Niche artificial intelligence (AI) company Tempus AI (NASDAQ: TEM) is a stock recently listed on the exchange that is making significant moves. On news that one of these was a strategic investment in a peer, investors bid the company's stock up by almost 22% on Wednesday. That was more than enough of a bounce to crush the S&P 500 index's 0.4% gain on the day.
Scooping up more shares of a peer
Tempus AI revealed in a regulatory filing after market hours Tuesday that it had completed a fresh purchase of Personalis (NASDAQ: PSNL) shares under the terms of an investment agreement. The two companies had announced at the end of last week that they would be making the transactions.
Just over 9.2 million Personalis shares were purchased by Tempus AI by exercising two sets of warrants. The warrants were originally obtained in late 2023 and entitled Tempus AI to buy the common stock of its peer for either $1.50 or $2.50 per share. Exercising the warrants resulted in a total price of slightly more than $18.4 million for the buyer.
Separately, the obviously determined Tempus AI purchased 3.5 million shares outright. For these, it paid $5.07 apiece, for a total of over $17.7 million.
A major owner
The two companies have notable synergy, as Tempus AI focuses on healthcare " intelligence diagnostics ," while Personalis is a biotech that specializes in developing cancer diagnostic tests. In announcing their original strategic collaboration in 2023, Personalis said the aim was for the pair to commercialize the biotech's NeXT Personal Dx diagnostic product.
According to both Tempus AI and Personalis, the former company now owns just over 19% of the latter's outstanding common shares.
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