Senti Biosciences, Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended June 30, 2023. The filing identifies the registrant as Senti Biosciences, Inc. Senti is a preclinical biotechnology company developing cell and gene therapies using its gene-circuit platform; it has no approved products and has generated no product-sale revenue.
Financial performance and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Total revenue | $0.94 million | $1.36 million | $2.22 million | $2.46 million |
| Operating expenses | $20.57 million | $23.13 million | $41.69 million | $35.99 million |
| Operating loss | $19.64 million | $21.77 million | $39.47 million | $33.53 million |
| Net loss | $18.70 million | $11.55 million | $37.42 million | $23.36 million |
| Basic and diluted loss per share | $0.42 | $0.86 | $0.85 | $2.80 |
Revenue was primarily research contract revenue and grant income; there was no product revenue. Q2 contract revenue declined $0.42 million, mainly due to lower services under the Spark collaboration. Research and development expense rose to $10.95 million in Q2 and $22.27 million for the half-year, reflecting personnel and facility costs. General and administrative expense fell to $9.62 million in Q2, largely because stock-based compensation was lower; it was broadly flat year over year for the half-year.
Net loss increased despite a smaller operating loss: the prior-year periods included substantially larger non-cash gains from remeasurement of the contingent earnout liability and, in 2022, a convertible-note extinguishment gain. Six-month 2023 interest income was $1.86 million versus $0.03 million in 2022.
At June 30, 2023, cash and cash equivalents were $36.75 million and short-term investments were $22.88 million, or $59.64 million combined; restricted cash was another $3.34 million. Total assets were $143.63 million, total liabilities $46.21 million, and accumulated deficit $210.71 million. Six-month operating cash use was $29.98 million; investing activities provided $8.83 million, mainly from investment maturities, while financing activities provided $0.25 million. Cash, cash equivalents and restricted cash declined $20.90 million. The filing reports lease liabilities, including $38.10 million of total operating lease liabilities and $0.14 million of related-party finance lease liabilities; it does not present conventional borrowings.
Material changes, outlook and risks
- Going concern: Management stated that, as of the August 11, 2023 issuance date, there was substantial doubt about the company’s ability to continue as a going concern because existing cash, equivalents and investments might not fund operations beyond twelve months. Senti expects continued operating losses and negative operating cash flows and says additional funding will be needed.
- GeneFab transaction: Announced August 10, 2023, after quarter-end. Senti agreed to transfer specified Alameda facility assets and rights, sublease the facility, and receive $37.8 million in cash before the end of 2025. Approximately $18.9 million due at closing was netted against Senti’s prepayment for GeneFab manufacturing and support services; the remaining $18.9 million is payable in installments in 2024 and 2025. Senti also agreed to prepay $18.9 million for manufacturing and research activities and is to receive $8.0 million in manufacturing credits, subject to conditions. Management said the transaction provides capital and reduces longer-term operating expenses. Terms include a GeneFab option to purchase up to $20 million of Senti stock at $1.01867 per share, subject to conditions, and a potential economic-share arrangement.
- Development and manufacturing: All current candidates remain preclinical. Senti had expected multiple IND filings beginning in 2023, but the filing provides no updated numerical guidance. The company identifies clinical, regulatory, funding and manufacturing execution as significant uncertainties. GeneFab has not previously operated a cGMP facility, and Senti disclosed it has no redundant second-source supply arrangement for the facility.
- Listing and controls: Nasdaq notified Senti on August 7 that its closing bid price had remained below $1.00 for 30 consecutive trading days; the initial compliance deadline is February 5, 2024. A previously identified material weakness in internal control over financial reporting remained under remediation; management said additional time was needed to complete and assess remediation.
- Other items: The company reported no legal proceedings it believes would have a material adverse effect. It received $3.3 million in letters of credit held with SVB related to its facility lease and disclosed uncertainty over access to those funds following SVB’s receivership.
Key facts for investors to verify
- Whether the GeneFab consideration is received on schedule and how the closing payment’s netting against the services prepayment affects actual liquidity; also verify manufacturing-credit conditions and ongoing facility lease obligations.
- Cash runway and financing needs after the GeneFab transaction, given the disclosed substantial doubt about continuing as a going concern and the company’s stated need for additional capital.
- Progress toward IND filings and clinical development, and whether GeneFab can meet cGMP, quality, capacity and timing requirements for Senti’s programs.
- Potential dilution from the GeneFab stock option, outstanding equity awards and any future equity financing; confirm Nasdaq bid-price compliance by the stated deadline.
- Progress in remediating the material weakness in financial reporting controls and the status of the SVB-related letters of credit.