towards where the growth is and where the ROI is going to come from. It also requires refinements in our go-to-market structure, which will enable greater specialization to support the customers in the segments that we're targeting. From a just investment magnitude standpoint, we don't expect material change. On the manufacturing footprint, that is something that we are working through.

[Francis Van Parys, CEO at Oxford Nanopore]

We are working now through the operationalization of the strategy, as we indicated before. One of the elements there is, what does our manufacturing footprint need to look like to support the volumes we foresee by 2030? That will likely mean some expansion at some point. More details to follow as we make those decisions. Those decisions actually are quite near term, because you don't build a factory in a day, as you know.

[Nick Keher, CFO at Oxford Nanopore]

Just to give you, on the CapEx through 2030 piece as well, that will be the significant number essentially will be on a manufacturing facility should that decision be taken, which clearly we are looking at, we will come back to. It is not going to distort the profile of the company to a significant level is what I would say. It will be spread over a multi-year period. It is not going to be, we can go offline, but what we are looking at here is the flow cell manufacturing, and we are thinking smartly about if we are having a second facility, because even from a BCP perspective, we are going to want one by that point, and we are going to think about territories. We are going to think about funding for the manufacturing facility as well, and where that could come from.

[Nick Keher, CFO at Oxford Nanopore]

We are going to put all of that together and work through it over the next six months, and we will have more to talk about. On the Roche assessment, I mean, Francis does want to-

[Francis Van Parys, CEO at Oxford Nanopore]

Yeah. From a commercial standpoint, we are seeing placements. I have met with customers who are investing in the platform. It is early days. Frankly, we believe this is an adjacent space for us and is not at the expense of where Oxford Nanopore is targeting our applications. As we explained today, we are focusing on high-value applications where our technology can make a meaningful difference. They are in nature quite different from where we believe the Accelrys platform will focus and is focusing. It is still a short read-focused platform that is looking at the higher throughput opportunities, and that is typically not where we are focusing our strategy, also not going forward. So it might well be a platform that sits in an adjacent space to where we are.

[Kane Slutzkin, Analyst at Deutsche Bank]

Thank you. Sorry, while I am here, just to follow up on Sam's question on research. Were you guys talking about research more broadly? Just on the U.S. piece, what is sort of in the numbers or for the remainder of 2026 into 2027 for U.S. sort of academic or government funding?

[Nick Keher, CFO at Oxford Nanopore]

The overall research revenue line, single-digits, low-single-digits, essentially. I mean, we've still outperformed what the peers are doing, for sure, on all that. But there's quite a bit mix between academic, government-funded, which has clearly been very difficult. So we're seeing a broad mix there. But the overall research revenue number for the U.S., single-digits.

[Kane Slutzkin, Analyst at Deutsche Bank]

Low single-digit growth you're saying?

[Nick Keher, CFO at Oxford Nanopore]

Yes.

[Kane Slutzkin, Analyst at Deutsche Bank]

Okay, perfect. Thanks, Nick.

[Operator]

Thank you. That's your question, sir. We'll now be moving to Miles Dixon calling from Peel Hunt. Go ahead.

[Miles Dixon, Analyst at Peel Hunt]

Nick, Francis, thank you for taking my questions, and my apologies if they've been asked before, my line dropped. I wanted to ask you about the operating costs. I mean, Nick, it's been a really impressive three halves of trajectory. I was wondering about the guidance. Even though you've improved it today, the suggestion is that the second half might see a step-up in operating costs. Is that just you building in some additional headroom, or is there genuinely something where you might expect a bit more cost in the second half? Is any of it related to the GBP 20 million license fee deal that you've announced today? Lastly, on a technical point, if I can ask about your capitalized development spend, which is creeping up on R&D. How might we expect to see that moving forward?

[Miles Dixon, Analyst at Peel Hunt]

What is the driver that's really changing that or classification to capitalize it rather than expense it? Thank you.

[Nick Keher, CFO at Oxford Nanopore]

Yeah. Great. Thank you. Thanks, Miles. Operating costs are building a bit of prudence and headroom for the second half, for sure. That's not to say that we might see some step-up in certain areas. As you've seen today, the leadership team being built out, clearly that's going to add to the bottom line from a cost perspective. Nothing related to the global diagnostics company cross licensing agreement that we've talked to. So there's no cost for us associated with that. Yeah, building in a bit of prudence, but also just allowing for the fact that we may see some build-out in certain areas as well before we think about that kind of reallocation piece. In terms of capitalized development spend, absolutely right. The things that have been growing here, it's more about the maturation of the platform.

[Nick Keher, CFO at Oxford Nanopore]

As products go from more research and then into development because they're becoming commercially available for customers, this is just the accounting rules essentially being applied to our R&D spend. As we look forward, the overall spend level is going to be broadly similar. There's a few pieces, though, that I don't want to hide away from, which is things like protein, where protein is predominantly like a research activity today, but we're getting close, and that will switch to being more development-led, potentially over 2027, and certainly over 2028. So that piece there, that's the big thing I can see coming through. Otherwise, the platform is basically there, and the absolute spend and split is broadly right. It's just that I can see movement coming on the protein piece, if I was going to point to anything. Otherwise, it's just applying the accounting rules.

[Nick Keher, CFO at Oxford Nanopore]

Essentially the fact the platform's becoming more mature. This isn't about creating a brand new process that we don't know works. This is actually about improving processes that we know work now and adding things in like automation, and things like that.

[Miles Dixon, Analyst at Peel Hunt]

Thanks, Nick.

[Nick Keher, CFO at Oxford Nanopore]

No worries, Miles.

[Francis Van Parys, CEO at Oxford Nanopore]

Thank you.

[Operator]

Thank you. That is the end of your questions. Our next question will be going to Julie Simmonds coming from Panmure Gordon. Please go ahead, Julie. Your line is open. Thank you.

[Julie Simmonds, Analyst at Panmure Gordon]

Thank you very much. Two questions, please. Firstly, on the bigger strategic part. The biggest area of growth looks like biopharma in the near term, and I am just wondering whether this is to do with either where you are currently with customers or just because the timeline to adoption in the biopharma field is quicker than that in the clinical space. Secondly, on the consumables in the current business, I am just wondering how much the slower consumable sales this year relate to the switch in business model to the capital first side, and whether you have an idea as to how long it takes for a capital sold instrument to get up to the levels you would have expected previously, if you expect them to get there, or if there is a big change in that.

[Julie Simmonds, Analyst at Panmure Gordon]

Thank you.

[Francis Van Parys, CEO at Oxford Nanopore]

Thank you for the question. Let me take the first one, and I will leave Nick to answer the second one. On the biopharma opportunity, your assumption that the take-up of the technology and the validation is faster than in clinical is correct. That does not mean that the validation cycle is not thorough and lengthy. But once it is adopted in a particular quality control process for a molecule, it is easier to replicate in other molecules. The testing is repetitive, and therefore, once it is part of a filing with the FDA, for instance, it is obviously a technology that is then established and used repeatedly. Therefore, the adoption is more of a step change, if you will. As in clinical, that opportunity is a longer-term process, especially the closer you get beyond laboratory-developed tests and going into IVD.

[Francis Van Parys, CEO at Oxford Nanopore]

That is a longer-term development opportunity. Therefore, we expect the bigger impact to come, even though it's significant in our growth for 2030, the bigger impact will still be, and it will probably overtake the biopharma opportunity beyond 2030. I'll take the second question.

[Nick Keher, CFO at Oxford Nanopore]

Yeah, thank you. So it's a good point, Julie, as well, the consumables piece. Without a doubt. So if people were to go back and have a look at how many flow cells, for instance, they signed up to when they took a project pack on, we said this at the time, there was a bit of a perhaps it wasn't the right number because an active user, the user wouldn't necessarily use that in a normal year. So we saw this kind of like bolus of, like they'd burn through the flow cells, and then it would kind of drop to a level, and then it would increase from there. So we're not seeing that kind of peak and trough before growth. We're seeing more of just the buying what they need now.

[Nick Keher, CFO at Oxford Nanopore]

I think that's a very important piece because this is like we're going through that normalization event where people are buying what they need and buying with the device that they're purchasing outright. So there is definitely that normalization piece that we're seeing through at the moment. How long does it take for a customer to buy a device and then start get up and going? This is a metric that we kind of look at all the time with the commercial team because it's incredibly important. In terms of, like, it depends on the device, depends on the customer, it depends on the type of contract we're looking at.

[Nick Keher, CFO at Oxford Nanopore]

But really, we should be thinking about less than three months, because there's a training piece they go through, depending on the device they have, the installation, the setup, making sure the bioinformatics and everything works the way they want, and then there is the kind of ramp-up period we see as well. So we've absolutely seen that for the last 12+ months, where we look at active utilization per device and how long did it take before they kind of get to the normal level, and how many devices are kind of running below that, and what do we need to do about it. So we've got the data. We clearly don't publish the data. But we are looking at it, and we can see that that kind of ramp-up should happen from here, particularly on the consumable level.

[Nick Keher, CFO at Oxford Nanopore]

I mean, just to kind of, sorry, really to hit the point, like on the larger P24 in particular, we have consistently seen utilization growth year-on-year. As we are kind of lapping these larger research programs, so the GBP 8.3 million, NIHR, GEL 2.0, and PRECISE II, and that is just the first half headwind. The vast majority of that was consumables as well. But we have been placing out a load of devices with new customers, and they are going to start ramping up over the next 3 months+.

[Julie Simmonds, Analyst at Panmure Gordon]

Lovely. Thank you.

[Operator]

Thank you, Julie. Our next question will be coming from James Orsborne of Stifel. Please go ahead.

[James Orsborne, Analyst at Stifel]

Hi, Nick. Hi, Francis. Appreciate you taking the questions, and just two, if I may. Firstly, on the adjusted EBITDA margins for 2030, I think you said of greater than 15%. Is there any reason why this cannot be higher? I know your competitors, more established competitors, are close to the high 20s. What are the long and term expectations here? Is that high 20s possible for Oxford Nanopore versus the peers? Then second question is around the GBP 100 million cash trough. I think you mentioned this still stand. Is that inclusive of the licensing and royalties, or is that based on the pure organic previously? Maybe just how you view this in terms of you have mentioned selected M&A and how that kind of incorporates into your free cash flow breakeven target in 2028, and breakeven target in general. Thank you.

[Francis Van Parys, CEO at Oxford Nanopore]

Thanks for the question. I will start, then Nick, you take over. On adjusted EBITDA, we have said 15% or more, so there might be opportunity there. It is also important to state it does not include any contribution from royalties of a cross-licensing arrangement that we spoke about earlier today, nor does it include any upside through other partnerships or business development opportunities that we may do between now and 2030. So we believe there is upside to that. Peers are in the 20s. There is no reason that medium to long-term, we cannot get there. We are pretty confident we can. At this point, we are being prudent on what the commitment is for 2030. It is going to be 15% or more.

[Nick Keher, CFO at Oxford Nanopore]

Yeah, exactly. The only other thing, just to add, it really depends on where that revenue number is. So you are greater than GBP 700 million. Clearly, GBP 701 million will be greater than 15%, but if it is GBP 800 or GBP 900 million or GBP 1 billion, clearly, it is going to be a higher adjusted EBITDA margin overall. I think the key point is that royalty number will be additive on top because that is coming through at 100% gross margin with no costs underneath. On the GBP 100 million cash trough as well, yes.

[Nick Keher, CFO at Oxford Nanopore]

So even on the underlying basis, we are still going to go through that GBP 100 million. Clearly, it will be benefited now by the royalties going on top. There will be more to update on this front, I think, at the end of the year in terms of allocation of capital, et cetera, and how that will look going forward.

[Nick Keher, CFO at Oxford Nanopore]

Selective M&A, I know that Frans will add to this. The way the capital allocation framework set out, it is about innovation, internal innovation, and driving organic growth. The second piece, it is about partnerships and allocating capital there. The third piece is then about M&A. But, in the near term-

[Nick Keher, CFO at Oxford Nanopore]

We are going to be building out the plan aligned to that kind of the workflow that you have seen. We will come back at the right time when we need to talk further. We are not going to do a deal. Sorry. It is underpinned by the strength of the balance sheet. We are not going to do something to take away our foundational strength of the balance sheet. So it might be a little bit later than 2028 before we start thinking about the M&A pieces.

[James Orsborne, Analyst at Stifel]

Great. Okay. Thank you very much. Very clear.

[Operator]

Thank you, Mr. James. As we have no further questions at this time, I turn the call back over to your hosts for any additional or closing remarks. Thank you.

[Francis Van Parys, CEO at Oxford Nanopore]

Okay. If we have no further questions, I want to thank you for spending the time with us, asking the questions, and your interest in our update. I hope it was useful and insightful for you. We look forward to engaging further in the next few days and months, and remain available to answer any further questions and share our views on the market. As we stated on pillar two and three of our strategy, expect us to come back at full-year results, where we will share more detail on how we intend to operationalize this strategy. We are now going to go back to work. Thank you.

[Nick Keher, CFO at Oxford Nanopore]

Thank you very much.

Participants

Analysts

• Francis Van Parys, CEO at Oxford Nanopore
• Nick Keher, CFO at Oxford Nanopore
• Zain Ebrahim, Analyst at JPMorgan
• Kyle Mikson, Analyst at Canaccord
• Jon Unwin, Analyst at Barclays
• Veronika Dubajova, Analyst at Citi
• Sam England, Analyst at Berenberg
• Kane Slutzkin, Analyst at Deutsche Bank
• Miles Dixon, Analyst at Peel Hunt
• Julie Simmonds, Analyst at Panmure Gordon
• James Orsborne, Analyst at Stifel