Cabaletta Bio, Inc.
For the period ended Dec 31, 2025. Filed Mar 23, 2026.
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FY2025 · Filed Mar 23, 2026
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Item 8. Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Cabaletta Bio, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Cabaletta Bio, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
The Company's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Accounting for Accrued Clinical Trial Expenses | |
| Description of the Matter | As disclosed in Note 2 to the consolidated financial statements, the Company expenses research and development costs as incurred, which include costs relating to clinical trial activities. The Company’s accrued clinical trial expenses are based on factors such as estimates of the work completed in accordance with agreements established with a contract research organization. As disclosed in Note 5 to the consolidated financial statements, the Company’s total accrued expenses and other current liabilities related to clinical trial research and development services were $5.3 million at December 31, 2025.Auditing the Company’s accrued clinical trial expenses required subjective auditor judgement due to the estimation required by management in determining the services provided but not yet invoiced. Specifically, the amount of accrued clinical trial expenses recognized is sensitive to the availability of information to make the estimate, including the estimate of the period over which services will be performed, the associated cost of such services, and the level of services performed and progress in the period for which the Company has not yet received an invoice |
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| How We Addressed the Matter in Our Audit | To test the accrued clinical trial expenses our audit procedures included, among others, reviewing a sample of agreements with the service providers to corroborate key financial and contractual terms, and testing the accuracy and completeness of the underlying data used in the accrual expense computations. We also evaluated management’s estimates of the progress of a sample of clinical trial activities by making inquiries of the Company’s operations personnel that oversee the clinical trials and confirming information directly with the contract research organization. To evaluate the completeness of the accruals, we also examined subsequent invoices from the service providers and cash disbursements to the service providers, to the extent such invoices were received, or payments were made prior to the date that the consolidated financial statements were issued. |
| Accounting for Common Stock Warrants | |
| Description of the Matter | As discussed in Note 10 to the consolidated financial statements, in June 2025, concurrent with the issuance of common stock and pre-funded warrants, the Company issued a total of 53,090,190 common stock warrants. The common stock warrants were classified as a component of permanent stockholders’ equity within additional paid-in capital.Auditing management’s evaluation of whether the common stock warrants required classification as a liability or equity is especially challenging and required significant audit effort and judgment due to the complex assessment of provisions within the warrants under authoritative guidance. |
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| How We Addressed the Matter in Our Audit | To test the classification of the common stock warrants, our audit procedures included, among others, reviewing terms and conditions of the common stock warrant agreements, evaluating management's application of authoritative accounting guidance and related judgments, and testing the accuracy of underlying data supporting management’s assertions. We involved our |
internal accounting subject matter resources to assist in evaluating the Company’s assessment and judgments applied in its evaluation of the classification for the warrants.
/s/Ernst & Young LLP
We have served as the Company’s auditor since 2018.
Philadelphia, Pennsylvania
March 23, 2026
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.