Contract analysis

I. Executive Summary You asked us to analyze the implications of designating New York law as the governing law for the proposed Master Clinical Trial Agreement (the "MCTA") between Penterra Pharmaceuticals Corp. ("Penterra"), a Delaware corporation headquartered at 200 Biopharma Boulevard, Suite 1400, Princeton, New Jersey 08540, and Veridian Health Research Network, Inc. ("Veridian"), a Delaware Section 501(c)(3) ta

II. Background and Transaction Overview A. The Parties Penterra Pharmaceuticals Corp. Penterra is a Delaware corporation organized under the Delaware General Corporation Law and publicly traded on the Nasdaq Global Select Market under the ticker symbol "PTRA." As of the first quarter of 2023, Penterra's market capitalization is approximately $4.2 billion. In fiscal year 2022, Penterra reported total revenue of $1.87

III. Enforceability of New York Choice-of-Law Clause A. New York General Obligations Law § 5-1401 The principal statutory authority supporting the parties' selection of New York governing law is New York General Obligations Law § 5-1401. This provision, enacted in 1984 and subsequently amended, was designed to promote New York as a center of commercial activity by enabling parties to choose New York law to govern the

Section 5-1402 of the New York General Obligations Law is a companion provision to § 5-1401. It provides that parties to contracts meeting the $250,000 threshold who agree that New York law governs their agreement may also consent to the jurisdiction of the courts of the State of New York. Specifically, § 5-1402 bars a party who has agreed to a New York choice-of-law clause in a qualifying contract from contesting pe

1. State Healthcare and Research-Subject Protection Statutes. States in which clinical trial sites are located have a compelling interest in protecting the health and safety of research subjects enrolled at those sites. State statutes governing the conduct of human-subjects research, informed consent requirements, and research-subject injury compensation may be deemed mandatory law that cannot be overridden by a cont

2. State Anti-Kickback and Fraud-and-Abuse Laws. Many states have enacted their own anti-kickback statutes and fraud-and-abuse laws that supplement the federal Anti-Kickback Statute. These laws typically apply to healthcare transactions occurring within the state's borders and are expressions of fundamental state policy regarding the integrity of healthcare delivery.

3. State Insurance Regulatory Requirements. Insurance is regulated primarily at the state level. Requirements regarding clinical trial insurance, proof of financial responsibility, or research-subject injury coverage imposed by the state in which a site operates would apply as a matter of state regulatory law, regardless of the MCTA's governing law clause.

4. State Employment Laws Governing Site Personnel. Research coordinators, study nurses, and other clinical trial staff at each site are employees of the site institution and are subject to the employment laws of the state where they work. Wage-and-hour requirements, anti-discrimination protections, and other employment mandates are mandatory law that the New York governing law clause cannot displace.

5. State Consumer Protection Laws Applicable to Research Subjects. Certain states, most notably Massachusetts (Chapter 93A), have broadly interpreted consumer protection statutes that may reach clinical trial conduct involving residents of those states. In addition to these state-law considerations, the MCTA is subject to a comprehensive federal regulatory regime that operates independently of the parties' choice of

IV. Enforceability of Indemnification Provisions Under New York Law A. General Enforceability Framework New York courts have long recognized and enforced contractual indemnification provisions between sophisticated commercial parties, including broad indemnification for third-party claims. The freedom of contract is a cornerstone of New York commercial law, and courts are generally reluctant to interfere with indemni

V. Enforceability of Limitation-of-Liability Provisions Under New York Law A. General Principles New York courts consistently enforce limitation-of-liability clauses in commercial agreements between sophisticated parties. The principle of freedom of contract is given particular weight in the context of agreements between entities with substantial bargaining power, access to legal counsel, and the ability to negotiate

VI. Enforceability of Arbitration Agreement Under New York Law A. Federal Arbitration Act Preemption The MCTA's dispute resolution clause establishes a three-step escalation process for the resolution of disputes between the parties: Step 1 — Designated Representative Negotiation. Upon the occurrence of a dispute, the parties will designate senior representatives to attempt to resolve the dispute through good-faith n

VII. Confidentiality Provisions Under New York Law A. Enforceability of 10-Year Confidentiality Term The MCTA includes confidentiality provisions requiring each party to maintain the confidentiality of the other party's Confidential Information for a period of 10 years from the date of disclosure. "Confidential Information" as defined in the MCTA encompasses Protocol-related information, investigational product speci

VIII. Data Ownership and intellectual Property Under New York Law A. Data Ownership The MCTA provides that Penterra retains exclusive ownership of all clinical trial data generated in connection with the CLARION trial, including but not limited to individual subject data, case report forms, aggregate data, statistical analyses, interim analyses, final study results, and any data compilations or databases derived ther

IX. Insurance Provisions and Multi-State Regulatory Considerations A. Penterra's Insurance Obligations Under the MCTA, Penterra is required to maintain clinical trial liability insurance throughout the duration of the CLARION trial, with the following coverage terms: • Carrier: Briarcliff Mutual Insurance Company (a Connecticut-domiciled mutual insurance company) • Policy Number: BM-CTL-2023-04182 • Per-Occurrence Li