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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period from _______ to _______
Commission File Number 001-40440
_________________________
Senti Biosciences, Inc.
(Exact name of registrant as specified in its charter)
_________________________
Delaware86-2437900
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
2 Corporate Drive, First Floor
South San Francisco, CA 94080
(Address of principal executive offices and zip code)
(650) 239-2030
(Registrant’s telephone number, including area code)
Dynamics Special Purpose Corp.
2875 El Camino Real
Redwood City, CA 94061
(408) 212-0200
(Former name, former address and former fiscal year, if changed since last report)
_________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange
on which registered
Common stock, par value $0.0001 per shareSNTIThe Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 1, 2023 there were 44,168,034 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.




Table of Contents
SENTI BIOSCIENCES, INC.
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


i





                    
PART 1 - FINANCIAL INFORMATION
Item 1.    FINANCIAL STATEMENTS (UNAUDITED)
SENTI BIOSCIENCES, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
March 31,December 31,
20232022
Assets
Cash and cash equivalents$31,600 $57,621 
Accounts receivable791 626 
Short-term investments44,506 40,942 
Prepaid expenses and other current assets3,614 3,390 
Total current assets80,511 102,579 
Restricted cash3,551 3,366 
Property and equipment, net58,987 56,136 
Operating lease right-of-use assets17,905 18,418 
Other long-term assets471 293 
Total assets$161,425 $180,792 
Liabilities and Stockholders’ Equity (Deficit)
Accounts payable$2,582 $2,267 
Finance lease liabilities - related party, current portion 95  
Early exercise liability, current portion135 135 
Deferred revenue407 799 
Accrued expenses and other current liabilities7,591 12,864 
Operating lease liabilities2,056 1,988 
Total current liabilities12,866 18,053 
Finance lease liabilities - related party, net of current portion 73  
Operating lease liabilities, net of current portion35,866 35,103 
Contingent earnout liability168 227 
Early exercise liability, net of current portion112 146 
Total liabilities49,085 53,529 
Commitments and contingencies (Note 11)
Stockholders’ equity (deficit):
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at March 31, 2023 and December 31, 2022; zero shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively
  
Common stock, $0.0001 par value; 500,000,000 shares authorized at March 31, 2023 and December 31, 2022; 44,075,194 and 44,062,534 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively
4 4 
Additional paid-in capital304,341 300,544 
Other comprehensive income3 1 
Accumulated deficit(192,008)(173,286)
Total stockholders’ equity112,340 127,263 
Total liabilities, preferred stock and stockholders’ equity$161,425 $180,792 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1





                    
SENTI BIOSCIENCES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
(in thousands, except share and per share data)
Three Months Ended March 31,
20232022
Revenue
Contract revenue$1,036 $854 
Grant income250 250 
Total revenue1,286 1,104 
Operating expenses
Research and development11,318 7,603 
General and administrative9,802 5,259 
Total operating expenses21,120 12,862 
Loss from operations(19,834)(11,758)
Other income (expense)
Interest income, net1,061 4 
Change in fair value of contingent earnout liability59  
Other income (expense)(8)(54)
Total other income (expense), net1,112 (50)
Net loss(18,722)(11,808)
Other comprehensive loss
Unrealized gain on investments2  
Comprehensive loss$(18,720)$(11,808)
Net loss per share, basic and diluted$(0.42)$(3.72)
Weighted-average shares outstanding, basic and diluted44,070,974 3,171,254 
The accompanying notes are an integral part of these condensed consolidated financial statements.
2





                    

SENTI BIOSCIENCES, INC.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(unaudited)
(in thousands, except share data)
  Redeemable Convertible
Preferred Stock
Common StockAdditional Paid-in CapitalOther Comprehensive IncomeAccumulated
Deficit
Total
Stockholders’
Equity (Deficit)
SharesAmountSharesAmount
Balance as of December 31, 2021
19,517,988$171,833 2,972,409 $ $3,619 $ $(115,076)$(111,457)
Exercise of common stock options— — 172,606 — 422 — — 422 
Vesting of early exercise of common stock options— — 143,524 — 375 — — 375 
Stock-based compensation expense— — — — 661 — — 661 
Net loss— — — — — — (11,808)(11,808)
Balance as of March 31, 2022
19,517,988$171,833 3,288,539 $ $5,077 $ $(126,884)$(121,807)
The accompanying notes are an integral part of these condensed consolidated financial statements.




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SENTI BIOSCIENCES, INC.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(unaudited)
(in thousands, except share data)
  Redeemable Convertible
Preferred Stock
Common StockAdditional Paid-in CapitalOther Comprehensive IncomeAccumulated
Deficit
Total
Stockholders’
Equity (Deficit)
SharesAmountSharesAmount
Balance as of December 31, 2022
 $ 44,062,534 $4 $300,544 $1 $(173,286)$127,263 
Vesting of early exercise of common stock options— — 12,660 — 34 — — 34 
Stock-based compensation expense— — — 3,763 — — 3,763 
Unrealized gain on investments— — — — — 2 — 2 
Net loss— — — — — — (18,722)(18,722)
Balance as of March 31, 2023
$ 44,075,194 $4 $304,341 $3 $(192,008)$112,340 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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SENTI BIOSCIENCES, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Three Months Ended March 31,
20232022
Cash flows from operating activities
Net loss$(18,722)$(11,808)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation467 240 
Amortization of operating lease right-of-use assets462 770 
Accretion of discount on short-term investments(572) 
Change in fair value of contingent earnout liability(59) 
Stock-based compensation expense3,763 661 
Loss on write-off of fixed assets 12 
Interest income accrued and not received(30) 
Changes in assets and liabilities:
Accounts receivable(135)53 
Prepaid expenses and other assets(402)(381)
Accounts payable280 (164)
Accrued expenses and other current liabilities(1,846)(1,413)
Deferred revenue(392)(453)
Operating lease liabilities882 2,424 
Net cash from operating activities(16,304)(10,059)
Cash flows from investing activities
Purchases of short-term investments(17,990) 
Maturities of short-term investments15,000  
Purchases of property and equipment(6,507)(7,380)
Net cash from investing activities(9,497)(7,380)
Cash flows from financing activities
Proceeds from issuance of common stock upon exercise of stock options 140 
Principal finance lease payments(35) 
Payment of deferred transaction costs related to Merger (595)
Net cash from financing activities(35)(455)
Net decrease in cash and cash equivalents(25,836)(17,894)
Cash, cash equivalents, and restricted cash, beginning of period60,987 59,291 
Cash, cash equivalents, and restricted cash, end of period$35,151 $41,397 
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents$31,600 $38,140 
Restricted cash3,551 3,257 
Total cash, cash equivalents and restricted cash$35,151 $41,397 
Supplemental disclosures of noncash financing and investing items
Purchases of property and equipment in accounts payable and accrued expenses$4,758 $8,920 
Merger and related PIPE financing costs included in accounts payable and accrued expenses$ $2,462 
Receivables in transit from issuance of common stock upon exercise of stock options$ $306 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)


1. Organization and Description of Business
Senti Biosciences, Inc. and its subsidiaries (the “Company” or “Senti”), is a biotechnology company that was founded to create a new generation of smarter medicines that outmaneuver 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 what the Company refers to as “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 defined below, the “Reverse Recapitalization”)). As a result of the Merger, Dynamics was renamed Senti Biosciences, Inc.
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 studies and has not realized substantial revenues from its planned principal operations. To date, the Company raised aggregate gross proceeds of $298.8 million from the Merger and PIPE Financing, the issuance of shares of our redeemable convertible preferred stock, the issuance of convertible notes and, to a less extent, through collaboration agreements and government grants.
At March 31, 2023 and December 31, 2022, the Company had an accumulated deficit of $192.0 million and $173.3 million, respectively. The Company’s net losses were $18.7 million and $11.8 million for the three months ended March 31, 2023 and 2022, 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.
As of March 31, 2023 and December 31, 2022, the Company had cash, cash equivalents and short-term investments of $76.1 million and $98.6 million, respectively. As of May 9, 2023, the issuance date of the condensed consolidated financial statements as of for the three months ended March 31, 2023, there is uncertainty about whether the Company’s combined cash, cash equivalents, and short-term investments will be sufficient to fund operations, including clinical trial expenses and capital expenditure requirements, beyond twelve months from the issuance date of these financial statements and therefore the Company concluded that substantial doubt existed about the Company’s ability to continue as a going concern.
The Company’s continued existence is dependent upon management’s ability to raise capital and develop profitable operations. Management is devoting substantially all of its efforts to developing its business and raising capital and there can be no assurance that the Company’s efforts will be successful. No assurance can be given that management’s actions will result in profitable operations or the meeting of ongoing liquidity needs.
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to 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 condensed 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. We have one business activity and operate in one reportable segment.
Unless otherwise noted, the Company has retroactively adjusted all common and preferred share and related price information to give effect to the exchange ratio established in the Merger Agreement.
Use of Estimates
The preparation of financial statements in conformity with 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 condensed 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 contingent earnout, the valuation of convertible notes, the valuation of common and redeemable convertible preferred stock, the valuation of preferred stock tranche liability, standalone selling price (“SSP”) 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.
Unaudited Interim Condensed Consolidated Financial Statements
The accompanying interim condensed consolidated financial statements and the related footnote disclosures are unaudited. These unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2023 and its results of operations for the three months ended March 31, 2023 and 2022, and cash flows for the three months ended March 31, 2023 and 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ended December 31, 2023 or any other period. The December 31, 2022 year-end condensed consolidated balance sheet was derived from audited annual financial statements but does not include all disclosures from the annual financial statements.
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 and the related notes included in the Company’s Form 10-K, filed with the SEC on March 22, 2023, which provides a more complete discussion of the Company’s accounting policies and certain other information. There have been no material changes to the Company’s significant accounting policies as of and for the three months ended March 31, 2023, as compared to the significant accounting policies described in the Company’s audited annual consolidated financial statements as of and for the year ended December 31, 2022, except as discussed below.
Recent Accounting Standards
The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

3. Fair Value Measurements
The following tables summarize the estimated value of cash equivalents and restricted cash (in thousands):
March 31, 2023
Adjusted CostUnrealized GainUnrealized LossEstimated Fair ValueCash and cash equivalentsRestricted cashShort-term investments
Cash$46 $— $— $46 $46 $ $ 
Level 1:
Money market funds35,105 — — 35,105 31,554 3,551  
Subtotal35,105 — — 35,105 31,554 3,551  
Level 2:
U.S. Treasury securities11,380 2  11,382   11,382 
U.S. agency securities13,744 3 (1)13,746   13,746 
Commercial Paper17,381   17,381   17,381 
Corporate debt securities1,998  (1)1,997   1,997 
Subtotal44,503 5 (2)44,506   44,506 
Total$79,654 $5 $(2)$79,657 $31,600 $3,551 $44,506 
December 31, 2022
Adjusted CostUnrealized GainUnrealized LossEstimated Fair ValueCash and cash equivalentsRestricted cashShort-term investments
Level 1:
Money market funds$45,412 $— $— $45,412 $42,046 $3,366 $ 
Subtotal45,412 — — 45,412 42,046 3,366  
Level 2:
U.S. Treasury securities14,866 4 (3)14,867   14,867 
U.S. agency securities5,938   5,938 3,983  1,955 
Commercial Paper28,122   28,122 5,994  22,128 
Corporate debt securities7,590 1 (1)7,590 5,598  1,992 
Subtotal56,516 5 (4)56,517 15,575  40,942 
Total$101,928 $5 $(4)$101,929 $57,621 $3,366 $40,942 
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.
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

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, 2022
$(227)
Change in fair value included in other income (expense)59 
Fair value as of March 31, 2023
$(168)
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 6, Stockholders’ Equity (Deficit), for further details of the Contingent Earnout.
4. Other Financial Statement information
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
March 31,December 31,
20232022
Prepaid expenses (including prepaid rent)$2,202 $1,871 
Deposits1,300 1,418 
Other 112 101 
Total prepaid expenses and other current assets$3,614 $3,390 
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
March 31,December 31,
20232022
Lab equipment$8,474 $8,265 
Leasehold improvements1,869 1,869 
Computer equipment and software390 389 
Furniture and fixtures326 326 
Construction in progress51,347 48,273 
Property and equipment at cost62,406 59,122 
Less: accumulated depreciation(3,419)(2,986)
Property and equipment, net$58,987 $56,136 
Depreciation totaled $0.5 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively.
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
March 31,December 31,
20232022
Accrued professional and service fees related to facility construction$3,990 $7,342 
Accrued employee-related expenses1,799 3,743 
Accrued professional and service fees other1,749 1,750 
Other accrued expenses53 29 
Total accrued expenses and other current liabilities$7,591 $12,864 
5. Operating Leases
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”) that commenced on July 30, 2021, and is expected to be placed into service in June 2023. The corporate headquarters 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 provides for a tenant improvement allowance of up to $17.5 million for the costs relating to the design, permitting and construction of the improvements, to be disbursed by the landlord no later than December 31, 2023. The Company is 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 is 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 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:
Three Months Ended March 31,
20232022
Operating lease cost$1,309 $1,326 
Short-term lease cost31 2 
Variable lease cost244 172 
Total lease cost$1,584 $1,500 

Three Months Ended March 31,
20232022
Other information:
Operating cash flows net inflows and (outflows) from operating lease$37$1,874
ROU assets obtained in exchange for operating lease obligations (including remeasurement of ROU and lease liabilities due to changes in the timing of receipt of lease incentives)$(51)$239
Weighted-average remaining lease term8.0 years7.9 years
Weighted-average discount rate9.1%9.1%
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

For the three months ended March 31, 2023 and 2022, the Company received $1.0 million and $2.5 million, respectively, of the $17.5 million tenant improvement allowance. Through March 31, 2023, the Company utilized $15.1 million of the tenant improvement allowance inception-to-date.
As of March 31, 2023 and 2022, amounts disclosed for ROU assets obtained in exchange for lease obligations include amounts added to the carrying amount of ROU assets resulting from lease modifications and reassessments.
Maturities of the Company’s lease liabilities as of March 31, 2023, were as follows (in thousands):
2023, for the remainder of the year$5,307 
20247,254 
20257,478 
20267,712 
20275,769 
Thereafter24,384 
Total undiscounted lease payments57,904 
Less imputed interest(17,637)
Tenant improvement allowance remaining(2,345)
Total lease liabilities$37,922 
6. Stockholders’ Equity (Deficit)
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 preferred stock with respect to dividend rights and rights upon liquidation, winding up, and dissolution of the Company; although, no preferred stock is outstanding as of March 31, 2023 and December 31, 2022. Through March 31, 2023, no cash dividends have been declared or paid.
At March 31, 2023 and December 31, 2022, the Company was authorized to issue 500,000,000 shares of common stock, all at a par value of $0.0001 per share, and had reserved the following shares for future issuance:
March 31,December 31,
20232022
Common Stock Purchase Agreement8,327,0498,327,049
Common stock options issued and outstanding 11,792,9089,875,675
RSUs issued and outstanding388,322447,948
Common stock shares available for future issuance under equity plans 3,299,2662,948,472
Common stock shares available for future issuance under the 2022 Employee Stock Purchase Plan (the "ESPP") 923,307481,627
Contingent earnout common stock2,000,0002,000,000
Unvested early exercised common stock 92,840105,500
Total26,823,69224,186,271
Preferred Stock
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 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. There were
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

10,000,000 shares designated as preferred stock and none were outstanding as of March 31, 2023 and December 31, 2022.
Common Stock Purchase Agreement
On August 31, 2022, the Company entered into a Common Stock Purchase Agreement and a Registration Rights Agreement (collectively referred to as the “Purchase Agreement”) with Chardan Capital Markets LLC (“Chardan”). Pursuant to the Purchase Agreement, the Company has 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 may not issue to Chardan under the Purchase Agreement more than 8,727,049 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, upon execution of the Purchase Agreement, the Company issued 100,000 shares of its common stock to Chardan and paid a $0.4 million document preparation fee. Upon execution of the Purchase Agreement, the Company recognized an expense of $0.7 million within general and administrative expenses in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss for the Chardan related costs and legal fees incurred in connection with the agreement.
Other than the issuance of the commitment shares of the Company’s common stock to Chardan, the Company issued 300,000 Class A common stock shares up until December 31, 2022 aggregating to net proceeds of $0.7 million, under the Purchase Agreement. There were no shares issued within three months ended March 31, 2023.
Contingent Earnout Equity
Following the closing of the Merger, former holders of Legacy Senti common stock and preferred stock may receive up to 2,000,000 additional shares of the Company’s common stock in the aggregate, in two equal tranches of 1,000,000 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 and second tranche term is two and three years, respectively, from the closing of the Merger. If there is a change of control within the three-year 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 Company shall issue the earnout shares to the holders of Legacy Senti common stock and preferred stock.
The estimated fair value of the total Contingent Earnout Shares at the Closing on June 8, 2022, was $9.8 million based on a Monte Carlo simulation valuation model. Of this amount, $9.7 million was accounted for as a Contingent Earnout Liability because the triggering events that determine the number of Contingent Earnout Shares required to be issued include events that are not solely indexed to the common stock of the Company. The remaining balance of $0.1 million relates to holders of Legacy Senti common stock that are subject to repurchase were accounted for as stock-based compensation expense and recorded as an expense, as there was no remaining service period.
The Contingent Earnout Liability was remeasured to fair value as of March 31, 2023, resulting in the recording of a non-cash gain of $0.1 million for the three months ended March 31, 2023, classified within change in fair value of contingent earnout liability in the condensed consolidated statements of operations and comprehensive loss.
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

Assumptions used in the valuation are described below:
March 31,December 31,
20232022
Current stock price$1.18$1.41
Expected share price volatility95.0%85.0%
Risk-free interest rate4.1%4.3%
Estimated dividend yield0.0%0.0%
Expected term (years)2.22.4

7. Revenue
The Company’s revenue consists of amounts received related to research services provided to customers.
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 will be 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 is 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. In December 2022, the Company amended the research collaboration and license agreement to allow for an increase in budget and a two-month 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 was accounted for as a contract modification and a cumulative catch-up of $(0.7) million was recognized in December 2022. As of March 31, 2023 and December 31, 2022, there was a total of $0.4 million and $0.8 million, respectively, remaining of the upfront payment to be recognized over the remaining period of the research program.
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 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
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

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 will recognize the transaction price as research and development services are 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.
For the three months ended March 31, 2023 and 2022, the Company recorded revenue, which was previously included in deferred revenue at the beginning of each period, of $0.4 million and $0.4 million, respectively. Contract asset balances related to unbilled revenue for our collaboration agreements were zero as of March 31, 2023 and 2022, and are presented within prepaid expenses and other current assets on the condensed consolidated balance sheets.
Grant Income
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.
Entity-wide information
During the three months ended March 31, 2023, Customers A and B accounted for 81% and 19%, respectively, of revenue. During the three months ended March 31, 2022, Customers A and B accounted for 77% and 23%, respectively, of revenue.
All revenues were generated in the United States for the three months ended March 31, 2023 and 2022.
8. 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 option 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.
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

Stock 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 2,492,735 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 March 31, 2023, the total number of shares of common stock available for issuance under the 2022 Plan is 2,168,837.
2022 Inducement Equity Plan
On August 5, 2022, the Company adopted a 2022 Inducement Equity Plan (the “2022 Inducement Plan”). The 2022 Plan provides 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 persons not previously an employee of the Company and its affiliates.
The exercise price of an option 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 2,000,000 shares of common stock for issuance under the 2022 Inducement Plan.
As of March 31, 2023, the total number of shares of common stock available for issuance under the 2022 Inducement Plan is 1,130,429.
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.
The Company initially reserved 592,584 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.
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

As of March 31, 2023, the total number of shares of common stock available for issuance under the ESPP is 923,307.
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 OptionsWeighted-Average Exercise PriceWeighted-Average
Remaining Contractual Life (Years)
Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2022
4,191,426 $3.18 9.1$6 
Granted2,189,700 $1.81 
Forfeited(203,367)$3.15 
Outstanding at March 31, 2023
6,177,759 $2.69 8.9$5 
Vested and exercisable at March 31, 2023
972,055 $3.97 7.5$5 
The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2023 and 2022 were $1.30 and none, respectively. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2023 and 2022 were none and $1.2 million, respectively.
As of March 31, 2023, the unrecognized stock-based compensation expense related to stock options was approximately $9.5 million, expected to be recognized over a weighted-average period of 2.8 years.
Early Exercise of Stock Options into Restricted Stock
For the three months ended March 31, 2023 and 2022, the Company issued zero shares of common stock upon exercise of unvested stock options. As of March 31, 2023 and December 31, 2022, 92,840 and 105,500 shares were held by employees subject to repurchase at an aggregate price of $0.2 million and $0.3 million, respectively.
Performance Awards
In connection with the Merger, on December 19, 2021, Legacy Senti approved 8,400,892 performance award options 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 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 6,796,074 awards were granted on June 8, 2022. Refer to Note 6, Stockholders’ Equity (Deficit), for further details of the shares of common stock authorized.
Number of OptionsWeighted-Average Exercise PriceWeighted-Average
Remaining Contractual Life (Years)
Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2022
5,368,501 $9.92 9.0$— 
Forfeited(69,100)$9.92 
Outstanding at March 31, 2023
5,299,401 $9.92 8.5$— 
Vested and exercisable at March 31, 2023
334,586 $9.92 7.1$— 
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

The were no performance based options granted or exercised during the three months ended March 31, 2023 and 2022.
As of March 31, 2023, the unrecognized stock-based compensation expense related to performance based options was approximately $10.4 million, expected to be recognized over a weighted-average period of 1.8 years.
Market Awards
In connection with the Business Combination Agreement with DYNS, on December 19, 2021, Legacy Senti approved 605,451 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 315,748 awards were granted on June 8, 2022. Refer to Note 6, Stockholders’ Equity (Deficit), for further details of the shares of common stock authorized.
The were no market based options granted or exercised during the three months ended March 31, 2023 and 2022.
As of March 31, 2023, the unrecognized stock-based compensation expense related to market based options was approximately $0.6 million, expected to be recognized over a weighted-average period of 1.1 years.
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 UnitsWeighted-Average Grant Date Fair Value
Outstanding at December 31, 2022
447,948 $2.50 
Forfeited(59,626)$2.50 
Outstanding at March 31, 2023
388,322 $2.50 
As of March 31, 2023, the unrecognized stock-based compensation expense related to restricted stock units was approximately $0.7 million, expected to be recognized over a weighted-average period of 1.5 years.
Stock-Based Compensation Expense
In determining the fair value of the stock-based awards, 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
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SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

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.
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:
Three Months Ended March 31,
20232022
Expected term (in years)6.0
Expected volatility82%
Risk-free interest rate3.5%
Dividend yield
Total stock-based compensation expense was as follows (in thousands):
Three Months Ended March 31,
20232022
General and administrative$3,239 $458 
Research and development524 203 
Total stock-based compensation expense$3,763 $661 

9. Income Tax
No provision for income taxes was recorded for the three months ended March 31, 2023 and 2022, respectively. Deferred tax assets generated from the Company’s net operating losses have been fully reserved, as the Company believes it is not more likely than not that the benefit will be realized due to the Company’s cumulative losses generated to date.
10. 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 loss per share is as follows:
Three Months Ended March 31,
20232022
Net loss$(18,722)$(11,808)
Weighted-average shares used in computing net loss per share, basic and diluted44,070,974 3,171,254 
Net loss per share attributable to common stockholders, basic and diluted