SION US Equity☆

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes and other financial information included elsewhere in this Annual Report. This discussion and analysis and other parts of this Annual Report contain forward-looking statements based upon our current plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and beliefs. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report. You should carefully read the “Risk Factors” section of this Annual Report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Also see the section titled “Cautionary Note Regarding Forward-Looking Statements.”

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.

In February 2025, we disclosed interim data from two ongoing randomized, double-blinded, placebo-controlled Phase 1 clinical trials of our highly potent NBD1 stabilizers—SION-719 and SION-451—evaluating the safety, tolerability and PK of single ascending doses ("SAD") and multiple ascending doses ("MAD") of each

118

Table of Contents

product candidate in healthy subjects. As of the interim data cutoff date of January 14, 2025, five SAD cohorts and three MAD cohorts of SION-719 had been completed, with over 60 healthy subjects dosed, and six SAD cohorts and three MAD cohorts of SION-451 had been completed, with over 70 healthy subjects dosed. Both SION-719 and SION-451 were generally well tolerated based on interim Phase 1 clinical data as of the interim data cutoff date. In these trials, at both single and multiple doses, SION-719 and SION-451 exposures were achieved that have the potential, based on our preclinical CFHBE model, to provide clinically meaningful benefit if SION-719 or SION-451 were administered as part of a dual combination or as an add-on to the standard of care (“SOC”). Since reporting interim data, we have completed dosing in the MAD part of the Phase 1 trial of SION-451, and the final MAD cohort of the SION-719 trial, evaluating 120 mg of SION-719, is planned. The additional completed cohorts evaluated 225 mg and 25 mg (fed) of SION-451 and 160 mg of SION-719, dosed twice daily ("BID") over 10 days. All MAD data, including from the recently completed cohorts, remain blinded to individual subject treatment assignment. Both compounds were generally well tolerated in these additional cohorts. The Part C of each trial, in which we are evaluating the effect of food on the PK of each product candidate and the bioequivalence of a table formulation, is ongoing. Topline data from the Phase 1 trials are expected in the first half of 2025.

We are also developing a portfolio of complementary CFTR modulators designed to work synergistically with our NBD1 stabilizers to improve CFTR function, as seen in preclinical models. In July 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), 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 SION-109, which targets CFTR’s intracellular loop 4 (“ICL4”) region.

We believe our robust pipeline of NBD1 stabilizers and complementary modulators provide multiple potential pathways to achieving our goal, either in combination with each other to produce a proprietary combination CF therapy, or in combination with the current standard of care. We plan to evaluate multiple NBD1 stabilizer candidates and complementary modulator candidates and select the most promising candidates to advance into later-stage development. Initially, we intend to evaluate an NBD1 stabilizer candidate in combination with the current standard of care in a proof-of-concept trial. In parallel, we will determine the proprietary dual combination that we believe is optimal to advance into a Phase 2b dose-ranging trial in CF patients. We currently have exclusive rights to develop and commercialize our compounds.

Since our inception in 2019, we have not generated any revenue. Historically we had funded our operations primarily with proceeds from the sale and issuance of our preferred stock. As of December 31, 2024, we raised aggregate net proceeds of $330.4 million from 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 million from the sale of 12,176,467 shares 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 $61.7 million and $47.3 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $181.1 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, including an NBD1 stabilizer product candidate;

•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, including an NBD1 stabilizer product candidate, 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;

119

Table of Contents

•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 December 31, 2024, we had cash, cash equivalents and marketable securities of $168.0 million. Based upon our current operating plans, we believe that the net proceeds from the IPO, together 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 Annual Report.

License and Collaboration Agreements

Below is a summary of the key terms for certain of our license and collaboration agreements. For a more detailed description of these agreements, see the section titled “Business—License and Collaboration Agreements.”

Sanofi License Agreement

In December 2019, we entered into a license agreement, which has been subsequently amended (as amended, the “Sanofi License Agreement”), with Sanofi, pursuant to which we have been granted an exclusive, worldwide, sublicensable, royalty-bearing license to develop and commercialize products using the licensed compounds and know-how for CFTR modulator therapies. The licensed and derived rights are being utilized in SION-719, SION-109 and SION-451.

120

Table of Contents

As initial consideration for the license, we paid a non-refundable, upfront payment of $1.5 million, as well as a reimbursement of $0.3 million for Sanofi’s research and development expenses, which was previously recorded as research and development expense because the acquired license represented in-process research and development with no alternative future use. In addition, we are required to pay Sanofi a total of up to $40.0 million upon achievement of certain late-stage developmental and commercial milestones. As of December 31, 2024, no milestones were achieved. We are also required to pay royalties to Sanofi in the low single-digit percentage range based on net sales of licensed products, subject to customary reductions and offsets. Such royalty payments shall be reduced for products covered by derived patents.

CFF Payment Agreement

In December 2019, we entered into a payment agreement (the “CFF Payment Agreement”) with the Cystic Fibrosis Foundation (“CFF”), pursuant to which we agreed to provide CFF with compensation in exchange for the grant of, or forbearance from exercising, certain of CFF’s rights existing under the license agreement, by and between CFF (through an assignment by Cystic Fibrosis Foundation Therapeutics, Inc.) and Genzyme Corporation, an affiliate of Sanofi (the “CFFT-Genzyme Agreement”). Under the CFF Payment Agreement, we are obligated to compensate CFF in connection with our development and commercialization of licensed products under the Sanofi License Agreement.

As initial consideration for CFF’s grant of, and forbearance from exercising, its rights under the CFFT-Genzyme Agreement, we paid an upfront fee of $0.2 million and issued CFF shares of our preferred stock, valued at $1.0 million, which were previously recorded as research and development expenses. In addition, we agreed to pay CFF a sub-teen double-digit percentage of any amounts paid by us to Sanofi under the Sanofi License Agreement, other than milestone, royalty or reimbursement payments. We are required to pay CFF a total of up to $40.0 million upon achievement of certain late-stage developmental and commercial milestones. As of December 31, 2024, no milestones were achieved. We are also required to pay revenue-shares of royalty payments to CFF in the low single-digit percentage range based on net sales of licensed products, subject to customary reductions and offsets. Such milestone and royalty payments shall be reduced for products covered by derived patents. Further, a side letter was executed between us and Sanofi, which clarifies the relationship between us, Sanofi and CFF, under which we are obligated to pay Sanofi 20% of the milestones it would have been obligated to pay CFF, net of the milestone amounts it is obligated to pay under the Sanofi License Agreement.

AbbVie License Agreement

In July 2024, we entered into a license agreement (the “AbbVie License Agreement”) with AbbVie, pursuant to which we have been granted a license to research, develop and commercialize certain CFTR compounds. The licensed rights are directed, among other things, to three clinical-stage CFTR modulator therapies: SION-2222, SION-2851 and SION-3067. The license granted to us under the AbbVie License Agreement is subject to certain preexisting rights held by AbbVie and Galapagos NV (“Galapagos”). In particular, certain of the licensed patents and other intellectual property rights were developed by or on behalf of Galapagos and are sublicensed to us subject to the terms of the second amended and restated collaboration agreement between Galapagos and AbbVie in October 2018 (the “Galapagos License Agreement”), as amended by a side letter between Galapagos and AbbVie in July 2024.

As initial consideration for the license, we paid a non-refundable, upfront payment of $5.0 million and issued shares of our common stock with a fair value of $8.6 million to AbbVie. We determined that the AbbVie License Agreement represented an asset acquisition as it did not meet the definition of the business. We recorded the total initial consideration of $13.6 million as research and development expense during the year ended December 31, 2024, because the acquired license represented in-process research and development with no alternative future use. In addition, we are required to pay AbbVie a total of up to $360.0 million upon achievement of certain development and commercial milestones, consisting of up to $70.0 million in late-stage development milestones and up to $290.0 million in commercial milestones. We are also required to pay royalties to AbbVie in the low to mid single-digit percentage range based on net sales of licensed products, subject to customary reductions and offsets.

In addition, we are required to pay AbbVie up to $130.0 million in commercial and sales-based milestone payments, mid to high single-digit royalties on the licensed products or other payments due to

121

Table of Contents

Galapagos pursuant to the Galapagos License Agreement, to the extent such payments are triggered by our use of the licensed rights owned by Galapagos under the AbbVie License Agreement. There were no milestones achieved under the AbbVie License Agreement and Galapagos License Agreement as of December 31, 2024.

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. If our development efforts for our current or future product candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales. 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 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 obtained from (i) internal personnel regarding the services that have been performed on the Company's behalf and estimating the associated cost incurred for those services or (ii) 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

122

Table of Contents

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 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 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, office and information technology costs, insurance costs and facilities, depreciation and other general and administrative expenses that are allocated. 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,

123

Table of Contents

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 marketable securities. We expect our interest income will increase as we invest the cash received from the net proceeds from the IPO.

Other Income

Other income consists of sublease income through our subleasing agreement which is further discussed within Note 7, “Leases” in our consolidated financial statements included elsewhere in this Annual Report.

Income Taxes

Since our inception, we have not recorded any income tax benefits for the net losses we have incurred in each period or for our earned research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credits will not be realized.

As of December 31, 2024 and 2023, we had $65.6 million and $48.2 million of federal operating loss carryforwards, and $68.2 million and $47.1 million of state operating loss carryforwards, respectively. The federal NOLs are not subject to expiration and the state NOLs begin to expire in 2044. These loss carryforwards are available to reduce future federal taxable income, if any. As of December 31, 2024 and 2023, we have recorded a full valuation allowance against our net deferred tax assets.

Results of Operations

Comparison of Years Ended December 31, 2024 and 2023

The following table summarizes our results of operations (in thousands):

Year Ended December 31, Change

Operating expenses:

Other income:

124

Table of Contents

Research and Development Expenses

The following table summarizes our research and development expenses (in thousands):

Year Ended December 31, Change

Direct research and development expenses by program:

Unallocated research and development expenses:

Personnel-related (including stock-based compensation) 9,128 8,681 447

Research and development expenses increased by $16.7 million to $57.3 million for the year ended December 31, 2024, from $40.6 million for the year ended December 31, 2023. The change in research and development expenses was primarily due to the following:

•direct research and development expenses increased nominally resulting from a $4.5 million increase in complementary modulator program expenses due to the SION-109 Phase 1 clinical trial in 2024 offset by a $4.3 million decrease in NBD1 program expenses due to a decrease in manufacturing costs; and

•unallocated research and development expenses increased by $16.5 million due to IPR&D acquisition costs incurred in connection with the AbbVie License Agreement of $13.6 million and an increase of $2.9 million due to professional services and other unallocated research and development expenses.

General and Administrative Expenses

The following table summarizes our general and administrative expenses (in thousands):

Year Ended December 31, Change

Personnel-related (including stock-based compensation) $ 7,842 $ 5,924 $ 1,918

Total general and administrative expenses $ 13,268 $ 9,707 $ 3,561

General and administrative expenses increased by $3.6 million to $13.3 million for the year ended December 31, 2024, from $9.7 million for the year ended December 31, 2023. The increase in general and administrative expenses was primarily due to:

•$1.9 million increase in personnel-related expenses due to an increase in stock-based compensation; and

•$1.5 million increase in fees related to the increased use of consultants and professional service organizations.

Interest Income

Interest income increased by $5.4 million to $8.2 million for the year ended December 31, 2024, from $2.8 million for the year ended December 31, 2023, primarily driven by an increased investment in debt securities due to the proceeds received from the issuance of our Series C preferred stock (the “Series C Financing”) and the amortization of discounts on our investment activity.

125

Table of Contents

Other Income

Other income increased by $0.4 million to $0.7 million for the year ended December 31, 2024, from $0.3 million for the year ended December 31, 2023, driven by 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 a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings or strategic agreements.

We have funded our operations historically primarily from the sale of proceeds of preferred stock. As of December 31, 2024, we had raised aggregate net proceeds of $330.4 million from the sale of our preferred stock. As of December 31, 2024, we had $168.0 million in cash, cash equivalents and marketable securities.

In February 2025, we raised aggregate net proceeds of $199.6 million from the sale of shares of common stock in our IPO.

Cash Flows

The following table sets forth a summary of the net cash flow activity (in thousands):

Year Ended December 31,

Net cash used in operating activities $ (52,787) $ (43,699)

Net cash (used in) provided by investing activities (126,913) 27,352

Net cash provided by financing activities 178,967 31

Net decrease in cash, cash equivalents and restricted cash $ (733) $ (16,316)

Operating Activities

For the year ended December 31, 2024, net cash used in operating activities was $52.8 million primarily due to our net loss of $61.7 million and changes in operating assets and liabilities of $3.1 million, partially offset by $12.0 million of non-cash charges related to non-cash license expense, stock-based compensation, depreciation, non-cash operating lease expense and amortization of discounts on marketable securities.

For the year ended December 31, 2023, net cash used in operating activities was $43.7 million primarily due to our net loss of $47.3 million and changes in operating assets and liabilities of $0.8 million, partially offset by $4.4 million of non-cash charges related to stock-based compensation, depreciation, non-cash operating lease expense and amortization of discounts on marketable securities.

Investing Activities

Net cash used in investing activities was $126.9 million during the year ended December 31, 2024, which was primarily driven by purchases of marketable securities of $182.8 million, partially offset by maturities of marketable securities of $56.0 million.

Net cash provided by investing activities was $27.4 million during the year ended December 31, 2023, which was primarily driven by maturities of marketable securities of $52.0 million, partially offset by purchases of marketable securities for $23.5 million and purchases of property and equipment of $1.1 million.

126

Table of Contents

Financing Activities

Net cash provided by financing activities was $179.0 million during the year ended December 31, 2024, as compared to $31,000 during the year ended December 31, 2023. The increase in net cash provided by financing activities was primarily due to the Series C Financing which occurred in March 2024, compared to no financings completed during 2023, partially offset by $2.5 million of payments for offering costs related to our IPO, which closed in February 2025.

Future Funding Requirements

As of December 31, 2024, we had cash, cash equivalents and marketable securities of $168.0 million. Based upon our current operating plans, we believe that the net proceeds from our IPO, together with our existing cash, cash equivalents and 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, CFF 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.

127

Table of Contents

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

Research and Development and Manufacturing Agreements

We enter into contracts in the normal course of business with CROs, CDMOs and other vendors to assist in the research and development activities and other services and products for operating purposes. These contracts generally provide for termination at any time upon a certain amount of prior notice.

Leases

In May 2022, we executed a non-cancelable operating lease in Waltham, Massachusetts (the “Waltham Lease”) to rent out 24,051 square feet of laboratory and office space and relocated our headquarters to Waltham in January 2023. Total expected cash payments in connection with the Waltham Lease will be $9.7 million over the term of the agreement ending in 2030. This excludes our share of facility operating expenses, real-estate taxes and other costs that are reimbursable to the landlord under the lease. For additional information regarding the lease obligations see Note 7, “Leases” in our consolidated financial statements included elsewhere in this Annual Report.

License Agreements

Our agreements with certain third parties to license intellectual property include potential milestone fees, sublicense fees and royalty fees. The milestone fees are dependent upon the development of products using the intellectual property licensed under the arrangements and contingent upon the achievement of development or regulatory approval milestones, as well as commercial milestones. These potential obligations are contingent upon the occurrence of future events and the timing and likelihood of such potential obligations are not known with certainty. For further information regarding these agreements, please see “Business—Licenses and Collaboration Agreements.”

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 generally accepted accounting principles in the United States of America. 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.

While our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” in our consolidated financial statements included elsewhere in this Annual Report, we believe that our critical accounting estimates are as follows.

Research and Development Expenses and Accruals

In preparing the consolidated financial statements, we are required to estimate our accrued research and development expenses as of each balance sheet date. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. This process involves reviewing open contracts, communicating with internal personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. We periodically confirm the accuracy of our estimates with our service providers and make adjustments, if necessary. The majority of our service providers invoice in arrears for services performed or when contractual milestones are met. The

128

Table of Contents

financial terms of agreements with these service providers are subject to negotiation, vary from contract-to-contract and may result in uneven payment flows. In circumstances where amounts have been paid in excess of costs incurred, we record a prepaid expense.

Contingent developmental and regulatory milestone payments will be recognized when the milestone is achieved, and commercial milestones, such as sales-based milestone payments, and royalties will be recognized when the underlying sale(s) occur.

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

Stock-Based Compensation Expense

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

Determination of Fair Value of Common Stock Valuations

Prior to our IPO, there was no public market for our common stock. As a result, the estimated fair value of our common stock has been determined by our board of directors as of the date of each option grant with input from management, considering our most recently available third-party valuations of common stock, and our board of directors’ 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. These 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. Our common stock valuation was prepared using either the option pricing method (“OPM”) or the hybrid method, both of which used a market approach to estimate our equity value. The OPM treats common stock and convertible preferred stock as call options on the 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 the OPM, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the convertible preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. The hybrid method is a probability-weighted expected return method ("PWERM") where the equity value in one or more of the scenarios is calculated using an OPM. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for us 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 valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock.

129

Table of Contents

These third-party valuations were performed at various dates, which resulted in valuation of our common stock of $6.11 per share as of February 2024, $8.08 per share as of August 2024 and $10.33 per share as of October 2024. The fair value of our common stock was determined by our board of directors, with input from management and considering the independent third-party valuations and various objective and subjective factors as of each grant date, including:

•the prices at which we sold preferred stock and the superior rights and preferences of the preferred stock relative to our common stock at the time of each grant;

•our ability to raise future financings;

•the progress of our research and development efforts, including the status of clinical trials for our product candidates;

•the lack of liquidity of our equity as a private company;

•our stage of development and business strategy and the material risks related to our business and industry;

•the achievement of enterprise milestones, including entering into collaboration and license agreements;

•the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies;

•any external market conditions affecting the biotechnology industry and trends within the biotechnology industry;

•the likelihood of achieving a liquidity event for the holders of our preferred stock and holders of our common stock, such as an initial public offering, or a sale of our company, given prevailing market conditions; and

•the analysis of IPOs and the market performance of similar companies in the biopharmaceutical industry.

The assumptions underlying these valuations were highly complex and subjective and represented management’s best estimates, which involved inherent uncertainties and the application of management’s judgment. As a result, if we had used significantly different assumptions or estimates, the fair value of our common stock and our stock-based compensation expense could be materially different.

In February 2025, we completed our IPO. As such, the fair value of our common stock will be determined based on the quoted market price of our common stock and it is no longer necessary for our board of directors to estimate the fair value of our common stock in connection with our accounting for granted stock options and other such awards we may grant.

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 included elsewhere in this Annual 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

130

Table of Contents

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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a "smaller reporting company," as defined by Rule 12b-2 of the Exchange Act, and pursuant to Item 305 of Regulation S-K we are not required to provide quantitative and qualitative disclosures about market risk

As a "smaller reporting company," as defined by Rule 12b-2 of the Exchange Act, and pursuant to Item 305 of Regulation S-K we are not required to provide quantitative and qualitative disclosures about market risk.

131

Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements for the Years Ended December 31, 2024 and 2023:

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) F-2

Consolidated Balance Sheets F-3

Consolidated Statements of Operations and Comprehensive Loss F-4

Consolidated Statements of Cash Flows F-6

Notes to Consolidated Financial Statements F-7

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Sionna Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sionna Therapeutics, Inc., and subsidiary (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders' deficit, and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

March 20, 2025

We have served as the Company’s auditor since 2021.

F-2

Table of Contents

SIONNA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

Year Ended December 31,

Assets

Current assets:

Marketable securities, current 109,750 —

Prepaid expenses and other current assets 3,455 686

Marketable securities, noncurrent 20,505 —

Operating lease right-of-use asset 7,832 8,625

Liabilities, convertible preferred stock and stockholders’ deficit

Current liabilities:

Operating lease liability, current 1,072 728

Operating lease liability, noncurrent 8,677 9,749

Commitments and contingencies (Note 8)

Stockholders’ deficit:

Accumulated other comprehensive income 368 —

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Table of Contents

SIONNA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

Year Ended December 31,

Operating expenses:

Other income:

Net loss per share, basic and diluted $ (15.99) $ (16.11)

Comprehensive loss:

Other comprehensive income:

Unrealized gain on marketable securities 368 16

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Table of Contents

SIONNA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(in thousands, except share amounts)

Preferred Stock Preferred Stock Preferred Stock Preferred Stock Common Stock

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Exercise of common stock options — — — — — — — — 35,552 — 31 — — 31

Vesting of restricted common stock awards — — — — — — — — 222,382 — — — — —

Stock-based compensation expense — — — — — — — — — — 2,259 — — 2,259

Unrealized gain on marketable debt securities — — — — — — — — — — — 16 — 16

Exercise of common stock options — — — — — — — — 71,264 1 140 — — 141

Vesting of restricted common stock awards — — — — — — — — 186,191 — — — — —

Stock-based compensation expense — — — — — — — — — — 3,708 — — 3,708

Unrealized gain on marketable debt securities — — — — — — — — — — — 368 — 368

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Table of Contents

SIONNA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Non-cash expense related to IPR&D acquisition 8,639 —

Stock-based compensation expense 3,708 2,259

Non-cash operating lease expense 1,962 2,184

Amortization of discount on marketable securities (3,001) (679)

Changes in operating assets and liabilities:

Prepaid expenses and other current assets (2,760) 333

Operating lease liabilities (1,897) (172)

Other assets 35 —

Net cash used in operating activities (52,787) (43,699)

Cash flows from investing activities:

Purchases of property and equipment (27) (1,116)

Net cash (used in) provided by investing activities (126,913) 27,352

Cash flows from financing activities:

Payment of deferred offering costs (2,502) —

Exercise of common stock options 141 31

Net cash provided by financing activities 178,967 31

Net decrease in cash, cash equivalents and restricted cash (733) (16,316)

Cash, cash equivalents and restricted cash at beginning of period 39,483 55,799

Cash, cash equivalents and restricted cash at end of period $ 38,750 $ 39,483

Supplemental disclosure of non-cash investing and financing activities:

Deferred offering costs in accrued expenses $ 492 $ —

Reconciliation of cash, cash equivalents and restricted cash:

Total cash, cash equivalents, and restricted cash $ 38,750 $ 39,483

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Table of Contents

SIONNA THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business

Organization

Sionna Therapeutics, Inc. (the “Company”), formerly known as Sling Therapeutics, Inc., is a clinical-stage biopharmaceutical company dedicated to researching and developing novel medicines for cystic fibrosis. The Company was incorporated in Delaware in August 2019 and is headquartered in Waltham, Massachusetts.

Risks and Uncertainties

The Company is subject to a number of risks common to other companies in the biotechnology industry, including but not limited to, development by competitors of new technological innovations, risks of failure of preclinical studies and clinical trials, development and manufacturing of product candidates, obtaining regulatory approval for product candidates, competition from substitute products, the need to successfully commercialize and gain market acceptance of its product candidates, protection of proprietary technology, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third party organizations compliance with government regulations, and the need to obtain additional financing. Product candidates currently under development will require significant additional research and development efforts, including extensive clinical testing and regulatory approval, prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel infrastructure, and extensive compliance-reporting capabilities. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Reverse Stock Split

On January 31, 2025, the Company effected a 1-for-1.4611 reverse stock split of its issued and outstanding shares of common stock, which also resulted in a proportional adjustment to the conversion price for each series of its convertible preferred stock and to the exercise prices of the outstanding stock options. The par value and authorized number of shares of common stock and redeemable convertible preferred stock were not adjusted as a result. All share and per share amounts for all periods presented in the consolidated financial statements and notes thereto have been retroactively adjusted to reflect the effect of the reverse stock split.

Initial Public Offering

In February 2025, the Company completed its initial public offering ("IPO"), in which the Company sold an aggregate of 10,588,233 shares of its common stock at a public offering price of $18.00 per share and sold an additional 1,588,234 shares of its common stock to the underwriters of the IPO pursuant to the full exercise of their option to purchase additional shares, resulting in aggregate net proceeds of approximately $199.6 million, after deducting underwriter discounts, commissions and other offering expenses. Immediately prior to the closing of the IPO, the Company's outstanding redeemable convertible preferred stock automatically converted into 27,149,206 shares of common stock. Following the closing of the IPO, no shares of redeemable convertible preferred stock were outstanding.

In connection with the closing of the IPO, the Company's certificate of incorporation was amended and restated to authorize 500,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share.

Liquidity and Going Concern

The Company historically has funded its operations primarily with proceeds from the sale of convertible preferred stock and has not generated revenue from product sales or other sources. As of December 31, 2024, the Company has raised an aggregate of $330.4 million in net proceeds through the sale of convertible preferred stock. The Company has incurred annual net operating losses and has generated negative operating cash flows in every year since inception. As of December 31, 2024, the Company had an accumulated deficit of

F-7

Table of Contents

$181.1 million. The Company expects its operating losses to continue into the foreseeable future as it continues to pursue its research and development efforts.

The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. The Company believes that its existing cash, cash equivalents, and marketable securities together with the additional proceeds received from the IPO will be sufficient to allow the Company to fund operations beyond twelve months from the date of issuance of these consolidated financial statements.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) of the Financial Accounting Standards Board (“FASB”). The accompanying consolidated financial statements include the accounts of Sionna Therapeutics, Inc., and its wholly owned subsidiary, Sionna Therapeutics Securities Corporation. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities and expenses and the related disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected within the consolidated financial statements include, but are not limited to, research and development expenses and accruals and the valuation of the Company’s common shares in connection with the accounting for stock-based awards. The Company bases its estimates on historical experience and various other assumptions that are believed to be 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. On an ongoing basis, management evaluates its estimates, as there are changes in circumstances and facts. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with original maturities of ninety days or less at the time of purchase to be cash equivalents. Cash and cash equivalents typically include cash held in deposit accounts and money market funds.

Cash accounts with any type of restriction are classified as restricted cash. As of December 31, 2024 and 2023, the Company had restricted cash of $1.0 million held to secure a letter of credit associated with the Company’s leased corporate headquarters. The restricted funds are maintained in a certificate of deposit account. The Company classified this amount as restricted cash in the accompanying consolidated balance sheets within other assets based on the release date of the restrictions.

Marketable Securities

The Company classifies marketable securities with a remaining maturity greater than three months at the time of purchase and less than one year from the balance sheet date as current. Marketable securities would be classified as long-term assets on the consolidated balance sheets if the maturity exceeded one year, and the Company did not intend to utilize the marketable securities to fund current operations.

The Company classifies all of its investments as available-for-sale securities. Accordingly, these investments are recorded at fair value. Realized gains and losses and amortization of discounts and premiums are included in interest income, which is a component of other income. Unrealized gains and losses on available-for-sale securities are included in accumulated other comprehensive loss as a component of

F-8

Table of Contents

stockholders’ deficit until realized. Interest receivables earned on marketable securities are recorded as a component of prepaid expenses and other current assets.

At each balance sheet date, the Company assesses available-for-sale debt securities in an unrealized loss position to determine whether the unrealized loss or any potential credit losses should be recognized. The Company evaluates whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. The Company also evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the severity of the impairment, any changes in interest rates, changes to the underlying credit ratings and forecasted recovery, among other factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in other income. There have been no impairment or credit losses recognized during any of the periods presented.

Concentration of Credit Risk and Off-Balance Sheet Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash, cash equivalents and marketable securities. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. The Company believes that it is not exposed to significant credit risk as its deposits are held at financial institutions that management believes to be of high credit quality and the Company has not experienced any losses on these deposits. The Company regularly invests excess cash with major financial institutions in money market funds, U.S. Treasury securities and government agency securities, and commercial paper, all of which can be readily purchased and sold using established markets. The Company believes that the market risk arising from its holdings of these financial instruments is mitigated based on the fact that many of these securities are either government-backed or of high credit rating.

Fair Value of Financial Instruments

Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Level 3—Unobservable inputs for the asset or liability (i.e., supported by little or no market activity). Level 3 inputs include management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of the fair value requires more judgement. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The carrying values of prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

F-9

Table of Contents

Property and Equipment, net

Property and equipment is stated at cost net of accumulated depreciation. Costs of major additions and betterments are capitalized. Maintenance and repairs to an asset that do not improve or extend its life are expensed in the period incurred. Depreciation expense is recognized using the straight-line method over the estimated useful life of each asset as follows:

Estimated Useful Life (in years)

Lab equipment 5

Furniture & fixtures 5

Hardware & software 3

Leasehold improvements Shorter of useful life or remaining lease term

When an item is sold or retired, the costs and related accumulated depreciation are eliminated, and the resulting gain or loss, if any, is credited or charged to the consolidated statement of operations and comprehensive loss. Property and equipment to be disposed of is carried at fair value less costs to sell.

Impairment of Long-Lived Assets

Long-lived assets consist primarily of property and equipment and right-of-use assets. The Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may be impaired. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use or disposition of an asset group are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written down to their fair values. The Company has not recognized any impairment charges during the years ended December 31, 2024 and 2023.

Leases

At the inception of an arrangement the Company determines whether the arrangement contains a lease. Operating leases are included in operating lease right-of-use lease asset (“ROU asset”), operating lease liability, current, and operating lease liability, noncurrent, on the Company’s consolidated balance sheets. Assets subject to finance leases are included in property and equipment, and the related lease obligation is included in other current liabilities and other long-term liabilities on the Company’s consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. As of December 31, 2024 and 2023, the Company did not have any finance leases. The Company has elected the short-term lease recognition exemption for short-term leases, which allows the Company not to recognize lease liabilities and ROU assets on the consolidated balance sheets for leases with an original term of twelve months or less.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities and their corresponding ROU assets are initially recognized based on the present value of lease payments over the expected remaining lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. Certain adjustments to the ROU asset may be required for items such as incentives received from the lessor. The interest rate implicit in lease contracts is typically not readily determinable. Therefore, the Company utilizes its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the fixed rate at which the Company could borrow, on a collateralized basis, the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Leases generally provide for payments of non-lease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. The Company accounts for non-lease components together with lease components. Variable lease payments, such as periodic adjustments for inflation, reimbursement of real estate taxes, and variable common area maintenance are expensed as incurred as variable lease costs and are not recorded on the consolidated balance sheets.

F-10

Table of Contents

Sublease income is recognized on a straight-line basis over the term of the sublease agreement and is recorded within Other Income on the consolidated statements of operations and comprehensive loss.

Research and Development Expenses and Accruals

Research and development costs include (i) employee-related expenses, including salaries, benefits, and stock-based compensation expense; (ii) external research and development expenses incurred under arrangements with third parties, such as contract research organizations (“CRO”) agreements, contract development and manufacturing organizations (“CDMOs”), consultants and scientific advisors; (iii) costs associated with preclinical and clinical activities and (iv) lab supplies, lab expenses and an allocation of rent, depreciation, and infrastructure.

The Company recognizes research and development costs in the periods in which they are incurred. Typically, external expenses are recognized based on an evaluation of the progress to completion of specific tasks using information obtained from (i) internal personnel regarding the services that have been performed on the Company's behalf and estimating the associated cost incurred for those services or (ii) information provided to the Company by their service providers as of each reporting date. Advance payments 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 accrued or prepaid expense balances at the end of any reporting period.

Asset Acquisitions and Acquired In-Process Research and Development Expense

The Company accounts for acquisitions of assets or a group of assets that do not meet the definition of a business as asset acquisitions based on the cost to acquire the asset or group of assets, which include certain transaction costs. In an asset acquisition, the cost to acquire is allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values as of the acquisition date. No goodwill is recorded in an asset acquisition. Assets that are acquired in an asset acquisition for use in research and development activities that have an alternative future use are capitalized as in process research and development (“IPR&D”). Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as research and development expense as of the acquisition date.

The Company will recognize additional research and development expenses in the future if and when the Company becomes obligated to make contingent milestone or royalty payments which are governed by the terms of the agreements by which it acquired the IPR&D assets. Developmental and regulatory milestone payments will be recorded when the milestone is achieved, and commercial milestones, such as sales-based milestone payments, and royalties will be recorded when the underlying sale(s) occur.

The Company presents the costs to acquire IPR&D as a component of operating activities in the consolidated statements of cash flows.

Patent Costs

All patent-related costs incurred in connection with filing and prosecuting patent applications such as direct application fees, and legal and consulting expenses are expensed as incurred due to the uncertainty about the recovery of the expenditure. Patent-related costs are classified as general and administrative expenses within the Company’s consolidated statements of operations and comprehensive loss.

Deferred Offering Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are direct and incremental costs associated with in-process equity financings as deferred offering costs until such financing is consummated. After consummation of the equity financing, these costs are recorded as a reduction of the proceeds generated as a result of the offering within additional paid-in capital. In the event that the equity financing is abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the condensed consolidated statements of operations and comprehensive loss.

F-11

Table of Contents

Convertible Preferred Stock

The Company’s convertible preferred stock is classified as temporary equity in the accompanying consolidated balance sheets and excluded from stockholders’ deficit as the potential redemption of such stock is outside the Company’s control and would require the redemption of the then-outstanding convertible preferred stock. The convertible preferred stock is not redeemable except for in the event of a liquidation, dissolution, or winding up of the Company (see Note 10). Costs incurred in connection with the issuance of convertible preferred stock are recorded as a reduction of gross proceeds from issuance. Subsequent adjustments of the carrying values to the ultimate redemption values will be made only when it becomes probable that these events will occur.

Fair Value of Common Stock

The Company determined the estimated fair value of common stock prior to the completion of the IPO based on a number of objective and subjective factors, including, but not limited to, external market conditions affecting the biotechnology industry sector, the prices at which the Company sold shares of convertible preferred stock and the superior rights and preferences of securities senior to the Company’s common stock at the time, and the likelihood and potential timing of achieving a liquidity event, such as an initial public offering, in light of prevailing market conditions. The Company utilized valuation methodologies 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, to estimate the fair value of common stock. The methodologies utilized to estimate the fair value of common stock prior to the completion of the IPO included the option pricing method (“OPM”) or the hybrid method, both of which use a market approach to estimate the Company’s equity value. The OPM treats common stock and 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 the OPM, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the convertible preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. The hybrid method is a probability-weighted expected return method ("PWERM") where the equity value in one or more of the scenarios is calculated using an OPM. 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 invest 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 valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock. Significant changes to the key assumptions used in the valuations could result in different fair values of common stock.

Stock-Based Compensation

The Company measures all stock options and other stock-based awards granted to employees, non-employees, and directors based on the fair value on the date of the grant and recognizes compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. The Company’s stock-based payments include stock options and grants of restricted common stock awards. Generally, the Company issues stock-based awards with only service-based vesting conditions.The Company’s policy is to account for forfeitures when they occur. Stock-based compensation expense is classified in the accompanying consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipients service payments are classified.

Restricted common stock awards are subject to repurchase rights until such awards meet all vesting conditions. Accordingly, the Company has recorded the proceeds from the issuance of restricted common stock awards as a liability in the consolidated balance sheets. The restricted common stock liability is reclassified into stockholders’ equity as the restricted common stock vests.

F-12

Table of Contents

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Board of Directors of the Company (the “Board”) determines the fair value of the Company’s common stock taking into consideration its most recently available third-party valuations of common stock as well as additional factors which may have changed since the date of the most recent contemporaneous valuation through grant date. Due to the lack of company-specific historical and implied volatility information, the Company estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until it has adequate historical data regarding the volatility of its own traded stock price. The Company uses the simplified method as prescribed by the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term for options granted to employees and non-employees as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero because the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future.

Income Taxes

The Company’s provision for income taxes, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect our best assessment of estimated future taxes to be paid. Significant judgments and estimates based on interpretations of existing tax laws or regulations in the United States are required in determining our provision for income taxes. Changes in tax laws, statutory tax rates, and estimates of our future taxable income could impact the deferred tax assets and liabilities provided for in the consolidated financial statements and would require an adjustment to the provision for income taxes.

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, which are considered appropriate as well as the related net interest and penalties.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares outstanding during the period and, if dilutive, the weighted-average number of potential shares of common shares. Net loss per share attributable to common stockholders is calculated using the two-class method, which is an earnings allocation formula that determines net loss per share for the holders of the Company’s common shares and participating securities. The Company’s convertible preferred stock contains participation rights in any dividend paid by the Company and is deemed to be a participating security. The participating securities do not include a contractual obligation to share in losses of the Company and are not included in the calculation of net loss per share in the periods in which a net loss is recorded.

F-13

Table of Contents

Diluted net loss per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method. The Company allocates earnings first to preferred stockholders based on dividend rights and then to common and preferred stockholders based on ownership interests. The weighted-average number of common shares included in the computation of diluted net loss per share gives effect to all potentially dilutive common equivalent shares.

Common stock equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is antidilutive.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholder’s deficit that result from transactions and events other than those with stockholders. The Company’s unrealized gains and losses on marketable securities represent the only component of other comprehensive loss that are excluded from the reported net loss and that are presented in the consolidated statements of operations and comprehensive loss.

Segment Information

The Company is managed as one operating segment, and thus reports as a single reportable segment. This operating segment is focused on the research and development of cystic fibrosis therapies. Management assessed the financial information routinely reviewed by the Company's Chief Operating Decision Maker ("CODM"), its President and Chief Executive Officer, to monitor the Company's operating performance and support decision making regarding allocation of resources to its operations, and determined that performance is continuously monitored at the consolidated level. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets. The measure used by the CODM in assessing performance and deciding how to allocate resources is based on consolidated net loss, as reported on the consolidated statement of operations and comprehensive loss. The CODM uses consolidated net loss to monitor budget versus actual results to identify deviations from expected results, which is used in assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280: Improvements to Reportable Segment Disclosures) (“ASU 2023-07”). The amendments in this update improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. All disclosure requirements of the update are required for entities with a single reportable segment. The Company has adopted this standard as of January 1, 2024.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2024, the FASB issued ASU 2023-09, Income Taxes (Topic 740: Improvements to Income Tax Disclosures) (“ASU 2023-09”). ASU 2023-09 provides more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and incomes taxes paid information. For public companies, the amendments are effective for annual periods beginning after

F-14

Table of Contents

December 15, 2024, and should be applied prospectively. The Company has determined that the effects of adopting the amendments in ASU 2023-09 will not have a material impact on its consolidated financial position, the results of its operations, or related disclosures when such amendment is adopted.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires entities to disclose additional information about specific expense categories in the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 may be applied retrospectively or prospectively. The Company is currently evaluating the effect of this update on its consolidated financial statements and related disclosures.

3. Marketable Securities

The following table summarizes the amortized cost and estimated fair value of the Company’s current and noncurrent marketable securities (in thousands):

Amortized Cost Unrealized Gain Unrealized Loss Fair Value

Marketable securities, current:

Marketable securities, noncurrent:

There were no unrealized gains or losses on marketable securities as of December 31, 2023.

The Company has determined that there were no material changes in the credit risk, therefore the Company has not recognized any allowance for credit losses on its debt securities. As of December 31, 2024, the Company holds marketable securities with an aggregate fair value of$20.5 million that had remaining maturities between one and two years. All other securities had a contractual maturity of less than a year. There were no realized gains or losses during the year ended December 31, 2024 or 2023.

F-15

Table of Contents

4. Fair Value Measurements

The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the inputs the Company utilized to determine such fair value (in thousands):

Total Level 1 Level 2 Level 3

Assets

Cash equivalents:

Marketable securities:

Total Level 1 Level 2 Level 3

Assets

Cash equivalents:

During the year ended December 31, 2024 and 2023, there were no transfers or reclassifications between fair value measurement levels of assets or liabilities.

5. Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

December 31,

Deposits on lab and office equipment $ — $ 116

Less: accumulated depreciation (1,571) (914)

Property and equipment, net $ 2,466 $ 3,107

Depreciation expense was $0.7 million and $0.6 million for the years ended December 31, 2024 and 2023, respectively.

F-16

Table of Contents

6. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

December 31,

Accrued research and development $ 3,961 $ 3,065

Accrued compensation and benefits 2,972 3,112

Accrued professional fees 737 362

Accrued deferred offering costs 492 —

Accrued other — 51

7. Leases

Operating Leases Summary

Waltham, Massachusetts

In May 2022, the Company entered into a noncancelable facility lease agreement to lease 24,051 square feet of office and laboratory space in Waltham, Massachusetts (“Waltham Lease”), which became the Company headquarters in January 2023 following the completion of construction of the prebuilt office and lab space, and when the Company received full access and control over the leased space. At commencement of the lease the right-of-use asset was $9.5 million, which was reduced by $0.4 million of lease incentives, offset by $0.2 million of lease prepayments, and the lease liability was $9.7 million.

The original term for the Waltham Lease is for the period from January 2023 through November 2030, and the Company has the option to extend the Waltham Lease for an additional five-year term at market-based rates. The renewal option is not reasonably certain to occur, and as such, it was not considered in the measurement of the right-of-use asset and lease liability. The Waltham Lease has escalating base rent payments, which commenced in September 2023 and continue through the expiration of the lease. The Company received eight months of free rent and five additional months of 50% rent abatement. The Company is responsible for other fixed and variable payments including operating expenses and property taxes.

Sublease Agreement

In June 2023, the Company entered into a sublease agreement to sublet 6,399 square feet of its office and laboratory space under the Waltham Lease (the “Sublease”). The Company was not relieved of its obligation to the lessor for the head lease as a result of its entry into the Sublease. The Sublease is classified as an operating lease and commenced in July 2023 and will expire in September 2025. The Sublease has escalating rent payments and is secured by a letter of credit of $0.1 million with the Company named as the beneficiary. Sublease income is recognized on a straight-line basis and the rental income and reimbursement for operating expenses and taxes is included in other income on the consolidated statements of operations and comprehensive loss. For the years ended December 31, 2024 and 2023, the Company recognized $0.7 million and $0.3 million, respectively, of sublease income within other income on the consolidated statements of operations and comprehensive loss.

F-17

Table of Contents

Operating Lease Tables

The following table presents inputs used in the calculation of the Company’s right of use asset and lease liabilities at the end of each reporting period:

December 31,

Weighted average remaining lease term (years) 5.9 6.9

Weighted average discount rate 11.0 % 11.0 %

The components of lease costs were as follows (in thousands):

December 31,

Short-term lease costs — 88

Lease commitments

Future minimum lease payments were as follows (in thousands):

Year ended December 31, Amount

Total future minimum lease payments 13,521

Less imputed interest (3,772)

Present value of operating lease liabilities $ 9,749

8. Commitments and Contingencies

Legal Proceedings

The Company was not subject to any material legal proceedings during the years ended December 31, 2024 and 2023, and the Company is not aware of any material legal proceedings that are currently pending or threatened.

Other Contracts

The Company is party to various contracts with CROs and CDMOs that generally provide for termination on notice, with the exact amounts in the event of termination to be based on the timing of the termination and the terms of the agreement.

Indemnification Agreements

In the ordinary course of business the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including arising out of the relationship between such parties and the Company. In addition, the Company has entered into

F-18

Table of Contents

indemnification agreements with members of its board of directors and senior management that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date however, the Company has not incurred any material costs as a result of such indemnifications nor experienced any losses related to them. As of December 31, 2024 and 2023, the Company was not aware of any claims under indemnification arrangements and it has not accrued any liabilities related to such obligations.

9. License Agreements

Sanofi License Agreement

In December 2019, the Company entered into a license agreement, which has been subsequently amended (as amended, the “Sanofi License Agreement”), with Sanofi SA (f/k/a Genzyme) (“Sanofi”), pursuant to which the Company has been granted an exclusive, sub-licensable, royalty-bearing, worldwide license to develop and commercialize products using the licensed compounds and know-how for cystic fibrosis transmembrane conductance regulator (“CFTR”) correctors.

As initial consideration for the license, the Company paid a non-refundable, upfront payment of $1.5 million, as well as a reimbursement of $0.3 million for Sanofi’s research and development expenses, which was previously recorded as research and development expense because the acquired license represented in-process research and development with no alternative future use. In addition, the Company is required to pay Sanofi a total of up to $40.0 million upon achievement of certain late-stage developmental and commercial milestones. As of December 31, 2024, no milestones have been achieved. The Company is also required to pay royalties to Sanofi in the low single-digit percentage range based on net sales of licensed products, subject to customary reductions and offsets. Such royalty payments shall be reduced for products covered by derived patents.

CFF Payment Agreement

In December 2019, the Company entered into a payment agreement (the “CFF Payment Agreement”) with the Cystic Fibrosis Foundation (“CFF”), pursuant to which the Company agreed to provide CFF with compensation in exchange for the grant of, or forbearance from exercising, certain of CFF’s rights existing under the license agreement by and between CFF (through an assignment by Cystic Fibrosis Foundation Therapeutics, Inc.) and Genzyme Corporation, an affiliate of Sanofi (the “CFFT-Genzyme Agreement”). Under the CFF Payment Agreement, the Company is obligated to compensate CFF in connection with the Company’s development and commercialization of licensed products under the Sanofi License Agreement.

As initial consideration for CFF’s grant of, and forbearance from exercising, its rights under the CFFT-Genzyme Agreement, the Company paid an upfront fee of $0.2 million and issued CFF shares of preferred stock, valued at $1.0 million which were previously recorded as research and development expenses. In addition, the Company agreed to pay CFF a sub-teen double-digit percentage of any amounts paid by it to Sanofi under the Sanofi License Agreement, other than milestone, royalty or reimbursement payments. In addition, the Company is required to pay CFF a total of up to $40.0 million upon achievement of certain late-stage developmental and commercial milestones.

As of December 31, 2024, no milestones have been achieved. The Company is also required to pay revenue-shares of royalty payments to CFF in the low single-digit percentage range based on net sales of licensed products subject to customary reductions and offsets. Such milestone and royalty payments shall be reduced for products covered by derived patents. Further, a side letter was executed between the Company and Sanofi, which clarifies the relationship between the Company, Sanofi and CFF, under which the Company is obligated to pay Sanofi 20% of the milestones it would have been obligated to pay CFF, net of the milestone amounts it is obligated to pay under the Sanofi License Agreement.

AbbVie Agreement

In July 2024, the Company entered into a license agreement (the “AbbVie License Agreement”) with AbbVie Global Enterprises Ltd. (“AbbVie”), pursuant to which the Company has been granted an exclusive worldwide, royalty-bearing, sublicensable license to research, develop and commercialize certain CFTR

F-19

Table of Contents

compounds. The licensed rights are directed, among other things, to three clinical-stage CFTR modulator assets. The license granted to us under the AbbVie License Agreement is subject to certain preexisting rights held by AbbVie and Galapagos NV (“Galapagos”). In particular, certain of the licensed patents and other intellectual property rights were developed by or on behalf of Galapagos and are sublicensed to us subject to the terms of the second amended and restated collaboration agreement between Galapagos and AbbVie in October 2018 (the “Galapagos License Agreement”), as amended by a side letter between Galapagos and AbbVie in July 2024.

As initial consideration for the license, the Company paid a non-refundable, upfront payment of $5.0 million and issued shares of its common stock with a fair value of $8.6 million to AbbVie. The Company determined that the AbbVie License Agreement represented an asset acquisition as it did not meet the definition of the business. The Company recorded the total initial consideration of $13.6 million as research and development expense during the year ended December 31, 2024, because the acquired license represented in-process research and development with no alternative future use. In addition, the Company is required to pay AbbVie a total of up to $360.0 million upon achievement of certain development and commercial milestones, consisting of up to $70.0 million in late-stage development milestones and up to $290.0 million in commercial milestones. The Company is also required to pay royalties to AbbVie in the low to mid single-digit percentage range based on net sales of licensed products, subject to customary reductions and offsets.

In addition, the Company is required to pay AbbVie up to $130.0 million in commercial and sales-based milestone payments, mid to high single-digit royalties on the licensed products, or other payments due to Galapagos pursuant to the Galapagos License Agreement, to the extent such payments are triggered by the Company’s use of the licensed rights owned by Galapagos under the AbbVie License Agreement. As of December 31, 2024, none of such milestones under the AbbVie License Agreement and Galapagos License Agreement have been achieved.

10. Convertible Preferred Stock

Series Seed

In December 2019, the Company issued and sold 2,762,762 shares of Series Seed convertible preferred stock, par value $0.001 per share (“Series Seed Preferred Stock”) to certain investors at a purchase price of $3.33 per share, for gross proceeds of $8.2 million (the “Series Seed Financing”). As disclosed in Note 9, the Company issued Series Seed Preferred Stock to CFF in connection with the CFF Payment Agreement. One investor was also issued 684,415 shares of common stock in connection with the initial Series Seed Financing closing. The proceeds from that investor were allocated between the Series Seed Preferred Stock and common stock on a relative fair value basis. There were no material issuance costs incurred related to this financing.

In June 2020, upon the Board’s approval, the Company issued an additional 1,201,202 shares of Series Seed Preferred Stock to an additional investor at $3.33 per share for gross proceeds of $4.0 million. The Company incurred $38,887 of issuance costs in connection with this issuance.

Series A

In September 2020, the Company issued and sold 5,704,161 shares of Series A convertible preferred stock, par value $0.001 per share (“Series A Preferred Stock”), at a purchase price of $4.4289 per share, for gross proceeds of $25.3 million (the “Series A Financing”). The Company incurred $0.1 million of issuance costs in connection with the Series A Financing.

Series B

In February 2022, the Company issued and sold 11,370,621 shares of Series B convertible preferred stock, par value $0.001 per share (“Series B Preferred Stock”), at a purchase price of $9.762 per share, for gross proceeds of $111.0 million (the “Series B Financing”). The Company incurred $0.2 million of issuance costs in connection with the Series B Financing.

F-20

Table of Contents

Series C

In March 2024, the Company issued and sold 18,628,970 shares of Series C convertible preferred stock, par value $0.001 per share (“Series C Preferred Stock”) at a purchase price of $9.762 per share, for gross proceeds of $181.9 million (the “Series C Financing”). The Company incurred $0.5 million of issuance costs in connection with the Series C Financing.

Upon the issuance of Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (the “Preferred Stock”), the Company assessed the embedded conversion and liquidation features of the shares and determined that the Company was not required to separately account for these features.

Preferred Stock consists of the following (in thousands, except share amounts):

The holders of Preferred Stock have the following rights, preferences and privileges:

Voting Rights

The holders of each series of Preferred Stock are entitled to vote on all matters and shall have the number of votes equal to the number of shares of common stock into which the Preferred Stock is convertible.

Dividends

Dividends shall be payable only when, as, and if declared by the Board of Directors, and the Company shall be under no obligation to pay any dividends. The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock unless the Preferred Stockholders then outstanding first receive the dividend amounts calculated based upon the dividend on the class or series of capital stock that would result in the highest Preferred Stock dividend.

Liquidation Preference

The holders of the Preferred Stock have first preference in the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, including a merger or sale of the Company. The amount to be paid is equal to greater of the Series C Preferred Stock original issue price in the case of the Series C Preferred Stock, Series B Preferred Stock original issue price in the case of the Series B Preferred Stock, the Series A Preferred Stock original issue price in the case of the Series A Preferred Stock, and the Series Seed Preferred Stock original issue price in the case of the Series Seed Preferred Stock, plus any dividends declared

F-21

Table of Contents

but unpaid thereon, or such amount per share as would have been payable had all shares of the Preferred Stock been converted into common stock.

Redemption

The Preferred Stock does not have redemption rights, except for the contingent redemption upon the occurrence of a liquidation event, which would constitute a merger or consolidation, or the sale, lease, transfer, exclusive license, or other disposition, of all or substantially all of the Company’s or its subsidiaries assets.

Conversion

Each share of Preferred Stock shall be convertible, at the option of the holder (without payment) into common stock as determined by dividing the Preferred Stock’s original issue price by the conversion price in effect at the time of conversion. The Series C Preferred Stock and Series B Preferred Stock conversion price shall initially be equal to $9.762, the Series A Preferred Stock conversion price shall initially be equal to $4.4289, and the Series Seed Preferred Stock conversion price shall initially be equal to $3.33. In the event of a liquidation, dissolution or winding up of the Company or a Deemed Liquidation Event, the conversion right shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock.

All shares of Preferred Stock automatically converted into shares of common stock on a 1-to-1.4611 basis in connection with the Company's IPO in February 2025 (see Note 1).

11. Common Stock

The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preference of the holders of the Preferred Stock set forth in Note 10 above.

The number of shares of common stock that have been reserved for the potential conversion of preferred stock, exercise of stock options, and vesting of restricted common stock is as follows:

Year Ended December 31,

12. Stock-Based Compensation

2020 Stock Option and Grant Plan

The Company’s 2020 Stock Option and Grant Plan, as amended (the “2020 Plan”), provides for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the Board and consultants of the Company. The 2020 Plan is administered by the Board, or at the discretion of the Board, by a committee of the Board. The exercise prices, vesting and other restrictions are determined at the discretion of the Board, or their committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the share of common stock on the date of grant and the term of stock option may not be greater than ten years.

The total number of shares of common stock that may be issued under the 2020 Plan is 6,067,289 shares, of which 1,035,891 remained available for future grant as of December 31, 2024. Vesting periods are determined at the discretion of the Board. Stock options and restricted common awards granted to-

F-22

Table of Contents

date typically vest over four years. Certain stock options and restricted common awards are subject to accelerated vesting upon a change in control, as defined in the respective grant agreements.

If a restricted common stockholder ceases to have a business relationship with the Company, the Company may repurchase any unvested shares of common stock held by these individuals at their original purchase price. The unvested shares of common stock are not considered outstanding shares for accounting purposes and are recorded as a liability until the shares vest. Accordingly, the common stock outstanding as reported on the consolidated statement of convertible preferred stock and stockholder's deficit excludes unvested restricted common stock as of each reporting date.

Restricted Common Stock

A summary of the Company’s restricted common stock activity during the year ended December 31, 2024, is presented below:

Number of Restricted Shares Weighted-Average Per-Share Grant-Date Fair Value

The Company did not issue shares of restricted common stock to founders and officers during the years ended December 31, 2024 or 2023. For the years ended December 31, 2024 and 2023, the liability related to the payments received for shares of unvested restricted common stock was de minimis. The aggregate fair value of restricted common stock awards that vested during the years ended December 31, 2024 and 2023, was $1.3 million and $1.4 million, respectively.

Stock Option Valuation

The weighted average assumptions used to determine the fair values of stock options granted to employees and directors during the years ended December 31, 2024 and 2023, are presented as follows:

Year Ended December 31,

Expected term (in years) 6.0 6.0

Interest rate 4.2 % 4.1 %

Dividend yield — —

Stock Option Activity

The following table summarizes the Company’s stock option activity under the 2020 Plan for the year ended December 31, 2024:

(in years) (in thousands)

F-23

Table of Contents

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the estimated fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted-average grant date fair value of options granted during the years ended December 31, 2024 and 2023, was $4.61 and $5.10, respectively. The total intrinsic value of options exercised in the years ended December 31, 2024 and 2023, was $0.4 million and $0.2 million, respectively.

Stock-Based Compensation Expense

During the years ended December 31, 2024 and 2023, the Company recorded stock-based compensation in the accompanying consolidated statements of operations and comprehensive loss as follows (in thousands):

Year Ended December 31,

Research and development expense $ 1,500 $ 1,135

General and administrative expense 2,208 1,124

As of December 31, 2024, there was $9.8 million of unrecognized stock-based compensation expense that is expected to be recognized over a weighted average period of 2.7 years that is related to unvested stock options. As of December 31, 2024, the unrecognized stock-based compensation expense for restricted common stock awards is de minimis.

13. Income Taxes

The Company had no federal or state income tax expense due to operating losses incurred for the years ended December 31, 2024 and 2023.

A reconciliation of income tax expense (benefit) from continuing operations to the amount computed by applying the statutory federal income tax rate to the net loss from continuing operations is summarized as follows:

Year Ended December 31,

Tax expense (benefit) at the statutory rate 21.0 % 21.0 %

State income taxes, net of federal benefit 6.0 % 6.3 %

Other permanent differences (0.5 %) (0.4 %)

Changes in tax rates (1.2 %) 0.7 %

Tax credits 3.0 % 2.4 %

Change in valuation allowance (28.3 %) (30.0 %)

Effective tax rate 0.0 % 0.0 %

F-24

Table of Contents

The components of the Company’s deferred tax assets and liabilities are comprised of the following (in thousands):

Year Ended December 31,

Stock-based compensation 885 296

Other temporary differences 21 8

Other deferred tax liabilities (81) —

Total deferred tax liabilities $ (2,164) $ (2,375)

Net deferred tax asset (liability) $ — $ —

As of December 31, 2024 and 2023, the Company had federal net operating loss carryforwards of approximately $65.6 million and $48.2 million, respectively, which may be available to offset future income tax liabilities. The 2017 Tax Cuts and Jobs Act (“TCJA”) will generally allow losses incurred after 2017 to be carried over indefinitely but will generally limit the net operating loss deduction to the lesser of the net operating loss carryover or 80% of a corporation’s taxable income (subject to Section 382 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”)). Also, there is no carry back for losses incurred after 2017. All net operating loss carryforwards were generated after 2017.

In addition, the Company has state net operating loss carryforwards of $68.2 million and $47.1 million as of December 31, 2024 and 2023, respectively, which will expire at various dates through 2044.

As of December 31, 2024 and 2023, the Company had federal research and development tax credit (“Federal R&D Tax Credit”) carryforwards of $2.7 million and $1.5 million, respectively, available to reduce future tax liabilities, which will expire at various dates through 2044.

As of December 31, 2024 and 2023, the Company had state research and development credit (“State R&D Tax Credit”) carryforwards of approximately $1.7 million and $1.4 million, respectively, available to reduce future tax liabilities, which will expire at various dates through 2039.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which are comprised primarily of net operating loss carryforwards, the capitalization of research and experimental expenditures, and tax credits. Management has considered the Company’s history of cumulative net losses in the United States, estimated future taxable income and prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its U.S. federal and state deferred tax assets. Accordingly, a full valuation allowance of $51.6 million and $34.3 million has been established against these net deferred tax assets as of December 31, 2024 and 2023, respectively. The Company reevaluates the positive and negative evidence at each reporting period. The Company’s valuation allowance increased during 2024 by approximately $17.3 million, primarily due to the capitalization of research and experimental expenditures and the increase in net operating loss and tax credit carryforwards.

Under the provision of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net

F-25

Table of Contents

operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative change in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Section 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership change may further affect the limitation in future years. The Company has not yet completed a change in control analysis, as defined under Section 382 and 383 of the Internal Revenue Code, through December 31, 2024, and the Company has not determined whether the future utilization of net operating loss carryforwards may be materially limited based on past financings. In addition, the Company may complete future financings that could result in a change in control in the future which may limit the amount of tax attributes available to offset future tax liabilities.