PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Memorandum
FROM: Brendan Walsh, Associate, Capital Markets Group, Calderwood & Harkness LLP
TO: Jennifer Kwon, Partner, Capital Markets Group, Calderwood & Harkness LLP
CC: Audrey Zhou, Senior Associate, Capital Markets Group, Calderwood & Harkness LLP; Theodore Langston, Partner, Capital Markets Group, Calderwood & Harkness LLP
DATE: October 13, 2023
RE: Section 16 Form 4 Filing Obligations — Castellano Family Insider Dispositions in Connection with Penterra Pharmaceuticals Corp. Selling-Stockholder Secondary Offering
MATTER: Penterra Pharmaceuticals Corp. — $260,000,000 Registered Secondary Offering
This memorandum constitutes attorney work product and is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressees and copied parties identified above in connection with the legal representation of Penterra Pharmaceuticals Corp. and the selling stockholders in the referenced transaction. This memorandum should not be disclosed, distributed, or copied to any third party without the prior written consent of Calderwood & Harkness LLP.
Right-click to update Table of Contents
I. Executive Summary
This memorandum analyzes the Section 16(a) reporting obligations arising under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in connection with the dispositions of shares of common stock of Penterra Pharmaceuticals Corp. ("PPC" or the "Company") (Nasdaq: PNTR; SEC CIK No. 0001987654) by three insiders of the Company who are selling stockholders in PPC's registered selling-stockholder secondary offering, which priced on October 12, 2023 (the "Offering"). The purpose of this memorandum is to identify the applicable filing obligations, calculate the relevant deadlines, address indirect beneficial ownership attribution considerations, and outline the action items necessary to ensure timely compliance with Section 16(a).
The three reporting persons who are selling shares in the Offering are: (i) Dr. Elena Castellano, Co-Founder and Board Chair (a director of PPC); (ii) Dr. Riccardo Castellano, Co-Founder and Board Member (a director of PPC); and (iii) Dr. Marco Castellano, Chief Executive Officer (an officer and director of PPC). Each of these individuals qualifies as a "reporting person" under Section 16(a) of the Exchange Act by virtue of his or her status as either an officer or a director of PPC, as defined in Rule 16a-1(f) and Section 3(a)(7) of the Exchange Act, respectively. In addition, each individual is a beneficial owner of more than ten percent (10%) of PPC's outstanding common stock, though their independent status as directors and/or officers is sufficient to trigger the Section 16(a) reporting obligation.
A separate entity, Castellano Family Holdings LLC ("CFH LLC") (EIN 87-2165438), is also a selling stockholder in the Offering and is disposing of 250,000 base shares and up to 37,500 additional shares subject to the over-allotment option. CFH LLC is not itself an officer or director of PPC. However, as discussed in greater detail in Section V below, beneficial ownership of the shares held by CFH LLC may be attributable to one or more of the individual reporting persons under Rule 16a-1(a)(2) and Rule 13d-3 promulgated under the Exchange Act, depending on the governance structure and allocation of voting and investment control within CFH LLC.
Each reporting person disposed of shares via an open market disposition on the trade date of October 12, 2023 (the date of pricing and execution of the Underwriting Agreement), with settlement expected on October 17, 2023 (T+3). Under Rule 16a-3(g) of the Exchange Act, Form 4 (Statement of Changes in Beneficial Ownership) must be filed with the Securities and Exchange Commission (the "SEC") before the end of the second business day following the day on which the subject transaction was executed. Because the transaction execution date was Thursday, October 12, 2023, and October 14 and October 15 fall on Saturday and Sunday, respectively, the two-business-day deadline extends to Monday, October 16, 2023.
Recommendation: All three Form 4 filings should be prepared, reviewed, approved, and filed electronically via the SEC's EDGAR system no later than 10:00 p.m. Eastern Time on Monday, October 16, 2023. Draft Form 4s should be circulated to PPC's General Counsel, David Orenstein, and to the selling stockholders' personal counsel, Patricia Velázquez of Whitfield & Garza LLP, for review and sign-off by the insiders no later than Sunday, October 15, 2023, to ensure adequate time for EDGAR submission on Monday. In the event that the underwriters exercise the over-allotment option (exercisable through November 11, 2023), additional Form 4 filings will be required within two business days of the over-allotment exercise date.
II. Background
A. The Offering
Penterra Pharmaceuticals Corp. is a Delaware corporation headquartered at 400 Meridian Parkway, Suite 1200, Princeton, New Jersey 08540. PPC's common stock is listed and publicly traded on the Nasdaq Global Select Market under the ticker symbol "PNTR." The Company is a clinical-stage biopharmaceutical company focused on the development of novel therapeutics for rare metabolic and neurological disorders. PPC completed its initial public offering on April 17, 2023.
The Offering consists of a registered selling-stockholder secondary offering of 6,250,000 shares of PPC common stock (par value $0.001 per share; CUSIP 70831X 10 5) at a public offering price of $41.60 per share, for aggregate gross offering proceeds of approximately $260,000,000. The Offering is being conducted as a shelf takedown under PPC's registration statement on Form S-3 (SEC File No. 333-274851), which was declared effective by the SEC on August 22, 2023. A prospectus supplement relating to the Offering was filed with the SEC pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended, on October 12, 2023.
The Offering is a secondary offering only; no primary shares are being offered by PPC, and PPC will not receive any proceeds from the sale of shares by the selling stockholders. All shares in the Offering are being sold by the selling stockholders identified in the prospectus supplement.
The Underwriting Agreement was executed on October 12, 2023, among PPC, the selling stockholders, and the underwriters. The underwriting syndicate is led by Ridgeline Securities LLC and Broadmark Capital Inc. as joint book-running managers, with Linden Groves & Co. and Harborview Partners LLC serving as co-managers. The underwriters are purchasing the shares from the selling stockholders at a net price of $40.56 per share, reflecting an underwriting discount of 2.50% (or $1.04 per share). Aggregate net proceeds to the selling stockholders from the base offering are approximately $253,500,000.
Settlement and closing of the Offering are expected to occur on October 17, 2023 (T+3 from the pricing date). The selling stockholders have granted the underwriters an over-allotment option to purchase up to an additional 937,500 shares of common stock (representing 15% of the base offering shares), exercisable in whole or in part at any time within 30 calendar days of the pricing date. The deadline for exercise of the over-allotment option is therefore November 11, 2023, with an expected closing date for over-allotment shares of November 16, 2023.
B. The Reporting Persons and Their Dispositions
Each of the three individual insiders who are selling stockholders in the Offering is identified below, together with their respective positions at PPC and the number of shares being sold in the base offering and subject to the over-allotment option:
As noted above, Castellano Family Holdings LLC is also a selling stockholder in the Offering, disposing of 250,000 base shares and up to 37,500 over-allotment shares. The analysis of beneficial ownership attribution with respect to CFH LLC's shares is addressed separately in Section V below.
The aggregate insider dispositions in the base offering total 6,000,000 shares, accounting for 96.0% of the total 6,250,000-share base offering. When combined with CFH LLC's 250,000 shares, the Castellano family and related entities account for the entirety of the shares being sold in the Offering.
The pre-offering and post-offering direct holdings for each individual insider are summarized in the following table:
These figures reflect each reporting person's directly held shares only. Indirect holdings attributable through CFH LLC are discussed in Section V and will be reflected in the Form 4 filings as appropriate.
C. Transaction Date
For purposes of Section 16(a) reporting, the relevant date of the transaction is the trade date or execution date — that is, the date on which the transaction was executed, not the date on which settlement occurs. The Underwriting Agreement was executed and pricing occurred on October 12, 2023. Accordingly, for Form 4 purposes, the deemed date of the transaction is October 12, 2023, notwithstanding that settlement and delivery of shares will not occur until October 17, 2023.
This distinction is important because the two-business-day filing deadline under Rule 16a-3(g) is measured from the trade/execution date, not the settlement date. Reporting persons are required to file Form 4 before the end of the second business day following October 12, 2023, as calculated in Section IV below.
III. Section 16(a) Reporting Requirements — Legal Framework
A. Statutory and Regulatory Basis
Section 16(a) of the Securities Exchange Act of 1934 (15 U.S.C. § 78p(a)) imposes reporting obligations on certain insiders of issuers that have a class of equity securities registered under Section 12 of the Exchange Act. Specifically, Section 16(a) requires every person who is a director, an officer (as defined in Rule 16a-1(f) under the Exchange Act), or a beneficial owner of more than ten percent (10%) of a class of equity securities registered under Section 12 to file with the SEC statements of changes in beneficial ownership with respect to that class of equity securities.
PPC's common stock is registered under Section 12 of the Exchange Act and listed on the Nasdaq Global Select Market. Accordingly, Section 16(a) applies to PPC's directors, officers, and greater-than-10% beneficial owners.
The reporting forms prescribed by the SEC for Section 16(a) compliance include:
• Form 3 (Initial Statement of Beneficial Ownership) — filed within 10 days of becoming a director, officer, or 10% owner (or at the time of the issuer's registration statement becoming effective);
• Form 4 (Statement of Changes in Beneficial Ownership) — filed to report any change in beneficial ownership, including acquisitions and dispositions of securities;
• Form 5 (Annual Statement of Changes in Beneficial Ownership) — filed within 45 days after the issuer's fiscal year end to report transactions not otherwise required to be reported on Form 4, or that were eligible for deferred reporting.
For purposes of the dispositions at issue in this memorandum, Form 4 is the applicable form. Form 4 requires disclosure of the nature, date, and amount of each transaction, the price per share, and the reporting person's post-transaction holdings.
Under Rule 16a-3(g) of the Exchange Act, as amended by the Sarbanes-Oxley Act of 2002, Form 4 must be filed with the SEC before the end of the second business day following the day on which the subject transaction was executed. This accelerated deadline (reduced from the prior 10-day reporting period) was adopted pursuant to Section 403 of the Sarbanes-Oxley Act to enhance the timeliness and transparency of insider transaction reporting.
All Section 16(a) filings must be made electronically via the SEC's EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system. Manual or paper filings are not accepted for Form 4. The EDGAR filing window is open from 6:00 a.m. to 10:00 p.m. Eastern Time on business days. A filing is deemed timely if it is accepted by EDGAR before the close of the filing window (10:00 p.m. ET) on the deadline date.
B. Identification of Reporting Persons
Each of the three individual insiders who are selling shares in the Offering qualifies as a reporting person under Section 16(a) as follows:
Dr. Elena Castellano. Dr. Elena Castellano serves as Co-Founder and Board Chair of PPC. As a member of PPC's Board of Directors, she is a "director" within the meaning of Section 3(a)(7) of the Exchange Act and is therefore a reporting person under Section 16(a). Dr. Elena Castellano beneficially owns approximately 14,200,000 shares of PPC common stock (approximately 11.8% of the 120,000,000 shares outstanding) prior to the Offering, which independently qualifies her as a greater-than-10% beneficial owner. However, her status as a director is sufficient to trigger the Section 16(a) filing obligation irrespective of her ownership percentage.
Dr. Riccardo Castellano. Dr. Riccardo Castellano serves as Co-Founder and a Board Member (non-executive director) of PPC. As a member of PPC's Board of Directors, he is a "director" within the meaning of Section 3(a)(7) of the Exchange Act and is therefore a reporting person under Section 16(a). Dr. Riccardo Castellano beneficially owns approximately 12,800,000 shares of PPC common stock (approximately 10.7% of the 120,000,000 shares outstanding) prior to the Offering. Like Dr. Elena Castellano, his status as a director independently triggers the Section 16(a) reporting obligation.
Dr. Marco Castellano. Dr. Marco Castellano serves as Chief Executive Officer of PPC and is also a member of PPC's Board of Directors. As PPC's CEO, he qualifies as an "officer" within the meaning of Rule 16a-1(f) under the Exchange Act, which defines "officer" to include, among others, a company's president, principal financial officer, principal accounting officer, any vice-president in charge of a principal business unit, division, or function, and any other officer who performs a policy-making function. As the CEO, Dr. Marco Castellano clearly falls within the definition of "officer" under Rule 16a-1(f). He is also a "director" by virtue of his board membership. Dr. Marco Castellano beneficially owns approximately 4,500,000 shares of PPC common stock (approximately 3.75% of the 120,000,000 shares outstanding) prior to the Offering. While he does not independently qualify as a greater-than-10% beneficial owner on the basis of his direct holdings alone, his status as both an officer and a director triggers the Section 16(a) reporting obligation.
C. Transaction Code
Form 4 requires that each reported transaction be identified by a standardized transaction code. For purposes of Table I (Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned), the applicable transaction code for the dispositions at issue is Code "S", which denotes an open market or private sale of a non-derivative security. Although the shares are being disposed of through a registered selling-stockholder secondary offering pursuant to the Underwriting Agreement rather than through a traditional open-market brokerage transaction, the SEC's Form 4 instructions treat sales of equity securities — including sales in underwritten offerings — as "dispositions" reportable in Table I with transaction Code "S."
It should be noted that an alternative interpretation might suggest the use of Code "F" (payment of exercise price or tax liability by delivering or withholding securities) or Code "J" (other acquisition or disposition), but these codes are inapplicable here. Code "S" is the most appropriate and commonly used code for sales of equity securities by insiders in secondary offerings, and this approach is consistent with SEC Staff interpretive guidance and prevailing market practice.
Each Form 4 should include a footnote disclosing that the reported sale was effected pursuant to a registered selling-stockholder secondary offering under the prospectus supplement dated October 12, 2023, filed pursuant to Rule 424(b)(5) under the Securities Act of 1933, in connection with PPC's shelf registration statement on Form S-3 (SEC File No. 333-274851). This footnote provides context for the transaction and is consistent with best practices for Section 16 reporting of dispositions in registered offerings.
IV. Filing Deadline Calculation
A. Computation of Two-Business-Day Deadline
The filing deadline for Form 4 is calculated by reference to the execution date of the transaction, in accordance with Rule 16a-3(g) under the Exchange Act. The relevant computation is as follows:
Transaction Execution Date: Thursday, October 12, 2023
Business Day 1: Friday, October 13, 2023
Non-Business Days: Saturday, October 14, 2023, and Sunday, October 15, 2023 (weekends are excluded from the computation of business days under the SEC's rules)
Business Day 2: Monday, October 16, 2023
Accordingly, the filing deadline is Monday, October 16, 2023, before 10:00 p.m. Eastern Time, which is the close of the EDGAR filing window. A filing that is accepted by EDGAR before 10:00 p.m. ET on Monday, October 16, 2023, will be deemed timely. If a filing is submitted after 10:00 p.m. ET on October 16, 2023, it will be treated as filed on the following business day (Tuesday, October 17, 2023) and will be late.
We note that there are no federal holidays occurring during this period that would affect the deadline calculation. Columbus Day (also observed as Indigenous Peoples' Day) was observed on Monday, October 9, 2023, which is prior to the transaction date and does not impact the filing deadline. The EDGAR system is expected to be operational on its normal schedule during the period from October 12 through October 16, 2023.
B. Recommendation on Timing
We recommend that all three Form 4 filings be prepared, reviewed, approved by the reporting persons, and filed electronically via EDGAR on or before Monday, October 16, 2023. To ensure timely filing, we propose the following timeline:
• October 13, 2023 (Friday): Calderwood & Harkness to prepare draft Form 4s for each of the three reporting persons and circulate internally to Jennifer Kwon for review and approval.
• October 14–15, 2023 (Saturday–Sunday): Circulate approved drafts to David Orenstein, General Counsel and Corporate Secretary of PPC, and to Patricia Velázquez of Whitfield & Garza LLP (selling stockholders' personal counsel) for review and sign-off by the respective reporting persons. While this falls on a weekend, the urgency of the filing deadline warrants weekend circulation, and we have confirmed that Mr. Orenstein and Ms. Velázquez are available.
• October 16, 2023 (Monday): PPC's in-house team to file all three Form 4s via EDGAR no later than 10:00 p.m. ET. We recommend targeting an earlier filing time (e.g., by 5:00 p.m. ET) to allow a buffer for any technical difficulties with the EDGAR system.
Coordination with David Orenstein is essential to ensure that EDGAR filing codes and credentials are current and operational. PPC typically handles Section 16 filings for its insiders through its in-house legal and compliance team, which has direct access to EDGAR or utilizes a third-party EDGAR filing agent. We understand that PPC's transfer agent is Pinnacle Trust & Transfer Co., which may also assist with EDGAR submission if directed by PPC. Calderwood & Harkness will prepare the draft Form 4s in EDGAR-ready format and transmit them to Mr. Orenstein for filing.
In the event that the underwriters exercise the over-allotment option (which may be exercised in whole or in part at any time through November 11, 2023), additional Form 4 filings will be required within two business days of the over-allotment exercise/execution date. We will prepare contingent draft Form 4s reflecting the over-allotment dispositions and hold them in reserve pending notice of exercise from the underwriters. The closing of the over-allotment option, if exercised, is expected to occur on or about November 16, 2023, but the Form 4 filing deadline runs from the exercise date, not the closing date.
V. Special Considerations — Castellano Family Holdings LLC
A. Beneficial Ownership Attribution
Castellano Family Holdings LLC is a Delaware limited liability company that is selling 250,000 shares of PPC common stock in the base offering and has committed up to 37,500 additional shares subject to the over-allotment option. CFH LLC is not itself a director or officer of PPC and does not independently qualify as a Section 16 reporting person on the basis of its corporate status. However, the analysis does not end there.
Under Rule 16a-1(a)(2) under the Exchange Act, the term "beneficial owner" of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares a direct or indirect pecuniary interest in the security. Rule 16a-1(a)(2) further provides that a person is deemed to have an indirect pecuniary interest in securities held by, among other entities, a limited liability company to the extent that the person's interest in the LLC is proportionate to the person's entitlement to share in the profits of the LLC, or to the extent that the person can vest or revest title to the securities in himself or herself.
In addition, Rule 13d-3 under the Exchange Act — which provides the general framework for determining beneficial ownership — provides that a person is the beneficial owner of a security if that person has or shares voting power (the power to vote or direct the voting of the security) or investment power (the power to dispose of or direct the disposition of the security) with respect to the security.
Applied to the facts at hand, if any of the three individual reporting persons has or shares voting power or investment power with respect to the PPC shares held by CFH LLC, then CFH LLC's shares — and any dispositions of those shares — must be reported on that individual's Form 4 as indirectly beneficially owned securities. This is true even though CFH LLC is itself a separate legal entity.
We need to confirm the governance structure of CFH LLC, including: (i) the identity of the managing member(s) or manager(s) of CFH LLC; (ii) the allocation of voting and investment control over the LLC's investment assets (including PPC shares); and (iii) the membership interests held by each of Dr. Elena Castellano, Dr. Riccardo Castellano, and Dr. Marco Castellano, respectively.
Our preliminary understanding, based on information provided by Patricia Velázquez of Whitfield & Garza LLP (who serves as personal counsel to the selling stockholders and the Castellano family), is as follows:
• Dr. Elena Castellano and Dr. Riccardo Castellano are the co-managers of CFH LLC and share voting and investment control over the LLC's assets, including the PPC shares held by CFH LLC.
• Dr. Marco Castellano holds a membership interest in CFH LLC but does not have voting power or investment power with respect to the LLC's assets. His membership interest entitles him to a proportionate share of the LLC's profits and distributions but does not confer upon him the authority to vote or direct the disposition of the PPC shares held by CFH LLC.
If this preliminary understanding is confirmed, then Dr. Elena Castellano and Dr. Riccardo Castellano are each deemed beneficial owners of the PPC shares held by CFH LLC by virtue of their shared voting and investment control, and the dispositions of CFH LLC's shares must be reported on their respective Form 4 filings. Dr. Marco Castellano would not be required to report CFH LLC's shares or dispositions on his Form 4, as he does not have voting or investment power over those shares, provided that his membership interest alone does not confer an indirect pecuniary interest that would trigger reporting. Under the circumstances described, the absence of voting or investment control should be sufficient to exclude Dr. Marco Castellano from reporting CFH LLC's transactions.
B. Reporting Implications
Assuming the preliminary governance information is confirmed, the following reporting implications apply:
Dr. Elena Castellano and Dr. Riccardo Castellano. Each of their respective Form 4 filings should include, in addition to the direct disposition reported in Row 1 of Table I, an additional line item in Table I reflecting the indirect disposition of shares attributable through CFH LLC. Specifically:
• The Form 4 for each of Dr. Elena Castellano and Dr. Riccardo Castellano should include a second row in Table I reporting the disposition of 250,000 shares (base offering) held by Castellano Family Holdings LLC, with ownership form designated as "I" (indirect) and the nature of indirect beneficial ownership identified as "By Castellano Family Holdings LLC."
• Because Dr. Elena Castellano and Dr. Riccardo Castellano share voting and investment control over CFH LLC's shares, each reporting person should report the full 250,000-share disposition (not a pro rata portion), with a footnote explaining that the shares are held by CFH LLC and that the reporting person shares voting and investment power with the other co-manager. This approach is consistent with SEC guidance on reporting shared beneficial ownership, which provides that where two or more persons share voting or investment control, each person reports the full amount of the securities subject to shared control.
• A footnote should be included on each Form 4 stating substantially as follows: "These shares are held by Castellano Family Holdings LLC, a Delaware limited liability company. The reporting person is a co-manager of Castellano Family Holdings LLC and shares voting and investment control over the shares held by Castellano Family Holdings LLC with [name of other co-manager]. The reporting person disclaims beneficial ownership of such shares except to the extent of the reporting person's pecuniary interest therein."
• If the over-allotment option is exercised with respect to CFH LLC's 37,500 over-allotment shares, an additional Form 4 filing (or amendment) will be required for each of Dr. Elena Castellano and Dr. Riccardo Castellano to report the indirect disposition of those shares.
Dr. Marco Castellano. Based on the preliminary information, Dr. Marco Castellano does not have voting or investment power over the PPC shares held by CFH LLC. Accordingly, his Form 4 would not include any reporting of CFH LLC's dispositions. If, however, further inquiry reveals that Dr. Marco Castellano has any degree of voting or investment control — or if the governance documents of CFH LLC provide him with any veto rights, consent rights, or other authority that could be construed as shared investment power — then the analysis would need to be revisited, and CFH LLC's shares may need to be reported on his Form 4 as well.
Action Item: We must confirm the CFH LLC governance structure with Patricia Velázquez at Whitfield & Garza LLP and, if possible, review the LLC operating agreement to verify the allocation of voting and investment control among the members. We should also confirm with David Orenstein at PPC whether the Company's records reflect any different understanding of CFH LLC's governance. This confirmation is a prerequisite to finalizing the draft Form 4s for Dr. Elena Castellano and Dr. Riccardo Castellano and should be obtained no later than October 15, 2023.
VI. Form 4 Content — Summary for Each Reporting Person
Set forth below is a summary of the key content to be included in each of the three Form 4 filings. Draft Form 4s in EDGAR-ready XML format will be prepared by Brendan Walsh and Audrey Zhou and circulated under separate cover.
A. Dr. Elena Castellano — Form 4
Issuer Name: Penterra Pharmaceuticals Corp.
Issuer Ticker Symbol: PNTR
Issuer CIK Number: 0001987654
Reporting Person: Dr. Elena Castellano
Reporting Person's Relationship to Issuer: Director (Board Chair)
Date of Earliest Transaction (Month/Day/Year): 10/12/2023
If Amendment, Date of Original Filed (Month/Day/Year): N/A
Table I — Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned:
Row 1 (Direct Ownership):
• Title of Security: Common Stock
• Transaction Date: 10/12/2023
• Deemed Execution Date: N/A
• Transaction Code: S
• Amount: 3,000,000 shares
• Acquired (A) or Disposed of (D): D
• Price: $41.60 per share
• Amount of Securities Beneficially Owned Following Reported Transaction(s): 11,200,000 shares (direct)
• Ownership Form: D (Direct)
Row 2 (Indirect Ownership — CFH LLC, if applicable per Section V analysis):
• Title of Security: Common Stock
• Transaction Date: 10/12/2023
• Deemed Execution Date: N/A
• Transaction Code: S
• Amount: 250,000 shares (amount to be confirmed; subject to Section V analysis regarding shared reporting with Dr. Riccardo Castellano)
• Acquired (A) or Disposed of (D): D
• Price: $41.60 per share
• Amount of Securities Beneficially Owned Following Reported Transaction(s): Approximately 8,350,000 shares (indirect, via Castellano Family Holdings LLC; subject to confirmation of pre-offering indirect holdings); or approximately 8,312,500 shares if full over-allotment is exercised
• Ownership Form: I (Indirect)
• Nature of Indirect Beneficial Ownership: By Castellano Family Holdings LLC
Post-Transaction Holdings (Direct): 11,200,000 shares (base only); 10,750,000 shares if full over-allotment is exercised.
Post-Transaction Holdings (Indirect via CFH LLC): Approximately 8,350,000 shares (to be confirmed), or approximately 8,312,500 shares if full over-allotment is exercised.
Footnotes:
Footnote 1: The shares were sold pursuant to a registered selling-stockholder secondary offering under the prospectus supplement dated October 12, 2023, filed pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended, in connection with the Issuer's shelf registration statement on Form S-3 (SEC File No. 333-274851).
Footnote 2 (if Row 2 is included): These shares are held by Castellano Family Holdings LLC, a Delaware limited liability company. The reporting person is a co-manager of Castellano Family Holdings LLC and shares voting and investment control over the shares held by Castellano Family Holdings LLC with Dr. Riccardo Castellano. The reporting person disclaims beneficial ownership of such shares except to the extent of the reporting person's pecuniary interest therein.
Footnote 3: The reporting person is subject to a 90-day lock-up agreement with respect to the reporting person's retained shares, effective from October 17, 2023 through January 15, 2024, pursuant to the terms of the lock-up agreement entered into in connection with the offering.
B. Dr. Riccardo Castellano — Form 4
Issuer Name: Penterra Pharmaceuticals Corp.
Issuer Ticker Symbol: PNTR
Issuer CIK Number: 0001987654
Reporting Person: Dr. Riccardo Castellano
Reporting Person's Relationship to Issuer: Director
Date of Earliest Transaction (Month/Day/Year): 10/12/2023
If Amendment, Date of Original Filed (Month/Day/Year): N/A
Table I — Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned:
Row 1 (Direct Ownership):
• Title of Security: Common Stock
• Transaction Date: 10/12/2023
• Deemed Execution Date: N/A
• Transaction Code: S
• Amount: 2,500,000 shares
• Acquired (A) or Disposed of (D): D
• Price: $41.60 per share
• Amount of Securities Beneficially Owned Following Reported Transaction(s): 10,300,000 shares (direct)
• Ownership Form: D (Direct)
Row 2 (Indirect Ownership — CFH LLC, if applicable per Section V analysis):
• Title of Security: Common Stock
• Transaction Date: 10/12/2023
• Deemed Execution Date: N/A
• Transaction Code: S
• Amount: 250,000 shares (amount to be confirmed; subject to Section V analysis regarding shared reporting with Dr. Elena Castellano)
• Acquired (A) or Disposed of (D): D
• Price: $41.60 per share
• Amount of Securities Beneficially Owned Following Reported Transaction(s): To be determined based on confirmation of CFH LLC's pre-offering holdings and allocation of indirect beneficial ownership
• Ownership Form: I (Indirect)
• Nature of Indirect Beneficial Ownership: By Castellano Family Holdings LLC
Post-Transaction Holdings (Direct): 10,300,000 shares (base only); 9,925,000 shares if full over-allotment is exercised.
Post-Transaction Holdings (Indirect via CFH LLC): To be determined per Section V analysis and confirmation of CFH LLC's total holdings.
Footnotes:
Footnote 1: The shares were sold pursuant to a registered selling-stockholder secondary offering under the prospectus supplement dated October 12, 2023, filed pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended, in connection with the Issuer's shelf registration statement on Form S-3 (SEC File No. 333-274851).
Footnote 2 (if Row 2 is included): These shares are held by Castellano Family Holdings LLC, a Delaware limited liability company. The reporting person is a co-manager of Castellano Family Holdings LLC and shares voting and investment control over the shares held by Castellano Family Holdings LLC with Dr. Elena Castellano. The reporting person disclaims beneficial ownership of such shares except to the extent of the reporting person's pecuniary interest therein.
Footnote 3: The reporting person is subject to a 90-day lock-up agreement with respect to the reporting person's retained shares, effective from October 17, 2023 through January 15, 2024, pursuant to the terms of the lock-up agreement entered into in connection with the offering.
C. Dr. Marco Castellano — Form 4
Issuer Name: Penterra Pharmaceuticals Corp.
Issuer Ticker Symbol: PNTR
Issuer CIK Number: 0001987654
Reporting Person: Dr. Marco Castellano
Reporting Person's Relationship to Issuer: Officer (Chief Executive Officer) and Director
Date of Earliest Transaction (Month/Day/Year): 10/12/2023
If Amendment, Date of Original Filed (Month/Day/Year): N/A
Table I — Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned:
Row 1 (Direct Ownership):
• Title of Security: Common Stock
• Transaction Date: 10/12/2023
• Deemed Execution Date: N/A
• Transaction Code: S
• Amount: 500,000 shares
• Acquired (A) or Disposed of (D): D
• Price: $41.60 per share
• Amount of Securities Beneficially Owned Following Reported Transaction(s): 4,000,000 shares (direct)
• Ownership Form: D (Direct)
Row 2 (Indirect Ownership):
• Likely not applicable. Based on preliminary information from Whitfield & Garza LLP, Dr. Marco Castellano holds a membership interest in CFH LLC but does not have voting or investment power over the PPC shares held by CFH LLC. Accordingly, he is not expected to be deemed a beneficial owner of CFH LLC's shares for Section 16 reporting purposes. This conclusion is subject to confirmation of CFH LLC's governance structure as described in Section V above.
Post-Transaction Holdings (Direct): 4,000,000 shares (base only); 3,925,000 shares if full over-allotment is exercised.
Footnotes:
Footnote 1: The shares were sold pursuant to a registered selling-stockholder secondary offering under the prospectus supplement dated October 12, 2023, filed pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended, in connection with the Issuer's shelf registration statement on Form S-3 (SEC File No. 333-274851).
Footnote 2: The reporting person is the Chief Executive Officer of the Issuer.
Footnote 3: The reporting person is subject to a 90-day lock-up agreement with respect to the reporting person's retained shares, effective from October 17, 2023 through January 15, 2024, pursuant to the terms of the lock-up agreement entered into in connection with the offering.
Footnote 4 (if applicable): The reporting person holds a membership interest in Castellano Family Holdings LLC, a Delaware limited liability company, but does not have voting or investment control over the shares of the Issuer held by Castellano Family Holdings LLC. The reporting person disclaims beneficial ownership of any shares held by Castellano Family Holdings LLC.
VII. Over-Allotment Option — Contingent Additional Filings
The selling stockholders have granted the underwriters a 30-day over-allotment option, exercisable in whole or in part at any time through November 11, 2023 (30 calendar days from the October 12, 2023 pricing date), to purchase up to 937,500 additional shares of PPC common stock. The over-allotment option was granted pursuant to the terms of the Underwriting Agreement dated October 12, 2023, and represents a standard 15% greenshoe provision.
The allocation of over-allotment shares among the insiders is as follows:
If the underwriters exercise the over-allotment option, whether in whole or in part, the exercise will constitute an additional disposition of shares by the selling stockholders. Each such additional disposition will require a new Form 4 filing (or, if the original Form 4 has already been filed, an additional Form 4 filing reflecting the new transaction) within two business days of the exercise/execution date of the over-allotment transaction.
It is important to note that the Form 4 filing deadline for over-allotment dispositions runs from the date on which the over-allotment option is exercised (i.e., the date on which the underwriters deliver notice of exercise and the transaction is deemed executed), not the date on which closing and settlement of the over-allotment shares occur. If the over-allotment is exercised on its final date of November 11, 2023 (a Saturday), the exercise would likely be deemed to have occurred on the next business day, November 13, 2023 (Monday), or alternatively, on the last business day before the deadline, November 10, 2023 (Friday), depending on the terms of the Underwriting Agreement and the actual date on which the underwriters deliver notice. We will need to monitor the precise exercise date carefully.
The over-allotment closing is expected to occur approximately three business days after the exercise date (i.e., if exercised on or about November 11, 2023, closing would be expected on or about November 16, 2023).
Action Items:
• Audrey Zhou will prepare contingent Form 4 drafts for each reporting person reflecting the over-allotment dispositions, to be held in reserve pending receipt of exercise notice from the underwriters.
• The deal team should monitor the over-allotment exercise status through the November 11, 2023 deadline. Primary contact for exercise status is Angela Ferris at Ridgeline Securities LLC (syndicate desk). Brendan Walsh will maintain periodic contact with Ms. Ferris and with PPC's General Counsel regarding any indication of over-allotment exercise.
• If the over-allotment is exercised in part (rather than in full), the contingent Form 4 drafts will need to be updated to reflect the actual number of shares disposed of by each reporting person.
• If CFH LLC's 37,500 over-allotment shares are sold, the indirect ownership reporting implications for Dr. Elena Castellano and Dr. Riccardo Castellano (as discussed in Section V above) will also apply to the over-allotment Form 4 filings.