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Tempus Stock Up Following Collaboration Expansion in Oncology R&D

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Tempus AI, Inc (TEM - Free Report) announced the expansion of its collaboration with Takeda Pharmaceutical Company Limited (TAK - Free Report) . The tie-up expansion aims to enhance Takeda’s oncology research and development (R&D) efforts.

The latest announcement of an expanded partnership is expected to significantly boost Tempus’ biological modeling capabilities and solidify its foothold in the niche space.

Likely Trend of TEM Stock Following the News

Following the announcement on Sept. 26, 2024, shares of the company moved nearly 3.8% north to $53.84 till last trading.

Historically, the company has gained a high level of synergies from its partnerships and expertise in AI-enabled advancements in precision medicine. We expect market sentiment on the stock to continue to remain positive around this announcement, too.

Meanwhile, Tempus currently has a market capitalization of $8.31 billion. It has a current ratio of 3.70, higher than the industry’s 2.22. In the last reported quarter, TEM delivered a negative earnings surprise of 6.8%.

Rationale Behind the Expansion of Tempus’ Collaboration

Tempus and Takeda had earlier collaborated that leveraged Tempus’ de-identified multimodal datasets. The latest agreement is expected to expand upon that work.

Per Tempus, its multimodal real-world datasets and biological modeling capabilities will likely be combined by Takeda to advance its pipeline of cancer therapeutics. The pipeline includes antibody-drug conjugates and gamma delta T-cell therapies, among others. Takeda researchers will use Tempus’ analytics platform, Lens, to gain real-time access to de-identified patient records and a suite of AI-enabled tools to accelerate critical insights for its drug development efforts.

It is worth mentioning that initial work has resulted in research that will be presented at an upcoming medical congress.

Additionally, the two companies have also commenced a multi-phase biological modeling project leveraging one of the largest repositories of patient-derived tumor organoids in the world.

Per Tempus’ management, the collaboration is expected to assist in efforts to accelerate Takeda’s growing oncology therapeutic pipeline, which may lead to the next generation of cancer treatments.

Industry Prospects in Favor of TEM

Per a report by Precedence Research, the global cancer therapeutics market is expected to be worth around $393.61 billion by 2032 from $164 billion in 2022, witnessing a CAGR of 9.2%. Factors like the rise in the prevalence of cancer cases and cancer research and an increase in the adoption of gene therapies and personalized medicine are likely to drive the market.

Given the market potential, the latest expanded collaboration is expected to provide a significant boost to Tempus’ business.

Tempus’ Recent Developments

This month, Tempus announced a multi-year collaboration with BioNTech SE. Under the collaboration, Tempus is expected to provide analytical support and computational biology expertise to BioNTech across its comprehensive R&D oncology pipeline.

Last month, Tempus reported its second-quarter 2024 results, wherein it recorded a robust year-over-year uptick in its overall revenues and data licensing revenues. During the quarter, the company expanded into the minimal residual disease market with the launch of both tumor-naïve and tumor-informed assays.

TEM’s Share Price Performance

Shares of the company have gained 61.5% in the past three months compared with the industry’s 17.4% rise and the S&P 500's 4.3% growth.

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Tempus’ Zacks Rank & Stocks to Consider

Currently, TEM carries a Zacks Rank #4 (Sell).

A couple of better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) and Baxter International Inc. (BAX - Free Report) .

DaVita, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 24.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita’s shares have gained 17.7% compared with the industry’s 14.2% rise in the past three months.

Baxter, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 10%. BAX’s earnings surpassed estimates in each of the trailing four quarters, with the average being 3.7%.

Baxter has gained 17.7% compared with the industry’s 12.8% rise in the past three months.

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