Contract analysis

I. Purpose and Scope The purpose of this memorandum is to identify, catalog, and analyze all existing relationships, financial interests, and affiliations between the directors, officers, and other insiders of Penterra Pharmaceuticals Corp. ("Penterra" or the "Company") (NYSE: PPHR), a Delaware corporation headquartered at 400 Innovation Drive, Suite 1200, Princeton, New Jersey 08540, on the one hand, and the equity

II. Executive Summary of Findings Based on our comprehensive review of the sources described above, we have identified two material related-party relationships between Penterra Insiders and Caliston stakeholders. We have also identified one additional Penterra director whose recusal from Special Committee deliberations is warranted on a precautionary basis due to his lack of independence from one of the conflicted in

III. Detailed Analysis of Identified Relationships A. Dr. Marcus Hale — Chairman & Chief Executive Officer, Penterra Pharmaceuticals Corp.

1. Background and Position at Penterra. Dr. Marcus Hale has served as Chairman of the Board of Directors and Chief Executive Officer of Penterra since the Company's founding. Dr. Hale co-founded Penterra in 2004 and has served continuously as a member of the Board of Directors since the Company's inception. He has served as Chief Executive Officer since 2004 and was elected Chairman of the Board in 2008 upon the reti

2. Equity Interest in Caliston BioSciences. Dr. Hale holds a twenty-eight and one-half percent (28.5%) equity interest in Caliston BioSciences, Inc., making him the single largest individual stockholder of Caliston. This equity interest was acquired through a series of personal investments totaling Forty-Two Million Dollars ($42,000,000), deployed across three of Caliston's four completed financing rounds: (a) Seed R

3. Financial Interest in the Proposed Transaction. The Proposed Transaction contemplates an aggregate equity value for Caliston of Nine Hundred Twenty-Five Million Dollars ($925,000,000), consisting of cash and Penterra common stock in a 75%/25% mix, together with CVRs with an aggregate face value of $125,000,000. At the proposed $925,000,000 aggregate equity value, Dr. Hale's 28.5% equity stake in Caliston implies t

4. Board Observer Role at Caliston. Since 2018, Dr. Hale has held a non-voting board observer seat at Caliston BioSciences. During the period from 2018 to the present, Dr. Hale has attended fourteen (14) of sixteen (16) Caliston board meetings, reflecting an attendance rate of approximately eighty-seven and one-half percent (87.5%). A summary of Dr. Hale's attendance record is attached as Exhibit D to this memorandum

5. Disclosure History. The timing and circumstances of Dr. Hale's disclosure of his Caliston equity interest to the Penterra Board of Directors warrant careful attention. Based on our review, the relevant timeline is as follows: (a) Dr. Hale's investments in Caliston span the Seed, Series A, and Series B financing rounds. While the precise dates of these investments are set forth in Exhibit C, we note that the earlie

6. Conflict Classification. Based on the foregoing, Dr. Hale is classified as an "interested director" under DGCL §144 by reason of his direct and material financial interest in Caliston. Specifically: (a) Dr. Hale holds a 28.5% equity interest in Caliston, the target company in the Proposed Transaction, and would receive implied proceeds of $263,625,000 (or up to $299,250,000 inclusive of CVRs) upon consummation of

1. Background and Position at Penterra. Angela Whitmore serves as a non-independent member of the Penterra Board of Directors and concurrently holds the position of Executive Vice President, Commercial Operations at Penterra. In her executive capacity, Ms. Whitmore oversees Penterra's commercial organization, including sales, marketing, market access, and commercial strategy for the Company's marketed products. Ms. W

2. Spousal Relationship with Dr. Evan Whitmore. Angela Whitmore is the spouse of Dr. Evan Whitmore. Dr. Evan Whitmore serves in the following capacities at Caliston BioSciences: (a) Head of Clinical Development. Dr. Evan Whitmore holds the position of Head of Clinical Development at Caliston, in which capacity he is responsible for overseeing the design, execution, and management of Caliston's clinical trial programs

3. Conflict Classification. Angela Whitmore's spousal relationship with a member of Caliston's Board of Directors and a senior officer of Caliston creates a conflict of interest that, while indirect in nature, is sufficient to disqualify her from service on the Special Committee and from participation in the Special Committee's deliberations regarding the Proposed Transaction. Delaware courts have recognized that fam

1. Background. Raymond Tusk serves as a non-independent member of the Penterra Board of Directors. Mr. Tusk has been identified as a Hale appointee to the Board — that is, Mr. Tusk was nominated to the Board at the suggestion or direction of Dr. Hale, and his continued service on the Board is understood to be attributable, at least in part, to his relationship with Dr. Hale. Our review has not identified any direct e

2. Basis for Recusal. Notwithstanding the absence of a direct relationship between Mr. Tusk and Caliston, Mr. Tusk has been classified as non-independent for purposes of the Proposed Transaction due to his relationship with Dr. Hale. The characterization of Mr. Tusk as a "Hale appointee" raises concerns that Mr. Tusk may not be able to exercise fully independent judgment with respect to a transaction in which Dr. Hal

IV. Review of Other Penterra Directors and Officers A. Independent Directors (Special Committee Members) The Special Committee is composed of three independent directors of Penterra, each of whom has been reviewed and confirmed as independent for purposes of the Proposed Transaction.

1. Diane Prescott — Special Committee Chair. Diane Prescott serves as an independent member of the Penterra Board of Directors and has been designated as Chair of the Special Committee. Ms. Prescott is the former Chief Executive Officer of Windbridge Health Systems, Inc., a publicly traded healthcare services company, where she served as CEO from 2008 to 2019. She has served on the Penterra Board since 2020. Our revi

2. James Okafor — Special Committee Member. James Okafor serves as an independent member of the Penterra Board of Directors and as a member of the Special Committee. Mr. Okafor is a retired Managing Director of Fielding Capital Partners, LLC, a healthcare-focused private equity firm, where he spent over twenty years advising on and executing transactions in the life sciences sector. He has served on the Penterra Boar

3. Dr. Helen Ng — Special Committee Member. Dr. Helen Ng serves as an independent member of the Penterra Board of Directors and as a member of the Special Committee. Dr. Ng is a Professor of Pharmacology at Wexford University and a former member of an advisory committee to the U.S. Food and Drug Administration. She has served on the Penterra Board since 2021. Our review has confirmed that Dr. Ng does not hold any equ

1. Priya Anand — Chief Financial Officer. Priya Anand serves as Chief Financial Officer of Penterra. Our review has confirmed that Ms. Anand does not hold any equity interest in Caliston BioSciences. We have identified no familial, employment, consulting, or other business relationships between Ms. Anand and any Caliston stakeholder. Ms. Anand completed a director and officer questionnaire, and no conflicts of intere

2. Lawrence Whittaker — General Counsel and Corporate Secretary. Lawrence Whittaker serves as General Counsel and Corporate Secretary of Penterra. Our review has confirmed that Mr. Whittaker does not hold any equity interest in Caliston BioSciences. We have identified no familial, employment, consulting, or other business relationships between Mr. Whittaker and any Caliston stakeholder. Mr. Whittaker completed a dire

V. Review of Caliston Stakeholders and Advisors for Cross-Relationships A. Caliston Major Equity Holders The following table sets forth the major equity holders of Caliston BioSciences, together with their equity interests and any identified relationships with Penterra Insiders: With respect to the institutional investors, we note the following: (a) Ridgeline Ventures, LP is a life sciences-focused venture capital fi

VI. Analysis of Potential Indirect or Undisclosed Relationships In addition to the specific reviews described in Sections III through V above, we have conducted a broader analysis to identify any indirect, non-obvious, or potentially undisclosed relationships between Penterra Insiders and Caliston stakeholders. The results of that analysis are as follows: (a) Vendor and Consulting Relationships. We reviewed available

VII. Implications for the Special Committee Process A. Entire Fairness Considerations Dr. Hale's 28.5% equity interest in Caliston and his concurrent position as Chairman and Chief Executive Officer of Penterra places the Proposed Transaction squarely within the interested-director framework under DGCL §144 and implicates the entire fairness standard of judicial review. Under Delaware law, where a corporate fiduciary

1. Independent Special Committee. The Special Committee is composed of three fully independent directors — Diane Prescott (Chair), James Okafor, and Dr. Helen Ng — each of whom has been reviewed and confirmed as independent for purposes of the Proposed Transaction. The Special Committee has been granted sole and exclusive authority to evaluate the Proposed Transaction, negotiate the terms thereof, and make a recommen

2. Independent Legal Counsel. The Special Committee has retained Calderwood & Harkness LLP (Daniel Obi, Working Associate; Renata Vasquez, Responsible Partner) as its independent legal counsel. Calderwood & Harkness LLP does not represent Penterra in any other matter and has no relationship with Dr. Hale, Caliston, or any Caliston stakeholder that would compromise its independence.

3. Independent Financial Advisor. The Special Committee has engaged Thorngate Partners LLC as its independent financial advisor, effective June 16, 2023. Thorngate Partners will provide the Special Committee with an independent valuation analysis of Caliston, an assessment of the fairness of the proposed consideration from a financial point of view, and a fairness opinion if requested by the Special Committee. Thorng

4. Recusal of Conflicted Insiders. Dr. Marcus Hale, Angela Whitmore, and Raymond Tusk have been recused from all Special Committee deliberations, materials, and communications relating to the Proposed Transaction. The recusal is documented in the Board Resolution dated June 2, 2023 and is reinforced by the Voting and Recusal Agreement executed by Dr. Hale on the same date.

5. Information Barrier. An information barrier has been established under the Independence Protocol, including a segregated Project Coriander workspace for the storage and management of all documents, analyses, and communications related to the Special Committee's evaluation of the Proposed Transaction. Access to the Project Coriander workspace is limited to the Special Committee members, Calderwood & Harkness LLP, T

6. Recusal of Penterra's Regular Outside Counsel. Alcott, Barringer & Cole LLP (Victoria Shen), Penterra's regular outside counsel, has been recused from advising the Special Committee on the substantive evaluation and negotiation of the Proposed Transaction. Alcott, Barringer & Cole provided initial governance advice in connection with the identification of Dr. Hale's conflict and the formation of the Special Commit

1. Continue Operating Under the Independence Protocol. The Special Committee should continue to operate under the Independence Protocol and Information Barrier Policy adopted on June 2, 2023, without modification unless circumstances warrant. The procedural safeguards currently in place are well-designed to address the conflicts of interest identified herein and to establish a strong record of fair process that would

2. Route All Communications Through Independent Advisors. All communications with Caliston, its counsel (Whitfield Graves LLP), and its financial advisor (Fendowell Sinclair & Co.) should be routed exclusively through Calderwood & Harkness LLP and Thorngate Partners LLC. Under no circumstances should Dr. Hale, Angela Whitmore, or Raymond Tusk serve as a conduit for communications between the Special Committee and Cal

3. Monitor for Additional Relationships or Interests. Any additional relationships, affiliations, or financial interests that come to light during the course of due diligence or otherwise should be immediately disclosed to the Special Committee and documented as a supplement to this memorandum. We will continue to review data room productions and other materials as they become available for any indications of previou

4. Maintain This Memorandum as Part of the Process Record. This memorandum should be maintained as part of the Special Committee's formal process record in support of the entire fairness analysis. The memorandum should be updated as warranted to reflect any new information or developments, and all updates should be distributed to the Special Committee members and retained in the Project Coriander workspace.

5. Consider Supplemental Inquiry Regarding Dr. Hale's Disclosure Timeline. As noted in Section III.A.5 above, the delay between the date on which Dr. Hale first acquired his Caliston equity interest and the date on which he disclosed that interest to the Penterra Board is notable. The Special Committee may wish to consider whether a supplemental inquiry — conducted through counsel — into the circumstances of this del

VIII. Relationship Matrix (Summary Table) The following table provides a comprehensive summary of all Penterra Insiders reviewed in this memorandum, together with their roles, any identified Caliston relationships, the nature and extent of any financial interest, and their recusal status:

IX. Exhibits / Attachments The following exhibits are attached to and incorporated by reference into this memorandum: Exhibit A: Caliston BioSciences, Inc. — Capitalization Table (summary, as of the most recent available date, based on preliminary data room materials) Exhibit B: Penterra Pharmaceuticals Corp. — Board of Directors Roster and Independence Classifications (reflecting the independence determinations made