Company: SION
Filing Date: 2025-02-03
Form Type: S-1/A
Source: 0001193125-25-018825
Chunk: 331

Company: Sionna Therapeutics, Inc.
Filing Date: 2025-02-03
Form: S-1/A
Chunk 331
---
 Development Expenses and Accruals

Research and development costs include (i) employee-related expenses, including salaries, benefits, and stock-based compensation expense;
(ii) external research and development expenses incurred under arrangements with third parties, such as contract research organizations (“CRO”) agreements, contract development and manufacturing organizations (“CDMOs”),
consultants and scientific advisors; (iii) costs associated with preclinical and clinical activities and (iv) lab supplies, lab expenses and an allocation of rent, depreciation, and infrastructure.

The Company enters into contracts in the normal course of business with CROs, CDMOs, and other vendors to assist in research and development activities.
These contracts generally provide for termination at any time upon a certain amount of prior notice and payment of costs incurred.

The Company
recognizes research and development costs in the periods in which they are incurred. Typically, external expenses are recognized based on an evaluation of the progress to completion of specific tasks using information provided to the Company by
their service providers as of each reporting date. Advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses, which are expensed as the related goods are
delivered or the services are performed, or when it is no longer expected that the goods will be delivered, or the services rendered. Significant judgments and estimates are made in determining the accrued, or prepaid expense balances at the end of
any reporting period.

Asset Acquisitions and Acquired In-ProcessResearch and Development Expense

The Company accounts for acquisitions of assets or a group of assets that do not meet the definition of a business as asset acquisitions based on the
cost to acquire the asset or group of assets, which include certain transaction costs. In an asset acquisition, the cost to acquire is allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values as of
the acquisition date. No goodwill is recorded in an asset acquisition. Assets that are acquired in an asset acquisition for use in research and development activities that have an alternative future use are capitalized as in process research and
development (“IPR&D”). Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as research and development expense as of the acquisition date. The Company will recognize additional research and
development expenses in the future if and when the Company becomes obligated to make contingent milestone payments under the terms of the agreements by which it acquired the IPR&D assets.

F-11

Contingent consideration in the form of