Correspondence 0001193125-25-012256 from Sionna Therapeutics, Inc. (SION) (CIK 0002036042) (SION)
Sionna Therapeutics, Inc. (SION) (CIK 0002036042)
Date: Jan. 24, 2025 · CIK: 0002036042 · Accession: 0001193125-25-012256
AI Filing Summary & Sentiment
File numbers found in text: 333-284352
Referenced dates: October 10, 2024
Letter
VIA EDGAR Division of Corporation Finance Office of Life Sciences Attention: Tamika Sheppard, Laura Crotty, Jenn Do and Angela Connell Registration Statement on Form S-1 File No. 333-284352 CIK No. 0002036042 Rule 83 Confidential Treatment Request by Sionna Therapeutics, Inc.
Dear Ladies and Gentlemen:
On behalf of Sionna Therapeutics, Inc. (the “Company”), in response to comments from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) received by letter dated October 10, 2024 (the “Comment Letter”) relating to the Company’s Registration Statement on Form S-1, originally confidentially submitted to the Commission on September 12, 2024, and subsequently publicly filed by the Company with the Commission on January 17, 2025 (File No. 333-284352) (the “Registration Statement”), we submit this supplemental letter to address comment 16 of the Comment Letter.
Because of the commercially sensitive nature of information contained herein, this submission is accompanied by the Company’s request for confidential treatment for selected portions of this letter. The Company has concurrently filed a separate letter with the Office of Freedom of Information and Privacy Act Operations in connection with the confidential treatment request, pursuant to Rule 83 of the Commission’s Rules on Information and Requests, 17 C.F.R. § 200.83. For the Staff’s reference, we have enclosed a copy of the Company’s letter to the Office of Freedom of Information and Privacy Act Operations.
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
We confirm on behalf of the Company that, prior to circulating copies of the preliminary prospectus in connection with the offering, the Company will file a pre-effective amendment to the Registration Statement that will include all information other than information that may be excluded in reliance upon Rule 430A of Regulation C, and the final price range to be included in such amendment which will comply with the Staff’s interpretation regarding the parameters of a bona fide price range.
Prior to the effectiveness of the Registration Statement, the Company intends to implement a reverse stock split of its common stock, par value $0.001 per share (“Common Stock” and such reverse stock split, the “Stock Split”). The Company expects to reflect the Stock Split in a pre-effective amendment to the Registration Statement that includes the actual price range. For purposes of this letter, we have presented all dollar and per share amounts without giving effect to the Stock Split to be consistent with the current presentation in the Registration Statement.
The Company respectfully requests that the bracketed information contained in this letter be treated as confidential information pursuant to Rule 83 promulgated by the Commission, 17 C.F.R. §200.8, and that the Commission provide timely notice to Michael Cloonan before it permits any disclosure of the bracketed information in this letter.
For the convenience of the Staff, we have recited the prior comment from the Staff in the Comment Letter in italicized type and have followed the comment with the Company’s response.
16. Once you have an estimated offering price range, please explain to us how you determined the fair value of the common stock underlying your equity issuances and the reasons for any differences between the recent valuations of your common stock leading up to the initial public offering and the estimated offering price.
The Company respectfully submits the below additional information to assist the Staff in its review of the Company’s position with respect to its determination of the fair value of the Common Stock, underlying its outstanding equity awards and the reasons for the differences between the recent valuations of the Common Stock and the estimated offering price for its initial public offering (“IPO”).
Preliminary IPO Price Range
The Company advises the Staff that it estimates a preliminary price range of approximately $[***] to $[***] per share (the “Preliminary Price Range”) for its IPO, before giving effect to the Stock Split, resulting in a midpoint of the Preliminary Price Range of $[***] per share. The actual price range to be included in a subsequent amendment to the Registration Statement (which will comply with the Staff’s interpretation regarding the parameters of a bona fide price range) has not yet been determined and remains subject to adjustment based on factors outside of the Company’s control. However, the Company believes that the foregoing Preliminary Price Range will not be subject to significant change.
Determining the Fair Value of Common Stock Prior to the IPO
As there has been no public market for the Common Stock to date, the estimated fair value of the Common Stock has been determined by the Company’s board of directors (the “Board”) as of the grant date of each equity award, with input from management, considering the Company’s most recently available third-party valuations of the Common Stock, and the Board’s assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant.
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
The Company’s most recent third-party valuations of the Common Stock utilized by the Board in determining exercise prices at the time of each equity award were as follows:
Date of Third-Party Valuation
Date of Board Approval of Third-Party Valuation
Estimated Fair Market Value of Common Stock per Share
January 25, 2022
March 2, 2022
$ 4.18
February 13, 2024
March 13, 2024
$ 4.18
August 9, 2024
September 11, 2024
$ 5.53
October 29, 2024
November 14, 2024
$ 7.07
Equity Awards Between January 1, 2023 and January 24, 2025
The following table summarizes by grant date the number of shares subject to awards granted between January 1, 2023 and January 24, 2025, the per share exercise price of the awards and the fair value of Common Stock underlying the awards on each grant date:
Grant Date
Type of Award
Number of Shares Subject to Awards Granted
Per Share Exercise Price of Award
Per Share Fair Value of Common Stock on Grant Date
Per Share Estimated Fair Value of Award on Grant Date(1)
03/07/2023
Option
171,973
$ 4.18
$ 4.18
$ 3.43
06/08/2023
Option
74,700
$ 4.18
$ 4.18
$ 3.57
12/07/2023
Option
15,800
$ 4.18
$ 4.18
$ 3.65
03/13/2024
Option
2,383,590
$ 4.18
$ 4.18
$ 3.06
07/15/2024
Option
286,300
$ 4.18
$ 4.18
$ 3.07
09/11/2024
Option
65,200
$ 5.53
$ 5.53
$ 4.03
11/14/2024
Option
64,991
$ 7.07
$ 7.07
$ 5.14
11/22/2024
Option
28,150
$ 7.07
$ 7.07
$ 5.15
(1) The per share estimated fair value of options reflects the fair value of options granted on each grant date determined using the Black-Scholes option-pricing model.
Valuation Methodologies
The third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the “Practice Aid”). As disclosed in the Registration Statement, the Company’s equity value valuations were prepared using either an option pricing method (“OPM”), a market-adjusted equity approach based on a recent arms-length transaction, or a hybrid method, which is a combination of an OPM scenario and one or more scenarios using a probability-weighted expected return method (“PWERM”), with a near-term IPO scenario, a base case IPO scenario and a trade sale scenario.
The OPM treats common stock and redeemable convertible preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the redeemable convertible preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. A discount for lack of marketability (“DLOM”) of the common stock is then applied to arrive at an indication of value for the common stock.
The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the Company, assuming various outcomes. The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of 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
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 409A 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 date.
February 13, 2024 Valuation
The fair value of the Common Stock of $4.18 per share at February 13, 2024 was determined with the assistance of an independent third-party valuation firm and approved by the Board on March 13, 2024. This valuation was used to support the fair market value of the Common Stock in accordance with Section 409A of the IRC with respect to options granted on March 13, 2024 and July 15, 2024, along with other factors determined by the Board to be relevant at the time of each such grant of options.
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
The February 13, 2024 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 C redeemable convertible preferred s
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CORRESP 1 filename1.htm CORRESP Goodwin Procter LLP 100 Northern Avenue Boston, MA 02210 goodwinlaw.com +1 617 570 1000 January 24, 2025 FOIA CONFIDENTIAL TREATMENT REQUESTED The entity requesting confidential treatment is: Sionna Therapeutics, Inc. 21 Hickory Drive, Suite 500 Waltham, MA 02451 Telephone: (617) 819-2020 CERTAIN PORTIONS OF THIS LETTER HAVE BEEN OMITTED FROM THE VERSION FILED VIA EDGAR. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. INFORMATION THAT WAS OMITTED IN THE EDGAR VERSION HAS BEEN NOTED IN THIS LETTER WITH A PLACEHOLDER IDENTIFIED BY THE MARK “[***].” VIA EDGAR U.S. Securities and Exchange Commission Division of Corporation Finance Office of Life Sciences 100 F Street, N.E. Washington, D.C. 20549 Attention: Tamika Sheppard, Laura Crotty, Jenn Do and Angela Connell Re: Sionna Therapeutics, Inc. Registration Statement on Form S-1 File No. 333-284352 CIK No. 0002036042 Rule 83 Confidential Treatment Request by Sionna Therapeutics, Inc. Dear Ladies and Gentlemen: On behalf of Sionna Therapeutics, Inc. (the “Company”), in response to comments from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) received by letter dated October 10, 2024 (the “Comment Letter”) relating to the Company’s Registration Statement on Form S-1, originally confidentially submitted to the Commission on September 12, 2024, and subsequently publicly filed by the Company with the Commission on January 17, 2025 (File No. 333-284352) (the “Registration Statement”), we submit this supplemental letter to address comment 16 of the Comment Letter. Because of the commercially sensitive nature of information contained herein, this submission is accompanied by the Company’s request for confidential treatment for selected portions of this letter. The Company has concurrently filed a separate letter with the Office of Freedom of Information and Privacy Act Operations in connection with the confidential treatment request, pursuant to Rule 83 of the Commission’s Rules on Information and Requests, 17 C.F.R. § 200.83. For the Staff’s reference, we have enclosed a copy of the Company’s letter to the Office of Freedom of Information and Privacy Act Operations. 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 2 We confirm on behalf of the Company that, prior to circulating copies of the preliminary prospectus in connection with the offering, the Company will file a pre-effective amendment to the Registration Statement that will include all information other than information that may be excluded in reliance upon Rule 430A of Regulation C, and the final price range to be included in such amendment which will comply with the Staff’s interpretation regarding the parameters of a bona fide price range. Prior to the effectiveness of the Registration Statement, the Company intends to implement a reverse stock split of its common stock, par value $0.001 per share (“Common Stock” and such reverse stock split, the “Stock Split”). The Company expects to reflect the Stock Split in a pre-effective amendment to the Registration Statement that includes the actual price range. For purposes of this letter, we have presented all dollar and per share amounts without giving effect to the Stock Split to be consistent with the current presentation in the Registration Statement. The Company respectfully requests that the bracketed information contained in this letter be treated as confidential information pursuant to Rule 83 promulgated by the Commission, 17 C.F.R. §200.8, and that the Commission provide timely notice to Michael Cloonan before it permits any disclosure of the bracketed information in this letter. For the convenience of the Staff, we have recited the prior comment from the Staff in the Comment Letter in italicized type and have followed the comment with the Company’s response. 16. Once you have an estimated offering price range, please explain to us how you determined the fair value of the common stock underlying your equity issuances and the reasons for any differences between the recent valuations of your common stock leading up to the initial public offering and the estimated offering price. The Company respectfully submits the below additional information to assist the Staff in its review of the Company’s position with respect to its determination of the fair value of the Common Stock, underlying its outstanding equity awards and the reasons for the differences between the recent valuations of the Common Stock and the estimated offering price for its initial public offering (“IPO”). Preliminary IPO Price Range The Company advises the Staff that it estimates a preliminary price range of approximately $[***] to $[***] per share (the “Preliminary Price Range”) for its IPO, before giving effect to the Stock Split, resulting in a midpoint of the Preliminary Price Range of $[***] per share. The actual price range to be included in a subsequent amendment to the Registration Statement (which will comply with the Staff’s interpretation regarding the parameters of a bona fide price range) has not yet been determined and remains subject to adjustment based on factors outside of the Company’s control. However, the Company believes that the foregoing Preliminary Price Range will not be subject to significant change. Determining the Fair Value of Common Stock Prior to the IPO As there has been no public market for the Common Stock to date, the estimated fair value of the Common Stock has been determined by the Company’s board of directors (the “Board”) as of the grant date of each equity award, with input from management, considering the Company’s most recently available third-party valuations of the Common Stock, and the Board’s assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. 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 3 The Company’s most recent third-party valuations of the Common Stock utilized by the Board in determining exercise prices at the time of each equity award were as follows: Date of Third-Party Valuation Date of Board Approval of Third-Party Valuation Estimated Fair Market Value of Common Stock per Share January 25, 2022 March 2, 2022 $ 4.18 February 13, 2024 March 13, 2024 $ 4.18 August 9, 2024 September 11, 2024 $ 5.53 October 29, 2024 November 14, 2024 $ 7.07 Equity Awards Between January 1, 2023 and January 24, 2025 The following table summarizes by grant date the number of shares subject to awards granted between January 1, 2023 and January 24, 2025, the per share exercise price of the awards and the fair value of Common Stock underlying the awards on each grant date: Grant Date Type of Award Number of Shares Subject to Awards Granted Per Share Exercise Price of Award Per Share Fair Value of Common Stock on Grant Date Per Share Estimated Fair Value of Award on Grant Date(1) 03/07/2023 Option 171,973 $ 4.18 $ 4.18 $ 3.43 06/08/2023 Option 74,700 $ 4.18 $ 4.18 $ 3.57 12/07/2023 Option 15,800 $ 4.18 $ 4.18 $ 3.65 03/13/2024 Option 2,383,590 $ 4.18 $ 4.18 $ 3.06 07/15/2024 Option 286,300 $ 4.18 $ 4.18 $ 3.07 09/11/2024 Option 65,200 $ 5.53 $ 5.53 $ 4.03 11/14/2024 Option 64,991 $ 7.07 $ 7.07 $ 5.14 11/22/2024 Option 28,150 $ 7.07 $ 7.07 $ 5.15 (1) The per share estimated fair value of options reflects the fair value of options granted on each grant date determined using the Black-Scholes option-pricing model. Valuation Methodologies The third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the “Practice Aid”). As disclosed in the Registration Statement, the Company’s equity value valuations were prepared using either an option pricing method (“OPM”), a market-adjusted equity approach based on a recent arms-length transaction, or a hybrid method, which is a combination of an OPM scenario and one or more scenarios using a probability-weighted expected return method (“PWERM”), with a near-term IPO scenario, a base case IPO scenario and a trade sale scenario. The OPM treats common stock and redeemable convertible preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the redeemable convertible preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. A discount for lack of marketability (“DLOM”) of the common stock is then applied to arrive at an indication of value for the common stock. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the Company, assuming various outcomes. The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of 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 409A 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 date. February 13, 2024 Valuation The fair value of the Common Stock of $4.18 per share at February 13, 2024 was determined with the assistance of an independent third-party valuation firm and approved by the Board on March 13, 2024. This valuation was used to support the fair market value of the Common Stock in accordance with Section 409A of the IRC with respect to options granted on March 13, 2024 and July 15, 2024, along with other factors determined by the Board to be relevant at the time of each such grant of options. 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 5 The February 13, 2024 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 C redeemable convertible preferred s