What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-13 · 258 added, 227 removed, 523 unchanged (48% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

June 30, December 31,

September 30, December 31,

Cash and cash equivalents $ 10,479 $ 35,926

23 unchanged sentences

GeneFab Option - related party — 6,331

Other liabilities, net of current portion 2,543 —

Contingent earnout liability, net of current portion — 20

2 unchanged sentences

Commitments and contingencies (Note 13)

June 30, December 31,

September 30, December 31,

Stockholders’ equity:

Preferred stock, $ 0.0001 par value;

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

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

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

Common stock, $ 0.0001 par value;

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

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

4,586,957 and 4,569,900 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 312,517 311,256

9 unchanged sentences

(in thousands, except share and per share data)

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

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

2024 2023 2024 2023

3 unchanged sentences

Operating expenses

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

Research and development (including related party cost of $ 3,790 and $ 1,186 for the three months ended September 30, 2024 and 2023, respectively, and $ 11,059 and $ 1,186 for the nine months ended September 30, 2024 and 2023, respectively)

8,655 9,092 26,584 23,028

General and administrative 6,247 9,431 17,975 27,871

Impairment of long-lived assets 313 25,691 313 25,691

Total operating expenses 15,215 44,214 44,872 76,590

8 unchanged sentences

Other income (expense) ( 11 ) ( 14 ) ( 6 ) ( 26 )

Total other income, net 2,153 938 6,343 2,050

Total other income (expense), net ( 13,651 ) 7,261 ( 7,308 ) 9,311

Net loss from continuing operations ( 28,866 ) ( 36,615 ) ( 52,180 ) ( 64,718 )

Net loss from discontinued operations — ( 4,447 ) — ( 9,316 )

Net income from discontinued operations — 21,692 — 12,376

Net loss ( 28,866 ) ( 14,923 ) ( 52,180 ) ( 52,342 )

2 unchanged sentences

Comprehensive loss $ ( 28,866 ) $ ( 14,923 ) $ ( 52,180 ) $ ( 52,343 )

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

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

2024 2023 2024 2023

1 unchanged sentence

Net loss per share from continuing operations, basic and diluted $ ( 6.31 ) $ ( 8.24 ) $ ( 11.41 ) $ ( 14.62 )

Net loss per share from discontinued operations, basic and diluted — ( 1.00 ) — ( 2.11 )

Net income per share from discontinued operations, basic and diluted — 4.88 — 2.80

Net loss per share, basic and diluted $ ( 6.31 ) $ ( 3.36 ) $ ( 11.41 ) $ ( 11.82 )

20 unchanged sentences

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

Unrealized loss on investments — — — — — —

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

1 unchanged sentence

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

Common Stock Purchase Agreement settled in common stock, net of fees 3,593 — 10 — — 10

Issuance of common stock for vesting of restricted stock units 9,666 — — — — —

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

Stock-based compensation expense — — 668 — — 668

Net loss — — — — ( 28,866 ) ( 28,866 )

Balance as of September 30, 2024

4,586,957 $ 1 $ 312,517 $ — $ ( 296,524 ) $ 15,994

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

17 unchanged sentences

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

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

Stock-based compensation expense — — 409 — — 409

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

Balance as of September 30, 2023

4,447,650 $ — $ 308,564 $ — $ ( 225,628 ) $ 82,936

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

5 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

4 unchanged sentences

Accretion of discount on short-term investments — ( 1,069 )

Gain on disposal of business — ( 21,862 )

Change in fair value of contingent earnout liability — ( 207 )

2 unchanged sentences

Change in fair value of GeneFab Option - related party ( 6,331 ) ( 5,629 )

Impairment of long-lived assets 313 25,691

Stock-based compensation expense 1,150 7,606

Loss on sale of property and equipment - related party 107 —

Other non-cash charges 74 ( 5 )

Other non-cash charges, net 98 ( 21 )

Changes in assets and liabilities:

8 unchanged sentences

Operating lease liabilities ( 2,963 ) 114

Net cash from operating activities ( 20,027 ) ( 29,979 )

Other liabilities, net of current portion 113 —

Net cash used in operating activities ( 27,893 ) ( 45,358 )

Cash flows from investing activities

2 unchanged sentences

Purchases of property and equipment ( 15 ) ( 12,034 )

Net cash from investing activities ( 15 ) 8,834

Proceeds from sale of property and equipment 60 —

Net cash provided by investing activities 45 29,976

Cash flows from financing activities

Proceeds from CIRM Grant 2,430 —

Proceeds from issuance of common stock under Common Stock Purchase Agreement 10 308

Principal finance lease payments — ( 85 )

Net cash from financing activities — 246

Net decrease in cash and cash equivalents ( 20,042 ) ( 20,899 )

Net cash provided by financing activities 2,440 223

Nine Months Ended September 30,

Net decrease in cash, cash equivalents and restricted cash ( 25,408 ) ( 15,159 )

Cash, cash equivalents, and restricted cash, beginning of period 39,448 60,987

Cash, cash equivalents, and restricted cash, end of period $ 14,040 $ 45,828

Six Months Ended June 30,

Reconciliation of cash, cash equivalents and restricted cash

4 unchanged sentences

Purchases of property and equipment in accounts payable and accrued expenses $ — $ 3

Receivable in prepaid expenses and other current assets $ 52 $ —

Refer to Note 3.

27 unchanged sentences

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 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.

To date, the Company has raised aggregate gross proceeds of $ 302.5 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 redeemable convertible preferred stock, the issuance of convertible notes and, to a lesser extent, through collaboration agreements, government grants and loans.

On August 3, 2024, the Company executed an agreement with California Institute of Regenerative Medicine (the “CIRM Grant Agreement”) for a total grant award of $ 8.0 million.

Under the CIRM Grant Agreement, the Company must achieve certain operational milestones to receive the grant tranches.

Refer to Note 8.

CIRM Grant, for further details of the CIRM Grant Agreement.

At September 30, 2024 and December 31, 2023, the Company had an accumulated deficit of $ 296.5 million and $ 244.3 million , respectively.

The Company’s net losses were $ 52.2 million and $ 52.3 million for the nine months ended September 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 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.

The Company has concluded that substantial doubt exists that the Company’s cash and cash equivalents of $ 10.5 million as of September 30, 2024 are sufficient for the Company to continue as a going concern for at least one year from the issuance date of these condensed consolidated financial statements.

Additional funds will be necessary to maintain current operations and to continue research and development activities.

The Company’s

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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.

GeneFab Transaction , for further details of the GeneFab transaction.

The Company’s continued existence is dependent upon management’s ability to raise capital and develop profitable op erations.

Management is devoting substantially all of its efforts to developing its business and raising capital, which included the framework agreement with GeneFab, and there can be no assurance that the Company’s efforts will be successful.

No assurance can be given that management’s actions will result in profitable operations or the meeting of ongoing liquidity needs.

continued existence is dependent upon management’s ability to raise capital and ultimately develop profitable op erations.

While management is devoting substantially all of its efforts to developing the Company’s business and raising capital, there can be no assurance that the Company’s efforts will be successful.

Moreover, no assurance can be given that management’s actions will result in profitable operations or the meeting of ongoing liquidity needs.

NASDAQ Bid Price Compliance Notice

4 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 (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.

1 unchanged sentence

(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.

NASDAQ Audit Committee Requirement Notice

On October 22, 2024, the Company received a notice (the “Notice”) from Nasdaq indicating that the Company is no longer compliant with the audit committee requirements as set forth in Nasdaq Listing Rule 5605, the Company has until December 9, 2024 to regain compliance as provided in Nasdaq Listing Rule 5605(c)(4) which defines the cure period.

The Company is evaluating the membership of the audit committee and is exploring options to enable it to regain compliance with the Nasdaq Listing Rule 5605 prior to the expiration of the applicable cure period.

The Notice has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market.

Summary of Significant Accounting Policies

7 unchanged sentences

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

All long-lived assets of the Company are maintained in the United States.

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.

As a result, the Company has retrospectively restated its condensed consolidated statements of operations for the three and nine months ended September 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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

disposed business in the condensed consolidated statements of cash flows.

Supplemental disclosures related to discontinued operations for the statements of cash flows have been provided in Note 3.

1 unchanged sentence

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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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.

On July 17, 2024, the Company effected a 1 for 10 reverse stock split of its common stock (the “Reverse Stock Split”).

The par value per share and the number of authorized shares were not adjusted as a result of the Reverse Stock Split.

The shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities.

In addition, the shares available for grants under the Company’s incentive plans were adjusted as a result of the Reverse Stock Split.

All references to common stock, options to purchase common stock, outstanding common stock warrants, common stock share data, per share data, and related information contained in the condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.

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.

1 unchanged sentence

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 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.

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

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 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.

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated 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, 2024 and its results of operations for the three months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023.

The results of operations for the three and nine months ended September 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 consolidated financial statements but does not include all disclosures from the audited consolidated financial statements.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S.

1 unchanged sentence

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 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.

Other than the policy 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, 2024, as compared to the significant accounting policies described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2023, included in the Form 10-K filed with SEC on March 21, 2024.

California Institute for Regenerative Medicine Gran t

On August 3, 2024, the Company executed an agreement with the California Institute for Regenerative Medicine (“CIRM”) for a total grant award of $ 8.0 million (“CIRM Grant”) in support of the research project related to the ongoing clinical development of SENTI-202.

As the Company has the option to convert the CIRM Grant to a loan and thus may be required to repay some or all of the amounts awarded by CIRM, the Company accounted for this award as a liability.

Given the uncertainty in amounts due upon repayment, the Company has recorded amounts received without any discount or interest recorded, and upon determination of amounts that would become due, the Company will adjust accordingly.

Refer to Note 8.

CIRM Grant , for further details of the CIRM Grant.

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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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 condensed 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.

Concentration of Credit Risk

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

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

As of September 30, 2024 , t he Company has prepaid future manufacturing and research services of $ 3.9 million under an agreement with GeneFab for certain development and manufacturing services agreement which are recorded in GeneFab prepaid expenses - related party in the condensed consolidated balance sheets and $ 1.1 million receivable related to general and administrative services provided under the transition services agreement which are recorded in GeneFab receivable - related party in the condensed consolidated balance sheets .

The prepaid expenses 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.

Recent Accounting Standards

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

The Company is currently evaluating the potential impact of adopting this new guidance on its condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

5 unchanged sentences

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

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.

The Company is currently evaluating the potential impact of adopting this new guidance on its condensed consolidated financial statements and related disclosures.

The Company believes that the impact of recently issued accounting standards that are not yet effective will not be material to 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 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.

On August 7, 2023, the Company entered into a framework agreement (the “GeneFab 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 a lease agreement 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.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Concurrently with the transaction, the Company and GeneFab entered into a development and manufacturing services agreement (the “GeneFab 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 due at closing and was netted against prepayment due to GeneFab for future manufacturing and research activities.

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 total consideration in connection with the transaction was $ 37.8 million, 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 consideration (the “GeneFab Note Receivable”) is 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.

The GeneFab Note Receivable 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 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 was 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.

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

As of September 30, 2024, $ 3.9 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.

As a result of sublease event, the Company recognized an impairment of long-lived assets of $ 25.7 million for the nine months ended September 30, 2023 due to the impairment of the Company’s leasehold improvements.

Refer to Note 6.

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”).

In connection with the transaction, Philip Lee, Ph.D., former Co-Founder and Chief Technology Officer of the Company, assumed the role of Chief Executive Officer of GeneFab.

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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 is 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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

the condensed consolidated statements of operations and comprehensive loss.

Refer to Note 4.

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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

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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.

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

June 30, December 31,

Accrued expenses and other current liabilities — 243

Total current liabilities of discontinued operations $ — $ 243

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

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

2024 2023 2024 2023

As of September 30, 2024 and December 31, 2023, there were no assets related to the discontinued operations, and the liabilities related to the discontinued operations were zero and $ 0.2 million, respectively.

There were no material operating expenses related to the discontinued operations since August 2023, when the transaction with GeneFab closed.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

The following table summarizes the condensed operating results of the discontinued operations for the three and nine months ended September 30, 2023 (in thousands):

Three Months Ended September 30, Nine months ended September 30,

Operating expenses:

3 unchanged sentences

Loss from discontinued operations ( 163 ) ( 9,479 )

Net income (loss) from discontinued operations $ — $ ( 4,447 ) $ — $ ( 9,316 )

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

Six months ended June 30,

Other expense ( 6 ) ( 6 )

Gain on disposal of business 21,861 21,861

Net income from discontinued operations $ 21,692 $ 12,376

The following table summarizes the condensed cash flow information of the discontinued operations for the nine months ended September 30, 2023 (in thousands):

Nine months ended September 30,

Operating activities (noncash adjustments to net income):

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Purchases of property and equipment $ ( 4,079 )

Supplemental disclosures of noncash investing items:

Purchases of property and equipment in accounts payable and accrued expenses — 81

Fair Value Measurements

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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

June 30, 2024

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

September 30, 2024

Adjusted Cost Estimated Fair Value Cash and cash equivalents Restricted cash

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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

GeneFab Note Receivable

3 unchanged sentences

Change in fair value included in other income (expense) ( 17,240 )

Fair value as of June 30, 2024

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

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

The Company determined that the fair value of the GeneFab Note Receivable was zero as of September 30, 2024, due to the probability that a suitable license agreement, which is a condition of the Company realizing the GeneFab Note Receivable, would not be signed.

GeneFab Option

3 unchanged sentences

Change in fair value included in other income (expense) 6,331

Fair value as of June 30, 2024

Fair value as of September 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.

Additionally, the Company determined that the fair value of the GeneFab Option was zero as of September 30, 2024, due to the low probability that a suitable license agreement, which is a condition for exercise of the Option, would be signed.

The significant assumptions utilized in the valuation are described below:

June 30, December 31,

Current stock price $ 6.60

2 unchanged sentences

Expected term (years) 2.5

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

GeneFab Economic Share

1 unchanged sentence

GeneFab Economic Share

Initial recognition as of December 31, 2023

Fair value as of December 31, 2023

Change in fair value included in other income (expense) $ ( 1,816 )

Fair value as of June 30, 2024

Fair value as of September 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.

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:

June 30, December 31,

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

The significant assumptions utilized in the valuation as of December 31, 2023 are described below:

GeneFab equity value $ 35,448

2 unchanged sentences

Expected term 4.0

As of September 30, 2024, the Company determined that the fair value of the GeneFab Economic Share was zero due to the low probability of the events triggering the payment underlying the GeneFab Economic Share.

Other Financial Statement information

1 unchanged sentence

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

June 30, December 31,

September 30, December 31,

Prepaid expenses (including prepaid rent) $ 1,481 $ 2,546

5 unchanged sentences

Notes to Condensed Consolidated Financial Statements

June 30, December 31,

September 30, December 31,

Leasehold improvements $ 22,648 $ 22,648

5 unchanged sentences

Property and equipment, net $ 22,218 $ 25,338

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.

Depreciation totaled $ 0.9 million and $ 1.3 million for the three months ended September 30, 2024 and 2023, respectively and $ 2.9 million and $ 2.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Accrued Expenses and Other Current Liabilities

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

June 30, December 31,

September 30, December 31,

Accrued employee-related expenses $ 1,571 $ 3,555

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Notes to Condensed Consolidated Financial Statements

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

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

2024 2023 2024 2023

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Total lease cost $ 1,589 $ 1,603 $ 4,740 $ 4,910

Six Months Ended June 30,

Nine Months Ended September 30,

Other information:

Operating cash flows net inflows and (outflows) from operating lease $ ( 5,412 ) $ ( 2,449 )

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) $ — $ ( 30 )

Right-of-use assets obtained in exchange for operating lease obligations (including remeasurement of right-of-use assets and lease liabilities due to changes in the timing of receipt of lease incentives) $ — $ 13

Weighted-average remaining lease term (years) 6.9 7.6

Weighted-average discount rate 9.2 % 9.2 %

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 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):

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

As of December 31, 2023, the Company received the full $ 17.5 million tenant improvement allowance.

Maturities of the Company’s lease liabilities as of September 30, 2024, were as follows (in thousands):

2024, for the remainder of the year $ 1,839

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Less imputed interest ( 12,576 )

Tenant improvement allowance remaining —

Total lease liabilities $ 34,606

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.

Letters of Credit

As of September 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 which are recorded as restricted cash in the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023.

Lessor Accounting

GeneFab Sublease

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.

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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,

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

2024 2023 2024 2023

3 unchanged sentences

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):

Refer to Note 14.

Related Parties, for GeneFab related party considerations.

BKPBIOTECH and JLSA2 Therapeutics Sublease

On September 23, 2024, the Company entered into a sublease agreement with BKPBIOTECH, Inc.

and JLSA2 Therapeutics, Inc., to sublease a portion of the Company’s corporate headquarter premises in South San Francisco.

The sublease commenced on October 7, 2024, and will expire on April 30, 2027.

Total sublease income to be earned from this operating lease, in aggregate, will be approximately $ 1.0 million over the term of the sublease agreement.

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

Pursuant to ASC Topic 842, Leases , the Company concluded that the sublease is a separate lease and it qualifies as an operating lease.

As a result of sublease, the Company identified an impairment indicator related to the HQ Lease.

The Company compared the estimated undiscounted cash flows to the carrying value of the asset group, which includes right-of-use assets and leasehold improvements allocable to the sublease.

The Company concluded that the carrying value of the asset group was not recoverable as it exceeded the estimated undiscounted cash flows.

The Company calculated the amount of impairment using a discounted cash flow model to calculate the fair value of the asset group which incorporated the net identifiable cash flows for the term of sublease, including an estimate for cash flows in the residual period, and an estimated borrowing rate of a market participant subtenant.

The impairment charge of $ 0.3 million was recorded as impairment of long-lived assets in the statement of operations and comprehensive loss for the three months ended September 30, 2024.

Maturities of the Company’s sublease payments for the subleases of both Alameda facility and corporate headquarter premises as of September 30, 2024, were as follows (in thousands):

2024, for the remainder of the year $ 1,205

1 unchanged sentence

Total undiscounted sublease payments

Refer to Note 13.

Related Parties for GeneFab related party considerations.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Stockholders’ Equity

Holders of common stock are entitled to one vote per share, and to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders.

The holders have no preemptive or other subscription rights, and there are no redemption or sinking fund provisions with respect to such shares.

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 June 30, 2024 and December 31, 2023.

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

As of September 30, 2024 and December 31, 2023, the Company’s certificate of incorporation authorized the Company to issue 500,000,000 shares of common stock at a par value of $ 0.0001 per share.

Each share of common stock is entitled to one vote.

The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Company’s board of directors.

As of September 30, 2024 and December 31, 2023, no dividends have been declared.

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.

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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,

At September 30, 2024 and December 31, 2023, the Company has reserved shares of its Common Stock for future issuance as follows:

September 30, December 31,

Common Stock Purchase Agreement 729,111 732,704

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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 June 30, 2024 and December 31, 2023.

There were 10,000,000 shares designated as preferred stock and none were outstanding as of September 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, as amended and restated on August 31, 2024 (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-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 July 16, 2024 (collectively referred to as the “Purchase Agreement”) with Chardan Capital Markets LLC (“Chardan”).

Pursuant to the Purchase Agreement, the Company has the right, in

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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-month term of the Purchase Agreement.

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”).

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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 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.

On July 16, 2024, the Company amended and restated this Purchase Agreement (hereinafter, the “A&R Purchase Agreement”) with Chardan 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).

The Company has issued 143,593 shares of common stock to Chardan under the A&R Purchase Agreement, including 10,000 shares issued to Chardan as consideration for its execution and delivery of the A&R Purchase Agreement, with aggregate net proceeds of $ 1.2 million.

There were no shares issued under the Purchase Agreement during the three and nine months ended September 30, 2023.

The shares issued during the three and nine months ended September 30, 2024 were 3,593 .

Contingent Earnout Equity

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.

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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 and six months ended June 30, 2024.

Contingent earnout is accounted at fair value and classified as a liability in the Company’s condensed consolidated financial statements.

The Company recognized zero and $ 0.2 million gain for the change in fair value of contingent earnout liability for the three and nine months ended September 30, 2023, respectively.

Contingent earnout liability was less than $ 0.1 million at September 30, 2024 and December 31, 2023.

On August 3, 2024, the Company executed an agreement with CIRM for a total grant award of $ 8.0 million in support of the research project related to the ongoing clinical development of SENTI-202.

The award is payable to the Company upon achievement of milestones that are primarily based on patient enrollment in the Company’s SENTI-202 clinical trial.

Under the terms of the CIRM Grant, the Company has certain obligations of co-funding up to $ 4.8 million and is required to provide CIRM timely progress and financial update reports.

Under the terms of the CIRM Grant, the Company is obligated to pay royalties and licensing fees based on 0.1 % of net commercial revenue of CIRM-funded product candidates or CIRM-funded technology for every $ 1.0 million of CIRM funding received.

This payment continues for either 10 years from the first commercial sale of the drug product or until the total royalties paid equal nine times the original CIRM Grant.

As an alternative to revenue sharing, the Company has the option to convert the CIRM Grant to a loan.

In the event the Company exercises its right to convert the CIRM Grant to a loan, the Company would be obligated to repay the loan within 10 business

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

days of making such election.

Repayment amounts vary dependent upon the phase of clinical development of SENTI-202 at the time of the Company’s election, ranging from 80 % to 100 % plus interest at 10 % plus the 90-day Secured Overnight Financing Rate (“SOFR”).

As of September 30, 2024, the Company has received an aggregate of $ 2.4 million which was recorded as other liabilities, net of current portion in the condensed consolidated balance sheets.

The Company’s revenue earned in the three and nine months ended September 30, 2023 consists of amounts received related to research services provided.

The Company earned no revenue in the three and nine months ended September 30, 2024.

Contract Revenue

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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.

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.

In December 2022, the Company amended the research collaboration and license agreement with Spark to allow for an increase in budget and a two-month extension of the research program.

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 and a cumulative catch-up of $( 0.7 ) million was recognized in December 2022.

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.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

In December 2022 and May 2023, the Company amended the research collaboration and license agreement with Spark to allow for an increase in budget and an extension of the research program.

As there were no changes to performance obligations and the services to be provided are not distinct from those already transferred, the transactions were accounted for as a contract modifications.

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.

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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 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.

For the three and nine months ended September 30, 2023, the Company recorded revenue, which was previously included in deferred revenue at the beginning of each period, of $ 0.2 million and $ 0.8 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.

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

For the three and nine months ended September 30, 2023, the Company recorded $ 0.1 million and $ 0.6 million grant income, respectively.

Entity-wide information

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.

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

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

All revenues were generated in the United States.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation

2016 Stock Incentive Plan (as Amended and Restated)

The Company’s 2016 Stock Incentive Plan (the “2016 Plan”) provides for the grant of incentive stock options, non-qualified stock options and restricted stock awards to employees, directors, and consultants of the Company.

Stock options granted under the 2016 Plan generally vest over four years and expire no later than ten years after the grant date.

Following the Merger, the 2016 Plan was terminated.

No additional stock awards will be granted under the 2016 Plan.

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 (as defined below).

2022 Stock Incentive Plan

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 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.

With respect to a 10 % stockholder, the exercise price of an option granted shall not be less than 110 % of the fair value of the common stock share on the date of grant.

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

The Company initially reserved 249,274 shares of common stock for issuance under the 2022 Plan.

On the first day of each year commencing January 1, 2023, the 2022 Plan will automatically increase by 5 % 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.

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 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

Equity Incentive Plans

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

As of September 30, 2024, the total number of shares of common stock available for issuance under the 2022 Plan is 510,383 .

On August 5, 2022, the Company adopted a 2022 Inducement Equity Plan (the “2022 Inducement Plan”).

The 2022 Plan provides 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 persons not previously an employee of the Company and its affiliates.

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.

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

As of September 30, 2024, the total number of shares of common stock available for issuance under the 2022 Inducement Plan is 172,312 .

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

2022 Employee Stock Purchase Plan

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

The ESPP allows eligible employees to purchase shares of the Company's common stock at a price equal to 85 % of the lower of the fair market values of the stock on the first day of an offering or on the date of purchase.

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 59,258 shares of common stock for issuance under the ESPP.

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

As of September 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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

4 unchanged sentences

Total stock-based compensation expense $ 668 $ 409 $ 1,150 $ 7,606

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.

As of September 30, 2024, there was $ 3.5 million of total unrecognized compensation expense related to unvested stock options under all equity plans and restricted stock units, which the Company expects to recognize over the weighted average remaining period of approximately 1.6 years.

The Company’s income tax provision for the three and nine months ended September 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.

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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:

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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

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

2024 2023 2024 2023

Net loss from continuing operations $ ( 28,866 ) $ ( 36,615 ) $ ( 52,180 ) $ ( 64,718 )

Net income (loss) from discontinued operations $ — $ ( 4,447 ) $ — $ ( 9,316 )

Net income from discontinued operations — 21,692 — 12,376

Net loss $ ( 28,866 ) $ ( 14,923 ) $ ( 52,180 ) $ ( 52,342 )

1 unchanged sentence

Net loss per share from continuing operations, basic and diluted $ ( 6.31 ) $ ( 8.24 ) $ ( 11.41 ) $ ( 14.62 )

Net income (loss) per share from discontinued operations, basic and diluted — ( 1.00 ) — ( 2.11 )

Net income per share from discontinued operations, basic and diluted — 4.88 — 2.80

Net loss per share attributable to common stockholders, basic and diluted $ ( 6.31 ) $ ( 3.36 ) $ ( 11.41 ) $ ( 11.82 )

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

4 unchanged sentences

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

GeneFab Option 1,963,344 0 1,963,344 0

GeneFab Option (Note 3) 1,963,344 1,963,344 1,963,344 1,963,344

Total 3,149,595 3,387,061 3,149,595 3,387,061

Refer to Note 3.

GeneFab Transaction , for further details of the GeneFab transaction.

Commitments and Contingencies

In the ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancelable payment obligations, for which the Company is liable in future periods.

On June 3, 2021, the Company entered into a lease agreement for a new cGMP facility in Alameda, California to support planned initial clinical trials for our product candidates.

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

Research and Development Agreements

The Company enters into various agreements in the ordinary course of business, such as those with suppliers, clinical research organizations and contract manufacturing organizations.

These agreements provide for termination at the request of either party, generally with less than one-year notice and are, therefore, cancellable contracts and, if cancelled, are not anticipated to have a material effect on the Company’s condensed consolidated financial condition, results of operations, or cash flows.

The Company’s corporate headquarters and an additional office are located in South San Francisco, California.

The 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.

On June 3, 2021, the Company entered into a lease agreement for a new cGMP facility in Alameda, California to support planned initial clinical trials for its product candidates.

The lease will expire in 2032.

Refer to Note 6.

Operating Leases , for further details of the leases.

Operating Leases , for further details on the leases.

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.

Indemnification

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions.

The Company was not subject to any material legal proceedings during the nine months ended September 30, 2024 and 2023.

Guarantees and Indemnifications

In the ordinary course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification.

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

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

arising from third-party actions.

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

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

1 unchanged sentence

The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions and has never accrued any liabilities related to such obligations in its condensed consolidated financial statements.

The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

permitted by Delaware corporate law.

The Company currently has directors’ and officers’ insurance.

As of September 30, 2024, and December 31, 2023, the Company did not have any material indemnification claims that were probable or reasonably possible, and consequently, has not recorded any related liabilities.

Related Parties

4 unchanged sentences

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.

The Company concluded that the BlueRock 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.

The Company also determined that the agreement is also not currently within the scope of ASC 606 because the BlueRock Agreement does not currently meet the criteria of a contract with a customer, and will not be within the scope of ASC 606 until any consideration is paid.

1 unchanged sentence

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

As of September 30, 2024, Bayer has not exercised its option for a license.

Bayer held 13 % of the outstanding shares of the Company’s common stock as of September 30, 2024 and December 31, 2023.

Accordingly, Bayer is considered a related party.

1 unchanged sentence

(“Seer”) (NASDAQ:

Omid Farokhzad, a member of the Company’s board of directors is the Chief Executive Officer for Seer.

Omid Farokhzad, a member of the Company’s board of directors is the Chief Executive Officer of Seer.

The consideration of $ 0.2 million, plus interest, will be paid over a two-year period, and title will transfer to the Company upon final payment.

7 unchanged sentences

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,

The Company has also subleased its manufacturing facility in Alameda to GeneFab and recorded total sublease income of $ 4.7 million including variable costs charged for the nine months ended September 30, 2024.

In connection with the services agreement entered into with GeneFab on August 7, 2023, the Company was entitled to $ 18.9 million for future services under the agreement, of which $ 3.9 million remained in GeneFab prepaid expenses - related party as of September 30, 2024.

Additionally, amounts due from GeneFab related to costs incurred by Senti on its behalf were $ 0.9 million as of September 30, 2024 and were recorded in GeneFab receivable - related party on the condensed consolidated balance sheets.

The Company incurred $ 3.8 million and $ 11.1 million

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

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.

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

of research and development expenses under the services agreement during the three and nine months ended September 30, 2024.

Subsequent Events

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.

On October 21, 2024, the Company notified the Nasdaq Stock Market (“Nasdaq”) that the Company is not in compliance with the audit committee requirement under Nasdaq Listing Rule 5605(c)(2)(A) due to the Company having only two members on its audit committee solely due to a vacancy resulting from Susan Berland’s resignation from the Board effective June 11, 2024.

The Company is evaluating the membership of the audit committee and is working to regain compliance with the Nasdaq Listing Rule 5605 prior to the expiration of the applicable cure period.

The Notice has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market.

On November 1, 2024, the Company received a $ 2.5 million payment from CIRM in relation to a milestone achieved in August 2024.

Refer to Note 8.

CIRM Grant, for additional details regarding the CIRM grant and related milestone payments.

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