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  "documentTitle": "Tempus AI, Inc. (TEM)",
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  "authorName": "Spruce Point Capital Management",
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  "presentationDate": "2025-05-28 00:00:00",
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  "notes": "Uses a 'smell test' argument to frame the financial provision as suspicious.",
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      "text": "This provision does not pass our smell test. Why should AstraZeneca's commitment to buy TEM's products and services depend at all on TEM's share price rather than true economic demand for its products and services and the perceived value being delivered?",
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      "text": "As previously disclosed, in November 2021, we entered into the MSA with, and issued a warrant to, AstraZeneca. Under the MSA, we agreed, on a non-exclusive basis, to provide AstraZeneca with certain of our products and services, including licensed data, sequencing, clinical trial matching, organoid modeling services, algorithm development, and others. In exchange for certain discounted prices, AstraZeneca has committed to spend a minimum of $220 million on such products and services during the term of the MSA. The term of the MSA will continue through December 31, 2028, unless terminated sooner. The minimum commitment may increase from $220 million to $320 million through December 2028 if the average closing price of our Class A common stock exceeds two times the price of shares of Class A common stock in our initial public offering, or the IPO, for any 30-day trading period following the one-year anniversary of our IPO. Under the warrant, AstraZeneca had the right to purchase up to $100 million in shares of our Class A common stock at an exercise price equal to $37.00 per share, representing the public offering price in our IPO. The warrant was exercisable through December 31, 2026. The warrant was automatically cancelled and terminated for no consideration as AstraZeneca declined to extend its financial commitment before December 31, 2024.",
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      "text": "Notice carefully that the agreement with AstraZeneca has a provision that it may increase its minimum commitment with Tempus if the share price exceeds two times TEM’s IPO price for any 30-day period following the IPO. This provision does not pass our smell test. Why should AstraZeneca’s commitment to buy TEM’s products and services depend at all on TEM’s share price rather than true economic demand for its products and services and the perceived value being delivered? AstraZeneca had a warrant which it forfeited. In theory had the stock price doubled and it exercised the warrant, it would have received a large financial windfall. Recycling gains made from selling TEM’s share price into purchasing more products and services from Tempus appears to be a weak justification for increasing the commitment. We believe that AstraZeneca’s increased financial commitment should be tied to the efficacy and value delivered from the products and services and not be even remotely a function of TEM’s share price.",
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      "text": "As previously disclosed, in November 2021, we entered into the MSA with, and issued a warrant to, AstraZeneca. Under the MSA, we agreed, on a non-exclusive basis, to provide AstraZeneca with certain of our products and services... The minimum commitment may increase from $220 million to $320 million through December 2028 if the average closing price of our Class A common stock exceeds two times the price of shares of Class A common stock in our initial public offering... The warrant was automatically cancelled and terminated for no consideration as AstraZeneca declined to extend its financial commitment before December 31, 2024. — TEM SEC filings",
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      "text": "Source: TEM SEC filings",
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      "text": "Dubious Deal-Making And Financial Commitments From AstraZeneca",
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      "text": "AstraZeneca and Tempus History",
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