Cabaletta Confident Inc. Will Put Philly on the Biotech Map

Company IPO raised $75 million, which will help fund first clinical trial

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Feb 27, 2020
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The head of a Philadelphia-based biotech company acknowledges there will be losers and winners among investors who have pumped billions into the industry. Steven Nichtberger, CEO of Cabaletta Bio Inc. (CABA, Financial), is confident his company will emerge as one of the victors.

Nichtberger has some high-powered scientists on his team, University of Pennsylvania's Aimee Payne and Michael Milone. The company was backed by biotech investors from Boston, New York and California before its initial public stock offering last fall, when it raised $75 million even though it had to boost its offering to 6.8 million shares. The company sold shares at a rate of $11 per share. The pricing was below its target price of $14 to $16 per share as listed in documents filed with the Securities and Exchange Commission. It shares currently trade at just below $16.

Of course, you wouldn’t expect Nichtberger to be anything but buoyant about Cabaletta’s prospects. Still, his track record might make investors leery. The CEO previously headed Tengion Inc., which had 100 employees and a state-of-the-art factory. It was worth more than $400 million at its peak during another biotech buildup 10 years ago, only to fall flat on its face when it failed to produce cures.

So what’s different now? According to an article in The Philadelphia Inquirer, Nichtberger emphasized that times have changed.

“The science at Tengion was very new. There were no contract-manufacturing organizations in those days," he added. "We had to take a lot of risk and build out our own manufacturing up front. But the science did not bear out. It went sideways."

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Nichtberger says the government-backed Human Genome Project, which substantially completed the mapping of human genes in the early 2000s, marked not just new access for medical science, but the basis for a “compression” of cure technology.

“Instead of finding insights and trying to prove them over many years, we can now treat many diseases and conditions as genetic engineering problems whose treatments can be tested and proven rapidly, by medical standards," he said. "It’s huge, it’s exciting and it’s compelling medically."

Scientists at Cabaletta are developing T-cells that don’t harm human B-cells indiscriminately, but target destructive ones. In 2018, the company raised $38 million from three out-of-town companies, then $50 million three months later, before going public. The money will give Nichtberger the resources to run the 25-person company for the next several years and fund clinical trials. Its first clinical trial is expected to begin in 2020, targeting a rare skin disorder called mucosal pemphigus vulgaris.

Disclosure: The author holds no positions in Cabaletta.

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