Why Tempus AI Skyrocketed This Week
Key Points
Tempus AI stock surged this week after Merck and Moderna published encouraging trial results for a cancer treatment.
A company that Tempus AI is acquiring provided technologies that aided the development of Merck and Moderna's cancer vaccine.
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Tempus AI (NASDAQ: TEM) stock posted massive gains this week despite valuation pressures across the broader market. The healthcare artificial intelligence (AI) specialist's share price climbed 39.5% over its close at the end of the previous week's trading. Meanwhile, the S&P 500's level declined 1.9%, and the Nasdaq Composite's level declined 2.8%.
Tempus's big gains this week stemmed from a press release published by Merck and Moderna that provided an update on a trial for their cancer vaccine. Despite the big valuation pop, Tempus stock is still down roughly 10% over the last year.
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Investors saw promise in Merck and Moderna's latest trial update
On Wednesday, Merck and Moderna published a press release detailing Phase 3 trial data for the use of a jointly developed messenger ribonucleic acid (mRNA) vaccine along with Merck's Keytruda immunotherapy as a cancer treatment. The results showed that patients who took the combined treatment saw significant benefits compared to those who just took Keytruda, with the return and spread of cancer both being diminished among the cohort.
Tempus stock soared following the announcement, largely due to its pending acquisition of Personalis -- the company that developed the genomic tumor-profiling technology that was central to the development of Merck and Moderna's cancer vaccines. Tempus's deal to acquire Personalis is a binding agreement and is expected to close late this year or early in 2027.
Why is this a big deal for Tempus AI?
The encouraging phase 3 trial results released by Merck and Moderna appear to be a strong validation of Personalis's NeXT Platform for genomic tumor profiling. With Personalis set to be integrated into Tempus in the near future, the acquisition is looking like a smart move -- and Tempus could see strong tailwinds thanks to the apparent success of personalized vaccines developed with Personalis's tech. In addition to direct sales benefits, Merck and Moderna's phase 3 cancer vaccine trial results also bode well for the precision medicine and genomic diagnostics technologies that are a big part of Tempus's long-term growth story.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tempus AI. The Motley Fool has a disclosure policy.
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