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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Miriam Calloway, Partner, Calderwood & Harkness LLP

FROM: Sean Morrissey, Associate, Calderwood & Harkness LLP

DATE: June 3, 2023

RE: Key Open Issues Remaining After Veridian/WJC Second Markup of MCTA — Protocol PPC-4871-III (CLARION)

MATTER NO.: 1018-00004

CLIENT: Penterra Pharmaceuticals Corp.

I. EXECUTIVE SUMMARY

This memorandum summarizes the principal unresolved issues in the Master Clinical Trial Agreement ("MCTA") between our client, Penterra Pharmaceuticals Corp. ("Penterra"), and Veridian Health Research Network, Inc. ("Veridian"), following our receipt of Veridian's second markup from its outside counsel, Whitmore, Jansen & Callahan LLP ("WJC"), on June 2, 2023. The purpose of this memorandum is to identify the remaining gaps between the parties' respective positions, provide analysis and recommended responses, and propose a path toward resolution of these issues in advance of Penterra's aggressive first-patient-in ("FPI") target date.

By way of context, our second draft MCTA was circulated to WJC on May 19, 2023. That draft incorporated Penterra's positions from the indemnification term sheet exchanged on May 5, 2023, as well as Penterra's responses to the substantive issues raised in Veridian's initial markup dated April 28, 2023. While the parties have made meaningful progress on a number of commercially significant terms — including the payment milestone structure, per-patient fees, network coordination fees, confidentiality term, dispute resolution framework, governing law, site indemnity caps, and indemnification notice requirements — several material issues remain unresolved.

I have identified three categories of material open issues requiring attention:

1. Insurance Adequacy Dispute. Veridian has reduced its per-occurrence insurance demand from $50 million to $35 million but continues to press for coverage levels exceeding Penterra's existing Briarcliff Mutual policy. Veridian has also introduced new requirements relating to a subject-injury sublimit increase, extended reporting period ("tail") coverage, and material-reduction notification.

2. Protocol-Deviation Liability Allocation. Veridian proposes the creation of a new defined category — "Medically Necessary Protocol Deviations" — that would remain within the scope of sponsor indemnification. Veridian further seeks to elevate the negligence standard governing the indemnification carve-out to "gross negligence" and proposes the appointment of an Independent Medical Monitor to adjudicate deviation classification disputes.

3. Investigator Independence and Publication Rights. Veridian contests the additional 90-day patent filing delay, demands explicit anti-suppression and no-veto language, seeks reduced review periods for conference presentations, requests guaranteed authorship positions for the principal investigator, and proposes a Publications Committee mechanism.

In addition to these three principal issues, several secondary matters remain open, including termination wind-down payment obligations, certain clarifications to the safety-reporting framework under Exhibit J, and definitional refinements to "Study-Related Injury" and "Investigational Product."

Given the number and complexity of the remaining issues, I recommend that we propose an in-person negotiation session with Veridian and WJC to resolve all outstanding terms efficiently. Philadelphia would be the most practical venue, given WJC's offices there and the proximity to Veridian's headquarters. I recommend targeting the session for June 9, 2023.

The commercial urgency of reaching resolution cannot be overstated. The total deal value of the CLARION trial across Veridian's network is approximately $80,000,000, spanning 38 Veridian Network sites across 14 states over the projected life of the study. Penterra's target FPI date of August 14, 2023 requires that the MCTA be executed no later than the end of June 2023 in order to preserve adequate lead time for site activation, IRB approval processing, and investigator credentialing. Each week of delay in MCTA finalization places the FPI timeline at material risk.

I understand that copies of this memorandum may be shared with Rebecca Liang, Associate General Counsel, Clinical Affairs, at Penterra, at your direction.

II. BACKGROUND AND PROCEDURAL HISTORY

Calderwood & Harkness opened this matter on March 20, 2023, upon engagement by Penterra to negotiate and draft the MCTA governing the CLARION trial (Protocol PPC-4871-III), a Phase III, randomized, double-blind, placebo-controlled study of penterafenib (PPC-4871) in patients with advanced non-small cell lung cancer. The CLARION trial is being conducted under IND 157823 and is a pivotal registration study for Penterra.

Veridian is one of the largest integrated clinical research networks in the United States, operating 38 sites across 14 states. The MCTA will serve as the master agreement governing the relationship between Penterra and the Veridian network for the duration of the CLARION trial, with site-specific terms to be captured in individual Site Participation Agreements attached as exhibits. Veridian is represented in the MCTA negotiations by WJC, with primary contacts being Allison Whitmore (Partner) and David Kesselman (Senior Associate).

The procedural history of the negotiations is summarized as follows:

• April 7, 2023: Calderwood & Harkness circulated the first draft MCTA to WJC on behalf of Penterra. The first draft reflected Penterra's standard clinical trial agreement template, customized for the CLARION trial protocol and Veridian's multi-site network structure.

• April 28, 2023: Veridian/WJC returned their initial markup of the MCTA. The initial markup contained a number of significant demands, including: (a) uncapped subject-injury indemnification; (b) a per-occurrence insurance requirement of $50 million; (c) a front-loaded payment structure with 60% of per-patient fees payable upon enrollment; and (d) substantially expanded publication rights for investigators, including unrestricted publication with no sponsor review period.

• May 5, 2023: Following internal review and preparation of a negotiation strategy memorandum, Penterra circulated an indemnification term sheet to Veridian/WJC. The term sheet proposed a per-subject medical care cap of $500,000, an aggregate medical care cap of $15,000,000, and uncapped indemnification for claims arising from product defects.

• May 19, 2023: Calderwood & Harkness circulated the second draft MCTA, reflecting Penterra's compromise positions. Key concessions included: (a) revised payment milestones structured as 25%/25%/25%/25% per patient at $13,000 per milestone; (b) revised indemnification incorporating the term sheet positions; and (c) modified publication review language reducing certain timelines and clarifying the scope of Penterra's review rights.

• June 2, 2023: Veridian/WJC returned their second markup of the MCTA. This is the document under review in this memorandum.

Resolved Issues. Before turning to the open issues, it is worth noting the significant progress the parties have made. The following material terms have been agreed upon and are reflected in consistent language across both the second draft and the second markup:

• Payment Milestone Structure: The 25%/25%/25%/25% milestone structure has been accepted by Veridian. Payments of $13,000 will be made at each of four milestones: (1) subject enrollment/randomization; (2) completion of Cycle 4; (3) completion of Cycle 8; and (4) study completion or early termination visit.

• Per-Patient Fee: Confirmed at $52,000 per patient ($13,000 × 4 milestones), for a projected enrollment of 1,200 patients across the network (800 treatment arm, 400 placebo arm).

• Start-Up Fees: $75,000 per site, payable 50% upon site activation and 50% upon enrollment of the first patient at such site. Total start-up costs across 38 sites: $2,850,000.

• Network Coordination Fee: $300,000 per quarter for 14 quarters (projected trial duration of approximately 3.5 years), totaling $4,200,000 over the life of the study.

• Confidentiality Term: 10 years from the date of disclosure.

• Dispute Resolution: 30-day good-faith negotiation period, followed by 60-day mediation administered by the American Arbitration Association, followed by binding arbitration in New York before a three-arbitrator panel under AAA Commercial Arbitration Rules.

• Governing Law: State of New York, without regard to conflict-of-laws principles.

• Site Indemnity Cap: $5,000,000 per site per occurrence, with an aggregate cap of $20,000,000 across all sites.

• Indemnification Notice Requirement: 30 days' written notice to the indemnifying party following the indemnified party's knowledge of a claim.

The remaining open issues, which are the subject of this memorandum, are discussed in detail below.

III. OPEN ISSUE #1: INSURANCE ADEQUACY DISPUTE

A. Current Penterra Position (as Reflected in Second Draft)

The second draft MCTA requires Penterra to maintain clinical trial liability insurance throughout the term of the study and for a reasonable period thereafter. Penterra's current clinical trial liability policy is issued by Briarcliff Mutual Insurance Company under Policy No. BM-CTL-2023-04182, with the following material terms:

• Policy Period: April 1, 2023 through March 31, 2024 (renewable annually).

• Per-Occurrence Limit: $25,000,000.

• Aggregate Limit: $75,000,000.

• Subject-Injury Sublimit: $10,000,000 per occurrence, $50,000,000 in the aggregate.

Under the second draft, Penterra agrees to name Veridian and each participating site as additional insureds under the Briarcliff policy. Reciprocally, Veridian and each site are required to maintain general liability and professional liability insurance coverage of at least $5,000,000 per occurrence and $10,000,000 in the aggregate. Certificates of insurance are to be exchanged within 15 business days of MCTA execution and annually thereafter for the duration of the study.

B. Veridian's Second Markup Position

Veridian's second markup reflects a partial retreat from the initial demand of $50 million per-occurrence coverage. However, the positions taken in the second markup remain meaningfully distant from Penterra's current policy limits. Specifically, the Veridian/WJC second markup proposes the following:

1. Per-Occurrence Limit: Veridian now demands a minimum per-occurrence limit of $35,000,000, a reduction from the initial $50,000,000 demand but still $10,000,000 in excess of Penterra's current Briarcliff policy limit.

2. Subject-Injury Sublimit: Veridian insists on a minimum subject-injury sublimit of $15,000,000 per occurrence, compared to the Briarcliff policy's current sublimit of $10,000,000 per occurrence. This represents a $5,000,000 gap.

3. Material Coverage Reduction Notice: Veridian requests that the MCTA include a covenant prohibiting Penterra from materially reducing its insurance coverage during the term of the study without providing at least 60 days' prior written notice to Veridian.

4. Extended Reporting Period ("Tail") Coverage: This is a new request not previously raised. Veridian demands that Penterra maintain "tail" or extended reporting period coverage for at least 3 years following study completion. Given a projected study completion date of approximately August 2028, this would require coverage through approximately August 2031.

5. Annual Renewal Assurance: Veridian requests contractual assurance that Penterra will renew its insurance annually with identical or better coverage levels and will notify Veridian promptly if Briarcliff declines to renew the policy.

C. Analysis and Recommended Response

Per-Occurrence Limit. Penterra's $25,000,000 per-occurrence limit is consistent with prevailing industry benchmarks for Phase III oncology trials. As detailed in the insurance requirements analysis memorandum previously circulated to you on April 15, 2023, a survey of MCTAs for comparable Phase III studies over the past three years indicates that per-occurrence limits typically range from $20,000,000 to $30,000,000, with a median of $25,000,000. I recommend firmly holding at $25,000,000 per occurrence. This position is defensible both on industry-standard grounds and on the practical ground that Penterra's Briarcliff policy is already in place with these limits.

I have confirmed with Karen Tremblay at Briarcliff that the existing policy terms, including the per-occurrence limit and the subject-injury sublimit, cannot be restructured mid-term without triggering a material premium increase. Any request to increase the per-occurrence limit to $35,000,000 would require either a policy endorsement or a supplemental policy, either of which would involve substantial additional cost and an underwriting review that could take 6–8 weeks. This timeline would almost certainly jeopardize the FPI date.

I recommend declining the $35,000,000 per-occurrence demand. As an alternative concession to demonstrate good faith, we could offer to provide Veridian with an annual compliance certificate confirming that the required insurance remains in force, which would give Veridian a contractual mechanism to monitor coverage without requiring a change in policy limits.

Subject-Injury Sublimit. The $10,000,000 per-occurrence subject-injury sublimit under the Briarcliff policy is adequate in light of the indemnification framework already agreed upon by the parties. The per-subject medical care cap of $500,000 and the aggregate medical care cap of $15,000,000 provide meaningful limits on Penterra's direct indemnification exposure. The insurance sublimit is an additional layer of protection that complements, rather than replaces, the contractual indemnification. I recommend holding at the $10,000,000 per-occurrence sublimit, while recognizing that this may require further discussion (see Section III.D below regarding a potential fallback).

Material Coverage Reduction Notice. This is a reasonable request in principle, though I recommend proposing a 30-day notice period rather than the 60 days requested by Veridian. A 30-day period is consistent with typical insurance notification provisions in clinical trial agreements and gives Veridian adequate time to assess the impact of any coverage change.

Extended Reporting Period. The concept of tail coverage is legitimate, particularly for a Phase III oncology trial where latent injuries may not manifest until after study completion. However, Veridian's request of 3 years is at the outer end of the range typically seen in clinical trial agreements. I recommend offering a 2-year extended reporting period post-study completion as a compromise. This would provide coverage through approximately August 2030 — a meaningful period of post-study protection while avoiding the full cost of a 3-year tail. The specific terms and cost of extended reporting period coverage would need to be confirmed with Briarcliff.

Annual Renewal Assurance. I recommend that Penterra agree to use commercially reasonable efforts to maintain comparable coverage upon annual renewal and to provide prompt notice to Veridian in the event that Briarcliff declines to renew or proposes materially different terms. We should avoid an absolute covenant to maintain identical coverage, as market conditions and Penterra's overall insurance portfolio may require adjustments from year to year.

In summary, our recommended responses are:

• (i) Hold at $25,000,000 per-occurrence limit.

• (ii) Hold at $10,000,000 per-occurrence subject-injury sublimit (with fallback discussed below).

• (iii) Agree to 30-day prior written notice of material coverage reduction (vs. Veridian's request for 60 days).

• (iv) Offer 2-year extended reporting period post-study completion (vs. Veridian's request for 3 years).

• (v) Agree to commercially reasonable efforts to maintain comparable coverage upon renewal; prompt notification of any non-renewal.

• (vi) Offer to provide an annual compliance certificate confirming insurance in force.

D. Items for Discussion

Two items require Miriam's guidance before we finalize our position:

1. Fallback on Subject-Injury Sublimit. Should we instruct Karen Tremblay at Briarcliff to provide a supplemental quote for increasing the subject-injury sublimit from $10,000,000 to $15,000,000 per occurrence? If the premium increase is modest, this could serve as a fallback concession to close the gap on this issue without conceding on the per-occurrence limit. The decision to pursue this quote should be made promptly so that we have the information available before the negotiation session.

2. Internal Risk Management Coordination. If increasing the sublimit is feasible, we should coordinate with Jennifer Holt (VP, Risk Management, Penterra) to confirm that Penterra's internal risk management team would accept the premium increase and that the cost falls within the CLARION trial budget's insurance allocation. Any premium increase would need to be factored into the trial's overall financial model.

IV. OPEN ISSUE #2: PROTOCOL-DEVIATION LIABILITY ALLOCATION

A. Current Framework in Second Draft

The indemnification framework in the second draft MCTA allocates liability for subject injuries based on whether the investigational product was administered "in accordance with the Protocol." Under the current structure:

Sponsor Indemnification (Section 10.1). Penterra agrees to indemnify, defend, and hold harmless Veridian, each participating site, and each investigator and their respective personnel from and against claims, losses, damages, and expenses arising from subject injuries that occur when the investigational product is administered in accordance with the Protocol and applicable law, except to the extent such claims arise from:

(i) the negligence or willful misconduct of the site, investigator, or site personnel;

(ii) any deviation from the Protocol that was not authorized by Penterra in writing or required for the immediate safety of the subject; or

(iii) the site's breach of the MCTA or applicable law.

Site/Investigator Indemnification (Section 10.2). Reciprocally, Veridian and each site agree to indemnify Penterra from claims arising from: (a) unauthorized protocol deviations; (b) negligence or willful misconduct of site personnel; and (c) the site's breach of the MCTA or applicable law.

This framework is consistent with Penterra's standard clinical trial agreement template and reflects a conventional allocation of risk between sponsor and site.

B. Veridian's Second Markup Position

The Veridian/WJC second markup proposes several significant modifications to the protocol-deviation liability framework. These changes, taken together, would substantially expand the scope of Penterra's sponsor indemnification obligation and narrow the circumstances under which sites bear responsibility for protocol deviations.

1. New Defined Category: "Medically Necessary Protocol Deviations." Veridian proposes the addition of a new defined term — "Medically Necessary Protocol Deviations" — encompassing deviations undertaken by the investigator in the exercise of clinical judgment to protect a subject's safety, health, or welfare. The proposed definition is broad, requiring only that the investigator have exercised "clinical judgment" in determining that the deviation was warranted.

2. Sponsor Indemnification for Medically Necessary Deviations. Under the Veridian markup, Medically Necessary Protocol Deviations would not be treated as carve-outs from Penterra's sponsor indemnification. In other words, Penterra would continue to bear indemnification responsibility for subject injuries arising from protocol deviations, provided that the deviation was "medically necessary" as defined. This effectively shifts liability for a potentially significant category of investigator decisions back to the sponsor.

3. Elevation of Negligence Standard. Veridian proposes that only "gross negligence or willful misconduct" by site personnel — rather than simple "negligence" — should trigger the carve-out from sponsor indemnification. This would mean that Penterra would remain obligated to indemnify sites for injuries resulting from ordinary negligence of site personnel, a significant expansion of the sponsor's risk.

4. Good Faith Standard. Veridian requests the addition of a subjective "good faith" standard, under which the sponsor indemnification would apply if the investigator deviated from the Protocol in a "good faith belief" that the deviation was required for subject safety. This standard is inherently difficult to evaluate and adjudicate, as it turns on the investigator's subjective state of mind at the time of the deviation.

5. Independent Medical Monitor. Veridian proposes that the determination of whether a deviation was "Medically Necessary" be made by a jointly appointed Independent Medical Monitor — a mechanism not currently contemplated in the MCTA. If the parties and the Independent Medical Monitor cannot agree on classification, Veridian's markup provides for escalation to an independent expert panel. This would create a parallel adjudication mechanism outside the MCTA's existing dispute resolution framework.

C. Analysis and Recommended Response

This is the most complex of the three principal open issues and requires careful balancing of Penterra's commercial interests against the legitimate ethical and practical concerns of investigators and sites.

Concept of Medically Necessary Protocol Deviations. The concept has substantial merit and is not uncommon in clinical trial agreements, particularly for complex oncology protocols. Investigators have a well-recognized ethical obligation to protect the safety and welfare of their subjects, and FDA regulations expressly contemplate that investigators may deviate from an investigational plan to protect the life or physical well-being of a subject. See 21 C.F.R. § 312.60 (providing that an investigator may deviate from the protocol "without prior IRB approval, to protect the life or physical well-being of a subject in an emergency"). Refusing to recognize this concept entirely could be perceived as unreasonable and could complicate site recruitment and investigator willingness to participate.

However, Penterra should not accept unlimited indemnification for all "good faith" deviations. As currently drafted, Veridian's proposed definition is overbroad. It does not require that the deviation be responsive to an immediate hazard, nor does it require prompt reporting or contemporaneous documentation. Under the broad formulation, any deviation that an investigator later characterizes as having been motivated by clinical judgment could be classified as "Medically Necessary," potentially exposing Penterra to significant liability for investigator errors that are retroactively framed as safety-motivated.

Recommended Compromise on the Definition. I recommend that we accept the concept of "Medically Necessary Protocol Deviations" but define it narrowly. Specifically, I propose that a "Medically Necessary Protocol Deviation" be defined as a deviation from the Protocol that satisfies all three of the following requirements:

(i) The deviation was required to eliminate an apparent immediate hazard to the subject's life or physical well-being;

(ii) The deviation was promptly reported to Penterra and the responsible Institutional Review Board ("IRB") within 24 hours of the deviation; and

(iii) The deviation was documented by the investigator with contemporaneous clinical rationale in the subject's medical record and the clinical trial file.

This narrow definition tracks the language of 21 C.F.R. § 312.60 and limits the category to genuine emergency situations where the investigator had no practical alternative. The 24-hour reporting requirement and contemporaneous documentation requirement create an objective evidentiary record that can be reviewed to determine whether the deviation qualifies.

Medically Necessary Protocol Deviations meeting this narrow definition should remain within the scope of sponsor indemnification, subject to the investigator's good faith and proper reporting. This is a meaningful concession that acknowledges the investigator's ethical obligations while protecting Penterra from liability for vaguely justified deviations.

Negligence Standard. I recommend firmly retaining the "negligence" standard for the general carve-out from sponsor indemnification. Elevating the standard to "gross negligence" would effectively eliminate the carve-out in most circumstances, as the gross negligence threshold is difficult to satisfy and rarely proven. The negligence standard is appropriate for the general carve-out because it ensures that sites bear responsibility for injuries resulting from their own failure to exercise reasonable care.

However, as a compromise, I recommend that we accept that Medically Necessary Protocol Deviations — as narrowly defined above — made in good faith and properly reported should not be treated as negligent simply because they deviated from the Protocol. In other words, the negligence carve-out would not apply to deviations that satisfy the narrow definition of Medically Necessary Protocol Deviations. This provides investigators with the protection they need when acting in genuine emergencies while preserving the negligence standard for all other circumstances.

Independent Medical Monitor. I recommend opposing the proposed Independent Medical Monitor mechanism for several reasons. First, it creates a cumbersome parallel adjudication process outside the MCTA's existing dispute resolution framework, which the parties have already agreed upon (30-day negotiation, 60-day mediation, binding arbitration). Second, the appointment, governance, and cost of the Independent Medical Monitor are not adequately addressed in the markup. Third, the mechanism could create delays in resolving deviation classification disputes at a time when the trial is ongoing and timely resolution is important.

Instead, I recommend that disputes over whether a particular deviation qualifies as a "Medically Necessary Protocol Deviation" under the narrow definition be subject to the MCTA's existing dispute escalation procedure. The arbitration panel can engage independent medical experts as needed to evaluate the clinical circumstances of a disputed deviation. This approach keeps all disputes within a single framework and avoids the administrative burden of a standing Independent Medical Monitor.

Clinical Input Required. Before finalizing our position on the narrow definition, I recommend coordinating with Dr. Elaine Whitford (Chief Medical Officer) and Dr. Marcus Yun (SVP, Clinical Development) to confirm that the proposed definition is clinically workable and does not inadvertently discourage investigators from taking appropriate safety measures. Their input on the types of deviations that commonly occur in Phase III oncology trials and the circumstances in which immediate action is genuinely required will be valuable in refining the language.

Interaction with Safety Reporting. Any protocol-deviation reporting obligation must be integrated with the existing safety reporting framework set forth in Exhibit J of the MCTA. Under the current framework, SAEs must be reported within 24 hours from site awareness, and IND safety reports follow 7-day and 15-day reporting timelines pursuant to 21 C.F.R. § 312.32. The 24-hour reporting requirement for Medically Necessary Protocol Deviations should be coordinated with these existing timelines to avoid duplicative or conflicting obligations for site personnel.

D. Items for Discussion

1. FDA Regulatory Perspective. Given that deviations from a Phase III protocol under IND 157823 may have regulatory consequences — including the potential for FDA to question the integrity of data collected during a deviation — I recommend that we consult with Castleton & Hargrove LLP (specifically Dr. Priya Sundaram) before the negotiation session to confirm that the proposed narrow definition of Medically Necessary Protocol Deviations is consistent with FDA expectations and will not create regulatory risk for Penterra.

2. CRO Coordination. Meridian CRO (contact: Thomas Hartwell) is responsible for clinical monitoring of the CLARION trial across all Veridian Network sites. The monitoring plan will need to address the documentation and classification of protocol deviations, including any new reporting requirements. We should coordinate with Meridian to ensure that the contractual language is operationally workable and that Meridian's monitors are equipped to verify compliance with the narrow definition.

V. OPEN ISSUE #3: INVESTIGATOR INDEPENDENCE AND PUBLICATION RIGHTS

A. Current Framework in Second Draft

The second draft MCTA addresses data ownership and publication rights in Article 12, with detailed terms set forth in Exhibit G (IP and Publication Rights). An IP side letter is being prepared concurrently to address joint inventions and related intellectual property matters. The current framework provides as follows:

• Data Ownership: Penterra retains exclusive ownership of all clinical trial data generated under the MCTA, including without limitation case report forms, electronic data, statistical analyses, and clinical study reports.

• Publication Review Period: Investigators may publish results of the study subject to Penterra's prior review. Penterra has a 60-day review period following receipt of a manuscript to identify confidential information and patentable subject matter.

• Patent Filing Delay: Penterra may request an additional delay of up to 90 days beyond the initial 60-day review period to allow preparation and filing of patent applications covering patentable subject matter disclosed in the manuscript. The total potential delay is 150 days from manuscript submission.

• Source Document Retention: Sites must retain source documents for a minimum of 15 years following study completion.

• IP Side Letter: An IP side letter is to be executed concurrently with the MCTA, governing ownership and licensing of joint inventions, background intellectual property, and improvements.

B. Veridian's Second Markup Position

The Veridian/WJC second markup proposes significant changes to the publication rights framework. Taken together, these changes reflect Veridian's emphasis on protecting investigator independence and ensuring timely access to study results, consistent with broader academic and regulatory trends favoring transparency in clinical trial reporting. The specific proposals are as follows:

1. Reduced Patent Filing Delay. Veridian rejects the 90-day additional patent delay as excessive. WJC proposes a maximum additional delay of 45 days beyond the initial 60-day review period, for a total potential delay of 105 days from manuscript submission. WJC's cover letter characterizes the 90-day additional delay as "unprecedented in length" and "inconsistent with academic norms," though our review indicates that 90-day additional delays are in fact used by Penterra and a number of peer sponsors.

2. Limited Scope of Review. Veridian demands that Penterra's review right be expressly limited to the identification and redaction of "Sponsor Confidential Information" (a new proposed defined term) and that the review right not extend to editorial control over scientific conclusions, data interpretation, or the investigators' characterization of study results.

3. Anti-Suppression / No-Veto Language. Veridian insists on explicit language confirming that: (a) Penterra may not suppress or prevent the publication of results, including negative or inconclusive results; and (b) Penterra's review right does not include a right to veto publication. The proposed language is absolute and does not include exceptions for trade secrets or proprietary manufacturing information.

4. Conference Presentations. Veridian proposes that investigators should have the right to present preliminary data at academic conferences — including poster and oral presentations — with only 30 days' prior notice to Penterra. Under this proposal, Penterra would have no review right over conference presentation materials; the 30-day period is characterized as a "courtesy notice" only.

5. Guaranteed Authorship for Principal Investigator. Veridian requests that the MCTA include a provision guaranteeing that Dr. Catherine Aldridge, as Global Principal Investigator, will have first or last authorship on all primary trial publications arising from the CLARION study. This is framed as a non-negotiable condition of Dr. Aldridge's continued participation.

6. Publications Committee. Veridian proposes the establishment of a Publications Committee to coordinate multi-center publications. Under the proposal, the committee would be chaired by the Global PI (Dr. Aldridge), with representation from Penterra, but Penterra would not have a controlling vote. All primary and secondary publications would be reviewed by the Publications Committee prior to submission for publication.

C. Analysis and Recommended Response

Patent Filing Delay. The 90-day additional patent delay is a standard term in Penterra's clinical trial agreements and has been accepted by other site networks in prior transactions. However, I recognize that this is an area of increasing sensitivity in the academic research community, and a rigid insistence on 90 days may be perceived as unreasonable.

I recommend offering a 60-day additional delay as a compromise, for a total potential delay of 120 days from manuscript submission. A 60-day window provides adequate time for patent counsel to review the manuscript, conduct prior art searches, draft patent applications, and file provisional applications as necessary. This represents a meaningful concession from Penterra's initial position (reducing the total delay by 30 days) while maintaining a commercially defensible timeline. I would note that any reduction below 60 additional days would create genuine risk that patent applications cannot be prepared and filed in time, particularly for complex chemical composition or methods-of-treatment claims.

This compromise should be discussed with Penterra's patent counsel (we should confirm whether Penterra is currently using Harrington & Kline LLP or in-house patent resources) to ensure that the 60-day window is operationally sufficient. Penterra's patent portfolio strategy for penterafenib and the importance of securing adequate patent protection for any inventions arising from the CLARION trial data should inform this analysis.

Scope of Review Right. I recommend accepting the limitation of Penterra's review right to the identification and redaction of confidential information and patentable subject matter. This is consistent with ICH E6(R2) Good Clinical Practice principles, which emphasize the investigator's independent right to analyze and publish study results. It is also consistent with academic publishing norms and the policies of most major medical journals. Penterra should not seek editorial control over scientific conclusions, as doing so would undermine investigator credibility and could invite scrutiny from regulators and the academic community.

However, we should ensure that the defined term "Sponsor Confidential Information" is drafted broadly enough to include trade secrets, proprietary manufacturing processes, formulation details, and other commercially sensitive information. The current WJC draft definition is somewhat narrow and should be reviewed carefully.

Anti-Suppression / No-Veto Language. This is a sensitive issue that requires careful drafting. As a matter of principle, Penterra should not and does not suppress legitimate scientific findings, including negative or inconclusive results. Transparency in reporting is both an ethical obligation and a regulatory requirement under ClinicalTrials.gov and FDAAA Section 801.

However, the WJC draft language as currently written is problematic because it could be read to preclude Penterra from requesting the removal of proprietary manufacturing information, trade secrets, or other confidential commercial information from a manuscript. I recommend proposing alternative language that:

(a) Acknowledges that Penterra will not unreasonably withhold, condition, or delay its consent to the publication of study results, including negative or inconclusive results;

(b) Confirms that Penterra's review right does not constitute a right to suppress scientific findings or data;

(c) Preserves Penterra's right to request, and require, the removal of trade secrets, proprietary manufacturing information, and Sponsor Confidential Information from any manuscript or presentation prior to publication or dissemination; and

(d) Provides that any dispute over whether particular information constitutes Sponsor Confidential Information shall be resolved through the MCTA's dispute resolution procedures, with the manuscript held pending resolution.

This formulation balances investigator independence with Penterra's legitimate interest in protecting commercially sensitive information.

Conference Presentations. I recommend accepting the 30-day notice period for academic conference presentations (posters and oral presentations) as a concession from the full 60-day review applicable to manuscripts. Conference presentations typically contain less detail than full manuscripts and are subject to time-sensitive submission deadlines that make a 60-day review impractical.

However, I recommend that we require a 15-day review right — not merely notice — within the 30-day period. Specifically, I propose that the investigator provide 30 days' advance notice of any planned conference presentation and submit the presentation materials (slides, poster, abstract) to Penterra no later than 30 days before the presentation. Penterra would have 15 days from receipt to review the materials and identify any Sponsor Confidential Information for removal. The investigator would then have the remaining 15 days to finalize the presentation. This gives Penterra a meaningful opportunity to protect confidential information while respecting the shorter timelines associated with conference presentations.

Authorship. Authorship of scientific publications should be governed by the criteria established by the International Committee of Medical Journal Editors ("ICMJE"). The ICMJE criteria require that authorship be based on (1) substantial contributions to the conception or design of the work, or to the acquisition, analysis, or interpretation of data; (2) drafting the work or revising it critically for important intellectual content; (3) final approval of the version to be published; and (4) agreement to be accountable for all aspects of the work.

Rather than guaranteeing specific authorship positions (first or last author) in the MCTA — which could be inconsistent with ICMJE criteria if, for example, a particular publication is primarily based on data or analyses contributed by other investigators — I recommend that the MCTA reference ICMJE standards as the governing framework for authorship determinations. Penterra can acknowledge that Dr. Aldridge, as Global Principal Investigator, is expected to have a lead authorship role on primary trial publications consistent with her contributions and the ICMJE criteria. This approach respects Dr. Aldridge's central role while avoiding a rigid contractual guarantee that could conflict with journal policies or the contributions of other investigators.

Publications Committee. The concept of a Publications Committee is acceptable in principle and is consistent with practices in many multi-center clinical trials. I recommend that the MCTA establish a Publications Committee with equal representation from Penterra and Veridian/investigators, with the Global PI serving as chair. The committee's role should be to coordinate the timing and content of multi-center publications, manage authorship disputes, and ensure that all publications are reviewed consistent with the contractual review timelines before submission to journals or presentation at conferences.

It is important that the Publications Committee operate within, and not supersede, the contractual review timelines. All publications should be subject to Penterra's review rights as set forth in the MCTA before submission, regardless of the Publications Committee's review.

We should ensure that the publication rights language in the body of the MCTA is fully consistent with the detailed terms in Exhibit G and the IP side letter being prepared concurrently.

D. Items for Discussion

1. Clinical Leadership Involvement. Whether Dr. Elaine Whitford or Dr. Marcus Yun should be involved in the discussions regarding publication governance, either at the negotiation session or through review of the proposed language. Their perspective on the clinical and scientific aspects of publication timing, authorship, and data sharing will be valuable.

2. Securities Law Considerations. Whether Ridgeline Capital Markets LLC (Penterra's financial advisor) has views on publication timing relative to Penterra's market-sensitive disclosures. The publication of negative or unexpected clinical data from the CLARION trial could have material effects on Penterra's stock price. I recommend coordinating with Nathaniel Briggs on any securities law considerations that should inform the publication rights framework, including whether Penterra needs the ability to delay publication briefly in connection with required SEC filings or Regulation FD obligations.

3. Patent Portfolio Strategy. The adequacy of the patent filing delay period is directly connected to Penterra's patent portfolio strategy for penterafenib. Consultation with Penterra's patent counsel regarding the types of patent claims that may arise from CLARION trial data and the realistic timeline for preparing and filing applications is essential to determining whether the proposed 60-day additional delay is sufficient.

VI. SECONDARY OPEN ISSUES

In addition to the three principal open issues discussed above, the Veridian/WJC second markup raises several secondary matters that will need to be addressed. While these issues are less commercially significant individually, they should be resolved at the negotiation session to avoid further rounds of markup.

A. Termination Wind-Down Payment Obligations

The second draft MCTA provides for a 120-day wind-down period following termination for subject safety. During this period, subjects in active treatment must be transitioned to alternative care or permitted to complete their current treatment cycle. The wind-down provision is designed to ensure continuity of care and protect subject welfare, consistent with Penterra's ethical obligations and FDA requirements.

Veridian's second markup adds two financial requirements to the wind-down framework:

1. Continued Per-Patient Fees. Veridian proposes that Penterra continue to pay full per-patient fees ($52,000) for all subjects enrolled prior to the date of the termination notice, including all four milestone payments, regardless of whether the subject completes the full study protocol. Under this proposal, Penterra would owe the full per-patient fee even if the subject is transitioned to alternative care during the wind-down period and does not complete all four milestones.

2. Wind-Down Administrative Fee. Veridian proposes a "wind-down administrative fee" equal to 6 months of site maintenance fees, calculated at $20,000 per site, for each active site at the time of termination. If all 38 sites are active at termination, this would total $760,000 (38 sites × $20,000).

Recommended Position. I recommend that Penterra accept continued milestone payments for subjects already enrolled through the completion of their treatment cycles. This is a reasonable request that ensures that sites are compensated for the care they continue to provide during wind-down. However, Penterra should not accept an obligation to pay all four milestone payments for subjects who do not complete all four milestones; payment should be tied to actual completion of each milestone.

I recommend resisting the wind-down administrative fee as excessive. Six months of site maintenance fees is disproportionate to the actual administrative costs of winding down site operations, which should be largely covered by the 120-day wind-down period itself. As a compromise, I recommend offering 3 months' site maintenance fees per active site ($10,000 per site), which would total $380,000 if all 38 sites are active at termination.

It should be noted that any wind-down payments would come from the $2,500,000 contingency reserve within the overall $80,000,000 CLARION trial budget or would require a budget modification. Rebecca Liang should be consulted regarding the financial impact of the various scenarios.

B. Safety Reporting Clarifications

The Veridian/WJC second markup raises two relatively minor issues regarding the safety reporting framework in Exhibit J:

1. Simultaneous SAE Reporting. The current draft requires that SAE reports be submitted to Penterra, which then forwards the reports to Meridian CRO. Veridian proposes that SAE reports be submitted simultaneously to both Penterra and Meridian CRO. This is a procedural change that eliminates a potential delay in the information flow to the CRO and is consistent with the approach taken in the Meridian CRO Master Services Agreement dated January 15, 2023.

2. Safety Data Sharing with Investigators. Veridian seeks confirmation that Penterra will promptly share all safety data and Data Safety Monitoring Board ("DSMB") reports with investigators, to the extent permitted by the blinding provisions of the Protocol. This is a standard request designed to ensure that investigators have access to the information they need to make informed clinical decisions for their subjects.

Recommended Position. I recommend accepting both of these requests. The simultaneous reporting approach is operationally sound and eliminates an unnecessary intermediary step. Sharing safety data and DSMB reports with investigators through established DSMB procedures (subject to blinding protections) is consistent with FDA guidance and GCP requirements. No material concession is involved.

C. Definitional Issues

Veridian's second markup proposes refinements to two key definitions:

1. "Study-Related Injury." Veridian requests that the definition of "Study-Related Injury" be expanded to cover injuries arising from protocol-required procedures — such as biopsies, imaging studies, blood draws, and other diagnostic or therapeutic interventions required by the Protocol — and not only injuries resulting from the administration of the investigational product (PPC-4871). This is a legitimate clarification. If a subject suffers an injury during a protocol-mandated biopsy, that injury is properly treated as study-related even though it did not arise from the drug itself.

2. "Investigational Product." Veridian proposes expanding the definition of "Investigational Product" to include the placebo and any active comparator used in the study. This is consistent with the double-blind, placebo-controlled design of the CLARION trial (800 subjects in the treatment arm receiving penterafenib; 400 subjects in the placebo arm). Under the current blinding, neither investigators nor subjects know whether they are receiving the active product or placebo, and injuries can occur in either arm. The definition should encompass all study treatments for purposes of indemnification and safety reporting.

Recommended Position. Both of these are reasonable and appropriate clarifications that do not materially change Penterra's risk profile. I recommend accepting both revised definitions.

VII. RECOMMENDED NEXT STEPS

Based on the foregoing analysis, I recommend the following next steps to advance the MCTA negotiation toward timely resolution:

1. In-Person Negotiation Session. Schedule an in-person negotiation session with Veridian (Gregory Callahan, EVP; Patricia Dunne, SVP Clinical Operations) and WJC (Allison Whitmore, David Kesselman) at WJC's offices in Philadelphia. I recommend targeting Friday, June 9, 2023, at WJC's offices at 1500 Market Street, Suite 3200, Philadelphia, Pennsylvania. A full-day session should be sufficient to work through the remaining issues, provided that both sides arrive with adequate authority and prepared positions.

2. Penterra Attendees. Attendees from the Penterra side should include: Miriam Calloway and Sean Morrissey from Calderwood & Harkness; and Rebecca Liang (Associate General Counsel, Clinical Affairs) and Samantha Novak (Director, Contract Negotiations) from Penterra. Depending on the outcome of our discussions regarding clinical leadership involvement, Dr. Whitford or Dr. Yun may also attend or be available by phone.

3. Preparation of Negotiation Materials. I will prepare detailed talking points and fallback positions for each of the open issues identified in this memorandum, as well as an authority parameters memo for Miriam's review and approval prior to the session. These materials should be in Miriam's hands no later than June 7, 2023.

4. Castleton & Hargrove Consultation. We should consult with Castleton & Hargrove LLP (Dr. Priya Sundaram) regarding the regulatory implications of the protocol-deviation language — specifically, whether the proposed narrow definition of "Medically Necessary Protocol Deviations" is consistent with FDA regulatory expectations for a Phase III study under IND 157823. This consultation should occur before the negotiation session so that our position is informed by regulatory counsel's guidance.

5. Briarcliff Insurance Inquiry. We should instruct Karen Tremblay at Briarcliff Mutual to provide a supplemental quote for increasing the subject-injury sublimit from $10,000,000 to $15,000,000 per occurrence, and to confirm the feasibility and cost of a 2-year extended reporting period post-study completion. Having this information in hand at the negotiation session will give us flexibility to make a targeted concession on the insurance issue if needed.

6. Clinical Leadership Input. We should seek input from Dr. Elaine Whitford (CMO) and Dr. Marcus Yun (SVP, Clinical Development) on the clinical acceptability of the proposed narrow definition of "Medically Necessary Protocol Deviations" and on the publication governance framework. Their views on these issues will strengthen our negotiating position and ensure that the contractual language is workable in practice.

7. Timeline and Execution Targets. The target is to resolve all remaining open issues at the in-person session on June 9. Following the session, I will circulate a near-final draft reflecting all agreed terms within one week (target: June 16, 2023). The target execution date for the MCTA is the end of June 2023, which preserves approximately six weeks of lead time before the August 14, 2023 FPI date.

8. Parallel Workstreams. It should be noted that IRB approvals and executed investigator signature pages remain conditions precedent to site activation that must proceed in parallel with the MCTA negotiation. The lead site's approval through Graystone IRB (Protocol No. IRB00012847) is currently under review, and Veridian Central IRB approvals for non-Pennsylvania sites must be initiated promptly upon MCTA execution. Any delay in finalizing the MCTA will have a cascading effect on these parallel workstreams and, ultimately, on the FPI date.

VIII. APPENDIX: SUMMARY TABLE OF OPEN ISSUES

The following table provides a summary of all open issues identified in the Veridian/WJC second markup, including the current positions of both parties, the gap, the recommended compromise, and the priority level assigned to each issue.

I am available to discuss this memorandum and the recommended positions at your convenience. I will begin preparing the detailed talking points and authority parameters memo once we have aligned on the approach for each issue.

Sean Morrissey Associate Calderwood & Harkness LLP Tel: (212) 555-8214

Email: smorrissey@calderwoodharkness.com

cc: File (Matter No. 1018-00004) Distribution to Rebecca Liang, Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp., at the direction of Miriam Calloway.

Issue	Penterra Position (Second Draft)	Veridian Position (Second Markup)	Gap	Recommended Compromise	Priority
Insurance per-occurrence limit	$25M	$35M (reduced from $50M)	$10M	Hold at $25M; offer annual compliance certificate	High
Subject-injury sublimit per occurrence	$10M	$15M	$5M	Hold at $10M; explore Briarcliff quote as fallback	High
Insurance tail / extended reporting period	Not addressed	3 years post-study	New issue	Offer 2 years post-study	Medium
Protocol-deviation liability — Medically Necessary Deviations	Not recognized as category	New defined category; sponsor indemnification applies	New category	Accept narrow definition with 24-hr reporting and documentation requirements	High
Negligence vs. gross negligence standard	Negligence	Gross negligence	Standard elevation	Hold at negligence for general carve-out; carve-out not applicable to qualifying Medically Necessary Deviations	High
Independent Medical Monitor for deviation classification	Not contemplated	Jointly appointed monitor with escalation to expert panel	New mechanism	Reject; use existing dispute resolution framework (negotiation → mediation → arbitration)	Medium
Publication patent delay	90 additional days (150 total)	45 additional days (105 total)	45 days	Offer 60 additional days (120 total)	High
Publication review scope	Confidential information and patentable matter	Redaction of "Sponsor Confidential Information" only; no editorial control	Scope narrowing	Accept; ensure defined term broadly covers trade secrets	Medium
No-veto / anti-suppression language	Not included	Explicit no-veto provision; absolute	New provision	Accept modified version: no unreasonable withholding; preserve trade-secret removal right	Medium
Conference presentations	Subject to 60-day review	30-day notice only (no review)	Review vs. notice	30-day notice with 15-day review right for confidential information	Medium
PI authorship guarantee	Not addressed	Guaranteed first/last authorship for Dr. Aldridge	New provision	Reference ICMJE criteria; acknowledge expected lead authorship role	Low
Publications Committee	Not contemplated	Committee chaired by Global PI; Penterra non-controlling	New mechanism	Accept with equal Penterra/Veridian representation; PI as chair	Low
Wind-down payment obligations	Transition/completion of current treatment cycle	Full per-patient fees for all enrolled subjects + 6-month admin fee per site	Additional cost	Accept milestone continuation for treatment cycles; offer 3-month admin fee	Medium
SAE simultaneous reporting	Sequential (to Penterra, then Meridian)	Simultaneous to Penterra and Meridian CRO	Minor procedural	Accept	Low
Study-Related Injury and Investigational Product definitions	Narrow (drug administration only)	Broader (including protocol procedures, placebo, comparator)	Definitional scope	Accept	Low

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Miriam Calloway, Partner, Calderwood & Harkness LLP
FROM: Sean Morrissey, Associate, Calderwood & Harkness LLP
DATE: June 3, 2023
RE: Key Open Issues Remaining After Veridian/WJC Second Markup of MCTA — Protocol PPC-4871-III (CLARION)
MATTER NO.: 1018-00004
CLIENT: Penterra Pharmaceuticals Corp.
I. EXECUTIVE SUMMARY
This memorandum summarizes the principal unresolved issues in the Master Clinical Trial Agreement ("MCTA") between our client, Penterra Pharmaceuticals Corp. ("Penterra"), and Veridian Health Research Network, Inc. ("Veridian"), following our receipt of Veridian's second markup from its outside counsel, Whitmore, Jansen & Callahan LLP ("WJC"), on June 2, 2023. The purpose of this memorandum is to identify the remaining gaps between the parties' respective positions, provide analysis and recommended responses, and propose a path toward resolution of these issues in advance of Penterra's aggressive first-patient-in ("FPI") target date.
By way of context, our second draft MCTA was circulated to WJC on May 19, 2023. That draft incorporated Penterra's positions from the indemnification term sheet exchanged on May 5, 2023, as well as Penterra's responses to the substantive issues raised in Veridian's initial markup dated April 28, 2023. While the parties have made meaningful progress on a number of commercially significant terms — including the payment milestone structure, per-patient fees, network coordination fees, confidentiality term, dispute resolution framework, governing law, site indemnity caps, and indemnification notice requirements — several material issues remain unresolved.
I have identified three categories of material open issues requiring attention:
1. Insurance Adequacy Dispute. Veridian has reduced its per-occurrence insurance demand from $50 million to $35 million but continues to press for coverage levels exceeding Penterra's existing Briarcliff Mutual policy. Veridian has also introduced new requirements relating to a subject-injury sublimit increase, extended reporting period ("tail") coverage, and material-reduction notification.
2. Protocol-Deviation Liability Allocation. Veridian proposes the creation of a new defined category — "Medically Necessary Protocol Deviations" — that would remain within the scope of sponsor indemnification. Veridian further seeks to elevate the negligence standard governing the indemnification carve-out to "gross negligence" and proposes the appointment of an Independent Medical Monitor to adjudicate deviation classification disputes.
3. Investigator Independence and Publication Rights. Veridian contests the additional 90-day patent filing delay, demands explicit anti-suppression and no-veto language, seeks reduced review periods for conference presentations, requests guaranteed authorship positions for the principal investigator, and proposes a Publications Committee mechanism.
In addition to these three principal issues, several secondary matters remain open, including termination wind-down payment obligations, certain clarifications to the safety-reporting framework under Exhibit J, and definitional refinements to "Study-Related Injury" and "Investigational Product."
Given the number and complexity of the remaining issues, I recommend that we propose an in-person negotiation session with Veridian and WJC to resolve all outstanding terms efficiently. Philadelphia would be the most practical venue, given WJC's offices there and the proximity to Veridian's headquarters. I recommend targeting the session for June 9, 2023.
The commercial urgency of reaching resolution cannot be overstated. The total deal value of the CLARION trial across Veridian's network is approximately $80,000,000, spanning 38 Veridian Network sites across 14 states over the projected life of the study. Penterra's target FPI date of August 14, 2023 requires that the MCTA be executed no later than the end of June 2023 in order to preserve adequate lead time for site activation, IRB approval processing, and investigator credentialing. Each week of delay in MCTA finalization places the FPI timeline at material risk.
I understand that copies of this memorandum may be shared with Rebecca Liang, Associate General Counsel, Clinical Affairs, at Penterra, at your direction.
II. BACKGROUND AND PROCEDURAL HISTORY
Calderwood & Harkness opened this matter on March 20, 2023, upon engagement by Penterra to negotiate and draft the MCTA governing the CLARION trial (Protocol PPC-4871-III), a Phase III, randomized, double-blind, placebo-controlled study of penterafenib (PPC-4871) in patients with advanced non-small cell lung cancer. The CLARION trial is being conducted under IND 157823 and is a pivotal registration study for Penterra.
Veridian is one of the largest integrated clinical research networks in the United States, operating 38 sites across 14 states. The MCTA will serve as the master agreement governing the relationship between Penterra and the Veridian network for the duration of the CLARION trial, with site-specific terms to be captured in individual Site Participation Agreements attached as exhibits. Veridian is represented in the MCTA negotiations by WJC, with primary contacts being Allison Whitmore (Partner) and David Kesselman (Senior Associate).
The procedural history of the negotiations is summarized as follows:
• April 7, 2023: Calderwood & Harkness circulated the first draft MCTA to WJC on behalf of Penterra. The first draft reflected Penterra's standard clinical trial agreement template, customized for the CLARION trial protocol and Veridian's multi-site network structure.
• April 28, 2023: Veridian/WJC returned their initial markup of the MCTA. The initial markup contained a number of significant demands, including: (a) uncapped subject-injury indemnification; (b) a per-occurrence insurance requirement of $50 million; (c) a front-loaded payment structure with 60% of per-patient fees payable upon enrollment; and (d) substantially expanded publication rights for investigators, including unrestricted publication with no sponsor review period.
• May 5, 2023: Following internal review and preparation of a negotiation strategy memorandum, Penterra circulated an indemnification term sheet to Veridian/WJC. The term sheet proposed a per-subject medical care cap of $500,000, an aggregate medical care cap of $15,000,000, and uncapped indemnification for claims arising from product defects.
• May 19, 2023: Calderwood & Harkness circulated the second draft MCTA, reflecting Penterra's compromise positions. Key concessions included: (a) revised payment milestones structured as 25%/25%/25%/25% per patient at $13,000 per milestone; (b) revised indemnification incorporating the term sheet positions; and (c) modified publication review language reducing certain timelines and clarifying the scope of Penterra's review rights.
• June 2, 2023: Veridian/WJC returned their second markup of the MCTA. This is the document under review in this memorandum.
Resolved Issues. Before turning to the open issues, it is worth noting the significant progress the parties have made. The following material terms have been agreed upon and are reflected in consistent language across both the second draft and the second markup:
• Payment Milestone Structure: The 25%/25%/25%/25% milestone structure has been accepted by Veridian. Payments of $13,000 will be made at each of four milestones: (1) subject enrollment/randomization; (2) completion of Cycle 4; (3) completion of Cycle 8; and (4) study completion or early termination visit.
• Per-Patient Fee: Confirmed at $52,000 per patient ($13,000 × 4 milestones), for a projected enrollment of 1,200 patients across the network (800 treatment arm, 400 placebo arm).
• Start-Up Fees: $75,000 per site, payable 50% upon site activation and 50% upon enrollment of the first patient at such site. Total start-up costs across 38 sites: $2,850,000.
• Network Coordination Fee: $300,000 per quarter for 14 quarters (projected trial duration of approximately 3.5 years), totaling $4,200,000 over the life of the study.
• Confidentiality Term: 10 years from the date of disclosure.
• Dispute Resolution: 30-day good-faith negotiation period, followed by 60-day mediation administered by the American Arbitration Association, followed by binding arbitration in New York before a three-arbitrator panel under AAA Commercial Arbitration Rules.
• Governing Law: State of New York, without regard to conflict-of-laws principles.
• Site Indemnity Cap: $5,000,000 per site per occurrence, with an aggregate cap of $20,000,000 across all sites.
• Indemnification Notice Requirement: 30 days' written notice to the indemnifying party following the indemnified party's knowledge of a claim.
The remaining open issues, which are the subject of this memorandum, are discussed in detail below.
III. OPEN ISSUE #1: INSURANCE ADEQUACY DISPUTE
A. Current Penterra Position (as Reflected in Second Draft)
The second draft MCTA requires Penterra to maintain clinical trial liability insurance throughout the term of the study and for a reasonable period thereafter. Penterra's current clinical trial liability policy is issued by Briarcliff Mutual Insurance Company under Policy No. BM-CTL-2023-04182, with the following material terms:
• Policy Period: April 1, 2023 through March 31, 2024 (renewable annually).
• Per-Occurrence Limit: $25,000,000.
• Aggregate Limit: $75,000,000.
• Subject-Injury Sublimit: $10,000,000 per occurrence, $50,000,000 in the aggregate.
Under the second draft, Penterra agrees to name Veridian and each participating site as additional insureds under the Briarcliff policy. Reciprocally, Veridian and each site are required to maintain general liability and professional liability insurance coverage of at least $5,000,000 per occurrence and $10,000,000 in the aggregate. Certificates of insurance are to be exchanged within 15 business days of MCTA execution and annually thereafter for the duration of the study.
B. Veridian's Second Markup Position
Veridian's second markup reflects a partial retreat from the initial demand of $50 million per-occurrence coverage. However, the positions taken in the second markup remain meaningfully distant from Penterra's current policy limits. Specifically, the Veridian/WJC second markup proposes the following:
1. Per-Occurrence Limit: Veridian now demands a minimum per-occurrence limit of $35,000,000, a reduction from the initial $50,000,000 demand but still $10,000,000 in excess of Penterra's current Briarcliff policy limit.
2. Subject-Injury Sublimit: Veridian insists on a minimum subject-injury sublimit of $15,000,000 per occurrence, compared to the Briarcliff policy's current sublimit of $10,000,000 per occurrence. This represents a $5,000,000 gap.
3. Material Coverage Reduction Notice: Veridian requests that the MCTA include a covenant prohibiting Penterra from materially reducing its insurance coverage during the term of the study without providing at least 60 days' prior written notice to Veridian.
4. Extended Reporting Period ("Tail") Coverage: This is a new request not previously raised. Veridian demands that Penterra maintain "tail" or extended reporting period coverage for at least 3 years following study completion. Given a projected study completion date of approximately August 2028, this would require coverage through approximately August 2031.
5. Annual Renewal Assurance: Veridian requests contractual assurance that Penterra will renew its insurance annually with identical or better coverage levels and will notify Veridian promptly if Briarcliff declines to renew the policy.
C. Analysis and Recommended Response
Per-Occurrence Limit. Penterra's $25,000,000 per-occurrence limit is consistent with prevailing industry benchmarks for Phase III oncology trials. As detailed in the insurance requirements analysis memorandum previously circulated to you on April 15, 2023, a survey of MCTAs for comparable Phase III studies over the past three years indicates that per-occurrence limits typically range from $20,000,000 to $30,000,000, with a median of $25,000,000. I recommend firmly holding at $25,000,000 per occurrence. This position is defensible both on industry-standard grounds and on the practical ground that Penterra's Briarcliff policy is already in place with these limits.
I have confirmed with Karen Tremblay at Briarcliff that the existing policy terms, including the per-occurrence limit and the subject-injury sublimit, cannot be restructured mid-term without triggering a material premium increase. Any request to increase the per-occurrence limit to $35,000,000 would require either a policy endorsement or a supplemental policy, either of which would involve substantial additional cost and an underwriting review that could take 6–8 weeks. This timeline would almost certainly jeopardize the FPI date.
I recommend declining the $35,000,000 per-occurrence demand. As an alternative concession to demonstrate good faith, we could offer to provide Veridian with an annual compliance certificate confirming that the required insurance remains in force, which would give Veridian a contractual mechanism to monitor coverage without requiring a change in policy limits.
Subject-Injury Sublimit. The $10,000,000 per-occurrence subject-injury sublimit under the Briarcliff policy is adequate in light of the indemnification framework already agreed upon by the parties. The per-subject medical care cap of $500,000 and the aggregate medical care cap of $15,000,000 provide meaningful limits on Penterra's direct indemnification exposure. The insurance sublimit is an additional layer of protection that complements, rather than replaces, the contractual indemnification. I recommend holding at the $10,000,000 per-occurrence sublimit, while recognizing that this may require further discussion (see Section III.D below regarding a potential fallback).
Material Coverage Reduction Notice. This is a reasonable request in principle, though I recommend proposing a 30-day notice period rather than the 60 days requested by Veridian. A 30-day period is consistent with typical insurance notification provisions in clinical trial agreements and gives Veridian adequate time to assess the impact of any coverage change.
Extended Reporting Period. The concept of tail coverage is legitimate, particularly for a Phase III oncology trial where latent injuries may not manifest until after study completion. However, Veridian's request of 3 years is at the outer end of the range typically seen in clinical trial agreements. I recommend offering a 2-year extended reporting period post-study completion as a compromise. This would provide coverage through approximately August 2030 — a meaningful period of post-study protection while avoiding the full cost of a 3-year tail. The specific terms and cost of extended reporting period coverage would need to be confirmed with Briarcliff.
Annual Renewal Assurance. I recommend that Penterra agree to use commercially reasonable efforts to maintain comparable coverage upon annual renewal and to provide prompt notice to Veridian in the event that Briarcliff declines to renew or proposes materially different terms. We should avoid an absolute covenant to maintain identical coverage, as market conditions and Penterra's overall insurance portfolio may require adjustments from year to year.
In summary, our recommended responses are:
• (i) Hold at $25,000,000 per-occurrence limit.
• (ii) Hold at $10,000,000 per-occurrence subject-injury sublimit (with fallback discussed below).
• (iii) Agree to 30-day prior written notice of material coverage reduction (vs. Veridian's request for 60 days).
• (iv) Offer 2-year extended reporting period post-study completion (vs. Veridian's request for 3 years).
• (v) Agree to commercially reasonable efforts to maintain comparable coverage upon renewal; prompt notification of any non-renewal.
• (vi) Offer to provide an annual compliance certificate confirming insurance in force.
D. Items for Discussion
Two items require Miriam's guidance before we finalize our position:
1. Fallback on Subject-Injury Sublimit. Should we instruct Karen Tremblay at Briarcliff to provide a supplemental quote for increasing the subject-injury sublimit from $10,000,000 to $15,000,000 per occurrence? If the premium increase is modest, this could serve as a fallback concession to close the gap on this issue without conceding on the per-occurrence limit. The decision to pursue this quote should be made promptly so that we have the information available before the negotiation session.
2. Internal Risk Management Coordination. If increasing the sublimit is feasible, we should coordinate with Jennifer Holt (VP, Risk Management, Penterra) to confirm that Penterra's internal risk management team would accept the premium increase and that the cost falls within the CLARION trial budget's insurance allocation. Any premium increase would need to be factored into the trial's overall financial model.
IV. OPEN ISSUE #2: PROTOCOL-DEVIATION LIABILITY ALLOCATION
A. Current Framework in Second Draft
The indemnification framework in the second draft MCTA allocates liability for subject injuries based on whether the investigational product was administered "in accordance with the Protocol." Under the current structure:
Sponsor Indemnification (Section 10.1). Penterra agrees to indemnify, defend, and hold harmless Veridian, each participating site, and each investigator and their respective personnel from and against claims, losses, damages, and expenses arising from subject injuries that occur when the investigational product is administered in accordance with the Protocol and applicable law, except to the extent such claims arise from:
(i) the negligence or willful misconduct of the site, investigator, or site personnel;
(ii) any deviation from the Protocol that was not authorized by Penterra in writing or required for the immediate safety of the subject; or
(iii) the site's breach of the MCTA or applicable law.
Site/Investigator Indemnification (Section 10.2). Reciprocally, Veridian and each site agree to indemnify Penterra from claims arising from: (a) unauthorized protocol deviations; (b) negligence or willful misconduct of site personnel; and (c) the site's breach of the MCTA or applicable law.
This framework is consistent with Penterra's standard clinical trial agreement template and reflects a conventional allocation of risk between sponsor and site.
B. Veridian's Second Markup Position
The Veridian/WJC second markup proposes several significant modifications to the protocol-deviation liability framework. These changes, taken together, would substantially expand the scope of Penterra's sponsor indemnification obligation and narrow the circumstances under which sites bear responsibility for protocol deviations.
1. New Defined Category: "Medically Necessary Protocol Deviations." Veridian proposes the addition of a new defined term — "Medically Necessary Protocol Deviations" — encompassing deviations undertaken by the investigator in the exercise of clinical judgment to protect a subject's safety, health, or welfare. The proposed definition is broad, requiring only that the investigator have exercised "clinical judgment" in determining that the deviation was warranted.
2. Sponsor Indemnification for Medically Necessary Deviations. Under the Veridian markup, Medically Necessary Protocol Deviations would not be treated as carve-outs from Penterra's sponsor indemnification. In other words, Penterra would continue to bear indemnification responsibility for subject injuries arising from protocol deviations, provided that the deviation was "medically necessary" as defined. This effectively shifts liability for a potentially significant category of investigator decisions back to the sponsor.
3. Elevation of Negligence Standard. Veridian proposes that only "gross negligence or willful misconduct" by site personnel — rather than simple "negligence" — should trigger the carve-out from sponsor indemnification. This would mean that Penterra would remain obligated to indemnify sites for injuries resulting from ordinary negligence of site personnel, a significant expansion of the sponsor's risk.
4. Good Faith Standard. Veridian requests the addition of a subjective "good faith" standard, under which the sponsor indemnification would apply if the investigator deviated from the Protocol in a "good faith belief" that the deviation was required for subject safety. This standard is inherently difficult to evaluate and adjudicate, as it turns on the investigator's subjective state of mind at the time of the deviation.
5. Independent Medical Monitor. Veridian proposes that the determination of whether a deviation was "Medically Necessary" be made by a jointly appointed Independent Medical Monitor — a mechanism not currently contemplated in the MCTA. If the parties and the Independent Medical Monitor cannot agree on classification, Veridian's markup provides for escalation to an independent expert panel. This would create a parallel adjudication mechanism outside the MCTA's existing dispute resolution framework.
C. Analysis and Recommended Response
This is the most complex of the three principal open issues and requires careful balancing of Penterra's commercial interests against the legitimate ethical and practical concerns of investigators and sites.
Concept of Medically Necessary Protocol Deviations. The concept has substantial merit and is not uncommon in clinical trial agreements, particularly for complex oncology protocols. Investigators have a well-recognized ethical obligation to protect the safety and welfare of their subjects, and FDA regulations expressly contemplate that investigators may deviate from an investigational plan to protect the life or physical well-being of a subject. See 21 C.F.R. § 312.60 (providing that an investigator may deviate from the protocol "without prior IRB approval, to protect the life or physical well-being of a subject in an emergency"). Refusing to recognize this concept entirely could be perceived as unreasonable and could complicate site recruitment and investigator willingness to participate.
However, Penterra should not accept unlimited indemnification for all "good faith" deviations. As currently drafted, Veridian's proposed definition is overbroad. It does not require that the deviation be responsive to an immediate hazard, nor does it require prompt reporting or contemporaneous documentation. Under the broad formulation, any deviation that an investigator later characterizes as having been motivated by clinical judgment could be classified as "Medically Necessary," potentially exposing Penterra to significant liability for investigator errors that are retroactively framed as safety-motivated.
Recommended Compromise on the Definition. I recommend that we accept the concept of "Medically Necessary Protocol Deviations" but define it narrowly. Specifically, I propose that a "Medically Necessary Protocol Deviation" be defined as a deviation from the Protocol that satisfies all three of the following requirements:
(i) The deviation was required to eliminate an apparent immediate hazard to the subject's life or physical well-being;
(ii) The deviation was promptly reported to Penterra and the responsible Institutional Review Board ("IRB") within 24 hours of the deviation; and
(iii) The deviation was documented by the investigator with contemporaneous clinical rationale in the subject's medical record and the clinical trial file.
This narrow definition tracks the language of 21 C.F.R. § 312.60 and limits the category to genuine emergency situations where the investigator had no practical alternative. The 24-hour reporting requirement and contemporaneous documentation requirement create an objective evidentiary record that can be reviewed to determine whether the deviation qualifies.
Medically Necessary Protocol Deviations meeting this narrow definition should remain within the scope of sponsor indemnification, subject to the investigator's good faith and proper reporting. This is a meaningful concession that acknowledges the investigator's ethical obligations while protecting Penterra from liability for vaguely justified deviations.
Negligence Standard. I recommend firmly retaining the "negligence" standard for the general carve-out from sponsor indemnification. Elevating the standard to "gross negligence" would effectively eliminate the carve-out in most circumstances, as the gross negligence threshold is difficult to satisfy and rarely proven. The negligence standard is appropriate for the general carve-out because it ensures that sites bear responsibility for injuries resulting from their own failure to exercise reasonable care.
However, as a compromise, I recommend that we accept that Medically Necessary Protocol Deviations — as narrowly defined above — made in good faith and properly reported should not be treated as negligent simply because they deviated from the Protocol. In other words, the negligence carve-out would not apply to deviations that satisfy the narrow definition of Medically Necessary Protocol Deviations. This provides investigators with the protection they need when acting in genuine emergencies while preserving the negligence standard for all other circumstances.
Independent Medical Monitor. I recommend opposing the proposed Independent Medical Monitor mechanism for several reasons. First, it creates a cumbersome parallel adjudication process outside the MCTA's existing dispute resolution framework, which the parties have already agreed upon (30-day negotiation, 60-day mediation, binding arbitration). Second, the appointment, governance, and cost of the Independent Medical Monitor are not adequately addressed in the markup. Third, the mechanism could create delays in resolving deviation classification disputes at a time when the trial is ongoing and timely resolution is important.
Instead, I recommend that disputes over whether a particular deviation qualifies as a "Medically Necessary Protocol Deviation" under the narrow definition be subject to the MCTA's existing dispute escalation procedure. The arbitration panel can engage independent medical experts as needed to evaluate the clinical circumstances of a disputed deviation. This approach keeps all disputes within a single framework and avoids the administrative burden of a standing Independent Medical Monitor.
Clinical Input Required. Before finalizing our position on the narrow definition, I recommend coordinating with Dr. Elaine Whitford (Chief Medical Officer) and Dr. Marcus Yun (SVP, Clinical Development) to confirm that the proposed definition is clinically workable and does not inadvertently discourage investigators from taking appropriate safety measures. Their input on the types of deviations that commonly occur in Phase III oncology trials and the circumstances in which immediate action is genuinely required will be valuable in refining the language.
Interaction with Safety Reporting. Any protocol-deviation reporting obligation must be integrated with the existing safety reporting framework set forth in Exhibit J of the MCTA. Under the current framework, SAEs must be reported within 24 hours from site awareness, and IND safety reports follow 7-day and 15-day reporting timelines pursuant to 21 C.F.R. § 312.32. The 24-hour reporting requirement for Medically Necessary Protocol Deviations should be coordinated with these existing timelines to avoid duplicative or conflicting obligations for site personnel.
D. Items for Discussion
1. FDA Regulatory Perspective. Given that deviations from a Phase III protocol under IND 157823 may have regulatory consequences — including the potential for FDA to question the integrity of data collected during a deviation — I recommend that we consult with Castleton & Hargrove LLP (specifically Dr. Priya Sundaram) before the negotiation session to confirm that the proposed narrow definition of Medically Necessary Protocol Deviations is consistent with FDA expectations and will not create regulatory risk for Penterra.
2. CRO Coordination. Meridian CRO (contact: Thomas Hartwell) is responsible for clinical monitoring of the CLARION trial across all Veridian Network sites. The monitoring plan will need to address the documentation and classification of protocol deviations, including any new reporting requirements. We should coordinate with Meridian to ensure that the contractual language is operationally workable and that Meridian's monitors are equipped to verify compliance with the narrow definition.
V. OPEN ISSUE #3: INVESTIGATOR INDEPENDENCE AND PUBLICATION RIGHTS
A. Current Framework in Second Draft
The second draft MCTA addresses data ownership and publication rights in Article 12, with detailed terms set forth in Exhibit G (IP and Publication Rights). An IP side letter is being prepared concurrently to address joint inventions and related intellectual property matters. The current framework provides as follows:
• Data Ownership: Penterra retains exclusive ownership of all clinical trial data generated under the MCTA, including without limitation case report forms, electronic data, statistical analyses, and clinical study reports.
• Publication Review Period: Investigators may publish results of the study subject to Penterra's prior review. Penterra has a 60-day review period following receipt of a manuscript to identify confidential information and patentable subject matter.
• Patent Filing Delay: Penterra may request an additional delay of up to 90 days beyond the initial 60-day review period to allow preparation and filing of patent applications covering patentable subject matter disclosed in the manuscript. The total potential delay is 150 days from manuscript submission.
• Source Document Retention: Sites must retain source documents for a minimum of 15 years following study completion.
• IP Side Letter: An IP side letter is to be executed concurrently with the MCTA, governing ownership and licensing of joint inventions, background intellectual property, and improvements.
B. Veridian's Second Markup Position
The Veridian/WJC second markup proposes significant changes to the publication rights framework. Taken together, these changes reflect Veridian's emphasis on protecting investigator independence and ensuring timely access to study results, consistent with broader academic and regulatory trends favoring transparency in clinical trial reporting. The specific proposals are as follows:
1. Reduced Patent Filing Delay. Veridian rejects the 90-day additional patent delay as excessive. WJC proposes a maximum additional delay of 45 days beyond the initial 60-day review period, for a total potential delay of 105 days from manuscript submission. WJC's cover letter characterizes the 90-day additional delay as "unprecedented in length" and "inconsistent with academic norms," though our review indicates that 90-day additional delays are in fact used by Penterra and a number of peer sponsors.
2. Limited Scope of Review. Veridian demands that Penterra's review right be expressly limited to the identification and redaction of "Sponsor Confidential Information" (a new proposed defined term) and that the review right not extend to editorial control over scientific conclusions, data interpretation, or the investigators' characterization of study results.
3. Anti-Suppression / No-Veto Language. Veridian insists on explicit language confirming that: (a) Penterra may not suppress or prevent the publication of results, including negative or inconclusive results; and (b) Penterra's review right does not include a right to veto publication. The proposed language is absolute and does not include exceptions for trade secrets or proprietary manufacturing information.
4. Conference Presentations. Veridian proposes that investigators should have the right to present preliminary data at academic conferences — including poster and oral presentations — with only 30 days' prior notice to Penterra. Under this proposal, Penterra would have no review right over conference presentation materials; the 30-day period is characterized as a "courtesy notice" only.
5. Guaranteed Authorship for Principal Investigator. Veridian requests that the MCTA include a provision guaranteeing that Dr. Catherine Aldridge, as Global Principal Investigator, will have first or last authorship on all primary trial publications arising from the CLARION study. This is framed as a non-negotiable condition of Dr. Aldridge's continued participation.
6. Publications Committee. Veridian proposes the establishment of a Publications Committee to coordinate multi-center publications. Under the proposal, the committee would be chaired by the Global PI (Dr. Aldridge), with representation from Penterra, but Penterra would not have a controlling vote. All primary and secondary publications would be reviewed by the Publications Committee prior to submission for publication.
C. Analysis and Recommended Response
Patent Filing Delay. The 90-day additional patent delay is a standard term in Penterra's clinical trial agreements and has been accepted by other site networks in prior transactions. However, I recognize that this is an area of increasing sensitivity in the academic research community, and a rigid insistence on 90 days may be perceived as unreasonable.
I recommend offering a 60-day additional delay as a compromise, for a total potential delay of 120 days from manuscript submission. A 60-day window provides adequate time for patent counsel to review the manuscript, conduct prior art searches, draft patent applications, and file provisional applications as necessary. This represents a meaningful concession from Penterra's initial position (reducing the total delay by 30 days) while maintaining a commercially defensible timeline. I would note that any reduction below 60 additional days would create genuine risk that patent applications cannot be prepared and filed in time, particularly for complex chemical composition or methods-of-treatment claims.
This compromise should be discussed with Penterra's patent counsel (we should confirm whether Penterra is currently using Harrington & Kline LLP or in-house patent resources) to ensure that the 60-day window is operationally sufficient. Penterra's patent portfolio strategy for penterafenib and the importance of securing adequate patent protection for any inventions arising from the CLARION trial data should inform this analysis.
Scope of Review Right. I recommend accepting the limitation of Penterra's review right to the identification and redaction of confidential information and patentable subject matter. This is consistent with ICH E6(R2) Good Clinical Practice principles, which emphasize the investigator's independent right to analyze and publish study results. It is also consistent with academic publishing norms and the policies of most major medical journals. Penterra should not seek editorial control over scientific conclusions, as doing so would undermine investigator credibility and could invite scrutiny from regulators and the academic community.
However, we should ensure that the defined term "Sponsor Confidential Information" is drafted broadly enough to include trade secrets, proprietary manufacturing processes, formulation details, and other commercially sensitive information. The current WJC draft definition is somewhat narrow and should be reviewed carefully.
Anti-Suppression / No-Veto Language. This is a sensitive issue that requires careful drafting. As a matter of principle, Penterra should not and does not suppress legitimate scientific findings, including negative or inconclusive results. Transparency in reporting is both an ethical obligation and a regulatory requirement under ClinicalTrials.gov and FDAAA Section 801.
However, the WJC draft language as currently written is problematic because it could be read to preclude Penterra from requesting the removal of proprietary manufacturing information, trade secrets, or other confidential commercial information from a manuscript. I recommend proposing alternative language that:
(a) Acknowledges that Penterra will not unreasonably withhold, condition, or delay its consent to the publication of study results, including negative or inconclusive results;
(b) Confirms that Penterra's review right does not constitute a right to suppress scientific findings or data;
(c) Preserves Penterra's right to request, and require, the removal of trade secrets, proprietary manufacturing information, and Sponsor Confidential Information from any manuscript or presentation prior to publication or dissemination; and
(d) Provides that any dispute over whether particular information constitutes Sponsor Confidential Information shall be resolved through the MCTA's dispute resolution procedures, with the manuscript held pending resolution.
This formulation balances investigator independence with Penterra's legitimate interest in protecting commercially sensitive information.
Conference Presentations. I recommend accepting the 30-day notice period for academic conference presentations (posters and oral presentations) as a concession from the full 60-day review applicable to manuscripts. Conference presentations typically contain less detail than full manuscripts and are subject to time-sensitive submission deadlines that make a 60-day review impractical.
However, I recommend that we require a 15-day review right — not merely notice — within the 30-day period. Specifically, I propose that the investigator provide 30 days' advance notice of any planned conference presentation and submit the presentation materials (slides, poster, abstract) to Penterra no later than 30 days before the presentation. Penterra would have 15 days from receipt to review the materials and identify any Sponsor Confidential Information for removal. The investigator would then have the remaining 15 days to finalize the presentation. This gives Penterra a meaningful opportunity to protect confidential information while respecting the shorter timelines associated with conference presentations.
Authorship. Authorship of scientific publications should be governed by the criteria established by the International Committee of Medical Journal Editors ("ICMJE"). The ICMJE criteria require that authorship be based on (1) substantial contributions to the conception or design of the work, or to the acquisition, analysis, or interpretation of data; (2) drafting the work or revising it critically for important intellectual content; (3) final approval of the version to be published; and (4) agreement to be accountable for all aspects of the work.
Rather than guaranteeing specific authorship positions (first or last author) in the MCTA — which could be inconsistent with ICMJE criteria if, for example, a particular publication is primarily based on data or analyses contributed by other investigators — I recommend that the MCTA reference ICMJE standards as the governing framework for authorship determinations. Penterra can acknowledge that Dr. Aldridge, as Global Principal Investigator, is expected to have a lead authorship role on primary trial publications consistent with her contributions and the ICMJE criteria. This approach respects Dr. Aldridge's central role while avoiding a rigid contractual guarantee that could conflict with journal policies or the contributions of other investigators.
Publications Committee. The concept of a Publications Committee is acceptable in principle and is consistent with practices in many multi-center clinical trials. I recommend that the MCTA establish a Publications Committee with equal representation from Penterra and Veridian/investigators, with the Global PI serving as chair. The committee's role should be to coordinate the timing and content of multi-center publications, manage authorship disputes, and ensure that all publications are reviewed consistent with the contractual review timelines before submission to journals or presentation at conferences.
It is important that the Publications Committee operate within, and not supersede, the contractual review timelines. All publications should be subject to Penterra's review rights as set forth in the MCTA before submission, regardless of the Publications Committee's review.
We should ensure that the publication rights language in the body of the MCTA is fully consistent with the detailed terms in Exhibit G and the IP side letter being prepared concurrently.
D. Items for Discussion
1. Clinical Leadership Involvement. Whether Dr. Elaine Whitford or Dr. Marcus Yun should be involved in the discussions regarding publication governance, either at the negotiation session or through review of the proposed language. Their perspective on the clinical and scientific aspects of publication timing, authorship, and data sharing will be valuable.
2. Securities Law Considerations. Whether Ridgeline Capital Markets LLC (Penterra's financial advisor) has views on publication timing relative to Penterra's market-sensitive disclosures. The publication of negative or unexpected clinical data from the CLARION trial could have material effects on Penterra's stock price. I recommend coordinating with Nathaniel Briggs on any securities law considerations that should inform the publication rights framework, including whether Penterra needs the ability to delay publication briefly in connection with required SEC filings or Regulation FD obligations.
3. Patent Portfolio Strategy. The adequacy of the patent filing delay period is directly connected to Penterra's patent portfolio strategy for penterafenib. Consultation with Penterra's patent counsel regarding the types of patent claims that may arise from CLARION trial data and the realistic timeline for preparing and filing applications is essential to determining whether the proposed 60-day additional delay is sufficient.
VI. SECONDARY OPEN ISSUES
In addition to the three principal open issues discussed above, the Veridian/WJC second markup raises several secondary matters that will need to be addressed. While these issues are less commercially significant individually, they should be resolved at the negotiation session to avoid further rounds of markup.
A. Termination Wind-Down Payment Obligations
The second draft MCTA provides for a 120-day wind-down period following termination for subject safety. During this period, subjects in active treatment must be transitioned to alternative care or permitted to complete their current treatment cycle. The wind-down provision is designed to ensure continuity of care and protect subject welfare, consistent with Penterra's ethical obligations and FDA requirements.
Veridian's second markup adds two financial requirements to the wind-down framework:
1. Continued Per-Patient Fees. Veridian proposes that Penterra continue to pay full per-patient fees ($52,000) for all subjects enrolled prior to the date of the termination notice, including all four milestone payments, regardless of whether the subject completes the full study protocol. Under this proposal, Penterra would owe the full per-patient fee even if the subject is transitioned to alternative care during the wind-down period and does not complete all four milestones.
2. Wind-Down Administrative Fee. Veridian proposes a "wind-down administrative fee" equal to 6 months of site maintenance fees, calculated at $20,000 per site, for each active site at the time of termination. If all 38 sites are active at termination, this would total $760,000 (38 sites × $20,000).
Recommended Position. I recommend that Penterra accept continued milestone payments for subjects already enrolled through the completion of their treatment cycles. This is a reasonable request that ensures that sites are compensated for the care they continue to provide during wind-down. However, Penterra should not accept an obligation to pay all four milestone payments for subjects who do not complete all four milestones; payment should be tied to actual completion of each milestone.
I recommend resisting the wind-down administrative fee as excessive. Six months of site maintenance fees is disproportionate to the actual administrative costs of winding down site operations, which should be largely covered by the 120-day wind-down period itself. As a compromise, I recommend offering 3 months' site maintenance fees per active site ($10,000 per site), which would total $380,000 if all 38 sites are active at termination.
It should be noted that any wind-down payments would come from the $2,500,000 contingency reserve within the overall $80,000,000 CLARION trial budget or would require a budget modification. Rebecca Liang should be consulted regarding the financial impact of the various scenarios.
B. Safety Reporting Clarifications
The Veridian/WJC second markup raises two relatively minor issues regarding the safety reporting framework in Exhibit J:
1. Simultaneous SAE Reporting. The current draft requires that SAE reports be submitted to Penterra, which then forwards the reports to Meridian CRO. Veridian proposes that SAE reports be submitted simultaneously to both Penterra and Meridian CRO. This is a procedural change that eliminates a potential delay in the information flow to the CRO and is consistent with the approach taken in the Meridian CRO Master Services Agreement dated January 15, 2023.
2. Safety Data Sharing with Investigators. Veridian seeks confirmation that Penterra will promptly share all safety data and Data Safety Monitoring Board ("DSMB") reports with investigators, to the extent permitted by the blinding provisions of the Protocol. This is a standard request designed to ensure that investigators have access to the information they need to make informed clinical decisions for their subjects.
Recommended Position. I recommend accepting both of these requests. The simultaneous reporting approach is operationally sound and eliminates an unnecessary intermediary step. Sharing safety data and DSMB reports with investigators through established DSMB procedures (subject to blinding protections) is consistent with FDA guidance and GCP requirements. No material concession is involved.
C. Definitional Issues
Veridian's second markup proposes refinements to two key definitions:
1. "Study-Related Injury." Veridian requests that the definition of "Study-Related Injury" be expanded to cover injuries arising from protocol-required procedures — such as biopsies, imaging studies, blood draws, and other diagnostic or therapeutic interventions required by the Protocol — and not only injuries resulting from the administration of the investigational product (PPC-4871). This is a legitimate clarification. If a subject suffers an injury during a protocol-mandated biopsy, that injury is properly treated as study-related even though it did not arise from the drug itself.
2. "Investigational Product." Veridian proposes expanding the definition of "Investigational Product" to include the placebo and any active comparator used in the study. This is consistent with the double-blind, placebo-controlled design of the CLARION trial (800 subjects in the treatment arm receiving penterafenib; 400 subjects in the placebo arm). Under the current blinding, neither investigators nor subjects know whether they are receiving the active product or placebo, and injuries can occur in either arm. The definition should encompass all study treatments for purposes of indemnification and safety reporting.
Recommended Position. Both of these are reasonable and appropriate clarifications that do not materially change Penterra's risk profile. I recommend accepting both revised definitions.
VII. RECOMMENDED NEXT STEPS
Based on the foregoing analysis, I recommend the following next steps to advance the MCTA negotiation toward timely resolution:
1. In-Person Negotiation Session. Schedule an in-person negotiation session with Veridian (Gregory Callahan, EVP; Patricia Dunne, SVP Clinical Operations) and WJC (Allison Whitmore, David Kesselman) at WJC's offices in Philadelphia. I recommend targeting Friday, June 9, 2023, at WJC's offices at 1500 Market Street, Suite 3200, Philadelphia, Pennsylvania. A full-day session should be sufficient to work through the remaining issues, provided that both sides arrive with adequate authority and prepared positions.
2. Penterra Attendees. Attendees from the Penterra side should include: Miriam Calloway and Sean Morrissey from Calderwood & Harkness; and Rebecca Liang (Associate General Counsel, Clinical Affairs) and Samantha Novak (Director, Contract Negotiations) from Penterra. Depending on the outcome of our discussions regarding clinical leadership involvement, Dr. Whitford or Dr. Yun may also attend or be available by phone.
3. Preparation of Negotiation Materials. I will prepare detailed talking points and fallback positions for each of the open issues identified in this memorandum, as well as an authority parameters memo for Miriam's review and approval prior to the session. These materials should be in Miriam's hands no later than June 7, 2023.
4. Castleton & Hargrove Consultation. We should consult with Castleton & Hargrove LLP (Dr. Priya Sundaram) regarding the regulatory implications of the protocol-deviation language — specifically, whether the proposed narrow definition of "Medically Necessary Protocol Deviations" is consistent with FDA regulatory expectations for a Phase III study under IND 157823. This consultation should occur before the negotiation session so that our position is informed by regulatory counsel's guidance.
5. Briarcliff Insurance Inquiry. We should instruct Karen Tremblay at Briarcliff Mutual to provide a supplemental quote for increasing the subject-injury sublimit from $10,000,000 to $15,000,000 per occurrence, and to confirm the feasibility and cost of a 2-year extended reporting period post-study completion. Having this information in hand at the negotiation session will give us flexibility to make a targeted concession on the insurance issue if needed.
6. Clinical Leadership Input. We should seek input from Dr. Elaine Whitford (CMO) and Dr. Marcus Yun (SVP, Clinical Development) on the clinical acceptability of the proposed narrow definition of "Medically Necessary Protocol Deviations" and on the publication governance framework. Their views on these issues will strengthen our negotiating position and ensure that the contractual language is workable in practice.
7. Timeline and Execution Targets. The target is to resolve all remaining open issues at the in-person session on June 9. Following the session, I will circulate a near-final draft reflecting all agreed terms within one week (target: June 16, 2023). The target execution date for the MCTA is the end of June 2023, which preserves approximately six weeks of lead time before the August 14, 2023 FPI date.
8. Parallel Workstreams. It should be noted that IRB approvals and executed investigator signature pages remain conditions precedent to site activation that must proceed in parallel with the MCTA negotiation. The lead site's approval through Graystone IRB (Protocol No. IRB00012847) is currently under review, and Veridian Central IRB approvals for non-Pennsylvania sites must be initiated promptly upon MCTA execution. Any delay in finalizing the MCTA will have a cascading effect on these parallel workstreams and, ultimately, on the FPI date.
VIII. APPENDIX: SUMMARY TABLE OF OPEN ISSUES
The following table provides a summary of all open issues identified in the Veridian/WJC second markup, including the current positions of both parties, the gap, the recommended compromise, and the priority level assigned to each issue.
I am available to discuss this memorandum and the recommended positions at your convenience. I will begin preparing the detailed talking points and authority parameters memo once we have aligned on the approach for each issue.
Sean Morrissey Associate Calderwood & Harkness LLP Tel: (212) 555-8214
Email: smorrissey@calderwoodharkness.com
cc: File (Matter No. 1018-00004) Distribution to Rebecca Liang, Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp., at the direction of Miriam Calloway.
Issue | Penterra Position (Second Draft) | Veridian Position (Second Markup) | Gap | Recommended Compromise | Priority
Insurance per-occurrence limit | $25M | $35M (reduced from $50M) | $10M | Hold at $25M; offer annual compliance certificate | High
Subject-injury sublimit per occurrence | $10M | $15M | $5M | Hold at $10M; explore Briarcliff quote as fallback | High
Insurance tail / extended reporting period | Not addressed | 3 years post-study | New issue | Offer 2 years post-study | Medium
Protocol-deviation liability — Medically Necessary Deviations | Not recognized as category | New defined category; sponsor indemnification applies | New category | Accept narrow definition with 24-hr reporting and documentation requirements | High
Negligence vs. gross negligence standard | Negligence | Gross negligence | Standard elevation | Hold at negligence for general carve-out; carve-out not applicable to qualifying Medically Necessary Deviations | High
Independent Medical Monitor for deviation classification | Not contemplated | Jointly appointed monitor with escalation to expert panel | New mechanism | Reject; use existing dispute resolution framework (negotiation → mediation → arbitration) | Medium
Publication patent delay | 90 additional days (150 total) | 45 additional days (105 total) | 45 days | Offer 60 additional days (120 total) | High
Publication review scope | Confidential information and patentable matter | Redaction of "Sponsor Confidential Information" only; no editorial control | Scope narrowing | Accept; ensure defined term broadly covers trade secrets | Medium
No-veto / anti-suppression language | Not included | Explicit no-veto provision; absolute | New provision | Accept modified version: no unreasonable withholding; preserve trade-secret removal right | Medium
Conference presentations | Subject to 60-day review | 30-day notice only (no review) | Review vs. notice | 30-day notice with 15-day review right for confidential information | Medium
PI authorship guarantee | Not addressed | Guaranteed first/last authorship for Dr. Aldridge | New provision | Reference ICMJE criteria; acknowledge expected lead authorship role | Low
Publications Committee | Not contemplated | Committee chaired by Global PI; Penterra non-controlling | New mechanism | Accept with equal Penterra/Veridian representation; PI as chair | Low
Wind-down payment obligations | Transition/completion of current treatment cycle | Full per-patient fees for all enrolled subjects + 6-month admin fee per site | Additional cost | Accept milestone continuation for treatment cycles; offer 3-month admin fee | Medium
SAE simultaneous reporting | Sequential (to Penterra, then Meridian) | Simultaneous to Penterra and Meridian CRO | Minor procedural | Accept | Low
Study-Related Injury and Investigational Product definitions | Narrow (drug administration only) | Broader (including protocol procedures, placebo, comparator) | Definitional scope | Accept | Low

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1018-00004

I. EXECUTIVE SUMMARY

II. BACKGROUND AND PROCEDURAL HISTORY

VI. SECONDARY OPEN ISSUES

VII. RECOMMENDED NEXT STEPS

VIII. APPENDIX: SUMMARY TABLE OF OPEN ISSUES

Record

Parties

Dates

Amounts