10x Genomics Partners with PharosAI for Cancer Research, But Core Growth Remains Stalled

What happened

10x Genomics has announced a partnership with PharosAI, a UK research consortium, to leverage its Xenium spatial platform for building a comprehensive multimodal cancer dataset integrated with AI models. This initiative aims to advance precision medicine and aligns with 10x's strategy to drive spatial biology adoption, which is currently its only growth pillar. However, the DeepValue report indicates that 10x's core products and services revenue has been flat, with recent growth propped up by non-recurring IP settlements rather than organic demand. Instrument sales have declined over 35% year-over-year, and the company faces risks from NIH funding cuts and execution challenges from recent workforce reductions. While the partnership could enhance long-term market position, it does not address the immediate financial pressures or change the guidance for only flat-to-low-single-digit growth in the near term.

Implication

This collaboration may strengthen 10x's competitive moat in spatial biology by generating valuable datasets and AI tools that could drive future consumables usage. However, it is unlikely to result in immediate revenue boosts, as such research partnerships often have long development cycles and uncertain commercialization timelines. Investors should note that 10x's financial health still hinges on sustaining high spatial consumables growth to offset declining instruments and Chromium consumables. The DeepValue report's bear case of revenue falling below $580M by 2026 remains a risk if spatial growth decelerates or NIH cuts materialize. Therefore, while strategically positive, this news does not warrant a change in the cautious investment stance, with the stock trading at a premium despite flat core growth.

Thesis delta

The partnership does not materially shift the investment thesis. It supports the bull case for spatial leadership but lacks near-term financial impact, and the SELL rating remains justified until evidence of organic revenue acceleration emerges.