Senti Biosciences, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; comparisons are with FY2022. The filing reports annual results, not standalone fourth-quarter results. FY2022 amounts were retrospectively adjusted for the presentation of the GeneFab-related business as discontinued operations.
Business context
Senti is a clinical-stage biotechnology company developing gene-circuit-enabled cell and gene therapies. Its lead program, SENTI-202, is an off-the-shelf CAR-NK candidate for hematologic malignancies including AML. The FDA cleared its IND in December 2023. SENTI-301A, being advanced in China with Celest Therapeutics, is the other lead program.
Financial results and liquidity
| Metric | FY2023 / Dec. 31, 2023 | FY2022 / Dec. 31, 2022 |
|---|---|---|
| Total revenue | $2.6 million | $4.3 million |
| Research and development expense | $32.2 million | $28.1 million |
| General and administrative expense | $37.2 million | $38.2 million |
| Impairment of long-lived assets | $26.0 million | None reported |
| Loss from continuing operations | $83.4 million | $49.7 million |
| Net loss | $71.1 million | $58.2 million |
| Net cash used in operating activities | $52.4 million | $34.9 million |
| Cash, cash equivalents and short-term investments | $35.9 million | $98.6 million |
Contract revenue was $2.0 million and grant income was $0.6 million; Senti has not generated product-sales revenue. FY2023 revenue declined primarily because Spark collaboration services and SBIR grant income fell. The net loss includes $12.3 million of income from discontinued operations, including a $21.9 million GeneFab disposal gain; the continuing-operations loss therefore better reflects ongoing operating performance. Operating expenses rose chiefly because of the impairment charge and higher R&D costs.
At year-end, current assets were $71.2 million and current liabilities were $12.7 million. Current assets included $17.6 million of GeneFab receivable and $14.8 million of prepaid GeneFab services; these are not cash. Restricted cash was $3.5 million. The balance sheet reported $37.6 million of operating lease liabilities; the filing does not report material conventional borrowings outstanding at year-end.
Material changes, outlook and risks
- Liquidity and going concern: Management and the auditor concluded substantial doubt exists about the company’s ability to continue as a going concern beyond 12 months from the March 21, 2024 financial-statement issuance date. Management said additional financing is needed and is being pursued; no assurance of funding is provided.
- GeneFab transaction: Senti sold manufacturing assets and transferred certain related rights, subleased its Alameda facility, and entered into a manufacturing-services arrangement with GeneFab. Total stated consideration was $37.8 million: $18.9 million was applied to future services at closing, and the remaining $18.9 million is payable in 2024–2025 subject to conditions. The filing records a $21.9 million disposal gain in discontinued operations. GeneFab is a related party.
- Potential dilution and contingent value: GeneFab received an option to buy up to 19.6 million shares for up to $20 million at $1.01867 per share, subject to agreement and other conditions. Senti also has a Chardan equity purchase facility of up to $50 million, with only $1.2 million of net proceeds received through year-end 2023. Both could dilute existing holders if used.
- Development plans: Senti expected to dose the first SENTI-202 patient in Q2 2024. Celest expected to begin a SENTI-301A pilot study in China in Q2 2024. These were expectations at filing, not reported completed milestones. Potential Celest option, milestone and royalty proceeds are contingent; the filing cites up to $156 million in aggregate option and milestone payments if a license is executed and conditions are met.
- Strategic reduction: In January 2024, Senti announced a workforce reduction of approximately 37% and a focus on SENTI-202 and the China partnership for SENTI-301A.
- Execution risks: Senti depends on third parties, particularly GeneFab, for clinical manufacturing. GeneFab had not previously operated a cGMP facility, and Senti reported no redundant second-source supply arrangement. Clinical success, regulatory approval, financing, collaboration performance and manufacturing remain uncertain.
- Controls and listing: Internal control over financial reporting was deemed ineffective at December 31, 2023. Some remediation was completed, but the material weakness was not fully remediated. Nasdaq granted until August 5, 2024 to regain compliance with the $1.00 minimum bid-price requirement after the listing moved to the Capital Market.
- Other items: No material legal proceedings were reported. The company disclosed no material cybersecurity incident. It reported no cash dividends.
Most important facts for investors to verify
- Current cash runway, financing secured since the filing, and whether the going-concern uncertainty has changed.
- Whether SENTI-202 and Celest’s SENTI-301A program began dosing on the anticipated schedules, and any safety or efficacy data.
- GeneFab’s ability to manufacture clinical-grade product reliably, and collection of the deferred consideration subject to conditions.
- Potential dilution from the GeneFab option, Chardan facility, equity awards and other share issuances.
- Progress in remediating the financial-reporting material weakness and the company’s Nasdaq bid-price compliance status.