Senti Biosciences, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; this is an annual report, not a quarterly filing. Senti is a preclinical biotechnology company developing gene-circuit-enabled cell and gene therapies. Its common stock trades on Nasdaq under SNTI. The June 2022 merger with Dynamics SPAC brought the company public.
Financial performance and liquidity
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | $4.3 million | $2.8 million | +$1.5 million |
| Research and development expense | $34.1 million | $22.0 million | +$12.1 million |
| General and administrative expense | $40.8 million | $21.3 million | +$19.6 million |
| Operating loss | $70.6 million | $40.4 million | Loss increased $30.2 million |
| Net loss | $58.2 million | $55.3 million | Loss increased $2.9 million |
| Net cash used in operations | $34.9 million | $34.6 million | +$0.3 million |
- Revenue was from research collaborations and grants, not product sales. Contract revenue was $3.3 million and grant income $1.0 million. No product is approved for sale.
- Operating expenses rose substantially, driven in part by personnel, stock-based compensation, professional services, insurance and facility costs. Stock-based compensation was $16.4 million, versus $2.3 million in 2021.
- Net loss was partly offset by $9.5 million in noncash income from remeasurement of the contingent earnout liability and a $1.3 million gain on extinguishment of convertible notes. FY2021 included a $14.7 million loss from remeasurement of preferred-stock tranche liability.
- At year-end, cash and cash equivalents were $57.6 million and short-term investments were $40.9 million, totaling $98.6 million. Restricted cash of $3.4 million is reported separately. Current assets were $102.6 million and current liabilities $18.1 million.
- Investing cash outflow was $82.0 million, including $41.4 million for property and equipment and $40.6 million for short-term investments. Financing provided $118.6 million, primarily from the merger and PIPE financing.
- The May 2022 $5.2 million convertible note was exchanged for shares in the merger; the filing reports no remaining borrowing balance. Lease liabilities totaled $37.1 million; undiscounted lease payments were $59.0 million.
Material changes and business developments
- In January 2023, Senti announced a reprioritization: focus internal resources on SENTI-202 and SENTI-401, pursue other gene-circuit programs with partners, and pause SENTI-301A development for financial—not scientific—reasons while seeking partners.
- SENTI-202, an off-the-shelf CAR-NK candidate for hematologic malignancies including AML, was selected as the lead development candidate in 2022. The company planned to submit an IND in the second half of 2023; it remained preclinical at the filing date.
- SENTI-401 is a preclinical CAR-NK candidate for colorectal and other solid tumors. The company planned to present preclinical data in 2023. SENTI-301A is a preclinical HCC candidate whose development was paused.
- The company received $112.0 million net from the merger and related PIPE financing during 2022. Its Chardan equity purchase facility provides for up to $50 million subject to share, market and other conditions; $0.7 million in net proceeds had been received by year-end.
Outlook, risks and unusual items
- Going concern: Management concluded that substantial doubt existed about Senti’s ability to continue as a going concern beyond 12 months from issuance of the financial statements. The auditor included a going-concern explanatory paragraph. Additional funding is needed, and management’s financing plans are not assured.
- Funding and execution: Senti expects continued losses and significant spending as it advances preclinical work, planned clinical development and manufacturing. It may need to delay, reduce or stop programs or seek partnerships or financing on potentially dilutive or unfavorable terms.
- Manufacturing commitments: The Alameda manufacturing facility was under construction; the company reported $56.1 million in net property and equipment, including $48.3 million in construction in progress. It had paid $35.5 million of a $42.1 million construction commitment by year-end and had a long-term facility lease.
- Banking exposure: In March 2023, Senti disclosed two Silicon Valley Bank letters of credit totaling $3.3 million tied to its facility lease and noted it might be unable to access those funds following the bank’s receivership.
- Financial reporting controls: The company reported that a material weakness in internal control over financial reporting had not been fully remediated as of December 31, 2022; disclosure controls were deemed ineffective. Management cited accounting-resource and control-process deficiencies and described ongoing remediation.
- Clinical and platform risks: All candidates were preclinical and had not been tested in humans. Safety, efficacy, regulatory clearance, scale-up manufacturing, supply, intellectual-property protection and collaborator execution remain significant uncertainties.
- There were no material legal proceedings reported. No income tax expense or benefit was recorded; deferred tax assets were fully offset by a valuation allowance.
Investor verification priorities
- Verify the company’s latest cash runway, financing needs and progress in obtaining additional capital, including any use of the Chardan facility.
- Check subsequent updates on the SENTI-202 IND timeline and manufacturing readiness, and whether SENTI-401 or SENTI-301A plans changed.
- Review whether the internal-control material weakness was remediated and whether any further financial-reporting issues were disclosed.
- Confirm the status and recoverability of the $3.3 million in SVB-related letters of credit and other banking exposures.
- Assess the terms, funding obligations and potential value of Spark and BlueRock collaborations; potential milestone and royalty amounts depend on options, development and commercialization.