Business Context and Reporting Period
Senti Biosciences Holdings, Inc. (Senti) is an early clinical-stage biotechnology company developing next-generation cell and gene therapies using its proprietary gene circuit platform. The company focuses on oncology indications, with its lead product candidate, SENTI-202, having received FDA clearance for an Investigational New Drug (IND) application in December 2023 and initiating Phase 1 clinical trials in May 2024. This filing covers the quarterly period ended June 30, 2024.
On August 7, 2023, Senti completed a strategic transaction with GeneFab, LLC, disposing of its non-oncology business and in-house manufacturing operations. This transaction is reported as discontinued operations. Senti subleased its Alameda manufacturing facility to GeneFab, which now supports the clinical manufacturing of Senti's CAR-NK programs.
Key Financial Metrics
| Metric (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 |
|---|---|---|---|---|
| Total Revenue | $0 | $937 | $0 | $2,223 |
| Net Loss (Continuing Ops) | $(11,203) | $(14,250) | $(23,314) | $(28,103) |
| Net Loss (Total) | $(11,203) | $(18,697) | $(23,314) | $(37,419) |
| Net Loss Per Share (Basic/Diluted) | $(2.45) | $(4.22) | $(5.10) | $(8.47) |
| Cash and Cash Equivalents (Balance Sheet) | $15,860 (as of June 30, 2024) $35,926 (as of Dec 31, 2023) |
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| Accumulated Deficit | ||||
| Operating Cash Flow (6 Months) | $(20,027) | $(29,979) |
Note: All share and per-share data have been retroactively adjusted to reflect a 1-for-10 reverse stock split effective July 17, 2024.
Material Changes vs. Prior Period
- Revenue: Total revenue was $0 for the three and six months ended June 30, 2024, compared to $0.9 million and $2.2 million in the prior year periods. The decrease is due to the completion of research services under the Spark Therapeutics collaboration and the SBIR grant in 2023.
- Operating Expenses:
- R&D Expenses: Increased to $9.2 million (Q2) and $17.9 million (6 months) from $6.9 million and $13.9 million, respectively. The increase was driven primarily by higher external services and supplies costs ($3.5 million increase in Q2), partially offset by lower personnel and facility costs.
- G&A Expenses: Decreased significantly to $4.2 million (Q2) and $11.7 million (6 months) from $9.2 million and $18.4 million. This reduction is attributed to a 37% workforce reduction announced in January 2024 and lower personnel-related expenses.
- Other Income/Expense: Net other income increased to $2.2 million (Q2) and $6.3 million (6 months) from $0.9 million and $2.1 million. This was driven by:
- GeneFab Sublease Income: $1.6 million (Q2) and $3.0 million (6 months) recognized from subleasing facilities to GeneFab.
- GeneFab Option Fair Value: A gain of $1.6 million (Q2) and $3.9 million (6 months) due to the decrease in Senti's stock price.
- GeneFab Economic Share: A loss of $1.5 million (Q2) and $1.4 million (6 months) due to a decrease in GeneFab's equity value.
- Discontinued Operations: There were no discontinued operations in 2024. In the prior year periods, the company reported net losses of $4.4 million (Q2) and $9.3 million (6 months) related to the disposed non-oncology business.
Guidance, Outlook, Risks, and Unusual Items
- Liquidity and Going Concern: Management has concluded that there is substantial doubt about the company's ability to continue as a going concern for twelve months from the issuance date of the financial statements (August 13, 2024). As of June 30, 2024, cash and cash equivalents were $15.9 million. The company expects to incur substantial operating losses and negative cash flows as it advances clinical trials.
- Recent Developments:
- Reverse Stock Split: A 1-for-10 reverse stock split was effected on July 17, 2024, to regain compliance with Nasdaq's minimum bid price requirement. Compliance was confirmed on August 2, 2024.
- CIRM Grant: On August 3, 2024, Senti executed an agreement with the California Institute of Regenerative Medicine for an $8 million grant to support the clinical development of SENTI-202. The first tranche is expected in August 2024.
- ChEF Purchase Agreement: On July 16, 2024, the company amended its equity facility with Chardan Capital Markets to permit Intraday VWAP Purchases.
- Internal Controls: The company identified a material weakness in internal control over financial reporting related to a lack of sufficient resources in the finance and accounting function for complex transactions. Remediation efforts are underway, but controls were deemed ineffective for the quarter.
- Unusual Items: Significant non-cash items impacted the net loss, including changes in the fair value of the GeneFab Option (gain), GeneFab Economic Share (loss), and GeneFab Note Receivable (gain). Stock-based compensation expense was negative ($0.8 million) for Q2 2024 due to the reversal of previously recognized expense from forfeited performance awards.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $15.9 million cash balance against the projected burn rate for SENTI-202 clinical trials and the timeline for receiving the $8 million CIRM grant.
- GeneFab Transaction Terms: Review the conditions attached to the remaining $18.9 million receivable from GeneFab, expected in H1 2025, and the potential dilution from the GeneFab Option (up to 1.96 million shares).
- Internal Control Remediation: Monitor the progress of remediation for the material weakness in internal controls to ensure future financial reporting reliability.
- Stock Price Compliance: Confirm continued compliance with Nasdaq listing requirements following the reverse stock split.
- Collaboration Milestones: Track the progress of the SENTI-301A pilot trial in China with Celest Therapeutics and the status of the SENTI-202 Phase 1 trial.