PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP Counselors at Law
280 Park Avenue, 34th Floor New York, New York 10017
101 Carnegie Center, Suite 500 Princeton, New Jersey 08540
July 18, 2023
MEMORANDUM
TO: Nathaniel Briggs, Esq., Vice President & General Counsel, Penterra Pharmaceuticals Corp. Rebecca Liang, Esq., Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp.
FROM: Miriam Calloway, Partner, Calderwood & Harkness LLP
DATE: July 18, 2023
RE: Post-Closing Summary Memorandum — Master Clinical Trial Agreement between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. (Protocol PPC-4871-III / CLARION Trial)
MATTER NO.: 1018-00004
I. Purpose and Overview
The purpose of this memorandum is to confirm the Effective Date of the Master Clinical Trial Agreement (the "MCTA") between Penterra Pharmaceuticals Corp. ("Penterra" or the "Sponsor") and Veridian Health Research Network, Inc. ("Veridian" or the "Site Network"), to provide a comprehensive summary of all executed transaction documents delivered at or prior to closing, to identify outstanding post-closing obligations of the parties, and to set forth key upcoming milestone dates relevant to the commencement and ongoing administration of the clinical trial governed by the MCTA.
The MCTA, dated as of June 28, 2023 (the "Signing Date"), was entered into between Penterra Pharmaceuticals Corp., a corporation organized and existing under the laws of the State of Delaware with its principal offices located at 200 Biopharma Boulevard, Suite 1400, Princeton, New Jersey 08540, and Veridian Health Research Network, Inc., a Delaware non-stock, non-profit corporation qualified under Section 501(c)(3) of the Internal Revenue Code with its principal offices located at 750 Research Parkway, 8th Floor, Philadelphia, Pennsylvania 19104. All conditions precedent to the effectiveness of the MCTA were satisfied as of July 5, 2023 (the "Closing Date"), and the MCTA became effective as of July 18, 2023 (the "Effective Date").
The MCTA governs the conduct of Penterra's Phase III, randomized, double-blind, placebo-controlled, multi-center clinical trial of penterafenib (PPC-4871), an oral multi-kinase inhibitor, for the treatment of advanced hepatocellular carcinoma ("HCC"), conducted under Protocol PPC-4871-III, titled "Clinical Assessment of Response with Longitudinal Investigation in ONcology" (the "CLARION Trial"). The CLARION Trial has been registered on ClinicalTrials.gov under Identifier NCT05928174 and is being conducted pursuant to Investigational New Drug Application No. IND 157823 filed with the United States Food and Drug Administration (the "FDA").
The total deal value of the MCTA is approximately Eighty Million Dollars ($80,000,000), which encompasses all payments to be made by Penterra to Veridian and the participating sites across the Veridian network. The CLARION Trial is projected to be conducted at thirty-eight (38) Veridian Network sites located in fourteen (14) states over a projected sixty (60)-month study duration, comprising a forty-two (42)-month enrollment period followed by an eighteen (18)-month follow-up period. The MCTA is governed by the laws of the State of New York, without regard to its conflict of laws principles.
This memorandum is intended for the internal use of Penterra's legal department and is protected by the attorney-client privilege and the work product doctrine. It should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
II. Transaction Timeline Summary
Set forth below is a summary timeline of the principal events in the negotiation, execution, and closing of the MCTA and the ancillary transaction documents:
The total elapsed time from engagement opening to the Effective Date was approximately four (4) months. The negotiation process, from initial draft circulation to final agreed-upon draft, spanned approximately eleven (11) weeks. Calderwood & Harkness notes that the timeline was consistent with market practice for transactions of this complexity and scope, and acknowledges the cooperative and professional approach of counterparty counsel throughout the negotiation process.
III. Summary of Executed Documents
Set forth below is a comprehensive summary of all documents executed in connection with the closing of the MCTA transaction. Executed originals and/or certified copies of each document listed below have been included in the Closing Binder delivered to Penterra concurrently with this memorandum.
A. Master Clinical Trial Agreement
The Execution Version of the Master Clinical Trial Agreement, dated as of June 28, 2023, was executed between Penterra Pharmaceuticals Corp., in its capacity as Sponsor, and Veridian Health Research Network, Inc., in its capacity as Site Network. The MCTA is the principal agreement governing the relationship of the parties with respect to the conduct of the CLARION Trial.
The CLARION Trial, conducted under Protocol PPC-4871-III, is designed as a Phase III, randomized, double-blind, placebo-controlled, multi-center study of penterafenib (PPC-4871) in adult subjects with advanced hepatocellular carcinoma. The planned enrollment is 1,200 subjects, randomized in a 2:1 ratio (800 subjects in the treatment arm and 400 subjects in the placebo arm). The primary endpoint of the study is overall survival (OS). The key secondary endpoints include progression-free survival (PFS), objective response rate (ORR) per RECIST v1.1 criteria, and duration of response (DOR).
The total deal value under the MCTA is Eighty Million Dollars ($80,000,000), broken down into the following principal categories:
(i) Per-Patient Site Fees: $52,000 per subject multiplied by 1,200 planned subjects, for a total of $62,400,000. Per-patient fees are payable on a milestone basis, with four equal installments of $13,000 per subject payable as follows:
• Twenty-five percent (25%) ($13,000) payable upon randomization of the subject;
• Twenty-five percent (25%) ($13,000) payable upon completion of the Week 12 visit;
• Twenty-five percent (25%) ($13,000) payable upon completion of the Week 24 visit; and
• Twenty-five percent (25%) ($13,000) payable upon study completion for that subject (defined as completion of the final study visit or early termination, whichever is applicable).
(ii) Start-Up Fees: $75,000 per site multiplied by 38 planned sites, for a total of $2,850,000. Start-up fees are payable in two equal installments:
• Fifty percent (50%) ($37,500) payable upon site activation (defined as completion of site qualification visit, IRB approval, regulatory document collection, and site initiation visit); and
• Fifty percent (50%) ($37,500) payable upon enrollment of the first patient at that site.
(iii) Annual Site Maintenance Fees: $40,000 per site per year, multiplied by 38 sites, over an average projected site participation period of 3.5 years, for a total of $5,320,000.
(iv) Investigator Grants: $1,500,000 in the aggregate, to be allocated among qualified investigators conducting ancillary translational research in connection with the CLARION Trial, as determined by the Sponsor in consultation with the Global Principal Investigator.
(v) Network Coordination and Administrative Fee: $4,200,000, payable in fourteen (14) quarterly installments of $300,000 each, commencing on the Effective Date. This fee compensates Veridian's central office for network-level coordination, site recruitment, centralized IRB services, and administrative support.
(vi) Technology and EDC Integration Costs: $1,230,000 for the integration of Pinnacle Data Solutions, Inc.'s electronic data capture (EDC) platform with Veridian's existing clinical trial management systems across all participating sites.
(vii) Contingency and Change Order Reserve: $2,500,000, to be drawn upon only upon mutual written agreement of the parties in connection with protocol amendments, scope changes, or unanticipated costs.
All payments under the MCTA are due and payable Net 45 days from Penterra's receipt of a proper and complete invoice from Veridian or the applicable site, as the case may be. Invoices must conform to the format specified in Exhibit B and include all required supporting documentation, including subject enrollment verification and milestone completion confirmation.
B. MCTA Signature Pages
The MCTA was executed by the following authorized signatories on June 28, 2023:
(i) On behalf of Penterra Pharmaceuticals Corp.: Nathaniel Briggs, Esq., Vice President & General Counsel, pursuant to authority granted by resolution of the Board of Directors of Penterra dated June 15, 2023.
(ii) On behalf of Veridian Health Research Network, Inc.: Dr. Franklin Osei, M.D., Ph.D., President & Chief Executive Officer, pursuant to authority granted by resolution of the Board of Directors of Veridian dated June 20, 2023.
(iii) On behalf of Graystone University Medical Center (the designated lead site under the MCTA): Dr. William Corwin, M.D., President, Graystone University Medical Center, dated June 28, 2023.
Each signatory's authority was confirmed through the delivery of the Secretary's Certificates described in Section III.G below.
C. MCTA Exhibits and Schedules
The MCTA includes the following exhibits and schedules, each of which was executed or delivered concurrently with the MCTA and is incorporated therein by reference:
Exhibit A — Protocol Synopsis (PPC-4871-III / CLARION). A summary of Protocol PPC-4871-III, setting forth the study objectives, design, patient population, endpoints, sample size, statistical considerations, and study procedures. The full protocol is maintained by Penterra's clinical operations department and has been filed with the FDA as part of IND 157823.
Exhibit B — Budget and Payment Schedule. A detailed financial breakdown of the $80,000,000 total deal value, organized by cost category, payment milestone, and projected payment timeline. Exhibit B includes per-patient payment schedules, site start-up fee installment schedules, network coordination fee payment dates, and the contingency reserve draw-down procedures.
Exhibit C — Form of Individual Site Agreement (Joinder). The standard-form joinder agreement to be executed by each participating Veridian Network site, pursuant to which each site agrees to be bound by the terms of the MCTA and undertakes site-specific obligations with respect to the conduct of the CLARION Trial. The form joinder includes site-specific data fields for the site name and address, principal investigator identification, IRB of record, estimated enrollment capacity, and any site-specific modifications to the MCTA budget or procedures.
Exhibit D — Subject-Injury Indemnification Provisions. The subject-injury indemnification framework, which reflects one of the most extensively negotiated provisions of the MCTA. The principal terms are as follows:
• Sponsor Indemnification of Sites and Investigators: Penterra shall indemnify, defend, and hold harmless Veridian, each participating site, and each investigator against claims arising from subject injury caused by the investigational product or the conduct of the study in accordance with the protocol, subject to a per-subject medical care cap of Five Hundred Thousand Dollars ($500,000) and an aggregate cap of Fifteen Million Dollars ($15,000,000). The indemnification is uncapped with respect to claims arising from product defect, including claims based on the manufacture, formulation, packaging, labeling, or inherent properties of penterafenib.
• Carve-Outs: The Sponsor's indemnification obligation does not extend to claims arising from (a) investigator negligence or willful misconduct, (b) unauthorized deviations from the protocol (as distinguished from medically necessary deviations made in the interest of subject safety), or (c) material breach by the site of its obligations under the MCTA or the applicable Individual Site Agreement.
• Reciprocal Site Indemnification: Each site shall indemnify Penterra against claims arising from the site's negligence, willful misconduct, or material breach of the MCTA, subject to a cap of Five Million Dollars ($5,000,000) per site per occurrence and an aggregate cap of Twenty Million Dollars ($20,000,000) across all sites.
• Notice Requirement: Each party must provide written notice of any claim or potential claim within thirty (30) calendar days of becoming aware of the event giving rise to the claim.
Exhibit E — Insurance Requirements and Certificate Forms. The insurance requirements applicable to each party, together with the forms of insurance certificates to be delivered at closing and annually thereafter. The key requirements are as follows:
• Penterra: Clinical trial liability insurance with limits of not less than Twenty-Five Million Dollars ($25,000,000) per occurrence and Seventy-Five Million Dollars ($75,000,000) in the aggregate, provided through Briarcliff Mutual Insurance Company under Policy No. BM-CTL-2023-04182. The policy includes a subject-injury sublimit of Ten Million Dollars ($10,000,000) per occurrence and Fifty Million Dollars ($50,000,000) in the aggregate. Veridian and all participating sites are to be named as additional insureds on the policy.
• Veridian and Participating Sites: General liability and professional liability insurance with limits of not less than Five Million Dollars ($5,000,000) per occurrence and Ten Million Dollars ($10,000,000) in the aggregate.
Exhibit F — Confidentiality and Data Protection Provisions. Comprehensive confidentiality provisions applicable to all confidential information exchanged between the parties, with a confidentiality term of ten (10) years from the date of disclosure. Exhibit F also includes detailed provisions regarding compliance with the Health Insurance Portability and Accountability Act of 1996, as amended ("HIPAA"), including requirements for the execution of Business Associate Agreements where applicable, de-identification standards, and subject authorization requirements.
Exhibit G — Intellectual Property and Publication Rights. Provisions governing the ownership of clinical trial data, publication rights of investigators, and the treatment of pre-existing intellectual property. Key terms include:
• Data Ownership: Penterra retains exclusive ownership of all clinical trial data generated under the CLARION Trial, including but not limited to case report forms, electronic data, biospecimen data, and statistical analyses.
• Publication Rights: Investigators retain the right to publish the results of the CLARION Trial and related academic research, subject to a sixty (60)-day review period during which Penterra may review proposed publications for accuracy, protection of confidential information, and patentable subject matter. If Penterra identifies potentially patentable subject matter, it may request an additional delay of up to ninety (90) days to permit the filing of patent applications.
• Pre-Existing IP: Each party retains all right, title, and interest in its pre-existing intellectual property. Neither party acquires any rights in the other party's pre-existing intellectual property except as expressly set forth in the MCTA or the IP Side Letter.
Exhibit H — Regulatory Compliance Representations and Covenants. Representations, warranties, and covenants of each party regarding compliance with applicable laws and regulations governing the conduct of clinical trials, including but not limited to:
• 21 C.F.R. Part 11 (Electronic Records; Electronic Signatures);
• 21 C.F.R. Part 50 (Protection of Human Subjects);
• 21 C.F.R. Part 54 (Financial Disclosure by Clinical Investigators);
• 21 C.F.R. Part 56 (Institutional Review Boards);
• 21 C.F.R. Part 312 (Investigational New Drug Application);
• International Council for Harmonisation Guideline E6(R2) (Good Clinical Practice);
• The Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b));
• The Physician Payments Sunshine Act / Open Payments (42 U.S.C. § 1320a-7h); and
• Fair market value representations with respect to all investigator and site compensation.
Exhibit I — Form of Investigator Undertaking. The standard-form undertaking to be executed by each investigator participating in the CLARION Trial, pursuant to which the investigator agrees to comply with the protocol, Good Clinical Practice, and all applicable regulatory requirements.
Exhibit J — Safety Reporting Procedures. Detailed procedures for the reporting of adverse events, serious adverse events ("SAEs"), and suspected unexpected serious adverse reactions ("SUSARs") in connection with the CLARION Trial. Key timelines include:
• SAE reporting by sites to Penterra: within twenty-four (24) hours of the site's awareness of the event;
• IND safety reports for fatal or life-threatening events: within seven (7) calendar days;
• IND safety reports for all other reportable events: within fifteen (15) calendar days; and
• Coordination of safety reporting with Meridian Contract Research Organization, Inc. ("Meridian CRO"), the contract research organization engaged by Penterra to provide pharmacovigilance and safety database management services for the CLARION Trial.
Exhibit K — Approved Subcontractors List. A list of subcontractors approved by Penterra and Veridian for the performance of specified functions in connection with the CLARION Trial, including:
• Meridian Contract Research Organization, Inc. (CRO services, including monitoring, pharmacovigilance, and data management);
• Pinnacle Data Solutions, Inc. (electronic data capture platform development and integration); and
• Northbridge Bioanalytical Laboratories, Inc. (central laboratory and bioanalytical services).
Schedule 1 — List of Participating Veridian Network Sites. A comprehensive list of the thirty-eight (38) Veridian Network sites approved for participation in the CLARION Trial, located across fourteen (14) states, including site addresses, anticipated principal investigators, IRBs of record, and estimated enrollment capacity.
D. Individual Site Agreements (Joinders) — Executed at Closing
Individual Site Agreements in the form of Exhibit C to the MCTA were executed at or prior to the Closing Date for the following five (5) lead sites:
Site 001 — Graystone University Medical Center
Address: 1200 University Avenue, Philadelphia, Pennsylvania 19104
Principal Investigator: Dr. Catherine Aldridge, M.D., Ph.D., Professor of Oncology IRB of Record: Graystone University Institutional Review Board (FWA No. FWA00008721; IRB Registration No. IRB00012847) Estimated Enrollment Capacity: 80 subjects
Site 002 — Lakemont Medical Center
Address: 4400 North Michigan Drive, Chicago, Illinois 60611
Co-Principal Investigator: Dr. Howard Matsuoka, M.D., Associate Professor of Hepatology & Oncology IRB of Record: Veridian Central Institutional Review Board Estimated Enrollment Capacity: 55 subjects
Site 003 — Haverford Regional Medical Center
Location: Boston, Massachusetts IRB of Record: Veridian Central Institutional Review Board Estimated Enrollment Capacity: 40 subjects
Site 004 — Cedar Falls University Hospital
Location: Denver, Colorado IRB of Record: Veridian Central Institutional Review Board Estimated Enrollment Capacity: 35 subjects
Site 005 — Weston Memorial Health System
Location: Atlanta, Georgia IRB of Record: Veridian Central Institutional Review Board Estimated Enrollment Capacity: 45 subjects
The remaining thirty-three (33) Individual Site Agreements will be executed on a rolling basis as each site completes its activation process. The procedures and timeline for execution of the remaining joinder agreements are discussed in Section V.A below.
E. Investigator Agreements
The following Investigator Agreements were executed in connection with the closing of the MCTA:
(i) Principal Investigator Agreement — executed by Dr. Catherine Aldridge, M.D., Ph.D., Professor of Oncology at Graystone University Medical Center, in her capacity as Global Principal Investigator for the CLARION Trial. Dr. Aldridge's agreement sets forth her responsibilities for overall scientific and medical oversight of the study, coordination with Penterra's medical monitor, review of safety data, and participation in publications and presentations related to the CLARION Trial.
(ii) Co-Principal Investigator Agreement — executed by Dr. Howard Matsuoka, M.D., Associate Professor of Hepatology & Oncology at Lakemont Medical Center, in his capacity as Co-Principal Investigator for the CLARION Trial. Dr. Matsuoka's agreement addresses his responsibilities for enrollment coordination at Lakemont and regional sites, participation in the Data Safety Monitoring Board review process, and secondary analysis of hepatology-specific endpoints.
F. Intellectual Property Side Letter
An intellectual Property Side Letter (the "IP Side Letter") was executed concurrently with the MCTA on June 28, 2023, by and between Penterra and Veridian. The IP Side Letter supplements the intellectual property provisions set forth in Exhibit G to the MCTA and addresses the following additional topics:
• Ownership and licensing of joint inventions arising from the CLARION Trial;
• Procedures for identification, disclosure, and evaluation of potentially patentable inventions;
• Retention by each party of all right, title, and interest in its pre-existing intellectual property;
• Patent prosecution procedures, including allocation of prosecution costs and control of patent prosecution decisions; and
• Rights of first negotiation with respect to the licensing of joint inventions for commercial applications.
G. Closing Certificates
The following certificates were executed and delivered at or prior to the Closing Date:
(i) Closing Certificate — Penterra Pharmaceuticals Corp. Executed by Nathaniel Briggs, Esq., Vice President & General Counsel, dated July 5, 2023. The certificate confirms that all representations and warranties of Penterra contained in the MCTA are true and correct in all material respects as of the Closing Date and that Penterra has performed all pre-closing obligations required to be performed by it under the MCTA.
(ii) Closing Certificate — Veridian Health Research Network, Inc. Executed by Dr. Franklin Osei, M.D., Ph.D., President & Chief Executive Officer, dated July 5, 2023. The certificate confirms that all representations and warranties of Veridian contained in the MCTA are true and correct in all material respects as of the Closing Date and that Veridian has performed all pre-closing obligations required to be performed by it under the MCTA.
(iii) Secretary's Certificate — Penterra Pharmaceuticals Corp. Certifying (a) the resolutions of the Board of Directors of Penterra authorizing the execution and delivery of the MCTA and all ancillary agreements, (b) the incumbency and specimen signatures of Nathaniel Briggs, Esq. (Vice President & General Counsel) and Dr. Anand Raghavan (Chief Medical Officer), and (c) attaching true and correct copies of Penterra's Amended and Restated Bylaws and Certificate of Incorporation.
(iv) Secretary's Certificate — Veridian Health Research Network, Inc. Certifying (a) the resolutions of the Board of Directors of Veridian authorizing the execution and delivery of the MCTA and all ancillary agreements, and (b) the incumbency and specimen signatures of Dr. Franklin Osei, M.D., Ph.D. (President & Chief Executive Officer) and Gregory Callahan, Esq. (General Counsel).
(v) Officer's Certificate — Penterra Pharmaceuticals Corp. Providing a bringdown of Penterra's representations and warranties as of the Closing Date of July 5, 2023, confirming that no events have occurred since the Signing Date that would render any such representations or warranties untrue or incorrect in any material respect.
H. Insurance Documentation
The following insurance documentation was delivered at or prior to the Closing Date:
(i) Certificate of Insurance — Briarcliff Mutual Insurance Company. Certificate evidencing Penterra's clinical trial liability insurance under Policy No. BM-CTL-2023-04182, with a policy period of April 1, 2023 through March 31, 2024. The policy provides coverage of Twenty-Five Million Dollars ($25,000,000) per occurrence and Seventy-Five Million Dollars ($75,000,000) in the aggregate, with a subject-injury sublimit of Ten Million Dollars ($10,000,000) per occurrence and Fifty Million Dollars ($50,000,000) in the aggregate.
(ii) Additional Insured Endorsement. Endorsement to Policy No. BM-CTL-2023-04182 naming Veridian Health Research Network, Inc. and all participating Veridian Network sites as additional insureds under the policy with respect to the conduct of the CLARION Trial.
(iii) Site Insurance Certificates. Certificates of insurance received from each of the five (5) initial sites (Graystone University Medical Center, Lakemont Medical Center, Haverford Regional Medical Center, Cedar Falls University Hospital, and Weston Memorial Health System), each evidencing general liability and professional liability coverage of not less than Five Million Dollars ($5,000,000) per occurrence and Ten Million Dollars ($10,000,000) in the aggregate, as required by Exhibit E to the MCTA.
IV. Conditions Precedent — Satisfaction Confirmed
All conditions precedent to the closing of the MCTA were satisfied as of the Closing Date of July 5, 2023. The satisfaction of each condition precedent has been documented in the Conditions Precedent Satisfaction Memorandum prepared by Sean Morrissey, Associate, Calderwood & Harkness LLP, a copy of which is enclosed with this memorandum. No conditions precedent were waived by either party.
The conditions precedent and their respective dates of satisfaction are summarized as follows:
(a) Delivery by Penterra of its certificate of insurance from Briarcliff Mutual Insurance Company, Policy No. BM-CTL-2023-04182, together with the additional insured endorsement naming Veridian and participating sites — satisfied June 30, 2023.
(b) Delivery of site insurance certificates for the five (5) initial sites (Sites 001 through 005), each evidencing the minimum coverage levels required by Exhibit E — satisfied July 3, 2023 (all five certificates received and confirmed compliant).
(c) Receipt of IRB approvals: Graystone University Institutional Review Board (IRB Registration No. IRB00012847) approval of Protocol PPC-4871-III and the informed consent form for Site 001, dated June 22, 2023; Veridian Central Institutional Review Board approval of Protocol PPC-4871-III and the informed consent form for Sites 002 through 005, dated June 26, 2023 — satisfied as of the stated dates.
(d) Delivery of executed investigator signature pages: Principal Investigator Agreement executed by Dr. Catherine Aldridge, M.D., Ph.D., dated June 28, 2023; Co-Principal Investigator Agreement executed by Dr. Howard Matsuoka, M.D., dated June 28, 2023 — satisfied June 28, 2023.
(e) Delivery of executed Secretary's Certificates by Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. — satisfied July 5, 2023.
(f) Delivery of executed Closing Certificates by Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. — satisfied July 5, 2023.
(g) Execution and delivery of the intellectual Property Side Letter by Penterra and Veridian — satisfied June 28, 2023.
(h) Execution and delivery of Individual Site Agreements (Joinders) for the five (5) lead sites (Sites 001 through 005) — satisfied June 28, 2023 (Sites 001, 002, and 005) and July 3, 2023 (Sites 003 and 004).
Based on the foregoing, Calderwood & Harkness confirms that all conditions precedent to the effectiveness of the MCTA were duly satisfied prior to the Effective Date.
V. Outstanding Post-Closing Obligations
Notwithstanding the satisfaction of all conditions precedent and the effectiveness of the MCTA as of the date hereof, certain obligations of the parties remain outstanding and will require ongoing attention and coordination during the operational phase of the CLARION Trial. Set forth below is a summary of these post-closing obligations.
A. Site Joinder Execution for Remaining Sites
As noted in Section III.D above, Individual Site Agreements in the form of Exhibit C to the MCTA have been executed for five (5) of the thirty-eight (38) planned Veridian Network sites. The remaining thirty-three (33) sites have not yet executed Individual Site Agreements.
The joinder agreements for the remaining sites will be executed on a rolling basis as each site completes the site activation process. The site activation process requires, at a minimum, the completion of the following steps:
(i) Approval of Protocol PPC-4871-III and the informed consent form by the site's IRB of record (or reliance on the Veridian Central IRB, as applicable);
(ii) Identification and qualification of the site's principal investigator and sub-investigators;
(iii) Completion of the site qualification visit by Meridian CRO;
(iv) Submission of FDA Form 1572 (Statement of Investigator) to Penterra for inclusion in the IND file; and
(v) Collection of all required regulatory and financial documentation, including the investigator's financial disclosure certification under 21 C.F.R. Part 54.
Penterra's Director of Clinical Contracts, Samantha Novak, and Veridian's Director of Sponsored Research Agreements, Patricia Dunne, will coordinate the execution of the remaining joinder agreements. The form joinder (Exhibit C to the MCTA) will be used for all sites, with site-specific modifications limited to the data fields contemplated by the form. Calderwood & Harkness remains available to review any proposed site-specific modifications that deviate from the standard form joinder, should the need arise.
B. Annual Insurance Renewals and Certificate Updates
Penterra's clinical trial liability insurance policy with Briarcliff Mutual Insurance Company (Policy No. BM-CTL-2023-04182) has a current policy period of April 1, 2023 through March 31, 2024. This policy must be renewed annually throughout the duration of the CLARION Trial, which is projected to extend through approximately August 2028 (based on the sixty-month projected study duration from the Effective Date).
Under the terms of the MCTA, renewed certificates of insurance, together with updated additional insured endorsements naming Veridian and all then-participating sites, must be delivered to Veridian within fifteen (15) business days of each policy renewal date. Penterra should establish an internal calendar reminder for the annual renewal, with the first renewal deadline being March 31, 2024.
Insurance certificates for each participating site must likewise be updated annually, on each site's activation anniversary date. Veridian's central office has undertaken to coordinate the collection and delivery of site insurance certificates, but Penterra's clinical contracts team should independently confirm receipt of each renewal certificate.
Karen Tremblay, Vice President of Life Sciences Lines at Briarcliff Mutual Insurance Company, has been identified as the primary contact for coordination of the annual renewal process. Her contact information has been provided separately to Penterra's risk management department.
C. Investigator Financial Disclosure Collection
In accordance with 21 C.F.R. Part 54 (Financial Disclosure by Clinical Investigators), financial disclosure certifications must be collected from all investigators (including principal investigators, co-principal investigators, and sub-investigators) across all thirty-eight (38) participating sites prior to those investigators' participation in the CLARION Trial. The financial disclosure forms certify that investigators do not have financial interests in the outcome of the trial that could affect the reliability of the data.
Penterra has prepared a template financial disclosure form based on the requirements of 21 C.F.R. § 54.4. The collection and review of completed financial disclosure forms will be coordinated by Jennifer Holt (Vice President, Clinical Operations, Penterra Pharmaceuticals Corp.) and Samantha Novak (Director, Clinical Contracts, Penterra Pharmaceuticals Corp.), working in conjunction with Meridian CRO's regulatory affairs team.
Financial disclosure forms must be collected at the time of investigator onboarding and must be updated annually and at the conclusion of the trial. Calderwood & Harkness recommends that Penterra maintain a centralized tracking system for financial disclosure certifications to ensure compliance at all times.
D. Form FDA 1572 Collection
FDA Form 1572 (Statement of Investigator) must be collected from the principal investigator at each participating site prior to the enrollment of the first subject at that site. The Form 1572 commits the investigator to conduct the study in accordance with the protocol and all applicable FDA regulations, identifies the investigator's qualifications and the facilities available for the study, and lists the IRB responsible for initial and continuing review of the study.
Collection and filing of Forms 1572 will be coordinated by Penterra's clinical operations department in collaboration with Meridian Contract Research Organization, Inc. Meridian's Chief Executive Officer, Thomas Hartwell, and his team are responsible for monitoring regulatory document completeness under the Master Services Agreement between Penterra and Meridian dated January 15, 2023 (the "Meridian MSA"). Each completed Form 1572 will be included in the IND file maintained by Penterra's regulatory affairs department and will be available for FDA inspection.
E. Ongoing Regulatory Compliance Reporting
Several ongoing regulatory compliance obligations will require Penterra's attention throughout the duration of the CLARION Trial:
(i) Open Payments / Sunshine Act Reporting. Under Section 6002 of the Affordable Care Act (42 U.S.C. § 1320a-7h), commonly known as the Physician Payments Sunshine Act, Penterra is required to track and annually report to the Centers for Medicare & Medicaid Services ("CMS") all payments and transfers of value made to physicians and teaching hospitals in connection with the MCTA and the CLARION Trial. This includes per-patient site fees, start-up fees, investigator grants, and any other compensation or in-kind transfers provided to investigators or institutions. Penterra's compliance department should ensure that all payments made under the MCTA are properly captured in Penterra's Open Payments tracking system.
(ii) Anti-Kickback Statute Compliance. The Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) prohibits the knowing and willful offer, payment, solicitation, or receipt of any remuneration to induce or reward referrals of items or services reimbursable by federal healthcare programs. All investigator and site compensation under the MCTA has been structured to reflect fair market value for services rendered, consistent with the representations made in Exhibit H to the MCTA. Penterra must maintain contemporaneous documentation supporting the fair market value determination for all payments made under the MCTA, including the methodology used, comparable market data, and any third-party valuation opinions relied upon.
(iii) IND Maintenance and FDA Interactions. Castleton & Hargrove LLP continues to serve as Penterra's regulatory counsel for the maintenance of IND 157823 and all interactions with the FDA relating to the CLARION Trial. The primary contact at Castleton & Hargrove is Dr. Priya Sundaram, Esq., Partner. Penterra's regulatory affairs department should coordinate all FDA submissions, including annual IND reports, IND safety reports, protocol amendments, and any FDA inquiries, through Dr. Sundaram's team.
F. Network Coordination Fee Payments
Quarterly installments of Three Hundred Thousand Dollars ($300,000) to Veridian's central office for network coordination and administrative services commenced upon the Effective Date of the MCTA. Based on a payment term of Net 45 days from the Effective Date (July 18, 2023), the first quarterly installment is due on or about September 1, 2023.
A total of fourteen (14) quarterly installments will be payable over the course of the CLARION Trial, for an aggregate amount of Four Million Two Hundred Thousand Dollars ($4,200,000). Penterra's finance department should establish the appropriate payment schedule and ensure timely remittance to Veridian in accordance with the invoice and payment procedures set forth in the MCTA and Exhibit B.
VI. Key Upcoming Milestone Dates
Set forth below are the key upcoming milestone dates relevant to the administration and conduct of the CLARION Trial under the MCTA:
These dates are projections based on current enrollment assumptions and are subject to change based on actual enrollment rates, protocol amendments, regulatory developments, and other factors. Penterra should monitor progress against these milestones and communicate any material deviations to Calderwood & Harkness as appropriate.
VII. Closing Binder
A complete closing binder (the "Closing Binder") containing executed originals and/or certified copies of all transaction documents has been assembled by Calderwood & Harkness and delivered to Penterra concurrently with this memorandum. The Closing Binder is organized in tabbed sections corresponding to the categories of documents described in Section III above.
The Closing Binder Index and Table of Contents, which provides a tab-by-tab listing of all documents included in the Closing Binder, is enclosed with this memorandum. Penterra's legal department should retain the Closing Binder in a secure location accessible to authorized personnel and should treat the contents as privileged and confidential.
In addition to the physical Closing Binder, digital copies of all executed documents have been uploaded to and will be maintained in Calderwood & Harkness's document management system under Matter No. 1018-00004. Digital copies are available to Penterra upon request and will be retained in accordance with Calderwood & Harkness's document retention policies and applicable professional responsibility obligations.
VIII. Key Negotiation Points Resolved
For the reference of Penterra's legal team and for the purpose of preserving the institutional knowledge gained during the negotiation process, set forth below is a brief summary of the principal negotiation issues that were raised and resolved during the course of the transaction:
Subject-Injury Indemnification. Veridian initially demanded fully uncapped indemnification from Penterra with respect to all claims arising from subject injury in connection with the CLARION Trial. After extensive negotiation, including the exchange of the indemnification term sheet on May 5, 2023 and detailed discussion at the June 9 in-person negotiation session, the parties agreed to a per-subject medical care cap of Five Hundred Thousand Dollars ($500,000) and an aggregate cap of Fifteen Million Dollars ($15,000,000). The indemnification remains uncapped with respect to claims arising from product defect, which was Veridian's primary concern. Penterra successfully preserved carve-outs for investigator negligence, unauthorized protocol deviations, and site breach of the MCTA.
Insurance Coverage Levels. Veridian initially required Penterra to maintain clinical trial liability insurance with per-occurrence limits of not less than Fifty Million Dollars ($50,000,000). Calderwood & Harkness, in consultation with Penterra's risk management department and Karen Tremblay at Briarcliff Mutual, provided an analysis of the Briarcliff policy terms demonstrating that the existing policy structure at Twenty-Five Million Dollars ($25,000,000) per occurrence and Seventy-Five Million Dollars ($75,000,000) in the aggregate provided adequate protection, particularly in light of the subject-injury sublimits and the product-defect uncap in the indemnification provisions. Veridian ultimately accepted this position.
Publication Rights. Veridian, as a network of academic medical centers, insisted on unrestricted academic freedom for investigators to publish the results of the CLARION Trial. Penterra's position was that the Sponsor must have the right to review proposed publications prior to submission for accuracy, protection of confidential information, and identification of patentable inventions. The parties resolved this issue by agreeing to a sixty (60)-day sponsor review period, during which Penterra may review any proposed publication, followed by an additional delay of up to ninety (90) days if Penterra identifies patentable subject matter and wishes to file patent applications. This framework balances the investigators' academic interests with Penterra's legitimate commercial interests.
Payment Structure. Veridian initially sought a front-loaded payment structure, with a substantial percentage of per-patient fees payable at the time of enrollment. Penterra preferred a milestone-based structure that tied payments to meaningful clinical milestones, thereby aligning financial incentives with study progress and data quality. The parties ultimately agreed to a four-milestone payment structure: twenty-five percent (25%) at randomization, twenty-five percent (25%) at Week 12, twenty-five percent (25%) at Week 24, and twenty-five percent (25%) at study completion. This structure provides regular cash flow to the sites while ensuring that Penterra's payments are linked to subject retention and study progress.
Protocol Deviation Liability. The parties devoted significant attention to establishing a framework for distinguishing between protocol deviations that are medically necessary and made in the interest of subject safety (for which the Sponsor's indemnification obligation is preserved) and unauthorized deviations from the protocol (which are carved out from the Sponsor's indemnification and may give rise to site liability). The agreed framework requires sites to document all protocol deviations, classify them as medically necessary or non-medically necessary, and report all deviations to Penterra and the IRB of record in accordance with applicable regulatory requirements.
Termination Wind-Down. The parties negotiated a one hundred twenty (120)-day wind-down period applicable upon early termination of the MCTA or any Individual Site Agreement, during which subjects in active treatment must be transitioned to an alternative treatment provider or, where medically appropriate, permitted to complete their current treatment cycle. The wind-down provisions include detailed obligations for data transfer, drug return, and financial reconciliation during the wind-down period.
IX. Engagement Team and Ongoing Support
The Calderwood & Harkness engagement team for Matter No. 1018-00004 was as follows:
• Miriam Calloway, Partner — Responsible Partner for all aspects of the engagement, including lead negotiation, client communication, and supervision of all work product.
• Joel Strauss, Partner — Billing Partner responsible for engagement economics and billing administration.
• Sean Morrissey, Associate — Lead Associate responsible for the preparation and management of all transaction documents, including drafting, redlining, conditions precedent tracking, and closing coordination.
• Christopher Aiken, Associate — Working Associate responsible for research support, regulatory compliance analysis, insurance documentation review, and closing binder assembly.
Counterparty counsel for Veridian Health Research Network, Inc. was Whitmore, Jansen & Callahan LLP, 1500 Market Street, Suite 3200, Philadelphia, Pennsylvania 19102. The WJC team was led by Allison Whitmore, Partner, with support from David Kesselman, Associate.
Matter No. 1018-00004 is now closed. All time and expenses incurred by Calderwood & Harkness in connection with this engagement have been billed and submitted to Penterra in accordance with the terms of the engagement letter.
Calderwood & Harkness remains available to provide post-closing advisory support to Penterra in connection with the CLARION Trial, including but not limited to:
• Review and approval of site-specific modifications to the form Individual Site Agreement (Exhibit C);
• Guidance on insurance renewal compliance and certificate review;
• Advice on any disputes, claims, or indemnification matters arising under the MCTA;
• Supplemental regulatory compliance counseling as needed; and
• General transactional support in connection with amendments, modifications, or extensions of the MCTA.
Any such post-closing advisory work would be performed under a new or reopened matter number and would be subject to a supplemental engagement letter, unless otherwise agreed by the parties.
X. Closing Statement
Calderwood & Harkness is pleased to confirm that the Master Clinical Trial Agreement between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. has been fully executed, that all conditions precedent to the effectiveness of the MCTA have been satisfied, and that the Effective Date of the MCTA is confirmed as July 18, 2023.
We wish to acknowledge the invaluable contributions of the Penterra team members who were instrumental in bringing this transaction to a successful closing, including Nathaniel Briggs, Esq. (Vice President & General Counsel), Rebecca Liang, Esq. (Associate General Counsel, Clinical Affairs), Jennifer Holt (Vice President, Clinical Operations), Samantha Novak (Director, Clinical Contracts), Dr. Marcus Yun (Senior Director, Medical Affairs), and Dr. Elaine Whitford (Vice President, Regulatory Affairs). Their responsiveness, expertise, and collaborative approach were essential to the efficient and timely completion of this complex transaction.
Calderwood & Harkness stands ready to support Penterra throughout the operational phase of the CLARION Trial and looks forward to our continued engagement with the Penterra team.