Contract analysis

I. Executive Summary Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") serves as outside counsel to Penterra Pharmaceuticals Corp. ("Penterra" or the "Company") in connection with the Company's proposed acquisition of one hundred percent (100%) of the outstanding capital stock of Veridian Biosciences, Inc. ("Veridian" or the "Target") for an aggregate purchase price of Nine Hundred Million Dollars ($9

1. Authorize the termination of the SPA pursuant to Section 8.1(d) thereof;

2. Authorize Dr. Anand Rajagopal, Chief Executive Officer, and Thomas F. Holbrook, General Counsel and Secretary, to execute and deliver the Termination Notice to Veridian and the Stockholder Representative; and

3. Authorize the ancillary actions described in Section IX of this memorandum, including termination of the financing commitment, escrow notifications, and litigation preparation. Basis for Recommendation. The factual basis for the Firm's recommendation is as follows. On August 14, 2024, the independent Data Monitoring Committee (the "DMC") for the Marlowe Asset Management-2 Phase II clinical trial (ClinicalTrials.go

II. Background and Transaction Summary A. Transaction Overview On June 10, 2024, Penterra entered into the SPA to acquire one hundred percent (100%) of the outstanding capital stock of Veridian for an aggregate cash purchase price of Nine Hundred Million Dollars ($900,000,000). The SPA was executed by Dr. Anand Rajagopal on behalf of Penterra, in his capacity as Chief Executive Officer, and by Dr. Julian Marek on beh

1. Committed Term Loan Facility. A $500,000,000 senior secured term loan facility provided pursuant to a Commitment Letter (Ref. No. CL-2024-PPCA-0607) dated June 7, 2024, from Summit Ridge Capital Partners, LP, as lead arranger and bookrunner, and Ironclad Trust Company, N.A., as administrative agent. The commitment letter was delivered in connection with the execution of the SPA and was customary in form for a tran

2. Cash on Hand. The remaining $400,000,000 of the purchase price was to be funded from Penterra's cash on hand. As of the end of the second fiscal quarter of 2024 (June 30, 2024), Penterra reported cash and cash equivalents and short-term investments of approximately $2.1 billion, providing ample liquidity to fund the cash portion of the purchase price. D. Key Pre-Termination Milestones Achieved Notwithstanding the

III. Intervening Events — VRD-4187 Clinical Data and FDA Action The events described in this Section III constitute the factual predicate for Calderwood & Harkness's recommendation that the Board authorize termination of the SPA. These events are presented in chronological order. A. Marlowe Asset Management-2 Phase II Interim Analysis (August 14, 2024) Marlowe Asset Management-2 is a randomized, open-label Phase II c

IV. Legal Analysis: Material Adverse Effect Under the SPA A. MAE Definition (SPA § 1.1) The SPA defines "Material Adverse Effect" or "MAE" in Section 1.1 as follows: any event, change, development, occurrence, condition, or effect that, individually or in the aggregate with all other events, changes, developments, occurrences, conditions, or effects, has had or would reasonably be expected to have a material adverse

V. Termination Right Under SPA § 8.1(d) A. Termination Mechanics

Section 8.1(d) of the SPA provides Buyer with a right to terminate the Agreement as follows: "This Agreement may be terminated by Buyer if any condition to Buyer's obligation to consummate the Transactions set forth in Section 7.2 is not satisfied as of the date on which the Closing would otherwise be required to occur and is incapable of being satisfied prior to the Outside Date; provided, however, that Buyer shall

1. A condition to Buyer's closing obligation under Section 7.2 is not satisfied. As set forth in Section IV.F above, both Section 7.2(a) (representations and warranties bring-down) and Section 7.2(b) (no MAE) are unsatisfied.

2. The unsatisfied condition is incapable of being satisfied prior to the Outside Date. As discussed above, the clinical data and FDA clinical hold cannot be remediated before December 10, 2024. The data is permanent, and the regulatory process for resolving the clinical hold — which requires submission of a complete response, FDA review, and potential additional clinical requirements — is measured in months or years

3. Buyer is not in material breach of the SPA. Penterra is not in material breach of any provision of the SPA. Penterra has complied in all material respects with all of its covenants and obligations under the SPA, including its pre-closing cooperation obligations under Section 5.3, its reasonable best efforts obligation under Section 5.6, and its obligation to maintain the financing commitment under Section 5.7. Cal

1. The Board adopts a resolution authorizing termination of the SPA (a draft resolution is attached hereto as Attachment A).

2. Dr. Anand Rajagopal (CEO) and Thomas F. Holbrook (General Counsel) execute and deliver a written Termination Notice to Veridian Biosciences, Inc. (addressed to Dr. Julian Marek, CEO, and Rachel Stein-Goldberg, General Counsel) and to David Ng, as Stockholder Representative, with a copy to Zalcourt Archer & Cole LLP (Rebecca Whitmore). A draft form of Termination Notice is attached hereto as Attachment B.

3. Termination of the SPA is effective upon delivery of the Termination Notice. B. Reverse Termination Fee — Not Triggered The SPA provides for a reverse termination fee of Forty-Five Million Dollars ($45,000,000) (equal to 5% of the Purchase Price), payable by Penterra under SPA § 8.3(a). However, the reverse termination fee is triggered solely in the event of a termination resulting from Buyer's failure to consumma

VI. Assessment of Veridian's Counterarguments A. Veridian's Position (as Articulated in September 13, 2024 Response) As noted above, Veridian, through Zalcourt Archer & Cole LLP, delivered a formal response to Penterra's Deficiency Notice on September 13, 2024. Veridian's response advanced the following principal arguments in support of its position that no MAE has occurred and that Penterra is obligated to proceed t

1. Clinical Data is Preliminary. Veridian asserts that the Marlowe Asset Management-2 interim analysis data is preliminary and does not constitute a final readout of the trial. Veridian argues that interim analyses are, by their nature, subject to significant statistical uncertainty and that the final data, once available, may present a materially different safety and efficacy profile.

2. Protocol Amendment Addresses Safety Concerns. Veridian contends that the Protocol v4.0 amendment, which introduces mandatory tocilizumab prophylaxis and reduces the starting dose of VRD-4187 from 1.5 mg/kg to 0.75 mg/kg, adequately addresses the safety signal identified in the interim analysis and demonstrates that the Company is taking proactive and scientifically appropriate steps to manage the risk.

3. FDA Partial Clinical Hold is Routine. Veridian characterizes the FDA's partial clinical hold as a routine regulatory action that is a standard part of the drug development process and that is expected to be resolved through the standard complete response mechanism within a reasonable timeframe.

4. Delaware's Exacting MAE Standard. Veridian argues that the facts do not satisfy Delaware's exacting standard for finding an MAE, emphasizing the durational significance requirement and the historically high bar that Delaware courts have set for buyers seeking to invoke MAE provisions. B. Calderwood & Harkness's Assessment of Veridian's Arguments Calderwood & Harkness has carefully analyzed each of Veridian's argum

VII. Litigation Risk Assessment A. Anticipated Claims by Veridian Calderwood & Harkness anticipates that Veridian and/or the Stockholder Representative will pursue the following claims in the event Penterra terminates the SPA: Breach of Contract. Veridian will allege that Penterra breached the SPA by wrongfully refusing to consummate the closing and by issuing an invalid termination notice. Veridian will argue that n