1018-00003 · Client 1018 · Engagement & Independence Protocol

director-independence-questionnaire-summary.docx DOCUMENT M&A / Corporate

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June 5, 2023

MEMORANDUM

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

TO: Special Committee of the Board of Directors, Penterra Pharmaceuticals Corp. Diane Prescott, Chair James Okafor Dr. Helen Ng

FROM: Sophie Tremblay and Daniel Obi, Calderwood & Harkness LLP

RE: Summary Analysis of Director Independence Questionnaires — Diane Prescott, James Okafor, and Dr. Helen Ng

C&H Matter No.: 1025-00006

Project Code Name: Project Coriander

I. Purpose and Executive Summary

This memorandum summarizes the results of Calderwood & Harkness LLP’s review and analysis of the completed Director Independence Questionnaires submitted by the three members of the Special Committee of Penterra Pharmaceuticals Corp. (“Penterra” or the “Company”) (NYSE: PPHR): Diane Prescott, James Okafor, and Dr. Helen Ng.

As the Committee is aware, the Special Committee was established pursuant to board resolutions adopted on June 2, 2023 by the unanimous vote of the six independent directors then serving on the Penterra board, with Dr. Marcus Hale, Angela Whitmore, and Raymond Tusk recused from consideration and approval of those resolutions. The Committee was formed in connection with the board’s consideration of a proposed acquisition of Caliston BioSciences, Inc. (“Caliston”), a related-party transaction because Dr. Hale, Penterra’s Chairman and Chief Executive Officer, holds a significant equity interest in Caliston and has maintained an ongoing relationship with that company.

The independence analysis of each member of the Special Committee is a critical threshold issue. First, because the proposed transaction involves an interested fiduciary, Delaware law would ordinarily subject the transaction to review under the entire fairness doctrine absent the satisfaction of procedural safeguards recognized by the Delaware courts and codified in relevant part through DGCL Section 144 and related case law. Second, if the board elects to structure the process to seek the procedural protections described in Kahn v. M&F Worldwide Corp. and its progeny, the Special Committee must be comprised of directors who are in fact independent and disinterested, and who are able to function effectively and free from disabling conflicts. Third, Penterra remains subject to NYSE listing standards that require the board affirmatively to determine that directors serving in independent capacities do not have material relationships with the Company or other relevant counterparties that would impair their judgment.

Our review has included: (i) the completed questionnaires submitted by each Committee member; (ii) follow-up interviews conducted by counsel on June 4 and June 5, 2023; (iii) cross-checking against the Company’s most recent proxy statement filed in April 2023 and director and officer questionnaires maintained by the Company; and (iv) a review of publicly available information concerning the directors, Caliston, and the principal transaction participants identified during this diligence process.

Conclusion. Based on the completed questionnaires, supplemental inquiries, and our independent analysis, it is our opinion that all three directors — Diane Prescott, James Okafor, and Dr. Helen Ng — are independent for purposes of serving on the Special Committee under both NYSE listing standards and Delaware law. We did not identify any material relationship between any of these directors, on the one hand, and Caliston BioSciences, Inc., Dr. Marcus Hale, Angela Whitmore, Dr. Evan Whitmore, Ridgeline Ventures, LP, Meridian Life Sciences Fund III, LP, or any other party to the proposed transaction, on the other hand, that would reasonably be expected to impair such director’s independence, disinterestedness, or ability to exercise judgment solely on the merits of the proposed transaction.

In light of the foregoing, we believe the Special Committee, as presently constituted, is appropriately staffed to proceed with its mandate to evaluate, negotiate, and determine whether the proposed Caliston transaction is advisable and in the best interests of Penterra and its unaffiliated stockholders.

II. Background

A. The Proposed Transaction

Penterra Pharmaceuticals Corp. is a Delaware corporation headquartered at 400 Innovation Drive, Suite 1200, Princeton, New Jersey 08540. The Company is evaluating a proposed acquisition of 100% of the outstanding equity interests of Caliston BioSciences, Inc., a Delaware corporation with its principal office at 88 Harbor Point Road, Cambridge, Massachusetts 02142. Based on the information made available to us, the transaction is expected to be structured as a one-step merger in which Caliston would become a wholly owned subsidiary of Penterra.

The current proposal contemplates an aggregate equity value for Caliston of $925,000,000. Of that amount, approximately 75% would be paid in cash, equal to $693,750,000, and approximately 25% would be paid in shares of Penterra common stock, equal to $231,250,000. The stock consideration has been calculated using a 30-day volume-weighted average price of $39.17 per share as of June 1, 2023, implying the issuance of approximately 5,903,497 shares of Penterra common stock.

In addition, the proposed consideration package includes contingent value rights with a potential aggregate payout of $125,000,000 upon the achievement of a specified regulatory milestone, namely FDA approval of CLT-4019 on or before December 31, 2026. If that contingency is satisfied, the maximum aggregate transaction value would be $1,050,000,000.

Caliston is a clinical-stage biopharmaceutical company focused on the development of novel kinase inhibitors for solid tumors. Its lead asset, CLT-4019, is described as a selective CDK4/6 inhibitor currently in Phase 2b development for HR+/HER2– metastatic breast cancer. We understand that the relevant Investigational New Drug application, IND 158429, was filed in March 2020. Because the transaction would involve the acquisition of a clinical-stage platform company with a lead product candidate that remains subject to significant development and regulatory risk, a rigorous process overseen by an independent committee is especially important both from a governance standpoint and from a process-litigation perspective.

B. The Conflict of Interest

The principal conflict giving rise to the creation of the Special Committee arises from Dr. Marcus Hale’s ownership and involvement with Caliston. According to information provided to us and confirmed in the course of our review, Dr. Hale holds a 28.5% equity interest in Caliston. That interest was acquired through personal investments totaling $42 million across Caliston’s Seed, Series A, and Series B financing rounds.

At the currently proposed transaction value of $925,000,000, Dr. Hale’s 28.5% interest would imply proceeds of approximately $263,625,000. Based on his aggregate invested capital of $42 million, his implied gain would be approximately $221,625,000, exclusive of any potential value attributable to contingent value rights. This represents a substantial personal economic benefit to Dr. Hale that is not shared pro rata by Penterra’s public stockholders and that therefore creates a paradigmatic conflict requiring careful procedural protections.

We also understand that Dr. Hale has served as a non-voting board observer at Caliston since 2018 and attended 14 of 16 Caliston board meetings during that period. This ongoing role, while formally non-voting, further underscores the depth of his relationship with Caliston and supports treating the transaction as one involving a conflicted fiduciary.

Of additional significance, Dr. Hale did not disclose his Caliston investment to the Penterra board until February 14, 2023, when he first proposed that Penterra consider acquiring Caliston. Although the legal consequences of that timing are outside the scope of this memorandum, the delayed disclosure reinforces the need for a demonstrably independent process from this point forward.

A second conflict is presented by Angela Whitmore, a Penterra director and Executive Vice President, Commercial Operations, whose spouse, Dr. Evan Whitmore, is Caliston’s Head of Clinical Development and also serves on the Caliston board. That relationship independently supports Ms. Whitmore’s recusal from any board or committee deliberations concerning the proposed acquisition.

Raymond Tusk, a Penterra director described to us as non-independent and a Hale appointee, has likewise been recused. Accordingly, the Special Committee has been tasked with functioning as the independent decision-making body for Penterra in relation to this proposed transaction.

C. The Special Committee

The Special Committee was formed by board resolution dated June 2, 2023. Based on the resolutions reviewed by us, the Committee was granted sole and exclusive authority to evaluate the proposed transaction; negotiate terms and conditions with Caliston and other relevant parties; retain independent legal, financial, and other advisors; recommend approval or rejection of the transaction to the board; and consider and explore strategic alternatives, including the authority to decline to proceed with the transaction altogether. In our view, this grant of authority includes meaningful “say no” power and is consistent with the type of mandate Delaware courts expect an effective special committee to possess.

Calderwood & Harkness LLP was engaged as independent counsel to the Special Committee on June 2, 2023. We further understand that Thorngate Partners LLC was subsequently engaged as the Committee’s independent financial advisor on June 16, 2023.

Penterra’s regular outside counsel, Alcott, Barringer & Cole LLP, led on this matter by Victoria Shen, was recused from advising the Special Committee in order to preserve the independence of the process. That separation of advisory roles is a positive process feature and reduces the risk that counsel to the Committee could be perceived as influenced by management relationships or by prior representation of interested parties in connection with the transaction.

D. Methodology

To assess the independence of the three Committee members, Calderwood & Harkness LLP prepared and distributed customized Director Independence Questionnaires to each director on June 2, 2023. Each of the questionnaires was completed and returned by June 4, 2023.

The questionnaires were designed to solicit information relevant to three overlapping but distinct frameworks:

1. NYSE Listed Company Manual Section 303A, including both the bright-line disqualification tests and the broader board determination of absence of material relationships;

2. Delaware common law standards of independence and disinterestedness applicable to interested-director transactions, including principles reflected in Aronson v. Lewis, Rales v. Blasband, and the MFW line of cases; and

3. SEC Rule 10A-3 audit committee independence concepts, which, while not directly controlling for this purpose, provide a useful analogous framework for identifying compensatory and affiliative relationships that could impair independent judgment.

Following receipt of the completed questionnaires, we conducted supplemental inquiries by telephone with each of the three directors on June 4 and June 5, 2023. Those calls were intended to clarify any potential overlaps, affiliations, prior dealings, academic or charitable relationships, investment relationships, and other ties not always readily captured in a standardized form. We also cross-referenced the questionnaire responses against Penterra’s most recent proxy statement filed in April 2023, the Company’s D&O questionnaires on file, and publicly available information relating to the directors and relevant counterparties.

No inconsistencies, omissions, or red flags were identified in that process that would alter the conclusions set forth below.

III. Applicable Independence Standards

A. NYSE Listing Standards

Section 303A.02 of the NYSE Listed Company Manual provides that a director is “independent” only if the board affirmatively determines that the director has no material relationship with the listed company, either directly or as a partner, shareholder, or officer of an organization that has a relationship with the company. This standard combines bright-line disqualifications with a broader facts-and-circumstances inquiry.

The relevant bright-line disqualification criteria include the following:

1. A director who is, or has been within the prior three years, an employee of the listed company is not independent.

2. A director who has received, or whose immediate family member has received, during any twelve-month period within the prior three years, more than $120,000 in direct compensation from the listed company, other than director and committee fees and certain forms of deferred compensation, is not independent.

3. A director who is affiliated with or employed by the company’s internal or external auditor, or who has an immediate family member falling within the specified audit-firm categories, within the relevant three-year period is not independent. Penterra’s independent auditor is Harwick & Tolliver LLP.

4. A director is not independent if the director or an immediate family member is employed as an executive officer of another company where any present Penterra executive officer serves on that other company’s compensation committee, creating an interlocking compensation committee relationship.

5. A director is not independent if the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, Penterra for property or services in an amount which, in any of the prior three fiscal years, exceeds the greater of $1 million or 2% of that other company’s consolidated gross revenues.

Penterra’s board previously determined in its most recent proxy statement that Ms. Prescott, Mr. Okafor, and Dr. Ng each satisfied the NYSE independence standards. Although that prior determination is relevant and helpful, it is not alone dispositive for purposes of the Special Committee’s mandate in this related-party context. We have therefore independently assessed both the bright-line criteria and the broader material-relationship inquiry as applied to the specific transaction participants.

B. Delaware Law Standards

Under Delaware law, the inquiry is both functional and contextual. A director is considered independent for purposes of evaluating an interested-director transaction if the director is capable of basing his or her decision on the corporate merits of the subject transaction rather than on extraneous considerations or influences. A director is disinterested if the director does not stand to receive a personal financial benefit from the transaction that differs from the benefit received by the stockholders generally, and does not face a sufficiently material detriment unique to the director in the event the transaction is not approved.

The Delaware courts have emphasized that independence may be compromised not only by direct financial ties, but also by relationships of domination, control, material personal or professional dependence, or other circumstances suggesting that a director cannot act adversely to the wishes of an interested fiduciary when the corporate interest so requires. Accordingly, the inquiry here is not limited to whether each director has a direct stake in Caliston. It also includes whether any director has a relationship with Dr. Hale, Caliston, or other transaction participants that is sufficiently material, from the director’s perspective, to call into question the director’s ability to exercise impartial judgment.

The MFW framework, derived from Kahn v. M&F Worldwide Corp. and later cases, provides that in certain controller or controller-like conflict transactions, the standard of review may be shifted from entire fairness to business judgment if the transaction is conditioned ab initio on approval by both (i) a well-functioning special committee composed of independent directors and (ii) an informed, uncoerced majority-of-the-minority stockholder vote. Even where a court ultimately concludes that MFW does not apply in a formal sense, the independence and effective functioning of the special committee remain central to any later judicial assessment of process, fair dealing, and the quality of board-level decision-making.

For these reasons, our analysis focuses on whether Ms. Prescott, Mr. Okafor, and Dr. Ng each lack disabling ties to Dr. Hale, Caliston, Caliston management, Caliston investors, and other transaction participants, and whether each is positioned to evaluate and negotiate the proposed merger solely on the merits and in the interests of Penterra and its unaffiliated stockholders.

IV. Director-by-Director Independence Analysis

A. Diane Prescott (Special Committee Chair)

1. Background and Qualifications

Diane Prescott has served as an independent director of Penterra since 2016, giving her approximately seven years of service on the board as of the date of this memorandum. She is the former Chief Executive Officer of Windbridge Health Systems, Inc., from which she retired in 2014. Her prior executive experience appears to have been substantial, and her current professional activities are limited to board service and related governance work.

Based on the information provided in her questionnaire and follow-up call, Ms. Prescott currently serves on two other public company boards. We reviewed those directorships at a high level for conflict purposes and identified no relationship between those boards, Caliston, Dr. Hale, the Whitmores, Ridgeline Ventures, LP, Meridian Life Sciences Fund III, LP, or other relevant stakeholders in the proposed transaction. She has no current employment other than such board service.

From a governance perspective, Ms. Prescott’s profile is consistent with that of an experienced public company independent director who is not economically dependent on her role at Penterra.

2. Relationships with Interested Parties

With respect to Dr. Marcus Hale, Ms. Prescott reported that she has no familial, financial, or personal relationship with him beyond their shared board service at Penterra. She reported no prior professional relationship predating her Penterra board service, no history of co-investment with Dr. Hale, no joint participation in private investment vehicles, and no co-venture, charitable, or advisory affiliation that would suggest any relationship of unusual closeness or dependency. During our supplemental inquiry, she reaffirmed that her interactions with Dr. Hale have been limited to ordinary board and management presentations, routine governance interactions, and occasional board-related communications.

With respect to Angela Whitmore and Dr. Evan Whitmore, Ms. Prescott reported no relationship apart from her ordinary board interactions with Ms. Whitmore in Ms. Whitmore’s capacity as a fellow director and executive officer of Penterra. She indicated that she does not have a social relationship with Ms. Whitmore, does not know Dr. Evan Whitmore personally, and has had no professional interaction with him.

With respect to Caliston, Ms. Prescott reported no equity interest, no direct or indirect beneficial ownership, no employment or consulting arrangement, no advisory role, no lender relationship, no research sponsorship, and no prior business dealings. She further confirmed that she has never served on any board, scientific advisory board, or observer group relating to Caliston.

We also asked specifically about known Caliston-affiliated investors and counterparties. Ms. Prescott reported no investment in Ridgeline Ventures, LP and no prior relationship with Ava Lindström. She likewise reported no investment in Meridian Life Sciences Fund III, LP and no prior relationship with Tomás Reyes. She reported no prior relationship with Dr. Nadia Sorensen or Dr. Raj Malhotra of Caliston management.

We did not identify any publicly disclosed affiliation or overlap that would contradict these responses.

3. Compensation from Penterra

Ms. Prescott receives standard non-employee director compensation from Penterra, consisting of a board retainer and committee fees, together with standard equity compensation in the form of restricted stock units. Based on the materials reviewed, the amount of her annual cash compensation is below $120,000 per year, excluding the equity component and ordinary board fees. She confirmed that she has no consulting, advisory, employment, or other compensatory arrangement with Penterra beyond the standard director compensation program.

Importantly, nothing in the record suggests that Ms. Prescott is financially dependent on her Penterra board compensation. To the contrary, based on her prior executive career at Windbridge Health Systems and her broader board experience, her financial circumstances appear independent of her service on the Penterra board. That fact is relevant under Delaware law because even ordinary director fees can, in unusual circumstances, assume outsized significance for a particular director. We see no indication of such dependence here.

4. NYSE Bright-Line Tests

Based on the information reviewed, Ms. Prescott satisfies each of the NYSE bright-line independence criteria.

She is not, and has not within the prior three years been, employed by Penterra.

She has not received direct compensation from Penterra in excess of the applicable threshold, other than standard board and committee fees and equity awards of the type expressly contemplated for non-employee directors.

She has no affiliation with Harwick & Tolliver LLP, Penterra’s auditor, and no immediate family member relationship that would raise audit-firm concerns under Section 303A.02.

We identified no interlocking compensation committee issue involving any company at which she or an immediate family member serves as an executive officer and on whose compensation committee a Penterra executive serves.

We likewise identified no disqualifying business relationship between Penterra and any organization with which Ms. Prescott is affiliated that would exceed the greater of $1 million or 2% of consolidated gross revenues in any of the prior three fiscal years.

Result: Ms. Prescott passes all NYSE bright-line tests.

5. Delaware Law Analysis

For Delaware-law purposes, Ms. Prescott appears both independent and disinterested. She does not have any direct or indirect financial interest in Caliston or in the proposed merger consideration. She will share in any impact of the transaction on Penterra stock solely in her capacity as a stockholder or holder of ordinary director equity awards, in the same general manner as other stockholders. There is no indication that she stands to receive any side payment, rollover opportunity, consulting arrangement, indemnification enhancement, or other non-ratable benefit from the transaction.

Equally important, we found no personal, professional, academic, social, charitable, or financial tie between Ms. Prescott and Dr. Hale, Caliston, or any identified Caliston stakeholder that would suggest domination, control, or beholdenness. Her professional stature and retirement from operating management further support the conclusion that she is capable of acting independently and, if necessary, contrary to Dr. Hale’s preferences.

Conclusion: Diane Prescott is independent and disinterested under Delaware law.

B. James Okafor

1. Background and Qualifications

James Okafor has served as an independent director of Penterra since 2019, representing approximately four years of board service. He is the retired managing director of Fielding Capital Partners, LLC, a private equity firm, from which he retired in 2018. His background includes healthcare and life sciences investing, which may be particularly valuable in evaluating a clinical-stage biopharmaceutical acquisition such as the proposed Caliston transaction.

Mr. Okafor reported that he has no current employment other than board service. He does not presently hold an operating role with Fielding Capital Partners or any successor fund or affiliate. That distinction is relevant because current executive or economic relationships with investment firms can sometimes require additional diligence regarding portfolio-company overlaps, side-by-side investments, or carried-interest incentives. Based on the information provided, no such current role exists here.

2. Relationships with Interested Parties

Mr. Okafor reported no familial, financial, or personal relationship with Dr. Marcus Hale beyond their shared service on the Penterra board. He specifically confirmed that he has never co-invested with Dr. Hale in any venture, private placement, syndicate, or fund vehicle, and that he has no private business relationship with him. During supplemental inquiry, Mr. Okafor stated that his interactions with Dr. Hale have been confined to board and management settings and have not extended into social or investment activities.

He reported no relationship with Angela Whitmore or Dr. Evan Whitmore beyond ordinary awareness of Ms. Whitmore’s role at Penterra. He does not socialize with either and has had no professional collaboration with Dr. Evan Whitmore.

With respect to Caliston, Mr. Okafor reported no equity interest, advisory role, consulting arrangement, board or observer seat, warrant, lender position, or other financial interest. He reported no prior business dealings with Caliston. He further confirmed that Fielding Capital Partners, LLC did not invest in Caliston, directly or indirectly, and had no portfolio-company or fund exposure to Caliston to his knowledge. This point was specifically covered in both the questionnaire and the supplemental inquiry.

As to other identified transaction participants, Mr. Okafor reported no investment in Ridgeline Ventures, LP, no co-investment history with Ridgeline, and no professional or personal relationship with Ava Lindström. He likewise reported no investment in Meridian Life Sciences Fund III, LP and no professional or personal relationship with Tomás Reyes. He reported no prior relationship with Dr. Nadia Sorensen or Dr. Raj Malhotra.

We found no contrary indication in the public materials reviewed.

3. Compensation from Penterra

Mr. Okafor receives standard non-employee director compensation from Penterra. Based on the information reviewed, such compensation is below $120,000 annually, exclusive of ordinary board-related equity awards and fees. He reported no consulting agreement, strategic advisory retainer, transaction bonus, or other separate compensatory arrangement with Penterra.

As with Ms. Prescott, there is no indication that Mr. Okafor is financially dependent on his service as a Penterra director. His prior career as a managing director at Fielding Capital Partners suggests substantial independent financial resources. We therefore do not believe his compensation from Penterra gives rise to any concern under either NYSE standards or Delaware-law concepts of material dependence or beholdenness.

4. NYSE Bright-Line Tests

Based on the information available to us, Mr. Okafor satisfies the NYSE bright-line independence criteria.

He is not currently employed by Penterra and has not been employed by Penterra within the prior three years.

He has not received compensation from Penterra in excess of the applicable threshold, other than standard director compensation.

He has no affiliation with Harwick & Tolliver LLP and no identified familial relationship giving rise to auditor-independence concerns.

We identified no interlocking directorate or compensation committee issue of the type prohibited by Section 303A.02.

We also specifically considered whether any relationship between Penterra and Fielding Capital Partners, LLC could present a disqualifying business relationship. Based on Mr. Okafor’s questionnaire responses and our follow-up inquiry, Fielding Capital Partners, LLC did not make payments to, or receive payments from, Penterra in amounts exceeding the applicable thresholds during the last three fiscal years. Moreover, Mr. Okafor is retired and no longer serves as an officer of that firm, further reducing any conceivable concern under the literal terms of the NYSE test.

Result: Mr. Okafor passes all NYSE bright-line tests.

5. Delaware Law Analysis

Under Delaware-law principles, Mr. Okafor appears independent and disinterested. He has no direct or indirect financial interest in Caliston or in the transaction consideration, and there is no indication he will receive any non-ratable benefit from consummation of the merger. Like other Penterra stockholders, he may be affected by the transaction to the extent he holds Penterra shares or RSUs received through ordinary director compensation, but that fact does not create a disabling conflict because it does not differentiate his interest from that of stockholders generally in any material way.

Nor did we identify any relationship with Dr. Hale, Caliston, or other relevant participants that would suggest domination, control, or beholdenness. His investing background and lack of current employment dependence further support the conclusion that he is capable of evaluating the proposed transaction on the merits.

Conclusion: James Okafor is independent and disinterested under Delaware law.

C. Dr. Helen Ng

1. Background and Qualifications

Dr. Helen Ng has served as an independent director of Penterra since 2020, approximately three years as of the date hereof. She is a professor of pharmacology at Wexford University and previously served on an FDA advisory committee, bringing relevant scientific and regulatory expertise to the Special Committee’s work.

Based on the information provided, Dr. Ng’s career is principally academic. She reported no involvement in commercial pharmaceutical ventures other than her Penterra board service. That profile is important in two respects. First, it supports the view that she is not economically dependent on the Company. Second, because academic and scientific communities can involve co-authorships, advisory boards, grant relationships, and clinical trial collaboration, we undertook specific diligence to determine whether she had any professional overlap with Caliston, Caliston management, or Dr. Hale. As described below, none was identified.

2. Relationships with Interested Parties

Dr. Ng reported no familial, financial, or personal relationship with Dr. Marcus Hale beyond ordinary board service at Penterra. She further noted that Dr. Hale holds an MD/PhD from Kellmore University, whereas she is affiliated with Wexford University; the institutions are distinct, and she reported no overlapping academic connection, alumni activity, faculty collaboration, or institutional affiliation with Dr. Hale. She specifically confirmed that she has no history of co-authorship, co-research, conference leadership, editorial collaboration, or grant-related work with Dr. Hale.

Dr. Ng also reported no relationship with Angela Whitmore or Dr. Evan Whitmore. In particular, she confirmed that she has not collaborated with Dr. Evan Whitmore in any clinical development, scientific, academic, or conference setting.

With respect to Caliston, Dr. Ng reported no equity interest, no consulting arrangement, no scientific advisory board role, no research grant, and no other financial interest. She further confirmed that she has had no involvement in CLT-4019 clinical trials and no participation in any Caliston-sponsored research. She is not a principal investigator, sub-investigator, advisor, or speaker connected to Caliston or its product candidates.

Dr. Ng reported no relationship with Ridgeline Ventures, LP or Ava Lindström, and no relationship with Meridian Life Sciences Fund III, LP or Tomás Reyes. She also reported no academic collaboration, co-authorship, or professional relationship with Dr. Nadia Sorensen or Dr. Raj Malhotra.

Because academic affiliations can present less obvious ties than conventional corporate relationships, we specifically asked about scientific societies, editorial boards, grant review panels, and conference steering committees. Dr. Ng reported no overlapping service with any of the identified Caliston personnel or stakeholders in any such forum. We found no public evidence to the contrary.

3. Compensation from Penterra

Dr. Ng receives standard non-employee director compensation from Penterra, below the $120,000 annual threshold referenced in the NYSE bright-line tests, excluding ordinary board fees and equity awards. She reported no consulting fees, advisory compensation, sponsored research support, or other compensatory arrangement with Penterra beyond ordinary director pay.

Dr. Ng indicated that her primary income is derived from her university salary and academic grants that are independent of Penterra. That fact strongly supports the conclusion that she is not financially dependent on Penterra for livelihood or professional standing.

4. NYSE Bright-Line Tests

Dr. Ng satisfies the NYSE bright-line criteria based on the information reviewed.

She is not employed by Penterra and has not been employed by Penterra within the prior three years.

She has not received direct compensation from Penterra above the applicable threshold other than ordinary director compensation.

She has no affiliation with Harwick & Tolliver LLP and no identified immediate family relationship that would implicate auditor-independence concerns.

We identified no interlocking compensation committee relationship.

We also reviewed potential payment relationships between Penterra and Wexford University. Based on the information provided, Wexford University did not make payments to, or receive payments from, Penterra in excess of the greater of $1 million or 2% of consolidated gross revenues during the prior three fiscal years. To the extent any research grants, sponsored programs, or other payments from Penterra to Wexford University may have existed, those were reviewed and confirmed to be immaterial for purposes of the NYSE standard and not of a nature that would call Dr. Ng’s independence into question.

Result: Dr. Ng passes all NYSE bright-line tests.

5. Delaware Law Analysis

For Delaware-law purposes, Dr. Ng is both independent and disinterested. She has no financial interest in Caliston, no involvement with CLT-4019, no consulting or advisory arrangement with either party, and no non-ratable benefit tied to the proposed acquisition. Her interest as a holder of ordinary Penterra equity received through director compensation does not distinguish her from stockholders generally in any disabling respect.

We also identified no academic, scientific, financial, personal, or professional relationship with Dr. Hale, Caliston, or any Caliston stakeholder that could compromise her ability to exercise independent judgment. There is no evidence of domination, control, or beholdenness. Indeed, her academic background and independence from commercial pharmaceutical ventures other than board service support the conclusion that she is well situated to evaluate the transaction on its merits.

Conclusion: Dr. Helen Ng is independent and disinterested under Delaware law.

V. Additional Cross-Checks and Considerations

A. Relationships with Transaction Advisors

As an additional diligence measure, we reviewed whether any of the three directors has a material relationship with the principal advisors and institutions presently associated with the proposed transaction or likely to appear in the transaction process. Specifically, we confirmed the absence of material relationships between any of Ms. Prescott, Mr. Okafor, or Dr. Ng and the following entities or individuals: Thorngate Partners LLC and Gregory Ashford; Whitfield Graves LLP and Kenneth Pratt; Fendowell Sinclair & Co. and Sandra Wu; Brentmoor Advisors LLP; and Greystone National Bank, N.A.

None of the directors reported a personal banking, investment advisory, consulting, employment, or other material relationship with any of those entities or individuals. We also did not identify any public indication of such a relationship. Accordingly, we see no advisor-related issue that would impair the independence of any Committee member.

B. Penterra Stock Holdings

Each of the three directors holds equity interests in Penterra in the form of restricted stock units, common shares, or both, acquired through the standard non-employee director compensation program. We reviewed these holdings as part of the independence analysis.

In our judgment, those holdings are de minimis relative to each director’s overall net worth and do not create a financial interest in the transaction that differs from the interests of stockholders generally. To the contrary, such holdings align the directors with stockholder interests in the ordinary course and are not indicative of a conflict.

We also confirmed that none of the three directors holds any short position, derivative instrument, hedging arrangement, pledge, or other atypical economic position with respect to Penterra shares that might create incentives divergent from those of the broader stockholder base.

C. D&O Insurance Coverage

Each of the three directors is covered under Penterra’s directors’ and officers’ liability insurance program issued by Northpoint Specialty Insurance Company, Policy No. NSI-DO-2023-88412, with a $50 million tower providing Side A, Side B, and Side C coverage.

This coverage is standard for a public company of Penterra’s profile and does not affect the independence analysis. Ordinary indemnification and insurance rights available to directors in connection with service on the board or a special committee do not, without more, constitute disabling interests under either NYSE standards or Delaware law.

D. Cross-Directorship and Interlocking Relationships

We reviewed whether any of Ms. Prescott, Mr. Okafor, or Dr. Ng serves on any board, governing body, or similar organization together with Dr. Hale, Angela Whitmore, Raymond Tusk, or any officer or director of Caliston. No such overlap was identified.

We also considered other potentially relevant affiliations, including charitable boards, trade associations, university advisory councils, scientific organizations, and similar memberships. Based on the information available to us, no shared membership or affiliation exists that would raise a concern that any director’s judgment could be influenced by loyalty, gratitude, dependency, or reputational ties to an interested party.

VI. Conclusion and Recommendation

Based on the completed questionnaires, supplemental inquiries, and our independent review, we reach the following conclusions:

• Diane Prescott: Independent and disinterested under NYSE listing standards and Delaware law. Qualified to serve as Chair of the Special Committee.

• James Okafor: Independent and disinterested under NYSE listing standards and Delaware law. Qualified to serve as a member of the Special Committee.

• Dr. Helen Ng: Independent and disinterested under NYSE listing standards and Delaware law. Qualified to serve as a member of the Special Committee.

In our opinion, the Special Committee as presently constituted satisfies the independence requirements necessary to: (a) comply with applicable NYSE listing standards; (b) support a potential defense of the transaction under the entire fairness doctrine by demonstrating the use of a genuinely independent decision-making body; and (c) satisfy the independent special committee prong of the MFW framework should the full board determine to condition the transaction from the outset on both Special Committee approval and an informed, uncoerced majority-of-the-minority stockholder vote.

We recommend that the Special Committee formally confirm these independence determinations at its next meeting and that this memorandum be retained in the Project Coriander document management workspace as part of the formal process record. Maintaining a clear contemporaneous record of the Committee’s composition, mandate, and independence analysis will be important in any subsequent judicial, regulatory, or stockholder review of the process.

We further recommend that, if any new information comes to light that could bear on the independence of any Committee member — including newly discovered business, personal, academic, financial, or advisory relationships — this analysis be revisited promptly and, if necessary, supplemented or updated.

VII. Attachments

The following materials accompany or are referenced by this memorandum and should be maintained in the Project Coriander files:

• Attachment A: Completed Director Independence Questionnaire — Diane Prescott (dated June 4, 2023)

• Attachment B: Completed Director Independence Questionnaire — James Okafor (dated June 4, 2023)

• Attachment C: Completed Director Independence Questionnaire — Dr. Helen Ng (dated June 4, 2023)

• Attachment D: Template Director Independence Questionnaire (Calderwood & Harkness LLP form)

This memorandum has been prepared solely for the use of the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp. in connection with its evaluation of the proposed Caliston BioSciences, Inc. transaction. It reflects legal analysis based on information made available to Calderwood & Harkness LLP as of the date hereof and should not be circulated beyond persons with a need to know absent prior approval of counsel.

June 5, 2023
MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
TO: Special Committee of the Board of Directors, Penterra Pharmaceuticals Corp. Diane Prescott, Chair James Okafor Dr. Helen Ng
FROM: Sophie Tremblay and Daniel Obi, Calderwood & Harkness LLP
RE: Summary Analysis of Director Independence Questionnaires — Diane Prescott, James Okafor, and Dr. Helen Ng
C&H Matter No.: 1025-00006
Project Code Name: Project Coriander
I. Purpose and Executive Summary
This memorandum summarizes the results of Calderwood & Harkness LLP’s review and analysis of the completed Director Independence Questionnaires submitted by the three members of the Special Committee of Penterra Pharmaceuticals Corp. (“Penterra” or the “Company”) (NYSE: PPHR): Diane Prescott, James Okafor, and Dr. Helen Ng.
As the Committee is aware, the Special Committee was established pursuant to board resolutions adopted on June 2, 2023 by the unanimous vote of the six independent directors then serving on the Penterra board, with Dr. Marcus Hale, Angela Whitmore, and Raymond Tusk recused from consideration and approval of those resolutions. The Committee was formed in connection with the board’s consideration of a proposed acquisition of Caliston BioSciences, Inc. (“Caliston”), a related-party transaction because Dr. Hale, Penterra’s Chairman and Chief Executive Officer, holds a significant equity interest in Caliston and has maintained an ongoing relationship with that company.
The independence analysis of each member of the Special Committee is a critical threshold issue. First, because the proposed transaction involves an interested fiduciary, Delaware law would ordinarily subject the transaction to review under the entire fairness doctrine absent the satisfaction of procedural safeguards recognized by the Delaware courts and codified in relevant part through DGCL Section 144 and related case law. Second, if the board elects to structure the process to seek the procedural protections described in Kahn v. M&F Worldwide Corp. and its progeny, the Special Committee must be comprised of directors who are in fact independent and disinterested, and who are able to function effectively and free from disabling conflicts. Third, Penterra remains subject to NYSE listing standards that require the board affirmatively to determine that directors serving in independent capacities do not have material relationships with the Company or other relevant counterparties that would impair their judgment.
Our review has included: (i) the completed questionnaires submitted by each Committee member; (ii) follow-up interviews conducted by counsel on June 4 and June 5, 2023; (iii) cross-checking against the Company’s most recent proxy statement filed in April 2023 and director and officer questionnaires maintained by the Company; and (iv) a review of publicly available information concerning the directors, Caliston, and the principal transaction participants identified during this diligence process.
Conclusion. Based on the completed questionnaires, supplemental inquiries, and our independent analysis, it is our opinion that all three directors — Diane Prescott, James Okafor, and Dr. Helen Ng — are independent for purposes of serving on the Special Committee under both NYSE listing standards and Delaware law. We did not identify any material relationship between any of these directors, on the one hand, and Caliston BioSciences, Inc., Dr. Marcus Hale, Angela Whitmore, Dr. Evan Whitmore, Ridgeline Ventures, LP, Meridian Life Sciences Fund III, LP, or any other party to the proposed transaction, on the other hand, that would reasonably be expected to impair such director’s independence, disinterestedness, or ability to exercise judgment solely on the merits of the proposed transaction.
In light of the foregoing, we believe the Special Committee, as presently constituted, is appropriately staffed to proceed with its mandate to evaluate, negotiate, and determine whether the proposed Caliston transaction is advisable and in the best interests of Penterra and its unaffiliated stockholders.
II. Background
A. The Proposed Transaction
Penterra Pharmaceuticals Corp. is a Delaware corporation headquartered at 400 Innovation Drive, Suite 1200, Princeton, New Jersey 08540. The Company is evaluating a proposed acquisition of 100% of the outstanding equity interests of Caliston BioSciences, Inc., a Delaware corporation with its principal office at 88 Harbor Point Road, Cambridge, Massachusetts 02142. Based on the information made available to us, the transaction is expected to be structured as a one-step merger in which Caliston would become a wholly owned subsidiary of Penterra.
The current proposal contemplates an aggregate equity value for Caliston of $925,000,000. Of that amount, approximately 75% would be paid in cash, equal to $693,750,000, and approximately 25% would be paid in shares of Penterra common stock, equal to $231,250,000. The stock consideration has been calculated using a 30-day volume-weighted average price of $39.17 per share as of June 1, 2023, implying the issuance of approximately 5,903,497 shares of Penterra common stock.
In addition, the proposed consideration package includes contingent value rights with a potential aggregate payout of $125,000,000 upon the achievement of a specified regulatory milestone, namely FDA approval of CLT-4019 on or before December 31, 2026. If that contingency is satisfied, the maximum aggregate transaction value would be $1,050,000,000.
Caliston is a clinical-stage biopharmaceutical company focused on the development of novel kinase inhibitors for solid tumors. Its lead asset, CLT-4019, is described as a selective CDK4/6 inhibitor currently in Phase 2b development for HR+/HER2– metastatic breast cancer. We understand that the relevant Investigational New Drug application, IND 158429, was filed in March 2020. Because the transaction would involve the acquisition of a clinical-stage platform company with a lead product candidate that remains subject to significant development and regulatory risk, a rigorous process overseen by an independent committee is especially important both from a governance standpoint and from a process-litigation perspective.
B. The Conflict of Interest
The principal conflict giving rise to the creation of the Special Committee arises from Dr. Marcus Hale’s ownership and involvement with Caliston. According to information provided to us and confirmed in the course of our review, Dr. Hale holds a 28.5% equity interest in Caliston. That interest was acquired through personal investments totaling $42 million across Caliston’s Seed, Series A, and Series B financing rounds.
At the currently proposed transaction value of $925,000,000, Dr. Hale’s 28.5% interest would imply proceeds of approximately $263,625,000. Based on his aggregate invested capital of $42 million, his implied gain would be approximately $221,625,000, exclusive of any potential value attributable to contingent value rights. This represents a substantial personal economic benefit to Dr. Hale that is not shared pro rata by Penterra’s public stockholders and that therefore creates a paradigmatic conflict requiring careful procedural protections.
We also understand that Dr. Hale has served as a non-voting board observer at Caliston since 2018 and attended 14 of 16 Caliston board meetings during that period. This ongoing role, while formally non-voting, further underscores the depth of his relationship with Caliston and supports treating the transaction as one involving a conflicted fiduciary.
Of additional significance, Dr. Hale did not disclose his Caliston investment to the Penterra board until February 14, 2023, when he first proposed that Penterra consider acquiring Caliston. Although the legal consequences of that timing are outside the scope of this memorandum, the delayed disclosure reinforces the need for a demonstrably independent process from this point forward.
A second conflict is presented by Angela Whitmore, a Penterra director and Executive Vice President, Commercial Operations, whose spouse, Dr. Evan Whitmore, is Caliston’s Head of Clinical Development and also serves on the Caliston board. That relationship independently supports Ms. Whitmore’s recusal from any board or committee deliberations concerning the proposed acquisition.
Raymond Tusk, a Penterra director described to us as non-independent and a Hale appointee, has likewise been recused. Accordingly, the Special Committee has been tasked with functioning as the independent decision-making body for Penterra in relation to this proposed transaction.
C. The Special Committee
The Special Committee was formed by board resolution dated June 2, 2023. Based on the resolutions reviewed by us, the Committee was granted sole and exclusive authority to evaluate the proposed transaction; negotiate terms and conditions with Caliston and other relevant parties; retain independent legal, financial, and other advisors; recommend approval or rejection of the transaction to the board; and consider and explore strategic alternatives, including the authority to decline to proceed with the transaction altogether. In our view, this grant of authority includes meaningful “say no” power and is consistent with the type of mandate Delaware courts expect an effective special committee to possess.
Calderwood & Harkness LLP was engaged as independent counsel to the Special Committee on June 2, 2023. We further understand that Thorngate Partners LLC was subsequently engaged as the Committee’s independent financial advisor on June 16, 2023.
Penterra’s regular outside counsel, Alcott, Barringer & Cole LLP, led on this matter by Victoria Shen, was recused from advising the Special Committee in order to preserve the independence of the process. That separation of advisory roles is a positive process feature and reduces the risk that counsel to the Committee could be perceived as influenced by management relationships or by prior representation of interested parties in connection with the transaction.
D. Methodology
To assess the independence of the three Committee members, Calderwood & Harkness LLP prepared and distributed customized Director Independence Questionnaires to each director on June 2, 2023. Each of the questionnaires was completed and returned by June 4, 2023.
The questionnaires were designed to solicit information relevant to three overlapping but distinct frameworks:
1. NYSE Listed Company Manual Section 303A, including both the bright-line disqualification tests and the broader board determination of absence of material relationships;
2. Delaware common law standards of independence and disinterestedness applicable to interested-director transactions, including principles reflected in Aronson v. Lewis, Rales v. Blasband, and the MFW line of cases; and
3. SEC Rule 10A-3 audit committee independence concepts, which, while not directly controlling for this purpose, provide a useful analogous framework for identifying compensatory and affiliative relationships that could impair independent judgment.
Following receipt of the completed questionnaires, we conducted supplemental inquiries by telephone with each of the three directors on June 4 and June 5, 2023. Those calls were intended to clarify any potential overlaps, affiliations, prior dealings, academic or charitable relationships, investment relationships, and other ties not always readily captured in a standardized form. We also cross-referenced the questionnaire responses against Penterra’s most recent proxy statement filed in April 2023, the Company’s D&O questionnaires on file, and publicly available information relating to the directors and relevant counterparties.
No inconsistencies, omissions, or red flags were identified in that process that would alter the conclusions set forth below.
III. Applicable Independence Standards
A. NYSE Listing Standards
Section 303A.02 of the NYSE Listed Company Manual provides that a director is “independent” only if the board affirmatively determines that the director has no material relationship with the listed company, either directly or as a partner, shareholder, or officer of an organization that has a relationship with the company. This standard combines bright-line disqualifications with a broader facts-and-circumstances inquiry.
The relevant bright-line disqualification criteria include the following:
1. A director who is, or has been within the prior three years, an employee of the listed company is not independent.
2. A director who has received, or whose immediate family member has received, during any twelve-month period within the prior three years, more than $120,000 in direct compensation from the listed company, other than director and committee fees and certain forms of deferred compensation, is not independent.
3. A director who is affiliated with or employed by the company’s internal or external auditor, or who has an immediate family member falling within the specified audit-firm categories, within the relevant three-year period is not independent. Penterra’s independent auditor is Harwick & Tolliver LLP.
4. A director is not independent if the director or an immediate family member is employed as an executive officer of another company where any present Penterra executive officer serves on that other company’s compensation committee, creating an interlocking compensation committee relationship.
5. A director is not independent if the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, Penterra for property or services in an amount which, in any of the prior three fiscal years, exceeds the greater of $1 million or 2% of that other company’s consolidated gross revenues.
Penterra’s board previously determined in its most recent proxy statement that Ms. Prescott, Mr. Okafor, and Dr. Ng each satisfied the NYSE independence standards. Although that prior determination is relevant and helpful, it is not alone dispositive for purposes of the Special Committee’s mandate in this related-party context. We have therefore independently assessed both the bright-line criteria and the broader material-relationship inquiry as applied to the specific transaction participants.
B. Delaware Law Standards
Under Delaware law, the inquiry is both functional and contextual. A director is considered independent for purposes of evaluating an interested-director transaction if the director is capable of basing his or her decision on the corporate merits of the subject transaction rather than on extraneous considerations or influences. A director is disinterested if the director does not stand to receive a personal financial benefit from the transaction that differs from the benefit received by the stockholders generally, and does not face a sufficiently material detriment unique to the director in the event the transaction is not approved.
The Delaware courts have emphasized that independence may be compromised not only by direct financial ties, but also by relationships of domination, control, material personal or professional dependence, or other circumstances suggesting that a director cannot act adversely to the wishes of an interested fiduciary when the corporate interest so requires. Accordingly, the inquiry here is not limited to whether each director has a direct stake in Caliston. It also includes whether any director has a relationship with Dr. Hale, Caliston, or other transaction participants that is sufficiently material, from the director’s perspective, to call into question the director’s ability to exercise impartial judgment.
The MFW framework, derived from Kahn v. M&F Worldwide Corp. and later cases, provides that in certain controller or controller-like conflict transactions, the standard of review may be shifted from entire fairness to business judgment if the transaction is conditioned ab initio on approval by both (i) a well-functioning special committee composed of independent directors and (ii) an informed, uncoerced majority-of-the-minority stockholder vote. Even where a court ultimately concludes that MFW does not apply in a formal sense, the independence and effective functioning of the special committee remain central to any later judicial assessment of process, fair dealing, and the quality of board-level decision-making.
For these reasons, our analysis focuses on whether Ms. Prescott, Mr. Okafor, and Dr. Ng each lack disabling ties to Dr. Hale, Caliston, Caliston management, Caliston investors, and other transaction participants, and whether each is positioned to evaluate and negotiate the proposed merger solely on the merits and in the interests of Penterra and its unaffiliated stockholders.
IV. Director-by-Director Independence Analysis
A. Diane Prescott (Special Committee Chair)
1. Background and Qualifications
Diane Prescott has served as an independent director of Penterra since 2016, giving her approximately seven years of service on the board as of the date of this memorandum. She is the former Chief Executive Officer of Windbridge Health Systems, Inc., from which she retired in 2014. Her prior executive experience appears to have been substantial, and her current professional activities are limited to board service and related governance work.
Based on the information provided in her questionnaire and follow-up call, Ms. Prescott currently serves on two other public company boards. We reviewed those directorships at a high level for conflict purposes and identified no relationship between those boards, Caliston, Dr. Hale, the Whitmores, Ridgeline Ventures, LP, Meridian Life Sciences Fund III, LP, or other relevant stakeholders in the proposed transaction. She has no current employment other than such board service.
From a governance perspective, Ms. Prescott’s profile is consistent with that of an experienced public company independent director who is not economically dependent on her role at Penterra.
2. Relationships with Interested Parties
With respect to Dr. Marcus Hale, Ms. Prescott reported that she has no familial, financial, or personal relationship with him beyond their shared board service at Penterra. She reported no prior professional relationship predating her Penterra board service, no history of co-investment with Dr. Hale, no joint participation in private investment vehicles, and no co-venture, charitable, or advisory affiliation that would suggest any relationship of unusual closeness or dependency. During our supplemental inquiry, she reaffirmed that her interactions with Dr. Hale have been limited to ordinary board and management presentations, routine governance interactions, and occasional board-related communications.
With respect to Angela Whitmore and Dr. Evan Whitmore, Ms. Prescott reported no relationship apart from her ordinary board interactions with Ms. Whitmore in Ms. Whitmore’s capacity as a fellow director and executive officer of Penterra. She indicated that she does not have a social relationship with Ms. Whitmore, does not know Dr. Evan Whitmore personally, and has had no professional interaction with him.
With respect to Caliston, Ms. Prescott reported no equity interest, no direct or indirect beneficial ownership, no employment or consulting arrangement, no advisory role, no lender relationship, no research sponsorship, and no prior business dealings. She further confirmed that she has never served on any board, scientific advisory board, or observer group relating to Caliston.
We also asked specifically about known Caliston-affiliated investors and counterparties. Ms. Prescott reported no investment in Ridgeline Ventures, LP and no prior relationship with Ava Lindström. She likewise reported no investment in Meridian Life Sciences Fund III, LP and no prior relationship with Tomás Reyes. She reported no prior relationship with Dr. Nadia Sorensen or Dr. Raj Malhotra of Caliston management.
We did not identify any publicly disclosed affiliation or overlap that would contradict these responses.
3. Compensation from Penterra
Ms. Prescott receives standard non-employee director compensation from Penterra, consisting of a board retainer and committee fees, together with standard equity compensation in the form of restricted stock units. Based on the materials reviewed, the amount of her annual cash compensation is below $120,000 per year, excluding the equity component and ordinary board fees. She confirmed that she has no consulting, advisory, employment, or other compensatory arrangement with Penterra beyond the standard director compensation program.
Importantly, nothing in the record suggests that Ms. Prescott is financially dependent on her Penterra board compensation. To the contrary, based on her prior executive career at Windbridge Health Systems and her broader board experience, her financial circumstances appear independent of her service on the Penterra board. That fact is relevant under Delaware law because even ordinary director fees can, in unusual circumstances, assume outsized significance for a particular director. We see no indication of such dependence here.
4. NYSE Bright-Line Tests
Based on the information reviewed, Ms. Prescott satisfies each of the NYSE bright-line independence criteria.
She is not, and has not within the prior three years been, employed by Penterra.
She has not received direct compensation from Penterra in excess of the applicable threshold, other than standard board and committee fees and equity awards of the type expressly contemplated for non-employee directors.
She has no affiliation with Harwick & Tolliver LLP, Penterra’s auditor, and no immediate family member relationship that would raise audit-firm concerns under Section 303A.02.
We identified no interlocking compensation committee issue involving any company at which she or an immediate family member serves as an executive officer and on whose compensation committee a Penterra executive serves.
We likewise identified no disqualifying business relationship between Penterra and any organization with which Ms. Prescott is affiliated that would exceed the greater of $1 million or 2% of consolidated gross revenues in any of the prior three fiscal years.
Result: Ms. Prescott passes all NYSE bright-line tests.
5. Delaware Law Analysis
For Delaware-law purposes, Ms. Prescott appears both independent and disinterested. She does not have any direct or indirect financial interest in Caliston or in the proposed merger consideration. She will share in any impact of the transaction on Penterra stock solely in her capacity as a stockholder or holder of ordinary director equity awards, in the same general manner as other stockholders. There is no indication that she stands to receive any side payment, rollover opportunity, consulting arrangement, indemnification enhancement, or other non-ratable benefit from the transaction.
Equally important, we found no personal, professional, academic, social, charitable, or financial tie between Ms. Prescott and Dr. Hale, Caliston, or any identified Caliston stakeholder that would suggest domination, control, or beholdenness. Her professional stature and retirement from operating management further support the conclusion that she is capable of acting independently and, if necessary, contrary to Dr. Hale’s preferences.
Conclusion: Diane Prescott is independent and disinterested under Delaware law.
B. James Okafor
1. Background and Qualifications
James Okafor has served as an independent director of Penterra since 2019, representing approximately four years of board service. He is the retired managing director of Fielding Capital Partners, LLC, a private equity firm, from which he retired in 2018. His background includes healthcare and life sciences investing, which may be particularly valuable in evaluating a clinical-stage biopharmaceutical acquisition such as the proposed Caliston transaction.
Mr. Okafor reported that he has no current employment other than board service. He does not presently hold an operating role with Fielding Capital Partners or any successor fund or affiliate. That distinction is relevant because current executive or economic relationships with investment firms can sometimes require additional diligence regarding portfolio-company overlaps, side-by-side investments, or carried-interest incentives. Based on the information provided, no such current role exists here.
2. Relationships with Interested Parties
Mr. Okafor reported no familial, financial, or personal relationship with Dr. Marcus Hale beyond their shared service on the Penterra board. He specifically confirmed that he has never co-invested with Dr. Hale in any venture, private placement, syndicate, or fund vehicle, and that he has no private business relationship with him. During supplemental inquiry, Mr. Okafor stated that his interactions with Dr. Hale have been confined to board and management settings and have not extended into social or investment activities.
He reported no relationship with Angela Whitmore or Dr. Evan Whitmore beyond ordinary awareness of Ms. Whitmore’s role at Penterra. He does not socialize with either and has had no professional collaboration with Dr. Evan Whitmore.
With respect to Caliston, Mr. Okafor reported no equity interest, advisory role, consulting arrangement, board or observer seat, warrant, lender position, or other financial interest. He reported no prior business dealings with Caliston. He further confirmed that Fielding Capital Partners, LLC did not invest in Caliston, directly or indirectly, and had no portfolio-company or fund exposure to Caliston to his knowledge. This point was specifically covered in both the questionnaire and the supplemental inquiry.
As to other identified transaction participants, Mr. Okafor reported no investment in Ridgeline Ventures, LP, no co-investment history with Ridgeline, and no professional or personal relationship with Ava Lindström. He likewise reported no investment in Meridian Life Sciences Fund III, LP and no professional or personal relationship with Tomás Reyes. He reported no prior relationship with Dr. Nadia Sorensen or Dr. Raj Malhotra.
We found no contrary indication in the public materials reviewed.
3. Compensation from Penterra
Mr. Okafor receives standard non-employee director compensation from Penterra. Based on the information reviewed, such compensation is below $120,000 annually, exclusive of ordinary board-related equity awards and fees. He reported no consulting agreement, strategic advisory retainer, transaction bonus, or other separate compensatory arrangement with Penterra.
As with Ms. Prescott, there is no indication that Mr. Okafor is financially dependent on his service as a Penterra director. His prior career as a managing director at Fielding Capital Partners suggests substantial independent financial resources. We therefore do not believe his compensation from Penterra gives rise to any concern under either NYSE standards or Delaware-law concepts of material dependence or beholdenness.
4. NYSE Bright-Line Tests
Based on the information available to us, Mr. Okafor satisfies the NYSE bright-line independence criteria.
He is not currently employed by Penterra and has not been employed by Penterra within the prior three years.
He has not received compensation from Penterra in excess of the applicable threshold, other than standard director compensation.
He has no affiliation with Harwick & Tolliver LLP and no identified familial relationship giving rise to auditor-independence concerns.
We identified no interlocking directorate or compensation committee issue of the type prohibited by Section 303A.02.
We also specifically considered whether any relationship between Penterra and Fielding Capital Partners, LLC could present a disqualifying business relationship. Based on Mr. Okafor’s questionnaire responses and our follow-up inquiry, Fielding Capital Partners, LLC did not make payments to, or receive payments from, Penterra in amounts exceeding the applicable thresholds during the last three fiscal years. Moreover, Mr. Okafor is retired and no longer serves as an officer of that firm, further reducing any conceivable concern under the literal terms of the NYSE test.
Result: Mr. Okafor passes all NYSE bright-line tests.
5. Delaware Law Analysis
Under Delaware-law principles, Mr. Okafor appears independent and disinterested. He has no direct or indirect financial interest in Caliston or in the transaction consideration, and there is no indication he will receive any non-ratable benefit from consummation of the merger. Like other Penterra stockholders, he may be affected by the transaction to the extent he holds Penterra shares or RSUs received through ordinary director compensation, but that fact does not create a disabling conflict because it does not differentiate his interest from that of stockholders generally in any material way.
Nor did we identify any relationship with Dr. Hale, Caliston, or other relevant participants that would suggest domination, control, or beholdenness. His investing background and lack of current employment dependence further support the conclusion that he is capable of evaluating the proposed transaction on the merits.
Conclusion: James Okafor is independent and disinterested under Delaware law.
C. Dr. Helen Ng
1. Background and Qualifications
Dr. Helen Ng has served as an independent director of Penterra since 2020, approximately three years as of the date hereof. She is a professor of pharmacology at Wexford University and previously served on an FDA advisory committee, bringing relevant scientific and regulatory expertise to the Special Committee’s work.
Based on the information provided, Dr. Ng’s career is principally academic. She reported no involvement in commercial pharmaceutical ventures other than her Penterra board service. That profile is important in two respects. First, it supports the view that she is not economically dependent on the Company. Second, because academic and scientific communities can involve co-authorships, advisory boards, grant relationships, and clinical trial collaboration, we undertook specific diligence to determine whether she had any professional overlap with Caliston, Caliston management, or Dr. Hale. As described below, none was identified.
2. Relationships with Interested Parties
Dr. Ng reported no familial, financial, or personal relationship with Dr. Marcus Hale beyond ordinary board service at Penterra. She further noted that Dr. Hale holds an MD/PhD from Kellmore University, whereas she is affiliated with Wexford University; the institutions are distinct, and she reported no overlapping academic connection, alumni activity, faculty collaboration, or institutional affiliation with Dr. Hale. She specifically confirmed that she has no history of co-authorship, co-research, conference leadership, editorial collaboration, or grant-related work with Dr. Hale.
Dr. Ng also reported no relationship with Angela Whitmore or Dr. Evan Whitmore. In particular, she confirmed that she has not collaborated with Dr. Evan Whitmore in any clinical development, scientific, academic, or conference setting.
With respect to Caliston, Dr. Ng reported no equity interest, no consulting arrangement, no scientific advisory board role, no research grant, and no other financial interest. She further confirmed that she has had no involvement in CLT-4019 clinical trials and no participation in any Caliston-sponsored research. She is not a principal investigator, sub-investigator, advisor, or speaker connected to Caliston or its product candidates.
Dr. Ng reported no relationship with Ridgeline Ventures, LP or Ava Lindström, and no relationship with Meridian Life Sciences Fund III, LP or Tomás Reyes. She also reported no academic collaboration, co-authorship, or professional relationship with Dr. Nadia Sorensen or Dr. Raj Malhotra.
Because academic affiliations can present less obvious ties than conventional corporate relationships, we specifically asked about scientific societies, editorial boards, grant review panels, and conference steering committees. Dr. Ng reported no overlapping service with any of the identified Caliston personnel or stakeholders in any such forum. We found no public evidence to the contrary.
3. Compensation from Penterra
Dr. Ng receives standard non-employee director compensation from Penterra, below the $120,000 annual threshold referenced in the NYSE bright-line tests, excluding ordinary board fees and equity awards. She reported no consulting fees, advisory compensation, sponsored research support, or other compensatory arrangement with Penterra beyond ordinary director pay.
Dr. Ng indicated that her primary income is derived from her university salary and academic grants that are independent of Penterra. That fact strongly supports the conclusion that she is not financially dependent on Penterra for livelihood or professional standing.
4. NYSE Bright-Line Tests
Dr. Ng satisfies the NYSE bright-line criteria based on the information reviewed.
She is not employed by Penterra and has not been employed by Penterra within the prior three years.
She has not received direct compensation from Penterra above the applicable threshold other than ordinary director compensation.
She has no affiliation with Harwick & Tolliver LLP and no identified immediate family relationship that would implicate auditor-independence concerns.
We identified no interlocking compensation committee relationship.
We also reviewed potential payment relationships between Penterra and Wexford University. Based on the information provided, Wexford University did not make payments to, or receive payments from, Penterra in excess of the greater of $1 million or 2% of consolidated gross revenues during the prior three fiscal years. To the extent any research grants, sponsored programs, or other payments from Penterra to Wexford University may have existed, those were reviewed and confirmed to be immaterial for purposes of the NYSE standard and not of a nature that would call Dr. Ng’s independence into question.
Result: Dr. Ng passes all NYSE bright-line tests.
5. Delaware Law Analysis
For Delaware-law purposes, Dr. Ng is both independent and disinterested. She has no financial interest in Caliston, no involvement with CLT-4019, no consulting or advisory arrangement with either party, and no non-ratable benefit tied to the proposed acquisition. Her interest as a holder of ordinary Penterra equity received through director compensation does not distinguish her from stockholders generally in any disabling respect.
We also identified no academic, scientific, financial, personal, or professional relationship with Dr. Hale, Caliston, or any Caliston stakeholder that could compromise her ability to exercise independent judgment. There is no evidence of domination, control, or beholdenness. Indeed, her academic background and independence from commercial pharmaceutical ventures other than board service support the conclusion that she is well situated to evaluate the transaction on its merits.
Conclusion: Dr. Helen Ng is independent and disinterested under Delaware law.
V. Additional Cross-Checks and Considerations
A. Relationships with Transaction Advisors
As an additional diligence measure, we reviewed whether any of the three directors has a material relationship with the principal advisors and institutions presently associated with the proposed transaction or likely to appear in the transaction process. Specifically, we confirmed the absence of material relationships between any of Ms. Prescott, Mr. Okafor, or Dr. Ng and the following entities or individuals: Thorngate Partners LLC and Gregory Ashford; Whitfield Graves LLP and Kenneth Pratt; Fendowell Sinclair & Co. and Sandra Wu; Brentmoor Advisors LLP; and Greystone National Bank, N.A.
None of the directors reported a personal banking, investment advisory, consulting, employment, or other material relationship with any of those entities or individuals. We also did not identify any public indication of such a relationship. Accordingly, we see no advisor-related issue that would impair the independence of any Committee member.
B. Penterra Stock Holdings
Each of the three directors holds equity interests in Penterra in the form of restricted stock units, common shares, or both, acquired through the standard non-employee director compensation program. We reviewed these holdings as part of the independence analysis.
In our judgment, those holdings are de minimis relative to each director’s overall net worth and do not create a financial interest in the transaction that differs from the interests of stockholders generally. To the contrary, such holdings align the directors with stockholder interests in the ordinary course and are not indicative of a conflict.
We also confirmed that none of the three directors holds any short position, derivative instrument, hedging arrangement, pledge, or other atypical economic position with respect to Penterra shares that might create incentives divergent from those of the broader stockholder base.
C. D&O Insurance Coverage
Each of the three directors is covered under Penterra’s directors’ and officers’ liability insurance program issued by Northpoint Specialty Insurance Company, Policy No. NSI-DO-2023-88412, with a $50 million tower providing Side A, Side B, and Side C coverage.
This coverage is standard for a public company of Penterra’s profile and does not affect the independence analysis. Ordinary indemnification and insurance rights available to directors in connection with service on the board or a special committee do not, without more, constitute disabling interests under either NYSE standards or Delaware law.
D. Cross-Directorship and Interlocking Relationships
We reviewed whether any of Ms. Prescott, Mr. Okafor, or Dr. Ng serves on any board, governing body, or similar organization together with Dr. Hale, Angela Whitmore, Raymond Tusk, or any officer or director of Caliston. No such overlap was identified.
We also considered other potentially relevant affiliations, including charitable boards, trade associations, university advisory councils, scientific organizations, and similar memberships. Based on the information available to us, no shared membership or affiliation exists that would raise a concern that any director’s judgment could be influenced by loyalty, gratitude, dependency, or reputational ties to an interested party.
VI. Conclusion and Recommendation
Based on the completed questionnaires, supplemental inquiries, and our independent review, we reach the following conclusions:
• Diane Prescott: Independent and disinterested under NYSE listing standards and Delaware law. Qualified to serve as Chair of the Special Committee.
• James Okafor: Independent and disinterested under NYSE listing standards and Delaware law. Qualified to serve as a member of the Special Committee.
• Dr. Helen Ng: Independent and disinterested under NYSE listing standards and Delaware law. Qualified to serve as a member of the Special Committee.
In our opinion, the Special Committee as presently constituted satisfies the independence requirements necessary to: (a) comply with applicable NYSE listing standards; (b) support a potential defense of the transaction under the entire fairness doctrine by demonstrating the use of a genuinely independent decision-making body; and (c) satisfy the independent special committee prong of the MFW framework should the full board determine to condition the transaction from the outset on both Special Committee approval and an informed, uncoerced majority-of-the-minority stockholder vote.
We recommend that the Special Committee formally confirm these independence determinations at its next meeting and that this memorandum be retained in the Project Coriander document management workspace as part of the formal process record. Maintaining a clear contemporaneous record of the Committee’s composition, mandate, and independence analysis will be important in any subsequent judicial, regulatory, or stockholder review of the process.
We further recommend that, if any new information comes to light that could bear on the independence of any Committee member — including newly discovered business, personal, academic, financial, or advisory relationships — this analysis be revisited promptly and, if necessary, supplemented or updated.
VII. Attachments
The following materials accompany or are referenced by this memorandum and should be maintained in the Project Coriander files:
• Attachment A: Completed Director Independence Questionnaire — Diane Prescott (dated June 4, 2023)
• Attachment B: Completed Director Independence Questionnaire — James Okafor (dated June 4, 2023)
• Attachment C: Completed Director Independence Questionnaire — Dr. Helen Ng (dated June 4, 2023)
• Attachment D: Template Director Independence Questionnaire (Calderwood & Harkness LLP form)
This memorandum has been prepared solely for the use of the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp. in connection with its evaluation of the proposed Caliston BioSciences, Inc. transaction. It reflects legal analysis based on information made available to Calderwood & Harkness LLP as of the date hereof and should not be circulated beyond persons with a need to know absent prior approval of counsel.

June 5, 2023

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