>>714495005Sephiroth is the result of a super soldier program conducted by Hojo of Shinra, where in they used genetic material from an Alien, JENOVA. This experiment was conducted in a way so that Sephiroth was born.
Cloud was part of secondary experiments to try and replicate the results of the Sephiroth program by directly infusing people with JENOVA and/or Sephiroth cells, being one of the last people subjected to this process and perhaps because of the escape, he survived this and wasn't given a number. The experiment resulted in partial amnesia and he grafted some of his memories onto the Soldier that saved him, Zack.
You never actually encounter Sephiroth in game till the end, he is frozen in the North Crater. All the times you see him otherwise is him projecting himself into other victims of the experiment Cloud was a part of, the "This guy are sick" people in robes and marked with numbers.