Related Party Transactions

9 Months Ended

Sep. 30, 2025

Related Party Transactions [Abstract]

Related Party Transactions

Note 8. Related Party Transactions

The Company determined that Tempus and Merck & Co., Inc. (“Merck”) are related parties because they own more than 10% of the Company's common stock.

Tempus

Tempus acquired its ownership stake in August 2024 by exercising the Tempus Warrants and purchasing additional shares under the Investment Agreement (defined below).

Overview of Tempus Agreement

In November 2023, the Company entered into a Commercialization and Reference Laboratory Agreement (as amended by Amendment No. 1, dated August 16, 2024, Amendment No. 2, dated September 20, 2024, Amendment No. 3, dated December 13, 2024, Amendment No. 4, dated July 8, 2025 and Amendment No. 5, dated September 11, 2025, collectively, the “Tempus Agreement”) with Tempus pursuant to which Tempus markets the Company's NeXT Personal Dx test in the United States. The Company performs tests ordered by patients through Tempus and the Company bills the patients or payors. The Company compensates Tempus for orders obtained and results delivered on a per-test basis. The term of the Tempus Agreement is six years, which may be extended for successive one-year terms. Either party may terminate the Tempus Agreement for convenience upon 30 months' prior written notice.

Under the Tempus Agreement, the Company conducted development activities to analytically validate NeXT Personal Dx in three indications: breast cancer, lung cancer and immuno-oncology monitoring. In consideration of the Company performing such development activities, in addition to the activation and first milestone fees, Tempus agreed to pay the Company a second milestone fee of $6.0 million (the "Market Development Fee"), payable in six equal quarterly installments.

Separately, the parties are performing co-promotion activities, and the Company is compensating Tempus for promotional and commercialization services through the end of 2026.

The Tempus Agreement also granted Tempus access to initial and longitudinal genomic data derived from performance of the tests and Tempus will have the right to use such data. If Tempus licenses such data to a third party and Tempus recognizes revenue from such license, Tempus will pay the Company a percentage of its gross revenues attributable to such license that is in the range of 10% to 20%. Such revenue share shall be payable during the term of the agreement and for 10 years thereafter. There was no revenue share recognized during the three and nine months ended September 30, 2025.

Additionally, as partial consideration of Tempus' obligations to the Company under the Tempus Agreement, the Company issued warrants to Tempus. See "Tempus Warrants" section below.

In July 2025, the Company and Tempus entered into an amendment to the Tempus Agreement pursuant to which the Company authorized Tempus to market NeXT Personal Dx in a fourth indication, colorectal cancer, on the same terms as Tempus’ marketing of the other indications covered by the Tempus Agreement and the parties extended the term of the Tempus Agreement through November 25, 2029.

In addition, the amendment extends the time period to December 31, 2028, during which the Company will not allow any third party (other than an acquiror of the Company or any affiliates of such acquiror) to market NeXT Personal Dx in any of the indications and Tempus will not market another tumor-informed molecular residual disease assay indicated for use in such indications (whether its own or that of a third party), in each case subject to certain exceptions and to the extent they do not expire earlier (the “Exclusivity Period”).

The amendment modified the term of certain customary standstill restrictions agreed to by Tempus in the Tempus Agreement such that they will automatically expire on the earlier of (i) June 4, 2027 and (ii) the expiration or termination of the Exclusivity Period.

In September 2025, the Company and Tempus entered into an amendment to the Tempus Agreement, pursuant to which the existing standstill was amended to allow Tempus to acquire shares of the Company's common stock in open market purchases as long as Tempus's beneficial ownership of the Company's common stock does not exceed 19.99%.

Tempus Warrants

In consideration of Tempus’ obligations to Personalis under the Tempus Agreement, on November 28, 2023, the Company issued to Tempus two warrants to purchase up to 9,218,800 shares of Personalis common stock at an average exercise price of $2.00 per share (the “Tempus Warrants”). In August 2024, concurrently with the execution of the Tempus Investment Agreement (described below), Tempus exercised in full the Tempus Warrants for $18.4 million in cash.

The Tempus Warrants included a provision under which the total number of shares issuable upon settlement were subject to adjustment, which caused the Tempus Warrants to be classified as liability instruments while outstanding and subject to remeasurement at each balance sheet date, with changes in fair value recognized as other income (expense), net in the consolidated statements of operations. Fair values of the warrants were estimated using the Black-Scholes option-pricing model. See Note 5, Fair Value Measurements for discussion of inputs used in the measurements of the Tempus Warrants and the resulting noncash loss recognized in the consolidated statements of operations. During the three and nine months ended September 30, 2024, the Company recognized noncash losses of $26.0 million and $18.3 million, respectively, for the change in fair value of the Tempus Warrants.

Investment Agreement with Tempus

In August 2024, the Company entered into an investment agreement (the "Tempus Investment Agreement") with Tempus under which the Company issued and sold 3,500,000 shares of common stock at a price per share of $5.07 and received $17.7 million of cash from the sale of the shares.

Impact of Tempus Agreement on the Financial Statements

The Market Development Fee for the second milestone is recorded as a liability when received and offset against promotional fees as they are paid by the Company to Tempus. As of September 30, 2025, all of the $6.0 million Market Development Fee for the second milestone has been received.

Amounts of transactions with Tempus during each income statement period presented, along with amounts due from or to Tempus as of each balance sheet date, are as follows (in thousands):

	Income Statement
	Three Months Ended September 30, 2025		Nine Months Ended September 30, 2025
Orders and results delivery fees and net promotional fees — Selling, general and administrative expenses	$	1,208	$	2,718
	Balance Sheet
	September 30, 2025		December 31, 2024
Accrued and other current liabilities:
Unamortized Market Development Fees	$	3,500	$	1,400
Accrued payable to Tempus		1,114		345
Total accrued and other current liabilities	$	4,614	$	1,745
Other long-term liabilities:
Unamortized Market Development Fees	$	1,050	$	1,200
Total other long-term liabilities	$	1,050	$	1,200

Merck Sharp & Dohme LLC

Investment Agreement with Merck

On December 19, 2024, the Company entered into an investment agreement (the "Merck Investment Agreement") with Merck under which the Company issued and sold 14,044,943 shares of common stock at a price per share of $3.56, representing the last reported closing price of the common stock. The Company received $50.0 million of cash from the sale of the shares and incurred $0.3 million of issuance costs directly related to the sale. Pursuant to the terms of the Merck Investment Agreement, the Company agreed to reserve $10.0 million of the proceeds to open an ISO-certified laboratory in a region outside of the United States, with such region mutually agreed upon by the Company and Merck. This cash was not legally restricted under the Merck Investment Agreement and therefore included in cash and cash equivalents as of September 30, 2025 and December 31, 2024.

Before Merck became a related party in December 2024, the Company entered into a Master Service Agreement (the “Master Agreement”), in June 2017, as amended from time to time, with Merck for the performance of DNA and RNA sequencing analysis and data interpretation services, as well as synthesis and/or analysis of chemical compounds, genetic material and related samples for preclinical research purposes. In February 2024, the Company entered into an amendment whereby Merck engaged the Company to provide clinical laboratory services in connection with Merck's clinical studies.

During the three and nine months ended September 30, 2025, the Company invoiced $1.0 million and $3.3 million, respectively, pursuant to the terms of the Master Agreement and recorded as revenue in its consolidated statement of operations. As of each of September 30, 2025 and December 31, 2024, $2.5 million was outstanding as a receivable from Merck and included in accounts receivable in the consolidated balance sheets.