Analyst Sees $600M Sequencing Revenue for Tempus AI in Cancer Vaccine Gold Rush

The market capitalization of Moderna and Merck has risen by more than $50 billion combined, driven by personalized cancer vaccines. That momentum is now revealing a less direct investing lane: the diagnostics work required for every dose.

These vaccines rely on genetic sequencing to pinpoint the mutations each patient's immune system needs to target. That sequencing step could be emerging as a distinct investable opportunity, separate from the vaccines themselves.

Recurring Per-Patient Revenue, Not a One-Time Service

Every personalized cancer vaccine requires a tumor to be sequenced first. Analysts view that step as a recurring revenue stream tied to each patient. It is not a one-off service linked to a single drug launch.

Tempus AI, a genomic-sequencing firm, is one diagnostics company poised to benefit. Tempus has indicated it will act as the sequencing partner if the Moderna-Merck vaccine wins regulatory approval.

Moderna's stock has also gained from investor enthusiasm for its broader drug pipeline, a pipeline-driven rally in its stock that predates the vaccine news.

According to Piper Sandler, the melanoma vaccine could generate at least $50 million in annual sequencing revenue if regulators approve it. BTIG analyst Mark Massaro forecasts that figure could exceed $600 million.

That projection assumes expansion into lung, bladder, and kidney cancers. Therefore, Massaro said, that opportunity is barely reflected in Tempus AI's shares today.

The Bigger Opportunity May Arrive After Treatment

Yet the greater potential might not be the initial sequencing fee. Following treatment, doctors still need to monitor patients for cancer recurrence. That monitoring often relies on a blood test called minimal residual disease (MRD) testing, which detects trace tumor DNA.

Douglas Eby, CEO of Bioaxia, whose firm holds shares in both Tempus and Personalis, sees the sequencing step as a customer-acquisition funnel. He said sequencing brings patients into Tempus's ecosystem, while MRD testing could bring them back for years of monitoring.

MRD testing is seen by investors as a multibillion-dollar opportunity. Meanwhile, Natera currently controls most of that market, with a valuation near $45 billion.

The mRNA cancer-vaccine space remains unproven. Just weeks after Moderna's positive trial results, rival BioNTech faced a setback in a mid-stage colorectal cancer vaccine trial. That reversal shows how quickly sentiment can shift in this sector.

Drugmakers could eventually handle some sequencing in-house. They could also split the work among competing diagnostic labs, leaving diagnostics firms with a smaller slice of the business than investors currently expect.