Cabaletta Bio, Inc. Earnings Per Share Disclosure
12. Net Loss Per Share
The Company calculates basic and diluted net loss per share in conformity with the two-class method required for participating securities. For the year ended December 31, 2023, the Company had voting and non-voting common stock outstanding. In May 2024, 1,444,295 shares of non-voting common stock was converted to voting common stock and as of December 31, 2024, no shares of non-voting common stock remain outstanding. Since the rights of the voting and non-voting common stock are identical, except with respect to voting, the undistributed losses of the Company have been allocated on a proportionate basis to the two classes. Basic net loss per share of common stock is computed by dividing the net loss per share of common stock by the weighted average number of shares of common stock outstanding for the period.
The weighted average shares of common stock outstanding as of December 31, 2023 included outstanding pre-funded warrants to purchase up to an aggregate of 1,168,054 shares of common stock. No pre-funded warrants remain outstanding as of December 31, 2024.
Diluted net loss per share is calculated using the if-converted method, which assumes conversion of all non-voting common stock to voting common stock.
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Year ended December 31, 2024 |
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Voting common stock |
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Non-voting common stock |
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Basic net loss per share: |
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Numerator |
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Allocation of undistributed losses |
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$ |
(114,728 |
) |
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$ |
(1,136 |
) |
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Denominator |
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Weighted average number of shares used in basic per share computation |
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49,038,726 |
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485,378 |
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Net loss per share, basic |
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$ |
(2.34 |
) |
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$ |
(2.34 |
) |
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Diluted net loss per share: |
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Numerator |
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Allocation of undistributed losses for basic computation |
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$ |
(114,728 |
) |
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$ |
(1,136 |
) |
Reallocation of undistributed losses as a result of conversion of |
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(1,136 |
) |
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— |
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Allocation of undistributed losses |
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$ |
(115,864 |
) |
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$ |
(1,136 |
) |
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Denominator |
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Weighted average number of shares used in basic per share computation |
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49,038,726 |
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485,378 |
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Add: conversion of non-voting to voting common shares outstanding |
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485,378 |
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— |
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Weighted average number of shares used in diluted per share computation |
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49,524,104 |
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485,378 |
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Net loss per share, diluted |
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$ |
(2.34 |
) |
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$ |
(2.34 |
) |
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Year ended December 31, 2023 |
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Voting common stock |
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Non-voting common stock |
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Basic net loss per share: |
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Numerator |
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Allocation of undistributed losses |
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$ |
(64,776 |
) |
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$ |
(2,899 |
) |
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Denominator |
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Weighted average number of shares used in basic per share computation |
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39,192,445 |
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1,753,505 |
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Net loss per share, basic |
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$ |
(1.65 |
) |
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$ |
(1.65 |
) |
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Diluted net loss per share: |
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Numerator |
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Allocation of undistributed losses for basic computation |
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$ |
(64,776 |
) |
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$ |
(2,899 |
) |
Reallocation of undistributed losses as a result of conversion of |
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(2,899 |
) |
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— |
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Allocation of undistributed losses |
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$ |
(67,675 |
) |
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$ |
(2,899 |
) |
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Denominator |
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Weighted average number of shares used in basic per share computation |
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39,192,445 |
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1,753,505 |
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Add: conversion of non-voting to voting common shares outstanding |
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1,753,505 |
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— |
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Weighted average number of shares used in diluted per share computation |
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40,945,950 |
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1,753,505 |
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Net loss per share, diluted |
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$ |
(1.65 |
) |
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$ |
(1.65 |
) |
The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share, as their effect is anti-dilutive:
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As of December 31, |
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2024 |
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2023 |
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Stock options to purchase common stock |
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11,231,148 |
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8,141,035 |
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11,231,148 |
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8,141,035 |
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About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.