Contract analysis

Section 1.1 — Taxpayer Information The taxpayer that is a party to this Closing Agreement is identified as follows: Full Legal Name: Penterra Pharmaceuticals Corp. Employer Identification Number (EIN): 22-3741856 Principal Place of Business and Mailing Address: 2200 Independence Boulevard Princeton Junction, New Jersey 08550 State of Incorporation: Delaware Stock Exchange Listing: The common stock of Penterra Pharmac

Section 1.2 — Authorized Representative of the Taxpayer The taxpayer is represented in the execution of this Closing Agreement by the following duly authorized officer: Name: Marcus Whitfield Title: Vice President, Global Tax Authority: Mr. Whitfield is a duly authorized officer of Penterra Pharmaceuticals Corp. and has been vested with full authority, by resolution of the Board of Directors of Penterra Pharmaceutica

Section 1.3 — Representative of the Commissioner The Commissioner of Internal Revenue is represented in the execution of this Closing Agreement by the following duly authorized official: Appeals Officer: Noreen Castañeda, Appeals Officer, IRS Independent Office of Appeals IRS Examination Team Reference: LB&I-NE-TP-2022-00641 The examination that gave rise to this Closing Agreement was originally conducted by the foll

Section 1.4 — Taxpayer's Authorized Legal Representatives Throughout the examination and Appeals proceedings, the taxpayer has been represented by the following law firm, as authorized by IRS Form 2848 (Power of Attorney and Declaration of Representative) filed with the Internal Revenue Service on June 8, 2022: Firm: Calderwood & Harkness LLP Office Addresses: 600 Lexington Avenue New York, New York 10022 1735 Market

Section 2.1 — Examination History On May 16, 2022, the Internal Revenue Service opened an examination of the federal income tax returns (Forms 1120) of Penterra Pharmaceuticals Corp. for the taxable years ending December 31, 2017, December 31, 2018, December 31, 2019, and December 31, 2020. The examination was initiated by issuance of Letter 2205-A (Notification of Examination) addressed to the taxpayer at its princi

Section 2.2 — Intercompany Arrangements at Issue The examination identified and focused upon the following intercompany arrangements between the taxpayer and PBI: (a) Qualified Cost-Sharing Arrangement. The taxpayer and PBI entered into a Qualified Cost-Sharing Arrangement ("CSA"), effective July 1, 2012, pursuant to Treasury Regulations § 1.482-7. Under the terms of the CSA, PBI acquired the right to develop and exp

Section 2.3 — Notice of Proposed Adjustment On October 12, 2023, following the completion of its analysis, the IRS examination team issued a Notice of Proposed Adjustment ("NOPA") for all four taxable years at issue. The NOPA proposed the following adjustments to the taxpayer's taxable income under IRC § 482: (a) CSA Cost-Sharing Ratio Adjustments. The examination team proposed an increase in PBI's cost-sharing perce

Section 2.4 — 30-Day Letter and Formal Protest Following the issuance of the NOPA, a 30-Day Letter was issued by the IRS to the taxpayer on November 8, 2023, advising the taxpayer of its right to file a written protest and to request a conference with the IRS Independent Office of Appeals. The taxpayer, through its authorized legal representatives at Calderwood & Harkness LLP, filed a timely Formal Protest on Decembe

Section 2.5 — Appeals Conference and Settlement An Appeals conference was held in person at the IRS Independent Office of Appeals, Manhattan office, on February 28, 2024. The following individuals attended the Appeals conference: On behalf of the Taxpayer: Leonard Cross, Esq. — Calderwood & Harkness LLP (Responsible Partner) Sylvia Hartwell, Esq. — Calderwood & Harkness LLP (Billing Partner) Garrett Simmons, Esq. — C

Section 3.1 — Agreed Adjustments to Taxable Income The parties agree that the taxable income of Penterra Pharmaceuticals Corp. (EIN: 22-3741856), as reported on its Forms 1120 for the taxable years specified below, shall be increased by the following amounts. These amounts represent the agreed adjustments under IRC § 482 to the intercompany transfer pricing between Penterra Pharmaceuticals Corp. and Penterra Biopharm

Section 3.2 — Applicable Tax Rates and Additional Tax Due The agreed adjustments to taxable income result in the following additional federal income tax liabilities for each taxable year: The total additional federal income tax due under this agreement is Ten Million Dollars ($10,000,000). This amount is computed as the sum of the additional tax for each taxable year. For the taxable year ending December 31, 2017, th

Section 3.3 — Interest Interest on the additional tax determined under this Closing Agreement shall be computed at the applicable federal underpayment rate as prescribed by IRC § 6621(a)(2), compounded daily pursuant to IRC § 6622, from the respective original due date of each taxable year's federal income tax return (without regard to extensions) through the date on which payment of the additional tax is received by

Section 3.4 — Penalties The IRC § 6662(e) substantial valuation misstatement penalty in the amount of Fifteen Million Nine Hundred Seventy-Seven Thousand Dollars ($15,977,000) (approximately $15,980,000), as originally proposed by the Commissioner in the Notice of Proposed Adjustment dated October 12, 2023, is hereby fully abated and shall not be asserted or assessed against the taxpayer for any of the taxable years

Section 3.5 — Summary of Total Cash Liability The total cash liability of the taxpayer under this Closing Agreement is summarized as follows: Additional Federal Income Tax: $10,000,000 Estimated Interest (IRC § 6621): $2,840,000 Penalties: $0 Total Estimated Liability: $12,840,000 The total estimated liability of approximately Twelve Million Eight Hundred Forty Thousand Dollars ($12,840,000) is subject to adjustment

Section 4.1 — Scope of Agreement This Closing Agreement covers, and is final and conclusive with respect to, the following specific matters for the taxable years ending December 31, 2017, December 31, 2018, December 31, 2019, and December 31, 2020: (a) The arm's-length nature of the cost-sharing percentages applied by the taxpayer under the Qualified Cost-Sharing Arrangement between Penterra Pharmaceuticals Corp. and

Section 4.2 — Matters Not Covered This Closing Agreement does not cover, and is not final or conclusive with respect to, the following matters: (a) Future Taxable Years. This agreement does not constitute an advance pricing agreement ("APA") within the meaning of Revenue Procedure 2015-41 (or any successor guidance) and does not bind either the Commissioner or the taxpayer with respect to any taxable year other than

Section 4.3 — No Precedential Effect This Closing Agreement is entered into solely to resolve the specific matters covered herein for the taxable years specified. The terms and adjustments agreed to herein do not constitute a concession by either party of any legal position or factual determination, and this agreement shall not be cited, referenced, or relied upon by either party as precedent or authority in any othe

Section 5.1 — Taxpayer Representations The taxpayer, Penterra Pharmaceuticals Corp., represents and warrants as follows: (a) All information provided by the taxpayer to the Internal Revenue Service during the course of the examination, including but not limited to responses to forty-seven (47) Information Document Requests, financial data, transfer pricing analyses, intercompany agreements, and other documentation, w

Section 5.2 — Commissioner Representations The Commissioner, through Appeals Officer Noreen Castañeda, represents as follows: (a) The settlement reflected in this Closing Agreement is based upon Appeals Officer Castañeda's independent consideration of the hazards of litigation and the relative merits of the respective positions of the Commissioner and the taxpayer with respect to each of the issues resolved herein. (

Section 6.1 — Effect on Assessment Period The parties acknowledge the following with respect to the statute of limitations for assessment of federal income tax: (a) Consents to extend the period of limitations on assessment of federal income tax (IRS Forms 872 — Consent to Extend the Time to Assess Tax) were executed by the taxpayer and the Commissioner for the taxable years ending December 31, 2017 and December 31,

Section 7.1 — Binding Effect This Closing Agreement, upon execution by both the taxpayer and the duly authorized representative of the Commissioner, is final and conclusive as to the specific matters covered herein, and is binding upon the taxpayer, the Commissioner of Internal Revenue, and their respective successors, in accordance with IRC § 7121. Except upon a showing of fraud or malfeasance, or misrepresentation

Section 7.2 — Examination Closure Upon execution of this Closing Agreement by both parties, the examination of Penterra Pharmaceuticals Corp. (EIN: 22-3741856) for the taxable years ending December 31, 2017, December 31, 2018, December 31, 2019, and December 31, 2020, conducted under Exam Team ID LB&I-NE-TP-2022-00641, is hereby closed with respect to all matters covered by this agreement. The IRS shall issue appropr

Section 8.1 — Taxpayer PENTERRA PHARMACEUTICALS CORP. (EIN: 22-3741856) By: ________ Name: Marcus Whitfield Title: Vice President, Global Tax Date: March 29, 2024

Section 8.2 — Commissioner's Representative COMMISSIONER OF INTERNAL REVENUE By: ________ Name: Noreen Castañeda Title: Appeals Officer, IRS Independent Office of Appeals Date: March 29, 2024

Section 8.3 — Approving Official REVIEWED AND APPROVED: By: ________ Name: ________ Title: Appeals Team Manager / Area Director, IRS Independent Office of Appeals Date: March 29, 2024 ATTACHMENT A SCHEDULE OF ADJUSTMENTS BY TAXABLE YEAR The following schedule sets forth, for each taxable year covered by the Closing Agreement, the agreed adjustments to taxable income, the corrected taxable income, the additional feder

1. Interest shall be computed at the applicable federal underpayment rate under IRC § 6621(a)(2), compounded daily pursuant to IRC § 6622, from the original due date of each taxable year's return (March 15, 2018 for TY 2017; April 15, 2019 for TY 2018; July 15, 2020 for TY 2019, as extended under Notice 2020-23; April 15, 2021 for TY 2020) through the date of payment.

2. The additional tax for TY 2017 reflects the statutory corporate income tax rate of 35% in effect for taxable years beginning before January 1, 2018.

3. The IRC § 6662(e) substantial valuation misstatement penalty has been fully abated for all taxable years, as set forth in Section 3.4 of the Closing Agreement.

4. The estimated total interest of $2,840,000 is subject to final computation by the IRS upon receipt of payment. ATTACHMENT B IDENTIFICATION OF RELATED ENTITIES The following entities are related to the taxpayer and are relevant to the intercompany transactions covered by this Closing Agreement:

1. Penterra Biopharma International DAC Entity Type: Designated Activity Company organized under the laws of Ireland Registered Office: 4th Floor, Claremont House, Sandyford Business Park, Dublin D18 K7T4, Ireland Irish Tax Reference Number: 3218764T Managing Director: Aidan Naughton Ownership: 100% owned by Penterra Holdings Luxembourg S.à r.l. Relationship to Taxpayer: Indirect wholly-owned subsidiary of Penterra P

2. Penterra Holdings Luxembourg S.à r.l. Entity Type: Société à responsabilité limitée organized under the laws of the Grand Duchy of Luxembourg Registered Office: 14, rue Aldringen, L-1118 Luxembourg RCS Number: B 168452 Ownership: 100% owned by Penterra Pharmaceuticals Corp. U.S. Federal Tax Classification: Disregarded entity for U.S. federal income tax purposes pursuant to Treasury Regulations § 301.7701-3 Role: I

3. Penterra Manufacturing Ireland Ltd. Entity Type: Irish private company limited by shares Registered Office: Unit 7, Ringaskiddy Industrial Estate, Co. Cork T12 PX29, Ireland CRO Number: 512347 Ownership: 100% owned by Penterra Biopharma International DAC Role: Contract manufacturer for Penterra Biopharma International DAC under a cost-plus manufacturing services arrangement; manufactures pharmaceutical products fo

1. Qualified Cost-Sharing Arrangement Effective Date: July 1, 2012 Parties: Penterra Pharmaceuticals Corp. (U.S. parent) and Penterra Biopharma International DAC (Irish subsidiary) Governing Regulations: Treasury Regulations § 1.482-7 Description: The CSA governs the sharing of qualified research and development costs incurred in connection with the development of pharmaceutical compounds and related intangible prope

2. Intercompany License Agreement for Legacy Compounds Effective Date: July 1, 2012 (concurrent with the CSA, covering compounds not subject to the CSA) Parties: Penterra Pharmaceuticals Corp. (licensor) and Penterra Biopharma International DAC (licensee) Description: This intercompany license agreement grants PBI a non-exclusive license to use, manufacture (or have manufactured), market, distribute, and sell legacy