A young British company has made a powerful entry into one of the fastest-moving and most competitive fields of technology – gene sequencing for science and medicine.

Oxford Nanopore, set up in 2005, unveiled on Friday the world’s first miniature DNA sequencer, small enough to fit in the hand.

The company says its technology reads the four biochemical letters of DNA more quickly and less expensively than the established companies in the field.

The corporate leaders in DNA sequencing are two US companies: Illumina, for which Roche of Switzerland launched a $5.7bn hostile bid last month, and Life Technologies, which made a splash with its recent announcement of a machine that could read a whole human genome – 3bn DNA letters – for just $1,000 in less than a day.

What makes Oxford Nanopore’s “strand sequencing” so effective is that it reads the chemical letters on the DNA directly, one by one, as the molecule ratchets through a microscopic nanopore – a round protein structure with a hole in the middle. Each letter is recognised by its distinct electrical signal.

One advantage of the technique is that it can read much longer strands of DNA than other sequencing methods. Another, said Clive Brown, chief technologist of Oxford Nanopore, is that it requires less sample preparation – making it possible for a doctor to read a patient’s DNA directly from a blood sample in the surgery.

Oxford Nanopore said its MINION sequencer, the size of a USB memory stick, would be available commercially this year at a price below $900.

Ewan Birney, senior scientist at the European Bioinformatics Institute and a scientific adviser to the company, commented: “If you line up all the characteristics of Oxford Nanopore against the other technologies, they will become the dominant technology – they win.”

Gordon Sanghera, chief executive of Oxford Nanopore, said his company aims to grow into a large UK technology champion without being acquired by a larger group.

“My management team came into this because we wanted to deliver a strong, independent British technology company,” said Mr Sanghera. “Our shareholder register does not include any venture capital funds that might be looking for a quick exit. We have only long-term investors.”

UK financial institutions have put £74m into Oxford Nanopore over six years. IP Group, which has a 23 per cent stake, has been a shareholder from the start.

“We share the long-term view of Gordon [Sanghera] and his team,” said Alan Aubrey, chief executive of IP Group. “We believe this is the first truly fundamental and disruptive new technology to emerge in DNA sequencing. It is a fantastic company and a great advert for British science.”

A more recent addition to the shareholder base is Invesco Perpetual. “We have come in as patient, long-term investors,” said Neil Woodford, Invesco’s head of investment. “We are prepared to see Oxford Nanopore grow into a large independent company.

“On so many occasions the great technology being developed in our universities has not got funding. Then the technology – and its financial upside – has leaked abroad,” Mr Woodford added.

The UK has made a big contribution to the international development of gene technology ever since the double helix structure of DNA was discovered in Cambridge almost 60 years ago.

Today Illumina depends on technology it acquired when it bought Cambridge-based Solexa in 2007, while Life Technologies uses technology licensed from DNA Electronics, a gene testing company spun out from Imperial College London.

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