LONDON (ShareCast) - (Sharecast News) - Shares in Oxford Nanopore Technologies (ONT) plunged on Tuesday after the DNA/RNA sequencing tech firm warned of lower full-year margins due to a change in a purchase agreement to do with the Emirati Genome Program.
The EGP contract, which was originally signed in November 2021 over a three-year period, has been extended to the end of 2026. However, the outstanding purchase commitment under the original agreement has now been removed.

ONT has now signed an agreement to replace and supersede the existing purchase agreement it has with G42 Laboratories in support of the EGP.

Excluding EGP, group gross margins are expected to have been 57% for the 2023 full year, in line with prior guidance. However, as a result of the G42 agreement, they are tipped to fall to between 53% and 55%.

Ahead of its annual results in March, the company said it expects to report Life Science Research Tools revenue of £169m, up 15% on 2022.

Excluding revenues from the EGP and Covid-19 sequencing, which heavily affected 2022 results, revenue growth would have been 39% on a constant currency basis, though underlying growth was held back by a slower-than-expected ramp-up of certain customers in the S3 customer group, it said.

"In addition, there was some slow-down in growth in China and in the Middle East following issuance of the recent US semiconductor trade rule further regulating sales of advanced AI semiconductors. Product development plans within 2024 include updates that are expected to mitigate this headwind," the company explained.

The stock was down 14% at 173p by 1116 GMT.

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