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Item 7. Management’s Discussion and Analysis

2025-03-20 compared with 2024-03-21 · 191 added, 138 removed, 231 unchanged (59% of the section changed)

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The transactions contemplated in the Agreement are collectively referred to as the “Merger”.

You should read the following discussion and analysis of our financial condition and results of operations together with our accompanying consolidated financial statements and the related notes contained in Part II, Item 8 of this Annual Report on Form 10-K.

You should read the following discussion and analysis of our financial condition and results of operations together with our accompanying consolidated financial statements and the

related notes contained in Part II, Item 8 of this Annual Report on Form 10-K.

Unless the context indicates otherwise, references in this Annual Report on Form 10-K to the “Company,” “Senti,” “we,” “us,” “our” and similar terms refer to Senti Biosciences, Inc.

(formerly known as Dynamics Special Purpose Corp.) and its consolidated subsidiaries following the Company’s Merger.

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Cautionary Statement Regarding Forward-Looking Statements

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Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Senti is an early clinical stage biotechnology company developing next-generation cell and gene therapies engineered with its gene circuit platform technologies for patients living with incurable diseases.

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

To accomplish this mission, Senti has built a synthetic biology platform that it believes may enable it to program next-generation cell and gene therapies with gene circuits.

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

Using gene circuits, Senti’s product candidates are designed to precisely kill cancer cells, spare healthy cells, increase specificity to target cells and control the expression of drugs even after administration.

Senti is applying its gene circuit technologies to develop a pipeline of medicines that use off-the-shelf chimeric antigen receptor natural killer (“CAR-NK”) cells with the goal of addressing major challenges and providing potentially lifesaving treatments for people living with cancer.

Senti’s lead product candidates utilize off-the-shelf healthy adult donor derived NK cells to create CAR-NK cells outfitted with its gene circuit technologies in several oncology indications with high unmet need.

We are a clinical-stage biotechnology company developing next-generation cell and gene therapies engineered with our gene circuit platform technologies for patients living with incurable diseases.

Our mission is to create a new generation of smarter medicines that outsmart complex diseases using novel and unprecedented approaches.

To accomplish this mission, we have built a synthetic biology platform that we believe may enable us to program next-generation cell and gene therapies with gene circuits.

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

Using gene circuits, our product candidates are designed to precisely kill cancer cells, spare healthy cells, increase specificity to target cells and control the expression of drugs even after administration.

We are applying our gene circuit technologies to develop a pipeline of medicines that use chimeric antigen receptor (“CAR”) white blood cells with the goal of addressing major challenges and providing potentially lifesaving treatments for people living with cancer.

Our lead product candidates utilize off-the-shelf healthy adult donor derived natural killer (“NK”) cells to create CAR-NK cells outfitted with gene circuit technologies in several oncology indications with high unmet need.

In 2024, we initiated a clinical trial of SENTI-202 for blood cancers and our partner, Celest Therapeutics, (Shanghai) Co.

Ltd., initiated a clinical trial for SENTI-301A/SN301A for solid tumors.

We have incurred net losses of $52.8 million and $71.1 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2023 and 2022, we had cash, cash equivalents, and short-term investments, of $35.9 million and $98.6 million, respectively, and an accumulated deficit of $244.3 million and $173.3 million, respectively.

As of December 31, 2024 and 2023, we had cash and cash equivalents, of $48.3 million and $35.9 million, respectively, and an accumulated deficit of $297.1 million and $244.3 million, respectively.

Net cash flows used in operating activities were $41.4 million and $52.4 million during the years ended December 31, 2024 and 2023, respectively.

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• fund manufacturing of our current and future product candidates;

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• seek regulatory approval of our current and future product candidates;

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Recent Developments

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

On August 7, 2023, we completed a transaction with GeneFab and Valere Bio, GeneFab’s parent company which is wholly owned by Celadon.

GeneFab is a contract manufacturing and synthetic biology biofoundry focused on next-generation cell and gene therapies.

We sold, assigned and transferred rights, title and interest in certain of our assets and contractual rights, including all of our equipment at our facilities in Alameda and certain of our intellectual property related to the schematics for and design of the Alameda facility.

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

In connection with the transaction, we are 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 owed by us for manufacturing and research activities to GeneFab.

The remaining $18.9 million will be paid to us in installments in 2024 and 2025, subject to satisfaction of certain conditions.

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.

We also agreed to grant a license to GeneFab under certain of our 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.

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

In connection with the transaction, we were 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 a prepayment owed by us for manufacturing and research activities to GeneFab.

The remaining $18.9 million was waived by the parties as part of an amendment to the Framework Agreement that was entered into in connection with our private placement transaction announced in December 2024, in which Celadon participated.

GeneFab was provided an option, which was subsequently transferred to Celadon, to purchase up to 1,963,344 shares (i.e.

up to $20.0 million worth) of our common stock at an exercise price of $10.18670 (the “GeneFab Option”).

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

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In accordance with ASC 205, Presentation of Financial Statements , we determined that the disposal of the non-oncology business, including the equipment and transfer of in-house manufacturing services in the Alameda facility, represented a strategic shift that will have a major effect on our operations and financial results, thus meeting the criteria to be reported as discontinued operations.

As a result, we have retrospectively restated our consolidated balance sheet at December 31, 2022 and consolidated statements of operations and comprehensive loss for the year ended December 31, 2022 to reflect the assets and liabilities and operating results, respectively, related to the disposed business in discontinued operations.

We have chosen not to segregate the cash flows of the disposed business in the consolidated statements of cash flows.

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Unless otherwise specified, the results of operations refer to continuing operations only.

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

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

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

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

In January 2023 we announced a strategic plan to focus internal resources on SENTI-202 and SENTI-404, to develop gene circuits for other programs with potential partners, and to suspend research and development efforts for SENTI-301A.

In December 2024, the first patient was dosed into the pilot trial of SN301A.

In January 2024, we announced a strategic plan to streamline business operations and focus our resource allocation to investment on clinical development of SENTI-202, for which an Investigational New Drug (“IND”) application was cleared by the U.S.

Food and Drug Administration (“FDA”) in December 2023, and on the partnership of our SENTI-301A program in China with Celest.

On July 17, 2024, we 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 our issued and outstanding common stock.

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

(Eastern Time) on July 17, 2024, and our 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, we 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, we regained compliance with the Bid Price Rule, and that the matter is now closed.

On August 3, 2024, we executed an agreement with 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.

The award is payable to us upon achievement of milestones that are primarily based on patient enrollment in our related clinical trial.

On August 15, 2024, in connection with the execution of the CIRM Grant, we received the first payment from CIRM in the amount of $2.4 million.

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

Refer to Note 8.

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

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

and JLSA2 Therapeutics, Inc.

to sublease a portion of our corporate headquarter premises in South San Francisco.

The sublease commenced on October 7, 2024, the date when the subtenants gained access to the premises, 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.

Refer to Note 6.

Operating Leases , in the footnotes to the consolidated financial statements included in this Form 10-K for further details of the sublease.

On December 2, 2024, we entered into a securities purchase agreement with certain investors in which the we agreed to sell, in a private placement (the “Offering”), (i) up to 21,157 shares of Series A redeemable convertible preferred stock, par value $0.0001 per share, for an aggregate offering price of $47.6 million and (ii) accompanying warrants to purchase up to 31,735,500 shares of common stock, par value $0.0001 per share.

Each share of Series A redeemable convertible preferred stock will be issued at $2,250.00 per share and, subject to stockholder approval, is convertible into 1,000 shares of Common Stock.

Each Warrant has an exercise price per share of $2.30.

The Warrants are exercisable at any time on or after the Stockholder Approval and on or prior to the five-year anniversary of the original issuance date.

A holder of a Warrant may not exercise the Warrant if the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the number of shares of the common stock outstanding immediately after giving effect to such exercise.

A holder of a Warrant may increase or decrease this percentage not in excess of 45.00% by providing at least 61 days’ prior notice to the Company.

The Company intends to use the net proceeds from the Offering for working capital purposes, general corporate purposes, other research and development activities and to advance its SENTI-202 program.

The investors are venture capital and other institutional investment funds.

The investors include entities affiliated with New Enterprise Associates, Inc.

(“NEA”), which is associated with a member of our Board of Directors and is a holder of more than 5% of our outstanding capital stock, as well as entities affiliated with Bayer Healthcare, LLC, which is also holder of more than 5% of our outstanding capital stock, and Celadon Partners, the parent company of GeneFab, a related party of ours.

On December 9, 2024, we closed the initial tranche of 16,713 shares of Series A redeemable convertible preferred stock and Warrants to purchase 25,069,500 shares of common stock.

The gross proceeds of the initial issuance of Series A redeemable convertible preferred stock and Warrants totaled approximately $37.6 million, before deducting fees to be paid to the placement agent of the Company and other offering expenses payable by the Company.

The fees to be paid to the placement agent were $1.5 million.

Additionally, pursuant to the terms of the Securities Purchase Agreement, a certain investor has the option to purchase up to an additional 4,444 shares of Series A redeemable convertible preferred stock and Warrants to purchase 6,666,000 shares of common stock at a subsequent closing (the “Preferred Stock Tranche Liability”), for gross proceeds of up to $10.0 million.

On December 31, 2024, we closed the Preferred Stock Tranche Liability of 4,444 shares of Series A redeemable convertible preferred stock and Warrants to purchase 6,666,000 shares of common stock for gross proceeds of $10.0 million.

The Company intends to use the net proceeds from the Offering for working capital purposes, general corporate purposes, other research and development activities and to advance its SENTI-202 program.

On March 10, 2025, we converted the outstanding shares of Series A redeemable convertible preferred stock into such number of shares of common stock, at the conversion price of $2.25 per share (the “Conversion Price”), subject to the terms and limitations contained in the Certificate of Designation.

On March 17, 2025, the Company provided notice to Chardan that it was terminating the A&R Purchase Agreement.

Components of Results of Operations

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• the cost of consultants engaged in research and development, regulatory, and clinical related services;

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• the cost to develop our manufacturing process and manufacturing product candidates for use in our research, preclinical studies and clinical trials, including under agreements with third parties, such as consultants, contractors and CMOs;

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As such, we do not maintain information regarding these costs incurred for these early-stage research and product candidate discovery programs on a project-specific basis.

Our direct external development program expenses reflect external costs attributable to our preclinical development candidates selected for further development as well as investigational new drug applications (“INDs”) and clinical development activities.

Our direct external development program expenses reflect external costs attributable to our preclinical development candidates selected for further development as well as INDs and clinical development activities.

Such expenses include third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities.

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Our research and development expenses related to the assets sold to GeneFab are included in discontinued operations.

Research and development expenses consisted of the following (in thousands):

Research and development expenses from our continuing operations consisted of the following (in thousands):

External services and supplies $ 20,795 $ 13,247

Personnel-related expenses, including share-based compensation expense 7,694 10,508

Office and facilities 7,316 7,274

Other 1,079 777

Facilities and other

Total $ 34,356 $ 32,150

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In addition, future regulatory factors beyond our control may impact our preclinical development programs.

Product candidates in clinical development generally have higher development costs than those in preclinical stages of development, primarily due to the increased size and duration of clinical trials.

Product candidates in clinical development generally have higher development costs than those in

preclinical stages of development, primarily due to the increased size and duration of clinical trials.

At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical development of any of our product candidates.

However, we expect that our research and development expenses and manufacturing costs will increase in connection with our planned preclinical and clinical development activities in the near term and in the future.

The successful development of our current and future product candidates is highly uncertain.

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• product-related side effects experienced by participants in our clinical trials or by individuals using therapeutics similar to our product candidates;

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• delays in submitting IND applications or comparable foreign applications, or delays or failures to obtain the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;

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General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance and other administrative functions.

Other significant costs include legal fees relating to corporate matters, professional fees for accounting and consulting services and an allocation of facility-related costs.

Other significant costs include legal fees relating to corporate matters, professional fees for accounting and consulting services, insurance and an allocation of facility-related costs.

Our general and administrative costs related to the assets sold to GeneFab are included in discontinued operations.

General and administrative expenses consisted of the following (in thousands):

General and administrative expenses from our continuing operations consisted of the following (in thousands):

Personnel-related expenses, including share-based compensation expense $ 8,379 $ 23,117

External services and supplies 7,624 6,930

Office and facilities 2,567 1,361

Facilities and other

Depreciation and amortization 2,860 2,308

Insurance 1,658 1,207

Other 596 626

Total $ 26,370 $ 37,176

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Impairment of Long-lived assets

Impairment of long-lived assets relates mainly to the impairment of our leasehold improvements for the Alameda facility subleased to GeneFab as a result of our asset group reassessment which triggered a need to perform an impairment analysis following the closing of the GeneFab transaction.

Impairment of long-lived assets mainly relates to the impairment of our leasehold improvements for the Alameda facility subleased to GeneFab as a result of our asset group reassessment which triggered a need to perform an impairment analysis following the closing of the GeneFab transaction in August 2023, as well as impairment of lease right-of-use assets as a result of subleasing a portion of our headquarter premises.

For the years ended December 31, 2024 and 2023, impairment of long-lived assets was $0.3 million and $26.0 million, respectively.

Other Income (Expense)

Interest Income, net

Interest income, net consists of interest earned on our cash and cash equivalents, and short-term investments, if any, held during the year, net of interest expense.

Change in Fair Value of Contingent Earnout Liability

The change in fair value of the contingent earnout liability that was accounted for as a liability as of the date of the Merger is remeasured to fair value at each reporting period, resulting in a non-cash gain or loss.

Interest income, net consists of interest earned on our cash and cash equivalents, restricted cash and short-term investments, if any, held during the year, net of interest expense.

Change in Fair Value of Preferred Stock Tranche Liability - related party

The change in fair value of Preferred Stock Tranche Liability consists of the remeasurement to fair value at each reporting period of the additional closing option given to a certain investor as part of the private placement in December 2024, for which we have determined to be a liability and thus recorded at fair value.

Refer to Note 4.

Fair Value Measurements , in the footnotes to the consolidated financial statements included in this Form 10-K related to the valuation methodology and assumptions used.

Change in Fair Value of GeneFab Note Receivable - related party

The change in fair value of GeneFab Note Receivable consists of the remeasurement to fair value at each reporting period of the deferred consideration due from GeneFab for which we have elected the fair value option.

Refer to Note 4.

Fair Value Measurements , in the footnotes to the consolidated financial statements included in this Form 10-K related to the valuation methodology and assumptions used.

In December 2024, the receivable was waived by the parties in an amendment to the Framework Agreement in connection with Celadon’s investment in the PIPE.

Change in Fair Value of GeneFab Economic Share - related party

The change in fair value of GeneFab Economic Share is a result of the change in the equity value of GeneFab at each reporting period.

The change in fair value of GeneFab Economic Share is a result of the change in the equity value of GeneFab and the volatility at each reporting period.

Refer to Note 4.

Fair Value Measuremen ts, in the footnotes to the consolidated financial statements included in this Form 10-K related to the valuation methodology and assumptions used.

Change in Fair Value of GeneFab Option - related party

The change in fair value of the GeneFab Option consists of the remeasurement to fair value at each reporting period of the derivative liability related to the option provided to GeneFab to acquire up to $20.0 million in shares of our common stock at a purchase price of $1.01867.

Gain on Extinguishment of Convertible Notes

Our convertible note was extinguished as part of the Merger and the change in fair value was recorded in earnings.

The change in fair value of the GeneFab Option consists of the remeasurement to fair value of the derivative liability related to the option provided to GeneFab to acquire up to $20.0 million in shares of our common stock at a purchase price of $10.18670 per share.

Refer to Note 4.

Fair Value Measurements , in the footnotes to the

consolidated financial statements included in this Form 10-K related to the valuation methodology and assumptions used.

GeneFab sublease Income - related party

Other income (expense) is primarily comprised of income from our sublease with GeneFab.

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Sublease Income is primarily comprised of income from our sublease agreements with GeneFab.

Net Income (Loss) from Discontinued Operations

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Change in fair value of contingent earnout liability 20 207 (187)

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

Change in fair value of Preferred Stock Tranche Liability - related party

13,404 — 13,404

Change in fair value of GeneFab Note Receivable - related party (17,240) 626 (17,866)

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Net loss from continuing operations (52,790) (83,406) 30,616

Net income (loss) from discontinued operations $ 12,348 $ (8,545) $ 20,893

Net income from discontinued operations $ — $ 12,348 $ (12,348)

Net loss $ (52,790) $ (71,058) $ 18,268

Contract revenue .

For the years ended December 31, 2023 and 2022, we generated revenue from contracts and license agreements of $2.0 million and $3.3 million, respectively.

The decrease of $1.3 million was primarily due to decline in services provided under the Spark collaboration agreement.

For the year ended December 31, 2024, we generated no revenue from contracts and license agreements and $2.0 million for the year ended December 31, 2023.

The decrease of $2.0 million was primarily due to no services provided under the Spark collaboration agreement in the current year.

Grant income .

For the years ended December 31, 2023 and 2022, we generated revenue from grants of $0.6 million and $1.0 million, respectively.

The decrease of $0.4 million was primarily due to the recognition of revenue related to the SBIR SENTI-202 grant funding which was completed in FY 2023.

For the years ended December 31, 2024 and 2023, we generated no revenue and $0.6 million from grants, respectively.

The decrease of $0.6 million was primarily due to the recognition of revenue related to the SBIR SENTI-202 grant funding which was completed in 2023.

Research and development expenses .

Research and development expenses were $34.4 million and $32.2 million for the years ended December 31, 2024 and 2023, respectively.

The increase of $4.0 million was primarily due to an increase of $1.9 million in personnel-related expenses, which includes a $0.8 million decrease in stock-based compensation expense, an increase of $1.7 million in professional services costs and an increase of $0.3 million in other research and development expenses.

The increase of $2.2 million was primarily due to an increase of $7.5 million in external services and supplies offset by a $2.8 million decrease in personnel-related expenses and a $2.5 million decrease in facilities and other expense.

General and administrative expenses .

General and administrative expenses were $26.4 million and $37.2 million for the years ended December 31, 2024 and 2023, respectively.

The decrease of $1.0 million was primarily due to a decrease of $4.4 million in personnel-related expenses, which includes a $3.1 million decrease in stock-based compensation expense, partially offset by an increase of $1.7 million in depreciation and amortization expenses, an increase of $1.2 million in facility costs and an increase in insurance of $0.5 million.

The decrease of $10.8 million was primarily due to a decrease of $14.7 million in personnel-related expenses, which includes a $8.6 million decrease in stock-based compensation expense, partially offset by an increase of $2.7 million in facilities and other expense and an increase of $0.6 million in depreciation and amortization expenses.

Impairment of long-lived assets.

Impairment of long-lived assets was $26.0 million for the year ended December 31, 2023, mainly due to the impairment of our leasehold improvements related to the Alameda facility subleased to GeneFab as a result of our asset group reassessment which triggered a need to perform an impairment analysis following the closing of the GeneFab transaction.

Impairment of long-lived assets were $0.3 million and $26.0 million for the years ended December 31, 2024 and 2023, respectively.

The decrease of $25.6 million was mainly due to the impairment of our leasehold improvements in 2023 related to the Alameda facility subleased to GeneFab as a result of our asset group reassessment which triggered a need to perform an impairment analysis following the closing of the GeneFab transaction.

Interest Income, net.

Interest income was $0.9 million and $2.9 million for the years ended December 31, 2024 and 2023, respectively.

The increase of $1.2 million was due to higher average cash balances, as well as an increase in interest rates in the relevant periods.

The decrease of $1.9 million was due to higher average cash balances as well as short-term investments during the majority of 2023 compared to no investments in 2024.

Change in fair value of contingent earnout liability .

For the years ended December 31, 2023 and 2022, we recognized a non-cash gain of $0.2 million and $9.5 million, respectively.

The decrease of $9.3 million related to the decrease in the fair value of our common stock.

Gain on extinguishment of convertible notes.

For the year ended December 31, 2022, we recognized a gain of $1.3 million upon extinguishment of convertible notes.

For the years ended December 31, 2024 and 2023, we recognized a non-cash gain of zero and a non-cash gain of $0.2 million, respectively, primarily due to the decrease in the fair value of our common stock.

Change in fair value of Preferred Stock Tranche liability .

For the year ended December 31, 2024 the change in fair value of the Preferred Stock Tranche liability was $13.4 million primarily due to the option for a certain shareholder to purchase additional shares at a later date in connection with the private placement of convertible preferred stock.

The gain was a result of the remeasurement of the option before the option was exercised.

Change in fair value of GeneFab Note Receivable - related party.

For the year ended December 31, 2023, the change in fair value of GeneFab Note Receivable was a gain of $0.6 million primarily due to a change in the discount rate and passage of time.

For the years ended December 31, 2024 and 2023, the change in fair value of GeneFab Note Receivable was a loss of $17.2 million and a gain of $0.6 million, respectively.

The decrease of $17.9 million was primarily due to the probability that a suitable license agreement, which was a condition of the Company realizing the GeneFab Note Receivable, would not be signed.

Additionally, in December 2024, the receivable was waived by the parties in an amendment to the Framework Agreement in connection with Celadon’s investment in the PIPE.

Change in fair value of GeneFab Economic Share - related party.

For the years ended December 31, 2024 and 2023, the change in fair value of GeneFab Economic Share was a loss of $1.8 million and a nominal gain, respectively.

The decrease of $1.8 million was primarily due to the low probability of the events triggering the payment underlying the GeneFab Economic Share.

Change in fair value of GeneFab Option - related party.

For the year ended December 31, 2023, the change in fair value of GeneFab Option was a gain of $3.3 million primarily due to the decrease in the fair value of our common stock, which is a significant input in the measurement of the GeneFab Option.

For the years ended December 31, 2024 and 2023, the change in fair value of GeneFab Option was a gain of $6.3 million and $3.3 million, respectively.

The increase of $3.0 million was primarily due to the low probability that a suitable license agreement, which is a condition for the Option to be exercised , would be signed.

GeneFab sublease income - related party.

For the year ended December 31, 2023, sublease income was $2.3 million from the sublease to GeneFab for the Alameda facility.

For the years ended December 31, 2024 and 2023, sublease income was $6.4 million and $2.3 million, respectively.

The increase of $4.1 million related to a full year of the sublease to GeneFab for the Alameda facility as well as a portion of our corporate headquarters leased to GeneFab.

Net income (loss) from discontinued operations.

Net income from discontinued operations was $12.3 million for the year ended December 31, 2023, compared to net loss from discontinued operations of $8.5 million for the year ended December 31, 2022.

The increase was primarily due to the gain of $21.9 million on the disposal of the assets sold to GeneFab and an increase of $1.0 million in discontinued operations expense mainly stemming from increased personnel costs.

There was no net income from discontinued operations for the year ended December 31, 2024, compared to net income from discontinued operations of $12.3 million for the year ended December 31, 2023.

The decrease was due to there being no discontinued operations in 2024.

Liquidity and Capital Resources

Sources of Liquidity

From inception to December 31, 2023, we raised aggregate gross proceeds of $300.1 million from the Merger and PIPE Financing, the issuance of shares of our 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 governmental grants.

On August 31, 2022, we entered into the Purchase Agreement with Chardan.

Pursuant to the Purchase Agreement, we have the right, in our sole discretion, to sell to Chardan up to the lesser of:

From inception to December 31, 2024, we raised aggregate gross proceeds of $354.3 million from the Merger and the December 2024 private placement (“PIPE Financing”), the issuance of shares of our 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 governmental grants.

On August 31, 2022, we entered into the Purchase Agreement with Chardan, which was amended and restated on July 16, 2024 (the “A&R Purchase Agreement”).

We sent a termination notice pursuant to the A&R Purchase Agreement on March 17, 2025.

Pursuant to the A&R Purchase Agreement, we had the right, in our sole discretion, to sell to Chardan up to the lesser of:

(i) $50.0 million of shares of our common stock;

and (ii) 872,704 shares of common stock at 97% of the volume weighted average price (“VWAP”) of the common stock calculated in accordance with the Purchase Agreement, over a period of 36 months subject to certain limitations and conditions contained in the Purchase Agreement.

Sales and timing of any sales of common stock are solely at our election, and we are under no obligation to sell any securities to Chardan under the Purchase Agreement.

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

preparation fee.

We recognized an expense of $0.7 million within general and administrative expenses in our consolidated statements of operations and comprehensive loss for the Chardan related costs and legal fees incurred in connection with the agreement.

Other than the issuance of the commitment shares of the Company’s common stock to Chardan, we issued 1,300,000 shares of Class A common stock through December 31, 2023, for aggregate net proceeds of $1.2 million under the Common Stock Purchase Agreement.

There were 1,000,000 issued during the year ended December 31, 2023 for aggregate net proceeds of $0.5 million.

Sales and timing of any sales of common stock were solely at our election, and we were under no obligation to sell any securities to Chardan under the Purchase Agreement.

As consideration for Chardan’s commitment to purchase shares of our common stock at our direction upon the terms and subject to the conditions set forth in the Purchase Agreement, upon execution of the Purchase Agreement, we issued 10,000 shares of our common stock to Chardan and paid a $0.4 million document preparation fee.

We have issued 384,313 shares of common stock through December 31, 2024, for aggregate net proceeds of $3.0 million under the Common Stock Purchase Agreement.

On March 17, 2025, the Company provided notice to Chardan that it was terminating the A&R Purchase Agreement.

We do not have any products approved for sale and have not generated any revenue from product sales or otherwise.

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future.

As of December 31, 2023, we had $35.9 million in cash, cash equivalents, and short-term investments, and an accumulated deficit of $244.3 million, respectively.

As of December 31, 2024, we had $48.3 million in cash and cash equivalents, and an accumulated deficit of $297.1 million.

We will need substantial additional funding to support our continuing operations and pursue our development strategy.

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Should we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back, or discontinue the development and commercialization of our product candidates or delay our efforts to expand our product pipeline.

We may also be required to sell or license to other parties rights to develop or commercialize our product candidates that we would prefer to retain.

As substantial doubt exists about our ability to continue as a going concern, we may also be required to sell or license to other parties’ rights to develop or commercialize our product candidates that we would prefer to retain

The transaction with GeneFab, as described in “Recent Developments” above, provided us with additional capital in the form of a note receivable and rights to future manufacturing and research activities and reduced longer term operating expenses.

The remaining consideration of $18.9 million will be received in installments during 2024 and 2025, subject to satisfaction of certain conditions.

The following table sets forth a summary of our cash flows for each of the periods indicated (in thousands):

Net cash from operating activities $ (52,395) $ (34,896)

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 a prepayment owed by us for manufacturing and research activities to GeneFab.

The remaining consideration of $18.9 million was to be received in installments during 2024 and 2025, subject to satisfaction of certain conditions.

We 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 was remeasured each reporting period with changes from remeasurement included in other income (expense) in the consolidated statements of operations and comprehensive loss.

Refer to Note 4.

Fair Value Measurements , in the footnotes to consolidated financial statements included in this Form 10-K elsewhere for further details.

In December 2024, the remaining consideration of $18.9 million was waived in connection with the private placement of preferred stock described in “Recent Developments.”

The agreement with CIRM, as described in “Recent Developments” above is expected to provide us in total a grant of $8.0 million, subject to achievement of certain operational milestones.

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

Refer to Note 8 .

CIRM Grant , in the footnotes to consolidated financial statements included in this Form 10-K elsewhere for further details of the CIRM agreement.

In December 2024, we issued 21,157 shares of Series A redeemable convertible preferred stock and accompanying warrants to purchase up to 31,735,500 shares of common stock for an aggregate offering price of $47.6 million.

The following table sets forth a summary of our cash flows from continuing and discontinued operations for each of the periods indicated (in thousands):

Net cash used in operating activities

$ (41,397) $ (52,395)

Net cash from investing activities 34 30,077

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Operating Activities

For the year ended December 31, 2023, net cash used in operating activities of $52.4 million was primarily due to our loss of $71.1 million with non-cash expense adjustments of $26.0 million for impairment of long-lived assets, $9.7 million for stock-based compensation expense, and $5.4 million for depreciation and amortization of operating lease right-of-use-assets offset by non-cash gains of $21.9 million gain on disposal of business to GeneFab $3.3 million gain from change in fair value of the GeneFab Option, $1.1 million for accretion of discount on short-term investments, $0.6 million gain for the change in fair value of the GeneFab receivable, and $0.2 million gain for the change in fair value of contingent earnout liability.

Other material changes were comprised of $4.8 million decrease

in prepaid expenses and other current assets, $0.7 million increase in sublease deferred income, $0.5 million increase in operating lease liabilities and a $0.4 million increase in accounts payable and accrued expenses and other liabilities, offset by $0.9 million increase in accounts receivable and $0.8 million decrease in deferred revenue.

For the year ended December 31, 2022, net cash used in operating activities of $34.9 million was primarily due to our loss of $58.2 million with non-cash adjustments of $16.4 million for stock-based compensation expense, $9.5 million for the change in fair value of the contingent earnout liability, $3.9 million for depreciation and amortization of operating lease right-of-use-assets, $1.3 million for gain on extinguishment of convertible notes and $0.4 million for accretion of discount on short-term investments.

Other material changes comprised of $14.1 million increase in operating lease liabilities, $2.2 million increase in accounts payable and accrued expenses and other current liabilities offset by $1.3 million increase in prepaid expenses and other current assets and as well as a $1.0 million decrease in deferred revenue.

For the year ended December 31, 2024, net cash used in operating activities of $41.4 million was primarily due to our loss of $52.8 million with non-cash expense adjustments of $1.8 million for stock-based compensation expense, $5.9 million for depreciation and amortization of operating lease right-of-use-assets, a $6.3 million gain from change in fair value of the GeneFab Option, and a $13.4 million change in fair value of the Preferred Stock Tranche liability, offset by non-cash expense adjustment of $17.2 million for the change in fair value of the GeneFab Note Receivable.

Other material changes were comprised of a $4.0 million decrease in operating lease liabilities and a $8.1 million increase in related party prepaid expenses.

For the year ended December 31, 2023, net cash used in operating activities of $52.4 million was primarily due to our loss of $71.1 million with non-cash adjustments of $26.0 million f or impairment of long-lived assets, $9.7 million for stock-based compensation expense, and $5.4 million for depreciation and amortization of operating lease right-of-use-assets;

offset by non-cash gains of $21.9 million gain on disposal of business to GeneFab, $3.3 million gain from change in fair value of the GeneFab Option, $1.1 million for accretion of discount on short-term investments, $0.6 million gain for the change in fair value of the GeneFab receivable, and $0.2 million gain for the change in fair value of contingent earnout liability.

Other material changes comprised of $4.8 million decrease in prepaid expenses and other current assets, $0.7 million increase in sublease deferred income, $0.5 million increase in operating lease liabilities, a $0.4 million increase in accounts payable and accrued expenses and other liabilities, a $0.9 million increase in accounts receivable, and a $0.8 million decrease in deferred revenue.

Investing Activities

For the year ended December 31, 2023, net cash provided by investing activities of $30.1 million was due to $60.0 million in proceeds from maturities of short-term investments and $0.1 million in proceeds from the sale of property and equipment, offset by $18.0 million in purchases of short-term investments and $12.0 million in purchases of property and equipment.

For the year ended December 31, 2024, net cash provided by investing activities was nominal from proceeds from the sale of property, plant and equipment which were offset by an immaterial amount of capital expenditures.

For the year ended December 31, 2023, net cash used in investing activities of $30.1 million was due to $18.0 million in purchases of short-term investments and $12.0 million in purchases of property and equipment.

Financing Activities

For the year ended December 31, 2023, net cash provided by financing activities of $0.8 million was primarily due to $0.5 million from issuance of common stock under Common Stock Purchase Agreement and $0.4 million from the issuance of common stock under Employee Stock Purchase Plan (ESPP), offset by $0.1 million of principal finance lease payments.

For the year ended December 31, 2022, net cash provided by financing activities of $118.6 million was primarily due to $112.0 million proceeds received from Merger and related PIPE financing activities, net of transaction cost, $5.2 million from issuance of convertible notes, $0.7 million from issuance of common stock under Common Stock Purchase Agreement, $0.5 million from the issuance of common stock upon exercise of stock options and $0.2 million from the issuance of common stock under Employee Stock Purchase Plan (ESPP).

For the year ended December 31, 2024, net cash provided by financing activities of $53.7 million was primarily due to $47.3 million from proceeds of private placement offering net of issuance costs and $4.9 million from proceeds from the CIRM grant.

Funding Requirements

Based upon our current operating plans, we believe that our existing cash and cash equivalents will not be sufficient to fund our operations beyond the next twelve months from the date of this Annual Report.

We anticipate that we will continue to seek additional funding, though the precise timing of such may prove uncertain.

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Additionally, the process of testing and manufacturing product candidates in preclinical studies and clinical trials is costly and the timing and expenses in these trials are uncertain.

Based upon our current operating plans, substantial doubt exists about whether our existing cash and cash equivalents will be sufficient to fund our operations, including clinical trial expenses and business operating expenses requirements, beyond twelve months from the date of this Annual Report.

We anticipate that we will continue to seek additional funding, though the precise timing of such may prove uncertain.

Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Our assumptions may prove to be inaccurate, and we could deplete our capital resources sooner than we expect.

Additionally, the process of testing and manufacturing product candidates in preclinical studies and clinical trials is costly and the timing and expenses in these trials are uncertain.

Our future capital requirements will depend on many factors, including:

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• the costs, timing and outcome of regulatory review of our product candidates;

• the scope and costs of constructing and operating our planned cGMP facility and any commercial manufacturing activities;

• the scope and costs of any commercial manufacturing activities;

• the cost associated with commercializing any approved product candidates;

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Although management continues to pursue these plans, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all.

Accounting standards require that management evaluate whether we have adequate financial resources to continue as a going concern beyond twelve months after the date that these consolidated financial statements are available to be issued.

Management has determined that additional funds will be needed to continue as a going concern for the period defined in the accounting standards.

Contractual Obligations and Commitments

On June 3, 2021, we 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.

See Note 7 - Operating Leases for details on our lease obligations.

During the year ended December 31, 2021, we entered into a three-year collaboration and option agreement with BlueRock Therapeutics LP (“BlueRock”) under which the Company granted BlueRock an option to execute an exclusive or non-exclusive license to develop, manufacture and commercialize cell therapy products (See Part II, Item 8, Notes to Consolidated Financial Statements, Note 16 - Related Parties for details into the BlueRock agreement).

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

We have also entered into license agreements under which we are obligated to make annual maintenance payments of $0.2 million and specified milestone and royalty payments.

Milestone and royalty payment obligations under these agreements are contingent upon future events, such as our achievement of specified development, regulatory, and sales milestones, or generating product sales.

As of December 31, 2023, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales.

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.

Refer to Note 9, Stockholders’ Equity (Deficit), for further details of the contingent earnout.

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and regulations of the SEC.

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S.

generally accepted accounting

principles, or GAAP.

generally accepted accounting principles, or GAAP.

The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes.

On an ongoing basis, we evaluate our estimates and judgments.

On an ongoing basis, we evaluate

our estimates and judgments.

We base our estimates and assumptions on historical experience, known trends and events, and various other factors that are believed to be reasonable and appropriate under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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GAAP that require us to make subjective estimates and judgments about matters that are inherently uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.

Impairment of Long-Lived Assets

As a result of the change in the manner in which the Company expects to recover the assets associated with the lease on the Alameda facility to GeneFab and the related leasehold improvements became a separate asset group for the purposes of long-lived asset impairment assessment.

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

The Company tested the asset group for impairment and recognized an impairment loss in the amount of $25.7 million during the year ended December 31, 2023, representing the difference between the carrying value of the asset group of $54.6 million and its estimated fair value of $28.9 million, determined based on the discounted cash flows expected to be generated from the use of the asset group through the sublease.

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

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

GeneFab Note Receivable

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We estimated the fair value by discounting future payments under multiple probability-weighted scenarios using GeneFab’s cost of borrowing based on published CCC-rated corporate bond yields.

GeneFab Economic Share

We elected to account for the GeneFab Economic Share under the fair value option in ASC 825.

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

We estimated the fair value using the option pricing method, which allocates total estimated enterprise value to various classes of equity using the Backsolve method.

Significant assumptions used were the equity value of GeneFab, volatility, risk-free rate, expected term, and dividend yield.

GeneFab Option

The GeneFab Option meets the definition of a derivative under ASC 815, Derivatives and Hedging (“ASC 815”), and does not meet the criteria for equity classification.

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

The fair value of the liability was determined using a Black-Scholes option pricing model incorporating assumptions such as the fair value of our common stock, the risk-free rate, volatility, expected term and dividend yield.

Contingent Earnout Liability

In connection with the Reverse Recapitalization, Legacy Senti equity holders are entitled to receive as additional merger consideration up to 2,000,000 shares of our common stock in the aggregate, in two equal tranches of 1,000,000 shares of common stock per tranche, for no consideration upon the occurrence of certain triggering events, including a change of control event.

In accordance with ASC 815, as certain terms of the Contingent Earnout Shares were not indexed to the common stock, they were accounted for as a liability at the Reverse Recapitalization date and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income (expense), net in the consolidated statements of operations and comprehensive loss.

The estimated fair value of the Contingent Earnout Shares was determined using a Monte Carlo simulation valuation model using a distribution of potential outcomes.

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

The common stock price was based on the closing price of our common stock as reported on the date at the Reverse Recapitalization and each reporting date.

Historically, we have been a private company and lacked company-specific and implied volatility information for our common stock.

Therefore, we estimated our expected volatility based on the historical volatility of a representative group of public companies in the biotechnology industry for the expected terms.

The risk-free rate was determined by reference to the U.S.

Treasury yield curve for time periods approximately equal to the expected term of the Contingent Earnout Shares.

The expected dividend yield was 0% based on the fact that we have never paid or declared dividends.

The risk-free rate and expected volatility requires significant judgment and actual results can differ from assumed and estimated amounts.

Our board of directors and management develop best estimates based on the application of these approaches and the assumptions underlying these valuations, giving careful consideration to the advice from our third-party valuation expert.

Such estimates involve inherent uncertainties and the application of significant judgment.

As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our equity-based compensation expense could be materially different.

In December 2024, the receivable was waived by the parties in an amendment to the Framework Agreement in connection with Celadon’s investment in the PIPE discussed above in Item 7.

Recent Developments , thus no further estimation was required as of December 31, 2024.

Additional Closing Option

The option granted to a certain investor to purchase additional convertible preferred stock at a later date as part of the private placement transaction in December 2024 was determined to be a freestanding financial instrument that meets the definition of a liability under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and does not meet the criteria for equity classification.

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

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

The Black-Scholes option-pricing model requires the use of subjective assumptions, including the expected volatility of our common stock, the assumed dividend yield, the risk-free interest rate and the fair value of the redeemable convertible preferred stock on the initial valuation date and subsequent remeasurement at period end.

Upon exercise of the option on December 31, 2024, we remeasured the liability and reclassified the final value associated with the preferred stock tranche liability to the carrying value of the Series A redeemable convertible preferred stock.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act (“JOBS”) Act permits an emerging growth company to take advantage of an extended transition to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.

The JOBS Act permits an emerging growth company to take advantage of an extended transition to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.

The Company is an “emerging growth company” as defined in Section 2(a) of the Securities Act, and has elected to not take advantage of the benefits of this extended transition period.

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Segment Information

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

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess performance.

The Company and the Company’s chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, views the Company’s operations and manages the business as a single operating segment, which is the research and development of the Company’s gene circuit platform.

Refer to footnote 10.

Segment Reporting , for additional information related to operating segment.

All long-lived assets are located in the United States.

The Company does not currently generate any revenue.

Contractual Obligations and Commitments

On June 3, 2021, we 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 has an initial term of eleven years will expire in 2032 with future undiscounted operating lease payments of $38.1 million over the remaining lease period.

Operating Leases in Part II - Item 8.

Financial and Supplementary Data - Notes to Consolidated Financial Statements of this Annual Report on Form 10-K for details on our lease and sublease obligations.

Related Parties for details into the BlueRock agreement).

We have also entered into license agreements under which we are obligated to make annual maintenance payments of $0.1 million and specified milestone and royalty payments.

As of December 31, 2024, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales.

Following the closing of the Merger, former holders of Legacy Senti common stock and preferred stock may receive up to 100,000 additional shares of the Company’s common stock in the aggregate, in one remaining tranche.

Refer to Note 7.

Stockholders’ Equity in Part II - Item 8.

Financial and Supplementary Data - Notes to Consolidated Financial Statements of this Annual Report on Form 10-K , for further details of the contingent earnout.

As part of the amendment to the Framework Agreement with Valere Bio and GeneFab, we agreed to make an additional advance payment of $10.0 million.

As of December 31, 2024, the Company had made $6.0 million of the $10.0 million payment.

The remaining amount was paid in January 2025.

This amount is recorded in GeneFab prepaid expenses - related party.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and regulations of the SEC.

Quantitative and Qualitative Disclosures About Market Risk

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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-K

Item 7. Management’s Discussion and Analysis