PSNL looks like an opportunity with limited downside yet substantial upside if the Tempus merger falls through

TLDR: PSNL has very limited downside risk (low single digit %) due to an earlier merger agreement with Tempus and yet potentially triple digit % return if the merger deal is to fall through, which looks increasingly likely after the Moderna cancer vaccine update - especially after considering the stock has been trading ABOVE the buyout price consistently for 2 weeks with almost 50% of outstanding shares traded above that level.

Personalis, a tiny and very little known company, powers the engine behind the recently hyped Merck-Moderna cancer vaccine.

Despite the huge revenue upside from the vaccine, the stock has barely performed after the news, due to its previous merger agreement with Tempus at $16.25, which was BEFORE the vaccine update and is still pending shareholders’ vote.

This is where things get interesting- after the vaccine news, PSNL stock broke through $16.25 and has been trading at a slight premium over the buyout price for 2 weeks in a row. And almost 50% of outstanding shares have been traded above the buyout price so far. IF the merger is to go through, all these new buyers, retail or institutions, will lose money. So I think it’s safe to assume they have strong incentives to vote no to the deal.

In addition to the vaccine, Personalis’ MRD business is also gaining traction fast, acquiring multiple Medicare coverages over the past few quarters including breast cancer, lung cancer, IO monitoring etc. In fact, according to their latest filing, MRD clinical testing volume is expected to grow over 300% and the corresponding revenue is expected to grow 600% and reach 177m by 2028. All these recently released info makes the merger even less likely to go through.

Besides, after the buyout of Saga (by Roche) and Foresight (by Natera), PSNL is now the only pure play MRD business on the market. So it’s also likely for another bidder to step in before the Tempus deck even reaches the shareholders meeting.

The shares trades at only about 3% premium over $16.25. I have built a small position in the past few days. I feel the latest development like the vaccine and its fast growing MRD business make Tempus’ offer look kind of ridiculous… Any thoughts?