Cambridge University has pocketed millions of pounds on a seed investment it made seven years ago in a company that makes “test tube patients” for drug research.

The university made £3.17m, more than 30 times its original investment, after selling its stake in Horizon Discovery, which grows batches of cells containing tailored DNA.

It was one of the original investors in Horizon, which was founded in 2007, and sold its shareholding as part of a £68.6m fundraising on London’s Aim that valued the company at £120.5m.

“It was one of our bigger returns, and definitely in the top five,” said a spokeswoman for Cambridge Enterprise, the university’s commercial arm. The University’s biggest ever return, at 92 times its investment, was for BlueGnome, a company that runs genetic tests to improve the success rates for IVF.

The funds will go into further seed investments for other start-ups based in the city of Cambridge.

Cambridge University has pocketed millions of pounds on a seed investment it made seven years ago in a company that makes “test tube patients” for drug research.

The university made £3.17m, more than 30 times its original investment, after selling its stake in Horizon Discovery, which grows batches of cells containing tailored DNA.

It was one of the original investors in Horizon, which was founded in 2007, and sold its shareholding as part of a £68.6m fundraising on London’s Aim that valued the company at £120.5m.

“It was one of our bigger returns, and definitely in the top five,” said a spokeswoman for Cambridge Enterprise, the university’s commercial arm. The University’s biggest ever return, at 92 times its investment, was for BlueGnome, a company that runs genetic tests to improve the success rates for IVF.

The funds will go into further seed investments for other start-ups based in the city of Cambridge.

Horizon’s float is the biggest ever for a company from Cambridge’s biotech cluster, and, with £40m raised in new shares issued, well above the company’s original target of £25m.

The bonanza fundraising comes hot on the heels of the £581m float of Circassia, an Oxford-based drug maker which is developing a new cat allergy treatment.

Horizon will use the funds to embark on an expansion plan covering the company’s research and development, marketing, and sales activities.

Darrin Disley, chief executive, said he believed the strong interest in Horizon’s shares reflected a “strong understanding of the value of our technology platform”.

Odey Asset Management, the $12.2bn (£7.3bn) hedge fund run by Crispin Odey, is among the major shareholders in Horizon. It has bought a 3.3pc stake in the Cambridge-based company, valuing its holding at nearly £4m. The single biggest shareholder is Dr Jonathan Milner, chief executive of fellow Cambridge cluster company Abcam, who was one of the original investors in Horizon when it was founded in 2007. He holds a 14.5pc stake in the company.

Horizon is well placed to benefit from a surge in research into personalised medicines, which target patient groups with specific genetic characteristics, especially in cancer.

It makes money by supplying genetically tailored cells to drug developers, who either pay an annual licence fee or buy batches for single use.

It also provides contract research services and has struck deals with some drug makers, including AstraZeneca, to receive milestone and royalty payments on revenues made from medicines developed using its technology.

Horizon bought the gene editing technology central to the business in mid-2007 from the University of Washington in the US for “virtually nothing, the small tens of thousands”, according to Mr Disley. As the technology was already being used in a large number of academic laboratories, it had a ready-made client base and started generating revenues straight away.

Mr Disley has said Horizon’s growth, which averaged an annual 126pc between 2007 and 2013, proved that “you can build world class life science companies in the UK”.