SCHEDULE: Tempus AI Boosts Personalis Stake, Easing Standstill Terms

Tempus AI increased its beneficial ownership in Personalis, Inc. to 14.3% and amended their commercial agreement to allow for further open market share acquisitions up to 19.99%.

Summary

• Tempus AI, Inc. and its controlling stockholder Eric Lefkofsky reported increased beneficial ownership in Personalis, Inc.
• On August 16, 2024, Tempus AI exercised warrants to acquire 9,218,800 shares of Personalis common stock for an aggregate price of $18,437,600.
• Concurrently, Tempus AI purchased an additional 3,500,000 shares of Personalis common stock from the Issuer at $5.07 per share, totaling $17,745,000.
• The total investment for these transactions was $36,182,600, funded from Tempus AI's working capital.
• Tempus AI now beneficially owns 12,718,800 shares, representing 14.3% of Personalis' outstanding common stock.
• Eric Lefkofsky, as Tempus AI's controlling stockholder, is deemed to beneficially own these shares, plus an additional 150,000 shares he holds directly, bringing his total beneficial ownership to 12,868,800 shares or 14.5%.
• On September 11, 2025, Personalis and Tempus AI entered into Amendment No. 5 to their Commercialization and Reference Laboratory Agreement.
• This amendment modifies the existing standstill provision, allowing Tempus AI to acquire additional shares of Personalis common stock through open market purchases.
• These open market purchases are permitted as long as Tempus AI and its affiliates do not beneficially own more than 19.99% of the outstanding common stock and Tempus AI is not in breach of the standstill agreement's Section 1(e).

Sentiment

Score: 7

Explanation: The filing indicates a strengthening of the strategic partnership between Tempus AI and Personalis, with Tempus AI increasing its stake and gaining more flexibility for future investments. This suggests positive long-term prospects for the collaboration, although the standstill still imposes some limitations.

Positives

• Tempus AI's increased stake demonstrates continued strategic interest and confidence in Personalis.
• The amendment to the standstill agreement provides Tempus AI with greater flexibility to increase its ownership in Personalis through open market purchases, signaling potential for further investment.
• The substantial investment of $36,182,600 by Tempus AI into Personalis strengthens their commercial partnership.

Negatives

• The 19.99% beneficial ownership cap for open market purchases still limits Tempus AI's ability to fully acquire or control Personalis without further negotiation or waiver.
• The standstill agreement, even with the amendment, continues to restrict Tempus AI from certain actions like tender offers, proxy solicitations, or seeking board control, which could limit Personalis' strategic options or potential for a full takeover bid from Tempus AI.

Risks

• Integration Risk: The success of the commercialization agreement and Tempus AI's investment depends on effective collaboration and integration between the two companies.
• Market Volatility: The value of Tempus AI's investment in Personalis is subject to fluctuations in Personalis' stock price.
• Regulatory Scrutiny: Any further significant increase in ownership by Tempus AI could attract increased regulatory attention.
• Strategic Alignment: Potential for misalignment in strategic objectives between a significant shareholder (Tempus AI) and Personalis' management or other shareholders.

Future Outlook

The amendment to the standstill agreement indicates Tempus AI's potential interest in further increasing its stake in Personalis through open market purchases, up to a beneficial ownership of 19.99%. This suggests a continued strategic alignment and potential for deeper collaboration or influence, though a full takeover is still restricted by the standstill.

Management Comments

• Tempus AI funded the exercise of the Warrants and the purchase of the shares of Common Stock using funds from its working capital.

Industry Context

This transaction occurs within the rapidly evolving genomics and healthcare technology sectors. Strategic investments and partnerships are common as companies seek to leverage complementary technologies and expand market reach. Tempus AI, a leader in AI-powered precision medicine, increasing its stake in Personalis, a company focused on advanced genomic sequencing, suggests a deepening of their existing commercial relationship and a belief in the synergistic potential of their offerings in the precision oncology and diagnostics space. The relaxation of the standstill could indicate a desire for greater influence or a more flexible investment strategy in a key partner.

Comparison to Industry Standards

• Strategic investments and partnerships, often accompanied by standstill agreements, are common in the biotech and health tech sectors, similar to collaborations seen between large pharmaceutical companies and smaller innovative biotechs (e.g., Roche's investments in Genentech, or various partnerships in the CRISPR gene-editing space).
• The 19.99% ownership cap is a common threshold in such agreements, often designed to avoid triggering certain regulatory requirements (like HSR filings) or to maintain the target company's independence while allowing for significant influence. For example, many strategic investors will cap their ownership below 20% to avoid equity method accounting or to signal a partnership rather than an immediate takeover intent.
• The use of warrants and direct share purchases is a standard mechanism for strategic investors to build a significant stake, providing capital to the target company while also securing future upside.

Corporate Governance

Related Party Transactions

• The share acquisition and the amendment to the Commercialization and Reference Laboratory Agreement are transactions between Tempus AI, Inc. and Personalis, Inc., which are related parties due to Tempus AI's significant ownership stake and existing commercial agreement.

Stakeholder Impact

• Shareholders (Personalis): Increased confidence from a strategic investor (Tempus AI) could be viewed positively, potentially stabilizing or boosting share price. The relaxation of the standstill might be seen as a step towards deeper integration or a potential future acquisition, but the 19.99% cap limits immediate takeover speculation.
• Management (Personalis): The amendment provides clarity on Tempus AI's investment strategy and allows for continued collaboration within defined parameters.
• Employees (Personalis): A strengthened partnership could lead to more stable operations and potential growth opportunities.
• Customers (Personalis & Tempus AI): Deeper collaboration could lead to enhanced product offerings and integrated solutions in genomic sequencing and precision medicine.

Next Steps

• Tempus AI may continue to acquire additional shares of Personalis common stock in open market purchases, subject to the 19.99% beneficial ownership cap.
• Continued collaboration under the Commercialization and Reference Laboratory Agreement between Personalis and Tempus AI.

Key Dates

Recommendation

The filing indicates a strengthening of a strategic partnership and a significant investment by Tempus AI into Personalis. While the increased stake and flexibility for further open market purchases are positive signals, the existing standstill agreement, even with its amendment, still caps Tempus AI's beneficial ownership at 19.99% and restricts actions like a full takeover bid or proxy contest. This suggests a continued partnership rather than an imminent acquisition. Investors should hold to observe the execution of the commercial agreement and any further strategic developments, as the current information points to a stable, but not immediately transformative, relationship.

Keywords

Personalis Inc, Tempus AI Inc, Schedule 13D, Common Stock, Beneficial Ownership, Investment Agreement, Warrants, Commercialization Agreement, Standstill Agreement, Share Acquisition, Biotechnology, Genomics, Healthcare Technology