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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

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

Project Coriander

November 15, 2023

Date: November 15, 2023

Time: 2:00 p.m. Eastern Time

Location: Conference Room 12-A, 400 Innovation Drive, Suite 1200, Princeton, New Jersey 08540, with certain participants joining by secure videoconference

1. Call to Order and Attendance

Diane Prescott, Chair of the Special Committee of the Board of Directors (the "Special Committee") of Penterra Pharmaceuticals Corp. (the "Company" or "Penterra"), called the meeting to order at 2:00 p.m. Eastern Time.

The following members of the Special Committee were present, constituting all of the members of the Special Committee and a quorum for the transaction of business (a majority of the members of the Special Committee constituting a quorum under Article III, Section 2 of the Special Committee Charter, adopted by unanimous written consent of the independent directors of the Board effective June 2, 2023):

• Diane Prescott, Independent Director and Chair of the Special Committee (former Chief Executive Officer of Windbridge Health Systems, Inc.);

• James Okafor, Independent Director (retired Managing Director of Fielding Capital Partners, LLC); and

• Dr. Helen Ng, Independent Director (Professor of Pharmacology, Wexford University; former member of the United States Food and Drug Administration ("FDA") Oncologic Drugs Advisory Committee).

The following individuals were also in attendance, having been invited by the Special Committee to participate in the meeting in their advisory capacities:

• Renata Vasquez, Responsible Partner, Calderwood & Harkness LLP ("Calderwood & Harkness" or "Independent Counsel"), independent legal counsel to the Special Committee;

• Sophie Tremblay, Lead Associate, Calderwood & Harkness LLP; and

• Gregory Ashford, Managing Director, Thorngate Partners LLC ("Thorngate" or the "Independent Financial Advisor"), independent financial advisor to the Special Committee.

Ms. Prescott noted for the record that the following directors of the Company were not present and had not been invited to attend, having been recused from all Special Committee deliberations, materials, and communications pursuant to the Independence Protocol and Information Barrier Policy adopted by the Special Committee on June 2, 2023 (the "Independence Protocol"): (a) Dr. Marcus Hale, Chairman of the Board and Chief Executive Officer of the Company; (b) Angela Whitmore, Director and Executive Vice President, Commercial Operations of the Company; and (c) Raymond Tusk, Director of the Company. Ms. Prescott confirmed that no information regarding the substance of the Special Committee's deliberations, or any materials prepared for or by the Special Committee, had been shared with Dr. Hale, Ms. Whitmore, or Mr. Tusk, and that all such materials continue to be maintained in the segregated "Project Coriander" workspace administered by Calderwood & Harkness LLP.

Ms. Tremblay was designated as assistant secretary for the meeting for purposes of preparing these minutes.

Ms. Prescott observed that this meeting was the tenth of the Special Committee meetings held since the Committee's formation on June 2, 2023, and that the Committee had convened regularly and frequently over the preceding five months in connection with its evaluation of the proposed merger transaction described below.

2. Approval of Agenda

Ms. Prescott presented the proposed agenda for the meeting, which included the following items:

1. Delivery and presentation of the fairness opinion by Thorngate Partners LLC;

2. Calderwood & Harkness LLP's analysis of the legal sufficiency of the fairness opinion;

3. Discussion and deliberation regarding whether to recommend the proposed merger to the full Board of Directors of the Company (the "Board"); and

4. Next steps and scheduling.

Ms. Prescott asked whether any member of the Special Committee wished to add any items to the agenda or raise any preliminary matters. No additional items were proposed. Upon motion duly made by Mr. Okafor and seconded by Dr. Ng, the Special Committee unanimously approved the agenda as presented.

3. Status Update by Independent Counsel

Ms. Prescott invited Ms. Vasquez to provide the Special Committee with a status update on developments since the prior Special Committee meeting (held on November 8, 2023).

3.1 Negotiation Status

Ms. Vasquez reported that negotiation of the Agreement and Plan of Merger (the "Merger Agreement") between Penterra Pharmaceuticals Corp. and Caliston BioSciences, Inc. ("Caliston") had continued to advance since the prior meeting. Calderwood & Harkness LLP's initial draft of the Merger Agreement (draft v.5) had been circulated to Caliston's legal counsel, Whitfield Graves LLP (Kenneth Pratt, lead partner), and Caliston's financial advisor, Fendowell Sinclair & Co. (Sandra Wu, Managing Director), on November 1, 2023. Since that time, the parties had engaged in multiple rounds of negotiation, resulting in the current working draft, version 7.2 of the Merger Agreement.

Ms. Vasquez summarized the key provisions that had been the subject of negotiation between drafts v.5 and v.7.2, including the scope of representations and warranties, the application of materiality qualifiers and material adverse effect carve-outs, interim operating covenants governing Caliston's conduct of business between signing and closing, the definitions of milestones under the Contingent Value Rights ("CVR") agreement, and the triggers for the payment of termination fees by each party. Ms. Vasquez reported that all open legal issues had been resolved or were, in the judgment of Calderwood & Harkness LLP, immaterial, and that the Merger Agreement was expected to be in execution-ready form promptly following Board approval.

Ms. Vasquez further noted that the Merger Agreement is governed by the laws of the State of Delaware, as agreed by the parties in early negotiations, and that the Delaware Court of Chancery would serve as the exclusive forum for disputes arising under the agreement.

3.2 Recap of Transaction Terms

Ms. Vasquez then provided the Special Committee with a comprehensive summary of the material terms of the proposed transaction as reflected in the current working draft (v.7.2) of the Merger Agreement, as follows:

Structure. The proposed transaction is structured as a one-step merger, pursuant to which Caliston BioSciences, Inc. would merge with and into Penterra Pharmaceuticals Corp., with Penterra surviving as the surviving corporation. Following the merger, Caliston would cease to exist as a separate entity, and its assets, operations, employees, and liabilities would be assumed by Penterra.

Aggregate Equity Value. The aggregate equity value for Caliston is $925,000,000 (nine hundred twenty-five million dollars).

Consideration Mix. The merger consideration is comprised of (a) 75% cash, in the aggregate amount of $693,750,000 (six hundred ninety-three million seven hundred fifty thousand dollars), and (b) 25% Penterra common stock, with an aggregate value of $231,250,000 (two hundred thirty-one million two hundred fifty thousand dollars). The stock component is calculated based on a 30-day volume-weighted average price ("VWAP") of $39.17 per share of Penterra common stock (ticker: PPHR, New York Stock Exchange ("NYSE")) as of June 1, 2023, resulting in an implied issuance of 5,903,497 shares of Penterra common stock to former Caliston stockholders.

Contingent Value Rights. In addition to the base merger consideration, former Caliston stockholders will be entitled to receive CVRs providing for additional payments in the aggregate amount of up to $125,000,000 (one hundred twenty-five million dollars), payable upon FDA approval of CLT-4019 (Caliston's lead product candidate) on or before December 31, 2026. Columnar Trust Services, Inc. has been designated to serve as the CVR Trustee under the CVR Agreement.

Maximum Aggregate Transaction Value. The maximum aggregate transaction value, including the base equity consideration and the full CVR payment, is $1,050,000,000 (one billion fifty million dollars).

Termination Fees. The Merger Agreement provides for a reverse termination fee payable by Penterra in the amount of $32,375,000 (three and one-half percent (3.5%) of the aggregate equity value), payable in the event of certain termination triggers, including the failure to obtain required regulatory approvals or a financing failure. A company termination fee payable by Caliston in the amount of $27,750,000 (three percent (3.0%) of the aggregate equity value) is payable in the event Caliston terminates the Merger Agreement to accept a superior proposal.

Escrow. An amount equal to $46,250,000 (five percent (5%) of the aggregate equity value) will be deposited at closing with Greystone National Bank, N.A., as escrow agent, to secure the indemnification obligations of former Caliston stockholders. The escrow will be subject to an 18-month survival period for indemnification claims under the Merger Agreement.

Stockholder Representative. Ridgeline Ventures, LP (Ava Lindström, Managing Partner) has been designated as the stockholder representative for former Caliston stockholders for purposes of post-closing indemnification, escrow claims, and other matters arising under the Merger Agreement.

Premium. The aggregate equity value of $925,000,000 represents a premium of 36.03% over Caliston's October 2021 Series C post-money valuation of $680,000,000.

Financing. The cash component of the merger consideration will be funded from (a) $400,000,000 of cash on hand and (b) a draw of $293,750,000 on Penterra's existing $1.5 billion revolving credit facility with Greystone National Bank, N.A. (the "Revolver"), bearing interest at SOFR plus 150 basis points, with a maturity date of March 2026 and undrawn availability of approximately $1,100,000,000 as of June 1, 2023. No additional financing commitments are required.

Stockholder Approvals. The issuance of 5,903,497 shares of Penterra common stock in the merger will require approval of Penterra stockholders under applicable NYSE listing standards (which require stockholder approval for the issuance of shares in excess of 1% of outstanding shares in connection with an acquisition). The merger will also require approval of Caliston stockholders, which will be obtained by written consent of holders of a majority of the outstanding shares of Caliston capital stock.

3.3 Related-Party Conflict Summary

Ms. Vasquez then reiterated, for the benefit of the Special Committee's deliberations, the conflict of interest framework applicable to the proposed transaction.

Ms. Vasquez noted that Dr. Marcus Hale, Chairman of the Board and Chief Executive Officer of Penterra, holds a 28.5% equity interest in Caliston, acquired through personal investments aggregating $42,000,000 across Caliston's Seed, Series A, and Series B financing rounds. Based on the negotiated aggregate equity value of $925,000,000, Dr. Hale's implied proceeds from the transaction are $263,625,000 (representing 28.5% of $925,000,000), resulting in an implied gain of $221,625,000 over his aggregate personal investment. Ms. Vasquez noted that Dr. Hale has served as a non-voting board observer at Caliston since 2018 and has attended 14 of 16 Caliston board meetings during the period of his board observer role. Ms. Vasquez further noted that Dr. Hale did not disclose his Caliston investment to the Penterra Board until February 14, 2023, at which time he first proposed the acquisition of Caliston by Penterra.

Ms. Vasquez also noted that Angela Whitmore, a Director of Penterra and Executive Vice President, 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. No other Penterra directors or officers hold equity interests in Caliston or have material relationships with Caliston.

Ms. Vasquez confirmed that Dr. Hale executed a Voting and Recusal Agreement dated June 2, 2023, pursuant to which he committed to recuse himself from all Board deliberations and to abstain from the Board vote on the proposed merger. Ms. Vasquez further confirmed that the Independence Protocol and information barrier established by the Special Committee on June 2, 2023 have been maintained throughout the process without any reported breaches. Dr. Hale, Angela Whitmore, and Raymond Tusk have been excluded from all Special Committee deliberations, materials, and communications. All Special Committee materials have been housed exclusively in the segregated Project Coriander workspace, with access limited to the Committee members, Calderwood & Harkness LLP personnel, and Thorngate Partners LLC personnel, as specified in the Independence Protocol.

4. Presentation of Fairness Opinion by Thorngate Partners LLC

Ms. Prescott invited Gregory Ashford, Managing Director of Thorngate Partners LLC, to present the fairness opinion prepared by Thorngate in connection with the proposed merger. Ms. Prescott noted for the record that Mr. Ashford's engagement with the Special Committee bears the Thorngate internal reference number 1018-00003.

4.1 Independence Confirmation

Before proceeding with the substantive presentation, Mr. Ashford confirmed for the record that Thorngate Partners LLC has no material relationships with Caliston BioSciences, Inc., Dr. Marcus Hale (individually or in any capacity), Ridgeline Ventures, LP, Meridian Life Sciences Fund III, LP, Whitfield Graves LLP, or Fendowell Sinclair & Co. that would impair its independence or objectivity in rendering the fairness opinion. Mr. Ashford further confirmed that Thorngate has not previously provided advisory or other services to any of the foregoing parties.

Mr. Ashford reviewed the terms of Thorngate's engagement with the Special Committee. Thorngate was engaged pursuant to an engagement letter dated June 16, 2023. The advisory fee is $2,500,000, payable as follows: 50% ($1,250,000) upon delivery of the fairness opinion, and 50% ($1,250,000) upon the earlier of closing of the merger or termination of Thorngate's engagement. Penterra paid a non-refundable retainer of $500,000, which will be credited against the final fee. In addition, Penterra agreed to reimburse Thorngate for its reasonable out-of-pocket expenses. Mr. Ashford emphasized that no portion of the advisory fee is contingent on the conclusions reached in the fairness opinion (other than the timing of the fee payments as described above), and that this fee structure was fully disclosed to the Special Committee at the outset of the engagement and approved by the Committee.

4.2 Summary of Valuation Analyses

Mr. Ashford then presented the final valuation analyses prepared by Thorngate in connection with its fairness opinion. Mr. Ashford noted that these analyses are consistent with, and represent refinements of, the preliminary valuation analyses that Thorngate presented to the Special Committee at its meeting on August 3, 2023. The refinements reflect updated market data, further due diligence findings, and the finalization of certain assumptions based on the completed negotiation of transaction terms. Mr. Ashford directed the Committee's attention to the detailed presentation materials, copies of which had been distributed to the Committee members (and which are attached hereto as Attachment C).

4.2.1 discounted Cash Flow Analysis — CLT-4019 Only. Mr. Ashford presented the results of a discounted cash flow ("DCF") analysis focused solely on Caliston's lead product candidate, CLT-4019, a selective CDK4/6 inhibitor for HR+/HER2– metastatic breast cancer (IND 158429). Mr. Ashford noted that CLT-4019 is currently in Phase 2b clinical development, with topline data expected in the fourth quarter of 2023.

The CLT-4019-only DCF analysis yielded an implied equity value range for Caliston of $780,000,000 to $1,020,000,000, with a midpoint of $900,000,000. Mr. Ashford noted that the analysis utilized a weighted average cost of capital ("WACC") of 12.5% and a terminal growth rate of 2.0%. Key assumptions underlying the analysis included risk-adjusted probability of regulatory approval (based on historical success rates for oncology compounds at similar stages of development, calibrated for Caliston-specific data), projected peak sales for CLT-4019, the anticipated revenue ramp profile, and the remaining patent life for the compound and its associated intellectual property portfolio.

4.2.2 discounted Cash Flow Analysis — Full Pipeline (Risk-Adjusted NPV). Mr. Ashford then presented a risk-adjusted net present value ("rNPV") analysis of Caliston's full pipeline, which includes CLT-4019 as well as two earlier-stage preclinical candidates: CLT-5227 (a next-generation immuno-oncology compound targeting solid tumors) and CLT-6034 (a small molecule inhibitor with potential applications in hematologic malignancies). This analysis yielded an implied equity value range of $870,000,000 to $1,180,000,000, with a midpoint of $1,025,000,000. Mr. Ashford noted that the incremental value attributed to CLT-5227 and CLT-6034 was heavily risk-adjusted given the early stage of development and the historically low probability of success for preclinical-stage oncology candidates. The full pipeline analysis was intended to capture the option value of Caliston's broader research platform, while the CLT-4019-only analysis provided a more conservative, asset-specific valuation.

4.2.3 Comparable Transactions Analysis. Mr. Ashford presented a comparable transactions analysis based on seven precedent transactions in the oncology therapeutic area. The analysis yielded an implied equity value range for Caliston of $820,000,000 to $1,050,000,000. Mr. Ashford described the metrics analyzed, which included enterprise value as a multiple of projected peak sales, price per indication, and stage-adjusted multiples. Mr. Ashford noted that the seven transactions were selected based on criteria including therapeutic area (oncology), stage of development (Phase 2 or Phase 3), deal structure, and transaction size, and that while no single precedent transaction was perfectly comparable to the proposed Caliston acquisition, the selected set represented the best available market evidence for clinical-stage oncology acquisitions.

4.2.4 Premiums Paid Analysis. Finally, Mr. Ashford presented a premiums paid analysis, which examined the premiums paid over the most recent private financing round valuation in comparable biotech acquisitions. The observed premium range was 30% to 45%. Applied to Caliston's October 2021 Series C post-money valuation of $680,000,000, this premium range implied an equity value range of $884,000,000 to $986,000,000 for Caliston.

Mr. Ashford presented the following summary table of the valuation analyses:

4.3 Fairness Conclusion

Mr. Ashford then delivered the fairness opinion of Thorngate Partners LLC. Mr. Ashford stated that, based upon and subject to the assumptions, qualifications, limitations, and other matters set forth in the written opinion, and based upon such other factors as Thorngate deemed relevant, it is the opinion of Thorngate Partners LLC that, as of November 15, 2023, the aggregate consideration of $925,000,000 (excluding the CVRs) to be paid by Penterra Pharmaceuticals Corp. in the proposed merger is fair, from a financial point of view, to Penterra Pharmaceuticals Corp.

Mr. Ashford noted that the fairness opinion does not address the CVR component of $125,000,000, which would represent additional value transferred to former Caliston stockholders if the FDA approval milestone for CLT-4019 is achieved on or before December 31, 2026. Mr. Ashford explained that the CVR component was excluded from the fairness determination because it represents a contingent obligation, the realization of which is subject to significant regulatory uncertainty, and that its inclusion or exclusion does not affect the fairness conclusion with respect to the base consideration. Mr. Ashford further noted that the base consideration of $925,000,000 falls within the valuation ranges produced by each of the four methodologies employed by Thorngate, which supports the conclusion that the consideration is fair from a financial point of view to Penterra.

Mr. Ashford delivered a signed copy of the written fairness opinion, dated November 15, 2023, to the Special Committee and to Calderwood & Harkness LLP. The fairness opinion is attached to these minutes as Attachment A.

4.4 Committee Questions and Discussion

Ms. Prescott thanked Mr. Ashford for his thorough presentation and invited the Committee members to direct questions to Mr. Ashford.

Mr. Okafor asked Mr. Ashford to elaborate on the sensitivity of the DCF analysis to changes in the WACC and the probability-of-approval assumptions. Mr. Ashford presented sensitivity tables (included in the presentation materials attached as Attachment C) illustrating the impact of these variables on the CLT-4019-only DCF analysis. Specifically, Mr. Ashford noted that the midpoint of the CLT-4019-only DCF valuation moves from approximately $830,000,000 at a WACC of 14% to approximately $980,000,000 at a WACC of 11%, reflecting the significant impact of the discount rate on the present value of projected future cash flows. Mr. Ashford further noted that a 10-percentage-point change in the assumed probability of regulatory approval (in either direction) shifts the midpoint of the CLT-4019-only DCF valuation by approximately $100,000,000. Mr. Okafor expressed satisfaction with the sensitivity analysis and noted that the negotiated price of $925,000,000 falls within the valuation range across a reasonable range of discount rate and probability assumptions.

Dr. Ng inquired about the clinical data assumptions underlying the CLT-4019 valuation, specifically whether Thorngate had independently assessed the regulatory pathway and the probability of FDA approval. Mr. Ashford responded that Thorngate relied upon Caliston management's clinical projections, including efficacy and safety data from the ongoing Phase 2b trial, as well as Caliston's FDA feedback letters (including minutes from the Type B pre-IND meeting and the End-of-Phase 2 meeting), in formulating its assumptions regarding the probability and timing of regulatory approval. Mr. Ashford confirmed that Thorngate did not independently assess the clinical data from a medical or scientific perspective, but that the clinical assumptions used by Thorngate were reviewed by the Special Committee's Independent Counsel, Calderwood & Harkness LLP, as part of the comprehensive regulatory due diligence process. Dr. Ng acknowledged this explanation and noted her own review of the available clinical data in her capacity as a pharmacologist and former FDA advisory committee member.

Ms. Prescott asked whether the market check conducted between August 22, 2023 and September 14, 2023 had informed Thorngate's fairness opinion. Mr. Ashford confirmed that the market check process was considered by Thorngate as part of its overall assessment. Mr. Ashford stated that during the market check, Calderwood & Harkness LLP (at the direction of the Special Committee) approached a limited number of potential alternative acquisition targets and explored strategic alternatives, and that no superior alternative acquisition opportunities were identified during that period. Mr. Ashford noted that the absence of superior alternatives during the market check supported the conclusion that the negotiated price of $925,000,000 was within the range of fairness and represented a reasonable outcome for Penterra.

Mr. Okafor then asked about the comparability of the seven precedent transactions used in the comparable transactions analysis. Mr. Ashford described the selection criteria in greater detail, noting that the transactions were selected from a universe of oncology acquisitions completed between 2019 and 2023 involving clinical-stage target companies with Phase 2 or Phase 3 lead assets. Mr. Ashford acknowledged that no single precedent transaction was perfectly comparable to the proposed Caliston acquisition, given differences in therapeutic sub-area, stage of clinical development, competitive landscape, and deal structure, but noted that the selected set represented the best available market evidence and that the valuation range derived from the comparable transactions analysis was broadly consistent with the ranges produced by the other methodologies.

There being no further questions for Mr. Ashford, Ms. Prescott thanked him for his presentation and his work on behalf of the Special Committee throughout the engagement. At 3:25 p.m. Eastern Time, at Ms. Prescott's request, Mr. Ashford excused himself from the meeting to permit the Special Committee to deliberate in executive session with its Independent Counsel.

5. Calderwood & Harkness Analysis of Fairness Opinion — Legal Sufficiency

Following Mr. Ashford's departure, Ms. Prescott invited Ms. Vasquez to present Calderwood & Harkness LLP's analysis of the legal sufficiency of the Thorngate fairness opinion.

Ms. Vasquez noted that Calderwood & Harkness LLP had prepared a memorandum dated November 15, 2023, analyzing the legal sufficiency of the Thorngate fairness opinion (the "Legal Sufficiency Memorandum"), copies of which had been circulated to the Committee members in advance of the meeting. The Legal Sufficiency Memorandum is attached to these minutes as Attachment B.

5.1 Delaware Fiduciary Duty Standards

Ms. Vasquez reviewed the applicable fiduciary duty standards under Delaware law as they relate to the proposed transaction.

First, Ms. Vasquez discussed Section 144 of the Delaware General Corporation Law ("DGCL"), which addresses interested director transactions. Ms. Vasquez explained that under DGCL §144, a transaction involving a director who has a personal interest is not void or voidable solely by reason of that interest if: (a) the material facts as to the director's relationship or interest and as to the transaction are disclosed or known to the board of directors or a committee thereof, and the board or committee in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors; (b) the material facts are disclosed or known to the stockholders entitled to vote thereon, and the transaction is specifically approved in good faith by a vote of the stockholders; or (c) the transaction is fair as to the corporation as of the time it is authorized, approved, or ratified. Ms. Vasquez noted that the Special Committee process is designed to satisfy clause (a) and, through the required Penterra stockholder vote on the share issuance, clause (b) as well.

Second, Ms. Vasquez discussed the entire fairness standard of review, which is the most exacting standard of judicial review applied under Delaware law. Ms. Vasquez explained that entire fairness applies to the proposed transaction given Dr. Hale's significant personal financial interest — specifically, his 28.5% equity interest in Caliston, resulting in implied personal proceeds of $263,625,000 — and his position as the Chairman and Chief Executive Officer of Penterra. The entire fairness standard requires a showing of both (i) fair dealing (i.e., that the process by which the transaction was negotiated, structured, and approved was fair) and (ii) fair price (i.e., that the consideration paid or received was fair at the time of the transaction).

Third, Ms. Vasquez addressed the framework established in Kahn v. M&F Worldwide Corp. (the "MFW framework"), which provides that business judgment review — a more deferential standard — may apply to transactions involving a controlling stockholder if the transaction is conditioned from the outset on both the approval of a well-functioning, empowered special committee of independent directors and the approval of an informed, uncoerced majority of the minority stockholders. Ms. Vasquez noted that while Dr. Hale is not a controlling stockholder of Penterra (holding only approximately 1.8% of Penterra's outstanding shares, or 2,140,000 shares out of approximately 121,400,000 outstanding shares), the dual procedural protections of an empowered special committee and an informed stockholder vote could support invocation of business judgment review under the MFW framework. However, Ms. Vasquez advised the Committee that, given the magnitude of Dr. Hale's personal interest in the transaction (both his 28.5% stake in the target company and his implied personal gain of $221,625,000), and his dual role as the Company's chief executive officer and the individual who proposed the acquisition, it would be prudent for the Committee to assume that the entire fairness standard applies and to ensure that the process record supports a finding of entire fairness in all respects.

5.2 Adequacy of the Fairness Opinion

Ms. Vasquez then presented Calderwood & Harkness LLP's assessment of the adequacy of the Thorngate fairness opinion under applicable Delaware and SEC standards. Ms. Vasquez confirmed the following:

• Thorngate employed multiple, independent valuation methodologies — including two variants of discounted cash flow analysis, a comparable transactions analysis, and a premiums paid analysis — consistent with best practices for fairness opinions in transactions of this nature;

• The assumptions and limitations underlying Thorngate's analyses are clearly and prominently disclosed in the written opinion, including limitations regarding Thorngate's reliance on management-provided projections and publicly available information;

• The independence confirmations included in the opinion are appropriate and consistent with applicable standards, including the absence of material relationships with Caliston, Dr. Hale, and the other parties described above;

• The opinion is consistent in methodology and conclusions with Thorngate's preliminary valuation analyses presented to the Special Committee on August 3, 2023, which provides continuity and reduces the risk that the opinion could be challenged as result-oriented;

• The opinion addresses only the financial fairness of the base merger consideration of $925,000,000 (excluding the CVRs), which is appropriate given the contingent nature of the CVR obligation;

• The opinion is properly addressed to the Special Committee, reflecting the Committee's role as the body empowered and charged with evaluating the proposed transaction, rather than to the full Board or to Penterra stockholders; and

• The opinion complies in form and substance with the requirements applicable to fairness opinions under Delaware law and SEC guidance.

Ms. Vasquez concluded that, in Calderwood & Harkness LLP's professional judgment, the Thorngate fairness opinion is legally sufficient to support the Special Committee's evaluation of the proposed merger and, if the Committee determines to recommend the transaction, to serve as a component of the entire fairness record.

5.3 Disclosure Considerations

Ms. Vasquez addressed the disclosure implications of the fairness opinion. Ms. Vasquez noted that the fairness opinion, including the underlying valuation analyses and material assumptions, will need to be summarized in the proxy statement to be filed by Penterra with the Securities and Exchange Commission ("SEC") in connection with the Penterra stockholder vote required under NYSE listing rules for the issuance of 5,903,497 shares of Penterra common stock in the merger. The proxy statement will be subject to SEC review and comment, and the fairness opinion disclosure must be accurate, complete, and not misleading.

Ms. Vasquez confirmed that Calderwood & Harkness LLP will review the fairness opinion disclosure in the proxy statement for accuracy and completeness, in coordination with Penterra's regular outside counsel, Alcott, Barringer & Cole LLP (Victoria Shen, lead partner, Mergers & Acquisitions), subject to the recusal protocol established by the Independence Protocol. Ms. Vasquez noted that Thorngate will be asked to consent to the inclusion of the fairness opinion and a description of the underlying analyses in the proxy statement.

6. Deliberation Regarding Recommendation

Ms. Prescott opened deliberation on whether the Special Committee should recommend the proposed merger to the full Board of Directors.

6.1 Fair Price Analysis

The Special Committee discussed the negotiated price of $925,000,000 in the context of Thorngate's valuation analyses.

Ms. Prescott observed that the negotiated consideration of $925,000,000 compares favorably across each of Thorngate's four valuation methodologies:

• The negotiated price of $925,000,000 is above the midpoint of the CLT-4019-only DCF range ($900,000,000 midpoint; range of $780,000,000 to $1,020,000,000), indicating that the price is supported even when the value of Caliston's earlier-stage pipeline candidates is excluded entirely.

• The negotiated price falls within the full pipeline DCF range of $870,000,000 to $1,180,000,000 (midpoint: $1,025,000,000), and is below the midpoint of that range, indicating that Penterra is not paying full option value for the preclinical pipeline.

• The negotiated price falls within the comparable transactions range of $820,000,000 to $1,050,000,000 (midpoint: $935,000,000), and is near the midpoint.

• The negotiated price is above the midpoint of the premiums paid range of $884,000,000 to $986,000,000 (midpoint: $935,000,000), and the 36.03% premium to Caliston's October 2021 Series C post-money valuation of $680,000,000 falls within the observed range of premiums in comparable biotech acquisitions (30% to 45%).

Ms. Prescott then reviewed the negotiation history, noting that the Special Committee's initial counter-offer was approximately $850,000,000, which was presented in response to Caliston's initial asking price of approximately $1,100,000,000. The final negotiated price of $925,000,000 reflects the outcome of extensive arm's-length negotiation over multiple sessions between the Special Committee's advisors and Caliston's advisors, commencing September 29, 2023. Ms. Prescott noted that the negotiation resulted in a price that represents a meaningful discount from Caliston's initial ask and a meaningful premium over the Special Committee's initial counter, reflecting genuine give-and-take between the parties.

Ms. Prescott also noted that the CVR component of $125,000,000 (contingent on FDA approval of CLT-4019 on or before December 31, 2026) appropriately allocates regulatory risk between the parties. If CLT-4019 does not receive FDA approval by the milestone date, the CVR would expire unexercised and the total consideration would remain at $925,000,000. If the milestone is achieved, the additional $125,000,000 payment to former Caliston stockholders would be justified by the significantly enhanced commercial value of CLT-4019 as an FDA-approved product, which would inure to the benefit of Penterra as the surviving corporation.

Mr. Okafor observed that the maximum aggregate transaction value, including the CVR, is $1,050,000,000, which is near the top of most of the valuation ranges produced by Thorngate's analyses. Mr. Okafor noted, however, that this maximum value would only be realized upon a positive FDA approval event, at which point the value of CLT-4019 to Penterra would be substantially greater than reflected in the pre-approval DCF analyses. Accordingly, Mr. Okafor expressed the view that the maximum aggregate consideration of $1,050,000,000 represents a reasonable outcome given the potential value of CLT-4019 as an approved therapeutic.

6.2 Fair Dealing / Process Analysis

The Special Committee then reviewed the process safeguards that had been established and maintained throughout the evaluation of the proposed transaction, as evidence of fair dealing.

Ms. Prescott summarized the key elements of the process as follows:

• The Special Committee was formed on June 2, 2023, by unanimous vote of the six independent directors of the Board. Dr. Hale, Angela Whitmore, and Raymond Tusk were recused from all Special Committee proceedings, and the Independence Protocol and Information Barrier Policy was adopted simultaneously with the Committee's formation.

• The Special Committee was granted sole and exclusive authority over the evaluation of the proposed transaction, including the power to reject the proposed transaction, negotiate the terms of any definitive agreement, retain independent legal counsel and independent financial advisors, and explore strategic alternatives.

• Independent legal counsel (Calderwood & Harkness LLP, engaged June 2, 2023; Calderwood & Harkness Matter Number 1025-00006) and independent financial advisors (Thorngate Partners LLC, engaged June 16, 2023) were promptly retained by the Special Committee. Both advisors confirmed their independence and the absence of conflicts of interest at the time of engagement and throughout the process.

• Director independence questionnaires were completed and analyzed for all three Committee members (Prescott, Okafor, and Ng). Each member was confirmed to be independent under NYSE listing standards and under Delaware law, with no material relationships with Caliston, Dr. Hale, or any other party to the transaction.

• The Information Barrier and Independence Protocol were maintained throughout the process without any reported breaches. All Special Committee materials were maintained in the segregated Project Coriander workspace, with access strictly limited to authorized individuals.

• Comprehensive due diligence was conducted, including the preparation and review of a legal due diligence report, an intellectual property diligence memorandum, a regulatory due diligence memorandum, an antitrust/HSR Act analysis, a tax analysis, and a summary of related-party relationships.

• A market check was conducted between August 22, 2023 and September 14, 2023, during which the Special Committee (through its advisors) explored strategic alternatives to the proposed Caliston acquisition. No superior alternative transactions were identified during the market check.

• Active, arm's-length negotiation was conducted with Caliston's legal counsel (Whitfield Graves LLP, Kenneth Pratt) and financial advisor (Fendowell Sinclair & Co., Sandra Wu) over multiple sessions commencing September 29, 2023, resulting in significant concessions from Caliston, including reductions in the aggregate equity value, the introduction of the CVR structure to allocate regulatory risk, the imposition of escrow and indemnification obligations, and the refinement of termination fee provisions.

• The Special Committee held ten meetings to date (including the present meeting), with detailed minutes maintained for each meeting, creating a comprehensive contemporaneous record of the Committee's deliberations.

• A fairness opinion was delivered by the independent financial advisor, Thorngate Partners LLC, concluding that the aggregate base consideration of $925,000,000 is fair, from a financial point of view, to Penterra.

Ms. Prescott stated that, in her judgment, the process safeguards implemented by the Special Committee are consistent with, and in many respects exceed, the standards set forth in Delaware case law for transactions involving conflicts of interest.

6.3 Consideration of Financial Impact on Penterra

The Special Committee discussed the financial impact of the proposed transaction on Penterra.

Ms. Prescott reviewed Penterra's current financial position, as follows:

• Penterra's fiscal year 2022 revenue was $1,836,000,000, with EBITDA of $412,000,000 and net income of $247,000,000.

• As of June 1, 2023, Penterra had approximately $892,000,000 in cash and cash equivalents on hand, and a market capitalization of approximately $4,720,000,000, based on approximately 121,400,000 shares of common stock outstanding.

• The cash outlay for the merger consideration — $693,750,000, comprised of $400,000,000 from cash on hand and $293,750,000 drawn on the Revolver — is manageable in the context of Penterra's balance sheet and available liquidity. The draw of $293,750,000 on the Revolver against approximately $1,100,000,000 of undrawn availability leaves substantial remaining borrowing capacity for ongoing operations and future strategic initiatives.

• The issuance of 5,903,497 shares of Penterra common stock in the merger represents approximately 4.9% dilution to existing Penterra stockholders. The Committee noted that this level of dilution is modest in the context of a transaction of this magnitude and is consistent with dilution levels observed in comparable biotech acquisitions.

Ms. Prescott noted that Caliston is a pre-revenue, clinical-stage company (fiscal year 2022 revenue: $0; fiscal year 2022 net cash burn: $78,400,000; cash on hand as of March 31, 2023: $112,600,000, with an estimated cash runway through the first quarter of 2025). The acquisition is therefore fundamentally a strategic investment in Penterra's oncology pipeline, with the primary value driver being CLT-4019 and the potential contributions of the preclinical candidates CLT-5227 and CLT-6034.

The Committee further discussed the operational integration of Caliston's 94 employees into Penterra's existing operations and infrastructure. Ms. Prescott noted that Dr. Nadia Sorensen, Caliston's Chief Executive Officer, will be required to enter into a 2-year non-competition agreement and a 2-year non-solicitation agreement as a condition to closing, which will protect Penterra's investment in the Caliston pipeline and workforce.

6.4 Protective Provisions

The Special Committee noted the key protective provisions negotiated in the Merger Agreement and ancillary agreements:

• Escrow. An escrow deposit of $46,250,000 (5% of the aggregate equity value) will be maintained with Greystone National Bank, N.A. as escrow agent, with an 18-month survival period for indemnification claims, providing Penterra with a dedicated source of recovery for post-closing indemnification obligations.

• Termination Fees. The reverse termination fee of $32,375,000 (3.5% of equity value) and company termination fee of $27,750,000 (3.0% of equity value) are appropriately sized relative to the aggregate transaction value, providing meaningful deal certainty while preserving flexibility for both parties in the event of a superior proposal or regulatory impediment.

• Voting and Recusal Agreement. Dr. Hale's Voting and Recusal Agreement ensures that he will abstain from the Board vote on the proposed merger, eliminating the risk of a conflicted vote at the Board level.

• Stockholder Support Agreements. Dr. Hale has committed his 2,140,000 Penterra shares to vote in favor of the share issuance at the Penterra stockholder meeting, providing additional deal certainty. On the Caliston side, Ridgeline Ventures, LP (holding 22.3% of Caliston's outstanding shares) and Meridian Life Sciences Fund III, LP (holding 18.7% of Caliston's outstanding shares) have committed to execute the written consent required for Caliston stockholder approval, providing a clear path to the requisite majority.

6.5 Preliminary Sentiment

Ms. Prescott invited each member of the Special Committee to express a preliminary view on whether the Committee should recommend the proposed merger to the full Board.

Mr. Okafor stated that he is inclined to recommend the transaction. Mr. Okafor noted that the negotiated price of $925,000,000 falls within the range of fairness as determined by each of Thorngate's valuation methodologies, that the process has been thorough, rigorous, and independent, and that the strategic rationale for acquiring CLT-4019 — including the opportunity to strengthen Penterra's oncology pipeline with a differentiated late-stage clinical asset — is compelling. Mr. Okafor further noted that the CVR structure appropriately allocates regulatory risk and that the protective provisions, including the escrow and termination fee structure, adequately safeguard Penterra's interests.

Dr. Ng concurred with Mr. Okafor's assessment. Dr. Ng noted her favorable view of the available clinical data supporting CLT-4019, including the mechanism of action, the preliminary efficacy signals, and the FDA's constructive engagement during the regulatory process. Dr. Ng expressed her view that the CVR structure is appropriate and well-designed, providing former Caliston stockholders with upside participation in the event of FDA approval while protecting Penterra from overpayment in the event of a negative regulatory outcome. Dr. Ng also noted the rigor and integrity of the independence process maintained by the Special Committee, which in her judgment meets or exceeds the standards expected under Delaware law.

Ms. Prescott expressed her agreement with the views of Mr. Okafor and Dr. Ng. Ms. Prescott stated that, in her assessment, the Special Committee has fulfilled its obligations under Delaware law and its Charter to ensure both fair dealing and fair price, and that the negotiated transaction, as supported by Thorngate's fairness opinion and Calderwood & Harkness LLP's legal analysis, represents a transaction that is in the best interests of Penterra and its stockholders.

6.6 Decision to Defer Formal Vote

Notwithstanding the favorable preliminary views expressed by each Committee member, and after further discussion, the Special Committee determined to defer the formal vote on the recommendation to a subsequent meeting. The Committee agreed that deferral would allow each member additional time to review the final draft of the Merger Agreement (which is expected to progress from the current working draft, v.7.2, to execution-ready form in the coming days) and to consult further with Independent Counsel regarding any remaining issues.

Ms. Vasquez confirmed that Calderwood & Harkness LLP would circulate a near-final draft of the Merger Agreement, together with the comprehensive process memorandum (a detailed narrative of all Special Committee activities from formation through the present meeting), for the Committee's review prior to the next meeting. Ms. Vasquez noted that the process memorandum is intended to serve as the definitive contemporaneous record of the Special Committee's activities in support of the entire fairness analysis.

The Special Committee scheduled its next meeting — and eleventh meeting overall — for November 20, 2023, at which time the formal recommendation vote would be taken.

7. Next Steps

Ms. Vasquez outlined the anticipated timeline for the remaining steps in the transaction process:

• November 17, 2023: Calderwood & Harkness LLP to circulate to the Special Committee members the finalized memorandum on the legal sufficiency of the fairness opinion, the near-final draft of the Merger Agreement, and the comprehensive process memorandum.

• November 20, 2023: Special Committee meeting — formal vote on whether to recommend the proposed merger to the full Board of Directors.

• November 22, 2023: Full Board meeting (with participation limited to non-recused directors, in accordance with the Independence Protocol) to consider the Special Committee's recommendation and vote on approval of the Merger Agreement and authorization of the merger.

• Following Board Approval: Execution and delivery of the Merger Agreement and all ancillary documents, including the CVR Agreement, the Escrow Agreement, the Stockholder Support Agreements, the Voting and Recusal Agreement, and the Non-Competition and Non-Solicitation Agreement with Dr. Nadia Sorensen.

• Public Announcement: Promptly following execution, a Current Report on Form 8-K will be filed with the SEC announcing the transaction.

• Caliston Stockholder Written Consent: Written consent of holders of a majority of Caliston's outstanding shares will be solicited promptly following execution of the Merger Agreement.

• Administrative Steps: The Secretary's certificate and closing checklist will be prepared by Lawrence Whittaker, General Counsel and Corporate Secretary of Penterra, with the assistance of Calderwood & Harkness LLP (Daniel Obi, Senior Associate).

8. Executive Session

At 4:10 p.m. Eastern Time, upon motion by Ms. Prescott, the Special Committee entered executive session with only the three Committee members and Calderwood & Harkness LLP counsel (Ms. Vasquez and Ms. Tremblay) present. All other attendees were excused from the meeting during the executive session.

During the executive session, the Committee discussed privileged matters relating to the process record and the preparation of the comprehensive process memorandum in support of the entire fairness analysis. The substance of the executive session discussion is protected by the attorney-client privilege and attorney work product doctrine.

No formal action was taken during the executive session.

9. Adjournment

At the conclusion of the executive session, the Committee returned to open session. 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 adjourned at 4:35 p.m. Eastern Time.

The next meeting of the Special Committee was confirmed for November 20, 2023.

These minutes have been prepared by Sophie Tremblay, Calderwood & Harkness LLP, in her capacity as assistant secretary for the meeting, and are submitted for approval at the next meeting of the Special Committee.

APPROVED AND ADOPTED

________________________________________

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

Date: ________

________________________________________

Sophie Tremblay Lead Associate, Calderwood & Harkness LLP Assistant Secretary for the Meeting

Date: ________

ATTACHMENTS

The following attachments are incorporated by reference into these minutes:

Attachment A: Fairness Opinion of Thorngate Partners LLC, dated November 15, 2023

Attachment B: Calderwood & Harkness LLP Memorandum on Fairness Opinion — Legal Sufficiency and Disclosure Review, dated November 15, 2023

Attachment C: Summary of Thorngate Partners LLC Valuation Analyses (presentation materials)

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT These minutes and all attachments hereto are confidential and privileged communications prepared at the direction of Calderwood & Harkness LLP, independent legal counsel to the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp., and are subject to the attorney-client privilege and the attorney work product doctrine. These minutes are not to be disclosed to any person other than the members of the Special Committee and authorized representatives of Calderwood & Harkness LLP and Thorngate Partners LLC without the prior written consent of the Special Committee.

Methodology	Low ($M)	Midpoint ($M)	High ($M)
DCF — CLT-4019 Only	$780	$900	$1,020
DCF — Full Pipeline (rNPV)	$870	$1,025	$1,180
Comparable Transactions	$820	$935	$1,050
Premiums Paid	$884	$935	$986
Negotiated Equity Value	—	$925	—

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
MINUTES OF A MEETING OF THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF PENTERRA PHARMACEUTICALS CORP.
Project Coriander
November 15, 2023
Date: November 15, 2023
Time: 2:00 p.m. Eastern Time
Location: Conference Room 12-A, 400 Innovation Drive, Suite 1200, Princeton, New Jersey 08540, with certain participants joining by secure videoconference
1. Call to Order and Attendance
Diane Prescott, Chair of the Special Committee of the Board of Directors (the "Special Committee") of Penterra Pharmaceuticals Corp. (the "Company" or "Penterra"), called the meeting to order at 2:00 p.m. Eastern Time.
The following members of the Special Committee were present, constituting all of the members of the Special Committee and a quorum for the transaction of business (a majority of the members of the Special Committee constituting a quorum under Article III, Section 2 of the Special Committee Charter, adopted by unanimous written consent of the independent directors of the Board effective June 2, 2023):
•  Diane Prescott, Independent Director and Chair of the Special Committee (former Chief Executive Officer of Windbridge Health Systems, Inc.);
•  James Okafor, Independent Director (retired Managing Director of Fielding Capital Partners, LLC); and
•  Dr. Helen Ng, Independent Director (Professor of Pharmacology, Wexford University; former member of the United States Food and Drug Administration ("FDA") Oncologic Drugs Advisory Committee).
The following individuals were also in attendance, having been invited by the Special Committee to participate in the meeting in their advisory capacities:
•  Renata Vasquez, Responsible Partner, Calderwood & Harkness LLP ("Calderwood & Harkness" or "Independent Counsel"), independent legal counsel to the Special Committee;
•  Sophie Tremblay, Lead Associate, Calderwood & Harkness LLP; and
•  Gregory Ashford, Managing Director, Thorngate Partners LLC ("Thorngate" or the "Independent Financial Advisor"), independent financial advisor to the Special Committee.
Ms. Prescott noted for the record that the following directors of the Company were not present and had not been invited to attend, having been recused from all Special Committee deliberations, materials, and communications pursuant to the Independence Protocol and Information Barrier Policy adopted by the Special Committee on June 2, 2023 (the "Independence Protocol"): (a) Dr. Marcus Hale, Chairman of the Board and Chief Executive Officer of the Company; (b) Angela Whitmore, Director and Executive Vice President, Commercial Operations of the Company; and (c) Raymond Tusk, Director of the Company. Ms. Prescott confirmed that no information regarding the substance of the Special Committee's deliberations, or any materials prepared for or by the Special Committee, had been shared with Dr. Hale, Ms. Whitmore, or Mr. Tusk, and that all such materials continue to be maintained in the segregated "Project Coriander" workspace administered by Calderwood & Harkness LLP.
Ms. Tremblay was designated as assistant secretary for the meeting for purposes of preparing these minutes.
Ms. Prescott observed that this meeting was the tenth of the Special Committee meetings held since the Committee's formation on June 2, 2023, and that the Committee had convened regularly and frequently over the preceding five months in connection with its evaluation of the proposed merger transaction described below.
2. Approval of Agenda
Ms. Prescott presented the proposed agenda for the meeting, which included the following items:
1.  Delivery and presentation of the fairness opinion by Thorngate Partners LLC;
2.  Calderwood & Harkness LLP's analysis of the legal sufficiency of the fairness opinion;
3.  Discussion and deliberation regarding whether to recommend the proposed merger to the full Board of Directors of the Company (the "Board"); and
4.  Next steps and scheduling.
Ms. Prescott asked whether any member of the Special Committee wished to add any items to the agenda or raise any preliminary matters. No additional items were proposed. Upon motion duly made by Mr. Okafor and seconded by Dr. Ng, the Special Committee unanimously approved the agenda as presented.
3. Status Update by Independent Counsel
Ms. Prescott invited Ms. Vasquez to provide the Special Committee with a status update on developments since the prior Special Committee meeting (held on November 8, 2023).
3.1 Negotiation Status
Ms. Vasquez reported that negotiation of the Agreement and Plan of Merger (the "Merger Agreement") between Penterra Pharmaceuticals Corp. and Caliston BioSciences, Inc. ("Caliston") had continued to advance since the prior meeting. Calderwood & Harkness LLP's initial draft of the Merger Agreement (draft v.5) had been circulated to Caliston's legal counsel, Whitfield Graves LLP (Kenneth Pratt, lead partner), and Caliston's financial advisor, Fendowell Sinclair & Co. (Sandra Wu, Managing Director), on November 1, 2023. Since that time, the parties had engaged in multiple rounds of negotiation, resulting in the current working draft, version 7.2 of the Merger Agreement.
Ms. Vasquez summarized the key provisions that had been the subject of negotiation between drafts v.5 and v.7.2, including the scope of representations and warranties, the application of materiality qualifiers and material adverse effect carve-outs, interim operating covenants governing Caliston's conduct of business between signing and closing, the definitions of milestones under the Contingent Value Rights ("CVR") agreement, and the triggers for the payment of termination fees by each party. Ms. Vasquez reported that all open legal issues had been resolved or were, in the judgment of Calderwood & Harkness LLP, immaterial, and that the Merger Agreement was expected to be in execution-ready form promptly following Board approval.
Ms. Vasquez further noted that the Merger Agreement is governed by the laws of the State of Delaware, as agreed by the parties in early negotiations, and that the Delaware Court of Chancery would serve as the exclusive forum for disputes arising under the agreement.
3.2 Recap of Transaction Terms
Ms. Vasquez then provided the Special Committee with a comprehensive summary of the material terms of the proposed transaction as reflected in the current working draft (v.7.2) of the Merger Agreement, as follows:
Structure. The proposed transaction is structured as a one-step merger, pursuant to which Caliston BioSciences, Inc. would merge with and into Penterra Pharmaceuticals Corp., with Penterra surviving as the surviving corporation. Following the merger, Caliston would cease to exist as a separate entity, and its assets, operations, employees, and liabilities would be assumed by Penterra.
Aggregate Equity Value. The aggregate equity value for Caliston is $925,000,000 (nine hundred twenty-five million dollars).
Consideration Mix. The merger consideration is comprised of (a) 75% cash, in the aggregate amount of $693,750,000 (six hundred ninety-three million seven hundred fifty thousand dollars), and (b) 25% Penterra common stock, with an aggregate value of $231,250,000 (two hundred thirty-one million two hundred fifty thousand dollars). The stock component is calculated based on a 30-day volume-weighted average price ("VWAP") of $39.17 per share of Penterra common stock (ticker: PPHR, New York Stock Exchange ("NYSE")) as of June 1, 2023, resulting in an implied issuance of 5,903,497 shares of Penterra common stock to former Caliston stockholders.
Contingent Value Rights. In addition to the base merger consideration, former Caliston stockholders will be entitled to receive CVRs providing for additional payments in the aggregate amount of up to $125,000,000 (one hundred twenty-five million dollars), payable upon FDA approval of CLT-4019 (Caliston's lead product candidate) on or before December 31, 2026. Columnar Trust Services, Inc. has been designated to serve as the CVR Trustee under the CVR Agreement.
Maximum Aggregate Transaction Value. The maximum aggregate transaction value, including the base equity consideration and the full CVR payment, is $1,050,000,000 (one billion fifty million dollars).
Termination Fees. The Merger Agreement provides for a reverse termination fee payable by Penterra in the amount of $32,375,000 (three and one-half percent (3.5%) of the aggregate equity value), payable in the event of certain termination triggers, including the failure to obtain required regulatory approvals or a financing failure. A company termination fee payable by Caliston in the amount of $27,750,000 (three percent (3.0%) of the aggregate equity value) is payable in the event Caliston terminates the Merger Agreement to accept a superior proposal.
Escrow. An amount equal to $46,250,000 (five percent (5%) of the aggregate equity value) will be deposited at closing with Greystone National Bank, N.A., as escrow agent, to secure the indemnification obligations of former Caliston stockholders. The escrow will be subject to an 18-month survival period for indemnification claims under the Merger Agreement.
Stockholder Representative. Ridgeline Ventures, LP (Ava Lindström, Managing Partner) has been designated as the stockholder representative for former Caliston stockholders for purposes of post-closing indemnification, escrow claims, and other matters arising under the Merger Agreement.
Premium. The aggregate equity value of $925,000,000 represents a premium of 36.03% over Caliston's October 2021 Series C post-money valuation of $680,000,000.
Financing. The cash component of the merger consideration will be funded from (a) $400,000,000 of cash on hand and (b) a draw of $293,750,000 on Penterra's existing $1.5 billion revolving credit facility with Greystone National Bank, N.A. (the "Revolver"), bearing interest at SOFR plus 150 basis points, with a maturity date of March 2026 and undrawn availability of approximately $1,100,000,000 as of June 1, 2023. No additional financing commitments are required.
Stockholder Approvals. The issuance of 5,903,497 shares of Penterra common stock in the merger will require approval of Penterra stockholders under applicable NYSE listing standards (which require stockholder approval for the issuance of shares in excess of 1% of outstanding shares in connection with an acquisition). The merger will also require approval of Caliston stockholders, which will be obtained by written consent of holders of a majority of the outstanding shares of Caliston capital stock.
3.3 Related-Party Conflict Summary
Ms. Vasquez then reiterated, for the benefit of the Special Committee's deliberations, the conflict of interest framework applicable to the proposed transaction.
Ms. Vasquez noted that Dr. Marcus Hale, Chairman of the Board and Chief Executive Officer of Penterra, holds a 28.5% equity interest in Caliston, acquired through personal investments aggregating $42,000,000 across Caliston's Seed, Series A, and Series B financing rounds. Based on the negotiated aggregate equity value of $925,000,000, Dr. Hale's implied proceeds from the transaction are $263,625,000 (representing 28.5% of $925,000,000), resulting in an implied gain of $221,625,000 over his aggregate personal investment. Ms. Vasquez noted that Dr. Hale has served as a non-voting board observer at Caliston since 2018 and has attended 14 of 16 Caliston board meetings during the period of his board observer role. Ms. Vasquez further noted that Dr. Hale did not disclose his Caliston investment to the Penterra Board until February 14, 2023, at which time he first proposed the acquisition of Caliston by Penterra.
Ms. Vasquez also noted that Angela Whitmore, a Director of Penterra and Executive Vice President, 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. No other Penterra directors or officers hold equity interests in Caliston or have material relationships with Caliston.
Ms. Vasquez confirmed that Dr. Hale executed a Voting and Recusal Agreement dated June 2, 2023, pursuant to which he committed to recuse himself from all Board deliberations and to abstain from the Board vote on the proposed merger. Ms. Vasquez further confirmed that the Independence Protocol and information barrier established by the Special Committee on June 2, 2023 have been maintained throughout the process without any reported breaches. Dr. Hale, Angela Whitmore, and Raymond Tusk have been excluded from all Special Committee deliberations, materials, and communications. All Special Committee materials have been housed exclusively in the segregated Project Coriander workspace, with access limited to the Committee members, Calderwood & Harkness LLP personnel, and Thorngate Partners LLC personnel, as specified in the Independence Protocol.
4. Presentation of Fairness Opinion by Thorngate Partners LLC
Ms. Prescott invited Gregory Ashford, Managing Director of Thorngate Partners LLC, to present the fairness opinion prepared by Thorngate in connection with the proposed merger. Ms. Prescott noted for the record that Mr. Ashford's engagement with the Special Committee bears the Thorngate internal reference number 1018-00003.
4.1 Independence Confirmation
Before proceeding with the substantive presentation, Mr. Ashford confirmed for the record that Thorngate Partners LLC has no material relationships with Caliston BioSciences, Inc., Dr. Marcus Hale (individually or in any capacity), Ridgeline Ventures, LP, Meridian Life Sciences Fund III, LP, Whitfield Graves LLP, or Fendowell Sinclair & Co. that would impair its independence or objectivity in rendering the fairness opinion. Mr. Ashford further confirmed that Thorngate has not previously provided advisory or other services to any of the foregoing parties.
Mr. Ashford reviewed the terms of Thorngate's engagement with the Special Committee. Thorngate was engaged pursuant to an engagement letter dated June 16, 2023. The advisory fee is $2,500,000, payable as follows: 50% ($1,250,000) upon delivery of the fairness opinion, and 50% ($1,250,000) upon the earlier of closing of the merger or termination of Thorngate's engagement. Penterra paid a non-refundable retainer of $500,000, which will be credited against the final fee. In addition, Penterra agreed to reimburse Thorngate for its reasonable out-of-pocket expenses. Mr. Ashford emphasized that no portion of the advisory fee is contingent on the conclusions reached in the fairness opinion (other than the timing of the fee payments as described above), and that this fee structure was fully disclosed to the Special Committee at the outset of the engagement and approved by the Committee.
4.2 Summary of Valuation Analyses
Mr. Ashford then presented the final valuation analyses prepared by Thorngate in connection with its fairness opinion. Mr. Ashford noted that these analyses are consistent with, and represent refinements of, the preliminary valuation analyses that Thorngate presented to the Special Committee at its meeting on August 3, 2023. The refinements reflect updated market data, further due diligence findings, and the finalization of certain assumptions based on the completed negotiation of transaction terms. Mr. Ashford directed the Committee's attention to the detailed presentation materials, copies of which had been distributed to the Committee members (and which are attached hereto as Attachment C).
4.2.1 discounted Cash Flow Analysis — CLT-4019 Only.  Mr. Ashford presented the results of a discounted cash flow ("DCF") analysis focused solely on Caliston's lead product candidate, CLT-4019, a selective CDK4/6 inhibitor for HR+/HER2– metastatic breast cancer (IND 158429). Mr. Ashford noted that CLT-4019 is currently in Phase 2b clinical development, with topline data expected in the fourth quarter of 2023.
The CLT-4019-only DCF analysis yielded an implied equity value range for Caliston of $780,000,000 to $1,020,000,000, with a midpoint of $900,000,000. Mr. Ashford noted that the analysis utilized a weighted average cost of capital ("WACC") of 12.5% and a terminal growth rate of 2.0%. Key assumptions underlying the analysis included risk-adjusted probability of regulatory approval (based on historical success rates for oncology compounds at similar stages of development, calibrated for Caliston-specific data), projected peak sales for CLT-4019, the anticipated revenue ramp profile, and the remaining patent life for the compound and its associated intellectual property portfolio.
4.2.2 discounted Cash Flow Analysis — Full Pipeline (Risk-Adjusted NPV).  Mr. Ashford then presented a risk-adjusted net present value ("rNPV") analysis of Caliston's full pipeline, which includes CLT-4019 as well as two earlier-stage preclinical candidates: CLT-5227 (a next-generation immuno-oncology compound targeting solid tumors) and CLT-6034 (a small molecule inhibitor with potential applications in hematologic malignancies). This analysis yielded an implied equity value range of $870,000,000 to $1,180,000,000, with a midpoint of $1,025,000,000. Mr. Ashford noted that the incremental value attributed to CLT-5227 and CLT-6034 was heavily risk-adjusted given the early stage of development and the historically low probability of success for preclinical-stage oncology candidates. The full pipeline analysis was intended to capture the option value of Caliston's broader research platform, while the CLT-4019-only analysis provided a more conservative, asset-specific valuation.
4.2.3 Comparable Transactions Analysis.  Mr. Ashford presented a comparable transactions analysis based on seven precedent transactions in the oncology therapeutic area. The analysis yielded an implied equity value range for Caliston of $820,000,000 to $1,050,000,000. Mr. Ashford described the metrics analyzed, which included enterprise value as a multiple of projected peak sales, price per indication, and stage-adjusted multiples. Mr. Ashford noted that the seven transactions were selected based on criteria including therapeutic area (oncology), stage of development (Phase 2 or Phase 3), deal structure, and transaction size, and that while no single precedent transaction was perfectly comparable to the proposed Caliston acquisition, the selected set represented the best available market evidence for clinical-stage oncology acquisitions.
4.2.4 Premiums Paid Analysis.  Finally, Mr. Ashford presented a premiums paid analysis, which examined the premiums paid over the most recent private financing round valuation in comparable biotech acquisitions. The observed premium range was 30% to 45%. Applied to Caliston's October 2021 Series C post-money valuation of $680,000,000, this premium range implied an equity value range of $884,000,000 to $986,000,000 for Caliston.
Mr. Ashford presented the following summary table of the valuation analyses:
4.3 Fairness Conclusion
Mr. Ashford then delivered the fairness opinion of Thorngate Partners LLC. Mr. Ashford stated that, based upon and subject to the assumptions, qualifications, limitations, and other matters set forth in the written opinion, and based upon such other factors as Thorngate deemed relevant, it is the opinion of Thorngate Partners LLC that, as of November 15, 2023, the aggregate consideration of $925,000,000 (excluding the CVRs) to be paid by Penterra Pharmaceuticals Corp. in the proposed merger is fair, from a financial point of view, to Penterra Pharmaceuticals Corp.
Mr. Ashford noted that the fairness opinion does not address the CVR component of $125,000,000, which would represent additional value transferred to former Caliston stockholders if the FDA approval milestone for CLT-4019 is achieved on or before December 31, 2026. Mr. Ashford explained that the CVR component was excluded from the fairness determination because it represents a contingent obligation, the realization of which is subject to significant regulatory uncertainty, and that its inclusion or exclusion does not affect the fairness conclusion with respect to the base consideration. Mr. Ashford further noted that the base consideration of $925,000,000 falls within the valuation ranges produced by each of the four methodologies employed by Thorngate, which supports the conclusion that the consideration is fair from a financial point of view to Penterra.
Mr. Ashford delivered a signed copy of the written fairness opinion, dated November 15, 2023, to the Special Committee and to Calderwood & Harkness LLP. The fairness opinion is attached to these minutes as Attachment A.
4.4 Committee Questions and Discussion
Ms. Prescott thanked Mr. Ashford for his thorough presentation and invited the Committee members to direct questions to Mr. Ashford.
Mr. Okafor asked Mr. Ashford to elaborate on the sensitivity of the DCF analysis to changes in the WACC and the probability-of-approval assumptions. Mr. Ashford presented sensitivity tables (included in the presentation materials attached as Attachment C) illustrating the impact of these variables on the CLT-4019-only DCF analysis. Specifically, Mr. Ashford noted that the midpoint of the CLT-4019-only DCF valuation moves from approximately $830,000,000 at a WACC of 14% to approximately $980,000,000 at a WACC of 11%, reflecting the significant impact of the discount rate on the present value of projected future cash flows. Mr. Ashford further noted that a 10-percentage-point change in the assumed probability of regulatory approval (in either direction) shifts the midpoint of the CLT-4019-only DCF valuation by approximately $100,000,000. Mr. Okafor expressed satisfaction with the sensitivity analysis and noted that the negotiated price of $925,000,000 falls within the valuation range across a reasonable range of discount rate and probability assumptions.
Dr. Ng inquired about the clinical data assumptions underlying the CLT-4019 valuation, specifically whether Thorngate had independently assessed the regulatory pathway and the probability of FDA approval. Mr. Ashford responded that Thorngate relied upon Caliston management's clinical projections, including efficacy and safety data from the ongoing Phase 2b trial, as well as Caliston's FDA feedback letters (including minutes from the Type B pre-IND meeting and the End-of-Phase 2 meeting), in formulating its assumptions regarding the probability and timing of regulatory approval. Mr. Ashford confirmed that Thorngate did not independently assess the clinical data from a medical or scientific perspective, but that the clinical assumptions used by Thorngate were reviewed by the Special Committee's Independent Counsel, Calderwood & Harkness LLP, as part of the comprehensive regulatory due diligence process. Dr. Ng acknowledged this explanation and noted her own review of the available clinical data in her capacity as a pharmacologist and former FDA advisory committee member.
Ms. Prescott asked whether the market check conducted between August 22, 2023 and September 14, 2023 had informed Thorngate's fairness opinion. Mr. Ashford confirmed that the market check process was considered by Thorngate as part of its overall assessment. Mr. Ashford stated that during the market check, Calderwood & Harkness LLP (at the direction of the Special Committee) approached a limited number of potential alternative acquisition targets and explored strategic alternatives, and that no superior alternative acquisition opportunities were identified during that period. Mr. Ashford noted that the absence of superior alternatives during the market check supported the conclusion that the negotiated price of $925,000,000 was within the range of fairness and represented a reasonable outcome for Penterra.
Mr. Okafor then asked about the comparability of the seven precedent transactions used in the comparable transactions analysis. Mr. Ashford described the selection criteria in greater detail, noting that the transactions were selected from a universe of oncology acquisitions completed between 2019 and 2023 involving clinical-stage target companies with Phase 2 or Phase 3 lead assets. Mr. Ashford acknowledged that no single precedent transaction was perfectly comparable to the proposed Caliston acquisition, given differences in therapeutic sub-area, stage of clinical development, competitive landscape, and deal structure, but noted that the selected set represented the best available market evidence and that the valuation range derived from the comparable transactions analysis was broadly consistent with the ranges produced by the other methodologies.
There being no further questions for Mr. Ashford, Ms. Prescott thanked him for his presentation and his work on behalf of the Special Committee throughout the engagement. At 3:25 p.m. Eastern Time, at Ms. Prescott's request, Mr. Ashford excused himself from the meeting to permit the Special Committee to deliberate in executive session with its Independent Counsel.
5. Calderwood & Harkness Analysis of Fairness Opinion — Legal Sufficiency
Following Mr. Ashford's departure, Ms. Prescott invited Ms. Vasquez to present Calderwood & Harkness LLP's analysis of the legal sufficiency of the Thorngate fairness opinion.
Ms. Vasquez noted that Calderwood & Harkness LLP had prepared a memorandum dated November 15, 2023, analyzing the legal sufficiency of the Thorngate fairness opinion (the "Legal Sufficiency Memorandum"), copies of which had been circulated to the Committee members in advance of the meeting. The Legal Sufficiency Memorandum is attached to these minutes as Attachment B.
5.1 Delaware Fiduciary Duty Standards
Ms. Vasquez reviewed the applicable fiduciary duty standards under Delaware law as they relate to the proposed transaction.
First, Ms. Vasquez discussed Section 144 of the Delaware General Corporation Law ("DGCL"), which addresses interested director transactions. Ms. Vasquez explained that under DGCL §144, a transaction involving a director who has a personal interest is not void or voidable solely by reason of that interest if: (a) the material facts as to the director's relationship or interest and as to the transaction are disclosed or known to the board of directors or a committee thereof, and the board or committee in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors; (b) the material facts are disclosed or known to the stockholders entitled to vote thereon, and the transaction is specifically approved in good faith by a vote of the stockholders; or (c) the transaction is fair as to the corporation as of the time it is authorized, approved, or ratified. Ms. Vasquez noted that the Special Committee process is designed to satisfy clause (a) and, through the required Penterra stockholder vote on the share issuance, clause (b) as well.
Second, Ms. Vasquez discussed the entire fairness standard of review, which is the most exacting standard of judicial review applied under Delaware law. Ms. Vasquez explained that entire fairness applies to the proposed transaction given Dr. Hale's significant personal financial interest — specifically, his 28.5% equity interest in Caliston, resulting in implied personal proceeds of $263,625,000 — and his position as the Chairman and Chief Executive Officer of Penterra. The entire fairness standard requires a showing of both (i) fair dealing (i.e., that the process by which the transaction was negotiated, structured, and approved was fair) and (ii) fair price (i.e., that the consideration paid or received was fair at the time of the transaction).
Third, Ms. Vasquez addressed the framework established in Kahn v. M&F Worldwide Corp. (the "MFW framework"), which provides that business judgment review — a more deferential standard — may apply to transactions involving a controlling stockholder if the transaction is conditioned from the outset on both the approval of a well-functioning, empowered special committee of independent directors and the approval of an informed, uncoerced majority of the minority stockholders. Ms. Vasquez noted that while Dr. Hale is not a controlling stockholder of Penterra (holding only approximately 1.8% of Penterra's outstanding shares, or 2,140,000 shares out of approximately 121,400,000 outstanding shares), the dual procedural protections of an empowered special committee and an informed stockholder vote could support invocation of business judgment review under the MFW framework. However, Ms. Vasquez advised the Committee that, given the magnitude of Dr. Hale's personal interest in the transaction (both his 28.5% stake in the target company and his implied personal gain of $221,625,000), and his dual role as the Company's chief executive officer and the individual who proposed the acquisition, it would be prudent for the Committee to assume that the entire fairness standard applies and to ensure that the process record supports a finding of entire fairness in all respects.
5.2 Adequacy of the Fairness Opinion
Ms. Vasquez then presented Calderwood & Harkness LLP's assessment of the adequacy of the Thorngate fairness opinion under applicable Delaware and SEC standards. Ms. Vasquez confirmed the following:
•  Thorngate employed multiple, independent valuation methodologies — including two variants of discounted cash flow analysis, a comparable transactions analysis, and a premiums paid analysis — consistent with best practices for fairness opinions in transactions of this nature;
•  The assumptions and limitations underlying Thorngate's analyses are clearly and prominently disclosed in the written opinion, including limitations regarding Thorngate's reliance on management-provided projections and publicly available information;
•  The independence confirmations included in the opinion are appropriate and consistent with applicable standards, including the absence of material relationships with Caliston, Dr. Hale, and the other parties described above;
•  The opinion is consistent in methodology and conclusions with Thorngate's preliminary valuation analyses presented to the Special Committee on August 3, 2023, which provides continuity and reduces the risk that the opinion could be challenged as result-oriented;
•  The opinion addresses only the financial fairness of the base merger consideration of $925,000,000 (excluding the CVRs), which is appropriate given the contingent nature of the CVR obligation;
•  The opinion is properly addressed to the Special Committee, reflecting the Committee's role as the body empowered and charged with evaluating the proposed transaction, rather than to the full Board or to Penterra stockholders; and
•  The opinion complies in form and substance with the requirements applicable to fairness opinions under Delaware law and SEC guidance.
Ms. Vasquez concluded that, in Calderwood & Harkness LLP's professional judgment, the Thorngate fairness opinion is legally sufficient to support the Special Committee's evaluation of the proposed merger and, if the Committee determines to recommend the transaction, to serve as a component of the entire fairness record.
5.3 Disclosure Considerations
Ms. Vasquez addressed the disclosure implications of the fairness opinion. Ms. Vasquez noted that the fairness opinion, including the underlying valuation analyses and material assumptions, will need to be summarized in the proxy statement to be filed by Penterra with the Securities and Exchange Commission ("SEC") in connection with the Penterra stockholder vote required under NYSE listing rules for the issuance of 5,903,497 shares of Penterra common stock in the merger. The proxy statement will be subject to SEC review and comment, and the fairness opinion disclosure must be accurate, complete, and not misleading.
Ms. Vasquez confirmed that Calderwood & Harkness LLP will review the fairness opinion disclosure in the proxy statement for accuracy and completeness, in coordination with Penterra's regular outside counsel, Alcott, Barringer & Cole LLP (Victoria Shen, lead partner, Mergers & Acquisitions), subject to the recusal protocol established by the Independence Protocol. Ms. Vasquez noted that Thorngate will be asked to consent to the inclusion of the fairness opinion and a description of the underlying analyses in the proxy statement.
6. Deliberation Regarding Recommendation
Ms. Prescott opened deliberation on whether the Special Committee should recommend the proposed merger to the full Board of Directors.
6.1 Fair Price Analysis
The Special Committee discussed the negotiated price of $925,000,000 in the context of Thorngate's valuation analyses.
Ms. Prescott observed that the negotiated consideration of $925,000,000 compares favorably across each of Thorngate's four valuation methodologies:
•  The negotiated price of $925,000,000 is above the midpoint of the CLT-4019-only DCF range ($900,000,000 midpoint; range of $780,000,000 to $1,020,000,000), indicating that the price is supported even when the value of Caliston's earlier-stage pipeline candidates is excluded entirely.
•  The negotiated price falls within the full pipeline DCF range of $870,000,000 to $1,180,000,000 (midpoint: $1,025,000,000), and is below the midpoint of that range, indicating that Penterra is not paying full option value for the preclinical pipeline.
•  The negotiated price falls within the comparable transactions range of $820,000,000 to $1,050,000,000 (midpoint: $935,000,000), and is near the midpoint.
•  The negotiated price is above the midpoint of the premiums paid range of $884,000,000 to $986,000,000 (midpoint: $935,000,000), and the 36.03% premium to Caliston's October 2021 Series C post-money valuation of $680,000,000 falls within the observed range of premiums in comparable biotech acquisitions (30% to 45%).
Ms. Prescott then reviewed the negotiation history, noting that the Special Committee's initial counter-offer was approximately $850,000,000, which was presented in response to Caliston's initial asking price of approximately $1,100,000,000. The final negotiated price of $925,000,000 reflects the outcome of extensive arm's-length negotiation over multiple sessions between the Special Committee's advisors and Caliston's advisors, commencing September 29, 2023. Ms. Prescott noted that the negotiation resulted in a price that represents a meaningful discount from Caliston's initial ask and a meaningful premium over the Special Committee's initial counter, reflecting genuine give-and-take between the parties.
Ms. Prescott also noted that the CVR component of $125,000,000 (contingent on FDA approval of CLT-4019 on or before December 31, 2026) appropriately allocates regulatory risk between the parties. If CLT-4019 does not receive FDA approval by the milestone date, the CVR would expire unexercised and the total consideration would remain at $925,000,000. If the milestone is achieved, the additional $125,000,000 payment to former Caliston stockholders would be justified by the significantly enhanced commercial value of CLT-4019 as an FDA-approved product, which would inure to the benefit of Penterra as the surviving corporation.
Mr. Okafor observed that the maximum aggregate transaction value, including the CVR, is $1,050,000,000, which is near the top of most of the valuation ranges produced by Thorngate's analyses. Mr. Okafor noted, however, that this maximum value would only be realized upon a positive FDA approval event, at which point the value of CLT-4019 to Penterra would be substantially greater than reflected in the pre-approval DCF analyses. Accordingly, Mr. Okafor expressed the view that the maximum aggregate consideration of $1,050,000,000 represents a reasonable outcome given the potential value of CLT-4019 as an approved therapeutic.
6.2 Fair Dealing / Process Analysis
The Special Committee then reviewed the process safeguards that had been established and maintained throughout the evaluation of the proposed transaction, as evidence of fair dealing.
Ms. Prescott summarized the key elements of the process as follows:
•  The Special Committee was formed on June 2, 2023, by unanimous vote of the six independent directors of the Board. Dr. Hale, Angela Whitmore, and Raymond Tusk were recused from all Special Committee proceedings, and the Independence Protocol and Information Barrier Policy was adopted simultaneously with the Committee's formation.
•  The Special Committee was granted sole and exclusive authority over the evaluation of the proposed transaction, including the power to reject the proposed transaction, negotiate the terms of any definitive agreement, retain independent legal counsel and independent financial advisors, and explore strategic alternatives.
•  Independent legal counsel (Calderwood & Harkness LLP, engaged June 2, 2023; Calderwood & Harkness Matter Number 1025-00006) and independent financial advisors (Thorngate Partners LLC, engaged June 16, 2023) were promptly retained by the Special Committee. Both advisors confirmed their independence and the absence of conflicts of interest at the time of engagement and throughout the process.
•  Director independence questionnaires were completed and analyzed for all three Committee members (Prescott, Okafor, and Ng). Each member was confirmed to be independent under NYSE listing standards and under Delaware law, with no material relationships with Caliston, Dr. Hale, or any other party to the transaction.
•  The Information Barrier and Independence Protocol were maintained throughout the process without any reported breaches. All Special Committee materials were maintained in the segregated Project Coriander workspace, with access strictly limited to authorized individuals.
•  Comprehensive due diligence was conducted, including the preparation and review of a legal due diligence report, an intellectual property diligence memorandum, a regulatory due diligence memorandum, an antitrust/HSR Act analysis, a tax analysis, and a summary of related-party relationships.
•  A market check was conducted between August 22, 2023 and September 14, 2023, during which the Special Committee (through its advisors) explored strategic alternatives to the proposed Caliston acquisition. No superior alternative transactions were identified during the market check.
•  Active, arm's-length negotiation was conducted with Caliston's legal counsel (Whitfield Graves LLP, Kenneth Pratt) and financial advisor (Fendowell Sinclair & Co., Sandra Wu) over multiple sessions commencing September 29, 2023, resulting in significant concessions from Caliston, including reductions in the aggregate equity value, the introduction of the CVR structure to allocate regulatory risk, the imposition of escrow and indemnification obligations, and the refinement of termination fee provisions.
•  The Special Committee held ten meetings to date (including the present meeting), with detailed minutes maintained for each meeting, creating a comprehensive contemporaneous record of the Committee's deliberations.
•  A fairness opinion was delivered by the independent financial advisor, Thorngate Partners LLC, concluding that the aggregate base consideration of $925,000,000 is fair, from a financial point of view, to Penterra.
Ms. Prescott stated that, in her judgment, the process safeguards implemented by the Special Committee are consistent with, and in many respects exceed, the standards set forth in Delaware case law for transactions involving conflicts of interest.
6.3 Consideration of Financial Impact on Penterra
The Special Committee discussed the financial impact of the proposed transaction on Penterra.
Ms. Prescott reviewed Penterra's current financial position, as follows:
•  Penterra's fiscal year 2022 revenue was $1,836,000,000, with EBITDA of $412,000,000 and net income of $247,000,000.
•  As of June 1, 2023, Penterra had approximately $892,000,000 in cash and cash equivalents on hand, and a market capitalization of approximately $4,720,000,000, based on approximately 121,400,000 shares of common stock outstanding.
•  The cash outlay for the merger consideration — $693,750,000, comprised of $400,000,000 from cash on hand and $293,750,000 drawn on the Revolver — is manageable in the context of Penterra's balance sheet and available liquidity. The draw of $293,750,000 on the Revolver against approximately $1,100,000,000 of undrawn availability leaves substantial remaining borrowing capacity for ongoing operations and future strategic initiatives.
•  The issuance of 5,903,497 shares of Penterra common stock in the merger represents approximately 4.9% dilution to existing Penterra stockholders. The Committee noted that this level of dilution is modest in the context of a transaction of this magnitude and is consistent with dilution levels observed in comparable biotech acquisitions.
Ms. Prescott noted that Caliston is a pre-revenue, clinical-stage company (fiscal year 2022 revenue: $0; fiscal year 2022 net cash burn: $78,400,000; cash on hand as of March 31, 2023: $112,600,000, with an estimated cash runway through the first quarter of 2025). The acquisition is therefore fundamentally a strategic investment in Penterra's oncology pipeline, with the primary value driver being CLT-4019 and the potential contributions of the preclinical candidates CLT-5227 and CLT-6034.
The Committee further discussed the operational integration of Caliston's 94 employees into Penterra's existing operations and infrastructure. Ms. Prescott noted that Dr. Nadia Sorensen, Caliston's Chief Executive Officer, will be required to enter into a 2-year non-competition agreement and a 2-year non-solicitation agreement as a condition to closing, which will protect Penterra's investment in the Caliston pipeline and workforce.
6.4 Protective Provisions
The Special Committee noted the key protective provisions negotiated in the Merger Agreement and ancillary agreements:
•  Escrow. An escrow deposit of $46,250,000 (5% of the aggregate equity value) will be maintained with Greystone National Bank, N.A. as escrow agent, with an 18-month survival period for indemnification claims, providing Penterra with a dedicated source of recovery for post-closing indemnification obligations.
•  Termination Fees. The reverse termination fee of $32,375,000 (3.5% of equity value) and company termination fee of $27,750,000 (3.0% of equity value) are appropriately sized relative to the aggregate transaction value, providing meaningful deal certainty while preserving flexibility for both parties in the event of a superior proposal or regulatory impediment.
•  Voting and Recusal Agreement. Dr. Hale's Voting and Recusal Agreement ensures that he will abstain from the Board vote on the proposed merger, eliminating the risk of a conflicted vote at the Board level.
•  Stockholder Support Agreements. Dr. Hale has committed his 2,140,000 Penterra shares to vote in favor of the share issuance at the Penterra stockholder meeting, providing additional deal certainty. On the Caliston side, Ridgeline Ventures, LP (holding 22.3% of Caliston's outstanding shares) and Meridian Life Sciences Fund III, LP (holding 18.7% of Caliston's outstanding shares) have committed to execute the written consent required for Caliston stockholder approval, providing a clear path to the requisite majority.
6.5 Preliminary Sentiment
Ms. Prescott invited each member of the Special Committee to express a preliminary view on whether the Committee should recommend the proposed merger to the full Board.
Mr. Okafor stated that he is inclined to recommend the transaction. Mr. Okafor noted that the negotiated price of $925,000,000 falls within the range of fairness as determined by each of Thorngate's valuation methodologies, that the process has been thorough, rigorous, and independent, and that the strategic rationale for acquiring CLT-4019 — including the opportunity to strengthen Penterra's oncology pipeline with a differentiated late-stage clinical asset — is compelling. Mr. Okafor further noted that the CVR structure appropriately allocates regulatory risk and that the protective provisions, including the escrow and termination fee structure, adequately safeguard Penterra's interests.
Dr. Ng concurred with Mr. Okafor's assessment. Dr. Ng noted her favorable view of the available clinical data supporting CLT-4019, including the mechanism of action, the preliminary efficacy signals, and the FDA's constructive engagement during the regulatory process. Dr. Ng expressed her view that the CVR structure is appropriate and well-designed, providing former Caliston stockholders with upside participation in the event of FDA approval while protecting Penterra from overpayment in the event of a negative regulatory outcome. Dr. Ng also noted the rigor and integrity of the independence process maintained by the Special Committee, which in her judgment meets or exceeds the standards expected under Delaware law.
Ms. Prescott expressed her agreement with the views of Mr. Okafor and Dr. Ng. Ms. Prescott stated that, in her assessment, the Special Committee has fulfilled its obligations under Delaware law and its Charter to ensure both fair dealing and fair price, and that the negotiated transaction, as supported by Thorngate's fairness opinion and Calderwood & Harkness LLP's legal analysis, represents a transaction that is in the best interests of Penterra and its stockholders.
6.6 Decision to Defer Formal Vote
Notwithstanding the favorable preliminary views expressed by each Committee member, and after further discussion, the Special Committee determined to defer the formal vote on the recommendation to a subsequent meeting. The Committee agreed that deferral would allow each member additional time to review the final draft of the Merger Agreement (which is expected to progress from the current working draft, v.7.2, to execution-ready form in the coming days) and to consult further with Independent Counsel regarding any remaining issues.
Ms. Vasquez confirmed that Calderwood & Harkness LLP would circulate a near-final draft of the Merger Agreement, together with the comprehensive process memorandum (a detailed narrative of all Special Committee activities from formation through the present meeting), for the Committee's review prior to the next meeting. Ms. Vasquez noted that the process memorandum is intended to serve as the definitive contemporaneous record of the Special Committee's activities in support of the entire fairness analysis.
The Special Committee scheduled its next meeting — and eleventh meeting overall — for November 20, 2023, at which time the formal recommendation vote would be taken.
7. Next Steps
Ms. Vasquez outlined the anticipated timeline for the remaining steps in the transaction process:
•  November 17, 2023: Calderwood & Harkness LLP to circulate to the Special Committee members the finalized memorandum on the legal sufficiency of the fairness opinion, the near-final draft of the Merger Agreement, and the comprehensive process memorandum.
•  November 20, 2023: Special Committee meeting — formal vote on whether to recommend the proposed merger to the full Board of Directors.
•  November 22, 2023: Full Board meeting (with participation limited to non-recused directors, in accordance with the Independence Protocol) to consider the Special Committee's recommendation and vote on approval of the Merger Agreement and authorization of the merger.
•  Following Board Approval: Execution and delivery of the Merger Agreement and all ancillary documents, including the CVR Agreement, the Escrow Agreement, the Stockholder Support Agreements, the Voting and Recusal Agreement, and the Non-Competition and Non-Solicitation Agreement with Dr. Nadia Sorensen.
•  Public Announcement: Promptly following execution, a Current Report on Form 8-K will be filed with the SEC announcing the transaction.
•  Caliston Stockholder Written Consent: Written consent of holders of a majority of Caliston's outstanding shares will be solicited promptly following execution of the Merger Agreement.
•  Administrative Steps: The Secretary's certificate and closing checklist will be prepared by Lawrence Whittaker, General Counsel and Corporate Secretary of Penterra, with the assistance of Calderwood & Harkness LLP (Daniel Obi, Senior Associate).
8. Executive Session
At 4:10 p.m. Eastern Time, upon motion by Ms. Prescott, the Special Committee entered executive session with only the three Committee members and Calderwood & Harkness LLP counsel (Ms. Vasquez and Ms. Tremblay) present. All other attendees were excused from the meeting during the executive session.
During the executive session, the Committee discussed privileged matters relating to the process record and the preparation of the comprehensive process memorandum in support of the entire fairness analysis. The substance of the executive session discussion is protected by the attorney-client privilege and attorney work product doctrine.
No formal action was taken during the executive session.
9. Adjournment
At the conclusion of the executive session, the Committee returned to open session. 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 adjourned at 4:35 p.m. Eastern Time.
The next meeting of the Special Committee was confirmed for November 20, 2023.
These minutes have been prepared by Sophie Tremblay, Calderwood & Harkness LLP, in her capacity as assistant secretary for the meeting, and are submitted for approval at the next meeting of the Special Committee.
APPROVED AND ADOPTED
________________________________________
Diane Prescott Chair, Special Committee of the Board of Directors Penterra Pharmaceuticals Corp.
Date: ________
________________________________________
Sophie Tremblay Lead Associate, Calderwood & Harkness LLP Assistant Secretary for the Meeting
Date: ________
ATTACHMENTS
The following attachments are incorporated by reference into these minutes:
Attachment A: Fairness Opinion of Thorngate Partners LLC, dated November 15, 2023
Attachment B: Calderwood & Harkness LLP Memorandum on Fairness Opinion — Legal Sufficiency and Disclosure Review, dated November 15, 2023
Attachment C: Summary of Thorngate Partners LLC Valuation Analyses (presentation materials)
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT These minutes and all attachments hereto are confidential and privileged communications prepared at the direction of Calderwood & Harkness LLP, independent legal counsel to the Special Committee of the Board of Directors of Penterra Pharmaceuticals Corp., and are subject to the attorney-client privilege and the attorney work product doctrine. These minutes are not to be disclosed to any person other than the members of the Special Committee and authorized representatives of Calderwood & Harkness LLP and Thorngate Partners LLC without the prior written consent of the Special Committee.
Methodology | Low ($M) | Midpoint ($M) | High ($M)
DCF — CLT-4019 Only | $780 | $900 | $1,020
DCF — Full Pipeline (rNPV) | $870 | $1,025 | $1,180
Comparable Transactions | $820 | $935 | $1,050
Premiums Paid | $884 | $935 | $986
Negotiated Equity Value | — | $925 | —

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

APPROVED AND ADOPTED

ATTACHMENTS

Record

Parties

Dates

Amounts