PSNL and TEM: Pioneering MRD Testing in Colorectal Cancer—A Growth Engine for Precision Oncology

The collaboration between Personalis (PSNL) and Tempus (TEM) has taken a significant leap forward with its expanded focus on minimal residual disease (MRD) testing for colorectal cancer (CRC), unlocking a $1.2 billion addressable market in the U.S. alone. This strategic partnership, now extended through 2029, positions both companies at the forefront of an emerging paradigm shift in cancer management—one where ultra-sensitive liquid biopsy tests like Personalis' NeXT Personal® can detect recurrence earlier, improve survival outcomes, and redefine reimbursement dynamics.

Accelerated Market Penetration: Tempus' Oncologist Reach is the Catalyst

Tempus' exclusive partnership with Personalis gives it unparalleled access to over 50% of U.S. oncologists, a critical advantage in scaling the NeXT Personal® test. This reach is already driving adoption: NeXT Personal® tests surged 52% in Q1 2025, a growth rate that could accelerate further as colorectal cancer is added to the test's indications. With CRC alone affecting over 150,000 new patients annually in the U.S., the expanded collaboration creates a clear path to dominate this high-value segment.

The integration of NeXT Personal® into Tempus' clinical workflow is a masterstroke. By embedding the test into routine post-treatment monitoring for CRC patients, Tempus can leverage its salesforce to position MRD testing as a standard of care. This strategy is supported by compelling clinical data from the VICTORI study, which showed the test's ability to detect CRC recurrence up to 16 months earlier than imaging—a breakthrough that could transform patient management.

Reimbursement Potential: The "Win in MRD" Strategy in Action

Personalis' “Win in MRD” strategy hinges on two pillars: clinical validation and reimbursement. The NeXT Personal® test's tumor-informed design, which uses whole-genome sequencing to detect MRD at 0.01% sensitivity, is now validated in four indications, including CRC. This robust evidence base is critical to convince payers to cover the test, which currently lacks broad reimbursement.

The partnership with Tempus is accelerating this process. By channeling the test through Tempus' network, Personalis gains real-world data from tens of thousands of patients, creating a virtuous cycle of evidence generation. For instance, the recent CALLA study demonstrated the test's predictive power in cervical cancer, a success that can be extrapolated to CRC. Analysts at H.C. Wainwright, who raised their price target to $9.00, note that reimbursement approvals for even one indication could unlock a 300%+ revenue upside.

Biopharma Traction: A New Revenue Stream

Beyond clinical adoption, Tempus' expanded offering of NeXT Personal® to biopharma partners represents a significant growth lever. Pharmaceutical companies are increasingly integrating MRD testing into clinical trials to monitor treatment efficacy in real time—a $200 million+ opportunity by 2028. With Tempus bundling the test with its own AI-driven platform, Personalis gains recurring revenue while reducing its salesforce burden.

This biopharma segment is already paying dividends. Q1 2025 revenue of $20.6 million beat expectations, with institutional clients (likely pharma partners) driving outsized growth. The current ratio of 6.91 suggests ample liquidity to fund further validation studies, reinforcing investor confidence.

Risks and the Path Forward

The partnership isn't without challenges. Regulatory hurdles—such as FDA approval for the NeXT Personal® Dx variant—remain unresolved, and competition from rivals like Grail (a Roche subsidiary) looms. However, Personalis' proprietary algorithms and Tempus' oncologist reach create a defensible moat.

The most critical risk is reimbursement. Without coverage, the test's adoption will stagnate despite its clinical utility. Here, the “Win in MRD” strategy's focus on generating real-world data from Tempus' network is the best counterweight.

Investment Thesis: PSNL's Valuation is Still Undervalued

With a market cap of $625 million and a stock up 360% over the past year, PSNL is no longer a hidden gem. Yet, the valuation still lags peers given the partnership's scale. Key catalysts include:
- 2025-2026: Reimbursement decisions in CRC and breast cancer.
- 2027: Exclusivity expiration (but Tempus' standstill restrictions may delay competition).
- 2030s: Potential for standalone MRD testing as a $5+ billion market.

For investors, the near-term focus should be on reimbursement milestones and biopharma adoption. Longer-term, the 150K+ CRC patients and Tempus' oncologist reach create a compounding growth story. At current levels, PSNL offers a compelling risk/reward with a 2025 price target of $9.00 and upside to $12 if reimbursement accelerates.

Final Call: Buy PSNL for its leadership in MRD testing, but monitor reimbursement progress closely. TEM's 19.3% stake in PSNL also positions it as a beneficiary of this partnership's success, though its broader AI initiatives dilute the focus. For pure-play MRD exposure, PSNL remains the better bet.

This analysis underscores the transformative potential of the PSNL-TEM collaboration. With clinical validation, Tempus' reach, and a focus on reimbursement, this duo is primed to redefine cancer care—and investor returns—in the coming years.