Company: SION
Filing Date: 2025-01-24
Form Type: CORRESP
Source: 0001193125-25-012256
Chunk: 4

Company: Sionna Therapeutics, Inc.
Filing Date: 2025-01-24
Form: CORRESP
Chunk 4
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 each class of stock. The future value of the common stock under each outcome is discounted back to the date of the applicable valuation (each, a “ Valuation Date”) at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. A DLOM is then applied to arrive at an indication of value for the common stock. FOIA CONFIDENTIAL TREATMENT REQUESTED BY SIONNA THERAPEUTICS, INC.

Division of Corporation Finance

Office of Life Sciences

U.S. Securities and Exchange Commission

January 24, 2025

Page
4

The hybrid method is a hybrid between the PWERM and OPM, estimating the probability-weighted value across
multiple scenarios. When using the hybrid method, the third-party valuations considered three future-event scenarios: a near-term IPO scenario, a base case IPO scenario and a trade sale scenario also referred to as a market adjusted approach with
option pricing allocation. The equity value of the Company in the IPO scenarios was determined using a direct waterfall approach to allocate the value to the Common Stock. The IPO scenarios assumed that all shares of redeemable convertible preferred
stock would convert into shares of Common Stock and would no longer have the liquidation preferences and preferential rights attributable to the redeemable convertible preferred stock as compared to the Common Stock prior to the IPO. The guideline
initial public offering transactions considered in each of the IPO scenarios consist of biotechnology companies with recent initial public offerings. The valuation converted the Company’s estimated future value in an IPO to present value using
a risk-adjusted discount rate. The equity value for the trade sale scenario was estimated using the price of a recently issued preferred security or a market adjusted equity approach which was used to account for the incremental research and
development and operational expenses incurred from the prior Common Stock 409A valuation prepared, through the Valuation Date. The valuation utilized an OPM to quantify or attribute value to these economic rights of redeemable convertible preferred
stock as compared to the Common Stock, such as liquidation preferences, dividend provisions, and participation rights after liquidation preferences.

January 25, 2022 Valuation

The fair value of
the Common Stock of $4.18 per share at January 25, 2022 was determined with the assistance of an independent third-party valuation firm and approved by the Board on March 2, 2022. This valuation was used to support the fair market value of
the Common Stock in accordance with Section 409