Sionna Therapeutics Inc(SION) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information This section provides basic identification details for Sionna Therapeutics, Inc.'s Form 10-Q filing for the quarterly period ended June 30, 2025 Registrant Information This section provides the basic identification details for Sionna Therapeutics, Inc.'s Form 10-Q filing for the quarterly period ended June 30, 2025, including its address, telephone number, and Nasdaq Global Market trading symbol 'SION', classifying the company as a non-accelerated filer, a smaller reporting company, and an emerging growth company - Sionna Therapeutics, Inc. is filing its Quarterly Report on Form 10-Q for the period ended June 30, 2025[2] - The number of shares of registrant's common stock outstanding as of August 1, 2025, was 44,139,823[5] Trading Symbol Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, $0.001 par value per share | SION | The Nasdaq Global Market | Filer Status | Filer Status | | | :---------------------- | :--- | | Large accelerated filer | o | | Accelerated filer | o | | Non-accelerated filer | x | | Smaller reporting company | x | | Emerging growth company | x | Cautionary Note Regarding Forward-Looking Statements This section cautions readers about forward-looking statements in the report, which involve substantial risks and uncertainties Nature of Forward-Looking Statements This section highlights that the report contains forward-looking statements involving substantial risks and uncertainties, cautioning that actual results may differ materially - The Quarterly Report contains forward-looking statements about the company and its industry, involving substantial risks and uncertainties, made pursuant to safe harbor provisions[8] - Statements cover future results of operations, financial position, business strategy, product candidates, preclinical studies, clinical trials, research and development costs, regulatory approvals, commercial strategy, timing and likelihood of success, and management plans[8] - Actual results, performance, or achievements may be materially different from those expressed or implied by forward-looking statements due to known and unknown risks, uncertainties, and other important factors beyond the company's control[8] Key Areas of Forward-Looking Statements This section details specific forward-looking statements regarding R&D, clinical trials, regulatory approvals, funding, market potential, and intellectual property - Initiation, timing, progress, and results of research and development programs, preclinical studies, and clinical trials[10] - Ability of clinical trials to demonstrate safety and efficacy of product candidates[10] - Timing, scope, and likelihood of regulatory filings and approvals[10] - Implementation of business model and strategic plans for product candidates[10] - Ability to obtain additional cash and sufficiency of existing cash to fund operations[10] - Accuracy of estimates regarding expenses, future revenue, capital requirements, and financing needs[10] - Size and growth potential of markets for product candidates and manufacturing capabilities[10] - Scope of intellectual property protection[10] - Developments relating to competitors and industry[10] - Existing regulations and regulatory developments, including changes in U.S. federal policy[10] - Expectations regarding future events under collaboration and licensing agreements[10] - General economic, industry, and market conditions, including elevated interest rates and inflation[10] - Ability to attract and retain key personnel[10] - Expectations regarding emerging growth company status[10] - Anticipated use of existing cash, cash equivalents, and marketable securities[10] - These statements are based on current expectations and projections but are not guarantees of future performance and are subject to risks described in the 'Risk Factors' section[9][11] Note Regarding Trademarks This section clarifies the ownership and usage of trademarks within the report, including company and third-party marks Trademark Ownership and Usage This section clarifies Sionna Therapeutics, Inc.'s trademark ownership and usage, noting that other trademarks belong to third parties - Sionna Therapeutics, Inc. owns the trademarks SIONNA and SIONNA THERAPEUTICS, and other design trademarks[15] - The absence of ™ and ® symbols does not indicate a lack of trademark rights[15] - References to 'Sionna,' 'Company,' 'we,' 'us,' and 'our' refer to Sionna Therapeutics, Inc. and its subsidiary[16] Summary of Material Risks Associated with Our Business This section provides a high-level overview of the significant risks inherent in the company's business operations and financial outlook Key Business Risks This section summarizes key risks including operating losses, funding needs, dependence on NBD1 stabilizers, regulatory uncertainties, competition, and stock volatility - Incurred significant operating losses since inception, with net losses of $34.6 million and $20.4 million for the six months ended June 30, 2025, and 2024, respectively, and an accumulated deficit of $215.6 million as of June 30, 2025[18] - Requires substantial additional funding for product development and commercialization, with potential inability to raise capital on acceptable terms[19] - Substantially dependent on the success of NBD1 stabilizers; failure or delays would materially harm the business[19] - Developing combination treatments increases complexity and risk, including drug-drug interactions and unforeseen side effects[19] - Regulatory approval processes are lengthy, time-consuming, and unpredictable; failure to obtain approval would substantially harm the business[19] - Preclinical and interim clinical trial results are not necessarily predictive of later clinical trial outcomes[19] - Targeting the NBD1 domain of CFTR protein is novel, with no guarantee of successful product development[19] - Clinical trials may fail to demonstrate safety and efficacy, or identify serious adverse side effects[19] - Must prioritize development of certain product candidates due to limited resources, potentially missing more profitable opportunities[19] - Dependent on licensed intellectual property; loss of rights or breach of agreements could prevent development/commercialization[19] - Relies on third parties for manufacturing, increasing risks of insufficient quantities, unacceptable cost, or quality[19] - Inability to obtain, maintain, and enforce intellectual property rights could allow competitors to commercialize similar products[19] - Faces substantial competition, particularly from Vertex, which holds significant market share and greater resources[21] - The trading price of common stock may be volatile, leading to potential investment loss[21] Part I - Financial Information This section presents the unaudited interim condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements (Unaudited) This section presents the unaudited interim condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Assets (June 30, 2025) | Amount ($) | Assets (December 31, 2024) | Amount ($) | | :----------------------- | :--------- | :--------------------------- | :--------- | | Cash and cash equivalents | 40,985 | Cash and cash equivalents | 37,788 | | Marketable securities, current | 221,586 | Marketable securities, current | 109,750 | | Prepaid expenses and other current assets | 4,175 | Prepaid expenses and other current assets | 3,455 | | Total current assets | 266,746 | Total current assets | 150,993 | | Property and equipment, net | 2,246 | Property and equipment, net | 2,466 | | Marketable securities, noncurrent | 74,699 | Marketable securities, noncurrent | 20,505 | | Restricted cash | 962 | Restricted cash | 962 | | Operating lease right-of-use asset | 7,395 | Operating lease right-of-use asset | 7,832 | | Other assets | — | Other assets | 2,994 | | Total assets | 352,048 | Total assets | 185,752 | | Liabilities (June 30, 2025) | Amount ($) | Liabilities (December 31, 2024) | Amount ($) | | Accounts payable | 914 | Accounts payable | 1,186 | | Accrued expenses | 5,468 | Accrued expenses | 8,162 | | Operating lease liability, current | 1,168 | Operating lease liability, current | 1,072 | | Total current liabilities | 7,550 | Total current liabilities | 10,420 | | Operating lease liability, noncurrent | 8,069 | Operating lease liability, noncurrent | 8,677 | | Total liabilities | 15,619 | Total liabilities | 19,097 | | Total convertible preferred stock | — | Total convertible preferred stock | 330,368 | | Stockholders' equity (deficit) | 336,429 | Stockholders' equity (deficit) | (163,713) | | Total liabilities, convertible preferred stock and stockholders' equity (deficit) | 352,048 | Total liabilities, convertible preferred stock and stockholders' equity (deficit) | 185,752 | - Total assets increased significantly from $185.8 million at December 31, 2024, to $352.0 million at June 30, 2025, primarily driven by an increase in marketable securities[29] - Total liabilities decreased from $19.1 million to $15.6 million, while stockholders' equity shifted from a deficit of $163.7 million to a positive $336.4 million, largely due to the IPO and conversion of preferred stock[29] Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Research and development | $15,383 | $8,233 | $29,051 | $18,453 | | General and administrative | $6,523 | $3,059 | $12,514 | $5,986 | | Total operating expenses | $21,906 | $11,292 | $41,565 | $24,439 | | Loss from operations | $(21,906) | $(11,292) | $(41,565) | $(24,439) | | Interest income | $3,667 | $2,566 | $6,667 | $3,698 | | Other income | $171 | $174 | $348 | $342 | | Total other income | $3,838 | $2,740 | $7,015 | $4,040 | | Net loss | $(18,068) | $(8,552) | $(34,550) | $(20,399) | | Net loss per share, basic and diluted | $(0.41) | $(2.71) | $(0.98) | $(6.54) | | Weighted-average common shares outstanding | 44,116,997 | 3,159,815 | 35,404,928 | 3,121,225 | | Unrealized loss on marketable securities | $(118) | $(148) | $(185) | $(156) | | Comprehensive loss | $(18,186) | $(8,700) | $(34,735) | $(20,555) | - Net loss for the six months ended June 30, 2025, increased to $34.6 million from $20.4 million in the prior year, driven by higher operating expenses[31] - Research and development expenses increased by $10.6 million (57.4%) and general and administrative expenses increased by $6.5 million (109.0%) for the six months ended June 30, 2025, compared to the same period in 2024[31] - Interest income significantly increased to $6.7 million for the six months ended June 30, 2025, from $3.7 million in 2024, due to increased investment in debt securities following the IPO[31] Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) This section outlines changes in the company's equity structure, including preferred stock conversion and IPO impact - Upon the closing of the initial public offering in February 2025, all outstanding convertible preferred stock (Series Seed, A, B, C) automatically converted into 27,149,206 shares of common stock[36][42] - The IPO also resulted in the issuance of 12,176,467 shares of common stock, generating net proceeds of approximately $199.6 million[36][42] - Total stockholders' equity (deficit) dramatically improved from a deficit of $(163.7 million) at December 31, 2024, to a positive $336.4 million at June 30, 2025[36] Condensed Consolidated Statements of Cash Flows This section presents the inflows and outflows of cash from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(34,441) | $(23,320) | | Net cash used in investing activities | $(164,439) | $(152,548) | | Net cash provided by financing activities | $202,077 | $181,371 | | Net increase in cash, cash equivalents and restricted cash | $3,197 | $5,503 | - Net cash used in operating activities increased to $34.4 million for the six months ended June 30, 2025, from $23.3 million in the prior year, primarily due to increased net loss[38][118][119] - Net cash provided by financing activities was $202.1 million in 2025, mainly from the IPO, compared to $181.4 million in 2024 from Series C convertible preferred stock issuance[38][121] - Cash, cash equivalents, and restricted cash at the end of the period were $41.9 million in 2025, a slight decrease from $45.0 million in 2024[38] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements 1. Nature of the Business This note describes Sionna Therapeutics, Inc.'s core focus, recent corporate actions, and financial viability - Sionna Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing novel medicines to normalize CFTR protein function for cystic fibrosis patients[39] - The company completed a 1-for-1.4611 reverse stock split on January 31, 2025, and an Initial Public Offering (IPO) in February 2025, raising approximately $199.6 million net proceeds[41][42] - As of June 30, 2025, the company had an accumulated deficit of $215.6 million but believes its existing cash, cash equivalents, and marketable securities of $337.3 million will fund operations beyond twelve months[44][45] 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and recent pronouncements relevant to the financial statements - No material changes to significant accounting policies since the Annual Report on Form 10-K for the year ended December 31, 2024[46] - The interim financial statements are unaudited and prepared on the same basis as audited annual statements, reflecting normal recurring adjustments[47] - ASU 2023-09 (Income Taxes): Effective for annual periods after December 15, 2024; not expected to have a material impact[48] - ASU 2024-03 (Income Statement Expenses): Effective for annual periods after December 15, 2026; currently evaluating the effect[49] 3. Marketable Securities This note details the composition and fair value of the company's marketable securities portfolio Marketable Securities (in thousands) | Category | June 30, 2025 Fair Value ($) | December 31, 2024 Fair Value ($) | | :----------------------------- | :----------------------------- | :----------------------------- | | U.S. Treasury securities | 183,705 | 70,679 | | Commercial paper | 61,638 | 5,934 | | Government agency securities | 37,870 | 36,415 | | Corporate debt | 13,072 | 17,227 | | Total marketable securities | 296,285 | 130,255 | - Total marketable securities increased significantly from $130.3 million at December 31, 2024, to $296.3 million at June 30, 2025[50] - As of June 30, 2025, $74.7 million of marketable securities had remaining maturities between one and two years; all others matured in less than a year. No realized gains or losses were recorded in either period[50] 4. Fair Value Measurements This note describes the fair value hierarchy and measurements applied to the company's financial assets Fair Value Measurements of Financial Assets (in thousands) | Asset Category | June 30, 2025 Total Fair Value ($) | December 31, 2024 Total Fair Value ($) | | :----------------------- | :--------------------------------- | :--------------------------------- | | Money market funds | 40,485 | 37,288 | | U.S. Treasury securities | 183,705 | 70,679 | | Commercial paper | 61,638 | 5,934 | | Government agency securities | 37,870 | 36,415 | | Corporate debt | 13,072 | 17,227 | | Total financial assets | 336,770 | 167,543 | - Total financial assets measured at fair value increased from $167.5 million at December 31, 2024, to $336.8 million at June 30, 2025[52] - The majority of assets are classified as Level 1 (money market funds, U.S. Treasury securities) or Level 2 (commercial paper, government agency securities, corporate debt) in the fair value hierarchy[52] 5. Property and Equipment, net This note provides details on the company's property and equipment, including depreciation Property and Equipment, net (in thousands) | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :----------------------- | :---------------- | :-------------------- | | Leasehold improvements | 1,854 | 1,854 | | Laboratory equipment | 1,547 | 1,461 | | Furniture & fixtures | 722 | 722 | | Total property and equipment | 4,123 | 4,037 | | Less: accumulated depreciation | (1,877) | (1,571) | | Property and equipment, net | 2,246 | 2,466 | - Net property and equipment decreased from $2.47 million at December 31, 2024, to $2.25 million at June 30, 2025[53] - Depreciation expense was $0.3 million for both the six months ended June 30, 2025, and 2024[53] 6. Accrued Expenses This note details the composition and changes in the company's accrued expenses Accrued Expenses (in thousands) | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :----------------------------- | :---------------- | :-------------------- | | Accrued research and development | 2,660 | 3,961 | | Accrued compensation and benefits | 1,991 | 2,972 | | Accrued professional fees | 782 | 737 | | Accrued other | 35 | — | | Accrued offering costs | — | 492 | | Total accrued expenses | 5,468 | 8,162 | - Total accrued expenses decreased from $8.16 million at December 31, 2024, to $5.47 million at June 30, 2025, primarily due to decreases in accrued research and development and compensation and benefits, and the payment of accrued offering costs[54] 7. Commitments and Contingencies This note outlines the company's operating lease commitments, legal proceedings, and indemnification obligations - No material changes to operating lease commitments during the six months ended June 30, 2025[55] - The company was not subject to any material legal proceedings as of June 30, 2025, and is not aware of any pending or threatened[56] - The company provides indemnification to vendors, lessors, business partners, directors, and senior management, with potential unlimited future payments, but has not incurred material costs to date[59] 8. License Agreements This note describes the company's various third-party license agreements and their financial implications - The company has various license agreements with third parties involving upfront, milestone, and royalty payments[60] - No material changes to the terms, conditions, or accounting conclusions of these license agreements since the Annual Report[60] 9. Stock-Based Compensation This note details the company's stock option plans and the associated compensation expense - The 2020 Stock Option and Grant Plan has no shares remaining for future issuance as of June 30, 2025[61] - The 2025 Stock Option and Incentive Plan became effective in February 2025, initially reserving 5,060,000 shares, subject to evergreen provisions[62] Stock Option Activity (Six Months Ended June 30, 2025) | Metric | Number of Common Stock Options | Weighted-Average Exercise Price ($) | | :----------------------------- | :----------------------------- | :---------------------------------- | | Outstanding as of Dec 31, 2024 | 3,700,335 | 5.87 | | Granted | 2,305,760 | 17.40 | | Exercised | (7,944) | 0.76 | | Cancelled or forfeited | (24,000) | 10.16 | | Outstanding as of June 30, 2025 | 5,974,151 | 10.31 | | Exercisable as of June 30, 2025 | 2,097,556 | 6.39 | Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Research and development | 1,084 | 396 | 1,888 | 675 | | General and administrative | 1,756 | 575 | 3,046 | 943 | | Total | 2,840 | 971 | 4,934 | 1,618 | - Total stock-based compensation expense increased to $4.9 million for the six months ended June 30, 2025, from $1.6 million in the prior year[66] 10. Segment Information This note provides a breakdown of the company's net loss and expenses by operational categories Segment Net Loss and Expenses (in thousands) | Category | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | External research and development expenses | 11,291 | 5,485 | 21,269 | 13,204 | | Personnel-related R&D (excl. stock-based comp) | 2,494 | 1,821 | 4,877 | 3,508 | | Facility and IT allocated R&D expenses | 464 | 460 | 904 | 924 | | Personnel-related G&A (excl. stock-based comp) | 2,417 | 1,267 | 4,649 | 2,467 | | General corporate and facility expenses | 1,902 | 876 | 3,845 | 1,971 | | Other segment items | (500) | (1,357) | (994) | (1,675) | | Net loss | 18,068 | 8,552 | 34,550 | 20,399 | - External research and development expenses increased significantly, reflecting increased clinical programs and combination development activities[67] - Personnel-related expenses for both R&D and G&A functions increased due to workforce expansion[67] 11. Net Loss Per Share This note explains the calculation of net loss per share and the impact of anti-dilutive securities Shares Excluded from Diluted Net Loss Per Share Calculation | Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :----------------------------- | :----------------------------- | | Convertible Preferred Stock | — | 27,149,206 | | Options to purchase common stock | 5,974,151 | 3,434,751 | | Unvested restricted common stock | — | 165,301 | | Total | 5,974,151 | 30,749,258 | - All convertible preferred stock converted to common stock upon the IPO in 2025, hence no preferred stock was excluded from diluted EPS calculation for the 2025 period[68] - Options to purchase common stock and unvested restricted common stock were excluded due to their anti-dilutive effect[68] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition, operations, product candidate progress, liquidity, and future funding needs Overview This section provides a high-level summary of the company's mission and recent clinical development milestones - Sionna Therapeutics is a clinical-stage biopharmaceutical company developing novel medicines to normalize CFTR protein function for cystic fibrosis patients[71] - The company announced positive topline data from two Phase 1 clinical trials for lead NBD1 stabilizer product candidates, SION-719 and SION-451, in June 2025[73] - Both SION-719 and SION-451 were well tolerated, with no serious adverse events, and met exposure thresholds predictive of clinically meaningful benefit in preclinical models[74] - SION-719 will advance into a Phase 2a proof-of-concept trial in CF patients as an add-on to standard of care, anticipated in H2 2025[75] - SION-451 will advance to a Phase 1 dual combination trial in healthy volunteers with galicaftor (SION-2222) and SION-109, anticipated in H2 2025[76] Strategic In-Licensing & Complementary Modulators This section describes the company's strategy to expand its product pipeline through in-licensing and complementary modulators - The company in-licensed three clinical-stage compounds from AbbVie Global Enterprises Ltd. in 2024 to expand its portfolio of combination product opportunities[77] - This includes galicaftor (SION-2222), a complementary modulator targeting CFTR's TMD1, which has completed Phase 2 clinical trials[77] - A Phase 1 clinical trial for another complementary modulator, SION-109 (targeting CFTR's ICL4 region), was completed in December 2024[77] Sources of Liquidity and Financing History This section reviews the company's funding sources, historical capital raises, and future liquidity outlook - Since inception in 2019, the company has not generated revenue and has funded operations primarily through preferred stock sales, raising $330.4 million[79] - In February 2025, the company completed its IPO, raising $199.6 million net proceeds from the sale of 12,176,467 common shares[79] - Net losses were $34.6 million and $20.4 million for the six months ended June 30, 2025, and 2024, respectively, with an accumulated deficit of $215.6 million as of June 30, 2025[80] - Expenses and operating losses are expected to increase substantially due to advancing clinical development, research, regulatory approvals, manufacturing, intellectual property, personnel, and public company costs[81] - The company expects to finance operations through equity offerings, debt financings, or strategic arrangements, as it does not have approved products for sale[82] - As of June 30, 2025, cash, cash equivalents, and marketable securities totaled $337.3 million, projected to fund operations into 2028[83][85] Components of Results of Operations This section explains the key revenue and expense categories contributing to the company's financial performance - The company has not generated any revenue to date and does not expect to for several years, if ever, relying on product sales from approved products or collaboration/license agreements in the future[87] - Research and development expenses include personnel, external costs (CROs, CDMOs, consultants), manufacturing, facility costs, and intellectual property protection[89][90] - R&D expenses are expected to increase substantially as product candidates advance to later stages[91][92] - General and administrative expenses include personnel, legal, professional fees, office, IT, and insurance costs, expected to increase with public company operations and pre-commercial activities[94][95] - Interest income is from cash equivalents and marketable securities, while other income primarily consists of sublease income[97][98][99][100] Results of Operations This section provides a comparative analysis of the company's financial performance over different reporting periods Comparison of the Three Months Ended June 30, 2025 and 2024 This section compares the company's financial performance for the second quarter of 2025 against the same period in 2024 Results of Operations (Three Months Ended June 30, in thousands) | Metric | 2025 ($) | 2024 ($) | Change ($) | | :-------------------------- | :------- | :------- | :--------- | | Research and development | 15,383 | 8,233 | 7,150 | | General and administrative | 6,523 | 3,059 | 3,464 | | Total operating expenses | 21,906 | 11,292 | 10,614 | | Loss from operations | (21,906) | (11,292) | (10,614) | | Interest income | 3,667 | 2,566 | 1,101 | | Other income | 171 | 174 | (3) | | Net loss | (18,068) | (8,552) | (9,516) | - Net loss increased by $9.5 million to $18.1 million for Q2 2025, compared to $8.6 million for Q2 2024[102] - Research and development expenses increased by $7.2 million, primarily due to increased clinical programs and combination development activities, and a $1.4 million increase in personnel-related expenses[103] - General and administrative expenses increased by $3.5 million, driven by a $2.3 million increase in personnel-related expenses and a $1.0 million increase in professional services fees[104][108] - Interest income increased by $1.1 million due to increased investment in debt securities from IPO proceeds[105] Comparison of the Six Months Ended June 30, 2025 and 2024 This section compares the company's financial performance for the first half of 2025 against the same period in 2024 Results of Operations (Six Months Ended June 30, in thousands) | Metric | 2025 ($) | 2024 ($) | Change ($) | | :-------------------------- | :------- | :------- | :--------- | | Research and development | 29,051 | 18,453 | 10,598 | | General and administrative | 12,514 | 5,986 | 6,528 | | Total operating expenses | 41,565 | 24,439 | 17,126 | | Loss from operations | (41,565) | (24,439) | (17,126) | | Interest income | 6,667 | 3,698 | 2,969 | | Other income | 348 | 342 | 6 | | Net loss | (34,550) | (20,399) | (14,151) | - Net loss increased by $14.2 million to $34.6 million for the six months ended June 30, 2025, compared to $20.4 million for the same period in 2024[107] - Research and development expenses increased by $10.6 million, primarily due to a $7.3 million increase in direct R&D for clinical programs and combination development, and a $2.6 million increase in personnel-related expenses[109][112] - General and administrative expenses increased by $6.5 million, mainly from a $4.3 million increase in personnel-related expenses and a $2.1 million increase in professional services fees[110][113] - Interest income increased by $3.0 million due to higher investment in debt securities following the IPO[111] Liquidity and Capital Resources This section discusses the company's current cash position, cash flow activities, and future funding requirements - As of June 30, 2025, the company had $337.3 million in cash, cash equivalents, and marketable securities[116] - Existing capital is believed to be sufficient to fund operations into 2028, but this is a forward-looking estimate subject to risks[122] - Net cash used in operating activities was $34.4 million for the six months ended June 30, 2025, primarily due to net loss[117][118] - Net cash used in investing activities was $164.4 million, mainly from purchases of marketable securities[120] - Net cash provided by financing activities was $202.1 million, primarily from the IPO proceeds[121] - Future funding requirements depend on clinical trial progress, manufacturing costs, regulatory review, intellectual property, personnel, and commercialization efforts[123] Contractual Obligations and Commitments This section addresses the company's contractual obligations and commitments, noting no material changes - No material changes to contractual obligations and commitments during the six months ended June 30, 2025, as described in the Annual Report[126] Critical Accounting Estimates This section discusses the significant judgments and assumptions used in preparing the financial statements - No material changes to critical accounting estimates during the six months ended June 30, 2025, as described in the Annual Report[128] - The preparation of financial statements requires estimates and assumptions affecting reported amounts, based on historical experience and reasonable factors[127] Recent Accounting Pronouncements This section refers to disclosures regarding recently issued accounting standards and their potential impact - Information on recently issued accounting pronouncements is disclosed in Note 2, 'Summary of Significant Accounting Policies,' within the consolidated financial statements[129] Emerging Growth Company and Smaller Reporting Company Status This section explains the company's status as an emerging growth and smaller reporting company, and associated regulatory benefits - The company qualifies as an 'emerging growth company' and 'smaller reporting company,' allowing it to take advantage of reduced disclosure and governance requirements[130][131] - The company has elected to use the extended transition period for complying with new or revised accounting standards[130] - Emerging growth company status will be maintained until the earlier of five years post-IPO, $1.235 billion in annual gross revenue, becoming a large accelerated filer, or issuing over $1.0 billion in non-convertible debt[130] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' Sionna Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk under Item 305 of Regulation S-K - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its 'smaller reporting company' status[132] Item 4. Controls and Procedures This section details the company's disclosure controls and procedures and internal control over financial reporting, concluding that disclosure controls were effective as of June 30, 2025, with no material changes in internal control - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[133] - No material changes in internal control over financial reporting occurred during the six months ended June 30, 2025[134] Part II - Other Information This section provides additional information not covered in the financial statements, including legal, risk factors, and equity sales Item 1. Legal Proceedings This section states that Sionna Therapeutics, Inc. is not currently involved in any material legal proceedings that could significantly impact its financial position, results of operations, or cash flows as of June 30, 2025, and records liabilities for probable and estimable future losses from legal matters - The company is not aware of any material legal proceedings currently pending or threatened as of June 30, 2025[136] - Liabilities for legal matters are recorded when probable and reasonably estimable[136] Item 1A. Risk Factors This section comprehensively outlines various risks impacting the business, including financial, development, third-party dependence, intellectual property, regulatory, commercial, operational, and stock ownership factors Risks Related to Our Limited Operating History, Financial Condition and Need for Additional Capital This section details risks stemming from the company's limited operational history, significant losses, and ongoing need for substantial capital - The company is a clinical-stage biopharmaceutical company with a limited operating history, incurring significant operating losses since inception ($34.6 million net loss for H1 2025, $215.6 million accumulated deficit as of June 30, 2025)[138][139] - Substantial additional funding is required to develop and commercialize product candidates, with no guarantee of raising capital on acceptable terms, potentially leading to delays or elimination of development programs[146][148] - Raising additional capital may dilute stockholders' ownership, restrict operations, or require relinquishing rights to product candidates[149][150] Risks Related to the Discovery and Development of Our Product Candidates This section outlines risks associated with the R&D of product candidates, including clinical trial failures and regulatory hurdles - The company is substantially dependent on the success of its NBD1 stabilizers (SION-719 and SION-451); failure to advance or obtain regulatory approval would materially harm the business[152][153] - Developing combination treatments increases complexity and risk, including potential drug-drug interactions, unforeseen side effects, or clinical trial failures[161][162] - Regulatory approval processes are lengthy, time-consuming, and unpredictable, with no assurance of obtaining approval for any product candidate[164] - Preclinical, interim, topline, and preliminary results are not necessarily predictive of later clinical trial outcomes, and positive results may not be replicated[179][181][182] - Targeting the NBD1 domain of the CFTR protein is novel, introducing uncertainty regarding successful product development and potential regulatory challenges[185][186] - Clinical trials may fail to demonstrate safety and efficacy, or identify serious adverse side effects, potentially leading to abandonment, delays, or limitations on development[187] Risks Related to Our Dependence on Third Parties This section addresses risks arising from reliance on third parties for intellectual property, clinical trials, manufacturing, and collaborations - The company is dependent on licensed intellectual property from third parties (e.g., Sanofi, AbbVie); loss of these rights or breach of agreements could prevent development or commercialization[219][220] - Reliance on CROs and other vendors for clinical trials means limited control over their performance, potentially leading to delays or compromised data quality[224][225] - Reliance on CDMOs for manufacturing increases the risk of insufficient quantities, unacceptable cost/quality, or supply disruptions, potentially delaying development or commercialization[228][229] - Establishing collaborations for development or commercialization is challenging; failure to secure favorable terms or unsuccessful arrangements could alter development plans[233][234][235] Risks Related to Our Intellectual Property This section covers risks concerning the company's ability to obtain, maintain, enforce, and protect its intellectual property rights - Inability to obtain, maintain, and enforce intellectual property rights (patents, trade secrets) could allow competitors to commercialize similar products, adversely affecting commercialization efforts[239][240][241] - Patent terms may be inadequate to protect competitive position, and failure to obtain patent term extensions could shorten exclusivity and reduce revenue[250][251][252] - Failure to comply with obligations in third-party intellectual property licenses could result in loss of material rights, impacting development and commercialization[253][255] - Patent reform legislation (e.g., Leahy-Smith Act) and changes in patent laws could increase uncertainties and costs for patent prosecution and enforcement[260][261][262] - Involvement in lawsuits to protect or enforce patents could be expensive, time-consuming, and unsuccessful, potentially leading to invalidation of patents or licensing requirements[263][264][265] - Third parties may allege infringement of their intellectual property rights, leading to litigation, substantial damages, or the need to obtain costly licenses[267][268] - Reliance on third parties necessitates sharing trade secrets, increasing the risk of misappropriation or unauthorized disclosure, which could harm competitive position[273][275] - Limited geographical patent protection and varying enforceability of intellectual property rights in different countries could hinder global commercialization efforts[277][278][279] Risks Related to Legal and Regulatory Compliance Matters This section details risks associated with healthcare laws, regulatory oversight, reform initiatives, and potential misconduct - Business operations are subject to extensive healthcare laws (e.g., fraud and abuse laws); non-compliance could lead to substantial penalties, reputational harm, and significant defense costs[303][304][307] - Approved products remain subject to ongoing regulatory oversight, including manufacturing, labeling, promotion, and post-marketing requirements; failure to comply could result in restrictions or withdrawal from the market[308][309][311] - Healthcare reform initiatives in the U.S. and foreign jurisdictions could adversely impact business, leading to more rigorous coverage criteria, downward pressure on pricing, or other negative consequences[313][314][318] - Inadequate funding or disruptions at government agencies (FDA, SEC) could delay product development, regulatory approvals, or normal business functions[344][345] - Misconduct by employees, contractors, or collaborators, including non-compliance with regulatory standards or healthcare laws, could lead to significant penalties and reputational damage[346][348] Risks Related to the Commercialization of Our Product Candidates This section addresses risks concerning market competition, product acceptance, reimbursement, market size, and product liability - The company faces substantial competition, particularly from Vertex Pharmaceuticals, which holds significant market share and greater resources in the CF market[321][324] - Even if approved, product candidates may fail to achieve sufficient market acceptance by physicians, patients, and third-party payors, especially against established standard-of-care therapies like Trikafta[326][327] - Commercial success depends significantly on obtaining and maintaining coverage and adequate reimbursement from third-party payors; cost containment trends could adversely affect profitability[329][330] - Estimates of the potential market for product candidates may be smaller than anticipated, limiting revenues and hindering profitability[333] - Clinical trial and product liability lawsuits could divert resources, incur substantial liabilities, and limit commercialization, with insurance potentially inadequate to cover all costs[334][335] Risks Related to Our Business Operations, Employee Matters and Managing Our Growth This section covers risks related to personnel retention, managing organizational growth, potential litigation, and business disruptions - Future success depends on retaining key executives and attracting/retaining qualified personnel; loss of key individuals could impede objectives[337][338] - Expected expansion in clinical development, regulatory, and commercial capabilities may lead to difficulties in managing growth, disrupting operations and increasing costs[340] - The company could be affected by litigation, government investigations, and enforcement actions, leading to significant damages, fines, reputational harm, and diversion of resources[341][343] - Business disruptions (e.g., natural disasters, cybersecurity incidents) affecting operations or those of suppliers/CROs could harm revenue, financial condition, and increase costs[354] Risks Related to Ownership of Our Common Stock This section addresses risks concerning stock price volatility, potential dilution, corporate governance, and dividend policy - Operating results may fluctuate significantly due to various factors (e.g., clinical trial outcomes, competition, regulatory changes), making future results difficult to predict and potentially causing stock price decline[355][356][357] - The trading price of common stock may be highly volatile due to industry-specific and general market factors, leading to potential loss of investment[358][359] - Sales of a substantial number of common stock shares by stockholders (e.g., after lock-up expiry) could significantly drop the market price[366] - Provisions in corporate charter documents and Delaware law may prevent or frustrate attempts to change management or acquire a controlling interest, potentially lowering stock price[367][368][369] - Executive officers, directors, and principal stockholders own a significant percentage of stock, allowing them to exert substantial control over stockholder-approved matters[370] - The company does not anticipate paying cash dividends in the foreseeable future, making capital appreciation the sole source of gain for stockholders[372] General Risk Factors This section covers broad risks including cybersecurity, data privacy, compliance, internal controls, tax laws, and global economic conditions - Compromised information technology systems or data, or those of third parties, could lead to regulatory actions, litigation, fines, business disruptions, and reputational harm[375][376][386] - The company is subject to stringent and evolving data privacy and security laws (e.g., GDPR, HIPAA); non-compliance could result in investigations, fines, litigation, and operational disruptions[389][390][392][397] - Compliance with governmental export/import controls, economic sanctions, and anti-corruption laws is required; violations could lead to criminal liability and severe consequences[399][400] - Failure to maintain an effective system of internal controls over financial reporting could impair the ability to produce accurate financial statements, leading to stock price decline and sanctions[401][404] - The company may not be able to utilize a significant portion of its net operating loss (NOL) carryforwards due to limitations under Section 382 of the IRC or future regulatory changes[406][407] - New or changed tax laws (e.g., OBBBA) could materially adversely affect business, cash flows, financial condition, or results of operations[408][409][410] - Unstable global economic and geopolitical conditions (e.g., inflation, conflicts, tariffs) could adversely affect business, financial condition, stock price, and ability to raise capital[418][419][420] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on the company's initial public offering (IPO) completed on February 6, 2025, detailing the shares issued, net proceeds, and the current use of these funds - On February 6, 2025, the company completed its IPO, issuing and selling 12,176,467 shares of common stock at $18.00 per share[422] - The IPO generated aggregate net proceeds of $199.6 million, after deducting underwriter discounts, commissions, and other offering expenses[422] - A significant portion of the net proceeds is held in money market funds, with no material change in the planned use of proceeds[423] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[425] Item 4. Mine Safety Disclosures This item is not applicable to Sionna Therapeutics, Inc - This item is not applicable[426] Item 5. Other Information This section discloses Rule 10b5-1 trading arrangements adopted by the company's executive officers during the three months ended June 30, 2025, specifying plans for common stock sales with expiration dates in 2026 Rule 10b5-1 Trading Arrangements Adopted by Executive Officers (Three Months Ended June 30, 2025) | Name (Title) | Action Taken (Date of Action) | Type of Trading Arrangement | Nature of Trading Arrangement | Expiration Date of Trading Arrangement | Aggregate Number of Securities | | :--------------------------------------- | :---------------------------- | :-------------------------- | :---------------------------- | :------------------------------------- | :----------------------------- | | Michael Cloonan (President and CEO) | Adoption (May 21, 2025) | Rule 10b5-1 trading arrangement | Sale | August 17, 2026 | Up to 200,000 | | Elena Ridloff (CFO and Head of Corporate Development) | Adoption (May 20, 2025) | Rule 10b5-1 trading arrangement | Sale | August 6, 2026 | Up to 85,000 | | Jennifer Fitzpatrick (Chief Legal Officer) | Adoption (June 5, 2025) | Rule 10b5-1 trading arrangement | Sale | September 15, 2026 | Up to 41,000 | Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate charter documents, stock certificates, officer certifications, and Inline XBRL documents - Exhibit 3.1: Fifth Amended and Restated Certificate of Incorporation[430] - Exhibit 3.2: Amended and Restated Bylaws[430] - Exhibit 4.1: Specimen Common Stock Certificate[430] - Exhibit 31.1*: Certification of Principal Executive Officer (Section 302)[430] - Exhibit 31.2*: Certification of Principal Financial Officer (Section 302)[430] - Exhibit 32.1*+: Certification of Principal Executive Officer and Principal Financial Officer (Section 906)[430] - Exhibit 101.INS: Inline XBRL Instance Document[430] - Exhibit 101.SCH: Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents[430] - Exhibit 104: Cover Page Interactive Data File[430] Signatures This section contains the authorized signatures confirming the submission of the Form 10-Q report Authorized Signatures This section contains the authorized signatures for the Form 10-Q report, confirming its submission on behalf of Sionna Therapeutics, Inc. by its President and Chief Executive Officer, Michael Cloonan, and its Chief Financial Officer and Head of Corporate Development, Elena Ridloff, both dated August 11, 2025 - The report is signed by Michael Cloonan, President and Chief Executive Officer (Principal Executive Officer), and Elena Ridloff, Chief Financial Officer and Head of Corporate Development (Principal Financial Officer and Principal Accounting Officer)[436] - The signing date for the report is August 11, 2025[436]