Tempus AI, Inc. (NASDAQ:TEM) experienced a 3.5% increase in its share price on Friday following an updated FDA clearance for its xT CDx next-generation sequencing test that expands the label to include a tumor-only indication.
The expanded approval allows the company to offer the xT CDx assay when a matched normal specimen is not available, positioning Tempus as the first laboratory to hold FDA companion diagnostic approval for both tumor-only and tumor-normal comprehensive genomic profiling.
What the approval covers
Tempus xT CDx is a tissue-based molecular profiling assay that analyzes 648 genes across all solid tumor malignancies. The test detects substitutions, insertions and deletions in those genes and reports microsatellite instability status. It uses DNA extracted from formalin-fixed, paraffin-embedded tumor tissue specimens.
As a companion diagnostic, xT CDx is used to identify colorectal cancer patients who may be candidates for targeted therapies Erbitux and Vectibix. Prior to the recent approval, the xT CDx workflow required a matched normal sample obtained from blood or saliva in order to run the assay.
Company strategy and commercial implications
Tempus said the regulatory milestone will enable the company to migrate its entire DNA solid tumor portfolio to FDA-approved assays that are priced within its current ADLT framework. Jim Rogers, Tempus' chief financial officer, characterized the approval as a milestone for both the company's regulatory and reimbursement strategy, and he noted an expectation of an estimated $200 average selling price benefit beginning in 2027 as a result of the expanded clearance.
Clinical flexibility
By permitting tumor-only testing, the expanded label gives clinicians an option when a matched normal specimen is not viable or cannot be obtained. Kate Sasser, Tempus' chief scientific officer, said the company aims to provide clinicians with advanced genomic profiling choices. She emphasized that tumor-normal matched sequencing remains an important approach, but acknowledged that matched samples are not always available and that this approval allows patients to access an FDA-cleared test even when a matched specimen cannot be provided.
Market reaction
The stock movement reflected investor response to the regulatory update. Alongside the market volatility, Tempus outlined how the clearance could shift portions of its solid tumor DNA testing business into FDA-approved price bands under existing ADLT pricing policies, with management pointing to the potential ASP uplift beginning in 2027.
Assay technical details
The xT CDx assay operates on DNA isolated from formalin-fixed, paraffin-embedded tumor tissue and is designed to identify a broad range of genetic alterations across 648 genes, including single-nucleotide substitutions and insertion-deletion events, in addition to assessing microsatellite instability.
Conclusion
The FDA's tumor-only indication for xT CDx expands testing flexibility for clinicians and may carry commercial implications for Tempus' solid tumor DNA portfolio. Management has highlighted the regulatory and reimbursement significance of the clearance and provided an estimate for future pricing benefits commencing in 2027.
Note: The article reports company statements and the FDA clearance as described by Tempus leadership; it reflects the information provided by the company regarding the approval, assay capabilities, and management expectations.