Cabaletta Bio, Inc 10-K for FY2019

Cabaletta Bio, Inc. (CABA)

10-K 2020-03-30 For: 2019-12-31

Added on April 08, 2026

About this 10-K

Cabaletta Bio, Inc filed this 10-K on March 30, 2020, covering the fiscal year ended December 31, 2019 (FY2019).

Headline figures

Fiscal year ended December 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $16.94M; compared with a net loss of $12.2M a year earlier

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Delaware	82-1685768
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2929 Arch Street, Suite 600 Philadelphia, PA	19104
(Address of principal executive offices)	(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
.
Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒

		Page
PART I		3
Item 1.	Business	50
Item 1A.	Risk Factors	113
Item 1B.	Unresolved Staff Comments	113
Item 2.	Properties	113
Item 3.	Legal Proceedings	113
Item 4.	Mine Safety Disclosures	113

PART II		114
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	114
Item 6.	Selected Financial Data	116
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	117
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	127
Item 8.	Financial Statements and Supplementary Data	127
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	128
Item 9A.	Controls and Procedures	128
Item 9B.	Other Information	128

PART III		129
Item 10.	Directors, Executive Officers and Corporate Governance	129
Item 11.	Executive Compensation	129
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	129
Item 13.	Certain Relationships and Related Transactions, and Director Independence	129
Item 14.	Principal Accounting Fees and Services	129

PART IV		130
Item 15.	Exhibits, Financial Statement Schedules	130
Item 16	Form 10-K Summary	130
	Signatures	134

	Year Ended December 31,
	2019			2018			Change
	(in thousands)
Statements of Operations Data:
Operating expenses:
Research and development	$	11,671		$	4,467		$	7,204
General and administrative		7,012			1,726			5,286
Total operating expenses		18,683			6,193			12,490
Loss from operations		(18,683	)		(6,193	)		(12,490	)
Other income and (expense):
Interest income		1,740			235			1,505
Fair value adjustments on convertible notes		—			(6,244	)		6,244
Net loss	$	(16,943	)	$	(12,202	)	$	(4,741	)

	Year Ended December 31,
	2019		2018		Change
	(in thousands)
Sponsored research activities	$	2,228	$	1,985	$	243
License of intellectual property and subscription fee		292		1,155		(863	)
Manufacturing of preclinical and clinical supplies		2,686		722		1,964
Clinical trials		441		—		441
Personnel		4,006		541		3,465
Development services		1,796		54		1,742
Other		222		10		212
	$	11,671	$	4,467	$	7,204

		Page
Report of Independent Registered Public Accounting Firm		F-2
Balance Sheets as of December 31, 2019 and 2018		F-3
Statements of Operations for the Years Ended December 31, 2019 and 2018		F-4
Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Years Ended December 31, 2019 and 2018		F-5
Statements of Cash Flows for the Years Ended December 31, 2019 and 2018		F-6
Notes to Financial Statements		F-7

	December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	136,204		$	33,017
Prepaid expenses and other current assets		4,348			977
Total current assets		140,552			33,994
Property, plant and equipment, net		815			—
Other assets		101			—
Deferred offering costs		—			180
Total Assets	$	141,468		$	34,174
Liabilities, convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	920		$	603
Accrued and other current liabilities		2,227			340
Total current liabilities		3,147			943
Commitments and contingencies (see Note 7)

Convertible preferred stock:
Series A, A-1 and A-2 convertible preferred stock, $0.00001 par value: no shares and 12,393,497 shares authorized as of December 31, 2019 and 2018, respectively; no and 12,393,047 shares issued and outstanding at December 31, 2019 and 2018 respectively; aggregate liquidation preference of $38,256 at December 31, 2018		—			43,921
Stockholders’ equity (deficit):
Preferred stock, $0.00001 par value: 10,000,000 and no shares authorized as of December 31, 2019 and 2018, respectively; no shares issued or outstanding at December 31, 2019 and 2018, respectively		—			—
Voting and non-voting common stock, $0.00001 par value: 150,000,000 (voting 143,590,481 shares and non-voting 6,409,519 shares) and 21,147,115 (voting) shares authorized as of December 31, 2019 and 2018, respectively; 24,034,022 (voting 17,624,503 shares and non-voting 6,409,519 shares) and 3,848,320 (voting) shares issued and outstanding at December 31, 2019 and 2018, respectively		—			—
Additional paid-in capital		171,280			1,762
Accumulated deficit		(32,959	)		(12,452	)
Total stockholders’ equity (deficit)		138,321			(10,690	)
Total liabilities convertible preferred stock and stockholders’ equity (deficit)	$	141,468		$	34,174

	Convertible Preferred Stock						Preferred Stock				Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares			Amount			Shares		Amount		Shares		Amount		Capital			Deficit			Equity (Deficit)
Balance—December 31, 2017		—			—			—		—		3,333,332		—		1			(250	)		(249	)
Issuance of common stock in connection with license agreement		—			—			—		—		481,318		—		1,155			—			1,155
Issuance of common stock		—			—			—		—		33,670		—		—			—			—
Issuance of convertible preferred stock upon conversion of convertible notes		4,693,044			15,910			—		—		—		—		—			—			—
Issuance of convertible preferred stock upon milestone closing of convertible notes		4,553,452			15,436			—		—		—		—		—			—			—
Issuance of convertible preferred stock, net of issuance costs of $169		3,146,551			12,575			—		—		—		—		—			—			—
Stock-based compensation		—			—			—		—		—		—		606			—			606
Net loss		—			—			—		—		—		—		—			(12,202	)		(12,202	)
Balance—December 31, 2018		12,393,047			43,921			—		—		3,848,320		—		1,762			(12,452	)		(10,690	)
Issuance of convertible preferred stock, net of issuance costs of $1,293		6,963,788			48,707			—		—		—		—		—			—			—
Issuance of common stock upon completion of initial public offering, net of issuance costs of $3,408		—			—			—		—		7,275,501		—		71,020			—			71,020
Issuance of common stock in connection with exercise of stock options								—		—		5,667		—		6			—			6
Exchange of convertible preferred stock including deemed dividend		—			5,326			—		—		—		—		(1,762	)		(3,564	)		(5,326	)
Conversion of convertible preferred stock into common stock on a 1.5 for 1 basis		(19,356,835	)		(97,954	)		—		—		12,904,534		—		97,954			—			97,954
Stock-based compensation		—			—			—		—		—		—		2,300			—			2,300
Net loss		—			—			—		—		—		—		—			(16,943	)		(16,943	)
Balance—December 31, 2019		—		$	—			—	$	—		24,034,022	$	—	$	171,280		$	(32,959	)	$	138,321


Property and equipment		Estimated useful life
Laboratory equipment		Three years
Furniture and fixtures		Three years
Computer equipment		Three years
Leasehold improvements		Lesser of estimated useful life or remaining lease term

	December 31, 2019
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash equivalents:
Money market funds	$	136,204	$	136,204	$	—	$	—
Total	$	136,204	$	136,204	$	—	$	—

	December 31, 2018
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash equivalents:
Money market funds	$	33,017	$	33,017	$	—	$	—
Total	$	33,017	$	33,017	$	—	$	—

Balance—January 1, 2018	$	—
Initial fair value		12,535
Fair value adjustments		6,244
Conversion into convertible preferred stock		(18,779	)
Balance—December 31, 2018	$	—

	Series A Preferred						Series A-1 Preferred						Series A-2 Preferred						Series B Preferred						Total Convertible Preferred Stock
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Balance—December 31, 2017		—		$	—			—		$	—			—		$	—			—		$	—			—		$	—
Issuance on conversion of convertible notes		—			—			2,819,267			9,558			1,873,777			6,352			—			—			4,693,044			15,910
Issuance on milestone closing of convertible notes		—			—			4,553,452			15,436			—			—			—			—			4,553,452			15,436
Issuance		3,146,551			12,744			—			—			—			—			—			—			3,146,551			12,744
Issuance costs		—			(169	)		—			—			—			—									—			(169	)
Balance—December 31, 2018		3,146,551			12,575			7,372,719			24,994			1,873,777			6,352			—			—			12,393,047			43,921
Issuance		—			—			—			—			—			—			6,963,788			50,000			6,963,788			50,000
Exchange, including deemed dividend		—			—			—			—			(1,405,332	)		(4,764	)		1,405,332			10,090			—			5,326
Issuance costs		—			—			—			—			—			—			—			(1,293	)		—			(1,293	)
Conversion to common stock		(3,146,551	)		(12,575	)		(7,372,719	)		(24,994	)		(468,445	)		(1,588	)		(8,369,120	)		(58,797	)		(19,356,835	)		(97,954	)
Balance—December 31, 2019		—		$	—			—		$	—			—		$	—			—		$	—			—		$	—

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding as of January 1, 2018		—		$	—		—	$	—
Granted		971,353			1.01
Outstanding as of December 31, 2018		971,353			1.01		9.8	$	4,051
Granted		1,340,839			7.97
Exercised		(5,667	)		1.01
Cancelled		(176,893	)		4.22
Outstanding as of December 31, 2019		2,129,632		$	5.12		9.2	$	18,844
Options Exercisable at December 31, 2019		365,385		$	1.61		8.9	$	4,516

	For the Year Ended December 31,
	2019	2018
Risk-free interest rate	1.39%—2.59%	2.92%—2.96%
Expected term	0.3—6.1 years	5.5—6.2 years
Expected volatility	70%—76%	72%
Expected dividend yield	0%	0%

	Voting common stock			Non-voting common stock
Basic net loss per share:
Numerator
Allocation of undistributed losses attributable to common stockholders	$	(17,693	)	$	(4,576	)

Denominator
Weighted average number of shares used in basic per share computation		4,345,530			1,123,861
Net loss per share, basic	$	(4.07	)	$	(4.07	)

Diluted net loss per share:
Numerator
Allocation of undistributed losses for basic computation	$	(17,693	)	$	(4,576	)
Reallocation of undistributed losses as a result of conversion of non-voting to voting common shares		(4,576	)		—
Allocation of undistributed losses	$	(22,269	)	$	(4,576	)

Denominator
Weighted average number of shares used in basic per share computation		4,345,530			1,123,861
Add: Conversion of non-voting to voting common shares outstanding		1,123,861			—
Weighted average number of shares used in diluted per share computation		5,469,391			1,123,861
Net loss per share, diluted	$	(4.07	)	$	(4.07	)

	Common stock
Basic and diluted net loss per share:
Numerator
Net loss attributable to common stockholders	$	(12,202	)

Denominator
Weighted average number of shares used in basic and diluted per share computation		1,775,468
Net loss per share, diluted	$	(6.87	)

Exhibit Number		Description

3.1		Third Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K (File No. 001-39103) filed on October 30, 2019)

3.2		Amended and Restated Bylaws of the Registrant, as currently in effect (incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K (File No. 001-39103) filed on October 30, 2019)

4.1		Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form S-1 (File No. 333-234017) filed on October 16, 2019)

4.2		Amended and Restated Investors' Rights Agreement among the Registrant and certain of its stockholders, dated January 2, 2019 (incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-1 (File No. 333-234017) filed on September 30, 2019)

4.3*		Description of Securities

10.1#		2018 Stock Option and Grant Plan, as amended, and form of award agreements thereunder (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form S-1 (File No. 333-234017) filed on September 30, 2019)

10.2#		2019 Stock Option and Incentive Plan, and form of award agreements thereunder. (incorporated by reference to Exhibit 10.2 of the Registrant’s Registration Statement on Form S-1/A (File No. 333-234017) filed on October 16, 2019)

10.3#		2019 Employee Stock Purchase Plan. (incorporated by reference to Exhibit 10.3 of the Registrant’s Registration Statement on Form S-1/A (File No. 333-234017) filed on October 16, 2019)

10.4#		Senior Executive Cash Incentive Bonus Plan (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q filed on December 5, 2019)

10.5#		Form of Indemnification Agreement between the Registrant and each of its directors (incorporated by reference to Exhibit 10.5 of the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.6#		Form of Indemnification Agreement between the Registrant and each of its executive officers (incorporated by reference to Exhibit 10.4 of the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.7		Amended and Restated License Agreement, dated as of July 23, 2019, among the Registrant, the Trustees of the University of Pennsylvania and the Children’s Hospital of Philadelphia (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.8		Sponsored Research Agreement, dated as of April 23, 2018, between the Registrant and the Trustees of the University of Pennsylvania (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.9		Sponsored Research Agreement, dated as of April 23, 2018, between the Registrant and the Trustees of the University of Pennsylvania (incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.10		Master Translational Research Services Agreement, dated as of October 2018, between the Registrant and the Trustees of the University of Pennsylvania (incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.11		CAROT Master Services Addendum to Master Translational Research Services Agreement, dated as of February 4, 2019, between the Registrant and the Trustees of the University of Pennsylvania (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.12		CVPF Master Services Addendum to Master Translational Research Services Agreement, dated as of October 22, 2018, between the Registrant and the Trustees of the University of Pennsylvania (incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.13		Research Agreement A19-3095, dated as of October 31, 2018, between the Registrant and The Regents of the University of California (incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.14		Lease, dated as of February 11, 2019, between the Registrant and Brandywine Cira, L.P. (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.15		Consulting Agreement, dated as of May 7, 2018, between the Registrant and Danforth Advisors, LLC (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.16		Amendment No. 1 to Consulting Agreement, dated as of May 7, 2019, between the Registrant and Danforth Advisors, LLC (incorporated by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.17#		Employment Agreement between the Registrant and Steven Nichtberger (incorporated by reference to Exhibit 10.16 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.18#		Employment Agreement between the Registrant and Anup Marda (incorporated by reference to Exhibit 10.17 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.19#		Employment Agreement between the Registrant and Gwendolyn Binder (incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.20#		Employment Agreement between the Registrant and David Chang (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.21#		Employment Agreement between the Registrant and Brian Stalter (incorporated by reference to Exhibit 10.20 to the Registrant’s Registration Statement on Form S-1, filed with the SEC on September 30, 2019)

10.22#*		Non-Employee Director Compensation Policy

21.1*		List of Subsidiaries of the Registrant

23.1*		Consent of Ernst & Young, independent registered public accounting firm


31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended

32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

	Cabaletta Bio, Inc.

Date: March 30, 2020	By:	/s/ Steven Nichtberger
		Steven Nichtberger
		Chief Executive Officer and President

Name	Title	Date

/s/ Steven Nichtberger	Director, Chief Executive Officer and President	March 30, 2020
Steven Nichtberger	(Principal Executive Officer)

/s/ Anup Marda	Chief Financial Officer	March 30, 2020
Anup Marda	(Principal Financial and Accounting Officer)

/s/ Catherine Bollard	Director	March 30, 2020
Catherine Bollard

/s/ Brian Daniels	Director	March 30, 2020
Brian Daniels

/s/ Richard Henriques	Director	March 30, 2020
Richard Henriques

/s/ Mark Simon	Director	March 30, 2020
Mark Simon