Taking a slice of good old British intellectual flair isn’t as easy as it used to be. Our university research departments are excellent at producing and patenting new technologies and ideas, but they are increasingly funded privately, or snapped up by companies overseas before UK investors can take a stake.
Recently buyers have come calling for privately held Oxford Ionics, a quantum computing start-up from Oxford University, raising the possibility that other university spin-offs might be next.
But while most of these businesses are private, Britain’s boffins have spun out companies in the past that are listed on the stock market.
Here are three to consider:
Oxford Nanopore
Spun out of Oxford University, Nanopore’s sensing technology uses tiny holes (or pores) and electric current to read the sequence of DNA and RNA, quickly and effectively
The company listed in 2021 with much fanfare, and shares surged from 425p to over 570p on the first morning of trading. Today, despite the company’s annual Clash-inspired conference London Calling in late May, the shares sit on just £1.50. An uninspiring performance that is scarcely going to Rock the Casbah.
However, fans of the stock reckon it is chronically underpriced. Douglas Brodie, who holds it in the Edinburgh Worldwide Investment Trust, has described it as ‘among the most misunderstood businesses that we own’ and lauds its ‘exquisitely sensitive technology’.
Lift-off: Katy Perry flew aboard the Blue Origin rocket, above
Nanopore technology already has broad uses, from academic research through to vaccine manufacture, but if it can be used to read proteins as well as DNA then the opportunity for the business could be huge.
Dr Lakmal Jayasinghe, the group’s chief scientific officer, has said this is the ‘next frontier’ for the business and indicated there may be an early access programme for the company’s protein detection tools later in 2025.
The company is not yet profitable and has previously said it hopes to break even in 2027, as it continues to move into providing its technology for more commercial applications.
Nanopore’s shares have suffered from the general decline in the price of life sciences businesses since Covid, but also from the vacillations of the Trump administration over National Institutes of Health grant funding.
That uncertainty isn’t going to go away any time soon, but there are a couple of things that might move the share price. The first is further announcements on the protein front, and the rather more obvious second is an approach from a US company eager to get its hands on the Nanopore technology.
It’s a common story right now, less London Calling and more London Leaving, so with either prospect in sight, now might be a good time to snap up some shares.
Traded on: Main market Ticker: ONT
Filtronic
If you’re looking for the granddaddy of university spinouts, look no further than Filtronic.
The business was developed at Leeds University in 1977 and listed in 1994.
That doesn’t make it one for fusty academics though. The company’s advanced radio frequency technology, originally developed for telecoms, is now used for satellite communications, defence and space. It has one big customer – Elon Musk’s Space X, though insiders insist it is trying to reduce its reliance on this one business.
Space is big business, as coverage of Katy Perry’s orbital tourism aboard Blue Origin showed, but it’s hard to find businesses in this sector that make a profit.
Filtronic is both profitable and AIM-listed, which means that if you hold the shares for more than two years your beneficiaries will pay only half the inheritance tax due on them.
The company also works in the world’s biggest growth industry at present – defence. This gives investors a double reason to give Filtronic a chance.
New CEO Nat Edington has made a stratospheric start since joining last May. The company has turnover of £50million, but he wants to push it to £100million. The company has been firing on all cylinders, with a huge Space X order in May and other smaller contracts announced with defence business Leonardo, Airbus and the European Space Agency.
The share price has also taken off, though it is still far away from the £20 highs it reached 25 years ago.
At £1.66 this week, shares are up an impressive 127 per cent in the past 12 months.
Excitement around Space X is one reason for this meteoric rise, but the possibility that someone else might pick the stock up is another. It’s worth a look.
Traded on: AIM Ticker: FTC
Ceres Power
Spun out from Imperial College in 2001, fuel cell business Ceres Power listed on AIM on 2003 before moving to the main stock market two years ago.
Shareholders have had a bumpy ride since.
The company makes solid fuel cells that convert fuel into electricity in an efficient manner, but the technology now also converts electricity to split water into hydrogen and oxygen.
The hydrogen producing process is more efficient than many competitor processes and is a serious contender for making low-cost greener fuel – a holy grail for many companies and countries.
Meanwhile, the fuel cells are used in data centres to provide portable power supplies.
The hydrogen process is likely to bring more excitement in the long term, with the fuel cells more useful now in powering a data centre boom. So, Ceres gives the possibility of jam today and tomorrow.
Ceres licenses its technology to others, rather than manufacturing itself, which is a good strategy until you lose a major partner and your shares react accordingly.
That’s what happened earlier this year when Bosch said it was no longer working with Ceres and would also sell a 17 per cent stake in the business.
Analysts cut their target prices savagely, with Investec pulling back from a 600p price target to 145p, and Panmure Liberum back from 700p to 150p.
The share price now, at 101p, is below all these targets though, and outside of the Bosch disappointment, the Ceres order book looks as solid as its fuel cells.
Clients include Delta in Taiwan, Denso in Japan and Thermax in India, while the company’s collaboration with Shell, in India, produced its first hydrogen in May.
The company is still loss making, though royalty revenue should come soon from several businesses which should tip the balance back, and there’s no imminent danger of it running out of steam.
Analyst Alex O’Hanlon, at Panmure Liberum, reckons that the company will still have £80million of cash at its financial year end.
Potential new investors must decide whether the share price reaction around Bosch was overdone, and if they are willing to wait and see whether the company’s other strategies will come good.
The company has already had something of a turnaround in the past few weeks, and the shares are up 16 per cent this month.
If more positive newsflow comes out in the coming weeks, those who buy in now may also have their portfolio refuelled. Buy.
Traded on: Main market Ticker: CWR
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
InvestEngine
InvestEngine
Account and trading fee-free ETF investing
Trading 212
Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
