Contract analysis

I. Introduction and Purpose of This Letter Calderwood & Harkness LLP ("C&H") represents Penterra Pharmaceuticals Corp. ("PPC") in connection with the above-referenced examination. Our firm was retained as authorized representatives of PPC pursuant to IRS Form 2848 (Power of Attorney and Declaration of Representative), filed with the Internal Revenue Service on June 8, 2022. That authorization designates the following

II. Background on PPC's Cooperation with the Examination Since the examination opened with the IRS's initial contact letter (Letter 2205-A), dated May 16, 2022, PPC has demonstrated an unwavering commitment to cooperating with the examination team. Over the course of approximately nine months, the examination team has issued a total of twenty-five (25) Information Document Requests, spanning a wide range of topics re

III. Description of IDR No. 26 as Issued IDR No. 26, as drafted and issued on or about February 1, 2023, seeks expansive categories of documents and information relating to all global intercompany transactions within the entire PPC corporate group. Critically, the request is not limited to the transfer pricing arrangements between PPC and PBI — that is, the CSA, the legacy IP royalty arrangement, the PCT valuation, o

1. All intercompany agreements, service-level agreements, and management fee arrangements among any and all PPC affiliates worldwide, for all periods from 2012 through 2020 — encompassing dozens of entities across multiple jurisdictions, many of which are not parties to the CSA or the legacy IP royalty arrangement and have no involvement in the transfer pricing issues under examination;

2. All board minutes, resolutions, and governance documents for every PPC subsidiary globally — not limited to PBI, but extending to affiliates in Asia-Pacific, Latin America, and other regions that play no role in the intercompany arrangements at issue;

3. All communications between PPC headquarters personnel and personnel of any foreign subsidiary regarding any pricing, product launch, or commercial strategy decision, without limitation as to the subsidiary, the product, or the time period involved;

4. All documents reflecting compensation, travel records, and time allocation of any PPC U.S.-based employee who interacted with any foreign affiliate at any time during the 2012–2020 period, regardless of whether such interaction had any connection to the CSA, PBI, or the transfer pricing arrangements under examination; and

5. Complete email archives for broad categories of PPC employees across multiple departments — including Research & Development, Commercial, Regulatory Affairs, Finance, and Legal — for the full 2012–2020 period, without limitation by search terms, custodians, or subject matter. The request, as described above, is not limited to the CSA between PPC and PBI, the legacy IP royalty arrangement, or the specific transfer

IV. Legal Standards Governing IDR Scope and Taxpayer Objections The IRS's own published guidance sets forth clear standards governing the issuance and scope of Information Document Requests, as well as the rights of taxpayers to object to requests that exceed those standards. Internal Revenue Manual § 4.46.4, which governs IDR procedures for Large Business & International Division examinations, provides that Informat

V. Specific Objections to IDR No. 26 A. Overbreadth: The Request Extends to Entities and Transactions Not Under Examination The examination at issue concerns the transfer pricing methodology employed in PPC's Irish intellectual property holding structure — specifically, the following intercompany arrangements and related issues: (i) the CSA between PPC and PBI, effective July 1, 2012, pursuant to which PPC and PBI sh

VI. PPC's Proposed Narrowing of IDR No. 26 In the spirit of cooperation and in furtherance of PPC's commitment to facilitating the examination, PPC proposes that IDR No. 26 be narrowed to the following reasonable and targeted scope: Entities. The scope of IDR No. 26 should be limited to documents and information relating to PPC, PBI, PHL (solely to the extent of its holding-company role in the corporate structure), a

VII. Request for Conference In accordance with the procedures set forth in the IRM and the LB&I Directive on the IDR Enforcement Process, PPC respectfully requests a conference with Revenue Agent Patricia Dunleavy and Supervisory Revenue Agent Gerald Meskill (Team Manager) to discuss the scope of IDR No. 26 and to work toward an agreement on an appropriately narrowed scope before any response deadline is imposed. PPC

VIII. Reservation of Rights PPC expressly reserves all rights to raise additional objections to IDR No. 26, or to any modified or revised version thereof, including but not limited to objections based on relevance, scope, burden, privilege, or any other applicable ground. PPC's filing of this objection to the scope of IDR No. 26 does not constitute a refusal to comply with the examination, and PPC reaffirms its commi