Contract analysis

I. EXECUTIVE SUMMARY A. Purpose of the Analysis This Functional Analysis has been prepared to document, in comprehensive detail, the functions performed, assets used or employed, and risks assumed by Penterra Biopharma International DAC ("PBI") in connection with its role as the intellectual property-holding company and commercial principal for the non-Americas commercialization of products developed and marketed by

1. PBI maintained substantial economic substance in Ireland throughout the Examination Period. PBI performed genuine, material functions related to each element of the DEMPE framework for the non-Americas territories. PBI was not a passive holding company, a conduit entity, or a "cash box." Rather, PBI operated as a fully functional commercial principal with an expanding operational infrastructure in Dublin, Ireland.

2. PBI controlled key commercial decisions and bore meaningful risks. PBI exercised independent decision-making authority over pricing in sixty-eight non-Americas country markets, market entry sequencing, distribution partner selection, regulatory submission strategies, and product lifecycle management. PBI's Managing Director, Aidan Naughton, and his specialized functional teams made and implemented these decisions

3. PBI employed a substantial and growing workforce of specialized professionals. PBI's headcount grew from fifty-two employees at its establishment in 2012 to one hundred eighty-five employees by year-end 2020. These employees include regulatory scientists, medical affairs professionals, commercial strategists, supply chain managers, finance and treasury staff, and legal and compliance personnel — all based in Dubli

4. PBI maintained independent governance. PBI's board of directors held forty-two board meetings during the Examination Period, all conducted in Dublin, at which the board reviewed and approved pricing strategies, market entry decisions, regulatory budgets, capital expenditures, distribution partner agreements, financial statements, and CSA cost-sharing obligations. These meetings were not pro forma; they involved su

5. PBI invested materially in regulatory activities. PBI incurred cumulative regulatory expenditures of €47.2 million during the Examination Period, reflecting genuine investment in regulatory submissions, marketing authorization maintenance, pharmacovigilance, and post-approval commitments across EMEA and APAC jurisdictions. These expenditures created proprietary regulatory dossiers and intangible assets of PBI.

6. PBI generated substantial revenue from genuine commercial activities. PBI recorded revenue of €2.14 billion and pre-tax income of €1.06 billion in fiscal year 2020 alone, derived from the commercialization of PPC products in sixty-eight non-Americas country markets through PBI's independently managed commercial operations. D. Relevance to Transfer Pricing Positions The functional analysis set forth in this documen

II. SCOPE AND METHODOLOGY A. Scope of the Analysis This Functional Analysis covers the tax years 2017, 2018, 2019, and 2020 — the four tax years that are the subject of the IRS examination opened on May 16, 2022 (Letter 2205-A). Where relevant to provide context for PBI's functions, assets, and risks during the Examination Period, this analysis also references events and arrangements from prior periods, including the

1. Regulatory Framework This Functional Analysis has been conducted in accordance with the following regulatory and interpretive authorities: • Internal Revenue Code § 482, which authorizes the Secretary of the Treasury to distribute, apportion, or allocate gross income, deductions, credits, or allowances between or among organizations, trades, or businesses owned or controlled by the same interests, to the extent ne

2. Information Sources The factual conclusions set forth in this analysis are based on the following sources of information, which were gathered, reviewed, and analyzed by Calderwood & Harkness LLP and Whitmore Valuation Group LLC during the period from June through October 2022: a. Employee Interviews. Garrett Simmons (Associate, Calderwood & Harkness LLP) and Leila Nazari (Senior Manager, Whitmore Valuation Group L

III. BACKGROUND — PBI AND THE PPC GROUP STRUCTURE A. PPC Group Overview Penterra Pharmaceuticals Corp. ("PPC") is a corporation organized under the laws of the State of Delaware and publicly traded on the Nasdaq Stock Market under the ticker symbol "PPCA." PPC's principal executive offices are located at 2200 Independence Boulevard, Princeton Junction, New Jersey 08550. PPC operates in the specialty pharmaceutical an

1. Veritaxol (Oncology) Veritaxol is PPC's blockbuster oncology product and the largest revenue-generating product in the PPC group's portfolio. Veritaxol is a targeted therapy approved for the treatment of certain advanced solid tumors. In fiscal year 2020, Veritaxol generated global net sales of $3.12 billion, of which $1.34 billion (approximately 43% of global net sales) was attributable to non-Americas markets wi

2. Imvara (Immunology) Imvara is PPC's leading immunology product, approved for the treatment of certain autoimmune and inflammatory conditions. In fiscal year 2020, Imvara generated global net sales of $1.87 billion, of which $0.79 billion (approximately 42% of global net sales) was attributable to non-Americas markets. Imvara's non-Americas commercialization is managed entirely by PBI, including pricing, market acc

3. Cerulon (Rare Disease) Cerulon is a rare-disease therapeutic approved for the treatment of a specific lysosomal storage disorder. In fiscal year 2020, Cerulon generated global net sales of $0.62 billion, of which $0.28 billion (approximately 45% of global net sales) was attributable to non-Americas markets. Cerulon's non-Americas commercialization presents unique challenges related to small patient populations, sp

4. Legacy Compounds In addition to the products developed under the CSA, PBI holds an exclusive license to certain legacy compounds (pre-2012 vintage, not covered by the CSA) for non-Americas exploitation under a separate royalty arrangement with PPC. Legacy compound non-Americas net sales have declined gradually over the Examination Period as these products mature, from $814.6 million in 2017 to $624.1 million in 20

1. Cost-Sharing Arrangement (CSA) Effective July 1, 2012, PPC and PBI entered into a qualified cost-sharing arrangement (the "CSA") pursuant to Treas. Reg. § 1.482-7. Under the CSA, PBI acquired the right to develop and exploit PPC's pharmaceutical intellectual property portfolio outside the Americas (defined in the CSA as North America, Central America, South America, and the Caribbean). The Americas territory is re

2. Legacy IP License Agreement PBI licenses certain legacy compounds from PPC under a separate license agreement (the "Legacy IP License Agreement"). The legacy compounds are pre-2012 vintage products that were not included in the CSA but for which PBI was granted an exclusive license to exploit in the non-Americas territory. The royalty rate under the Legacy IP License Agreement is 4.5% of net sales of legacy compou

3. Contract Manufacturing Agreement (PBI–PMI) PBI engages PMI as a contract manufacturer for the production of PPC's oncology and immunology biologics for non-Americas markets. Under the contract manufacturing agreement, PMI is compensated on a cost-plus basis at cost plus 8%. PMI does not own intellectual property related to the products it manufactures and does not bear entrepreneurial risk in connection with its m

IV. PBI'S FUNCTIONS — DETAILED ANALYSIS A. Overview of PBI's Functional Profile PBI operates as the non-Americas commercial principal within the PPC group. This role encompasses far more than passive IP ownership or the mechanical receipt of royalty income. PBI is an active, fully operational business enterprise that performs substantive activities across all five categories of the DEMPE framework: Development, Enhan

1. R&D Cost-Sharing Contributions PBI is a co-funder of the PPC group's research and development activities under the CSA. During the Examination Period, PBI's cost-sharing contributions ranged from $186.15 million (2017) to $255.52 million (2020), representing 38.2% to 42.7% of total qualified R&D costs under the CSA. These contributions are not merely passive payments or mechanical funding obligations. Rather, PBI'

2. Clinical Development Oversight (Non-Americas) PBI personnel participate in the design and execution of clinical development programs to the extent those programs relate to non-Americas regulatory submissions and market requirements. While PPC's U.S.-based R&D organization conducts the primary research and clinical trials for new compounds and new indications, PBI's regulatory affairs team contributes to the clinic

3. Local Adaptation and Formulation PBI oversees formulation adaptations, packaging modifications, and labeling requirements that are specific to non-Americas jurisdictions. These activities include: • Adapting product labeling and packaging to comply with the regulatory requirements of individual EMEA and APAC markets, including translations, local regulatory text, and country-specific patient information leaflets.

1. Product Lifecycle Management PBI manages the product lifecycle strategy for Veritaxol, Imvara, Cerulon, and legacy products in the non-Americas territory. Product lifecycle management is a critical Enhancement function that involves strategic decisions about how to maximize the commercial value of products over their life cycle, including: Line extensions. PBI evaluates and, where appropriate, pursues line extensi

2. Market Development PBI's commercial strategy team, based in Dublin, identifies and develops new market opportunities across PBI's sixty-eight country markets. Market development activities constitute a significant Enhancement function, as they directly increase the value and commercial reach of the intangible property in the non-Americas territory. PBI's market development activities include: Market potential eval

3. Medical Affairs Programs PBI funds and directs medical affairs activities in EMEA and APAC markets. Medical affairs functions enhance the value of intangible property by deepening the clinical understanding of products, building relationships with key opinion leaders ("KOLs"), and generating real-world evidence that supports ongoing commercialization. PBI's medical affairs activities include: Medical science liais

1. Quality Assurance and Pharmacovigilance PBI maintains a dedicated pharmacovigilance team responsible for adverse event reporting and safety monitoring in all non-Americas markets. Pharmacovigilance is a critical Maintenance function, as the continuous monitoring and reporting of product safety data is essential to maintaining marketing authorizations and ensuring the ongoing commercial viability of products. PBI's

2. Product Supply Continuity PBI manages the supply chain logistics for the non-Americas territory, ensuring the uninterrupted availability of products to patients and healthcare providers across sixty-eight country markets. This is a critical Maintenance function, as supply disruptions can result in loss of market share, regulatory sanctions, and damage to the commercial intangibles (customer relationships, market p

3. Regulatory Maintenance PBI handles ongoing regulatory compliance across all non-Americas jurisdictions where it holds marketing authorizations. Regulatory maintenance is a continuous, resource-intensive function that is essential to preserving the commercial value of products and the regulatory intangibles held by PBI. PBI's regulatory maintenance activities include: • Filing regulatory variations (Type IA, Type I

1. Intellectual Property Protection PBI manages IP protection activities in the non-Americas territory. While PPC's global IP team manages the overall IP portfolio at the global level, PBI takes responsibility for the prosecution, maintenance, and enforcement of IP rights specific to non-Americas jurisdictions. PBI's IP protection activities include: • Coordinating with PPC's global IP team and outside patent counsel

2. Regulatory Exclusivity PBI actively manages regulatory exclusivity periods in EMEA and APAC jurisdictions. Regulatory exclusivity is a form of intangible property that protects products from generic or biosimilar competition for defined periods, and its active management is a critical Protection function. PBI's regulatory exclusivity activities include: • Monitoring and enforcing data exclusivity and market exclus

3. Anti-Counterfeiting and Brand Protection PBI coordinates anti-counterfeiting and brand protection efforts in the non-Americas territory. These activities are particularly important given the global prevalence of counterfeit pharmaceuticals and the regulatory requirements for product authentication in key markets. PBI's anti-counterfeiting activities include: • Compliance with the EU Falsified Medicines Directive (

1. Independent Pricing Authority PBI exercises independent pricing authority across sixty-eight non-Americas country markets. Pricing is one of the most economically significant Exploitation functions, as it directly determines PBI's revenue, profitability, and market position. PBI's pricing decisions are made by PBI's pricing committee, which is chaired by Managing Director Aidan Naughton and includes senior members

2. Market Entry Decisions PBI independently determines market entry sequencing, timing of product launches, and portfolio prioritization for non-Americas territories. Market entry decisions involve significant commercial judgment and risk assessment, including: • Evaluation of market size and growth potential for each product in each prospective country market. • Assessment of the regulatory pathway, including the co

3. Distribution Partner Management PBI independently selects, negotiates with, and manages distribution partners across EMEA and APAC markets. In many non-Americas markets, PBI does not maintain its own direct sales force but instead commercializes products through local or regional distribution partners, such as pharmaceutical wholesalers, specialty distributors, and hospital suppliers. PBI's distribution partner ma

4. Commercial Operations PBI's commercial strategy team, based entirely in Dublin, manages the full scope of commercial operations for the non-Americas territory. These activities include: • Development and execution of marketing campaigns tailored to the regulatory and competitive environments of individual non-Americas markets. • Management of tender processes for hospital and public procurement contracts in market

5. Revenue Generation PBI generates its own revenue streams from the commercialization of PPC products in the non-Americas territory. In fiscal year 2020, PBI recorded revenue of €2.14 billion and pre-tax income of €1.06 billion. This revenue is not passively received royalty or dividend income; it is earned through the active, commercially substantive operations described throughout this Section IV. PBI invoices dis

V. PBI'S ASSETS A. Intangible Assets

1. CSA Intangibles PBI owns the rights (outside the Americas) to intangible property developed under the CSA. This ownership interest was acquired through PBI's payment of the $312 million PCT at the inception of the CSA on July 1, 2012, and is augmented on an ongoing basis by PBI's cost-sharing contributions ($186.15 million to $255.52 million annually during the Examination Period). The CSA intangibles include the

2. Licensed Legacy IP PBI holds an exclusive license to certain legacy compounds for non-Americas exploitation under the Legacy IP License Agreement. While PBI does not own the underlying intellectual property for legacy compounds (which remains with PPC), PBI's exclusive license confers the right to commercialize legacy products in the non-Americas territory, and PBI performs substantive Exploitation and Maintenance

3. Regulatory Filings and Marketing Authorizations PBI holds marketing authorizations in its own name across EMEA and APAC jurisdictions for Veritaxol, Imvara, Cerulon, and legacy products. These marketing authorizations are regulatory intangible assets that are legally held by PBI (not PPC or any other group entity) and are essential to PBI's ability to commercialize products in the non-Americas territory. PBI's cum

4. Commercial Intangibles Through its commercial operations over the period from 2012 to 2020, PBI has developed significant commercial intangibles specific to the non-Americas territory. These include: • Customer relationships: PBI has developed and maintains direct relationships with distribution partners, hospital pharmacy procurement departments, governmental health authorities, and other customers across sixty-e