Tempus AI Stock Declines Despite New Partnership with Genialis

Tempus AI, Inc. (TEM - Free Report) has recently shared exciting news about a collaboration with Genialis, an innovative RNA-biomarker company. This multi-year partnership allows Genialis to utilize Tempus’ vast multimodal dataset to create new RNA-based algorithms tailored for various cancers.

The collaboration combines Tempus’ extensive expertise in clinical and molecular data with Genialis’ advanced AI-driven analytics. Together, they are working to create sophisticated RNA-based biomarker algorithms aimed at enhancing the precision of diagnostics and personalizing treatment options in the field of precision medicine.

Analysis of TEM Stock After the Announcement

Despite this promising collaboration, Tempus shares fell by 3.5%, with the stock closing at $37.49. Over the past year, shares of TEM have decreased by 6.9%, while the broader industry has dropped by 10.5%. In contrast, the S&P 500 has seen a significant rise of 25.4% during the same period.

Even with the dip in stock value, the partnership with Genialis is expected to enrich Tempus’ capabilities in precision medicine, especially with the development of AI-driven RNA biomarkers. This could lead to additional partnerships, enhance their diagnostic and treatment platforms, and boost potential revenue streams. As advancements in healthcare take shape, Tempus might gain a stronger market position, paving the way for long-term growth. Investors may begin to recognize these developments, which could positively influence the stock's value over time.

At present, Tempus holds a market capitalization of $6.12 billion. According to the Zacks Consensus Estimate, the estimated revenue for fiscal 2024 stands at $698.5 million, indicating a substantial growth of 117.8% compared to the previous fiscal year.

Details on the Tempus and Genialis Partnership

Accurate biomarkers are crucial in cancer treatment, as they help predict patient responses to therapies, yet their availability remains limited. Genialis has developed an AI-driven model utilizing data from around one million RNA-sequencing samples from a diverse range of patients globally. This advanced molecular model, known as the Genialis TM Supermodel, can create highly accurate biomarker algorithms, offering significant insights to biopharmaceutical companies in drug development.

Through their collaboration, Genialis will use its analytics platform, Lens, to access de-identified patient data and validate these biomarkers. This partnership is set to accelerate the development of Genialis’ clinical algorithms, bringing them closer to real-world application in medical settings. Additionally, Tempus will have opportunities to evaluate and possibly license these algorithms for integration into its xR platform, enhancing its clinical drug development capabilities.

Tempus' multimodal dataset has already played a crucial role in developing Genialis’ krasID, the first commercially available algorithm designed to identify cancer patients who will benefit from KRAS inhibition. Launched at the 6th Annual Targeting-RAS Drug Development Summit in September 2024, this algorithm helps predict patient responses to KRAS-targeted treatments across various cancer types and mutations. It has been independently validated using real-world data provided by Tempus, effectively categorizing patients into groups based on their likelihood of responding to treatment, groups that are currently undergoing testing in real-world studies.

Positive Industry Growth for TEM

According to a Grand View Research report, the global AI in healthcare market was valued at approximately $19.27 billion in 2023 and is projected to expand with a compound annual growth rate (CAGR) of 38.5% from 2024 to 2030.

The increasing adoption of digital technologies in healthcare, driven by the need for cost reductions and improved quality of patient care, plays a significant role in propelling the growth of artificial intelligence in the healthcare sector.

TEM’s Market Position and Other Notable Stocks

Currently, Tempus is assigned a Zacks Rank of #2 (Buy).

Other well-rated stocks in the healthcare sector include Masimo (MASI - Free Report), Accuray (ARAY - Free Report), and Abbott Laboratories (ABT - Free Report).

Masimo holds a Zacks Rank of #2 currently and is anticipated to grow by 11.8% in 2025, with its earnings exceeding estimates consistently over the past quarters, resulting in an average surprise of 17.10%. Its stock has risen by 31.7%, contrasting with a mere 1% decline in its industry over the past six months.

Accuray shares, with a Zacks Rank of #2, are projected to grow substantially by 1200% in 2025, though it has faced some earnings challenges over recent quarters.

Abbott, also ranked #2 by Zacks, has a forecasted earnings growth rate of 10% for 2025 and has shown a consistent ability to exceed earnings expectations.

collaboration, stock, cancer, AI, biomarker