Senti Biosciences(US:SNTI)2024-08-13 20:19PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Senti Biosciences' cash decreased to $15.9 million, raising substantial doubt about its going concern ability - The company's cash and cash equivalents decreased by 55.9% from $35.9 million at the end of 2023 to $15.9 million as of June 30, 2024428 Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $15,860 | $35,926 | | Total current assets | $44,339 | $71,200 | | Total assets | $86,913 | $119,484 | | Total current liabilities | $9,068 | $12,672 | | Total liabilities | $42,765 | $52,571 | | Total stockholders' equity | $44,148 | $66,913 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total revenue | $0 | $2,223 | | Research and development | $17,929 | $13,936 | | General and administrative | $11,728 | $18,440 | | Loss from operations | ($29,657) | ($30,153) | | Net loss from continuing operations | ($23,314) | ($28,103) | | Net loss from discontinued operations | $0 | ($9,316) | | Net loss | ($23,314) | ($37,419) | | Net loss per share, basic and diluted | ($5.10) | ($8.47) | - The company concluded that substantial doubt exists about its ability to continue as a going concern, as its cash and cash equivalents may not be sufficient to fund operations for the next twelve months28 - Subsequent to the quarter end, the company effected a 1-for-10 reverse stock split on July 17, 2024, regained compliance with Nasdaq's minimum bid price rule on August 2, 2024, and executed an agreement for an $8 million grant from CIRM on August 3, 2024123124125 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a history of losses, negative cash flows, and $15.9 million cash, raising going concern doubts - The company's strategic plan is to focus resources on the clinical development of SENTI-202, for which an IND was cleared by the FDA in December 2023, and to partner its SENTI-301A program in China with Celest139 Comparison of Results of Operations (in thousands) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Total revenue | $0 | $2,223 | ($2,223) | | Research and development | $17,929 | $13,936 | $3,993 | | General and administrative | $11,728 | $18,440 | ($6,712) | | Net loss from continuing operations | ($23,314) | ($28,103) | $4,789 | | Net loss from discontinued operations | $0 | ($9,316) | $9,316 | | Net loss | ($23,314) | ($37,419) | $14,105 | - The increase of $4.0 million in R&D expenses for the first six months of 2024 was primarily due to a $6.1 million increase in professional services costs, partially offset by decreases in other areas165 - The decrease of $6.7 million in G&A expenses was mainly due to a $9.0 million decrease in personnel-related expenses166 - As of June 30, 2024, the company had $15.9 million in cash and cash equivalents172 - Management has concluded that substantial doubt exists about the company's ability to fund operations beyond twelve months from the report's issuance date and is actively pursuing additional financing181 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is not required to provide this information as it qualifies as a "smaller reporting company" - As a "smaller reporting company," Senti Biosciences is not required to provide quantitative and qualitative disclosures about market risk193 Item 4. Controls and Procedures Disclosure controls were ineffective due to a material weakness in finance and accounting resources; remediation efforts are underway - The company has concluded that its disclosure controls and procedures are not effective as of the end of the period covered by this report195 - A material weakness was identified related to a lack of sufficient and adequate resources in the finance and accounting function, resulting in ineffective process level control activities over non-routine, unusual or complex transactions195 - Remediation efforts are underway, including engaging a professional accounting services firm, hiring personnel with appropriate experience, and enhancing internal controls around complex accounting areas196 PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not aware of any legal proceedings expected to have a material adverse effect on its business or financials - The Company is not currently party to any legal proceedings that are expected to have a material adverse effect on its business201 Item 1A. Risk Factors Substantial risks include going concern doubts, material financial control weaknesses, unproven technology, and uncertain clinical development - The company is an early-stage clinical biotechnology company with a history of losses and expects to incur significant losses for the foreseeable future, raising substantial doubt about its ability to continue as a going concern203204 - A material weakness in internal control over financial reporting has been identified, which could adversely affect the ability to accurately report financial results204223 - The company's gene circuit platform technologies are novel and unproven, which makes predicting the time, cost, and success of product development and regulatory approval difficult208261 - The company's lead product candidate, SENTI-202, only recently entered a Phase 1 clinical trial, and the rest of the pipeline is in preclinical development, facing high risks of failure or delays205 - There are risks associated with the GeneFab transaction, including the potential failure to receive all anticipated payments or achieve all anticipated benefits206299 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the reported period561 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans or other trading arrangements during Q2 2024 - No directors or officers adopted or terminated any Rule 10b5-1 trading plans or other trading arrangements during the second quarter of 2024562 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate amendments, agreements, and officer certifications - Exhibits filed include amendments to the Certificate of Incorporation for officer exculpation and the reverse stock split, a sublease agreement with GeneFab, an amended purchase agreement with Chardan, and consulting agreements564