1018-00003 · Client 1018 · Special Committee Process

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

MINUTES OF MEETING OF THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF PENTERRA PHARMACEUTICALS CORP.

August 3, 2023 Project Coriander

Date: August 3, 2023

Time: 10:00 a.m. Eastern Time

Location: Offices of Calderwood & Harkness LLP, 1700 Market Street, Suite 3400, Philadelphia, PA 19103 (and via secure videoconference)

Project Code Name: Project Coriander

ATTENDEES AND INVITEES

Special Committee Members Present:

Independent Legal Counsel — Calderwood & Harkness LLP:

Independent Financial Advisor — Thorngate Partners LLC:

Absent / Recused (confirmed not present and not provided access to meeting materials):

Recording Secretary: Daniel Obi, Working Associate, Calderwood & Harkness LLP (participating by secure videoconference)

I. CALL TO ORDER AND QUORUM

Ms. Diane Prescott, Chair of the Special Committee, called the meeting to order at 10:00 a.m. Eastern Time. Ms. Prescott confirmed that all three members of the Special Committee were present, either in person at the offices of Calderwood & Harkness LLP in Philadelphia or by secure videoconference, and that a quorum was present and acting throughout the meeting. The quorum requirement was satisfied in accordance with the majority-vote quorum provision set forth in Section 4(a) of the Special Committee Charter, which was adopted by unanimous resolution of the Board of Directors of Penterra Pharmaceuticals Corp. (the "Company" or "Penterra") on June 2, 2023.

Ms. Prescott confirmed that the information barrier protocol established pursuant to Section 6 of the Special Committee Charter remained in full force and effect. Ms. Prescott stated that she had received no communications of any kind regarding the proposed transaction from Dr. Marcus Hale, Ms. Angela Whitmore, or Mr. Raymond Tusk since the prior meeting of the Special Committee held on July 19, 2023, and she asked each of the other Committee members to confirm the same. Mr. Okafor and Dr. Ng each confirmed that they had not received any such communications.

Ms. Prescott further noted that all meeting materials for today's session, including the preliminary valuation presentation prepared by Thorngate Partners LLC ("Thorngate" or the "Financial Advisor"), had been distributed exclusively through the segregated Project Coriander workspace on Penterra's document management system. Access to the Project Coriander workspace remained restricted to Special Committee members and their authorized advisors at Calderwood & Harkness LLP ("C&H" or "Independent Counsel") and Thorngate Partners, and no other directors, officers, or employees of Penterra had been granted access to the workspace or to any materials contained therein.

II. APPROVAL OF PRIOR MEETING MINUTES

Ms. Prescott presented the draft minutes of the Special Committee meeting held on July 19, 2023, at which the Committee had received a management presentation from Dr. Nadia Sorensen, Chief Executive Officer, and Dr. Raj Malhotra, Chief Scientific Officer, of Caliston BioSciences, Inc. ("Caliston"). The draft minutes had been circulated to the Committee members in advance of today's meeting through the Project Coriander workspace. Ms. Prescott asked whether any Committee member had corrections or revisions to propose.

Mr. Okafor noted that he had reviewed the draft minutes and found them to be accurate and complete in all material respects. Dr. Ng concurred, noting no corrections.

Upon motion duly made by Mr. Okafor and seconded by Dr. Ng, the Special Committee unanimously approved the minutes of the July 19, 2023 meeting as circulated, without amendment.

III. STATUS UPDATE FROM INDEPENDENT COUNSEL

A. Due Diligence Update

Ms. Renata Vasquez, Responsible Partner at Calderwood & Harkness LLP, provided the Committee with a comprehensive update on the status of legal due diligence on Caliston BioSciences, Inc.

Ms. Vasquez reminded the Committee that C&H's initial due diligence request list was issued to Whitfield Graves LLP (contact partner: Kenneth Pratt), legal counsel to Caliston, on June 9, 2023. Following an initial period of document collection and production, Caliston's initial diligence materials were received by C&H on June 28, 2023, and subsequent supplemental productions continued thereafter on a rolling basis. C&H reviewed these materials in conjunction with its team of associates and, where appropriate, with outside subject-matter specialists.

Ms. Vasquez reported that C&H's comprehensive Legal Due Diligence Report was delivered to the Special Committee on July 14, 2023. The IP Diligence Memorandum, which included a detailed analysis of Caliston's intellectual property portfolio, patent prosecution history, freedom-to-operate considerations, and chain-of-title verification, was delivered on July 21, 2023. The Regulatory Diligence Memorandum, which addressed Caliston's regulatory filings, FDA correspondence, clinical trial status, and compliance history, was delivered on July 25, 2023. Each of these memoranda was uploaded to the Project Coriander workspace and made available to Committee members and the Financial Advisor.

Ms. Vasquez summarized the key findings of the due diligence review as follows:

Corporate Organization and Status. Caliston BioSciences, Inc. is a corporation organized under the laws of the State of Delaware, with its principal office located at 88 Harbor Point Road, Cambridge, Massachusetts 02142. Caliston was incorporated on April 12, 2017. As of the date of the due diligence review, Caliston employed approximately 94 full-time employees and maintained no subsidiary entities.

Financial Condition. Caliston is a pre-commercial, clinical-stage company with zero revenue. For the fiscal year ended December 31, 2022, Caliston reported net cash burn (defined as total cash used in operating and investing activities) of approximately $78.4 million. As of March 31, 2023, the most recent interim financial reporting date for which data was available, Caliston held cash and cash equivalents of approximately $112.6 million. Based on Caliston management's projections and current burn rate, this cash position was estimated to provide a runway through approximately the first quarter of 2025, assuming no additional financing.

Capitalization. The capitalization of Caliston as of the date of the due diligence review was as follows:

Within the founders and management pool, Dr. Nadia Sorensen, Chief Executive Officer, held approximately 14.2%, and Dr. Raj Malhotra, Chief Scientific Officer, held approximately 9.8%. The remaining approximately 6.5% was allocated among other employees and an unallocated equity incentive pool.

Litigation. No material litigation was identified. C&H conducted customary searches of federal and state court dockets and found no pending or threatened claims, suits, or proceedings against Caliston or any of its officers or directors that would be material to the evaluation of the proposed transaction.

intellectual Property. The IP assignment chain for Caliston's core patent portfolio was verified. All inventions underlying Caliston's three pipeline candidates (CLT-4019, CLT-5227, and CLT-6034) were properly assigned to the company pursuant to valid invention assignment agreements executed by the relevant inventors. C&H identified no material deficiencies in the chain of title.

Regulatory Status. Caliston's Investigational New Drug Application (IND) No. 158429 for CLT-4019 was filed with the U.S. Food and Drug Administration in March 2020 and has been active since that date without clinical hold. CLT-4019 is a selective CDK4/6 inhibitor being developed for the treatment of HR+/HER2– metastatic breast cancer. The compound is currently in a Phase 2b clinical trial, with topline data expected in the fourth quarter of 2023.

Preclinical Pipeline. Two additional preclinical candidates were identified: CLT-5227, a next-generation kinase inhibitor targeting a novel CDK isoform, and CLT-6034, a dual kinase inhibitor with potential application in non-small cell lung cancer. Both compounds are in preclinical development and have not yet been the subject of IND filings.

Ms. Tremblay added that the Antitrust/HSR Act analysis was in progress. C&H was working with its antitrust team in Washington, D.C. to evaluate whether the proposed transaction would require a filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and to assess any potential substantive antitrust concerns. Ms. Tremblay estimated that the Antitrust/HSR Act Analysis memorandum would be delivered to the Committee by approximately August 10, 2023. (For the record, this memorandum was subsequently delivered on August 10, 2023, as anticipated.)

B. Related-Party Relationships Reminder

Ms. Vasquez reminded the Committee of the detailed Related-Party Relationships Summary Memorandum prepared by C&H and dated June 20, 2023, which had been previously circulated to the Committee and remained available in the Project Coriander workspace. Ms. Vasquez highlighted the following key points, which she stated were important context for the Committee's ongoing evaluation of the proposed transaction.

Dr. Marcus Hale's Conflict of Interest. Dr. Hale, the Chairman and Chief Executive Officer of Penterra, holds a 28.5% equity interest in Caliston BioSciences, acquired through a personal investment of approximately $42 million deployed across Caliston's Seed, Series A, and Series B financing rounds. Dr. Hale has held a board observer seat at Caliston since 2018 and has attended 14 of 16 Caliston board meetings during the period from 2018 through the present. Notably, Dr. Hale did not disclose his personal investment in Caliston to the Penterra Board of Directors until February 14, 2023, at which time he first proposed that Penterra acquire Caliston. Prior to that date, no member of the Penterra Board, other than Dr. Hale himself, was aware of his financial interest in Caliston or his board observer role.

Angela Whitmore's Conflict of Interest. Ms. Whitmore, a director of Penterra 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 is a member of Caliston's board of directors. This spousal relationship creates a direct conflict of interest with respect to the proposed transaction.

Ms. Vasquez confirmed that, in light of these relationships, the entire fairness standard under Delaware law applies to the proposed transaction. Under the entire fairness standard, the transaction must be entirely fair to Penterra and its stockholders, both in terms of fair dealing (the process by which the transaction is negotiated and approved) and fair price (the economic terms of the transaction). Ms. Vasquez reiterated, however, that the Special Committee process — including the independence of the Committee, the retention of independent legal counsel and an independent financial advisor, and the anticipated delivery of a fairness opinion — is designed to support the application of the business judgment standard under the framework established in Delaware case law, effectively shifting the burden of proof in any subsequent challenge to the plaintiff. Ms. Vasquez referenced C&H's Delaware Law Memorandum dated June 8, 2023, which analyzed Section 144 of the Delaware General Corporation Law and the entire fairness doctrine in detail, and which remained available to the Committee in the Project Coriander workspace for reference.

Ms. Prescott thanked Ms. Vasquez and Ms. Tremblay for their thorough update and invited Gregory Ashford of Thorngate Partners to proceed with his preliminary valuation presentation.

IV. PRESENTATION BY THORNGATE PARTNERS LLC — PRELIMINARY VALUATION ANALYSES

A. Introduction and Engagement Overview

Mr. Gregory Ashford, Managing Director and Lead Banker at Thorngate Partners LLC, introduced himself and reminded the Committee of the terms and scope of Thorngate's engagement. Thorngate was retained by the Special Committee on June 16, 2023, pursuant to an engagement letter bearing reference number 1018-00003, to serve as the Committee's independent financial advisor in connection with the proposed acquisition of Caliston BioSciences, Inc.

Under the terms of the engagement letter, Thorngate's advisory fee is $2.5 million, with 50% payable upon delivery of a fairness opinion (whether positive or negative) and 50% payable upon the earlier of the closing of the proposed transaction or the formal termination of the engagement. In addition, Thorngate received a $500,000 non-refundable retainer upon execution of the engagement letter, which amount is to be credited against the final advisory fee. Penterra is also responsible for the reimbursement of Thorngate's reasonable out-of-pocket expenses incurred in connection with the engagement.

Mr. Ashford confirmed Thorngate's independence. He stated that Thorngate Partners LLC had no material relationships with Caliston BioSciences, Inc., Dr. Marcus Hale (in his individual capacity), Ridgeline Ventures, LP, Meridian Life Sciences Fund III, LP, Whitfield Graves LLP, or Fendowell Sinclair & Co. that would impair Thorngate's independence in rendering financial advisory services or, ultimately, a fairness opinion to the Special Committee. Mr. Ashford noted that Thorngate had conducted an internal conflicts review prior to accepting the engagement and had confirmed the absence of any disqualifying relationships.

Mr. Ashford stated that the preliminary valuation analyses to be presented at today's meeting were based upon and subject to the following information sources: (i) publicly available information regarding Penterra Pharmaceuticals Corp., including SEC filings, investor presentations, analyst reports, and market data; (ii) non-public information provided by Caliston through the Project Coriander virtual data room, including financial statements, projections, clinical data packages, and corporate records; (iii) the Caliston management presentation delivered to the Special Committee at the July 19, 2023 meeting by Dr. Nadia Sorensen and Dr. Raj Malhotra; and (iv) Thorngate's independent research on comparable companies and precedent transactions in the oncology sector, supplemented by consultations with external subject-matter experts.

Mr. Ashford emphasized, and requested that the Committee note for the record, that the analyses being presented today were preliminary in nature and did not constitute a final fairness opinion. Thorngate anticipated that additional information, including the outcome of any market check process, further refinement of clinical probability assumptions, and updated market data, would inform the final fairness opinion, which would be rendered only at such time as the Special Committee determined appropriate.

B. Overview of Caliston BioSciences

Mr. Ashford presented a summary overview of Caliston BioSciences, Inc. for the benefit of the Committee. Caliston was founded in 2017 as a clinical-stage biopharmaceutical company focused on the discovery and development of novel kinase inhibitors for the treatment of solid tumors. The company's research and development activities are headquartered in Cambridge, Massachusetts, and it employs approximately 94 full-time personnel, the majority of whom are engaged in research, clinical development, and regulatory affairs functions.

Lead Asset — CLT-4019. Caliston's lead development candidate is CLT-4019, a selective CDK4/6 inhibitor designed for the treatment of hormone receptor-positive, HER2-negative (HR+/HER2–) metastatic breast cancer. CLT-4019 is differentiated from approved CDK4/6 inhibitors (including palbociclib, ribociclib, and abemaciclib) by its improved selectivity profile and reduced hematologic toxicity observed in preclinical and early clinical studies. An Investigational New Drug Application (IND No. 158429) for CLT-4019 was filed with the FDA in March 2020. The compound is currently being evaluated in a randomized, double-blind Phase 2b clinical trial enrolling approximately 280 patients across 42 clinical sites in the United States and Europe. Topline data from the Phase 2b trial are expected in the fourth quarter of 2023, and the readout is widely anticipated to be a key catalyst for the valuation of Caliston and the proposed transaction.

Preclinical Pipeline. Caliston has two additional preclinical candidates at earlier stages of development. CLT-5227 is a next-generation kinase inhibitor targeting a novel CDK isoform, with potential application in multiple solid tumor indications. CLT-6034 is a dual kinase inhibitor with preliminary preclinical data suggesting activity in non-small cell lung cancer models. Neither candidate has advanced to the IND stage, and both are subject to significant development risk and uncertainty.

Financing History and Last Private Valuation. Caliston has raised a total of approximately $347 million in equity financing across four rounds: Seed (2017), Series A (2018), Series B (2020), and Series C (October 2021). The most recent financing round, the Series C, closed in October 2021 at a post-money valuation of $680 million. Since the Series C closing, Caliston has not raised additional equity capital and has funded its operations from the proceeds of the Series C round and, to a lesser extent, non-dilutive grant funding.

Financial Profile. For the fiscal year ended December 31, 2022, Caliston reported zero revenue (consistent with its pre-commercial status), net cash burn of approximately $78.4 million, and total operating expenses of approximately $84.2 million. As of March 31, 2023, Caliston held cash and cash equivalents of approximately $112.6 million. Based on current burn rates and planned clinical activities, Caliston management estimates that its existing cash position provides a runway through approximately the first quarter of 2025, absent additional financing or a strategic transaction.

C. Proposed Transaction Summary

Mr. Ashford then presented a summary of the proposed transaction as outlined by Dr. Hale in his initial proposal and as further developed through preliminary discussions.

The proposed transaction contemplates the acquisition by Penterra of 100% of the outstanding equity of Caliston BioSciences, Inc. through a one-step merger, in which Caliston would merge with and into a newly formed, wholly owned subsidiary of Penterra, with Caliston surviving as the surviving entity and becoming a wholly owned subsidiary of the Company.

The key financial terms of the proposed transaction, as initially proposed by Dr. Hale, are as follows:

Aggregate Equity Value (Base Consideration): $925 million.

Consideration Structure: 75% cash / 25% Penterra common stock.

• Cash component: $693.75 million (75% of $925 million).

• Stock component: $231.25 million (25% of $925 million), based on a 30-day volume-weighted average price ("VWAP") of Penterra common stock of $39.17 per share as of June 1, 2023, implying the issuance of approximately 5,903,497 new shares of Penterra common stock (ticker: PPHR).

Contingent Value Rights (CVRs): An additional $125 million in cash would be payable to Caliston's former stockholders upon FDA approval of CLT-4019 (specifically, the issuance of a complete response letter or approval letter by the FDA for an NDA for CLT-4019) on or before December 31, 2026.

Maximum Aggregate Transaction Value (Including CVRs): $1.05 billion ($925 million base consideration plus $125 million CVR).

Premium to Last Private Round: The proposed base consideration of $925 million represents a premium of approximately 36.03% to Caliston's most recent private valuation of $680 million at the Series C closing in October 2021 (calculated as ($925 million − $680 million) ÷ $680 million = 36.03%).

Dr. Hale's Implied Economics: As a 28.5% equity holder in Caliston, Dr. Hale would receive implied aggregate proceeds of approximately $263.625 million at the proposed base consideration (28.5% × $925 million = $263.625 million), representing an implied gain of approximately $221.625 million on his personal investment of $42 million. If the CVR milestone is achieved, Dr. Hale's additional CVR payment would be approximately $35.625 million (28.5% × $125 million), bringing his total implied proceeds to approximately $299.25 million.

Mr. Ashford noted that the magnitude of Dr. Hale's personal financial interest in the transaction underscored the importance of the Special Committee's independent evaluation and the role of the fairness opinion.

D. Penterra Financial Context

Mr. Ashford presented a summary of Penterra's financial profile to provide the Committee with context for evaluating the proposed transaction and its potential impact on the Company.

Selected Financial Data — Penterra Pharmaceuticals Corp.

Mr. Ashford discussed the anticipated financing for the proposed transaction. The cash consideration of $693.75 million was expected to be funded from a combination of: (i) approximately $400 million of cash on hand from Penterra's existing cash and cash equivalents balance, and (ii) approximately $293.75 million drawn on Penterra's existing $1.5 billion senior unsecured revolving credit facility with Greystone National Bank, N.A. serving as administrative agent. The revolving credit facility was entered into in March 2021 and has a maturity date of March 2026. Borrowings under the facility bear interest at a rate of SOFR plus 150 basis points. As of June 1, 2023, the undrawn availability under the facility was approximately $1.1 billion, providing ample capacity to fund the anticipated draw.

Mr. Ashford noted that, upon completion of the proposed transaction, Penterra would retain substantial liquidity. Assuming cash on hand of approximately $892 million as of December 31, 2022 (and without giving effect to cash generated from operations in the first half of 2023), after deploying approximately $400 million in cash and drawing approximately $293.75 million on the revolver, Penterra would retain approximately $492 million in cash and approximately $806.25 million in undrawn revolver availability. Mr. Ashford observed that the Company's continued cash flow generation from its existing commercial portfolio would further support post-transaction liquidity and debt service capacity.

E. Valuation Methodology 1: Discounted Cash Flow Analysis — CLT-4019 Only

Mr. Ashford presented the first of four preliminary valuation methodologies: a risk-adjusted discounted cash flow ("DCF") analysis focused solely on CLT-4019, Caliston's lead development candidate, as the sole commercially viable asset in the near term.

Mr. Ashford explained that this analysis was designed to provide a "floor" valuation for Caliston by excluding the speculative value of the two preclinical-stage candidates (CLT-5227 and CLT-6034) and focusing exclusively on the asset with the greatest near-term commercial potential and the most robust clinical data available. The key assumptions underlying this analysis were as follows:

Revenue Projections. Revenue projections were based on probability-weighted market penetration scenarios for CLT-4019 in the HR+/HER2– metastatic breast cancer indication. Thorngate modeled three scenarios (base, upside, and downside) based on varying assumptions regarding market share capture, pricing, formulary access, and competitive dynamics vis-à-vis existing approved CDK4/6 inhibitors. The probability weights assigned to the three scenarios were informed by Thorngate's independent assessment of CLT-4019's differentiation profile and the competitive landscape.

Clinical Success Probability Adjustments. The revenue projections were risk-adjusted to account for the probability of clinical and regulatory success at each remaining development stage. Specifically, Thorngate applied stage-appropriate probability of success factors for the transition from Phase 2b to Phase 3, from Phase 3 to NDA submission, and from NDA submission to FDA approval. These probability factors were based on published industry data from BIO/QLS/Informa and were cross-referenced against Thorngate's proprietary dataset of oncology clinical outcomes.

Projection Period and Terminal Value. The DCF model employed a ten-year explicit projection period (2024–2033), followed by a terminal value calculated using the perpetuity growth method.

Weighted Average Cost of Capital (WACC). A WACC of 12.5% was applied, reflecting the risk profile of a single-asset, clinical-stage biopharmaceutical investment. The WACC was derived using the capital asset pricing model, adjusted for size and stage-of-development premiums.

Terminal Growth Rate. A long-term terminal growth rate of 2.0% was applied, consistent with long-term nominal GDP growth expectations and typical assumptions for mature pharmaceutical assets.

Implied Equity Value Range: Based on these assumptions, the CLT-4019-only DCF analysis yielded an implied equity value range for Caliston of $780 million to $1,020 million, with a midpoint of $900 million.

Mr. Ashford noted that the range reflected sensitivities around key assumptions, including market penetration rates, pricing, and probability of clinical success.

Committee Discussion. Mr. Okafor asked about the sensitivity of the implied equity value range to variations in the WACC assumption. Mr. Ashford presented a sensitivity table (included as part of Exhibit A) showing that at a WACC of 11.0%, the implied equity value range expanded upward to approximately $870 million to $1,130 million, while at a WACC of 14.0%, the range contracted to approximately $690 million to $910 million. Mr. Okafor observed that the WACC assumption was a significant driver of the analysis and asked Thorngate to be prepared to discuss its WACC derivation in greater detail at a future meeting.

Dr. Ng inquired about the specific Phase 2b probability of success assumptions used in the model and how they compared to industry benchmarks for oncology assets at a similar stage of development. Mr. Ashford responded that Thorngate had applied a Phase 2b-to-Phase 3 transition probability of approximately 40%, which was consistent with published industry data for oncology compounds in Phase 2, and that the overall cumulative probability of success from the current stage through FDA approval was estimated at approximately 18% to 22%, depending on the scenario. Dr. Ng observed that these figures were in line with her understanding of historical success rates for oncology drug candidates and asked whether the Phase 2b topline data expected in Q4 2023 would materially affect these assumptions. Mr. Ashford confirmed that positive topline data would likely result in a meaningful upward revision to the probability of success factors and, consequently, to the implied valuation range.

F. Valuation Methodology 2: Discounted Cash Flow Analysis — Full Pipeline

Mr. Ashford presented the second valuation methodology: a risk-adjusted net present value ("rNPV") analysis applied to the full Caliston pipeline, including CLT-4019, CLT-5227, and CLT-6034.

This methodology employed the same general framework as the CLT-4019-only DCF analysis but extended the model to include independent rNPV calculations for each of the two preclinical candidates. Mr. Ashford explained that because CLT-5227 and CLT-6034 are at the preclinical stage, they were subject to significantly lower probabilities of clinical and regulatory success and higher discount rates than CLT-4019. Specifically, the preclinical-to-approval cumulative probability of success applied to these candidates ranged from approximately 5% to 8%, consistent with industry benchmarks for preclinical oncology compounds. In addition, a higher asset-specific discount rate was applied to the preclinical candidates to reflect the additional risk and longer expected time to potential commercialization.

Implied Equity Value Range: Based on these assumptions, the full-pipeline rNPV analysis yielded an implied equity value range for Caliston of $870 million to $1,180 million, with a midpoint of $1,025 million.

Committee Discussion. Dr. Ng observed that the preclinical assets (CLT-5227 and CLT-6034) contributed meaningfully to the upper end of the valuation range, adding approximately $90 million to $160 million of incremental value relative to the CLT-4019-only analysis. She noted that this contribution was noteworthy given the early stage and high failure rates associated with preclinical compounds, and she asked Thorngate to carefully consider whether the market would ascribe this level of value to preclinical assets in a transaction of this nature.

Ms. Prescott asked about the risk adjustment methodology in greater detail and whether Thorngate had independently verified Caliston management's clinical development timelines for the preclinical candidates. Mr. Ashford confirmed that Thorngate had conducted independent diligence on the preclinical programs and had consulted with two external oncology consultants — one a former FDA reviewer and one a clinical pharmacologist with expertise in kinase inhibitor development — to validate the clinical timelines, probability of success assumptions, and competitive positioning of CLT-5227 and CLT-6034. Mr. Ashford stated that while there was inherent uncertainty in any assessment of preclinical-stage assets, Thorngate was satisfied that the assumptions employed in the full-pipeline rNPV model were reasonable and supportable.

G. Valuation Methodology 3: Comparable Transactions Analysis

Mr. Ashford presented the third valuation methodology: an analysis of precedent transactions involving acquisitions of clinical-stage oncology companies.

Thorngate identified and analyzed seven precedent transactions that were selected based on the following comparability criteria: (i) the target was a clinical-stage biopharmaceutical company with a lead asset in oncology; (ii) the transaction occurred within the five-year period from January 2018 through June 2023; (iii) the lead asset was in Phase 2 or Phase 3 clinical development at the time of the transaction; and (iv) the target was a privately held or recently public company with a similar financial profile (i.e., pre-commercial, limited or no revenue). Mr. Ashford presented a summary table of the seven precedent transactions (included in Exhibit A), identifying the acquirer, target, announcement date, transaction value, stage of lead asset, and therapeutic area.

Implied Equity Value Range: Based on the multiples and valuation metrics derived from the comparable transactions analysis, the implied equity value range for Caliston was $820 million to $1,050 million.

Mr. Ashford discussed the selection criteria and inherent limitations of the comparable transactions methodology. He acknowledged that the seven selected transactions varied in terms of pipeline breadth, stage of development of the lead asset, therapeutic area focus within oncology, and the competitive landscape at the time of the respective transactions. He noted that no single precedent transaction was perfectly comparable to the proposed acquisition of Caliston and that the comparable transactions analysis should be considered in conjunction with, rather than in isolation from, the other valuation methodologies.

Mr. Okafor asked whether any of the seven precedent transactions involved related-party elements similar to those present in the proposed Caliston acquisition. Mr. Ashford responded that one of the seven transactions — which he identified for the Committee by name — had involved a related-party dimension, in that a significant stockholder of the target also served on the board of the acquirer. Mr. Ashford noted, however, that the premium analysis was based on unaffiliated, arm's-length benchmarks and that Thorngate had not adjusted the comparable transactions data to account for the related-party element in that particular transaction. Mr. Ashford offered to prepare a supplemental analysis excluding the related-party transaction if the Committee so desired.

H. Valuation Methodology 4: Premiums Paid Analysis

Mr. Ashford presented the fourth and final valuation methodology: an analysis of premiums paid in acquisitions of privately held clinical-stage biopharmaceutical companies relative to their most recent private financing rounds.

Thorngate analyzed a dataset of acquisitions of privately held clinical-stage biopharmaceutical companies completed between January 2018 and June 2023, in which the target company had completed a venture-backed equity financing round within the preceding three years. The analysis focused on the premium paid by the acquirer relative to the target's post-money valuation at its most recent private financing round.

Premium Range Observed: The premium range observed across the dataset was approximately 30% to 45% above the target's last private round valuation.

Applied to Caliston's most recent private valuation — the $680 million post-money valuation at the Series C closing in October 2021 — this premium range yielded an implied equity value range for Caliston of $884 million to $986 million (calculated as $680 million × 1.30 = $884 million and $680 million × 1.45 = $986 million).

Committee Discussion. Ms. Prescott noted that the October 2021 Series C valuation was nearly two years old at the time of the proposed transaction and asked whether the passage of time and the advancement of CLT-4019 through Phase 2b clinical development since the Series C closing should, in Thorngate's view, increase the appropriate premium to be applied. Mr. Ashford acknowledged this was an important observation. He agreed that the clinical de-risking that had occurred since the Series C round — including the enrollment and advancement of the Phase 2b trial, the accumulation of favorable safety data, and the approaching topline data readout — supported the application of a premium toward the higher end of the observed range, or potentially above it. Mr. Ashford noted that if the Phase 2b topline data were positive, the clinical de-risking would be substantially greater and could support a premium meaningfully above the 45% upper bound observed in the historical dataset. He stated that this dynamic would be factored into Thorngate's ongoing analysis and any final fairness opinion.

I. Summary of Valuation Ranges

Mr. Ashford concluded his preliminary valuation presentation by presenting a summary chart (included as Exhibit B) illustrating the implied equity value ranges derived from each of the four valuation methodologies. The chart was presented in a "football field" format, with each methodology displayed as a horizontal bar showing the low, midpoint (where applicable), and high end of the implied equity value range.

Mr. Ashford observed that the proposed base consideration of $925 million falls within all four of the preliminary valuation ranges. He further noted that if the $125 million CVR milestone is achieved (i.e., FDA approval of CLT-4019 on or before December 31, 2026), the total aggregate consideration of $1.05 billion would remain within the upper bounds of both the full-pipeline DCF range ($1,180 million) and the comparable transactions range ($1,050 million), while modestly exceeding the upper bounds of the CLT-4019-only DCF range ($1,020 million) and the premiums paid range ($986 million).

Mr. Ashford cautioned the Committee once again that these analyses were preliminary in nature and that additional refinement — including updated market data, the results of any market check process, further clinical diligence, and the incorporation of the Phase 2b topline data (if available prior to the rendering of a fairness opinion) — would be undertaken before any final fairness opinion was delivered. He stated that Thorngate expected to present updated analyses and, if directed by the Committee, a final fairness opinion at a subsequent meeting.

Ms. Prescott thanked Mr. Ashford for the comprehensive and thoughtful presentation.

V. COMMITTEE DISCUSSION AND DELIBERATION

A. Discussion of Valuation Findings

Ms. Prescott thanked Mr. Ashford for the thorough presentation and opened the floor for discussion among the Committee members.

Mr. Okafor stated that he found the preliminary valuation analyses to be well-constructed and informative. He noted that the proposed base consideration of $925 million sits slightly above the midpoint of the CLT-4019-only DCF analysis ($900 million) but below the midpoint of the full-pipeline DCF analysis ($1,025 million). Mr. Okafor expressed the view that this positioning raised important questions for the Committee to consider. Specifically, he stated that the Committee should carefully evaluate whether the proposed price adequately compensates Penterra's stockholders for the risk inherent in the preclinical pipeline. If Penterra is paying a price that implies meaningful value for CLT-5227 and CLT-6034, the Committee should satisfy itself that those preclinical assets have a reasonable prospect of generating returns commensurate with the premium being paid. Conversely, if the price is primarily reflective of CLT-4019 alone, the preclinical pipeline could represent meaningful upside for Penterra's stockholders — but only if the programs advance successfully.

Dr. Ng raised the question of whether the CVR structure adequately shifts clinical risk to Caliston's stockholders. She noted that the $125 million CVR is contingent on FDA approval of CLT-4019 on or before December 31, 2026, and therefore provides some measure of downside protection for Penterra in the event that CLT-4019 fails to obtain regulatory approval within that timeframe. However, Dr. Ng observed that the base consideration of $925 million — which is not contingent on any milestone — represents a substantial commitment of Penterra's capital regardless of the clinical outcome. She suggested that the Committee should consider whether a larger proportion of the total consideration should be allocated to the CVR component, thereby more effectively linking the purchase price to clinical and regulatory success.

Ms. Prescott acknowledged both points and stated that these were precisely the types of issues the Committee needed to address in its deliberations. She then asked Ms. Vasquez for her views on the process going forward from a fiduciary perspective.

B. Independent Counsel Guidance

Ms. Vasquez advised the Committee that, in addition to continuing to refine its assessment of the financial terms of the proposed transaction, the Special Committee should consider whether a market check — that is, a structured exploration of whether alternative strategic transactions or acquisition targets are available that might be superior to the proposed Caliston acquisition — would strengthen the record under the entire fairness standard.

Ms. Vasquez explained that under Delaware law, while a market check is not legally required in the context of an interested-director transaction, it is a recognized procedural safeguard that the Delaware Court of Chancery and the Delaware Supreme Court have viewed favorably in evaluating the fair dealing component of the entire fairness analysis. A well-designed and adequately documented market check can demonstrate that the Special Committee acted in an informed manner, considered available alternatives, and made a reasoned decision that the proposed transaction was the best available option — or, alternatively, that the proposed transaction was not the best available option and should be renegotiated or rejected.

Ms. Vasquez reminded the Committee that the Board resolution of June 2, 2023 establishing the Special Committee granted the Committee sole and exclusive authority to evaluate the proposed transaction and to explore alternatives, including the power to negotiate the terms of the proposed transaction, to explore alternative acquisition targets or strategic transactions, to retain additional advisors as necessary, and to decline the proposed transaction in its entirety. The Committee is not obligated to recommend the transaction and retains full discretion to reject it if, in the Committee's judgment, the transaction is not in the best interests of Penterra and its unaffiliated stockholders.

C. Discussion Regarding Market Check

Mr. Okafor expressed his support for conducting a market check. Drawing on his extensive experience evaluating comparable investment opportunities during his tenure at Fielding Capital Partners, Mr. Okafor stated that a disciplined survey of alternative targets would serve two important purposes. First, it would inform the Committee's judgment on the reasonableness of the valuation by providing a comparative framework — that is, by identifying what else Penterra could acquire in the clinical-stage oncology space for a comparable investment of capital and risk. Second, it would demonstrate procedural rigor and due care, creating a strong evidentiary record that the Committee had considered alternatives before approving (or declining) the proposed transaction.

Dr. Ng concurred with Mr. Okafor's recommendation. She added that the market check should be focused and targeted, concentrating on clinical-stage oncology assets that are reasonably comparable to Caliston — particularly companies with CDK4/6 inhibitor programs or related kinase inhibitor programs in solid tumor indications. Dr. Ng cautioned against an overly broad or diffuse market check, which she believed could be time-consuming, costly, and ultimately unhelpful if it failed to identify genuinely comparable alternatives. She suggested that Thorngate Partners, with the Committee's guidance, should develop specific screening criteria to ensure that the market check was efficient and informative.

Ms. Prescott agreed with both Mr. Okafor and Dr. Ng and stated that the Committee should direct Thorngate Partners to conduct a targeted market check. She asked Mr. Ashford whether Thorngate had the capacity and willingness to undertake such a review.

Mr. Ashford confirmed that Thorngate Partners had both the capability and the willingness to conduct a market check on behalf of the Special Committee. He estimated that a targeted market check — involving the identification and preliminary evaluation of alternative clinical-stage oncology acquisition candidates — could be completed within approximately three to four weeks, depending on the scope and the responsiveness of potential alternative targets and their advisors. Mr. Ashford stated that Thorngate would prepare a detailed market check scope proposal, including proposed screening criteria, for the Committee's review and approval.

D. Resolution Regarding Market Check

The Committee discussed the process and timing for formally directing Thorngate to undertake the market check. After deliberation, the Committee determined that it would not formally resolve to direct the market check at today's meeting. Ms. Prescott noted that the Committee would benefit from additional time to consider the appropriate scope and parameters of the market check and that a formal directive to Thorngate would be issued at the next scheduled meeting of the Special Committee on August 22, 2023, following further deliberation and review of Mr. Ashford's market check scope proposal.

Ms. Prescott asked that the record reflect the Committee's strong preliminary consensus in favor of conducting a market check, while noting that the formal resolution would be deferred to the next meeting.

(Note for the record: At the subsequent meeting of the Special Committee held on August 22, 2023, the Special Committee formally directed Thorngate Partners LLC to explore alternative acquisition targets in accordance with the market check scope proposal approved at that meeting.)

VI. OTHER BUSINESS

A. Upcoming Deliverables and Scheduling

Ms. Vasquez provided the Committee with an update on the anticipated timeline for remaining due diligence deliverables. She noted that C&H expected to deliver the Antitrust/HSR Act Analysis memorandum to the Special Committee by approximately August 10, 2023. This memorandum would address the applicability of the Hart-Scott-Rodino Act filing requirements to the proposed transaction and provide an assessment of any potential substantive antitrust concerns. In addition, C&H anticipated delivering the Tax Structure and Considerations memorandum by approximately August 15, 2023, which would analyze the tax implications of the proposed merger structure for Penterra, Caliston, and the respective stockholder groups, including the treatment of the cash and stock consideration components and the contingent value rights.

Ms. Prescott confirmed that the next meeting of the Special Committee was scheduled for August 22, 2023. At that meeting, the Committee would: (i) formally direct Thorngate Partners to commence the market check; (ii) receive updates on remaining due diligence workstreams, including the antitrust and tax analyses; (iii) review Thorngate's market check scope proposal; and (iv) continue its deliberations regarding the financial terms of the proposed transaction.

Mr. Ashford confirmed that he would prepare and circulate a detailed market check scope proposal, including proposed screening criteria and a preliminary list of potential alternative targets, in advance of the August 22 meeting for the Committee's consideration and approval.

B. Confirmation of Information Barrier Compliance

Ms. Prescott returned to the subject of information barrier compliance. She asked each Committee member to confirm, for the record, that they had not received any communications from Dr. Marcus Hale, Ms. Angela Whitmore, or Mr. Raymond Tusk regarding the proposed transaction, the Committee's deliberations, or any related matters since the prior meeting of the Special Committee held on July 19, 2023.

Mr. Okafor confirmed that he had received no such communications.

Dr. Ng confirmed that she had received no such communications.

Ms. Prescott confirmed the same on her own behalf.

Ms. Vasquez confirmed that Calderwood & Harkness LLP had not received any communications from Dr. Hale, Ms. Whitmore, Mr. Tusk, or their respective personal counsel regarding the proposed transaction or the Special Committee's deliberations. Ms. Vasquez further confirmed that C&H had reviewed the access logs for the Project Coriander workspace on Penterra's document management system and that the logs showed no unauthorized access attempts. Access remained limited to the authorized users: the three Special Committee members, Ms. Vasquez, Ms. Tremblay, Mr. Obi, and Mr. Ashford of Thorngate Partners.

VII. EXECUTIVE SESSION

At 12:15 p.m. Eastern Time, Ms. Prescott announced that the Special Committee would convene in executive session with independent counsel only. Mr. Ashford of Thorngate Partners was excused from the meeting at this time, and Ms. Prescott confirmed that Mr. Ashford departed the conference room (and disconnected from the secure videoconference) prior to the commencement of the executive session.

The Special Committee met in executive session with Ms. Vasquez and Ms. Tremblay of Calderwood & Harkness LLP. The Committee discussed, in privilege with independent counsel, its preliminary impressions of the valuation analyses presented by Thorngate Partners, its initial views on the reasonableness of the proposed consideration, and the appropriate process and strategy for the Committee's continued evaluation of the proposed transaction.

No formal action was taken during the executive session.

The executive session concluded at 12:35 p.m. Eastern Time.

VIII. ADJOURNMENT

There being no further business to come before the Special Committee, upon motion duly made by Mr. Okafor and seconded by Dr. Ng, the meeting was unanimously adjourned at 12:37 p.m. Eastern Time.

The next meeting of the Special Committee was scheduled for August 22, 2023, at a time and location to be confirmed.

These minutes were prepared by Daniel Obi, Working Associate, Calderwood & Harkness LLP, in his capacity as Recording Secretary, and have been reviewed by Renata Vasquez, Responsible Partner, Calderwood & Harkness LLP, and approved by the Chair of the Special Committee.

PREPARED BY:

________________________________________

Daniel Obi Working Associate Calderwood & Harkness LLP

REVIEWED BY:

________________________________________

Renata Vasquez Responsible Partner Calderwood & Harkness LLP

APPROVED BY:

________________________________________

Diane Prescott Chair, Special Committee of the Board of Directors Penterra Pharmaceuticals Corp.

Date: ________

C&H Matter Number: 1025-00006

APPENDICES / EXHIBITS REFERENCED

The following exhibits and reference documents were referenced during the meeting and are maintained in the Project Coriander workspace on Penterra's document management system. These materials are not attached to these minutes but are incorporated herein by reference and are available to the Special Committee members and their authorized advisors.

Exhibit A: Thorngate Partners LLC Preliminary Valuation Presentation, dated August 3, 2023 (confidential; maintained in Project Coriander workspace; file reference: 1018-00003-VAL-001).

Exhibit B: Summary Valuation Ranges Chart (football-field diagram), prepared by Thorngate Partners LLC, dated August 3, 2023 (included as a component of Exhibit A and also maintained as a standalone document in the Project Coriander workspace).

Reference Documents:

• Legal Due Diligence Report, prepared by Calderwood & Harkness LLP, delivered July 14, 2023 (C&H Matter No. 1025-00006).

• IP Diligence Memorandum, prepared by Calderwood & Harkness LLP, delivered July 21, 2023 (C&H Matter No. 1025-00006).

• Regulatory Diligence Memorandum, prepared by Calderwood & Harkness LLP, delivered July 25, 2023 (C&H Matter No. 1025-00006).

• Related-Party Relationships Summary Memorandum, prepared by Calderwood & Harkness LLP, dated June 20, 2023 (C&H Matter No. 1025-00006).

• Delaware Law Memorandum (analysis of DGCL §144 and the entire fairness doctrine), prepared by Calderwood & Harkness LLP, dated June 8, 2023 (C&H Matter No. 1025-00006).

• Special Committee Charter, adopted by the Board of Directors of Penterra Pharmaceuticals Corp. on June 2, 2023.

• Thorngate Partners LLC Engagement Letter (Reference No. 1018-00003), executed June 16, 2023.

• Minutes of the Special Committee Meeting held July 19, 2023 (approved at this meeting).

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT These minutes contain privileged and confidential information protected by the attorney-client privilege and the work product doctrine. Distribution is limited to the members of the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp. and their authorized advisors. Any unauthorized disclosure, copying, or distribution of these minutes or the information contained herein is strictly prohibited.

Name	Role
Diane Prescott, Chair	Independent Director; former Chief Executive Officer of Windbridge Health Systems, Inc.
James Okafor	Independent Director; retired Managing Director of Fielding Capital Partners, LLC
Dr. Helen Ng	Independent Director; Professor of Pharmacology, Wexford University; former member, FDA Oncologic Drugs Advisory Committee
Name	Role
Renata Vasquez	Responsible Partner
Sophie Tremblay	Lead Associate
Name	Role
Gregory Ashford	Managing Director (Lead Banker)
Name	Basis for Recusal
Dr. Marcus Hale, Chairman & CEO, Penterra	Interested party; holds 28.5% equity interest in Caliston BioSciences, Inc.
Angela Whitmore, Director; EVP, Commercial Operations	Spouse of Dr. Evan Whitmore, Caliston board member and Head of Clinical Development
Raymond Tusk, Director (non-independent)	Recused pursuant to Special Committee Charter, Section 3(c)
Stockholder	Ownership (%)
Dr. Marcus Hale (personal investment)	28.5%
Ridgeline Ventures, LP (Ava Lindström, Managing Partner)	22.3%
Meridian Life Sciences Fund III, LP (Tomás Reyes, Managing Partner)	18.7%
Founders / Management Pool (aggregate)	30.5%
Metric	FY2022	FY2021
Revenue	$1.836 billion	$1.614 billion
EBITDA	$412 million	$358 million
Net Income	$247 million	$198 million
Balance Sheet Item	As of December 31, 2022
Total Assets	$5.12 billion
Cash & Cash Equivalents	$892 million

Total Debt	$1.35 billion
Market Data	As of June 1, 2023
Market Capitalization	Approximately $4.72 billion
Shares Outstanding	Approximately 121.4 million
Share Price (30-day VWAP)	$39.17
Methodology	Low	Midpoint	High
DCF — CLT-4019 Only	$780M	$900M	$1,020M
DCF — Full Pipeline (rNPV)	$870M	$1,025M	$1,180M
Comparable Transactions	$820M	—	$1,050M
Premiums Paid Analysis	$884M	—	$986M

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
MINUTES OF MEETING OF THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF PENTERRA PHARMACEUTICALS CORP.
August 3, 2023 Project Coriander
Date: August 3, 2023
Time: 10:00 a.m. Eastern Time
Location: Offices of Calderwood & Harkness LLP, 1700 Market Street, Suite 3400, Philadelphia, PA 19103 (and via secure videoconference)
Project Code Name: Project Coriander
ATTENDEES AND INVITEES
Special Committee Members Present:
Independent Legal Counsel — Calderwood & Harkness LLP:
Independent Financial Advisor — Thorngate Partners LLC:
Absent / Recused (confirmed not present and not provided access to meeting materials):
Recording Secretary: Daniel Obi, Working Associate, Calderwood & Harkness LLP (participating by secure videoconference)
I. CALL TO ORDER AND QUORUM
Ms. Diane Prescott, Chair of the Special Committee, called the meeting to order at 10:00 a.m. Eastern Time. Ms. Prescott confirmed that all three members of the Special Committee were present, either in person at the offices of Calderwood & Harkness LLP in Philadelphia or by secure videoconference, and that a quorum was present and acting throughout the meeting. The quorum requirement was satisfied in accordance with the majority-vote quorum provision set forth in Section 4(a) of the Special Committee Charter, which was adopted by unanimous resolution of the Board of Directors of Penterra Pharmaceuticals Corp. (the "Company" or "Penterra") on June 2, 2023.
Ms. Prescott confirmed that the information barrier protocol established pursuant to Section 6 of the Special Committee Charter remained in full force and effect. Ms. Prescott stated that she had received no communications of any kind regarding the proposed transaction from Dr. Marcus Hale, Ms. Angela Whitmore, or Mr. Raymond Tusk since the prior meeting of the Special Committee held on July 19, 2023, and she asked each of the other Committee members to confirm the same. Mr. Okafor and Dr. Ng each confirmed that they had not received any such communications.
Ms. Prescott further noted that all meeting materials for today's session, including the preliminary valuation presentation prepared by Thorngate Partners LLC ("Thorngate" or the "Financial Advisor"), had been distributed exclusively through the segregated Project Coriander workspace on Penterra's document management system. Access to the Project Coriander workspace remained restricted to Special Committee members and their authorized advisors at Calderwood & Harkness LLP ("C&H" or "Independent Counsel") and Thorngate Partners, and no other directors, officers, or employees of Penterra had been granted access to the workspace or to any materials contained therein.
II. APPROVAL OF PRIOR MEETING MINUTES
Ms. Prescott presented the draft minutes of the Special Committee meeting held on July 19, 2023, at which the Committee had received a management presentation from Dr. Nadia Sorensen, Chief Executive Officer, and Dr. Raj Malhotra, Chief Scientific Officer, of Caliston BioSciences, Inc. ("Caliston"). The draft minutes had been circulated to the Committee members in advance of today's meeting through the Project Coriander workspace. Ms. Prescott asked whether any Committee member had corrections or revisions to propose.
Mr. Okafor noted that he had reviewed the draft minutes and found them to be accurate and complete in all material respects. Dr. Ng concurred, noting no corrections.
Upon motion duly made by Mr. Okafor and seconded by Dr. Ng, the Special Committee unanimously approved the minutes of the July 19, 2023 meeting as circulated, without amendment.
III. STATUS UPDATE FROM INDEPENDENT COUNSEL
A. Due Diligence Update
Ms. Renata Vasquez, Responsible Partner at Calderwood & Harkness LLP, provided the Committee with a comprehensive update on the status of legal due diligence on Caliston BioSciences, Inc.
Ms. Vasquez reminded the Committee that C&H's initial due diligence request list was issued to Whitfield Graves LLP (contact partner: Kenneth Pratt), legal counsel to Caliston, on June 9, 2023. Following an initial period of document collection and production, Caliston's initial diligence materials were received by C&H on June 28, 2023, and subsequent supplemental productions continued thereafter on a rolling basis. C&H reviewed these materials in conjunction with its team of associates and, where appropriate, with outside subject-matter specialists.
Ms. Vasquez reported that C&H's comprehensive Legal Due Diligence Report was delivered to the Special Committee on July 14, 2023. The IP Diligence Memorandum, which included a detailed analysis of Caliston's intellectual property portfolio, patent prosecution history, freedom-to-operate considerations, and chain-of-title verification, was delivered on July 21, 2023. The Regulatory Diligence Memorandum, which addressed Caliston's regulatory filings, FDA correspondence, clinical trial status, and compliance history, was delivered on July 25, 2023. Each of these memoranda was uploaded to the Project Coriander workspace and made available to Committee members and the Financial Advisor.
Ms. Vasquez summarized the key findings of the due diligence review as follows:
Corporate Organization and Status. Caliston BioSciences, Inc. is a corporation organized under the laws of the State of Delaware, with its principal office located at 88 Harbor Point Road, Cambridge, Massachusetts 02142. Caliston was incorporated on April 12, 2017. As of the date of the due diligence review, Caliston employed approximately 94 full-time employees and maintained no subsidiary entities.
Financial Condition. Caliston is a pre-commercial, clinical-stage company with zero revenue. For the fiscal year ended December 31, 2022, Caliston reported net cash burn (defined as total cash used in operating and investing activities) of approximately $78.4 million. As of March 31, 2023, the most recent interim financial reporting date for which data was available, Caliston held cash and cash equivalents of approximately $112.6 million. Based on Caliston management's projections and current burn rate, this cash position was estimated to provide a runway through approximately the first quarter of 2025, assuming no additional financing.
Capitalization. The capitalization of Caliston as of the date of the due diligence review was as follows:
Within the founders and management pool, Dr. Nadia Sorensen, Chief Executive Officer, held approximately 14.2%, and Dr. Raj Malhotra, Chief Scientific Officer, held approximately 9.8%. The remaining approximately 6.5% was allocated among other employees and an unallocated equity incentive pool.
Litigation. No material litigation was identified. C&H conducted customary searches of federal and state court dockets and found no pending or threatened claims, suits, or proceedings against Caliston or any of its officers or directors that would be material to the evaluation of the proposed transaction.
intellectual Property. The IP assignment chain for Caliston's core patent portfolio was verified. All inventions underlying Caliston's three pipeline candidates (CLT-4019, CLT-5227, and CLT-6034) were properly assigned to the company pursuant to valid invention assignment agreements executed by the relevant inventors. C&H identified no material deficiencies in the chain of title.
Regulatory Status. Caliston's Investigational New Drug Application (IND) No. 158429 for CLT-4019 was filed with the U.S. Food and Drug Administration in March 2020 and has been active since that date without clinical hold. CLT-4019 is a selective CDK4/6 inhibitor being developed for the treatment of HR+/HER2– metastatic breast cancer. The compound is currently in a Phase 2b clinical trial, with topline data expected in the fourth quarter of 2023.
Preclinical Pipeline. Two additional preclinical candidates were identified: CLT-5227, a next-generation kinase inhibitor targeting a novel CDK isoform, and CLT-6034, a dual kinase inhibitor with potential application in non-small cell lung cancer. Both compounds are in preclinical development and have not yet been the subject of IND filings.
Ms. Tremblay added that the Antitrust/HSR Act analysis was in progress. C&H was working with its antitrust team in Washington, D.C. to evaluate whether the proposed transaction would require a filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and to assess any potential substantive antitrust concerns. Ms. Tremblay estimated that the Antitrust/HSR Act Analysis memorandum would be delivered to the Committee by approximately August 10, 2023. (For the record, this memorandum was subsequently delivered on August 10, 2023, as anticipated.)
B. Related-Party Relationships Reminder
Ms. Vasquez reminded the Committee of the detailed Related-Party Relationships Summary Memorandum prepared by C&H and dated June 20, 2023, which had been previously circulated to the Committee and remained available in the Project Coriander workspace. Ms. Vasquez highlighted the following key points, which she stated were important context for the Committee's ongoing evaluation of the proposed transaction.
Dr. Marcus Hale's Conflict of Interest. Dr. Hale, the Chairman and Chief Executive Officer of Penterra, holds a 28.5% equity interest in Caliston BioSciences, acquired through a personal investment of approximately $42 million deployed across Caliston's Seed, Series A, and Series B financing rounds. Dr. Hale has held a board observer seat at Caliston since 2018 and has attended 14 of 16 Caliston board meetings during the period from 2018 through the present. Notably, Dr. Hale did not disclose his personal investment in Caliston to the Penterra Board of Directors until February 14, 2023, at which time he first proposed that Penterra acquire Caliston. Prior to that date, no member of the Penterra Board, other than Dr. Hale himself, was aware of his financial interest in Caliston or his board observer role.
Angela Whitmore's Conflict of Interest. Ms. Whitmore, a director of Penterra 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 is a member of Caliston's board of directors. This spousal relationship creates a direct conflict of interest with respect to the proposed transaction.
Ms. Vasquez confirmed that, in light of these relationships, the entire fairness standard under Delaware law applies to the proposed transaction. Under the entire fairness standard, the transaction must be entirely fair to Penterra and its stockholders, both in terms of fair dealing (the process by which the transaction is negotiated and approved) and fair price (the economic terms of the transaction). Ms. Vasquez reiterated, however, that the Special Committee process — including the independence of the Committee, the retention of independent legal counsel and an independent financial advisor, and the anticipated delivery of a fairness opinion — is designed to support the application of the business judgment standard under the framework established in Delaware case law, effectively shifting the burden of proof in any subsequent challenge to the plaintiff. Ms. Vasquez referenced C&H's Delaware Law Memorandum dated June 8, 2023, which analyzed Section 144 of the Delaware General Corporation Law and the entire fairness doctrine in detail, and which remained available to the Committee in the Project Coriander workspace for reference.
Ms. Prescott thanked Ms. Vasquez and Ms. Tremblay for their thorough update and invited Gregory Ashford of Thorngate Partners to proceed with his preliminary valuation presentation.
IV. PRESENTATION BY THORNGATE PARTNERS LLC — PRELIMINARY VALUATION ANALYSES
A. Introduction and Engagement Overview
Mr. Gregory Ashford, Managing Director and Lead Banker at Thorngate Partners LLC, introduced himself and reminded the Committee of the terms and scope of Thorngate's engagement. Thorngate was retained by the Special Committee on June 16, 2023, pursuant to an engagement letter bearing reference number 1018-00003, to serve as the Committee's independent financial advisor in connection with the proposed acquisition of Caliston BioSciences, Inc.
Under the terms of the engagement letter, Thorngate's advisory fee is $2.5 million, with 50% payable upon delivery of a fairness opinion (whether positive or negative) and 50% payable upon the earlier of the closing of the proposed transaction or the formal termination of the engagement. In addition, Thorngate received a $500,000 non-refundable retainer upon execution of the engagement letter, which amount is to be credited against the final advisory fee. Penterra is also responsible for the reimbursement of Thorngate's reasonable out-of-pocket expenses incurred in connection with the engagement.
Mr. Ashford confirmed Thorngate's independence. He stated that Thorngate Partners LLC had no material relationships with Caliston BioSciences, Inc., Dr. Marcus Hale (in his individual capacity), Ridgeline Ventures, LP, Meridian Life Sciences Fund III, LP, Whitfield Graves LLP, or Fendowell Sinclair & Co. that would impair Thorngate's independence in rendering financial advisory services or, ultimately, a fairness opinion to the Special Committee. Mr. Ashford noted that Thorngate had conducted an internal conflicts review prior to accepting the engagement and had confirmed the absence of any disqualifying relationships.
Mr. Ashford stated that the preliminary valuation analyses to be presented at today's meeting were based upon and subject to the following information sources: (i) publicly available information regarding Penterra Pharmaceuticals Corp., including SEC filings, investor presentations, analyst reports, and market data; (ii) non-public information provided by Caliston through the Project Coriander virtual data room, including financial statements, projections, clinical data packages, and corporate records; (iii) the Caliston management presentation delivered to the Special Committee at the July 19, 2023 meeting by Dr. Nadia Sorensen and Dr. Raj Malhotra; and (iv) Thorngate's independent research on comparable companies and precedent transactions in the oncology sector, supplemented by consultations with external subject-matter experts.
Mr. Ashford emphasized, and requested that the Committee note for the record, that the analyses being presented today were preliminary in nature and did not constitute a final fairness opinion. Thorngate anticipated that additional information, including the outcome of any market check process, further refinement of clinical probability assumptions, and updated market data, would inform the final fairness opinion, which would be rendered only at such time as the Special Committee determined appropriate.
B. Overview of Caliston BioSciences
Mr. Ashford presented a summary overview of Caliston BioSciences, Inc. for the benefit of the Committee. Caliston was founded in 2017 as a clinical-stage biopharmaceutical company focused on the discovery and development of novel kinase inhibitors for the treatment of solid tumors. The company's research and development activities are headquartered in Cambridge, Massachusetts, and it employs approximately 94 full-time personnel, the majority of whom are engaged in research, clinical development, and regulatory affairs functions.
Lead Asset — CLT-4019. Caliston's lead development candidate is CLT-4019, a selective CDK4/6 inhibitor designed for the treatment of hormone receptor-positive, HER2-negative (HR+/HER2–) metastatic breast cancer. CLT-4019 is differentiated from approved CDK4/6 inhibitors (including palbociclib, ribociclib, and abemaciclib) by its improved selectivity profile and reduced hematologic toxicity observed in preclinical and early clinical studies. An Investigational New Drug Application (IND No. 158429) for CLT-4019 was filed with the FDA in March 2020. The compound is currently being evaluated in a randomized, double-blind Phase 2b clinical trial enrolling approximately 280 patients across 42 clinical sites in the United States and Europe. Topline data from the Phase 2b trial are expected in the fourth quarter of 2023, and the readout is widely anticipated to be a key catalyst for the valuation of Caliston and the proposed transaction.
Preclinical Pipeline. Caliston has two additional preclinical candidates at earlier stages of development. CLT-5227 is a next-generation kinase inhibitor targeting a novel CDK isoform, with potential application in multiple solid tumor indications. CLT-6034 is a dual kinase inhibitor with preliminary preclinical data suggesting activity in non-small cell lung cancer models. Neither candidate has advanced to the IND stage, and both are subject to significant development risk and uncertainty.
Financing History and Last Private Valuation. Caliston has raised a total of approximately $347 million in equity financing across four rounds: Seed (2017), Series A (2018), Series B (2020), and Series C (October 2021). The most recent financing round, the Series C, closed in October 2021 at a post-money valuation of $680 million. Since the Series C closing, Caliston has not raised additional equity capital and has funded its operations from the proceeds of the Series C round and, to a lesser extent, non-dilutive grant funding.
Financial Profile. For the fiscal year ended December 31, 2022, Caliston reported zero revenue (consistent with its pre-commercial status), net cash burn of approximately $78.4 million, and total operating expenses of approximately $84.2 million. As of March 31, 2023, Caliston held cash and cash equivalents of approximately $112.6 million. Based on current burn rates and planned clinical activities, Caliston management estimates that its existing cash position provides a runway through approximately the first quarter of 2025, absent additional financing or a strategic transaction.
C. Proposed Transaction Summary
Mr. Ashford then presented a summary of the proposed transaction as outlined by Dr. Hale in his initial proposal and as further developed through preliminary discussions.
The proposed transaction contemplates the acquisition by Penterra of 100% of the outstanding equity of Caliston BioSciences, Inc. through a one-step merger, in which Caliston would merge with and into a newly formed, wholly owned subsidiary of Penterra, with Caliston surviving as the surviving entity and becoming a wholly owned subsidiary of the Company.
The key financial terms of the proposed transaction, as initially proposed by Dr. Hale, are as follows:
Aggregate Equity Value (Base Consideration): $925 million.
Consideration Structure: 75% cash / 25% Penterra common stock.
•  Cash component: $693.75 million (75% of $925 million).
•  Stock component: $231.25 million (25% of $925 million), based on a 30-day volume-weighted average price ("VWAP") of Penterra common stock of $39.17 per share as of June 1, 2023, implying the issuance of approximately 5,903,497 new shares of Penterra common stock (ticker: PPHR).
Contingent Value Rights (CVRs): An additional $125 million in cash would be payable to Caliston's former stockholders upon FDA approval of CLT-4019 (specifically, the issuance of a complete response letter or approval letter by the FDA for an NDA for CLT-4019) on or before December 31, 2026.
Maximum Aggregate Transaction Value (Including CVRs): $1.05 billion ($925 million base consideration plus $125 million CVR).
Premium to Last Private Round: The proposed base consideration of $925 million represents a premium of approximately 36.03% to Caliston's most recent private valuation of $680 million at the Series C closing in October 2021 (calculated as ($925 million − $680 million) ÷ $680 million = 36.03%).
Dr. Hale's Implied Economics: As a 28.5% equity holder in Caliston, Dr. Hale would receive implied aggregate proceeds of approximately $263.625 million at the proposed base consideration (28.5% × $925 million = $263.625 million), representing an implied gain of approximately $221.625 million on his personal investment of $42 million. If the CVR milestone is achieved, Dr. Hale's additional CVR payment would be approximately $35.625 million (28.5% × $125 million), bringing his total implied proceeds to approximately $299.25 million.
Mr. Ashford noted that the magnitude of Dr. Hale's personal financial interest in the transaction underscored the importance of the Special Committee's independent evaluation and the role of the fairness opinion.
D. Penterra Financial Context
Mr. Ashford presented a summary of Penterra's financial profile to provide the Committee with context for evaluating the proposed transaction and its potential impact on the Company.
Selected Financial Data — Penterra Pharmaceuticals Corp.
Mr. Ashford discussed the anticipated financing for the proposed transaction. The cash consideration of $693.75 million was expected to be funded from a combination of: (i) approximately $400 million of cash on hand from Penterra's existing cash and cash equivalents balance, and (ii) approximately $293.75 million drawn on Penterra's existing $1.5 billion senior unsecured revolving credit facility with Greystone National Bank, N.A. serving as administrative agent. The revolving credit facility was entered into in March 2021 and has a maturity date of March 2026. Borrowings under the facility bear interest at a rate of SOFR plus 150 basis points. As of June 1, 2023, the undrawn availability under the facility was approximately $1.1 billion, providing ample capacity to fund the anticipated draw.
Mr. Ashford noted that, upon completion of the proposed transaction, Penterra would retain substantial liquidity. Assuming cash on hand of approximately $892 million as of December 31, 2022 (and without giving effect to cash generated from operations in the first half of 2023), after deploying approximately $400 million in cash and drawing approximately $293.75 million on the revolver, Penterra would retain approximately $492 million in cash and approximately $806.25 million in undrawn revolver availability. Mr. Ashford observed that the Company's continued cash flow generation from its existing commercial portfolio would further support post-transaction liquidity and debt service capacity.
E. Valuation Methodology 1: Discounted Cash Flow Analysis — CLT-4019 Only
Mr. Ashford presented the first of four preliminary valuation methodologies: a risk-adjusted discounted cash flow ("DCF") analysis focused solely on CLT-4019, Caliston's lead development candidate, as the sole commercially viable asset in the near term.
Mr. Ashford explained that this analysis was designed to provide a "floor" valuation for Caliston by excluding the speculative value of the two preclinical-stage candidates (CLT-5227 and CLT-6034) and focusing exclusively on the asset with the greatest near-term commercial potential and the most robust clinical data available. The key assumptions underlying this analysis were as follows:
Revenue Projections. Revenue projections were based on probability-weighted market penetration scenarios for CLT-4019 in the HR+/HER2– metastatic breast cancer indication. Thorngate modeled three scenarios (base, upside, and downside) based on varying assumptions regarding market share capture, pricing, formulary access, and competitive dynamics vis-à-vis existing approved CDK4/6 inhibitors. The probability weights assigned to the three scenarios were informed by Thorngate's independent assessment of CLT-4019's differentiation profile and the competitive landscape.
Clinical Success Probability Adjustments. The revenue projections were risk-adjusted to account for the probability of clinical and regulatory success at each remaining development stage. Specifically, Thorngate applied stage-appropriate probability of success factors for the transition from Phase 2b to Phase 3, from Phase 3 to NDA submission, and from NDA submission to FDA approval. These probability factors were based on published industry data from BIO/QLS/Informa and were cross-referenced against Thorngate's proprietary dataset of oncology clinical outcomes.
Projection Period and Terminal Value. The DCF model employed a ten-year explicit projection period (2024–2033), followed by a terminal value calculated using the perpetuity growth method.
Weighted Average Cost of Capital (WACC). A WACC of 12.5% was applied, reflecting the risk profile of a single-asset, clinical-stage biopharmaceutical investment. The WACC was derived using the capital asset pricing model, adjusted for size and stage-of-development premiums.
Terminal Growth Rate. A long-term terminal growth rate of 2.0% was applied, consistent with long-term nominal GDP growth expectations and typical assumptions for mature pharmaceutical assets.
Implied Equity Value Range: Based on these assumptions, the CLT-4019-only DCF analysis yielded an implied equity value range for Caliston of $780 million to $1,020 million, with a midpoint of $900 million.
Mr. Ashford noted that the range reflected sensitivities around key assumptions, including market penetration rates, pricing, and probability of clinical success.
Committee Discussion. Mr. Okafor asked about the sensitivity of the implied equity value range to variations in the WACC assumption. Mr. Ashford presented a sensitivity table (included as part of Exhibit A) showing that at a WACC of 11.0%, the implied equity value range expanded upward to approximately $870 million to $1,130 million, while at a WACC of 14.0%, the range contracted to approximately $690 million to $910 million. Mr. Okafor observed that the WACC assumption was a significant driver of the analysis and asked Thorngate to be prepared to discuss its WACC derivation in greater detail at a future meeting.
Dr. Ng inquired about the specific Phase 2b probability of success assumptions used in the model and how they compared to industry benchmarks for oncology assets at a similar stage of development. Mr. Ashford responded that Thorngate had applied a Phase 2b-to-Phase 3 transition probability of approximately 40%, which was consistent with published industry data for oncology compounds in Phase 2, and that the overall cumulative probability of success from the current stage through FDA approval was estimated at approximately 18% to 22%, depending on the scenario. Dr. Ng observed that these figures were in line with her understanding of historical success rates for oncology drug candidates and asked whether the Phase 2b topline data expected in Q4 2023 would materially affect these assumptions. Mr. Ashford confirmed that positive topline data would likely result in a meaningful upward revision to the probability of success factors and, consequently, to the implied valuation range.
F. Valuation Methodology 2: Discounted Cash Flow Analysis — Full Pipeline
Mr. Ashford presented the second valuation methodology: a risk-adjusted net present value ("rNPV") analysis applied to the full Caliston pipeline, including CLT-4019, CLT-5227, and CLT-6034.
This methodology employed the same general framework as the CLT-4019-only DCF analysis but extended the model to include independent rNPV calculations for each of the two preclinical candidates. Mr. Ashford explained that because CLT-5227 and CLT-6034 are at the preclinical stage, they were subject to significantly lower probabilities of clinical and regulatory success and higher discount rates than CLT-4019. Specifically, the preclinical-to-approval cumulative probability of success applied to these candidates ranged from approximately 5% to 8%, consistent with industry benchmarks for preclinical oncology compounds. In addition, a higher asset-specific discount rate was applied to the preclinical candidates to reflect the additional risk and longer expected time to potential commercialization.
Implied Equity Value Range: Based on these assumptions, the full-pipeline rNPV analysis yielded an implied equity value range for Caliston of $870 million to $1,180 million, with a midpoint of $1,025 million.
Committee Discussion. Dr. Ng observed that the preclinical assets (CLT-5227 and CLT-6034) contributed meaningfully to the upper end of the valuation range, adding approximately $90 million to $160 million of incremental value relative to the CLT-4019-only analysis. She noted that this contribution was noteworthy given the early stage and high failure rates associated with preclinical compounds, and she asked Thorngate to carefully consider whether the market would ascribe this level of value to preclinical assets in a transaction of this nature.
Ms. Prescott asked about the risk adjustment methodology in greater detail and whether Thorngate had independently verified Caliston management's clinical development timelines for the preclinical candidates. Mr. Ashford confirmed that Thorngate had conducted independent diligence on the preclinical programs and had consulted with two external oncology consultants — one a former FDA reviewer and one a clinical pharmacologist with expertise in kinase inhibitor development — to validate the clinical timelines, probability of success assumptions, and competitive positioning of CLT-5227 and CLT-6034. Mr. Ashford stated that while there was inherent uncertainty in any assessment of preclinical-stage assets, Thorngate was satisfied that the assumptions employed in the full-pipeline rNPV model were reasonable and supportable.
G. Valuation Methodology 3: Comparable Transactions Analysis
Mr. Ashford presented the third valuation methodology: an analysis of precedent transactions involving acquisitions of clinical-stage oncology companies.
Thorngate identified and analyzed seven precedent transactions that were selected based on the following comparability criteria: (i) the target was a clinical-stage biopharmaceutical company with a lead asset in oncology; (ii) the transaction occurred within the five-year period from January 2018 through June 2023; (iii) the lead asset was in Phase 2 or Phase 3 clinical development at the time of the transaction; and (iv) the target was a privately held or recently public company with a similar financial profile (i.e., pre-commercial, limited or no revenue). Mr. Ashford presented a summary table of the seven precedent transactions (included in Exhibit A), identifying the acquirer, target, announcement date, transaction value, stage of lead asset, and therapeutic area.
Implied Equity Value Range: Based on the multiples and valuation metrics derived from the comparable transactions analysis, the implied equity value range for Caliston was $820 million to $1,050 million.
Mr. Ashford discussed the selection criteria and inherent limitations of the comparable transactions methodology. He acknowledged that the seven selected transactions varied in terms of pipeline breadth, stage of development of the lead asset, therapeutic area focus within oncology, and the competitive landscape at the time of the respective transactions. He noted that no single precedent transaction was perfectly comparable to the proposed acquisition of Caliston and that the comparable transactions analysis should be considered in conjunction with, rather than in isolation from, the other valuation methodologies.
Mr. Okafor asked whether any of the seven precedent transactions involved related-party elements similar to those present in the proposed Caliston acquisition. Mr. Ashford responded that one of the seven transactions — which he identified for the Committee by name — had involved a related-party dimension, in that a significant stockholder of the target also served on the board of the acquirer. Mr. Ashford noted, however, that the premium analysis was based on unaffiliated, arm's-length benchmarks and that Thorngate had not adjusted the comparable transactions data to account for the related-party element in that particular transaction. Mr. Ashford offered to prepare a supplemental analysis excluding the related-party transaction if the Committee so desired.
H. Valuation Methodology 4: Premiums Paid Analysis
Mr. Ashford presented the fourth and final valuation methodology: an analysis of premiums paid in acquisitions of privately held clinical-stage biopharmaceutical companies relative to their most recent private financing rounds.
Thorngate analyzed a dataset of acquisitions of privately held clinical-stage biopharmaceutical companies completed between January 2018 and June 2023, in which the target company had completed a venture-backed equity financing round within the preceding three years. The analysis focused on the premium paid by the acquirer relative to the target's post-money valuation at its most recent private financing round.
Premium Range Observed: The premium range observed across the dataset was approximately 30% to 45% above the target's last private round valuation.
Applied to Caliston's most recent private valuation — the $680 million post-money valuation at the Series C closing in October 2021 — this premium range yielded an implied equity value range for Caliston of $884 million to $986 million (calculated as $680 million × 1.30 = $884 million and $680 million × 1.45 = $986 million).
Committee Discussion. Ms. Prescott noted that the October 2021 Series C valuation was nearly two years old at the time of the proposed transaction and asked whether the passage of time and the advancement of CLT-4019 through Phase 2b clinical development since the Series C closing should, in Thorngate's view, increase the appropriate premium to be applied. Mr. Ashford acknowledged this was an important observation. He agreed that the clinical de-risking that had occurred since the Series C round — including the enrollment and advancement of the Phase 2b trial, the accumulation of favorable safety data, and the approaching topline data readout — supported the application of a premium toward the higher end of the observed range, or potentially above it. Mr. Ashford noted that if the Phase 2b topline data were positive, the clinical de-risking would be substantially greater and could support a premium meaningfully above the 45% upper bound observed in the historical dataset. He stated that this dynamic would be factored into Thorngate's ongoing analysis and any final fairness opinion.
I. Summary of Valuation Ranges
Mr. Ashford concluded his preliminary valuation presentation by presenting a summary chart (included as Exhibit B) illustrating the implied equity value ranges derived from each of the four valuation methodologies. The chart was presented in a "football field" format, with each methodology displayed as a horizontal bar showing the low, midpoint (where applicable), and high end of the implied equity value range.
Mr. Ashford observed that the proposed base consideration of $925 million falls within all four of the preliminary valuation ranges. He further noted that if the $125 million CVR milestone is achieved (i.e., FDA approval of CLT-4019 on or before December 31, 2026), the total aggregate consideration of $1.05 billion would remain within the upper bounds of both the full-pipeline DCF range ($1,180 million) and the comparable transactions range ($1,050 million), while modestly exceeding the upper bounds of the CLT-4019-only DCF range ($1,020 million) and the premiums paid range ($986 million).
Mr. Ashford cautioned the Committee once again that these analyses were preliminary in nature and that additional refinement — including updated market data, the results of any market check process, further clinical diligence, and the incorporation of the Phase 2b topline data (if available prior to the rendering of a fairness opinion) — would be undertaken before any final fairness opinion was delivered. He stated that Thorngate expected to present updated analyses and, if directed by the Committee, a final fairness opinion at a subsequent meeting.
Ms. Prescott thanked Mr. Ashford for the comprehensive and thoughtful presentation.
V. COMMITTEE DISCUSSION AND DELIBERATION
A. Discussion of Valuation Findings
Ms. Prescott thanked Mr. Ashford for the thorough presentation and opened the floor for discussion among the Committee members.
Mr. Okafor stated that he found the preliminary valuation analyses to be well-constructed and informative. He noted that the proposed base consideration of $925 million sits slightly above the midpoint of the CLT-4019-only DCF analysis ($900 million) but below the midpoint of the full-pipeline DCF analysis ($1,025 million). Mr. Okafor expressed the view that this positioning raised important questions for the Committee to consider. Specifically, he stated that the Committee should carefully evaluate whether the proposed price adequately compensates Penterra's stockholders for the risk inherent in the preclinical pipeline. If Penterra is paying a price that implies meaningful value for CLT-5227 and CLT-6034, the Committee should satisfy itself that those preclinical assets have a reasonable prospect of generating returns commensurate with the premium being paid. Conversely, if the price is primarily reflective of CLT-4019 alone, the preclinical pipeline could represent meaningful upside for Penterra's stockholders — but only if the programs advance successfully.
Dr. Ng raised the question of whether the CVR structure adequately shifts clinical risk to Caliston's stockholders. She noted that the $125 million CVR is contingent on FDA approval of CLT-4019 on or before December 31, 2026, and therefore provides some measure of downside protection for Penterra in the event that CLT-4019 fails to obtain regulatory approval within that timeframe. However, Dr. Ng observed that the base consideration of $925 million — which is not contingent on any milestone — represents a substantial commitment of Penterra's capital regardless of the clinical outcome. She suggested that the Committee should consider whether a larger proportion of the total consideration should be allocated to the CVR component, thereby more effectively linking the purchase price to clinical and regulatory success.
Ms. Prescott acknowledged both points and stated that these were precisely the types of issues the Committee needed to address in its deliberations. She then asked Ms. Vasquez for her views on the process going forward from a fiduciary perspective.
B. Independent Counsel Guidance
Ms. Vasquez advised the Committee that, in addition to continuing to refine its assessment of the financial terms of the proposed transaction, the Special Committee should consider whether a market check — that is, a structured exploration of whether alternative strategic transactions or acquisition targets are available that might be superior to the proposed Caliston acquisition — would strengthen the record under the entire fairness standard.
Ms. Vasquez explained that under Delaware law, while a market check is not legally required in the context of an interested-director transaction, it is a recognized procedural safeguard that the Delaware Court of Chancery and the Delaware Supreme Court have viewed favorably in evaluating the fair dealing component of the entire fairness analysis. A well-designed and adequately documented market check can demonstrate that the Special Committee acted in an informed manner, considered available alternatives, and made a reasoned decision that the proposed transaction was the best available option — or, alternatively, that the proposed transaction was not the best available option and should be renegotiated or rejected.
Ms. Vasquez reminded the Committee that the Board resolution of June 2, 2023 establishing the Special Committee granted the Committee sole and exclusive authority to evaluate the proposed transaction and to explore alternatives, including the power to negotiate the terms of the proposed transaction, to explore alternative acquisition targets or strategic transactions, to retain additional advisors as necessary, and to decline the proposed transaction in its entirety. The Committee is not obligated to recommend the transaction and retains full discretion to reject it if, in the Committee's judgment, the transaction is not in the best interests of Penterra and its unaffiliated stockholders.
C. Discussion Regarding Market Check
Mr. Okafor expressed his support for conducting a market check. Drawing on his extensive experience evaluating comparable investment opportunities during his tenure at Fielding Capital Partners, Mr. Okafor stated that a disciplined survey of alternative targets would serve two important purposes. First, it would inform the Committee's judgment on the reasonableness of the valuation by providing a comparative framework — that is, by identifying what else Penterra could acquire in the clinical-stage oncology space for a comparable investment of capital and risk. Second, it would demonstrate procedural rigor and due care, creating a strong evidentiary record that the Committee had considered alternatives before approving (or declining) the proposed transaction.
Dr. Ng concurred with Mr. Okafor's recommendation. She added that the market check should be focused and targeted, concentrating on clinical-stage oncology assets that are reasonably comparable to Caliston — particularly companies with CDK4/6 inhibitor programs or related kinase inhibitor programs in solid tumor indications. Dr. Ng cautioned against an overly broad or diffuse market check, which she believed could be time-consuming, costly, and ultimately unhelpful if it failed to identify genuinely comparable alternatives. She suggested that Thorngate Partners, with the Committee's guidance, should develop specific screening criteria to ensure that the market check was efficient and informative.
Ms. Prescott agreed with both Mr. Okafor and Dr. Ng and stated that the Committee should direct Thorngate Partners to conduct a targeted market check. She asked Mr. Ashford whether Thorngate had the capacity and willingness to undertake such a review.
Mr. Ashford confirmed that Thorngate Partners had both the capability and the willingness to conduct a market check on behalf of the Special Committee. He estimated that a targeted market check — involving the identification and preliminary evaluation of alternative clinical-stage oncology acquisition candidates — could be completed within approximately three to four weeks, depending on the scope and the responsiveness of potential alternative targets and their advisors. Mr. Ashford stated that Thorngate would prepare a detailed market check scope proposal, including proposed screening criteria, for the Committee's review and approval.
D. Resolution Regarding Market Check
The Committee discussed the process and timing for formally directing Thorngate to undertake the market check. After deliberation, the Committee determined that it would not formally resolve to direct the market check at today's meeting. Ms. Prescott noted that the Committee would benefit from additional time to consider the appropriate scope and parameters of the market check and that a formal directive to Thorngate would be issued at the next scheduled meeting of the Special Committee on August 22, 2023, following further deliberation and review of Mr. Ashford's market check scope proposal.
Ms. Prescott asked that the record reflect the Committee's strong preliminary consensus in favor of conducting a market check, while noting that the formal resolution would be deferred to the next meeting.
(Note for the record: At the subsequent meeting of the Special Committee held on August 22, 2023, the Special Committee formally directed Thorngate Partners LLC to explore alternative acquisition targets in accordance with the market check scope proposal approved at that meeting.)
VI. OTHER BUSINESS
A. Upcoming Deliverables and Scheduling
Ms. Vasquez provided the Committee with an update on the anticipated timeline for remaining due diligence deliverables. She noted that C&H expected to deliver the Antitrust/HSR Act Analysis memorandum to the Special Committee by approximately August 10, 2023. This memorandum would address the applicability of the Hart-Scott-Rodino Act filing requirements to the proposed transaction and provide an assessment of any potential substantive antitrust concerns. In addition, C&H anticipated delivering the Tax Structure and Considerations memorandum by approximately August 15, 2023, which would analyze the tax implications of the proposed merger structure for Penterra, Caliston, and the respective stockholder groups, including the treatment of the cash and stock consideration components and the contingent value rights.
Ms. Prescott confirmed that the next meeting of the Special Committee was scheduled for August 22, 2023. At that meeting, the Committee would: (i) formally direct Thorngate Partners to commence the market check; (ii) receive updates on remaining due diligence workstreams, including the antitrust and tax analyses; (iii) review Thorngate's market check scope proposal; and (iv) continue its deliberations regarding the financial terms of the proposed transaction.
Mr. Ashford confirmed that he would prepare and circulate a detailed market check scope proposal, including proposed screening criteria and a preliminary list of potential alternative targets, in advance of the August 22 meeting for the Committee's consideration and approval.
B. Confirmation of Information Barrier Compliance
Ms. Prescott returned to the subject of information barrier compliance. She asked each Committee member to confirm, for the record, that they had not received any communications from Dr. Marcus Hale, Ms. Angela Whitmore, or Mr. Raymond Tusk regarding the proposed transaction, the Committee's deliberations, or any related matters since the prior meeting of the Special Committee held on July 19, 2023.
Mr. Okafor confirmed that he had received no such communications.
Dr. Ng confirmed that she had received no such communications.
Ms. Prescott confirmed the same on her own behalf.
Ms. Vasquez confirmed that Calderwood & Harkness LLP had not received any communications from Dr. Hale, Ms. Whitmore, Mr. Tusk, or their respective personal counsel regarding the proposed transaction or the Special Committee's deliberations. Ms. Vasquez further confirmed that C&H had reviewed the access logs for the Project Coriander workspace on Penterra's document management system and that the logs showed no unauthorized access attempts. Access remained limited to the authorized users: the three Special Committee members, Ms. Vasquez, Ms. Tremblay, Mr. Obi, and Mr. Ashford of Thorngate Partners.
VII. EXECUTIVE SESSION
At 12:15 p.m. Eastern Time, Ms. Prescott announced that the Special Committee would convene in executive session with independent counsel only. Mr. Ashford of Thorngate Partners was excused from the meeting at this time, and Ms. Prescott confirmed that Mr. Ashford departed the conference room (and disconnected from the secure videoconference) prior to the commencement of the executive session.
The Special Committee met in executive session with Ms. Vasquez and Ms. Tremblay of Calderwood & Harkness LLP. The Committee discussed, in privilege with independent counsel, its preliminary impressions of the valuation analyses presented by Thorngate Partners, its initial views on the reasonableness of the proposed consideration, and the appropriate process and strategy for the Committee's continued evaluation of the proposed transaction.
No formal action was taken during the executive session.
The executive session concluded at 12:35 p.m. Eastern Time.
VIII. ADJOURNMENT
There being no further business to come before the Special Committee, upon motion duly made by Mr. Okafor and seconded by Dr. Ng, the meeting was unanimously adjourned at 12:37 p.m. Eastern Time.
The next meeting of the Special Committee was scheduled for August 22, 2023, at a time and location to be confirmed.
These minutes were prepared by Daniel Obi, Working Associate, Calderwood & Harkness LLP, in his capacity as Recording Secretary, and have been reviewed by Renata Vasquez, Responsible Partner, Calderwood & Harkness LLP, and approved by the Chair of the Special Committee.
PREPARED BY:
________________________________________
Daniel Obi Working Associate Calderwood & Harkness LLP
REVIEWED BY:
________________________________________
Renata Vasquez Responsible Partner Calderwood & Harkness LLP
APPROVED BY:
________________________________________
Diane Prescott Chair, Special Committee of the Board of Directors Penterra Pharmaceuticals Corp.
Date: ________
C&H Matter Number: 1025-00006
APPENDICES / EXHIBITS REFERENCED
The following exhibits and reference documents were referenced during the meeting and are maintained in the Project Coriander workspace on Penterra's document management system. These materials are not attached to these minutes but are incorporated herein by reference and are available to the Special Committee members and their authorized advisors.
Exhibit A: Thorngate Partners LLC Preliminary Valuation Presentation, dated August 3, 2023 (confidential; maintained in Project Coriander workspace; file reference: 1018-00003-VAL-001).
Exhibit B: Summary Valuation Ranges Chart (football-field diagram), prepared by Thorngate Partners LLC, dated August 3, 2023 (included as a component of Exhibit A and also maintained as a standalone document in the Project Coriander workspace).
Reference Documents:
•  Legal Due Diligence Report, prepared by Calderwood & Harkness LLP, delivered July 14, 2023 (C&H Matter No. 1025-00006).
•  IP Diligence Memorandum, prepared by Calderwood & Harkness LLP, delivered July 21, 2023 (C&H Matter No. 1025-00006).
•  Regulatory Diligence Memorandum, prepared by Calderwood & Harkness LLP, delivered July 25, 2023 (C&H Matter No. 1025-00006).
•  Related-Party Relationships Summary Memorandum, prepared by Calderwood & Harkness LLP, dated June 20, 2023 (C&H Matter No. 1025-00006).
•  Delaware Law Memorandum (analysis of DGCL §144 and the entire fairness doctrine), prepared by Calderwood & Harkness LLP, dated June 8, 2023 (C&H Matter No. 1025-00006).
•  Special Committee Charter, adopted by the Board of Directors of Penterra Pharmaceuticals Corp. on June 2, 2023.
•  Thorngate Partners LLC Engagement Letter (Reference No. 1018-00003), executed June 16, 2023.
•  Minutes of the Special Committee Meeting held July 19, 2023 (approved at this meeting).
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT These minutes contain privileged and confidential information protected by the attorney-client privilege and the work product doctrine. Distribution is limited to the members of the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp. and their authorized advisors. Any unauthorized disclosure, copying, or distribution of these minutes or the information contained herein is strictly prohibited.
Name | Role
Diane Prescott, Chair | Independent Director; former Chief Executive Officer of Windbridge Health Systems, Inc.
James Okafor | Independent Director; retired Managing Director of Fielding Capital Partners, LLC
Dr. Helen Ng | Independent Director; Professor of Pharmacology, Wexford University; former member, FDA Oncologic Drugs Advisory Committee
Name | Role
Renata Vasquez | Responsible Partner
Sophie Tremblay | Lead Associate
Name | Role
Gregory Ashford | Managing Director (Lead Banker)
Name | Basis for Recusal
Dr. Marcus Hale, Chairman & CEO, Penterra | Interested party; holds 28.5% equity interest in Caliston BioSciences, Inc.
Angela Whitmore, Director; EVP, Commercial Operations | Spouse of Dr. Evan Whitmore, Caliston board member and Head of Clinical Development
Raymond Tusk, Director (non-independent) | Recused pursuant to Special Committee Charter, Section 3(c)
Stockholder | Ownership (%)
Dr. Marcus Hale (personal investment) | 28.5%
Ridgeline Ventures, LP (Ava Lindström, Managing Partner) | 22.3%
Meridian Life Sciences Fund III, LP (Tomás Reyes, Managing Partner) | 18.7%
Founders / Management Pool (aggregate) | 30.5%
Metric | FY2022 | FY2021
Revenue | $1.836 billion | $1.614 billion
EBITDA | $412 million | $358 million
Net Income | $247 million | $198 million
Balance Sheet Item | As of December 31, 2022
Total Assets | $5.12 billion
Cash & Cash Equivalents | $892 million
Total Debt | $1.35 billion
Market Data | As of June 1, 2023
Market Capitalization | Approximately $4.72 billion
Shares Outstanding | Approximately 121.4 million
Share Price (30-day VWAP) | $39.17
Methodology | Low | Midpoint | High
DCF — CLT-4019 Only | $780M | $900M | $1,020M
DCF — Full Pipeline (rNPV) | $870M | $1,025M | $1,180M
Comparable Transactions | $820M | — | $1,050M
Premiums Paid Analysis | $884M | — | $986M

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

ATTENDEES AND INVITEES

I. CALL TO ORDER AND QUORUM

II. APPROVAL OF PRIOR MEETING MINUTES

III. STATUS UPDATE FROM INDEPENDENT COUNSEL

V. COMMITTEE DISCUSSION AND DELIBERATION

VI. OTHER BUSINESS

VII. EXECUTIVE SESSION

VIII. ADJOURNMENT

PREPARED BY:

REVIEWED BY:

APPROVED BY:

APPENDICES / EXHIBITS REFERENCED

Record

Parties

Dates

Amounts