Artificial intelligence (AI) is far from losing its luster with investors judging from two market-shaping events this week: Nvidia (NVDA) continues to hover around $3 trillion in market capitalization while AI-based precision medicine company Tempus AI (TEM) is expected to raise about $400 million through an initial public offering (IPO). And both companies are growing their AI-based businesses in part through products and services that target biopharmas.
Nvidia cracked $3T in market cap—the product of the share price and the number of outstanding shares—on Wednesday, surpassing Apple as Wall Street’s most valuable publicly-traded company. The Silicon Valley microprocessing giant that has expanded its market-leading footprint in AI chips to industries that include the life sciences reached a stratosphere of stock value around the levels of Apple ($3.01 trillion as of Friday) and Microsoft ($3.16 trillion) following a series of announcements, many of them centered on biopharma.
At the COMPUTEX 2024 technology event in Taipei last Sunday, Nvidia disclosed that more than 40 users ranging from drug developers to healthcare providers have adopted the Nvidia-powered Llama 3 large language model developed by Facebook owner Meta. Nvidia announced at COMPUTEX that it was making Llama 3 available for download as an NVIDIA Inference Microservice or NIM. Users of Llama 3—which has been trained and optimized using NVIDIA accelerated computing—can now deploy the NIM’s optimized generative AI models for copilots, chatbots, and other applications for uses ranging from drug discovery and clinical trial optimization to digital assistants and surgical planning.
And last Tuesday at the European Society of Human Genetics (ESHG), Nvidia released an updated version 4.3.1 of its NVIDIA Parabricks scalable genomics analysis software suite, less than three months after coming out with version 4.3 at its NVIDIA GTC 2024 conference.
The latest version of Parabricks includes new functionality for variant calling in somatic data and features such as support for Google’s DeepSomatic in short-read sequencing; and access to upgraded versions of Google’s DeepVariant (version 1.6.1) and Minimap2 (version 2.26). DeepSomatic uses a deep neural network to call somatic variants from tumor-normal sequencing data, while DeepVariant uses a deep neural network to call genetic variants from next-generation DNA sequencing data, and Minimap2 aligns DNA or mRNA sequences against a large reference database.
Also this past week, Nvidia announced a 10-for-1 stock split that took effect Friday. Nvidia shares hardly budged that day, all but plateauing by finishing down 0.09%, from $1,209.98 to $1,208.88 a share. The flat finish was likely because the split didn’t change the total value of investors’ stock: For each share an investor holds, they received 10 new shares priced at 10% of the old share—a price designed to enable smaller investors to snap up Nvidia stock.
Nvidia shares have more than doubled, leaping 151% so far this year from $481.68 on January 2, and more than tripled, catapulting 323% over the past year, from $374.75 on June 7, 2023.
“As we look ahead, we think NVDA [Nvidia] is on pace to become the most valuable company, given the plethora of ways it can monetize AI and our belief that it has the largest addressable market-expansion opportunity across the tech sector,” Angelo Zino, senior equity analyst at CFRA Research, wrote Wednesday in a research note, as reported by Dow Jones.
Zino is more than bullish on Nvidia, having called it “the most important company to our civilization for decades to come” based on its invention of the graphics processing unit (GPU) in 1999. The far-reaching potential of that technology is only now being realized, he said.
“The GPU will clearly on the hardware side of things be the most important invention in all of our lifetimes and really holds the keys to moving toward a more AI-driven world,” Zino said Wednesday on Fox Business.
Tempus fugit
Also on the AI front, Tempus AI is expected this week to launch an IPO that could lift to new heights shares of companies steeped in the technology. The company plans to offer 11.1 million shares to investors at between $35 and $37 per share, according to Amendment No. 1 to its Form S-1 Registration Statement, filed Wednesday with the U.S. Securities and Exchange Commission. That means at the midpoint of that pricing range, $36, Tempus would raise $403.2 million in gross proceeds.
At that midpoint, Tempus estimated, it would receive $361.1 million in net proceeds. That figure would balloon to $416.9 million if underwriters of the company’s IPO exercise in full their 30-day option to purchase up to 1.7 million additional shares. Also at the midpoint, Tempus AI would command a fully diluted market value of $6.2 billion, according to IPO research and money management firm Renaissance Capital.
Headquartered in Chicago, with a lab there and offices in New York and the San Francisco suburb of Redwood Shores, CA, Tempus applies AI in healthcare with the aim of developing laboratory tests that are more accurate, tailored, and personalized to individual patients. Those tests or “Intelligent Diagnostics” are intended to link lab results to a patient’s own clinical data.
“Our novel insight was realizing that all laboratory test results, genomic or otherwise, could be contextualized for a specific patient based upon that patient’s unique characteristics, and technology could therefore guide therapy selection and treatment decisions to allow each patient to progress on their own unique path,” Tempus explained in its IPO filing.
Tempus also explained that a significant portion of its business comes from biotech and pharmaceutical customers.
“Since our inception, our offerings have been used by more than 7,000 physicians and we have worked with over 200 biotech companies, as well as 19 of the 20 largest public pharmaceutical companies based on 2023 revenue, albeit with many we are still at an early stage of adoption,” Tempus disclosed.
Those companies are among the biopharma customers of Tempus’s “data and services” operations, which primarily represent data licensing and clinical trial services that the company provides to pharmaceutical and biotechnology companies. Those operations include commercializing data generated in the lab through the licensing of de-identified datasets to third parties, as well as providing clinical trial support such as matching patients to clinical trials enrolled in its clinical trial network, and related services.
Data and services accounted for roughly 30% of Tempus’s first quarter net revenues with $43.251 million, up 29% from $33.566 million in Q1 2023. For all of last year, data and services represented 32% of total net revenues, generating $168.8 million or about 38% more than the $122.684 million reported for 2022. Interestingly, data and services commanded a larger percentage (38%) of Tempus’s total revenues in 2022,
Biopharmas are also among the customers for Tempus’s larger genomics business, which includes selling lab services to physicians, academic research institutions, and other entities. Genomics made up roughly 70% of Tempus’s Q1 2024 net revenues with $102.569 million, up 25% from $82.058 million a year earlier. For 2023, genomics generated $363.022 million, 83% more than the $197.984 million reported for 2022.
Data and services include a product line focused on AI applications or “Algos” (short for “algorithms”) that garnered less than $1 million for this year’s first quarter and Q1 2023. But AI product line revenues jumped last year to $5.5 million from $1.4 million in 2022, and Tempus expects AI applications to grow into a third significant product line through which the company plans to leverage AI models to help route patients to their optimal therapy, as well as advance research more broadly.
“Our business model allows both Tempus and our customers to unlock value from the data we make available in different ways across our different product lines,” Tempus stated. “We believe these network effects provide a unique advantage to our business, as the compounding value of each data record in our database serves to enhance our competitive advantage. The more data we collect, the smarter our tests become, the more applications we can launch, the more physicians join our network, further growing our database, making our tests smarter for clinicians and our database more valuable for researchers.”
Tempus finished the first quarter of this year with $145.820 million in revenue—up 26% from the $115.624 million of Q1 2023. The company generated $531.822 million last year, a 66% jump from the $320.668 million Tempus racked up in 2022.
Despite its revenue growth, Tempus continues to operate in the red. It finished Q1 with a net loss of $64.743 million, 19% above its $54.377 million net loss in the year-ago quarter. However, the company narrowed its net loss last year compared with 2022, to $214.188 million from $289.811 million.
Caribou shares downgraded on trial delay
Caribou Biosciences (CRBU) shares tumbled 25.5% from $2.88 to $2.15 on June 3, and fell another 9% over the four following days to $1.95 on Friday, after Evercore ISI analyst Liisa Bayko downgraded her firm’s rating on the genome-edited cell therapy developer’s shares from “Outperform” to “In Line.” Bayko also slashed Evercore ISI’s 12-month price target on Caribou shares 77%, from $13 to $3.
The downgrade followed Caribou’s announcement that it expected to launch a pivotal trial of its lead clinical-phase candidate CB-010 in the second half of 2025, upon confirmation of improved outcomes seen in the cohort of patients treated with the therapy manufactured from a donor with partial human leukocyte antigen (HLA) matching (≥4 matching HLA alleles).
That’s a delay from Caribou’s previous timeframe for the start of the trial, which was year-end 2024. The delay reflects the company’s shift toward a partial HLA matching strategy after finding patients who receive partially HLA matched CB-010 showed improved efficacy and durability outcomes that could rival the safety, efficacy, and durability of approved autologous CAR-T cell therapies.
Caribou announced the shift along with updated clinical data from its ongoing Phase I ANTLER trial (NCT04637763). ANTLER evaluated three dose levels of CB-010 (40×106, 80×106, and 120×106 CAR-T cells) in a total of 46 patients. Sixteen patients with multiple subtypes of aggressive relapsed or refractory B cell non-Hodgkin lymphoma (r/r B-NHL) were enrolled in the dose escalation portion of the study, while 30 patients with second-line large B cell lymphoma (2L LBCL) were enrolled in dose expansion.
The updated data, presented during the recent 2024 American Society of Clinical Oncology (ASCO) Annual Meeting, came from a retrospective analysis of all patient data showing that patients who received a dose of CB-010 manufactured from a donor with partial HLA matching demonstrated a median progression-free survival (PFS) of 14.4 months in 13 patients treated with CB-010 with ≥4 HLA matches, compared to 2.8 months for the 33 patients treated with CB-010 with ≤3 HLA matches.
“We next plan to prospectively evaluate this compelling observation by enrolling approximately 20 additional 2L LBCL patients, in either the inpatient or outpatient treatment setting, and we will ensure that they receive a partially matched (≥4 HLA matches) dose of CB-010,” Caribou president and CEO Rachel Haurwitz, PhD, said in a statement.
Haurwitz added that Caribou will also expand the ANTLER trial to patients who have relapsed following any prior CD19-targeted therapy in a proof-of-concept cohort for up to 10 patients. Data from the CD19-relapsed and 2L cohorts is expected in the first half of 2025. Following that data plus confirmation of improved outcomes in additional partially HAL-matched patients, Caribou plans to launch its pivotal Phase III clinical trial of CB-010 in 2L LBCL patients, including patients regardless of HLA type, in the second half of 2025.
CB-010 is an off-the-shelf allogeneic anti-CD19 CAR T cell therapy with a PD-1 knockout, being developed as a treatment for patients with relapsed or refractory B cell non-Hodgkin lymphoma (r/r B-NHL). Caribou says CB-010 is the first allogeneic CAR T cell therapy in the clinic with a PD-1 knockout, a genome-editing strategy designed to improve activity against diseases by limiting premature CAR T cell exhaustion.
CB-010 uses Cas9 CRISPR hybrid RNA-DNA (chRDNA or “Chardonnay”) guides to make three edits: 1) Knocking out the TRAC gene to remove the T-cell receptor, 2) Site-specifically inserting an anti-CD19 CAR into the TRAC gene, and 3) knocking out PD-1.
Bayko wasn’t the only analyst souring on Caribou shares.
Robert Burns, managing director and senior healthcare analyst with H.C. Wainwright & Co., cited the pivotal trial delay on Tuesday in chopping his firm’s 12-month price target on Caribou shares 62.5%, from $24 to $9. However, Burns reiterated Wainwright’s “Buy” rating on the stock.
Caribou’s focus on improving durability and response rates justified continued investment in the company despite the pivotal trial delay, Burns wrote in a research note as reported by TipRanks.
Leaders and laggards
- Structure Therapeutics (GPCR) shares soared 65% over three days this week, from $34.20 to $56.30, after the company announced positive 12-week topline obesity data from its Phase IIa trial (NCT05762471) assessing the small molecule glucagon-like-peptide-1 (GLP-1) receptor agonist GSBR-1290, along with positive topline results from its capsule to tablet PK study of the drug. Both studies achieved their primary and secondary objectives. At 12 weeks, Structure said, GSBR-1290 showed a clinically meaningful and statistically significant placebo-adjusted mean decrease in weight of 6.2% at 12 weeks. Also, 67% of GSBR-1290 treated participants achieved ≥6% weight loss and 33% achieved ≥ 10% weight loss, compared to 0% for placebo. Shares surged Monday to $52.74, then $54.29 Tuesday and $56.30 Wednesday, when the company priced an upsized underwritten public offering of 9,066,972 American depositary shares (ADSs), each representing three ordinary shares, at $52.50 per ADS. Structure said it expected to generate approximately $476 million in aggregate gross proceeds.
- Virax Biolabs Group (VRAX) shares rocketed 86% from $1.06 to $1.97 Thursday on investor concerns about bird flu after the World Health Organization (WHO) confirmed the death of a 59-year-old Mexican man from the H5N2 subtype of avian influenza—the first lab-confirmed human case of infection with that viral strain. The man had no known exposure to infected animals, according to the WHO. Last year, Virax introduced a real-time PCR test kit in the European Union for laboratory use that can detect and differentiate H5, H7, and H9 subtypes of Avian Influenza A Virus.
