Item 7. Management’s Discussion and Analysis
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Senti Biosciences, Inc. (“Senti”) entered into a business combination agreement (the “Agreement”) with Dynamics Special Purpose Corp. (“DYNS”) on December 19, 2021. The transactions contemplated by the terms of the Agreement were completed on June 8, 2022 (the “Closing”), in conjunction with which DYNS changed its name to Senti Biosciences, Inc. (hereafter referred to, collectively with its subsidiaries, as “Senti”, the “Company”, “we”, “us” or “our”, unless the context otherwise requires). 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
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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.
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10‑K including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “explore,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Annual Report Part I, Item 1A of this Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. 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.
Overview
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, 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. Substantially all of our net losses resulted from costs incurred in connection with our research and development programs, from general and administrative costs associated with our operations , and impairment of the Company’s long-lived assets . We expect to continue to incur significant losses for the foreseeable future.
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We anticipate that our expenses and operating losses will increase substantially over the foreseeable future. The expected increase in expenses will be driven in large part by our ongoing activities, if and as we:
• continue to advance our gene circuit platform technologies;
• continue preclinical development of our current and future product candidates and initiate additional preclinical studies;
• fund clinical development of our current product candidates;
• commence clinical studies of our future product candidates;
• fund manufacturing of our current and future product candidates;
• seek regulatory approval of our current and future product candidates;
• expand our operational, financial, and management systems and increase personnel, including personnel to support our preclinical and clinical development, manufacturing and commercialization efforts;
• continue to develop, grow, maintain, enforce and defend our intellectual property portfolio; and
• incur additional legal, accounting, or other expenses in operating our business, including the additional costs associated with operating as a public company.
As of March 20, 2025, the issuance date of the consolidated financial statements for the year ended December 31, 2024, the Company concluded that substantial doubt existed about the Company’s ability to continue as a going concern beyond twelve months from the issuance date of the annual consolidated financial statements. In light of these concerns, our independent registered public accounting firm included in its opinion for the year ended December 31, 2024 an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern beyond twelve months from March 20, 2025.
Recent Developments
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. We subleased our recently constructed 92,000 square foot current good manufacturing practice facility in Alameda, California to GeneFab which will support the clinical manufacturing of our CAR-NK programs, including SENTI-202. 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 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.
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 pursuant to a license agreement under negotiation.
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”). The GeneFab Option becomes exercisable upon the execution of the license agreement, no later than August 7, 2026. The GeneFab Option may be exercised in installments of common stock equal to no more than 19.9% of our outstanding shares of common stock as of the closing date of the transaction.
As additional consideration for the transaction, we entered into a seller economic share agreement with GeneFab (“GeneFab Economic Share”), pursuant to which we will be entitled to receive ten percent of the realized gains of GeneFab’s parent company arising and resulting from any cash or in-kind distributions from GeneFab in connection with a dividend or sale event, subject to the terms and conditions of the GeneFab Economic Share.
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As the assets and contractual rights transferred to GeneFab were determined to constitute a business as defined in ASC 805, Business Combinations , we accounted for the disposal by applying the derecognition guidance in ASC 810, Consolidations , which requires that a gain or loss be recognized for the difference between the carrying value of the assets sold and the fair value of the consideration received (or receivable). In connection with the sale, we recognized a gain on disposal in the amount of $21.9 million in net income from discontinued operations during the year ended December 31, 2023, representing the excess of the fair value of the consideration received and receivable (net of the portion allocated to the GeneFab Option) over the carrying value of the assets sold. The gain on disposal was primarily related to the grant of the non-oncology license to GeneFab which had no carrying value.
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. We have chosen not to segregate the cash flows of the disposed business in the consolidated statements of cash flows. Supplemental disclosures related to discontinued operations for the statements of cash flows have been provided in Note 3. GeneFab Transaction to our consolidated financial statements. 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. 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. In addition, the Company agreed to grant an exclusive option to enter a license agreement with Celest to research, develop, manufacture and commercialize SENTI-301A in mainland China, Hong Kong, Macau, and Taiwan. Outside of these jurisdictions, the Company would retain its rights in the SENTI-301A program. Pursuant to the Agreement, 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 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
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$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
Total Revenue
We currently have no therapeutic products approved for sale, and we have never generated any revenue from the sale of any therapeutic products. Total revenue consists of contract revenue related to research services provided to customers and grant income which is research funding received from grants.
Our ability to generate product revenues will depend on our partners’ ability to replicate our results and the successful development and eventual commercialization of our product candidates, which we do not expect for the foreseeable future, if ever. We may also look to generate revenue from collaboration and license agreements in the future.
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Operating Expenses
Our operating expenses consist of research and development expenses, general and administrative expenses, and impairment of long-lived assets.
Research and Development Expenses
Research and development costs consist primarily of costs incurred for the discovery, preclinical and clinical development of our product candidates, which include:
• employee-related expenses, including salaries, related benefits, and stock-based compensation expenses for employees engaged in research and development functions;
• expenses incurred in connection with research, laboratory consumables and clinical and preclinical studies;
• the cost of consultants engaged in research and development, regulatory, and clinical related services;
• 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;
• facilities, depreciation and other expenses, which include allocated expenses for rent and maintenance of facilities, insurance and supplies;
• costs related to regulatory compliance; and
• the cost of annual license fees.
We have not historically tracked research and development expenses by program, with the exception of third-party research projects. Our internal resources, employees and infrastructure are not directly tied to any one research or product candidate project and are typically deployed across multiple projects. 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 INDs and clinical development activities. Such expenses include third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities. We do not allocate internal research and development costs which include personnel, facility costs, laboratory consumables and discovery and research related activities associated with our pipeline because these costs are deployed across multiple programs and our platform, and, as such, are not separately classified.
Our research and development expenses related to the assets sold to GeneFab are included in discontinued operations.
Research and development expenses from our continuing operations consisted of the following (in thousands):
Years Ended
December 31,
2024 2023
External services and supplies $ 20,795 $ 13,247
Personnel-related expenses, including share-based compensation expense 7,694 10,508
Facilities and other
5,867 8,395
Total $ 34,356 $ 32,150
Research and development activities are central to our business model. There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. 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
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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. This is due to numerous risks and uncertainties, including the following:
• negative or inconclusive results from our preclinical studies or clinical trials or the clinical trials of others for product candidates similar to ours, leading to a decision or requirement to conduct additional preclinical studies or clinical trials or abandon any or all of our programs;
• product-related side effects experienced by participants in our clinical trials or by individuals using therapeutics similar to our product candidates;
• 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;
• conditions imposed by the FDA or other regulatory authorities regarding the scope or design of our clinical trials;
• delays in enrolling research subjects in clinical trials;
• high drop-out rates of research subjects;
• inadequate supply or quality of product candidate components or materials or other supplies necessary for the conduct of our clinical trials;
• Chemistry, manufacturing and control (“CMC”) challenges associated with manufacturing and scaling up biologic product candidates to ensure consistent quality, stability, purity and potency among different batches used in clinical trials;
• greater-than-anticipated clinical trial costs;
• poor potency or effectiveness of our product candidates during clinical trials;
• unfavorable FDA or other regulatory authority inspection and review of a clinical trial or manufacturing site;
• failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all;
• delays and changes in regulatory requirements, policies and guidelines; and
• the FDA or other regulatory authorities interpret our data differently than we do.
A change in the outcome of any of these variables may significantly impact the costs and timing associated with the development of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates.
General and Administrative Expenses
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, 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.
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General and administrative expenses from our continuing operations consisted of the following (in thousands):
Years Ended
December 31,
2024 2023
Personnel-related expenses, including share-based compensation expense $ 8,379 $ 23,117
External services and supplies 7,624 6,930
Facilities and other
7,507 4,821
Depreciation and amortization 2,860 2,308
Total $ 26,370 $ 37,176
Impairment of Long-lived assets
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, 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 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 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
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consolidated financial statements included in this Form 10-K related to the valuation methodology and assumptions used.
GeneFab sublease Income - related party
Sublease Income is primarily comprised of income from our sublease agreements with GeneFab.
Net Income (Loss) from Discontinued Operations
Net income (loss) from discontinued operations includes the results of our manufacturing and research activities related to the Alameda facility through the disposition date of August 7, 2023.
Net income (loss) from discontinued operations is summarized below (in thousands):
Years Ended
December 31,
2024 2023
Operating expenses:
Research and development $ — $ 10,003
General and administrative — (496)
Total operating expenses — 9,507
Loss from discontinued operations — (9,507)
Other income (expense) — (6)
Gain on disposal of business — 21,861
Net income (loss) from discontinued operations $ — $ 12,348
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Results of Operations
Comparison of the Years Ended December 31, 2024 and 2023
The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (in thousands):
Years Ended
December 31,
2024 2023 Change
Revenue
Contract revenue $ — $ 1,978 $ (1,978)
Grant income — 583 (583)
Total revenue — 2,561 (2,561)
Operating expenses
Research and development (included related party cost of $14,266 and $3,113, respectively) 34,356 32,150 2,206
General and administrative 26,370 37,176 (10,806)
Impairment of long-lived assets 313 25,962 (25,649)
Total operating expenses 61,039 95,288 (34,249)
Loss from operations (61,039) (92,727) 31,688
Other income (expense)
Interest income, net 948 2,864 (1,916)
Change in fair value of contingent earnout liability 20 207 (187)
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)
Change in fair value of GeneFab Economic Share - related party (1,816) 16 (1,832)
Change in fair value of GeneFab Option - related party 6,331 3,318 3,013
GeneFab sublease income - related party 6,449 2,323 4,126
Other income (expense) 153 (33) 186
Total other income (expense), net 8,249 9,321 (1,072)
Net loss from continuing operations (52,790) (83,406) 30,616
Net income from discontinued operations $ — $ 12,348 $ (12,348)
Net loss $ (52,790) $ (71,058) $ 18,268
Contract revenue . 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, 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 $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.
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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 $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 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 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, 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 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 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 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. 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, 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
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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 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, 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. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, if at all. 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. 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 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.
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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.
Cash Flows
The following table sets forth a summary of our cash flows from continuing and discontinued operations for each of the periods indicated (in thousands):
Years Ended
December 31,
2024 2023
Net cash used in operating activities
$ (41,397) $ (52,395)
Net cash from investing activities 34 30,077
Net cash from financing activities 53,730 779
Net change in cash and cash equivalents $ 12,367 $ (21,539)
Operating Activities
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, 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, 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.
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).
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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 issuance 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.
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:
• the scope, rate of progress, results and costs of drug discovery, clinical and preclinical development, laboratory testing and clinical trials for our product candidates;
• the number and development requirements of product candidates that we may pursue, and other indications for our current product candidates that we may pursue;
• the costs, timing and outcome of regulatory review of our product candidates;
• the scope and costs of any commercial manufacturing activities;
• the cost associated with commercializing any approved product candidates;
• the cost and timing of developing our ability to establish sales and marketing capabilities, if any;
• the costs of preparing, filing and prosecuting patent applications, maintaining, enforcing and protecting our intellectual property rights, defending intellectual property-related claims and obtaining licenses to third-party intellectual property;
• the timing and amount of any milestone and royalty payments we are required to make under our present or future license agreements;
• our ability to establish and maintain collaborations on favorable terms, if at all; and
• the extent to which we acquire or in-license other product candidates and technologies and associated intellectual property.
In order to improve our liquidity, management is actively pursuing additional financing. We will need to obtain substantial additional funding for continuing operations. If we are unable to raise capital when needed, or on attractive terms, we could be forced to delay, reduce or eliminate our research or drug development programs or any future commercialization efforts. 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.
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. 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
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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. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies and estimates to be most critical to the preparation of our consolidated financial statements. We define our critical accounting policies as those under U.S. 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.
GeneFab Note Receivable
We elected to account for the GeneFab Note Receivable from GeneFab under the fair value option in ASC 825, Financial Instruments (“ASC 825” ) . The GeneFab Note Receivable 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 by discounting future payments under multiple probability-weighted scenarios using GeneFab’s cost of borrowing based on published CCC-rated corporate bond yields. 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 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.
We expect to remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Dynamics Initial Public Offering (“IPO”) (which occurred on May 25, 2021), (b) in which we have total annual revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of that fiscal year’s second fiscal quarter and our net sales for the year exceed $100 million; and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the preceding, rolling three-year period.
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Smaller Reporting Company Status
The Company is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company if (1) the market value of our common stock held by non-affiliates is less than $250 million as of the last business day of the second fiscal quarter, or (2) our annual revenues in our most recent fiscal year completed before the last business day of our second fiscal quarter are less than $100 million and the market value of our common stock held by non-affiliates is less than $700 million as of the last business day of the second fiscal quarter.
Segment Information
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. See Note 6. 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.
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 $0.1 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, 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.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We qualify as a smaller reporting company, as defined by Item 10 of Regulation S-K and, thus, are not required to provide the information required by this Item.
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