Senti Biosciences Holdings, Inc. 10-K

Item 8. Financial Statements and Supplementary Data SENTI BIOSCIENCES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm 140 Consolidated Balance Sheets as of December 31, 2024 and 2023 141 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2024 and 2023 144 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 145 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 146 Notes to Consolidated Financial Statements 148 139 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors Senti Biosciences, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Senti Biosciences, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, redeemable convertible preferred stock and stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring losses and negative cash flows from operations and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLP We have served as the Company’s auditor since 2019. San Francisco, California March 20, 2025 140 SENTI BIOSCIENCES, INC. Consolidated Balance Sheets 141 (in thousands, except share and per share data) December 31, 2024 2023 Assets Cash and cash equivalents $ 48,277 $ 35,926 Accounts receivable 159 112 GeneFab receivable - related party 1,646 17,592 GeneFab prepaid expenses - related party 6,639 14,787 Prepaid expenses and other current assets 2,240 2,783 Total current assets 58,961 71,200 Restricted cash 3,538 3,522 GeneFab receivable - related party, net of current portion — 1,119 Property and equipment, net 21,289 25,338 Operating lease right-of-use assets 13,948 16,274 GeneFab Economic Share - related party — 1,816 Other long-term assets 105 215 Total assets $ 97,841 $ 119,484 Liabilities and Stockholders’ Equity Accounts payable $ 1,454 $ 1,250 Finance lease liabilities - related party, current portion 103 97 Early exercise liability, current portion 11 135 GeneFab sublease deferred income - related party 660 989 Accrued expenses and other current liabilities 6,271 5,927 Operating lease liabilities 4,647 4,031 Current liabilities of discontinued operations — 243 Total current liabilities 13,146 12,672 Operating lease liabilities, net of current portion 28,891 33,538 Contingent earnout liability — 20 GeneFab Option - related party — 6,331 Early exercise liability, net of current portion — 10 Other liabilities, net of current portion 5,049 — Total liabilities 47,086 52,571 Commitments and contingencies (Note 15) Series A redeemable convertible preferred stock, $ 0.0001 par value; 21,200 and no shares authorized at December 31, 2024 and December 31, 2023, respectively; 21,157 and no shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively; aggregate liquidation preference of $ 147.6 million and none at December 31, 2024 and December 31, 2023, respectively 25,106 — Stockholders’ equity: Common stock, $ 0.0001 par value; 500,000,000 shares authorized at December 31, 2024 and December 31, 2023; 4,829,035 and 4,569,900 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively 1 1 Additional paid-in capital 322,782 311,256 Accumulated deficit ( 297,134 ) ( 244,344 ) Total stockholders’ equity 25,649 66,913 Total liabilities, redeemable convertible preferred stock and stockholders’ equity $ 97,841 $ 119,484 142 All periods presented have been retroactively adjusted to reflect the 1-for-10 reverse stock split effected on July 17, 2024. Refer to Note 2. Summary of Significant Accounting Policies, for further information. The accompanying notes are an integral part of these consolidated financial statements. 143 SENTI BIOSCIENCES, INC. Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) Years Ended December 31, 2024 2023 Revenue Contract revenue $ — $ 1,978 Grant income — 583 Total revenue — 2,561 Operating expenses Research and development (included related party costs of $ 14,266 and $ 3,113 , respectively) 34,356 32,150 General and administrative 26,370 37,176 Impairment of long-lived assets 313 25,962 Total operating expenses 61,039 95,288 Loss from operations ( 61,039 ) ( 92,727 ) Other income (expense) Interest income, net 948 2,864 Change in fair value of contingent earnout liability 20 207 Change in fair value of Preferred Stock Tranche Liability - related party 13,404 — Change in fair value of GeneFab Note Receivable - related party ( 17,240 ) 626 Change in fair value of GeneFab Economic Share - related party ( 1,816 ) 16 Change in fair value of GeneFab Option - related party 6,331 3,318 GeneFab sublease income - related party 6,449 2,323 Other income (expense) 153 ( 33 ) Total other income (expense), net 8,249 9,321 Net loss from continuing operations ( 52,790 ) ( 83,406 ) Net income from discontinued operations — 12,348 Net loss ( 52,790 ) ( 71,058 ) Other comprehensive loss Unrealized loss on investments — ( 1 ) Comprehensive loss $ ( 52,790 ) $ ( 71,059 ) Net loss per share, basic and diluted Net loss per share from continuing operations, basic and diluted $ ( 12.03 ) $ ( 18.80 ) Net income per share from discontinued operations, basic and diluted $ — $ 2.79 Net loss per share, basic and diluted $ ( 12.03 ) $ ( 16.01 ) Weighted-average shares outstanding, basic and diluted 4,595,946 4,437,106 The accompanying notes are an integral part of these consolidated financial statements. 144 SENTI BIOSCIENCES, INC. Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (in thousands, except share and per share data) Redeemable Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Shares Amount Shares Amount Balance as of December 31, 2022 — $ — 4,406,137 $ — $ 300,548 $ ( 173,286 ) $ 1 $ 127,263 Common Stock Purchase Agreement settled in common stock, net of fees — — 100,000 1 527 — — 528 Vesting of early exercise of common stock options — — 5,064 — 136 — — 136 Issuance of common stock under Employee Stock Purchase Plan (ESPP) — — 58,699 — 375 — — 375 Stock-based compensation expense — — — — 9,670 — — 9,670 Unrealized gain (loss) on investments — — — — — — ( 1 ) ( 1 ) Net loss — — — — — ( 71,058 ) — ( 71,058 ) Balance as of December 31, 2023 — $ — 4,569,900 $ 1 $ 311,256 $ ( 244,344 ) $ — $ 66,913 Funds received from Chardan ChEF Instrument — — 244,313 — 1,806 — — 1,806 Issuance of common stock for RSU Release — — 9,666 — — — — — Issuance of Series A redeemable convertible preferred stock (net of issuance costs) 21,157 22,584 — — — — — — Series A redeemable convertible preferred stock accretion — 2,522 — — ( 2,522 ) — — ( 2,522 ) Shares issued upon exercise of options — — 92 — — — — — Stock-based compensation expense — — — — 1,755 — — 1,755 Vesting of early exercise of common stock options — — 5,064 — 135 — — 135 Warrants to purchase common stock issued in connection with Series A redeemable convertible preferred stock (net of issuance costs) — — — — 10,352 — — 10,352 Net loss — — — — — ( 52,790 ) — ( 52,790 ) Balance as of December 31, 2024 21,157 $ 25,106 4,829,035 $ 1 $ 322,782 $ ( 297,134 ) $ — $ 25,649 The accompanying notes are an integral part of these consolidated financial statements. 145 SENTI BIOSCIENCES, INC. Consolidated Statements of Cash Flows (in thousands) Years Ended December 31, 2024 2023 Cash flows from operating activities Net loss $ ( 52,790 ) $ ( 71,058 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 3,838 3,561 Amortization of operating lease right-of-use assets 2,013 1,868 Accretion of discount on short-term investments — ( 1,069 ) Gain on disposal of business — ( 21,862 ) Change in fair value of contingent earnout liability ( 20 ) ( 207 ) Change in fair value of GeneFab Note Receivable - related party 17,240 ( 626 ) Change in fair value of GeneFab Economic Share - related party 1,816 ( 16 ) Change in fair value of GeneFab Option - related party ( 6,331 ) ( 3,318 ) Change in fair value of Preferred Stock Tranche liability - related party ( 13,404 ) — Impairment of long-lived assets 313 25,962 Stock-based compensation expense 1,755 9,670 Other non-cash charges 130 35 Changes in assets and liabilities: Accounts receivable ( 62 ) 507 GeneFab receivable - related party ( 665 ) ( 1,436 ) GeneFab prepaid expenses - related party 8,148 4,113 Prepaid expenses and other assets 707 681 Accounts payable 797 ( 290 ) Accrued expenses and other current liabilities ( 671 ) 716 GeneFab sublease deferred income - related party ( 329 ) 689 Deferred revenue — ( 799 ) Operating lease liabilities ( 4,031 ) 484 Other liabilities, net of current portion 149 — Net cash used in operating activities $ ( 41,397 ) $ ( 52,395 ) Cash flows from investing activities Purchases of short-term investments $ — $ ( 17,990 ) Maturity of short-term investments — 60,000 Purchases of property and equipment ( 26 ) ( 12,038 ) Proceeds from sale of property and equipment 60 105 Net cash from investing activities $ 34 $ 30,077 Cash flows from financing activities Proceeds from private placement, net of fees paid to investor $ 47,253 $ — Payment of issuance costs ( 229 ) — Proceeds from CIRM award 4,900 — 146 Years Ended December 31, 2024 2023 Proceeds from issuance of common stock under Common Stock Purchase Agreement 1,806 512 Proceeds from issuance of common stock under Employee Stock Purchase Plan (ESPP) — 375 Principal finance lease payments — ( 108 ) Net cash from financing activities $ 53,730 $ 779 Net (decrease) increase in cash and cash equivalents 12,367 ( 21,539 ) Cash, cash equivalents, and restricted cash, beginning of period 39,448 60,987 Cash, cash equivalents, and restricted cash, end of period $ 51,815 $ 39,448 Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents $ 48,277 $ 35,926 Restricted cash 3,538 3,522 Total cash, cash equivalents and restricted cash $ 51,815 $ 39,448 Supplemental disclosures of noncash financing and investing items Purchase of property and equipment in accounts payable and accrued expenses and other current liabilities $ — $ 15 Unpaid Issuance Costs 1,903 — The accompanying notes are an integral part of these consolidated financial statements. 147 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements 1. Organization and Description of Business Senti Biosciences, Inc. and its subsidiaries (the “Company” or “Senti”), is a clinical stage biotechnology company developing next-generation cell and gene therapies engineered with its gene circuit platform technologies for patients living with incurable diseases. Senti’s mission is to create a new generation of smarter therapies that can outsmart complex diseases using novel and unprecedented approaches. Senti has built a synthetic biology platform that enables it to program next-generation cell and gene therapies with gene circuits. These gene circuits, which are created from novel and proprietary combinations of DNA sequences, reprogram cells with biological logic to sense inputs, compute decisions and respond to their cellular environments. The Company is headquartered in South San Francisco, California. On June 8, 2022 (the “Closing Date”), Dynamics Special Purpose Acquisition Corp. (“Dynamics” or “DYNS”) consummated a merger pursuant to which Explore Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and wholly owned subsidiary of Dynamics, merged with and into Senti Sub I, Inc., formerly named Senti Biosciences, Inc. (“Legacy Senti”), with Legacy Senti surviving as a wholly-owned subsidiary of Dynamics (such transactions, the “Merger,” and, collectively with the other transactions described in the merger agreement). As a result of the Merger, Dynamics was renamed Senti Biosciences, Inc. On August 7, 2023, the Company completed a transaction with GeneFab, LLC (“GeneFab”), a contract manufacturing and synthetic biology biofoundry focused on next-generation cell and gene therapies. As part of that transaction, the Company disposed of its non-oncology business and in-house manufacturing services and subleased its manufacturing facility to GeneFab. Refer to Note 3. GeneFab Transaction, for further details of the transaction, and to Note 16. Related Parties, for related party discussion. Liquidity and Going Concern These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. The Company has devoted substantially all of its efforts to organizing and staffing, business planning, raising capital, and conducting preclinical and clinical studies and has not realized substantial revenues from its planned principal operations. To date , the Company raised aggregate gross proceeds of $ 354.3 million from the Merger and a private placement completed concurrently with the Merger, the issuance of shares of common stock, the issuance of shares of redeemable convertible preferred stock, the issuance of convertible notes and, to a lesser extent, through collaboration agreements and governmental grants and loans. On August 3, 2024 , the Company executed an agreement with California Institute of Regenerative Medicine (the “CIRM Grant Agreement”) for a total grant award of $ 8.0 million . Under the CIRM Grant Agreement, the Company must achieve certain operational milestones to receive the grant tranches. Refer to Note 8. CIRM Grant, for further details of the CIRM Grant Agreement. At December 31, 2024 and December 31, 2023, the Company had an accumulated deficit of $ 297.1 million and $ 244.3 million, respectively. The Company’s net losses were $ 52.8 million and $ 71.1 million for the years ended December 31, 2024 and 2023, respectively. Substantially all of the Company’s net losses resulted from costs incurred in connection with the Company’s research and development programs and from general and administrative costs associated with the Company’s operations. The Company expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future as the Company advances its preclinical activities and clinical trials for its product candidates in development . The Company has concluded that substantial doubt exists that the Company’s cash and cash equivalents of $ 48.3 million as of December 31, 2024, are sufficient for the Company to continue as a going concern for at least 148 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements one year from the issuance date of these consolidated financial statements. Additional funds will be necessary to maintain current operations and to continue research and development activities. The Company’s continued existence is dependent upon management’s ability to raise capital and ultimately develop profitable operations. While management is devoting substantially all of its efforts to developing the Company’s business and raising capital, there can be no assurance that the Company’s efforts will be successful. Moreover, no assurance can be given that management’s actions will result in profitable operations or the meeting of ongoing liquidity needs. NASDAQ Bid Price Compliance Notice On August 7, 2023, the Company received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Listing Qualifications Department”) notifying the Company that, for the last 30 consecutive trading days, the closing bid price of the Company’s common stock had closed below the minimum bid price requirement of $1.00 per share for continued listing on The Nasdaq Global Market. The Company had been provided an initial compliance period of 180 calendar days, or until February 5, 2024, to regain compliance with the minimum bid price requirement. Issuers listed on The Nasdaq Global Market are not eligible for a second 180-day grace period under the Nasdaq Listing Rules. However, based upon the Company’s compliance with the various criteria required under Nasdaq Listing Rule 5810(c)(3)(A)(ii) to obtain a second 180-day grace period applicable to issuers listed on The Nasdaq Capital Market, the Company applied to transfer the listing of its common stock to The Nasdaq Capital Market. On January 23, 2024, the Company received written notice from the Listing Qualifications Department granting the Company its request to transfer the listing of its common stock from the Nasdaq Global Market tier to the Nasdaq Capital Market tier. The transfer of the listing of the Company’s common stock from the Nasdaq Global Market to the Nasdaq Capital Market took effect with the open of business on January 25, 2024. On February 6, 2024, the Listing Qualifications Department granted the Company’s request for a second 180- calendar day period, or until August 5, 2024, to regain compliance with the $1.00 bid price requirement. On July 17, 2024, the Company filed a Certificate of Amendment to Second Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, pursuant to which the Company effected a 1-for-10 reverse stock split (the “Reverse Stock Split”) of Company’s issued and outstanding common stock. The Reverse Stock Split became effective as of 5:00 p.m. (Eastern Time) on July 17, 2024, and the Company’s common stock began trading on a split-adjusted basis on the Nasdaq Capital Market at the market open on July 18, 2024. On August 2, 2024, the Company received notification from Nasdaq that for ten consecutive business days, the closing bid price of the Company’s common stock was at least $1.00 per share, and accordingly, the Company regained compliance with the Bid Price Rule, and that the matter is now closed. NASDAQ Audit Committee Requirement Notice On October 21, 2024, we notified the Nasdaq Stock Market (“Nasdaq”) that we were not in compliance with the Audit Committee requirement under Nasdaq Listing Rule 5605(c)(2)(A) due to having only two members on our Audit Committee which was the result of Susan Berland’s resignation from the Board effective June 11, 2024. On October 22, 2024, the Company received a notice (the “Notice”) from Nasdaq indicating that the Company was no longer compliant with the Audit Committee requirements as set forth in Nasdaq Listing Rule 5605, the Company had until December 9, 2024 to regain compliance as provided in Nasdaq Listing Rule 5605(c)(4) which defined the cure period. On December 9, 2024, Frances Schulz was appointed to the Board of Directors and the Company’s Audit Committee. On December 19, 2024, the Company received notice from Nasdaq that the Company had regained compliance with Rule 5605 and the matter was closed. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to 149 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of Senti Biosciences, Inc., and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company has one business activity and operates in one reportable segment within continuing operations. All long-lived assets of the Company are maintained in the United States. The Company determined that the assets sold to GeneFab met the criteria for presentation as a discontinued operation. The Company has 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 . Unless otherwise specified, the disclosures in these consolidated financial statements refer to continuing operations only. Reverse Stock Split On July 17, 2024, the Company effected a 1 for 10 reverse stock split of its common stock (the “Reverse Stock Split”). The par value per share and the number of authorized shares were not adjusted as a result of the Reverse Stock Split. The shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities. In addition, the shares available for grants under the Company’s incentive plans were adjusted as a result of the Reverse Stock Split. All references to common stock, options to purchase common stock, outstanding common stock warrants, common stock share data, per share data, and related information contained in the consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented. No fractional shares were issued as a result of the reverse stock split, as fractional shares of common stock were rounded down to the nearest whole share. Refer to Note 7. Stockholders’ Equity , for additional information related to the reverse stock split. California Institute for Regenerative Medicine Grant On August 3, 2024, the Company executed an agreement with the California Institute for Regenerative Medicine (“CIRM”) for a total grant award of $ 8.0 million (“CIRM Grant”) in support of the research project related to the ongoing clinical development of SENTI-202. As the Company has the option to convert the CIRM Grant to a loan and thus may be required to repay some or all of the amounts awarded by CIRM, the Company accounted for this award as a liability. Given the uncertainty in amounts due upon repayment, the Company has recorded amounts received without any discount or interest recorded, and upon determination of amounts that would become due, the Company will adjust accordingly. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the valuation of stock-based awards, the accrual for research and development expenses, the valuation of GeneFab Option, the valuation of GeneFab Economic Share, the valuation of the GeneFab Note Receivable, redeemable convertible preferred stock, preferred stock tranche liability, the discount rate used to discount future cash flows for the impairment of long-lived assets, and the determination of the incremental borrowing rate. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates. Concentration of Credit Risk Financial instruments that potentially subject the Company to a significant concentration of credit risk consist of cash, cash equivalents, and restricted cash are maintained in checking and money market accounts at multiple 150 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements financial institutions, which at times, may exceed federally insured limits. As of December 31, 2024 and 2023 , the Company has not experienced any credit losses in such accounts or investments. As of December 31, 2024, t he Company has prepaid future manufacturing and research services of $ 6.6 million under an agreement with GeneFab for certain development and manufacturing services agreement which are recorded in GeneFab prepaid expenses - related party in the consolidated balance sheet and $ 1.6 million receivable related to services provided under the transition services agreement as well as sublease rent payments which are recorded in GeneFab receivable - related party in the balance sheets. The prepaid expense and receivable balances from GeneFab potentially subject the Company to a significant concentration of credit risk if the Company is unable to realize these balances. Refer to Note 3. GeneFab Transaction , for further details of the GeneFab transaction. Cash, Cash Equivalents, and Restricted Cash Cash equivalents consist of amounts deposited in money market funds and securities with original maturity dates of three months or less, which are stated at fair value. The Company’s restricted cash consists of cash deposited with a financial institution as collateral for a letter of credit required under the Company’s headquarters and research facility leases as well as employee contributions collected under employee stock purchase plan. The restricted cash is presented separately from cash and cash equivalents and classified as non-current on the consolidated balance sheets, as the Company expects the cash to remain restricted for a period greater than one year. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that total to the amounts shown in the consolidated statements of cash flows for the Company: December 31, 2024 2023 Cash and cash equivalents $ 48,277 $ 35,926 Restricted cash 3,538 3,522 Total $ 51,815 $ 39,448 Short-term Investments Investments in marketable securities with original maturities less than 12 months from the balance sheet date, if any, are classified as short-term investments. Investments with original maturities of greater than 12 months from the balance sheet date, if any, are classified as long-term. The Company classifies all of its investments as available-for-sale and records such assets at estimated fair value in the consolidated balance sheets, with unrealized gains and losses, if any, reported as a component of other comprehensive loss within the consolidated statement of operations and comprehensive loss, and as a separate component of stockholders’ equity. These investments consist of corporate debt securities, U.S. Government securities, asset-based securities, and commercial paper, which are subject to minimal credit and market risk. Unrealized gains and losses are included in other comprehensive loss. Interest on available-for-sale securities is included in interest income in the consolidated statements of operations and comprehensive loss. Fair Value Measurements Certain assets and liabilities of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: • Level 1 – Quoted prices in active markets for identical assets or liabilities. 151 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements • Level 2 – Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies, and similar techniques. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The estimated fair values of the Company’s cash and cash equivalents, restricted cash, trade, and other receivables and accounts payable approximate their carrying values given their short-term nature. Fair Value Option The Company elected to account for the deferred consideration (GeneFab Note Receivable) and contingent consideration receivable (GeneFab Economic Share) from the GeneFab transaction under the fair value option in ASC 825, Financial Instruments (“ASC 825”). Accordingly, these instruments were recognized at their fair value at the closing of the transaction and are subsequently remeasured each reporting period with changes in fair value recorded in other income (expense) in the consolidated statements of operations and comprehensive loss until settlement. The fair value of the GeneFab Note Receivable was determined by discounting future payments under multiple probability-weighted scenarios using GeneFab’s cost of borrowing. The fair value of the GeneFab Option was determined using an option pricing method. In December 2024, the GeneFab Note Receivable was waived by the parties in an amendment to the Framework Agreement in connection with Celadon’s investment in the PIPE. Refer to Note 3. GeneFab Transaction , for further details of the GeneFab transaction. Property and Equipment, Net Property and equipment, net is stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which are as follows: Asset Classification Estimated useful Life Small equipment 2 years Computer equipment and software 3 years Laboratory equipment 5 - 7 years Furniture and fixtures 5 - 7 years Leasehold improvements Shorter of the lease term and the useful life The Company capitalizes certain costs incurred during the construction phase of a project or asset into construction-in-progress. Once the construction is complete and the asset is placed into service, the Company transfers its carrying value into the appropriate fixed asset category and begins depreciating the value over its useful life. When assets are retired or disposed of, any resulting gain or loss is included in net loss. Expenditures for maintenance and repairs are expensed as incurred. Impairment of Long-Lived Assets The Company evaluates its long-lived assets, such as property and equipment, net and lease ROU assets, for impairment whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. Recoverability of these assets is measured by comparing their carrying value to the future net undiscounted cash flows the assets are expected to generate over their remaining economic life. If such assets are 152 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements considered to be impaired, the amount of any impairment is measured as the difference between their carrying value and their fair value. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the revised shorter useful life. Leases The Company determines if an arrangement is or contains a lease at inception. Operating leases are recorded on the consolidated balance sheets with right-of-use assets (“ROU”) representing the Company’s right to use an underlying asset for the lease term and lease liabilities representing the Company’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets also include the effect of any lease payments made prior to or on lease commencement and excludes lease incentives and initial direct costs incurred, as applicable. As the implicit rate in the Company’s leases is typically unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company gives consideration to its credit risk, the term of the lease, and total lease payments and adjusts for the impacts of collateral as necessary when calculating its incremental borrowing rates. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease payments are recorded as an expense in the period incurred. The Company entered into subleases for its Alameda manufacturing facility as well as for portions of the Company’s headquarters, which are being accounted for under lessor accounting. The nature of these subleases did not relieve the Company of its obligations under the original leases. Each of these respective leases were classified as operating leases and, as such, the Company continues to account for the original leases as it did prior to entering into the sublease agreements. If the total remaining lease cost on the original lease for the term of the sublease is greater than the anticipated sublease income, the long-lived asset is assessed for impairment. Income from the subleases are recorded in other income (expense) within the consolidated statement of operations and comprehensive loss. The Company has elected to not separate lease and non-lease components for any leases within its existing classes of assets and, as a result, accounts for any lease and non-lease components as a single lease component. The Company has also elected not to apply the recognition requirement for leases with a term of 12 months or less. Revenue Recognition Contract Revenue Revenue is recognized when a customer obtains control of promised goods or services. The Company applies the following five steps to recognize revenue: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to performance obligations in the contract; and (v) recognize revenue when (or as) the performance obligations are satisfied. A performance obligation is defined as a promise to transfer a product or a service to a customer that is distinct. A product or a service is distinct if both (i) the customer can benefit from the product or the service either on its own or together with other resources that are readily available to the customer and (ii) the Company’s promise to transfer the product or the service to the customer is separately identifiable from other promises in the contract. Each distinct promise to transfer a product or a service is a unit of accounting for revenue recognition. If a promise to transfer a product or a service is not distinct from other promises in the contract, such promises should be combined into a single performance obligation. The assessment of each of these elements may require significant judgments. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. If these options provide a material right to the customer, they are considered performance obligations. The identification of material rights requires judgments related to the determination of the value of the underlying license relative to the option exercise price, including assumptions about technical feasibility and the probability of developing a candidate that would be subject to the option rights. 153 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements The transaction price is the amount of consideration the Company is entitled to receive in exchange for the transfer of control of a product or a service to a customer. The Company’s agreements may include both fixed and variable consideration. Fixed payments are included in the transaction price, while variable consideration, such as milestone payments and fees for research services, are estimated and constrained (if required) at the inception of the contract and evaluated on a periodic basis thereafter. If a contract has multiple performance obligations, the Company allocates the transaction price to each distinct performance obligation based on the relative stand-alone selling price (“SSP”) of the performance obligation. The Company determines SSP at contract inception and at contract modification. Determining the SSP for performance obligations requires significant judgment. Changes in the key assumptions used to determine the SSP could have a significant effect on the allocation of arrangement consideration between multiple performance obligations. For each distinct performance obligation, revenue is recognized as the Company transfers control of the product or the service applicable to such performance obligations. In instances where the Company first receives consideration in advance of satisfying its performance obligation, the Company classifies such consideration as deferred revenue until the Company satisfies such performance obligations. In instances where the Company first satisfies its performance obligation prior to its receipt of consideration, the consideration is a contract asset recorded in prepaid expenses and other current assets on the consolidated balance sheets. Grant Income The Company receives government grants that reimburses the Company for certain allowable costs for funded projects. Grant income is recognized on a systematic basis over the period in which the Company recognizes qualified research and development costs that grant is intended to compensate and there is reasonable assurance that the Company will meet the terms and conditions of the grant. This income is recorded as grant income in the consolidated statements of operations and comprehensive loss. Grant payments received in excess of grant revenue earned are recognized as deferred revenue on the balance sheets, and grant income earned in excess of grant payments received is recognized as trade and other receivables on the consolidated balance sheets. Research and Development Research and development costs are expensed as incurred. Research and development costs consist of salaries and other personnel-related expenses, including associated stock-based compensation expense, lab supplies and services, in-license and technology costs, consulting and sponsored research fees, manufacturing costs, facility costs and depreciation expense. Nonrefundable advance payments for goods and services that will be used or received in future research and development activities are deferred and recognized as an expense in the period in which the related goods are delivered, or services are performed. Similarly, GeneFab prepaid expenses are recognized as an expense in the period in which the related manufacturing or research activities are performed. The Company has acquired and may continue to acquire the rights to gene circuit or other technologies from third parties. The upfront payments to acquire a license, product, or rights, as well as any annual maintenance charges and future milestone payments, are immediately recognized as research and development expense provided that there is no alternative future use of the rights in other research and development projects. GeneFab Option The option granted to GeneFab as part of the GeneFab transaction meets the definition of a derivative under ASC 815, Derivatives and Hedging (“ASC 815”), and does not meet the criteria for equity classification. The derivative liability is recorded at its fair value on issuance and subsequently remeasured each reporting period with changes in fair value recorded in other income (expense) in the consolidated statements of operations and comprehensive loss until settlement. The fair value of the derivative liability was determined using a Black-Scholes 154 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements option pricing model incorporating assumptions such as the fair value of our common stock, the risk-free rate, volatility, expected term and dividend yield. 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 (“Preferred Stock Tranche Liability”) 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 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 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, the Company 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. Commitments and Contingencies The Company recognizes a liability with regard to loss contingencies when it believes it is probable a liability has occurred and the amount can be reasonably estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, the Company accrues that amount. When no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount in the range. The Company has not recorded any such liabilities as of December 31, 2024 and 2023 . Contingent Earnout Equity In connection with the Reverse Recapitalization and pursuant to the Merger dated as of June 8, 2022 by and among the Merger Sub and Legacy Senti, former holder of the Legacy Senti common stock and Legacy Senti preferred stock are entitled to receive as additional consideration of up to 200,000 shares of the Company’s common stock (the “Contingent Earnout Shares”), comprised of two separate tranches of 100,000 shares per tranche, for no consideration upon the achievement of certain share price milestones within a period of two years from the closing date of the Merger for the first tranche term and the second tranche term is three years from the closing date of the Merger. The Contingent Earnout Shares are a form of dividend for holders of Legacy Senti common stock and Legacy Senti preferred stock. If there is a change of control within the three-year period following the closing of the Merger that results in a per share price equal to or in excess of certain share price milestones not previously met, then the Company shall issue the earnout shares to the holders of Legacy Senti common stock and preferred stock. In accordance with ASC 815 as certain terms of the contingent earnout shares were not indexed to the common stock, equity treatment is precluded and liability classification is required at the Reverse Recapitalization date and subsequently remeasured at each reporting date with changes in fair value recorded as Change in fair value of contingent earnout liability in the consolidated statements of operations and comprehensive loss. A portion of the earnout shares were granted to holders of Legacy Senti common stock that are subject to repurchase, and as of the date of the Merger were accounted for as stock-based compensation expense and expensed as there was no remaining service period. The estimated fair value of the Contingent Earnout Shares was determined using a Monte Carlo simulation using a distribution of potential outcomes on a monthly basis over a three-year period prioritizing the most reliable information available. The assumptions utilized in the calculation were based on the achievement of certain stock price milestones, including the current Company common stock price, expected volatility, risk-free rate, expected term and expected dividend yield. Stock-Based Compensation Expense The Company recognizes stock-based compensation expense related to employees and non-employees based on the grant date fair value of the awards. For awards that vest solely based on continued service, stock-based 155 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements compensation expense is recognized in the consolidated statements of operations and comprehensive loss using the straight-line method. For performance and market awards, stock-based compensation expense is recognized over the requisite service period using the accelerated attribution method. No compensation expense will be recognized for awards subject to performance conditions until it is probable that the performance condition will be met. The Company recognizes stock-based compensation expense related to purchase rights issued pursuant to its employee stock purchase plan on a straight-line basis over the offering period. The Company has allowed specified option holders to exercise unvested options. The options that are exercised prior to vesting continue to vest according to the respective option agreement, and such unvested shares are subject to repurchase by the Company at the option holder’s original exercise price in the event the option holder's service with the Company voluntarily or involuntarily terminates. The Company records proceeds from the early exercise of options as a current and long-term liability in the consolidated balance sheets, and reclassifies this liability to additional paid-in capital as the Company's repurchase right lapses. The shares purchased by the option holders pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares have vested. Net Loss Per Share The Company follows the two-class method when computing net loss per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires loss available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in undistributed earnings as if all loss for the period had been distributed. Basic earnings per share for both continuing and discontinued operations is computed by dividing net loss from continuing operations and net income (loss) from discontinued operations attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share for both continuing and discontinued operations is computed by adjusting net earnings for both continuing and discontinued operations for an allocation of the undistributed earnings and dividing it by the weighted-average number of common shares outstanding for the period, including potential dilutive common shares. For purposes of this calculation, the Company's outstanding stock options, redeemable convertible preferred stock, and potential issuance of redeemable convertible preferred stock under existing preferred stock tranches, are considered potential dilutive common shares. The Company's participating securities contractually entitle the holders of such securities to participate in dividends but do not contractually require the holders of such securities to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. When the Company is reporting discontinued operations, it uses net loss from continuing operations as the control number in determining whether those potential dilutive securities are dilutive or anti-dilutive. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the consolidated statement of operations and comprehensive loss in the period that includes the enactment date. 156 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions on the basis of a two-step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability. To date, there have been no interest charges or penalties related to unrecognized tax benefits. Recently Adopted Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective are not expected to have a material impact on the Company’s financial position, results of operations, or cash flows upon adoption. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company adopted the guidance in the fiscal year ended December 31, 2024. There was no impact on the Company’s reportable segments identified. Required disclosures have been included in Note 10. Segment Reporting . Recent Accounting Standards In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which improves income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company believes that the impact of recently issued accounting standard that is not yet effective are not expected to have a material impact on its financial position or results of operations upon adoption. 3 . GeneFab Transaction On August 7, 2023, the Company entered into a framework agreement (“the GeneFab Framework Agreement”) with GeneFab and Valere Bio, Inc., a Delaware corporation and the parent company of GeneFab, which is wholly owned by Celadon Partners, LLC, pursuant to which the Company, subject to the terms and conditions therein, sold, assigned and transferred its rights, title and interest in certain of the assets and contractual rights, including all of the Company’s equipment at the Company’s facilities in Alameda and certain of the Company’s non-oncology license rights, intellectual property related to the schematics for and design of the Alameda facility, and subleased to GeneFab its premises under a lease for the Alameda facility. The transaction provided the Company with additional 157 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements capital in the form of a note receivable and rights to future manufacturing and research activities performed by GeneFab at market rates and reduced longer-term operating expenses. Concurrently with the transaction, the Company and GeneFab entered into a development and manufacturing services agreement (“DMSA”), pursuant to which GeneFab will provide certain services to the Company using the subleased Alameda facility and acquired equipment. As part of this transaction, the Company entered into a transition services agreement with GeneFab whereby certain services are to be provided by each party to the other party during a transition period beginning on the closing of the transaction. The total consideration in connection with the transaction was $ 37.8 million, of which $ 18.9 million was due at closing and was netted against prepayment due to GeneFab for future manufacturing and research activities. The remaining $ 18.9 million was to be paid to the Company in installments in 2024 and 2025 (the “GeneFab Note Receivable”), subject to satisfaction of certain conditions. The Company elected to account for the GeneFab Note Receivable under the fair value option and recorded the GeneFab Note Receivable at its fair value of $ 16.6 million at the closing date of the transaction. The GeneFab Note Receivable was remeasured each reporting period with changes from remeasurement included in other income (expense) in the consolidated statements of operations and comprehensive loss. The Company was entitled to $ 18.9 million in future manufacturing and research activities to be rendered by GeneFab under the services agreement, which are recorded in GeneFab prepaid expenses on the consolidated balance sheets. As of December 31, 2024, $ 0.6 million of this initial prepaid amount is remaining for future manufacturing and research activities. As part of the transaction, the Company subleased the facility in Alameda, California to GeneFab which will support the clinical manufacturing of the Company’s chimeric antigen receptor natural killer (CAR-NK) programs, including SENTI-202. As a result of this sublease event, the Company recognized an impairment of long-lived assets of $ 25.7 million for the year ended December 31, 2023 due to the impairment of the Company’s leasehold improvements. Refer to Note 6. Operating Leases for additional information on the sublease. The Company agreed to grant a license to GeneFab under certain of its intellectual property rights to conduct manufacturing services and to research, develop, manufacture and commercialize products outside of oncology, pursuant to a license agreement under negotiation (the “Non-Oncology License”). In connection with the transaction, Philip Lee, Ph.D., Co-Founder and former Chief Technology Officer of the Company, assumed the role of Chief Executive Officer of GeneFab. Additionally, GeneFab extended offers of employment to 45 of the Company's employees formerly employed in its research and development and manufacturing functions. All 45 employees accepted the offers of employment and are actively engaged in providing manufacturing and research activities to the Company. GeneFab was granted an option to purchase up to 1,963,344 shares (i.e. up to $ 20.0 million worth) of the Company’s common stock at a per share purchase price of $ 10.18670 (the “GeneFab Option”). The GeneFab Option becomes exercisable upon the execution of the license agreement, no later than August 7, 2026. The GeneFab Option may be exercised in installments of common stock equal to no more than 19.9 % of the Company’s outstanding shares of common stock as of the closing date of the transaction. The purchase of the remaining shares under the GeneFab Option requires approval by the Company’s stockholders. The Company determined that the GeneFab Option was a derivative as the terms of the instrument contain certain provisions that preclude equity classification in accordance with ASC 815. As such, the GeneFab Option was recorded as a liability at its fair value of $ 9.6 million at the closing date of the transaction and subsequently remeasured with changes in fair value recorded in other income (expense) in the consolidated statements of operations and comprehensive loss. Refer to Note 4. Fair Value Measurements . As additional consideration for the transaction, the Company and GeneFab entered into a seller economic share agreement (the “GeneFab Economic Share”), pursuant to which the Company will be entitled to receive 10 % of the realized gains of GeneFab’s parent company arising and resulting from any cash or in-kind distributions from GeneFab in connection with a dividend or sale event, subject to the terms and conditions of the GeneFab Economic Share. The Company elected to account for the GeneFab Economic Share under the fair value option and recorded 158 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements the GeneFab Economic Share at its fair value of $ 1.8 million at the date of the transaction. The GeneFab Economic Share is remeasured each reporting period with changes from remeasurement included in other income (expense) in the consolidated statements of operations and comprehensive loss. Refer to Note 4. Fair Value Measurements . The Company determined that GeneFab is a variable interest entity (VIE) since its total equity at risk is not sufficient to finance its activities without additional subordinated financial support. The Company performed a qualitative analysis to determine if it is the primary beneficiary of GeneFab and determined it does not have the power to direct the significant activities of GeneFab. As a result, the Company determined it is not the primary beneficiary and therefore does not consolidate GeneFab. On December 10, 2024, in connection with the private placement described in further detail in Note 7. Stockholders’ Equity , the Company entered into an amendment of the GeneFab Framework Agreement with GeneFab and Valere Bio, Inc. As part of the agreement, the GeneFab Note Receivable was waived by the parties. Additionally, the Company entered into an amended and restated DMSA with GeneFab. As part of this agreement, the Company 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, with the remaining amount paid in January 2025. This amount is recorded in GeneFab prepaid expenses - related party. Refer to Note 16. Related Parties for GeneFab related party considerations. Gain on the Disposal of Business As the assets and contractual rights transferred to GeneFab were determined to constitute a business as defined in ASC 805, Business Combinations , the Company accounted for the disposal by applying the derecognition guidance in ASC 810, Consolidation , which requires that a gain or loss be recognized for the difference between the carrying value of the assets sold and the fair value of the consideration received (or receivable). As of August 7, 2023, the total fair value of the consideration was determined to be $ 37.3 million, including the GeneFab prepaid expenses of $ 18.9 million, the estimated fair value of the GeneFab Note Receivable of $ 16.6 million and the estimated fair value of the GeneFab Economic Share of $ 1.8 million. Out of the total consideration, $ 9.6 million was allocated to the GeneFab Option, representing its estimated fair value as of the closing date. In connection with the sale, the Company recognized a gain on disposal in the amount of $ 21.9 million in net income from discontinued operations during the year ended December 31, 2023, representing the excess of the fair value of the consideration (net of the portion allocated to the GeneFab Option) over the carrying value of the assets sold of $ 5.5 million. The gain on disposal was primarily related to the transfer of the non-oncology intellectual property to GeneFab which had no carrying value. Discontinued Operations In accordance with ASC 205, Presentation of Financial Statements (“ASC 205”), the Company determined that the sale of the non-oncology business, including the equipment and transfer of in-house manufacturing activities in the Alameda facility, to GeneFab represented a strategic shift that will have a major effect on the Company’s operations and financial results, thus meeting the criteria to be reported as discontinued operations. Discontinued operations include the cost and depreciation of equipment and related deposits or liabilities, manufacturing personnel-related costs including costs arising as a result of the disposal such as equity award modifications and severance, and the gain from the disposal of the business. Refer to Note 7. Stockholders’ Equity, for further details of the award modifications. There were no material operating expenses related to the discontinued operations since August 2023, when the transaction with GeneFab closed. 159 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements The following table summarizes the major classes of assets and liabilities of the discontinued operations (in thousands): December 31, 2024 2023 Accrued expenses and other current liabilities — 243 Total current liabilities of discontinued operations $ — $ 243 The following table summarizes the operating results of the discontinued operations (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 General and administrative expenses were negative for the year ended December 31, 2023 due to the reversal of compensation expense for unvested awards that were cancelled due to the termination of employees subsequently hired by GeneFab. See Note 7. Stockholders’ Equity. The following table summarizes the cash flow information of the discontinued operations (in thousands): Years Ended December 31, 2024 2023 Operating activities (noncash adjustments to net income): Depreciation $ — $ 185 Stock-based compensation expense — ( 2,022 ) Gain on disposal of business — 21,861 Investing activities: (1) Purchases of property and equipment — ( 4,079 ) ________________ (1) The total consideration received of $ 37.8 million is a non-cash investing activity. 160 4 . Fair Value Measurements Cash, Cash Equivalents, and Restricted Cash The following tables summarize the estimated value of cash, cash equivalents, and restricted cash by category (in thousands): December 31, 2024 Amortized Cost Estimated Fair Value Cash and cash equivalents Restricted cash Cash $ 12,408 $ 12,408 $ 12,408 $ — Level 1 Money market funds $ 39,407 $ 39,407 $ 35,869 $ 3,538 Subtotal 39,407 39,407 35,869 3,538 Total $ 51,815 $ 51,815 $ 48,277 $ 3,538 December 31, 2023 Amortized Cost Estimated Fair Value Cash and cash equivalents Restricted cash Cash $ 4,205 $ 4,205 $ 4,205 $ — Level 1 Money market funds $ 35,243 $ 35,243 $ 31,721 $ 3,522 Subtotal 35,243 35,243 31,721 3,522 Total $ 39,448 $ 39,448 $ 35,926 $ 3,522 No securities have contractual maturities of longer than one year. There were no transfers between Levels 1, 2, or 3 for any of the periods presented. 161 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Contingent Earnout Liability The following table presents a summary of the changes in the fair value of the Company’s Level 3 financial instruments (in thousands): Contingent Earnout Liability Fair value as of December 31, 2023 $ ( 20 ) Change in fair value included in other income (expense) 20 Fair value as of December 31, 2024 $ — The fair value of the Contingent Earnout Liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. In determining the fair value of the Contingent Earnout Liability, the Company used a Monte Carlo simulation value model using a distribution of potential outcomes. The assumptions utilized in the calculation were based on the achievement of certain stock price milestones, including the current Company common stock price, expected volatility, risk-free rate, expected term and expected dividend yield. Refer to Note 7. Stockholders’ Equity , for further details of the Contingent Earnout. Additionally, the Company determined that the fair value of the Contingent Earnout Liability was zero as of December 31, 2024, due to the low probability of the remaining tranche terms being met. GeneFab Note Receivable The following table presents a summary of the changes in the fair value of the GeneFab Note Receivable (in thousands): Note Receivable Fair value as of December 31, 2023 $ 17,240 Change in fair value included in other income (expense) ( 17,240 ) Fair value as of December 31, 2024 $ — The fair value of the GeneFab Note Receivable as of December 31, 2023 is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The fair value of the GeneFab Note Receivable as of December 31, 2023 was determined by discounting future payments under multiple probability-weighted scenarios using the Company’s cost of borrowing, which was estimated at 12.53 % based on published CCC-rated corporate bond yields. In connection with the private placement discussed in Note 7. S tockholders’ Equity , the Company waived the Note Receivable due from GeneFab. Thus, the value of the GeneFab Note Receivable as of December 31, 2024 was zero . GeneFab Option The following table presents a summary of the changes in the fair value of the GeneFab Option (in thousands): GeneFab Option Fair value as of December 31, 2023 $ ( 6,331 ) Change in fair value included in other income (expense) 6,331 Fair value as of December 31, 2024 $ — The fair value of the GeneFab Option is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. 162 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements In determining the fair value of the GeneFab Option, the Company used a Black-Scholes option pricing model. Additionally, the Company determined that the fair value of the GeneFab Option was zero as of December 31, 2024, due to the probability that a suitable license agreement, which is a condition of GeneFab obtaining the Option, would not be signed. The significant assumptions utilized in the valuation as of December 31, 2023 are described below: December 31, 2023 Current stock price $ 6.60 Expected volatility 98.1 % Risk-free interest rate 4.12 % Expected term (years) 2.5 GeneFab Economic Share The following table presents a summary of the changes in the fair value of the GeneFab Economic Share (in thousands): GeneFab Economic Share Fair value as of December 31, 2023 $ 1,816 Change in fair value included in other income (expense) ( 1,816 ) Fair value as of December 31, 2024 $ — The fair value of the GeneFab Economic Share is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The Company elected to account for the GeneFab Economic Share under the fair value option in ASC 825, with changes in fair value reported as a component of other income (expense) in the consolidated statements of operations and comprehensive loss. In determining the fair value of the GeneFab Economic Share, the Company used the option pricing method, which allocates total estimated enterprise value to various classes of equity using the Backsolve method. As of December 31, 2024, the Company determined that the fair value of the GeneFab Economic Share was zero due to the low probability of the events triggering the payment underlying the GeneFab Economic Share. The significant assumptions utilized in the valuation as of December 31, 2023 are described below: December 31, 2023 GeneFab equity value (in thousands) $ 35,448 Volatility 65.8 % Risk free rate 3.93 % Expected term 4 163 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Additional Closing Option The following table presents a summary of the changes in the fair value of the additional closing option (“Preferred Stock Tranche Liability”) (in thousands): Preferred Stock Tranche Liability Initial recognition as of December 9, 2024 $ 19,003 Change in fair value included in other income (expense) ( 13,404 ) Fair value as of December 31, 2024 (prior to option exercise) 5,599 Exercise of underlying option on December 31, 2024 ( 5,599 ) Fair value as of December 31, 2024 $ — The fair value of the Preferred Stock Tranche Liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The Company initially estimated the fair value of the preferred stock tranche liability using the Black-Scholes option pricing model with an expected term of 0.06 years, the fair value of the Series A redeemable convertible preferred stock of $ 5.74 , expected volatility of 100.0 %, a probability of exercise of the tranche at virtually 100 % and risk-free interest rate of 4.42 % as of December 9, 2024. On December 31, 2024, the option was exercised to acquire the additional shares per the private placement (refer to Note 7. Stockholders’ Equity for additional information); accordingly, the Company used the fair value of the Series A redeemable convertible preferred stock of $ 3.09 to remeasure the preferred stock tranche liability immediately prior to the exercise of the option. 5 . Other Financial Statement information Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): December 31, 2024 2023 Prepaid expenses (including prepaid rent) $ 1,321 $ 2,546 Deposits 335 42 Other 584 195 Total prepaid expenses and other current assets $ 2,240 $ 2,783 Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): December 31, 2024 2023 Lab equipment $ 7,550 $ 8,186 Leasehold improvements 22,660 22,648 Computer equipment and software 299 360 Furniture and fixtures 331 326 Property and equipment at cost 30,840 31,520 Less: accumulated depreciation ( 9,551 ) ( 6,182 ) Property and equipment, net $ 21,289 $ 25,338 Buildout of the current good manufacturing practice (cGMP) facility in Alameda was completed in June 2023 and the assets were placed in service. 164 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements As a result of the change in the manner in which the Company expects to recover the assets associated with the lease on the Alameda facility (refer to Note 3. GeneFab Transaction ), the ROU asset and the related leasehold improvements became a separate asset group for the purposes of long-lived asset impairment assessment as of August 7, 2023. This asset group reassessment triggered a need to perform an impairment analysis. The Company concluded that the asset group was not recoverable, as the carrying value of the asset group was less than the sum of undiscounted net cash flows expected to be generated from the use of the asset group. The Company tested the asset group for impairment and recognized an impairment loss in the amount of $ 25.7 million during the 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. The adjusted carrying value of the leasehold improvements of $ 20.1 million will be amortized under the existing accounting policy under ASC 842, Leases (“ASC 842”) on a straight-line basis over the remaining lease term. Depreciation totaled $ 3.8 million and $ 3.4 million for the years ended December 31, 2024 and 2023, respectively. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2024 2023 Accrued professional and service fees other $ 3,410 $ 3,555 Accrued employee-related expenses 2,542 2,363 Other accrued expenses 319 9 Total accrued expenses and other current liabilities $ 6,271 $ 5,927 6 . Operating Leases Lessee Accounting The Company’s operating leases are primarily for its corporate headquarters located in South San Francisco, California (“HQ lease”) and for additional office and laboratory space located in Alameda, California (“Alameda lease”). The HQ lease has an initial term of eight years expiring in 2027, with an option to renew for an additional eight years unless canceled by either party thereafter. The Alameda lease has an initial term of eleven years expiring in 2032, with an option to renew the lease for up to two additional terms of five years . The exercise of these renewal options is not recognized as part of the ROU assets and lease liabilities, as the Company did not conclude, at the commencement date of the leases, that the exercise of renewal options or termination options was reasonably certain. The Alameda lease provided for a tenant improvement allowance of up to $ 17.5 million for the costs relating to the design, permitting and construction of the improvements, and were fully disbursed by the landlord as of December 31, 2023. The Company was deemed to be the accounting owner of the tenant improvements primarily because the Company is the principal in the construction and design of the assets, is responsible for costs overruns and retains substantially all economic benefits from the leasehold improvements over their economic lives . Accordingly, the tenant improvement allowance was considered an incentive and was deducted from the initial measurement of the ROU asset and lease liability. The Company estimated the timing of tenant improvement 165 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements reimbursements at the lease commencement date and upon receipt of the cash incentives, the Company recognized the cash received as an increase in the lease liability. A summary of total lease costs and other information for the period relating to the Company’s operating leases is as follows (in thousands): Years Ended December 31, 2024 2023 Operating lease cost $ 5,236 $ 5,277 Short-term lease cost 34 73 Variable lease cost 1,040 1,138 Total lease cost $ 6,310 $ 6,488 Variable lease costs comprise primarily of common area maintenance charges for the operating leases, which is dependent upon usage. These costs are classified as operating lease expenses due to the election to not separate lease and non-lease components. These costs were not included within the measurement of the Company’s operating lease ROU assets and operating lease liabilities. Years Ended December 31, 2024 2023 Other information: Operating cash flows net outflows from operating lease $ ( 7,252 ) $ ( 2,922 ) ROU assets obtained in exchange for operating lease obligations (including remeasurement of ROU and lease liabilities due to changes in the timing of receipt of lease incentives) $ — $ ( 5 ) Weighted-average remaining lease term 6.7 years 7.5 years Weighted-average discount rate 9.2 % 9.2 % During the year ended December 31, 2023, the Company received the remaining $ 3.4 million, of the $ 17.5 million tenant improvement allowance. Maturities of the Company’s lease liabilities as of December 31, 2024, were as follows (in thousands): 2025 7,478 2026 7,712 2027 5,769 2028 4,855 2029 5,000 Thereafter 14,529 Total undiscounted lease payments 45,343 Less imputed interest ( 11,805 ) Total lease liabilities $ 33,538 Letters of Credit As of December 31, 2024, the Company held a letter of credit held with JPMorgan Chase Bank in the amount of approximately $ 2.9 million related to the Alameda facility and a letter of credit with JPMorgan Chase Bank in the amount of approximately $ 0.5 million related to our HQ facility lease which are recorded as restricted cash in the consolidated balance sheets as of December 31, 2024 and December 31, 2023. Lessor Accounting GeneFab Sublease - Related Party 166 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements In connection with the GeneFab transaction, on August 7, 2023, the Company entered into a sublease with GeneFab to sublease the facility included in the Alameda lease, expiring in September 2032. Total sublease income to be earned from this operating lease, in aggregate, will be approximately $ 44.1 million over the term of the sublease agreement. On June 12, 2024, the Company entered into a sublease with GeneFab for a portion of the Company’s corporate headquarter premises in South San Francisco. Total sublease income to be earned from this operating lease, in aggregate, will be approximately $ 1.3 million over the term of the sublease agreement. Refer to Note 16. Related Parties for GeneFab related party considerations. BKPBIOTECH and JLSA2 Therapeutics Sublease On September 23, 2024, the Company entered into a sublease agreement with BKPBIOTECH, Inc. and JLSA2 Therapeutics, Inc., to sublease a portion of the Company’s corporate headquarter premises in South San Francisco. The sublease commenced on October 7, 2024, and will expire on April 30, 2027. Total sublease income to be earned from this operating lease, in aggregate, will be approximately $ 1.1 million over the term of the sublease agreement. The sublease contains customary events of default, representations, warranties and covenants. Pursuant to ASC Topic 842, Leases , the Company concluded that the sublease is a separate lease and it qualifies as an operating lease. As a result of sublease, the Company identified an impairment indicator related to the HQ Lease. The Company compared the estimated undiscounted cash flows to the carrying value of the asset group, which includes right-of use assets and leasehold improvements allocable to the sublease. The Company concluded that the carrying value of the asset group was not recoverable as it exceeded the estimated undiscounted cash flows. The Company calculated the amount of impairment using a discounted cash flow model to calculate the fair value of the asset group which incorporated the net identifiable cash flows for the term of sublease, including an estimate for cash flows in the residual period, and an estimated borrowing rate of a market participant subtenant. The impairment charge of $ 0.3 million was recorded as impairment of long-lived assets in the statement of operations and comprehensive loss for the year ended December 31, 2024. Maturities of the Company’s sublease payments for the subleases of both Alameda facility and corporate headquarter premises as of December 31, 2024, were as follows (in thousands): 2025 $ 5,357 2026 5,492 2027 5,060 2028 4,891 2029 5,037 Thereafter 13,258 Total undiscounted sublease payments $ 39,095 A summary of total sublease income for the period relating to the Company’s operating leases is as follows (in thousands): December 31, 2024 2023 Sublease income - base rent $ 5,170 $ 2,005 Sublease income - variable and other $ 1,438 $ 318 Total Sublease Income $ 6,608 $ 2,323 167 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements 7 . Stockholders’ Equity Common Stock Holders of common stock are entitled to one vote per share, and to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders. The holders have no preemptive or other subscription rights, and there are no redemption or sinking fund provisions with respect to such shares. Common stock is subordinate to the redeemable convertible preferred stock with respect to dividend rights and rights upon liquidation, winding up, and dissolution of the Company. Through December 31, 2024, no cash dividends have been declared or paid. As of December 31, 2024 and December 31, 2023, the Company’s certificate of incorporation authorized the Company to issue 500,000,000 shares of common stock at a par value of $ 0.0001 per share. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Company’s Board of Directors. As of December 31, 2024 and December 31, 2023, no dividends have been declared. On July 10, 2024, the Board approved a reverse stock split of the common stock at a ratio of 1-for-10, $ 0.0001 par value. Effective as of 5:00 p.m. Eastern Time on July 17, 2024, the Company filed the Reverse Stock Split Amendment and effected a 1-for-10 reverse stock split of its shares of common stock (the “Reverse Stock Split”). All common stock amounts and references have been retroactively adjusted for all figures presented to reflect this split unless specifically stated otherwise. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would have otherwise been entitled to receive fractional shares as a result of the Reverse Stock Split were entitled to a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would have otherwise been entitled multiplied by the closing sales price per share of the common stock (as adjusted for the Reverse Stock Split) on the Nasdaq Capital Market on July 17, 2024, the last trading day immediately preceding the effective time of the Reverse Stock Split. Trading of the Company’s common stock on the Nasdaq Capital Market commenced on a split-adjusted basis as of market open on July 18, 2024, under the existing trading symbol “SNTI.” At December 31, 2024 and December 31, 2023, the Company has reserved shares of its common stock for future issuance as follows: December 31, 2024 2023 Series A redeemable convertible preferred stock 21,157,000 — Common Stock Purchase Agreement 484,944 732,704 Common stock options issued and outstanding 1,333,030 1,158,294 Restricted stock units outstanding 56,423 22,528 Performance stock units outstanding 106,806 — Common stock shares available for future issuance under equity plans 270,907 367,228 Common stock shares available for future issuance under the 2022 Employee Stock Purchase Plan (the "ESPP") 79,387 33,632 Contingent earnout common stock 100,000 200,000 GeneFab Option 1,963,344 1,963,344 Warrants to purchase common stock issued in connection with Series A redeemable convertible preferred stock 31,735,500 — Unvested early exercised common stock 422 5,486 Total 57,287,763 4,483,216 Common Stock Purchase Agreement On August 31, 2022, the Company entered into a Common Stock Purchase Agreement and a Registration Rights Agreement, which was amended and restated on July 16, 2024 (collectively referred to as the “A&R 168 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Purchase Agreement”) with Chardan Capital Markets LLC (“Chardan”). Pursuant to the Purchase Agreement, the Company had the right, in its sole discretion, to sell to Chardan up to the lesser of (i) $ 50.0 million of newly issued shares of the Company’s common stock, and (ii) the Exchange Cap (as defined below) (subject to certain conditions and limitations), from time to time during the 36 -month term of the Purchase Agreement. Under the applicable NASDAQ rules, the Company was prohibited from issuing to Chardan under the Purchase Agreement more than 872,704 shares of common stock, which number of shares is equal to 19.99 % of the common shares outstanding immediately prior to the execution of the Purchase Agreement unless certain exceptions are met (the “Exchange Cap”). The purchase price of the shares of common stock will be determined by reference to the Volume Weighted Average Price (“VWAP”) of the common stock during the applicable purchase date, less a fixed 3 % discount to such VWAP. However, the total shares to be purchased on any day may not exceed 20 % of the trading volume, and the total purchase price on any day may not exceed $ 3.0 million. As consideration for Chardan’s commitment to purchase shares of common stock at the Company’s direction upon the terms and subject to the conditions set forth in the Purchase Agreement, the Company issued 10,000 shares of its common stock to Chardan and paid a $ 0.4 million document preparation fee, upon execution of the Purchase Agreement. On July 16, 2024, the Company amended and restated the Purchase Agreement (“A&R Purchase Agreement”) with Chardan to update the volume weighted average price purchase mechanics of the equity facility to permit Intraday VWAP Purchases (as defined in the A&R Purchase Agreement). We sent a termination notice pursuant to the A&R Purchase Agreement on March 17, 2025. The Company has issued 384,313 shares of common stock to Chardan under the agreement, with aggregate net proceeds of $ 3.0 million. The shares issued during the years ended December 31, 2024 and December 31, 2023 were 244,313 and 100,000 , respectively. Contingent Earnout Equity Following the closing of the Merger, former holders of Legacy Senti common stock and preferred stock may receive up to 200,000 additional shares of the Company’s common stock in the aggregate, in two equal tranches of 100,000 shares of common stock per tranche. The first and second tranches are issuable if the closing volume weighted average price (“VWAP”) per share of common stock quoted on the Nasdaq (or the exchange on which the shares of common stock are then listed) is greater or equal to $ 15.00 and $ 20.00 , respectively over any twenty trading days within any thirty-day trading period. The first tranche term is two years from the closing of the Merger (the “First Tranche Term”) and the second tranche term is three years from the closing of the Merger (the “Second Tranche Term”) and together with the First Tranche Term, the “Tranche Terms”). If there is a change of control within the applicable Tranche Term-following the closing of the Merger that results in a per share price equal to or in excess of the $ 15.00 and $ 20.00 share price milestones not previously met, then the Company shall issue the earnout shares to the holders of Legacy Senti common stock and preferred stock. The $ 15.00 share price milestone for the first tranche was not satisfied during the First Tranche Term and any such rights to receive the first tranche of additional shares of the Company’s common stock have been cancelled and extinguished. Contingent earnout was accounted at fair value and classified as a liability in the Company’s consolidated financial statements. The Company recognized a $ 0.2 million gain for the change in fair value of contingent earnout liability for the year ended December 31, 2023. The Company determined that the fair value of the Contingent Earnout Liability was zero as of December 31, 2024, due to the low probability of the remaining tranche terms being met, as such the Company recognized a nominal gain for the change in fair value of the Contingent Earnout Liability for the year ended December 31, 2024. Redeemable Convertible Preferred Stock As of December 31, 2024 and December 31, 2023, the Company’s certificate of incorporation authorized the Company to issue 10,000,000 shares of undesignated preferred stock at a par value of $ 0.0001 per share. In connection with the close of the Merger, the Company’s Amended and Restated Certificate of Incorporation provides the Company’s Board of Directors with the authority to issue $ 0.0001 par value preferred stock in one or more series and to establish from time to time the number of shares to be included in each such series, by adopting a 169 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements resolution and filing a certification of designations. Voting powers, designations, powers, preferences and relative, participating, optional, special and other rights shall be stated and expressed in such resolutions. As of December 31, 2024 and December 31, 2023, the Company had convertible preferred stock as follows (in thousands except shares): December 31, 2024 Shares Authorized Shares Issued and Outstanding Net Carrying Value Aggregate Liquidation Preference Series A 21,200 21,157 $ 25,106 $ 147,647 Total 21,200 21,157 $ 25,106 $ 147,647 Private Placement On December 2, 2024, the Company entered into a securities purchase agreement with certain investors in which the Company 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 (defined below), 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. Subject to the terms and limitations contained in the Certificate of Designation, the Series A redeemable convertible preferred stock issued in the Offering will not become convertible until the Company’s stockholders approve (i) the issuance of all common stock issuable upon conversion of the Series A redeemable convertible preferred stock and (ii) the issuance of the Warrant Shares upon exercise of the Warrants (collectively, the “Stockholder Approval”). On the first trading day following the announcement of the Stockholder Approval, the Company may, at its option, cause each share of Series A redeemable convertible preferred stock to convert 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. Additionally, subject to the terms and limitations in the Certificate of Designation, if the Company has not elected to convert the Series A redeemable convertible preferred stock, then at the option of each individual holder of Series A redeemable convertible preferred stock, each share of the Series A redeemable convertible preferred stock held by such holder, not otherwise converted, shall be convertible into the applicable number of shares of common stock at the Conversion Price. On December 9, 2024, the Company closed the initial tranche of the Offering, in which the Company issued 16,713 shares of Series A redeemable convertible preferred stock and Warrants to purchase 25,069,500 shares of common stock for $ 35.2 million, net of issuance costs of $ 2.4 million. Additionally, pursuant to the terms of the securities purchase agreement, a certain investor had 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 (“Additional Closing Option”). This Additional Closing Option was determined to be a liability under ASC 480 and was recorded as the Preferred Stock Tranche Liability at fair value of $ 19.0 million upon issuance. Refer to Note 4. Fair Value Measurements . On December 31, 2024, the Company closed the second tranche of the Offering, in which the Company issued 4,444 shares of Series A redeemable convertible preferred stock and Warrants to purchase 6,666,000 shares of 170 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements common stock for $ 9.9 million, net of issuance costs of $ 0.1 million. As a result of the exercise of the Additional Closing Option, the Preferred Stock Tranche Liability was remeasured to its fair value of $ 5.6 million immediately prior to the closing of the second tranche and the carrying value of the Preferred Stock Tranche Liability was reclassified to Series A redeemable convertible preferred stock subsequent to the closing. On March 10, 2025, we converted the outstanding shares of Series A redeemable convertible preferred stock into 21,157,000 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. Dividend Rights Dividends shall accrue at the rate per annum of 18 % (“Accruing Dividends”), compounded annually from June 30, 2025 on any unpaid dividends. Accruing Dividends shall accrue on a quarterly basis whether or not declared, and such Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors. Accruing Dividends shall be payable at the option of the Company in cash, additional shares of Series A redeemable convertible preferred stock, or any combination thereof, and shall be paid on June 30 and December 31 of each calendar year with respect to any shares of Series A redeemable convertible preferred stock then outstanding. The first dividend payment date shall be June 30, 2025, but shall not be payable on any shares of Series A redeemable convertible preferred stock that prior to such date have been converted into common stock. In the event all the shares of Series A redeemable convertible preferred stock have been converted into common stock on or before June 30, 2025, no Accruing Dividends shall be payable pursuant to this Certificate of Designation. The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock unless the holders of the Series A redeemable convertible preferred stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A redeemable convertible preferred stock in an amount at least equal to the sum of the amount of the aggregate Accruing Dividends then accrued on such share of Series A redeemable convertible preferred stock and not previously paid. Voting Rights The holders of the Series A redeemable convertible preferred stock have no voting rights, however, so long as at least 6,347 shares of the Series A redeemable convertible preferred stock remain outstanding, the Company shall not, either directly or indirectly by amendment, merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion, or otherwise, effect certain acts or transactions, as provided in the Certificate of Designation, without the written consent or affirmative vote of at least a majority of the then outstanding shares of Series A redeemable convertible preferred stock, voting together as a single class. Conversion Rights Each share of Series A redeemable convertible preferred stock shall be convertible into a number of shares of common stock equal to original per share price, plus all declared and unpaid dividends, divided by the Conversion Price, rounded down to the nearest whole share of common stock (“Conversion Ratio”). Notwithstanding the foregoing, no share of Series A redeemable convertible preferred stock shall be convertible at any time until on or after the first trading day following the public announcement of Stockholder Approval. After this approval, the Company may, at its option, cause each share of Series A redeemable convertible preferred stock to convert into such number of shares of common stock equal to the product of the Conversion Ratio and the number of shares of Series A redeemable convertible preferred stock to be converted. Additionally, at the option of the Holder of the Series A redeemable convertible preferred stock, each share of Series A redeemable convertible preferred stock shall be convertible into such number of shares of Common Stock equal to the product of the Conversion Ratio and the number of shares of Series A redeemable convertible preferred stock to be converted. Liquidation Rights In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, including a change of control transaction, or deemed liquidation event (any such event, a “Liquidation”) the holders of shares of Series A redeemable convertible preferred stock then outstanding shall be entitled to be paid out of the assets of the 171 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Company available for distribution to its stockholders, before any payment shall be made to the holders of common stock of the Company, an amount in cash equal to the three times the original per share price. 8. CIRM Grant On August 3, 2024, the Company executed an agreement with CIRM for a total grant award of $ 8.0 million in support of the research project related to the ongoing clinical development of SENTI-202. The award is payable to the Company upon achievement of milestones that are primarily based on patient enrollment in the Company’s SENTI-202 clinical trial. Under the terms of the CIRM Grant, the Company has certain obligations of co-funding up to $ 4.8 million and is required to provide CIRM timely progress and financial update reports. Under the terms of the CIRM Grant, the Company is obligated to pay royalties and licensing fees based on 0.1 % of net commercial revenue of CIRM-funded product candidates or CIRM-funded technology for every $ 1.0 million of CIRM funding received. This payment continues for either 10 years from the first commercial sale of the drug product or until the total royalties paid equal nine times the original CIRM Grant. As an alternative to revenue sharing, the Company has the option to convert the CIRM Grant to a loan. In the event the Company exercises its right to convert the CIRM Grant to a loan, the Company would be obligated to repay the loan within 10 business days of making such election. Repayment amounts vary dependent upon the phase of clinical development of SENTI-202 at the time of the Company’s election, ranging from 80 % to 100 % plus interest at 10 % plus the 90-day Secured Overnight Financing Rate (“SOFR”). As of December 31, 2024, the Company has received an aggregate of $ 4.9 million which was recorded as other liabilities, net of current portion in the consolidated balance sheets. 9. Revenue The Company’s revenue earned in the year ended December 31, 2023 consists of amounts received related to research services provided. The Company earned no revenue in the year ended December 31, 2024. Contract Revenue In April 2021, the Company entered into a research collaboration and license agreement with Spark Therapeutics, Inc. (“Spark”). Under the agreement, the Company was responsible for a research program, which includes designing, building and testing five cell type specific-synthetic promoters for use in developing certain gene therapies using the Company’s proprietary technology. The Company received an upfront payment from Spark of $ 3.0 million and Spark was obligated to reimburse the Company for costs and expenses incurred for the research program. The Company expected to complete the research program over a two-year period. The Company assessed this agreement in accordance with ASC 606, Revenue Recognition (“ASC 606”) and concluded that the contract counterparty, Spark, is a customer. The Company identified only one combined performance obligation in the agreement, which is to perform research services, the related joint research plan and committees for the five specified promoters. The Company determined that the research activities for each of the five promoters are not distinct given there is one single research plan that is performed by the same research team and research results for one promoter may provide insights for other promoters. Pursuant to the agreement, once the research program is completed and the Company delivers a data package to Spark, Spark has 24 months (the “Evaluation Period”) to determine whether Spark will exercise its options to obtain field-limited, royalty-bearing licenses to develop, manufacture and commercialize promoters corresponding to each of the five specified promoters being researched. For each licensed promoter option that is exercised, the Company is eligible to receive a license fee, potential research, development and commercial milestone payments and royalties on product sales. Spark may generally terminate the agreement upon 90 days prior written notice or 180 days prior written notice if the licensed promoter is in clinical trials or is being commercialized at the time of termination. The Company evaluated Spark’s optional rights to license, develop, manufacture and commercialize each of the promoter profiles to determine whether they provide Spark with any material rights to purchase the promoter licenses at an incremental discount. The Company’s proprietary technology used to develop the promoters is in the early stages of development, so technological feasibility and probability of developing a product is highly uncertain. As a result, determining the SSP for the optional rights is subject to significant judgment. Given the subjectivity 172 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements associated with determining the SSP for the right to a future license related to unproven technology at contract inception, the Company also evaluated whether the contract consideration associated with the research services represents the SSP for those services. The Company determined the transaction price, inclusive of the upfront payment and reimbursement of costs and expenses incurred for the research program, is commensurate with SSP for the research being conducted given the specialized nature and reliance on proprietary technology. Based on the Company’s assessment of the optional consideration and the qualitative factors of feasibility and probability of development combined with the quantitative assessment that research services are priced at their SSP, the Company concluded that the license option does not provide Spark with an incremental discount and therefore does not constitute a material right. The transaction price associated with the research services in this agreement consists of the fixed upfront amount of $ 3.0 million and variable consideration. For Spark collaboration agreement, the Company recognized the transaction price as research and development services were provided, using a cost-based input method to measure the progress toward completion of its performance obligation and to calculate the corresponding amount of revenue to recognize each period. The Company believes that the cost-based input method is the best measure of progress because other measurements would not reflect how the Company transfers the control related to the performance obligation to our customers. In December 2022 and May 2023, the Company amended the research collaboration and license agreement with Spark to allow for an increase in budget and an extension of the research program. As there were no changes to performance obligations and the services to be provided are not distinct from those already transferred, the transactions were accounted for as a contract modifications In July 2023, the Company completed the research program under the research collaboration and license agreement with Spark and the remaining upfront payment was recognized. In November 2023, the Company entered into a Collaboration and Option Agreement with Celest Therapeutics (Shanghai) Co. Ltd. (“Celest”). Subject to the terms and conditions of the Agreement, the Company and Celest will enter into a collaboration under which Celest will lead a pilot trial of a candidate product for the SENTI-301A program in mainland China, with certain technical support from the Company. In addition, the Company agreed to grant an exclusive option to enter a license agreement with Celest to research, develop, manufacture and commercialize SENTI-301A in mainland China, Hong Kong, Macau, and Taiwan. Outside of these jurisdictions, the Company would retain its rights in the SENTI-301A program. Pursuant to the Agreement, with the exercise of the option and entering into a license agreement, the Company may become eligible to receive certain option exercise fee and milestone payments, in an aggregate amount of $ 156.0 million, as well as certain tiered royalty payments. For the year ended December 31, 2023, the Company recorded revenue, which was previously included in the deferred revenue at the beginning of each period, of $ 0.8 million. No revenue was recorded for the year ended December 31, 2024. Grant Income SBIR Grant In 2021, the Small Business Innovation Research (“SBIR”) awarded the Company a grant in the amount of $ 2.0 million over two years subject to meeting certain terms and conditions. The purpose of the grant is to support the further development of SENTI-202 for acute myeloid leukemia towards clinical development. Grant income was recognized when qualified research and development costs were incurred and the Company obtained reasonable assurance that the terms and conditions of the grant were met. In August 2023, the Company completed the research and development project which was the subject of the SBIR grant. For the year ended December 31, 2023, the Company recorded $ 0.6 million grant income. 173 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Entity-wide information For the year ended December 31, 2023, Customers A and B accounted for 77 % and 23 %, of revenue respectively. All revenues were generated in the United States. No revenue was recorded for the year ended December 31, 2024. 10. Segment Reporting The Company views operations and manages the business as one operating and reportable segment, which is the research and development of the Company’s gene circuit platform. The Company’s Chief Operating Decision Maker (the “CODM”), its Chief Executive Officer, manages and allocates resources on a consolidated basis. This decision making process reflects the way in which financial information is regularly reviewed and used by the CODM to review budgets and trial related data, decides how to allocate resources and evaluate performance. The CODM assesses financial performance based on consolidated net loss. The CODM utilizes consolidated net loss by comparing actual results against budgeted amount on a quarterly basis. As part of this process, consolidated net loss is used as a measure of profit or loss in allocating resources and assessing segment performance. The CODM reviews cash and cash equivalents as a measure of segment assets. As of December 31, 2024 and 2023, the Company’s cash and cash equivalents were $ 48.3 million and $ 35.9 million, respectively. A summary of the segment loss, including significant expenses, is as noted in the table below (in thousands). December 31, 2024 2023 Revenue Contract revenue $ — $ 1,978 Grant income — 583 Total revenue $ — $ 2,561 Operating expenses Research and development: External services and supplies $ 20,795 $ 13,247 Personnel related expenses 7,694 10,508 Facilities and other 4,889 7,303 General and administrative: Personnel related expenses 8,379 23,117 External services and supplies 7,624 6,930 Facilities and other 7,507 4,821 Depreciation and amortization 3,838 3,400 Impairment of long-lived assets 313 25,962 Total operating expenses 61,039 95,288 Loss from operations ( 61,039 ) ( 92,727 ) Interest income 948 2,864 Sublease income 6,449 2,323 Other income, net 852 4,134 Segment net loss from continuing operations $ ( 52,790 ) $ ( 83,406 ) 174 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Net income from discontinued operations $ — $ 12,348 Consolidated net loss $ ( 52,790 ) $ ( 71,058 ) 11 . Stock-Based Compensation 2016 Stock Incentive Plan (as Amended and Restated) The Company’s 2016 Stock Incentive Plan (the “2016 Plan”) provides for the grant of incentive stock options, non-qualified stock options and restricted stock awards to employees, directors, and consultants of the Company. Stock options granted under the 2016 Plan generally vest over four years and expire no later than ten years after the grant date. Following the Merger, the 2016 Plan was terminated. No additional stock awards will be granted under the 2016 Plan. All awards previously granted and outstanding as of the effective date of the Merger, were adjusted to reflect the impact of the Merger, but otherwise remain in effect pursuant to their original terms. The shares underlying any award granted under the 2016 Plan that are forfeited back to or repurchased or reacquired by the Company, will revert to and again become available for issuance under the 2022 Plan. 2022 Stock Incentive Plan On June 8, 2022, upon the Merger, the Company adopted a 2022 Stock Incentive Plan (the “2022 Plan”). The 2022 Plan provides for the grant of incentive stock options to employees, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants. The exercise price of an options granted under the 2022 Plan shall not be less than the fair market value of a common stock share on the date of grant. With respect to a 10 % stockholder, the exercise price of an option granted shall not be less than 110 % of the fair value of the common stock share on the date of grant. Options granted under the 2022 Plan generally vest over four years and expire no later than ten years after the grant date. The Company initially reserved 249,273 shares of common stock for issuance under the 2022 Plan. On the first day of each year commencing January 1, 2023, the 2022 Plan will automatically increase by 5 % of the outstanding number of shares of common stock of the Company on the last day of the preceding calendar year or such lesser number of shares as approved by the Company’s Board of Directors prior to the effective date of the annual increase. In addition, the shares underlying any award granted under the 2016 Plan that are forfeited back to or repurchased or reacquired by the Company, will revert to and again become available for issuance under the 2022 Plan. As of December 31, 2024, the total number of shares of common stock available for issuance under the 2022 Plan is 146,809 . 2022 Inducement Plan On August 5, 2022, the Company adopted a 2022 Inducement Plan (the “2022 Inducement Plan”). The 2022 Plan provides for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, 175 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements restricted stock unit awards, performance awards and other forms of awards to persons not previously an employee of the Company and its affiliates. The exercise price of an options granted under the 2022 Inducement Plan shall not be less than the fair market value of a common stock share on the date of grant. Stock options granted under the 2022 Inducement Plan generally vest over four years and expire no later than ten years after the grant date. The Company initially reserved 200,000 shares of common stock for issuance under the 2022 Inducement Plan. As of December 31, 2024, the total number of shares of common stock available for issuance under the 2022 Inducement Plan is 124,098 . 2022 Employee Stock Purchase Plan On June 8, 2022, upon the Merger, the Company adopted a 2022 Employee Stock Purchase Plan (the “ESPP”). The ESPP allows eligible employees to purchase shares of the Company's common stock at a price equal to 85 % of the lower of the fair market values of the stock on the first day of an offering or on the date of purchase. The Company’s ESPP operates with rolling offering periods, which are generally 24 months. On November 15, 2023, upon termination of the then-current offering period in accordance with the terms of the ESPP, the Company suspended the ESPP and no new offering periods may commence under the ESPP until such time as later authorized by the Company. The Company initially reserved 59,258 shares of common stock for issuance under the ESPP. On the first day of each year commencing January 1, 2023, the 2022 Plan will automatically increase by 1 % of the outstanding number of shares of common stock of the Company on the last day of the preceding calendar year or such lesser number of shares as approved by the Company’s Board of Directors prior to the effective date of the annual increase. As of December 31, 2024, the total number of shares of common stock available for issuance under the ESPP is 79,387 . Stock Options The following table summarizes the Company’s stock option activity and related information under all equity plans, excluding performance and market awards: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2023 623,612 $ 24.20 7.2 $ 2 Granted 620,943 $ 3.70 Exercised ( 92 ) $ 4.57 Forfeited ( 301,944 ) $ 25.42 Outstanding at December 31, 2024 942,519 $ 10.32 8.6 $ 89 Vested and exercisable at December 31, 2024 279,759 $ 20.36 6.6 $ — The weighted-average grant date fair value of options granted during the years ended December 31, 2024 and 2023 were $ 5.79 and $ 11.40 , respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2024 and 2023 were $ 1.2 million and zero , respectively. As of December 31, 2024 and 2023, the unrecognized stock-based compensation expense related to stock options was approximately $ 2.7 million and $ 5.2 million respectively, expected to be recognized over a weighted-average period of 2.8 years and 2.16 years respectively. 176 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Early Exercise of Stock Options into Restricted Stock For the years ended December 31, 2024 and 2023, the Company issued zero shares of common stock upon exercise of unvested stock options. As of December 31, 2024 and December 31, 2023, 422 and 5,486 shares were held by employees subject to repurchase at a nominal aggregate price and an aggregate price of $ 0.1 million, respectively. Performance Awards In connection with the Merger, on December 19, 2021, Legacy Senti approved 840,089 performance awards to existing employees that vest contingent upon the satisfaction of both a four-year service condition and a performance condition tied to the consummation of the Merger. The awards and the associated recognition of stock-based compensation expense were contingent on the Merger being consummated. As of the approval date of the performance awards, Legacy Senti did not have sufficient common stock available for issuance. Upon the Merger, the Company increased the number of shares authorized and 679,607 awards were granted on June 8, 2022. Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2023 503,114 $ 99.20 7.5 $ — Forfeited ( 144,171 ) $ 99.20 Outstanding at December 31, 2024 358,943 $ 99.20 6.9 $ — Vested and exercisable at December 31, 2024 229,051 $ 99.20 6.8 $ — As of December 31, 2024, the unrecognized stock-based compensation expense related to performance awards was approximately $ 0.7 million, expected to be recognized over a weighted-average period of 0.94 years. Market Awards In connection with the Merger, on December 19, 2021, Legacy Senti approved 60,545 market award options to its co-founder and Chief Executive Officer, Dr. Timothy Lu, that vest contingent upon the satisfaction of all three of the following conditions: a service condition, a performance condition tied to the consummation of the Merger, and market conditions. The market condition is achieved in four tranches, where 25 % of the options will vest when the trading price of the Company’s stock is above various thresholds of price per share. The award and the associated recognition of stock-based compensation were contingent on the Merger being consummated. The estimated fair value of the market awards at the grant date was based on a Monte Carlo simulation valuation model. As of the approval date, Legacy Senti did not have sufficient common stock available for issuance to allow for exercise of the stock options. Upon the Merger, the Company increased the number of shares authorized and 31,574 awards were granted on June 8, 2022. Through December 31, 2024 , these market awards did not meet the vesting thresholds. The were no market based options granted or exercised during the years ended December 31, 2024 and 2023. As of December 31, 2024, the Company had recognized all stock-based compensation expense related to the market awards. 177 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Restricted Stock Units The following table summarizes the Company’s restricted stock units activity and related information under all equity plans: Number of Restricted Stock Units Weighted-Average Grant Date Fair Value Outstanding at December 31, 2023 22,509 $ 25.00 Granted 82,051 $ 1.80 Vested ( 9,666 ) $ 19.01 Forfeited ( 38,471 ) $ 7.52 Outstanding at December 31, 2024 56,423 $ 1.58 As of December 31, 2024, the unrecognized stock-based compensation expense related to restricted stock units was approximately $ 0.2 million, expected to be recognized over a weighted-average period of 2.09 years. Stock-Based Compensation Expense The Company estimates the fair value of stock options using a Black-Scholes option-pricing model. The fair value of restricted stock is based on the fair value of the Company’s common stock on the grant date. The Company uses the assumptions below for the Black-Scholes option pricing model, which are subjective and generally require significant judgment. Fair Value of Common Stock — The fair value of the shares of common stock has historically been determined by the Company’s Board of Directors as there was no public market for the common stock. The Board of Directors determined the fair value of the common stock by considering a number of objective and subjective factors, including: third-party valuations of the Company’s common stock, the valuation of comparable companies, the Company’s operating and financial performance, and general and industry-specific economic outlook, amongst other factors. As of the closing of the Merger and going forward, the fair value of common stock will be based on the publicly traded market value. Expected Term — The expected term represents the period that the Company’s stock options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). The expected term for the ESPP purchase rights is the length of the purchase period. Volatility — The expected volatility is based on the average historical volatility of comparable publicly-traded peer companies, over a period equal to the expected term of the stock option grants, as the Company was not publicly traded prior to the Merger and does not have a trading history for its common stock for a sufficient period of time subsequent to the Merger. Risk-free Rate — The risk-free rate assumption is based on the U.S. Treasury zero-coupon issues in effect at the time of grant for periods corresponding with the expected term of the option. Dividends — The Company has never paid dividends on its common stock and does not anticipate paying dividends on common stock. Therefore, the Company uses an expected dividend yield of zero. 178 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements The assumptions used to determine the grant date fair value of non-market based, stock options granted were as follows, presented on a weighted-average basis: Years Ended December 31, 2024 2023 Expected term (in years) 5.8 5.9 Expected volatility 86.6 % 82.6 % Risk-free interest rate 4.1 % 3.6 % Dividend yield — — Total stock-based compensation expense was as follows (in thousands): Years Ended December 31, 2024 2023 General and administrative $ 1,602 $ 10,236 Research and development 153 1,456 Total stock-based compensation expense $ 1,755 $ 11,692 In August 2023, in connection with the GeneFab transaction, the Company’s Board of Directors approved the modification of equity awards as part of termination of employment for the Co mpany's employees transferred to GeneFab, including the Company’s Chief Technology Officer. The award modifications included the acceleration of certain non-vested stock options and the extension of the post-termination exercise period of certain vested stock options. The Company accounted for the award modifications under ASC 718, Compensation – Stock Compensation . During year ended December 31, 2023, the Company recorded a one-time, noncash incremental compensation expense net of the required reversal of previously recognized compensation attributed to non-vested awards in the amount of $ 2.0 million related to the equity awards modifications of the employees that were extended offers of employment by GeneFab which was included in net income from discontinued operations in the consolidated statements of operations and comprehensive loss. Total stock-based compensation expense from discontinued operations was $( 2.0 ) million for the year ended December 31, 2023. 179 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements 12 . Income Tax The Company did not record any income tax expense or benefit during the years ended December 31, 2024 and 2023. The Company has a net operating loss and has provided a valuation allowance against net deferred tax assets due to uncertainties regarding the Company’s ability to realize these assets. For the calendar years ended December 31, 2024 and 2023, the tax effects of significant items comprising the Company's deferred taxes are as follows (in thousands): Years Ended December 31, 2024 2023 Deferred tax assets: Net operating losses $ 50,961 $ 33,566 Capitalized R&D Section 174 expense 13,509 10,146 Tax credits 10,592 9,237 Lease liability 5,639 6,005 Stock-based compensation 3,736 4,785 Accruals and reserves 532 724 Related Party Fair Value Adjustment — 346 Fixed asset basis 438 — Total deferred tax assets 85,407 64,809 Deferred tax liabilities: Operating lease right-of-use assets ( 1,534 ) ( 1,548 ) Fixed asset basis ( 2,165 ) ( 2,008 ) Total deferred tax liabilities ( 3,699 ) ( 3,556 ) Valuation allowance ( 81,708 ) ( 61,253 ) Net deferred taxes $ — $ — The Company records the tax benefit of net operating losses, temporary differences, and credit carryforwards as assets to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance. The valuation allowance increased by approximately $ 20.5 million and $ 19.2 million during years ended December 31, 2024 and 2023, respectively, and the Company’s deferred tax assets continue to be fully offset by the valuation allowance as at December 31, 2024. For the years ended December 31, 2024 and 2023, the Company did not record an income tax provision. 180 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Net operating losses and tax credit carryforwards as of December 31, 2024 are as follows (in thousands): Amount Expiration Years Net operating losses, federal (Post December 31, 2017) $ 188,302 Do Not Expire Net operating losses, federal (Pre January 1, 2018) $ 3,508 2036-2037 Net operating losses, state $ 152,895 2036-2044 Tax credits, federal $ 7,699 2036-2044 Tax credits, state $ 6,362 Do Not Expire Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. This annual limitation may result in the expiration of net operating losses and credits before utilization. The Company has not performed an analysis to determine the limitation of our net operating loss carryforwards. The effective tax rate of the Company's provision (benefit) for income taxes differs from the federal statutory rate as follows: Years Ended December 31, 2024 2023 Statutory rate 21.00 % 21.00 % State tax 11.87 % 3.30 % Other 0.08 % ( 0.86 )% Tax credits 1.43 % 3.37 % Fair value of contingent earnout liability 2.53 % 1.04 % Fair value of preferred stock tranche liability 5.33 % — % Stock Based Compensation ( 3.49 )% — % Valuation allowance ( 38.75 )% ( 27.84 )% Total — % — % The Company has elected to include interest and penalties as a component of tax expense. For the years ended December 31, 2024 and 2023, the Company did not recognize accrued interest and penalties related to unrecognized tax benefits. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease during the next 12 months. The Company files income tax returns in federal and various state jurisdictions where a filing obligation has been determined. The federal and state income tax returns from inception to December 31, 2024 remain subject to examination. The Company had $ 2.4 million of unrecognized tax benefits as of December 31, 2024. No liability related to uncertain tax positions is recorded on the financial statements as all uncertain tax positions are currently recorded as a reduction to the Company’s deferred tax assets, which are subject to a valuation allowance. If recognized, none of the unrecognized tax benefits would affect the effective tax rate. The Company does not anticipate the total amounts of unrecognized tax benefits will significantly increase or decrease in the next 12 months. No positions were settled with tax authorities in 2024 and no positions were reduced as a result of a lapse of applicable statutes of limitations. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes, as necessary. The Company did not recognize any accrued interest and penalties related to gross unrecognized tax benefits related to the year ended December 31, 2024. A reconciliation of the Company’s unrecognized tax benefits for the years ended December 31, 2024 and 2023 is as follows (in thousands): 181 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2024 2023 Balance at beginning of the year $ 2,076 $ 1,643 Decrease related to prior year tax positions — ( 243 ) Increase related to current year tax positions 301 676 Balance at end of the year $ 2,376 $ 2,076 13 . Net Loss Per Share A reconciliation of net loss available to common stockholders and the number of shares in the calculation of basic and diluted net loss per share is as follows (in thousands, except share and per share amounts): Years Ended December 31, 2024 2023 Net loss from continuing operations $ ( 52,790 ) $ ( 83,406 ) Net income from discontinued operations — 12,348 Accretion for Series A redeemable convertible preferred stock $ ( 2,522 ) $ — Net loss $ ( 55,312 ) $ ( 71,058 ) Weighted-average shares used in computing net loss per share, basic and diluted 4,595,946 4,437,106 Net loss per share from continuing operations, basic and diluted $ ( 12.03 ) ( 18.80 ) Net income (loss) per share from discontinued operations, basic and diluted — 2.79 Net loss per share attributable to common stockholders, basic and diluted $ ( 12.03 ) $ ( 16.01 ) As the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods presented. The following potential common stock securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (on an as-converted basis): Years Ended December 31, 2024 2023 Series A redeemable convertible preferred stock 21,157,000 — Stock options to purchase common stock 1,333,030 1,158,294 Unvested early exercised options 422 5,486 Restricted stock units outstanding 56,423 22,528 Performance stock units outstanding 106,806 — Contingent earnout common stock 100,000 200,000 Warrants to purchase common stock issued in connection with Series A redeemable convertible preferred stock 31,735,500 — GeneFab Option (Note 3) 1,963,344 1,963,344 Total 56,452,525 3,349,652 14 . Retirement Plan The Company maintains a defined contribution employee retirement plan, or 401(k) plan, for all employees upon their date of hire. The 401(k) plan is intended to qualify as tax-qualified plans under Section 401(k) of the Internal Revenue Code of 1986, as amended. The plan permit employees to contribute, on a pre-tax basis, a portion of their salary up to the Federally mandated limits. The Company matches an employee’s contribution up to 4 % of 182 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements the employee’s compensation. Contributions to the plans by the Company totaled $ 0.3 million and $ 0.7 million, respectively, for the years ended December 31, 2024 and 2023. 15 . Commitments and Contingencies In the ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancelable payment obligations, for which the Company is liable in future periods. On June 3, 2021, the Company entered into a lease agreement for a new cGMP facility in Alameda, California to support planned initial clinical trials for our product candidates. The lease will expire in 2032. Refer to Note 6. Operating Leases , for further details of the leases. In 2021, the Company entered into a three-year collaboration and option agreement with BlueRock Therapeutics LP (“BlueRock”) under which the Company granted BlueRock an option to acquire an exclusive or non-exclusive license to develop, manufacture and commercialize cell therapy products. Refer to Note 16. Related Parties , for further details of the related parties. In consideration for the option, the Company is responsible for up to $ 10.0 million in costs and expenses incurred over the three-year term. As of December 31, 2024, purchase commitments related to sponsored research agreements amounted to approximately $ 0.3 million. The Company has entered into license agreements under which they are obligated to make annual maintenance payments of $ 0.1 million and specified milestone and royalty payments. Future milestone and royalty payments under these agreements are not considered contractual obligations since the payments under these agreements are contingent upon future events, such as the Company’s achievement of specified development, regulatory, and sales milestones, or generating product sales. As of December 31, 2024, the Company is unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. In connection with 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 one remaining tranche. Refer to Note 7. Stockholders’ Equity, for further details of the contingent earnout liability. 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, with the remaining $ 4.0 million paid in January 2025. This amount is recorded in GeneFab prepaid expenses - related party. Legal Proceedings The Company is subject to claims and assessments from time to time in the ordinary course of business but does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Indemnification In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions and has never accrued any liabilities related to such obligations in its consolidated financial statements. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance. 183 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements 16 . Related Parties NEA New Enterprise Associates, Inc. (“NEA”) held 9.2 % shares of common stock as of December 31, 2024 and 2023. NEA held one of the six seats on the Company’s Board of Directors as of December 31, 2024 and 2023. As part of the private placement in December 2024, NEA is also entitled to designate one additional director to the Company’s Board of Directors. Bayer Healthcare LLC On May 21, 2021, the Company entered into a collaboration and option agreement (“BlueRock Agreement”) with BlueRock, a wholly-owned subsidiary of Bayer, pursuant to which the Company granted to BlueRock an option (“BlueRock Option”), on a collaboration program-by-collaboration program basis, to obtain an exclusive or non-exclusive license to develop, manufacture and commercialize cell therapy products that contain cells of specified types and which incorporate an option gene circuit from such collaboration program or a closely related derivative gene circuit. The Company was responsible for up to $ 10 million in costs and expenses incurred in connection with the research plan and related activities to be conducted over a three-year research term as specified in the collaboration and option agreement. The Company completed the initial research plan and related activities in May 2024. If the Company and BlueRock agree to add new research activities to the research plan, then BlueRock will be obligated to reimburse the Company for the costs and expenses incurred. The Company concluded that the BlueRock Agreement is not within the scope of ASC 808, Collaborative Arrangements , because the Company did not receive any consideration and therefore, is not exposed to both significant risks and rewards for the arrangement. The Company also determined that the agreement is also not currently within the scope of ASC 606 because the BlueRock Agreement does not currently meet the criteria of a contract with a customer, and will not be within the scope of ASC 606 until any consideration is paid. Potential future milestone payments and royalties are subject to BlueRock’s exercise of the BlueRock Option and execution of a commercial license agreement by both parties. Under the BlueRock Agreement, the specific financial terms for milestone payments and royalties will be negotiated and agreed to only after the option is exercised. As of December 31, 2024, Bayer has not exercised its option for a license. Bayer held 12.2 % shares of the Company’s common stock as of December 31, 2024 and 2023. Accordingly, Bayer is considered a related party. GeneFab, LLC. As a result of the transaction with GeneFab (refer to Note 3. GeneFab Transaction ), whereby Philip Lee, Ph.D., the former Co-Founder and Chief Technology Officer of the Company, assumed the role of Chief Executive Officer of GeneFab, GeneFab is a related party. In connection with the disposal of the business, the Company received the GeneFab Note Receivable and the GeneFab Economic Share and provided GeneFab with the GeneFab Option. Refer to Note 4. Fair Value Measurements. On June 12, 2024, the Company entered into a sublease agreement with GeneFab for a portion of the Company’s corporate headquarters in South San Francisco. The Company has also subleased its manufacturing facility in Alameda to GeneFab and recorded total sublease income of $ 6.4 million including variable costs charged for the year ended December 31, 2024. In connection with the agreement entered into with GeneFab on August 7, 2023, the Company was entitled to $ 18.9 million for future services under the agreement. On December 10, 2024, in connection with the private placement described in further detail in Note 7. Stockholders’ Equity , the Company entered into an amendment of the GeneFab Framework Agreement. As part of this agreement, the Company 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. This amount, along with the remaining amount from the original prepaid, is recorded in GeneFab prepaid expenses - related party. Additionally, amounts due from GeneFab related to costs incurred by the Company on its behalf were $ 0.7 million as of December 31, 2024 and were recorded in GeneFab receivable - related party on the 184 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements consolidated balance sheet. The Company incurred $ 14.1 million and $ 4.1 million of research and development expenses under the services agreement during the years ended December 31, 2024 and 2023, respectively. Celadon Partners, LLC As part of the private placement in December 2024, Donald Tang, a founder and manager of Celadon, the parent company of Valere Bio, of which GeneFab is a wholly-owned subsidiary, was appointed to the Company’s Board of Directors. Celadon was also assigned the GeneFab Option in 2024. As of December 31, 2024, Celadon held one of the six seats on the Company’s Board of Directors. Additionally, in connection with the private placement, Celadon is entitled to designate two additional directors to the Company’s Board of Directors. As announced in March 2025 and described in more detail in Note 17. Subsequent Events , Feng Hsiung was appointed to the Board of Directors as one of these two additional directors. 17 . Subsequent Events Transition of Interim Chief Financial Officer On January 31, 2025, Yvonne Li, the Consulting Agreement by and between Senti Biosciences, Inc. (the “Company”) and Yvonne Li, the Company’s Interim Chief Financial Officer, expired in accordance with its terms. As such, effective January 31, 2025, Ms. Li will no longer serve as the Company’s principal financial officer and principal accounting officer. On February 5, 2025, the Company and Ms. Li entered into a new consulting agreement (the “New Consulting Agreement”) pursuant to which Ms. Li will serve as a consultant to the Company and will cooperate with the Company’s executive management team and other functional teams on an orderly transition of her responsibilities until March 31, 2025. Appointment of Principal Financial Officer and Principal Accounting Officer Following approval by our Board of Directors, Timothy Lu, M.D., Ph.D., our Chief Executive Officer, was appointed to serve as our interim principal financial officer and principal accounting officer, effective as of January 31, 2025, until immediately following the Company’s filing of this Annual Report on Form 10-K for the fiscal year ended December 31, 2024, when Mr. Cross will assume responsibilities as the Company’s principal financial officer and principal accounting officer as noted below. Appointment of Chief Financial Officer On February 23, 2025, following the approval by our Board of Directors, Jay Cross was appointed as our Chief Financial Officer, effective as of March 3, 2025. The Board also appointed Mr. Cross to serve as our principal financial officer and principal accounting officer, effective immediately following the filing of this Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Conversion of Series A Redeemable Convertible Preferred Stock On March 6, 2025, at our special meeting of stockholders (the “Special Meeting”), our stockholders approved the issuance of common stock in accordance with Nasdaq Listing Rule 5635 upon (i) conversion of Series A redeemable convertible preferred stock and (ii) the exercise of warrants to purchase shares of common stock. Subsequently, on March 10, 2025, we sent notices to our stockholders relating to the conversion of 21,157 shares of Series A redeemable convertible preferred stock into 21,157,000 shares of common stock, effective as of March 10, 2025. Amended and Restated 2022 Equity Incentive Plan On March 6, 2025, at the Special Meeting, our stockholders approved the A&R Plan, which (i) increased the number of shares of common stock available for issuance under the Company’s 2022 Equity Incentive Plan by an additional 4,300,000 shares, (ii) increased the number of shares that may be issued pursuant to incentive stock options to an aggregate number of shares reserved for issuance under the A&R Plan as of the date that stockholders approved the A&R Plan and (iii) extended the term of the plan to the tenth anniversary of the date that stockholders approved the A&R Plan. The A&R Plan was previously approved, subject to stockholder approval, by the Board. 185 Table of Contents SENTI BIOSCIENCES, INC. Notes to Consolidated Financial Statements Board Composition On March 7, 2025, our Board of Directors approved the appointment of Feng Hsiung, pursuant to the terms of a letter agreement dated as of December 2, 2024, by and between us and Celadon Partners. In connection with Mr. Hsiung’s appointment, our Board of Directors approved an increase in the authorized number of members of our Board of Directors from six ( 6 ) to seven ( 7 ) members. Mr. Hsiung was appointed to fill the vacancy created by the foregoing increase in the size of the Board, as a Class III director, to serve in such capacity until the annual meeting of stockholders in 2028 (if elected by stockholders at the annual meeting of stockholders in 2025) or until his earlier resignation, death or removal. Audit Committee Appointment Effective March 7, 2025, Brenda Cooperstone, who was previously appointed as a member of the Audit Committee of our Board of Directors (the “Audit Committee”), tendered her resignation as a member of the Audit Committee. Ms. Cooperstone continues to serve as a member of the Board and the Compensation Committee of the Board. On March 7, 2025, upon the recommendation of its Nominating and Corporate Governance Committee, our Board of Directors unanimously appointed Feng Hsiung to serve as a member of the Audit Committee in addition to serving as a member of the Board, effectively immediately. In addition to the annual stock option grant and the annual cash retainers for serving as a member of the Board, Mr. Hsiung will be eligible to receive $ 7,500 annually for serving as a member of the Audit Committee. Following this appointment, the Audit Committee is now comprised of Fran Schulz (Chair), Feng Hsiung and Ed Mathers. ChEF Termination On March 17, 2025, the Company provided notice to Chardan that it was terminating the A&R Purchase Agreement. 186 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None