Senti Biosciences, Inc. (NASDAQ:SNTI), a biotech firm specializing in biological products, has received a notice from Nasdaq regarding non-compliance with the exchange's audit committee requirements, as stated in an 8-K filing with the U.S. Securities and Exchange Commission.
The South San Francisco-based company disclosed on Monday that it currently does not meet Nasdaq Listing Rule 5605(c)(2)(A) due to having only two members on its audit committee following the resignation of Susan Berland from the Board on June 11, 2024. This situation has led to a notice from Nasdaq on October 22, 2024, indicating the company's failure to comply with the audit committee composition rules.
Nasdaq's rules require listed companies to have an audit committee composed of at least three members. Senti Biosciences has been granted a cure period to address this shortfall and regain compliance. The deadline for compliance is the earlier of the company's next annual stockholders' meeting or June 11, 2025; however, the company must address the issue by December 9, 2024, if the next annual meeting is held before that date.
The company has expressed its intent to fill the vacancy on the audit committee and regain compliance within the allotted cure period. The notice from Nasdaq does not immediately affect the trading of Senti Biosciences' common stock on The Nasdaq Capital Market.
This development follows the company's previous disclosure in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, and is part of a series of forward-looking statements regarding the company's plans to address the non-compliance issue. These statements, while based on current expectations, are subject to risks and uncertainties that could affect the company's business and financial results.
InvestingPro Insights
As Senti Biosciences (NASDAQ:SNTI) works to address its Nasdaq compliance issues, InvestingPro data provides additional context on the company's financial health. The company's market capitalization stands at a modest $9.89 million, reflecting its current challenges. InvestingPro Tips highlight that SNTI is "quickly burning through cash" and "suffers from weak gross profit margins," which aligns with the company's reported gross profit of -$35.8 million for the last twelve months as of Q2 2024.
The company's financial struggles are further emphasized by its negative revenue growth of -91.65% and an operating income margin of -18,017.46% over the same period. These figures underscore the importance of the audit committee in overseeing the company's financial reporting and internal controls during this critical time.
Despite these challenges, an InvestingPro Tip notes that SNTI's "liquid assets exceed short term obligations," which could provide some financial flexibility as the company works to regain Nasdaq compliance and improve its operational performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for SNTI, providing deeper insights into the company's financial position and market performance.
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