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MEMORANDUM

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

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I. Executive Summary

This memorandum analyzes the adequacy of Penterra Pharmaceuticals Corp.'s ("Penterra" or the "Sponsor") existing clinical trial liability insurance, underwritten by Briarcliff Mutual Insurance Company ("Briarcliff"), against the initial demand made by Veridian Health Research Network, Inc. ("Veridian") for no less than $50,000,000 in per-occurrence coverage as a condition of the Master Clinical Trial Agreement ("MCTA") currently under negotiation between the parties. Veridian's demand was first communicated in pre-negotiation correspondence from its outside counsel, Whitmore, Jansen & Callahan LLP ("WJC"), and was subsequently formalized in WJC's initial markup of the MCTA. The MCTA governs the conduct of Protocol PPC-4871-III (the "CLARION" trial), a Phase III, randomized, double-blind, placebo-controlled study of the investigational oral multi-kinase inhibitor penterafenib (PPC-4871) in patients with advanced hepatocellular carcinoma.

Based on our review of the Briarcliff policy terms, industry benchmarking data, the specific risk profile of the CLARION trial, and the MCTA's proposed indemnification structure, we recommend that Penterra maintain its current negotiating position of $25,000,000 per occurrence / $75,000,000 aggregate clinical trial liability insurance coverage. This recommendation rests on the following principal conclusions:

• The $25,000,000 per-occurrence limit is at or above the upper end of industry benchmarks for comparable Phase III oncology trials conducted across multi-site academic research networks in the United States.

• The $75,000,000 aggregate limit provides meaningful cushion for multiple occurrences over each annual policy period, with aggregate limits resetting upon annual renewal. Given the CLARION trial's projected 60-month study duration, this structure affords substantial cumulative protection.

• The subject-injury sublimit of $10,000,000 per occurrence / $50,000,000 aggregate, which is embedded within the broader per-occurrence and aggregate limits, is appropriate in light of the MCTA's proposed per-subject medical care cap of $500,000 and aggregate medical care cap of $15,000,000. The sublimit aligns with reasonably foreseeable subject-injury exposure, even under conservative multi-subject adverse-event scenarios.

• The MCTA's indemnification structure — including uncapped sponsor indemnification for product-defect claims, capped medical care obligations, and reciprocal indemnification from Veridian and its participating sites — operates in conjunction with the insurance coverage to provide comprehensive risk allocation. The indemnification carve-outs (excluding losses arising from site negligence, unauthorized protocol deviations, and site breaches) further limit Penterra's effective exposure.

• Veridian's demand for $50,000,000 in per-occurrence coverage is materially above market norms. Our benchmarking analysis, drawing on both publicly available data and proprietary information from prior Calderwood & Harkness engagements, indicates that most large academic medical center networks accept per-occurrence limits in the range of $15,000,000 to $25,000,000 for comparable Phase III oncology trials. Veridian's demand appears to represent an opening negotiation position rather than a firm operational requirement.

• Increasing the per-occurrence limit from $25,000,000 to $50,000,000 would likely require the procurement of an excess insurance layer or a material increase in premium, the cost of which would be disproportionate to the incremental risk protection afforded, particularly in light of the existing indemnification framework.

We further recommend that, as a fallback position only, Penterra consider whether a modest increase to $30,000,000 per occurrence could be achieved through an excess policy endorsement at reasonable cost, should Veridian prove unwilling to accept the $25,000,000 limit after reviewing industry benchmarking data. This fallback should not be raised by Penterra in initial negotiations.

The remainder of this memorandum sets forth the factual background, detailed policy analysis, industry benchmarking, interplay with the MCTA's indemnification provisions, and recommended negotiation strategy and action items.

II. Background

A. The CLARION Trial

Penterra Pharmaceuticals Corp. is a Delaware corporation headquartered at 200 Biopharma Boulevard, Suite 1400, Princeton, New Jersey 08540. Penterra's shares are listed on the Nasdaq Global Select Market under the ticker symbol "PTRA." As of the most recent publicly available financial data (Q1 2023), Penterra reported approximately $890 million in cash and cash equivalents, fiscal year 2022 revenue of approximately $1.87 billion, and a market capitalization of approximately $4.2 billion. Penterra's core therapeutic focus areas include oncology, rare diseases, and immunology.

Penterra is the sponsor of Protocol PPC-4871-III, designated by the study acronym "CLARION" (Clinical Assessment of Response with Longitudinal Investigation in ONcology). The CLARION trial is designed to evaluate the efficacy and safety of penterafenib (PPC-4871), an oral multi-kinase inhibitor, in adult patients with advanced hepatocellular carcinoma ("HCC") who have progressed on or after prior systemic therapy (i.e., second-line treatment).

The Investigational New Drug application for penterafenib was filed with the U.S. Food and Drug Administration ("FDA") in October 2021 under IND Number 157823. Phase I dose-escalation and dose-expansion studies were completed in 2022, and the Phase II study was completed in January 2023. Phase II results demonstrated a confirmed objective response rate ("ORR") of 38% with a manageable safety profile. No unexpected serious adverse events requiring dose-limiting toxicity adjustments were reported in the Phase II data. These results supported Penterra's decision to advance penterafenib into the Phase III CLARION trial.

The CLARION trial is designed as a Phase III, randomized, double-blind, placebo-controlled study. The study plans to enroll approximately 1,200 subjects, randomized in a 2:1 ratio (approximately 800 subjects in the treatment arm receiving penterafenib and approximately 400 subjects in the placebo arm). The primary endpoint is overall survival ("OS"), with secondary endpoints including progression-free survival ("PFS"), objective response rate, duration of response, and safety. The trial has been registered on ClinicalTrials.gov under Identifier NCT05928174.

The CLARION trial will be conducted at 38 sites within the Veridian Health Research Network, located across 14 states. The projected enrollment period is approximately 42 months, with a total study duration (including follow-up) of approximately 60 months, with projected study completion in approximately August 2028. The total value of the MCTA, encompassing per-subject payments, investigator grants, site management fees, pharmacy fees, and other pass-through costs across all 38 sites, is approximately $80,000,000.

B. The Counterparty

Veridian Health Research Network, Inc. is a Delaware corporation organized as a tax-exempt entity under Section 501(c)(3) of the Internal Revenue Code. Veridian is headquartered at 750 Research Parkway, 8th Floor, Philadelphia, Pennsylvania 19104, and operates under Employer Identification Number 23-4178205.

Veridian is a multi-site academic research network comprising 38 academic medical centers and affiliated research institutions located across 14 states. The network's mission is to advance clinical research through coordinated multi-site trial execution, data management, and regulatory compliance support. Veridian's annual research volume is approximately $1.4 billion in sponsored research expenditures, and the organization employs approximately 6,200 individuals, including investigators, research coordinators, regulatory affairs specialists, data managers, and administrative staff.

Veridian is represented in the MCTA negotiation by Whitmore, Jansen & Callahan LLP, located at 1500 Market Street, Suite 3200, Philadelphia, Pennsylvania 19102. The lead partner on the engagement is Allison Whitmore, who has extensive experience in academic clinical trial contracting and site-side representation.

C. Lead Sites and Investigators

The CLARION trial's lead site and Global Principal Investigator are as follows:

• Site 001 — Graystone University Medical Center, located at 1200 University Avenue, Philadelphia, Pennsylvania 19104. The Global Principal Investigator is Dr. Catherine Aldridge, M.D., Ph.D., who holds appointments in the Department of Medical Oncology and the Department of Pharmacology at Graystone University School of Medicine. Dr. Aldridge is an internationally recognized authority in hepatocellular carcinoma and targeted kinase inhibitor therapy. The institutional review board of record for Site 001 is the Graystone University Institutional Review Board (IRB registration number IRB00012847).

• Site 002 — Lakemont Medical Center, located at 4400 North Michigan Drive, Chicago, Illinois 60611. The Co-Principal Investigator is Dr. Howard Matsuoka, M.D., who leads the Liver Cancer Clinical Trials Program at Lakemont. The institutional review board of record for Site 002, and the central IRB for a number of other Veridian network sites, is the Veridian Central IRB.

Additional site-specific details and investigator designations for the remaining 36 Veridian sites are set forth in the draft MCTA's Exhibit B (Site and Investigator List), which is currently under negotiation and not reproduced herein.

D. Penterra's Existing Insurance Coverage

Penterra maintains clinical trial liability insurance through Briarcliff Mutual Insurance Company, a mutual insurance company organized under the laws of the State of Connecticut, with principal offices located at 55 Constitution Plaza, Hartford, Connecticut 06103. The designated underwriter contact for the Penterra account is Karen Tremblay, Vice President, Life Sciences Lines.

The key terms of the current policy are as follows:

The Briarcliff policy is a claims-made-and-reported policy with an extended reporting period provision. A detailed summary of the policy's key terms, conditions, and exclusions is attached as Appendix A.

E. Veridian's Initial Insurance Demand

In pre-negotiation correspondence from WJC dated March 30, 2023, and subsequently formalized in WJC's initial markup of the MCTA (received by our office on April 28, 2023, but reflecting positions communicated earlier), Veridian demanded that Penterra maintain clinical trial liability insurance of not less than $50,000,000 per occurrence as a condition of executing the MCTA. Veridian further insisted that Veridian and each of its 38 participating site institutions be named as additional insureds on the Penterra policy.

Veridian's stated rationale for the $50,000,000 per-occurrence demand, as articulated in WJC's correspondence and in telephonic discussions between Allison Whitmore and Miriam Calloway, was based on the following factors:

1. Trial Scale. The CLARION trial's enrollment of approximately 1,200 subjects, which Veridian characterized as creating substantial aggregate exposure for subject-injury claims.

2. Oncology Indication. The advanced HCC indication, involving patients with significant baseline morbidity and co-morbidities, which Veridian asserted heightened the risk and potential severity of adverse events, including fatal outcomes.

3. Multi-Site Network Structure. The involvement of 38 sites across 14 states, which Veridian argued exposed multiple institutions to potential liability from a single occurrence (e.g., a product-batch contamination event or a systemic safety signal affecting subjects across multiple sites simultaneously).

As discussed in detail below, while Veridian's concerns regarding trial risk are understandable as a matter of prudent risk management, its $50,000,000 per-occurrence demand is materially above industry benchmarks and is not warranted by the trial's risk profile or the proposed MCTA indemnification structure.

III. Analysis of Current Briarcliff Policy Coverage

A. Policy Structure and Key Terms

The Briarcliff policy (Policy No. BM-CTL-2023-04182) is a specialty clinical trial liability and subject-injury insurance policy issued under Briarcliff's Life Sciences Lines division. The policy is designed specifically for pharmaceutical and biotechnology companies sponsoring clinical trials and provides coverage for liability arising from the conduct of clinical investigations, including subject-injury claims, product-defect claims, and associated defense costs. This form of coverage is distinct from commercial general liability ("CGL") and product liability policies that Penterra also maintains, and is specifically tailored to address the unique risks associated with clinical trial conduct.

Named Insured. The named insured under the Briarcliff policy is Penterra Pharmaceuticals Corp. The policy permits the addition of additional insureds by endorsement, subject to underwriter approval. As discussed in Section VI below, we recommend that Penterra promptly request an endorsement naming Veridian and each of its 38 participating site institutions as additional insureds, which is a standard accommodation in the clinical trial insurance market and one that Briarcliff has granted on prior Penterra engagements.

Per-Occurrence Limit. The per-occurrence limit of $25,000,000 represents the maximum amount the policy will pay for all covered losses arising from a single occurrence. Under the policy's definition of "occurrence," this term encompasses a single event or a series of related events arising from the same cause or set of facts. Thus, for example, a product-batch contamination affecting multiple trial subjects across multiple sites would likely constitute a single occurrence for purposes of the per-occurrence limit.

Aggregate Limit. The aggregate limit of $75,000,000 represents the maximum amount the policy will pay for all covered losses during the policy period, regardless of the number of occurrences. This aggregate limit provides a 3:1 ratio to the per-occurrence limit, which is standard in the specialty clinical trial insurance market and reflects Briarcliff's assessment that multiple independent occurrences within a single policy period are unlikely but foreseeable. Importantly, because the Briarcliff policy is renewable annually and the aggregate limit resets with each policy period, Penterra's cumulative aggregate coverage over the projected 60-month CLARION trial duration (encompassing five policy years, assuming annual renewal) would be $375,000,000 in total potential aggregate coverage, a figure that provides substantial protection even in a worst-case scenario.

Subject-Injury Sublimit. The policy includes a subject-injury sublimit of $10,000,000 per occurrence and $50,000,000 in the aggregate. This sublimit is carved out specifically for claims arising from physical or psychological injury to clinical trial subjects that results from the administration of the investigational product or from study procedures conducted pursuant to the protocol. The subject-injury sublimit is a subset of (not in addition to) the broader per-occurrence and aggregate limits, meaning that a subject-injury claim that exhausts the $10,000,000 per-occurrence sublimit does not leave an additional $25,000,000 available for that same occurrence under the general per-occurrence limit. Rather, the sublimit functions as a cap on the portion of the per-occurrence limit that is available for subject-injury claims, while the full $25,000,000 per-occurrence limit remains available for non-subject-injury claims (e.g., claims by third parties, regulatory defense costs, or product-defect claims not involving direct subject injury).

Policy Period and Renewal. The current policy period runs from April 1, 2023, through March 31, 2024. The policy is renewable annually, and Penterra has maintained continuous clinical trial liability coverage with Briarcliff since 2019. Under the terms of the MCTA, Penterra would be obligated to maintain clinical trial liability coverage throughout the duration of the CLARION trial, which is projected to extend through approximately August 2028. Accordingly, Penterra will need to renew the Briarcliff policy (or obtain equivalent coverage) for at least five consecutive policy years.

Coverage Territory. The Briarcliff policy's coverage territory encompasses the entire United States, including all 14 states in which Veridian sites participating in the CLARION trial are located. No territorial limitations present any concern for the CLARION trial.

Defense Costs. The Briarcliff policy provides defense cost coverage for claims covered under the policy. We have reviewed the policy's treatment of defense costs and note that, under the current policy terms, defense costs are included within (i.e., erode) the per-occurrence and aggregate limits. This is common in the specialty clinical trial liability insurance market, where defense-outside-limits ("DOL") coverage is available but typically at a substantial premium increase. The erosion of limits by defense costs is a factor worth monitoring, particularly in the event of protracted litigation, but does not materially affect the adequacy analysis for the CLARION trial. Defense costs in clinical trial liability matters are typically a modest fraction of the per-occurrence limit, and the 3:1 aggregate-to-per-occurrence ratio provides meaningful cushion.

Additional Insured Endorsement. As noted above, the Briarcliff policy permits the addition of additional insureds by endorsement. Penterra has utilized this feature on prior clinical trial agreements with other research networks and individual academic sites. The endorsement extends coverage to the additional insured for liability arising from the clinical trial in question, subject to the same terms, conditions, and limits of the underlying policy. We recommend that Penterra promptly request Briarcliff to issue an additional insured endorsement naming Veridian Health Research Network, Inc. and each of its 38 participating site institutions as additional insureds under Policy No. BM-CTL-2023-04182. This is addressed further in Section VII.D (Action Items) below.

B. Subject-Injury Sublimit Analysis

The subject-injury sublimit warrants focused analysis because it is the coverage layer most directly relevant to the clinical trial context and the one most likely to be implicated in any adverse-event scenario arising during the CLARION trial.

Structure of the Sublimit. The $10,000,000 per-occurrence subject-injury sublimit is a subset of the broader $25,000,000 per-occurrence limit. Similarly, the $50,000,000 aggregate subject-injury sublimit is a subset of the broader $75,000,000 aggregate limit. This means that subject-injury claims draw down both the sublimit and the general limit simultaneously. For example, if a single occurrence gives rise to $10,000,000 in subject-injury claims, the per-occurrence limit would be reduced from $25,000,000 to $15,000,000 for any non-subject-injury claims arising from the same occurrence (e.g., regulatory defense costs or third-party claims). Similarly, $10,000,000 in subject-injury claims in a policy year would reduce the aggregate subject-injury sublimit to $40,000,000 and the general aggregate limit to $65,000,000.

Interplay with MCTA Indemnification Provisions. The proposed MCTA includes detailed indemnification provisions for study-related subject injury, which operate in conjunction with (and are partially backstopped by) the Briarcliff policy's subject-injury sublimit. Specifically:

• Per-Subject Medical Care Cap. The MCTA proposes that Penterra's obligation to pay or reimburse medical care costs for study-related injuries to individual subjects be capped at $500,000 per subject.

• Aggregate Medical Care Cap. The MCTA proposes an aggregate cap of $15,000,000 on medical care costs across all subjects over the life of the study.

• Product-Defect Claims. Penterra's indemnification obligation for claims arising from product defects (e.g., manufacturing contamination, formulation errors, or undisclosed risks) is proposed to be uncapped. Product-defect claims may involve subject-injury components but would also potentially include non-subject-injury components (e.g., regulatory response costs, site remediation costs). For such claims, the full $25,000,000 per-occurrence limit (not just the $10,000,000 subject-injury sublimit) would respond.

Sublimit Adequacy for Subject-Injury Claims. The $10,000,000 per-occurrence subject-injury sublimit is designed to cover multiple subject injuries arising from a single occurrence. In the context of a Phase III oncology trial, a "single occurrence" for subject-injury purposes could include, for example, a product-batch contamination event affecting multiple subjects, a newly identified systemic adverse event discovered during the trial that affects subjects across multiple sites, or a protocol-related procedural error replicated across sites.

Given the MCTA's proposed $500,000 per-subject medical care cap, the $10,000,000 per-occurrence sublimit would accommodate injuries to up to 20 subjects at the maximum per-subject cap before being exhausted. This represents a conservative scenario; in practice, the majority of study-related subject injuries result in medical care costs substantially below $500,000, and an occurrence affecting 20 or more subjects at the maximum cap level simultaneously would be an extraordinarily rare event in a well-monitored Phase III trial with a Data Safety Monitoring Board and established stopping rules.

The $50,000,000 aggregate subject-injury sublimit provides further protection across the policy year. Even in a scenario in which multiple unrelated subject-injury occurrences arise during a single policy year — an unlikely but not impossible scenario — the aggregate sublimit provides more than three times the coverage of the MCTA's $15,000,000 aggregate medical care cap. This provides substantial headroom above the indemnification obligation, ensuring that the insurance backstop remains available even if indemnification obligations are fully triggered.

Non-Subject-Injury Claims. For claims that do not fall within the subject-injury sublimit — including product-defect claims, third-party claims, and regulatory defense costs — the full $25,000,000 per-occurrence limit applies without sublimit restrictions. This is significant because product-defect claims, which are uncapped under the MCTA's indemnification provisions, represent the most significant potential exposure and are appropriately covered by the broader per-occurrence limit.

C. Adequacy Relative to Trial Risk Profile

The adequacy of the Briarcliff policy's limits must be assessed in light of the specific risk profile of the CLARION trial. Several factors bear on this assessment:

Oncology Trial Risk Factors. Penterafenib (PPC-4871) is an oral multi-kinase inhibitor. Multi-kinase inhibitors as a class are associated with known adverse events, including hepatotoxicity, hypertension, hand-foot syndrome (palmar-plantar erythrodysesthesia), diarrhea, and fatigue. The CLARION trial's target population — adult patients with advanced HCC who have progressed on prior systemic therapy — represents a patient cohort with significant baseline morbidity, including underlying liver dysfunction, which may exacerbate certain drug-related adverse events (particularly hepatotoxicity). These factors suggest a somewhat elevated risk profile compared to trials in healthier populations or non-oncology indications.

However, several mitigating factors reduce the effective risk:

• Placebo-Controlled Design. The 2:1 randomization design means that only approximately 800 of the 1,200 subjects will receive the investigational product. The remaining 400 subjects on placebo will have no drug-related injury exposure (beyond any study-procedure-related risks, which are generally modest). This effectively limits the drug-related injury exposure to two-thirds of the enrolled population.

• Phase II Safety Data. The completed Phase II study demonstrated a 38% ORR with a manageable safety profile. No unexpected serious adverse events requiring dose-limiting toxicity adjustments were reported. While Phase III trials are larger and may reveal adverse events not observed in Phase II, the Phase II data provides meaningful baseline confidence in the drug's safety profile.

• Trial Monitoring and Safety Oversight. The CLARION trial protocol includes standard safety oversight mechanisms, including a Data Safety Monitoring Board ("DSMB"), periodic safety reviews, pre-specified stopping rules for excess toxicity, and real-time adverse event reporting. These mechanisms substantially reduce the risk of a catastrophic, undetected multi-subject adverse event.

• Duration Consideration. The 60-month total study duration requires annual policy renewal, meaning that aggregate limits reset each policy year. Over the full course of the trial, Penterra would have cumulative access to up to $375,000,000 in aggregate coverage (five policy years × $75,000,000 aggregate) and up to $250,000,000 in aggregate subject-injury coverage (five policy years × $50,000,000 aggregate), assuming continuous renewal at current limits.

Historical Data on Clinical Trial Insurance Claims. Based on our review of available data — including published surveys by the Association of Clinical Research Organizations ("ACRO"), the Drug Information Association ("DIA"), and internal Calderwood & Harkness experience across more than 150 clinical trial agreements — most single-occurrence claims in Phase III oncology trials do not exceed $10,000,000. Catastrophic multi-subject events (i.e., events affecting dozens or hundreds of subjects simultaneously) are exceedingly rare in modern clinical trials due to the safety monitoring mechanisms described above. The largest reported clinical trial insurance claims in the United States in the past decade have generally been in the range of $5,000,000 to $15,000,000, with only a small number of outlier cases exceeding $20,000,000, and those typically involved earlier-phase trials with less safety data, novel mechanisms of action with unexpected toxicities, or trials in vulnerable populations such as pediatrics.

Accordingly, we conclude that the Briarcliff policy's $25,000,000 per-occurrence limit and $10,000,000 per-occurrence subject-injury sublimit are adequate for the reasonably foreseeable risk profile of the CLARION trial.

IV. Industry Benchmarking — Per-Occurrence and Aggregate Limits

A. Peer Sponsor Comparison

To assess whether Veridian's $50,000,000 per-occurrence demand is commercially reasonable, we conducted a benchmarking analysis of clinical trial insurance requirements in comparable multi-site Phase III oncology agreements. Our analysis draws on the following sources:

• Publicly available disclosure in FDA-mandated informed consent documents, which often reference insurance coverage levels.

• Proprietary data from prior Calderwood & Harkness engagements, encompassing more than 40 multi-site Phase III oncology clinical trial agreements negotiated by our firm in the past five years.

• Published industry surveys, including the 2022 ACRO Clinical Trial Insurance Benchmarking Report and the DIA Sponsor-Site Contracting Survey (2021).

• Informal market intelligence from specialty insurance brokers and underwriters in the life sciences insurance market.

The results of our analysis are summarized below:

A more detailed benchmarking table, using anonymized data from prior Calderwood & Harkness engagements, is attached as Appendix B.

Several observations emerge from this analysis:

1. Veridian's $50,000,000 per-occurrence demand exceeds the upper range of industry standard requirements. Across the data set we reviewed, per-occurrence limits for Phase III oncology trials ranged from $10,000,000 to $25,000,000, with the majority of agreements falling in the $15,000,000 to $25,000,000 range. No comparable agreement in our data set required a per-occurrence limit of $50,000,000 or above.

2. Most large academic medical center networks accept $15,000,000 to $25,000,000 per-occurrence limits in practice. While initial insurance demands from academic sites and site networks often exceed these levels (as Veridian's demand does here), these demands are routinely negotiated downward to the $15,000,000 to $25,000,000 range. Our experience indicates that Veridian's $50,000,000 demand is consistent with an opening negotiation position rather than a non-negotiable requirement.

3. Penterra's $25,000,000 per-occurrence limit is at the upper end of the market range. Penterra's existing coverage places it at or above the coverage levels maintained by peer pharmaceutical sponsors of comparable trials, including several large-cap and mid-cap pharmaceutical companies with Phase III oncology programs of similar scale.

4. Aggregate limits of $75,000,000 are at the upper end of market norms. Penterra's aggregate limit is well within (and at the high end of) the typical range, providing additional confidence in the adequacy of the current coverage structure.

5. Some large sponsors carry higher per-occurrence limits, but context matters. A small number of large pharmaceutical companies maintain per-occurrence limits of $50,000,000 or above, but these are typically global programs with sites in jurisdictions outside the United States where regulatory requirements may mandate higher coverage levels (e.g., certain European Union member states require sponsor insurance at prescribed levels under the EU Clinical Trials Regulation). The CLARION trial is a U.S.-only program, and no U.S. regulatory requirement mandates a specific minimum level of clinical trial liability insurance.

B. Site Network Benchmarking

We also examined insurance requirements from the site-network perspective, focusing on large multi-site research networks similar to Veridian in scale and structure.

Large multi-site academic research networks comprising 30 or more sites generally require per-occurrence coverage in the range of $20,000,000 to $25,000,000. Smaller networks (10–20 sites) typically accept lower limits, often in the $10,000,000 to $15,000,000 range. Veridian's 38-site network is among the largest in the United States, which may explain the elevated initial demand, but even accounting for network size, the $50,000,000 demand is well above the observed range.

We note that the Indemnification Benchmarking Memorandum prepared by Christopher Aiken in connection with this matter (dated April 12, 2023) confirmed that reciprocal site indemnity caps of $5,000,000 per site/per occurrence and $20,000,000 aggregate across all network sites are within market norms for large multi-site agreements. These reciprocal indemnity caps operate in tandem with the insurance requirements to allocate risk between sponsor and site network, and their presence further supports the adequacy of a $25,000,000 per-occurrence insurance limit.

C. Insurance Market Considerations

The specialty life sciences insurance market has experienced moderate hardening over the past two years, with premium increases in the range of 5% to 15% annually for clinical trial liability policies, depending on the sponsor's claims history, trial portfolio, and coverage limits. Briarcliff Mutual has been a competitive carrier in this space, and Penterra's current premium reflects favorable terms secured through Penterra's long-standing relationship with Briarcliff and its clean claims history.

Increasing the per-occurrence limit from $25,000,000 to $50,000,000 would likely require one of two approaches: (i) a primary policy limit increase, which would be subject to Briarcliff's underwriting appetite and pricing; or (ii) the procurement of a $25,000,000 excess layer above the existing $25,000,000 primary limit, which could be placed either with Briarcliff or with a separate excess carrier. In either case, the estimated additional premium cost could be significant relative to the incremental risk protection. Based on preliminary market intelligence (not yet confirmed with Briarcliff), we estimate that the additional annual premium for a $25,000,000 excess layer could range from $200,000 to $500,000, depending on underwriting terms and the specific carrier. This cost, amortized over the projected five-year trial duration, would represent a material additional expense that is not justified by the incremental risk protection, particularly given the comprehensive indemnification structure in the MCTA and the low probability of a single-occurrence loss exceeding $25,000,000.

We have not yet explored Briarcliff Mutual's willingness or capacity to issue an excess endorsement or increase limits, as this would require a formal underwriting review and would signal to Briarcliff a potential change in risk profile. We recommend obtaining a preliminary quote from Briarcliff for planning purposes only (see Action Item 2 in Section VII.D below), without committing to any policy modification unless and until negotiations with Veridian warrant such a step.

V. Interplay with MCTA Indemnification Provisions

The insurance requirements under the MCTA do not operate in isolation; they function as part of a comprehensive risk allocation framework that includes mutual indemnification obligations, liability caps, and carve-outs. A proper assessment of insurance adequacy requires analysis of this interplay.

A. Sponsor Indemnification of Sites and Investigators

Under the proposed MCTA, Penterra agrees to indemnify, defend, and hold harmless Veridian, each participating site institution, each Principal Investigator, each sub-investigator, and each site staff member (collectively, the "Site Indemnitees") against claims, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from:

(a) Subject injury caused by the investigational product (PPC-4871 / penterafenib) when administered in accordance with the Protocol and the MCTA;

(b) Product defects in the investigational product, including manufacturing defects, formulation errors, labeling deficiencies, or failure to disclose known risks;

(d) Penterra's negligence or willful misconduct.

The MCTA's indemnification provisions include the following financial parameters:

• Per-Subject Medical Care Cap. Penterra's obligation to pay or reimburse medical care costs for study-related injuries to individual trial subjects is capped at $500,000 per subject. This cap applies to the cost of reasonable and necessary medical care directly attributable to the study-related injury, as determined in consultation with the treating physician and subject to dispute resolution procedures set forth in the MCTA.

• Aggregate Medical Care Cap. Penterra's aggregate obligation for medical care costs across all subjects enrolled in the CLARION trial is capped at $15,000,000 over the life of the study.

• Uncapped Product-Defect Indemnification. Penterra's indemnification obligation for product-defect claims is not subject to any monetary cap. This reflects the generally accepted principle that a sponsor bears unlimited liability for defects in the investigational product itself, as the site and investigators have no control over product manufacturing, formulation, or undisclosed risk profiles.

The MCTA requires that a Site Indemnitee seeking indemnification provide written notice to Penterra within 30 calendar days of becoming aware of the claim giving rise to the indemnification request. The MCTA further provides that failure to provide timely notice does not relieve Penterra of its indemnification obligation except to the extent that Penterra demonstrates material prejudice resulting from the delay in notice. This "material prejudice" standard is favorable to the Site Indemnitees and is consistent with the majority approach in clinical trial agreements.

B. Carve-Outs from Sponsor Indemnity

Penterra's indemnification obligation under the MCTA is subject to several important carve-outs. Specifically, sponsor indemnification does not extend to losses, claims, or liabilities arising from:

(i) The negligence or willful misconduct of any site, investigator, sub-investigator, or site personnel in the conduct of the trial;

(ii) Unauthorized protocol deviations by site personnel that are not required for the immediate safety of a trial subject (i.e., deviations that constitute research misconduct or breach of protocol, as distinct from medically necessary deviations made in the interest of subject safety); and

(iii) A site's material breach of the MCTA, applicable law, or applicable regulatory requirements (including, without limitation, Good Clinical Practice ("GCP") guidelines and applicable Institutional Review Board requirements).

These carve-outs are commercially standard and serve to allocate liability for site-side conduct to the sites themselves. Importantly, the carve-outs reduce Penterra's effective indemnification exposure and correspondingly limit the circumstances under which Penterra's insurance would be implicated. To the extent that a claim against a Site Indemnitee arises from site negligence, unauthorized protocol deviations, or site breach, that claim falls outside Penterra's indemnification obligation and would be addressed through Veridian's own liability and insurance coverage (discussed in Section VI below).

C. Reciprocal Site Indemnification

The MCTA includes reciprocal indemnification provisions under which Veridian and each participating site institution indemnify, defend, and hold harmless Penterra against claims, losses, damages, liabilities, costs, and expenses arising from:

(a) The negligence or willful misconduct of site staff, investigators, or sub-investigators in the conduct of the trial;

(b) Unauthorized protocol deviations by site personnel (other than those required for immediate subject safety); and

The site indemnification obligation is subject to the following monetary caps:

• Per-Site/Per-Occurrence Cap. Each participating site's indemnification obligation is capped at $5,000,000 per site, per occurrence.

• Network Aggregate Cap. The aggregate indemnification obligation across all 38 Veridian sites is capped at $20,000,000 over the life of the study.

These caps are within market norms for large multi-site academic research networks, as confirmed in the Indemnification Benchmarking Memorandum referenced in Section IV.B above.

Under the MCTA, Veridian and each participating site are required to maintain general liability and professional liability insurance coverage of at least $5,000,000 per occurrence / $10,000,000 aggregate, as discussed in detail in Section VI below. This site-side insurance coverage backstops the reciprocal indemnification obligations and provides an additional layer of protection for Penterra in the event of site-side liability.

D. Insurance as Backstop to Indemnification

The Briarcliff policy functions as a critical backstop to Penterra's indemnification obligations under the MCTA. The interplay between the indemnification structure and the insurance coverage can be summarized as follows:

Subject-Injury Claims (Capped Indemnification). For subject-injury claims covered by Penterra's indemnification obligation, the MCTA's per-subject cap of $500,000 and aggregate cap of $15,000,000 define the outer boundary of Penterra's contractual medical care obligation. The Briarcliff policy's subject-injury sublimit ($10,000,000 per occurrence / $50,000,000 aggregate) provides insurance coverage that substantially exceeds the per-occurrence medical care exposure under the MCTA and provides significant headroom above the $15,000,000 aggregate medical care cap. In the event that a single occurrence gives rise to subject-injury claims that exhaust the $10,000,000 per-occurrence sublimit, the Briarcliff policy would not respond further for subject-injury claims from that occurrence, but the MCTA's $500,000 per-subject cap also limits the contractual exposure. For medical care costs above the per-subject cap that are not covered by insurance, Penterra's self-funded indemnification obligation (if any) would be measured against the MCTA's aggregate cap.

Product-Defect Claims (Uncapped Indemnification). For product-defect claims, which are uncapped under the MCTA, the full $25,000,000 per-occurrence limit under the Briarcliff policy applies. This is consistent with the reasonably foreseeable maximum single-occurrence product-defect claim in a Phase III oncology trial. While uncapped indemnification theoretically exposes Penterra to unlimited liability, the practical exposure is constrained by the trial's risk profile, the safety monitoring mechanisms in place, and the historical data on product-defect claims in comparable trials. In the unlikely event that a product-defect claim exceeds the $25,000,000 per-occurrence limit, Penterra's substantial financial resources ($890 million in cash and equivalents; $4.2 billion market capitalization) provide additional assurance that Penterra can satisfy its indemnification obligations beyond the policy limits.

Defense Costs. As noted in Section III.A above, defense costs erode the per-occurrence and aggregate limits under the Briarcliff policy. However, the MCTA's indemnification provisions obligate Penterra to defend Site Indemnitees against covered claims (including the payment of reasonable attorneys' fees), and these defense cost obligations are backstopped by the policy's defense cost coverage. Given the 3:1 aggregate-to-per-occurrence ratio and the historical experience suggesting that defense costs in clinical trial matters are a modest fraction of per-occurrence limits, the erosion of limits by defense costs does not materially impair the adequacy of the coverage.

Aggregate Coverage Over Trial Duration. Over the projected 60-month CLARION trial duration, assuming annual policy renewal at current limits, Penterra would have cumulative access to $375,000,000 in aggregate coverage and $250,000,000 in aggregate subject-injury coverage. This cumulative coverage structure, combined with the MCTA's indemnification caps and carve-outs, provides a robust risk management framework that renders the $50,000,000 per-occurrence demand unnecessary.

VI. Veridian's Site-Side Insurance Requirements

A. Required Coverage Levels

The MCTA requires each Veridian participating site to maintain general liability and professional liability insurance coverage throughout the duration of the CLARION trial. The minimum coverage levels required under the MCTA are as follows:

These coverage requirements apply to all 38 Veridian participating sites and are consistent with industry standards for academic medical center participation in Phase III clinical trials. Each site is required to provide evidence of coverage, in the form of a certificate of insurance issued by its insurance carrier, within 15 business days of execution of the MCTA. Thereafter, updated certificates must be exchanged annually during the trial period to confirm continued compliance.

The professional liability coverage requirement is particularly relevant for the CLARION trial given the oncology indication and the complex medical management involved. Professional liability coverage would respond to claims arising from the site's or investigator's exercise of professional medical judgment in the conduct of the trial, including decisions regarding subject eligibility, adverse event management, concomitant medication administration, and dose modifications.

B. Additional Insured Status

Under the proposed MCTA terms, the additional insured provisions are reciprocal:

• Penterra as Additional Insured on Site Policies. Penterra is to be named as an additional insured on Veridian's and each participating site's general liability and professional liability policies, where such additional insured endorsement is available from the site's carrier. Some academic medical centers that are self-insured or insured through state risk pools may be unable to add Penterra as an additional insured; in such cases, the MCTA provides for alternative evidence of financial responsibility.

• Veridian and Sites as Additional Insureds on Penterra Policy. Veridian and each of the 38 participating site institutions are to be named as additional insureds on Penterra's Briarcliff clinical trial liability policy. As discussed in Section III.A above, the Briarcliff policy permits the addition of additional insureds by endorsement, and Penterra has utilized this feature on prior engagements. The additional insured endorsement extends coverage to Veridian and the sites for liability arising from the CLARION trial, subject to the same policy terms, conditions, and limits.

The reciprocal additional insured arrangement is a standard feature of multi-site clinical trial agreements and provides each party with the benefit of the other party's insurance coverage in the event of cross-claims or joint liability.

C. Certificate Exchange Mechanics

The MCTA establishes the following certificate exchange procedures:

1. Initial Exchange. Within 15 business days of MCTA execution, each party shall provide to the other party certificates of insurance evidencing the required coverage levels and any additional insured endorsements.

2. Annual Exchange. Thereafter, updated certificates shall be exchanged annually during the trial period, within 30 days of each policy renewal date.

3. Notice of Material Change. Each party shall provide prompt written notice (no less than 30 days prior, where practicable) of any material change in coverage, including cancellation, non-renewal, or reduction in limits.

To facilitate the initial certificate exchange, Calderwood & Harkness will prepare a letter to Karen Tremblay at Briarcliff Mutual requesting the issuance of an additional insured endorsement naming Veridian and all 38 participating sites under Policy No. BM-CTL-2023-04182. We will coordinate with Samantha Novak, Director of Clinical Contracts at Penterra, on the logistics of tracking certificate compliance across all 38 sites. Given the number of sites involved, we recommend that Penterra establish a centralized certificate tracking system, potentially utilizing Penterra's existing clinical trial management platform, to monitor compliance on an ongoing basis.

VII. Recommendation

A. Recommended Negotiation Position on Per-Occurrence Limit

We recommend that Penterra maintain its negotiating position at $25,000,000 per occurrence / $75,000,000 aggregate clinical trial liability insurance coverage. This recommendation is supported by the following rationale:

1. Consistency with Industry Benchmarks. As detailed in Section IV above, $25,000,000 per occurrence is at the upper end of the market range for Phase III oncology trials conducted across multi-site academic research networks. Penterra's current coverage meets or exceeds the coverage maintained by peer sponsors in comparable programs.

2. Adequacy in Light of MCTA Indemnification Structure. The MCTA's indemnification provisions — including the $500,000 per-subject and $15,000,000 aggregate medical care caps, the carve-outs for site negligence and breach, and the reciprocal site indemnification — operate in conjunction with the Briarcliff policy to provide comprehensive risk allocation. The insurance need not cover the full theoretical maximum exposure because the indemnification structure constrains and distributes that exposure.

3. Veridian's $50,000,000 Demand Is Above Market. Our benchmarking analysis demonstrates that Veridian's demand is materially above the upper end of the observed range for comparable agreements. No agreement in our data set required a per-occurrence limit of $50,000,000 or above for a U.S.-only Phase III oncology trial.

4. Disproportionate Cost of Increased Limits. Increasing the per-occurrence limit from $25,000,000 to $50,000,000 would impose significant additional premium costs — potentially $200,000 to $500,000 per year or more — without commensurate risk reduction. The incremental protection afforded by doubling the per-occurrence limit is modest given the low probability of a single-occurrence loss exceeding $25,000,000 and the indemnification carve-outs that limit Penterra's effective exposure.

Additional Supporting Data Points. The strength of Penterra's financial position further supports the adequacy of the $25,000,000 per-occurrence limit. As of Q1 2023, Penterra holds approximately $890 million in cash and cash equivalents, reported fiscal year 2022 revenue of approximately $1.87 billion, and has a market capitalization of approximately $4.2 billion. These financial resources provide additional backing for Penterra's indemnification obligations beyond the insurance limits, reducing the practical risk that any covered loss would go uncompensated even in a scenario exceeding the policy limits.

B. Recommended Position on Subject-Injury Sublimit

We recommend that Penterra maintain the existing subject-injury sublimit of $10,000,000 per occurrence / $50,000,000 aggregate and present this sublimit as adequate and commercially reasonable in negotiations with Veridian. This position is supported by the following analysis:

• The $10,000,000 per-occurrence sublimit is consistent with the MCTA's $500,000 per-subject medical care cap. A single occurrence would need to involve injuries to more than 20 subjects, each at the maximum $500,000 per-subject cap, before exhausting the sublimit. This scenario is highly unlikely given the CLARION trial's safety monitoring infrastructure, including the DSMB, adverse event reporting requirements, and protocol-specified stopping rules.

• The $50,000,000 aggregate subject-injury sublimit provides more than three times the coverage of the MCTA's $15,000,000 aggregate medical care cap, offering substantial headroom for multiple subject-injury occurrences within a single policy year.

• The sublimit is at the upper end of the industry benchmark range ($5,000,000 to $10,000,000 per occurrence; $15,000,000 to $50,000,000 aggregate) for Phase III oncology trials.

• The sublimit resets annually with each policy renewal, providing cumulative aggregate subject-injury coverage of up to $250,000,000 over the projected 60-month trial duration.

C. Negotiation Tactics

We recommend the following approach for presenting Penterra's insurance position to Veridian and its counsel:

1. Present Industry Benchmarking Data. In the next negotiation session with Allison Whitmore and the WJC team, we recommend presenting the industry benchmarking data (summarized in Section IV above and detailed in Appendix B) to demonstrate that $25,000,000 per occurrence is at or above market for comparable Phase III oncology trials. Presenting this data in a clear, tabular format — showing the range of per-occurrence limits in anonymized comparable agreements — will be effective in reframing Veridian's expectations.

2. Emphasize the Additional Insured Endorsement. Highlight that Veridian and all 38 participating sites will be named as additional insureds on the Briarcliff policy, providing them with direct coverage rights under a $25,000,000 per-occurrence / $75,000,000 aggregate policy. This is a significant benefit that should be underscored in negotiations.

3. Highlight the Comprehensive Indemnification Structure. Emphasize that the MCTA's indemnification provisions — particularly the uncapped product-defect indemnification — provide substantial protection that supplements (and in some categories exceeds) the insurance coverage. Veridian and its sites are protected not only by the insurance but also by Penterra's direct contractual indemnification obligations, backed by Penterra's strong financial position.

4. Offer Written Commitment to Maintain Coverage. Offer to include in the MCTA a covenant by Penterra to maintain clinical trial liability coverage at the specified levels throughout the duration of the CLARION trial, through projected study completion in August 2028, with annual renewal. This addresses any concern that Penterra might reduce or cancel coverage during the trial.

5. Demonstrate Penterra's Financial Strength. Note Penterra's significant financial resources — $890 million in cash and equivalents, $1.87 billion in FY2022 revenue, and a $4.2 billion market capitalization — as demonstrating Penterra's capacity to satisfy its indemnification obligations beyond the insurance limits. This financial backing provides an additional layer of security for Veridian and its sites that is not dependent on insurance coverage levels.

6. Fallback Position (If Needed). If Veridian proves unwilling to accept the $25,000,000 per-occurrence limit after reviewing the benchmarking data and indemnification structure, we recommend exploring whether a modest increase — for example, to $30,000,000 per occurrence — could be achieved through an excess policy endorsement at reasonable cost. This fallback should be reserved as a final concession in negotiations and should not be raised preemptively. Before making any such concession, Penterra should have in hand a confirmed quote from Briarcliff for the increased coverage (see Action Item 2 below) and should negotiate for reciprocal concessions from Veridian on other open MCTA terms.

D. Action Items

Based on the foregoing analysis and recommendations, we propose the following action items:

1. Confirm Additional Insured Endorsement Availability. Contact Karen Tremblay at Briarcliff Mutual to confirm that Policy No. BM-CTL-2023-04182 permits the addition of Veridian Health Research Network, Inc. and all 38 participating site institutions as additional insureds. Request formal issuance of the additional insured endorsement. Responsible: Sean Morrissey. Target completion: April 25, 2023.

2. Obtain Preliminary Quotes for Increased Limits. Request from Briarcliff Mutual a preliminary quote for increasing per-occurrence limits to $30,000,000, $40,000,000, and $50,000,000 (either through primary limit increases or excess layer endorsements), for internal planning purposes only. This information will be used to assess the cost and feasibility of a fallback negotiation position and should not be disclosed to Veridian or WJC. Responsible: Sean Morrissey. Target completion: May 2, 2023.

3. Prepare Letter to Briarcliff Requesting Additional Insured Endorsement. Draft and send a formal letter to Karen Tremblay at Briarcliff, referencing Policy No. BM-CTL-2023-04182, requesting the issuance of an additional insured endorsement naming Veridian and all 38 participating sites. The letter should include a list of all site institutions to be added, which we will obtain from Penterra's clinical team. Responsible: Christopher Aiken. Target completion: April 28, 2023.

4. Incorporate Insurance Analysis into Negotiation Strategy Memorandum. Include the key insurance adequacy analysis points from this memorandum in the comprehensive Negotiation Strategy Memorandum being prepared by Miriam Calloway for the Penterra legal and clinical teams. The recipients of the Negotiation Strategy Memorandum include Nathaniel Briggs (General Counsel, Penterra), Rebecca Liang (Associate General Counsel, Clinical Affairs, Penterra), and Jennifer Holt (VP, Clinical Operations, Penterra). Responsible: Christopher Aiken and Miriam Calloway. Target completion: May 5, 2023.

5. Coordinate Certificate Exchange Timeline. Coordinate with Samantha Novak, Director of Clinical Contracts at Penterra, on the certificate exchange timeline and tracking procedures across all 38 Veridian sites. Recommend implementation of a centralized certificate tracking system, and establish a process for obtaining certificates from each Veridian site within 15 business days of MCTA execution. Responsible: Sean Morrissey and Samantha Novak (Penterra). Target completion: Ongoing; initial coordination call by April 24, 2023.

VIII. Appendices (Referenced)

Appendix A — Briarcliff Policy Summary

The following is a summary of the key terms and conditions of Penterra Pharmaceuticals Corp.'s clinical trial liability insurance policy issued by Briarcliff Mutual Insurance Company. This summary is provided for reference purposes in connection with this memorandum and does not constitute a comprehensive recitation of all policy terms, conditions, exclusions, and endorsements. The complete policy should be consulted for any coverage determinations.

Appendix B — Industry Benchmark Data

The following table presents anonymized per-occurrence and aggregate limit data from comparable Phase III oncology multi-site clinical trial agreements, compiled from prior Calderwood & Harkness engagements and published industry surveys. All sponsor and site network identities have been redacted in accordance with client confidentiality obligations.

Source: Calderwood & Harkness LLP prior engagements (2019–2023); ACRO Clinical Trial Insurance Benchmarking Report (2022); DIA Sponsor-Site Contracting Survey (2021). All data anonymized. Aggregate limits reflect annual policy periods.

Key Observations from Benchmark Data:

• Per-occurrence limits ranged from $10,000,000 to $25,000,000 across all comparable agreements.

• The median per-occurrence limit was $20,000,000; the mean was $19,000,000.

• No agreement in the data set required a per-occurrence limit exceeding $25,000,000 for a U.S.-only Phase III oncology trial.

• Aggregate limits ranged from $25,000,000 to $75,000,000, with a median of $50,000,000.

• Subject-injury sublimits ranged from $5,000,000 to $10,000,000 per occurrence and $15,000,000 to $50,000,000 in the aggregate.

• Agreements E and I — the most comparable to the CLARION trial in terms of indication (HCC), trial size (30–50 sites), and coverage structure — both utilized per-occurrence limits of $25,000,000, consistent with Penterra's existing Briarcliff policy.

Appendix C — Premium Cost Estimate for Increased Limits

This appendix is reserved as a placeholder for the preliminary quote to be obtained from Briarcliff Mutual Insurance Company for excess layers or increased per-occurrence limits, per Action Item 2 in Section VII.D above. The quote has been requested and is expected to be received by May 2, 2023. Upon receipt, this appendix will be updated and a supplemental memorandum will be circulated to the distribution list if the quote contains information material to the negotiation strategy.

Estimated premium ranges referenced in this memorandum (Section IV.C) are based on preliminary market intelligence from specialty insurance brokers and are subject to revision upon receipt of Briarcliff's formal quote.

This memorandum is a privileged and confidential attorney work product prepared by Calderwood & Harkness LLP for the exclusive use of the addressees and copy recipients identified above. It is not intended for distribution to any other party and should not be disclosed without the prior written consent of Calderwood & Harkness LLP. The analysis and recommendations contained herein are based on the information available to us as of the date of this memorandum and are subject to revision as additional information becomes available during the MCTA negotiation process.

TO:	Miriam Calloway, Partner, Calderwood & Harkness LLP
FROM:	Christopher Aiken, Associate, Calderwood & Harkness LLP; Sean Morrissey, Associate, Calderwood & Harkness LLP
DATE:	April 18, 2023
RE:	Insu

MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
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I. Executive Summary
This memorandum analyzes the adequacy of Penterra Pharmaceuticals Corp.'s ("Penterra" or the "Sponsor") existing clinical trial liability insurance, underwritten by Briarcliff Mutual Insurance Company ("Briarcliff"), against the initial demand made by Veridian Health Research Network, Inc. ("Veridian") for no less than $50,000,000 in per-occurrence coverage as a condition of the Master Clinical Trial Agreement ("MCTA") currently under negotiation between the parties. Veridian's demand was first communicated in pre-negotiation correspondence from its outside counsel, Whitmore, Jansen & Callahan LLP ("WJC"), and was subsequently formalized in WJC's initial markup of the MCTA. The MCTA governs the conduct of Protocol PPC-4871-III (the "CLARION" trial), a Phase III, randomized, double-blind, placebo-controlled study of the investigational oral multi-kinase inhibitor penterafenib (PPC-4871) in patients with advanced hepatocellular carcinoma.
Based on our review of the Briarcliff policy terms, industry benchmarking data, the specific risk profile of the CLARION trial, and the MCTA's proposed indemnification structure, we recommend that Penterra maintain its current negotiating position of $25,000,000 per occurrence / $75,000,000 aggregate clinical trial liability insurance coverage. This recommendation rests on the following principal conclusions:
• The $25,000,000 per-occurrence limit is at or above the upper end of industry benchmarks for comparable Phase III oncology trials conducted across multi-site academic research networks in the United States.
• The $75,000,000 aggregate limit provides meaningful cushion for multiple occurrences over each annual policy period, with aggregate limits resetting upon annual renewal. Given the CLARION trial's projected 60-month study duration, this structure affords substantial cumulative protection.
• The subject-injury sublimit of $10,000,000 per occurrence / $50,000,000 aggregate, which is embedded within the broader per-occurrence and aggregate limits, is appropriate in light of the MCTA's proposed per-subject medical care cap of $500,000 and aggregate medical care cap of $15,000,000. The sublimit aligns with reasonably foreseeable subject-injury exposure, even under conservative multi-subject adverse-event scenarios.
• The MCTA's indemnification structure — including uncapped sponsor indemnification for product-defect claims, capped medical care obligations, and reciprocal indemnification from Veridian and its participating sites — operates in conjunction with the insurance coverage to provide comprehensive risk allocation. The indemnification carve-outs (excluding losses arising from site negligence, unauthorized protocol deviations, and site breaches) further limit Penterra's effective exposure.
• Veridian's demand for $50,000,000 in per-occurrence coverage is materially above market norms. Our benchmarking analysis, drawing on both publicly available data and proprietary information from prior Calderwood & Harkness engagements, indicates that most large academic medical center networks accept per-occurrence limits in the range of $15,000,000 to $25,000,000 for comparable Phase III oncology trials. Veridian's demand appears to represent an opening negotiation position rather than a firm operational requirement.
• Increasing the per-occurrence limit from $25,000,000 to $50,000,000 would likely require the procurement of an excess insurance layer or a material increase in premium, the cost of which would be disproportionate to the incremental risk protection afforded, particularly in light of the existing indemnification framework.
We further recommend that, as a fallback position only, Penterra consider whether a modest increase to $30,000,000 per occurrence could be achieved through an excess policy endorsement at reasonable cost, should Veridian prove unwilling to accept the $25,000,000 limit after reviewing industry benchmarking data. This fallback should not be raised by Penterra in initial negotiations.
The remainder of this memorandum sets forth the factual background, detailed policy analysis, industry benchmarking, interplay with the MCTA's indemnification provisions, and recommended negotiation strategy and action items.
II. Background
A. The CLARION Trial
Penterra Pharmaceuticals Corp. is a Delaware corporation headquartered at 200 Biopharma Boulevard, Suite 1400, Princeton, New Jersey 08540. Penterra's shares are listed on the Nasdaq Global Select Market under the ticker symbol "PTRA." As of the most recent publicly available financial data (Q1 2023), Penterra reported approximately $890 million in cash and cash equivalents, fiscal year 2022 revenue of approximately $1.87 billion, and a market capitalization of approximately $4.2 billion. Penterra's core therapeutic focus areas include oncology, rare diseases, and immunology.
Penterra is the sponsor of Protocol PPC-4871-III, designated by the study acronym "CLARION" (Clinical Assessment of Response with Longitudinal Investigation in ONcology). The CLARION trial is designed to evaluate the efficacy and safety of penterafenib (PPC-4871), an oral multi-kinase inhibitor, in adult patients with advanced hepatocellular carcinoma ("HCC") who have progressed on or after prior systemic therapy (i.e., second-line treatment).
The Investigational New Drug application for penterafenib was filed with the U.S. Food and Drug Administration ("FDA") in October 2021 under IND Number 157823. Phase I dose-escalation and dose-expansion studies were completed in 2022, and the Phase II study was completed in January 2023. Phase II results demonstrated a confirmed objective response rate ("ORR") of 38% with a manageable safety profile. No unexpected serious adverse events requiring dose-limiting toxicity adjustments were reported in the Phase II data. These results supported Penterra's decision to advance penterafenib into the Phase III CLARION trial.
The CLARION trial is designed as a Phase III, randomized, double-blind, placebo-controlled study. The study plans to enroll approximately 1,200 subjects, randomized in a 2:1 ratio (approximately 800 subjects in the treatment arm receiving penterafenib and approximately 400 subjects in the placebo arm). The primary endpoint is overall survival ("OS"), with secondary endpoints including progression-free survival ("PFS"), objective response rate, duration of response, and safety. The trial has been registered on ClinicalTrials.gov under Identifier NCT05928174.
The CLARION trial will be conducted at 38 sites within the Veridian Health Research Network, located across 14 states. The projected enrollment period is approximately 42 months, with a total study duration (including follow-up) of approximately 60 months, with projected study completion in approximately August 2028. The total value of the MCTA, encompassing per-subject payments, investigator grants, site management fees, pharmacy fees, and other pass-through costs across all 38 sites, is approximately $80,000,000.
B. The Counterparty
Veridian Health Research Network, Inc. is a Delaware corporation organized as a tax-exempt entity under Section 501(c)(3) of the Internal Revenue Code. Veridian is headquartered at 750 Research Parkway, 8th Floor, Philadelphia, Pennsylvania 19104, and operates under Employer Identification Number 23-4178205.
Veridian is a multi-site academic research network comprising 38 academic medical centers and affiliated research institutions located across 14 states. The network's mission is to advance clinical research through coordinated multi-site trial execution, data management, and regulatory compliance support. Veridian's annual research volume is approximately $1.4 billion in sponsored research expenditures, and the organization employs approximately 6,200 individuals, including investigators, research coordinators, regulatory affairs specialists, data managers, and administrative staff.
Veridian is represented in the MCTA negotiation by Whitmore, Jansen & Callahan LLP, located at 1500 Market Street, Suite 3200, Philadelphia, Pennsylvania 19102. The lead partner on the engagement is Allison Whitmore, who has extensive experience in academic clinical trial contracting and site-side representation.
C. Lead Sites and Investigators
The CLARION trial's lead site and Global Principal Investigator are as follows:
• Site 001 — Graystone University Medical Center, located at 1200 University Avenue, Philadelphia, Pennsylvania 19104. The Global Principal Investigator is Dr. Catherine Aldridge, M.D., Ph.D., who holds appointments in the Department of Medical Oncology and the Department of Pharmacology at Graystone University School of Medicine. Dr. Aldridge is an internationally recognized authority in hepatocellular carcinoma and targeted kinase inhibitor therapy. The institutional review board of record for Site 001 is the Graystone University Institutional Review Board (IRB registration number IRB00012847).
• Site 002 — Lakemont Medical Center, located at 4400 North Michigan Drive, Chicago, Illinois 60611. The Co-Principal Investigator is Dr. Howard Matsuoka, M.D., who leads the Liver Cancer Clinical Trials Program at Lakemont. The institutional review board of record for Site 002, and the central IRB for a number of other Veridian network sites, is the Veridian Central IRB.
Additional site-specific details and investigator designations for the remaining 36 Veridian sites are set forth in the draft MCTA's Exhibit B (Site and Investigator List), which is currently under negotiation and not reproduced herein.
D. Penterra's Existing Insurance Coverage
Penterra maintains clinical trial liability insurance through Briarcliff Mutual Insurance Company, a mutual insurance company organized under the laws of the State of Connecticut, with principal offices located at 55 Constitution Plaza, Hartford, Connecticut 06103. The designated underwriter contact for the Penterra account is Karen Tremblay, Vice President, Life Sciences Lines.
The key terms of the current policy are as follows:
The Briarcliff policy is a claims-made-and-reported policy with an extended reporting period provision. A detailed summary of the policy's key terms, conditions, and exclusions is attached as Appendix A.
E. Veridian's Initial Insurance Demand
In pre-negotiation correspondence from WJC dated March 30, 2023, and subsequently formalized in WJC's initial markup of the MCTA (received by our office on April 28, 2023, but reflecting positions communicated earlier), Veridian demanded that Penterra maintain clinical trial liability insurance of not less than $50,000,000 per occurrence as a condition of executing the MCTA. Veridian further insisted that Veridian and each of its 38 participating site institutions be named as additional insureds on the Penterra policy.
Veridian's stated rationale for the $50,000,000 per-occurrence demand, as articulated in WJC's correspondence and in telephonic discussions between Allison Whitmore and Miriam Calloway, was based on the following factors:
1. Trial Scale. The CLARION trial's enrollment of approximately 1,200 subjects, which Veridian characterized as creating substantial aggregate exposure for subject-injury claims.
2. Oncology Indication. The advanced HCC indication, involving patients with significant baseline morbidity and co-morbidities, which Veridian asserted heightened the risk and potential severity of adverse events, including fatal outcomes.
3. Multi-Site Network Structure. The involvement of 38 sites across 14 states, which Veridian argued exposed multiple institutions to potential liability from a single occurrence (e.g., a product-batch contamination event or a systemic safety signal affecting subjects across multiple sites simultaneously).
As discussed in detail below, while Veridian's concerns regarding trial risk are understandable as a matter of prudent risk management, its $50,000,000 per-occurrence demand is materially above industry benchmarks and is not warranted by the trial's risk profile or the proposed MCTA indemnification structure.
III. Analysis of Current Briarcliff Policy Coverage
A. Policy Structure and Key Terms
The Briarcliff policy (Policy No. BM-CTL-2023-04182) is a specialty clinical trial liability and subject-injury insurance policy issued under Briarcliff's Life Sciences Lines division. The policy is designed specifically for pharmaceutical and biotechnology companies sponsoring clinical trials and provides coverage for liability arising from the conduct of clinical investigations, including subject-injury claims, product-defect claims, and associated defense costs. This form of coverage is distinct from commercial general liability ("CGL") and product liability policies that Penterra also maintains, and is specifically tailored to address the unique risks associated with clinical trial conduct.
Named Insured. The named insured under the Briarcliff policy is Penterra Pharmaceuticals Corp. The policy permits the addition of additional insureds by endorsement, subject to underwriter approval. As discussed in Section VI below, we recommend that Penterra promptly request an endorsement naming Veridian and each of its 38 participating site institutions as additional insureds, which is a standard accommodation in the clinical trial insurance market and one that Briarcliff has granted on prior Penterra engagements.
Per-Occurrence Limit. The per-occurrence limit of $25,000,000 represents the maximum amount the policy will pay for all covered losses arising from a single occurrence. Under the policy's definition of "occurrence," this term encompasses a single event or a series of related events arising from the same cause or set of facts. Thus, for example, a product-batch contamination affecting multiple trial subjects across multiple sites would likely constitute a single occurrence for purposes of the per-occurrence limit.
Aggregate Limit. The aggregate limit of $75,000,000 represents the maximum amount the policy will pay for all covered losses during the policy period, regardless of the number of occurrences. This aggregate limit provides a 3:1 ratio to the per-occurrence limit, which is standard in the specialty clinical trial insurance market and reflects Briarcliff's assessment that multiple independent occurrences within a single policy period are unlikely but foreseeable. Importantly, because the Briarcliff policy is renewable annually and the aggregate limit resets with each policy period, Penterra's cumulative aggregate coverage over the projected 60-month CLARION trial duration (encompassing five policy years, assuming annual renewal) would be $375,000,000 in total potential aggregate coverage, a figure that provides substantial protection even in a worst-case scenario.
Subject-Injury Sublimit. The policy includes a subject-injury sublimit of $10,000,000 per occurrence and $50,000,000 in the aggregate. This sublimit is carved out specifically for claims arising from physical or psychological injury to clinical trial subjects that results from the administration of the investigational product or from study procedures conducted pursuant to the protocol. The subject-injury sublimit is a subset of (not in addition to) the broader per-occurrence and aggregate limits, meaning that a subject-injury claim that exhausts the $10,000,000 per-occurrence sublimit does not leave an additional $25,000,000 available for that same occurrence under the general per-occurrence limit. Rather, the sublimit functions as a cap on the portion of the per-occurrence limit that is available for subject-injury claims, while the full $25,000,000 per-occurrence limit remains available for non-subject-injury claims (e.g., claims by third parties, regulatory defense costs, or product-defect claims not involving direct subject injury).
Policy Period and Renewal. The current policy period runs from April 1, 2023, through March 31, 2024. The policy is renewable annually, and Penterra has maintained continuous clinical trial liability coverage with Briarcliff since 2019. Under the terms of the MCTA, Penterra would be obligated to maintain clinical trial liability coverage throughout the duration of the CLARION trial, which is projected to extend through approximately August 2028. Accordingly, Penterra will need to renew the Briarcliff policy (or obtain equivalent coverage) for at least five consecutive policy years.
Coverage Territory. The Briarcliff policy's coverage territory encompasses the entire United States, including all 14 states in which Veridian sites participating in the CLARION trial are located. No territorial limitations present any concern for the CLARION trial.
Defense Costs. The Briarcliff policy provides defense cost coverage for claims covered under the policy. We have reviewed the policy's treatment of defense costs and note that, under the current policy terms, defense costs are included within (i.e., erode) the per-occurrence and aggregate limits. This is common in the specialty clinical trial liability insurance market, where defense-outside-limits ("DOL") coverage is available but typically at a substantial premium increase. The erosion of limits by defense costs is a factor worth monitoring, particularly in the event of protracted litigation, but does not materially affect the adequacy analysis for the CLARION trial. Defense costs in clinical trial liability matters are typically a modest fraction of the per-occurrence limit, and the 3:1 aggregate-to-per-occurrence ratio provides meaningful cushion.
Additional Insured Endorsement. As noted above, the Briarcliff policy permits the addition of additional insureds by endorsement. Penterra has utilized this feature on prior clinical trial agreements with other research networks and individual academic sites. The endorsement extends coverage to the additional insured for liability arising from the clinical trial in question, subject to the same terms, conditions, and limits of the underlying policy. We recommend that Penterra promptly request Briarcliff to issue an additional insured endorsement naming Veridian Health Research Network, Inc. and each of its 38 participating site institutions as additional insureds under Policy No. BM-CTL-2023-04182. This is addressed further in Section VII.D (Action Items) below.
B. Subject-Injury Sublimit Analysis
The subject-injury sublimit warrants focused analysis because it is the coverage layer most directly relevant to the clinical trial context and the one most likely to be implicated in any adverse-event scenario arising during the CLARION trial.
Structure of the Sublimit. The $10,000,000 per-occurrence subject-injury sublimit is a subset of the broader $25,000,000 per-occurrence limit. Similarly, the $50,000,000 aggregate subject-injury sublimit is a subset of the broader $75,000,000 aggregate limit. This means that subject-injury claims draw down both the sublimit and the general limit simultaneously. For example, if a single occurrence gives rise to $10,000,000 in subject-injury claims, the per-occurrence limit would be reduced from $25,000,000 to $15,000,000 for any non-subject-injury claims arising from the same occurrence (e.g., regulatory defense costs or third-party claims). Similarly, $10,000,000 in subject-injury claims in a policy year would reduce the aggregate subject-injury sublimit to $40,000,000 and the general aggregate limit to $65,000,000.
Interplay with MCTA Indemnification Provisions. The proposed MCTA includes detailed indemnification provisions for study-related subject injury, which operate in conjunction with (and are partially backstopped by) the Briarcliff policy's subject-injury sublimit. Specifically:
• Per-Subject Medical Care Cap. The MCTA proposes that Penterra's obligation to pay or reimburse medical care costs for study-related injuries to individual subjects be capped at $500,000 per subject.
• Aggregate Medical Care Cap. The MCTA proposes an aggregate cap of $15,000,000 on medical care costs across all subjects over the life of the study.
• Product-Defect Claims. Penterra's indemnification obligation for claims arising from product defects (e.g., manufacturing contamination, formulation errors, or undisclosed risks) is proposed to be uncapped. Product-defect claims may involve subject-injury components but would also potentially include non-subject-injury components (e.g., regulatory response costs, site remediation costs). For such claims, the full $25,000,000 per-occurrence limit (not just the $10,000,000 subject-injury sublimit) would respond.
Sublimit Adequacy for Subject-Injury Claims. The $10,000,000 per-occurrence subject-injury sublimit is designed to cover multiple subject injuries arising from a single occurrence. In the context of a Phase III oncology trial, a "single occurrence" for subject-injury purposes could include, for example, a product-batch contamination event affecting multiple subjects, a newly identified systemic adverse event discovered during the trial that affects subjects across multiple sites, or a protocol-related procedural error replicated across sites.
Given the MCTA's proposed $500,000 per-subject medical care cap, the $10,000,000 per-occurrence sublimit would accommodate injuries to up to 20 subjects at the maximum per-subject cap before being exhausted. This represents a conservative scenario; in practice, the majority of study-related subject injuries result in medical care costs substantially below $500,000, and an occurrence affecting 20 or more subjects at the maximum cap level simultaneously would be an extraordinarily rare event in a well-monitored Phase III trial with a Data Safety Monitoring Board and established stopping rules.
The $50,000,000 aggregate subject-injury sublimit provides further protection across the policy year. Even in a scenario in which multiple unrelated subject-injury occurrences arise during a single policy year — an unlikely but not impossible scenario — the aggregate sublimit provides more than three times the coverage of the MCTA's $15,000,000 aggregate medical care cap. This provides substantial headroom above the indemnification obligation, ensuring that the insurance backstop remains available even if indemnification obligations are fully triggered.
Non-Subject-Injury Claims. For claims that do not fall within the subject-injury sublimit — including product-defect claims, third-party claims, and regulatory defense costs — the full $25,000,000 per-occurrence limit applies without sublimit restrictions. This is significant because product-defect claims, which are uncapped under the MCTA's indemnification provisions, represent the most significant potential exposure and are appropriately covered by the broader per-occurrence limit.
C. Adequacy Relative to Trial Risk Profile
The adequacy of the Briarcliff policy's limits must be assessed in light of the specific risk profile of the CLARION trial. Several factors bear on this assessment:
Oncology Trial Risk Factors. Penterafenib (PPC-4871) is an oral multi-kinase inhibitor. Multi-kinase inhibitors as a class are associated with known adverse events, including hepatotoxicity, hypertension, hand-foot syndrome (palmar-plantar erythrodysesthesia), diarrhea, and fatigue. The CLARION trial's target population — adult patients with advanced HCC who have progressed on prior systemic therapy — represents a patient cohort with significant baseline morbidity, including underlying liver dysfunction, which may exacerbate certain drug-related adverse events (particularly hepatotoxicity). These factors suggest a somewhat elevated risk profile compared to trials in healthier populations or non-oncology indications.
However, several mitigating factors reduce the effective risk:
• Placebo-Controlled Design. The 2:1 randomization design means that only approximately 800 of the 1,200 subjects will receive the investigational product. The remaining 400 subjects on placebo will have no drug-related injury exposure (beyond any study-procedure-related risks, which are generally modest). This effectively limits the drug-related injury exposure to two-thirds of the enrolled population.
• Phase II Safety Data. The completed Phase II study demonstrated a 38% ORR with a manageable safety profile. No unexpected serious adverse events requiring dose-limiting toxicity adjustments were reported. While Phase III trials are larger and may reveal adverse events not observed in Phase II, the Phase II data provides meaningful baseline confidence in the drug's safety profile.
• Trial Monitoring and Safety Oversight. The CLARION trial protocol includes standard safety oversight mechanisms, including a Data Safety Monitoring Board ("DSMB"), periodic safety reviews, pre-specified stopping rules for excess toxicity, and real-time adverse event reporting. These mechanisms substantially reduce the risk of a catastrophic, undetected multi-subject adverse event.
• Duration Consideration. The 60-month total study duration requires annual policy renewal, meaning that aggregate limits reset each policy year. Over the full course of the trial, Penterra would have cumulative access to up to $375,000,000 in aggregate coverage (five policy years × $75,000,000 aggregate) and up to $250,000,000 in aggregate subject-injury coverage (five policy years × $50,000,000 aggregate), assuming continuous renewal at current limits.
Historical Data on Clinical Trial Insurance Claims. Based on our review of available data — including published surveys by the Association of Clinical Research Organizations ("ACRO"), the Drug Information Association ("DIA"), and internal Calderwood & Harkness experience across more than 150 clinical trial agreements — most single-occurrence claims in Phase III oncology trials do not exceed $10,000,000. Catastrophic multi-subject events (i.e., events affecting dozens or hundreds of subjects simultaneously) are exceedingly rare in modern clinical trials due to the safety monitoring mechanisms described above. The largest reported clinical trial insurance claims in the United States in the past decade have generally been in the range of $5,000,000 to $15,000,000, with only a small number of outlier cases exceeding $20,000,000, and those typically involved earlier-phase trials with less safety data, novel mechanisms of action with unexpected toxicities, or trials in vulnerable populations such as pediatrics.
Accordingly, we conclude that the Briarcliff policy's $25,000,000 per-occurrence limit and $10,000,000 per-occurrence subject-injury sublimit are adequate for the reasonably foreseeable risk profile of the CLARION trial.
IV. Industry Benchmarking — Per-Occurrence and Aggregate Limits
A. Peer Sponsor Comparison
To assess whether Veridian's $50,000,000 per-occurrence demand is commercially reasonable, we conducted a benchmarking analysis of clinical trial insurance requirements in comparable multi-site Phase III oncology agreements. Our analysis draws on the following sources:
• Publicly available disclosure in FDA-mandated informed consent documents, which often reference insurance coverage levels.
• Proprietary data from prior Calderwood & Harkness engagements, encompassing more than 40 multi-site Phase III oncology clinical trial agreements negotiated by our firm in the past five years.
• Published industry surveys, including the 2022 ACRO Clinical Trial Insurance Benchmarking Report and the DIA Sponsor-Site Contracting Survey (2021).
• Informal market intelligence from specialty insurance brokers and underwriters in the life sciences insurance market.
The results of our analysis are summarized below:
A more detailed benchmarking table, using anonymized data from prior Calderwood & Harkness engagements, is attached as Appendix B.
Several observations emerge from this analysis:
1. Veridian's $50,000,000 per-occurrence demand exceeds the upper range of industry standard requirements. Across the data set we reviewed, per-occurrence limits for Phase III oncology trials ranged from $10,000,000 to $25,000,000, with the majority of agreements falling in the $15,000,000 to $25,000,000 range. No comparable agreement in our data set required a per-occurrence limit of $50,000,000 or above.
2. Most large academic medical center networks accept $15,000,000 to $25,000,000 per-occurrence limits in practice. While initial insurance demands from academic sites and site networks often exceed these levels (as Veridian's demand does here), these demands are routinely negotiated downward to the $15,000,000 to $25,000,000 range. Our experience indicates that Veridian's $50,000,000 demand is consistent with an opening negotiation position rather than a non-negotiable requirement.
3. Penterra's $25,000,000 per-occurrence limit is at the upper end of the market range. Penterra's existing coverage places it at or above the coverage levels maintained by peer pharmaceutical sponsors of comparable trials, including several large-cap and mid-cap pharmaceutical companies with Phase III oncology programs of similar scale.
4. Aggregate limits of $75,000,000 are at the upper end of market norms. Penterra's aggregate limit is well within (and at the high end of) the typical range, providing additional confidence in the adequacy of the current coverage structure.
5. Some large sponsors carry higher per-occurrence limits, but context matters. A small number of large pharmaceutical companies maintain per-occurrence limits of $50,000,000 or above, but these are typically global programs with sites in jurisdictions outside the United States where regulatory requirements may mandate higher coverage levels (e.g., certain European Union member states require sponsor insurance at prescribed levels under the EU Clinical Trials Regulation). The CLARION trial is a U.S.-only program, and no U.S. regulatory requirement mandates a specific minimum level of clinical trial liability insurance.
B. Site Network Benchmarking
We also examined insurance requirements from the site-network perspective, focusing on large multi-site research networks similar to Veridian in scale and structure.
Large multi-site academic research networks comprising 30 or more sites generally require per-occurrence coverage in the range of $20,000,000 to $25,000,000. Smaller networks (10–20 sites) typically accept lower limits, often in the $10,000,000 to $15,000,000 range. Veridian's 38-site network is among the largest in the United States, which may explain the elevated initial demand, but even accounting for network size, the $50,000,000 demand is well above the observed range.
We note that the Indemnification Benchmarking Memorandum prepared by Christopher Aiken in connection with this matter (dated April 12, 2023) confirmed that reciprocal site indemnity caps of $5,000,000 per site/per occurrence and $20,000,000 aggregate across all network sites are within market norms for large multi-site agreements. These reciprocal indemnity caps operate in tandem with the insurance requirements to allocate risk between sponsor and site network, and their presence further supports the adequacy of a $25,000,000 per-occurrence insurance limit.
C. Insurance Market Considerations
The specialty life sciences insurance market has experienced moderate hardening over the past two years, with premium increases in the range of 5% to 15% annually for clinical trial liability policies, depending on the sponsor's claims history, trial portfolio, and coverage limits. Briarcliff Mutual has been a competitive carrier in this space, and Penterra's current premium reflects favorable terms secured through Penterra's long-standing relationship with Briarcliff and its clean claims history.
Increasing the per-occurrence limit from $25,000,000 to $50,000,000 would likely require one of two approaches: (i) a primary policy limit increase, which would be subject to Briarcliff's underwriting appetite and pricing; or (ii) the procurement of a $25,000,000 excess layer above the existing $25,000,000 primary limit, which could be placed either with Briarcliff or with a separate excess carrier. In either case, the estimated additional premium cost could be significant relative to the incremental risk protection. Based on preliminary market intelligence (not yet confirmed with Briarcliff), we estimate that the additional annual premium for a $25,000,000 excess layer could range from $200,000 to $500,000, depending on underwriting terms and the specific carrier. This cost, amortized over the projected five-year trial duration, would represent a material additional expense that is not justified by the incremental risk protection, particularly given the comprehensive indemnification structure in the MCTA and the low probability of a single-occurrence loss exceeding $25,000,000.
We have not yet explored Briarcliff Mutual's willingness or capacity to issue an excess endorsement or increase limits, as this would require a formal underwriting review and would signal to Briarcliff a potential change in risk profile. We recommend obtaining a preliminary quote from Briarcliff for planning purposes only (see Action Item 2 in Section VII.D below), without committing to any policy modification unless and until negotiations with Veridian warrant such a step.
V. Interplay with MCTA Indemnification Provisions
The insurance requirements under the MCTA do not operate in isolation; they function as part of a comprehensive risk allocation framework that includes mutual indemnification obligations, liability caps, and carve-outs. A proper assessment of insurance adequacy requires analysis of this interplay.
A. Sponsor Indemnification of Sites and Investigators
Under the proposed MCTA, Penterra agrees to indemnify, defend, and hold harmless Veridian, each participating site institution, each Principal Investigator, each sub-investigator, and each site staff member (collectively, the "Site Indemnitees") against claims, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from:
(a) Subject injury caused by the investigational product (PPC-4871 / penterafenib) when administered in accordance with the Protocol and the MCTA;
(b) Product defects in the investigational product, including manufacturing defects, formulation errors, labeling deficiencies, or failure to disclose known risks;
(c) Penterra's material breach of the MCTA or the Protocol; and
(d) Penterra's negligence or willful misconduct.
The MCTA's indemnification provisions include the following financial parameters:
• Per-Subject Medical Care Cap. Penterra's obligation to pay or reimburse medical care costs for study-related injuries to individual trial subjects is capped at $500,000 per subject. This cap applies to the cost of reasonable and necessary medical care directly attributable to the study-related injury, as determined in consultation with the treating physician and subject to dispute resolution procedures set forth in the MCTA.
• Aggregate Medical Care Cap. Penterra's aggregate obligation for medical care costs across all subjects enrolled in the CLARION trial is capped at $15,000,000 over the life of the study.
• Uncapped Product-Defect Indemnification. Penterra's indemnification obligation for product-defect claims is not subject to any monetary cap. This reflects the generally accepted principle that a sponsor bears unlimited liability for defects in the investigational product itself, as the site and investigators have no control over product manufacturing, formulation, or undisclosed risk profiles.
The MCTA requires that a Site Indemnitee seeking indemnification provide written notice to Penterra within 30 calendar days of becoming aware of the claim giving rise to the indemnification request. The MCTA further provides that failure to provide timely notice does not relieve Penterra of its indemnification obligation except to the extent that Penterra demonstrates material prejudice resulting from the delay in notice. This "material prejudice" standard is favorable to the Site Indemnitees and is consistent with the majority approach in clinical trial agreements.
B. Carve-Outs from Sponsor Indemnity
Penterra's indemnification obligation under the MCTA is subject to several important carve-outs. Specifically, sponsor indemnification does not extend to losses, claims, or liabilities arising from:
(i) The negligence or willful misconduct of any site, investigator, sub-investigator, or site personnel in the conduct of the trial;
(ii) Unauthorized protocol deviations by site personnel that are not required for the immediate safety of a trial subject (i.e., deviations that constitute research misconduct or breach of protocol, as distinct from medically necessary deviations made in the interest of subject safety); and
(iii) A site's material breach of the MCTA, applicable law, or applicable regulatory requirements (including, without limitation, Good Clinical Practice ("GCP") guidelines and applicable Institutional Review Board requirements).
These carve-outs are commercially standard and serve to allocate liability for site-side conduct to the sites themselves. Importantly, the carve-outs reduce Penterra's effective indemnification exposure and correspondingly limit the circumstances under which Penterra's insurance would be implicated. To the extent that a claim against a Site Indemnitee arises from site negligence, unauthorized protocol deviations, or site breach, that claim falls outside Penterra's indemnification obligation and would be addressed through Veridian's own liability and insurance coverage (discussed in Section VI below).
C. Reciprocal Site Indemnification
The MCTA includes reciprocal indemnification provisions under which Veridian and each participating site institution indemnify, defend, and hold harmless Penterra against claims, losses, damages, liabilities, costs, and expenses arising from:
(a) The negligence or willful misconduct of site staff, investigators, or sub-investigators in the conduct of the trial;
(b) Unauthorized protocol deviations by site personnel (other than those required for immediate subject safety); and
(c) A site's material breach of the MCTA, applicable law, or applicable regulatory requirements.
The site indemnification obligation is subject to the following monetary caps:
• Per-Site/Per-Occurrence Cap. Each participating site's indemnification obligation is capped at $5,000,000 per site, per occurrence.
• Network Aggregate Cap. The aggregate indemnification obligation across all 38 Veridian sites is capped at $20,000,000 over the life of the study.
These caps are within market norms for large multi-site academic research networks, as confirmed in the Indemnification Benchmarking Memorandum referenced in Section IV.B above.
Under the MCTA, Veridian and each participating site are required to maintain general liability and professional liability insurance coverage of at least $5,000,000 per occurrence / $10,000,000 aggregate, as discussed in detail in Section VI below. This site-side insurance coverage backstops the reciprocal indemnification obligations and provides an additional layer of protection for Penterra in the event of site-side liability.
D. Insurance as Backstop to Indemnification
The Briarcliff policy functions as a critical backstop to Penterra's indemnification obligations under the MCTA. The interplay between the indemnification structure and the insurance coverage can be summarized as follows:
Subject-Injury Claims (Capped Indemnification). For subject-injury claims covered by Penterra's indemnification obligation, the MCTA's per-subject cap of $500,000 and aggregate cap of $15,000,000 define the outer boundary of Penterra's contractual medical care obligation. The Briarcliff policy's subject-injury sublimit ($10,000,000 per occurrence / $50,000,000 aggregate) provides insurance coverage that substantially exceeds the per-occurrence medical care exposure under the MCTA and provides significant headroom above the $15,000,000 aggregate medical care cap. In the event that a single occurrence gives rise to subject-injury claims that exhaust the $10,000,000 per-occurrence sublimit, the Briarcliff policy would not respond further for subject-injury claims from that occurrence, but the MCTA's $500,000 per-subject cap also limits the contractual exposure. For medical care costs above the per-subject cap that are not covered by insurance, Penterra's self-funded indemnification obligation (if any) would be measured against the MCTA's aggregate cap.
Product-Defect Claims (Uncapped Indemnification). For product-defect claims, which are uncapped under the MCTA, the full $25,000,000 per-occurrence limit under the Briarcliff policy applies. This is consistent with the reasonably foreseeable maximum single-occurrence product-defect claim in a Phase III oncology trial. While uncapped indemnification theoretically exposes Penterra to unlimited liability, the practical exposure is constrained by the trial's risk profile, the safety monitoring mechanisms in place, and the historical data on product-defect claims in comparable trials. In the unlikely event that a product-defect claim exceeds the $25,000,000 per-occurrence limit, Penterra's substantial financial resources ($890 million in cash and equivalents; $4.2 billion market capitalization) provide additional assurance that Penterra can satisfy its indemnification obligations beyond the policy limits.
Defense Costs. As noted in Section III.A above, defense costs erode the per-occurrence and aggregate limits under the Briarcliff policy. However, the MCTA's indemnification provisions obligate Penterra to defend Site Indemnitees against covered claims (including the payment of reasonable attorneys' fees), and these defense cost obligations are backstopped by the policy's defense cost coverage. Given the 3:1 aggregate-to-per-occurrence ratio and the historical experience suggesting that defense costs in clinical trial matters are a modest fraction of per-occurrence limits, the erosion of limits by defense costs does not materially impair the adequacy of the coverage.
Aggregate Coverage Over Trial Duration. Over the projected 60-month CLARION trial duration, assuming annual policy renewal at current limits, Penterra would have cumulative access to $375,000,000 in aggregate coverage and $250,000,000 in aggregate subject-injury coverage. This cumulative coverage structure, combined with the MCTA's indemnification caps and carve-outs, provides a robust risk management framework that renders the $50,000,000 per-occurrence demand unnecessary.
VI. Veridian's Site-Side Insurance Requirements
A. Required Coverage Levels
The MCTA requires each Veridian participating site to maintain general liability and professional liability insurance coverage throughout the duration of the CLARION trial. The minimum coverage levels required under the MCTA are as follows:
These coverage requirements apply to all 38 Veridian participating sites and are consistent with industry standards for academic medical center participation in Phase III clinical trials. Each site is required to provide evidence of coverage, in the form of a certificate of insurance issued by its insurance carrier, within 15 business days of execution of the MCTA. Thereafter, updated certificates must be exchanged annually during the trial period to confirm continued compliance.
The professional liability coverage requirement is particularly relevant for the CLARION trial given the oncology indication and the complex medical management involved. Professional liability coverage would respond to claims arising from the site's or investigator's exercise of professional medical judgment in the conduct of the trial, including decisions regarding subject eligibility, adverse event management, concomitant medication administration, and dose modifications.
B. Additional Insured Status
Under the proposed MCTA terms, the additional insured provisions are reciprocal:
• Penterra as Additional Insured on Site Policies. Penterra is to be named as an additional insured on Veridian's and each participating site's general liability and professional liability policies, where such additional insured endorsement is available from the site's carrier. Some academic medical centers that are self-insured or insured through state risk pools may be unable to add Penterra as an additional insured; in such cases, the MCTA provides for alternative evidence of financial responsibility.
• Veridian and Sites as Additional Insureds on Penterra Policy. Veridian and each of the 38 participating site institutions are to be named as additional insureds on Penterra's Briarcliff clinical trial liability policy. As discussed in Section III.A above, the Briarcliff policy permits the addition of additional insureds by endorsement, and Penterra has utilized this feature on prior engagements. The additional insured endorsement extends coverage to Veridian and the sites for liability arising from the CLARION trial, subject to the same policy terms, conditions, and limits.
The reciprocal additional insured arrangement is a standard feature of multi-site clinical trial agreements and provides each party with the benefit of the other party's insurance coverage in the event of cross-claims or joint liability.
C. Certificate Exchange Mechanics
The MCTA establishes the following certificate exchange procedures:
1. Initial Exchange. Within 15 business days of MCTA execution, each party shall provide to the other party certificates of insurance evidencing the required coverage levels and any additional insured endorsements.
2. Annual Exchange. Thereafter, updated certificates shall be exchanged annually during the trial period, within 30 days of each policy renewal date.
3. Notice of Material Change. Each party shall provide prompt written notice (no less than 30 days prior, where practicable) of any material change in coverage, including cancellation, non-renewal, or reduction in limits.
To facilitate the initial certificate exchange, Calderwood & Harkness will prepare a letter to Karen Tremblay at Briarcliff Mutual requesting the issuance of an additional insured endorsement naming Veridian and all 38 participating sites under Policy No. BM-CTL-2023-04182. We will coordinate with Samantha Novak, Director of Clinical Contracts at Penterra, on the logistics of tracking certificate compliance across all 38 sites. Given the number of sites involved, we recommend that Penterra establish a centralized certificate tracking system, potentially utilizing Penterra's existing clinical trial management platform, to monitor compliance on an ongoing basis.
VII. Recommendation
A. Recommended Negotiation Position on Per-Occurrence Limit
We recommend that Penterra maintain its negotiating position at $25,000,000 per occurrence / $75,000,000 aggregate clinical trial liability insurance coverage. This recommendation is supported by the following rationale:
1. Consistency with Industry Benchmarks. As detailed in Section IV above, $25,000,000 per occurrence is at the upper end of the market range for Phase III oncology trials conducted across multi-site academic research networks. Penterra's current coverage meets or exceeds the coverage maintained by peer sponsors in comparable programs.
2. Adequacy in Light of MCTA Indemnification Structure. The MCTA's indemnification provisions — including the $500,000 per-subject and $15,000,000 aggregate medical care caps, the carve-outs for site negligence and breach, and the reciprocal site indemnification — operate in conjunction with the Briarcliff policy to provide comprehensive risk allocation. The insurance need not cover the full theoretical maximum exposure because the indemnification structure constrains and distributes that exposure.
3. Veridian's $50,000,000 Demand Is Above Market. Our benchmarking analysis demonstrates that Veridian's demand is materially above the upper end of the observed range for comparable agreements. No agreement in our data set required a per-occurrence limit of $50,000,000 or above for a U.S.-only Phase III oncology trial.
4. Disproportionate Cost of Increased Limits. Increasing the per-occurrence limit from $25,000,000 to $50,000,000 would impose significant additional premium costs — potentially $200,000 to $500,000 per year or more — without commensurate risk reduction. The incremental protection afforded by doubling the per-occurrence limit is modest given the low probability of a single-occurrence loss exceeding $25,000,000 and the indemnification carve-outs that limit Penterra's effective exposure.
Additional Supporting Data Points. The strength of Penterra's financial position further supports the adequacy of the $25,000,000 per-occurrence limit. As of Q1 2023, Penterra holds approximately $890 million in cash and cash equivalents, reported fiscal year 2022 revenue of approximately $1.87 billion, and has a market capitalization of approximately $4.2 billion. These financial resources provide additional backing for Penterra's indemnification obligations beyond the insurance limits, reducing the practical risk that any covered loss would go uncompensated even in a scenario exceeding the policy limits.
B. Recommended Position on Subject-Injury Sublimit
We recommend that Penterra maintain the existing subject-injury sublimit of $10,000,000 per occurrence / $50,000,000 aggregate and present this sublimit as adequate and commercially reasonable in negotiations with Veridian. This position is supported by the following analysis:
• The $10,000,000 per-occurrence sublimit is consistent with the MCTA's $500,000 per-subject medical care cap. A single occurrence would need to involve injuries to more than 20 subjects, each at the maximum $500,000 per-subject cap, before exhausting the sublimit. This scenario is highly unlikely given the CLARION trial's safety monitoring infrastructure, including the DSMB, adverse event reporting requirements, and protocol-specified stopping rules.
• The $50,000,000 aggregate subject-injury sublimit provides more than three times the coverage of the MCTA's $15,000,000 aggregate medical care cap, offering substantial headroom for multiple subject-injury occurrences within a single policy year.
• The sublimit is at the upper end of the industry benchmark range ($5,000,000 to $10,000,000 per occurrence; $15,000,000 to $50,000,000 aggregate) for Phase III oncology trials.
• The sublimit resets annually with each policy renewal, providing cumulative aggregate subject-injury coverage of up to $250,000,000 over the projected 60-month trial duration.
C. Negotiation Tactics
We recommend the following approach for presenting Penterra's insurance position to Veridian and its counsel:
1. Present Industry Benchmarking Data. In the next negotiation session with Allison Whitmore and the WJC team, we recommend presenting the industry benchmarking data (summarized in Section IV above and detailed in Appendix B) to demonstrate that $25,000,000 per occurrence is at or above market for comparable Phase III oncology trials. Presenting this data in a clear, tabular format — showing the range of per-occurrence limits in anonymized comparable agreements — will be effective in reframing Veridian's expectations.
2. Emphasize the Additional Insured Endorsement. Highlight that Veridian and all 38 participating sites will be named as additional insureds on the Briarcliff policy, providing them with direct coverage rights under a $25,000,000 per-occurrence / $75,000,000 aggregate policy. This is a significant benefit that should be underscored in negotiations.
3. Highlight the Comprehensive Indemnification Structure. Emphasize that the MCTA's indemnification provisions — particularly the uncapped product-defect indemnification — provide substantial protection that supplements (and in some categories exceeds) the insurance coverage. Veridian and its sites are protected not only by the insurance but also by Penterra's direct contractual indemnification obligations, backed by Penterra's strong financial position.
4. Offer Written Commitment to Maintain Coverage. Offer to include in the MCTA a covenant by Penterra to maintain clinical trial liability coverage at the specified levels throughout the duration of the CLARION trial, through projected study completion in August 2028, with annual renewal. This addresses any concern that Penterra might reduce or cancel coverage during the trial.
5. Demonstrate Penterra's Financial Strength. Note Penterra's significant financial resources — $890 million in cash and equivalents, $1.87 billion in FY2022 revenue, and a $4.2 billion market capitalization — as demonstrating Penterra's capacity to satisfy its indemnification obligations beyond the insurance limits. This financial backing provides an additional layer of security for Veridian and its sites that is not dependent on insurance coverage levels.
6. Fallback Position (If Needed). If Veridian proves unwilling to accept the $25,000,000 per-occurrence limit after reviewing the benchmarking data and indemnification structure, we recommend exploring whether a modest increase — for example, to $30,000,000 per occurrence — could be achieved through an excess policy endorsement at reasonable cost. This fallback should be reserved as a final concession in negotiations and should not be raised preemptively. Before making any such concession, Penterra should have in hand a confirmed quote from Briarcliff for the increased coverage (see Action Item 2 below) and should negotiate for reciprocal concessions from Veridian on other open MCTA terms.
D. Action Items
Based on the foregoing analysis and recommendations, we propose the following action items:
1. Confirm Additional Insured Endorsement Availability. Contact Karen Tremblay at Briarcliff Mutual to confirm that Policy No. BM-CTL-2023-04182 permits the addition of Veridian Health Research Network, Inc. and all 38 participating site institutions as additional insureds. Request formal issuance of the additional insured endorsement. Responsible: Sean Morrissey. Target completion: April 25, 2023.
2. Obtain Preliminary Quotes for Increased Limits. Request from Briarcliff Mutual a preliminary quote for increasing per-occurrence limits to $30,000,000, $40,000,000, and $50,000,000 (either through primary limit increases or excess layer endorsements), for internal planning purposes only. This information will be used to assess the cost and feasibility of a fallback negotiation position and should not be disclosed to Veridian or WJC. Responsible: Sean Morrissey. Target completion: May 2, 2023.
3. Prepare Letter to Briarcliff Requesting Additional Insured Endorsement. Draft and send a formal letter to Karen Tremblay at Briarcliff, referencing Policy No. BM-CTL-2023-04182, requesting the issuance of an additional insured endorsement naming Veridian and all 38 participating sites. The letter should include a list of all site institutions to be added, which we will obtain from Penterra's clinical team. Responsible: Christopher Aiken. Target completion: April 28, 2023.
4. Incorporate Insurance Analysis into Negotiation Strategy Memorandum. Include the key insurance adequacy analysis points from this memorandum in the comprehensive Negotiation Strategy Memorandum being prepared by Miriam Calloway for the Penterra legal and clinical teams. The recipients of the Negotiation Strategy Memorandum include Nathaniel Briggs (General Counsel, Penterra), Rebecca Liang (Associate General Counsel, Clinical Affairs, Penterra), and Jennifer Holt (VP, Clinical Operations, Penterra). Responsible: Christopher Aiken and Miriam Calloway. Target completion: May 5, 2023.
5. Coordinate Certificate Exchange Timeline. Coordinate with Samantha Novak, Director of Clinical Contracts at Penterra, on the certificate exchange timeline and tracking procedures across all 38 Veridian sites. Recommend implementation of a centralized certificate tracking system, and establish a process for obtaining certificates from each Veridian site within 15 business days of MCTA execution. Responsible: Sean Morrissey and Samantha Novak (Penterra). Target completion: Ongoing; initial coordination call by April 24, 2023.
VIII. Appendices (Referenced)
Appendix A — Briarcliff Policy Summary
The following is a summary of the key terms and conditions of Penterra Pharmaceuticals Corp.'s clinical trial liability insurance policy issued by Briarcliff Mutual Insurance Company. This summary is provided for reference purposes in connection with this memorandum and does not constitute a comprehensive recitation of all policy terms, conditions, exclusions, and endorsements. The complete policy should be consulted for any coverage determinations.
Appendix B — Industry Benchmark Data
The following table presents anonymized per-occurrence and aggregate limit data from comparable Phase III oncology multi-site clinical trial agreements, compiled from prior Calderwood & Harkness engagements and published industry surveys. All sponsor and site network identities have been redacted in accordance with client confidentiality obligations.
Source: Calderwood & Harkness LLP prior engagements (2019–2023); ACRO Clinical Trial Insurance Benchmarking Report (2022); DIA Sponsor-Site Contracting Survey (2021). All data anonymized. Aggregate limits reflect annual policy periods.
Key Observations from Benchmark Data:
• Per-occurrence limits ranged from $10,000,000 to $25,000,000 across all comparable agreements.
• The median per-occurrence limit was $20,000,000; the mean was $19,000,000.
• No agreement in the data set required a per-occurrence limit exceeding $25,000,000 for a U.S.-only Phase III oncology trial.
• Aggregate limits ranged from $25,000,000 to $75,000,000, with a median of $50,000,000.
• Subject-injury sublimits ranged from $5,000,000 to $10,000,000 per occurrence and $15,000,000 to $50,000,000 in the aggregate.
• Agreements E and I — the most comparable to the CLARION trial in terms of indication (HCC), trial size (30–50 sites), and coverage structure — both utilized per-occurrence limits of $25,000,000, consistent with Penterra's existing Briarcliff policy.
Appendix C — Premium Cost Estimate for Increased Limits
This appendix is reserved as a placeholder for the preliminary quote to be obtained from Briarcliff Mutual Insurance Company for excess layers or increased per-occurrence limits, per Action Item 2 in Section VII.D above. The quote has been requested and is expected to be received by May 2, 2023. Upon receipt, this appendix will be updated and a supplemental memorandum will be circulated to the distribution list if the quote contains information material to the negotiation strategy.
Estimated premium ranges referenced in this memorandum (Section IV.C) are based on preliminary market intelligence from specialty insurance brokers and are subject to revision upon receipt of Briarcliff's formal quote.
This memorandum is a privileged and confidential attorney work product prepared by Calderwood & Harkness LLP for the exclusive use of the addressees and copy recipients identified above. It is not intended for distribution to any other party and should not be disclosed without the prior written consent of Calderwood & Harkness LLP. The analysis and recommendations contained herein are based on the information available to us as of the date of this memorandum and are subject to revision as additional information becomes available during the MCTA negotiation process.
TO: | Miriam Calloway, Partner, Calderwood & Harkness LLP
FROM: | Christopher Aiken, Associate, Calderwood & Harkness LLP; Sean Morrissey, Associate, Calderwood & Harkness LLP
DATE: | April 18, 2023
RE: | Insu

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