1018-00004 · Penterra Pharmaceuticals Corp · Transaction Documents/MCTA Drafts

negotiation-session-summary-memo.docx DOCUMENT Finance & Banking

58 / 78 ← → ✕

CALDERWOOD & HARKNESS LLP Counselors at Law

280 Park Avenue, 34th Floor New York, New York 10017 Telephone: (212) 554-7800 Facsimile: (212) 554-7801 www.calderwoodharkness.com

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT

MEMORANDUM

TO:

Nathaniel Briggs, Esq., Vice President & General Counsel, Penterra Pharmaceuticals Corp.

Rebecca Liang, Esq., Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp.

Jennifer Holt, Vice President, Clinical Operations, Penterra Pharmaceuticals Corp.

FROM:

Miriam Calloway, Partner, Calderwood & Harkness LLP

CC:

Joel Strauss, Partner, Calderwood & Harkness LLP

Sean Morrissey, Associate, Calderwood & Harkness LLP

Christopher Aiken, Associate, Calderwood & Harkness LLP

DATE: June 10, 2023

RE: Summary of In-Person Negotiation Session — Master Clinical Trial Agreement between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. (Protocol PPC-4871-III / CLARION) — June 9, 2023

Matter No.: 1018-00004

I. Introduction and Overview

The purpose of this memorandum is to provide a comprehensive summary of the outcomes and action items resulting from the in-person negotiation session held on Friday, June 9, 2023, between representatives of Penterra Pharmaceuticals Corp. ("Penterra" or "Sponsor") and its outside counsel, Calderwood & Harkness LLP ("C&H"), on the one hand, and Veridian Health Research Network, Inc. ("Veridian") and its outside counsel, Whitmore, Jansen & Callahan LLP ("WJC"), on the other hand, concerning the Master Clinical Trial Agreement (the "MCTA") for the CLARION Phase III clinical trial (Protocol PPC-4871-III, IND 157823).

The session was held at the offices of Whitmore, Jansen & Callahan LLP, located at 1500 Market Street, Suite 3200, Philadelphia, Pennsylvania 19102. The negotiation session commenced at approximately 9:00 a.m. Eastern Time and concluded at approximately 5:00 p.m. Eastern Time, spanning approximately eight hours of substantive discussion, including a one-hour working lunch break during which the parties continued to discuss the publication rights framework in an informal setting.

The following individuals attended the session on behalf of Penterra and C&H:

• Miriam Calloway — Partner, Healthcare & Life Sciences Practice Group, Calderwood & Harkness LLP (lead outside counsel for Penterra)

• Sean Morrissey — Associate, Healthcare & Life Sciences Practice Group, Calderwood & Harkness LLP

• Rebecca Liang, Esq. — Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp.

• Samantha Novak — Director, Clinical Contracts, Penterra Pharmaceuticals Corp.

The following individuals attended the session on behalf of Veridian and WJC:

• Allison Whitmore — Partner, Whitmore, Jansen & Callahan LLP (lead outside counsel for Veridian)

• David Kesselman — Associate, Whitmore, Jansen & Callahan LLP

• Gregory Callahan — Vice President, Legal & Compliance, Veridian Health Research Network, Inc.

• Patricia Dunne — Director, Sponsored Research Agreements, Veridian Health Research Network, Inc.

The session was convened to resolve outstanding open issues in the MCTA following the second markup of the agreement received from Veridian and WJC on June 2, 2023. As the parties will recall, our initial draft of the MCTA was circulated on April 12, 2023, with Veridian's first markup returned on May 1, 2023 and our responsive second draft circulated on May 18, 2023. The June 2 markup from WJC identified six major open issues, along with a number of minor drafting comments that the associates had already been working to resolve through their direct communications.

We are pleased to report that significant progress was achieved at the June 9 session. The parties reached agreement on four of the six major open issues, and the two remaining items — both relating to aspects of the termination provisions — are narrowly defined and should be resolvable through the drafting process and follow-up discussions described in this memorandum. This represents a substantial step forward in the negotiation of an MCTA with a total deal value of approximately $80,000,000, encompassing clinical trial activities at 38 Veridian Network sites located across 14 states over the projected three-to-four-year life of the CLARION trial.

The memorandum is organized as follows: Section II addresses the issues that were resolved at the session; Section III addresses the issues that remain open and the next steps for resolution; Section IV summarizes other items discussed and confirmed during the session; Section V sets forth the revised timeline to execution; Section VI provides a consolidated action items summary table; and Section VII offers concluding observations.

II. Issues Resolved at the Session

A. Clinical Trial Liability Insurance Requirements (RESOLVED)

Background and Prior Positions. The question of clinical trial liability insurance requirements had been a significant point of contention since WJC's first markup. In their initial response and again in the June 2 second markup, Veridian took the position that Penterra should be required to maintain clinical trial liability insurance with a minimum coverage level of $50,000,000 per occurrence. WJC supported this position by reference to what they characterized as "best practices" in site network agreements and pointed to a recent increase in subject-injury verdicts in oncology trials as justification for the elevated coverage requirement.

Penterra's position, which we articulated in our second draft and advocated at the session, was that the appropriate coverage level is $25,000,000 per occurrence / $75,000,000 aggregate. This position is consistent with the terms of Penterra's existing clinical trial liability insurance policy maintained through Briarcliff Mutual Insurance Company (Policy No. BM-CTL-2023-04182; policy period April 1, 2023 through March 31, 2024, renewable annually). We emphasized that requiring Penterra to procure a policy with a $50,000,000 per-occurrence limit would necessitate obtaining excess coverage beyond the existing Briarcliff policy, at significant additional cost and with uncertain availability in the current insurance market for pharmaceutical clinical trial liability.

Resolution Reached. After extensive discussion, the parties agreed on the following insurance framework, which Veridian accepted after C&H presented a comparative analysis of insurance coverage maintained by peer pharmaceutical sponsors in comparable Phase III oncology trials:

1. Sponsor Clinical Trial Liability Insurance. Penterra shall maintain clinical trial liability insurance with minimum coverage levels of $25,000,000 per occurrence and $75,000,000 in the aggregate for the duration of the MCTA and for a period of three (3) years following study completion or termination, consistent with the existing Briarcliff Mutual policy.

2. Subject-Injury Sublimit. Penterra shall maintain a subject-injury sublimit of $10,000,000 per occurrence and $50,000,000 in the aggregate under the Briarcliff policy. This sublimit is specific to claims arising from adverse events, injuries, or deaths directly attributable to the administration of the investigational product (PPC-4871) or study-related procedures.

3. Additional Insured Endorsement. Veridian and each participating Veridian Network site shall be named as additional insureds under the Briarcliff policy with respect to claims arising out of the CLARION trial. Karen Tremblay, Vice President, Life Sciences Lines, at Briarcliff Mutual, had previously confirmed to C&H in a May 22, 2023 telephone conversation that Briarcliff has the capacity and willingness to issue an additional insured endorsement for the Veridian Network sites. C&H will prepare a formal letter requesting the endorsement and coordinate with Briarcliff to obtain the endorsement in advance of the MCTA closing date.

4. Veridian and Site Coverage. Veridian and each participating Veridian Network site shall maintain general liability insurance and professional liability (medical malpractice) insurance with minimum coverage levels of $5,000,000 per occurrence and $10,000,000 in the aggregate for the duration of the MCTA and for a period of three (3) years following study completion or termination.

5. Certificate of Insurance Exchange. The parties shall exchange certificates of insurance within fifteen (15) business days of MCTA execution and annually thereafter for the duration of the agreement and any applicable tail coverage period. Each party shall provide the other with at least thirty (30) days' prior written notice of any material change in, cancellation of, or failure to renew any required insurance coverage.

The comparative analysis that proved persuasive to Veridian demonstrated that the $25,000,000 per-occurrence level is within or above industry norms for Phase III oncology trials conducted by pharmaceutical sponsors of Penterra's size and risk profile. Specifically, the analysis surveyed publicly available information and C&H's prior experience across twelve comparable clinical trial agreements negotiated within the past three years, and found that per-occurrence limits ranged from $15,000,000 to $30,000,000, with a median of $25,000,000. Allison Whitmore acknowledged at the session that this analysis was helpful and that Veridian's original $50,000,000 demand had been based on a conservative internal risk assessment that did not fully account for the availability of subject-injury sublimits and additional insured status.

The agreed insurance framework will be reflected in Section 9 (Insurance) of the MCTA and in Exhibit E (Insurance Requirements and Certificates).

B. Investigator Publication Rights and Academic Freedom (RESOLVED)

Background and Prior Positions. The issue of investigator publication rights was one that Veridian identified as a threshold matter early in the negotiation, consistent with Veridian's institutional mission as a research network affiliated with academic medical centers. In their first markup, WJC inserted language providing that investigators affiliated with Veridian Network sites would have unrestricted publication rights with respect to the results of the CLARION trial, with no sponsor review period whatsoever. WJC characterized this as an essential protection of academic freedom and a non-negotiable institutional policy of Veridian.

Penterra's position, which we maintained throughout the negotiation, was that Penterra must have the right to review all manuscripts, abstracts, presentations, and other publications arising from the CLARION trial prior to submission for publication. This review right is necessary to (a) identify and protect confidential information and proprietary data belonging to Penterra, and (b) identify and protect patentable subject matter that could be jeopardized by premature public disclosure. Penterra's concern was particularly acute given the novel mechanism of action of PPC-4871 and the significant intellectual property portfolio under development in connection with the CLARION program.

Resolution Reached. After a lengthy and at times spirited discussion — particularly during the working lunch — the parties agreed on a balanced publication framework that respects investigator academic freedom while providing Penterra with meaningful protections for its confidential information and intellectual property. The agreed framework is as follows:

1. Right to Publish. Investigators affiliated with Veridian Network sites shall have the right to publish the results of the CLARION trial, including single-site results and multi-center results, subject to the review process described below.

2. Sponsor Review Period. Prior to submitting any proposed manuscript, abstract, poster, presentation, or other publication (collectively, "Publication Materials") to any journal, conference, or other forum, the investigator shall submit the proposed Publication Materials to Penterra at least sixty (60) days prior to the planned submission date. During this sixty-day review period, Penterra shall have the right to review the Publication Materials for the presence of (a) confidential information belonging to Penterra, and (b) patentable subject matter.

3. Patent Protection Delay. If Penterra identifies patentable subject matter in the proposed Publication Materials and determines, in its reasonable judgment, that the filing of a patent application is necessary to protect such subject matter, Penterra may request an additional delay of up to ninety (90) days beyond the initial sixty-day review period (for a total maximum delay of one hundred fifty (150) days from the date of initial submission of Publication Materials to Penterra). During this additional delay period, Penterra shall use commercially reasonable efforts to file any necessary patent applications.

4. Limitation on Sponsor Review Rights. Penterra may not suppress publication or require the removal of scientific findings, conclusions, or data from any Publication Materials. Penterra's review right is limited to (a) redaction or modification of confidential information (e.g., proprietary formulation details, manufacturing processes, or non-public business information), and (b) temporary delay of publication to permit the filing of patent applications as described above. Any disputes regarding whether specific content constitutes confidential information subject to redaction shall be resolved through the dispute resolution procedures set forth in Section 17 of the MCTA.

5. Multi-Center Publication Coordination. Multi-center publications involving data pooled from multiple Veridian Network sites shall be coordinated through the Global Principal Investigator, Dr. Catherine Aldridge, M.D., Ph.D., of Graystone University Medical Center, to prevent premature disclosure of pooled results that could compromise the integrity of the overall trial or interfere with Penterra's regulatory submission strategy. Dr. Aldridge shall serve as the primary point of contact for multi-center publication planning and shall work with Penterra's medical publications team to develop a publication plan within ninety (90) days of database lock.

6. Documentation. This publication rights framework shall be reflected in Exhibit G (Intellectual Property and Publication Rights) of the MCTA and in the IP Side Letter to be executed concurrently with the MCTA.

Allison Whitmore confirmed during the session that Dr. Lena Marchetti, Senior Vice President, Research Administration, Veridian Health Research Network, had pre-approved this compromise and that Veridian would not require further internal review of the publication framework, provided that the drafting faithfully reflects the terms agreed at the session. We consider this a significant concession from Veridian, as their initial position of zero sponsor review was firmly held through two prior rounds of markup, and the sixty-day review period plus ninety-day patent delay provides Penterra with robust protections.

C. Medically Necessary Protocol Deviations — Liability Framework (RESOLVED)

Background and Prior Positions. The allocation of liability for protocol deviations made for reasons of medical necessity or subject safety was one of the most complex issues discussed at the session. The fundamental tension is well-understood: sponsors typically limit their indemnification obligations to claims arising from protocol-compliant conduct, while site networks — particularly those with academic affiliations — insist that investigators exercising sound medical judgment to protect subject safety should not bear the financial risk of claims arising from such decisions.

Veridian's position, as articulated in WJC's second markup, was that all protocol deviations made by an investigator for medical necessity or subject safety reasons should be treated as protocol-compliant conduct for purposes of the indemnification provisions — meaning that Penterra's full indemnification obligation would apply to claims arising from such deviations, regardless of whether the deviation was pre-approved by the Sponsor.

Penterra's position was that only strictly protocol-compliant conduct should trigger Penterra's indemnification obligation, and that all protocol deviations — regardless of the reason — should fall within the investigator/site carve-out to sponsor indemnification. Penterra was concerned that an overly broad medical necessity exception could expose the Sponsor to liability for claims arising from investigator conduct that may have been well-intentioned but was nonetheless inconsistent with the protocol and potentially harmful to subjects or data integrity.

Resolution Reached. After significant negotiation, the parties agreed on a three-tiered framework that distinguishes among protocol deviations based on the circumstances and the degree of sponsor involvement in the decision to deviate:

Category 1 — Emergency Safety Deviations. A Category 1 deviation is a deviation from the protocol made by the investigator in response to an immediate threat to subject life or safety, where adherence to the protocol would, in the investigator's reasonable medical judgment, expose the subject to imminent serious harm or death. Category 1 deviations must be documented contemporaneously (i.e., in the subject's medical record and on the applicable case report form at or near the time of the deviation) and reported to Penterra and Meridian CRO within twenty-four (24) hours of the deviation. Claims arising from Category 1 deviations that satisfy these documentation and reporting requirements shall be treated as protocol-compliant conduct for indemnification purposes — Penterra's full indemnification obligation applies.

Category 2 — Pre-Approved Medically Necessary Deviations. A Category 2 deviation is a deviation from the protocol requested by the investigator for reasons of medical necessity or subject safety that is approved in writing by Penterra's Chief Medical Officer (Dr. Elaine Whitford) or her designee prior to implementation. Approval may be provided by email, letter, or through the electronic protocol deviation request system maintained by Meridian CRO, provided that a written record of the approval is created and retained. Claims arising from Category 2 deviations shall be treated as protocol-compliant conduct for indemnification purposes — Penterra's full indemnification obligation applies.

Category 3 — Unauthorized Deviations. All other protocol deviations not falling within Category 1 or Category 2 — including deviations made for medical necessity reasons that were not subject to an immediate threat to life or safety and were not pre-approved by Penterra's Chief Medical Officer — shall remain carved out from Penterra's indemnification obligation and shall be subject to the site/investigator indemnity obligations. Under the agreed reciprocal site indemnity structure, each Veridian Network site's indemnity obligation for Category 3 deviations is capped at $5,000,000 per site per occurrence and $20,000,000 in the aggregate across all Veridian Network sites.

A critical component of this framework is the documentation requirement, which the parties discussed at length. The parties agreed that:

• All Category 1 deviations must be reported to the Sponsor and CRO within twenty-four (24) hours. The report must include the investigator's contemporaneous documentation of the deviation, including the nature of the immediate threat to subject safety, the specific protocol provision from which the investigator deviated, the alternative course of action taken, and the clinical rationale for the deviation.

• All Category 2 deviations must have documented prior written approval from the Chief Medical Officer or her designee. The written approval must specify the protocol provision from which the deviation is permitted, the scope and duration of the permitted deviation, and any conditions or limitations on the deviation.

• Failure to comply with the applicable documentation requirements may result in reclassification of a deviation from Category 1 or Category 2 to Category 3, thereby removing the deviation from the scope of Penterra's indemnification obligation. This reclassification mechanism provides an important incentive for investigators and sites to maintain rigorous documentation practices.

This three-tiered framework will be incorporated into Exhibit D (Subject-Injury Indemnification Provisions) of the MCTA and will be cross-referenced in the protocol deviation reporting section of the main body of the agreement (Section 6.4). Sean Morrissey has been asked to prepare the initial drafting of this framework language for incorporation into the near-final draft.

D. Subject-Injury Indemnification Caps — Confirmation (RESOLVED / CONFIRMED)

Background. The overall structure and caps for subject-injury indemnification were the subject of extensive negotiation earlier in the process, culminating in the execution of an Indemnification Term Sheet on May 5, 2023. The purpose of the discussion at the June 9 session was to confirm that the indemnification structure set forth in the May 5 Term Sheet remained agreed and to ensure consistency between the Term Sheet and the protocol deviation liability framework described in Section II.C above.

Confirmed Structure. The parties confirmed the following indemnification structure, which remains unchanged from the May 5, 2023 Indemnification Term Sheet:

• Per-Subject Medical Care Cap: $500,000 per subject for medical care costs arising from subject injuries attributable to the investigational product (PPC-4871) or study-related procedures conducted in accordance with the protocol.

• Aggregate Medical Care Cap: $15,000,000 in the aggregate across all Veridian Network sites for subject-injury medical care costs.

• Product-Defect Claims: Penterra shall provide uncapped indemnification for claims arising from defects in the investigational product, including manufacturing defects, design defects, and failures to provide adequate warnings or instructions for use, regardless of the per-subject or aggregate caps described above.

• Carve-Outs from Sponsor Indemnity: Penterra's indemnification obligation shall not extend to claims arising from: (a) the negligence or willful misconduct of the investigator or site personnel; (b) unauthorized protocol deviations (now defined as Category 3 deviations under the new framework); (c) breach of the MCTA by the site or Veridian; or (d) violation of applicable law or regulation by the site, investigator, or Veridian.

• Reciprocal Site Indemnity: Each Veridian Network site shall indemnify Penterra for claims arising from site negligence, willful misconduct, or Category 3 protocol deviations, subject to a cap of $5,000,000 per site per occurrence and $20,000,000 in the aggregate across all Veridian Network sites.

• Notice Requirement: The indemnified party must provide written notice of a claim to the indemnifying party within thirty (30) calendar days from the date the indemnified party becomes aware of such claim. Failure to provide timely notice shall not relieve Penterra of its indemnification obligation except to the extent that Penterra demonstrates that it has been materially prejudiced by the delay in notification.

No further changes to the indemnification caps or structure were proposed or discussed. The parties confirmed that the May 5, 2023 Indemnification Term Sheet accurately reflects the agreed indemnification framework, and the MCTA language in Exhibit D will be drafted to be consistent with both the Term Sheet and the new Category 1/2/3 protocol deviation framework.

III. Issues Remaining Open

Two issues remain open following the June 9 session. Both relate to the termination provisions of the MCTA. While the parties were unable to reach full agreement on these issues during the session, the discussion substantially narrowed the areas of disagreement, and we believe that resolution can be achieved through the drafting process and targeted follow-up discussions described below.

A. Termination Wind-Down Payment Obligations (OPEN)

Current Draft Position (Penterra). Under the current draft of the MCTA (Section 14.3), upon termination of the MCTA by either party for any reason, a 120-day wind-down period applies. During the wind-down period, subjects who are in active treatment at the time of the termination notice must be either (a) transitioned to alternative care arrangements at a facility and under the supervision of a physician acceptable to the subject, or (b) permitted to complete the current treatment cycle, whichever is clinically appropriate as determined by the investigator in consultation with Penterra's Chief Medical Officer. During the wind-down period, Penterra is obligated to pay per-patient milestone payments only for milestones actually achieved during the wind-down period, consistent with the milestone payment schedule set forth in Exhibit B (Budget and Payment Schedule).

Veridian's Position. Veridian, through WJC, insists that the current draft does not adequately protect sites and subjects in the event of an early termination by Penterra for convenience (i.e., a termination that is not based on cause such as site breach, safety concerns, or regulatory action). Specifically, Veridian's position is that, upon early termination by Penterra for convenience, Penterra should be obligated to pay:

(i) All earned but unpaid per-patient fees for subjects who have completed milestones prior to the date of the termination notice, including any fees that are accrued but not yet invoiced;

(ii) A "wind-down fee" equal to fifty percent (50%) of the remaining per-patient fees for all subjects who are actively enrolled and in treatment at the time of the termination notice, intended to cover the sites' costs of transitioning subjects to alternative care, including additional monitoring visits, transfer of medical records, coordination with receiving physicians, and subject counseling;

(iii) Prorated site maintenance fees through the end of the 120-day wind-down period, regardless of the level of clinical activity at the site during wind-down; and

(iv) Non-refundable start-up fees (both the initial installment and the second installment due upon site activation) for all activated sites, regardless of enrollment status at the time of termination, on the theory that these fees represent sunk costs that Veridian cannot recover if the trial is terminated early.

Penterra's Concern. Penterra's principal concern with Veridian's proposal is the magnitude of the 50% wind-down fee. Given the per-patient fee structure of $52,000 per subject (payable in four milestones of $13,000 each), and assuming that enrollment could reach several hundred subjects across 38 sites before a hypothetical termination event, the 50% wind-down fee could amount to several million dollars — or potentially more — depending on the stage of enrollment and treatment at the time of termination. Penterra views this as an excessive penalty for exercising a contractual termination right and as potentially disproportionate to the actual costs that sites would incur during wind-down. Penterra's preferred approach is a fixed per-subject transition fee of $5,000 per active subject at the time of termination, plus reimbursement of documented, reasonable wind-down costs actually incurred by the sites during the 120-day wind-down period. Penterra's position is that this approach more closely ties the wind-down payment obligation to the actual costs incurred and avoids creating a windfall for sites that may have minimal transition costs.

At the session, the parties engaged in a detailed discussion of the various cost components associated with subject transition and site wind-down, but were unable to bridge the gap between Veridian's 50% fee and Penterra's $5,000 per-subject proposal. Gregory Callahan indicated that Veridian might have flexibility on the 50% figure if Penterra could demonstrate that actual wind-down costs are materially lower, but he was not authorized to accept Penterra's proposal without further internal review.

Next Steps. The following steps have been agreed to advance resolution of this issue:

1. Sean Morrissey (C&H) and David Kesselman (WJC) shall exchange revised termination wind-down payment provisions by June 14, 2023. The revised provisions should reflect the areas of agreement (earned but unpaid fees, prorated maintenance fees, non-refundable start-up fees) and present compromise language on the wind-down fee mechanism.

2. Jennifer Holt (VP, Clinical Operations, Penterra) shall provide an estimate of actual wind-down costs per subject, based on Penterra's experience in prior clinical trials, by June 13, 2023. This estimate will be critical to informing Penterra's negotiating position and demonstrating to Veridian that a fixed per-subject fee plus documented costs is a fair and reasonable approach.

3. If the associates are unable to reach alignment through the drafting exchange, Miriam Calloway (C&H) and Allison Whitmore (WJC) will hold a partner-level call on June 15, 2023 to attempt to resolve the remaining differences.

B. Termination for Regulatory Action / Clinical Hold (OPEN)

Background. The parties discussed but were unable to resolve the specific rights and obligations that would apply in the event that the U.S. Food and Drug Administration ("FDA") places a clinical hold on IND 157823 or takes other regulatory action that results in a suspension of enrollment or dosing in the CLARION trial. This issue is distinct from the general termination-for-convenience scenario discussed above, as a clinical hold imposes regulatory constraints on the trial that are beyond the control of either party but may have significant operational and financial implications for Veridian and its Network sites.

Veridian's Position. Veridian's position, as articulated by Allison Whitmore and Gregory Callahan, is as follows:

• If a clinical hold imposed by the FDA lasts for more than ninety (90) days, Veridian should have the right to terminate the MCTA without the standard 120-day wind-down period, on the basis that a prolonged clinical hold creates an untenable operational and financial burden for sites that have committed personnel, facilities, and resources to the trial.

• Upon such termination, Penterra should be obligated to pay all accrued and unpaid site fees (including per-patient milestone fees, site maintenance fees, and start-up fees) plus a termination premium intended to compensate sites for the disruption caused by the clinical hold and the loss of anticipated revenue from the trial.

• Veridian's rationale is that investigator sites should not bear the financial risk of a regulatory action that is fundamentally a sponsor-side issue (i.e., a deficiency in the IND application, a safety signal in the investigational product, or a manufacturing issue that triggers a clinical hold).

Penterra's Position. Penterra's position, which we advocated at the session, differs from Veridian's in several important respects:

• A clinical hold should trigger a suspension of enrollment and dosing in accordance with FDA requirements, but should not trigger automatic termination of the MCTA. Clinical holds are a recognized part of the drug development process and are frequently resolved through sponsor engagement with the FDA.

• Penterra should have a cure period of up to one hundred eighty (180) days from the date of the clinical hold to resolve the hold — whether by providing additional safety data, amending the protocol, implementing enhanced monitoring procedures, or taking other corrective actions requested by the FDA — before Veridian may exercise a termination right.

• No termination premium should apply in the event of a clinical hold termination, as the clinical hold itself is not an act of bad faith or a breach of the MCTA by Penterra. Penterra would remain obligated to pay all accrued and unpaid fees, but a premium payment is not justified.

• During the suspension period, site maintenance fees would continue to be paid at a reduced rate (Penterra proposed 50% of the standard site maintenance fee) to compensate sites for maintaining readiness without conducting active enrollment or dosing activities.

The parties were unable to bridge the gap between Veridian's 90-day trigger / termination premium framework and Penterra's 180-day cure period / no premium framework. However, the discussion was productive in identifying the underlying interests of both parties, and we believe that a workable compromise is achievable.

Next Steps. The following steps have been agreed to advance resolution of this issue:

1. Christopher Aiken (C&H) shall contact Dr. Priya Sundaram, regulatory counsel at Castleton & Hargrove LLP, by June 13, 2023 to obtain guidance on typical clinical hold resolution timelines in oncology IND programs. This information will be critical to determining whether a 90-day or 180-day period (or some intermediate period) is a reasonable timeframe for resolving a clinical hold before a termination right is triggered.

2. Sean Morrissey (C&H) shall prepare revised regulatory termination / clinical hold provisions for inclusion in the near-final draft of the MCTA by June 14, 2023, incorporating Dr. Sundaram's guidance and proposing a compromise position.

3. The revised provisions will be shared with WJC as part of the near-final draft circulation on June 16, 2023, with the expectation that Veridian will provide comments by June 21, 2023.

IV. Other Items Discussed

In addition to the six major open issues addressed in Sections II and III above, the parties discussed and confirmed the status of a number of other provisions of the MCTA. Each of the items below is either fully agreed or requires only minor conforming edits in the near-final draft.

A. Fair Market Value / Anti-Kickback Compliance

The parties engaged in a brief but important discussion confirming that all payments under the MCTA have been assessed at fair market value ("FMV"), consistent with the requirements of the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and applicable safe harbor regulations (42 C.F.R. § 1001.952). Specifically, the parties confirmed the following payment levels:

• Per-patient fees: $52,000 per subject, payable in four milestones of $13,000 each (upon enrollment, upon completion of Cycle 3, upon completion of Cycle 6, and upon end-of-treatment visit)

• Site start-up fees: $75,000 per site (payable in two installments: $37,500 upon execution of the site-specific agreement and $37,500 upon site activation)

• Site maintenance fees: $40,000 per site per year

• Investigator grants: $1,500,000 in total across all Veridian Network sites for investigator-initiated sub-studies and translational research activities

Gregory Callahan confirmed Veridian's commitment to report all applicable payments through the CMS Open Payments system, consistent with the Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h). C&H's fair market value memorandum, which was prepared in consultation with an independent third-party valuation firm and documents the FMV analysis for each payment component, will be finalized and shared with Penterra's compliance department for retention in the Matter No. 1018-00004 compliance records.

B. IRB Reliance / Central IRB Structure

The parties briefly confirmed that the Institutional Review Board ("IRB") framework for the CLARION trial is settled and does not require further negotiation. The agreed structure is as follows:

• Graystone University Institutional Review Board (IRB Registration: IRB00012847, registered with OHRP) serves as the IRB of record for Graystone University Medical Center and for all other Pennsylvania-based Veridian Network sites, pursuant to an IRB reliance agreement among the applicable institutions.

• Veridian Central IRB serves as the IRB of record for all non-Pennsylvania Veridian Network sites, pursuant to an IRB Authorization Agreement executed between Veridian Central IRB and each participating site.

The parties confirmed that IRB approvals from both the Graystone University IRB and the Veridian Central IRB for the respective lead sites (Graystone University Medical Center and Lakemont Regional Medical Center) are conditions precedent to closing of the MCTA. Gregory Callahan and Patricia Dunne indicated that Veridian expects to be in a position to confirm lead-site IRB submission timelines by June 16, 2023. No further negotiation of the IRB provisions (Section 7 of the MCTA) is needed.

C. Safety Reporting Procedures

The parties confirmed that the safety reporting framework set forth in Exhibit J (Safety Reporting Procedures) is agreed and does not require further modification. Under the agreed framework:

• Investigator sites must report all Serious Adverse Events ("SAEs") to Penterra and Meridian CRO within twenty-four (24) hours of the investigator becoming aware of the event, using the electronic SAE reporting form maintained in the Pinnacle Data Solutions EDC platform.

• Penterra is responsible for the preparation and submission of all IND safety reports to the FDA, including seven (7)-day telephone or facsimile reports for fatal or life-threatening unexpected suspected adverse reactions and fifteen (15)-day written reports for all other reportable safety events, in accordance with 21 C.F.R. § 312.32.

• Penterra shall provide copies of all IND safety reports to Veridian and to each participating investigator within five (5) business days of submission to the FDA.

No changes to Exhibit J are required.

D. Data Ownership and Confidentiality

The parties confirmed the following provisions, which are reflected in Exhibit F (Confidentiality and Data Protection Provisions) and, with respect to intellectual property, in Exhibit G (IP and Publication Rights):

• Data Ownership: Penterra retains exclusive ownership of all clinical trial data generated in connection with the CLARION trial, including but not limited to case report form data, electronic data, biological sample data, imaging data, and any analyses or reports derived therefrom.

• Source Document Retention: Investigator sites must retain all source documents (including medical records, laboratory reports, pharmacy dispensing records, and imaging records) for a minimum of fifteen (15) years following study completion or termination, or for such longer period as may be required by applicable law or regulation.

• Confidentiality Term: All confidential information disclosed by either party in connection with the MCTA shall remain subject to confidentiality obligations for a period of ten (10) years from the date of disclosure.

• Permitted Disclosures: Notwithstanding the foregoing, confidential information may be disclosed (a) to the extent required for IRB submissions and continuing review; (b) to federal, state, or foreign regulatory authorities in connection with the CLARION trial or any regulatory submission by Penterra; (c) to legal counsel of the receiving party who are under a professional obligation of confidentiality; and (d) as otherwise required by applicable law, regulation, or court order, provided that the receiving party provides prompt notice to the disclosing party and cooperates with efforts to obtain a protective order.

No further changes to Exhibit F or Exhibit G are required, other than the incorporation of the publication rights compromise described in Section II.B above.

E. Network Coordination Fee and Payment Terms

The parties confirmed that the network coordination and administrative fee payable to Veridian's central administrative office is agreed as follows:

• Total Network Coordination Fee: $4,200,000

• Payment Schedule: Payable in quarterly installments of $300,000 each over fourteen (14) quarters, commencing on the first business day of the calendar quarter following the MCTA effective date

• Payment Terms: Net forty-five (45) days from receipt of a proper invoice containing a valid purchase order number and such other documentation as Penterra may reasonably require

No changes to these terms were proposed or discussed. The network coordination fee language in Exhibit B (Budget and Payment Schedule) remains as previously agreed.

F. Approved Subcontractors

The parties confirmed that the list of approved subcontractors set forth in Exhibit K (Approved Subcontractors) is agreed and that Veridian has no objection to any of the listed entities. The approved subcontractors are:

• Meridian Contract Research Organization, Inc. — serving as the contract research organization ("CRO") for the CLARION trial, pursuant to the Master Services Agreement between Penterra and Meridian dated January 15, 2023

• Pinnacle Data Solutions, Inc. — providing the electronic data capture ("EDC") platform for the CLARION trial

• Northbridge Bioanalytical Laboratories, Inc. — serving as the central laboratory for sample processing and bioanalytical testing

No further negotiation of Exhibit K is required.

G. Dispute Resolution

The parties confirmed that the dispute resolution framework set forth in Section 17 of the MCTA is agreed and does not require further modification. The agreed framework is as follows:

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

2. Three-Tier Dispute Resolution:

Tier 1 — Designated Representative Negotiation: The parties shall first attempt to resolve any dispute through good-faith negotiations between designated senior representatives of each party for a period of thirty (30) days following written notice of the dispute.

Tier 2 — Mediation: If the dispute is not resolved through Tier 1 negotiations, the parties shall submit the dispute to mediation administered by the American Arbitration Association ("AAA") under its Commercial Mediation Rules, for a period of sixty (60) days following the conclusion of the Tier 1 negotiation period.

Tier 3 — Binding Arbitration: If the dispute is not resolved through mediation, the parties shall submit the dispute to binding arbitration in New York, New York, administered by the AAA under its Commercial Arbitration Rules. The arbitration shall be conducted by a panel of three (3) arbitrators, with each party selecting one arbitrator and the two party-selected arbitrators selecting the third.

3. Injunctive Relief: Notwithstanding the foregoing, either party may seek temporary restraining orders, preliminary injunctions, or other injunctive or equitable relief in state or federal courts located in New York County, New York, to preserve the status quo or prevent irreparable harm pending resolution of a dispute through the three-tier process described above.

No changes to the dispute resolution provisions are required.

V. Revised Timeline to Execution

Based on the progress achieved at the June 9 session and the action items identified for the remaining open issues, the parties have agreed on the following revised timeline for completion and execution of the MCTA:

This timeline is aggressive but achievable, provided that all parties adhere to the deadlines set forth above and that the remaining open termination issues can be resolved at the associate level or, if necessary, through the June 15 partner call. We will monitor progress closely and will advise immediately if any slippage in the timeline appears likely.

VI. Action Items Summary Table

The following table consolidates all action items arising from the June 9 session, including responsible parties and deadlines:

We ask that each responsible party confirm receipt of this memorandum and their acceptance of the assigned action items and deadlines at your earliest convenience.

VII. Conclusion

The June 9, 2023 in-person negotiation session was productive and substantially advanced the MCTA toward execution. The resolution of four of six major open issues — clinical trial liability insurance requirements, investigator publication rights, the medically necessary protocol deviation liability framework, and confirmation of the subject-injury indemnification caps — represents significant progress and eliminates the most contentious substantive issues that had remained after two rounds of markup.

The two remaining open issues — termination wind-down payment obligations and termination for regulatory action / clinical hold — are narrowly defined, and the discussion at the June 9 session substantially narrowed the areas of disagreement on both points. We are confident that these issues can be resolved through the drafting process and follow-up discussions outlined in this memorandum, consistent with the timeline set forth in Section V above.

We remain on track for the June 28, 2023 target signing date and July 5, 2023 closing date, which supports the target first patient in date of August 14, 2023 for Protocol PPC-4871-III (CLARION). Maintaining this timeline is important to Penterra's overall clinical development plan for PPC-4871 and to meeting the enrollment milestones that the clinical operations team has established.

Please do not hesitate to contact me or Sean Morrissey with any questions regarding the contents of this memorandum, or if Penterra's positions on the open termination items require further internal discussion before the associates begin the drafting exchange. We are available at your convenience.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Miriam Calloway Partner, Healthcare & Life Sciences Practice Group Calderwood & Harkness LLP 280 Park Avenue, 34th Floor New York, New York 10017 Direct: (212) 554-7834

Email: mcalloway@calderwoodharkness.com

Matter No. 1018-00004

DISTRIBUTION NOTE: This memorandum is a privileged and confidential attorney-client communication and attorney work product prepared by Calderwood & Harkness LLP for the exclusive use of Penterra Pharmaceuticals Corp. This memorandum is protected by the attorney-client privilege, the work product doctrine, and all other applicable privileges and protections. Distribution is strictly limited to the addressees and cc'd individuals listed on the first page of this memorandum. Any unauthorized review, use, disclosure, copying, or distribution of this memorandum or its contents is strictly prohibited. If you have received this memorandum in error, please notify Miriam Calloway immediately at (212) 554-7834 and destroy all copies.

Date	Milestone
June 13, 2023	Jennifer Holt (Penterra) to provide wind-down cost-per-subject estimate; Christopher Aiken (C&H) to obtain clinical hold resolution timeline guidance from Castleton & Hargrove (Dr. Priya Sundaram)
June 14, 2023	Associates (Morrissey / Kesselman) to exchange revised termination wind-down and regulatory termination provisions; Exhibit D, Exhibit G, and IP Side Letter language to be finalized
June 15, 2023	Partner call (Calloway / Whitmore) if associate-level alignment on termination provisions is not achieved
June 16, 2023	Target circulation of near-final draft MCTA reflecting all June 9 agreements plus proposed resolution of remaining open items; FMV memorandum to be finalized
June 21, 2023	Deadline for final comments from WJC / Veridian on the near-final draft
June 23, 2023	Target date for final agreed-upon draft of the MCTA
June 28, 2023	Target signing date for the MCTA
July 5, 2023	Target closing date, subject to satisfaction of conditions precedent, including: (a) delivery of certificates of insurance from both parties; (b) IRB approvals for Graystone and Lakemont lead sites; (c) executed investigator signature pages from all lead-site principal investigators; (d) secretary's certificates from both Penterra and Veridian; and (e) officer's closing certificates
July 18, 2023	Projected MCTA effective date
August 14, 2023	Target first patient in (FPI) for the CLARION trial (Protocol PPC-4871-III)
No.	Action Item	Responsible Party	Deadline
1	Draft revised termination wind-down payment provisions and exchange with WJC	Sean Morrissey (C&H) / David Kesselman (WJC)	June 14, 2023
2	Provide wind-down cost-per-subject estimate based on prior Penterra clinical trial experience	Jennifer Holt (Penterra)	June 13, 2023
3	Obtain guidance on clinical hold resolution timelines in oncology IND programs from Castleton & Hargrove LLP (Dr. Priya Sundaram)	Christopher Aiken (C&H)	June 13, 2023
4	Draft revised regulatory termination / clinical hold provisions for MCTA	Sean Morrissey (C&H)	June 14, 2023
5	Finalize protocol deviation liability framework language (Categories 1, 2, and 3) for incorporation into Exhibit D (Subject-Injury Indemnification Provisions)	Sean Morrissey (C&H)	June 14, 2023
6	Finalize publication rights language for Exhibit G (IP and Publication Rights) and IP Side Letter	Christopher Aiken (C&H)	June 14, 2023
7	Confirm insurance coverage levels with Briarcliff Mutual Insurance Company (Karen Tremblay); prepare and submit additional insured endorsement request letter	Christopher Aiken (C&H)	June 14, 2023
8	Circulate near-final draft MCTA reflecting all June 9 agreements and proposed resolution of remaining open items	Miriam Calloway / Sean Morrissey (C&H)	June 16, 2023
9	Partner-level call to resolve termination provisions if associate-level alignment not achieved	Miriam Calloway (C&H) / Allison Whitmore (WJC)	June 15, 2023
10	Finalize fair market value memorandum and share with Penterra compliance	Sean Morrissey (C&H)	June 16, 2023
11	Confirm lead-site IRB submission timelines for Graystone (IRB00012847) and Veridian Central IRB	Gregory Callahan / Patricia Dunne (Veridian)	June 16, 2023
12	Confirm board authorization for MCTA execution by Penterra	Nathaniel Briggs / Rebecca Liang (Penterra)	June 23, 2023

CALDERWOOD & HARKNESS LLP Counselors at Law
280 Park Avenue, 34th Floor New York, New York 10017 Telephone: (212) 554-7800 Facsimile: (212) 554-7801 www.calderwoodharkness.com
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT
MEMORANDUM
TO:
Nathaniel Briggs, Esq., Vice President & General Counsel, Penterra Pharmaceuticals Corp.
Rebecca Liang, Esq., Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp.
Jennifer Holt, Vice President, Clinical Operations, Penterra Pharmaceuticals Corp.
FROM:
Miriam Calloway, Partner, Calderwood & Harkness LLP
CC:
Joel Strauss, Partner, Calderwood & Harkness LLP
Sean Morrissey, Associate, Calderwood & Harkness LLP
Christopher Aiken, Associate, Calderwood & Harkness LLP
DATE: June 10, 2023
RE: Summary of In-Person Negotiation Session — Master Clinical Trial Agreement between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. (Protocol PPC-4871-III / CLARION) — June 9, 2023
Matter No.: 1018-00004
I. Introduction and Overview
The purpose of this memorandum is to provide a comprehensive summary of the outcomes and action items resulting from the in-person negotiation session held on Friday, June 9, 2023, between representatives of Penterra Pharmaceuticals Corp. ("Penterra" or "Sponsor") and its outside counsel, Calderwood & Harkness LLP ("C&H"), on the one hand, and Veridian Health Research Network, Inc. ("Veridian") and its outside counsel, Whitmore, Jansen & Callahan LLP ("WJC"), on the other hand, concerning the Master Clinical Trial Agreement (the "MCTA") for the CLARION Phase III clinical trial (Protocol PPC-4871-III, IND 157823).
The session was held at the offices of Whitmore, Jansen & Callahan LLP, located at 1500 Market Street, Suite 3200, Philadelphia, Pennsylvania 19102. The negotiation session commenced at approximately 9:00 a.m. Eastern Time and concluded at approximately 5:00 p.m. Eastern Time, spanning approximately eight hours of substantive discussion, including a one-hour working lunch break during which the parties continued to discuss the publication rights framework in an informal setting.
The following individuals attended the session on behalf of Penterra and C&H:
• Miriam Calloway — Partner, Healthcare & Life Sciences Practice Group, Calderwood & Harkness LLP (lead outside counsel for Penterra)
• Sean Morrissey — Associate, Healthcare & Life Sciences Practice Group, Calderwood & Harkness LLP
• Rebecca Liang, Esq. — Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp.
• Samantha Novak — Director, Clinical Contracts, Penterra Pharmaceuticals Corp.
The following individuals attended the session on behalf of Veridian and WJC:
• Allison Whitmore — Partner, Whitmore, Jansen & Callahan LLP (lead outside counsel for Veridian)
• David Kesselman — Associate, Whitmore, Jansen & Callahan LLP
• Gregory Callahan — Vice President, Legal & Compliance, Veridian Health Research Network, Inc.
• Patricia Dunne — Director, Sponsored Research Agreements, Veridian Health Research Network, Inc.
The session was convened to resolve outstanding open issues in the MCTA following the second markup of the agreement received from Veridian and WJC on June 2, 2023. As the parties will recall, our initial draft of the MCTA was circulated on April 12, 2023, with Veridian's first markup returned on May 1, 2023 and our responsive second draft circulated on May 18, 2023. The June 2 markup from WJC identified six major open issues, along with a number of minor drafting comments that the associates had already been working to resolve through their direct communications.
We are pleased to report that significant progress was achieved at the June 9 session. The parties reached agreement on four of the six major open issues, and the two remaining items — both relating to aspects of the termination provisions — are narrowly defined and should be resolvable through the drafting process and follow-up discussions described in this memorandum. This represents a substantial step forward in the negotiation of an MCTA with a total deal value of approximately $80,000,000, encompassing clinical trial activities at 38 Veridian Network sites located across 14 states over the projected three-to-four-year life of the CLARION trial.
The memorandum is organized as follows: Section II addresses the issues that were resolved at the session; Section III addresses the issues that remain open and the next steps for resolution; Section IV summarizes other items discussed and confirmed during the session; Section V sets forth the revised timeline to execution; Section VI provides a consolidated action items summary table; and Section VII offers concluding observations.
II. Issues Resolved at the Session
A. Clinical Trial Liability Insurance Requirements (RESOLVED)
Background and Prior Positions. The question of clinical trial liability insurance requirements had been a significant point of contention since WJC's first markup. In their initial response and again in the June 2 second markup, Veridian took the position that Penterra should be required to maintain clinical trial liability insurance with a minimum coverage level of $50,000,000 per occurrence. WJC supported this position by reference to what they characterized as "best practices" in site network agreements and pointed to a recent increase in subject-injury verdicts in oncology trials as justification for the elevated coverage requirement.
Penterra's position, which we articulated in our second draft and advocated at the session, was that the appropriate coverage level is $25,000,000 per occurrence / $75,000,000 aggregate. This position is consistent with the terms of Penterra's existing clinical trial liability insurance policy maintained through Briarcliff Mutual Insurance Company (Policy No. BM-CTL-2023-04182; policy period April 1, 2023 through March 31, 2024, renewable annually). We emphasized that requiring Penterra to procure a policy with a $50,000,000 per-occurrence limit would necessitate obtaining excess coverage beyond the existing Briarcliff policy, at significant additional cost and with uncertain availability in the current insurance market for pharmaceutical clinical trial liability.
Resolution Reached. After extensive discussion, the parties agreed on the following insurance framework, which Veridian accepted after C&H presented a comparative analysis of insurance coverage maintained by peer pharmaceutical sponsors in comparable Phase III oncology trials:
1. Sponsor Clinical Trial Liability Insurance. Penterra shall maintain clinical trial liability insurance with minimum coverage levels of $25,000,000 per occurrence and $75,000,000 in the aggregate for the duration of the MCTA and for a period of three (3) years following study completion or termination, consistent with the existing Briarcliff Mutual policy.
2. Subject-Injury Sublimit. Penterra shall maintain a subject-injury sublimit of $10,000,000 per occurrence and $50,000,000 in the aggregate under the Briarcliff policy. This sublimit is specific to claims arising from adverse events, injuries, or deaths directly attributable to the administration of the investigational product (PPC-4871) or study-related procedures.
3. Additional Insured Endorsement. Veridian and each participating Veridian Network site shall be named as additional insureds under the Briarcliff policy with respect to claims arising out of the CLARION trial. Karen Tremblay, Vice President, Life Sciences Lines, at Briarcliff Mutual, had previously confirmed to C&H in a May 22, 2023 telephone conversation that Briarcliff has the capacity and willingness to issue an additional insured endorsement for the Veridian Network sites. C&H will prepare a formal letter requesting the endorsement and coordinate with Briarcliff to obtain the endorsement in advance of the MCTA closing date.
4. Veridian and Site Coverage. Veridian and each participating Veridian Network site shall maintain general liability insurance and professional liability (medical malpractice) insurance with minimum coverage levels of $5,000,000 per occurrence and $10,000,000 in the aggregate for the duration of the MCTA and for a period of three (3) years following study completion or termination.
5. Certificate of Insurance Exchange. The parties shall exchange certificates of insurance within fifteen (15) business days of MCTA execution and annually thereafter for the duration of the agreement and any applicable tail coverage period. Each party shall provide the other with at least thirty (30) days' prior written notice of any material change in, cancellation of, or failure to renew any required insurance coverage.
The comparative analysis that proved persuasive to Veridian demonstrated that the $25,000,000 per-occurrence level is within or above industry norms for Phase III oncology trials conducted by pharmaceutical sponsors of Penterra's size and risk profile. Specifically, the analysis surveyed publicly available information and C&H's prior experience across twelve comparable clinical trial agreements negotiated within the past three years, and found that per-occurrence limits ranged from $15,000,000 to $30,000,000, with a median of $25,000,000. Allison Whitmore acknowledged at the session that this analysis was helpful and that Veridian's original $50,000,000 demand had been based on a conservative internal risk assessment that did not fully account for the availability of subject-injury sublimits and additional insured status.
The agreed insurance framework will be reflected in Section 9 (Insurance) of the MCTA and in Exhibit E (Insurance Requirements and Certificates).
B. Investigator Publication Rights and Academic Freedom (RESOLVED)
Background and Prior Positions. The issue of investigator publication rights was one that Veridian identified as a threshold matter early in the negotiation, consistent with Veridian's institutional mission as a research network affiliated with academic medical centers. In their first markup, WJC inserted language providing that investigators affiliated with Veridian Network sites would have unrestricted publication rights with respect to the results of the CLARION trial, with no sponsor review period whatsoever. WJC characterized this as an essential protection of academic freedom and a non-negotiable institutional policy of Veridian.
Penterra's position, which we maintained throughout the negotiation, was that Penterra must have the right to review all manuscripts, abstracts, presentations, and other publications arising from the CLARION trial prior to submission for publication. This review right is necessary to (a) identify and protect confidential information and proprietary data belonging to Penterra, and (b) identify and protect patentable subject matter that could be jeopardized by premature public disclosure. Penterra's concern was particularly acute given the novel mechanism of action of PPC-4871 and the significant intellectual property portfolio under development in connection with the CLARION program.
Resolution Reached. After a lengthy and at times spirited discussion — particularly during the working lunch — the parties agreed on a balanced publication framework that respects investigator academic freedom while providing Penterra with meaningful protections for its confidential information and intellectual property. The agreed framework is as follows:
1. Right to Publish. Investigators affiliated with Veridian Network sites shall have the right to publish the results of the CLARION trial, including single-site results and multi-center results, subject to the review process described below.
2. Sponsor Review Period. Prior to submitting any proposed manuscript, abstract, poster, presentation, or other publication (collectively, "Publication Materials") to any journal, conference, or other forum, the investigator shall submit the proposed Publication Materials to Penterra at least sixty (60) days prior to the planned submission date. During this sixty-day review period, Penterra shall have the right to review the Publication Materials for the presence of (a) confidential information belonging to Penterra, and (b) patentable subject matter.
3. Patent Protection Delay. If Penterra identifies patentable subject matter in the proposed Publication Materials and determines, in its reasonable judgment, that the filing of a patent application is necessary to protect such subject matter, Penterra may request an additional delay of up to ninety (90) days beyond the initial sixty-day review period (for a total maximum delay of one hundred fifty (150) days from the date of initial submission of Publication Materials to Penterra). During this additional delay period, Penterra shall use commercially reasonable efforts to file any necessary patent applications.
4. Limitation on Sponsor Review Rights. Penterra may not suppress publication or require the removal of scientific findings, conclusions, or data from any Publication Materials. Penterra's review right is limited to (a) redaction or modification of confidential information (e.g., proprietary formulation details, manufacturing processes, or non-public business information), and (b) temporary delay of publication to permit the filing of patent applications as described above. Any disputes regarding whether specific content constitutes confidential information subject to redaction shall be resolved through the dispute resolution procedures set forth in Section 17 of the MCTA.
5. Multi-Center Publication Coordination. Multi-center publications involving data pooled from multiple Veridian Network sites shall be coordinated through the Global Principal Investigator, Dr. Catherine Aldridge, M.D., Ph.D., of Graystone University Medical Center, to prevent premature disclosure of pooled results that could compromise the integrity of the overall trial or interfere with Penterra's regulatory submission strategy. Dr. Aldridge shall serve as the primary point of contact for multi-center publication planning and shall work with Penterra's medical publications team to develop a publication plan within ninety (90) days of database lock.
6. Documentation. This publication rights framework shall be reflected in Exhibit G (Intellectual Property and Publication Rights) of the MCTA and in the IP Side Letter to be executed concurrently with the MCTA.
Allison Whitmore confirmed during the session that Dr. Lena Marchetti, Senior Vice President, Research Administration, Veridian Health Research Network, had pre-approved this compromise and that Veridian would not require further internal review of the publication framework, provided that the drafting faithfully reflects the terms agreed at the session. We consider this a significant concession from Veridian, as their initial position of zero sponsor review was firmly held through two prior rounds of markup, and the sixty-day review period plus ninety-day patent delay provides Penterra with robust protections.
C. Medically Necessary Protocol Deviations — Liability Framework (RESOLVED)
Background and Prior Positions. The allocation of liability for protocol deviations made for reasons of medical necessity or subject safety was one of the most complex issues discussed at the session. The fundamental tension is well-understood: sponsors typically limit their indemnification obligations to claims arising from protocol-compliant conduct, while site networks — particularly those with academic affiliations — insist that investigators exercising sound medical judgment to protect subject safety should not bear the financial risk of claims arising from such decisions.
Veridian's position, as articulated in WJC's second markup, was that all protocol deviations made by an investigator for medical necessity or subject safety reasons should be treated as protocol-compliant conduct for purposes of the indemnification provisions — meaning that Penterra's full indemnification obligation would apply to claims arising from such deviations, regardless of whether the deviation was pre-approved by the Sponsor.
Penterra's position was that only strictly protocol-compliant conduct should trigger Penterra's indemnification obligation, and that all protocol deviations — regardless of the reason — should fall within the investigator/site carve-out to sponsor indemnification. Penterra was concerned that an overly broad medical necessity exception could expose the Sponsor to liability for claims arising from investigator conduct that may have been well-intentioned but was nonetheless inconsistent with the protocol and potentially harmful to subjects or data integrity.
Resolution Reached. After significant negotiation, the parties agreed on a three-tiered framework that distinguishes among protocol deviations based on the circumstances and the degree of sponsor involvement in the decision to deviate:
Category 1 — Emergency Safety Deviations. A Category 1 deviation is a deviation from the protocol made by the investigator in response to an immediate threat to subject life or safety, where adherence to the protocol would, in the investigator's reasonable medical judgment, expose the subject to imminent serious harm or death. Category 1 deviations must be documented contemporaneously (i.e., in the subject's medical record and on the applicable case report form at or near the time of the deviation) and reported to Penterra and Meridian CRO within twenty-four (24) hours of the deviation. Claims arising from Category 1 deviations that satisfy these documentation and reporting requirements shall be treated as protocol-compliant conduct for indemnification purposes — Penterra's full indemnification obligation applies.
Category 2 — Pre-Approved Medically Necessary Deviations. A Category 2 deviation is a deviation from the protocol requested by the investigator for reasons of medical necessity or subject safety that is approved in writing by Penterra's Chief Medical Officer (Dr. Elaine Whitford) or her designee prior to implementation. Approval may be provided by email, letter, or through the electronic protocol deviation request system maintained by Meridian CRO, provided that a written record of the approval is created and retained. Claims arising from Category 2 deviations shall be treated as protocol-compliant conduct for indemnification purposes — Penterra's full indemnification obligation applies.
Category 3 — Unauthorized Deviations. All other protocol deviations not falling within Category 1 or Category 2 — including deviations made for medical necessity reasons that were not subject to an immediate threat to life or safety and were not pre-approved by Penterra's Chief Medical Officer — shall remain carved out from Penterra's indemnification obligation and shall be subject to the site/investigator indemnity obligations. Under the agreed reciprocal site indemnity structure, each Veridian Network site's indemnity obligation for Category 3 deviations is capped at $5,000,000 per site per occurrence and $20,000,000 in the aggregate across all Veridian Network sites.
A critical component of this framework is the documentation requirement, which the parties discussed at length. The parties agreed that:
• All Category 1 deviations must be reported to the Sponsor and CRO within twenty-four (24) hours. The report must include the investigator's contemporaneous documentation of the deviation, including the nature of the immediate threat to subject safety, the specific protocol provision from which the investigator deviated, the alternative course of action taken, and the clinical rationale for the deviation.
• All Category 2 deviations must have documented prior written approval from the Chief Medical Officer or her designee. The written approval must specify the protocol provision from which the deviation is permitted, the scope and duration of the permitted deviation, and any conditions or limitations on the deviation.
• Failure to comply with the applicable documentation requirements may result in reclassification of a deviation from Category 1 or Category 2 to Category 3, thereby removing the deviation from the scope of Penterra's indemnification obligation. This reclassification mechanism provides an important incentive for investigators and sites to maintain rigorous documentation practices.
This three-tiered framework will be incorporated into Exhibit D (Subject-Injury Indemnification Provisions) of the MCTA and will be cross-referenced in the protocol deviation reporting section of the main body of the agreement (Section 6.4). Sean Morrissey has been asked to prepare the initial drafting of this framework language for incorporation into the near-final draft.
D. Subject-Injury Indemnification Caps — Confirmation (RESOLVED / CONFIRMED)
Background. The overall structure and caps for subject-injury indemnification were the subject of extensive negotiation earlier in the process, culminating in the execution of an Indemnification Term Sheet on May 5, 2023. The purpose of the discussion at the June 9 session was to confirm that the indemnification structure set forth in the May 5 Term Sheet remained agreed and to ensure consistency between the Term Sheet and the protocol deviation liability framework described in Section II.C above.
Confirmed Structure. The parties confirmed the following indemnification structure, which remains unchanged from the May 5, 2023 Indemnification Term Sheet:
• Per-Subject Medical Care Cap: $500,000 per subject for medical care costs arising from subject injuries attributable to the investigational product (PPC-4871) or study-related procedures conducted in accordance with the protocol.
• Aggregate Medical Care Cap: $15,000,000 in the aggregate across all Veridian Network sites for subject-injury medical care costs.
• Product-Defect Claims: Penterra shall provide uncapped indemnification for claims arising from defects in the investigational product, including manufacturing defects, design defects, and failures to provide adequate warnings or instructions for use, regardless of the per-subject or aggregate caps described above.
• Carve-Outs from Sponsor Indemnity: Penterra's indemnification obligation shall not extend to claims arising from: (a) the negligence or willful misconduct of the investigator or site personnel; (b) unauthorized protocol deviations (now defined as Category 3 deviations under the new framework); (c) breach of the MCTA by the site or Veridian; or (d) violation of applicable law or regulation by the site, investigator, or Veridian.
• Reciprocal Site Indemnity: Each Veridian Network site shall indemnify Penterra for claims arising from site negligence, willful misconduct, or Category 3 protocol deviations, subject to a cap of $5,000,000 per site per occurrence and $20,000,000 in the aggregate across all Veridian Network sites.
• Notice Requirement: The indemnified party must provide written notice of a claim to the indemnifying party within thirty (30) calendar days from the date the indemnified party becomes aware of such claim. Failure to provide timely notice shall not relieve Penterra of its indemnification obligation except to the extent that Penterra demonstrates that it has been materially prejudiced by the delay in notification.
No further changes to the indemnification caps or structure were proposed or discussed. The parties confirmed that the May 5, 2023 Indemnification Term Sheet accurately reflects the agreed indemnification framework, and the MCTA language in Exhibit D will be drafted to be consistent with both the Term Sheet and the new Category 1/2/3 protocol deviation framework.
III. Issues Remaining Open
Two issues remain open following the June 9 session. Both relate to the termination provisions of the MCTA. While the parties were unable to reach full agreement on these issues during the session, the discussion substantially narrowed the areas of disagreement, and we believe that resolution can be achieved through the drafting process and targeted follow-up discussions described below.
A. Termination Wind-Down Payment Obligations (OPEN)
Current Draft Position (Penterra). Under the current draft of the MCTA (Section 14.3), upon termination of the MCTA by either party for any reason, a 120-day wind-down period applies. During the wind-down period, subjects who are in active treatment at the time of the termination notice must be either (a) transitioned to alternative care arrangements at a facility and under the supervision of a physician acceptable to the subject, or (b) permitted to complete the current treatment cycle, whichever is clinically appropriate as determined by the investigator in consultation with Penterra's Chief Medical Officer. During the wind-down period, Penterra is obligated to pay per-patient milestone payments only for milestones actually achieved during the wind-down period, consistent with the milestone payment schedule set forth in Exhibit B (Budget and Payment Schedule).
Veridian's Position. Veridian, through WJC, insists that the current draft does not adequately protect sites and subjects in the event of an early termination by Penterra for convenience (i.e., a termination that is not based on cause such as site breach, safety concerns, or regulatory action). Specifically, Veridian's position is that, upon early termination by Penterra for convenience, Penterra should be obligated to pay:
(i) All earned but unpaid per-patient fees for subjects who have completed milestones prior to the date of the termination notice, including any fees that are accrued but not yet invoiced;
(ii) A "wind-down fee" equal to fifty percent (50%) of the remaining per-patient fees for all subjects who are actively enrolled and in treatment at the time of the termination notice, intended to cover the sites' costs of transitioning subjects to alternative care, including additional monitoring visits, transfer of medical records, coordination with receiving physicians, and subject counseling;
(iii) Prorated site maintenance fees through the end of the 120-day wind-down period, regardless of the level of clinical activity at the site during wind-down; and
(iv) Non-refundable start-up fees (both the initial installment and the second installment due upon site activation) for all activated sites, regardless of enrollment status at the time of termination, on the theory that these fees represent sunk costs that Veridian cannot recover if the trial is terminated early.
Penterra's Concern. Penterra's principal concern with Veridian's proposal is the magnitude of the 50% wind-down fee. Given the per-patient fee structure of $52,000 per subject (payable in four milestones of $13,000 each), and assuming that enrollment could reach several hundred subjects across 38 sites before a hypothetical termination event, the 50% wind-down fee could amount to several million dollars — or potentially more — depending on the stage of enrollment and treatment at the time of termination. Penterra views this as an excessive penalty for exercising a contractual termination right and as potentially disproportionate to the actual costs that sites would incur during wind-down. Penterra's preferred approach is a fixed per-subject transition fee of $5,000 per active subject at the time of termination, plus reimbursement of documented, reasonable wind-down costs actually incurred by the sites during the 120-day wind-down period. Penterra's position is that this approach more closely ties the wind-down payment obligation to the actual costs incurred and avoids creating a windfall for sites that may have minimal transition costs.
At the session, the parties engaged in a detailed discussion of the various cost components associated with subject transition and site wind-down, but were unable to bridge the gap between Veridian's 50% fee and Penterra's $5,000 per-subject proposal. Gregory Callahan indicated that Veridian might have flexibility on the 50% figure if Penterra could demonstrate that actual wind-down costs are materially lower, but he was not authorized to accept Penterra's proposal without further internal review.
Next Steps. The following steps have been agreed to advance resolution of this issue:
1. Sean Morrissey (C&H) and David Kesselman (WJC) shall exchange revised termination wind-down payment provisions by June 14, 2023. The revised provisions should reflect the areas of agreement (earned but unpaid fees, prorated maintenance fees, non-refundable start-up fees) and present compromise language on the wind-down fee mechanism.
2. Jennifer Holt (VP, Clinical Operations, Penterra) shall provide an estimate of actual wind-down costs per subject, based on Penterra's experience in prior clinical trials, by June 13, 2023. This estimate will be critical to informing Penterra's negotiating position and demonstrating to Veridian that a fixed per-subject fee plus documented costs is a fair and reasonable approach.
3. If the associates are unable to reach alignment through the drafting exchange, Miriam Calloway (C&H) and Allison Whitmore (WJC) will hold a partner-level call on June 15, 2023 to attempt to resolve the remaining differences.
B. Termination for Regulatory Action / Clinical Hold (OPEN)
Background. The parties discussed but were unable to resolve the specific rights and obligations that would apply in the event that the U.S. Food and Drug Administration ("FDA") places a clinical hold on IND 157823 or takes other regulatory action that results in a suspension of enrollment or dosing in the CLARION trial. This issue is distinct from the general termination-for-convenience scenario discussed above, as a clinical hold imposes regulatory constraints on the trial that are beyond the control of either party but may have significant operational and financial implications for Veridian and its Network sites.
Veridian's Position. Veridian's position, as articulated by Allison Whitmore and Gregory Callahan, is as follows:
• If a clinical hold imposed by the FDA lasts for more than ninety (90) days, Veridian should have the right to terminate the MCTA without the standard 120-day wind-down period, on the basis that a prolonged clinical hold creates an untenable operational and financial burden for sites that have committed personnel, facilities, and resources to the trial.
• Upon such termination, Penterra should be obligated to pay all accrued and unpaid site fees (including per-patient milestone fees, site maintenance fees, and start-up fees) plus a termination premium intended to compensate sites for the disruption caused by the clinical hold and the loss of anticipated revenue from the trial.
• Veridian's rationale is that investigator sites should not bear the financial risk of a regulatory action that is fundamentally a sponsor-side issue (i.e., a deficiency in the IND application, a safety signal in the investigational product, or a manufacturing issue that triggers a clinical hold).
Penterra's Position. Penterra's position, which we advocated at the session, differs from Veridian's in several important respects:
• A clinical hold should trigger a suspension of enrollment and dosing in accordance with FDA requirements, but should not trigger automatic termination of the MCTA. Clinical holds are a recognized part of the drug development process and are frequently resolved through sponsor engagement with the FDA.
• Penterra should have a cure period of up to one hundred eighty (180) days from the date of the clinical hold to resolve the hold — whether by providing additional safety data, amending the protocol, implementing enhanced monitoring procedures, or taking other corrective actions requested by the FDA — before Veridian may exercise a termination right.
• No termination premium should apply in the event of a clinical hold termination, as the clinical hold itself is not an act of bad faith or a breach of the MCTA by Penterra. Penterra would remain obligated to pay all accrued and unpaid fees, but a premium payment is not justified.
• During the suspension period, site maintenance fees would continue to be paid at a reduced rate (Penterra proposed 50% of the standard site maintenance fee) to compensate sites for maintaining readiness without conducting active enrollment or dosing activities.
The parties were unable to bridge the gap between Veridian's 90-day trigger / termination premium framework and Penterra's 180-day cure period / no premium framework. However, the discussion was productive in identifying the underlying interests of both parties, and we believe that a workable compromise is achievable.
Next Steps. The following steps have been agreed to advance resolution of this issue:
1. Christopher Aiken (C&H) shall contact Dr. Priya Sundaram, regulatory counsel at Castleton & Hargrove LLP, by June 13, 2023 to obtain guidance on typical clinical hold resolution timelines in oncology IND programs. This information will be critical to determining whether a 90-day or 180-day period (or some intermediate period) is a reasonable timeframe for resolving a clinical hold before a termination right is triggered.
2. Sean Morrissey (C&H) shall prepare revised regulatory termination / clinical hold provisions for inclusion in the near-final draft of the MCTA by June 14, 2023, incorporating Dr. Sundaram's guidance and proposing a compromise position.
3. The revised provisions will be shared with WJC as part of the near-final draft circulation on June 16, 2023, with the expectation that Veridian will provide comments by June 21, 2023.
IV. Other Items Discussed
In addition to the six major open issues addressed in Sections II and III above, the parties discussed and confirmed the status of a number of other provisions of the MCTA. Each of the items below is either fully agreed or requires only minor conforming edits in the near-final draft.
A. Fair Market Value / Anti-Kickback Compliance
The parties engaged in a brief but important discussion confirming that all payments under the MCTA have been assessed at fair market value ("FMV"), consistent with the requirements of the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and applicable safe harbor regulations (42 C.F.R. § 1001.952). Specifically, the parties confirmed the following payment levels:
• Per-patient fees: $52,000 per subject, payable in four milestones of $13,000 each (upon enrollment, upon completion of Cycle 3, upon completion of Cycle 6, and upon end-of-treatment visit)
• Site start-up fees: $75,000 per site (payable in two installments: $37,500 upon execution of the site-specific agreement and $37,500 upon site activation)
• Site maintenance fees: $40,000 per site per year
• Investigator grants: $1,500,000 in total across all Veridian Network sites for investigator-initiated sub-studies and translational research activities
Gregory Callahan confirmed Veridian's commitment to report all applicable payments through the CMS Open Payments system, consistent with the Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h). C&H's fair market value memorandum, which was prepared in consultation with an independent third-party valuation firm and documents the FMV analysis for each payment component, will be finalized and shared with Penterra's compliance department for retention in the Matter No. 1018-00004 compliance records.
B. IRB Reliance / Central IRB Structure
The parties briefly confirmed that the Institutional Review Board ("IRB") framework for the CLARION trial is settled and does not require further negotiation. The agreed structure is as follows:
• Graystone University Institutional Review Board (IRB Registration: IRB00012847, registered with OHRP) serves as the IRB of record for Graystone University Medical Center and for all other Pennsylvania-based Veridian Network sites, pursuant to an IRB reliance agreement among the applicable institutions.
• Veridian Central IRB serves as the IRB of record for all non-Pennsylvania Veridian Network sites, pursuant to an IRB Authorization Agreement executed between Veridian Central IRB and each participating site.
The parties confirmed that IRB approvals from both the Graystone University IRB and the Veridian Central IRB for the respective lead sites (Graystone University Medical Center and Lakemont Regional Medical Center) are conditions precedent to closing of the MCTA. Gregory Callahan and Patricia Dunne indicated that Veridian expects to be in a position to confirm lead-site IRB submission timelines by June 16, 2023. No further negotiation of the IRB provisions (Section 7 of the MCTA) is needed.
C. Safety Reporting Procedures
The parties confirmed that the safety reporting framework set forth in Exhibit J (Safety Reporting Procedures) is agreed and does not require further modification. Under the agreed framework:
• Investigator sites must report all Serious Adverse Events ("SAEs") to Penterra and Meridian CRO within twenty-four (24) hours of the investigator becoming aware of the event, using the electronic SAE reporting form maintained in the Pinnacle Data Solutions EDC platform.
• Penterra is responsible for the preparation and submission of all IND safety reports to the FDA, including seven (7)-day telephone or facsimile reports for fatal or life-threatening unexpected suspected adverse reactions and fifteen (15)-day written reports for all other reportable safety events, in accordance with 21 C.F.R. § 312.32.
• Penterra shall provide copies of all IND safety reports to Veridian and to each participating investigator within five (5) business days of submission to the FDA.
No changes to Exhibit J are required.
D. Data Ownership and Confidentiality
The parties confirmed the following provisions, which are reflected in Exhibit F (Confidentiality and Data Protection Provisions) and, with respect to intellectual property, in Exhibit G (IP and Publication Rights):
• Data Ownership: Penterra retains exclusive ownership of all clinical trial data generated in connection with the CLARION trial, including but not limited to case report form data, electronic data, biological sample data, imaging data, and any analyses or reports derived therefrom.
• Source Document Retention: Investigator sites must retain all source documents (including medical records, laboratory reports, pharmacy dispensing records, and imaging records) for a minimum of fifteen (15) years following study completion or termination, or for such longer period as may be required by applicable law or regulation.
• Confidentiality Term: All confidential information disclosed by either party in connection with the MCTA shall remain subject to confidentiality obligations for a period of ten (10) years from the date of disclosure.
• Permitted Disclosures: Notwithstanding the foregoing, confidential information may be disclosed (a) to the extent required for IRB submissions and continuing review; (b) to federal, state, or foreign regulatory authorities in connection with the CLARION trial or any regulatory submission by Penterra; (c) to legal counsel of the receiving party who are under a professional obligation of confidentiality; and (d) as otherwise required by applicable law, regulation, or court order, provided that the receiving party provides prompt notice to the disclosing party and cooperates with efforts to obtain a protective order.
No further changes to Exhibit F or Exhibit G are required, other than the incorporation of the publication rights compromise described in Section II.B above.
E. Network Coordination Fee and Payment Terms
The parties confirmed that the network coordination and administrative fee payable to Veridian's central administrative office is agreed as follows:
• Total Network Coordination Fee: $4,200,000
• Payment Schedule: Payable in quarterly installments of $300,000 each over fourteen (14) quarters, commencing on the first business day of the calendar quarter following the MCTA effective date
• Payment Terms: Net forty-five (45) days from receipt of a proper invoice containing a valid purchase order number and such other documentation as Penterra may reasonably require
No changes to these terms were proposed or discussed. The network coordination fee language in Exhibit B (Budget and Payment Schedule) remains as previously agreed.
F. Approved Subcontractors
The parties confirmed that the list of approved subcontractors set forth in Exhibit K (Approved Subcontractors) is agreed and that Veridian has no objection to any of the listed entities. The approved subcontractors are:
• Meridian Contract Research Organization, Inc. — serving as the contract research organization ("CRO") for the CLARION trial, pursuant to the Master Services Agreement between Penterra and Meridian dated January 15, 2023
• Pinnacle Data Solutions, Inc. — providing the electronic data capture ("EDC") platform for the CLARION trial
• Northbridge Bioanalytical Laboratories, Inc. — serving as the central laboratory for sample processing and bioanalytical testing
No further negotiation of Exhibit K is required.
G. Dispute Resolution
The parties confirmed that the dispute resolution framework set forth in Section 17 of the MCTA is agreed and does not require further modification. The agreed framework is as follows:
1. Governing Law: The MCTA shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws principles.
2. Three-Tier Dispute Resolution:
Tier 1 — Designated Representative Negotiation: The parties shall first attempt to resolve any dispute through good-faith negotiations between designated senior representatives of each party for a period of thirty (30) days following written notice of the dispute.
Tier 2 — Mediation: If the dispute is not resolved through Tier 1 negotiations, the parties shall submit the dispute to mediation administered by the American Arbitration Association ("AAA") under its Commercial Mediation Rules, for a period of sixty (60) days following the conclusion of the Tier 1 negotiation period.
Tier 3 — Binding Arbitration: If the dispute is not resolved through mediation, the parties shall submit the dispute to binding arbitration in New York, New York, administered by the AAA under its Commercial Arbitration Rules. The arbitration shall be conducted by a panel of three (3) arbitrators, with each party selecting one arbitrator and the two party-selected arbitrators selecting the third.
3. Injunctive Relief: Notwithstanding the foregoing, either party may seek temporary restraining orders, preliminary injunctions, or other injunctive or equitable relief in state or federal courts located in New York County, New York, to preserve the status quo or prevent irreparable harm pending resolution of a dispute through the three-tier process described above.
No changes to the dispute resolution provisions are required.
V. Revised Timeline to Execution
Based on the progress achieved at the June 9 session and the action items identified for the remaining open issues, the parties have agreed on the following revised timeline for completion and execution of the MCTA:
This timeline is aggressive but achievable, provided that all parties adhere to the deadlines set forth above and that the remaining open termination issues can be resolved at the associate level or, if necessary, through the June 15 partner call. We will monitor progress closely and will advise immediately if any slippage in the timeline appears likely.
VI. Action Items Summary Table
The following table consolidates all action items arising from the June 9 session, including responsible parties and deadlines:
We ask that each responsible party confirm receipt of this memorandum and their acceptance of the assigned action items and deadlines at your earliest convenience.
VII. Conclusion
The June 9, 2023 in-person negotiation session was productive and substantially advanced the MCTA toward execution. The resolution of four of six major open issues — clinical trial liability insurance requirements, investigator publication rights, the medically necessary protocol deviation liability framework, and confirmation of the subject-injury indemnification caps — represents significant progress and eliminates the most contentious substantive issues that had remained after two rounds of markup.
The two remaining open issues — termination wind-down payment obligations and termination for regulatory action / clinical hold — are narrowly defined, and the discussion at the June 9 session substantially narrowed the areas of disagreement on both points. We are confident that these issues can be resolved through the drafting process and follow-up discussions outlined in this memorandum, consistent with the timeline set forth in Section V above.
We remain on track for the June 28, 2023 target signing date and July 5, 2023 closing date, which supports the target first patient in date of August 14, 2023 for Protocol PPC-4871-III (CLARION). Maintaining this timeline is important to Penterra's overall clinical development plan for PPC-4871 and to meeting the enrollment milestones that the clinical operations team has established.
Please do not hesitate to contact me or Sean Morrissey with any questions regarding the contents of this memorandum, or if Penterra's positions on the open termination items require further internal discussion before the associates begin the drafting exchange. We are available at your convenience.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Miriam Calloway Partner, Healthcare & Life Sciences Practice Group Calderwood & Harkness LLP 280 Park Avenue, 34th Floor New York, New York 10017 Direct: (212) 554-7834
Email: mcalloway@calderwoodharkness.com
Matter No. 1018-00004
DISTRIBUTION NOTE: This memorandum is a privileged and confidential attorney-client communication and attorney work product prepared by Calderwood & Harkness LLP for the exclusive use of Penterra Pharmaceuticals Corp. This memorandum is protected by the attorney-client privilege, the work product doctrine, and all other applicable privileges and protections. Distribution is strictly limited to the addressees and cc'd individuals listed on the first page of this memorandum. Any unauthorized review, use, disclosure, copying, or distribution of this memorandum or its contents is strictly prohibited. If you have received this memorandum in error, please notify Miriam Calloway immediately at (212) 554-7834 and destroy all copies.
Date | Milestone
June 13, 2023 | Jennifer Holt (Penterra) to provide wind-down cost-per-subject estimate; Christopher Aiken (C&H) to obtain clinical hold resolution timeline guidance from Castleton & Hargrove (Dr. Priya Sundaram)
June 14, 2023 | Associates (Morrissey / Kesselman) to exchange revised termination wind-down and regulatory termination provisions; Exhibit D, Exhibit G, and IP Side Letter language to be finalized
June 15, 2023 | Partner call (Calloway / Whitmore) if associate-level alignment on termination provisions is not achieved
June 16, 2023 | Target circulation of near-final draft MCTA reflecting all June 9 agreements plus proposed resolution of remaining open items; FMV memorandum to be finalized
June 21, 2023 | Deadline for final comments from WJC / Veridian on the near-final draft
June 23, 2023 | Target date for final agreed-upon draft of the MCTA
June 28, 2023 | Target signing date for the MCTA
July 5, 2023 | Target closing date, subject to satisfaction of conditions precedent, including: (a) delivery of certificates of insurance from both parties; (b) IRB approvals for Graystone and Lakemont lead sites; (c) executed investigator signature pages from all lead-site principal investigators; (d) secretary's certificates from both Penterra and Veridian; and (e) officer's closing certificates
July 18, 2023 | Projected MCTA effective date
August 14, 2023 | Target first patient in (FPI) for the CLARION trial (Protocol PPC-4871-III)
No. | Action Item | Responsible Party | Deadline
1 | Draft revised termination wind-down payment provisions and exchange with WJC | Sean Morrissey (C&H) / David Kesselman (WJC) | June 14, 2023
2 | Provide wind-down cost-per-subject estimate based on prior Penterra clinical trial experience | Jennifer Holt (Penterra) | June 13, 2023
3 | Obtain guidance on clinical hold resolution timelines in oncology IND programs from Castleton & Hargrove LLP (Dr. Priya Sundaram) | Christopher Aiken (C&H) | June 13, 2023
4 | Draft revised regulatory termination / clinical hold provisions for MCTA | Sean Morrissey (C&H) | June 14, 2023
5 | Finalize protocol deviation liability framework language (Categories 1, 2, and 3) for incorporation into Exhibit D (Subject-Injury Indemnification Provisions) | Sean Morrissey (C&H) | June 14, 2023
6 | Finalize publication rights language for Exhibit G (IP and Publication Rights) and IP Side Letter | Christopher Aiken (C&H) | June 14, 2023
7 | Confirm insurance coverage levels with Briarcliff Mutual Insurance Company (Karen Tremblay); prepare and submit additional insured endorsement request letter | Christopher Aiken (C&H) | June 14, 2023
8 | Circulate near-final draft MCTA reflecting all June 9 agreements and proposed resolution of remaining open items | Miriam Calloway / Sean Morrissey (C&H) | June 16, 2023
9 | Partner-level call to resolve termination provisions if associate-level alignment not achieved | Miriam Calloway (C&H) / Allison Whitmore (WJC) | June 15, 2023
10 | Finalize fair market value memorandum and share with Penterra compliance | Sean Morrissey (C&H) | June 16, 2023
11 | Confirm lead-site IRB submission timelines for Graystone (IRB00012847) and Veridian Central IRB | Gregory Callahan / Patricia Dunne (Veridian) | June 16, 2023
12 | Confirm board authorization for MCTA execution by Penterra | Nathaniel Briggs / Rebecca Liang (Penterra) | June 23, 2023

CALDERWOOD & HARKNESS LLP Counselors at Law

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT

MEMORANDUM

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts