Oxford Nanopore Technologies Aktie

Perfect. I think we can get started. Kallum Titchmarsh is here from the Life Sciences team at Morgan Stanley. Welcome to Day 2 of the Global Healthcare Conference. Really pleased today to be joined by the team from Oxford Nanopore. We have Francis Van Parys, CEO; and then Nick, CFO. Thank you both for being here.

Thanks for the opportunity.

And just before we get started, for all disclosures, please see morganstanley.com/researchdisclosures. So it feels like an exciting time for the business. But perhaps just to set the stage, can we just talk about how '26 has played out so far versus your initial expectations? Anything that has surprised you for the better, anything that's come in for the worse, and then we can dive in a little more into the business.

Sure. Yes, I've been in the role now for about 7 months, made a really interesting start. I feel as excited to be with the business as I started on day 1. And we feel first half has gone reasonably well. We've had a few headwinds in the Middle East, obviously, that's not exclusive to us, but also a few headwinds in China that we've been struggling with. We don't expect those to go away immediately. They put some pressure on our first half revenues. But we feel we've got a good line of sight towards the full year and looking to get to the guidance we've given for the full year. So, so far, so good.

And Nick, anything else you'd call out from the quarter or over half, I guess?

Yes. I mean we always knew there was going to be a second half weighting to revenue because of various contracts that essentially had rolled off, particularly in Europe and Asia Pacific. And that's all played through as expected. As Francis said, China was clearly a bit of a weak point for us due to export control restrictions and some things on our side.

But in spite of that, actually, we saw a meaningful improvement in our gross margins and our adjusted EBITDA loss narrowed to GBP 22 million in the half, so down about GBP 26 million versus the prior year, about GBP 16 million sequentially. So we've really kind of made progress on that kind of progression to breakeven. And results, we did talk about some positive things as well in terms of a global diagnostics contract being signed and other things as well. So first half had a bit of ups and downs, but we're certainly on track.

Exciting. A lot to dig into there. But maybe, Francis, again, you've been in the CEO seat now for, I think, coming 7 months. What has stood out to you the most during that journey so far outside of kind of the operations and the financials that we've heard of?

Yes, I joined because I was -- and I am super excited about the technology and its potential. So that's still the case. Having been here now for 7 months, that expectation has fulfilled itself. I don't think we've seen the adoption of the technology as much as the science deserves. And so my ambition will be to scale the company in an accelerated fashion by focusing in on fewer applications, higher-value applications that we feel we have a really clear path to win.

Really passionate about the team. There's a lot of good talent in the business. Added selectively to the management team to complement some of the skill sets that exist in the business, but can be further developed as we embark on our new strategic chapter. And I'm pleased that after 6 months, we were able to communicate a new direction for the company that hopefully brings some clarity on where we're going, how we want to intend to scale the business and how we intend to see the business by 2030.

Great. And then maybe diving in a little more into the results. You called out China, and I think the Middle East are those 2 main areas of weakness, but device sales were very strong. How should we be thinking about the timing and the magnitude of the consumable pull-through on those device sales? And what do you think would need to change for both China and the Middle East to begin that recovery?

Do you want to cover?

Yes. So on the -- you're absolutely right. First half device sales were very strong as they were last year as well. There's usually a circa 3-month period, I'd say, between kind of placing devices and essentially customers kind of getting ramped up. There's always timing aspects and limitations to that as well, and it also depends on what the customer is doing. But as we look forward, we kind of -- we are confident in essentially our consumables pull-through starting to pick up both in the second half and as we go into next year.

In spite of the consumables, number -- growth number being actually single digit, it's also worth pointing out that the volume increases was over 20% from our key lines at the PromethION. So we are all confident that essentially as we go into the second half with the new devices placed with existing customers as well, we're going to see that pull-through and come through. So -- and then on China itself, as Francis has said, we don't expect this to be a recovery in the second half.

To kind of talk through what happened. I think everybody knows, export control restrictions have been very tight, and they've been tightening over the last few years. It's a reason why we've had a number of existing customers cut off from supply. As we kind of -- going into this year, we've seen that increase again.

And I think some of that is the issue. Part of it is also us and that we are restructuring our commercial organization in China at the moment. We've actually done most of it now. And we're also reviewing our distributor network and changing things there as well. So as we go into the second half, we expect stabilization. We've expected the decline to be the same, so 16%, but stabilization from a fundamental perspective. And then we're not giving up on China as a market for us as we go into next year.

And that mix shift over to your applied end markets, is that happening quicker than you perhaps assumed and seen some very strong growth rates there during the first half. What's that being catalyzed by?

Yes. So on the clinical side, adoption in rare disease, infectious disease and oncology, are the kind of 3 areas where we're seeing that kind of really happen. It's worth saying that we're going on top largely here of existing platforms that are available. Besides infectious disease where I think you can see is becoming more frontline. And rare disease, whilst we're landing and going on top of existing platforms, there's a bigger opportunity for us to actually become a frontline test over time.

On biopharma, we're very excited about the opportunity here. This is both R&D, so things like target ID, antibody characterization and then things like the QC market, particularly with the mRNA personalized cancer vaccine space. So we're seeing good adoption and that growth come through. Arguably, it could be better. And actually, as we begin to focus more with the focused strategy that Francis is bringing as well, we anticipate we can actually do better over time because we've historically tried to do too much and now bringing that focus and putting the commercial teams aligned to it, maybe we can do better.

How about those industrial markets? It was interesting for me to see that evolve as well. Maybe just unpack what you're seeing on the ground there.

So there's different types of use cases within this. So within our applied industrial space, we only grew slightly weaker than we'd like because the plasmid market, which we are all doing very well in, is seeing quite a bit of price deflation in the market itself and more people are trying to use as many of our flow cells as possible to reduce them as much as possible. And we're seeing more multiplexing happening at this moment in time.

Now we're getting to a price point though that may allow us to open up a new market segment altogether and actually drive considerable volume growth over time. But this is going to take a bit of time to kind of come through, particularly on the R&D road map piece. So it may still be for the next couple of years, maybe a low-growth market for us.

Within the Food Safety Testing Market and other aspects that we have historically focused on, with the focused strategy now of circa 20 target application areas, it's likely that we're going to deep -- well, we're not going to put resource into these areas as well. And so whilst we may continue to take share, we're not guiding to that because our focus areas is going to be on these other 20 applications instead. So yes, we've done very well historically, but the size of the market opportunity is arguably greater than other places, and that's where we're going to focus.

Makes sense. And then on the '26 guide, 16% to 20% constant currency revenue growth on the core business, we can cover the margins a little later on, but you've spoken to pretty good coverage for that guide and visibility in the back half. What are some of the puts and takes to take us to the upper bound versus the lower bound of the range?

It's the opportunity pipeline. So we have the same visibility at this point in the year as we did last year when we delivered -- we guided to 20%to 23%, we delivered 24% growth, and we have the same relative coverage now from what's been done already and then scheduled to go out the door already booked in, plus our underlying run rate business.

Now the piece that goes on top of that is the opportunity pipeline that could kind of where are we going to swing within that guidance range. And there are a number of opportunities out there. I think some of it is actually for the U.S. and the NIH space and other research type activity because these projects can fall in or out. Within the applied markets, it's more about how quickly they kind of continue on that ramp-up curve. But to answer your question, it's the opportunity pipeline and how much of that falls in.

Yes. That makes sense. I want to dive a little deeper into the clinical business, up 35% year-over-year in the first half. You called out the reimbursement funded labs running assays or developing new clinical methods as a support there. How is that pipeline looking of those anchor accounts as we look ahead in clinical? And what does that scale up from pilot to production look like in practice?

Well, look, we have a lot of inbound interest from those labs. For specifically rare disease and oncology, our strategy is an LDT enablement strategy. There's a number of the providers that are currently validating our technology, adopting it, typically as a reflex test versus existing short-read diagnostic tests. But as they see the diagnostic yield pick up and as they generate clinical evidence to support that diagnostic yields can move from 30% to maybe 60% in some cases, then there is an opportunity to broaden the adoption and make this a frontline test. And so we are really in that uptake phase now, and this is where you see the sort of revenue growth coming from.

Exciting. And when you win one of those clinical workflows, like what budget are you typically taking? Are you displacing another sequencing platform or like consolidating several existing assays? I'm just curious how that process looks from your vantage point.

Yes. Well, it depends on the end markets. Sometimes we replace existing tests, mostly in some of these rare disease and oncology applications, typically, we come in as a reflex test. And so, it's on top of what is already existing, but then may push down. Now we're not the only one active in that market. It's usually competitive situation, but we've seen good win rates.

Great. And then more broadly, I think across the market, biopharma seems to be picking up across my coverage across the space as well. 25% growth there. You called that out as likely being the largest contributor out to 2030. 20 biopharma customers actively evaluating technology today. Once the customer validates Oxford Nanopore in a QC workflow, how quickly does that translate into a scaling revenue base for you?

Yes. So initially, you see it in clinical trial volume, which is obviously not as much as commercial. But as you go through commercial approval, then it depends on the ramp-up of the therapy, right, or the vaccine. And so typically, you see a first year moderate take-up, but as the therapy gets accepted, prescribed and then ultimately commercialized, that really gives you the full scope of the target patient population.

In the personalized vaccine space, it's typically patient populations 20,000, 30,000, 50,000. Each batch is a patient, each batch is a test. And so that's where you see the full scale impact. But it takes time before that ramps up. Now that doesn't mean there's no revenues before that. So as one indication is it gets approved, other indications are being explored through other clinical trials, which obviously then also generates more volume.

Yes. Just on that, like once the biopharma customer is onboarded for one molecule, how much easier is it for them to then expand across additional molecules or workflows or sites? Maybe just talk through that scale up from the initial to additional.

Yes. For the same molecule and other indications, it first translates into clinical trial volume. But then for other molecules, absolutely, as the pharma companies gets more familiar with the technology, has done all the validation in terms of the quality management system we use, the documentation we provide.

There's a lot of the validation that doesn't need to be repeated. And only the validation that is specific to the molecule needs to then be -- I mean, that's where the new data needs to be generated. But obviously, once you're in with one, it gets a lot more easy to be part of the QC workflow for the other molecules in the pipeline.

Yes, that makes sense. And you were pretty explicit quantifying some of those research headwinds during the first half, the roll-off of quite a few of those large contracts. Outside of those roll-offs, could you maybe deconstruct some of the market trends you're seeing? We're hearing of some stabilization in academia in the U.S. specifically, but maybe given your vantage point across the globe, what are you seeing there?

Sure. Well, generally speaking, the research market has been pretty good for us. We've seen good growth, mid-single digit in the first half this year. But historically, it's been a good growth driver for the company. These applied markets are going to accelerate our growth rates, definitely. In the U.S., we have indeed seen some pressures on NIH. Is that stabilizing? It's not getting worse, the impression. And Europe has been good for us. Looking forward, research markets will remain important for us, but it will be a smaller part of our revenues. So today, it's about 2/3 of our revenues. We expect by 2030, it's probably going to be closer to 40%.

Yes. And is there anything you can do? Let's assume the research environment funding, it is still poor out to 2030. Is there anything you can do internally to drive more uptake of the instruments of the consumables? We've had some companies targeting like the better funded labs within the U.S. but I'm curious whether you think there's anything you can do specifically to -- differently from the traditional funding we see in that market?

Yes. So I think one of the things that plays to our advantage here is the fact that if you want to get up and running on sequencing, we are the most...

Pretty accessible?

Thank you. Good word. Price point essentially for people to kind of start on. So people can buy a MinION for $5,000 with 5 flow cells and get going. They can buy GridION for $58,000, a P2i which is a fantastic device for like $80,000 versus competitive products. This is considerably lower price point for the CapEx upfront. And the consumables as well, given the fact you can batch and you can kind of more flexibility on our platform, we think that plays into our strengths.

So actually, we just continue to go as we are. Now absolutely, we have different funding models that are available for customers. So if they're in the U.S. or in Europe, we have specific third parties that can offer financing to companies as well as every big company kind of does. And there's always a discussion to be had on reagent rental approaches and things like that as well.

It feels like if you have the innovative products out there, customers are willing to find the budget for them because they don't want to themselves fall behind.

So that's exactly right. So like where does research dollars get pointed to? Is it to do the same experiment again? Or is it to try and unlock new biology? It's to unlock new biology, and that's where we believe we offer a considerable advantage here because of the long-read nature of the platform and the fact that we look at DNA and RNA directly, which means we see all modifications.

Yes. And then as we look out to the 2030 revenue ambition, what are the key assumptions there around customer mix, utilization and account expansion, just given, again, the volatility we've seen in some of these end markets, how are you thinking about that for the next few years?

Yes. So on -- we've been pretty prudent here. Well, you expect us to say that, but we have been in terms of what we're expecting on utilization actually because -- we know we can do better here. And historically, if you look at all of the numbers we printed, we've actually talked to quite considerable utilization growth year-on-year. We're not assuming that continues. We're really just looking at further adoption of the platform and those specific things within biopharma as well.

So -- and in terms of pricing, we've been pretty prudent here as well. Like on the PromethION flow cell, we're assuming that actually price declines because our cost per genome will come down over time. It just continues to go in that same trend. The difference is, we can see specific end markets, target applications, which are quite high value actually that we have a real right to win, and we're just going to focus on those areas and not play in the same spaces where the other players are.

Yes. And Francis, one of the clearer messages from the strategy update was the need to translate differentiated technology into a more market-led product road map. What changes in practice in terms of how you allocate R&D, decide what gets built? And just as importantly, what are you now prepared to stop or perhaps deprioritize?

Sure. So one of the things we did as we characterized these end markets and prioritize them, we did a gap analysis of the customer needs and requirements in each of those target applications and where we are now and what product enhancements, software workflow enhancements we would need to do in order to win and claim our fair share of that market. And so that's going to inform our product road map, our priorities in R&D, our go-to-market structure, and we expect refinements in all of these.

There -- in terms of the current activities in R&D, it is a long tail of activities that are currently happening. Our strategy historically has been driven by what's scientifically possible versus what -- where we can create customer value. And so there's an opportunity to truly reset and create more operational discipline, create a clear link between how we invest in R&D, how we align our resources versus the business and the customers we're serving.

And when you speak with those customers today, what do you think the biggest product constraint is? Is it reliability, workflow simplicity, bioinformatics? Just where do you see the biggest adoption unlock being in the years to come?

Yes. Look, the dependability and the robustness of our technology is not a theme anymore. It's not what I'm hearing from customers. It's enhancements around the workflow. It is some -- in specific segments, some gaps around bioinformatics. It is also about generating the evidence and the data to substantiate our claims to be clearer in our value proposition, to be clear in terms of showing the data that supports the claims we're making in terms of how long read is valuable, stressing the so what of what methylation can bring in terms of biological insights, structural variants, what information that actually -- what questions it helps answer, et cetera. And so it's a multitude of things, but there are tweaks, they're enhancements. They are not huge showstoppers. And clearly, the good news is we don't need to develop any new platforms or anything. The technology is there.

I thought the bioinformatics angle is interesting and I guess, software more broadly. Do you see that as just a way of removing friction and driving consumable usage? Or is that bioinformatics itself perhaps a revenue driver in isolation?

It could be. It depends on target segments and markets in some target segments, in biopharma in particular. And the expectation is really to start from sample to answer and to report, and that includes more than just the sequencing. So it includes the sample preparation. It includes the library preparation and the bioinformatics workflow all in one. And so that's not necessarily the case in clinical applications. So it depends really in terms of what use case you talk about, but software as a revenue generator is certainly an opportunity for us going forward.

And it's somewhat linked to that, but I've been spending a lot of time with investors working out who are the AI winners and losers are in the life science tool space. It feels like there is consensus that the data generators are the ones that have the advantage and you have the instruments to generate that data. So how are you thinking about that AI work stream in the future? And how important could that be as a potential tailwind for the business?

Yes, it's a really interesting question. And we believe in the sequencing industry, we generate the richest data, including long reads, but also methylation, structural variants, et cetera. And so you have to believe that if you use agentic AI, you've got to base it on the richest data. And so we're really excited about the potential of what that could bring for us.

As a first step, we look forward to the results of the U.K. Biobank who are now currently processing 50,000 samples based on our data. And those data will come out at the end of this year and will be a great use case to see what biological insights can be generated from that data. And hopefully, that will be a sign of more to come and perhaps an opportunity to look at the other 450,000 samples in the database and to see that as a use case for further database building and then ultimately exploiting that with the agentic AI models.

Exciting. And outside of just like the new demand vector, what are you doing internally with AI to make Oxford Nanopore smarter?

Well, AI and machine learning has been a big component for us in terms of base calling, and that's a key capability in our technology. So that's a core capability, I would say. We are looking also at what else we can do in terms of improving the data of our -- the quality of our data and how we let that inform our decision-making in a richer manner. We have hired a new Chief Information Officer, who started with us 3 months ago. So really in the process of exploiting that potential.

Amazing. And Nick, just on the gross margin, I think H1, 62.2%. There's quite a few moving pieces, it seems within that. Just perhaps for those newer to the story, do you mind unpacking that gross margin? And then is approximately 62% the right base? Or is there already kind of a higher underlying exit rate you think more broadly within the business?

Yes, of course. Gross margin is up around 400 bps from the prior year in the same period. This has been driven by -- last year, we took a 330 bps write-off related to inventory essentially, which essentially exited that. And we pointed people to it at the time and said the kind of see-through margin was more like 61%. We have seen product mix impact here. And that's to that earlier point about more device sales versus consumables. So you've seen that mix impact come through on the gross margin.

As we kind of look forward, we expect that to normalize. We've historically seen currency headwinds as well, but now the dollar has kind of stabilized. We're starting to see that stabilize as well. But we are seeing underlying improvements. Now over the last few years, we've seen quite considerable improvements to the gross margin from changing the pricing model. And so selling devices rather than kind of looking at place them with customers.

As we look further forward and to answer your question, I think it's fair to say that 62% is -- we are aiming to do better than it. So when we kind of exit the year and the kind of where we should be thinking about this going in the future is further increases. And this is going to be driven by recycling of the PromethION flow cell, where we're already making inroads and actually have the process working in certain instances. So for anybody who's new to the story, on our consumable item, the flow cell itself, one of the most expensive pieces is the wafer, the chip that's on it.

We -- as part of the ESG push, we do get the chips back from all the vast majority of the customers, particularly on the PromethION. And we are recycling them to essentially strip it all down, clean the wafer and then use it again. Now on the MinION, we are successful with this process, and it's already driven our margins on the MinION to quite high levels. PromethION, we're just starting that process, and we've got some percentage, like low percentage of all flow cells have now been recycled going out. And we're working through the process for how it works from different suppliers of that wafer to make sure the customers can't even notice the difference.

We think we've got a path here for this. And when we do, we could see a circa 10 percentage points increase in the margin for the PromethION range alone, and that's our biggest revenue line overall. And so yes, I think the 62% we're at today, but actually the trajectory that we're seeing for it is positive. And as we continue to increase the number of recycled chips for PromethION, you can think about expansion of our gross margin overall.

To round it off, we put in the slides from the recent results, we're around 75% on our consumables gross margin today. We were around 63% when we kind of -- like a few years ago. So we've delivered quite a meaningful increase. As we look out over the next couple of years, getting over 80% is absolutely possible.

Great. One point I'm just trying to understand and reconcile is that the clinical and biopharma is the mix shift that you want. I think customer mix, there was 160 bps gross margin headwind in H1. So why strategically is that better mix initially dilutive? And then when can we start to see that ramp more meaningfully take?

So it was customer and product. So essentially, it's that product piece essentially that you got to focus on rather than the customer. To answer to this square as well, for the biopharma piece, absolutely, that mix shift is going to be beneficial to our gross margin, particularly the majority of the customers in the QC pipeline are on the MinION product using the GridION Q. So the margins are substantially higher. We will see that be a benefit to margin over time.

On the clinical piece, this is an area where we see greater competition in certain segments. So against the other long-read player out there, we do see some price competition at times, and that means that the margin isn't as high as we'd like today. But we have advancements coming through from a product perspective, which will mean that we can do more -- and so more samples per flow cell. Our pricing is all per sample. So essentially, we can see the benefit coming through, and that will drive margins over time. But in the here and now, we want that adoption into those areas as well.

And the consumables, I think, 75% gross margin today, you have that potentially above 80%, I think, longer term. Devices and services roughly 34% with potential around 40% -- 34% with potential around 40%, which of those 2 margin journeys do you think is harder from here? And like what specifically has to change operationally to reach those levels?

I think it's harder on the devices and services piece because as we kind of flagged as well, we're living in a world where compute costs and memory costs are kind of going quite a bit. And now we're doing -- we are completing development on the products to essentially take out cost, and we're going to see those benefits offset by headwinds in the next year.

So we expect device margins to stay broadly flat actually for next year. The difference will be on services where we're scaling. And so for awareness in the room, this isn't where we are sequencing for customers. This is actually where we have fixed contracts for support -- enhanced support plans and things like that for customers, where we are seeing -- we could do better in terms of the number of customers, percentage of customers that are signed up. And as that scales, we'll see the margin improve significantly.

And just given the tighter product and market focus, how should we be thinking about the shape of R&D investment from here? I think innovation has obviously fueled the success you've had to date. So how are you thinking about that trade-off between those 2 factors?

Yes. I mean we feel that R&D at the current level is where it needs to be sustained for the foreseeable future, 2, 3 years or so. We have opportunity to reprioritize to make a clearer link between what we have in terms of target product profiles and how our R&D resources line up behind that.

Going forward, '28 and beyond, there's an opportunity to -- as we scale the business further to probably increase that spend a little again. But then we probably would need to do that on -- just on a basis of where we have installed more operational discipline and clear prioritization, and that's now Phase 1. And we feel pretty comfortable that what we need to achieve in order to win in those target applications, we can do that within the current levels of spend.

And then just on the path to adjusted EBITDA breakeven in 2027, a big inflection point for any company there. How much of that plan is within your control through gross margin and cost actions? And how much depends on sustaining that revenue growth in perhaps the mid-teens?

We absolutely do need to kind of continue to grow as the numbers suggest. So at the top line, we've guided the market already for next year the mid-teens. If we deliver the mid-teens growth that we believe it's absolutely possible. Gross margin expansion above the 62% we've guided to this year, a few hundred bps and costs remaining disciplined on costs.

So in the first half of this year, everybody has seen adjusted OpEx costs were down 7% overall. We've guided the market to negative 2% to 0 for this year, which we feel very comfortable with. And as we look into next year, if we can -- as Francis said, we've got opportunities to take out non-headcount-related expenditure, particularly around logistics and IT costs, and we've got focused programs of work that we're going on there. That will allow us to kind of invest in other areas. We'll reprioritize internally about what we're doing, costs remaining broadly flat. And essentially, we'll do one of those magic things that the company does turn profitable.

Good stuff. And maybe in the last 1.5 minutes, a question for you both. What do you think is most underappreciated about the Oxford Nanopore story when you spend time with us, when you spend time with investors?

Yes. I think -- I mean, the story for a long time has been around long read versus short reads, has been around accuracy, it's been around maturity of the technology. I think all of that is behind us now. And we see at least our customers telling us they want us to succeed. They want us to be successful. They don't want us to give them a reason not to validate our technology. And I feel really excited about that.

Great. Nick, anything to add?

Yes, I completely agree. And I think -- the fact that this is a sensing platform, I think we often get put next to other sequencing companies far too often actually when -- the ability for this to be a true sensing platform to see other things that those platforms can't see and those technologies can't see. We're seeing it ourselves now with like the mRNA opportunities. I think we're playing in a different park than those guys actually. And I'm not sure the investment community necessarily appreciates that yet.

Amazing. Francis and Nick. Thank you so much.

Okay. Thank you.

Thank you.

Hello, everyone. Thank you very much for joining. It's my privilege to introduce Francis Van Parys, CEO of Oxford Nanopore; alongside Nick Keher, CFO. For those of you who don't know me, my name is Charles Weston, and I cover European Life Sciences at RBC. If you have any questions through this session, please use the button that should be on your screen. That will send me an e-mail. I will try to weave that into the discussion. And if I'm not able to, then I will come back to you directly on that.

I'm not going to use this opportunity to recap the investor presentation. Hopefully, you've all had a chance to look at that. Instead, I'm going to try and pick up some of the key individual drivers of the business in the near and medium term. And first, let's take a high-level step through. You described four aspects to the strategy, Francis. Customer-centric growth, which I paraphrase as a focus on key applications, focused innovation, which sounds like effectively using R&D to support those applications and keep some blue sky investments, disciplined execution, which sounds like simplify and standardize and high level or high-performance culture. So we'll come back to the applications in a moment.

But on the H1 call, you described that high-performance culture and highlighted some key hires that you made. So first question, please, and pertinent perhaps given your announcement this morning, what are the personnel gaps at the top that remain? And I see you have quite a few senior hires on your website in business development and biopharma specifically. So is this an area where you're also looking to flesh out capabilities?

Well, thanks for the question. And first and foremost, the way you described those four pillars, indeed, what they sound like is indeed what we intend to communicate with those pillars. In terms of the leadership gaps, we have made an announcement earlier today with a Chief Marketing and Communications Officer joining us as well as a Chief Development and Product Officer, who's going to be responsible for our product development and product management capabilities. Those were two important positions to fill, given that as we went through the high-value applications that we want to pursue, we did a gap analysis of our current capabilities versus the customer needs in each of those applications.

And we've identified a number of opportunities to close the gap in terms of reasserting our value proposition, our evidence generation, our product development capabilities as well as opportunity to simplify the portfolio. So those positions will really help us with that. BD and biopharma is an important area given that as part of our strategy update, we described also the various participation models that we are considering depending on market segment. And so in order to execute on that, that's perhaps one area we still want to strengthen a little bit more. But I do expect fingers crossed that in the Q4 time frame, we have a full management team that we will go into operationalizing the strategy with in 2027.

So are there any more announcements that we should expect about the top of the house senior hires over the next few weeks to get you into that shape for Q4?

There's a couple. That's not more than that.

Okay. So we went through the four different pillars just then, and you sort of teased us about the middle two, innovation and execution saying that you're going to come back to those and provide more detail before the 2026 full year results. So what can we expect and when?

It was really important for us to lay out where and how we will play because it determines everything else. And so by determining those markets we want to go after where we have a true belief we can win, we can differentiate, it informs the decisions we can make afterwards. And some of those decisions are actually underway, but some of those decisions are also not -- have not been finalized.

And so what you can expect by full year results is that it is a true operational plan, which contains future product road map, go-to-market refinement, governance structure, organizational developments, if appropriate. And so a fully operationalized plan that follows on from the strategic choices that we have made. We expect to work on that in the next 2, 3 months and communicate about that by full year results time.

Okay. I guess that moves us on to some of those applications. And you presented a chart which I can bring up if it's helpful for you, of ease of realization versus effectively the differentiation for Nanopore, Oxford Nanopore Technologies and also the GBP 14 billion to GBP 16 billion serviceable market opportunity.

So how many individual target applications are within that GBP 14 billion to GBP 16 billion? And will we get to learn a little bit more about how you're splitting those out later in the year or the full year results?

We will go down more detailed view of what the schematic overview we presented represents. There is a much greater granularity that we have gone through, obviously, to select those high-value applications. We have come to anywhere between 15 and 20 that we want to focus on and maybe not all at the same time, but we have identified them as being significant contributors to our growth in the next 4 to 5 years.

As we do deep dives in the coming year, you may well expect to see some of the good examples of those applications. So more to come on that front. There's obviously some commercial sensitivity associated with the greater amount of detail, which is why we haven't presented the full analysis here. But you can rest assured that we have gone through a significant -- that prioritization exercise and a series of characterizations of those segments that enable us to really nail down the entitlements we have in each of those applications, and that has then led to our guidance on the medium and longer term.

Okay. So let's start heading into those applications or those bigger markets, and we'll take them in order of growth contribution over the next few years. So firstly, biopharma. I think, Nick, you said that there were 20 or so pharma companies evaluating the technology in QC. Can you give us a sense of the range of companies in terms of their size or specialism or anything else that gives us a bit of color around those?

Of course, yes. So the Global biopharma essentially make up over half. So -- and other names that you are well known to maybe not in the top 20, but are well known to people around the world for their specialism in terms of like their focus areas, like those are the sorts of companies we're talking about.

And maybe we'll come back to what those specialisms might look like. But I think it might be fair to say that some of these evaluations have taken a little bit longer than hoped in the past, Nick, I think you've admitted that some of the delay was due to ONT execution issues. So what have been the holdups there? And how confident are you that those have been addressed?

So yes, good question and absolutely right. So this has been something that we've been -- as a company, we've seen these things happening in the background for a few couple of years now at least, and it's been going on a little bit longer than that in terms of the evaluation phases.

So from a customer perspective, we can't control their time lines. And if you miss -- for the global companies, if you miss that yearly meeting, you genuinely miss that yearly assessment and it kind of comes around again. The other point is on for the companies that we've worked with, they've had delays on their own assets because for the majority of these instances, we're working on new assets, not established assets for the majority besides sterility, where that is across established assets.

And then on our side, what has kind of not gone in a straight line, I think what we know for the GridION Q, so we released the GridION Q, which is now the version 1, and that was released nearly 2 years ago now. And the version 2 was released last week. So it's now on market and available if you want to buy one. And essentially with that, it has incremental features from an audit perspective, in particular, that the customer required for them to be able to -- this to be part of BLA filings and similar. So it has incremental features.

Now on some of the product lines, so we've got 2 assays available that essentially are key ones in this space, which is the mRNA test pack and also the plasmid test pack. And on both of those, the clinical -- the critical attributes of the product have been improved along the way as well and now cover off the vast majority of what the customers want. There is actually some things we could do further on down the line, which actually means that particularly on the mRNA piece, we might be able to look at greater value capture over time as well.

But for what's required today from customers, it's now met. So very confident on those things pushing forward from where we are. We've still got three more workflows, there are sterility testing and AAV and things like that, that we want to work through and release and that will be key to delivering and unlocking the value within the biopharma space as well. But we have worked through those kind of the headline issues that we've had on our side. We can't control the issues that may happen on the other side, clearly.

And does version 2 mean that they have to go through the testing to get that whole evaluation process again? Or does that tick some final boxes that allow people to then sort of make a final decision?

It's more the latter. So it's not a revalidation as such. So these are updates to the software that are features that they perhaps would have expected first time around.

You've called out mRNA and companies like Lonza and Moderna have talked about using sequencing as part of their processes. What about other modalities, cell and gene therapy, antibodies, anything else?

We focused on mRNA first because we are quite unique in how we sequence direct RNA. We have a number of others in the pipeline, AAV, [ AVA ] were already mentioned. And so we will continue to expand the applications to which sequencing is relevant. Those are part of the target markets for biopharma QC, but the immediate focus is on mRNA, AAV and [ AVA ] vectors. We have a number of applications also in cell therapy and could down the line also see where cell line characterization is relevant in the development process. But from a QC perspective, those are the target areas.

Can I just add as well? And absolutely right. I think it's important that we've always talked about QC because of our kind of capability that we're going in there. But in the R&D side of it, we shouldn't -- the target R&D side of what we do there, absolutely. But to your point there, Charles, so like antibody characterization and genomic characterization full stop for cell therapy is a big part of what we're doing as well.

But those are more -- those aren't QC workflows. Those are in the R&D side. That's why biopharma has actually come up quite significant because we have this more research and development focused applications, but we've got these QC applications, which are a tech consolidation place ultimately to replace other modalities that are out there.

So that, to some extent, brings me on to the next point, which is around this GBP 4.1 billion to GBP 5.5 billion addressable market that you've highlighted in biopharma. Is that calculated on a kind of a bottom-up basis, number of instruments and usage? Or is it more of a kind of top down? This is what's already going in as a spend on some of that QC that can be consolidated into Nanopore. How should we think about how you've come up with those numbers?

Both. So both bottom up and top down. So the QC aspect we've got the companies. And so what we've done is this -- the bottom-up perspective essentially on we know what the contract values are and we know what the assets are and we can -- and we risk-adjusted the numbers because we don't know what the probability of success would be for these drugs in reality. So we've just used industry averages and things like that. So the QC side, absolutely. And then we've used external advisers to help do the top-down perspective as well.

In the R&D side, that's where it's been more of the top-down perspective because it's harder for us to get more reliable information for the bottom-up. But for QC, given the insight we've got, we could do the bottom-up part there. Yes.

Okay. So let's stick on mRNA because we all saw the big move in Moderna last week on the melanoma vaccine. All the sequencing companies moved a lot on that since you have to sequence an individual patient's tumor. Can Nanopore participate in that side of the equation for a vaccine like this? Or are you more focused on that QC product release side?

Our immediate opportunity, given the resolution of our technology is on the QC side of mRNA. We use that to replace a number of existing tests in the quality control process of an mRNA molecule. And so the characterization of the tumor, while that's an opportunity. It's perhaps not where we as differentiated.

Okay. And just thinking about Moderna then on that QC side or mRNA in general, perhaps. We know that they've attended some of your conferences, Moderna specifically, I'm assuming that they specifically have been looking at Nanopore sequencing as part of the QC. Is there a way we can think about value per patient in terms of the current spend on the existing QC pipeline?

Yes. So to help here, the test pack itself is about $2,000, and it's a test per patient. But you can clearly imagine that for high-volume commitments, we will discount commercially against that as well. So please don't work on $2,000 per patient or anything like that for any of those situations. But for multiyear high-volume commitments, clearly, we'll look at discounting to that.

It's also worth noting that we're getting a lot of interest for the test pack to be utilized in the R&D setting now as well. So by companies that aren't necessarily far along in their journey just yet, but I want to make sure this is part of their analytical capability. And we're discounting more meaningfully there again to ensure that they kind of for a better word, get hooked on it and essentially using it as part of their process early on. So yes, hopefully, that answers your question.

Yes, it does. That's helpful. So $2,000 is what you are ostensibly listing that pack for. Is that right?

Yes.

How do you -- taking a step back away from mRNA specifically, how do you envisage the mix of direct to pharma sales versus sales through partners evolving? You've announced partner companies like Lonza in direct RNA, ViruSure and pathogen testing, PathoQuest, which obviously recently been acquired. How should we be thinking about what the plan is in terms of direct versus partnered?

Yes. There's a mix of partnership models here. But in order to simplify -- when it comes to adoption of the technology in a quality control setting, the customer need is to have a start-to-finish workflow, one that works every time and that reliably drives a result at the end and a report that's consistent every time. And so there, it is important that we deliver the full solution from the sample that goes in to the test report that comes out through the bioinformatics and on all the steps in between.

For biopharma R&D, there's different partnership models depending on what the research is that the company is performing. And sometimes they do need test kits from some of our partners that we are that are complementary to our workflow. There's a bit more variation in what people are doing with the technology. So we would naturally focus on perhaps more of the kits to base calling capability, which is the essential part of our technology and what the platform does really well and what we fully own. And so where we have partnerships, it's primarily to help with things like automation, sample preparation or customized reporting and bioinformatics. But for a specific workflow, once again, typically, we want to own the full solution.

Okay. And just one last question on biopharma then. People on this call will want to model biopharma on a more bottom-up basis. Obviously, you've given us some potential shape of where biopharma or applied markets may -- that may contribute to 2030 sales. But from a bottom-up perspective, can we be thinking about number of mRNA patients multiplied by 2,000 or, let's say, 1,000 post discounting? Or is it just so much more complicated in terms of all the various different other applications and the partners? Is there a way that we can think about modeling this?

I think the mRNA piece, that's how I would think about it. So patient volumes times by price per test. And I think that's not a bad place to start at that $1,000 mark that you've got. And then the difficulty here is when we go into things like sterility testing, that's going to be different again because that's per batch. And actually saying this, the mRNA piece is per batch ultimately because every patient is a batch. But you get my point here. We're talking like a vat when you're talking about sterility testing. And so you'd have to think about the number of batches a biologics manufacturer may make. So that could be very difficult, I think, for somebody without real intimate knowledge of the other company to kind of like model that through in reality.

But it's the same for other companies. We all have similar issues. And then per plasmid, we've been surprised about how much companies actually spend on plasmid internally on Sanger. And these are -- every company could be quite a few million dollars actually of just plasmid sequencing in-house that they do besides the stuff they send externally to people like Plasmidsaurus.

So -- but again, we get paid per plasmid and plasmid kit, et cetera, but you're not going to get that sort of visibility for you guys, I'm afraid, and we shouldn't really be giving that to you either. I think what we will look at is potentially a deeper level of KPIs that we can kind of report externally on this. And coming to that when we come to the operationalization of strategy and talk through that, have more things we can talk to you.

Okay. That's really interesting. I was on Visible Alpha earlier today, and I saw that unrisk adjusted, the Moderna vaccine is expected to be in 100,000 patients per year by 2034. So we'll multiply that by 1,000. We'll probably go into a bit more detail on this in our Virtual Life Sciences conference on the 21st and 22nd of September with you guys. Thank you for attending that, too. And I hope some of the participants on this call will be able to make that.

In the meantime, let's move on to Diagnostics. Clinical grew 35% in the first half, making it the fastest-growing division. Can you disaggregate the growth driver here between infectious disease testing and surveillance versus oncology and rare disease applications?

Yes. So we can, but it's a bit more subjective than I'd like it to be. And the reason for that is, as we've gone through this exercise actually as well, as you know, we've got like end market and organization, there's about 5 different tagging layers we've got with the data below it. We've gone extensively to the lowest level and retagged all of the data for the last 3 years or tagged it. So to the extent where we've done about 70% revenue visibility for all of these applications, essentially, what is the customer doing with the product because there's not really much point as trying to figure out what every MinION customer is doing because there's just too many of them and they're spending like in reality, too little.

And that meant that we can see where that growth essentially is coming from. Rare disease on a relative basis, on an absolute basis, infectious disease has been a big growth driver for us. And we are seeing oncology, particularly in Europe and parts in the U.S. But -- so in order, relative growth, rare disease, infectious disease, oncology is what I'd say. And I think it goes down to the point we're talking before, within certain oncology indications, we're getting used now. But if you take like ALL and things like that, but these are rare tumors, the small volume numbers, but they need an instant quick result where the technology to lean into. But where for infectious disease, we're the first technology to reach to, because of the speed and the accuracy we've got.

And in rare disease, as you know, there's more of a competitive situation, but we have got data to show that it's like a 30% uplift in diagnostic yield versus short-read technologies. People are beginning to see that and so switch. That's why the MyOme contract. And that's also a positive thing we put into the update that Natera, a company obviously quite large and big in the space. But for their rare disease essentially are looking -- utilizing Nanopore because they think that's the best technology.

Yes. Natera is also attending our life sciences conference at the end of this month. So I'm sure we'll be asking them about that directly. It's actually getting quite tough to figure out what's happening across your various different partnerships for me anyway. You've got Danaher, Cepheid, you've got BioMerieux, Bio-Techne, Natera now with MyOme, and then you've got a number of smaller partners. So before we even get on to the new licensing agreements, can you help us understand how all these fit together and perhaps which has the greatest commercial potential in the long term and perhaps the near term?

Yes, absolutely. There's a different -- there's a few different categories of partnerships, if I can help breaking it down. one is around infectious disease with Cepheid and BioMerieux, where the need in that market segment is likely to be IVD certified. And so that is a capability that we chose and choose not to develop entirely by ourselves and where we feel we have an approach where either OEM type or co-development type of activities will need to happen to bring a solution to market. For that reason, because IVD certification takes a significant amount of time, including clinical trials, et cetera, we expect that return not to be significant before 3 to 5 years from now. So that's the first set of category. Ramping up in the meantime with a number of manual workflows that will precede some of those developments of those activities.

Then there is primarily on oncology, rare disease and enablement strategy that we have of LDTs. And that's where partnerships like Natera come in, who are service providers and specialized in the development of laboratory developed tests and where we are the component and technology provider, but the assay is developed by those service providers. And so they are helpful access to markets, particularly in the U.S., but not exclusively in the U.S. also in Europe.

And then there's a third category, which is more around our compatibility program, people who develop assays on our platform, who develop certain kits that help develop a certain sample type for a particular test and have validated that on our platform, which we then enable as a member of our -- or a partner in our compatibility program. And so they are typically more of an add-on capability and are smaller in nature, but could be quite significant over time as they enable new LDTs to be developed, right? So that's how I would characterize. Anything you want to add, Nick, on that?

No, perfect. I mean there is a slide actually as well that we had in the deck, which on the presentation today that I think is quite -- we get that question a lot, Charles. I think on like the whole partnership piece, and that's exactly why we put this in here as well, just to kind of -- this is -- we've mapped every single partnership to this and then also to the end market analysis that we've done for the target applications, et cetera. So yes, and that's how we're going to do all of these go forward.

And then if you think about, say, technology fit to automation. So instead of developing our own automated platform on the ElysION, we're now going to partner with all of the automation providers so that we kind of -- it's easier for the customer. So it's just thinking about -- so you're going to see more, not less. And yes, it could be difficult, but it's because we're following this framework and actually, it's a good thing to sign more, the right type that is.

And Francis, I know you talked about quite long time frames for clinical. What do you think is a nearer-term lever, the biggest kind of nearer-term lever out of all those partnerships you signed on the diagnostics side?

The longer-term time frame I referred to relates to an IVD solution for infectious disease in particular. I think in clinical, there are actually some nearer-term opportunities as well through the enablement of service providers and the LDTs that they specify. So similarly to biopharma, there's a number of those companies who are currently validating our technology in particular tests, typically for oncology and rare disease applications. As those come online and get rolled out as a part of their service offering to hospitals, we expect actually near-term take-up of those tests and actually drive a nearer-term opportunity. But because it's not IVD, it can be adopted more quickly, and we need just to effectively enable those LDTs by offering the right solution and the workflow that's associated with it.

And is there a way we can think about the value here? You've helped us with the mRNA side on the $2,000 sort of prediscounting. Is there a way that we can think about per patient per test value in, let's say, rare disease or oncology?

Yes. So not -- the pricing is quite varied essentially. So not today, but let us come back to you to see if we can be more helpful in the future because clearly, we have a price per sample that's kind of negotiated with the LDT provider. So I don't think we would be commercially not very good of us to kind of detail that much more. On the IVD setting, what I would think about here is kind of you can go find list prices for price for reimbursement for these tests themselves. And you can maybe think about what's a realistic value share that Oxford Nanopore should generate from that end market and then like multiply that by the number of patients per market, et cetera, et cetera.

Yes. Okay. Okay. A bit of Excelling to do there. Let's move on to your new cross-licensing agreement. Well, I say new, you've described this as new. And you've not mentioned anything about partnerships. So can we infer that this is not with an existing partner like Danaher or BioMerieux?

So it's not a partnership. It is a cross-licensing agreement. So yes, it does not concern Danaher or BioMerieux.

Okay. And you've said that it involves certain patents, and we think about Oxford Nanopore being a Nanopore sequencing company and having a lot of Nanopore-related patents and base calling and the associated technologies. So given that's your focus and where all your IP presumably lies, what can we infer from that from somebody who would want to, therefore, license that Nanopore IP?

Yes. So we have a broad IP portfolio that has taken a number of years to develop and covers a wide range of patents. We are committed to asserting the value of those patents, and this is one of those participation models that exists to do so.

Okay. I thought it would be quite tricky to get more out of you on that. But in terms of the product sales, you've been clear you said that there were $15 million of product sales to be booked in '27 and '28. You didn't mention anything beyond that. So should we assume that everything -- all the value and revenue beyond that is from royalties and not from product sales? Or can we -- should we be adding in product sales to our thinking, too?

That's what's been agreed. And so yes, that's what you should assume. Could further product sales be part of it at some point? That's not been agreed. It could well be, and it could evolve into something broader, but that's not the case at the moment.

Okay. And I wonder, Nick, whether you couldn't help me with my math homework here. You've said that there was $20 million upfront and $15 million of product sales at a company average gross margin. And that -- those together represented 10% of the economic value of the deal. So if I do a bit of back of the envelope math on this, taking some assumptions around discount rate and patent life assumptions, it implies to me that peak sales, peak royalties to you would be perhaps in excess of $40 million a year. And therefore, peak end market sales could be approaching $1.5 billion for your licensee. I know you're not going to give us the numbers specifically, but can you mark my math?

Again. So I think on this one, clearly, we can't get into the specifics around the royalty rate as well, but we've said low to mid-single digits essentially on that piece. And then on -- we shouldn't really be talking about peak sales for other people's products. But what we have taken when we gave that guidance, we used market expectations for what the counterparty -- the products that are covered under the IP. We used those market expectations.

We applied what we clearly know is the royalty rate. And we can see that from an NPV perspective, 10% of the value is only within the $35 million upfront. So $20 million upfront and $15 million product sales. So yes, and that's because of the duration of the patents and the royalty stream that should come from them.

Okay. That's helpful. I'll go back and tweak that Excel, I think. Last one then perhaps here. Are there -- is there a potential or a likelihood perhaps of you signing other deals like this licensing patents with this kind of sizable value creation?

There may be. It's not built into our guidance and should be considered upside towards the minimum of $700 million opportunity by 2030. And where appropriate, we will assert the value of our IP portfolio. But it's not something that we should be assumed as a regular cadence, if so.

Okay. I've had a question come in that's quite big picture. So I was wondering if we could just take a step back and talk about that. AI is enabling us to understand a lot more biology and therefore, theoretically may enable us to cure a lot more disease. What do you think the role is of decentralized diagnostics in this case and therefore, the potential role for Oxford Nanopore or an equivalent technology? And given that AI is such an enabler potentially for that biological understanding, again, what role does Nanopore have in the sort of data generation or AI analysis?

Yes. So we've been reflecting on this as well. Obviously, it's a great question. And we've sort of talked about this in a conceptual way around biological intelligence. We believe that Oxford Nanopore as a technology, as a sensing technology generates one of the richest data sets from a sequencing perspective. And so not only the sequencing itself, but methylation, structural variants, et cetera, et cetera.

And so with the potential that AI technologies are going to give us to treat those larger data sets and gain biological insights from it, it's certainly going to drive opportunity for us. So we're certainly at the early stage here. And I personally believe the decentralized nature also has some time before it actually is going to get very near to patients or to clinic or even to doctors' offices. But we are the only technology that is as scalable and could monetize that opportunity in the future. So where appropriate, some market segments will be faster than others. I could think about infectious disease to move to a decentralized setting sooner, for instance. So that's really an opportunity. Is that going to drive significant value between '28 and 2030? Remains to be seen. Beyond 2030, no doubt.

Okay. That's probably one we could carry on talking about for another hour. But let's move on to the research market, if we can. Now we've touched on biopharma and diagnostics. Tough market, it seems at the moment. By region, you discussed -- you just described Europe as healthy, U.S. is challenged, particularly in the government-funded side and China being also challenging for you, perhaps holding back the Asia territory. Can you tell us what you think the market growth rates are for research in those sort of 3 segments?

Yes. So in China, we actually believe it's been down for everybody actually. So for -- outside of China, healthy, but in China down. And we've seen that, I think, because it's 5th year of the 5-year plan essentially. So there's just less going on. In the U.S., we've definitely outperformed the end market because of what's going on with the NIH funding. Europe, healthy. So again, we've outperformed the market, but it's a healthier market overall. So -- and we're not the bellwether here, clearly. But when we've looked at what everybody else is saying, we can kind of triangulate where it is, and that's what our triangulation is that we're essentially performing better in the end markets, but not be able to separate away from them in the manner we'd like to be able to today.

So when I think about putting a number around the word healthy, would you -- is that a kind of high single-digit type of health?

For Europe, yes.

For Europe. Yes. And the U.S., is there a mid-single, low single, down, across all of Americas rather -- across all funding groups rather than just government.

So for research as a whole, still like flat to down actually. So it's not -- for Americas for the end markets, it's not healthy because I think the NIH piece has actually been -- even though we've lapped it now a year. Actually, what they've seen is that the funding just isn't flowing. So it's not got massively worse, but it's not got better, and it's actually just still quite challenged as the market overall. So yes, it's not been easy. And if you look at the peers, essentially what they're reporting as well.

Yes. And Asia ex China?

Healthy. So high single digit.

Okay. That's great. So just going back to the NIH piece, you said it's not flowing. I mean, sometimes we see some more positive headlines about some of that funding being -- or some of those grants actually moving out. Are you just not seeing that yet?

So we're seeing some things happen, but not as much as we'd like. And in terms of like the grand scheme of things, it's not back to how it needs to be. So this is more of a -- people may see the headlines that things are starting to flow, but the process still needs to happen. And unless they've got people to actually action the process, it still doesn't happen. So we've got lots of opportunities that we've been looking at that have not been funded. So the -- if the funding comes back, we should spring out the gates essentially, but we're not seeing it yet.

Okay. And so thinking about the market within those sort of market growth rates, you've been growing, as you said, above the market and for a number of years, but with a differentiated technology, obviously, off a smaller base. What can you do to further penetrate to sort of accelerate your growth, i.e., what's the self-help angle here to be able to drive growth in research as opposed to just being sort of exposed to whatever happens to the market?

Yes. In our target high-value applications, it's not just clinical and biopharma. So there's a couple also that are in research that are actually quite sizable. And it's those areas where research informs the research towards disease mechanisms and where things like methylation make a significant difference in terms of the biological insight that they drive.

So that's where we can grow significantly faster than the broader base of applications within academic or biopharma research. And so we feel that's where we need to do a better job at asserting our value proposition and demonstrating the evidence that's there on what value we create by driving or generating those insights. And I feel like we can -- and you should see the light of -- in that light, you should see the appointment of a Chief Marketing and Communications Officer to ensure we're really clear about what value we generate and how others should adopt that and then on a broader basis.

So that would be, to your point around marketing and I guess, sales, in particular, marketing and then, again, no meaningful requirement to innovate specifically. Obviously, you're already through methylation...

A lot of these data actually exist, but they need to exist in a format that is communicatable, that is a salesperson can pick up and present to customers in a compliant and easy-to-present fashion. We just haven't proactively done some of that work historically. We've counted on our customers to develop the applications on what's scientifically possible. I think it's time to rebalance that a bit and say this is -- these are the 5 or 7 things we do really well in research.

Yes.

So let's -- so you talked about technically differentiated, but there is the price component as well. So on a cost per genome basis, clearly, we've seen that number fall substantially, very substantially in short read according to some of the marketed numbers, but even in the long-read side, those numbers have come down. What do you think is the premium to short read that Nanopore can command on a sustainable basis?

I think that's exactly what we've got to kind of underpin now because we see that premium today for sure. And we were on a call yesterday where a customer said they will pay a healthy premium and x the multiple essentially for our technology, but they won't pay where it is today. So essentially, we've got to kind of -- like we've got to meet them somewhere. But this is exactly why we've got to do this work now. So -- and like the focus is really important because if you imagine, Charles, like the number of applications that we're focusing on is out of a large number. And so the strategy historically was to kind of go for everything like anyone anywhere, and they will tell us where to do it essentially.

Now we're going to focus on a smaller number because how could you develop all of the required marketing materials for all of these target applications because it's not just the marketing materials, it's the bioinformatics, it's the workflow, it's the kit, it's the sample prep, the binders, it's all of it essentially to be able to satisfy all of this. And so you end up not satisfying anybody. And so by reducing the number, we kind of really focus down on the complete product set and then develop the marketing materials for a focused number of applications where we can show clear utility. And then I think then we can answer that question much better than we can today because we've done that in biopharma, and we know that actually there's a lot more value capture still to go against where our current pricing is, if we can do some new things as well.

I mean in parallel to that, we are also working on technology advancements around the Nanopore, the technology, the software, the kits and the chemistry that will continue to enable us to also be competitive where we need to be for those applications that we think it is necessary to generate volume.

Yes, this is where I was going to go to. So that cost can be brought down further through innovation. You talked about more genomes per flow cell in the past. So that work is ongoing, but will be deployed as and where it's needed.

That's correct.

Okay. Okay. Can we move on to guidance now? You've talked about mid-teens underlying growth in 2026, accelerating through to 2030, excluding royalties. A simple sort of linear acceleration there to get to $700 million kind of the number you intend to exceed would imply an exit rate of over 20%. Does that acceleration come from a simple mix shift towards higher, faster growth applied markets sort of from lower growth research? Or are you also expecting a change in growth rates within clinical and biopharma?

Yes. So good question. So first of all, as we kind of talked to previously, across all of these target applications, including research, what we can see is that about 40% to 45% of our revenue is within those target applications today. That means 55%, 60% are in applications, which are -- we're still going to support, but we're not going to put our resources behind in the same manner. And so what we had to do was on those target applications, we've got 10 haircuts essentially to get to a figure about what we think is the baseline for where we can get to. For the other side, we had to apply more of a growth factor that is more potentially in line with market up or down depending on the halo effect from technology developments as well. So you've got over half of the business growing a lot slower than those target applications that are growing much quicker.

Now when we actually looked historically over the last 3 years, essentially, it's mapped out that way as well. When we've looked at our pipeline going forward and split the opportunities by these target applications and really importantly, by product type as well, they've all aligned the way they should do. So we already -- like that's confirmatory. So essentially what we're doing is the right step. So that's -- thank God.

And then essentially now it's about that shift. So the target applications, not just in research, but in clinical and biopharma in particular, those target applications should start to grow in size and start to -- that's why we'll see mid-teens and start to accelerate from that point. We will have, without a doubt, busier periods in biopharma -- and from year-to-year, it will be -- there will be certain things that happen that mean there'll be kind of like really high growth rates in year. Potentially, hopefully, when certain drugs are approved and like they go into kind of mass market, and that will be a big moment.

Perhaps when they -- more clinical trials happen within other indications like for lung and things like that, then we'll see a boost because we will be used in the clinical trials as well. So there'll be a bit of an ebb and flow to it. So I wouldn't expect it to be completely linear, but acceleration because of that underlying base essentially just getting bigger and bigger.

Okay. And can I come back to that $700 million, greater than $700 million. Now I know you were talking illustratively, Nick, when you talked about $800 million or $1 billion and how that relates to the margins, which we'll come back to in a second. But there was certainly no consideration of any number under $700 million when you were sort of speculating forwards. How should we think about the philosophy of how you set that guidance, that $700 million number? You've probably modeled out all sorts of various different scenarios. Some of them may have gone up to $1 billion or more. How did the Board think about putting the marker? Is it kind of middle of the pack? Is it bottom quartile? How should we think about the philosophy there?

Yes. Francis, you want to add to this as well. We deliberately put out a number that we can execute against and that is credible because there is a difficult me with all these things, Charles, of making sure that you're setting an ambitious target to the Street and also making sure that you set something that you know you're going to deliver. Now -- and so we believe we've got that place because it's greater than $700 million. We leave on the table the opportunity for us to like meaningfully beat that number. But if we were to set a range or anything like that, then we probably limit the upside from beating the number. So actually, we've set something here where we've captured a lot of risk elements.

And if I talk you through how we got the Board, how we all got comfortable with this as well, but there was a series of 10, if you like, haircuts essentially from the total value of where the market is all the way down to what we believe we can get -- and that -- actually, that's 10 cuts for the market value, and then we had to cut it for market shares. And so there are some -- there are assumptions along the way. One of them, I think the big one could actually be our market share where we could actually do better from a market share perspective within some of these target applications because we've been quite -- we've assumed quite healthy competition in some of these markets as well. So maybe we could do better there.

And then the reason why we've excluded things like BD, the royalty agreement, the upfront, et cetera, is because we think these things will be additive. We shouldn't necessarily be forecasting other people's product sales. And these things will happen, but we wanted to really focus on the core, if you like, business about what we can deliver today. Hopefully, that's answered your question but do you want to add, Francis?

Yes. Just, you explained it really well. The philosophy we've adopted is we meet full confidence we can deliver $700 million or more. Is it the internal plan we will work towards? Maybe we can be a little bit more ambitious and drive the teams towards higher ambition. At the same time, between now and then, there's a lot that can happen. Some drugs may preapproved and may be very successful, others maybe not so much. And we've tried to be cautious, realistic in our expectations and not overly bullish to ensure that we give a realistic outlook. And then if we do better, I think everybody will welcome that. And it's certainly our ambition to get to the $1 billion sooner rather than later.

Understood. And can I ask the same question for margin, please? You talked about over 15%. You were talking about these higher numbers giving you perhaps more drop-through and a higher margin. Again, how much wiggle room have you given yourself to spend and to increase your OpEx within that 15% even at $700 million, i.e., the low end of your guide? Is there enough wiggle room there to choose to spend? How could you manage around that 15%, especially given that gross margin is potentially going to carry on going up?

Yes, absolutely. So we have assumed -- so the baseline essentially for these assumptions, we've got headroom against it. But from a cost perspective, in any of the scenarios that we modeled out, so like worst case to best case, essentially, the spend profile is near and off the same. It's like within a fraction of each other, because we need to make sure that -- because like we still need to spend the money to do the things. And it's maybe just the revenue takes longer. So essentially, we had to have the same operational from a spend perspective kind of underpinning all of it. And then it's what happens if X, Y and Z doesn't happen, et cetera, et cetera. But we -- even against that greater than 15%, we feel comfortable with.

And to your point, there could be things we can do to the gross margin to like to move it higher as well.

And we got asked this question a lot by investors about how we think about gross margin. So we gave that incremental color on one of the slides about the mix, the consumable because I think the last time that was seen was probably around the IPO time. And so people could now see the progress that we've made, but we're not finished. Like there's actually really encouraging things that we can do like to improve gross margins over time.

And one of the things affecting the 700 and the 15%, which you excluded was business development. What do you mean -- what does that mean? Like when is something business development versus a sale to a customer or a partner?

I mean just -- sorry, the example here, really the global diagnostics company piece because clearly, that -- I mean, that's transformational for our P&L, if you think about it. Like I mean, if those numbers were correct that you talked to before, Charles, then that's straight down to EBITDA. That's quite meaningful to the margin profile. And we wouldn't want people going, you've only got there because of the royalty agreement essentially. So we need to kind of give this baseline core business view and people can add that on top. But -- and hopefully, we do more things like this, not necessarily like that deal, but maybe there's other deals that we can do that really help the outer years.

Okay. We're at the top of the hour, but can I just ask one more, again, a question from an investor that's come in. I know you don't like talking about your direct competitors or at least not to investors as much, but you've clearly outgrown your sort of direct long-read competitor. Can you point to 1 or 2 key things that have -- that you think stand you apart in terms of that market adoption?

I think where we have won and where we have driven adoption is where the rich data, the near-term real-time nature of the sequencing really drives different biological answers. And so that then, of course, has informed us as well on what our future high-value applications need to be. And so I think that's the work we've been building on. And we're lucky enough that there's another component to that, which is the scalability of our platform that will drive more future opportunity and adds to the other 2 that I think are the clearest differentiators of the platform.

That's great. And I don't want to take you too many minutes over the allotted time. So I think we'll leave it there. I wanted to thank you very much. We've gone through a heck of a lot of color and detail. To everyone who's asked questions, thank you very much to everyone who has logged on. Thank you. Let me know what you think. Let me know if there's anything that you'd like to discuss on this or for me to fire over to the company on your behalf. And with that, Francis and Nick, thank you very much for your time. Really appreciate that. And are there any closing remarks that you'd like to make?

Thank you for the opportunity. I'd say -- we believe and I believe the technology is ready to mature and scale. And it's about now delivering to the potential that it has shown and execute on that. And we look forward to providing you an update on our journey towards a minimum of $700 million by 2030.

Thank you very much. With that, I'll close the call.

Welcome and thank you for joining us. Let me briefly set out how we will structure today. I'll start with some opening remarks and set out our near-term outlook. I'll then hand over to Nick to take you through the first half performance and 2026 guidance in more detail. I'll come back after that to take you through our strategy, the priorities we have set and our longer-term outlook. I'll 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 6 months. I joined Oxford Nanopore because I strongly believe it can become an extraordinary company. And I've seen enough in my time here to know that it is true. 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've 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've spent time across the organization, understanding our R&D capabilities, manufacturing operations, commercial execution and the processes that will enable us to scale. I've also spoken to investors, governments and other key stakeholders. During the last 5 months, we have undertaken a comprehensive review of the business, including our markets, applications, innovation priorities and capital allocation and have been assessing how the organization needs to evolve to support the next phase of growth. 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'll 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% to 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 end point, but merely a stepping stone in our longer-term ambition to build a $1 billion-plus annual revenue business and beyond. 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. So while there's clearly more work to do, particularly on top line execution, the trajectory towards profitability and cash generation remains intact.

With that, I'll hand over to Nick to take you through the first half performance in detail.

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. 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. As we stated previously, we do not expect to recapture those lost revenues in H2. EMEAI delivered strong growth of 23.8% in 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 bps improvement year-on-year.

Coupled with the strong gross margin, we saw the benefits of the restructuring and efficiency actions taken in FY '25. 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. 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 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 a 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 3 main reasons. 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 move 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. 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 towards 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, GL 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. Growth was supported in particular by the winning of the Sequence ME 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, and Natera company announced today in the rare disease space that will be a growth driver going forward. 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 13.7 million, up 6.2% year-on-year, driven by continued adoption of our plasmid sequencing capabilities.

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 '26 guidance. As expected, the nonrecurrence of the GBP 3.3 million one-off noncash inventory charge recorded last year contributed 315 basis points to the year-on-year improvement. Product and customer mix was a 160 bps headwind, which we expect to moderate over time as the mix of consumables and devices evolves and as PromethION margins continue to improve. Importantly, the move to the CapEx pricing model initiated last year, alongside yield improvements and consumable recycling drove significant underlying margin improvement of 305 bps. There's further opportunity from PromethION flow cell recycling and additional yield improvements, which should support higher margins over time. Against this, FX was a further 60 bps headwind in the period, which we expect to moderate in the second half at current rates.

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 & 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. 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're 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 loss from negative GBP 48.3 million to negative GBP 22.1 million in the period. There is also a sequential improvement of around GBP 16 million in the second half of 2025. 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 '27 remains intact, underpinned by revenue growth, further gross margin expansion initiatives and continued cost control.

Turning to cash. We ended the period with GBP 234.5 million in net cash, cash equivalents and other liquid investments with no debt. This was GBP 68.3 million lower than at the year-end, reflecting the normal seasonality to our cash flows and one-offs. Operating cash flow outflow before working capital movements improved sharply to GBP 17.6 million, around GBP 27.2 million better than the first half in 2025 and broadly in line with our adjusted EBITDA performance. Working capital absorbed GBP 21.6 million compared to an outflow of only GBP 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 GBP 18.2 million in payables, which included GBP 25.7 million related to 2025 bonus payments that will, of course, reverse in the second half.

CapEx and capitalized development costs totaled GBP 30.1 million, for which the lion's share of GBP 24 million represented R&D capitalization, which is up from GBP 20 million in the prior year. We also spent GBP 4 million on licensing patents and GBP 2.1 million on PPE. The remaining movements were smaller, such as tax, which is GBP 1 million outflow and noting that we expect to receive our R&D tax credit in the second half of around GBP 10 million. Cash outflow in assets to customers has also improved to GBP 2.6 million, which is materially lower than the GBP 14.4 million recorded 2 years ago in the first half of '24 before we changed the pricing model to CapEx first. Other investing and financing items contributed a small net inflow of GBP 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 a 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. We are then set to receive a further $15 million of revenue across '27 and '28 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 economic value or around 90% of the arrangement sits in that longer-term royalty stream. As a reminder, our FY '26 guidance of 16% to 20% constant currency revenue growth excludes $20 million upfront. Royalties will also be additive as earned to the guidance and are not included in FY '26 or medium term at all because we cannot reliably forecast the counterparty's future revenue from the platform at this time.

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 $15 million in committed product purchases to be recognized over 2027 and 2028 that analysts and investors should model 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 plans. 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. As a reminder, our FY '26 guidance of 16% to 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 '26 guidance. Guidance on our core business remains 16% to 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% to 5% growth that we set out in March. Looking to the second half, we have significant revenue coverage that underpins our 16% to 20% guidance range from already confirmed business before adding on pipeline opportunities. Proportionately, 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 bps improvement of incremental constant currency revenue growth for 2026, this lifts top line constant currency growth expectations from 21% to 25% to 23% to 27%, respectively. Because that $20 million upfront payment is recognized at 100% gross margin, it will add 200 bps 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.

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

Thank you, Nick. There are 4 reasons why I'm confident about the opportunity at Oxford Nanopore. First, I have seen this type of opportunity before. I've 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. Vicor 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. I've 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. And finally, I believe there is significant headroom between what the technology can do and the value the business captures today. So I don't 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. 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 road maps 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. And 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 4 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. We will continue to invest in our differentiated technology platform, but with a clear commercial purpose. Our product and technology road maps 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 3 pillars. 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. And 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 road maps, 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. 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. So let me start with how we decide where to participate. For each application, we assess 2 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. Equally, an attractive market where we add little differentiated value is not a strategic priority. Our right to win is strongest where richer biological insights, 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, 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 investment, 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. 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. 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 $14 billion to $16 billion and within that, 3 priority areas where we can target organically now, research whole genome sequencing, biopharma and selected clinical. Today, research accounts for about 2/3 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 a smaller basis, but are expected to grow faster and become approximately 2/3 of group revenue by 2030. The chart shows the direction of travel rather than precise end market guidance. The important point is that we're not relying on one market. We are maintaining and growing the research franchise while building scale in the high-growth areas where our technology has a clear right to win. That changing mix supports our path to more than $700 million of organic revenue by 2030. Business development, licensing and royalties could provide additional upside. The next slide 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 low and complex genomes. 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 road maps 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. That matters commercially because it allows us to create products and workflows that are harder for legacy approaches to replicate. We already have 4 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 salable 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, tenders and handoffs. That fragmentation creates long turnaround times, significant labor and a substantial integration burden for customers. 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 build -- 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, the 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. What we have demonstrated is that a single Oxford Nanopore 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 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. We will focus on selected workflows where richer information or speed can change a clinical decision, rare disease and rapid hold-through 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 device can improve speed 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. In this acute leukemia study, 8 separate conventional pathology assays were consolidated into a single Oxford Nanopore adaptive sampling run. That single run generated 9 categories of output, including copy number variants, methylation and pharmacogenomics at an indicative cost around $350 to $450 per sample compared to approximately $1,650 to $2,050 across the conventional assays. The study demonstrates the ability of the platform to consolidate multiple tests into one workflow while providing richer information and potentially significantly lower cost.

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. And 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. But 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've 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 3 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. 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. But 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 to the strategy process.

There is strong alignment across the organization around the priorities we have identified. First is focus. 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, clearer ownership should help us make decisions faster and execute more consistently. Fourth, we need stronger collaboration across teams. Many of the outcomes our customers need to cut across R&D, product, commercial and operational teams. So we need those teams to working together more effectively. And 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. We had 67% participation, 75% positive engagement and 73% of employees said they would recommend Oxford Nanopore. So there's a strong foundation to build on, but also a clear agenda for change. Our focus now is to translate these teams into action, aligning the organization behind the 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 '26 guidance is 16% to 20% constant currency growth, which equates to approximately GBP 260 million to GBP 269 million or $345 million to $355 million of revenue. 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 '26 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. And importantly, the $20 million upfront payment from the cross-licensing agreement is excluded from this organic framework and from the FY '26 guidance. By FY '30, we see adjusted EBITDA margins above 15% and positive growing free cash flow from FY '28. 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 road maps that support our priority applications and the manufacturing capacity required to scale. Investments 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%. 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 3 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 3 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. 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 $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. And 2030 is not the end point, it's an important milestone towards a longer-term ambition I set out at the beginning, building Oxford Nanopore into a $1 billion-plus 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 Instructions] Our first question today is coming from Zain Ebrahim from JPMorgan.

Zain Ebrahim, JPMorgan. I'll try and stick to 2. 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 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's about 90% of the NPV, but any further color there would be helpful.

And then my second question is on the Clinical, BioPharma strategy, which was helpful to understand more from the presentation. And you mentioned it will be about 2/3 of revenues by 2030. So just to clarify, how much of that expectation is derisked by collaboration that you've already signed so far? And you're already delivering strong BioPharma revenue growth now, but the guidance or target in 2030, it seems to imply an inflection in revenue growth for BioPharma. So when can we expect to see that inflection?

Okay. Thanks, Zain, for the question. I'll briefly comment on the first question and leave Nick to give you a little bit more detail. It's an important agreement for us. It's a sign up 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're pleased with its potential impact, and we think this can be quite instrumental for us as a company. Nick?

Yes. Thanks, Francis, and thanks for the question, Zain. So clearly, 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 kind of model this out going forward. So on the royalties themselves, low to mid-single digit, Market expectations is what we can kind of point to is the significant growth for the products this covers to 2030. And as a result, quite a bit 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 will be appropriate. 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, patents usually have like 20-year life. It won't be that long, but it is towards that end rather than the 10. And as 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.

Thanks, Nick. On the second question, I think it's important to state that high-value applications that we are targeting and those that we talked about, which includes Clinical and BioPharma. As we estimate, they currently represent about 40% to 45% of group revenue and will grow into probably more like 65% of group revenue by 2030. The growth rate of the BioPharma and Clinical opportunities are in the high single-digit range. And as they grow in importance -- they're already growing at a high rate. And as they grow in importance and proportionately 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. 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. So 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 $700 million we target by 2030.

Sorry, just to kind of add as well on that kind of revenue split. So yes, 35% today being the applied markets, switching to 65% by that 2030 time frame. And the BioPharma piece, clearly, there's 2 elements here. There's the QC elements that we've got with the evaluators, but we see a very significant opportunity within the R&D space as well.

Next question will be coming from Kyle Mikson of Canaccord.

Congrats on the margins and profitability in the quarter and all this color in the deck is great. So 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 fiscal '27 growth on the Street consensus is at 20%. So I'm just curious, given probably a more favorable comparison to '26. And on this note, when you think about maybe beyond '23, it looks like clinical you're kind of being a little maybe conservative. How does clinical sort of expand meaningfully beyond this medium-term forecast as well? And I have a follow-up.

Do you want to take that, Nick?

Yes. Thank you. On the first one, the near-term outlook. So mid-teens and accelerating, I think, is a kind of key point here. So absolutely right. So there's a few moving pieces to kind of bear with us. We've got 2026 where we've got 16% to 20% almost like core business underlying growth. Then we've got this $20 million nonrecurring revenue that will come on top, which takes us to that 23% to 27% for this year. Now as we go into '27, we've got that core growth rate of, say, 16% to 20%. And from that, we expect to grow mid-teens in '27 and then to accelerate as we go to a greater than $700 million revenue that is by 2030. And consensus being at 20% today for next year, I would just also flag that our guidance does not assume anything for royalties from the global diagnostics company that we signed the agreement with or any other future business development activities that we are looking at. So I just want to make sure that people kind of capture that in their models that this will be additive overall.

And then beyond 2030, I know Francis will add to this, but just on the shape of the model, you're absolutely right. There's a lot for us to do in the clinical space, and we've 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, there will be perhaps beyond 2030 for some of them when the traction really starts to get going. And I think it's 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's more that the growth rate will continue to accelerate there beyond 2030 and what our model expectations are. Francis?

Yes. I think the way to look at it from now until 2030, the biggest proportion of our growth will come from BioPharma because it's a nearer-term opportunity. Clinical is the larger opportunity. And as you think about market segments like infectious disease where we're likely to move towards an IBD type play through partnership, those development product and regulatory requirements for that to really drive meaningful revenue, they are in the outer years and so will accelerate beyond 2030 quite significantly.

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

Yes. 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 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, do you want to share more details on that?

Yes, 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 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 2 and Pillar 3, 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 before -- well, actually, before our full year results for sure, we will 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 road map.

Our next question will be coming from Jon Unwin of Barclays.

It's Jon from Barclays. One on 2027 revenue and then on gross margin, please. Just on 2027, given you're forecasting to grow 16% to 20% constant currency this year, if you grow mid-teens in 2027, what would be causing that year-on-year deceleration in growth? And 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 and 2028, but that you might also see on top of that some royalty income, which is not included. And 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? And would you have been able to achieve that EBITDA breakeven next year without this new licensing contract and the committed product revenue that you've got?

Yes. I think it's got 5 questions there, John, but I will just try and pick them off one by one. So 2027 revenue and gross margin. So first of all, the $15 million of product revenue from the global -- from the cross-licensing arrangement, that is included in that mid-teens revenue expectation and then accelerating. Royalties are not. So royalties are on top of both the '27 or the medium-term outlook and even the '26 numbers that we're 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's why we kind of -- we did put this slide in around the progress we've made so far. So on consumables, we've seen gross margins reached, roughly speaking, 75%. And as you can imagine, that's a mix across both MinION, PromethION and kits. On MinION, the teams have done an incredible job of essentially the recycling efforts, and we're 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 percentage now already.

On Devices & Services, it's 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're helping to offset some of these through development activities to reduce our cost of goods, so we don't have to think about pricing. In certain instances, we may have to think about pricing as well. But we still believe we can achieve that 40% gross margin over time. And it's been 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 we saw a 400 bp 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 EBITDA breakeven? No. Is it going to help? Yes. Is it going to be additive to this? Yes. And we're really -- we really hope the market and investors understand what this deal could be for us, which is transformational to the profitability of the company. Is that everything, Jon? Or did you have the next one?

There was one that I wanted to ask that I think I did ask in the original 7 questions I asked. Just if you are seeing mid-teens growth next year, but you're doing 16% to 20% this year, is it fair to assume we could see a deceleration in growth next year ex the royalties and...

So sorry, Jon, I did miss that one. So -- and the reason why -- so 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. And we've also got our pipeline, which is very material of opportunities we looked at, and it's also split the same way of the applications people are working on. So what we've done when we've looked at that is we've got around 40% to 45% of our business that is within those target applications that is growing very quickly. And then we've got this like if you like all the other application areas that we're being prudent about what could happen there in terms of growth rate 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 up. And so 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 and the organization on those target applications start to generate the results that we want. So we're just being cautious at this moment in time. we hope -- 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. We will, of course, come back at the full year results and provide detailed in-year guidance as well.

Next, we're going to Veronika Dubajova of Citi.

I have 2, 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 dollars? And what are the big opportunities in your mind? And I guess maybe just related to that, we've 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 act?

And then my second question is for you, Nick, on the very impressive OpEx control we saw this half year. 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?

Thank you, Veronika. So going back to the first question on R&D, thank you for that. As I mentioned earlier, we believe it is -- 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 target high-value applications. And so 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 product road map, portfolio simplification initiatives, et cetera.

But 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. They are driven by product enhancements, workflow completions, ensuring we have a consistent, robust, easy-to-use workflow on our current platform. So 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 execute -- 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 are committed to continue our investment in that space. So I think what you're hearing and what you'll see 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.

And 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 investments in terms of future upgrade. 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 has started last year is underway and is soon to be finalized.

And just on your second question about OpEx control. So what's enabling us here to do this? So last year, we went through quite painful exercises within the company. And the second of which was the strategic realignment exercise to sharpen the focus on the portfolio and within the R&D projects that we were doing. And that has -- we're seeing the benefits of that now. We also did the same across the -- not just -- it wasn't just R&D, it was across SG&A as well. And we've seen the benefits there and have allowed us to reallocate capital internally. We have absolutely with investors in the market tried to have a say do kind of 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. We've demonstrated that ahead of expectations. And 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. And those -- 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.

And 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. And actually, we're going to execute on that over the next 6 months, and you're going to see the benefits of that next year in the numbers as well. These things are going to allow us to reallocate capital and essentially focus on the higher growth 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.

Our next question will be coming from Sam England from Berenberg.

First one, you commented on the acceleration you're 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 of how H2 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? And 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've baked in given the various sort of uncertainties at the moment? And could it actually surprise to the upside if the underlying markets improve, particularly around areas like China?

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. But 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. So overall, that gives us pretty good confidence going into 2026 for second half.

Just to kind of add to that as well. So we've got the exact same coverage that we can see in terms of invoice shipped or scheduled that we had at this point last year when we delivered 24% growth for the full year. So from a relative basis, we've got that same level of coverage and hence, confidence. In terms of how the second half started, we've only really had July and it's in line with the numbers that we expected. So there's a lot more to be done. But as you can imagine, the summer months are always the quiet ones. We've always talked to the fact that Q2 is seasonally -- Q3, sorry, is always seasonally a little bit weaker than Q2 and Q4. But we've already got those kind of that underpinning from the coverage we've got today and the size of the pipeline, which continues to grow. We have considerable pipeline coverage in places like the Americas as well.

On the second question around research, we assume mid-single digit. Yes, we have seen pressures, especially around NIH. Europe is still quite healthy from a research growth rate perspective. Is there opportunity to do better? That would assume the external environment to needing to improve. It's not something we've built in at the moment. Mid-single digit is our assumption, and that's what we're planning on. If we can do better, we certainly will do. And just to kind of -- 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 will be stronger because of the target application focus. And I think it also gives us an opportunity to talk about hopefully, people see that greater than $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. And so yes, absolutely, it could be something that does better in the medium term for sure.

Our next question will be coming from Kane Slutzkin calling from Deutsche Bank.

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

Yes. Thanks for the question. On the commercial infrastructure, R&D, we feel it is pretty much at the right level at the moment. And from '28, we will -- we assume that we will continue to invest in both of those at the rate of that is appropriate for the growth that we will see. Now 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. But from a just investment magnitude standpoint, we don't expect a material change.

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

And just to give you on the CapEx through 2030 piece as well, that will be the significant number essentially will be on the manufacturing facility should that decision be taken, which clearly we're looking at, we'll come back to. It won't be -- it's not going to distort the profile of the company to a significant level is what I'd say. It will be spread over a multiyear period. It's not going to be -- we can go offline. But what we're looking at here is the flow cell manufacturing, and we're thinking smartly about if we're having a second facility because even from a BCP perspective, we're going to want one by that point. And we're going to think about territories. We're going to think about funding for the manufacturing facility as well and where that could come from. And we're going to put all of that together and work through it over the next 6 months, and we'll have more to talk about. On the Roche assessment, I mean, Francis, you want to?

Yes. From a commercial standpoint, we are seeing placements. I've met with customers who are investing in the platform. It's early days. Frankly, we believe this is an adjacent space for us, and it's not at the expense of where Oxford Nanopore is targeting our applications. We -- as we explained today, we're focusing on high-value applications where our technology can make a meaningful difference. And they are, in nature, quite different from where we believe the Exalius platform will focus and is focusing. It's 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.

Sorry, while I'm sorry, just a 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 of the remainder of '26 into '27 for U.S. sort of academic or government funding?

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

Okay. Low single-digit growth, you say?

Yes.

We'll now be moving to Miles Dixon calling from Peel Hunt.

My apologies if they've been asked before, my line dropped. But I wanted to ask you about the operating costs. I mean, Nick, it's been a really impressive 3 halves of trajectory. And 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? And is it any of it related to the $20 million license fee deal that you've announced today?

And then lastly, on the 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? And what is the driver that's really changing that or classification to capitalize it rather than expense it?

Yes. Great. Thank you. Thanks, Miles. So operating costs, building a bit of prudence and headroom for the second half, for sure. But 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 be added to the bottom line from a cost perspective. And -- but 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. So yes, building in a bit of prudence, but also just allowing for the fact that we may see some buildout 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 is it's more about the maturation of the platform. So as products go from more research and then into development because they become commercially available for customers, this is just the accounting rules essentially being applied to our R&D spend. As we kind of look forward, the overall spend level is going to be broadly similar. There's a few pieces though that I don't want to kind of 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 '27 and certainly over '28. So that piece there, that's the big thing I can see kind of 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. So essentially the fact the platform is becoming more mature. So this isn't about creating a brand-new process that we don't know work. This is actually about improving processes that we know work now. and adding in things in like automation and things like that.

Our next question will be going to Julie Simmonds coming from Panier Liberum.

Two questions, please. Firstly, on the sort of bigger strategic part. The biggest area of growth looks like BioPharma in the sort of near term. And I'm just wondering whether this is to do with either where you are currently with customers or just because the time line to adoption in the BioPharma field is more -- is quicker than that in the Clinical space.

And then secondly, on the consumables in the current business. I'm just wondering whether the sort of how much the slower consumable sales this year relates to the switching business model to the sort of 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 sort of levels you would have expected previously if you expect them to get there or if there's a big change in that?

Thank you for the question. Let me take the first one, and I'll 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 doesn't mean that the validation cycle isn't thorough and lengthy. But once it is adopted in a particular quality control process for a molecule, it's 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. So 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 IBD, that is a longer-term development opportunity. And 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. Yes. Thank you. So it's a good point, Julie, as well for 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, they 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. And 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 to 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. And in terms of like it depends on the device, it depends on the customer. It depends on the type of contract that we're looking at. But really, we should be thinking about like less than 3 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. And so we've absolutely seen that for the last 12-plus months where we look at active utilization per device and how long will 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. So I mean, just to kind of -- sorry, really point, like on the larger P24s in particular, we're consistently seeing utilization growth like year-on-year. And as we're kind of lapping these larger research programs, so the GBP 8.3 million, NIHR, GL 2.0 and PRECISE II, and that's just the first half headwind. The vast majority of that was consumables as well. But we've been placing out load of devices with new customers, and they're going to start ramping up over the next 3 months plus.

Our next question will be coming from James Orsborne of Stifel.

Two, if I may. So firstly, on the EBITDA margin for 2030, you sort of greater than 15%. Is there any reason why this can't be higher? I know your sort of competitors, more established competitors are close to the high 20s. And so what are the longer-term expectations here? And is sort of that high 20s possible for ONT versus the peers? And then second question is around the GBP 100 million cash trough. I think you mentioned this still stands. Is that inclusive of the licensing and royalties? Or is that based on the pure organic previously? And maybe just how you view this in terms of you've mentioned selected M&A and how that kind of incorporates into your free cash flow breakeven target in '28 and breakeven target in general?

Thanks for the question. I'll start and Nick, you take over. On EBITDA, we have said 15% or more. So there might be an opportunity there. It's 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's upside to that. Peers are in the 20s. There's 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.

Yes, exactly. And the only other thing just to add, like it really depends on where that revenue number is. So you're greater than $700 million, clearly, $701 million will be greater than 15%. But if it's $800 million or $900 million, clearly, it's going to be a higher EBITDA margin overall. And I think the key point is that royalty number will be additive on top because that's coming through at 100% gross margin with no costs underneath.

On the GBP 100 million cash trough as well, yes. So like even on the underlying basis, we're still going to go through that GBP 100 million. Clearly, it will be benefited now by the royalties going on top. And there'll 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. Selective M&A, I know that you want to add to this, the way the capital allocation framework set out, it's about innovation, internal innovation and driving organic growth.

The second piece is about partnerships and allocating capital there. And the third piece is then about M&A. But -- and in the near term, we're going to be building out the plan aligned to that kind of the workflow that you've seen, and we'll come back at the right time when we need to talk further. But there's -- we're not going to do a deal -- sorry, it's underpinned by the strength of the balance sheet. We're not going to do something to take away our foundational strength of the balance sheet. So it might be a little bit later than '28 before we start thinking about the M&A pieces.

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

Okay. So 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. We will -- as we stated on Pillar 2 and 3 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're now going to go back to work. Thank you.

Thank you very much.

Good afternoon, everyone. My name is Jon Unwin. I'm one of the analysts on the European med tech and services team at Barclays. And I'm delighted to be joined by Nick Keher today, Chief Financial Officer of Oxford Nanopore Technologies. Welcome, Nick. Thank you for coming.

Thank you, Jonathan, for having me.

Lots of opportunities for Oxford Nanopore. We'll dive into lots of them as well. You split your revenues into sort of 4 end markets: research, clinical, biopharma and applied industrial. Today, research is the biggest portion of your revenues, but it's not the fastest growing. I wonder if you could talk a little bit about your journey into the clinical and biopharma space, perhaps setting out the -- the move from research to sort of LDTs to regulated tests, sort of where we are on that journey today. We've spoken about it a lot since Capital Markets Day back in -- when was it again?

'23.

2023. Just sort of like characterize where we are and what needs to be done in terms of products left to get you into that regulated environment and yes, just sort of set the scene for us.

Yes, absolutely. So yes, research is 67% of revenues in the year just gone. We grew just over 15% in the year, which is a good result given the turmoil that kind of everybody has seen, particularly in the Americas with the NIH funding situation, which is about 13% of our revenue overall. But thankfully, we're seeing fast, quick adoption into the applied markets.

So applied industrial, which we kind of badge as anybody doing synthetic biology in the kind of core service providers, clinical market, which was -- sorry, applied industrial is about 12% of our revenues in the year just gone, grew 27%. And there's about $1 billion, $1.5 billion market here in synthetic biology where we think we've got a right to win, particularly because of the nature of our technology, the fact you get long read, richer information, quick turnaround time and price point and the ability to debatch as well, actually. All of those things mean we think we've got a right to win there, and we're kind of replacing things like Sanger sequencing. And we've had great success with companies like Plasmidsaurus who are doing very well.

Then you go into the clinical space where 13% of our revenues in the year just gone. We grew 60%. And in the Americas, we actually grew around 85% overall. And we're growing there because the adoption of the technology now really of age within things like rare disease, within things like infectious disease and oncology, particularly rare blood tumors.

So within rare disease, I think everybody will know, you need to have long-read information to get that structural variation. We have a higher diagnostic yield than the conventional legacy short-read technologies that are out there. And because of our turnaround time, we can do this in ultra-quick fashion. So there are LDTs out there available, reimbursement becoming available in the U.S., which is mean that we're seeing this adoption curve really start to increase as people are thinking less about us being a reflex test and actually start to be think of as frontline test for things like rare disease which is very good.

Infectious disease because of the fact that we get rich metagenomic information because we've got that long-read capability, even methylation is important here as well. You combine that with our turnaround time and the fact that you can do it within 3 to 4 hours and the fact that you can miniaturize our technology. So we're going to do what Gordon always does and pull out one of the sequences right now. So the form factor is right as well. So for the infectious disease market, we think, again, this is a space that we can win at. And so we're pushing very hard on there. And again, it's the LDT market that's seeing the adoption today, but the forward-looking people as well, and we've signed deals with Danaher, so Cepheid and with bioMérieux, who are going to take this technology into the IVD space as well.

So product with -- there's various ways in which they're thinking about the end market potential. But think about those high-value infectious disease segments where pricing is also very high today, but PCR tests don't quite do it and where you need that full metagenomic information because you don't know exactly what you're looking for. So just get the entire picture and you need it quickly to treat patients, this is the answer. And so those companies have formed partnerships with us because they can see that this should be the intel inside for that market.

And so where we are on that journey, we've got AmPORE-TB, which we did in-house, and I think hindsight is always 2020, but maybe we might have thought about doing that in a different way, but we've got that product to market from the CE-IVD status. We've got that status now for our GridION Dx box as well. But interestingly, in most markets, you only really need to kind of get to a queue line status as we put it, so like a semi-regulated lockdown version is kind of what all the customers need from our perspective. And that will allow companies like Danaher, bioMérieux to develop these regulated tests on top.

So the clinical market grew very strongly, even faster -- 60%, even faster in Americas because these things are being adopted now and going more mainstream. And we've got a very good partnership with St. Jude's as well. And we had them at one of our commercial kickoffs recently, and they talked about the fact that they can turn $1,000 worth of pathology tests for things like AML, and they can do adaptive sampling on our platform and it costs $150 and gives you the exact same answers that you need to diagnose the patient.

So people will find -- like an adaptive sampling is going to be a big driver for this company in the oncology space in particular, because this is quite cool, but you can train the Nanopore to look for a gene of interest. And so we've got a hereditary cancer panel out there at the moment. You can ask it to look for 100 different genes of interest. It's like a software program. And then you throw on your DNA sample and Nanopore, if it's not the right gene, it will just split it out. And that will very quickly change the need to do a whole genome and actually just do that approach instead makes it much quicker, a hell of a lot cheaper because the prep time and cost of kits that you have to buy from third parties goes down. And it's -- yes, so it could revolutionize that space.

So currently, in that clinical space, most of those -- or all of those revenues are coming from LDTs?

Almost, yes.

Okay. And some of those LDTs are second line, but actually you're seeing some adoption in the first-line sort of treatment test.

Yes.

And it's fair to say -- I just get your opinion that the applications which you have the biggest right to play in are rare disease, infectious disease, and generally things where you need a quick turnaround time for POC and there where we should be thinking your right to win is.

Yes, or where methylation is needed as well because we have the gold standard for methylation.

Maybe if you can just talk about the development of methylation as a biomarker, why it's important and what differentiates Oxford Nanopore's technology in that space.

Yes, absolutely. So if you think about how methylation is done today on conventional platforms, they have a very deep approach, but very narrow approach to looking at the entire methylome so they don't get full 100% of the data. We can get the 100%, and you can go as deep as you like depending on the coverage you want to go for. We were with a customer yesterday in New York, actually, who is showing us what they're doing in the transplantation space where they're using methylation as a predictive marker for knowing when an organ is going to fail. And that's just in transplantation, but it's also the same in oncology where methylation starts to increase as cancers become active.

So this is a predictive marker for the need for patients to kind of go back into hospital for be it the transplant is going to fail, be it that cancer is coming back or it's becoming active. And the key thing here is we can look at all of the methylome on all of the sample types rather than just looking for things in the needle in the haystack that you know is there, we can just look at the entire haystack and just tell you everything that's there.

So there is the "so what" of value of the technology in methylation, absolutely agree. We've got more to do here, but there is a 50,000 U.K. biobank study going on at the moment where we are untapping all of this biology, which we believe could actually drive a lot of interest because as we start to show these biomarkers, it's going to create a whole new wave of interest, particularly from pharma who are going to think about this from a drug discovery standpoint, but also in the diagnostics world as people start going, "actually, this is pretty important." So more to come.

Okay. I guess to help contextualize rare disease infectious disease methylation, they are the sort of key things to think about in clinical. Like how big are those markets today? And like can you -- is this a share gain opportunity? Or is it like expanding into white space where tests aren't currently being done? Like how should we think about the opportunity for Oxford Nanopore in those 2 sort of buckets?

Yes, good question. So in terms of like the total clinical market today, it's broadly speaking, 1/3 to 1/2 of the total $9 billion to $10 billion of NGS spend that's happening. We think the serviceable addressable market for our technology is more like $20 billion to $25 billion. And so the balance of that is conventional tests, be it PCR assays, other things that are being used today.

In the clinical market, we think the total addressable market to us is around $10 billion. And of those high-priority segments, clinical is a big chunk. Another big chunk that we haven't quite got to is the biopharma piece. And so...

We'll get to it.

We're going to get -- and yes, that's maybe $3 billion to $4 billion and an area that we think is a high priority segment for us as well.

Okay. So there's some change from PCR to ONT, there's some change, there's some expansion. But would you expect to gain share from other sequencing platforms in this space as well?

Yes. So when I've been to see customers, I think legacy technologies where they've been adopted and they work very well, are going to be very hard to displace, and that's genuinely where we're trying to avoid going because actually, some of these technologies do the test very well. And in diagnostics, the test that works, the test that's used. And dislodging those tests is maybe a fool's errand. And actually, our focus is to provide value to the customer where they can't see it today. So -- and our belief is that -- and we can prove it out is that you can see more on a Nanopore. So that's what we want to show people.

And then -- so what we've seen is these people have multiple of the devices in their clinical labs, and we're being used on top of because they have to batch with these conventional techniques because they need a quick turnaround time, because they want the methylation, because they want to infectious disease, quality, accuracy, all of those things that you can get on ours that you can't get on theirs.

So we also, to be fair, don't actually have the ecosystem around the product the same way some of our competitors do today, but that is coming. So we've got to be realistic with we're going to land and we're going to expand. Absolutely, that's what you're seeing. And the technology is now at the time from the robustness, from an accuracy, from a cost perspective, where that's what we're seeing as well.

Okay. Maybe just thinking about competitors in this space. What differentiates you from PacBio, the other long-read player? And how would you characterize your technology versus the other Nanopore player that has been launched, which is Roche?

So on the PacBio front and the other -- the long-read technology that they have, good technology. And so nothing bad on that front. But I think with ours, we can see native DNA and RNA. That's really important. In our, we can do longer reads. We can do any read actually, length. And then you can also see -- you get the methylation from seeing direct data points. You can see modifications on RNA that you can't see on these other platforms, any other platform actually. And the ability to scale on Nanopore is clearly there. So form factor is also an important piece about the size of the technology.

So I think we have -- we all have benefits over each other in certain instances, but we've been growing historically very quickly. We delivered 24% last year in a market which is definitely challenged, 23% the year before that. I think we're kind of proving that the Nanopore technology has a real place here. And actually, we've got a long way to go still.

So -- and then against the other Nanopore player to launch, very different types of technology. And that's a key one, which is, again, we can see -- with our technology, you don't need to take a copy. We can see any read length. And that means that we get all of the methylation data, we get all of the direct information from looking at the DNA in its native form or the RNA and 1-day protein. The fact that you can kind of get that long read information, which we talked about from structural variation in things like rare disease, but over time, it will probably be proven out that it's important in everything. And the form factor and the ability to debatch, all of these things play into this as well.

So yes, there's more competition in the market. I wish there was less. But where we are today, the reasons why we're growing, we don't see these things changing.

We hosted a panel yesterday with a genomics expert from the Broadlab, and she was talking about the Illumina TruPath pathway and she characterized it as a direct shot at PacBio and ONT. How are you thinking about it in the competitive dynamics?

Yes. So again, it's the Constellation renamed technology as well. We've seen it coming for quite a while. I think it's yet another attempt trying to do long read. But again, I would just kind of emphasize the same points that we kind of talked all the way through, which is this is essentially a technology that's stitching together. So it's imputed. It's not direct. So it's taking short reads and putting them back together.

And how -- I think there's a lot to be proven out still. So how good is this going to be versus what we can do at looking at it directly, the entire read length or any read length you want to go for. So when you're looking at long variants in particular, we think we'll continue to have an edge. If you want to do long read and you want the methylation, we give you the methylation for free. You're not going to have to do a second test.

I think there is also question -- I think we've got a lot more to understand about that product still from like price point ultimately, yes, they put one up there, but how much volume has to come with it, the device that you're going to have to do it on versus our own. There's a lot of considerations for the customer. And there's a time line when all these things come together for that product, whereas for our own, you can do it today.

So I think it's also quite nice and ending that everybody is recognizing that long reads are important and multi-omic information is important. So it's great that all these things have come together. It'd be just great if you can do it all on one platform, that you can, Nanopore.

Yes. Okay. Maybe then taking a look at biopharma. So can you just high level run us through exactly what ONT is doing in the biopharma space and the quality control space and why they're uniquely positioned to save pharma companies money? Or what's the value proposition for Oxford Nanopore?

Yes. So this has been going on for a few years where we're seeing a lot of pharma company interest, particularly around certain key features of the technology. First of all, like a door open, something as simple as plasmid sequencing used in all kind of cell biology experiments, but you want a quality -- you want to control step to make sure whatever you're putting into your cell line is the right thing. And the gold standard for a long time has been seen as Sanger. And I think we're changing that now that actually the gold standard will become ONT.

And so we're seeing a lot of customers kind of evaluating our technology to move plasmid sequencing over to ourselves. And it's because you can get the full plasmid of information, we think you can see more and we can do it at a price point at a time, which is more competitive than what you can see from competitors. So that's the first thing.

Then the other tests that go alongside it are things like mRNA vaccine production, where we've signed a contract with one of the leading players in the quality control environment. And this isn't against sequencing now. This is actually against 7 to 8 orthogonal types of tests where essentially people are doing HPLC, mass spec, gels essentially to try and approximate what the vaccine looks like. And whereas we can just look at it directly, and then we can tell you the weight of it. We can tell you the modifications that are on it. And that provides the customer with a more direct way of measuring what they've just made.

And that's important from a quality control step from a safety perspective and an efficacy perspective. And so when we're thinking about personalized cancer vaccines and where they're all going, we think we could play a big part in this. And so that deal we struck being used in that mRNA vaccine production space, we're very excited about because we're not just being evaluated by one player. We're being evaluated by all of the players. And these things take time, but they're coming through.

And then we have other workflows that are also getting a lot of interest like AVA, AAV and sterility testing more broadly where they have -- there's a reason -- infectious disease, we think we've got the leading platform. It's essentially infectious disease in certain instances in biopharma QC, where you're using the same workflow, give or take, same approach, but you get the same rich metagenomic information quickly. And for quality control, that's quite important.

So what we're looking at here is an economic pull for the pharma company, which is a CFO, I guess. And then you're also getting this quality control step pull as well because you can see more with the information and it's quicker. So there are a lot of reasons why we're being evaluated by these pharmaceutical companies, and we think we can take sequencing into an area where you don't see sequencing today.

On that biopharma piece, when you do the quality control test, do you do it on the sort of big batch of API that they've produced or is that post fill/finish when it's in the vial and you're testing it there? So like is it one test or is it 5,000 tests?

It depends on what you're doing. So mRNA, it's because it's personalized cancer vaccines, this is literally per patient. And then for that European provider that we've also signed sterility pieces they're doing, they're having one facility that's monitoring several sites, and that is much more big batch biologic production.

Okay. Makes sense. Maybe we can talk a little bit about outlook in the last few minutes. So you did 24% constant currency growth in 2025. You're guiding to 21% to 25% this year and broadly similar next year. You had originally set a target of over 30% CAGR '24 to '27. So obviously, that's unlikely to happen at this stage. Can you just talk us through what has changed since setting that guidance in 2024 to essentially being 5% to 10% below it now?

Yes, absolutely. So when we set guidance in '24, at the beginning of '24, rolling back the clock now, when I joined, we had to push guidance back, first of all. So we actually -- we're aiming for breakeven in '26. Joining in '24 and evaluating everything we could see, it was kind of clear that, that wasn't going to be the case, otherwise that would be this year. And breakeven was going to be in '27. Cash flow breakeven in '28. And those were always the north stars of essentially what we were aiming for as a company, as a Board and as a management team, that's what we were kind of setting in stone, and we've reiterated that.

Now we did say when we set guidance for over -- those guidance points, we said, to help you with your models and investors as well, we believe we would get there through growing over 30% a year. That's what the aim was on a CAGR, '24 to '27 underlying constant currency and then gross margins to be over 62% and cost growth of 3% to 8% a year. Now as we went through '23 and we delivered -- sorry, '24 and we delivered 23% growth, we were doing a big operational review internally. And then last year, we did a strategic review as well, looking about how we can grow this business quicker because what we were seeing is we weren't necessarily getting to that top line growth that we wanted to.

Now we always said if we didn't achieve the top line, we would modulate the bottom line, and that's written down in the '24 release that we put the guidance out, anybody can check it. So we always said that that's what we would do. And last year, we took out a considerable amount of cost from the business twice. So we demonstrated that we do what we say.

And as we went through that strategic review about why we weren't growing top line quickly enough, it led to a lot of changes internally as well because I think it's fair to say what's changed in our model. Part of it is the market has been tougher than we expected. And I think everybody may forgive us for that because actually the NIH has happened post the guide. China has been tougher from an export control restrictions point. I think it's just -- that is the reality. We didn't expect it to be this size of a headwind. But then on balance, we could have done better as well. And so there was an execution part here where we have a lot of soul searching, but we can be better as a company.

So even though we're growing a lot faster than all of the competition, undoubted, we think we actually could be doing better again. And that's because we can see these end markets we're going for. We can see this $13 billion to $14 billion that actually we should win at. It's just how do we get there as quickly as possible. And now we -- I think we're aligning on that path to do it. But we've made very clear with everybody that '27 breakeven adjusted EBITDA was written in stone, and we've kept it in stone. We've not moved it out, even though we're not growing as fast as the top line because we're doing better on margin, we're doing better on cost control.

Okay. Great. We've got 5 seconds to spare, so I think I'll end it there. But thank you very much for your time this afternoon. Hope you all find it useful.

Thank you very much.

Good morning, everyone, and thank you for joining us today. Before we move into the 2025 results presentation, I'd like to begin by marking an important moment in the evolution of Oxford Nanopore.

As previously announced, today, Gordon Sanghera steps down as Chief Executive Officer after more than 2 decades leading the company he co-founded in 2005. Under Gordon's leadership, Oxford Nanopore has grown from a bold scientific idea into a global platform technology company, serving customers in more than 125 countries across research, clinical, biopharma and applied industrial markets. On behalf of the Board, I would like to thank Gordon for his incredible vision, determination and commitment in building the foundations that position the company strongly for its next phase of development. He will remain with the company in an advisory capacity through to early 2027 to support a smooth and orderly transition.

Today, also marks the first day of Francis Van Parys as CEO of Oxford Nanopore. Francis joins formally the company this morning. He's spending today in Oxford, meeting the team and therefore, will not be with us today. We look forward to introducing him to many of you in due course once he's had the opportunity to engage more deeply with the business. The Board is pleased to welcome Francis at this important stage of the company's evolution. His experience in scaling innovation-driven life sciences businesses, particularly within regulated and commercial environments will support Oxford Nanopore's continued development.

The Board remains focused on maintaining our support for leading-edge science, driving strong growth across our priority end markets through disciplined execution and delivering sustainable profits as the business continues to scale.

With that, I will hand over to Gordon and Nick, who will take you through the financial and operational highlights for 2025. Thank you.

Good morning, everybody. It's been a 21-year journey for me. Spring of 2004, I started looking at Hagan Bayley single molecule stochastic sensing. I had to go and check in the dictionary what stochastic meant, but I got the hang of it. The more I looked, the more excited I became that we could potentially deliver a new method of measurement. That doesn't happen very often for chemical and biological single molecules. So we were spun out in 2005 with GBP 0.5 million from IP Group, at that time, Dave Norwood, over a pie and a pint. It was just stunning that somebody would put that much money in -- on an idea, a concept.

The company's vision from the outset was to enable the analysis of anything by anyone, anywhere. And I would say that is a work in progress.

I think the proudest thing I've seen and the coolest thing I've seen in this technology is NASA taking it up into space, slated to go on the Artemis mission as well, very proud, but also Project NEEMO, which is NASA, going down into the depths of Mariana trench, and finding over 7,500 new species in extreme conditions, which kind of tells us there is life out there somewhere, which is exciting. So our first application area is DNA RNA. We're now extending that to proteomics and you'll hear more from Lakmal at London calling. I will be there as well. But we also have the potential to measure small molecules, chemicals, metabolites, volatile organic compounds as well. So this platform has a lot more to give over the coming years.

So I want to show some slides, I guess. That is our vision. You've seen that plenty of times. And as I say, we're just at the beginning of this journey, lots more to come. We launched our DNA products 10 years ago. And our direct RNA product approximately 5 years ago.

As Duncan has just said, we are today in over 125 countries. We have over 1,300 employees and we opened our factory because we had a bold ambition from the outset that we would deliver a tech company in the U.K. that would manufacture in the U.K. So our consumables, flow cells and revenues are manufactured in our factory, which we built with an ambitious growth trajectory, which means over the next 3 to 5 years, as we grow, we will be able to meet those demands for our consumables.

The key metric on this slide is the fact that in 10 years since we launched our first products, we have 20,000 publications. That is a phenomenal beat rate. And that decade of innovation underpins the unique value proposition and what this single molecule measurement platform delivers. There is no other company in this space, in our competitive space that sequences direct DNA, RNA. This body of work is a foundation for our growth. And since IPO, I'm proud to say we have grown 28% CAGR. And that is a testament to the unique things and a multiomic direct sequencing of DNA, RNA that can only be enabled by Oxford Nanopore.

Again, 2025 was a great growth year for us. We grew 24% on a constant currency basis, which is 1% above our top end of our guide, 23%. We have, across all regions, in a tough market where the competitors in the last 3 or 4 years have seen low growth, no growth or negative growth. We delivered 20% growth across all of our regions. 70% of our revenues come from our flow cells and kits, which are manufactured in [ Didcot ]. And we've been financially disciplined this year. We have just over GBP 300 million in cash and cash equivalents, leaving us well poised to build on our ambitious growth trajectory.

And as we set out in capital markets a couple of years ago, we would be transitioning from revenues entirely from life science research tools to our applied end markets. In 2025, life science research tools, which accounts for 66% of our revenues today, grew 15%. Again, to reiterate that is outperforming competitors significantly. Our strongest growing applied end market was clinical at 59%. BioPharma, came in at 30%, and applied industrial 27%. Year-on-year, that grew from 30% to 34% and is broadly in line with what we thought we would hit at capital markets a couple of years ago and is a testament to the maturing of the platform for our applied end markets.

Why are we growing substantially? It's not a fluke. We didn't get lucky. 20 years ago, we realized that single molecule electronic detection of biological polymers could be transformative. And what we deliver with this platform, and we are the only company in the world who does this, including the other Nanopore people, we read direct DNA, and we can read short hundreds of bases, long tens of thousands to hundred thousand bases to millions of bases ultra-long. No other tech does that. We are not just a long-read company. It's that native DNA that makes us highly differentiated.

We do this in real time, live streaming because the sample preps take hours, not days. All other sequencing platforms take days to prep their samples. We do not have to batch, which means we can get rapid insights in point of care in distributed affordable, accessible platforms. It is 1, 2 or all 3 of these attributes that are driving that strong growth, both continuing to, in our life science research tools market for translational and discovery work, which is a foundation then for the applied markets. So I want you to remember that this technology is driving adoption, and we are very early in this journey.

And I'll talk a little bit about Francis at the end, but I'm excited to be handing the baton on to him. And I will now pass over to Nick, who will get into details and talk about outlook for 2026.

Thank you, Gordon. So good morning, everyone. My name is Nick Keher, I'm the CFO of Oxford Nanopore. Today, I'll be updating on our FY '25 financials, outlook and operational performance.

So FY '25 was a year of both delivery and further transformation in a year of volatility. We delivered revenue growth of 24.2% at constant currency, marginally ahead of guidance of 20% to 23% set in March 2025. With over 20% growth in all regions on a constant currency basis and a return to growth across the MinION range as previously guided to also. Reported gross margins finished broadly in line with guidance and in spite of numerous headwinds, some of which that should not repeat, and with a see-through gross margin of closer to 61%.

Adjusted OpEx growth of only 1% reflects strong cost control of the period and 2 restructuring events. One in January previously discussed to allow for the reallocation of capital to higher growth opportunities. And another in November that related to a strategic realignment exercise to align the business to these high-priority end markets.

As a result, we improved our adjusted EBITDA loss by GBP 31.2 million or 26%, which is a material step forward in our path to profitability. We finished the year with GBP 302.8 million of cash with no debt, demonstrating a material improvement in cash conversion as we made improvements to our business model and focus on working capital. and continue to see minimum cash of at least GBP 100 million as we pass through adjusted EBITDA breakeven in '27 and cash flow breakeven in '28.

Turning to gross margins, the year reflects a solid improvement overall and in line with our original guidance of 59%. From a base of 57.5% in FY '24, we delivered underlying improvements of 460 bps, driven by the new CapEx-first pricing model; and two, yield improvements, particularly on the PromethION flow cell. Whilst we saw benefits from improving recycling on the PromethION flow cell, these were largely offset in the year by lower levels of recycling overall at MinION flow cell. From this position, we then saw headwinds of FX of 70 bps, the previously discussed one-off items related to obsolete inventory of 150 bps are not set to be repeated and product and customer mix headwinds of 130 bps. This provided a reported gross margin of 58.6% overall. Within this, we also took the charge related to restructuring in the year, related almost entirely to the ElysION product line of GBP 1.8 million or 80 bps. Absent this, the margin was 59.4%, and absent the one-off items taken in half 1, the margin would have been 60.9%.

We think this is the right figure for investors and analysts to look at as we enter FY '26, noting we still have a number of upsides to improve margin further in FY '26 and '27, namely on PromethION flow cell recycling, as we also continue to see further benefits from the change of the pricing model. The strong top-line growth and improvement in gross margin has been matched by discipline on the cost base, which saw an increase of only 1% to adjusted OpEx year-on-year. This meant we delivered a 26% improvement year-on-year to EBITDA, a total of GBP 31.2 million, with GBP 18 million of that coming in the second half, which itself showed a 32% improvement.

Stepping back, we have now delivered an adjusted EBITDA improvement each half since the beginning of FY '24, and we believe we have a solid path to achieving breakeven in '27. It is also worth putting this into the context of the top line and gross margin headwinds we have seen from a currency perspective, which have now reduced our adjusted EBITDA figure by GBP 9 million since January '24. We will deliver breakeven through continued above-market revenue growth, consistent with what we've delivered historically and are set to in FY '26, but with continued cost control of the cost base. In particular, we see opportunities to improve efficiencies we scale through IT, logistics and internal working practices with non-headcount related expenditures.

Turning to cash. The strong operational execution delivered in the year, coupled with the transformation to our business model completed have transferred -- had translated to improved cash conversion. Our operating loss before restructuring costs came to GBP 79.1 million, largely mirroring our EBITDA performance. Restructuring costs of GBP 13.8 million in the year are split GBP 5.2 million in the first half and GBP 8.6 million in the second half from the strategic realignment exercise in November.

Working capital was an inflow of GBP 13.4 million, reflecting a meaningful improvement in inventory management with total inventory levels down GBP 18 million in the period. We continue to see more opportunities for improvements as we look forward on this area. Assets at customers came in at GBP 10.1 million, down GBP 10.5 million from the prior year, thanks to adoption of the new pricing model. The second half increase of GBP 4.6 million relates primarily to devices for the U.K. Biobank contract and a small number of evaluation devices provided to customers.

CapEx and capitalized development costs of GBP 45.5 million are split GBP 41.5 million on capitalized development and GBP 4 million on CapEx across the business. This low level of CapEx in '25 reflects -- largely reflects timing of investments and significant projects such as the Spectrum Building are now complete. It is unlikely that this level of -- this low level will be repeated again in '26.

Tax income of GBP 18.9 million reflects the receipt of 2 R&D tax credits in the year, again, unlikely to be repeated in FY '25. Finally, other investing and financing inflow of GBP 15.3 million reflects the income from our bond portfolio in the year. As such, our net cash outflow finished the year at GBP 101 million, leaving us with GBP 302.8 million in the bank with reducing losses and improving cash conversion from both focus on working capital and the adoption of the CapEx first approach, we continue to see cash reserves of at least GBP 100 million as we pass through breakeven.

Turning now to the commercial strategy. In '25, we completed a strategic review to ensure we maximize the broad opportunities in front of us. This process incorporated a variety of perspectives from the inside -- from both inside and outside the group, ensuring we can prioritize the opportunities that best leverage our differentiated technology to create value for all of our stakeholders. As part of this strategic review, we looked at where we have the clearest right to win and where we can scale with discipline.

Across research, clinical, biopharma manufacturing QC and other markets, we identified roughly $13 billion to $14 billion of higher priority segments where our richer data, speed and accessibility provide meaningful competitive advantage over peer technologies. We then categorize segments into higher, medium and lower priority, not based purely on size, but on ease of access, differentiation and scalability. This prioritization is now shaping everything internally. Commercial resource allocation, product road map decisions, capital deployment and organizational focus.

The result is a more focused, more disciplined company concentrating investment behind the segments that drive sustainable growth and margin expansion. With that context, let me turn to how we action these insights in '25. In terms of our commercial performance, we delivered GBP 223.9 million of revenue of 24% at constant currency, with growth across all regions and all customer types despite challenging end markets. But the quality of growth is what matters here with clinical up close to 60%, biopharma up 30%, applied industrial 27% and research up 15% despite ongoing NIH pressures.

That mix shift towards applied end markets reflects the natural pull of our technology to these sectors, supported by our existing investments to support that growth. With our focus now enhanced on these end market segments as a corporation with our operational structures also aligned to enable a strategy, we expect to see further improvements in our commercial performance over time. In Clinical, we saw broader adoption across rare disease and oncology across strategic collaborations such as Cepheid and BioMerieux. In BioPharma and industrial, we supported QC deployment, plasma sequencing expansion and increased PromethION utilization.

We also saw strengthened pricing discipline and contracting structures, improving both margin profile and cash dynamics. Growth is increasingly weighted towards higher priority segments identified in the strategic review, and that gives us confidence in both durability and operational leverage as we move forward.

Turning to innovation. Gordon has already covered the technical performance improvements in detail at the JPM in January, including advances in output, accuracy and workflow maturity and these improvements will continue at pace. But the key stories of '25 are of prioritization and alignment. Following the strategic review we did last year, we refined the portfolio to concentrate investment behind platforms that best serve our priority end markets. That meant the discontinuation of sales of P2 Solo from June this year and the focused efforts internally on the P2i, pausing further internal development of the ElysION platform and discontinuing direct commercial efforts on the product. Hard decisions, but once taken. Focusing on the core platform and integrated systems such as the P2i and P24, advancing Q-line product lines more broadly across GridION and PromethION.

For GridION, we are set to launch a version 2 of the Q-Line product in 2026 that benefits a broader requirement set from our BioPharma customers, whilst on the Prom, revaluation of the time line leads to an updated launch date for late 2027. To ensure our innovation efforts drive greater returns, we are also improving our ways of working internally, formalizing process improvements to ensure greater success. This simplification reduces operational complexity, improves capital allocated discipline and ensures R&D is directed where returns are strongest. So innovation in 2025 became more focused, more commercially aligned and more scalable.

On operational excellence. Operationally, 2025 was about discipline and leverage. We delivered continued improvements to gross margin, reflecting pricing improvements, flow cell efficiency and operational scale. During the year, we completed 2 restructuring events to realign the organization, simplify the portfolio and refocus R&D behind our higher ROI opportunities. Operationally, we also advanced automation, expanded manufacturing capability and initiated ERP and CRM transformation to support scalable growth. The result is a structurally more focused business with improving operational leverage.

Looking forward, I would anticipate further additions to the executive team to strengthen our capabilities and to support our continued expansion into these target higher priority end markets. Turning to guidance. For FY '26, we are setting revenue guidance of between 21% and 25% at constant currency. This guidance is materially above what we see as end market growth with peers guiding for largely for low to mid-single-digit growth overall. This growth is being driven by growing interest in demand for Oxford Nanopore Technologies products and their desire to see more and do more against conventional legacy sequencing technologies.

The low end of the range is driven by the expectation for a continued subdued research environment in the U.S. and specific market dynamics, particularly in China. Alongside this, we have factored in some risk from the discontinuation of the P2 Solo. As always, we attempt to risk adjust our guidance to both set estimates in a place for the year ahead that derisk external expectations. As we look to the top end, it largely mirrors the opposite of these factors and we note the potential to exceed this guidance, should we succeed in converting more customers to P2i, which we believe is a superior product and delivers better results for customers.

Regionally, we see growth being strongest in the Americas, driven by continued expansion into the applied markets. EMEAI has delivered consistent, significant growth. But in FY '26, we note the timing of large research end market contracts rolling off and new contracts ramping up that lead us to expect a more cautious growth rate at this point of the year and hence for growth to be lower than in '25. Similarly, across APAC, we continue to see -- to expect above end market growth, but note the expected headwind from the PRECISE II contract ending and specific factors in China, that means this could be a slower growth rate overall.

Against our guidance, it is APAC, which could be the surprise factor to the upside. For FY '26, we would like to see how the year progresses from here. By end market, we continue to see growth strongest across the applied end markets driven by clinical and BioPharma again. This guidance has been taken into account -- has not taken into account any of the potential risks to recent events in the Middle East over the weekend. Our current efforts are to keep our own people safe, and our thoughts are with everyone impacted by the events over the weekend as this risk remains an evolving situation.

Our total revenues in the region represent around 3% of group revenues but the region also acts as a central point in the global supply chain. So the full impact from these events are arguably unknown at this time. On gross margins, we are setting guidance of 62% this year, 340 bps above FY '25 reported margins, but 110 bps above the see-through margin talked through earlier. We are confident that there are further benefits to margin from the adoption of the CapEx first pricing model alongside improving recycling rates at the PromethION flow cell that looks set to drive further improvements overall and offsetting expected headwinds in terms of product mix and currency.

And adjusted OpEx growth, we have set guidance at 0% to 5%, which reflects the expected benefits of the strategic realignment exercise in November and continued focus on improving efficiencies in the business overall. The range itself also reflects the timing of expected hiring across the business. Over the course of '26 and '27 we see opportunities to improve operational efficiency again and through non-headcount-related activities, particularly across logistics and IT.

Turning to my final slide on financial outlook and summary. Noting that we are reiterating our medium-term adjusted EBITDA and cash flow guidance targets at '27 and '28, respectively, but with amended constituent drivers of how we will get there. We expect to see this strong above-market broad-based revenue growth in '26 to continue in '27 and at a broadly similar rate. This growth is below the previously set medium-term CAGR of over 30%, reflect a mix of weaker end market backdrop than guidance was originally set and partly on execution, which we will look to improve going forward.

We delivered a 26% improvement in adjusted EBITDA in '25 and we continue to see further operational leverage in '26 and '27 to deliver adjusted EBITDA breakeven in line with our medium-term guidance. Given the improving gross margin profile that has accelerated ahead of initial expectations, alongside the restructuring exercise completed in '27 -- completed in -- sorry, and given the improving gross margin profile that's accelerated ahead of initial expectations alongside the restructuring exercises with further operational efficiencies, we continue to see breakeven EBITDA in '27 as reinforced even with a lower top line growth rate.

Lastly, as demonstrated today, we have continued to translate our operational performance into real improvements in cash. Our cash burn was down GBP 50 million in the year. With this profile set to continue in '26 and '27, driven by improved losses, the adoption of the CapEx model and supported further by benefits in working capital to come, we continue to see cash flow breakeven in '28 with a minimum amount of cash of over GBP 100 million.

With that, and before passing back to Gordon for final remarks, I also want to provide my own personal thanks to Gordon and congratulations on a truly remarkable achievement in building a great company like Oxford Nanopore.

Thanks, Nick. So last slide now we've got that up. I just wanted to say a few words after 21 years being at this -- at the helm. I've always felt this was a deep tech company. People talk about that a lot. It actually took us 10 years to deliver our first products. We've been in market place 10 years, and we've raised a lot of money and people look at that, and they think the return on the investment is low, but this company will be around in 100 years' time.

Already today, T2T genomes are the new gold standard. And you can't get any better than that because it's the whole genome completely mapped. And Craig Venter who is the founder of the original -- driver of the original human genome is out there building that gold standard. So as I reflect on this 20-year journey, it will never work. you'll never make a circuit, you can't stabilize a soap bubble, you can't raise money in London, you can't float in London, you will never be profitable, all these things just made us more determined and this is the right moment to hand over.

I've always known this moment will come. This company will be far bigger than any of the individuals. Yet it is each and every individual who in the last 21 years has really believed that we could do something special and different and we have. And it's a really exciting moment. And I'm really excited about Francis' coming in and taking the baton and really helping build this company, taking us to the next level. I would like to thank you all. It's been a blast and the journey, and I'd like to thank the Board, in particular for putting up with me for 5 years. And I'll leave you with this. I'm not retiring. And as David Bowie said on his 50th birthday, I don't know what I'll be doing next, but I can guarantee it will be interesting. Thank you very much.

Questions? Zain? Do you want to say your name and company.

Zain Ebrahim, JPMorgan. Firstly, just to extend my congratulations to Gordon as well for your legacy and everything that you built here. First question is on the '26 guidance just in terms of the moving parts you talked about it in terms of the revenue guide somewhat, but just to elaborate further in terms of what gets you to the upper end of the guide versus the lower end of the guide. It sounds like P2i Solo is a key driver in terms of conversion, but also geographically, what gives you confidence in Americas outgrowing or accelerating in growth versus 2025? That will be the first question.

The second question is on the adjusted EBITDA path to breakeven. You mentioned operational leverage that you can drive, but just potentially more color on where you see gross margin. Consensus is adjusted EBITDA loss of GBP 14 million for next year. So what do you think we as consensus are underappreciating?

So just on the '26 guidance for revenue. So geographically, what gives confidence in the Americas, they've got momentum. And so when we go through our exercise of guidance setting, there's a lot of things that kind of we look at. And in particular, in the non-research markets, when I look at the pipeline coverage, when I look at the sheer number of customers, that those high profile ones in either clinical or biopharma, they're evaluating, but also there in the hopper to take product on. Yes, I think we've got confidence in the Americas market and that we've turned that corner now. It's always been difficult to kind of penetrate the research market in the U.S. for us, and that could be a whole host of reasons why.

But the applied markets now has kind of got there quicker. We've talked about the fact that over 50% of the revenue in the Americas is now coming from those applied markets and that looks set to continue. So it's a different type of customer buying the product, they're getting to scale and they're driving the growth. On EMEA, we talked about this in the statement, but if I look at even the 5-year historic CAGR for EMEA, it's been a hell of a performance, and the team have done a great job in terms of like how they've delivered that growth consistently year-on-year. When I look to this year, we have a couple of contracts that are rolling off that we talked about, like NIHR, like GL 2.0. We have the U.K. Biobank contract that's coming in to help to offset it, but that means a proportion of revenue is essentially static for the year. And so there's kind of a piece there that we've just got to kind of factor in.

And so it might just be -- we're expecting it to be a lower growth year overall. As always, we try and set guidance prudently as well. And now for APAC, this is probably where there's a bit more of a wildcard factor at play. And we are seeing conversion, particularly in specific markets to clinical that is actually quite encouraging. So adaptive sampling is making material inroads with certain large customers, particularly in Australia. And there is a healthy pipeline of activity that we're going up. But there is just a timing aspect here for how things ramp up. And we've seen that it can take time for these things to kind of get to the scale we want them to.

At the same time, we have precise II that's ended and is coming off. So there's -- those non-China markets, we can see these dynamics at play. In China itself, I think there are a few things happening. So first of all, the export control restrictions haven't got easier. And we have a backlog now of potential revenue to go into that market because of the restrictions in place. We also could recognize that there are -- well, there is increased Nanopore competitors in the China market as well. We've evaluated those technology against our own. We believe our technology is superior, and that's demonstrated by the fact that even the price differential being what it is in that market, you still see high underlying demand for our technology overall, but it is something that is kind of -- has grown over the recent years.

And then finally, we think we can do better from an execution standpoint. And China is a substantial part of APAC overall. So we're setting guidance cautiously. That's why I talk about it being potentially surprise to the upside. And hopefully, as we progress through the year, as we improve upon that, and we get greater confidence, maybe we can look again.

In terms of product level as well because you asked about the P2i -- P2S piece, so we're setting guidance of 21% to 25% growth. We're putting some risk in there that the discontinuation of the P2 Solo should we not see that conversion to the P2i like we believe it will happen.

So when we've done this commercial realignment exercise, we've taken the 47 end market segments we're targeting, the high priority segments overall. We then evaluated the customer demands from requirements, table stakes, like for those high priority segments we're looking at. And what we found is that the P2i is a better fit. The P2 Solo is a very good product, but the P2i is a better fit for the customers overall.

And we are going to push the P2i stronger and harder than we have done before because we think our customers are going to get a better experience overall as well. So we've taken a tough decision. We're focusing efforts from a commercial market -- and that's the big C of commercial -- sorry sales, marketing, all of the efforts, application development, workflow development, all of that on the P2i or the P24, so that we essentially get a better return overall for the company and drive faster, more profitable growth.

Now there is a risk, though, in the interim that this essentially drives a little bit of a weaker performance as we execute on that. And so my job is to make sure that we've kind of factored that into the guidance overall, and that's hopefully what we've done.

Now on adjusted EBITDA breakeven, what's the market missing? If I look at consensus as today and it's updating, previously, the market, I believe, had a question over that top line growth rate. And to be clear, when we set medium-term guidance, it was always breakeven adjusted EBITDA in '27, cash flow in '28 and we gave constituent drivers for the market to kind of model how they would get there. And we also said if the top line growth wasn't achieving what we wanted to, we would actually modulate the cost base accordingly.

We've done exactly that. And we've got 2 examples of that in the year just gone. And now through those exercises, actually, we don't need to achieve over 30% CAGR to achieve that breakeven in '27. So hopefully, the market comes away from this going actually, with the new guidance that is out today. Actually, sorry, medium-term is reiterated, but with the updated constituent parts, it's actually a more realistic outlook to achieve adjusted EBITDA breakeven in '27. And hopefully, investors and analysts can start to model that in as well.

Veronika Dubajova from Citi. 2 questions for me, please. The first one is actually going back to the EBITDA breakeven pathway, Nick. And if you can maybe talk a little bit about the gross margin picture in particular, sort of on my math, you'd need to hit something that's better than 62% that we talked about previously to get to that breakeven. Maybe just give us some color on how we get there in 2027 and what gives you the increased confidence that it's achievable?

And then my second question is kind of bigger picture, both for you, Gordon, and for Nick, now that we've had the sort of strategic realignment, you've bedded it down for a number of months now within the organization following the restructuring. Just kind of talk about what are the bits that you're most excited about? How is the organization handling that change and sort of anything that has gone maybe better or worse than you expected?

And then finally, congratulations, Gordon, from me as well. We look forward to hearing more from you in your new advisory role, but amazing accomplishment, and I hope you enjoy a little bit of downtime.

Thank you, Veronika. So just on the EBITDA breakeven piece, and focusing specifically on gross margin. So absolutely. What we guided to do today is to a 62% gross margin for FY '26. That's bringing forward the original constituent guidance point of -- greater than 62% in '27. So we're bringing that forward a year. And in the statement, we believe that we'll see continued improvements as going into '27. I think it's fair to assume that, that means for the market to start thinking around 64% for '27 as being an achievable gross margin or perhaps around that level.

The reason why we're confident on that is that when we set the original guidance in '24, we did state to the market that -- sorry, we haven't updated the pricing model. The pricing model changes and going CapEx first has clearly had a benefit on the gross margin overall. And so we're updating for that. The piece that's still to deliver a true tailwind, and it will because we're seeing it, is in PromethION flow cell recycling. So in the year just gone, the drop in MinION recycling essentially canceled out the benefit we saw in PromethION. For this year going forward, MinION recycling rate is now at a level actually that will step over that.

But with PromethION increasing, it's going to deliver a meaningful improvement to overall gross margins. We've talked about it before, but if the MinION level, if we achieved the levels that we did with the Prom to the Min, then essentially, it could be a 10 percentage improvement -- point improvement on PromethION gross margins overall. We still got some way to go there. So that's how we get there.

On the bigger picture piece, would you like to go first, Gordon?

No, go ahead.

So the strategic realignment piece and parts of that excite. From myself, my opinion on it, I think prioritization of activities will always lead to better outcomes. And so the team, we've got an incredible capability in the business. And because the technology is so good, there's almost so much we can work on. And I think that's genuinely what I mean I've seen since I've been here is just there is so much opportunity for the technology to go on, 47 end market segments, it could arguably go with all of them.

I think actually having this kind of focus prioritized exercise completed and saying, well, we're going to have to put down tools here because we're going to focus there is a good thing for the business. And actually, it's going to drive increased efficiency overall because we can have more people working on those bigger projects that are going to move the dial as well. So that's the part I'm excited about. Clearly, going through change as a business, it's difficult, actually. And so I don't want to -- I think it's been hard, actually. And these things take time to work through.

But even since the start of the year, people are starting to kind of find their feet again and kind of realign to what that is. Not everybody is there yet as always, but we're working through it. And, I think, we're going to get there.

I think success can be painful with infinite possibilities, which is what happens when the impossible is made possible. And finite resource, it's a challenge. And the company has quite rightly and is evolving to be much more focused on what are the 5 or 10 big things. We are redesigning the PromethION chip for reuse, which has radical transformative revenue and margin gains rather than, "oh, we can reuse it even though it wasn't designed for reuse." So we are very confident about that trajectory.

Adaptive sampling is going to be groundbreaking and changing. This is where the DNA in the first seconds, is red and the sequencer is intelligent enough to decide whether that's a region of interest on target or off target. That means 2 days, $300 to $500 of target enrichment disappears. But in addition, because you are looking at the native DNA, you end up seeing methylation. 2026 will be the year of the methanone, the UK Biobank and the Office of Life Sciences with Nanopore are sequencing 50,000 patient samples. That will deliver the first and most comprehensive 5-base genome. That fifth base is scientifically incredibly important.

Now I could go on. The list is endless, but what we've done is targeted 3 to 5 major things, direct RNA with mods, direct DNA with mods, adaptive sampling reuse by design. And all of these major drivers mean that we cannot do all of the things we want to. And that is just a natural transition from being a heavy R company with some D to becoming an appropriate R company but with very much D because of the applied, regulated end markets, which gives us recurring sticky revenues over multiple years and radically change the way people use NGS, these are workflows that only we can enable.

All of those are the things that I'm excited about and will drive change and will be important in our growth trajectory.

It's Sam England from Berenberg. And first one, just around the 2026 revenue guide. Can you give us a sense for the cadence of growth in margins during 2026? I suppose, in particular, is there anything from a revenue or cost perspective that we should be aware of in terms of phasing this year? And then bigger picture, can you give us an update on your progress in biopharma QC? I suppose, are you seeing more interest from potential clients here at the moment? And is there anything you can say around the scope for large contract wins during 2026? I know it's something you talked about sort of over the course of '25.

And then lastly, just to echo everyone else's comments, Congratulations, Gordon, and best of luck for the future.

Tom, so on 2026 revenue cadence, margins and costs. So as like previous years, we're expecting revenues to be broadly 45-55 weighted in terms of first half, second half as we've seen consistently. So it's good to get -- make sure everybody gets the numbers in the right place for that. And then on margins, I think there's a few moving parts to this overall. But actually, we might see it broadly consistent half-on-half in terms of gross. So very much 62% level, I think, we're kind of aiming for, for both first half and second half.

In terms of cost phasing, we have just had the benefit of the restructuring event in November. So you're going to see some benefit in the first half of that as well. So -- but in terms of adjusted EBITDA loss, it will kind of mirror that revenue performance as well. I'm expecting us to show meaningful year-on-year adjusted EBITDA improvement. And well, if people plug through those numbers that we kind of put our guidance today, the market should work out at circa a negative GBP 45 million to GBP 55 million loss for the year as well as adjusted EBITDA, which is, I think, an improvement -- quite meaningful improvement on the year just gone and good against where consensus is at the moment as well.

Sorry, on the second one on biopharma QC, Gordon and I have been extremely frustrated with our inability from a commercial perspective to name companies in the space that are working on the technology, but rest assured, things are happening. So in the mRNA vaccine production space, we have signed a contract in that space. We have another one that we're hoping to sign this year.

In the sterility space, we have another one that we've talked about previously and in the statement today, which is a large European biopharma that is using our technology and centrally for several sites that it manages. And over time, it should expand out to those several sites as well. So -- and we have a pipeline of companies that are evaluating the technology as well. So in terms of confidence levels, biopharma QC is an area where, over time, we're going to see greater penetration of and there's a big market opportunity for us to win there. It's extremely frustrating that we can't kind of talk about the companies directly who they are. But I'm sure those eagle-eyed analysts out there will be able to go work it out over time. Gordon?

I think we put out a fee-for-service contract with Eurofins, who they put our contract, doing sequencing in biopharma QC and looking at sterility. In the first 3 weeks, they picked up a customer contamination that saved several millions and that's just an indication of what is going to happen here. They didn't say who it was. But so just -- you can see the glimpses and is frustrating that we've got a great list of partners that we can't talk about.

Charles Weston from RBC. Two questions, please. First of all, on the guide. You mentioned in the release that 2027 revenue expectations for growth would be sort of similar to 2026. You've mentioned a number of 2026 headwinds that are quite specific to 2026 and in 2027, of course, you'll have a higher base of the nonresearch markets, which are growing faster. So why shouldn't we expect an acceleration in growth in 2027?

And the second question, just on a couple of product-specific points. First of all, what is the timing of the Q line GridION version 2? You said 2026, but when should we expect that? And the PromethION 2 genome flow cell or chemistry, when should we see that?

Perfect. So on the guide, so 2027 could be higher than 2026. So it could be. In terms of what we're guiding to today, we're saying that it's going to be a broadly similar rate to what we see in 2026. And for the market, that's all it needs to achieve adjusted EBITDA breakeven in 2027. So that what we're trying to kind of get here is a prudent set of like market expectations that are out in the market as well.

You're not wrong that we may see the -- sorry, with the growth in the applied markets and the weighting that it has, I can't -- do we see there being something wrong that's going to slow this growth down over time? No, not necessarily, but we're here to kind of give '26 guidance and how people can get to '27 breakeven and keep that in place. We'll update on '27 guidance explicitly when we get to 2027.

On the timing of the GridION version 2, so the second half of this year. And then on the PromethION 2 genomes per flow cell. So actually, in -- with beta testing with customers, we can already demonstrate this. We're just thinking about how we roll this out from a product perspective effectively to our customers, and that's the key piece there. So because it's not just having a flow cell that can do it, it's actually having all of the constituent parts to make it a full product for companies as well.

And we've got to be careful here. I don't want people running away and thinking that all of our business will be able to achieve this because for the PromethION flow cell and that focus in particular, there will be certain customer segments that this is appropriate for. So what's the sample type, what's the read length, what is the customer doing with the product. And that's where this will be used in the first instance, and then we need to do further development work to mean that all customers can benefit from this as well.

Do you want to add anything to that, Gordon?

No, I think it's really important that there's this terrible thing going on with all the other competitors in a race to the bottom for whole genomes. This is not what this is about. We have applications in biopharma and clinical and other application, applied market applications -- of applications in there, where that throughput will be competitive with the incumbents, and that's where we will deploy it.

Everybody does not need that overcapacity. So this is a really good example of how we are becoming much more mature as a business and thinking about target customers and how we can stratify them appropriately. Somebody else somewhere else wants a much lower throughput, but a much higher accuracy. So it's just starting to really segment the markets, and we're at the beginning of that journey and then targeting the right products in our portfolio to meet that.

Congratulations, Gordon. Best of luck in your new endeavors.

And a couple of sort of more specific ones. Just wondering in terms of the MinION recycling decline. Just wondering what was behind that?

So nothing untoward, I think is the key piece. So for the MinION essentially, what we've noticed is that with the customers that use the MinION product because there's a lot of MinION devices out there and they are usually a lower-volume customer. And actually getting those flow cells back from the customer is more difficult than it is with the PromethION. So we kind of have the stockpiles kind of ebb and flow essentially in terms of the amount of recycling that we do.

It is also about what we are focused on internally in terms of manufacturing as well. So we can turn it up and down. So this is in our control. So we can kind of look to increase or decrease recycling rates as appropriate to ensure other factors as well, not just margin, but yes, there's nothing untoward. And we could increase it again. We can decrease it. It just really depends on where we are.

Lovely. And then just as far as inventory is concerned, just wondering about how much more reduction there's a possibility of there?

Yes. So it's a big focus from the Board all the way down to essentially manage our inventory levels. I think it's fair to say that we can still work through. So we reported an GBP 80 million number, but there is clearly provisions on that as well. So the gross number is actually higher. And there is an ability to work through this inventory position over the coming years, particularly with a focus on the MinION flow cell range, whilst maintaining the PromethION where it is.

And there are varying things that go into this. One is yield improvements. The better our yields go up, the less product that we're going to need, it means we can work through the inventory level. The other one is recycling rate, which actually hurts the inventory level. Because the more you can recycle, the less we chew through on an inventory perspective as well. But as we look forward, there is absolutely scope to further improve and reduce that inventory level by tens of millions over time on a gross level.

And as I think we've talked to you before, we've got cash stored up there. We should unlock it.

Absolutely. Well done, Gordon. It's a long time since our first IP to IPO investment.

Miles Dixon from Peel Hunt. Three quick questions, if I can. Firstly, on the restructuring programs. Nick, you already talked about the focus, but forgive me, I don't have the numbers in front of me. It looked like the headcount and the cost was broadly the same in R&D. So does this mean what's really changed? Are we seeing more go towards pre-existing chemistries and products? And is it about less going into proper blue sky research? And relatedly, we saw a really passionate presentation about the proteomics product at the London calling event. What really are you thinking about in terms of the time line to offering from a product like that? And if you can give us a clue on what kind of spend in R&D might go towards something like that, that would be great.

And then finally, on the clinical definition. You clearly have seen a 60% increase in sales into clinical, but what really constitutes clinical because a very significant chunk of that revenue might actually be a clinical research application. I just want to get a bit of a better understanding about that.

Okay. Probably the third one is easiest if I just take that one first, which is, well, how we define clinical and the customer base that's in there, is anybody that's using the technology to provide a diagnosis to patient. Now clearly, we don't have like complete understanding of what everybody is doing with all of our technology at any one time. We're working on that. And once we get that, I think that will be quite interesting for us to be able to segment our marketing approach as well.

So what we have to do is just look at how the customer is paid. So essentially, when we're selling these products to customers that are essentially in the clinical space who make their money from essentially providing diagnosis to patients as well. That's how we have to define it. So there could be a mix at times with like translational work that's in here because there's always going to be a bit of grayness about how they overlap. You're never going to have perfect reporting on this, unfortunately.

Just on that, Nick, because there's diagnosis, but there's also a screening. So just to be very clear, right? The bulk of the revenues come from LDT clear-waved where the physician signs off on the test, not Oxford Nanopore providing a diagnostic tool and workflow.

Sorry. Yes, very good just catch from a legal perspective. And then on the first piece for restructuring. So the -- if you look at the R&D headcount, there's a bit of a mix thing going on here as well as Gordon has talked to. So we've made quite significant investments in things like tech transfer and later-stage development opportunities. Also -- but have to -- the average headcount, bear in mind that we made a restructuring at the beginning of the year and reinvested in higher activities and things like late-stage development, quality manufacturing, which some of which sometimes fall in the R&D piece.

And then towards the end of the year, in November and the head count reductions that happened there, you still see the average benefit come through. So actually, you will see a reduction in head count in R&D next year from an average perspective, but we are reinvesting. So we are going to -- we're not -- it's very important that you guys and the investors take away as well that we're not stopping innovation. We are absolutely investing in the technology to drive future revenue growth as well.

What we're trying to do is just drive that prioritization. So actually, we get better return. And then proteomics?

So proteomics, I mean, we're very excited about the fact that we can map peptides. So true protein sequencing to come. But right now, we have what we call our early open access program request for information, and we've had some really exciting potential applications. So how much of that we can talk about because a lot of them are biopharma customers. But there's a lot of excitement. I mean, all GLP ones are like a bunch of peptides, right? And we can now read them directly at the single molecule level. Nobody else can do that. That's quite transformative.

And we're just finding our feet through that early, early open access program where and who can do some interesting things to start to show where the potential market is for this novel method of leucine protein peptides.

In terms of just on the cost piece as well. So single-digit millions today. But the thing is with all -- this is a platform technology. And so whilst it might be directly single million pounds essentially on this is because the broader technology is already there to essentially build on the back of.

I guess what I was asking is are we really thinking about a 2- to 4-year application? Or is it a 5- to 10-year application for those type of offerings on the platform, if you like?

Pure-play protein sequencing is medium term, so 3 to 5 years. But peptide mapping, there are some revenue opportunities sooner rather than later. We just don't know what they are because we're creating a whole new market space and a whole new sensing element. We've just got to work through that. But we're not getting -- we're getting some brilliant lone wolf academic applications, but we're also getting some big corporate interest -- a lot of corporate interest.

So it will go faster than I think DNA burn down was, but hard to predict right now.

And just reiterating like everybody else, congratulations Gordon.

It's Andrew Whitney from Investec. If I could just follow up on Miles' question. Just thinking about the philosophy of the business as a whole. I think does the slight tweak to near-term spending, does that mean you are staying focused on nuclear basis for longer before you go off into sort of proteins and metabolites, right? Should we be thinking about you into the midterm as a nuclear-based business more than we were before? Or are the time lines on some of those things unchanged? They're not really dependent on near-term spending, right? They're dependent on market opportunity or whatever it is. So should we be thinking nuclear basis for the foreseeable future and put all of our thinking into that? Or is there something else there?

And then my other one was just I think you mentioned some senior recruitment and maybe it's for thinking about when Francis has arrived, but where do you think you need to put people?

I'll answer that one first. As manager this season and not here next season, I'm not about to start telling Francis who he should recruit. That's called Tottenham Hotspur. We can see what a mess that is, right? But in regard to I mentioned volatile organic compounds and small metabolites, we made a decision strategically to do biology or chemistry. We chose biology.

So we've done DNA and 5 years later, we did RNA. Now we've got some really great opportunities in peptide mapping. So that's the beginning of proteomics in a very different way to everybody else, which is mostly mass spectrometry, and then protein sequencing will come. So we haven't made a conscious effort to go after chemistry right now. So we're not distracted by or inhibited by not doing chemistry. We are focused on multiomics and biology. And that's very much been the strategic rationale from day 1.

Can I just add to that as well on that because it speaks to Miles' question. We are doing a lot of thinking in the space about actually what the right product would be for the protein at the end markets we're going at. So we're getting very focused in terms of even what does the features and benefits of this specifically need to do to win. So essentially, we're really -- because again, there's loads of applications you could take this into. So if the peptide sequencing piece or a whole protein sequencing, so the peptide piece that Gordon just spoken to, we're looking now at the applications, what does it need to do to win, make sure the product can do that, make sure it's ready for launch and get a better launch profile when we actually go for it as well. And it's probably Duncan's best place to answer.

Perhaps as the coach, the departing coach can't comment, maybe I'll say a few words. I mean as a Board, I think it's very clear in this business that the quality of talent, the capabilities, particularly in research and development has been obvious to the Board for some time, a real credit to Gordon and others for building that up.

I think real progress over the last couple of years of building out strength in the commercial team, again, my credit to Gordon to bringing real talent into the business. I think the executive team now has a few gaps. So I think Francis has an opportunity to bring in some more talent to grow the business over the next few years. But I think there's a lot of talent in the business, and it's just some gaps at the senior level.

So it's quite encouraging, the opportunities ahead.

Congratulations, Gordon.

We've got a couple of analysts who've dialed in. So I think we've got about another 5 minutes if we could take 1 or 2 of those please, Sergei.

Sure. The first question is from Kyle Mikson from Canaccord.

Congratulations, Gordon, and look forward to speaking with -- meeting with Francis soon. So I have 2 questions. I'll lump into 1 here. First is on device revenue in '26. Just curious if you could kind of parse out shipment expectations for the year as you go through this P2S to P2i conversion and other things and also the pricing tailwinds maybe from the CapEx model that I would have thought have rolled off at this point, but maybe that's providing more of a benefit this year as well?

And the second question I have is about the clinical end market that grew nearly 60% in '25, You're obviously taking steps to continue your strong execution there, but is that becoming a more competitive space with long-read competitors, short-read competitors doing more in that market that maybe got more challenging to grow at that level going forward?

So I'll just take the first one on device revenue in '26 and what we're expecting there. I think you're right that actually, we are going to see continued benefits from the pricing model. It is an important piece to call out that when we changed the pricing model at the beginning of '25, actually in January, if people remember, and it went live in February, we did obviously take our customers a bit off guard here in terms of moving from placing the device for free to essentially charging for the device instead.

And that meant that we actually had a bit of a slowdown in device placements during the entire '25 that from the data we're seeing, it looks if it should reverse in '26. So we may -- I think we will see higher overall device revenue growth again in '26 than consumable pull-through. No doubt we'll get that wrong. But in terms of how we look at it today, that's exactly what we should expect.

And again, from a pricing tailwind benefit, we're still going to see a bit more on the margin here. There's some real fun stuff in deep accounting that I'll take people off-line on in terms of why that could be and why it will benefit margin, but particularly on the larger devices that we should see improving gross margins overall.

On the second piece in clinical end market growth and competition that's kind of coming in there. Clearly, there are new competitors entering the market. I know Gordon will definitely have a view on this as well. But I think it's important to recognize why we are growing even against the legacy conventional technologies that are out there, be them short read or long read. It's the richness of information that you get from Nanopore sequencing, the direct data that you get from looking -- direct DNA, RNA, the methylation, the long read, the structural variations you get all rolled into one that essentially is meaning that we can win today as well as the turnaround time.

So those don't change from the evolving landscape that we can see in front of us today. So no reason why we should necessarily slow down. And again, when I look at the Americas growth rate and I look at the customers that are evaluating or underpinning that growth, there are some big names in the clinical space that are looking at this.

Kyle, I think the competitive landscape is a real positive for Oxford Nanopore. The fact that Illumina has finally agreed long reads are important and they've launched a synthetic long-read play. This is the fourth one, I think. So good luck with that. We have native long, ultra-long, super long, short. So we can give you any relength you want on native DNA.

The fact that methylation has also come to the fore and they are launching a methylation profiler as well, again, is recognition that, that 20,000 publications and the foundational work that we have laid down on multiomics is important. So from our perspective, bring it on, native, direct, all in one read and one price will outperform the market. So we look forward to that landscape, that competitive landscape and how we are superior as a tech.

Thank you. Unfortunately, that's all the time we have for questions today. With this, I'd like to hand the call back over to Gordon for closing remarks.

I think just thank you, everybody, for your time today and over the last couple of years and see you all in 6 months with Francis and Nick leading the charge. Thank you, everyone.

Good afternoon, everyone, and welcome to the 2026 JPMorgan Healthcare Conference. My name is Zain Ebrahim. I'm a European pharma and life sciences analyst here at JPMorgan. It's my great pleasure to welcome the Oxford Nanopore CEO, Gordon Sanghera; as well as the CFO, Nick Keher, who will join Dr. Sanghera for the Q&A. So as a reminder, we'll follow the usual structure, 20 minutes presentation followed by 20 minutes Q&A, where you'll be able to ask questions either in the audience or through the web link. And with that, I'll hand over to Gordon. Thank you for being here.

Thanks, Zain. Afternoon, everybody. Okay. This has been a 20-year journey for me. We set the company up, spun out of Oxford, I was employee #1, often referred to as patient #1, still here, still going. I am coming to the end of my tenure at the end of this quarter. But our goal 20 years ago was to develop a single molecule electronic sensing platform. The company's vision was to enable the analysis of anything by anyone anywhere. So work in progress. We've done some amazing things from having sequencers in space to the marina trench and Antarctic, not Greenland, I don't think, but maybe we shouldn't talk about Greenland today.

Anyway, in that 20 years, we have developed DNA/RNA sequencing. And we are now extending the platform to proteomics as well. I'll talk a little bit about that later. It has the potential as well to measure metabolites and also volatile organic compounds. In 20 years -- well, 10 years ago, we launched products moving forward 10 years. In that time, there have been over 20,000 publications, 20,000 publications showing the multiomic genomics that we provide, which is highly differentiated from everybody else. That decade of innovation in the hands of our customers has enabled us to develop new workflows, new areas of NGS applications that are unique to Nanopore, where we deliver this multiomic workflow.

Our growth over the last 5 years has been 28% CAGR. So consistent strong growth with this highly differentiated platform. 2025 was another -- good growth year. Our estimate revenues are GBP 223 million to GBP 224 million. That is 24% growth on a constant currency basis. In all our regions, we outperformed the market significantly with over 20% growth. To remind you all, 70% of our revenues come from our sequencing consumables, and we have cash or cash equivalents of GBP 300 million, just over GBP 300 million. So we're well capitalized to continue this growth.

This publication growth, that exponential growth there tells you that we still know very little about our human genome 22 years after it was first mapped. And the more we look, and Jay is in the audience today, the more we look, the more we find it's complicated. The previous talk was about xenografts and HLA regions. These are regions that Nanopore can read cleanly. So it will have an impact across many markets. For us, growth came from our four target markets. Now the lifeblood of this company has been life science research tools workers and 67% of our revenues come from that segment. We grew 15%. That's significantly outperforming the market. In our target areas, clinical grew 60%, biopharma 30% and applied industrial 27%. That today represents 1/3 of our revenues. That shift in the last 2 to 3 years has really shown how the platform has matured from an interesting academic life science research translational tool into applied end markets. And that is why we are growing above market conditions with this platform.

This platform is highly differentiated, and I wanted to just remind you all what that means. So we read native DNA directly. We take double-stranded DNA, we singulate it and we pass it through a sensor. The sensor is a nanopore, which is an electronic measurement platform. So there are no fluorescence tags, no amplification. We read the native DNA directly, which means we can see modifications. We also read RNA directly. which was a -- should we do this or not an academic curiosity 5 years ago, it's really empowering our biopharma franchise today. We pair that with rapid real-time live streaming of that DNA/RNA information. And our platforms are affordable and accessible. Those three pillars underpin this highly differentiated sequencer.

The richness of content is all provided in one sequencing run. We can see the common SNPs and SNVs, but we can read at any length, short, hundreds of bases; long, tens of thousands of bases; ultra-long, hundreds of thousands of bases. The longest read so far is 4.5 million. We have an ambition at Nanopore that one of our customers will read end-to-end chromosomes in one contiguous fully loaded, fully omic read. Our RNA is the same. It's read directly. It's not a cDNA copy. So we can see modifications, and these are increasingly important in understanding the underpinning of our biology here. That richness of content, rapid real time and affordable, accessible is driving the growth.

When we look and how we selected the applications and workflows in those applied markets in particular, we did a lot of analysis. It's a 20 billion to 25 billion market that can take advantage of this highly differentiated platform. As we break that down into the segments we're interested in clinical, biopharma, research, that's 13 billion to 14 billion white space opportunities unique to Nanopore. So that's great, but that's a lot of opportunities. That's a lot of workflows you can think about with a finite amount of cash to do that. So key to growing strongly and picking the right workflows is our partnerships, both at the front end for sample extraction, sample collection, extraction, targeted enrichment, if necessary, and the back end, where we have data streaming, secondary analysis tools and territory analysis and customer workflows. All of those come together and they guide us on what to build and how to build in the target market audience that we're looking for to get the growth.

Focusing a little bit on what partnerships and collaborations look like and picking on clinical, which grew 60%. We have partnerships and collaborations in human genetics research, population scale. Methylation is driving our oncology franchises. In rare disease, with the long reads, we can now pick up 150,000 structural variants. We can see all copy numbers. We can see gene fusions. In oncology, I forgot to mention, 97% of the methylome is uncovered by Nanopore sequencing. And remember, that is part of the sequencing run. In infectious disease, rapid real-time insights in acute and critical care are driving adoption.

So I want to spend a few minutes talking about these target areas in research, clinical and biopharma and give you some examples of how we are either taking market share from existing sequencing or creating whole new workflows. So starting with research. And this really is our lifeblood. All the end market applications I'm going to talk about in clinical and biopharma shortly, all started in research. It all begins in research because we are redefining and rewriting what multiomics genomics looks like. So our population scale programs, we've just completed PRECISE, 10,000 genomes in Singapore. We have an active European long-read program, ELRIN. The PRECISE U.K. Biobank program is to sequence 50,000 samples to create the first 5 base genome. So we will publish the methylome of that data set. And I think that will be as significant as the first human genome as we look at that fifth base. All of these large data sets are not just revenue generating for big population scale programs. They create that pillar of innovation that is driven from those data sets. And with the potential of machine learning AI, we can do this at accelerated speeds.

So that leads us into exciting new areas. I'm going to -- 5 years ago, RNA was an academic curiosity. Today, it's driving our biopharma. We're just scratching the surface on understanding RNA. TRNA epitranscriptomics codes for proteins. So understanding mutations in DNA, understanding full-length transcripts directly in RNA and modifications, particularly epitranscriptomics will really allow us to understand how we're coding and the messenger systems and those synthetic biological process to make the proteins, which will be significantly important in drug discovery. So I'm really excited about that, and you'll hear a lot more about tRNA in the next couple of years. But there's so much more that happens in the academic space. This is a really hard slide to build because there were so many interesting things. Next-generation antibiotics, are being developed by sequencing the cell microbiome, getting nature to tell us how we can do something about these difficult pathogens. So all these research opportunities, today's revenue generators in LSRT are tomorrow's big blockbuster applications that are coming through.

In clinical, our most advanced programs are in infectious disease. 4 years ago at Guy’s and St Thomas’' they started looking at respiratory metagenomic scanning of patients in ICUs. That now has turned into a program funded by the U.K. government, the Office of Life Sciences to roll out this respiratory metagenomic workflow in ICU, in acute and critical care settings to 30 hospitals. We're in 7 now. And what we see is 1 in 3 people are on a broad spectrum antibiotic that is not going to do anything for them. Turnaround time is 2 to 3 hours versus 2 to 3 days. We had a delegation of U.K. KOLs come over to Guy’s and St Thomas’' and the Advent Group took away the learnings and set up a pathogen ID workflow and brought it in-house. In their first pilot, they are saving $250,000 per annum. Sequencing is replacing traditional microbiology. That workflow for Advent is going to be rolled out into 20 hospital groups.

Now one other thing that you get from the respiratory metagenomic scanning, Guy’s and St Thomas’' very cleverly partnered with the U.K. HSA and all of the data is uploaded to the HSA. That gives us an early warning on a novel new variant, respiratory variant and almost certainly, the next pandemic will be a respiratory pathogen. So as we roll out beyond the 30 hospitals into the whole of the NHS, we will have an always-on pandemic radar. That comes for free. First COVID genome in the U.K. was discovered in Brighton in ICU in a patient with respiratory infection. So we know that's how we're going to prevent the next pandemic.

On panels, clinical panels, we have an enabling technology, which is adaptive sampling. What is that? That is on sequencer intelligent, real-time targeted enrichment. So we don't have to do an enrichment step prior to putting it on the sequencer. As the DNA goes through the hole at 400 bases per second in the first second or 2, the sequencer will decide whether it's a gene of interest. So when we think about our hereditary cancer panel, there are 258 genes. You literally program them in, agile sample. You don't have to spend time, cost and complexity enriching, and it will read those 258 genes. And because it's full length, it is more -- it closes all the gaps you have as well. We see this as a real accelerator of our clinical applications into the panel space.

Similar story with our partnership with Asuragen. They have 11 challenging medically -- I knew I was going to get that wrong, 11 genes that have a lot of long-read issues, copy number, gene fusion, we can read those cleanly, which gives us a comprehensive panel with one workflow for those 11 genes versus multiple assays that they have to do today to look at carrier screening. So we're excited about unraveling these challenging areas.

Okay. This slide should have a lot of partners on it. But every single one of our biopharma partners said we can't talk about what we're doing with them. What I can tell you is in these three pillars, in discovery, in biomanufacturing QA/QC and ultimately, fee-for-service providers, we have lots of partnerships. It's almost easier to think about who is not on this list, but we can't talk about that. What I can tell you, and if I pick a couple of examples, if you look at mRNA, modifications drive both potency and stability. We take a workflow that takes 6 to 8 orthogonal analytical measurements, and it takes a month to characterize the DNA -- the modified RNA, sorry. We can do that overnight in one run. So that's radically transforming the discovery cycle for individual RNAs is 3 months. A month of it is characterization and testing. At the same time, once we have made that RNA, we can then manufacture it and look at the QA/QC. And ultimately, some of these workflows are bleeding into fee-for-service CRO providers.

The second one I want to talk about is adventitious agent viral testing, so viral contamination. Again, same story. It takes 2 to 3 weeks, and it's 6 to 8 orthogonal measurements. It's not real time. And we can do this in real time, and we have early access customers evaluating. We have customers who are looking to put it into routine testing. And ViruSure has launched the fee-for-service CRO AVA workflow. And one of our service providers, Eurofins did some sterility testing for a biopharma and saved a batch, early warning and saved a $15 million recall. This just shows you the power and the biopharma community are conservative. They're highly regulated, so it takes time, but you can see glimpses and that strong growth at 30% is coming from these groundbreaking unique to Nanopore workflows.

So it's not just about putting a lot of very smart sample-to-answer end-to-end workflows together. We continue to understand that we will create further new novel applications with these multiomic genomes. So our frontier innovations continue to drive sales in the research segment. We are looking at modifications beyond methylation. We're up to 4 on DNA. I talked about adaptive sampling. I think that is going to be a game changer in panels. And our direct RNA is going really well for biopharma, but tRNA is coming next, and that will be exciting as that biology is better understood. We are closer to proteomics, one step closer. We can now measure 20 to 30 peptides in a row. So we believe there's an application there, unique peptide measurement. And our amino acid callers are coming along. So we're making good progress on pure sequencing of proteins as well.

Our product platforms, we launched P2i, which is driving a strong PromethION adoption. It's a 2-channel PromethION. Mk1D, which replaces the MinION classic. If you have one of these, keep it, it will be worth a lot of money one day. We continue to improve outputs and accuracy. We are already the most accurate sequencer on the planet. Yes, we started our journey 10 years ago with something that was barely sufficient with regard to accuracy, but that's the way disruptive technologies come into the marketplace. Think digital photography, think early mobile phones, think Nanopore. Today, we provide the most comprehensive, the most accurate, the most complete genome. But there's more to come. We're at Q30. I'm pretty confident Q50 will be enabled, particularly catalyzed by the machine learning AI models that are coming at us at Lightspeed. That really will be transformative. End-to-end workflows drive these applied market applications, which give us sticky revenues, incredibly important for us.

So looking at the time, 2026, what am I excited about? We're currently typically for the last couple of years on PromethION, our APA has been around 1 human genome per flow cell. We're in early access, 2 genomes per flow cell. The headroom in this platform is 4 genomes per flow cell. That gets you into a couple of hundred dollar fully loaded genome. So that's coming. There's still lots more headroom. End-to-end workflows paired with our regulated platforms are driving the clinical and biopharma markets. And for us, for me, I'm really excited about proteomics. We don't need to go to full protein sequencing. You all know there are a lot of peptide drugs out there. We can now characterize those at the single molecule level. We can see modifications on those. So that's a really exciting space for us as we move into next year.

So in summary, GBP 223 million, GBP 224 million, GBP 0.25 billion. I never thought I'd be standing here saying that. It's like just still pinch me. 24% growth on a constant currency basis. GBP 300 million in the bank to continue our ambitious growth. And we're moving to the next stage. I will be stepping down in March. We're bringing in Francis Van Parys, comes from a bigger company. We've laid the foundations. He was at GE, in Cytiva, so biopharma experience. He was running Radiometer, several billion-dollar company, so clinical experience. We've laid the foundations on our innovation engine in the hands of our customers in our Life Science Research Tools business. We now really want to scale these businesses in the applied markets. So I'm looking forward to handing the baton on. I think we're in good shape, and I'm excited about that. And I want to leave you with this David Barry quote because a lot of people have asked what am I going to do next. And what he said when asked that, I don't know what I'm going to be doing next, but I can assure you, it will not be boring. Thank you.

And now we move into the Q&A portion of the session. So if you would like to ask a question, raise your hand and we can get a mic to you and also you can ask questions through the portal. Maybe I'll start off with a question whilst we wait for the audience. Gordon, maybe let's start there in terms of -- it's been an incredible tenure, 20 years as CEO, launched groundbreaking technology in Nanopore sequencing in terms of pioneering it and then bringing it to market with MinION over a decade ago. And then over the last -- and then bringing Oxford Nanopore as a company publicly about 5 years ago now. So how do you reflect on your journey in terms of your key thoughts and takeaways? And what are you most excited about for the next chapter?

First of all, I must thank JPM, 15 years ago we started coming here to showcase and talk to you guys. It's been brilliant. What I'm excited about, I think we've just laid the foundations of this platform. I would like to see this become as ubiquitous as a telescope or a microscope, and I think it can. And you've seen some of those use cases. I see in less than 5 years, all infectious disease will be run through Nanopore sequencing. And -- it's been a tough 5 years in the public domain, but it feels -- this conference feels like the green shoots of recovery are coming back, and I'm excited about that. The only thing I'll be disappointed about is the share price is going to go up just as I leave. But I'll take some credit for that. So I think we're kind of coming out of the post-COVID hangover. I mean I expected a 2- or 3-year hangover. It's now year 5, and it's still there. But I think I'm optimistic for the sector and for us.

And building on those green shoots, I mean, we've seen that from some of your peers, but you also reported overnight, as you said -- or this morning, U.K. time, as you said, overnight at San Francisco with a strong set of numbers in terms of 3% beat versus consensus and revenues ahead of where you initially set the guide. So can you talk through what were the key areas of strength that drove the outperformance versus the guide and maybe versus consensus in your view?

Do you want to take that, Nick?

Yes, absolutely. So we're very happy with the performance that we delivered in 2025, but I think it's full credit to the team essentially that kind of very focused during the year. So the areas of outperformance, when we set the guide of 20% to 23% is because we were at this conference last year, we just delivered 34% constant currency growth in the second half, and we're very excited about going into the new year. And then clearly, we had quite a few upsets in terms of NIH funding that kind of impacted the whole economy. We saw that as a key risk. So we set out some prudent guidance at the beginning of the year, said 20% to 23%. We've delivered 24%. We think we've taken share in the Americas, in particular in the research space. But we also kind of refocused in terms of those applied market opportunities and delivered quite substantial growth. So as Gordon has talked to, planting those kind of seeds and they've kind of grown up now and the clinical market growing 60%, biopharma 30% with a lot more room to grow. And in applied growing 27%. We're very pleased with how that's kind of performed overall. Clearly, we didn't do as -- we set cautious expectations for the Americas, in particular, the U.S. research space. And if anything, what we saw was actually we took share overall with collectively across a lot of customers, essentially, we just saw more orders, smaller orders essentially going through, which speaks to the value of the platform as well.

And maybe building on that in terms of the NIH exposed segment, is that where you saw the smaller orders? Was that within academic institutes mainly? And how did you see the government channel perform in the year?

Yes. So I mean, it was still a very tough year. Academic institutes, we actually saw about teens growth in the first half, and we're looking at the full detail still now. But for the full year overall in the Americas, when we look at combined with the distributor piece as well, our research and government market actually saw small growth. It's single digit, nearly high single digit against the rest of the market where we think the rest of the peers will be down. We think that just speaks to the fact that we've actually captured share in this market environment. So we're very happy with that. And it's also worth just calling out as well like regionally, we've done very well in the Americas with the second half performance of 30% growth. When we look at EMEA, it delivered very strong growth yet again, very consistent on a 3- and 5-year view. We'll continue to take market share. And in APAC, even in spite of a very large contract rolling off in the second half, we still delivered over 20% constant currency growth. So -- and that's a key thing to take away. This is not just one thing, one market. This is all markets, all product lines, we saw growth.

And you shifted business models as well early last year with the shift to CapEx model versus previously the OpEx model. It seems customer reception to that has been positive. So can you talk through that in terms of customers' reactions and how much of a tailwind that was to growth in '25? And what we should expect in '26?

Yes, absolutely. I mean I don't think we'd necessarily say that this has been over the moon with the change that we put forward, but we have seen adoption happen. So why did we do it? So essentially, we had a business model with the MinION, which clearly mass produce that, get it to as many hands as possible, get people sequencing, make perfect sense. With the large devices where we've got the GPUs inside, placing the instrument with customers, it was the right thing to do. We've now shifted that to actually match what essentially our competitors do in the market of selling the device upfront. It's better for our cash flow. It's more consistent with the customers expect with how they treat with other of our competitors, and it makes communication easier with them as well. So it's greater for transparency, easier by region and whilst we caught people out in terms of timing because of the budget cycles, which is what we saw, as we go into next year, we are looking at the fundamental bottom-up approach to our budgeting, we can see that the volume growth is coming back as well. So we saw a good Q4 for volumes overall for devices. We're looking at that kind of continuing now into next year. And as we think about the fact that we now charge for the device upfront, we think we've actually still got a bit of a tailwind to come. So we talked about the fact in the first half that we delivered about over 500 bps improvement in our gross margin, which I know we'll come to. And for the first half, we said that about 300 to 400 bps of that was related to the kind of pricing benefit that we saw as well. And that is not temporary, that is structural. And then from a cash perspective, we've improved our cash flow by about GBP 20 million a year as well from changing the business model approach, which thankfully, the customers have adopted as well. We're still here. So we didn't get too much of a bad response from people. But clearly, we're very pleased and happy with how the customers have responded to this change.

And beyond the CapEx model in terms of '26, thinking about what the key moving parts are, could you contextualize that for us?

Yes. So when you introduce something like this, clearly, we're not going to make everybody buy a device upfront, particularly if they had a quote order in the system or even -- at that quote stage, sorry. So we've honored everything in there. So if you imagine at the beginning of the year, when we introduced it, we were still seeing the majority of our sales with that kind of OpEx approach or kind of like a lease model. That's essentially dwindled down to the point now that the exit, we're more like 100% CapEx. So as we go into next year, we're going to get the full year cycle benefit now plus the volume aspect as well. So that's the kind of key moving part to it.

Makes sense. And thinking about overall revenue growth in '26 in terms of the key puts and takes, what would you say they are? It sounds like U.K. Biobank could be quite a strong contract for you. NIH funding pressure was maybe one to think about, but any other factors that we should be thinking about?

Yes. So last year, about 13% of our revenue is exposed to the federal funding in the U.S. So that's a big swing factor. China, which is now less than 8% of revenue is another one where continued restrictions on trading has been -- was an issue we even saw this year. And then it's about the U.K. Biobank on the more positive side. That will help with the fact that we've got some other contracts in the EMEA region kind of rolling off. But it's about those new market opportunities that Gordon has talked to, and it's also about the development of the platform. So when we think about throughput of the flow cell and the improvements we've got coming through there, that's just going to open up a bigger opportunity for us overall. We think about adaptive sampling and the adoption that that's seeing. We think about the infectious disease market and importantly, the biopharma market as well, where we have a lot of opportunities coming through. Timing of this is difficult. And I think it's fair to say that this year, we delivered 24% constant currency growth just gone. We were hoping for higher as well. And I think there is part of this where, yes, the market has been difficult and things take longer than expected. And I think we've also got to reflect and we've got things to work on internally as well in terms of execution that could essentially drive the platform even quicker.

And your '27 midterm target, like what -- how are you feeling about that in terms of confidence level on the back of the strong numbers we've just seen?

So the key thing here is 2027, we will deliver EBITDA breakeven. And that's the key message that we've kind of been getting across since day 1 when we put the guide out that we are modeling this business and like driving it towards breakeven, which we think will help from not just opening up more investors to as valuation support, but also takes control of the company going forward so that we can invest in the things we need to. When we set that guidance, we said that we're aiming for over 30% growth for the year. Clearly, things have gone in the way since then in terms of market as well as well as on our side, looking at execution as well. We're working on all of those things, but also gross margin. So we said that we'd be over 62% gross margin in 2027. In the half year just gone, adding back for an underlying write-off that we took, we're at 61%. So we're actually moving quicker on things like gross margin. When we look at the cost base, we've gone through two restructurings this year and essentially to kind of take -- refocus capital, reallocate it towards higher-growth opportunities and really focus what we're doing. So there are lots of moving parts to this that's more nuanced, and it has to be because nobody can control what's going on in the end market environment. And so we actually have to manage this business as we go through. So yes, there's lots of things that can push us over that 30% CAGR rate, but we've got to be cognizant of the fact that some of these things are outside of our control. And so we're going to manage it, and we're still going to deliver that breakeven in 2027.

And one of the elements you called out that is interesting is the share gains that you're seeing in the U.S. in research as well. So what's -- in your view, what's driving those share gains? How do you see the sustainability of those share gains? And...

Let me answer that first. We have a brilliant head of sales.

Got me.

We poached from Illumina about 2 years ago. She's sitting over there. She knows where all the bodies are buried. It's been brilliant. In fact, all of our three regional heads all have 10 years plus experience in their regions. And all three of them have worked together, grew up together at Illumina. So bringing in that leadership group has been phenomenal.

And the competitive positioning has been evolving. It's been evolving for the last few years. This year, we may see a launch from Roche in terms of their SBX technology. So how are you feeling about your competitive positioning and the moat that you've built around Nanopore?

And I see Element are also launching a high-throughput sequencer. So they're all the other guys. So Roche, the only similarity is the sensing element, then you immediately diverge away from each other. They're all a form of sequencing by synthesis. They take that beautiful high-definition, all those [ mods ], all that biology and completely pummel it to a black and white picture. And so you get your SNPs and your SNVs, and that's it. And so they're over there. So they're all the other guys. And we're clearly differentiated, and we wish to remain like that. Paul?

First of all, I wanted to be one amongst the audience to salute your 20 years of oversight of extraordinary innovation and you brought to humanity a technology that just goes on forever. The capabilities that you outlined today are astonishing for someone like me in the life science and diagnostics industry. So thank you.

I wanted to ask either or both of you to elaborate a little bit on the manufacturing ramp. You mentioned in the slide that you've got scale to handle your growth through 5 years. We all in the customer side are really interested in manufacturing, scale, yield, ability to fulfill all those things that come with the success of building the company to this size and with this growth. So if you could elaborate on the state of play of the manufacturing and its ability to meet the demand that would come?

We built -- we opened the factory in 2018, and when we did some projections of greater than 30% growth by the way. And we wanted it to be viable in 2030. And there are factors in there, automation, which also drives margin, but reuse, which has come along much quicker than I thought it would. So we have the scalability for the consumable, which is what we manufacture in-house. So there is plenty of headroom there. But there's also scalability on chip. I talked about we can get to 2 genomes now, 200 gigs. Actually, the capacity is 400. So there's still a lot of progress to come from that. So you're scaling it in 2 dimensions, and that then provides you with -- provides us with the confidence that we have enough there. And one of the disciplines that Francis will bring having been in regulated point-of-care business, radiometer clinical. So that factory is pretty close to being a highly regulated FDA auditable facility as it is today, but we'll be sharpening our pencils in that area as well as we see that ever-increasing growth in the regulated platform market.

I think with that, we've come to the end of the session. Thank you very much, Gordon, for your time and to Nick as well. And congratulations, obviously, on the 20 years and building quite a successful story.

Thank you.

Thank you.

Good morning, everyone, and welcome to the Citi Global Healthcare Conference. My name is Veronika Dubajova, and I run our European Medical Technology Research. And it is with great pleasure that I'm joined today by Nick Keher, CFO of Oxford Nanopore. Nick, thanks for being here.

Thank you very much for inviting us.

No, it's a real pleasure to have you. So I think everyone's old hands at this. Obviously, we are -- this is an entirely fireside chat Q&A. If you have some questions, please raise your hand, and we'll make sure that we get them answered. I will pick on you if there are no questions in the audience. No, just kidding. But help me out, so I'm not the only person asking questions.

But Nick, maybe we can start with some recent news and then kind of go into big picture. But obviously, you recently raised your top line guidance for 2025 to the top end of the 20% to 23% range. Can you maybe help us understand what's driven this upgrade? I know it's a modest upgrade, but what's driven the upgrade? And maybe comment on how the business is progressing now that we're almost at the end of the year.

Yes, absolutely. So as you know, we had a big second half last year. So as we got into the end of the first half of this year, 28% constant currency growth, clearly ahead of expectations, but we knew we still had a lot of wood to chop in the second half. So it wasn't the right time to think about an upgrade anyway when we were at the interims or the July trading update. As we've gone through the year, we've just grown in confidence in terms of what we've seen. And as always, we risk adjust what the year is going to look like. And as we're getting closer, essentially, we're just unrisking what we can kind of see come through.

We've had a good Q3. We've had a good start to Q4. I think geographically, we're getting -- we're encouraged by what we're seeing in the Americas actually. Things are a bit more constructive. I think this may be is not necessarily everything about the NIH funding or anything like that, even though it's maybe a bit more stable. It's more about the opportunities we're seeing, particularly in clinical. And biopharma that are doing -- driving quite a bit of growth. So Americas continue to do well. Asia Pacific, maybe a little bit lighter in the second half, but to be expected given what we've seen for PRECISE being first half contracts and then rolling off. And EMEA continues to do well.

So really, it was a bit about that kind of unrisking of the year as we go through, not one specific contract, not one specific thing, very much actually a broad base of revenue growth that we're seeing come through. So just encouraging really.

Okay. That's really helpful. I was going to ask you, just remind us in terms of the larger contract wins. I know earlier in the year, you sort of thought about look, maybe there is some more stuff coming in the back half of the year. Can you comment on any success that you've seen there that you can share with us at this point?

Yes, absolutely. So the biggest single contract that we have with one customer in time bound is actually the U.K. Biobank contract. Now in the first half of the year, we delivered GBP 1 million of revenue against that, and it's a teens million contract for us. We -- and that has now gone into full production. We're very, again, pleased with what we're seeing actually on the ground in terms of scaling up data. But this will predominantly be a '26 revenue generator for us. So we might get a quarter worth this year, but not that much. It's more about what we're going to see next year.

And to be honest with you, from where I'm sat at the moment, I'm absolutely fine with that, given everything else we're seeing. So actually being a supportive growth driver for '26 is no bad thing. Otherwise, the NIHR contract will likely come to an end this year, so in the U.K. And hopefully, we can see offshoots of that happen thereafter. GEL contract as per normal 2.0 for cancer and the other things we've done with them, those are just continuing. So otherwise, no large one-offs or anything like that besides the PRECISE contract, $3 million in the first half, $3 million in the second half of last year and nothing at the moment.

Okay. Got it. And in terms of any new contract wins, anything that you can share where you've seen successes in the back half of the year?

Yes. So the majority of the things we're looking at and winning at the moment are truly in that kind of clinical space in the U.S., where we are landing new customers, and we're having really good conversations. So they're seeing the need for our technology in the rare disease space, but they're already linking it to where they see gaps with their current infrastructure. So I was with a customer yesterday actually and discussing this live with them where they've clearly got a well-established machine that's working for a clinical lab in a hospital.

They've got established products that are there that do a very good job, but they can't do as much as they'd like or everything. And they're seeing where our devices and our technology can add more. And so essentially, that's where they're looking to integrate us. And so it's very encouraging because we know that this is a land and expand job for us given the kind of value we can bring. Rare disease is that first bolt hold, but methylation and tumor profiling, absolutely something and then also infectious disease, where we genuinely do have an edge against everything else that's there. So you can see where the customers are going with it, that's really encouraging.

Otherwise, large contracts, I mean, biopharma, unfortunately, we're not in a position where we can talk about customer names openly at this moment in time, but we are being used in -- for large vaccine and biologic players where we're either being part of their NDA, so their submission, which means it's a GMP regulated environment and will be tied in or for sterility testing in mRNA vaccine production. So very encouraging. And we might be talking, as we've always said, single million dollars per contract per site per year. But actually, these have the potential to grow 5, 6, 7x from where they are because essentially, we're talking about clinical trial phase for some of these things where it's 1,000 patients when it goes into production, and we start talking about, hopefully, tens of thousands of patients, it can be significantly higher value to us. So those things are happening in the background. Good news in clinical kind of progressing.

In terms of the larger kind of Biobank-type studies that are out there, we've got the U.K. Biobank contract we've talked to. Let's see what happens when the data starts coming out of that, but we think that's going to lead to offshoots of more things like it. And in terms of larger population genomic studies, we've got continuing discussions going on. I think it would be premature to talk about them now, to be honest with you, like nothing in the guide. Hopefully, this is going to be something we can talk to you for a '27 event actually more than anything. So not for the next 12 months.

Okay. You touched upon, obviously, the surprise maybe in terms of the guide has been Americas, but not necessarily NIH. How are you feeling about NIH at this point in time? I think some suggestions from some of your peers and other participants in that market that we're maybe hitting a point of stability, maybe a little bit of optimism heading into 2026. What's your best guess at the moment, what we might see? And just maybe remind us when we think about the midterm guidance, how important is that research U.S. segment to you hitting the midterm guide?

Yes. Thank you. So first of all, put into context, about 13% of our revenue in '24 was from NIH U.S. government funded. So we're a min in this, right? We are really small compared to the larger peers, such as Illumina, and the other tools players that are supplying that vast market. So first of all, I don't think we're the bellwether, unfortunately. So I can't -- I mean, any insight I'm going to give you is going to be very about the micro rather than macro, I'm afraid. Now that said, at the beginning of the year, think about the commercial organization.

We've got quite a few people in the U.S. When we kind of saw what was happening, we knew we had to lower their targets for this year given the kind of macro backdrop that we're seeing. It was the right thing to do. The confidence of the team since then has clearly been building and the conversations they're having with customers are more productive. They are still seeing delays. They're not seeing things dramatically turn around, but it's more of a stabilization.

I think, to your point, that it doesn't today feel like that we're seeing more cuts coming through to how these people think about spending their money. And because at the beginning, if you're a finance director working in one of those institutes, you're going to be thinking about how do you pay your wage bill with an NIH down. I think the bigger thing that people maybe going to think about is actually how about changes to Medicare going to impact actual health care spending overall, particularly as we go into the clinical field more and more. So more constructive.

Okay. That's helpful. And then I'd say the other market that we spent a lot of time debating is China, and lots of things happening there from a kind of big market top-down perspective. Obviously, we've also seen the Illumina export ban lifted. How are you thinking about China as we head into 2026? And maybe just remind us how big of a business it is for you at the moment?

Yes. So it's just shy of 10% of revenue essentially for us as a business. We're still growing in China, but we can't fulfill the demand is the truth. And we can't fulfill the demand because we have restrictions on export controls to China. We had an example very recently. So one of the benefits of our technology is particularly in plasmid sequencing, where because we can give you long-read information, we can give you the full plasmid for, say, $20, $30 even in an outsourced service environment versus if you want to use Sanger, it's considerably more than that. And it's longer, and we believe the data is actually better off our platform.

So in the Sanger space, we've been taking a lot of share. And in China, we had a customer that had multiple, like we're talking 20-plus device order for us, which is the size of us would have been very important. And essentially, that customer went on to the Americas restricted list and essentially, that killed the entire deal. And that is happening still where these things are just completely out of our control. So predicting the future for China is really tricky. We are examining other approaches about how we can act differently in China so that we won't be impacted like this going forward, but these things are going to take time.

So I mean, stepping back, it's a great market. It's high growth and the demand for the product is definitely there, either to replace existing technologies or to be adopted for new areas of science. The issue is we're kind of working in a world where restrictions are quite tight. So as we look forward, I don't see that changing.

Okay. And when you say you're exploring other ways of working in China, would that be through a local partnership...

Things like that. So I mean, we could -- there are different ways you can operate in China to ensure that the restrictions that are in place aren't as onerous. So we are thinking about those, yes. But more to update and these things will take months, months and months.

So this is not something we should expect a press release from you on imminent...

No, no, no, absolutely not. This is more of a -- as we go into next year, hopefully, by the end of the year, we'll be talking about these things a bit more openly.

Okay. Okay. That's helpful. We see the other big change for you this year has been around the pricing model. You've put through some price increases at the outset of the year. You've obviously switched away from a sort of an OpEx lease to a more CapEx model. Can you maybe just contextualize for us sort of how meaningful has pricing been so far this year when it comes to that 20% to 23% growth rate that you're expecting well now, 23? And then just looking into 2026, how should we be thinking about price as a driver or a component of growth?

Yes, absolutely. So the big change this year -- so there are 2 changes, as you say. First of all, on the consumables, we put up pricing to help offset the currency headwinds we are seeing because we're predominantly making sterling and we sell in dollars for 60% of our revenue. So essentially, it was the dollar devaluing, it's quite hurting our margin. Bottom line, here's a stat for you, to the half year, our EBITDA is now GBP 10 million worse off than when I joined just because of the devaluation of the dollar. It's quite a headwind. So we need to start thinking about how we offset this. So we put up our prices in certain markets. So in the U.S., 10% to 14%, depending on the type of product. Rest of world around 5% to help with these currency headwinds that we're seeing.

The bigger change though, as you're saying, it was on our -- what we're thinking about for the larger devices. So as you know, a USP of this platform is the fact that we don't need a large camera inside and we can miniaturize the technology because it's an electrical sensing platform, like the Mk1D device that you've now got.

[indiscernible] has it.

Now with those devices, the -- because it is -- you can miniaturize it, it's relatively cheap to manufacture. We have an ability to disrupt the market that other people don't have. So the company rightly chose a disruptive business model, which is just get as many of these devices out there as possible. Now as the company has evolved and our devices have now got GPUs inside, which from NVIDIA can cost multiple thousands of dollars, we've kind of stepped back and changed our approach. And we've changed that approach because of the customers, do you want to own the device rather than have a lease.

The communications with the customers has always been very tricky because you can't have a lease unless you've got a direct presence in a market, and that meant it was only really about 10 markets we could do it. And we had open transparent pricing. So there's loads of reasons why. But fundamentally, it then lessens the risk to us as a business as well because we were spending the best part of GBP 20 million a year, placing these larger devices with customers. So the P24s, the P2is, the GridIONs, where we've got a GPU inside. We said that when we made these changes, we're kind of moving all these things through. We were going to honor any contract, any pricing or quote that we had in our system with customers for the old model.

But going forward, we were going to charge for the devices upfront. We thought the technology was of age. We've done a lot of pricing analysis, and it suggested that we're still considerably cheaper than all of our competitors. And essentially, it's working. So the percentage of like what we called OpEx to CapEx essentially was maybe depending on device between 90-10 to 70-30. It's now kind of moved considerably where for the [ Proms ] were more the other way as we're exiting the year. So nearly all CapEx now. And it's allowing us to introduce other pricing mechanisms such as reagent rental, which is going to be very important for the clinical market.

So that introduction has happened. We always said it would be a benefit to cash flow. We were a bit more coy on kind of the margin and revenue benefit just because it all depends on volume. It all depends on mix and a load of other factors and what happens if it blows up in our face. Fortunately, though, first half of this year, as we reported in the numbers, we saw a GBP 10 million benefit to our cash flow. And so GBP 20 million a year, I think we created quite a lot of value for the company, actually. On margin, we saw a 525 bps improvement to margin, and we said about 2/3 of that is related to the pricing change going CapEx first. That's structural. That's going to sustain. And then on revenue, probably the same amount you saw from the margin benefit as well.

Now as we look forward, I actually think the benefit we're going to get from pricing is going to be greater next year because we'll have the full year benefit. And as we kind of talked about at the half year, we missed timing of CapEx cycles -- budget cycles for customers. So we went live with this change in January and announced to customers. We made the changes formally in February. Everybody's budget cycle is Q4. So essentially, we missed and then asking people to find an extra $50,000 to $300,000 in their budget is usually quite difficult. We've now gone through that.

And as we kind of go through our own budget process and look about the volume demand where we have names against items for next year from the commercial teams, we see the volumes coming back. So this is for the larger devices, in particular, so the P24, P2i, Grid. So actually, with those 3 things combined, I think we get a bit of a double bubble essentially in terms of we're going to get the volume and we're going to get the full price benefit as well. So I think next year, this could be, again, we're talking about 3%, 4% benefit this year. Full year benefit is to come next year.

So you'd say sort of the 3% to 4% is this year, that's not there for the full year, so it's probably a bit more. And then would you expect that to repeat again next year? Or next year, we're just thinking that the annualization from the 3% to 4% to 5% to 6%, let's say, maybe.

I think we'll get a bit more than 3% to 4%, actually. So just a tad based on the volumes that we're seeing essentially for demand for next year. And the good thing about the kind of the pricing work that we've done and the uplift we've made, this does allow us to be more competitive in the market as well if we need to from a discounting perspective. So it allows the commercial teams to kind of have more freedom. That was another reason why we did it.

Okay. Any pushback you've had from customers? Obviously, you were the low upfront CapEx company. Has that changed the conversations you're having, the type of customers that want to engage with you?

Not really. In fact, this has made it a lot simpler for people. Now don't get me wrong, some people won't like it. And if you go on chat forums, you're going to -- I'm probably going to get strung up at some point for the changes we've gone through. But I think on the whole, people understand why we've done it, which is we kind of -- the technology has evolved, the business has evolved, and we still do the OpEx model for the MinION. And so we still provide the MinION basically for free to people. So like there's still that option there for people who want to get going and be that accessible technology for everybody.

So we're still there. We still run a grant program. I don't know how many of the companies do this, but we run a grant program for low middle-income countries, essentially academics that don't have the money to actually buy the product. We give them the product. So essentially, we are trying to kind of remain true to as much of that as possible. But we also have to make sure we become a sustainable company because this is not an environment where you can kind of continue to lose as we did last year, GBP 117 million of EBITDA and GBP 150 million of cash. So we do -- we need to kind of maneuver this in the right way. So on the whole, customers have been receptive to it. Are there always going to be some outliers? Yes.

And you dodged my first question on the consumable price increases. But thinking about 2026, are we going to get another 10% to 14% in the...

Not that much. Not that much.

Okay. Then what should we be penciling in it?

I think it's reasonable to look at what's going on with currency and assume a portion of that. The problem is if currency moves wildly, you can't do that. But you can try and capture a bit of it to minimize your risk. And the interesting thing that I'm sure anybody could do is if you normalize each of our product prices by territory, you'll see that essentially the Brits are actually -- are paying the most for dollar per gig equivalent.

There's a massive disparity. Our market share in the U.K. is actually quite high. Now that's because we're a U.K. company, no doubt. But also I think people are willing to pay for the value of the technology that we bring. So this whole dollar gig argument absolutely exists, but it gets to a point where people start realizing the extra value that we can bring, essentially people are willing to pay for, and that's what I'm hearing from customers yesterday.

Got it. All right. Let's sort of -- we've discussed all the components, maybe a big picture question. Obviously, you have a midterm guidance out there, which calls for 30% plus sales CAGR. Clearly, this was given at a very different time. It was pre-tariffs. It was pre-China issues, pre-NIH issues. How do you sort of feel about that guide today and your kind of thoughts. And obviously, we are below that number, [ 25 ], meaning you'd have to accelerate growth pretty meaningfully both in '26 and '27. Just your view on how realistic that is and maybe that acceleration being front-end, back-end loaded? And how do we think about it?

Absolutely. And I think it's important to put it into the context as we've kind of talked to many times before that the key guiding light is EBITDA breakeven in '27. So that's the North Star that we're aiming for as a company because once we kind of get into that place, I think that we become more -- absolutely more sustainable as a business. And I think we get a different viewpoint from the investors overall, actually. Now -- and sequencing is a bit of a dirty word still in the U.S. relative -- and life science tools is in a very difficult place as well. So we need to get to that EBITDA breakeven.

And the way we kind of set it stated at the time, so this is old news, is we've got a growth target over 30% CAGR. And if we don't succeed that over 30% in any year, we'll modulate the cost base to make sure that we do achieve EBITDA breakeven in '27. We've been very consistent with that all the way through. Now last year, 23% growth, just a bit over. This year, 23% growth. We always thought there would be lumpiness and a bit of a ramp to this. And we've always been consistent on that because, yes, we expected research and government revenues to be around about teens growth for us.

NIH has not helped with that, but we are -- I mean, first half, we were 22% growth. So it's not like we're not still doing it. Biopharma, clinical and applied, the 3 areas where we believe we can essentially start to see real acceleration, and we still can. Now biopharma, these contracts with a number of companies we're working with take us into a space where we don't see our usual competitors, really important for us. White space opportunities where the size of the market, we believe biopharma QC is a $4 billion opportunity for us, and we are literally at the start. So that could grow incredibly quickly and change the outlook.

Do these things take longer than anybody ever wants? They always do. For clinical, grew over -- sorry, over 50%, just shy of 60% in the first half of this year and over 80% in the U.S. And that's actually going better and quicker than expected. And we have throughput advancements on the flow cell that are coming that essentially should lead us to be as competitive with some of the larger players. And I think at that point, actually the ability for us to take more of the clinical market starts to grow. Now we don't have all of the ecosystem around our product to be able to kind of just plug in and play. But it does allow us to be thought of as actually, yes, the price point may have been an issue. It's no longer an issue.

So some things have to work in lockstep for this to happen, but it's absolutely still possible. It's just -- has the risk increased because of what we've seen in recent years and because China remains so difficult and outside of our control, yes. Now to that extent, though, like the gross margin, if you strip out the write-off that we had in the first half of this year, so the see-through gross margin is over 61%. We said we'd be over 62% in '27. So I think investors and hopefully yourselves as analysts are getting confident that actually, yes, they're probably going to exceed that 62%.

We'll talk about that. I have a question for you about that later.

Perfect. But -- so if the revenue growth -- so essentially, it does come off at all above 30% CAGR, we've got increased margins, and we've demonstrated control on the cost base. We've gone through 2 rifts this year to essentially reduce our cost burden, and we are committed to that EBITDA breakeven in '27. That said, I'd be much rather...

Get through growth.

Get there through growth. That is absolutely the #1 aim, and it's still possible, but there are things that need to happen, and we've got to make sure we deliver on them.

And I guess, conceptually, if you are to get there through growth, is it fair to assume that '27 is the bigger growth year than '26? Or you think both of them should see meaningful growth acceleration versus '25?

So I mean both of them should. But the '27 year is likely going to -- only because of the throughput advancements on the flow cell. So we have live examples where we've landed in rare disease with some of these big players in the U.S. where they essentially are showing -- we're working with them on contracts to take oncology hereditary panels and whatnot, where if we can get to a price point then we'll get the business from the volume perspective. And the volume uplift from getting this type of business is 5 to 10x what we're doing in rare disease.

So like if we -- these throughputs, like if we can get to that 2 genome plus essentially per flow cell, which has always been an aim. But let's wait and see. And I think that starts to drive us into the clinical market even quicker than where we are at the moment. And that is going to be a data-driven piece where this year, it's about delivering it and showing it. '27 will be about then the full execution coming through. But Biopharma coming earlier. So that would be a '26 event.

Yes. Okay. That's helpful. I do want to talk about financials, but maybe before we move on to that, just your thoughts on Roche. Obviously, it's clear that they're not a direct competitor to you per se. But obviously, it is another player in the market. That's going to influence the dynamics a little bit. They are not necessarily going long read, but they're going somewhere between short and long and it's not entirely clear where just yet. How are you thinking about it? How much is it coming up in your conversations with customers at this point in time? To what extent do you see this as posing a threat for you guys either in the shorter term or in the midterm?

So I mean, I think we'd all prefer it if we had less competition than more competition. So that's the obvious point on all of this. Now in terms of what do I think? I think the risk is really around pricing. And I think it's around does this create more friction or noise in the market that leads to delays from customers because there will be a new technology that they may want to evaluate and that might just make people pause, delay ordering by 3, 6 months whilst they kind of reevaluate something or maybe a year because these are big decisions that people have to make because once you start your lab building out something, this is like a -- it's a 5-year commitment, 10-year commitment, millions of dollars invested. People aren't going to take these decisions lightly.

So I think we've got to be aware that that's potentially a threat. Now against us specifically, though, I think this is more of a competitor for other people than it is for us given what their technology does against what ours does. So we -- why are we growing 23% in a year where everybody else, I think, is either declining or single-digit growth? People -- we have to kind of look at those reasons why. And we are able to grow at that level because of the incremental insights, the richer insights we get off a Nanopore, our Nanopore versus other people's types of technology. And that doesn't change with the launch of the Roche platform. They definitely have speed and they definitely have scalability, absolutely. But in terms of the richness of insight on our long-read capability, that's still unique to us. And so direct reading the DNA, direct reading of the RNA. So I don't see the biopharma QC threat as being challenged by this.

And even the clinical conversations that we've been having yesterday, I think this is more of a threat for the established large incumbent and as it -- so our ability to go on top of these competitive products, I think, is still there. So it's -- so I don't want to dismiss at all because I think it could cause delay and pricing is my concern because if the whole genome is $100 or $80 or whatever the number ends up being, if that ends up coming down, I think it brings the entire market down with it because you struggle to be able to keep your premium for a premium product against the price that is kind of coming down. So I think it's going to be interesting to see how it plays out.

Okay. That's helpful. Let me see if there are any questions in the room. And if not, maybe we can talk a little bit about financials. You stole the words out of my mouth on gross margin earlier, which is obviously we're at 61% in the first half of the year on an underlying basis. I think the guidance you gave on the September call, the second half should be similar to maybe slightly lower, but somewhere around there. I guess are you still comfortable with that? Any incremental positives or negatives that we should bear in mind versus where we were in September?

So on gross margin, we guided this year to 59%, just to recap for everybody in the room. We hit 58.2% in the first half. And essentially, that was because of -- we took a GBP 3 billion -- GBP 3.4 million write-down, which is about 300 bps essentially of our gross margin. So if we hadn't had that, we would have been 61.2% to your point. And that was a good see-through margin for how we've achieved. Now going into the second half of this year, we kept to our 59% guidance, and we're still keeping to it. There are puts and takes against this. Currency is always a bit of a niggling one because essentially it's outside of our control. It continues to be a headwind against it. And even though last year, we kind of went through that, there's still a risk.

From where we sit today, still comfortable with the 59%. If it ends up being around that 59%, so 58.5% to 59.5%, that's maybe kind of like more we're thinking, but still keeping with the 59%. I think it's just -- there are always going to be things and swings and roundabouts towards the end of the year that kind of like move it around. And in particular, it's mix. So am I going to stop the salespeople from selling an extra device but is a much lower margin than a flow cell? No. So like if mix is outside of our control, it's outside of our control. But it's hitting the top line is more important, I suppose.

Okay. Got it. So maybe think 58.5%, 59.5%.

That range. Around 59%...

We are in that range, though.

No keep it to 59%.

Okay. Okay. Fundamentally, how are you thinking about gross margins? I guess, if we are at around 61% underlying this year, we're getting very close to the 62%, which is not a target until 2027. Do you think we hit that target sooner potentially already next year? And then I guess, is there a new number that we should have in mind for gross margin as the sort of '27 and beyond target?

So we always said over 62% for 2027, and we will stick with that. It will be over 62%. I -- yes, like the see-through of 61% in spite of the currency headwinds is really impressive, and we've still got the full year benefit from pricing to happen next year. So absolutely, I think there is a chance here that this is to be more constructive over the gross margin. And in particular, because the key driver for how we really moved this originally when we set all of our guidance, we didn't -- we knew pricing was a lever, but we needed to do the work before we can kind of pull it.

The lever that I see essentially continues to be PromethION Flow Cell recycling. So just for everybody's awareness, so the MinION -- we have 2 product lines in reality, the MinION Flow Cell, the PromethION Flow Cell. MinION Flow Cell has been around for over 10 years. We recycle this. And essentially, we get the most expensive part of it back. We strip it down, clean it thoroughly and put it into a new chip, and it can go round and round for multiple times. This actually reduces our cost of goods substantially and means that our gross margin on the MinION is substantially higher than our group gross margin.

On the PromethION, we've just started recycling this. We're nowhere near the same percentage recycling. But if we get even half of the way there, then we'll see the group gross margin rise above that 62% quite comfortably. And that is -- I think that is very likely.

Okay. And the time frame for that, do you think...

So we've started now. These things take time because you need to work through the process because you want to make sure that the product quality is good that goes out to customers. But by '27, we should be thinking about a proportional step -- a big step in terms of percentages of flow cells recycled. And the good thing is the MinION Flow Cell, we send it out to like thousands of customers out there who may be on a MinION and only buying a few of them, they're returning them. It's quite hard to get them all back. The Prom Flow Cells, they're going to very large customers who are buying quite a lot of them. And actually, it's much easier to get them back. So we've got warehouses full of PromethION Flow Cells that returned already to use. And so this actually could be a very big unwind for working capital as well.

And any bottlenecks that you're encountering as you're moving to recycling, anything that's not going to plan?

Well, only on the MinION that we need to think about how we can get these back from a dispersed customer base...

Yes, but on the PromethION...

No, I mean -- sorry, in terms of the process itself, fundamentally, it's the exact same thing we've got to go through. It's a bit trickier because it's a deeper well. So the Nanopore, the Prom essentially is longer. So essentially -- and the -- so that's the part that we've got to kind of figure out for because the chip itself is deeper. And so that -- so how you clean it properly to make sure it hasn't any remnants in it.

Got it. Got it. Obviously, you said earlier, the kind of guiding light for the business is this EBITDA breakeven goal in 2027. How do you, in your seat, think about balancing the growth opportunities that you see, some in the short term, some may be longer out against kind of managing that OpEx? I know you've held very tight reins on the P&L since your arrival. But how are you kind of thinking about it from where you sit today, especially as you think about your 2026 budgeting process?

It's not easy, to be honest, but I'd much rather be in this position. So essentially, we are delivering really strong top line growth. We've got increasing gross margins, and we've got loads of opportunities ahead of us because this technology can go so far and wide. What a great opportunity, right? It's just like just -- but it's still hard because the thing is everybody's got great ideas about what they want to do and how they want to take it forward.

So it's limiting that and being the no person internally is difficult. But the way we've gone about it is a significant process we've gone through this year where -- and you have got time. So first of all, we've looked at the 47 segments that essentially our technology is applicable to. So we've taken it across clinical, applied research, biopharma, QC. And we see 47 independent market opportunities that we've looked at. We've validated this with a third party and speaking to customers in the market as well. Then we've evaluated right, where does our technology actually add real value here? Where are we differentiated against our peers? And then how easy is it for us to actually access this market?

So for instance, clinical, quite difficult to access the market because the IVD regulations are around it or because you actually need to partner more extensively because we're not -- we are not going to have hundreds of market access people trying to get reimbursement, things like that. Biopharma QC, potentially the hurdles are a little bit lower because there's maybe only 50 to 100 customers. There's only 200 companies that make drugs. There's only 50 of them that are going to be applicable for our technology. It's a real sweet spot in terms of actually ease of access. And our technology is offering real value to those customers because we're speeding up development times by months, saving them millions of dollars and making their products better. So it's an easier sell.

So we've got those 47 end market segments. We put them all on a map. We've figured out where we wish we would be targeting and gone down to a smaller segment of that. And then we've thrown over all of the R&D opportunities that we're doing today. And anything that didn't fit those high priority segments, we've had to take a hard decision. But we've gone through a process. So how do we do this? You have to go through a fair and balanced process that involves everybody. And basically, it becomes obvious that we can't do this, we can't do that anymore. That is a great idea, but it's not now. Still is difficult. But we've done it successfully this year. We have stopped a number of programs that have been going on for a long time in the company. and we'll see the benefit of that next year in particular.

Got it. Look, we're almost out of time. So my final question, which I think has kind of been on top of people's minds, I see lots of departures from the senior leadership. We've seen Gordon announced his retirement, Rosemary and Spike have left, Clive left late last year. Anything to read into this? And I guess to what extent this is signaling a change in terms of the culture, priorities, ambitions in the business?

Yes. So I think what -- so Gordon essentially announced he was stepping down as CEO after 20 years. And he says it brilliantly actually when he's ever asked this question about how he cares more about the future of this company than he does about being CEO. And he realizes it's now time to kind of -- the company to evolve and bring on a new CEO, who can help with many of the great things we're looking at. We haven't even got on to the Danaher relationship, the bioMérieux relationship, and the fact that we want to have more relationships like that to actually penetrate markets quicker. So the need for a new CEO to come in and do that was -- it's kind of there now. 20 years is a great innings. The guys have created fire, right? So it's now about how do we make the best product from this fire to be able to kind of penetrate the markets even quicker.

So Clive, announcing he was going last year, left in July. Gordon in August time. It's a natural evolution. And so following that, yes, a number of people have left as well. It is really that kind of evolution of the management team. And people could ask me last year when I first joined, and I think it was something the Board have also opined on as well, we do need to bring in more capability. We're a company that essentially -- the team have done incredible, but there is always a time when a kind of company -- revenues get beyond 200 million or scaling 1,400 people in the company, FTSE 250 listed business from where it was from a founder-led enterprise, like 20 people, it's kind of time to think about adding more capabilities around the team as well. So that's all I'd say.

Nick, that's a great note to end on. Thank you so much for being here. Really appreciate your time.

Thank you very much. Appreciate it.

Thanks very much.