Contract analysis

I. Executive Summary The purpose of this memorandum is to evaluate the legal sufficiency of the fairness opinion (the "Opinion") delivered by Thorngate Partners LLC ("Thorngate") to the Special Committee of the Board of Directors (the "Special Committee") of Penterra Pharmaceuticals Corp. ("Penterra" or the "Company") on November 15, 2023. The Opinion concludes that the $925,000,000 aggregate equity value considerati

II. Background A. Transaction Summary The proposed Transaction contemplates a one-step merger of Caliston with and into Penterra, to be effected pursuant to an Agreement and Plan of Merger (the "Merger Agreement") under Section 251 of the Delaware General Corporation Law (the "DGCL"). Upon consummation of the merger, Caliston will cease to exist as a separate legal entity, and Penterra will succeed to all of Caliston

III. Delaware Law Standards for Fairness Opinions in Interested-Director Transactions A. Entire Fairness Doctrine Under Delaware law, when a corporate fiduciary stands on both sides of a transaction, or when a transaction involves self-dealing by a controlling stockholder or a director with a material interest in the transaction, the entire fairness standard of review applies. The entire fairness standard is the most

IV. Review of Thorngate Partners Fairness Opinion — Substance and Methodology A. Overview of the Opinion The Opinion was delivered by Thorngate Partners LLC to the Special Committee on November 15, 2023, during a meeting of the Special Committee at which all three members were present, together with Calderwood & Harkness counsel and the Thorngate deal team led by Gregory Ashford, Managing Director. The concluding lan

1. Discounted Cash Flow Analysis — CLT-4019 Only The first DCF analysis focused exclusively on CLT-4019, Caliston's lead clinical-stage asset — a selective CDK4/6 inhibitor currently in Phase 2b clinical development for the treatment of HR+/HER2– metastatic breast cancer (IND 158429). This methodology represents the most conservative of the valuation approaches employed by Thorngate, as it excludes any value attribut

2. Discounted Cash Flow Analysis — Full Pipeline (Risk-Adjusted NPV) The second DCF analysis expanded the valuation framework to include Caliston's full pipeline, encompassing CLT-4019 as well as two preclinical-stage candidates: CLT-5227 and CLT-6034. This methodology provides a more comprehensive view of Caliston's total enterprise value, but necessarily involves a wider range of outcomes given the early stage of t

3. Comparable Transactions Analysis Thorngate's comparable transactions analysis benchmarked the proposed Transaction against a set of seven precedent transactions involving the acquisition of oncology-focused biopharmaceutical companies at clinical-stage or early-commercial stages of development. This methodology provides a market-based reference point for evaluating the reasonableness of the Transaction price by re

4. Premiums Paid Analysis Thorngate's premiums paid analysis evaluated the Transaction premium relative to Caliston's most recent private financing benchmark. Because Caliston is a privately held company without publicly traded equity, the premiums paid analysis necessarily relied on the Series C financing round as the reference valuation, rather than a public market stock price. Key aspects of the premiums paid anal

V. Independence Confirmations A. Thorngate's Representation of Independence In the Opinion, Thorngate makes the following representations regarding its independence: • Thorngate has confirmed that it has no material relationship with Penterra, Caliston, Dr. Marcus Hale, or any of their respective affiliates that would impair its independence or its ability to render an objective and unbiased opinion. • Thorngate has

VI. Consistency with Preliminary Valuation Analyses (August 3, 2023) A. Comparison of Preliminary and Final Analyses As part of our review, we compared the valuation ranges and methodological approaches presented in Thorngate's preliminary valuation analyses, delivered to the Special Committee on August 3, 2023, with the corresponding ranges and methodologies reflected in the final fairness opinion delivered on Novem

VII. Assumptions and Limitations Disclosed A. Key Assumptions The Thorngate Opinion sets forth a series of assumptions upon which the fairness conclusion is based. Our review of these assumptions is as follows: Reliance on Caliston Management Projections. Thorngate relied on financial projections prepared by Caliston's management, including revenue forecasts for CLT-4019 and the broader pipeline, expense projections,