Contract analysis

I. Introduction and Purpose This Exhibit B provides a comprehensive summary of the Qualified Cost-Sharing Arrangement ("CSA") entered into between Penterra Pharmaceuticals Corp. ("PPC"), a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 2200 Independence Boulevard, Princeton Junction, New Jersey 08550, and Penterra Biopharma International DAC ("PBI")

II. Parties to the Cost-Sharing Arrangement A. Penterra Pharmaceuticals Corp. (PPC) Penterra Pharmaceuticals Corp. ("PPC") is a corporation organized and existing under the General Corporation Law of the State of Delaware. PPC's shares of common stock are listed on the Nasdaq Global Select Market under the ticker symbol "PPCA." PPC is the ultimate parent company of the Penterra global group of companies. PPC's employ

III. Effective Date and Execution The CSA was entered into with an effective date of July 1, 2012. The CSA agreement was executed contemporaneously with PBI's operational establishment and the commencement of its business activities following PBI's incorporation on March 15, 2012, under Irish law. The period between PBI's incorporation and the CSA's effective date was used to complete the organizational formalities n

IV. Scope of the CSA — Intangible Development Activity A. Intangibles Covered The CSA covers the development, enhancement, maintenance, protection, and exploitation ("DEMPE") of PPC's pharmaceutical intellectual property portfolio. The intangible property subject to the CSA includes, without limitation, the following categories of intangible assets: • Patents and patent applications, including composition-of-matter p

V. Platform Contribution Transaction (PCT) A. Nature and Purpose Pursuant to Treasury Regulation § 1.482-7(g), PBI made a platform contribution transaction ("PCT") payment to PPC to compensate PPC for PBI's use of pre-existing intangible property (the "platform contributions") that PPC made available to the CSA as of the CSA's effective date. The requirement for such a payment arises from the principle that, where a

VI. Cost-Sharing Payments — Reasonably Anticipated Benefits A. Methodology for Determining Cost-Sharing Percentages Under the terms of the CSA, each controlled participant's share of the annual qualified R&D costs constituting IDA is determined by reference to its reasonably anticipated benefits ("RABs") from the intangible development activity, in accordance with Treasury Regulation § 1.482-7(e). The RABs are measur

VII. Distinction from Legacy IP Royalty Arrangement Separately from the CSA, PBI licenses certain legacy pharmaceutical compounds from PPC under an intercompany license agreement (the "Legacy IP License"). The Legacy IP License covers compounds that were developed and approved prior to July 1, 2012, and that are not covered by the CSA (the "Legacy Compounds"). These Legacy Compounds were fully developed and commercia

VIII. Regulatory Compliance A. Treas. Reg. § 1.482-7 Requirements The CSA satisfies the requirements for a qualified cost-sharing arrangement under Treasury Regulation § 1.482-7, including, without limitation, each of the following:

1. Written Agreement. The CSA is memorialized in a comprehensive written agreement effective July 1, 2012, which contains all terms and provisions required under Treasury Regulation § 1.482-7(b), including the identification of the controlled participants, the scope of the intangible development activity, the method for determining each participant's share of intangible development costs, the territorial allocation o

2. Controlled Participants. Both PPC and PBI qualify as controlled participants within the meaning of Treasury Regulation § 1.482-7(j)(1)(i), as each participant performs functions, assumes risks, and employs assets in connection with the intangible development activity covered by the CSA. PPC serves as the primary R&D performer, while PBI contributes regulatory, medical affairs, and commercial resources and bears th

3. Cost-Sharing Based on Reasonably Anticipated Benefits. Cost-sharing percentages are determined annually based on each participant's reasonably anticipated benefits from the IDA, measured as projected revenue from the exploitation of CSA-covered intangible property in each participant's respective territory, in accordance with Treasury Regulation § 1.482-7(e). The RAB calculations are updated each year to reflect c

4. Platform Contribution Transaction. PBI made a PCT payment of $312 million to PPC on July 1, 2012, to compensate PPC for the pre-existing intangible property made available to the CSA as of the effective date, in compliance with Treasury Regulation § 1.482-7(g). The PCT payment was determined using an income method (DCF approach) and is supported by contemporaneous and independent economic analyses demonstrating th

5. Contemporaneous Documentation. Contemporaneous documentation has been maintained in compliance with Treasury Regulation § 1.482-7(k) and the documentation requirements of Internal Revenue Code § 6662(e) for each of the examination years, as described in Section VIII.B below. B. Contemporaneous Documentation Crestfield & Associates LLP, PPC's transfer pricing advisors, prepared comprehensive contemporaneous transfe

IX. PBI's Economic Substance and DEMPE Functions Under the CSA PBI is not a mere shell entity, passive holding company, or entity without genuine substance. To the contrary, PBI performs substantive DEMPE functions — that is, functions relating to the Development, Enhancement, Maintenance, Protection, and Exploitation of intangible property — in connection with the CSA. PBI exercises meaningful decision-making author

X. Summary of IRS Proposed Adjustments Relating to the CSA The following is a summary of all proposed adjustments set forth in the NOPA dated October 12, 2023, relating to the CSA and the related Legacy IP License:

1. CSA Cost-Sharing Ratio Adjustments. The IRS proposed increasing PBI's cost-sharing percentages under the CSA for Tax Years 2017 through 2020, resulting in proposed additional cost-sharing payments from PBI to PPC totaling $235,010,000, as detailed in Section VI.C above.

2. Legacy IP Royalty Rate Adjustments. The IRS proposed increasing the royalty rate on the Legacy IP License from 4.5% to 11.0%, resulting in proposed additional royalty income to PPC totaling $188,040,000 for Tax Years 2017 through 2020, as detailed in Section VII above.

3. Combined Gross Proposed Adjustment. The combined gross proposed adjustment from the CSA cost-sharing ratio adjustments and the Legacy IP royalty rate adjustments is $423,050,000.

4. Correlative Offset. The IRS examination team allowed a correlative offset of ($42,650,000) to avoid double-counting between the CSA cost-sharing adjustments and the Legacy IP royalty adjustments, to the extent that certain income items would otherwise have been subject to adjustment under both the CSA analysis and the royalty analysis.

5. Net Proposed Adjustment. After applying the correlative offset, the net proposed adjustment is $380,400,000 for Tax Years 2017 through 2020.

6. Proposed Penalty. The IRS proposed the imposition of a substantial valuation misstatement penalty under Internal Revenue Code § 6662(e) of approximately $15,977,000, computed as 20% of the underpayment of tax attributable to the $380,400,000 net proposed adjustment at the 21% corporate tax rate (i.e., 20% × ($380,400,000 × 21%) = approximately $15,977,000). PPC contests all proposed adjustments — both the CSA cost

XI. Conclusion Based on the foregoing summary, PPC respectfully submits the following conclusions with respect to the CSA between PPC and PBI: The CSA between PPC and PBI was established and has operated in compliance with the requirements of Treasury Regulation § 1.482-7 governing qualified cost-sharing arrangements and the arm's-length standard of Internal Revenue Code § 482 and the regulations thereunder. The CSA