Contract analysis

I. Executive Summary The purpose of this memorandum is to set forth Calderwood & Harkness LLP's recommended negotiation positions in response to the initial markup of the Master Clinical Trial Agreement (the "MCTA") received from Whitmore, Jansen & Callahan LLP ("WJC"), counsel to Veridian Health Research Network, Inc. ("Veridian"), on April 28, 2023. This memorandum is intended to serve as a comprehensive roadmap fo

II. Background A. Transaction Overview Penterra is sponsoring the CLARION trial (ClinicalTrials.gov Identifier NCT05928174; IND 157823), a Phase III, randomized, double-blind, placebo-controlled study evaluating penterafenib (PPC-4871) as a second-line treatment in adult patients with advanced hepatocellular carcinoma who have progressed on or following first-line systemic therapy. Penterafenib is a novel, orally bio

1. MCTA Execution: MCTA signing must occur by late June 2023, which we have identified as June 28, 2023, to permit satisfaction of conditions precedent and site activation activities in time for the August 14, 2023 FPI target.

2. IRB Approvals: Institutional Review Board approvals are required for lead sites prior to site activation. The lead site, Graystone University Medical Center, is subject to the Graystone University Institutional Review Board (IRB registration number IRB00012847). Non-Pennsylvania sites in the Veridian Network are expected to rely on the Veridian Central IRB under a single-IRB model consistent with the 2018 NIH sIRB

3. CRO Coordination: The Master Services Agreement between Penterra and Meridian Contract Research Organization, Inc. ("Meridian CRO") was executed on January 15, 2023. Meridian CRO's monitoring activities — including site initiation visits, clinical monitoring visits, and data management — are contingent upon finalization of the MCTA and site activation. Meridian CRO has reserved clinical research associate capacity

4. Competitive Pressures: As noted above, at least two competing FGFR-targeted agents are in Phase II development for HCC. Timely initiation of the CLARION trial is important to Penterra's competitive positioning and enrollment feasibility, as key opinion leaders and high-enrolling academic sites could be absorbed by competing trials if the CLARION trial is materially delayed. These timeline pressures underscore the

III. Summary of Veridian's Key Markup Positions This Section provides a detailed summary of the seven principal categories of contested provisions in Veridian's initial markup. Each subsection describes Veridian's proposed position, identifies the departures from Penterra's first draft, and flags the key issues for negotiation. Our recommended responses are set forth in Section IV. A. Subject-Injury Indemnification V

IV. Recommended Negotiation Positions This Section sets forth Calderwood & Harkness's recommended negotiation positions for each of the seven contested areas, along with supporting rationale, fallback positions, and strategic considerations. A. Subject-Injury Indemnification — Hold Firm on Caps; Concede on Product-Defect Uncapped Liability Subject-injury indemnification is the central contested provision in the MCTA

1. Per-Subject and Aggregate Caps on Medical Care Costs Recommendation: Maintain the per-subject cap of $500,000 and the aggregate cap of $15,000,000 for reasonable and customary medical costs for the treatment of study-related injuries that are not covered by the subject's own health insurance or other available coverage. These caps apply only to direct medical care costs and do not limit Penterra's liability for ot

2. Product-Defect Claims — Agree to Uncapped Indemnification Recommendation: Accept uncapped indemnification for third-party claims and subject injuries arising directly from defects in the investigational product (PPC-4871) when the product is administered in accordance with the Protocol and applicable labeling, including the Investigator's Brochure. This means that if a subject is injured by a defect in penterafeni

3. Carve-Outs for Investigator Negligence and Protocol Deviations Recommendation: Insist on retaining the standard carve-outs from sponsor indemnification for injuries and claims arising from: (i) the negligence or willful misconduct of the site, the investigator, or any site personnel, including research coordinators, study nurses, and pharmacists; (ii) unauthorized protocol deviations — that is, deviations from the

4. Notice Requirements Recommendation: Maintain the requirement that Veridian and each participating site provide written notice to Penterra of any indemnification claim within thirty (30) calendar days of the site's or Veridian's first becoming aware of the claim or the circumstances giving rise to the claim. This notice period is standard and reasonable. However, we recommend a targeted concession on the consequenc

5. Reciprocal Site Indemnity Recommendation: Insist on reciprocal indemnification from Veridian and each participating institution for third-party claims (including claims by subjects) arising from: (i) the negligence or willful misconduct of the site, its investigators, or its employees or agents; (ii) unauthorized protocol deviations attributable to the site; and (iii) the site's material breach of the MCTA, the Pr

6. Proposed Indemnification Term Sheet Recommendation: We strongly recommend circulating a detailed, stand-alone indemnification term sheet to WJC by May 5, 2023. The term sheet would memorialize all of Penterra's positions on subject-injury indemnification, product-defect indemnification, reciprocal site indemnity, caps, carve-outs, notice requirements, and related procedural provisions (defense and settlement autho

1. Per-Occurrence and Aggregate Limits Recommendation: Reject Veridian's demand for $50,000,000 per occurrence and $100,000,000 in the aggregate. Counter-propose $25,000,000 per occurrence and $75,000,000 in the aggregate — the existing limits under Penterra's Briarcliff Mutual Insurance Company clinical trial liability policy (Policy No. BM-CTL-2023-04182, with a policy period of April 1, 2023 through March 31, 2024

2. Subject-Injury Sublimit Recommendation: Disclose to WJC that the Briarcliff policy includes a subject-injury sublimit of $10,000,000 per occurrence and $50,000,000 in the aggregate. These sublimits are adequate in light of the proposed per-subject cap of $500,000 and aggregate cap of $15,000,000 for medical care costs under the MCTA. The subject-injury sublimit substantially exceeds the MCTA's aggregate indemnific

3. Additional Insured Status Recommendation: Agree to name Veridian Health Research Network, Inc. and each participating site as additional insureds under the Briarcliff policy, to the extent of Penterra's indemnification obligations under the MCTA. This is consistent with standard industry practice for multi-site clinical trial agreements and should be readily available under the Briarcliff policy. We recommend that

4. Change of Insurer Recommendation: Accept a contractual requirement to provide Veridian with thirty (30) days' prior written notice of any change in Penterra's clinical trial liability insurer during the term of the MCTA. This notice period is reasonable and gives Veridian the opportunity to review the replacement insurer's financial strength and coverage terms. However, Penterra should not grant Veridian consent r

5. Site Insurance Recommendation: Maintain the requirement that Veridian and each participating site carry general liability and professional liability insurance coverage of at least $5,000,000 per occurrence and $10,000,000 in the aggregate throughout the term of the MCTA. Certificates of insurance evidencing such coverage shall be due within fifteen (15) business days of MCTA execution. These site insurance require

1. Per-Patient Fee Milestones Recommendation: Reject Veridian's proposed front-loaded 50%/30%/20% milestone structure. Counter-propose an even 25%/25%/25%/25% milestone structure tied to meaningful clinical milestones throughout each subject's participation in the trial: Rationale: Milestone-based payments tied to sequential clinical events are the prevailing standard in Phase III clinical trial agreements for good r

2. Start-Up Fees Recommendation: Maintain the 50%/50% split for start-up fees — $37,500 payable upon site activation and $37,500 payable upon enrollment of the first patient at each site. The total start-up fees across 38 sites amount to $2,850,000. Justification: The split payment structure ensures that sites receive prompt compensation for start-up activities (regulatory submissions, staff training, equipment calib

3. Payment Terms Recommendation: Maintain Net 45 days from Penterra's receipt of a proper and complete invoice as the standard payment term for all categories of MCTA payments. Justification: Net 45 is the standard payment term across Penterra's vendor and sponsor agreements and is aligned with the Company's internal accounting and disbursement cycles. Penterra's accounts payable team processes clinical trial invoice

4. Network Coordination Fee and Site Maintenance Network Coordination Fee: The quarterly installment structure of $300,000 per quarter over 14 quarters ($4,200,000 total) has not been contested by Veridian in its initial markup. We recommend maintaining this structure as drafted. The network coordination fee compensates Veridian centrally for its administrative oversight, site coordination, central IRB management, an

5. Investigator Grants The investigator grants of $1,500,000 total, disbursed upon acceptance of manuscripts for peer-reviewed publication, should be maintained as drafted. This payment structure ties the grant disbursement to actual deliverables — accepted publications that advance the scientific understanding of penterafenib — and avoids any appearance of payment for referrals or enrollment incentives that could ra

1. Sponsor Review Period Recommendation: Propose a sixty (60)-day review period during which Penterra may review manuscripts, abstracts, and presentations prior to submission for publication or presentation. During this review period, Penterra's review rights are limited to: (a) identifying and requesting removal of Penterra's confidential information and trade secrets; (b) identifying patentable subject matter that

2. Patent-Filing Delay Recommendation: Propose an additional ninety (90)-day delay period beyond the 60-day review period if, during the review, Penterra identifies patentable subject matter that warrants the filing of a patent application before the publication would constitute a public disclosure. The total maximum delay from the investigator's submission of a manuscript to Penterra to the earliest date on which th

3. Authorship and Academic Freedom Recommendation: Acknowledge and affirm the investigators' right to authorship consistent with ICMJE guidelines. The MCTA should expressly provide that authorship of publications arising from the CLARION trial shall be determined in accordance with ICMJE criteria, which require that each author have made substantial contributions to the conception or design of the work, or the acquis

4. Multi-Site Publication Coordination Recommendation: Include a provision requiring that multi-site publications — including any publication reporting the primary endpoint results, any pre-specified secondary endpoint results, or any pooled data from two or more sites — be coordinated through the Global Principal Investigator, Dr. Catherine Aldridge, to ensure data consistency and to avoid premature or inconsistent

1. Standard for Carve-Out Recommendation: Reject Veridian's proposal to limit the indemnification carve-out to protocol deviations arising from "gross negligence" only. Maintain that ordinary negligence in protocol adherence is sufficient to trigger the carve-out from Penterra's indemnification obligation. Rationale: A gross-negligence-only standard would effectively make Penterra financially responsible for negligen

2. Medically Necessary Deviations Recommendation: Propose a compromise framework for medically necessary protocol deviations that balances the legitimate interests of both parties. Under this framework: Deviations from the Protocol that are required by an investigator in the exercise of clinical judgment for the immediate safety of a research subject shall be treated as protocol-compliant conduct for purposes of the

1. Wind-Down Period Recommendation: Maintain the 120-day wind-down period following the effective date of termination for subject safety and transition purposes. Reject Veridian's proposed 180-day wind-down period. A 120-day wind-down period is sufficient for the orderly transition of subjects in active treatment. In the context of a Phase III oncology trial, treatment cycles for penterafenib are expected to be 28-da