What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2023-11-14 · 209 added, 410 removed, 462 unchanged (57% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30, December 31,

March 31, December 31,

Cash and cash equivalents $ 23,723 $ 35,926

1 unchanged sentence

GeneFab receivable - related party 17,847 17,592

Short-term investments — 40,942

GeneFab prepaid expenses - related party 11,300 14,787

Prepaid expenses and other current assets 2,720 2,783

Current assets of discontinued operations — 209

Total current assets 55,666 71,200

5 unchanged sentences

Other long-term assets 86 215

Noncurrent assets of discontinued operations — 4,785

Total assets $ 102,185 $ 119,484

3 unchanged sentences

Early exercise liability, current portion 111 135

Deferred revenue — 799

GeneFab sublease deferred income - related party 862 989

3 unchanged sentences

Total current liabilities 9,609 12,672

Finance lease liabilities - related party, net of current portion 25 —

Operating lease liabilities, net of current portion 32,445 33,538

6 unchanged sentences

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized at September 30, 2023 and December 31, 2022;

zero shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

10,000,000 shares authorized at March 31, 2024 and December 31, 2023;

zero shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Common stock, $ 0.0001 par value;

500,000,000 shares authorized at September 30, 2023 and December 31, 2022;

44,477,666 and 44,062,534 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

500,000,000 shares authorized at March 31, 2024 and December 31, 2023;

45,712,821 and 45,700,161 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 312,544 311,252

7 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Contract revenue $ — $ 1,036

3 unchanged sentences

Research and development (included related party cost of $ 3,632 and $ — , respectively)

9,092 6,519 23,028 21,108

General and administrative 7,522 9,191

Impairment of property and equipment 25,691 — 25,691 —

Total operating expenses 16,301 16,250

6 unchanged sentences

Change in fair value of GeneFab Option - related party 2,314 —

Gain on extinguishment of convertible notes — — — 1,289

GeneFab sublease income - related party 1,461 —

Other income (expense) — ( 8 )

Total other income (expense), net 7,261 445 9,311 10,613

Total other income, net 4,190 1,112

Net loss from continuing operations ( 12,111 ) ( 13,852 )

Net income (loss) from discontinued operations 21,692 ( 2,337 ) 12,376 ( 5,323 )

Net loss from discontinued operations — ( 4,870 )

Net loss ( 12,111 ) ( 18,722 )

Other comprehensive loss

Unrealized loss on investments — — ( 1 ) —

Other comprehensive gain (loss)

Unrealized gain on investments — 2

Comprehensive loss $ ( 12,111 ) $ ( 18,720 )

1 unchanged sentence

Net loss per share from continuing operations, basic and diluted $ ( 0.26 ) $ ( 0.31 )

Net income (loss) per share from discontinued operations, basic and diluted 0.49 ( 0.05 ) 0.28 ( 0.26 )

Net loss per share from discontinued operations, basic and diluted — ( 0.11 )

Net loss per share, basic and diluted $ ( 0.26 ) $ ( 0.42 )

2 unchanged sentences

SENTI BIOSCIENCES, INC.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

Redeemable Convertible

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated

Deficit Total

Stockholders’

Equity (Deficit)

Shares Amount Shares Amount

Shares Amount

Balance as of December 31, 2022

44,062,534 $ 4 $ 300,544 $ 1 $ ( 173,286 ) $ 127,263

Exercise of common stock options — — 172,606 — 422 — — 422

Vesting of early exercise of common stock options 12,660 — 34 — — 34

Stock-based compensation expense — 3,763 — — 3,763

Unrealized gain on investments — — — 2 — 2

Net loss — — — — ( 18,722 ) ( 18,722 )

1 unchanged sentence

44,075,194 $ 4 $ 304,341 $ 3 $ ( 192,008 ) $ 112,340

Conversion of redeemable convertible preferred stock into common stock in connection with the Reverse Recapitalization, net of transaction cost ( 19,517,988 ) ( 171,833 ) 19,517,988 2 171,833 — — 171,835

Issuance of common stock upon Reverse Recapitalization, net of transaction costs — — 19,975,963 2 112,180 — — 112,182

Contingent earnout liability recognized upon closing of the Reverse Recapitalization — — — — ( 9,688 ) — — ( 9,688 )

Cancellation and exchange of convertible note in connection with PIPE financing — — 517,500 — 5,184 — — 5,184

Gain recognized on fair value of embedded derivative on SPAC merger date — — — — ( 1,289 ) — — ( 1,289 )

Exercise of common stock options — — 27,233 — 74 — — 74

Vesting of early exercise of common stock options — — 41,047 — 102 — — 102

Stock-based compensation expense — — — — 9,225 — — 9,225

Net loss — — — — — — ( 11,552 ) ( 11,552 )

Balance as of June 30, 2022

— — 43,368,270 4 292,698 — ( 138,436 ) 154,266

Common Stock Purchase Agreement fee settled in common stock — — 100,000 — 196 — — 196

Additional Reverse Recapitalization transaction costs — — — — ( 223 ) — — ( 223 )

Vesting of early exercise of common stock options — — 170,647 — 454 — — 454

Stock-based compensation expense — — — — 2,290 — — 2,290

Net loss — — — — — — ( 16,640 ) ( 16,640 )

Balance as of September 30, 2022

— $ — 43,638,917 $ 4 $ 295,415 $ — $ ( 155,076 ) $ 140,343

The accompanying notes are an integral part of these condensed consolidated financial statements.

SENTI BIOSCIENCES, INC.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share data)

Redeemable Convertible

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated

Deficit Total

Stockholders’

Equity (Deficit)

Shares Amount Shares Amount

Balance as of December 31, 2023

2 unchanged sentences

Stock-based compensation expense — — 1,258 — — 1,258

Unrealized gain (loss) on investments — — — — — 2 — 2

Net loss — — — — ( 12,111 ) ( 12,111 )

1 unchanged sentence

45,712,821 $ 5 $ 312,544 $ — $ ( 256,455 ) $ 56,094

Vesting of early exercise of common stock options — — 12,660 — 34 — — 34

Issuance of common stock under Employee Stock Purchase Plan (ESPP) — — 377,152 — 308 — — 308

Stock-based compensation expense — — — — 3,434 — — 3,434

Unrealized gain (loss) on investments — — — — — ( 3 ) — ( 3 )

Net loss — — — — — — ( 18,697 ) ( 18,697 )

Balance as of June 30, 2023

— — 44,465,006 4 308,117 — ( 210,705 ) 97,416

Vesting of early exercise of common stock options — — 12,660 — 34 — — 34

Stock-based compensation expense — — 409 — — 409

Net loss — — — — — — ( 14,923 ) ( 14,923 )

Balance as of September 30, 2023

— $ — 44,477,666 $ 4 $ 308,560 $ — $ ( 225,628 ) $ 82,936

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

4 unchanged sentences

Accretion of discount on short-term investments — ( 572 )

Gain on disposal of business ( 21,862 ) —

Gain on extinguishment of convertible notes — ( 1,289 )

Change in fair value of contingent earnout liability — ( 59 )

2 unchanged sentences

Change in fair value of GeneFab Option - related party ( 2,314 ) —

Impairment of property and equipment 25,691 —

Stock-based compensation expense 1,258 3,763

Interest income accrued and not received ( 21 ) —

Issuance of common stock for Common Stock Purchase Agreement fee — 196

Other non-cash charges 38 ( 30 )

5 unchanged sentences

Accounts payable 389 280

GeneFab sublease deferred income - related party 747 —

Accrued expenses and other current liabilities ( 2,946 ) ( 1,846 )

GeneFab sublease deferred income - related party ( 127 ) —

Deferred revenue — ( 392 )

7 unchanged sentences

Cash flows from financing activities

Proceeds from Merger and related PIPE financing, net of transaction costs — 111,979

Proceeds from issuance of common stock upon exercise of stock options — 521

Proceeds from issuance of common stock under Employee Stock Purchase Plan (ESPP) 308 —

Proceeds from issuance of convertible notes — 5,175

Principal finance lease payments — ( 35 )

Net cash from financing activities — ( 35 )

Nine Months Ended September 30,

Net decrease in cash and cash equivalents ( 11,697 ) ( 25,836 )

4 unchanged sentences

Restricted cash 4,028 3,551

Total cash, cash equivalents and restricted cash $ 45,828 $ 118,235

Supplemental disclosures of noncash financing and investing items

Total $ 27,751 $ 35,151

Three Months Ended March 31,

Supplemental disclosures of noncash investing and financing and items

Purchases of property and equipment in accounts payable and accrued expenses $ — $ 4,758

Refer to Note 3, GeneFab Transaction for details of non-cash items

Refer to Note 3.

GeneFab Transaction for details of non-cash items

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

Senti Biosciences, Inc.

and its subsidiaries (the “Company” or “Senti”), is a biotechnology company that was founded to create a new generation of smarter medicines that outmaneuver complex diseases using novel and unprecedented approaches.

Senti has built a synthetic biology platform that enables it to program next-generation cell and gene therapies with what the Company refers to as “gene circuits.” These gene circuits, which are created from novel and proprietary combinations of DNA sequences, reprogram cells with biological logic to sense inputs, compute decisions and respond to their cellular environments.

and its subsidiaries (the “Company” or “Senti”), is an early clinical stage biotechnology company developing next-generation cell and gene therapies engineered with its gene circuit platform technologies for patients living with incurable diseases.

Senti’s mission is to create a new generation of smarter therapies that can outsmart complex diseases using novel and unprecedented approaches.

Senti has built a synthetic biology platform that enables it to program next-generation cell and gene therapies with gene circuits.

These gene circuits, which are created from novel and proprietary combinations of DNA sequences, reprogram cells with biological logic to sense inputs, compute decisions and respond to their cellular environments.

The Company is headquartered in South San Francisco, California.

2 unchanged sentences

(“Merger Sub”), a Delaware corporation and wholly owned subsidiary of Dynamics, merged with and into Senti Sub I, Inc., formerly named Senti Biosciences, Inc.

(“Legacy Senti”), with Legacy Senti surviving as a wholly-owned subsidiary of Dynamics (such transactions, the “Merger,” and, collectively with the other transactions described in the merger agreement (as defined below, the “Reverse Recapitalization”)).

As a result of the Merger, Dynamics was renamed Senti Biosciences, Inc.

On August 7, 2023, the Company completed a transaction with GeneFab, LLC (“GeneFab”), a new independent contract manufacturing and synthetic biology biofoundry focused on next-generation cell and gene therapies.

On August 7, 2023, the Company completed a transaction with GeneFab, LLC (“GeneFab”), a contract manufacturing and synthetic biology biofoundry focused on next-generation cell and gene therapies.

As part of that transaction, the Company disposed of its non-oncology business and in-house manufacturing services and subleased its manufacturing facility to GeneFab.

Refer to Note 3.

GeneFab Transaction, for further details of the GeneFab transaction, and to Note 13.

Related Parties, for related party discussion.

Liquidity and Going Concern

3 unchanged sentences

The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.

The Company has devoted substantially all of its efforts to organizing and staffing, business planning, raising capital, and conducting preclinical studies and has not realized substantial revenues from its planned principal operations.

To date, the Company has raised aggregate gross proceeds of $ 299.5 million from the Merger and PIPE Financing, the issuance of shares of its common stock, the issuance of shares of our redeemable convertible preferred stock, the issuance of convertible notes and, to a lesser extent, through collaboration agreements and government grants.

At September 30, 2023 and December 31, 2022, the Company had an accumulated deficit of $ 225.6 million and $ 173.3 million , respectively.

The Company’s net losses were $ 52.3 million and $ 40.0 million for the nine months ended September 30, 2023 and 2022, respectively.

Substantially all of the Company’s net losses resulted from costs incurred in connection with the Company’s research and development programs and from general and administrative costs associated with the Company’s operations including impairment of property and equipment.

The Company has devoted substantially all of its efforts to organizing and staffing, business planning, raising capital, and conducting preclinical and clinical studies and has not realized substantial revenues from its planned principal operations.

To date, the Company has raised aggregate gross proceeds of $ 300.1 million from the Merger and a private placement completed concurrently with the Merger (the “PIPE Financing”), the issuance of shares of its common stock, the issuance of shares of our redeemable convertible preferred stock, the issuance of convertible notes and, to a lesser extent, through collaboration agreements and government grants.

At March 31, 2024 and December 31, 2023, the Company had an accumulated deficit of $ 256.5 million and $ 244.3 million , respectively.

The Company’s net losses were $ 12.1 million and $ 18.7 million for the three months ended March 31, 2024 and 2023, respectively.

Substantially all of the Company’s operating net losses resulted from costs incurred in connection with the Company’s research and development programs and from general and administrative costs associated with the Company’s operations.

The Company expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future as the Company advances its preclinical activities and clinical trials for its product candidates in development .

As of September 30, 2023 and December 31, 2022, the Company had cash, cash equivalents and short-term investments of $ 39.4 million and $ 98.6 million, respectively.

As of November 13, 2023, the issuance date of the condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023, there is uncertainty about whether the Company’s combined cash, cash equivalents, and short-term investments will be sufficient to fund operations, including clinical trial expenses and capital expenditure requirements, beyond twelve months from the issuance date of these financial statements and therefore the Company concluded that substantial doubt existed about the Company’s ability to continue as a going concern.

The transaction with GeneFab provided the Company with additional capital in the form of a note receivable

As of March 31, 2024 and December 31, 2023, the Company had cash and cash equivalents of $ 23.7 million and $ 35.9 million, respectively.

As of May 9, 2024, the issuance date of the condensed consolidated financial statements as of and for the three months ended March 31, 2024 , there is uncertainty about whether the Company’s combined cash and cash equivalents will be sufficient to fund operations, including clinical trial expenses and capital expenditure requirements, beyond twelve months from the issuance date of these financial statements and therefore the Company concluded that substantial doubt existed about the Company’s ability to continue as a going concern.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

and rights to future manufacturing and research activities and reduced longer-term operating expenses.

The transaction with GeneFab provided the Company with additional capital in the form of a note receivable and rights to future manufacturing and research activities and reduced longer-term operating expenses.

Refer to Note 3.

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NASDAQ Bid Price Compliance Notice

On August 7, 2023, the Company received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC notifying the Company that, for the last 30 consecutive trading days, the closing bid price of the Company’s common stock had closed below the minimum bid price requirement of $1.00 per share for continued listing on The Nasdaq Global Market.

The Company has been provided an initial compliance period of 180 calendar days, or until February 5, 2024, to regain compliance with the minimum bid price requirement.

On August 7, 2023, the Company received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (the “Listing Qualifications Department”) notifying the Company that, for the last 30 consecutive trading days, the closing bid price of the Company’s common stock had closed below the minimum bid price requirement of $1.00 per share for continued listing on The Nasdaq Global Market.

The Company was provided an initial compliance period of 180 calendar days, or until February 5, 2024, to regain compliance with the minimum bid price requirement.

On January 23, 2024, the Company received written notice from the Listing Qualifications Department granting the Company its request to transfer the listing of its common stock from The Nasdaq Global Market tier to The Nasdaq Capital Market tier.

The transfer of the listing of the Company’s common stock from The Nasdaq Global Market to The Nasdaq Capital Market took effect with the open of business on January 25, 2024.

On February 6, 2024, the Listing Qualifications Department granted the Company’s request for a second 180-calendar day period, or until August 5, 2024, to regain compliance with the $1.00 bid price requirement.

To regain compliance with such minimum price requirement, the Company must evidence a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days.

Summary of Significant Accounting Policies

6 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

We have one business activity and operate in one reportable segment.

Unless otherwise noted, the Company has retroactively adjusted all common and preferred share and related price information to give effect to the exchange ratio established in the Merger Agreement.

The Company has one business activity and operates in one reportable segment within continuing operations.

The Company determined that the assets sold to GeneFab met the criteria for presentation as a discontinued operation.

As a result, the Company has retrospectively restated its condensed consolidated balance sheet at December 31, 2022 and condensed consolidated statements of operations for the three and nine months ended September 30, 2022 to reflect the assets and liabilities and operating results, respectively, related to the disposed business in discontinued operations.

As a result, the Company has retrospectively restated its condensed consolidated statements of operations for the three months ended March 31, 2023 to reflect the assets and liabilities and operating results, respectively, related to the disposed business in discontinued operations.

The Company has chosen not to segregate the cash flows of the disposed business in the condensed consolidated statements of cash flows.

4 unchanged sentences

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the valuation of stock-based awards, the accrual for research and development expenses, the valuation of contingent earnout, the valuation of GeneFab Option, the valuation of GeneFab Economic Share, the valuation of the GeneFab Note Receivable, the valuation of convertible notes, the valuation of common and redeemable convertible preferred stock, standalone selling price (“SSP”), the discount rate used to discount future cash flows for the impairment of long-lived assets, and the determination of the incremental borrowing rate.

Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the valuation of stock-based awards, the accrual for research and

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

development expenses, the valuation of GeneFab Option, the valuation of GeneFab Economic Share, the valuation of the GeneFab Note Receivable, the discount rate used to discount future cash flows for the impairment of long-lived assets, and the determination of the incremental borrowing rate.

The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate.

Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist of cash and cash equivalents are maintained in checking and money market accounts at one financial institution, which at times, may exceed federally insured limits.

As of March 31, 2024 and 2023, the Company has not experienced any credit losses in such accounts or investments.

As of March 31, 2024 , t he Company has prepaid future manufacturing and research services of $ 11.3 million under the development and manufacturing services agreement entered into with GeneFab, a related party.

The Company also has a receivable from GeneFab under the framework agreement with a fair value of $ 17.3 million, subject to satisfaction of certain conditions.

The prepaid expense and receivable balances from GeneFab potentially subject the Company to a significant concentration of credit risk if the Company is unable to realize these balances.

Refer to Note 3.

GeneFab Transaction , for further details of the GeneFab transaction.

Unaudited Interim Condensed Consolidated Financial Statements

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

The accompanying interim condensed consolidated financial statements and the related footnote disclosures are unaudited.

These unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2023 and its results of operations for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022.

The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or any other period.

These unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2024 and its results of operations for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or any other period.

The December 31, 2023 year-end condensed consolidated balance sheet was derived from audited annual financial statements but does not include all disclosures from the annual financial statements.

2 unchanged sentences

Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 and the related notes included in the Company’s Form 10-K, filed with the SEC on March 21, 2024, which provides a more complete discussion of the Company’s accounting policies and certain other information.

Other than the policies included below, there have been no material changes to the Company’s significant accounting policies as of and for the three and nine months ended September 30, 2023, as compared to the significant accounting policies described in the Company’s audited annual consolidated financial statements as of and for the year ended December 31, 2022.

Fair Value Option

The Company elected to account for the deferred consideration (GeneFab Note Receivable) and contingent consideration receivable (GeneFab Economic Share) from the GeneFab transaction under the fair value option in ASC 825, Financial Instruments .

Accordingly, these instruments were recognized at their fair value at the closing of the transaction and are subsequently remeasured each reporting period with changes in fair value recorded in other income (expense) in the condensed consolidated statements of operations and comprehensive loss until settlement.

The fair value of the GeneFab Note Receivable was determined by discounting future payments under multiple probability-weighted scenarios using the Company’s cost of borrowing.

The fair value of the GeneFab Option was determined using an option pricing method.

Refer to Note 3.

GeneFab Transaction , for further details of the GeneFab transaction.

GeneFab Option

The option granted to GeneFab as part of the GeneFab transaction meets the definition of a derivative under ASC 815, Derivatives and Hedging , and does not meet the criteria for equity classification.

The derivative liability is recorded at its fair value on issuance and subsequently remeasured each reporting period with changes in fair value recorded in other income (expense) in the condensed consolidated statements of operations and comprehensive loss until settlement.

The fair value of the derivative liability was determined using a Black-Scholes option pricing model.

There have been no material changes to the Company’s significant accounting policies as of and for the three months ended March 31, 2024, as compared to the significant accounting policies described in the Company’s audited annual consolidated financial statements as of and for the year ended December 31, 2023.

Recent Accounting Standards

The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

GeneFab Transaction

On August 7, 2023, the Company entered into a framework agreement with GeneFab and Valere Bio, Inc., a Delaware corporation and the parent company of GeneFab, which is wholly owned by Celadon Partners, LLC, pursuant to which the Company, subject to the terms and conditions therein, sold, assigned and transferred its rights, title and interest in certain of the assets and contractual rights, including all of the Company’s equipment at the Company’s facilities in Alameda and certain of the Company’s non-oncology license, intellectual property related to the schematics for and design of the Alameda facility, and subleased to GeneFab its premises under the lease for the Alameda facility.

The transaction will provide the Company with additional capital in the form of a note receivable and rights to future manufacturing and research activities and reduced longer term operating expenses.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires an enhanced disclosure of significant segment expenses on an annual and interim basis.

This guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which improves income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

This guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

Upon adoption, the guidance can be applied prospectively or retrospectively.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

GeneFab Transaction

On August 7, 2023, the Company entered into a framework agreement with GeneFab and Valere Bio, Inc., a Delaware corporation and the parent company of GeneFab, which is wholly owned by Celadon Partners, LLC, pursuant to which the Company, subject to the terms and conditions therein, sold, assigned and transferred its rights, title and interest in certain of the assets and contractual rights, including all of the Company’s equipment at the Company’s facilities in Alameda and certain of the Company’s non-oncology license rights, intellectual property related to the schematics for and design of the Alameda facility, and subleased to GeneFab its premises under the lease for the Alameda facility.

The transaction provided the Company with additional capital in the form of a note receivable and rights to future manufacturing and research activities performed by GeneFab at market rates and reduced longer term operating expenses.

Concurrently with the transaction, the Company and GeneFab entered into a development and manufacturing services agreement (the “services agreement”), pursuant to which GeneFab will provide certain services to the Company using the subleased Alameda facility and acquired equipment.

As part of this transaction, the Company entered into a transition services agreement with GeneFab whereby certain services are to be provided by each party to the other party during a transition period beginning on the closing of the transaction.

Under the terms of the transaction, the Company is entitled to receive total consideration of $ 37.8 million before the end of 2025, of which $ 18.9 million was payable at closing and was netted against prepayment due to GeneFab for future manufacturing and research activities.

The remaining $ 18.9 million will be paid to the Company in installments in 2024 and 2025 (the “Note Receivable”), subject to satisfaction of certain conditions.

The Company elected to account for the Note Receivable under the fair value option and recorded the Note Receivable at its fair value of $ 16.6 million at the closing date of the transaction.

The Note Receivable will be remeasured each reporting period with changes from remeasurement included in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Under the terms of the transaction, the Company is entitled to receive total consideration of $ 37.8 million before the end of 2025, of which $ 18.9 million was due at closing and was netted against prepayment due to GeneFab for future manufacturing and research activities.

The remaining $ 18.9 million will be paid to the Company in installments in 2024 and 2025 (the “GeneFab Note Receivable”), subject to satisfaction of certain conditions.

The Company elected to account for the GeneFab Note Receivable under the fair value option and recorded the GeneFab Note Receivable at its fair value of $ 16.6 million at the closing date of the transaction.

The GeneFab Note Receivable will be remeasured each reporting period with changes from remeasurement included in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Refer to Note 4.

Fair Value Measurement .

The Company is entitled to $ 18.9 million in future manufacturing and research activities to be rendered under the services agreement, which are recorded in GeneFab prepaid expenses on the condensed consolidated balance sheet.

Fair Value Measurements .

The Company is entitled to $ 18.9 million in future manufacturing and research activities to be rendered by GeneFab under the services agreement, which are recorded in GeneFab prepaid expenses on the condensed consolidated balance sheet.

The Company determined that the $ 18.9 million for future manufacturing and research activities, inclusive of the volume discount provided, was executed at market terms and does not result in any impact to the total consideration received from GeneFab for the disposal of the business.

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GeneFab was granted an option to purchase up to 19,633,444 shares (i.e.

up to $ 20.0 million worth) of the Company’s common stock at a purchase price of $ 1.01867 (the “GeneFab Option”).

The GeneFab Option is exercisable for a period of 36 months following the execution of the license agreement.

up to $ 20.0 million worth) of the Company’s common stock at a per share purchase price of $ 1.01867 (the “GeneFab Option”).

The GeneFab Option becomes exercisable upon the execution of the license agreement, no later than August 7, 2026.

The GeneFab Option may be exercised in installments of common stock equal to no more than 19.9 % of the Company’s outstanding shares of common stock as of the closing date of the transaction.

The purchase of the remaining shares under the GeneFab Option require stockholder approval.

The Company determined that the GeneFab Option was a derivative as the terms of the instrument contain certain provisions that preclude equity classification in accordance with ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity .

The purchase of the remaining shares under the GeneFab Option requires approval by the Company’s stockholders.

The Company determined that the GeneFab Option was a derivative as the terms of the instrument contain certain provisions that preclude equity

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

classification in accordance with ASC 815.

As such, the GeneFab Option was recorded as a liability at its fair value of $ 9.6 million at the closing date of the transaction and subsequently remeasured with changes in fair value recorded in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Refer to Note 4.

Fair Value Measurement .

Fair Value Measurements .

As additional consideration for the transaction, the Company and GeneFab entered into a seller economic share agreement (the “GeneFab Economic Share”), pursuant to which the Company will be entitled to receive ten percent of the realized gains of GeneFab’s parent company arising and resulting from any cash or in-kind distributions from GeneFab in connection with a dividend or sale event, subject to the terms and conditions of the GeneFab Economic Share.

The Company elected to account for the GeneFab Economic Share under the fair value option and recorded the GeneFab Economic Share at its fair value of $ 1.8 million at the date of the transaction.

The GeneFab Economic Share will be remeasured each reporting period with changes from remeasurement included in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

The GeneFab Economic Share is remeasured each reporting period with changes from remeasurement included in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Refer to Note 4.

Fair Value Measurement .

Fair Value Measurements .

The Company determined that GeneFab is a variable interest entity (“VIE”) since its total equity at risk is not sufficient to finance its activities without additional subordinated financial support.

The Company performed a qualitative analysis to determine if it is the primary beneficiary of GeneFab and determined it does not have the power to direct the significant activities of GeneFab.

As a result, the Company determined it is not the primary beneficiary and therefore does not consolidate GeneFab.

Refer to Note 13.

Related Parties for GeneFab related party considerations.

Gain on the Disposal of Business

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

As the assets and contractual rights transferred to GeneFab were determined to constitute a business as defined in ASC 805, Business Combinations , the Company accounted for the disposal by applying the derecognition guidance in ASC 810, Consolidation , which requires that a gain or loss be recognized for the difference between the carrying value of the assets sold and the fair value of the consideration received (or receivable).

The total fair value of the consideration was determined to be $ 37.3 million, including the GeneFab prepaid expenses of $ 18.9 million, the estimated fair value of the Note Receivable of $ 16.6 million and the estimated fair value of the GeneFab Economic Share of $ 1.8 million.

As of August 7, 2023, the total fair value of the consideration was determined to be $ 37.3 million, including the GeneFab prepaid expenses of $ 18.9 million, the estimated fair value of the GeneFab Note Receivable of $ 16.6 million and the estimated fair value of the GeneFab Economic Share of $ 1.8 million.

Out of the total consideration, $ 9.6 million was allocated to the GeneFab Option, representing its estimated fair value as of the closing date.

In connection with the sale, the Company recognized a gain on disposal in the amount of $ 21.9 million in net income from discontinued operations during the three and nine months ended September 30, 2023, representing the excess of the fair value of the consideration (net of the portion allocated to the GeneFab Option) over the carrying value of the assets sold of $ 5.5 million.

In connection with the sale, the Company recognized a gain on disposal in the amount of $ 21.9 million in net income from discontinued operations during the year ended December 31, 2023, representing the excess of the fair value of the consideration (net of the portion allocated to the GeneFab Option) over the carrying value of the assets sold of $ 5.5 million.

The gain on disposal was primarily related to the transfer of the non-oncology intellectual property to GeneFab which had no carrying value.

1 unchanged sentence

In accordance with ASC 205, Presentation of Financial Statements (“ASC 205”), the Company determined that the sale of the non-oncology business, including the equipment and transfer of in-house manufacturing activities in the Alameda facility, to GeneFab represented a strategic shift that will have a major effect on the Company’s operations and financial results, thus meeting the criteria to be reported as discontinued operations.

Discontinued operations include the cost and depreciation of equipment and related deposits or liabilities, manufacturing personnel-related costs including costs arising as a result of the disposal such as equity award modifications and severance, and the

Refer to Note 9, Stock-Based Compensation, for further details of the award modifications.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

gain from the disposal of the business.

Refer to Note 9, Stock-Based Compensation, for further details of the award modifications.

The following table summarizes the major classes of assets and liabilities of the discontinued operations (in thousands):

September 30, December 31,

Prepaid expenses and other current assets $ — $ 209

Total current assets of discontinued operations $ — $ 209

Property and equipment, net $ — $ 4,775

Other long-term assets — 10

Total non-current assets of discontinued operations $ — $ 4,785

Accounts payable $ — $ 897

March 31, December 31,

Accrued expenses and other current liabilities — 243

1 unchanged sentence

The following table summarizes the condensed operating results of the discontinued operations (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Operating expenses:

3 unchanged sentences

Loss from discontinued operations — ( 4,870 )

Other income (expense) ( 6 ) — ( 6 ) —

Gain on disposal of business 21,861 — 21,861 —

Net income (loss) from discontinued operations $ — $ ( 4,870 )

General and administrative expenses were negative for the three and nine months ended September 30, 2023 due to the reversal of compensation expense for unvested awards that were cancelled due to the termination of employees subsequently hired by GeneFab.

Stock-Based Compensation.

The following table summarizes the condensed cash flow information of the discontinued operations (in thousands):

Nine Months Ended

September 30,

Three months ended March 31,

Operating activities (noncash adjustments to net income):

1 unchanged sentence

Stock-based compensation — 176

Gain on disposal of business ( 21,861 ) —

Investing activities:

2 unchanged sentences

Purchases of property and equipment in accounts payable and accrued expenses — 697

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Fair Value Measurements

The following tables summarize the estimated value of cash equivalents and restricted cash (in thousands):

September 30, 2023

Adjusted Cost Unrealized Gain Unrealized Loss Estimated Fair Value Cash and cash equivalents Restricted cash Short-term investments

March 31, 2024

Adjusted Cost Estimated Fair Value Cash and cash equivalents Restricted cash

Cash $ 2,063 $ 2,063 $ 2,063 $ —

2 unchanged sentences

Total $ 27,751 $ 27,751 $ 23,723 $ 4,028

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

December 31, 2023

Adjusted Cost Unrealized Gain Unrealized Loss Estimated Fair Value Cash and cash equivalents Restricted cash Short-term investments

Adjusted Cost Estimated Fair Value Cash and cash equivalents Restricted cash

Cash $ 4,205 $ 4,205 $ 4,205 $ —

Money market funds $ 35,243 $ 35,243 $ 31,721 $ 3,522

Subtotal 35,243 35,243 31,721 3,522

Treasury securities 14,866 4 ( 3 ) 14,867 — — 14,867

agency securities 5,938 — — 5,938 3,983 — 1,955

Commercial Paper 28,122 — — 28,122 5,994 — 22,128

Corporate debt securities 7,590 1 ( 1 ) 7,590 5,598 — 1,992

Subtotal 56,516 5 ( 4 ) 56,517 15,575 — 40,942

Total $ 39,448 $ 39,448 $ 35,926 $ 3,522

1 unchanged sentence

There were no transfers between Levels 1, 2, or 3 for any of the periods presented.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Contingent Earnout Liability

The following table presents a summary of the changes in the fair value of the Contingent Earnout Liability (in thousands):

Contingent Earnout Liability

Fair value as of December 31, 2022

Change in fair value included in other income (expense) 207

Fair value as of September 30, 2023

The fair value of the Contingent Earnout Liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.

In determining the fair value of the Contingent Earnout Liability, the Company used a Monte Carlo simulation value model using a distribution of potential outcomes.

The assumptions utilized in the calculation were based on the achievement of certain stock price milestones, including the current Company common stock price, expected volatility, risk-free rate, expected term and expected dividend yield.

Refer to Note 7.

Stockholders’ Equity (Deficit) , for further details of the Contingent Earnout Liability.

GeneFab Note Receivable

1 unchanged sentence

Note Receivable

Initial recognition as of August 7, 2023

Fair value as of December 31, 2023

Change in fair value included in other income (expense) 29

Fair value as of September 30, 2023

Fair value as of March 31, 2024

The fair value of the GeneFab Note Receivable is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.

The GeneFab Note Receivable is presented within GeneFab receivable on the condensed consolidated balance sheet.

The Company has elected to account for the GeneFab Note Receivable under the fair value option in ASC 825, Financial Instruments with changes in fair value reported as a component of other income (expense) in the consolidated statements of operations and comprehensive loss.

The fair value of the GeneFab Note Receivable was determined by discounting future payments under multiple probability-weighted scenarios using the Company’s cost of borrowing, which was estimated at 13.72 % as of the initial recognition date, to 13.97 % as of September 30, 2023 based on published CCC-rated corporate bond yields.

The fair value of the GeneFab Note Receivable was determined by discounting future payments under multiple probability-weighted scenarios using the Company’s cost of borrowing, which was estimated at 12.53 % as of December 31, 2023, to 12.87 % as of March 31, 2024 based on published CCC-rated corporate bond yields.

GeneFab Option

1 unchanged sentence

GeneFab Option

Initial recognition as of August 7, 2023

Fair value as of December 31, 2023

Change in fair value included in other income (expense) 2,314

Fair value as of September 30, 2023

Fair value as of March 31, 2024

The fair value of the GeneFab Option is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.

In determining the fair value of the GeneFab Option, the Company used a Black-Scholes option pricing model.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

The significant assumptions utilized in the valuation are described below:

September 30, August 7

March 31, December 31,

Current stock price $ 0.38 $ 0.66

2 unchanged sentences

Expected term (years) 2.5 2.5

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

GeneFab Economic Share

1 unchanged sentence

GeneFab Economic Share

Initial recognition as of August 7, 2023

Initial recognition as of December 31, 2023

Change in fair value included in other income (expense) 55

Fair value as of September 30, 2023

Fair value as of March 31, 2024

The fair value of the GeneFab Economic Share is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.

The Company has elected to account for the GeneFab Economic Share under the fair value option in ASC 825, Financial Instruments with changes in fair value reported as a component of other income (expense) in the consolidated statements of operations and comprehensive loss.

In determining the fair value of the GeneFab Economic Share, the Company used the option pricing method, which allocates total estimated enterprise value to various classes of equity using the Backsolve method.

The significant assumptions utilized in the valuation are described below:

September 30, August 7

March 31, December 31,

GeneFab equity value $ 35,448 $ 35,448

2 unchanged sentences

Expected term 4 4

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Other Financial Statement information

1 unchanged sentence

Prepaid expenses and other current assets consisted of the following (in thousands):

September 30, December 31,

March 31, December 31,

Prepaid expenses (including prepaid rent) 2,628 2,546

Deposits 92 42

Other 488 101

Total prepaid expenses and other current assets $ 2,720 $ 2,783

1 unchanged sentence

Property and equipment, net consisted of the following (in thousands):

September 30, December 31,

March 31, December 31,

Leasehold improvements $ 22,648 $ 22,648

2 unchanged sentences

Computer equipment and software 338 360

Construction in progress — 43,892

Property and equipment at cost 31,460 31,520

1 unchanged sentence

Property and equipment, net $ 24,354 $ 25,338

Buildout of the current good manufacturing practice (cGMP) facility in Alameda was completed in June 2023 and the assets were placed in service.

As a result of the change in the manner in which the Company expects to recover the assets associated with the lease on the Alameda facility (refer to Note 3.

GeneFab Transaction), the ROU asset and the related leasehold improvements became a separate asset group for the purposes of long-lived asset impairment assessment as of August 7, 2023.

This asset group reassessment triggered a need to perform an impairment analysis.

The Company concluded that the asset group was not recoverable, as the carrying value of the asset group was less than the sum of undiscounted net cash flows expected to be generated from the use of the asset group.

The Company tested the asset group for impairment and recognized an impairment loss in the amount of $ 25.7 million during the three and nine months ended September 30, 2023, representing the difference between the carrying value of the asset group of $ 54.6 million and its estimated fair value of $ 28.9 million, determined based on the discounted cash flows expected to be generated from the use of the asset group through the sublease.

Further, the Company determined that the individual fair value of the ROU asset within the asset group exceeded its carrying value as of the impairment testing date.

Accordingly, the Company allocated the entire impairment loss to the leasehold improvements associated with the Alameda lease.

The adjusted carrying value of the leasehold improvements of $ 20.1 million will be amortized under the existing accounting policy under ASC 842, Leases on a straight-line basis over the remaining lease term.

Depreciation totaled $ 1.3 million and $ 0.4 million for the three months ended September 30, 2023 and 2022, respectively, and $ 2.4 million and $ 0.9 million for the nine months ended September 30, 2023 and 2022, respectively.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Depreciation totaled $ 1.0 million and $ 0.5 million for the three months ended March 31, 2024 and 2023, respectively.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

September 30, December 31,

March 31, December 31,

Accrued employee-related expenses $ 888 $ 3,555

Accrued professional and service fees related to facility construction — 7,342

Accrued professional and service fees other 1,843 2,363

4 unchanged sentences

The Company’s operating leases are primarily for its corporate headquarters located in South San Francisco, California (“HQ lease”) and for additional office and laboratory space located in Alameda, California (“Alameda lease”).

The corporate headquarters lease has an initial term of eight years expiring in 2027, with an option to renew for an additional eight years unless canceled by either party thereafter.

The HQ Lease has an initial term of eight years expiring in 2027, with an option to renew for an additional eight years unless canceled by either party thereafter.

The Alameda lease has an initial term of eleven years expiring in 2032, with an option to renew the lease for up to two additional terms of five years .

The exercise of these renewal options is not recognized as part of the ROU assets and lease liabilities, as the Company did not conclude, at the commencement date of the leases, that the exercise of renewal options or termination options was reasonably certain.

The Alameda lease provides for a tenant improvement allowance of up to $ 17.5 million for the costs relating to the design, permitting and construction of the improvements, to be disbursed by the landlord no later than December 31, 2023.

The Alameda lease provided for a tenant improvement allowance of up to $ 17.5 million for the costs relating to the design, permitting and construction of the improvements, disbursed by the landlord by December 31, 2023.

The Company was deemed to be the accounting owner of the tenant improvements primarily because the Company is the principal in the construction and design of the assets, is responsible for costs overruns and retains substantially all economic benefits from the leasehold improvements over their economic lives .

1 unchanged sentence

The Company estimated the timing of tenant improvement reimbursements at the lease commencement date and upon receipt of the cash incentives, the Company recognized the cash received as an increase in the lease liability.

A summary of total lease costs and other information for the period relating to the Company’s operating leases is as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

A summary of total lease costs and other information for the period relating to the Company’s operating leases is as follows (in thousands):

Three Months Ended March 31,

Operating lease cost $ 1,316 $ 1,309

4 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Nine Months Ended September 30,

Three Months Ended March 31,

Other information:

1 unchanged sentence

ROU assets obtained in exchange for operating lease obligations (including remeasurement of ROU and lease liabilities due to changes in the timing of receipt of lease incentives) $ — $ ( 51 )

Weighted-average remaining lease term 7.6 years 8.2 years

Weighted-average remaining lease term (years) 7.3 8.0

Weighted-average discount rate 9.2 % 9.1 %

For the three months ended September 30, 2023 and 2022, the Company received no cash and $ 3.2 million, respectively, of $ 17.5 million tenant improvement allowance.

For the nine months ended September 30, 2023 and 2022, the Company received $ 2.0 million and $ 11.3 million, respectively, of the $ 17.5 million tenant improvement allowance.

Through September 30, 2023, the Company received $ 16.2 million of the tenant improvement allowance inception-to-date.

As of September 30, 2023 and 2022, amounts disclosed for ROU assets obtained in exchange for lease obligations include amounts added to the carrying amount of ROU assets resulting from lease modifications and reassessments.

Maturities of the Company’s lease liabilities as of September 30, 2023, were as follows (in thousands):

For the three months ended March 31, 2023, the Company received $ 1.0 million of $ 17.5 million tenant improvement allowance.

The Company received the full $ 17.5 million tenant improvement allowance through December 31, 2023.

As of March 31, 2024 and 2023, amounts disclosed for ROU assets obtained in exchange for lease obligations include amounts added to the carrying amount of ROU assets resulting from lease modifications and reassessments.

Maturities of the Company’s lease liabilities as of March 31, 2024, were as follows (in thousands):

2024, for the remainder of the year $ 5,470

4 unchanged sentences

Total lease liabilities $ 36,623

As of March 31, 2024 the Company held a letter of credit with JPMorgan Chase Bank in the amount of approximately $ 2.8 million related to the Alameda facility and a letter of credit with JPMorgan Chase Bank in the amount of approximately $ 0.5 million related to our HQ facility lease, which has been transferred from Silicon Valley Bank (SVB).

As of March 31, 2024 the letter of credit held by SVB was yet to be released.

Lessor Accounting

In connection with the GeneFab transaction, on August 7, 2023, the Company entered into a sublease with GeneFab to sublease the facility included in the Alameda lease, expiring in August 2032.

Total sublease income to be earned from this operating lease, in aggregate, will be approximately $ 44.1 million over the remaining term of the sublease agreement.

Sublease income was $ 0.8 million for the three and nine months ended September 30, 2023.

Variable sublease income was $ 0.1 million for the three and nine months ended September 30, 2023.

The Company records sublease income in other income (expense) in the condensed consolidated statement

Maturities of the Company’s sublease payments from GeneFab as of September 30, 2023, were as follows (in thousands):

In connection with the GeneFab transaction, on August 7, 2023, the Company entered into a sublease with GeneFab to sublease the facility included in the Alameda lease, expiring in September 2032.

Total sublease income to be earned from this operating lease, in aggregate, will be approximately $ 44.1 million over the term of the sublease agreement.

Sublease income was $ 1.2 million and variable sublease income was $ 0.3 million for the three months ended March 31, 2024.

The Company records sublease income in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Refer to Note 13.

Related Parties for GeneFab related party considerations.

Maturities of the Company’s sublease payments from GeneFab as of March 31, 2024, were as follows (in thousands):

SENTI BIOSCIENCES, INC.

7 unchanged sentences

Common stock is subordinate to the preferred stock with respect to dividend rights and rights upon liquidation, winding up, and dissolution of the Company;

although, no preferred stock is outstanding as of September 30, 2023 and December 31, 2022.

Through September 30, 2023, no cash dividends have been declared or paid.

At September 30, 2023 and December 31, 2022, the Company was authorized to issue 500,000,000 shares of common stock, all at a par value of $ 0.0001 per share, and had reserved the following shares for future issuance:

September 30, December 31,

although, no preferred stock is outstanding as of March 31, 2024 and December 31, 2023.

Through March 31, 2024, no cash dividends have been declared or paid.

At March 31, 2024 and December 31, 2023, the Company was authorized to issue 500,000,000 shares of common stock, all at a par value of $ 0.0001 per share, and had reserved the following shares for future issuance:

March 31, December 31,

Common Stock Purchase Agreement 7,327,049 7,327,049

5 unchanged sentences

GeneFab Option

19,633,444 19,633,444

Unvested early exercised common stock 42,200 54,860

3 unchanged sentences

Voting powers, designations, powers, preferences and relative, participating, optional, special and other rights shall be stated and expressed in such resolutions.

There were 10,000,000 shares designated as preferred stock and none were outstanding as of September 30, 2023 and December 31, 2022.

There were 10,000,000 shares designated as preferred stock and none were outstanding as of March 31, 2024 and December 31, 2023.

Common Stock Purchase Agreement

On August 31, 2022, the Company entered into a Common Stock Purchase Agreement and a Registration Rights Agreement (collectively referred to as the “Purchase Agreement”) with Chardan Capital Markets LLC (“Chardan”).

Pursuant to the Purchase Agreement, the Company has the right, in its sole discretion, to sell to Chardan up to the lesser of (i) $ 50.0 million of newly issued shares of the Company’s common stock, and (ii) the Exchange Cap (as defined below) (subject to certain conditions and limitations), from time to time during the 36 -

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Exchange Cap (as defined below) (subject to certain conditions and limitations), from time to time during the 36 -month term of the Purchase Agreement.

month term of the Purchase Agreement.

Under the applicable NASDAQ rules, the Company may not issue to Chardan under the Purchase Agreement more than 8,727,049 shares of common stock, which number of shares is equal to 19.99 % of the common shares outstanding immediately prior to the execution of the Purchase Agreement unless certain exceptions are met (the “Exchange Cap”).

2 unchanged sentences

As consideration for Chardan’s commitment to purchase shares of common stock at the Company’s direction upon the terms and subject to the conditions set forth in the Purchase Agreement, upon execution of the Purchase Agreement, the Company issued 100,000 shares of its common stock to Chardan and paid a $ 0.4 million document preparation fee.

Upon execution of the Purchase Agreement, the Company recognized an expense of $ 0.7 million within general and administrative expenses in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss for the Chardan related costs and legal fees incurred in connection with the agreement.

Other than the issuance of the commitment shares of the Company’s common stock to Chardan, the Company issued 300,000 common stock shares up until December 31, 2022 aggregating to net proceeds of $ 0.7 million, under the Purchase Agreement.

There were no shares issued within nine months ended September 30, 2023.

Other than the issuance of the commitment shares of the Company’s common stock to Chardan, the Company issued 1,300,000 common stock shares up until March 31, 2024 aggregating to net proceeds of $ 1.2 million, under the Purchase Agreement.

There were no shares issued within three months ended March 31, 2024.

Contingent Earnout Equity

3 unchanged sentences

If there is a change of control within the three-year period following the closing of the Merger that results in a per share price equal to or in excess of the $ 15.00 and $ 20.00 share price milestones not previously met, then Company shall issue the earnout shares to the holders of Legacy Senti common stock and preferred stock.

The estimated fair value of the total Contingent Earnout Shares at the Closing on June 8, 2022, was $ 9.8 million based on a Monte Carlo simulation valuation model.

Of this amount, $ 9.7 million was accounted for as a Contingent Earnout Liability because the triggering events that determine the number of Contingent Earnout Shares required to be issued include events that are not solely indexed to the common stock of the Company.

The remaining balance of $ 0.1 million relates to holders of Legacy Senti common stock that are subject to repurchase were accounted for as stock-based compensation expense and recorded as an expense, as there was no remaining service period.

The Contingent Earnout Liability was remeasured to fair value as of September 30, 2023, resulting in no change for the three months ended September 30, 2023, and a non-cash gain of $ 0.2 million for the nine months ended September 30, 2023, classified within change in fair value of contingent earnout liability in the condensed consolidated statements of operations and comprehensive loss.

Assumptions used in the valuation are described below:

September 30, December 31,

Current stock price $ 0.63 $ 1.41

Expected share price volatility 83.0 % 85.0 %

Risk-free interest rate 3.5 % 4.3 %

Estimated dividend yield 0.0 % 0.0 %

Expected term (years) 5.9 2.4

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

The Company’s revenue consists of amounts received related to research services provided to customers.

The Company earned no revenue in the three months ended March 31, 2024.

Contract Revenue

9 unchanged sentences

Spark may generally terminate the agreement upon 90 days prior written notice or 180 days prior written notice if the licensed promoter is in clinical trials or is being commercialized at the time of termination.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

The Company evaluated Spark’s optional rights to license, develop, manufacture and commercialize each of the promoter profiles to determine whether they provide Spark with any material rights to purchase the promoter licenses at an incremental discount.

5 unchanged sentences

The transaction price associated with the research services in this agreement consists of the fixed upfront amount of $ 3.0 million and variable consideration.

For Spark collaboration agreement, the Company will recognize the transaction price as research and development services are provided, using a cost-based input method to measure the progress toward completion of its performance obligation and to calculate the corresponding amount of revenue to recognize each period.

For Spark collaboration agreement, the Company recognized the transaction price as research and development services were provided, using a cost-based input method to measure the progress toward completion of its performance obligation and to calculate the corresponding amount of revenue to recognize each period.

The Company believes that the cost-based input method is the best measure of progress because other measurements would not reflect how the Company transfers the control related to the performance obligation to our customers.

2 unchanged sentences

In May 2023, the Company amended the research collaboration and license agreement with Spark to allow for an increase in budget and additional two-month extension of the research program.

As there were no changes to

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

performance obligations and the services to be provided are not distinct from those already transferred, the transaction was accounted for as a contract modification with no cumulative catch-up necessary.

In July 2023, the Company completed the research collaboration with Spark and the remaining upfront payment was recognized.

As of September 30, 2023 and December 31, 2022, there was a total of zero and $ 0.8 million, respectively, remaining of the upfront payment to be recognized over the remaining period of the research program.

For the three months ended September 30, 2023 and 2022, the Company recorded revenue, which was previously included in deferred revenue at the beginning of each period, of $ 0.2 million and $ 0.7 million, respectively.

For the nine months ended September 30, 2023 and 2022, the Company recorded revenue, which was previously included in the deferred revenue at the beginning of each period, of $ 0.8 million and $ 1.7 million, respectively.

Contract asset balances related to unbilled revenue for our collaboration agreements were zero as of September 30, 2023 and 2022, and are presented within prepaid expenses and other current assets on the condensed consolidated balance sheets.

As there were no changes to performance obligations and the services to be provided are not distinct from those already transferred, the transaction was accounted for as a contract modification with no cumulative catch-up necessary.

In July 2023, the Company completed the research program under the research collaboration and license agreement with Spark and the remaining upfront payment was recognized.

In November 2023, the Company entered into a Collaboration and Option Agreement with Celest Therapeutics (Shanghai) Co.

Subject to the terms and conditions of the Agreement, the Company and Celest will enter into a collaboration under which Celest will lead a pilot trial of a candidate product for the SENTI-301A program in mainland China, with certain technical support from the Company.

In addition, the Company agreed to grant an exclusive option to enter a license agreement with Celest to research, develop, manufacture and commercialize SENTI-301A in mainland China, Hong Kong, Macau, and Taiwan.

Outside of these jurisdictions, the Company would retain its rights in the SENTI-301A program.

Pursuant to the Agreement, with the exercise of the option and entering into a license agreement, the Company may become eligible to receive certain option exercise fee and milestone payments, in an aggregate amount of $ 156.0 million, as well as certain tiered royalty payments.

For the three months ended March 31, 2024 and 2023, the Company recorded revenue, which was previously included in deferred revenue at the beginning of each period, of zero and $ 0.4 million, respectively.

In 2021, the Small Business Innovation Research (“SBIR”) awarded the Company a grant in the amount of $ 2.0 million over two years subject to meeting certain terms and conditions.

1 unchanged sentence

Grant income was recognized when qualified research and development costs were incurred and the Company obtained reasonable assurance that the terms and conditions of the grant were met.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

In August 2023, the Company completed the research and development project which was the subject of the SBIR grant.

Entity-wide information

During the three months ended September 30, 2023, Customers A and B accounted for 75 % and 25 %, respectively, of revenue.

During the three months ended September 30, 2022, Customers A and B accounted for 86 % and 14 %, respectively, of revenue.

During the nine months ended September 30, 2023, Customers A and B accounted for 77 % and 23 %, respectively, of revenue.

During the nine months ended September 30, 2022, Customers A and B accounted for 82 % and 18 %, respectively, of revenue.

All revenues were generated in the United States for the three and nine months ended September 30, 2023 and 2022.

The Company earned no revenue in the three months ended March 31, 2024 and during the three months ended March 31, 2023, Customers A and B accounted for 81 % and 19 % of revenue, respectively.

All revenues were generated in the United States.

Stock-Based Compensation

8 unchanged sentences

On June 8, 2022, upon the Merger, the Company adopted a 2022 Stock Incentive Plan (the “2022 Plan”).

The 2022 Plan provides for the grant of incentive stock options to employees, and for the grant of non-statutory stock

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants.

The 2022 Plan provides for the grant of incentive stock options to employees, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants.

The exercise price of an option granted under the 2022 Plan shall not be less than the fair market value of a common stock share on the date of grant.

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In addition, the shares underlying any award granted under the 2016 Plan that are forfeited back to or repurchased or reacquired by the Company, will revert to and again become available for issuance under the 2022 Plan.

As of September 30, 2023, the total number of shares of common stock available for issuance under the 2022 Plan is 2,134,033 .

As of March 31, 2024, the total number of shares of common stock available for issuance under the 2022 Plan is 3,480,763 .

2022 Inducement Equity Plan

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The exercise price of an option granted under the 2022 Inducement Plan shall not be less than the fair market value of a common stock share on the date of grant.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Stock options granted under the 2022 Inducement Plan generally vest over four years and expire no later than ten years after the grant date.

The Company initially reserved 2,000,000 shares of common stock for issuance under the 2022 Inducement Plan.

As of September 30, 2023, the total number of shares of common stock available for issuance under the 2022 Inducement Plan is 1,176,816 .

As of March 31, 2024, the total number of shares of common stock available for issuance under the 2022 Inducement Plan is 1,460,050 .

2022 Employee Stock Purchase Plan

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The Company’s ESPP operates with rolling offering periods, which are generally 24 months.

On November 15, 2023, upon termination of the then-current offering period in accordance with the terms of the ESPP, the Company suspended the ESPP and no new offering periods may commence under the ESPP until such time as later authorized by the Company.

The Company initially reserved 592,584 shares of common stock for issuance under the ESPP.

On the first day of each year commencing January 1, 2023, the 2022 Plan will automatically increase by 1 % of the outstanding number of shares of common stock of the Company on the last day of the preceding calendar year or such lesser number of shares as approved by the Company’s Board of Directors prior to the effective date of the annual increase.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

As of September 30, 2023, the total number of shares of common stock available for issuance under the ESPP is 546,155 .

Stock options

The following table summarizes the Company’s stock option activity and related information under all equity plans, excluding performance and market awards:

Number of Options Weighted-Average Exercise Price Weighted-Average

Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands)

Outstanding at December 31, 2022

4,191,426 $ 3.18 9.1 $ 6

Granted 2,850,196 $ 1.62

Forfeited ( 542,863 ) $ 3.60

Outstanding at September 30, 2023

6,498,759 $ 2.46 8.1 $ —

Vested and exercisable at September 30, 2023

1,853,574 $ 3.13 7.6 $ —

The weighted-averag e gra nt date fair values of stock options granted during the nine months ended September 30, 2023 and 2022 were $ 1.17 and $ 1.27 , respectively.

The aggregate intrinsic values of stock options exercised during the nine months ended September 30, 2023 and 2022 were none and $ 2.4 million, respectively.

As of September 30, 2023, the unrecognized stock-based compensation expense related to stock options was approximately $ 6.5 million, expected to be recognized over a weighted-average period of 2.4 years.

Early Exercise of Stock Options into Restricted Stock

For the nine months ended September 30, 2023 and 2022, the Company issued zero shares of common stock upon exercise of unvested stock options.

As of September 30, 2023 and December 31, 2022, 67,520 and 105,500 shares were held by employees subject to repurchase at an aggregate price of $ 0.2 million a nd $ 0.3 million, respectively.

Performance Awards

In connection with the Merger, on December 19, 2021, Legacy Senti approved 8,400,892 performance award options to existing employees that vest contingent upon the satisfaction of both a four -year service condition and a performance condition tied to the consummation of the Merger.

The awards and the associated recognition of stock-based compensation were contingent on the Merger being consummated.

As of the approval date of the performance awards, Legacy Senti did not have sufficient common stock available for issuance.

Upon the Merger, the Company increased the number of shares authorized and 6,796,074 awards were granted on June 8, 2022.

Refer to Note 7, Stockholders’ Equity (Deficit), for further details of the shares of common stock authorized.

Number of Options Weighted-Average Exercise Price Weighted-Average

Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands)

Outstanding at December 31, 2022

5,368,501 $ 9.92 9.0 $ —

Forfeited ( 266,081 ) $ 9.92

Outstanding at September 30, 2023

5,102,420 $ 9.92 8.0 $ —

Vested and exercisable at September 30, 2023

1,699,129 $ 9.92 8.0 $ —

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

There were no performance based options granted or exercised during the nine months ended September 30, 2023, and there were 6,796,074 performance based options granted and no performance based options exercised during the nine months ended September 30, 2022.

As of September 30, 2023, the unrecognized stock-based compensation expense related to performance based options was approximately $ 4.7 million, expected to be recognized over a weighted-average period of 1.7 years.

Market Awards

In connection with the Business Combination Agreement with DYNS, on December 19, 2021, Legacy Senti approved 605,451 market award options to its co-founder and Chief Executive Officer, Dr.

Timothy Lu, that vest contingent upon the satisfaction of all three of the following conditions:

a service condition, a performance condition tied to the consummation of the Merger, and market conditions.

The market condition is achieved in four tranches, where 25 % of the options will vest when the trading price of the Company’s stock is above various thresholds of price per share.

The award and the associated recognition of stock-based compensation were contingent on the Merger being consummated.

The estimated fair value of the market awards at the grant date was based on a Monte Carlo simulation valuation model.

As of the approval date, Legacy Senti did not have sufficient common stock available for issuance to allow for exercise of the stock options.

Upon the Merger, the Company increased the number of shares authorized and 315,748 awards were granted on June 8, 2022.

Through September 30, 2023 , these market awards did not meet the vesting thresholds.

Refer to Note 7, Stockholders’ Equity (Deficit), for further details of the shares of common stock authorized.

The were no market based options granted or exercised during the nine months ended September 30, 2023, and there were 315,748 market based options granted and no market based options exercised during the nine months ended September 30, 2022.

As of September 30, 2023, the unrecognized stock-based compensation expense related to market based options was approximately $ 0.3 million, expected to be recognized over a weighted-average period of 0.7 years.

Restricted Stock Units

The following table summarizes the Company’s restricted stock units activity and related information under all equity plans:

Number of Restricted Stock Units Weighted-Average Grant Date Fair Value

Outstanding at December 31, 2022

447,948 $ 2.50

Forfeited ( 195,228 ) $ 2.50

Outstanding at September 30, 2023

252,720 $ 2.50

As of September 30, 2023, the unrecognized stock-based compensation expense related to restricted stock units was approximately $ 0.3 million, expected to be recognized over a weighted-average period of 1.0 years.

On the first day of each year commencing January 1, 2023, the ESPP will automatically increase by 1 % of the outstanding number of shares of common stock of the Company on the last day of the preceding calendar year or such lesser number of shares as approved by the Company’s Board of Directors prior to the effective date of the annual increase.

As of March 31, 2024, the total number of shares of common stock available for issuance under the ESPP is 793,870 .

Stock-Based Compensation Expense

The Company estimates the fair value of stock options using a Black-Scholes option-pricing model.

The fair value of restricted stock is based on the fair value of the Company’s common stock on the grant date.

The Company uses the assumptions below for the Black-Scholes option pricing model, which are subjective and generally require significant judgment.

Fair Value of Common Stock — The fair value of the shares of common stock has historically been determined by the Company’s board of directors as there was no public market for the common stock.

The board of directors determined the fair value of the common stock by considering a number of objective and subjective factors, including:

third-party valuations of the Company’s common stock, the valuation of comparable companies, the Company’s operating and financial performance, and general and industry-specific economic

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

outlook, amongst other factors.

As of the closing of the Merger and going forward, the fair value of common stock will be based on the publicly traded market value.

Expected Term — The expected term represents the period that the Company’s stock options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).

The expected term for the ESPP purchase rights is the length of the purchase period.

Volatility — The expected volatility is based on the average historical volatility of comparable publicly-traded peer companies, over a period equal to the expected term of the stock option grants, as the Company was not publicly traded prior to the Merger and does not have a trading history for its common stock for a sufficient period of time subsequent to the Merger.

Risk-free Rate — The risk-free rate assumption is based on the U.S.

Treasury zero-coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

Dividends — The Company has never paid dividends on its common stock and does not anticipate paying dividends on common stock.

Therefore, the Company uses an expected dividend yield of zero.

The assumptions used to determine the grant date fair value of non-market based, stock options granted were as follows, presented on a weighted-average basis:

Nine Months Ended September 30,

Expected term (in years) 5.9 6.5

Expected volatility 83 % 79 %

Risk-free interest rate 3.5 % 3.0 %

Dividend yield — —

Total stock-based compensation expense was as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

General and administrative $ 1,338 $ 3,239

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Total stock-based compensation expense $ 1,258 $ 3,587

In August 2023, in connection with the GeneFab transaction, the Board of Directors approved the modification of equity awards as part of termination of employment for the Co mpany's employees transferred to GeneFab, including the Company’s Chief Technology Officer.

The award modifications included the acceleration of certain non-vested stock options and the extension of the post-termination exercise period of certain vested stock options.

The Company accounted for the award modifications under ASC 718, Compensation – Stock Compensation .

During the three and nine months ended September 30, 2023, the Company recorded a one-time, noncash incremental compensation expense net of the required reversal of previously recognized compensation attributed to non-vested awards in the amount of $( 2.0 ) million related to the equity awards modifications of the employees that were

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

extended offers of employment by GeneFab which was included in net income from discontinued operations in the condensed consolidated statement of operations.

Total stock-based compensation expense from discontinued operations was $( 2.1 ) million and $ 0.2 million for the three months ended September 30, 2023 and 2022, respectively, and $( 2.0 ) million and $ 0.6 million for the nine months ended September 30, 2023 and 2022, respectively.

No provision for income taxes was recorded for the three and nine months ended September 30, 2023 and 2022, respectively.

Deferred tax assets generated from the Company’s net operating losses have been fully reserved, as the Company believes it is not more likely than not that the benefit will be realized due to the Company’s cumulative losses generated to date.

Total stock-based compensation expense from discontinued operations was zero and $ 0.2 million for the three months ended March 31, 2024 and 2023 , respectively.

The Company’s income tax provision for the three months ended March 31, 2024 and 2023 is zero , respectively.

While the company is subject to federal and state income taxes in various jurisdictions, due to cumulative losses their current income tax liability is zero and deferred tax assets generated from the Company’s net operating losses have been subject to a full valuation allowance, as the Company believes it is not more likely than not that the benefit will be realized due to the Company’s losses generated to date.

Net Loss Per Share

A reconciliation of net loss available to common stockholders and the number of shares in the calculation of basic and diluted loss per share is as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31,

Net loss from continuing operations $ ( 12,111 ) $ ( 13,852 )

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The following potential common stock securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (on an as-converted basis):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Stock options to purchase common stock 11,848,295 11,792,908

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GeneFab Transaction , for further details of the GeneFab transaction.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Commitments and Contingencies

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The lease will expire in 2032 with future undiscounted operating lease payments of $ 46.0 million over an initial lease period of eleven years .

Refer to Note 6, Operating Leases , for further details of the leases.

Refer to Note 6.

Operating Leases , for further details of the leases.

In 2021, the Company entered into a three-year collaboration and option agreement with BlueRock Therapeutics LP (“BlueRock”) under which the Company granted BlueRock an option to acquire an exclusive or non-exclusive license to develop, manufacture and commercialize cell therapy products.

Refer to Note 13, Related Parties , for details into the BlueRock agreement.

Refer to Note 13.

Related Parties , for details into the BlueRock agreement.

In consideration for the option, the Company is responsible for up to $ 10.0 million in costs and expenses incurred over the three-year term.

As of September 30, 2023, purchase commitments related to sponsored research agreements amounted to approximately $ 0.6 million.

The Company has entered into license agreements under which it is obligated to make annual maintenance payments of $ 0.1 million and specified milestone and royalty payments.

Future milestone and royalty payments under these agreements are not considered contractual obligations since the payments under these agreements are contingent upon future events, such as the Company’s achievement of specified development, regulatory, and sales milestones, or generating product sales.

As of September 30, 2023, the Company is unable to estimate the timing or likelihood of achieving these milestones or generating future product sales.

Following the Closing, former holders of Legacy Senti common stock and preferred stock may receive up to 2,000,000 additional shares of the Company’s common stock in the aggregate, in two equal tranches of 1,000,000 shares of common stock per tranche.

Refer to Note 7, Stockholders’ Equity (Deficit), for further details of the contingent earnout liability.

Legal Proceedings

The Company is subject to claims and assessments from time to time in the ordinary course of business but does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Indemnification

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Related Parties

NEA held 4,429,725 shares of the Company’s common stock as of September 30, 2023 and December 31, 2022.

NEA held one of the six seats on the Company’s Board of Directors as of September 30, 2023 and December 31, 2022.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Bayer Healthcare LLC

On May 19, 2022, Legacy Senti issued to Bayer a $ 5.2 million unsecured convertible promissory note (“the “May 2022 Note”).

On June 8, 2022, the May 2022 Note was automatically cancelled and exchanged for 517,500 shares of Common Stock at a price of $ 10.00 per share.

On May 21, 2021, the Company entered into a collaboration and option agreement (“BlueRock Agreement”) with BlueRock, a wholly-owned subsidiary of Bayer, pursuant to which the Company granted to BlueRock an option (“BlueRock Option”), on a collaboration program-by-collaboration program basis, to obtain an exclusive or non-exclusive license to develop, manufacture and commercialize cell therapy products that contain cells of specified types and which incorporate an option gene circuit from such collaboration program or a closely related derivative gene circuit.

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Under the BlueRock Agreement, the specific financial terms for milestone payments and royalties will be negotiated and agreed to only after the option is exercised.

Bayer held 5,878,488 shares, of the Company’s common stock as of September 30, 2023 and December 31, 2022.

Bayer held one of the six seats on the Company’s Board of Directors as of September 30, 2023 and December 31, 2022.

Bayer’s parent company is Bayer AG, which served as the lead investor in our Series B financing prior to the Merger through its Leaps by Bayer unit.

Bayer held 5,878,488 shares, of the Company’s common stock as of March 31, 2024 and December 31, 2023.

Accordingly, Bayer is considered a related party.

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Refer to Note 4.

Fair Value Measurement.

The Company also subleased its manufacturing facility in Alameda to GeneFab and recorded sublease income of $ 0.9 million including variable costs charged for the three and nine months ended September 30, 2023.

As of September 30, 2023, the Company had $ 1.2 million of sublease rent and other charges due from GeneFab which are included in GeneFab receivable on the condensed consolidated balance sheet.

In connection with the services agreement entered into with GeneFab, the Company is entitled to $ 18.9 million for future services under the agreement, of which $ 17.3 million remained in GeneFab prepaid expenses as of September 30, 2023.

Additionally, amounts due from GeneFab related to costs incurred by Senti on its behalf were $ 1.4 million as of September 30 2023 and were recorded in GeneFab receivable on the condensed consolidated balance sheet.

The Company incurred $ 1.2 million of research and development expenses under the services agreement during the three and nine months ended September 30, 2023.

Fair Value Measurements.

The Company also subleased its manufacturing facility in Alameda to GeneFab and recorded sublease income of $ 1.5 million including variable costs charged for the three months ended March 31, 2024.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

In connection with the services agreement entered into with GeneFab, the Company is entitled to $ 18.9 million for future services under the agreement, of which $ 11.3 million remained in GeneFab prepaid expenses as of March 31, 2024.

Additionally, amounts due from GeneFab related to costs incurred by Senti on its behalf were $ 0.9 million as of March 31, 2024 and were recorded in GeneFab receivable on the condensed consolidated balance sheet.

The Company incurred $ 3.6 million of research and development expenses under the services agreement during the three months ended March 31, 2024.

Based on the intricacies of the GeneFab Transaction noted above and in Note 3.

GeneFab Transaction , we have determined that GeneFab is a related party.

Subsequent Events

On November 6, 2023, the Company entered into a Collaboration and Option Agreement (the “Agreement”) with Celest Therapeutics (Shanghai) Co.

Ltd., a limited company organized under the laws of the People’s Republic of China (“Celest”).

Subject to the terms and conditions of the Agreement, the Company and Celest will enter into a collaboration under which Celest will lead a pilot trial of SENTI-301A in mainland China, with certain technical support from the Company.

Outside of these jurisdictions, the Company would retain its rights in SENTI-301A.

Pursuant to the Agreement, and beginning with the exercise of the option and entering into a license agreement, the Company may become eligible to receive certain milestone payments, in an aggregate amount of $ 156 million, as well as certain tiered royalty payments.

The Agreement contains representations, warranties and covenants of the Company and Celest that are customary for a transaction of this nature.

Entry into a Sublease Agreement

On May 7, 2024, the Company entered into a sublease agreement, or the Sublease, with GeneFab, LLC, as the subtenant for approximately 7,177 rentable square feet, or RSF, of certain space located at our corporate headquarters, Two Corporate Drive, First Floor, South San Francisco, CA 94080.

The term of Sublease will be effective on May 7, 2024, subject to the consent by the landlord, Britannia Biotech Gateway Limited Partnership and will expire April 30, 2027, subject to earlier termination in accordance with the terms of the Sublease.

Under the Sublease, GeneFab was granted a right of first refusal to sublease additional space of approximately three thousand RSF of the premise as described in the Sublease under certain conditions.

The Sublease contains customary events of default, representations, warranties and covenants.

As part of a prior agreement with GeneFab, GeneFab was permitted to access certain portions of the subleased premises.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements