conflicts-clearance-memorandum.docx

1018-00003 · Client 1018 · Engagement & Independence Protocol

conflicts-clearance-memorandum.docx DOCUMENT M&A / Corporate

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PRIVILEGED & CONFIDENTIAL — INTERNAL FIRM USE ONLY ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT PRIVILEGE NOT FOR DISTRIBUTION OUTSIDE THE FIRM

CALDERWOOD & HARKNESS LLP 1700 Market Street, Suite 3400 Philadelphia, PA 19103

INTERNAL MEMORANDUM

June 1, 2023

TO: Firm General Counsel / Conflicts Committee, Calderwood & Harkness LLP

FROM: Renata Vasquez, Responsible Partner Bernard Crawford, Billing Partner

RE: Conflicts Clearance — Proposed Engagement as Independent Counsel to the Special Committee of Penterra Pharmaceuticals Corp. (the "Special Committee") in Connection with Evaluation of Related-Party Acquisition of Caliston BioSciences, Inc.

MATTER NUMBER: 1025-00006

PROJECT CODE NAME: Project Coriander

I. Purpose of Memorandum

Calderwood & Harkness LLP (the "Firm") has been asked by the Special Committee of the Board of Directors (the "Special Committee") of Penterra Pharmaceuticals Corp. (NYSE: PPHR) ("Penterra"), a Delaware corporation headquartered at 400 Innovation Drive, Suite 1200, Princeton, NJ 08540, to serve as independent counsel in connection with the Special Committee's evaluation of a proposed related-party acquisition of Caliston BioSciences, Inc. ("Caliston"), a privately held Delaware corporation with its principal office at 88 Harbor Point Road, Cambridge, MA 02142. The engagement was initially requested by Diane Prescott, Chair of the Special Committee, through a telephone conversation with Renata Vasquez on May 28, 2023.

The proposed engagement requires the Firm to serve in an independent capacity, advising the Special Committee with respect to the fiduciary duty obligations of its members, the procedural and substantive fairness of the proposed transaction, and the negotiation and documentation of the definitive acquisition agreement and related transaction documents. Because of the independent nature of the engagement, a heightened conflicts analysis is required to confirm that no existing or prior relationships exist that would compromise the Firm's independence or create a conflict of interest under (a) the Pennsylvania Rules of Professional Conduct (as adopted by the Pennsylvania Supreme Court), (b) the American Bar Association Model Rules of Professional Conduct, (c) the Delaware Lawyers' Rules of Professional Conduct, and (d) Delaware fiduciary duty standards applicable to advisors of special committees formed to evaluate related-party transactions.

The purpose of this memorandum is to document the results of the Firm's comprehensive conflicts check, which was conducted on May 30–31, 2023, using the Firm's centralized conflict-checking database, and to confirm clearance for acceptance of the engagement. This memorandum is submitted to the Conflicts Committee for review and formal approval.

II. Background on the Proposed Engagement

A. Penterra Pharmaceuticals Corp.

Penterra Pharmaceuticals Corp. is a publicly traded specialty pharmaceutical company focused on the oncology and immunology therapeutic areas. Penterra's common stock is listed on the New York Stock Exchange under the ticker symbol PPHR. As of June 1, 2023, Penterra has an approximate market capitalization of $4.72 billion. For fiscal year 2022, Penterra reported total revenues of approximately $1.836 billion, driven primarily by its marketed oncology portfolio, which includes three FDA-approved products. Penterra's board of directors consists of nine members, and its executive team is led by Dr. Marcus Hale, who serves as both Chairman of the Board and Chief Executive Officer. The company's General Counsel and Corporate Secretary is Lawrence Whittaker, and its Chief Financial Officer is Priya Anand.

B. Caliston BioSciences, Inc.

Caliston BioSciences, Inc. is a clinical-stage biopharmaceutical company focused on the development of novel kinase inhibitors for solid tumors. Caliston was founded in 2017 and remains in the pre-commercial stage, having generated no product revenue to date. Caliston's lead clinical asset is CLT-4019, a selective CDK4/6 inhibitor for the treatment of HR+/HER2– metastatic breast cancer. An Investigational New Drug (IND) application for CLT-4019 was filed in March 2020 (IND No. 158429), and the compound is currently in Phase 2b clinical trials. Caliston's last private valuation was $680 million on a post-money basis, established in connection with its Series C financing round closed in October 2021. The company has raised a total of approximately $347 million in equity capital across its Seed, Series A, Series B, and Series C financing rounds. As of March 31, 2023, Caliston had approximately $112.6 million in cash on hand. The company employs approximately 94 individuals and is led by Dr. Nadia Sorensen (Co-Founder and Chief Executive Officer) and Dr. Raj Malhotra (Co-Founder and Chief Scientific Officer).

C. Related-Party Interests and the Need for a Special Committee

The proposed transaction raises significant related-party concerns, principally arising from the following circumstances:

(i) Dr. Marcus Hale — Dual Interest. Dr. Marcus Hale, the Chairman and CEO of Penterra, holds a 28.5% equity interest in Caliston, acquired through personal investments totaling approximately $42 million across Caliston's Seed, Series A, and Series B financing rounds. In addition, Dr. Hale has served as a board observer at Caliston since 2018, during which time he has attended 14 of 16 board meetings. As both the controlling executive of the acquirer and a significant equity holder in the target, Dr. Hale is the primary interested party in the proposed transaction. His equity interest in Caliston means he stands on both sides of the transaction, creating a direct economic conflict of interest.

(ii) Angela Whitmore — Familial Relationship. Angela Whitmore, a member of Penterra's board of directors and the company's Executive Vice President of Commercial Operations, is the spouse of Dr. Evan Whitmore, who serves as Caliston's Head of Clinical Development and a member of Caliston's board of directors. This familial relationship renders Ms. Whitmore a non-independent director with respect to the proposed transaction.

(iii) Raymond Tusk — Hale Appointee. Raymond Tusk, a Penterra director appointed at the nomination of Dr. Hale, is considered non-independent for purposes of this transaction given his relationship with Dr. Hale.

In light of these related-party concerns, Penterra's board of directors, on the recommendation of its Nominating and Corporate Governance Committee, formed a Special Committee of independent directors to evaluate the proposed transaction and to make a recommendation to the full board regarding whether to proceed. The Special Committee is empowered to retain its own independent legal and financial advisors, to negotiate the terms of the transaction on behalf of Penterra's unaffiliated stockholders, and to recommend or decline to recommend the transaction.

D. Special Committee Composition

The Special Committee comprises three independent directors, each of whom has been determined by the board to have no financial or personal interest in the proposed transaction:

(i) Diane Prescott (Chair) — former Chief Executive Officer of Windbridge Health Systems, Inc., a publicly traded managed-care organization; extensive experience in board governance and corporate transactions.

(ii) James Okafor — retired Managing Director of Fielding Capital Partners, LLC, a middle-market private equity firm; extensive experience in mergers and acquisitions, financial analysis, and capital markets.

(iii) Dr. Helen Ng — Professor of Pharmacology at Wexford University and former member of the FDA Advisory Committee on Oncologic Drugs; expertise in clinical development, drug safety, and regulatory matters.

E. Proposed Transaction Structure

The proposed transaction involves a one-step merger of Caliston with a wholly owned acquisition subsidiary of Penterra, pursuant to which all outstanding equity securities of Caliston would be acquired for an aggregate equity value of $925 million. The merger consideration would consist of approximately 75% cash and approximately 25% Penterra common stock. In addition, the proposed terms include the issuance of contingent value rights ("CVRs") providing for an additional $125 million in payments to former Caliston equityholders, payable upon FDA approval of CLT-4019 by December 31, 2026. The total potential transaction value, inclusive of the CVRs, is $1.05 billion.

F. Role of the Firm

The Firm would serve as independent counsel to the Special Committee, separate from and independent of Penterra's regular outside counsel, Alcott, Barringer & Cole LLP ("Alcott Barringer"), which is led on Penterra matters by Victoria Shen, Lead M&A Partner. Alcott Barringer has been recused from advising the Special Committee with respect to the proposed transaction to preserve the independence and integrity of the Special Committee process. The Firm's engagement would encompass all legal advice and representation required by the Special Committee in connection with its evaluation of the proposed transaction, including advice on fiduciary duties, review of the transaction structure and terms, negotiation of definitive transaction documents, and coordination with the Special Committee's independent financial advisor.

III. Scope of Conflicts Search

The Firm conducted its conflicts search on May 30–31, 2023, using the Firm's centralized conflict-checking database (the "Conflicts System"). The Conflicts System was searched against all parties to the proposed transaction, their known affiliates, key individuals, advisors, and counterparty counsel. The search utilized both exact-match and fuzzy-match algorithms and included searches of all active, dormant, and closed matters in the Firm's database, as well as the Firm's lateral-hire pre-clearance records. The categories of parties searched, and the specific names and entities within each category, are described below and are set forth in full in the system-generated conflicts search report printout attached hereto as Attachment A.

A. Proposed Client

The following entities and individuals were searched in connection with the proposed client relationship:

1. Penterra Pharmaceuticals Corp., including all known subsidiaries and affiliates (including but not limited to Penterra Oncology, Inc., Penterra Immunology Holdings, LLC, and Penterra International S.à r.l.).

2. Special Committee Members (individually):

(a) Diane Prescott

(b) James Okafor

B. Target Company and Affiliates

The following entities and individuals were searched in connection with the target company:

1. Caliston BioSciences, Inc.

2. Dr. Nadia Sorensen — Co-Founder and CEO of Caliston; 14.2% equity holder.

3. Dr. Raj Malhotra — Co-Founder and CSO of Caliston; 9.8% equity holder.

4. Dr. Evan Whitmore — Head of Clinical Development and board member of Caliston; spouse of Penterra director Angela Whitmore.

C. Interested Parties / Conflicted Individuals

The following individuals were searched as interested or conflicted parties:

1. Dr. Marcus Hale — individually, in his capacity as the holder of a 28.5% equity interest in Caliston, and in his capacity as Chairman and CEO of Penterra.

2. Angela Whitmore — Penterra director; EVP, Commercial Operations; non-independent due to spousal relationship with Dr. Evan Whitmore of Caliston.

3. Raymond Tusk — Penterra director; non-independent; appointed at the nomination of Dr. Hale.

D. Key Caliston Stockholders

The following institutional stockholders and their principals were searched:

1. Ridgeline Ventures, LP — 22.3% equity interest in Caliston; managing partner: Ava Lindström. The search included Ridgeline Ventures, LP, Ridgeline Ventures Management, LLC (its general partner), and Ava Lindström individually.

2. Meridian Life Sciences Fund III, LP — 18.7% equity interest in Caliston; managing partner: Tomás Reyes. The search included Meridian Life Sciences Fund III, LP, Meridian Life Sciences Capital, LLC (its general partner), and Tomás Reyes individually.

E. Counterparty Counsel and Financial Advisors

The following counterparty professional advisors were searched:

1. Whitfield Graves LLP — counsel to Caliston; lead partner: Kenneth Pratt; One Federal Street, Suite 2600, Boston, MA 02110. The search included the firm and Kenneth Pratt individually.

2. Fendowell Sinclair & Co. — financial advisor to Caliston; lead banker: Sandra Wu; 200 Clarendon Street, 50th Floor, Boston, MA 02116. The search included the firm and Sandra Wu individually.

F. Other Transaction Parties and Advisors

The following additional transaction parties, advisors, and service providers were searched:

1. Alcott, Barringer & Cole LLP — Penterra's regular outside counsel; recused from Special Committee matters; lead M&A partner: Victoria Shen.

2. Thorngate Partners LLC — prospective independent financial advisor to the Special Committee; Managing Director: Gregory Ashford; 590 Madison Avenue, 22nd Floor, New York, NY 10022.

3. Greystone National Bank, N.A. — administrative agent for Penterra's $1.5 billion revolving credit facility; 383 Madison Avenue, New York, NY 10179.

4. Harwick & Tolliver LLP — Penterra's independent auditor; 30 Rockefeller Plaza, New York, NY 10112.

5. Brentmoor Advisors LLP — Caliston's independent auditor; 125 Summer Street, Suite 800, Boston, MA 02110.

6. Northpoint Specialty Insurance Company — directors and officers liability insurance carrier (Policy No. NSI-DO-2023-88412); 100 Constitution Plaza, Hartford, CT 06103.

7. Columnar Trust Services, Inc. — Penterra's transfer agent; 6201 15th Avenue, Brooklyn, NY 11219.

8. Hargrove Proxy Advisors, Inc. — potential proxy solicitor; 17 Ashbury Asset Advisors, Suite 1100, New York, NY 10004.

In total, the conflicts search encompassed more than forty-five individual names and entity names, including all known variants, former names, and abbreviations, as reflected in the complete search report attached as Attachment A.

IV. Results of Conflicts Search

The results of the comprehensive conflicts search conducted on May 30–31, 2023, are summarized below by category of party. For each category, the Firm reports whether any current or prior attorney-client relationships, any adverse representations, any co-counsel or opposing-counsel relationships, or any other potential conflicts were identified.

A. Penterra Pharmaceuticals Corp. and Its Directors/Officers

The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship between the Firm and Penterra Pharmaceuticals Corp. or any of its known subsidiaries or affiliates, including Penterra Oncology, Inc., Penterra Immunology Holdings, LLC, and Penterra International S.à r.l. The Firm has never represented Penterra in any capacity — whether in transactional, litigation, regulatory, or advisory matters.

The Firm has no current or prior attorney-client relationship with any individual Penterra director or officer, including:

• Dr. Marcus Hale (Chairman and CEO)

• Priya Anand (Chief Financial Officer)

• Lawrence Whittaker (General Counsel and Corporate Secretary)

• Angela Whitmore (EVP, Commercial Operations; Director)

• Raymond Tusk (Director)

The Firm has no current or prior attorney-client relationship with any of the three proposed Special Committee members: Diane Prescott, James Okafor, or Dr. Helen Ng. No personal legal matters, board advisory engagements, or other professional relationships involving any of these individuals were identified in the Conflicts System.

No matters adverse to Penterra or any of its directors or officers were identified. The Firm has not been engaged by any party in any litigation, arbitration, regulatory proceeding, or other adversarial matter in which Penterra or any of its affiliates, directors, or officers is or was an adverse party.

B. Caliston BioSciences, Inc. and Its Founders/Officers

The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship between the Firm and Caliston BioSciences, Inc. The Firm has never represented Caliston in any capacity, including in connection with any of its financing rounds, intellectual property matters, regulatory filings, or employment matters.

The Firm has no current or prior attorney-client relationship with any of the following individuals associated with Caliston:

• Dr. Nadia Sorensen (Co-Founder and CEO; 14.2% equity holder)

• Dr. Raj Malhotra (Co-Founder and CSO; 9.8% equity holder)

• Dr. Evan Whitmore (Head of Clinical Development; board member)

No matters adverse to Caliston or any of its founders, officers, or directors were identified. The Firm has not been engaged by any party in any litigation, arbitration, regulatory proceeding, or other adversarial matter in which Caliston or any of its principals is or was an adverse party.

C. Dr. Marcus Hale (Individually)

The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Dr. Marcus Hale in his individual capacity. No personal legal matters, estate planning engagements, tax advisory relationships, or other individual representations involving Dr. Hale were identified. The Firm has not provided advice to Dr. Hale in connection with his personal investments, including his equity interest in Caliston, or any other personal business matter. No matters adverse to Dr. Hale in his individual capacity were identified.

D. Key Caliston Stockholders

The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Ridgeline Ventures, LP, its general partner Ridgeline Ventures Management, LLC, or its managing partner Ava Lindström. The search also returned no results for any known Ridgeline affiliates or portfolio companies. No matters adverse to Ridgeline Ventures or any of its affiliates were identified.

Similarly, the Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Meridian Life Sciences Fund III, LP, its general partner Meridian Life Sciences Capital, LLC, or its managing partner Tomás Reyes. The search also returned no results for any known Meridian affiliates or portfolio companies. No matters adverse to Meridian Life Sciences Fund III or any of its affiliates were identified.

E. Counterparty Counsel — Whitfield Graves LLP

The Firm's Conflicts System returned no results indicating any current or prior attorney-client, co-counsel, or opposing-counsel relationship with Whitfield Graves LLP or its lead partner Kenneth Pratt. The Firm has not been engaged by Whitfield Graves LLP as a client, has not served as co-counsel with Whitfield Graves LLP on any matter, and has not been adverse to Whitfield Graves LLP in any litigation or other adversarial proceeding. No matters in which the Firm and Whitfield Graves LLP are currently adverse or aligned in any capacity were identified.

F. Counterparty Financial Advisor — Fendowell Sinclair & Co.

The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Fendowell Sinclair & Co. or its lead banker Sandra Wu. The Firm has not served as outside counsel to Fendowell Sinclair & Co. on any corporate, litigation, or regulatory matter. No advisory, referral, or business-development relationships between the Firm and Fendowell Sinclair & Co. or Sandra Wu were identified. No adverse matters were found.

G. Other Advisors and Transaction Parties

The following additional transaction parties, advisors, and service providers were searched, with the results described below:

Alcott, Barringer & Cole LLP. The Firm's Conflicts System returned no results indicating any current or prior adverse, co-counsel, or client relationship with Alcott, Barringer & Cole LLP or its lead M&A partner Victoria Shen. Although Alcott Barringer serves as Penterra's regular outside counsel and will be recused from advising the Special Committee, the absence of any relationship between the Firm and Alcott Barringer eliminates any concern regarding potential conflicts or coordination issues arising from the recusal. The Firm's independence from Alcott Barringer further supports the integrity of the Special Committee process.

Thorngate Partners LLC. The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Thorngate Partners LLC or its Managing Director Gregory Ashford. The Firm has not previously served as counsel to Thorngate in any capacity, including in connection with any prior fairness opinion, valuation, or financial advisory engagement. No adverse matters were found. The absence of any prior relationship with Thorngate is a relevant consideration, as the Firm and Thorngate may be retained contemporaneously by the Special Committee and will need to coordinate closely; the lack of any preexisting relationship further supports the independent selection of each advisor.

Greystone National Bank, N.A. The Firm's Conflicts System returned no results indicating any current representation of, or adverse matter against, Greystone National Bank, N.A. in connection with any lending, credit facility, or banking matter relevant to this engagement. The Firm conducted a supplementary search across all practice groups, including the Banking & Financial Institutions, Corporate Finance, and Litigation practice groups, and confirmed that no unrelated matters involving Greystone National Bank are currently active or were previously handled by the Firm. Accordingly, no conflict or potential conflict exists with respect to Greystone National Bank.

Harwick & Tolliver LLP. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Harwick & Tolliver LLP. No conflict identified.

Brentmoor Advisors LLP. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Brentmoor Advisors LLP. No conflict identified.

Northpoint Specialty Insurance Company. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Northpoint Specialty Insurance Company. No conflict identified.

Columnar Trust Services, Inc. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Columnar Trust Services, Inc. No conflict identified.

Hargrove Proxy Advisors, Inc. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Hargrove Proxy Advisors, Inc. No conflict identified.

Summary. The comprehensive conflicts search returned no results indicating the existence of any current or prior attorney-client relationship, any adverse representation, any co-counsel or opposing-counsel relationship, or any other potential conflict of interest with respect to any party, individual, or entity identified in connection with the proposed engagement. The complete system-generated search report, dated May 31, 2023, is attached hereto as Attachment A and is incorporated herein by reference.

V. Analysis of Independence Requirements

A. The Heightened Independence Standard

The Firm's proposed role as independent counsel to the Special Committee requires the Firm to be free from any conflicts of interest — whether actual or potential, whether arising from current or prior professional relationships, financial interests, personal connections, or other circumstances — that could impair the Firm's ability to render independent legal advice regarding the proposed related-party transaction. The independence requirement applicable to counsel for a special committee formed to evaluate a conflicted transaction is more stringent than the general conflicts-of-interest rules applicable to ordinary attorney-client relationships, because the advisor's independence directly affects the legal protections available to the Special Committee members, the acquiring company, and its stockholders.

B. Delaware Law Framework

Under Delaware law, related-party transactions involving a controlling or interested officer or director are subject to heightened judicial scrutiny. Absent the procedural protections established in Kahn v. M&F Worldwide Corp. ("MFW"), 88 A.3d 635 (Del. 2014), and its progeny, such transactions are reviewed under the entire fairness standard, which places the burden on the interested party to demonstrate both procedural fairness (fair dealing) and substantive fairness (fair price). See Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983); Kahn v. Lynch Commc'n Sys., Inc., 638 A.2d 1110 (Del. 1994).

Under the MFW framework, a transaction involving a controlling stockholder (or, by extension, a conflicted fiduciary) may receive business judgment deference if, among other conditions, the transaction is (i) conditioned from the outset on approval by a well-functioning special committee of independent directors, with the power to retain independent legal and financial advisors, and (ii) conditioned on the informed vote of a majority of the minority stockholders. The independence and effectiveness of the special committee's advisors is a critical element in establishing procedural fairness and qualifying for business judgment review. See also In re MFW S'holders Litig., 67 A.3d 496 (Del. Ch. 2013), aff'd sub nom. Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014).

Section 144 of the Delaware General Corporation Law (the "DGCL") further provides a framework for evaluating transactions involving interested directors and officers, permitting such transactions to stand if approved by a majority of disinterested directors or stockholders upon full disclosure, or if the transaction is fair to the corporation at the time it is authorized.

In this context, the independence of the Special Committee's legal counsel is not merely a matter of professional ethics but a substantive element of the legal framework governing the validity and enforceability of the proposed transaction.

C. Application to the Proposed Engagement

The results of the conflicts search described in Section IV above confirm that the Firm has no current or prior relationships of any kind with the target company (Caliston BioSciences, Inc.), the interested party (Dr. Marcus Hale, in his individual capacity or otherwise), the other conflicted directors (Angela Whitmore and Raymond Tusk), Caliston's institutional stockholders (Ridgeline Ventures, LP and Meridian Life Sciences Fund III, LP), counterparty counsel (Whitfield Graves LLP), counterparty financial advisor (Fendowell Sinclair & Co.), or any other party to the proposed transaction. The absence of any such relationships confirms that the Firm satisfies the independence standard required of counsel to a special committee under Delaware law and applicable rules of professional conduct.

D. Financial Independence

The Firm has confirmed that it has no financial interest, whether direct or indirect, in the outcome of the proposed transaction. No member of the Firm holds any equity interest in Penterra, Caliston, Ridgeline Ventures, Meridian Life Sciences, or any other entity involved in the proposed transaction. No referral fees, success fees, or other contingent compensation arrangements have been or will be established in connection with this engagement.

The fee arrangement for the engagement has been structured to preserve the Firm's financial independence. The Firm will bill for its services on an hourly basis at blended rates of $1,025 per hour for partners and $625 per hour for associates. A $75,000 evergreen retainer will be funded by the Special Committee upon execution of the engagement letter. Importantly, no fee cap, no success fee, and no other fee arrangement contingent upon the consummation of the merger have been proposed or agreed to. This fee structure is consistent with standard market practice for independent counsel engagements and ensures that the Firm's compensation is not tied to any particular outcome of the Special Committee's evaluation.

E. Conclusion on Independence

Based on the foregoing analysis, the Firm is satisfied that it meets all applicable independence requirements for service as independent counsel to the Special Committee, including the standards established under Delaware law, the Pennsylvania Rules of Professional Conduct, and the ABA Model Rules of Professional Conduct.

VI. Engagement Team Confirmation

In addition to the entity- and party-level conflicts search described above, the Firm has conducted individual conflicts clearance for each member of the proposed engagement team. Each team member has been individually cleared through the Conflicts System and has confirmed, through personal attestation, that he or she has no personal, financial, familial, or social relationship with any party to the proposed transaction that could give rise to a conflict of interest or impair the Firm's independence.

The proposed engagement team and the results of their individual clearance are as follows:

No member of the proposed engagement team has previously represented, advised, or had a professional relationship with Penterra, Caliston, Dr. Marcus Hale, any member of the Special Committee, any Caliston stockholder, or any advisor to any party to the proposed transaction. No member of the engagement team has a personal or financial interest in the outcome of the proposed transaction.

Should any additional attorneys or professional staff be assigned to this matter, they will be subject to the same individual conflicts clearance process before commencing work on the engagement.

VII. Conclusion and Clearance

Based on the comprehensive conflicts search conducted on May 30–31, 2023, and the analysis set forth in this memorandum, the Firm's Conflicts Committee confirms that no conflicts of interest exist that would prevent Calderwood & Harkness LLP from accepting the engagement as independent counsel to the Special Committee of Penterra Pharmaceuticals Corp. in connection with the Special Committee's evaluation of the proposed related-party acquisition of Caliston BioSciences, Inc.

The Firm is cleared to proceed with the engagement, subject to execution of the engagement letter by the Special Committee. The anticipated date of engagement letter execution is June 2, 2023. A draft of the engagement letter is attached hereto as Attachment B for cross-reference to the scope of representation and fee terms.

The Firm's independence from the following parties and individuals is specifically confirmed:

• Caliston BioSciences, Inc.

• Dr. Marcus Hale (individually and in all capacities)

• Angela Whitmore

• Raymond Tusk

• Dr. Nadia Sorensen

• Dr. Raj Malhotra

• Dr. Evan Whitmore

• Whitfield Graves LLP and Kenneth Pratt

• Fendowell Sinclair & Co. and Sandra Wu

• Ridgeline Ventures, LP and Ava Lindström

• Meridian Life Sciences Fund III, LP and Tomás Reyes

• Alcott, Barringer & Cole LLP and Victoria Shen

• Thorngate Partners LLC and Gregory Ashford

• Greystone National Bank, N.A.

• Harwick & Tolliver LLP

• Brentmoor Advisors LLP

• Northpoint Specialty Insurance Company

• Columnar Trust Services, Inc.

• Hargrove Proxy Advisors, Inc.

This memorandum, together with the attached conflicts search report (Attachment A) and draft engagement letter (Attachment B), should be retained in the Firm's conflicts files and the matter file for Matter No. 1025-00006 — Project Coriander — in accordance with the Firm's document retention policies.

If additional parties to the transaction are identified following the date of this memorandum, supplemental conflicts searches will be conducted and the results documented in an addendum to this memorandum.

VIII. Approval / Sign-Off

The undersigned hereby confirm the accuracy and completeness of the foregoing conflicts clearance memorandum and request approval from the Conflicts Committee for acceptance of the proposed engagement.

CONFLICTS COMMITTEE APPROVAL:

APPROVED:

By: ________

Name: ________

Title: Chair, Conflicts Committee / Firm General Counsel

Calderwood & Harkness LLP

Date: ________

RESPONSIBLE PARTNER CONFIRMATION:

I have reviewed this memorandum and confirm that, to the best of my knowledge, the information set forth herein is accurate and complete.

By: ________

Name: Renata Vasquez

Title: Responsible Partner

Calderwood & Harkness LLP

Date: ________

BILLING PARTNER CONFIRMATION:

I have reviewed this memorandum and confirm that, to the best of my knowledge, the information set forth herein is accurate and complete.

By: ________

Name: Bernard Crawford

Title: Billing Partner

Calderwood & Harkness LLP

Date: ________

Note: Approved for engagement effective upon execution of the engagement letter by the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp. Anticipated execution date: June 2, 2023.

Attachments (Referenced)

Attachment A: Conflicts search report printout (system-generated; dated May 31, 2023) — complete list of all names and entities searched, including all name variants, abbreviations, and former names, together with the search results for each entry. [Attached separately.]

Attachment B: Draft engagement letter between Calderwood & Harkness LLP and the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp., for cross-reference to scope of representation and fee terms. [Attached separately.]

PRIVILEGED & CONFIDENTIAL — INTERNAL FIRM USE ONLY ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT PRIVILEGE Calderwood & Harkness LLP	1700 Market Street, Suite 3400	Philadelphia, PA 19103 Matter No. 1025-00006 — Project Coriander
Team Member	Role	Individual Conflicts Status
Renata Vasquez	Responsible Partner	No individual conflicts identified. No personal or financial relationship with any party to the transaction.
Bernard Crawford	Billing Partner	No individual conflicts identified. No personal or financial relationship with any party to the transaction.
Sophie Tremblay	Lead Associate	No individual conflicts identified. No personal or financial relationship with any party to the transaction.
Daniel Obi	Working Associate	No individual conflicts identified. No personal or financial relationship with any party to the transaction.

PRIVILEGED & CONFIDENTIAL — INTERNAL FIRM USE ONLY ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT PRIVILEGE NOT FOR DISTRIBUTION OUTSIDE THE FIRM
CALDERWOOD & HARKNESS LLP 1700 Market Street, Suite 3400 Philadelphia, PA 19103
INTERNAL MEMORANDUM
June 1, 2023
TO: Firm General Counsel / Conflicts Committee, Calderwood & Harkness LLP
FROM: Renata Vasquez, Responsible Partner Bernard Crawford, Billing Partner
RE: Conflicts Clearance — Proposed Engagement as Independent Counsel to the Special Committee of Penterra Pharmaceuticals Corp. (the "Special Committee") in Connection with Evaluation of Related-Party Acquisition of Caliston BioSciences, Inc.
MATTER NUMBER: 1025-00006
PROJECT CODE NAME: Project Coriander
I. Purpose of Memorandum
Calderwood & Harkness LLP (the "Firm") has been asked by the Special Committee of the Board of Directors (the "Special Committee") of Penterra Pharmaceuticals Corp. (NYSE: PPHR) ("Penterra"), a Delaware corporation headquartered at 400 Innovation Drive, Suite 1200, Princeton, NJ 08540, to serve as independent counsel in connection with the Special Committee's evaluation of a proposed related-party acquisition of Caliston BioSciences, Inc. ("Caliston"), a privately held Delaware corporation with its principal office at 88 Harbor Point Road, Cambridge, MA 02142. The engagement was initially requested by Diane Prescott, Chair of the Special Committee, through a telephone conversation with Renata Vasquez on May 28, 2023.
The proposed engagement requires the Firm to serve in an independent capacity, advising the Special Committee with respect to the fiduciary duty obligations of its members, the procedural and substantive fairness of the proposed transaction, and the negotiation and documentation of the definitive acquisition agreement and related transaction documents. Because of the independent nature of the engagement, a heightened conflicts analysis is required to confirm that no existing or prior relationships exist that would compromise the Firm's independence or create a conflict of interest under (a) the Pennsylvania Rules of Professional Conduct (as adopted by the Pennsylvania Supreme Court), (b) the American Bar Association Model Rules of Professional Conduct, (c) the Delaware Lawyers' Rules of Professional Conduct, and (d) Delaware fiduciary duty standards applicable to advisors of special committees formed to evaluate related-party transactions.
The purpose of this memorandum is to document the results of the Firm's comprehensive conflicts check, which was conducted on May 30–31, 2023, using the Firm's centralized conflict-checking database, and to confirm clearance for acceptance of the engagement. This memorandum is submitted to the Conflicts Committee for review and formal approval.
II. Background on the Proposed Engagement
A. Penterra Pharmaceuticals Corp.
Penterra Pharmaceuticals Corp. is a publicly traded specialty pharmaceutical company focused on the oncology and immunology therapeutic areas. Penterra's common stock is listed on the New York Stock Exchange under the ticker symbol PPHR. As of June 1, 2023, Penterra has an approximate market capitalization of $4.72 billion. For fiscal year 2022, Penterra reported total revenues of approximately $1.836 billion, driven primarily by its marketed oncology portfolio, which includes three FDA-approved products. Penterra's board of directors consists of nine members, and its executive team is led by Dr. Marcus Hale, who serves as both Chairman of the Board and Chief Executive Officer. The company's General Counsel and Corporate Secretary is Lawrence Whittaker, and its Chief Financial Officer is Priya Anand.
B. Caliston BioSciences, Inc.
Caliston BioSciences, Inc. is a clinical-stage biopharmaceutical company focused on the development of novel kinase inhibitors for solid tumors. Caliston was founded in 2017 and remains in the pre-commercial stage, having generated no product revenue to date. Caliston's lead clinical asset is CLT-4019, a selective CDK4/6 inhibitor for the treatment of HR+/HER2– metastatic breast cancer. An Investigational New Drug (IND) application for CLT-4019 was filed in March 2020 (IND No. 158429), and the compound is currently in Phase 2b clinical trials. Caliston's last private valuation was $680 million on a post-money basis, established in connection with its Series C financing round closed in October 2021. The company has raised a total of approximately $347 million in equity capital across its Seed, Series A, Series B, and Series C financing rounds. As of March 31, 2023, Caliston had approximately $112.6 million in cash on hand. The company employs approximately 94 individuals and is led by Dr. Nadia Sorensen (Co-Founder and Chief Executive Officer) and Dr. Raj Malhotra (Co-Founder and Chief Scientific Officer).
C. Related-Party Interests and the Need for a Special Committee
The proposed transaction raises significant related-party concerns, principally arising from the following circumstances:
(i) Dr. Marcus Hale — Dual Interest. Dr. Marcus Hale, the Chairman and CEO of Penterra, holds a 28.5% equity interest in Caliston, acquired through personal investments totaling approximately $42 million across Caliston's Seed, Series A, and Series B financing rounds. In addition, Dr. Hale has served as a board observer at Caliston since 2018, during which time he has attended 14 of 16 board meetings. As both the controlling executive of the acquirer and a significant equity holder in the target, Dr. Hale is the primary interested party in the proposed transaction. His equity interest in Caliston means he stands on both sides of the transaction, creating a direct economic conflict of interest.
(ii) Angela Whitmore — Familial Relationship. Angela Whitmore, a member of Penterra's board of directors and the company's Executive Vice President of Commercial Operations, is the spouse of Dr. Evan Whitmore, who serves as Caliston's Head of Clinical Development and a member of Caliston's board of directors. This familial relationship renders Ms. Whitmore a non-independent director with respect to the proposed transaction.
(iii) Raymond Tusk — Hale Appointee. Raymond Tusk, a Penterra director appointed at the nomination of Dr. Hale, is considered non-independent for purposes of this transaction given his relationship with Dr. Hale.
In light of these related-party concerns, Penterra's board of directors, on the recommendation of its Nominating and Corporate Governance Committee, formed a Special Committee of independent directors to evaluate the proposed transaction and to make a recommendation to the full board regarding whether to proceed. The Special Committee is empowered to retain its own independent legal and financial advisors, to negotiate the terms of the transaction on behalf of Penterra's unaffiliated stockholders, and to recommend or decline to recommend the transaction.
D. Special Committee Composition
The Special Committee comprises three independent directors, each of whom has been determined by the board to have no financial or personal interest in the proposed transaction:
(i) Diane Prescott (Chair) — former Chief Executive Officer of Windbridge Health Systems, Inc., a publicly traded managed-care organization; extensive experience in board governance and corporate transactions.
(ii) James Okafor — retired Managing Director of Fielding Capital Partners, LLC, a middle-market private equity firm; extensive experience in mergers and acquisitions, financial analysis, and capital markets.
(iii) Dr. Helen Ng — Professor of Pharmacology at Wexford University and former member of the FDA Advisory Committee on Oncologic Drugs; expertise in clinical development, drug safety, and regulatory matters.
E. Proposed Transaction Structure
The proposed transaction involves a one-step merger of Caliston with a wholly owned acquisition subsidiary of Penterra, pursuant to which all outstanding equity securities of Caliston would be acquired for an aggregate equity value of $925 million. The merger consideration would consist of approximately 75% cash and approximately 25% Penterra common stock. In addition, the proposed terms include the issuance of contingent value rights ("CVRs") providing for an additional $125 million in payments to former Caliston equityholders, payable upon FDA approval of CLT-4019 by December 31, 2026. The total potential transaction value, inclusive of the CVRs, is $1.05 billion.
F. Role of the Firm
The Firm would serve as independent counsel to the Special Committee, separate from and independent of Penterra's regular outside counsel, Alcott, Barringer & Cole LLP ("Alcott Barringer"), which is led on Penterra matters by Victoria Shen, Lead M&A Partner. Alcott Barringer has been recused from advising the Special Committee with respect to the proposed transaction to preserve the independence and integrity of the Special Committee process. The Firm's engagement would encompass all legal advice and representation required by the Special Committee in connection with its evaluation of the proposed transaction, including advice on fiduciary duties, review of the transaction structure and terms, negotiation of definitive transaction documents, and coordination with the Special Committee's independent financial advisor.
III. Scope of Conflicts Search
The Firm conducted its conflicts search on May 30–31, 2023, using the Firm's centralized conflict-checking database (the "Conflicts System"). The Conflicts System was searched against all parties to the proposed transaction, their known affiliates, key individuals, advisors, and counterparty counsel. The search utilized both exact-match and fuzzy-match algorithms and included searches of all active, dormant, and closed matters in the Firm's database, as well as the Firm's lateral-hire pre-clearance records. The categories of parties searched, and the specific names and entities within each category, are described below and are set forth in full in the system-generated conflicts search report printout attached hereto as Attachment A.
A. Proposed Client
The following entities and individuals were searched in connection with the proposed client relationship:
1.  Penterra Pharmaceuticals Corp., including all known subsidiaries and affiliates (including but not limited to Penterra Oncology, Inc., Penterra Immunology Holdings, LLC, and Penterra International S.à r.l.).
2.  Special Committee Members (individually):
(a) Diane Prescott
(b) James Okafor
(c) Dr. Helen Ng
B. Target Company and Affiliates
The following entities and individuals were searched in connection with the target company:
1.  Caliston BioSciences, Inc.
2.  Dr. Nadia Sorensen — Co-Founder and CEO of Caliston; 14.2% equity holder.
3.  Dr. Raj Malhotra — Co-Founder and CSO of Caliston; 9.8% equity holder.
4.  Dr. Evan Whitmore — Head of Clinical Development and board member of Caliston; spouse of Penterra director Angela Whitmore.
C. Interested Parties / Conflicted Individuals
The following individuals were searched as interested or conflicted parties:
1.  Dr. Marcus Hale — individually, in his capacity as the holder of a 28.5% equity interest in Caliston, and in his capacity as Chairman and CEO of Penterra.
2.  Angela Whitmore — Penterra director; EVP, Commercial Operations; non-independent due to spousal relationship with Dr. Evan Whitmore of Caliston.
3.  Raymond Tusk — Penterra director; non-independent; appointed at the nomination of Dr. Hale.
D. Key Caliston Stockholders
The following institutional stockholders and their principals were searched:
1.  Ridgeline Ventures, LP — 22.3% equity interest in Caliston; managing partner: Ava Lindström. The search included Ridgeline Ventures, LP, Ridgeline Ventures Management, LLC (its general partner), and Ava Lindström individually.
2.  Meridian Life Sciences Fund III, LP — 18.7% equity interest in Caliston; managing partner: Tomás Reyes. The search included Meridian Life Sciences Fund III, LP, Meridian Life Sciences Capital, LLC (its general partner), and Tomás Reyes individually.
E. Counterparty Counsel and Financial Advisors
The following counterparty professional advisors were searched:
1.  Whitfield Graves LLP — counsel to Caliston; lead partner: Kenneth Pratt; One Federal Street, Suite 2600, Boston, MA 02110. The search included the firm and Kenneth Pratt individually.
2.  Fendowell Sinclair & Co. — financial advisor to Caliston; lead banker: Sandra Wu; 200 Clarendon Street, 50th Floor, Boston, MA 02116. The search included the firm and Sandra Wu individually.
F. Other Transaction Parties and Advisors
The following additional transaction parties, advisors, and service providers were searched:
1.  Alcott, Barringer & Cole LLP — Penterra's regular outside counsel; recused from Special Committee matters; lead M&A partner: Victoria Shen.
2.  Thorngate Partners LLC — prospective independent financial advisor to the Special Committee; Managing Director: Gregory Ashford; 590 Madison Avenue, 22nd Floor, New York, NY 10022.
3.  Greystone National Bank, N.A. — administrative agent for Penterra's $1.5 billion revolving credit facility; 383 Madison Avenue, New York, NY 10179.
4.  Harwick & Tolliver LLP — Penterra's independent auditor; 30 Rockefeller Plaza, New York, NY 10112.
5.  Brentmoor Advisors LLP — Caliston's independent auditor; 125 Summer Street, Suite 800, Boston, MA 02110.
6.  Northpoint Specialty Insurance Company — directors and officers liability insurance carrier (Policy No. NSI-DO-2023-88412); 100 Constitution Plaza, Hartford, CT 06103.
7.  Columnar Trust Services, Inc. — Penterra's transfer agent; 6201 15th Avenue, Brooklyn, NY 11219.
8.  Hargrove Proxy Advisors, Inc. — potential proxy solicitor; 17 Ashbury Asset Advisors, Suite 1100, New York, NY 10004.
In total, the conflicts search encompassed more than forty-five individual names and entity names, including all known variants, former names, and abbreviations, as reflected in the complete search report attached as Attachment A.
IV. Results of Conflicts Search
The results of the comprehensive conflicts search conducted on May 30–31, 2023, are summarized below by category of party. For each category, the Firm reports whether any current or prior attorney-client relationships, any adverse representations, any co-counsel or opposing-counsel relationships, or any other potential conflicts were identified.
A. Penterra Pharmaceuticals Corp. and Its Directors/Officers
The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship between the Firm and Penterra Pharmaceuticals Corp. or any of its known subsidiaries or affiliates, including Penterra Oncology, Inc., Penterra Immunology Holdings, LLC, and Penterra International S.à r.l. The Firm has never represented Penterra in any capacity — whether in transactional, litigation, regulatory, or advisory matters.
The Firm has no current or prior attorney-client relationship with any individual Penterra director or officer, including:
•  Dr. Marcus Hale (Chairman and CEO)
•  Priya Anand (Chief Financial Officer)
•  Lawrence Whittaker (General Counsel and Corporate Secretary)
•  Angela Whitmore (EVP, Commercial Operations; Director)
•  Raymond Tusk (Director)
The Firm has no current or prior attorney-client relationship with any of the three proposed Special Committee members: Diane Prescott, James Okafor, or Dr. Helen Ng. No personal legal matters, board advisory engagements, or other professional relationships involving any of these individuals were identified in the Conflicts System.
No matters adverse to Penterra or any of its directors or officers were identified. The Firm has not been engaged by any party in any litigation, arbitration, regulatory proceeding, or other adversarial matter in which Penterra or any of its affiliates, directors, or officers is or was an adverse party.
B. Caliston BioSciences, Inc. and Its Founders/Officers
The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship between the Firm and Caliston BioSciences, Inc. The Firm has never represented Caliston in any capacity, including in connection with any of its financing rounds, intellectual property matters, regulatory filings, or employment matters.
The Firm has no current or prior attorney-client relationship with any of the following individuals associated with Caliston:
•  Dr. Nadia Sorensen (Co-Founder and CEO; 14.2% equity holder)
•  Dr. Raj Malhotra (Co-Founder and CSO; 9.8% equity holder)
•  Dr. Evan Whitmore (Head of Clinical Development; board member)
No matters adverse to Caliston or any of its founders, officers, or directors were identified. The Firm has not been engaged by any party in any litigation, arbitration, regulatory proceeding, or other adversarial matter in which Caliston or any of its principals is or was an adverse party.
C. Dr. Marcus Hale (Individually)
The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Dr. Marcus Hale in his individual capacity. No personal legal matters, estate planning engagements, tax advisory relationships, or other individual representations involving Dr. Hale were identified. The Firm has not provided advice to Dr. Hale in connection with his personal investments, including his equity interest in Caliston, or any other personal business matter. No matters adverse to Dr. Hale in his individual capacity were identified.
D. Key Caliston Stockholders
The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Ridgeline Ventures, LP, its general partner Ridgeline Ventures Management, LLC, or its managing partner Ava Lindström. The search also returned no results for any known Ridgeline affiliates or portfolio companies. No matters adverse to Ridgeline Ventures or any of its affiliates were identified.
Similarly, the Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Meridian Life Sciences Fund III, LP, its general partner Meridian Life Sciences Capital, LLC, or its managing partner Tomás Reyes. The search also returned no results for any known Meridian affiliates or portfolio companies. No matters adverse to Meridian Life Sciences Fund III or any of its affiliates were identified.
E. Counterparty Counsel — Whitfield Graves LLP
The Firm's Conflicts System returned no results indicating any current or prior attorney-client, co-counsel, or opposing-counsel relationship with Whitfield Graves LLP or its lead partner Kenneth Pratt. The Firm has not been engaged by Whitfield Graves LLP as a client, has not served as co-counsel with Whitfield Graves LLP on any matter, and has not been adverse to Whitfield Graves LLP in any litigation or other adversarial proceeding. No matters in which the Firm and Whitfield Graves LLP are currently adverse or aligned in any capacity were identified.
F. Counterparty Financial Advisor — Fendowell Sinclair & Co.
The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Fendowell Sinclair & Co. or its lead banker Sandra Wu. The Firm has not served as outside counsel to Fendowell Sinclair & Co. on any corporate, litigation, or regulatory matter. No advisory, referral, or business-development relationships between the Firm and Fendowell Sinclair & Co. or Sandra Wu were identified. No adverse matters were found.
G. Other Advisors and Transaction Parties
The following additional transaction parties, advisors, and service providers were searched, with the results described below:
Alcott, Barringer & Cole LLP. The Firm's Conflicts System returned no results indicating any current or prior adverse, co-counsel, or client relationship with Alcott, Barringer & Cole LLP or its lead M&A partner Victoria Shen. Although Alcott Barringer serves as Penterra's regular outside counsel and will be recused from advising the Special Committee, the absence of any relationship between the Firm and Alcott Barringer eliminates any concern regarding potential conflicts or coordination issues arising from the recusal. The Firm's independence from Alcott Barringer further supports the integrity of the Special Committee process.
Thorngate Partners LLC. The Firm's Conflicts System returned no results indicating any current or prior attorney-client relationship with Thorngate Partners LLC or its Managing Director Gregory Ashford. The Firm has not previously served as counsel to Thorngate in any capacity, including in connection with any prior fairness opinion, valuation, or financial advisory engagement. No adverse matters were found. The absence of any prior relationship with Thorngate is a relevant consideration, as the Firm and Thorngate may be retained contemporaneously by the Special Committee and will need to coordinate closely; the lack of any preexisting relationship further supports the independent selection of each advisor.
Greystone National Bank, N.A. The Firm's Conflicts System returned no results indicating any current representation of, or adverse matter against, Greystone National Bank, N.A. in connection with any lending, credit facility, or banking matter relevant to this engagement. The Firm conducted a supplementary search across all practice groups, including the Banking & Financial Institutions, Corporate Finance, and Litigation practice groups, and confirmed that no unrelated matters involving Greystone National Bank are currently active or were previously handled by the Firm. Accordingly, no conflict or potential conflict exists with respect to Greystone National Bank.
Harwick & Tolliver LLP. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Harwick & Tolliver LLP. No conflict identified.
Brentmoor Advisors LLP. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Brentmoor Advisors LLP. No conflict identified.
Northpoint Specialty Insurance Company. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Northpoint Specialty Insurance Company. No conflict identified.
Columnar Trust Services, Inc. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Columnar Trust Services, Inc. No conflict identified.
Hargrove Proxy Advisors, Inc. The Firm's Conflicts System returned no results indicating any current or prior client relationship with, or adverse matter involving, Hargrove Proxy Advisors, Inc. No conflict identified.
Summary. The comprehensive conflicts search returned no results indicating the existence of any current or prior attorney-client relationship, any adverse representation, any co-counsel or opposing-counsel relationship, or any other potential conflict of interest with respect to any party, individual, or entity identified in connection with the proposed engagement. The complete system-generated search report, dated May 31, 2023, is attached hereto as Attachment A and is incorporated herein by reference.
V. Analysis of Independence Requirements
A. The Heightened Independence Standard
The Firm's proposed role as independent counsel to the Special Committee requires the Firm to be free from any conflicts of interest — whether actual or potential, whether arising from current or prior professional relationships, financial interests, personal connections, or other circumstances — that could impair the Firm's ability to render independent legal advice regarding the proposed related-party transaction. The independence requirement applicable to counsel for a special committee formed to evaluate a conflicted transaction is more stringent than the general conflicts-of-interest rules applicable to ordinary attorney-client relationships, because the advisor's independence directly affects the legal protections available to the Special Committee members, the acquiring company, and its stockholders.
B. Delaware Law Framework
Under Delaware law, related-party transactions involving a controlling or interested officer or director are subject to heightened judicial scrutiny. Absent the procedural protections established in Kahn v. M&F Worldwide Corp. ("MFW"), 88 A.3d 635 (Del. 2014), and its progeny, such transactions are reviewed under the entire fairness standard, which places the burden on the interested party to demonstrate both procedural fairness (fair dealing) and substantive fairness (fair price). See Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983); Kahn v. Lynch Commc'n Sys., Inc., 638 A.2d 1110 (Del. 1994).
Under the MFW framework, a transaction involving a controlling stockholder (or, by extension, a conflicted fiduciary) may receive business judgment deference if, among other conditions, the transaction is (i) conditioned from the outset on approval by a well-functioning special committee of independent directors, with the power to retain independent legal and financial advisors, and (ii) conditioned on the informed vote of a majority of the minority stockholders. The independence and effectiveness of the special committee's advisors is a critical element in establishing procedural fairness and qualifying for business judgment review. See also In re MFW S'holders Litig., 67 A.3d 496 (Del. Ch. 2013), aff'd sub nom. Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014).
Section 144 of the Delaware General Corporation Law (the "DGCL") further provides a framework for evaluating transactions involving interested directors and officers, permitting such transactions to stand if approved by a majority of disinterested directors or stockholders upon full disclosure, or if the transaction is fair to the corporation at the time it is authorized.
In this context, the independence of the Special Committee's legal counsel is not merely a matter of professional ethics but a substantive element of the legal framework governing the validity and enforceability of the proposed transaction.
C. Application to the Proposed Engagement
The results of the conflicts search described in Section IV above confirm that the Firm has no current or prior relationships of any kind with the target company (Caliston BioSciences, Inc.), the interested party (Dr. Marcus Hale, in his individual capacity or otherwise), the other conflicted directors (Angela Whitmore and Raymond Tusk), Caliston's institutional stockholders (Ridgeline Ventures, LP and Meridian Life Sciences Fund III, LP), counterparty counsel (Whitfield Graves LLP), counterparty financial advisor (Fendowell Sinclair & Co.), or any other party to the proposed transaction. The absence of any such relationships confirms that the Firm satisfies the independence standard required of counsel to a special committee under Delaware law and applicable rules of professional conduct.
D. Financial Independence
The Firm has confirmed that it has no financial interest, whether direct or indirect, in the outcome of the proposed transaction. No member of the Firm holds any equity interest in Penterra, Caliston, Ridgeline Ventures, Meridian Life Sciences, or any other entity involved in the proposed transaction. No referral fees, success fees, or other contingent compensation arrangements have been or will be established in connection with this engagement.
The fee arrangement for the engagement has been structured to preserve the Firm's financial independence. The Firm will bill for its services on an hourly basis at blended rates of $1,025 per hour for partners and $625 per hour for associates. A $75,000 evergreen retainer will be funded by the Special Committee upon execution of the engagement letter. Importantly, no fee cap, no success fee, and no other fee arrangement contingent upon the consummation of the merger have been proposed or agreed to. This fee structure is consistent with standard market practice for independent counsel engagements and ensures that the Firm's compensation is not tied to any particular outcome of the Special Committee's evaluation.
E. Conclusion on Independence
Based on the foregoing analysis, the Firm is satisfied that it meets all applicable independence requirements for service as independent counsel to the Special Committee, including the standards established under Delaware law, the Pennsylvania Rules of Professional Conduct, and the ABA Model Rules of Professional Conduct.
VI. Engagement Team Confirmation
In addition to the entity- and party-level conflicts search described above, the Firm has conducted individual conflicts clearance for each member of the proposed engagement team. Each team member has been individually cleared through the Conflicts System and has confirmed, through personal attestation, that he or she has no personal, financial, familial, or social relationship with any party to the proposed transaction that could give rise to a conflict of interest or impair the Firm's independence.
The proposed engagement team and the results of their individual clearance are as follows:
No member of the proposed engagement team has previously represented, advised, or had a professional relationship with Penterra, Caliston, Dr. Marcus Hale, any member of the Special Committee, any Caliston stockholder, or any advisor to any party to the proposed transaction. No member of the engagement team has a personal or financial interest in the outcome of the proposed transaction.
Should any additional attorneys or professional staff be assigned to this matter, they will be subject to the same individual conflicts clearance process before commencing work on the engagement.
VII. Conclusion and Clearance
Based on the comprehensive conflicts search conducted on May 30–31, 2023, and the analysis set forth in this memorandum, the Firm's Conflicts Committee confirms that no conflicts of interest exist that would prevent Calderwood & Harkness LLP from accepting the engagement as independent counsel to the Special Committee of Penterra Pharmaceuticals Corp. in connection with the Special Committee's evaluation of the proposed related-party acquisition of Caliston BioSciences, Inc.
The Firm is cleared to proceed with the engagement, subject to execution of the engagement letter by the Special Committee. The anticipated date of engagement letter execution is June 2, 2023. A draft of the engagement letter is attached hereto as Attachment B for cross-reference to the scope of representation and fee terms.
The Firm's independence from the following parties and individuals is specifically confirmed:
•  Caliston BioSciences, Inc.
•  Dr. Marcus Hale (individually and in all capacities)
•  Angela Whitmore
•  Raymond Tusk
•  Dr. Nadia Sorensen
•  Dr. Raj Malhotra
•  Dr. Evan Whitmore
•  Whitfield Graves LLP and Kenneth Pratt
•  Fendowell Sinclair & Co. and Sandra Wu
•  Ridgeline Ventures, LP and Ava Lindström
•  Meridian Life Sciences Fund III, LP and Tomás Reyes
•  Alcott, Barringer & Cole LLP and Victoria Shen
•  Thorngate Partners LLC and Gregory Ashford
•  Greystone National Bank, N.A.
•  Harwick & Tolliver LLP
•  Brentmoor Advisors LLP
•  Northpoint Specialty Insurance Company
•  Columnar Trust Services, Inc.
•  Hargrove Proxy Advisors, Inc.
This memorandum, together with the attached conflicts search report (Attachment A) and draft engagement letter (Attachment B), should be retained in the Firm's conflicts files and the matter file for Matter No. 1025-00006 — Project Coriander — in accordance with the Firm's document retention policies.
If additional parties to the transaction are identified following the date of this memorandum, supplemental conflicts searches will be conducted and the results documented in an addendum to this memorandum.
VIII. Approval / Sign-Off
The undersigned hereby confirm the accuracy and completeness of the foregoing conflicts clearance memorandum and request approval from the Conflicts Committee for acceptance of the proposed engagement.
CONFLICTS COMMITTEE APPROVAL:
APPROVED:
By: ________
Name: ________
Title: Chair, Conflicts Committee / Firm General Counsel
Calderwood & Harkness LLP
Date: ________
RESPONSIBLE PARTNER CONFIRMATION:
I have reviewed this memorandum and confirm that, to the best of my knowledge, the information set forth herein is accurate and complete.
By: ________
Name: Renata Vasquez
Title: Responsible Partner
Calderwood & Harkness LLP
Date: ________
BILLING PARTNER CONFIRMATION:
I have reviewed this memorandum and confirm that, to the best of my knowledge, the information set forth herein is accurate and complete.
By: ________
Name: Bernard Crawford
Title: Billing Partner
Calderwood & Harkness LLP
Date: ________
Note: Approved for engagement effective upon execution of the engagement letter by the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp. Anticipated execution date: June 2, 2023.
Attachments (Referenced)
Attachment A: Conflicts search report printout (system-generated; dated May 31, 2023) — complete list of all names and entities searched, including all name variants, abbreviations, and former names, together with the search results for each entry. [Attached separately.]
Attachment B: Draft engagement letter between Calderwood & Harkness LLP and the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp., for cross-reference to scope of representation and fee terms. [Attached separately.]
PRIVILEGED & CONFIDENTIAL — INTERNAL FIRM USE ONLY ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT PRIVILEGE Calderwood & Harkness LLP | 1700 Market Street, Suite 3400 | Philadelphia, PA 19103 Matter No. 1025-00006 — Project Coriander
Team Member | Role | Individual Conflicts Status
Renata Vasquez | Responsible Partner | No individual conflicts identified. No personal or financial relationship with any party to the transaction.
Bernard Crawford | Billing Partner | No individual conflicts identified. No personal or financial relationship with any party to the transaction.
Sophie Tremblay | Lead Associate | No individual conflicts identified. No personal or financial relationship with any party to the transaction.
Daniel Obi | Working Associate | No individual conflicts identified. No personal or financial relationship with any party to the transaction.

INTERNAL MEMORANDUM

MATTER NUMBER: 1025-00006

CONFLICTS COMMITTEE APPROVAL:

APPROVED:

RESPONSIBLE PARTNER CONFIRMATION:

BILLING PARTNER CONFIRMATION:

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