1018-00004 · Penterra Pharmaceuticals Corp · Correspondence

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CALDERWOOD & HARKNESS LLP Attorneys at Law

280 Park Avenue, 34th Floor New York, NY 10017

Telephone: (212) 554-8000 Facsimile: (212) 554-8001 www.calderwoodharkness.com

May 19, 2023

Via Email and First-Class Mail

Allison Whitmore, Esq. Whitmore, Jansen & Callahan LLP 1500 Market Street, Suite 3200 Philadelphia, PA 19102

Re: Master Clinical Trial Agreement Between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. — Protocol PPC-4871-III (CLARION) Calderwood & Harkness Matter No. 1018-00004

Dear Allison:

On behalf of our client, Penterra Pharmaceuticals Corp. ("Penterra" or "Sponsor"), we are pleased to enclose the following documents for review by Veridian Health Research Network, Inc. ("Veridian") and its counsel:

(1) Second Draft of the Master Clinical Trial Agreement ("MCTA") between Penterra and Veridian, dated May 19, 2023 (clean version); and

(2) Redline comparison of the Second Draft against the First Draft circulated on April 7, 2023, showing all revisions in tracked changes.

The Second Draft reflects Penterra's considered responses to the comments and revisions set forth in Veridian's initial markup of the First Draft, which was received by our office on April 28, 2023. In addition, the enclosed draft incorporates and builds upon the indemnification term sheet exchanged between the parties on May 5, 2023, which addressed the principal areas of divergence on subject-injury liability and related coverage obligations. We have endeavored to address Veridian's concerns thoughtfully while maintaining appropriate protections for Penterra in its capacity as the trial Sponsor.

Set forth below is a summary of the key revisions reflected in the Second Draft, organized by subject-matter category for your convenience. We then identify the provisions that remain in brackets pending further discussion between the parties.

Summary of Key Revisions — Section-by-Section Overview

1. Indemnification Provisions (Article IX / Exhibit D)

The indemnification provisions have been significantly revised in this Second Draft, reflecting the most extensively negotiated section of the agreement. The revisions incorporate the structural framework set forth in the indemnification term sheet proposed by Penterra on May 5, 2023, which was the product of considerable internal analysis by Penterra's clinical operations and risk management teams.

Sponsor Indemnification. Under the revised Article IX and the corresponding terms detailed in Exhibit D, Penterra, as Sponsor, will indemnify, defend, and hold harmless Veridian, each participating site institution within the Veridian Health Research Network, each principal investigator, all sub-investigators, and site staff (including research coordinators and study nurses) against claims, losses, liabilities, damages, 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 (Protocol PPC-4871-III, CLARION);

(b) Any defect in the investigational product, including but not limited to defects in manufacture, formulation, labeling, packaging, or storage instructions provided by Penterra;

(d) Penterra's negligence or willful misconduct in the conduct or oversight of the clinical trial.

Subject Medical Care Costs. The Second Draft establishes a per-subject cap of Five Hundred Thousand Dollars ($500,000) for subject medical care costs arising from study-related injuries, with an aggregate cap across all participating sites of Fifteen Million Dollars ($15,000,000). Indemnification for claims arising from product defects, as described in clause (b) above, remains uncapped and is not subject to the per-subject or aggregate limitations. We believe this tiered approach appropriately distinguishes between the inherent risks of investigational product administration and the heightened liability that attaches to product-defect claims.

Carve-Outs from Sponsor Indemnification. The Second Draft clarifies the circumstances under which Penterra's indemnification obligations do not apply. Specifically, Penterra's indemnification will not extend to claims to the extent arising from:

(i) the negligence or willful misconduct of any site institution, principal investigator, sub-investigator, or site personnel;

(ii) protocol deviations that were not authorized or directed by Penterra and were not required for the immediate safety of the study subject; or

(iii) a site's or Veridian's breach of the MCTA or applicable law, including but not limited to violations of federal or state regulations governing the conduct of clinical research.

Reciprocal Site/Investigator Indemnification. Veridian and each participating site institution will provide reciprocal indemnification of Penterra, its officers, directors, employees, and agents against claims arising from the acts or omissions described in the carve-out provisions above. Reciprocal indemnification is subject to a cap of Five Million Dollars ($5,000,000) per site per occurrence and Twenty Million Dollars ($20,000,000) in the aggregate across all Veridian network sites.

Notice Requirements. The indemnification provisions require the indemnified party to provide written notice of any claim to the indemnifying party within thirty (30) calendar days from the date the indemnified party becomes aware of the claim or the facts giving rise thereto. Importantly, and in response to Veridian's comments on the First Draft, the Second Draft provides that failure to provide timely notice does not relieve the indemnifying party of its indemnification obligations except to the extent that the indemnifying party demonstrates that it has been materially prejudiced by such failure. This formulation reflects a compromise position that balances Penterra's legitimate interest in timely notice against the practical realities of claim identification at the site level.

We note that this draft responds to Veridian's initial demand for fully uncapped indemnification on all categories of subject injury. The structure presented in the Second Draft reflects the negotiated compromise position memorialized in the May 5 term sheet and, in Penterra's view, is consistent with prevailing market practice for multi-site Phase III clinical trial agreements in the oncology therapeutic area.

2. Insurance Requirements (Exhibit E)

The insurance provisions in Exhibit E have been revised to reflect Penterra's position regarding appropriate coverage levels for the CLARION trial.

Sponsor Insurance. Penterra will maintain clinical trial liability insurance with per-occurrence limits of Twenty-Five Million Dollars ($25,000,000) and aggregate limits of Seventy-Five Million Dollars ($75,000,000), underwritten by Briarcliff Mutual Insurance Company (Policy No. BM-CTL-2023-04182). Within this policy, a subject-injury sublimit of Ten Million Dollars ($10,000,000) per occurrence and Fifty Million Dollars ($50,000,000) in the aggregate applies.

We acknowledge that Veridian's initial markup requested per-occurrence limits of Fifty Million Dollars ($50,000,000). The Second Draft reflects Penterra's counterproposal at the $25,000,000 per occurrence / $75,000,000 aggregate levels, which are supported by the terms of the existing Briarcliff policy and which Penterra believes are consistent with industry standards for Phase III oncology trials of comparable scope and patient population. Penterra's clinical insurance advisors have confirmed that these coverage levels are at or above the median for multi-site Phase III trials conducted within academic research networks in the United States during the 2021–2023 period.

Site/Network Insurance. Veridian and each participating site institution are required to maintain commercial general liability and professional liability (errors and omissions) insurance coverage with limits of at least Five Million Dollars ($5,000,000) per occurrence and Ten Million Dollars ($10,000,000) in the aggregate throughout the term of the MCTA and for a period of three (3) years following study completion or early termination.

Certificate Exchange and Additional Insured Status. Certificates of insurance shall be exchanged within fifteen (15) business days following execution of the MCTA. Veridian and each participating site institution shall be named as additional insureds on Penterra's clinical trial liability policy, and Penterra shall be named as an additional insured on each site's general and professional liability policies, in each case to the extent of the indemnification obligations set forth in the MCTA.

We note that the final insurance coverage levels remain subject to further discussion between the parties, and we have bracketed certain provisions in Exhibit E accordingly.

3. Budget and Payment Schedule (Exhibit B)

The budget and payment provisions in Exhibit B have been revised to reflect the agreed framework for compensation of Veridian and the participating site institutions. The revised structure moves away from the front-loaded payment approach initially proposed in Veridian's markup and toward a milestone-based model that Penterra believes appropriately aligns payment disbursements with enrollment progress and study milestones.

Per-Patient Fees. Per-patient fees are set at Fifty-Two Thousand Dollars ($52,000) per enrolled subject, payable in four (4) equal milestone installments of Thirteen Thousand Dollars ($13,000) each, triggered upon the achievement of the following milestones:

(i) Randomization of the subject into the study;

(ii) Completion of the Week 12 assessment visit;

(iii) Completion of the Week 24 assessment visit; and

(iv) Study completion / final visit (including all end-of-treatment and follow-up assessments required by the Protocol).

Site Start-Up Fees. Each participating site will receive a start-up fee of Seventy-Five Thousand Dollars ($75,000), payable in two installments: fifty percent ($37,500) upon site activation (defined as completion of all regulatory and administrative prerequisites, including IRB approval, contract execution, and site initiation visit), and fifty percent ($37,500) upon enrollment of the first patient at such site.

Network Coordination Fee. Veridian, in its capacity as the coordinating network entity, will receive a network coordination fee of Four Million Two Hundred Thousand Dollars ($4,200,000) in total, payable in quarterly installments of Three Hundred Thousand Dollars ($300,000) over the anticipated fourteen (14) quarter study duration.

Annual Site Maintenance Fees. Each participating site will receive an annual site maintenance fee of Forty Thousand Dollars ($40,000) per year, payable annually in advance, to cover ongoing administrative, regulatory maintenance, and infrastructure costs associated with study participation.

Total Deal Value. The total deal value under the MCTA, across all thirty-eight (38) Veridian Network sites, is confirmed at approximately Eighty Million Dollars ($80,000,000), inclusive of all per-patient fees, start-up fees, network coordination fees, site maintenance fees, and pass-through costs as detailed in the budget schedules appended to Exhibit B.

We note that Veridian's initial markup sought a front-loaded payment structure under which a substantially greater proportion of per-patient fees would have been disbursed at or near randomization. The Second Draft reflects the compromise milestone-based approach described above, which Penterra believes appropriately aligns payments with enrollment progress and incentivizes timely completion of study visits and data collection activities.

Payment Terms. All invoiced amounts are payable net forty-five (45) days from Penterra's receipt of a proper invoice submitted in accordance with the invoicing procedures set forth in Exhibit B.

4. Publication Rights (Exhibit G)

The publication rights provisions have been revised in an effort to balance Veridian's emphasis on investigator academic freedom with Penterra's legitimate interest in protecting confidential information and patentable subject matter arising from the CLARION trial.

Under the revised Exhibit G, investigators retain the right to publish or present the results of the study, subject to Penterra's right to review any proposed publication or presentation for a period of sixty (60) calendar days prior to submission for publication or public disclosure. During this review period, Penterra may identify and request the removal of Penterra confidential information and may request a further delay of up to ninety (90) days if the proposed publication contains patentable subject matter that requires the filing of a patent application prior to public disclosure.

This provision represents a compromise between the parties' respective positions. We note, however, that the specific language of the publication rights provisions remains in brackets in the Second Draft, as Penterra anticipates that additional refinement may be necessary to address the precise scope of Penterra's review rights and the mechanism for resolving disputes over the removal of information from proposed publications. We welcome further discussion on this point.

5. Data Ownership and intellectual Property (Exhibits F and G)

The data ownership and intellectual property provisions have been revised as follows:

Data Ownership. Penterra retains exclusive ownership of all clinical trial data generated in the conduct of the CLARION trial, including but not limited to case report form data, source data, bioanalytical data, pharmacokinetic and pharmacodynamic data, safety data, efficacy data, and all analyses and reports derived therefrom. This position is consistent with Penterra's status as the IND holder and Sponsor of the trial under applicable FDA regulations.

Record Retention. Each participating site institution is required to maintain study records, including but not limited to source documents, informed consent forms, and regulatory files, for a minimum period of fifteen (15) years following study completion or early termination, or such longer period as may be required by applicable law, regulation, or institutional policy.

Pre-Existing intellectual Property. 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 by virtue of the MCTA, except to the extent expressly licensed thereunder for purposes of conducting the clinical trial.

Joint Inventions. The Second Draft acknowledges that joint inventions may arise during the course of the trial. The parties have agreed that ownership, licensing, and commercialization rights with respect to joint inventions will be addressed in a separate IP side letter to be negotiated and executed concurrently with the MCTA. We anticipate circulating a draft of the IP side letter under separate cover in the near term.

Confidentiality. The confidentiality term applicable to all confidential information disclosed under or in connection with the MCTA is ten (10) years from the date of disclosure, subject to customary exceptions for information that is or becomes publicly available, independently developed, or lawfully received from a third party without restriction.

6. Regulatory Compliance (Exhibit H)

The regulatory compliance provisions in Exhibit H have been updated to reflect both parties' representations, warranties, and ongoing covenants regarding compliance with the following regulatory requirements:

• 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);

• ICH E6(R2) Guideline for 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 requirements for all compensation paid to investigators and site institutions.

In addition, and consistent with the additions requested by Veridian in its initial markup, the Second Draft incorporates a HIPAA compliance framework, including provisions addressing the requirements of 45 C.F.R. Parts 160 and 164 (the HIPAA Privacy Rule, Security Rule, and Breach Notification Rule). The HIPAA provisions include representations regarding the use and disclosure of protected health information, minimum necessary standards, research authorization and waiver requirements, and the obligations of the parties as covered entities and/or business associates, as applicable.

7. Safety Reporting (Exhibit J)

The safety reporting provisions in Exhibit J have been confirmed and refined in the Second Draft as follows:

Site-Level SAE Reporting. Each participating site is required to report all serious adverse events ("SAEs") to both Penterra and Meridian Contract Research Organization, Inc. ("Meridian CRO") within twenty-four (24) hours of the site's awareness of the event, using the electronic SAE reporting form provided by Penterra through the Meridian EDC system.

Sponsor IND Safety Reporting. Penterra, as the IND holder, will comply with all applicable IND safety reporting requirements, including:

• Seven (7) calendar-day reporting to the FDA for fatal and life-threatening suspected adverse reactions; and

• Fifteen (15) calendar-day reporting to the FDA for all other IND safety reports.

The IND number for the CLARION trial is IND 157823, and the ClinicalTrials.gov Identifier is NCT05928174.

8. Termination and Wind-Down (Article XII)

The termination and wind-down provisions have been revised to provide for a wind-down period of one hundred twenty (120) calendar days following the effective date of termination, during which time the parties will cooperate to ensure the orderly transition or completion of treatment for all enrolled subjects. Subjects in active treatment at the time of termination must be either transitioned to an alternative treatment regimen or permitted to complete their current treatment cycle, as determined by the principal investigator in consultation with Penterra's Medical Monitor, in each case with the safety and welfare of the subject as the paramount consideration.

We note that certain details regarding Penterra's payment obligations during the wind-down period — including, in particular, the treatment of per-patient milestone payments for subjects who do not complete the full treatment course due to early termination — remain in brackets in the Second Draft and are subject to further discussion between the parties.

9. Dispute Resolution (Article XIV)

The dispute resolution provisions have been revised to reflect a three-step escalation framework, as follows:

Step 1 — Designated Representative Negotiation. In the event of any dispute, controversy, or claim arising out of or relating to the MCTA, the parties shall first attempt to resolve the matter through good-faith negotiations between their designated representatives for a period of thirty (30) calendar days from the date of written notice of the dispute.

Step 2 — Mediation. If the dispute is not resolved through negotiation within the thirty (30)-day period, either party may submit the dispute to mediation under the American Arbitration Association ("AAA") Commercial Mediation Rules. The mediation shall take place in New York, New York, and shall be completed within sixty (60) calendar days from the date of the initial mediation request, unless extended by mutual agreement.

Step 3 — Binding Arbitration. If the dispute is not resolved through mediation, either party may submit the dispute to final and binding arbitration in New York, New York, administered by the AAA under its Commercial Arbitration Rules. The arbitration shall be conducted before a panel of three (3) arbitrators, each of whom shall have experience in life sciences or pharmaceutical industry disputes.

Governing Law. The MCTA shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict-of-laws principles.

Injunctive Relief. Notwithstanding the foregoing dispute resolution provisions, either party may seek temporary, preliminary, or permanent injunctive or other equitable relief in the state and federal courts located in New York County, New York, and each party consents to the exclusive jurisdiction and venue of such courts for purposes of any action seeking injunctive or equitable relief.

10. Miscellaneous Revisions

The Second Draft includes a number of additional conforming and clarifying edits, including the following:

• Minor conforming edits throughout the MCTA and its exhibits to reflect Veridian's status as a 501(c)(3) tax-exempt organization (EIN: 23-4178205), including adjustments to representations regarding tax status, the inapplicability of certain withholding provisions, and the treatment of indirect cost recovery;

• An updated list of approved subcontractors in Exhibit K, which now identifies the following entities: (i) Meridian Contract Research Organization, Inc. (CRO services, including monitoring, data management, and project management); (ii) Pinnacle Data Solutions, Inc. (electronic data capture ("EDC") platform and related technology services); and (iii) Northbridge Bioanalytical Laboratories, Inc. (central laboratory services, including bioanalytical sample analysis and biomarker assessments);

• Revised IRB provisions, which now provide that the lead sites (Graystone University Medical Center and Lakemont Medical Center) require individual IRB approval from their respective institutional review boards, while all remaining participating sites within the Veridian network may rely on the Veridian Central IRB under an IRB Authorization Agreement executed in accordance with 45 C.F.R. § 46.114 and applicable institutional policies.

Remaining Open Issues

As noted above, several provisions remain bracketed in the Second Draft pending further negotiation between the parties. We identify these provisions here for the parties' reference and to facilitate focused discussion:

1. Insurance Coverage Levels. The final insurance coverage levels remain open. Penterra's position, as reflected in the Second Draft, is $25,000,000 per occurrence / $75,000,000 aggregate. Veridian's initial markup demanded $50,000,000 per occurrence. Penterra believes its proposed levels are appropriate and consistent with industry standards, as discussed above, but recognizes that this issue requires further dialogue.

2. Protocol-Deviation Liability Allocation. The distinction between medically necessary protocol deviations (i.e., deviations undertaken to protect the immediate safety of a study subject) and unauthorized deviations (i.e., deviations made without Penterra's prior written authorization and not required for subject safety) requires further clarification, particularly as it relates to the allocation of liability and the scope of the sponsor indemnification carve-outs.

3. Publication Rights. The specific language governing Penterra's sixty (60)-day review period and the additional ninety (90)-day patent delay remains in brackets. We anticipate that additional discussion will be needed to finalize the mechanics of the review and delay process, including the dispute resolution mechanism for disagreements regarding the removal of confidential or patentable information.

4. Termination Wind-Down Payment Obligations. The treatment of payment obligations during the one hundred twenty (120)-day wind-down period, including milestone payments for subjects in active treatment, requires further discussion and agreement.

5. Investigator Independence Language. Certain provisions regarding investigator independence in the conduct of the clinical trial, including the scope of the principal investigator's authority to make medical decisions independent of Sponsor direction, remain in brackets pending further negotiation.

We invite discussion on each of these points at your and your client's earliest convenience. We would welcome the opportunity to arrange a call between our respective legal teams — and, if helpful, representatives of the parties' clinical and operational teams — to discuss these open items prior to or concurrently with Veridian's formal markup of the Second Draft.

Requested Response Timeline

We respectfully request that Veridian and Whitmore, Jansen & Callahan provide their markup of the Second Draft within two weeks, i.e., by June 2, 2023. We are, of course, prepared to be flexible regarding timing should the open issues warrant additional internal deliberation on Veridian's part, and we are happy to schedule a call or in-person meeting between our respective teams at any point during the markup process to facilitate resolution of the bracketed items.

We note that if the parties are able to align on the remaining open issues expeditiously, finalization and execution of the MCTA may be achievable during the month of June, which would be consistent with the target first patient in date of August 14, 2023 established by Penterra's clinical development timeline for the CLARION trial. Timely resolution of the outstanding contractual issues will allow both parties to proceed with site activation, regulatory submissions, and other preparatory activities on schedule.

Contact Information

Please direct all inquiries regarding this matter and the enclosed documents to me at the address below:

Miriam Calloway, Partner Calderwood & Harkness LLP 280 Park Avenue, 34th Floor New York, NY 10017 Telephone: (212) 554-8146

Email: mcalloway@calderwoodharkness.com

For day-to-day coordination regarding document exchanges, scheduling, and logistical matters, please also feel free to contact Sean Morrissey, the lead associate on this engagement, at (212) 554-8239 or smorrissey@calderwoodharkness.com.

We look forward to continuing to work with you and the Veridian team toward the timely completion of this agreement.

Sincerely,

CALDERWOOD & HARKNESS LLP

By: ________

Miriam Calloway Partner

cc:

Rebecca Liang, Esq., Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp. Nathaniel Briggs, Esq., Vice President & General Counsel, Penterra Pharmaceuticals Corp. Sean Morrissey, Associate, Calderwood & Harkness LLP Christopher Aiken, Associate, Calderwood & Harkness LLP David Kesselman, Associate, Whitmore, Jansen & Callahan LLP

Enclosures:

(1) Second Draft — Master Clinical Trial Agreement between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. for Protocol PPC-4871-III (CLARION), dated May 19, 2023 (Clean)

(2) Redline — Second Draft MCTA against First Draft (April 7, 2023) (Tracked Changes)

CONFIDENTIAL — PRIVILEGED ATTORNEY-CLIENT COMMUNICATION AND ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law
280 Park Avenue, 34th Floor New York, NY 10017
Telephone: (212) 554-8000 Facsimile: (212) 554-8001 www.calderwoodharkness.com
May 19, 2023
Via Email and First-Class Mail
Allison Whitmore, Esq. Whitmore, Jansen & Callahan LLP 1500 Market Street, Suite 3200 Philadelphia, PA 19102
Re: Master Clinical Trial Agreement Between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. — Protocol PPC-4871-III (CLARION) Calderwood & Harkness Matter No. 1018-00004
Dear Allison:
On behalf of our client, Penterra Pharmaceuticals Corp. ("Penterra" or "Sponsor"), we are pleased to enclose the following documents for review by Veridian Health Research Network, Inc. ("Veridian") and its counsel:
(1) Second Draft of the Master Clinical Trial Agreement ("MCTA") between Penterra and Veridian, dated May 19, 2023 (clean version); and
(2) Redline comparison of the Second Draft against the First Draft circulated on April 7, 2023, showing all revisions in tracked changes.
The Second Draft reflects Penterra's considered responses to the comments and revisions set forth in Veridian's initial markup of the First Draft, which was received by our office on April 28, 2023. In addition, the enclosed draft incorporates and builds upon the indemnification term sheet exchanged between the parties on May 5, 2023, which addressed the principal areas of divergence on subject-injury liability and related coverage obligations. We have endeavored to address Veridian's concerns thoughtfully while maintaining appropriate protections for Penterra in its capacity as the trial Sponsor.
Set forth below is a summary of the key revisions reflected in the Second Draft, organized by subject-matter category for your convenience. We then identify the provisions that remain in brackets pending further discussion between the parties.
Summary of Key Revisions — Section-by-Section Overview
1. Indemnification Provisions (Article IX / Exhibit D)
The indemnification provisions have been significantly revised in this Second Draft, reflecting the most extensively negotiated section of the agreement. The revisions incorporate the structural framework set forth in the indemnification term sheet proposed by Penterra on May 5, 2023, which was the product of considerable internal analysis by Penterra's clinical operations and risk management teams.
Sponsor Indemnification. Under the revised Article IX and the corresponding terms detailed in Exhibit D, Penterra, as Sponsor, will indemnify, defend, and hold harmless Veridian, each participating site institution within the Veridian Health Research Network, each principal investigator, all sub-investigators, and site staff (including research coordinators and study nurses) against claims, losses, liabilities, damages, 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 (Protocol PPC-4871-III, CLARION);
(b) Any defect in the investigational product, including but not limited to defects in manufacture, formulation, labeling, packaging, or storage instructions provided by Penterra;
(c) Penterra's breach of the MCTA or Protocol; and
(d) Penterra's negligence or willful misconduct in the conduct or oversight of the clinical trial.
Subject Medical Care Costs. The Second Draft establishes a per-subject cap of Five Hundred Thousand Dollars ($500,000) for subject medical care costs arising from study-related injuries, with an aggregate cap across all participating sites of Fifteen Million Dollars ($15,000,000). Indemnification for claims arising from product defects, as described in clause (b) above, remains uncapped and is not subject to the per-subject or aggregate limitations. We believe this tiered approach appropriately distinguishes between the inherent risks of investigational product administration and the heightened liability that attaches to product-defect claims.
Carve-Outs from Sponsor Indemnification. The Second Draft clarifies the circumstances under which Penterra's indemnification obligations do not apply. Specifically, Penterra's indemnification will not extend to claims to the extent arising from:
(i) the negligence or willful misconduct of any site institution, principal investigator, sub-investigator, or site personnel;
(ii) protocol deviations that were not authorized or directed by Penterra and were not required for the immediate safety of the study subject; or
(iii) a site's or Veridian's breach of the MCTA or applicable law, including but not limited to violations of federal or state regulations governing the conduct of clinical research.
Reciprocal Site/Investigator Indemnification. Veridian and each participating site institution will provide reciprocal indemnification of Penterra, its officers, directors, employees, and agents against claims arising from the acts or omissions described in the carve-out provisions above. Reciprocal indemnification is subject to a cap of Five Million Dollars ($5,000,000) per site per occurrence and Twenty Million Dollars ($20,000,000) in the aggregate across all Veridian network sites.
Notice Requirements. The indemnification provisions require the indemnified party to provide written notice of any claim to the indemnifying party within thirty (30) calendar days from the date the indemnified party becomes aware of the claim or the facts giving rise thereto. Importantly, and in response to Veridian's comments on the First Draft, the Second Draft provides that failure to provide timely notice does not relieve the indemnifying party of its indemnification obligations except to the extent that the indemnifying party demonstrates that it has been materially prejudiced by such failure. This formulation reflects a compromise position that balances Penterra's legitimate interest in timely notice against the practical realities of claim identification at the site level.
We note that this draft responds to Veridian's initial demand for fully uncapped indemnification on all categories of subject injury. The structure presented in the Second Draft reflects the negotiated compromise position memorialized in the May 5 term sheet and, in Penterra's view, is consistent with prevailing market practice for multi-site Phase III clinical trial agreements in the oncology therapeutic area.
2. Insurance Requirements (Exhibit E)
The insurance provisions in Exhibit E have been revised to reflect Penterra's position regarding appropriate coverage levels for the CLARION trial.
Sponsor Insurance. Penterra will maintain clinical trial liability insurance with per-occurrence limits of Twenty-Five Million Dollars ($25,000,000) and aggregate limits of Seventy-Five Million Dollars ($75,000,000), underwritten by Briarcliff Mutual Insurance Company (Policy No. BM-CTL-2023-04182). Within this policy, a subject-injury sublimit of Ten Million Dollars ($10,000,000) per occurrence and Fifty Million Dollars ($50,000,000) in the aggregate applies.
We acknowledge that Veridian's initial markup requested per-occurrence limits of Fifty Million Dollars ($50,000,000). The Second Draft reflects Penterra's counterproposal at the $25,000,000 per occurrence / $75,000,000 aggregate levels, which are supported by the terms of the existing Briarcliff policy and which Penterra believes are consistent with industry standards for Phase III oncology trials of comparable scope and patient population. Penterra's clinical insurance advisors have confirmed that these coverage levels are at or above the median for multi-site Phase III trials conducted within academic research networks in the United States during the 2021–2023 period.
Site/Network Insurance. Veridian and each participating site institution are required to maintain commercial general liability and professional liability (errors and omissions) insurance coverage with limits of at least Five Million Dollars ($5,000,000) per occurrence and Ten Million Dollars ($10,000,000) in the aggregate throughout the term of the MCTA and for a period of three (3) years following study completion or early termination.
Certificate Exchange and Additional Insured Status. Certificates of insurance shall be exchanged within fifteen (15) business days following execution of the MCTA. Veridian and each participating site institution shall be named as additional insureds on Penterra's clinical trial liability policy, and Penterra shall be named as an additional insured on each site's general and professional liability policies, in each case to the extent of the indemnification obligations set forth in the MCTA.
We note that the final insurance coverage levels remain subject to further discussion between the parties, and we have bracketed certain provisions in Exhibit E accordingly.
3. Budget and Payment Schedule (Exhibit B)
The budget and payment provisions in Exhibit B have been revised to reflect the agreed framework for compensation of Veridian and the participating site institutions. The revised structure moves away from the front-loaded payment approach initially proposed in Veridian's markup and toward a milestone-based model that Penterra believes appropriately aligns payment disbursements with enrollment progress and study milestones.
Per-Patient Fees. Per-patient fees are set at Fifty-Two Thousand Dollars ($52,000) per enrolled subject, payable in four (4) equal milestone installments of Thirteen Thousand Dollars ($13,000) each, triggered upon the achievement of the following milestones:
(i) Randomization of the subject into the study;
(ii) Completion of the Week 12 assessment visit;
(iii) Completion of the Week 24 assessment visit; and
(iv) Study completion / final visit (including all end-of-treatment and follow-up assessments required by the Protocol).
Site Start-Up Fees. Each participating site will receive a start-up fee of Seventy-Five Thousand Dollars ($75,000), payable in two installments: fifty percent ($37,500) upon site activation (defined as completion of all regulatory and administrative prerequisites, including IRB approval, contract execution, and site initiation visit), and fifty percent ($37,500) upon enrollment of the first patient at such site.
Network Coordination Fee. Veridian, in its capacity as the coordinating network entity, will receive a network coordination fee of Four Million Two Hundred Thousand Dollars ($4,200,000) in total, payable in quarterly installments of Three Hundred Thousand Dollars ($300,000) over the anticipated fourteen (14) quarter study duration.
Annual Site Maintenance Fees. Each participating site will receive an annual site maintenance fee of Forty Thousand Dollars ($40,000) per year, payable annually in advance, to cover ongoing administrative, regulatory maintenance, and infrastructure costs associated with study participation.
Total Deal Value. The total deal value under the MCTA, across all thirty-eight (38) Veridian Network sites, is confirmed at approximately Eighty Million Dollars ($80,000,000), inclusive of all per-patient fees, start-up fees, network coordination fees, site maintenance fees, and pass-through costs as detailed in the budget schedules appended to Exhibit B.
We note that Veridian's initial markup sought a front-loaded payment structure under which a substantially greater proportion of per-patient fees would have been disbursed at or near randomization. The Second Draft reflects the compromise milestone-based approach described above, which Penterra believes appropriately aligns payments with enrollment progress and incentivizes timely completion of study visits and data collection activities.
Payment Terms. All invoiced amounts are payable net forty-five (45) days from Penterra's receipt of a proper invoice submitted in accordance with the invoicing procedures set forth in Exhibit B.
4. Publication Rights (Exhibit G)
The publication rights provisions have been revised in an effort to balance Veridian's emphasis on investigator academic freedom with Penterra's legitimate interest in protecting confidential information and patentable subject matter arising from the CLARION trial.
Under the revised Exhibit G, investigators retain the right to publish or present the results of the study, subject to Penterra's right to review any proposed publication or presentation for a period of sixty (60) calendar days prior to submission for publication or public disclosure. During this review period, Penterra may identify and request the removal of Penterra confidential information and may request a further delay of up to ninety (90) days if the proposed publication contains patentable subject matter that requires the filing of a patent application prior to public disclosure.
This provision represents a compromise between the parties' respective positions. We note, however, that the specific language of the publication rights provisions remains in brackets in the Second Draft, as Penterra anticipates that additional refinement may be necessary to address the precise scope of Penterra's review rights and the mechanism for resolving disputes over the removal of information from proposed publications. We welcome further discussion on this point.
5. Data Ownership and intellectual Property (Exhibits F and G)
The data ownership and intellectual property provisions have been revised as follows:
Data Ownership. Penterra retains exclusive ownership of all clinical trial data generated in the conduct of the CLARION trial, including but not limited to case report form data, source data, bioanalytical data, pharmacokinetic and pharmacodynamic data, safety data, efficacy data, and all analyses and reports derived therefrom. This position is consistent with Penterra's status as the IND holder and Sponsor of the trial under applicable FDA regulations.
Record Retention. Each participating site institution is required to maintain study records, including but not limited to source documents, informed consent forms, and regulatory files, for a minimum period of fifteen (15) years following study completion or early termination, or such longer period as may be required by applicable law, regulation, or institutional policy.
Pre-Existing intellectual Property. 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 by virtue of the MCTA, except to the extent expressly licensed thereunder for purposes of conducting the clinical trial.
Joint Inventions. The Second Draft acknowledges that joint inventions may arise during the course of the trial. The parties have agreed that ownership, licensing, and commercialization rights with respect to joint inventions will be addressed in a separate IP side letter to be negotiated and executed concurrently with the MCTA. We anticipate circulating a draft of the IP side letter under separate cover in the near term.
Confidentiality. The confidentiality term applicable to all confidential information disclosed under or in connection with the MCTA is ten (10) years from the date of disclosure, subject to customary exceptions for information that is or becomes publicly available, independently developed, or lawfully received from a third party without restriction.
6. Regulatory Compliance (Exhibit H)
The regulatory compliance provisions in Exhibit H have been updated to reflect both parties' representations, warranties, and ongoing covenants regarding compliance with the following regulatory requirements:
• 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);
• ICH E6(R2) Guideline for 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 requirements for all compensation paid to investigators and site institutions.
In addition, and consistent with the additions requested by Veridian in its initial markup, the Second Draft incorporates a HIPAA compliance framework, including provisions addressing the requirements of 45 C.F.R. Parts 160 and 164 (the HIPAA Privacy Rule, Security Rule, and Breach Notification Rule). The HIPAA provisions include representations regarding the use and disclosure of protected health information, minimum necessary standards, research authorization and waiver requirements, and the obligations of the parties as covered entities and/or business associates, as applicable.
7. Safety Reporting (Exhibit J)
The safety reporting provisions in Exhibit J have been confirmed and refined in the Second Draft as follows:
Site-Level SAE Reporting. Each participating site is required to report all serious adverse events ("SAEs") to both Penterra and Meridian Contract Research Organization, Inc. ("Meridian CRO") within twenty-four (24) hours of the site's awareness of the event, using the electronic SAE reporting form provided by Penterra through the Meridian EDC system.
Sponsor IND Safety Reporting. Penterra, as the IND holder, will comply with all applicable IND safety reporting requirements, including:
• Seven (7) calendar-day reporting to the FDA for fatal and life-threatening suspected adverse reactions; and
• Fifteen (15) calendar-day reporting to the FDA for all other IND safety reports.
The IND number for the CLARION trial is IND 157823, and the ClinicalTrials.gov Identifier is NCT05928174.
8. Termination and Wind-Down (Article XII)
The termination and wind-down provisions have been revised to provide for a wind-down period of one hundred twenty (120) calendar days following the effective date of termination, during which time the parties will cooperate to ensure the orderly transition or completion of treatment for all enrolled subjects. Subjects in active treatment at the time of termination must be either transitioned to an alternative treatment regimen or permitted to complete their current treatment cycle, as determined by the principal investigator in consultation with Penterra's Medical Monitor, in each case with the safety and welfare of the subject as the paramount consideration.
We note that certain details regarding Penterra's payment obligations during the wind-down period — including, in particular, the treatment of per-patient milestone payments for subjects who do not complete the full treatment course due to early termination — remain in brackets in the Second Draft and are subject to further discussion between the parties.
9. Dispute Resolution (Article XIV)
The dispute resolution provisions have been revised to reflect a three-step escalation framework, as follows:
Step 1 — Designated Representative Negotiation. In the event of any dispute, controversy, or claim arising out of or relating to the MCTA, the parties shall first attempt to resolve the matter through good-faith negotiations between their designated representatives for a period of thirty (30) calendar days from the date of written notice of the dispute.
Step 2 — Mediation. If the dispute is not resolved through negotiation within the thirty (30)-day period, either party may submit the dispute to mediation under the American Arbitration Association ("AAA") Commercial Mediation Rules. The mediation shall take place in New York, New York, and shall be completed within sixty (60) calendar days from the date of the initial mediation request, unless extended by mutual agreement.
Step 3 — Binding Arbitration. If the dispute is not resolved through mediation, either party may submit the dispute to final and binding arbitration in New York, New York, administered by the AAA under its Commercial Arbitration Rules. The arbitration shall be conducted before a panel of three (3) arbitrators, each of whom shall have experience in life sciences or pharmaceutical industry disputes.
Governing Law. The MCTA shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict-of-laws principles.
Injunctive Relief. Notwithstanding the foregoing dispute resolution provisions, either party may seek temporary, preliminary, or permanent injunctive or other equitable relief in the state and federal courts located in New York County, New York, and each party consents to the exclusive jurisdiction and venue of such courts for purposes of any action seeking injunctive or equitable relief.
10. Miscellaneous Revisions
The Second Draft includes a number of additional conforming and clarifying edits, including the following:
• Minor conforming edits throughout the MCTA and its exhibits to reflect Veridian's status as a 501(c)(3) tax-exempt organization (EIN: 23-4178205), including adjustments to representations regarding tax status, the inapplicability of certain withholding provisions, and the treatment of indirect cost recovery;
• An updated list of approved subcontractors in Exhibit K, which now identifies the following entities: (i) Meridian Contract Research Organization, Inc. (CRO services, including monitoring, data management, and project management); (ii) Pinnacle Data Solutions, Inc. (electronic data capture ("EDC") platform and related technology services); and (iii) Northbridge Bioanalytical Laboratories, Inc. (central laboratory services, including bioanalytical sample analysis and biomarker assessments);
• Revised IRB provisions, which now provide that the lead sites (Graystone University Medical Center and Lakemont Medical Center) require individual IRB approval from their respective institutional review boards, while all remaining participating sites within the Veridian network may rely on the Veridian Central IRB under an IRB Authorization Agreement executed in accordance with 45 C.F.R. § 46.114 and applicable institutional policies.
Remaining Open Issues
As noted above, several provisions remain bracketed in the Second Draft pending further negotiation between the parties. We identify these provisions here for the parties' reference and to facilitate focused discussion:
1. Insurance Coverage Levels. The final insurance coverage levels remain open. Penterra's position, as reflected in the Second Draft, is $25,000,000 per occurrence / $75,000,000 aggregate. Veridian's initial markup demanded $50,000,000 per occurrence. Penterra believes its proposed levels are appropriate and consistent with industry standards, as discussed above, but recognizes that this issue requires further dialogue.
2. Protocol-Deviation Liability Allocation. The distinction between medically necessary protocol deviations (i.e., deviations undertaken to protect the immediate safety of a study subject) and unauthorized deviations (i.e., deviations made without Penterra's prior written authorization and not required for subject safety) requires further clarification, particularly as it relates to the allocation of liability and the scope of the sponsor indemnification carve-outs.
3. Publication Rights. The specific language governing Penterra's sixty (60)-day review period and the additional ninety (90)-day patent delay remains in brackets. We anticipate that additional discussion will be needed to finalize the mechanics of the review and delay process, including the dispute resolution mechanism for disagreements regarding the removal of confidential or patentable information.
4. Termination Wind-Down Payment Obligations. The treatment of payment obligations during the one hundred twenty (120)-day wind-down period, including milestone payments for subjects in active treatment, requires further discussion and agreement.
5. Investigator Independence Language. Certain provisions regarding investigator independence in the conduct of the clinical trial, including the scope of the principal investigator's authority to make medical decisions independent of Sponsor direction, remain in brackets pending further negotiation.
We invite discussion on each of these points at your and your client's earliest convenience. We would welcome the opportunity to arrange a call between our respective legal teams — and, if helpful, representatives of the parties' clinical and operational teams — to discuss these open items prior to or concurrently with Veridian's formal markup of the Second Draft.
Requested Response Timeline
We respectfully request that Veridian and Whitmore, Jansen & Callahan provide their markup of the Second Draft within two weeks, i.e., by June 2, 2023. We are, of course, prepared to be flexible regarding timing should the open issues warrant additional internal deliberation on Veridian's part, and we are happy to schedule a call or in-person meeting between our respective teams at any point during the markup process to facilitate resolution of the bracketed items.
We note that if the parties are able to align on the remaining open issues expeditiously, finalization and execution of the MCTA may be achievable during the month of June, which would be consistent with the target first patient in date of August 14, 2023 established by Penterra's clinical development timeline for the CLARION trial. Timely resolution of the outstanding contractual issues will allow both parties to proceed with site activation, regulatory submissions, and other preparatory activities on schedule.
Contact Information
Please direct all inquiries regarding this matter and the enclosed documents to me at the address below:
Miriam Calloway, Partner Calderwood & Harkness LLP 280 Park Avenue, 34th Floor New York, NY 10017 Telephone: (212) 554-8146
Email: mcalloway@calderwoodharkness.com
For day-to-day coordination regarding document exchanges, scheduling, and logistical matters, please also feel free to contact Sean Morrissey, the lead associate on this engagement, at (212) 554-8239 or smorrissey@calderwoodharkness.com.
We look forward to continuing to work with you and the Veridian team toward the timely completion of this agreement.
Sincerely,
CALDERWOOD & HARKNESS LLP
By: ________
Miriam Calloway Partner
cc:
Rebecca Liang, Esq., Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp. Nathaniel Briggs, Esq., Vice President & General Counsel, Penterra Pharmaceuticals Corp. Sean Morrissey, Associate, Calderwood & Harkness LLP Christopher Aiken, Associate, Calderwood & Harkness LLP David Kesselman, Associate, Whitmore, Jansen & Callahan LLP
Enclosures:
(1) Second Draft — Master Clinical Trial Agreement between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. for Protocol PPC-4871-III (CLARION), dated May 19, 2023 (Clean)
(2) Redline — Second Draft MCTA against First Draft (April 7, 2023) (Tracked Changes)
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