Cathie Wood-Backed Tempus AI Says Pharma Contracts Solid Despite Biotech Funding Challenges, Tariff Pressures
Tempus AI Inc. (NASDAQ:TEM), a key holding in Cathie Wood's Ark Invest portfolio, reassured investors Tuesday that its major pharmaceutical contracts remain strong despite challenges in biotech funding and global tariff concerns.
What Happened: During the company's first-quarter earnings call, Tempus AI's CFO Jim Rogers addressed concerns about potential risks to the company's total contract value (TCV) due to a tougher macroeconomic environment, including biotech funding slowdowns and tariff uncertainties.
He explained that Tempus works with two main groups: 19 of the top 20 large pharmaceutical companies and a few hundred smaller biotechs.
The CFO acknowledged that the biotech sector has felt the impact of weaker funding over the past two years but stressed that it makes up only a small portion of Tempus's overall business.
"The majority of the TCV and the revenue come from the large pharma companies that have larger R&D budgets," Rogers said. "The relationships with big pharma tend to be multi-year subscriptions that are committed. And so we're delivering the data that they have agreed to license over these terms. We haven't seen a significant impact on the large pharma side."
Interestingly, Rogers added that tighter pharma budgets can benefit Tempus's data business: "When budgets tend to be flat or cut, we actually see a little bit of a benefit… because leveraging the types of data that we license folks allows them to more effectively design their trials or identify targets in a more effective way."
Why It's Important: Tempus AI posted first-quarter revenue of $255.74 million, surpassing expectations of $248.13 million.
The company, which specializes in AI-driven precision medicine and patient care, reported an adjusted loss of 24 cents per share for the quarter, smaller than the anticipated 27-cent loss, as per Benzinga Pro.
Wood's Ark Investment Management holds over 5.5 million shares of Tempus AI, as of Dec. 31, 2024.
Price Action: Tempus AI shares slipped $0.096 in pre-market trading on Wednesday, following a 3.48% decline during Tuesday's regular session.
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