| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 7, 2022, Cabaletta Bio, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Cowen and Company, LLC and Evercore Group L.L.C. (collectively, the “Underwriters”), relating to an underwritten offering (the “Offering”) of 126,815 shares (the “Shares”) of the Company’s common stock, $0.00001 par value per share (the “Common Stock”), and, in lieu of Common Stock to certain investors, pre-funded warrants (the “Pre-Funded Warrants”) to purchase 6,213,776 shares of Common Stock (the “Warrant Shares”). The closing of the Offering took place on December 12, 2022. All of the Shares and Pre-Funded Warrants were sold by the Company. The offering price of the Shares to the public is $5.52 per share, and the offering price of the Pre-Funded Warrants to the public is $5.51999 per share underlying each Pre-Funded Warrant. The Underwriters purchased the Shares from the Company pursuant to the Underwriting Agreement at a price of $5.1888 per share and the Pre-Funded Warrants from the Company pursuant to the Underwriting Agreement at a price of $5.1887906 per share underlying each Pre-Funded Warrant. The Offering was made in accordance with applicable Nasdaq rules and priced above the “Minimum Price” (as defined in the Nasdaq rules).
Each Pre-Funded Warrant has an exercise price per share of Common Stock equal to $0.00001 per share. The exercise price and the number of shares of Common Stock issuable upon exercise of each Pre-Funded Warrant is subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Common Stock. Each Pre-Funded Warrant is exercisable from the date of issuance by means of a cashless exercise. Under the Pre-Funded Warrants, the Company may not effect the exercise of any Pre-Funded Warrant, and a holder will not be entitled to exercise any portion of any Pre-Funded Warrant that, upon giving effect to such exercise, would cause: (i) the aggregate number of shares of Common Stock beneficially owned by such holder (together with its affiliates) to exceed 4.99% (or, at the election of the holder, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to the exercise; or (ii) the combined voting power of the Company’s securities beneficially owned by such holder (together with its affiliates) to exceed 4.99% (or, at the election of the holder, 9.99%) of the combined voting power of all of the Company’s securities outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded Warrant, which such percentage may be changed at the holder’s election to a higher or lower percentage not in excess of 19.99% upon 61 days’ notice to the Company.
In addition, in certain circumstances, upon a fundamental transaction, a holder of Pre-Funded Warrants will be entitled to receive, upon exercise of the Pre-Funded Warrants, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Pre-Funded Warrants immediately prior to the fundamental transaction; provided, however, that in the event of a fundamental transaction where the consideration consists solely of cash, solely of marketable securities or a combination thereof, each Pre-Funded Warrant will be deemed to be exercised in full in a cashless exercise effective immediately prior to and contingent upon the consummation of such fundamental transaction.
The Company estimates that the net proceeds from the Offering are approximately $32.5 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.
The Shares and the Pre-Funded Warrants were issued pursuant to a shelf registration statement on Form S-3 that was filed with the Securities and Exchange Commission (“SEC”) on November 10, 2020 and declared effective by the SEC on November 18, 2020 (File No. 333-250006). A prospectus supplement relating to the offering has been filed with the SEC.
The Underwriting Agreement contains customary representations, warranties, covenants, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, and other obligations of the parties. The representations, warranties and covenants contained in the Underwriting Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties. The foregoing is only a brief description of the terms of the Underwriting Agreement, does not purport to be a complete statement of the rights and obligations of the parties under the Underwriting Agreement and the transactions contemplated thereby, and is qualified in its entirety by reference to the Underwriting Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The foregoing is only a brief description of the terms of the form of Pre-Funded Warrant, does not purport to be a complete statement of the rights and obligations of the parties thereto and the transactions contemplated thereby, and is qualified in its entirety by reference to the form of Pre-Funded Warrant, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.
