Contract analysis

I. Purpose and Executive Summary This memorandum has been prepared to brief Miriam Calloway and Rebecca Liang in advance of the in-person negotiation session currently scheduled for Friday, June 9, 2023, at the offices of Whitmore, Jansen & Callahan LLP ("WJC"), located at 1500 Market Street, Suite 3200, Philadelphia, PA 19102. The session is expected to run from 10:00 AM to 4:00 PM (Eastern), with a working lunch, a

II. Overview of Remaining Open Issues Following a careful review of the Veridian/WJC second markup received on June 2, 2023, we have identified five principal categories of open issues that must be resolved at or promptly following the June 9 negotiation session. The table below provides a high-level summary of each issue, including its current status, the parties' respective last stated positions, and our recommende

III. Issue 1: Insurance Coverage Requirements A. Background and Negotiation History Penterra maintains clinical trial liability insurance through Briarcliff Mutual Insurance Company under Policy No. BM-CTL-2023-04182, with a policy period running from April 1, 2023 through March 31, 2024 (renewable annually). The current policy provides the following coverage: • General Policy Limits: $25,000,000 per occurrence / $75

1. Industry Benchmarking. The $25,000,000 per-occurrence / $75,000,000 aggregate limits are consistent with prevailing market standards for Phase III oncology trials of comparable size. Christopher Aiken has prepared an Insurance Adequacy Opinion Memorandum (included in the session materials) analyzing insurance coverage levels in eleven recent Phase III clinical trial agreements involving comparable trial designs, e

2. Additional Insured Status. The Briarcliff policy already provides additional insured status for Veridian and each of the 38 participating sites. This additional insured coverage is automatically triggered upon execution of the MCTA and site-level sub-agreements, without the need for separate endorsement requests. Additional insured status affords Veridian and its member sites direct access to the Briarcliff policy

3. Uncapped Product-Defect Indemnification. Penterra's indemnification obligations under Section 12.1 of the MCTA are uncapped with respect to product-defect claims — that is, claims arising from defects in the manufacture, design, labeling, or formulation of penterafenib (PPC-4871). This uncapped exposure provides Veridian and its sites with protection that extends well beyond the limits of any insurance policy. In

4. Cost and Timeline Implications of a $50M Policy. Obtaining a $50,000,000 per-occurrence policy would require Penterra to either (a) renegotiate the existing Briarcliff policy at a significantly higher premium, or (b) procure a separate excess/umbrella layer. Based on preliminary inquiries made by Penterra's risk management team, the estimated cost of an excess layer providing $25,000,000 in additional per-occurren

5. Adequacy of Subject-Injury Sublimit. The subject-injury sublimit of $10,000,000 per occurrence / $50,000,000 aggregate is substantial and appropriate in light of the CLARION trial's characteristics. The trial will enroll approximately 1,200 subjects with advanced HCC, a patient population with a median life expectancy of approximately 10 to 14 months. While this underscores the importance of adequate safety protec

6. Veridian's Alternative Proposal. With respect to Veridian's alternative proposal to increase the subject-injury sublimit or obtain an excess layer, the same cost and timeline concerns apply. Moreover, the subject-injury sublimit is a sublimit within the broader policy — increasing it would not increase the overall per-occurrence limit, but would merely reallocate coverage within the existing $25,000,000 per-occurr

IV. Issue 2: Protocol Deviation Liability Allocation A. Background and Negotiation History The indemnification provisions of the MCTA (Article 12) contain a standard carve-out excluding Penterra's indemnification obligations for losses arising from protocol deviations that are "not authorized by Penterra or required for subject safety." The scope and application of this carve-out have been the subject of significant

1. Penterra Supports Investigator Autonomy for Genuine Safety Concerns. It is important to begin this discussion by making clear that Penterra fully supports — and indeed requires — investigators to prioritize subject safety above all other considerations. Penterra's commitment to subject safety is not at issue. The question is how to structure the indemnification provisions so that they appropriately protect investi

2. The "Reasonable Medical Judgment" Standard Is Overbroad. Veridian's proposed "reasonable medical judgment" standard, as formulated in the June 2 markup, would cover "any deviation that, in the investigator's reasonable medical judgment, is in the best interest of the subject." This standard contains no temporal limitation (it is not limited to emergency or urgent situations), no procedural requirements (it does no

3. Proposed Tiered Framework. To bridge the gap between the parties, Penterra proposes a tiered framework that categorizes protocol deviations into three tiers based on the urgency and nature of the clinical situation, with corresponding indemnification treatment and procedural requirements for each tier: Tier 1 — Emergency Deviations. A Tier 1 deviation is a deviation from the Protocol undertaken by the investigator

4. The Tiered Framework Protects Both Parties. This framework serves both parties' interests. It protects investigators from the concern that they will lose indemnification coverage by exercising good-faith clinical judgment in genuine safety situations (Tiers 1 and 2). At the same time, it protects the integrity of the CLARION Protocol by requiring procedural safeguards — notification, documentation, and where feasi

5. Regulatory and Scientific Imperative. We should emphasize that the integrity of the Protocol is not merely a contractual concern — it is a regulatory requirement. Under 21 C.F.R. § 312.60, investigators are required to conduct clinical trials in accordance with the protocol. Excessive or uncontrolled deviations could compromise the statistical validity of the CLARION trial and could result in questions from the FD

V. Issue 3: Investigator Independence and Publication Rights A. Background and Negotiation History

Article 17 of the MCTA governs the rights of Veridian, its member sites, and the site investigators to publish or present the results of the CLARION trial. The publication rights provisions are among the most closely negotiated terms in any clinical trial agreement involving an academic or research-network partner, and the MCTA is no exception. The parties' positions have evolved significantly over the course of the

1. The 60-Day Review Period Is Agreed. We should note at the outset that the parties are aligned on the 60-day review period. This represents a meaningful compromise by Penterra from its initial 90-day proposal and should be acknowledged as such. 2. 90-Day Patent Delay Is Industry Standard. The 90-day patent delay is consistent with prevailing practice in Phase III sponsor-site agreements. A survey of comparable clin

4. Multi-Center Publication Priority Is Reasonable. Penterra is willing to concede on the multi-center publication priority point proposed by Veridian in the June 2 markup. Penterra agrees that the initial reporting of the CLARION trial's primary endpoint results (overall survival) should be via a multi-center publication authored by the Global Principal Investigator, Dr. Catherine Aldridge, and the investigators, wi

5. ICMJE Compliance. Nothing in Penterra's proposed publication provisions — including the 60-day review period and the 90-day patent delay — is inconsistent with the ICMJE guidelines. The ICMJE guidelines permit sponsors to review manuscripts prior to publication and to delay publication for a reasonable period for patent-related purposes, provided that the sponsor does not have the right to suppress findings or con

VI. Issue 4: Termination Wind-Down Payment Obligations A. Background and Negotiation History

Article 20 of the MCTA governs the rights and obligations of the parties upon termination or expiration of the agreement, including the procedures and payment obligations during the wind-down period. The MCTA provides for a 120-day wind-down period following any termination, during which the parties are required to cooperate to ensure the safety of enrolled subjects. Subjects who are in active treatment at the time o

1. Milestone-Based Payment Structure. The entire payment structure of the MCTA is milestone-based. The per-patient fees are structured as four equal milestone payments of $13,000 each, triggered at randomization, Week 12, Week 24, and study completion. This structure was deliberately chosen to align payment with the delivery of value — Penterra pays for each stage of a subject's participation as it occurs. Paying ful

2. Site Maintenance Fees. Site maintenance fees of $40,000 per site per year are intended to cover the ongoing costs of maintaining a site in a state of operational readiness for the trial — staffing, facilities, regulatory compliance, and related overhead. Once the trial is terminated and the wind-down is complete, these costs cease. Pro-rating the maintenance fees through the end of the 120-day wind-down period is

3. Start-Up Fees. The start-up fees ($75,000 per site) are already structured as non-refundable milestone payments — 50% ($37,500) payable at site activation and 50% ($37,500) payable at first patient enrolled. Because these milestones will have been triggered for all activated and enrolling sites prior to any termination, these fees are inherently non-refundable. We do not believe this is a contested point and it sh

4. Wind-Down Administrative Costs. Penterra recognizes that sites will incur legitimate administrative costs during the wind-down period, including costs associated with data reconciliation, source document verification, IRB and FDA notifications, archiving, and related activities. Penterra is willing to accommodate reasonable, documented wind-down administrative costs. However, Veridian's estimate of $150,000 per si

5. Shared Interest in Avoiding Termination. Both parties have a strong shared interest in completing the CLARION trial as designed. Termination provisions are, by their nature, worst-case scenarios that both parties hope will never be triggered. The wind-down payment provisions should be designed to ensure subject safety and fair compensation for sites' actual costs during the wind-down, not to function as punitive t

VII. Issue 5: Minor Residual Bracketed Provisions Three categories of minor residual bracketed provisions remain in the Second Draft and Veridian's June 2 markup. These are expected to be resolved quickly and are scheduled for the final segment of the June 9 session. We summarize each below with our recommended positions. A. Notice Mechanics (Section 22.1) The only remaining bracket in Section 22.1 concerns the preci

VIII. Confirmed/Agreed Terms — Summary for Reference The following terms have been substantially agreed between the parties and are reflected in the Second Draft MCTA (May 19, 2023) as modified by the Indemnification Term Sheet (May 5, 2023). These terms should be confirmed at the outset of the June 9 session. Any adjustments or corrections identified by either party should be addressed promptly before the parties mo