What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-17 compared with 2021-03-16 · 145 added, 151 removed, 605 unchanged (33% of the section changed)

26 unchanged sentences

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the fiscal quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As a result of the COVID-19 pandemic, since March 2020, most of our employees have been working remotely.

As a result of the COVID-19 pandemic, since March 2020, many of our employees have been working remotely.

We have not identified any material changes in our internal control over financial reporting as a result of these changes to the working environment.

1 unchanged sentence

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and Corporate Governance.

11 unchanged sentences

The information required by this Item 14 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2022 Annual Meeting of Stockholders within 120 days after the end of the fiscal year ended December 31, 2021 and is incorporated herein by reference .

Our independent public accounting firm is Ernst & Young, Philadelphia, PA, PCAOB Auditor ID 42 .

Exhibits, Financial Statement Schedules.

4 unchanged sentences

Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2021 and 202 0

Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity for the Years Ended December 31, 2020 and 2019

Statements of Convertible Preferred Stock and Stockholders’ E quity for the Years Ended December 31, 2021 and 2020

Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

10 unchanged sentences

Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2021 and 2020

Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity for the Years Ended December 31, 2020 and 2019

Statements of Stockholders’ E quity for the Years Ended December 31, 2021 and 2020

Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

4 unchanged sentences

We have audited the accompanying balance sheets of Cabaletta Bio, Inc.

(the Company) as of December 31, 2020 and 2019, the related statements of operations and comprehensive loss, convertible preferred stock and stockholders’ (deficit) equity and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

(the Company) as of December 31, 2021 and 2020, the related statements of operations and comprehensive loss, stockholders’ equity 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 at December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

35 unchanged sentences

Preferred stock, $ 0.00001 par value:

10,000,000 shares authorized as of

December 31, 2020 and 2019, respectively;

no shares issued or outstanding at December 31, 2020 and 2019, respectively

10,000,000 shares authorized and no

shares issued or outstanding as of December 31, 2021 and 2020

Voting and non-voting common stock, $ 0.00001 par value:

(143,590,481 voting and 6,409,519 non-voting) shares authorized as of December 31, 2020 and 2019, respectively;

24,062,775 (19,387,160 voting and 4,675,615 non-voting) shares issued and outstanding as of December 31, 2020 and 24,034,022 (17,624,503 voting and 6,409,519 non-voting) issued and outstanding as of December 31, 2019, respectively

( 143,590,481 voting and 6,409,519 non-voting) shares authorized as of

December 31, 2021 and 2020;

28,927,129 ( 24,614,629 voting and 4,312,500 non-voting) shares issued and outstanding as of December 31, 2021 and 24,062,775 ( 19,387,160 voting and 4,675,615 non-voting) shares issued and outstanding as of December 31, 2020

Additional paid-in capital

15 unchanged sentences

Interest income

Deemed dividend

Net loss attributable to common stockholders

Other comprehensive income:

4 unchanged sentences

CABALETTA BIO, INC.

Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity

Statements of Stockholders’ Equity

(in thousands, except share and per share amounts)

Convertible Preferred Stock

Additional Paid-in Capital

1 unchanged sentence

Accumulated Deficit

Total Stockholders’ (Deficit) Equity

Total Stockholders’ Equity

Balance—December 31, 2019

Issuance of convertible preferred stock,

net of issuance costs of $1,293

Issuance of common stock upon completion of initial public offering, net of issuance costs of $3,408

Issuance of common stock in conjunction with exercise of stock options

Exchange of convertible preferred stock,

including deemed dividend

Conversion of convertible preferred stock into common stock on a 1.5 for 1 basis

Issuance of common stock in connection with

exercise of stock options

Issuance of common stock under employee stock purchase plan

Net unrealized gains on available-for-sale

Stock-based compensation

Balance—December 31, 2020

Issuance of common stock in connection with exercise of stock options

Common stock issuance, net of $ 1,492 of issuance

Issuance of common stock in connection with

exercise of stock options

Issuance of common stock under employee stock purchase plan

Net unrealized gains on available-for-sale

Net unrealized losses on available-for-sale

Stock-based compensation

18 unchanged sentences

Proceeds from maturities of investments

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock, net of issuance costs

Proceeds from issuance of convertible preferred stock

Issuance costs of convertible preferred stock

Proceeds from issuance of common stock in connection with

2 unchanged sentences

stock purchase plan

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents—beginning of year

2 unchanged sentences

financing activities:

Conversion of convertible preferred stock into common stock

Exchange of convertible preferred stock, including deemed dividend

Deferred offering costs in accounts payable and accrued and other current liabilities

Property and equipment purchases included in accounts payable

10 unchanged sentences

Principal operations commenced in April 2018, when the Company executed two sponsored research agreements with the Trustees of the University of Pennsylvania (Penn).

On October 16, 2019, the Company effected a 1-for-1.5 reverse split of the Company’s issued and outstanding shares of common stock, par value $0.00001 per share (Common Stock).

Upon the effectiveness of the reverse stock split:

(i) all shares of outstanding Common Stock were adjusted;

(ii) the conversion price of the Series A convertible preferred stock (Series A Preferred), Series A-1 convertible preferred stock (Series A-1 Preferred), Series A-2 convertible preferred stock (Series A-2 Preferred) and Series B convertible preferred stock (Series B Preferred;

collectively, the Preferred Shares) was adjusted;

(iii) the number of shares of Common Stock for which each outstanding option to purchase Common Stock is exercisable was adjusted;

and (iv) the exercise price of each outstanding option to purchase Common Stock was adjusted.

All of the outstanding Common Stock share numbers (including shares of Common Stock subject to the Company’s options and as converted for the outstanding convertible preferred stock shares), share prices, exercise prices and per share amounts contained in the financial statements have been retroactively adjusted in the financial statements to reflect this reverse stock split for all periods presented.

The par value per share and the authorized number of shares of Common Stock and convertible preferred stock were not adjusted as a result of the reverse stock split.

On October 29, 2019, the Company completed its initial public offering (IPO) of 6,800,000 shares of Common Stock at an offering price of $ 11.00 per share.

7 unchanged sentences

As a result, the Company is unable to predict the timing or amount of increased expenses or when or if the Company will be able to achieve or maintain profitability.

Further, the Company is currently dependent on University of Pennsylvania (Penn) for much of its preclinical research, clinical research and development activities and initial manufacturing activities (Note 6).

Further, the Company is currently dependent on Penn for much of its preclinical research, clinical research and development activities and initial manufacturing activities (Note 6).

Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization.

1 unchanged sentence

If the Company fails to become profitable or is unable to sustain profitability on a continuing basis, then it may be unable to continue its operations at planned levels and be forced to reduce its operations.

In December 2019, a novel strain of coronavirus surfaced in Wuhan, China and has since reached multiple other regions and countries.

The COVID-19 pandemic is evolving, and to date has led to the implementation of various responses, including government-imposed quarantines, travel restrictions and other public health safety measures, which have delayed the commencement of non-COVID-19-related clinical trials, among other

restrictions.

The Company’s financial results for the year ended December 31 , 2020 were not significantly impacted by COVID-19 , h owever, the Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 pandemic, including new information that may emerge concerning the severity of COVID-19, the impact of new strains of the virus, the effectiveness and availability of vaccines and the actions to contain COVID-19 or treat its impact will have on its financial condition, operations, and business plans, including its ability to raise additional capital, the timing and enrollment of patients in its ongoing and planned clinical trials, future financings and other expected milestones of its product candidates.

In December 2019, a novel strain of coronavirus (COVID-19) surfaced in Wuhan, China and has since reached multiple other regions and countries.

The COVID-19 pandemic has continued to evolve as new variants of COVID-19 have been identified and spread, which has led to various responses, including government-imposed quarantines, travel restrictions and other public health safety measures in response to the emergence of new variants.

The extent to which COVID-19 will continue to impact the Company’s operations or those of its third party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, new information that may emerge concerning the severity of COVID-19, the impact of new strains of the virus, the effectiveness, availability and utilization of vaccines and the actions to contain COVID-19 or treat its impact, among others.

The Company’s financial results to date have not been significantly impacted by COVID-19, however, the Company cannot at this time predict the specific extent, duration, or full impact that the ongoing COVID-19 pandemic will have on its financial condition, operations, and business plans, including its ability to raise additional capital, the timing and enrollment of patients in its ongoing and planned clinical trials, future financings and other expected milestones of its product candidates.

The Company has sustained annual operating losses since inception and expects to continue to generate operating losses for the foreseeable future.

The Company’s ultimate success depends on the outcome of its research and development activities.

The Company had cash and cash equivalents and investments of $108,662 as of December 31, 2020.

The Company had cash and cash equivalents of $ 122,222 as of December 31, 2021.

Through December 31, 2021, the Company has incurred an accumulated deficit of $ 112,587 .

2 unchanged sentences

However, if such financing is not available at adequate levels and on a timely basis, or such agreements are not available on favorable terms, or at all, as and when needed, the Company will need to reevaluate its operating plan and may be required to delay or discontinue the development of one or more of its product candidates or operational initiatives.

The Company expects that its cash, cash equivalents and investments as of December 31, 2020 will be sufficient to fund its projected operations for at least 12 months from the date the Company’s Annual Report on Form 10-K is filed with the Securities and Exchange Commission (SEC).

The Company expects that its cash and cash equivalents as of December 31, 2021 will be sufficient to fund its projected operations for at least 12 months following the date the Company files this Annual Report on Form 10-K with the Securities and Exchange Commission (SEC).

Summary of Significant Accounting Policies

1 unchanged sentence

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period.

Significant estimates and assumptions made in the accompanying financial statements include but are not limited to the fair value of common stock, stock-based compensation and the valuation allowance on the Company’s deferred tax assets.

Significant estimates and assumptions made in the accompanying financial statements include but are not limited to the fair value of stock-based compensation, the valuation allowance on the Company’s deferred tax assets and certain accruals.

The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate.

1 unchanged sentence

Off-Balance Sheet Risk and Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and cash equivalents, which are primarily invested in U.S.

treasury-based money market funds, and available-for-sale debt securities, which are invested in investment grade corporate bonds with high credit quality issuers .

These investments have maturities in 2021.

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist of cash and cash equivalents, which are primarily invested in U.S.

treasury-based money market funds.

As of December 31, 2020, the Company held available-for-sale debt securities, which were invested in investment grade corporate bonds with high credit quality issuers.

These investments matured in 2021 .

A portion of the Company’s cash is maintained at a federally insured financial institution.

9 unchanged sentences

Investments are available-for-sale and carried at estimated fair value.

The Company’s valuations of available-for-sale debt securities are generally derived from independent pricing services based upon quoted prices in active markets for similar securities, with prices adjusted for yield and number of days to maturity, or based on industry models using data inputs, such as interest rates and prices that can be directly observed or corroborated in active markets.

Management determines the appropriate classification of its investments in debt securities at the time of purchase and at the end of each reporting period.

46 unchanged sentences

The Company accounts for forfeitures of stock option awards as they occur.

Prior to the Company’s IPO, the assumptions used in the Company's Black-Scholes option-pricing model represented management's best estimates and involve a number of variables, uncertainties and assumptions and the application of management's judgment, as they are inherently subjective.

The Company uses the asset and liability method of accounting for income taxes.

13 unchanged sentences

The rights, including the liquidation and dividend rights, of the holders of the voting and non-voting common stock are identical, except with respect to voting.

Each share of non-voting common stock may be converted at any time into one share of voting common stock at the option of its holder by providing written notice to the Company, subject to the limitations provided for in the amended and restated certificate of incorporation.

Each share of non-voting common stock may be converted at any

time into one share of voting common stock at the option of its holder by providing written notice to the Company, subject to the limitations provided for in the amended and restated certificate of incorporation.

The Company also considers its unvested shares of common stock held by the Company’s founders and, prior to its conversion to common stock, its convertible preferred stock to be participating securities as, in the event a dividend is paid on common stock, the holders of convertible preferred stock and unvested shares of common stock would be entitled to receive dividends on a basis consistent with the common stockholders.

2 unchanged sentences

As the liquidation and dividend rights are identical, the undistributed losses are allocated on a proportionate basis.

Net loss attributable to common stockholders for the year ended December 31, 2019 is calculated by adjusting the net loss of the Company for the deemed dividend associated with the exchange of Series A-2 Preferred for Series B Preferred.

Diluted net loss per share attributable to common stockholders is computed under the if-converted method and assumes that all non-voting common stock has been converted to common stock.

3 unchanged sentences

The Company has determined it operates in a single operating segment and has one reportable segment.

Related Party Transactions

The Company engaged a firm controlled by a former executive (until February 2019) of the Company for professional services related to accounting, finance and other administrative functions.

For the years ended December 31, 2020 and 2019, the costs incurred under this arrangement totaled $311 and $601, respectively.

These amounts were recorded as general and administrative expense in the accompanying statements of operations.

As of December 31, 2020 and 2019, amounts owed under this arrangement totaled $13 and $36, respectively, and are included in accounts payable in the accompanying balance sheets.

Emerging Growth Company Status

10 unchanged sentences

Early adoption is permitted.

As an Emerging Growth Company, the Company expects to adopt Topic 842 for its annual period ending December 31, 2021 and has not yet finalized the assessment of the impact that ASU 2016-02 will have on its financial statements or financial statement disclosures.

As an Emerging Growth Company, the Company expects to adopt Topic 842 in 2022 and has not yet finalized the assessment of the impact that Topic 842 will have on its financial statements or financial statement disclosures.

Fair Value Measurements

As of December 31, 2020 and 2019, the Company’s financial instruments included cash and cash equivalents, available-for-sale debt securities, accounts payable and accrued expenses.

The carrying amounts for cash and cash equivalents, accounts payable and accrued expenses reported in the Company’s financial statements for these instruments approximate their respective fair values because of the short-term nature of these instruments.

As of December 31, 2021 and 2020, the Company’s financial instruments included cash and cash equivalents, accounts payable and accrued expenses.

As of December 31, 2020, the Company also had available-for-sale debt securities.

The carrying amounts for cash and cash equivalents, accounts payable and accrued expenses reported in

the Company’s financial statements for these instruments approximate their respective fair values because of the short-term nature of these instruments.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

6 unchanged sentences

Money market funds

Short-term investments:

Corporate bonds

December 31, 2020

3 unchanged sentences

Financial assets

Cash equivalents:

Cash and cash equivalents:

Money market funds

Short-term investments:

Corporate bonds

Money market funds are measured at fair value on a recurring basis using quoted prices and are classified as Level 1.

Investments are measured at fair value based on inputs other than quoted prices that are derived from observable market data and are classified as Level 2 inputs.

There were no transfers of assets between the fair value measurement levels during the years ended December 31, 2020 or 2019.

For debt securities classified as available-for-sale investments, the Company records unrealized gains or losses resulting from changes in fair value between measurement dates as a component of other comprehensive income.

The Company did not hold any available-for-sale securities as of December 31, 2019.

The Company did no t hold any available-for-sale securities as of December 31, 2021.

December 31, 2020

24 unchanged sentences

Amended and Restated License Agreement with the Trustees of the University of Pennsylvania and Children’s Hospital of Philadelphia

In August 2018, the Company entered into a license agreement with Penn, as amended and restated in July 2019 to include CHOP as a party, and as amended in May 2020 (the License Agreement) pursuant to which the Company obtained (a) a non-exclusive, non-sublicensable worldwide license to certain of Penn’s intellectual property to conduct research, product development, clinical trials, cell manufacturing and other activities, and (b) an exclusive, worldwide, royalty-bearing right and license, with a right to sublicense, on a target-by-target basis, under certain of Penn’s intellectual property to make, use, sell, offer for sale, import, and otherwise commercialize products for the treatment of autoimmune and alloimmune diseases.

In August 2018, the Company entered into a license agreement with Penn, as amended and restated in July 2019 to include the Children’s Hospital of Philadelphia (CHOP) as a party, and as amended in May 2020 and October 2021 (the License Agreement) pursuant to which the Company obtained (a) a non-exclusive, non-sublicensable worldwide license to certain of Penn’s intellectual property to conduct research, product development, clinical trials, cell manufacturing and other activities, and (b) an exclusive, worldwide, royalty-bearing right and license, with a right to sublicense, on a target-by-target basis, under certain of Penn’s intellectual property to make, use, sell, offer for sale, import, and otherwise commercialize products for the treatment of autoimmune and alloimmune diseases.

Unless earlier terminated, the License Agreement expires on the expiration or abandonment or other termination of the last valid claim in Penn’s intellectual property licensed by the Company.

6 unchanged sentences

The Company is required to pay certain milestone payments upon the achievement of specified clinical and commercial milestones.

Milestone payments are reduced by a certain percentage for the second product that achieves a milestone, by an additional percentage for the third product that achieves a milestone, and so on, for each subsequent product that achieves a milestone.

Milestone payments are reduced by a certain percentage for the second product that achieves

a milestone, by an additional percentage for the third product that achieves a milestone, and so on, for each subsequent product that achieves a milestone.

In the event that the Company is able to successfully develop and launch multiple products under the License Agreement, total milestone payments could be approximately $ 21,000 .

1 unchanged sentence

To the extent the Company sublicenses its license rights under the License Agreement, Penn would be eligible to receive tiered sublicense income at percentage rates in the mid-single to low double-digits.

There were no amounts due under the License Agreement as of December 31, 2020.

There were no amounts due under the License Agreement as of December 31, 202 1 or 202 0.

Sponsored Research Agreements

The Company has sponsored research agreements with two faculty members at Penn, who are also scientific co-founders of the Company and members of the Company’s scientific advisory board.

In May 2020, one of the agreements was amended to expand the scope of sponsored research.

In August 2020, this agreement was further amended to extend the term of the original research plan.

Under the amended agreements, the Company has committed to funding a defined research plan through February 2023.

The total estimated cost of $11,781 under the agreements satisfies the Company’s annual obligation under the License Agreement (see Amended and Restated License Agreement with the Trustees of the University of Pennsylvania above).

As of December 31, 2020, $7,090 of cost has been incurred pursuant to these agreements.

For the years ended December 31, 2020 and 2019, the Company recognized research and development expense of $2,995 and $2,137, respectively, related to these agreements in the accompanying statements of operations.

As of December 31, 2020 and 2019, $1,851 and $1,588 respectively, of advance payments are included in Prepaid expenses and other current assets in the accompanying balance sheets and there was $217 included in Accrued and other current liabilities in the accompanying balance sheets as of December 31, 2020.

The Company has sponsored research agreements, or SRA, with two faculty members at Penn, who are also scientific co-founders of the Company and members of the Company’s scientific advisory board.

In May 2020, one of the SRAs was amended to expand the scope of sponsored research.

In August 2020, the same SRA was further amended to extend the term of the original research plan.

In December 2021, the Company further amended this SRA to extend the term and expand the workplan to include additional correlative studies related to the DesCAARTes TM trial.

In April 2021 and October 2021, the other SRA was amended to extend the term of the original research plan.

Under the amended SRAs, the Company has committed to funding defined research plans through December 2024 and November 2022 , respectively.

The total estimated cost of $ 12,483 under the SRAs satisfies the Company’s annual obligation under the License Agreement (see Amended and Restated License Agreement with the Trustees of the University of Pennsylvania above).

As of December 31, 2021, $ 9,930 of cost has been incurred pursuant to these SRAs.

For the years ended December 31, 2021 and 2020, the Company recognized research and development expense of $ 2,840 and $ 2,995 , respectively, related to these SRAs in the accompanying statements of operations.

As of December 31, 2021 and 2020, $ 346 and $ 1,851 respectively, of advance payments are included in Prepaid expenses and other current assets in the accompanying balance sheets and there was $ 36 and $ 217 included in Accrued and other current liabilities in the accompanying balance sheets as of December 31, 2021 and 2020.

In December 2021, the Company entered into a SRA with Penn for the laboratory of Dr.

Drew Weissman, or the Weissman SRA.

Under the Weissman SRA, discovery-stage proof of concept studies for lipid nanoparticle mRNA for the delivery and/or enhancement of CAAR technology is being conducted.

Under the Weissman SRA, Penn granted the Company a non-transferable, non-exclusive license to use certain intellectual property for specific internal research purposes and further grants the Company the first option to negotiate to acquire, subject to agreement on commercial terms, an exclusive or non-exclusive worldwide license to certain patent rights for specific CAAR products developed under the Weissman SRA.

Unless earlier terminated, the Weissman SRA will expire in December 2023.

Pursuant to the Weissman SRA, the Company also entered into an Option Agreement with Penn, or the Weissman Option, which grants the Company the option to negotiate to acquire a non-exclusive worldwide license to certain patent rights in connection with the Weissman SRA.

Master Translational Research Services Agreement

7 unchanged sentences

Technology transfer activities will be at the Company’s cost and subject to agreement as to the technology to be transferred.

Under this agreement, the Company recognized $250 of research and development expense for the year ended December 31, 2019.

The Company recognized $ 150 of research and development expense under this agreement for the year ended December 31, 2021.

No expense was recognized under this agreement for the year ended December 31, 2020.

Collaboration and License Agreement

Artisan Collaboration and License Agreement

In July 2020, the Company entered into a collaboration and license agreement with Artisan Bio, Inc.

(Artisan), wherein the Company and Artisan agreed to collaborate to potentially enhance certain pipeline products of the Company at specific targets using Artisan’s gene editing and engineering technology.

If the Artisan technology

is applied to any of the Company’s products, the Company will be responsible for the development, manufacturing, and commercialization of any such products.

If the Artisan technology is applied to any of the Company’s products, the Company will be responsible for the development, manufacturing, and commercialization of any such products.

Under the terms of the agreement, the Company was required to pay Artisan a nominal upfront fee, as well as costs associated with research and development activities.

1 unchanged sentence

The Company can terminate the agreement at will upon advance written notice with payment of a nominal cancellation fee.

Licence and Supply Agreement with Oxford Biomedica

In December 2021, the Company entered into a Licence and Supply agreement (LSA) with Oxford Biomedica (UK) Limited, wherein the LSA grants the Company a non-exclusive license to Oxford’s LentiVector® platform for its application in the Company’s DSG3-CAART program and puts in place a multi-year vector supply agreement.

Under the terms of the agreement, the Company is required to pay Oxford an upfront fee, as well as costs associated with initial vector manufacturing activities for a total cost of up to approximately $ 4,000 .

Oxford is eligible to receive regulatory and sales milestones in the low tens of millions and royalties in the low single digits on net sales of products that incorporate the Oxford technology.

The Company can terminate the agreement at will upon advance written notice and subject to certain manufacturing slot cancellation fees.

As of December 31, 2021, the Company has recognized expenses of approximately $ 1,100 in the accompanying statements of operations under this LSA.

Commitments and Contingencies

5 unchanged sentences

Rent expense related to this lease agreement recognized in the accompanying statement of operations was $ 272 and $ 266 for the years ended December 31, 2021 and 2020.

In February 2022, the Company amended this lease for an additional 35 months, through June 30, 2025 .

The annual base rent is $ 279 , starting on January 1, 2023 and such amount will increase by 2.5 % annually.

In January 2021, the Company entered into a Development and Manufacturing Services Agreement (WuXi Agreement) with WuXi Advanced Therapies, Inc.

(WuXi) to serve as the Company’s cell processing manufacturing partner for the planned MuSK-CAART Phase 1 clinical trial, or MusCAARTes TM trial.

The Company concluded the WuXi Agreement has an embedded lease as a dedicated manufacturing suite is used for the Company’s cell processing manufacturing.

The monthly fee of $ 125 for this suite is included in the minimum lease payment table below.

During the year ended December 31, 2021, the Company recognized $ 480 of expense related to this lease in the accompanying statements of operations.

The WuXi Agreement will expire the later of January 2024 , or upon completion of WuXi’s services related to the MusCAARTes TM trial.

The Company has the right to terminate the WuXi Agreement for convenience or other reasons specified in the WuXi Agreement upon prior written notice.

If the Company terminates the WuXi Agreement, it will be obligated to pay an early termination fee of up to $ 1,500 .

As of December 31, 2021, the future minimum payments for operating leases are as follows:

Research Service Agreement

In February 2021, the Company entered into a research service agreement with CHOP for vector manufacturing.

In May 2021, this agreement was amended to provide additional vector manufacturing services.

Research and development expense related to this research service agreement with CHOP recognized in the accompanying statements of operations was $ 1,071 for the year ended December 31, 2021.

No expense was recognized for the year ended December 31, 2020.

There was $ 166 recorded in Accrued and other current liabilities in the accompanying balance sheets as of December 31, 2021.

This agreement has a remaining cost of approximately $ 646 , expected to be incurred through the first half of 2023.

Manufacturing Agreement

In August and October 2021, the Company entered into agreements with a contract manufacturing organization for the purchase of plasmids to be used in vector manufacturing for a total cost of approximately $ 1,620 , expected to be incurred during 2021 and 2022.

As of December 31, 2021, $ 1,310 of expense related to these agreements has been recognized in the accompanying statements of operations.

There was $ 827 recorded in Accrued and other current liabilities in the accompanying balance sheets as of December 31, 2021.

Other Purchase Commitments

8 unchanged sentences

It is not possible to determine the maximum potential amount under these contracts due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

Convertible Preferred Stock

Preferred Stock

The Company has 10,000,000 shares of authorized preferred stock as of December 31, 2020, none of which is issued or outstanding.

The preferred stock is not redeemable and does not have a stated voting, dividend or liquidation preference.

Convertible Preferred Stock

The Company has issued Series A Preferred, Series A-1 Preferred, Series A-2 Preferred, and Series B Preferred of Convertible Preferred Stock.

The Company classified Convertible Preferred Stock outside of stockholders’ equity (deficit) because the shares contained deemed liquidation rights that were a contingent redemption feature not solely within the control of the Company.

Series A Preferred

Series A-1 Preferred

Series A-2 Preferred

Series B Preferred

Total Convertible

Preferred Stock

Balance—December 31, 2018

Exchange, including

deemed dividend

Issuance costs

Conversion to common

Balance—December 31, 2019

In January 2019, the Company’s certificate of incorporation was amended to increase the authorized shares of Convertible Preferred Stock to 20,762,168 shares, and the Company issued 6,963,788 shares of Series B Preferred, resulting in gross proceeds of $50,000.

In connection, the Company issued a further 1,405,332 shares of Series B Preferred in exchange for 1,405,332 shares of Series A-2 Preferred.

The Company determined the terms of the Series B Preferred to be materially, qualitatively different than the terms of the Series A-2 Preferred and, as such, applied extinguishment accounting with respect to the Series A-2 Preferred received in the exchange resulting in removal of the carrying amount of the Series A-2 Preferred received ($4,764), the addition of the Series B Preferred issued at fair value determined with reference to the contemporaneous issuance of Series B Preferred ($10,090) and the difference ($5,326) determined to be a deemed dividend recorded to additional paid-in capital (to the extent of paid-in capital) and accumulated deficit within stockholders’ deficit on the balance sheet.

The shares of Convertible Preferred Stock had various rights, including voting and dividend rights, preferences and privileges, including optional and mandatory conversion rights.

In October 2019, the Convertible Preferred Stock was converted into 12,904,534 shares of Common Stock.

Certain holders of the Company’s Convertible Preferred Stock elected to have such shares convert into 6,409,519 shares of non-voting Common Stock following the closing of the Company’s IPO.

The non-voting shares of Common Stock have the same rights and preferences as the Common Stock but are non-voting.

No Convertible Preferred Stock was outstanding as of December 31, 2020 or 2019.

Pending Litigation

On February 28, 2022, a purported stockholder of the Company filed a complaint against the Company and certain of the Company’s current officers and certain of the Company’s current and former directors in the United States District Court for the Eastern District of Pennsylvania captioned Patterson v.

Cabaletta Bio, Inc., et al.

2:22-cv-00737 (E.D.

The complaint was filed on behalf of a putative class of persons and entities who purchased or otherwise acquired (a) Cabaletta common stock pursuant and/or traceable to the offering documents issued in connection with the Company’s October 24, 2019 initial public offering;

and/or (b) Cabaletta securities between October 24, 2019 and December 13, 2021 both dates inclusive.

The complaint alleges claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder and under Sections 11 and 15 of the Securities Act based upon allegedly false or misleading statements and omissions regarding our DesCAARTes TM Phase 1 clinical trial of DSG3-CAART, clinical data for the DesCAARTes TM trial, the efficacy of DSG3-CAART, and the clinical and/or commercial prospects for DSG3-CAART.

The complaint seeks damages, prejudgment and post-judgment interest, and reasonable attorneys’ fees, expert fees and other costs.

The Company may also become subject to additional securities class action lawsuits in the future.

The Company intends to vigorously defend the lawsuit.

At this time, no assessment can be made as to its likely outcome or whether the outcome will be material to the Company.

No information is available to indicate that it is probable that a loss has been incurred and can be reasonably estimated as of the date of the financial statements and, as such, no accrual for the loss has been recorded within the financial statements.

Pursuant to the Company’s Third Amended and Restated Certificate of Incorporation filed in October 2019, the Company is authorized to issue 143,590,481 shares of voting common stock and 6,409,519 shares of non-voting common stock.

1 unchanged sentence

Each share of the Company’s non-voting common stock may be converted at any time into one share of common stock at the option of its holder by providing written notice to the Company, subject to the limitations provided for in the amended and restated certificate of incorporation.

In August 2020, 1,733,904 shares of non-voting common stock were converted to voting common stock.

At-The-Market Offering Sales Agreement

On November 10, 2020, the Company filed a Shelf Registration Statement in relation to the registration of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof for the purposes of selling, from time to time, the Company’s common stock, debt securities or other equity securities in one or more offerings.

The Company also simultaneously entered into a Sales Agreement with Cowen and Company, LLC, to provide for the offering, issuance and sale of up to an aggregate amount of $75.0 million of the Company’s common stock from time to time in “at-the-market” offerings under the Shelf Registration Statement and subject to the limitations thereof.

No shares have been sold under the Sales Agreement as of December 31, 2020.

Share-based Payment Awards

In May 2018, several of the Company’s founders agreed to modify their shares of common stock outstanding to include vesting provisions that require continued service to the Company in order to vest in those shares.

As such, the 2,904,000 modified shares of common stock became compensatory upon such modification.

The fair value of the awards on the modification date was determined to be $0.74 per share of common stock, based on the issuance of convertible notes in May 2018, considering the maximum conversion price and the seniority of the notes.

The total compensation cost resulting from the modification was $2,126.

The total compensation cost is being recognized over the three-year vesting term attendant to the founders’ common shares.

During the year ended December 31, 2020, the Company recognized $495 and $177 of this amount in research and development expense and general and administrative expense, respectively.

During the year ended December 31, 2019, the Company recognized $529 and $177 of this amount in research and development expense and general and administrative expense, respectively.

The Company has a Sales Agreement with Cowen and Company, LLC, to provide for the offering, issuance and sale of up to an aggregate amount of $ 75.0 million of common stock from time to time in “at-the-market” offerings (the ATM Program) pursuant to its shelf registration statement on Form S-3 (File No.

333-250006) and subject to the limitations thereof.

During the year ended December 31, 2021, the Company sold 4,792,562 shares pursuant to the ATM Program for net proceeds of $ 48.3 million, after deducting commissions of $ 1.4 million.

2018 Stock Option and Grant Plan

14 unchanged sentences

Outstanding as of January 1, 2021

Outstanding as of December 31, 2019

Forfeited/Cancelled

Outstanding as of December 31, 2021

12 unchanged sentences

These assumptions include:

Fair value of common stock —Prior to the Company’s IPO in October 2019, the fair value of the Company’s common stock underlying stock-based awards was estimated on each grant date by the Company’s board of directors.

In order to determine the fair value of the Company’s common stock underlying stock-based awards, the Company’s board of directors considered, among other things, a valuation of the Company’s common stock prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation .

Expected term —The expected term represents the period that stock-based awards are expected to be outstanding.

13 unchanged sentences

As of December 31, 2021, there was $ 14,897 of unrecognized compensation cost related to unvested option awards, which is expected to be recognized over a weighted-average period of 2.6 years .

As of December 31, 2020, there was $239 of unrecognized compensation cost related to unvested founder stock awards, which is expected to be recognized over a weighted-average period of 0.3 years.

2019 Employee Stock Purchase Plan

1 unchanged sentence

A total of 234,229 shares of common stock were initially reserved for issuance under the 2019 ESPP, and will be increased each January 1 thereafter through January 1, 2029 by the least of (i) 234,229 shares of common stock, (ii) 1 % of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31 or (iii) such lesser number of shares determined by the 2019 ESPP’s administrator.

On January 1, 2021, the total number of shares under the 2019 ESPP was increased by 234,229 shares.

On January 1, 2022, there was no increase to the total number of shares under the 2019 ESPP.

Employee contributions are made through payroll deductions of up to 15 % of eligible compensation over the offering period.

3 unchanged sentences

Thereafter, offerings will be six months in duration and will commence on each December 1 and June 1.

The Company recognized stock-based compensation expense of $18 during the year ended December 31, 2020 related to the 2019 ESPP.

The reconciliation of federal statutory income tax rate to the Company’s effective income tax rate is as follows:

80 unchanged sentences

Contributions totaled $ 256 and $ 203 for the years ended December 31, 2021 and 2020, respectively, and have been recorded in the statements of operations.

Subsequent Events

In January 2021, the Company entered into a Development and Manufacturing Services Agreement (Wuxi Agreement) with WuXi Advanced Therapies (Wuxi) to serve as the Company’s cell processing manufacturing partner for the anticipated MuSK-CAART Phase 1 clinical trial.

The Company has the right to terminate the Wuxi Agreement for convenience or other reasons specified in the Wuxi Agreement upon prior written notice.

If the Company terminates the Wuxi Agreement, it will be obligated to pay an early termination fee of $1,500.

In February 2021, the Company entered into a research service agreement with CHOP for vector manufacturing, with a total cost of $670, expected to be incurred during 2021.

EXHIBIT INDEX

26 unchanged sentences

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)

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)

Lease, dated as of February 11, 2019, between the Registrant and Brandywine Cira, L.P.

4 unchanged sentences

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)

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)

Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K (File No.

001-39103) filed on March 30, 2020)

Amended and Restated Non-Employee Director Compensation Policy

Amendment No.

9 unchanged sentences

001-39103) filed on November 10, 2020)

Amendment No.

1, dated April 27, 2021, to the Sponsored Research Agreement, dated April 23, 2018, between the Registrant and the Trustees of the University of Pennsylvania (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-39103) filed on May 3, 2021 )

Amendment No.

2, dated October 19, 2021, to the Sponsored Research Agreement, dated April 23, 2018, between the Registrant and the Trustees of the University of Pennsylvania (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-39103) filed on November 1, 2021 )

Second Amendment, dated October 19, 2021, to the First Amended and Restated License Agreement, dated May 27, 2020, among the Registrant, the Trustees of the University of Pennsylvania and the Children’s Hospital of Philadelphia (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-39103) filed on November 1, 2021)

First Amendment, dated February 15, 2022, to the Lease, dated as of February 11, 2019, between the Registrant and Brandywine Cira, L.P.

Amendment No.

3, dated December 17, 2021, to the Sponsored Research Agreement, dated April 23, 2018, between the Registrant and the Trustees of the University of Pennsylvania

Form of Employment Agreement

Sponsored Research Agreement, dated as of December 23, 2021, between the Registrant and the Trustees of the University of Pennsylvania

Option Agreement, dated December 23, 2021, by and between Registrant and the Trustees of the University of Pennsylvania

Licence and Supply Agreement, dated December 30, 2021, by and between the Registrant and Oxford Biomedica (UK) Limited

List of Subsidiaries of the Registrant

8 unchanged sentences

Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101*)

Management Contract or compensatory plan or arrangement.

Confidential treatment has been granted by the Securities and Exchange Commission as to certain portions.

Portions of this exhibit (indicated by asterisks) have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

Filed herewith.

5 unchanged sentences

/s/ Steven Nichtberger

Steven Nichtberger

Steven Nichtberger, M.D.

Chief Executive Officer and President

3 unchanged sentences

March 17, 2022

Steven Nichtberger

Steven Nichtberger, M.D.

(Principal Executive Officer)

5 unchanged sentences

March 17, 2022

Catherine Bollard

/s/ Brian Daniels

Catherine Bollard, M.D.

/s/ Scott Brun

March 17, 2022

Brian Daniels

Scott Brun, M.D.

/s/ Richard Henriques

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures