Full Press Release Details
SENTI BIOSCIENCES, INC.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||||
| Condensed Consolidated Financial Statements: | ||||
| Condensed Consolidated Balance Sheets | F-2 | |||
| Condensed Consolidated Statements of Operations and Comprehensive Loss | F-3 | |||
| Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders Deficit | F-4 | |||
| Condensed Consolidated Statements of Cash Flows | F-5 | |||
| Notes to Condensed Consolidated Financial Statements | F-6 |
SENTI BIOSCIENCES, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 38,140 | $ | 56,034 | ||||
| Trade and other receivables | 430 | 483 | ||||||
| Prepaid expenses and other current assets | 6,048 | 3,676 | ||||||
| Total current assets | 44,618 | 60,193 | ||||||
| Restricted cash | 3,257 | 3,257 | ||||||
| Property and equipment, net | 24,067 | 12,368 | ||||||
| Operating lease right-of-use assets | 20,178 | 20,708 | ||||||
| Other long-term assets | 186 | 176 | ||||||
| Total assets | $ | 92,306 | $ | 96,702 | ||||
| Liabilities and Stockholders Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 5,657 | $ | 5,187 | ||||
| Early exercise liability, current portion | 325 | 626 | ||||||
| Deferred revenue | 1,379 | 1,656 | ||||||
| Accrued expenses and other current liabilities | 8,979 | 5,331 | ||||||
| Operating lease liabilities | 1,799 | 1,743 | ||||||
| Total current liabilities | 18,139 | 14,543 | ||||||
| Operating lease liabilities, net of current portion | 23,596 | 20,988 | ||||||
| Deferred revenue, net of current portion | 176 | |||||||
| Early exercise liability, net of current portion | 545 | 619 | ||||||
| Total liabilities | 42,280 | 36,326 | ||||||
| Commitments and contingencies (Note 11) | ||||||||
| Redeemable convertible preferred stock (A and B), $0.0001 par value; 99,734,554 shares authorized at March 31, 2022 and December 31, 2021; 99,734,543 shares issued and outstanding at March 31, 2022 and December 31, 2021; aggregate liquidation preference of $163.8 million at March 31, 2022 and December 31, 2021 | 171,833 | 171,833 | ||||||
| Stockholders deficit: | ||||||||
| Common stock, $0.0001 par value; 138,000,000 shares authorized at March 31, 2022 and December 31, 2021; 16,804,476 and 15,189,091 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 1 | 1 | ||||||
| Additional paid-in capital | 5,076 | 3,618 | ||||||
| Other comprehensive income | ||||||||
| Accumulated deficit | (126,884 | ) | (115,076 | ) | ||||
| Total stockholders deficit | (121,807 | ) | (111,457 | ) | ||||
| Total liabilities, redeemable convertible preferred stock and stockholders deficit | $ | 92,306 | $ | 96,702 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
SENTI BIOSCIENCES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue: | ||||||||
| Contract revenue | $ | 854 | $ | 44 | ||||
| Grant income | 250 | 28 | ||||||
| Total revenue | 1,104 | 72 | ||||||
| Operating expenses: | ||||||||
| Research and development | 7,603 | 4,903 | ||||||
| General and administrative | 5,259 | 4,311 | ||||||
| Total operating expenses | 12,862 | 9,214 | ||||||
| Loss from operations | (11,758 | ) | (9,142 | ) | ||||
| Other income (expense): | ||||||||
| Interest income, net | 4 | 1 | ||||||
| Change in preferred stock tranche liability | (11,824 | ) | ||||||
| Other expense | (54 | ) | (37 | ) | ||||
| Total other income (expense), net | (50 | ) | (11,860 | ) | ||||
| Net loss and comprehensive loss | (11,808 | ) | (21,002 | ) | ||||
| Net loss per share, basic and diluted | $ | (0.73 | ) | $ | (1.44 | ) | ||
| Weighted-average shares outstanding, basic and diluted | 16,204,614 | 14,602,926 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
SENTI BIOSCIENCES, INC.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders Deficit
(in thousands, except share data)
| Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders Deficit | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance as of December 31, 2020 | 58,948,067 | $ | 89,662 | 14,504,193 | $ | 1 | $ | 1,043 | $ | (59,757 | ) | $ | (58,713 | ) | ||||||||||||||
| Issuance of Series B redeemable convertible preferred stock, net of preferred stock tranche liability of $33 thousand and issuance costs of $6 thousand | 1,420,426 | 2,294 | ||||||||||||||||||||||||||
| Issuance of common stock | 2,879,206 | 1,432 | 1,432 | |||||||||||||||||||||||||
| Early exercise of common stock options | (2,619,677 | ) | (1,329 | ) | (1,329 | ) | ||||||||||||||||||||||
| Stock-based compensation | 372 | 372 | ||||||||||||||||||||||||||
| Net loss | (21,002 | ) | (21,002 | ) | ||||||||||||||||||||||||
| Balance as of March 31, 2021 | 60,368,493 | $ | 91,956 | 14,763,722 | $ | 1 | $ | 1,518 | $ | (80,759 | ) | $ | (79,240 | ) |
| Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders Deficit | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance as of December 31, 2021 | 99,734,543 | $ | 171,833 | 15,189,091 | $ | 1 | $ | 3,618 | $ | (115,076 | ) | $ | (111,457 | ) | ||||||||||||||
| Issuance of common stock | 881,993 | 422 | 422 | |||||||||||||||||||||||||
| Vesting of early exercise of common stock options | 733,392 | 375 | 375 | |||||||||||||||||||||||||
| Stock-based compensation | 661 | 661 | ||||||||||||||||||||||||||
| Net loss | (11,808 | ) | (11,808 | ) | ||||||||||||||||||||||||
| Balance as of March 31, 2022 | 99,734,543 | $ | 171,833 | 16,804,476 | $ | 1 | $ | 5,076 | $ | (126,884 | ) | $ | (121,807 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
SENTI BIOSCIENCES, INC.
Condensed Consolidated Statements of Cash Flows
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (11,808 | ) | $ | (21,002 | ) | ||
| Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
| Depreciation | 240 | 165 | ||||||
| Amortization of operating lease right-of-use assets | 770 | 375 | ||||||
| Change in preferred stock tranche liability | 11,824 | |||||||
| Stock-based compensation expense | 661 | 372 | ||||||
| Loss on write-off of fixed assets | 12 | |||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 53 | 60 | ||||||
| Prepaid expenses and other assets | (381 | ) | (431 | ) | ||||
| Accounts payable | (164 | ) | 723 | |||||
| Accrued expenses and other current liabilities | (1,413 | ) | (98 | ) | ||||
| Deferred revenue | (453 | ) | ||||||
| Operating lease liabilities | 2,424 | (353 | ) | |||||
| Net cash from operating activities | (10,059 | ) | (8,365 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (7,380 | ) | (206 | ) | ||||
| Net cash from investing activities | (7,380 | ) | (206 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock upon exercise of stock options | 140 | 1,432 | ||||||
| Proceeds from issuance of Series B redeemable convertible preferred stock | 2,333 | |||||||
| Payment of issuance costs related to Series B redeemable convertible preferred stock | (42 | ) | ||||||
| Payment of deferred offering costs | (165 | ) | ||||||
| Payment of deferred transaction costs related to pending business combination | (595 | ) | ||||||
| Net cash from financing activities | (455 | ) | 3,558 | |||||
| Net change in cash and cash equivalents | (17,894 | ) | (5,013 | ) | ||||
| Cash, cash equivalents, and restricted cash, beginning of the year | 59,291 | 31,034 | ||||||
| Cash, cash equivalents, and restricted cash, end of the year | $ | 41,397 | $ | 26,021 | ||||
| Reconciliation of cash, cash equivalents and restricted cash | ||||||||
| Cash and cash equivalents | 38,140 | 25,524 | ||||||
| Restricted Cash | 3,257 | 497 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 41,397 | $ | 26,021 | ||||
| Supplemental disclosures of noncash financing and investing items | ||||||||
| Purchase of property and equipment in accounts payable and accrued expenses | $ | 8,920 | $ | 115 | ||||
| Recognition of Series B preferred stock tranche liability | 33 | |||||||
| Preferred stock issuance costs included in accounts payable and accrued expenses | 5 | |||||||
| Deferred transaction costs related to pending business combination in accounts payable and accrued expenses | 2,462 | 94 | ||||||
| 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.
SENTI BIOSCIENCES, INC.
Notes to Condensed Consolidated Financial Statements
Description of Business and Basis of Presentation
Senti Biosciences, Inc. or (the Company ), was incorporated under the
laws of the State of Delaware in June 2016, and is a biotechnology company that programs next-generation cell and gene therapies with what we refer to as gene circuits. The Company is headquartered in South San Francisco, California.
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 subsidiary. All intercompany balances and transactions have been eliminated in consolidation. We have one business activity and operate in one reportable segment.
Certain prior period amounts in Note 4, Other Financial Statement Information, have been reclassified to conform to the current
year s presentation.
Liquidity and 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. In addition, the Company has a limited operating history, has incurred recurring operating losses and negative cash flows from operations since
inception, has an accumulated deficit, has funded its operations primarily with proceeds from sale of redeemable convertible preferred stock and the issuance of convertible notes, and expects that it will continue to incur net losses and negative
cash flows from operations into the foreseeable future, particularly as the Company advances its preclinical activities and clinical trials for its product candidates in development.
The Company s continued existence is dependent upon management s ability to 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.
The accompanying condensed consolidated financial statements have been prepared on
a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. In 2021 and 2020, the Company received aggregate proceeds of $67.0 million and $30.0 million,
respectively, from the issuance of its Series B redeemable convertible preferred stock. Additionally, in 2020, the Company received $8.0 million from the issuance of promissory notes. As of March 31, 2022, the Company had an accumulated
deficit of $126.9 million, and cash, cash equivalents and restricted cash of $41.4 million. As of December 31, 2021, the Company had an accumulated deficit of $115.1 million, and cash, cash equivalents and restricted cash of
As of May 20, 2022, the issuance date of the condensed consolidated financial
statements as of and for the three months ended March 31, 2022, the Company expects that its cash and cash equivalents will not be sufficient to fund its operating expenses and capital expenditure requirements for at least one year from the
issuance date of the condensed consolidated financial statements and therefore the Company concluded that substantial doubt existed about the Company s ability to continue as a going concern.
The Company is seeking to complete a liquidity event via a special purpose acquisition company ( SPAC ) (see pending merger with
Dynamics Special Purpose Corp. below). Upon the completion of a qualified public offering on specified terms, the Company s outstanding convertible preferred stock will automatically convert into shares of common stock. These plans are
intended to mitigate the relevant conditions or events that raise substantial doubt about the Company s ability to continue as a going concern; however, as the plans are not entirely within the Company s control, management cannot assure
they will be effectively implemented. In the event the Company does not complete a SPAC merger, the Company expects to seek additional funding through private equity financings, debt financings, collaborations, licensing arrangements, and/or
strategic alliances. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other such arrangements. The terms of any financing may adversely affect the
holdings or the rights of the Company s stockholders. If the Company is unable to raise capital when needed, or on attractive terms, it could be forced to delay, reduce or eliminate its research or drug development programs or any future
commercialization efforts.
Pending Merger with Dynamics Special Purpose Corp.
On December 19, 2021, the Company entered into a Business Combination Agreement with Dynamics Special Purpose Corp. ( DYNS ), a
publicly-traded SPAC. Under the terms of the proposed transaction, DYNS will merge with the Company at an estimated combined enterprise value of approximately $276.0 million. The cash components of the transaction will be funded by DYNS
cash in trust of $230.0 million (assuming no redemptions) as well as a $66.8 million private placement of common stock at $10.00 per share from various accredited investors.
2. Summary of Significant Accounting Policies and Basis of Presentation
There have been no material changes to the Company s significant accounting policies as of and for the three months ended March 31,
2022, 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, 2021, except as discussed below.
Recently Adopted Accounting Pronouncements
In November 2021, the FASB issued Accounting Standards Update (ASU) No. 2021-10, Government
Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which requires business entities to provide certain disclosures when they have received government assistance and use a grant or contribution accounting model by
analogy to other accounting guidance. The ASU was effective January 1, 2022, and had no material impact on the Company s condensed consolidated financial statements and related disclosures.
In May 2021, the FASB issued ASU 2021-04 Earnings Per Share (Topic 260), Debt-Modifications and
Extinguishments (Subtopic 370-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity s Own Equity (Subtopic 815-40);
Issuer s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force), which clarifies and reduces diversity in an issuer s accounting for
modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The ASU was effective January 1, 2022, and had no material impact on the Company s condensed
consolidated financial statements and related disclosures.
In August 2020, the FASB issued ASU
No. 2020-06, Debt Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current
GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The ASU was effective
January 1, 2022, and had no material impact on the Company s condensed consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income
Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The ASU was
effective January 1, 2022, and had no material impact on the Company s condensed consolidated financial statements and related disclosures.
3. Fair Value Measurements
tables summarize the estimated value of cash equivalents and restricted cash (in thousands):
| March 31, 2022 | ||||||||||||||||
| Amortized Cost | Unrealized Gain | Unrealized Loss | Estimated Fair Value | |||||||||||||
| Cash equivalents: | ||||||||||||||||
| Money market fund | $ | 38,140 | $ | $ | $ | 38,140 | ||||||||||
| Restricted cash: | ||||||||||||||||
| Money market fund | 3,257 | 3,257 | ||||||||||||||
| Total | $ | 41,397 | $ | $ | $ | 41,397 |
| December 31, 2021 | ||||||||||||||||
| Amortized Cost | Unrealized Gain | Unrealized Loss | Estimated Fair Value | |||||||||||||
| Cash equivalents: | ||||||||||||||||
| Money market fund | $ | 56,034 | $ | $ | $ | 56,034 | ||||||||||
| Restricted cash: | ||||||||||||||||
| Money market fund | 3,257 | 3,257 | ||||||||||||||
| Total | $ | 59,291 | $ | $ | $ | 59,291 |
Financial assets and liabilities measured and recognized at fair value are as follows (in thousands):
| March 31, 2022 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents: | ||||||||||||||||
| Money market fund | $ | 38,140 | $ | $ | $ | 38,140 | ||||||||||
| Restricted cash: | ||||||||||||||||
| Money market fund | 3,257 | 3,257 | ||||||||||||||
| Total Assets | $ | 41,397 | $ | $ | $ | 41,397 |
| December 31, 2021 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents: | ||||||||||||||||
| Money market fund | $ | 56,034 | $ | $ | $ | 56,034 | ||||||||||
| Restricted cash: | ||||||||||||||||
| Money market fund | 3,257 | 3,257 | ||||||||||||||
| Total Assets | $ | 59,291 | $ | $ | $ | 59,291 |
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.
Preferred Stock Tranche Liability
The initial and subsequent fair values of the preferred stock tranche liability recognized in connection with the issuance of Series B
redeemable convertible preferred stock financing were determined with the assistance of a third-party valuation specialist using significant inputs not observable in the market which constitute Level 3 measurements within the fair value
The following reflects the significant quantitative inputs used in the valuation of the preferred stock tranche liability for
fiscal year 2020 on initial closing on October 22, 2020, second closing on December 28, 2020 and subsequent measurement as of December 31, 2020 using a Monte Carlo valuation model and/or Black-Scholes option pricing model:
| October 22, 2020 Initial Measurement Date | December 28 and December 31, 2020 Subsequent Measurement Dates | |||||||||||||||
| Tranche 2 Call Option | Tranche 3 Call Option | Tranche Features 2 and 3 Call Option | Tranche 2 and 3 Forward Contracts | |||||||||||||
| Estimated fair value of Series B redeemable convertible preferred stock(1) | $ | 1.25 | $ | 1.25 | $ | 1.62 | $ | 1.62 | ||||||||
| Discount rate | 0.12 | % | 0.17 | % | 0.11 | % | 0.11 | % | ||||||||
| Time to liquidity (years) | 0.9 | 2.2 | 0.5 | 0.5 | ||||||||||||
| Expected volatility | 54.9 | % | 54.9 | % | 73.8 | % | N/A | |||||||||
| Probability of call option and forward contract | N/A | N/A | 10 | % | 90 | % | ||||||||||
| Strike Price | $ | 1.6427 | $ | 1.6427 | $ | 1.6427 | $ | 1.6427 | ||||||||
| Value of each tranche feature | $ | 0.143 | $ | 0.199 | $ | 0.326 | $ | (0.023 | ) |
The weighted-average fair value of the tranche features on a per share basis was $0.172 as
of October 22, 2020, $0.012 as of December 28, 2020 and December 31, 2020 for a preferred stock tranche liability of $0.4 million as of December 31, 2020.
For the October 2020 issuance of Series B redeemable convertible preferred stock, certain investors received the right to participate in two
additional closings at a fixed price which were valued as a call option (Note 6) when issued.
In connection with the December 2020
issuance of Series B redeemable convertible preferred stock, certain investors of Series B redeemable convertible preferred stock that held 48.65% of the Company s outstanding shares and have 2 seats on the Company s board of directors,