What changed in this filing

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Item 1. Financial Statements

2024-08-13 compared with 2024-05-09 · 211 added, 132 removed, 539 unchanged (39% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

March 31, December 31,

June 30, December 31,

Cash and cash equivalents $ 15,860 $ 35,926

18 unchanged sentences

Operating lease liabilities 4,329 4,031

Contingent earnout liability 20 —

Current liabilities of discontinued operations — 243

1 unchanged sentence

Operating lease liabilities, net of current portion 31,311 33,538

Contingent earnout liability 20 20

GeneFab Option - related party 2,386 6,331

Contingent earnout liability, net of current portion — 20

Early exercise liability, net of current portion — 10

1 unchanged sentence

Commitments and contingencies (Note 12)

June 30, December 31,

Stockholders’ equity:

Preferred stock, $ 0.0001 par value;

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

10,000,000 shares authorized at June 30, 2024 and December 31, 2023;

zero shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.0001 par value;

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

500,000,000 shares authorized at June 30, 2024 and December 31, 2023;

4,572,432 and 4,569,900 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 311,805 311,256

Accumulated other comprehensive income — —

Accumulated deficit ( 267,658 ) ( 244,344 )

1 unchanged sentence

Total liabilities and stockholders’ equity $ 86,913 $ 119,484

All periods presented have been retroactively adjusted to reflect the 1-for-10 reverse stock split effected on July 17, 2024.

Refer to Note 2.

Summary of Significant Accounting Policies for further information.

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

2 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Contract revenue $ — $ 687 $ — $ 1,723

2 unchanged sentences

Operating expenses

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

Research and development (including related party cost of $ 3,637 and $ — , $ 7,269 and $ — respectively)

9,151 6,876 17,929 13,936

General and administrative 4,205 9,249 11,728 18,440

13 unchanged sentences

Net loss ( 11,203 ) ( 18,697 ) ( 23,314 ) ( 37,419 )

Other comprehensive gain (loss)

Unrealized gain on investments — 2

Other comprehensive loss

Unrealized loss on investments — ( 3 ) — ( 1 )

Comprehensive loss $ ( 11,203 ) $ ( 18,700 ) $ ( 23,314 ) $ ( 37,420 )

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net loss per share, basic and diluted

3 unchanged sentences

Weighted-average shares outstanding, basic and diluted 4,572,010 4,427,726 4,571,377 4,417,411

All periods presented have been retroactively adjusted to reflect the 1-for-10 reverse stock split effected on July 17, 2024.

Refer to Note 2.

Summary of Significant Accounting Policies for further information.

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

10 unchanged sentences

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

Unrealized gain on investments — — — 2 — 2

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

1 unchanged sentence

4,571,166 1 312,548 — ( 256,455 ) 56,094

Vesting of early exercise of common stock options 1,266 — 33 — — 33

Stock-based compensation expense — — ( 776 ) — — ( 776 )

Unrealized loss on investments — — — — — —

Net loss — — — — ( 11,203 ) ( 11,203 )

Balance as of June 30, 2024

4,572,432 $ 1 $ 311,805 $ — $ ( 267,658 ) $ 44,148

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

Deficit Total

Stockholders’

Shares Amount

Balance as of December 31, 2022

2 unchanged sentences

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

Unrealized gain on investments — — — 2 — 2

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

1 unchanged sentence

4,407,403 — 304,345 3 ( 192,008 ) 112,340

Vesting of early exercise of common stock options 1,266 — 34 — — 34

Issuance of common stock under Employee Stock Purchase Plan (ESPP) 37,715 — 308 — — 308

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

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

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

Balance as of June 30, 2023

4,446,384 $ — $ 308,121 $ — $ ( 210,705 ) $ 97,416

All periods presented have been retroactively adjusted to reflect the 1-for-10 reverse stock split effected on July 17, 2024.

Refer to Note 2.

Summary of Significant Accounting Policies for further information.

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

9 unchanged sentences

Stock-based compensation expense 482 7,197

Loss on sale of property and equipment - related party 70 —

Other non-cash charges 74 ( 5 )

16 unchanged sentences

Cash flows from financing activities

Proceeds from issuance of common stock under Common Stock Purchase Agreement — 308

Principal finance lease payments — ( 62 )

3 unchanged sentences

Cash, cash equivalents, and restricted cash, end of period $ 19,406 $ 40,088

Six Months Ended June 30,

Reconciliation of cash, cash equivalents and restricted cash

2 unchanged sentences

Total $ 19,406 $ 40,088

Three Months Ended March 31,

Supplemental disclosures of noncash investing and financing and items

24 unchanged sentences

These consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern.

generally accepted accounting principles (“U.S.

GAAP”) assuming the Company will continue as a going concern.

The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

2 unchanged sentences

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.

At June 30, 2024 and December 31, 2023, the Company had an accumulated deficit of $ 267.7 million and $ 244.3 million , respectively.

The Company’s net losses were $ 23.3 million and $ 37.4 million for the six months ended June 30, 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 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.

As of June 30, 2024 and December 31, 2023, the Company had cash and cash equivalents of $ 15.9 million and $ 35.9 million, respectively.

As of August 13, 2024, the issuance date of the condensed consolidated financial statements as of and for the three and six months ended June 30, 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.

12 unchanged sentences

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.

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 (the “Bid Price Rule”).

On July 17, 2024, the Company filed a Certificate of Amendment to Second Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, pursuant to which the Company effected a 1-for-10 reverse stock split (the “Reverse Stock Split”) of Company’s issued and outstanding common stock.

The Reverse Stock Split became effective as of 5:00 p.m.

(Eastern Time) on July 17, 2024, and the Company’s common stock began trading on a split-adjusted basis on the Nasdaq Capital Market at the market open on July 18, 2024.

On August 2, 2024, the Company received notification from Nasdaq that for ten consecutive business days, the closing bid price of the Company’s common stock was at least $1.00 per share, and accordingly, the Company regained compliance with the Bid Price Rule, and that the matter is now closed.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S.

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S.

GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”).

4 unchanged sentences

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 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 determined that the assets sold to GeneFab in August 2023 met the criteria for presentation as a discontinued operation.

As a result, the Company has retrospectively restated its condensed consolidated statements of operations for the three and six months ended June 30, 2023 to reflect the operating results 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.

2 unchanged sentences

Unless otherwise specified, the disclosures in these condensed consolidated financial statements refer to continuing operations only.

Use of Estimates

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

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.

Use of Estimates

The preparation of financial statements in conformity with U.S.

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 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.

Reverse Stock Split

On July 17, 2024, the Company effected a 1 for 10 reverse stock split of its common stock, $ 0.0001 par value.

All common stock amounts and references have been retroactively adjusted for all figures presented to reflect this split unless specifically stated otherwise.

No fractional shares were issued as a result of the reverse stock split, as fractional shares of Common Stock were rounded down to the nearest whole share.

Refer to Note 7.

Stockholders’ Equity for additional information related to the reverse stock split.

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.

As of June 30, 2024 and 2023, the Company has not experienced any credit losses in such accounts or investments.

As of June 30, 2024 , t he Company has prepaid future manufacturing and research services of $ 7.7 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 $ 17.4 million, subject to satisfaction of certain conditions.

4 unchanged sentences

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 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.

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 June 30, 2024 and its results of operations for the three and six months ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023.

The results of operations for the three and six months ended June 30, 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.

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.

There have been no material changes to the Company’s significant accounting policies as of and for the three and six months ended June 30, 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.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Recent Accounting Standards

12 unchanged sentences

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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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.

5 unchanged sentences

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 remaining $ 18.9 million is anticipated to be paid to the Company in the first half of 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.

4 unchanged sentences

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.

As of June 30, 2024, $ 7.7 million of this initial prepaid amount is remaining for future manufacturing and research activities.

As part of the transaction, the Company subleased the facility in Alameda, California to GeneFab which will support the clinical manufacturing of the Company’s chimeric antigen receptor natural killer (CAR-NK) programs, including SENTI-202.

1 unchanged sentence

Operating Leases for additional information on the sublease.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

The Company agreed to grant a license to GeneFab under certain of its intellectual property rights to conduct manufacturing services and to research, develop, manufacture and commercialize products outside of oncology, pursuant to a license agreement under negotiation (the “Non-Oncology License”).

2 unchanged sentences

All 45 employees accepted the offers of employment and are actively engaged in providing manufacturing and research activities to the Company.

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 per share purchase price of $ 1.01867 (the “GeneFab Option”).

GeneFab was granted an option to purchase up to 1,963,344 shares (i.e., up to $ 20.0 million worth) of the Company’s common stock at a per share purchase price of $ 10.18670 (the “GeneFab Option”).

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

1 unchanged sentence

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.

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.

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.

17 unchanged sentences

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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Discontinued Operations

1 unchanged sentence

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 gain from the disposal of the business.

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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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):

March 31, December 31,

June 30, 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 March 31,

Three Months Ended June 30, Six months ended June 30,

2024 2023 2024 2023

Operating expenses:

5 unchanged sentences

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

Three months ended March 31,

Six months ended June 30,

Operating activities (noncash adjustments to net income):

7 unchanged sentences

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

March 31, 2024

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

June 30, 2024

Adjusted Cost Estimated Fair Value Cash and cash equivalents Restricted cash

3 unchanged sentences

Total $ 19,406 $ 19,406 $ 15,860 $ 3,546

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

December 31, 2023

11 unchanged sentences

Change in fair value included in other income (expense) 195

Fair value as of March 31, 2024

Fair value as of June 30, 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 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.

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, as compared to 13.78 % as of June 30, 2024 based on published CCC-rated corporate bond yields.

GeneFab Option

3 unchanged sentences

Change in fair value included in other income (expense) 3,945

Fair value as of March 31, 2024

Fair value as of June 30, 2024

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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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

The significant assumptions utilized in the valuation are described below:

March 31, December 31,

June 30, December 31,

Current stock price $ 2.76 $ 6.60

2 unchanged sentences

Expected term (years) 2 2.5

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

GeneFab Economic Share

3 unchanged sentences

Change in fair value included in other income (expense) ( 1,418 )

Fair value as of March 31, 2024

Fair value as of June 30, 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.

1 unchanged sentence

The significant assumptions utilized in the valuation are described below:

March 31, December 31,

June 30, December 31,

GeneFab equity value $ 8,862 $ 35,448

5 unchanged sentences

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

March 31, December 31,

June 30, December 31,

Prepaid expenses (including prepaid rent) 2,046 2,546

3 unchanged sentences

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

March 31, December 31,

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

June 30, December 31,

Leasehold improvements $ 22,648 $ 22,648

5 unchanged sentences

Property and equipment, net $ 23,253 $ 25,338

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

Depreciation totaled $ 1.0 million and $ 0.8 million for the three months ended June 30, 2024 and 2023, respectively and $ 2.0 million and $ 1.2 million for the six months ended June 30, 2024 and 2023, respectively.

Accrued Expenses and Other Current Liabilities

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

March 31, December 31,

June 30, December 31,

Accrued employee-related expenses $ 1,343 $ 3,555

13 unchanged sentences

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,

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Operating lease cost $ 1,315 $ 1,320 $ 2,631 $ 2,629

2 unchanged sentences

Total lease cost $ 1,558 $ 1,723 $ 3,151 $ 3,307

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31,

Six Months Ended June 30,

Other information:

3 unchanged sentences

Weighted-average discount rate 9.2 % 9.1 %

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

For the three months ended June 30, 2023, the Company received $ 1.0 million of the $ 17.5 million tenant improvement allowance and for the six months ended June 30, 2023, the Company received $ 2.0 million of the $ 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):

As of June 30, 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 June 30, 2024, were as follows (in thousands):

2024, for the remainder of the year $ 3,668

4 unchanged sentences

Total lease liabilities $ 35,640

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.

As of June 30, 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.

Lessor Accounting

1 unchanged sentence

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.

Notes to Condensed Consolidated Financial Statements

On June 12, 2024, the Company entered into a sublease with GeneFab for a portion of the Company’s corporate headquarter premises in South San Francisco.

Total sublease income to be earned from this operating lease, in aggregate, will be approximately $ 1.3 million over the term of the sublease agreement.

A summary of total sublease income for the period relating to the Company’s operating leases is as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Sublease income - base rent 1,240 — 2,443 —

Sublease income - variable and other 347 — 604 —

Total sublease income $ 1,587 $ — $ 3,047 $ —

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

Maturities of the Company’s sublease payments from GeneFab for the sublease of both Alameda facility and the corporate headquarters as of June 30, 2024, were as follows (in thousands):

2024, for the remainder of the year $ 2,434

1 unchanged sentence

Total undiscounted sublease payments

Refer to Note 13.

Related Parties for GeneFab related party considerations.

Stockholders’ Equity

2 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 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,

although, no preferred stock is outstanding as of June 30, 2024 and December 31, 2023.

Through June 30, 2024, no cash dividends have been declared or paid.

On July 10, 2024, the Board approved a reverse stock split of the Common Stock at a ratio of 1-for-10, $ 0.0001 par value.

Effective as of 5:00 p.m.

Eastern Time on July 17, 2024, the Company filed the Reverse Stock Split Amendment and effected a 1-for-10 reverse stock split of its shares of Common Stock (the “Reverse Stock Split”).

All common stock amounts and references have been retroactively adjusted for all figures presented to reflect this split unless specifically stated otherwise.

No fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who would have otherwise been entitled to receive fractional shares as a result of the Reverse Stock Split were entitled to a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would have otherwise been entitled multiplied by the closing sales price per share of the Common Stock (as adjusted for the Reverse Stock Split) on The Nasdaq Capital Market on July 17, 2024, the last trading day immediately preceding the effective time of the Reverse Stock Split.

Trading of the Company’s Common Stock on The Nasdaq Capital Market commenced on a split-adjusted basis as of market open on July 18, 2024, under the existing trading symbol “SNTI.”

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

At June 30, 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:

June 30, December 31,

Common Stock Purchase Agreement 732,704 732,704

1 unchanged sentence

Restricted Stock Units (RSUs) issued and outstanding 73,404 22,528

Performance Stock Units (PSUs) issued and outstanding 116,567 —

Common stock shares available for future issuance under equity plans 571,253 367,228

8 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 March 31, 2024 and December 31, 2023.

There were 10,000,000 shares designated as preferred stock and none were outstanding as of June 30, 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

month term of the Purchase Agreement.

On August 31, 2022, the Company entered into a Common Stock Purchase Agreement and a Registration Rights Agreement, as amended and restated on August 31, 2024 (collectively referred to as the “Purchase Agreement”) with Chardan Capital Markets LLC (“Chardan”).

Under the applicable NASDAQ rules, the Company may not issue to Chardan under the Purchase Agreement more than 872,704 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 10,000 shares of its common stock to Chardan and paid a $ 0.4 million document preparation fee.

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.

Other than the issuance of the commitment shares of the Company’s common stock to Chardan, the Company issued 130,000 shares of common stock through June 30, 2024 aggregating to net proceeds of $ 1.2 million, under the Purchase Agreement.

There were no shares issued under the Purchase Agreement during the six months ended June 30, 2024.

Contingent Earnout Equity

Following the closing of the Merger, 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.

Following the closing of the Merger, former holders of Legacy Senti common stock and preferred stock may receive up to 200,000 additional shares of the Company’s common stock in the aggregate, in two equal tranches of

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

100,000 shares of common stock per tranche.

The first and second tranches are issuable if the closing volume weighted average price (“VWAP”) per share of common stock quoted on the Nasdaq (or the exchange on which the shares of common stock are then listed) is greater or equal to $ 150.00 and $ 200.00 , respectively over any twenty trading days within any thirty-day trading period.

The first and second tranche term is two and three years , respectively, from the closing of the Merger.

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 first tranche term is two years from the closing of the Merger (the “First Tranche Term”) and the second tranche term is three years from the closing of the Merger (the “Second Tranche Term”) and together with the First Tranche Term, the “Tranche Terms”).

If there is a change of control within the applicable Tranche Term-following the closing of the Merger that results in a per share price equal to or in excess of the $ 150.00 and $ 200.00 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 $ 150.00 share price milestone for the first tranche was not satisfied during the First Tranche Term and any such rights to receive the first tranche of additional shares of the Company’s common stock have been cancelled and extinguished.

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.

The Company earned no revenue in the three and six months ended June 30, 2024.

Contract Revenue

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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.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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.

10 unchanged sentences

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.

For the three months ended June 30, 2024 and 2023, the Company recorded revenue, which was previously included in deferred revenue at the beginning of each period, of zero and $ 0.2 million, respectively.

For the six months ended June 30, 2024 and 2023, the Company recorded revenue, which was previously included in deferred revenue at the beginning of each period, of zero and $ 0.6 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

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.

The Company earned no revenue in the three and six months ended June 30, 2024.

During the three months ended June 30, 2023, Customers A and B accounted for 73 % and 27 % of revenue, respectively.

During the six months ended June 30, 2023, Customers A and B accounted for 78 % and 22 % of revenue, respectively.

All revenues were generated in the United States.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation

5 unchanged sentences

All awards previously granted and outstanding as of the effective date of the Merger, were adjusted to reflect the impact of the Merger, but otherwise remain in effect pursuant to their original terms.

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.

2022 Stock Incentive Plan

7 unchanged sentences

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

As of June 30, 2024, the total number of shares of common stock available for issuance under the 2022 Plan is 407,835 .

2022 Inducement Equity Plan

2 unchanged sentences

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 200,000 shares of common stock for issuance under the 2022 Inducement Plan.

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 .

As of June 30, 2024, the total number of shares of common stock available for issuance under the 2022 Inducement Plan is 163,418 .

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

2022 Employee Stock Purchase Plan

5 unchanged sentences

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 .

As of June 30, 2024, the total number of shares of common stock available for issuance under the ESPP is 79,387 .

Stock-Based Compensation Expense

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

General and administrative $ ( 890 ) $ 3,081 $ 448 $ 6,320

Research and development 114 472 34 821

Total stock-based compensation expense from continuing operations ( 776 ) 3,553 482 7,141

Stock-based compensation expense from discontinued operations — ( 119 ) — 56

Total stock-based compensation expense $ ( 776 ) $ 3,434 $ 482 $ 7,197

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.

Negative stock-based compensation expense for the three months ended June 30, 2024 was caused by a $ 1.8 million reversal of previously recognized expense attributable to performance awards forfeited due to employment terminations.

The Company’s income tax provision for the three and six months ended June 30, 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.

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net loss from continuing operations $ ( 11,203 ) $ ( 14,250 ) $ ( 23,314 ) $ ( 28,103 )

6 unchanged sentences

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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Stock options to purchase common stock 1,015,502 1,205,673 1,015,502 1,205,673

1 unchanged sentence

Restricted stock units outstanding 73,404 33,588 73,404 33,588

Performance stock units outstanding 116,567 0 116,567 0

Contingent earnout common stock 100,000 200,000 100,000 200,000

9 unchanged sentences

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.

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.

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

1 unchanged sentence

Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party.

Some of the provisions will limit losses to those arising from third-party actions.

Some of the provisions will limit losses to those

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

arising from third-party actions.

In some cases, the indemnification will continue after the termination of the agreement.

6 unchanged sentences

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.

The Company is responsible for up to $ 10 million in costs and expenses incurred in connection with the research plan and related activities to be conducted over a term of three years as specified in the collaboration and option agreement.

If the Company and BlueRock agree to add new research activities to the research plan, then BlueRock will be obligated to reimburse the Company for the costs and expenses incurred that, together with costs and expenses incurred under the initial research plan, exceed $ 10 million.

The Company was responsible for up to $ 10 million in costs and expenses incurred in connection with the research plan and related activities to be conducted over a three-year research term as specified in the collaboration and option agreement.

The Company completed the initial research plan and related activities in May 2024.

If the Company and BlueRock agree to add new research activities to the research plan, then BlueRock will be obligated to reimburse the Company for the costs and expenses incurred.

The Company concluded that the Agreement is not within the scope of ASC 808, Collaborative Arrangements , because the Company did not receive any consideration and therefore, is not exposed to both significant risks and rewards for the arrangement.

2 unchanged sentences

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 March 31, 2024 and December 31, 2023.

Bayer held 587,848 shares of the Company’s common stock as of June 30, 2024 and December 31, 2023.

Accordingly, Bayer is considered a related party.

10 unchanged sentences

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.

On June 12, 2024, The Company entered into a sublease agreement with GeneFab for a portion of the Company’s corporate headquarters in South San Francisco.

The Company has also subleased its manufacturing facility in Alameda to GeneFab and recorded total sublease income of $ 3.0 million including variable costs charged for the six months ended June 30, 2024.

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 $ 7.7 million remained in GeneFab prepaid expenses as of June 30,

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.

Additionally, amounts due from GeneFab related to costs incurred by Senti on its behalf were $ 0.9 million as of June 30, 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 June 30, 2024.

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

1 unchanged sentence

Subsequent Events

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.

Amended and Restated ChEF Purchase Agreement

On July 16, 2024, the Company entered into an amended and restated ChEF purchase agreement (the “A&R Purchase Agreement”) with Chardan in connection with its outstanding $ 50,000,000 equity facility to sell shares of the Company’s common stock, par value $ 0.0001 per share, to update the volume weighted average price purchase mechanics of the equity facility to permit Intraday VWAP Purchases (as defined in the A&R Purchase Agreement).

Reverse Stock Split Charter Amendment

On July 17, 2024, the Company filed a certificate of amendment to the Certificate of Incorporation to effectuate a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $ 0.0001 per share, which became effective as of 5:00 p.m.

Eastern Time on July 17, 2024.

As a result, every ten shares of the Company’s common stock issued or outstanding were automatically reclassified into one validly issued, fully-paid and non-assessable new share of common stock, subject to the treatment of fractional shares as described below, without any action on the part of the holders.

Proportionate adjustments were made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, and certain existing agreements.

The shares of common stock outstanding following the reverse stock split remain fully paid and non-assessable.

The reverse stock split did not affect the number of authorized shares of common stock or the par value of the common stock.

NASDAQ Bid Price Compliance

On August 3, 2024, the Company executed the agreement with California Institute of Regenerative Medicine (“CIRM”) for a grant award of $ 8 million.

Pursuant to the executed agreement with CIRM, the first tranche of the grant award is expected to be received in August 2024.

The CIRM grant will support the ongoing clinical development of SENTI-202.

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