TEMPUS and GRAIL both became publicly-traded entities this week, TEMPUS through an IPO and GRAIL as a spin-out from Illumina.
TEMPUS (TEM) was priced at $37 earlier this week, and open trading on NASDAQ began at noon Friday. The stock bumped from $37 to $42 before settling at $38 in mid-afternoon. According to news sources, the transaction raised $410M.
One source stated that while Tempus's valuation at $37 would be $6.4B, the firm's highest valuation was in 2022 at $10.2B. Per Pitchbook, Google bought in at $8B in 2020, and Baillie Gifford holds $350M of the stock. (Here).
Baillie Gifford, an investment firm based in Edinborough, has a detailed and interesting online article on how evolutionary fitness can be applied to technology investments. [See also this book.]
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GRAIL (GRALV) has now traded for several days in a narrow band, around $14 to $15.50, with a market cap around $450M. Here.
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In other news, Reuters carries a story about a legal case from Guardant versus Tempus relative to DNA-testing patents.
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AI Corner.
Chat GPT 4 summarizes the investment article noted above.
The essay explores the concept of "fitness landscapes" from evolutionary biology and applies it to business strategy and growth investing. Key points include:
Complex Systems Commonality: Human brains, cities, cells, ecosystems, and business markets are all complex systems with dynamic interactions between underlying components. They exhibit properties like nonlinearity, emergence, punctuated equilibrium, and path dependence.
Fitness Landscapes: Introduced by geneticist Sewall Wright in 1932, fitness landscapes visualize genetic variations and their survival likelihood. Modern adaptations use three-dimensional models to represent these landscapes.
Dancing Fitness Landscapes: Biophysicist Stuart Kauffman and biologist Sönke Johnsen extended the concept by introducing time variability, highlighting that fitness landscapes are not static but continuously shifting due to interaction dynamics.
Adaptive Strategies in Business: Echoing natural evolutionary processes, businesses are encouraged to be restless, use parallel strategies, and balance short and long strategic moves to adapt and thrive in dynamic markets.
Three Horizons of Growth: McKinsey’s model identifies three strategic horizons: extending existing businesses (short jumps), leveraging the core business to create new opportunities (medium jumps), and creating entirely new businesses (long jumps). Duolingo is presented as a case study, successfully spanning all three horizons.
Founder's Edge: The essay suggests that founder-led companies are often more adaptable and better positioned to make bold strategic decisions necessary for long-term success.
Investment Risks: The document reminds investors of the risks associated with mutual funds, including international investing risks like currency rate changes, political uncertainty, and market volatility.
The essay serves as a guide for investors to understand and navigate the complexities of investing in businesses by learning from evolutionary biology and complex system theory, advising a proactive, diversified approach to business strategy and investment. [ / end chat gpt 4 ]
