Company: SION
Filing Date: 2025-01-24
Form Type: CORRESP
Source: 0001193125-25-012256
Chunk: 5

Company: Sionna Therapeutics, Inc.
Filing Date: 2025-01-24
Form: CORRESP
Chunk 5
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A of the Internal Revenue Code (the “IRC”) with respect to options granted on March 7, 2023, June 8, 2023 and December 7, 2023, along with other factors determined
by the Board to be relevant at the time of such grant of options.

The January 25, 2022 valuation applied the OPM to allocate the fair value of the
Company’s equity to various securities within the Company’s capital structure. Under this method, the OPM was built based on the Company’s capital structure and reasonable option model inputs. The equity value of the Company was
determined using a market approach such that the implied value per share of Series B redeemable convertible preferred stock (the “Series B Preferred Stock”) was equal to its original issue price paid by investors at the closing of
the Series B Preferred Stock financing on February 2, 2022. The 35.0% DLOM applied to the fair value of the Common Stock was estimated using a put option analysis.

The principal factors that contributed to the fair value of the Common Stock included the closing of the Series B Preferred Stock financing at a purchase
price of $9.762 per share. Given the proximity of the closing of the Series B Preferred Stock financing on February 2, 2022 to the Valuation Date, the valuation firm considered the OPM market approach to estimate the implied total equity value
of the Company. Under this method, an OPM allocation model was built based on the Company’s capital structure and reasonable option model inputs.

Between January 25, 2022 and December 7, 2023, the Company continued to operate its business in the ordinary course and there were no significant
developments in its business or capital structure. In particular, in advance of each of the option grants on March 7, 2023, June 8, 2023 and December 7, 2023, the Board considered, among other things, the Company’s capitalization
structure, cash resources and cash burn rate; the lack of significant developments in the Company’s business, including developments related to its pipeline; conditions affecting the liquidity of privately-held securities and the markets as a
whole; and conditions affecting the economic outlook for the biotechnology industry. After a review of such factors, the Company determined in good faith that there were no developments that would affect the valuation occurred from January 25,
2022 through December 7, 2023, including on each option grant