Tempus AI shares jump 8% in strong Nasdaq debut as US IPO market thaws

Illustration shows Tempus logo

(Reuters) -Shares of SoftBank Group-backed Tempus AI rose 8.1% in their debut on the Nasdaq on Friday, giving the artificial intelligence-based genetic testing company a valuation of $6.6 billion.

The company is among the several AI-focused firms that have garnered investors' interest, thanks to the popularity of OpenAI's viral chatbot ChatGPT.

The stock opened at $40 apiece, compared with the initial public offering (IPO) price of $37.

The strong debut bodes well for other companies looking to go public, as the U.S. capital market rebounds in 2024 after a dry spell that lasted nearly two years.

Other high-profile listings this year include Chinese EV firm Zeekr and social media platform Reddit, which fared well in their debuts too.

Tempus AI was founded in 2015, about a year after CEO Eric Lefkofsky found out that his wife had been diagnosed with breast cancer.

Tempus sells genomics diagnostics tests across oncology, neuropsychiatry, radiology and cardiology to clinicians and hospital systems.

The company boasts of several big investors including Alphabet's Google, investment managers Franklin Templeton and T Rowe Price, according to PitchBook.

Tempus' customers include major drugmakers such as AstraZeneca and GSK. It competes with Swiss drugmaker Roche's genomic profiling unit Foundation Medicine and cancer test maker Guardant Health.

Separately, Guardant had sued Tempus AI on Wednesday for allegedly infringing five patents related to DNA-based cancer testing.

Chicago, Illinois-based Tempus has raised $410.7 million in its IPO, after it priced its shares at the higher end of its targeted range of $35 to $37.

The offering was underwritten by a cartel of top Wall Street names such as Morgan Stanley, J.P. Morgan and Bank of America Securities, among others.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Shilpi Majumdar)