Sionna Therapeutics Inc.
11/05/2025 | Press release | Distributed by Public on 11/05/2025 06:29
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission ("SEC") on March 20, 2025 (the "Annual Report").
This discussion and analysis as well as other parts of this Quarterly Report contain forward-looking statements that involve risks and uncertainties, including but not limited to, information with respect to our plans and strategy for our business. As a result of many factors, including those set forth in the section titled "Risk Factors," our actual results could differ materially from the results described in or implied by the forward-looking statements. You should carefully read, consider and evaluate the section titled "Risk Factors" to gain an understanding of the factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled "Cautionary Note Regarding Forward-Looking Statements" included elsewhere in this Quarterly Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. For convenience of presentation, some of the numbers have been rounded in the text below.
Overview
We are a clinical-stage biopharmaceutical company on a mission to revolutionize the current treatment paradigm for cystic fibrosis ("CF") patients by developing novel medicines that normalize the function of the cystic fibrosis transmembrane conductance regulator ("CFTR") protein to deliver clinically meaningful benefit to CF patients. Our goal is to deliver differentiated medicines for people living with CF that can restore their CFTR function to as close to normal as possible by directly stabilizing CFTR's nucleotide binding domain 1 ("NBD1"). We believe stabilizing NBD1 is central to unlocking dramatic improvements in clinical outcomes and quality of life for CF patients.
We believe our robust pipeline of NBD1 stabilizers and complementary CFTR modulators provide multiple potential pathways to achieving our goal, either in combination with each other to produce a proprietary dual combination CF therapy, or an NBD1 stabilizer in combination with the current standard of care for CF.
In June 2025, we announced positive topline data from our two randomized, double-blinded, placebo-controlled Phase 1 clinical trials evaluating SION-719 and SION-451, our lead NBD1 stabilizer product candidates, in over 200 healthy volunteers, and our plans to advance both compounds to the next phase of clinical development. The trials assessed the safety, tolerability, and pharmacokinetics ("PK") of single and multiple ascending doses of each product candidate, as well as food effect and tablet bioequivalence.
Both SION-719 and SION-451 were generally well tolerated in these trials, with no serious adverse events, treatment emergent adverse events that led to discontinuation of drug, or dose-limiting toxicities observed. The Phase 1 data also supported the use of a tablet formulation in future trials and indicated that both compounds could be dosed in a fed or fasted state. Both NBD1 stabilizers met target exposure thresholds. Based on the Phase 1 data and our preclinical CF human bronchial epithelial ("CFHBE") model, we believe our NBD1 stabilizers have the potential to provide clinically meaningful benefit, including the potential to restore CFTR function up to wild-type levels, when SION-719 is administered as an add-on to the standard of care or when SION-451 is used in proprietary dual combinations with one of our complementary modulators.
In October 2025, we announced the initiation of a Phase 2a proof-of-concept trial in CF patients evaluating SION-719 as an add-on to the standard of care. The Phase 2a trial, called PreciSION CF, is designed to evaluate the safety, tolerability, and PK of SION-719 when administered with the standard of care for CF, Vertex Pharmaceuticals, Inc.'s Trikafta, and to assess change in CFTR function as measured by sweat chloride levels. Prior to initiation, we completed a drug-drug interaction study, which confirmed SION-719 can be dosed with Trikafta according to its label. Additionally, in August 2025, we announced the initiation of a Phase 1 dual combination trial in healthy volunteers evaluating SION-451 in dual combinations with each of galicaftor (SION-2222) and SION-109, two of our complementary CFTR modulators. The trial will evaluate the safety, tolerability, and PK of varying doses of the dual combinations and will inform selection of a dual combination for further development. Topline data from both trials are anticipated in mid-2026.
Strategic In-Licensing & Complementary Modulators
Our portfolio of complementary CFTR modulator candidates are designed to work synergistically with our NBD1 stabilizers to improve CFTR function, as seen in preclinical models. During 2024, we in-licensed three clinical-stage compounds from AbbVie Global Enterprises Ltd. ("AbbVie") to expand our portfolio of combination product opportunities, including galicaftor (SION-2222), a complementary modulator which targets CFTR's transmembrane domain 1 ("TMD1"), and has completed Phase 2 clinical trials. In addition, in December 2024, we completed a Phase 1 clinical trial evaluating another complementary modulator, SION-109, which targets CFTR's intracellular loop 4 ("ICL4") region. Galicaftor (SION-2222) and SION-109 are currently being evaluated in combination with SION-451 in our ongoing Phase 1 dual combination trial in healthy volunteers.
We currently have exclusive rights to develop and commercialize our compounds.
Sources of Liquidity and Financing History
Since our inception in 2019, we have not generated any revenue. We have historically funded our operations primarily with proceeds from the sale and issuance of our preferred stock. As of September 30, 2025,we raised aggregate net proceeds of $330.4 millionfrom the sale and issuance of our preferred stock. In February 2025, we completed our initial public offering ("IPO") and raised aggregate net proceeds of $199.6 millionfrom the sale of 12,176,467shares of common stock, which included 1,588,234 shares of common stock sold pursuant to the underwriters' full exercise of their option to purchase additional shares.
Due to our significant research, development and manufacturing expenditures, we have accumulated substantial losses and negative cash flows since our inception, including net losses of $54.8 million and $45.8 million for the nine months ended September 30, 2025, and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $235.9 million.
We expect our expenses and operating losses will increase substantially as we:
•continue to advance the clinical development of our current and future product candidates;
•continue to advance our research activities and seek to discover and develop additional product candidates to expand our pipeline;
•pursue regulatory approvals for any current or future product candidates that successfully complete clinical trials;
•continue to utilize third parties to manufacture our product candidates;
•continue to develop, maintain, expand, enforce, defend and protect our intellectual property portfolio (including intellectual property obtained through license agreements) and provide reimbursement of third-party expenses related to our patent portfolio;
•attract, hire and retain additional qualified personnel;
•add operational, financial and management information systems;
•undertake pre-commercial activities, and scale-up external commercial-scale manufacturing capabilities, to commercialize any current or future product candidates which may obtain regulatory approval;
•ultimately establish a sales, marketing and distribution infrastructure to commercialize any current or future product candidates which may receive regulatory approval; and
•incur additional audit, legal, regulatory, tax and other expenses associated with being a public company.
In addition, we have several clinical development, regulatory, and commercial milestones, as well as royalty payment obligations under our licensing arrangements. Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our ongoing and planned clinical trials and our expenditures on other research and development activities.
We do not have any products approved for sale and have not generated any revenue from product sales. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our current and any future product candidates, which we expect will take a number of years or may never occur. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings or other capital sources, potentially including collaborations, licenses or other strategic arrangements. See the section titled "-Liquidity and Capital Resources." We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates, or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Due to the numerous risks and uncertainties associated with drug development, we are unable to accurately predict the timing or amount of increased expenses or the timing of when, or if, we will be able to achieve or maintain profitability. Even if we generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of September 30, 2025, we had cash, cash equivalents and marketable securities of $325.0 million. Based upon our current operating plans, we believe that with our existing cash, cash equivalents and marketable securities, will be sufficient to fund our operations into 2028. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. In addition, we could utilize our available capital resources sooner than we expect. See the sections titled "-Liquidity and Capital Resources" and "Risk Factors-Risks Related to Our Limited Operating History, Financial Condition and Need for Additional Capital" included elsewhere in this Quarterly Report.
License and Collaboration Agreements
We have entered into several license agreements with various third parties. The terms and conditions as well as accounting analysis for our significant license agreements are described in Note 9, "License Agreements," in the audited consolidated annual financial statements in the Annual Report. There have been no material changes to the terms and conditions, or accounting conclusions, previously disclosed in the Annual Report.
Components of Results of Operations
Revenue
To date, we have not generated any revenue. In the future, we may generate revenue from product sales from any approved product, which approval we do not expect to occur for at least the next several years, if ever, as well as collaboration or license agreements we may enter into with respect to our current or future product candidates. We cannot predict if, when or to what extent we will generate revenue as we may never succeed in obtaining regulatory approval for any of our product candidates. If we fail to complete preclinical and clinical development of our current or future product candidates or fail to obtain regulatory approval for any that successfully complete clinical trials, our ability to generate future revenues, and our results of operations and financial position would be adversely affected.
Operating Expenses
Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.
Research and Development Expenses
Research and development expenses consist primarily of costs associated with the preclinical and clinical development of our current and potential future product candidates. In particular, our research and development expenses include:
•personnel-related costs, including salaries, payroll tax, bonuses, benefits and stock-based compensation for employees engaged in research and development functions;
•the costs to acquire in-process research and development ("IPR&D") with no alternative future use acquired in an asset acquisition;
•external expenses, including expenses incurred under arrangements with third parties, such as contract research organizations ("CROs"), contract development and manufacturing organizations ("CDMOs"), consultants and our scientific advisors;
•the cost of manufacturing our product candidates, including costs for laboratory supplies, research materials and reagents;
•facility costs, depreciation and other expenses, which include direct and allocated expenses; and
•the cost of obtaining and maintaining patent and trade secret protection for our product candidates.
We recognize research and development costs in the periods in which they are incurred. Most of our research and development expenses have been related to identifying and developing our product candidates. Typically, external expenses are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers as of each reporting date. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses, which are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered, or the services rendered. Significant judgments and estimates are made in determining the accrued, or prepaid expense balances at the end of any reporting period.
External costs represent a significant portion of our research and development expenses, which we track on a program-by-program basis following the nomination of a product candidate. Our internal research and development expenses consist primarily of personnel-related expenses, including stock- based compensation expenses and allocated expenses. We do not track our internal research and development expenses on a program-by-program basis as they either relate to early-stage research expenses, such as lab supplies or our personnel expenses, consulting fees or other costs that are deployed across multiple programs.
Product candidates in later stages of development generally have higher development costs than those in earlier stages resulting from larger and more complex clinical trials, manufacturing scale-up and an increase in research and development headcount to oversee these activities. As a result, management expects that our research and development expenses will increase substantially over the next several years as we potentially advance our product candidates into later-stage development efforts.
Our future development costs may vary significantly based on a variety of factors, including:
•the timing, complexity and progress of preclinical and clinical development activities;
•the number and scope of preclinical and clinical programs we decide to pursue;
•the extent to which we in-license or acquire other product candidates and technologies to further develop our pipeline;
•the successful initiation and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to domestic and foreign regulatory authorities;
•receipt of marketing approvals, if any, from applicable regulatory authorities;
•the development of commercial-scale manufacturing and distribution processes for our current and any future product candidates;
•our ability to obtain, maintain and protect patent, trade secret protection and regulatory exclusivity for our product candidates, both in the U.S. and internationally;
•our ability to successfully recruit and retain additional employees;
•the timing and amount of milestones, royalties or other payments we must make to our licensing partners; and
•the commercialization of our product candidates, if and when approved.
A change in the outcome of any of these variables with respect to the development of any current or future product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the U.S. Food and Drug Administration ("FDA") or another regulatory authority were to delay a planned start of a clinical trial or require us to conduct clinical trials beyond those that we currently anticipate would be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to slower than expected patient enrollment or other reasons, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate. We do not have control over many of these factors, including certain aspects of clinical development, the regulatory submissions process, potential threats to our intellectual property rights and general political and economic conditions that may negatively impact our business in the future. We may never obtain regulatory approval for any of our product candidates, and, even if we do, drug commercialization takes several years and millions of dollars in development costs.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, payroll tax, bonuses, benefits and stock-based compensation charges for those individuals in executive, legal, finance, human resources, information technology and other administrative functions. Other significant costs include legal fees relating to intellectual property and corporate matters, professional fees for auditing, accounting, tax and consulting services. Lastly, corporate overhead expenses such as information technology, insurance, facilities, and depreciation that are not allocated to the Company's research and development activities are included in general and administrative expenses. We recognize general and administrative expenses in the periods in which they are incurred.
We anticipate that our general and administrative expenses will increase in the future to support our increased research and development activities, pre-commercial preparation activities for our product candidates and any future product candidates and, if any product candidate receives marketing approval, commercialization activities. These increases will likely include increased costs related to the hiring of additional personnel and fees paid to outside consultants, among other expenses. We also anticipate increased expenses related to audit, accounting, legal and regulatory services associated with public company reporting and compliance, director and officer insurance premiums, investor and public relations costs and other administrative and professional services associated with operating as a public company.
Interest Income
Interest income consists primarily of interest earned and the amortization of discount or premiums on our cash equivalents and investments in marketable securities.
Other Income
Other income consists of sublease income through our subleasing agreement which is further discussed within Note 7, "Leases," in our audited consolidated annual financial statements in the Annual Report.
Results of Operations
Comparison of the Three Months Ended September 30, 2025 and 2024
The following table summarizes our results of operations (in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | $ | 16,044 | $ | 24,582 | $ | (8,538) | |||||||||||
| General and administrative | 7,761 | 3,402 | 4,359 | ||||||||||||||
| Total operating expenses | 23,805 | 27,984 | (4,179) | ||||||||||||||
| Loss from operations | (23,805) | (27,984) | 4,179 | ||||||||||||||
| Other income: | |||||||||||||||||
| Interest income | 3,456 | 2,353 | 1,103 | ||||||||||||||
| Other income | 71 | 190 | (119) | ||||||||||||||
| Total other income: | 3,527 | 2,543 | 984 | ||||||||||||||
| Net loss | $ | (20,278) | $ | (25,441) | $ | 5,163 | |||||||||||
Research and Development Expenses
The following table summarizes our research and development expenses (in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Direct research and development expenses by program: | |||||||||||||||||
|
NBD1 and combination development programs(1)
|
$ | 8,609 | $ | 5,815 | $ | 2,794 | |||||||||||
| Complementary modulator programs | 1,532 | 1,253 | 279 | ||||||||||||||
| Unallocated research and development expenses: | |||||||||||||||||
| IPR&D acquisition related costs | - | 13,639 | (13,639) | ||||||||||||||
| Personnel-related (including stock-based compensation) | 3,886 | 2,339 | 1,547 | ||||||||||||||
| Other R&D related costs | 1,377 | 869 | 508 | ||||||||||||||
| Facility, lab and depreciation | 640 | 667 | (27) | ||||||||||||||
| Total research and development expenses | $ | 16,044 | $ | 24,582 | $ | (8,538) | |||||||||||
(1)NBD1 and combination development program costs include NBD1 stabilizer activities and development of our proprietary combination therapy. Complementary modulator program costs include manufacturing expenses for the complementary modulators.
Research and development expenses decreased by $8.5 million to $16.0 million for the three months ended September 30, 2025, from $24.6 million for the three months ended September 30, 2024. The decrease in research and development expenses was primarily due to:
•direct research and development expenses increased by $3.1 million primarily due to an increase in clinical programs and combination development activities; and
•unallocated research and development expenses decreased by $11.6 million primarily due to IPR&D acquisition costs incurred in connection with our license agreement with AbbVie of $13.6 million in the third quarter of 2024, partially offset by a $1.5 million increase in personnel-related expenses including stock-based compensation, driven by an increase in the size of our workforce to support our clinical pipeline.
General and Administrative Expenses
The following table summarizes our general and administrative expenses (in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Personnel-related (including stock-based compensation) | $ | 5,192 | $ | 2,197 | $ | 2,995 | |||||||||||
| Professional services & fees | 2,049 | 817 | 1,232 | ||||||||||||||
| Facility and depreciation | 520 | 388 | 132 | ||||||||||||||
| Total general and administrative expenses | $ | 7,761 | $ | 3,402 | $ | 4,359 | |||||||||||
General and administrative expenses increased by $4.4 million to $7.8 million for the three months ended September 30, 2025, from $3.4 million for the three months ended September 30, 2024. The increase in general and administrative expenses was primarily due to:
•$3.0 million increase in personnel-related expenses including stock-based compensation, driven by an increase in the size of our workforce; and
•$1.2 million increase in fees related to the increased use of consultants and professional service organizations.
Interest Income
Interest income increased by $1.1 million to $3.5 million for the three months ended September 30, 2025, from $2.4 million for the three months ended September 30, 2024, primarily driven by an increased investment in debt securities due to the proceeds received from the initial public offering and the amortization of discounts on our investment activity.
Other Income
Other income was $0.1 million and $0.2 million for the three months ended September 30, 2025, and 2024, respectively, due to sublease income in connection with our subleasing agreement.
Comparison of the Nine Months Ended September 30, 2025 and 2024
The following table summarizes our results of operations (in thousands):
| Nine Months Ended September 30, | Change | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | $ | 45,095 | $ | 43,035 | $ | 2,060 | |||||||||||
| General and administrative | 20,275 | 9,388 | 10,887 | ||||||||||||||
| Total operating expenses | 65,370 | 52,423 | 12,947 | ||||||||||||||
| Loss from operations | (65,370) | (52,423) | (12,947) | ||||||||||||||
| Other income: | |||||||||||||||||
| Interest income | 10,123 | 6,051 | 4,072 | ||||||||||||||
| Other income | 419 | 532 | (113) | ||||||||||||||
| Total other income: | 10,542 | 6,583 | 3,959 | ||||||||||||||
| Net loss | $ | (54,828) | $ | (45,840) | $ | (8,988) | |||||||||||
Research and Development Expenses
The following table summarizes our research and development expenses (in thousands):
| Nine Months Ended September 30, | Change | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Direct research and development expenses by program: | |||||||||||||||||
|
NBD1 and combination development programs(1)
|
$ | 25,540 | $ | 13,588 | $ | 11,952 | |||||||||||
| Complementary modulator programs | 3,813 | 5,388 | (1,575) | ||||||||||||||
| Unallocated research and development expenses: | |||||||||||||||||
| IPR&D acquisition related costs | - | 13,639 | (13,639) | ||||||||||||||
| Personnel-related (including stock-based compensation) | 10,650 | 6,521 | 4,129 | ||||||||||||||
| Other R&D related costs | 3,294 | 1,974 | 1,320 | ||||||||||||||
| Facility, lab and depreciation | 1,798 | 1,925 | (127) | ||||||||||||||
| Total research and development expenses | $ | 45,095 | $ | 43,035 | $ | 2,060 | |||||||||||
(1)NBD1 and combination development program costs include NBD1 stabilizer activities and development of our proprietary combination therapy. Complementary modulator program costs include manufacturing expenses for the complementary modulators.
Research and development expenses increased by $2.1 million to $45.1 million for the nine months ended September 30, 2025, from $43.0 million for the nine months ended September 30, 2024. The increase in research and development expenses was primarily due to:
•direct research and development expenses increased by $10.4 million primarily due to an increase in clinical programs and combination development activities; and
•unallocated research and development expenses decreased by $8.3 million primarily due IPR&D acquisition costs incurred in connection with our license agreement with AbbVie of $13.6 million in the third quarter of 2024, partially offset by a $4.1 million increase in personnel-related expenses including stock-based compensation, driven by an increase in the size of our workforce to support our clinical pipeline.
General and Administrative Expenses
The following table summarizes our general and administrative expenses (in thousands):
| Nine Months Ended September 30, | Change | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Personnel-related (including stock-based compensation) | $ | 12,889 | $ | 5,608 | $ | 7,281 | |||||||||||
| Professional services & fees | 5,957 | 2,636 | 3,321 | ||||||||||||||
| Facility and depreciation | 1,429 | 1,144 | 285 | ||||||||||||||
| Total general and administrative expenses | $ | 20,275 | $ | 9,388 | $ | 10,887 | |||||||||||
General and administrative expenses increased by $10.9 million to $20.3 million for the nine months ended September 30, 2025, from $9.4 million for the nine months ended September 30, 2024. The increase in general and administrative expenses was primarily due to:
•$7.3 million increase in personnel-related expenses including stock-based compensation, driven by an increase in the size of our workforce; and
•$3.3 million increase in fees related to the increased use of consultants and professional service organizations.
Interest Income
Interest income increased by $4.0 million to $10.1 million for the nine months ended September 30, 2025, from $6.1 million for the nine months ended September 30, 2024, primarily driven by an increased investment in debt securities due to the proceeds received from the initial public offering and the amortization of discounts on our investment activity.
Other Income
Other income was $0.4 million and $0.5 million for the nine months ended September 30, 2025, and 2024, respectively, due to sublease income in connection with our subleasing agreement.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our product candidates and any future product candidates. As such, we expect our research and development and general and administrative costs will continue to increase significantly, including the costs associated with operating as a public company. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings or strategic agreements.
As of September 30, 2025, we had $325.0 million in cash, cash equivalents and marketable securities.
Cash Flows
The following table sets forth a summary of the net cash flow activity (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash used in operating activities | $ | (49,671) | $ | (41,006) | |||||||
| Net cash used in investing activities | (141,337) | (142,141) | |||||||||
| Net cash provided by financing activities | 204,051 | 180,375 | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 13,043 | $ | (2,772) | |||||||
Operating Activities
For the nine months ended September 30, 2025, net cash used in operating activities was $49.7 million primarily due to our net loss of $54.8 million and changes in operating assets and liabilities of $2.4 million, partially offset by $7.5 million of net non-cash charges, which includes stock-based compensation, depreciation, non-cash operating lease expense and amortization of discounts on marketable securities.
For the nine months ended September 30, 2024, net cash used in operating activities was $41.0 million primarily due to our net loss of $45.8 million and changes in operating assets and liabilities of $6.2 million, partially offset by $11.0 million of net non-cash charges, which includes stock-based compensation, depreciation, non-cash operating lease expense, non-cash expense related to IPR&D acquisition and amortization of discounts on marketable securities.
Investing Activities
Net cash used in investing activities was $141.3 million during the nine months ended September 30, 2025, which was primarily driven by purchases of marketable securities of $282.1 million and purchases of property and equipment of $0.2 million, partially offset by maturities of marketable securities of $141.0 million.
Net cash used in investing activities was $142.1 million during the nine months ended September 30, 2024, due to purchases of marketable securities of $175.6 million, partially offset by maturities of marketable securities of $33.5 million.
Financing Activities
Net cash provided by financing activities was $204.1 million during the nine months ended September 30, 2025, primarily due to net proceeds of $202.1 million received when the Company closed its IPO plus exercise proceeds totaling $2.0 million.
Net cash provided by financing activities was $180.4 million during the nine months ended September 30, 2024, during which time the Company closed its Series C Financing.
Future Funding Requirements
As of September 30, 2025, we had cash, cash equivalents and marketable securities of $325.0 million. Based upon our current operating plans, we believe that our existing cash, cash equivalents and investments in marketable securities, will be sufficient to fund our operations into 2028. However, our forecast for the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. Additionally, conducting preclinical studies and clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain. We will need to raise substantial additional capital in the future.
Our future funding requirements will depend largely on:
•the type, number, scope, progress, expansions, results, costs and timing of, discovery, preclinical studies and clinical trials of our current and future product candidates;
•the costs and timing of manufacturing for our current and future product candidates and commercial manufacturing;
•the costs, timing and outcome of regulatory review of our current and future product candidates;
•the timing and amount of milestones, royalties, or other payments we may be required to make to third parties, including Sanofi SA, the Cystic Fibrosis Foundation and AbbVie, and the terms and timing of establishing and maintaining any other similar arrangements we may enter in the future;
•the legal costs of obtaining, maintaining and enforcing our patents and other intellectual property rights;
•our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company;
•the costs associated with hiring additional personnel and consultants as our clinical activities increase;
•the costs and timing of establishing or securing sales and marketing capabilities if any current or future product candidate is approved;
•our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;
•the financial terms of any such agreement that we may enter into, including if we in-license or acquire additional product candidates or intellectual property; and
•costs to add additional operational, financial, clinical, quality and management information systems.
We have no committed sources of capital. Until such time, if ever, as we can generate substantial product revenue to support our cost structure, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, potentially including collaborations, licenses or other strategic arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. In addition, debt financing and equity financing, if available, may involve agreements that
include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional funds through a strategic agreement, we may have to grant rights to develop and market our current and future product candidates even if we would otherwise prefer to develop and market such product candidates ourselves. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.
If we are unable to raise additional funds, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts.
Contractual Obligations and Commitments
During the nine months ended September 30, 2025, there were no material changes to our contractual obligations and commitments described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report.
Critical Accounting Estimates
Our management's discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which are prepared in accordance with GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience, known trends and events and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
During the nine months ended September 30, 2025, there were no material changes to our critical accounting estimates described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report.
Recent Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, "Summary of Significant Accounting Policies" in our consolidated financial statements and our unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report.
Emerging Growth Company and Smaller Reporting Company Status
We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We may take advantage of these exemptions until we are no longer an emerging growth company. Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our consolidated financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the time that we are no longer an "emerging growth company."
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a "large accelerated filer" under the rules of the SEC, which means, among other things, the market value of our common stock that is held by non-affiliates exceeds
$700.0 million as of the last business day of our most recently completed second fiscal quarter and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We are also a "smaller reporting company" as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until for so long as either (i) our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
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