Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the mechanics and legal considerations associated with obtaining early release of lock-up restrictions in connection with the proposed $260,000,000 registered selling-stockholder secondary offering by members of the Castellano founding family of their shares of common stock of Penterra Pharmaceuticals Corp. ("PPC" or the "Company"). PPC is a Delaware c

II. Background A. The IPO Lock-Up Agreements The IPO Lock-Up Agreements were executed in connection with PPC's IPO, which closed on April 17, 2023. In the IPO, the Company sold 24,000,000 primary shares of common stock at a public offering price of $22.00 per share, generating gross proceeds of approximately $528,000,000. The shares were underwritten by the IPO Underwriters pursuant to an underwriting agreement dated

III. Lock-Up Waiver Mechanics A. Consent Requirement The IPO Lock-Up Agreements provide that the restrictions therein may be waived, in whole or in part, prior to the expiration of the 180-day lock-up period, with the prior written consent of all three of the IPO Underwriters — Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co. The language of the relevant provision is as follows: "The re

IV. 14-Day Advance Notice Requirement and Waiver A. The Notice Provision The IPO Lock-Up Agreements contain a provision requiring that, in the event any of the IPO Underwriters grants an early release or waiver of the lock-up restrictions, the IPO Underwriters shall provide at least 14 calendar days' advance notice to PPC and to the affected Lock-Up Parties prior to the effective date of any such early release or wai

V. SEC Disclosure Obligations A. Prospectus Supplement Disclosure The fact that the Selling Stockholders' shares are being sold pursuant to a lock-up waiver must be clearly and prominently disclosed in the prospectus supplement for the Secondary Offering. Securities Act and SEC staff guidance require that investors be provided with all material information regarding the shares being offered, including any restriction

Section 16(a) Reporting. Sales of PPC common stock by Section 16 insiders must be reported on Form 4, filed with the SEC no later than two business days following the date of the transaction. Assuming a trade date of October 12, 2023 (Thursday), the Form 4 filing deadline for each of Dr. Elena Castellano, Dr. Riccardo Castellano, and Dr. Marco Castellano would be October 16, 2023 (Monday). Calderwood & Harkness will

Section 16(b) Short-Swing Profit Recovery. Section 16(b) of the Exchange Act imposes strict liability on Section 16 insiders for profits realized from any purchase and sale, or sale and purchase, of the issuer's equity securities within a six-month period. To confirm that no short-swing profit liability will arise from the proposed sales, we must verify that none of the Selling Stockholders who are Section 16 insider

VI. New 90-Day Lock-Up Considerations for the Secondary Offering A. Rationale. It is customary in follow-on and secondary offerings for selling stockholders to agree to a new lock-up period in favor of the managing underwriters. The purpose of a new lock-up is to provide price stability in the aftermarket following the offering, protect investors who purchase shares in the offering from immediate dilution of the floa

VII. Procedural Recommendations and Timeline A. Recommended Actions and Responsible Parties Based on the analysis set forth above, we recommend the following actions and timeline:

1. September 14, 2023: Circulate this memorandum to Jennifer Kwon for review and comment. Audrey Zhou to be available for a follow-up discussion on September 15, 2023.

2. September 15–17, 2023: Draft the lock-up waiver request letters (three letters, one to each IPO Underwriter) and the corresponding form of waiver consent letter for each firm. Audrey Zhou and Brendan Walsh will prepare the initial drafts for Jennifer Kwon's review.

3. September 18, 2023: Send the finalized lock-up waiver request letters to Ridgeline Securities LLC (Attn: Jonathan Pryce-Hall), Broadmark Capital Inc. (Attn: Samuel Okonkwo), and Morningstar Zanthor & Co. (Attn: Diane Chaudhary). Each letter will be signed by David Orenstein, General Counsel and Corporate Secretary of PPC, on behalf of the Company and the Selling Stockholders. Copies of each letter will be sent to

4. September 18–29, 2023: Follow up with each IPO Underwriter to confirm receipt of the waiver request letters, address any questions, and negotiate any comments to the form of consent letter. We anticipate that Ridgeline and Broadmark will consent with minimal friction, given their participation in the Secondary Offering. Morningstar Zanthor may require additional engagement, and we should be prepared for the possib

5. By September 29, 2023: Target receipt of all three executed waiver consent letters. If any consent remains outstanding as of this date, Jennifer Kwon will escalate directly with the relevant firm.

6. October 2, 2023: File the preliminary prospectus supplement with the SEC pursuant to Rule 424(b)(5). The preliminary prospectus supplement will contain disclosure of the lock-up waiver and the new 90-day lock-up, among other offering terms.

7. October 12, 2023: Effective date of the lock-up waiver. Execution of the Underwriting Agreement for the Secondary Offering. Execution of the new 90-day lock-up agreements by each of the four Selling Stockholders. Filing of the final prospectus supplement pursuant to Rule 424(b)(5). Filing of Form 8-K reporting entry into the Underwriting Agreement. B. Risk Factors We have identified the following risk factors that

VIII. Conclusion Based on the foregoing analysis, we believe that the lock-up waiver mechanics are straightforward and well-supported by established market practice. The IPO Lock-Up Agreements clearly provide for early release with the prior written consent of all three IPO Underwriters, and the requested waiver — an early release of only two calendar days in connection with a fully registered secondary offering — is