Company: SION
Filing Date: 2025-01-17
Form Type: S-1
Source: 0001193125-25-008474
Chunk: 148

Company: Sionna Therapeutics, Inc.
Filing Date: 2025-01-17
Form: S-1
Chunk 148
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 subject to negotiation, vary from contract-to-contract and may result in uneven payment flows. In circumstances where amounts
have been paid in excess of costs incurred, we record a prepaid expense.

Contingent milestone payments, if any, are expensed when the milestone
results are probable and estimable, which is generally upon the achievement of the milestone.

Although we do not expect our estimates to be
materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any
particular period. To date, there have been no material differences between our estimates of such expenses and the amounts incurred.

Stock-Based Compensation Expense

We measure stock-based awards granted to employees, directors and non-employees based on
their fair value on the date of the grant. We recognize compensation expense for awards to employees and directors over the requisite service period, which is generally the vesting period of the respective award. Compensation expense for awards to non-employees with service-based vesting conditions is recognized in the same manner as if we had paid cash in exchange for the goods or services, which is generally over the vesting period of the award. For
stock-based awards with service-based vesting conditions, we recognize compensation expense using the straight-line method. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model,
which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option and our
expected dividend yield. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. These inputs are subjective and generally require judgment to develop. See Note 12,
“Stock-based Compensation” in our annual consolidated financial statements included elsewhere in this prospectus for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing
model to determine the estimated fair value of our stock options granted for the nine-month periods ended September 30, 2024 and 2023 and the years ended December 31, 2023 and 2022. For awards to
non-employees, the expected term of the option is equal to the contractual term of the non-employees’ service agreement. The fair value of each restricted common
stock award is estimated