PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 280 Park Avenue, 34th Floor New York, New York 10017
MEMORANDUM
Matter No.: 1018-00004
Date: June 20, 2023
To: Miriam Calloway, Partner, Calderwood & Harkness LLP
From: Sean Morrissey, Associate, and Christopher Aiken, Associate, Calderwood & Harkness LLP
CC: Rebecca Liang, Esq., Associate General Counsel, Clinical Affairs, Penterra Pharmaceuticals Corp.; Joel Strauss, Partner, Calderwood & Harkness LLP
Re: Resolution of Final Open Issues — Master Clinical Trial Agreement Between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. (Protocol PPC-4871-III / CLARION)
This memorandum is a privileged and confidential communication prepared by attorneys at Calderwood & Harkness LLP in connection with the provision of legal advice to Penterra Pharmaceuticals Corp. It constitutes attorney work product prepared in anticipation of and in connection with the negotiation and execution of the Master Clinical Trial Agreement described herein. This memorandum is not intended for disclosure to third parties and should not be distributed outside of the individuals identified above without prior authorization from Miriam Calloway or Joel Strauss.
I. Purpose and Executive Summary
This memorandum documents the final resolution of all remaining open issues in the Master Clinical Trial Agreement (the "MCTA") between Penterra Pharmaceuticals Corp. ("Penterra" or "Sponsor") and Veridian Health Research Network, Inc. ("Veridian" or the "Network") for Protocol PPC-4871-III, known by the trial acronym CLARION (Clinical Assessment of Response with Longitudinal Investigation in ONcology). CLARION is a Phase III, randomized, double-blind, placebo-controlled clinical trial evaluating the safety and efficacy of penterafenib (PPC-4871), a selective tyrosine kinase inhibitor, in the treatment of advanced hepatocellular carcinoma ("HCC") in adult patients who have progressed on or are intolerant to first-line systemic therapy.
The MCTA governs the conduct of the CLARION trial across thirty-eight (38) Veridian Network clinical research sites located in fourteen (14) states, with a total anticipated deal value of approximately Eighty Million Dollars ($80,000,000) over the projected life of the trial. The agreement encompasses per-patient milestone payments, site maintenance fees, network coordination fees, start-up costs, technology and electronic data capture ("EDC") integration costs, investigator publication grants, insurance requirements, indemnification obligations, and a contingency/change order reserve, among other financial and operational provisions.
Following the circulation of a near-final draft of the MCTA on June 16, 2023, three substantive issues remained open, each of which had been identified in brackets or open-item notations in the draft text:
(1) Termination Wind-Down Payment Obligations — the scope and methodology for calculating payments owed by Penterra to Veridian and its participating sites during and following the 120-day wind-down period triggered by termination of the MCTA;
(2) Subject Transition Procedures Upon Early Termination — the procedures and obligations governing the transition of subjects who are mid-treatment at the time of a termination event, including whether and for how long subjects deriving clinical benefit from penterafenib may continue to receive the investigational product beyond the wind-down period; and
(3) Medically Necessary Protocol Deviations and Indemnification Carve-Out Interplay — a narrow but significant formulation issue regarding the standard under which a protocol deviation undertaken by an investigator for subject safety purposes falls within or outside the scope of the Sponsor's indemnification obligations.
All three issues were resolved through two telephone conferences between Miriam Calloway of Calderwood & Harkness, representing Penterra, and Allison Whitmore of Whitmore, Jansen & Callahan LLP ("WJC"), representing Veridian. The first call took place on June 19, 2023, beginning at approximately 2:00 PM Eastern Time and lasting approximately forty-five (45) minutes. The second call took place on June 20, 2023, beginning at approximately 10:00 AM Eastern Time and lasting approximately thirty (30) minutes. No other parties participated in these calls, though both counsel indicated they had consulted with their respective clients between sessions.
With the resolution of these three issues, all brackets and open items in the MCTA have been fully resolved. No additional substantive or drafting issues remain outstanding. The final agreed draft of the MCTA is expected to be circulated by June 23, 2023, with a target signing date of June 28, 2023, and a target effective date of July 18, 2023. The anticipated date for First Patient In ("FPI") under the CLARION protocol is August 14, 2023.
This memorandum sets forth, in detail, the nature of each open issue, the positions of the respective parties, the agreed resolution, and the conforming language assignments necessary to incorporate the agreed terms into the final MCTA. A comprehensive issue resolution table summarizing all previously resolved and newly resolved issues is included in Section VI below, along with a detailed timeline for execution and a list of outstanding action items.
II. Background and Procedural History
The following summary outlines the procedural history of the MCTA negotiation from the opening of the Calderwood & Harkness matter through the present date. This history is provided for context and to establish a complete record of the negotiation process.
March 20, 2023: Calderwood & Harkness LLP opened Matter No. 1018-00004 on behalf of Penterra Pharmaceuticals Corp. to represent Penterra in the negotiation and drafting of the MCTA with Veridian Health Research Network, Inc. The engagement was authorized by Nathaniel Briggs, VP & General Counsel of Penterra, in consultation with Rebecca Liang, Associate General Counsel, Clinical Affairs. Joel Strauss serves as the supervising partner; Miriam Calloway serves as the lead negotiating partner.
April 7, 2023: Calderwood & Harkness circulated the first draft of the MCTA to Whitmore, Jansen & Callahan LLP, counsel to Veridian. The initial draft was prepared based on Penterra's standard form clinical trial agreement, with modifications to reflect the multi-site network structure of the Veridian relationship, the Phase III nature of the CLARION trial, and the specific financial terms discussed during preliminary business discussions between Penterra's clinical operations team (led by Jennifer Holt, VP, Clinical Operations) and Veridian's leadership (Gregory Callahan, CEO, and Patricia Dunne, COO). The first draft was approximately eighty-seven (87) pages, exclusive of exhibits and schedules.
April 28, 2023: WJC provided its initial markup of the MCTA. The markup was extensive, containing approximately two hundred forty (240) substantive comments and redline revisions. Principal areas of disagreement included the scope and caps of the subject-injury indemnification obligation, insurance coverage levels, publication rights and academic freedom provisions, the per-patient payment milestone structure, reciprocal site indemnification caps, and the framework for handling medically necessary protocol deviations. Calderwood & Harkness prepared an internal analysis of the WJC markup, which was circulated to Rebecca Liang and Miriam Calloway on May 2, 2023.
May 5, 2023: The parties exchanged an indemnification term sheet to narrow the outstanding issues on the subject-injury indemnification provisions. The term sheet established agreement on a per-subject cap of Five Hundred Thousand Dollars ($500,000), an aggregate cap of Fifteen Million Dollars ($15,000,000) for medical care costs, and uncapped indemnification for product-defect claims. This framework was subsequently incorporated into the second draft of the MCTA.
May 19, 2023: Calderwood & Harkness circulated the second draft of the MCTA, reflecting the agreed indemnification framework and Penterra's responses to the remaining WJC comments. The second draft resolved the per-patient payment milestone structure (25%/25%/25%/25% at randomization, Week 12, Week 24, and study completion, at $13,000 per milestone) and the reciprocal site indemnification caps ($5,000,000 per site/per occurrence; $20,000,000 aggregate).
June 2, 2023: WJC provided its second markup of the MCTA. The number of open issues had been significantly reduced, but several critical items remained unresolved, including insurance per-occurrence limits, publication review periods, the medically necessary protocol deviation framework, termination wind-down economics, and the subject transition procedures.
June 9, 2023: The parties convened an in-person negotiation session at WJC's offices at 1500 Market Street, Suite 3200, Philadelphia, Pennsylvania 19102. The session was attended by the following individuals:
• Calderwood & Harkness LLP (for Penterra): Miriam Calloway, Partner; Sean Morrissey, Associate
• Penterra Pharmaceuticals Corp.: Rebecca Liang, Associate General Counsel, Clinical Affairs
• Whitmore, Jansen & Callahan LLP (for Veridian): Allison Whitmore, Partner; David Kesselman, Associate
• Veridian Health Research Network, Inc.: Gregory Callahan, Chief Executive Officer; Patricia Dunne, Chief Operating Officer
The in-person session lasted approximately six (6) hours and resolved several significant outstanding issues, including:
• Insurance coverage levels: Agreed at $25,000,000 per occurrence and $75,000,000 aggregate, to be provided under Penterra's existing clinical trials insurance policy with Briarcliff Mutual (Policy No. BM-CTL-2023-04182);
• Publication review periods: Agreed at a sixty (60)-day review period plus a ninety (90)-day patent delay period, replacing Penterra's initial proposal of ninety (90)-day review plus ninety (90)-day delay and Veridian's request for unrestricted publication rights; and
• Medically necessary protocol deviations framework: The parties agreed in principle that safety-related deviations should be exempt from the indemnification carve-out, but deferred the precise formulation of the standard to further drafting discussions.
A Negotiation Session Summary & Action Items Memorandum was prepared by Sean Morrissey on June 10, 2023, documenting the resolutions reached at the in-person session and identifying three items carried forward for resolution: (1) termination wind-down payment obligations, (2) subject transition procedures upon early termination, and (3) the precise formulation of the indemnification carve-out language as it relates to medically necessary protocol deviations.
June 16, 2023: Calderwood & Harkness circulated the near-final draft of the MCTA, incorporating all resolutions from the in-person session and containing three remaining bracketed/open items corresponding to the three issues identified in the June 10 memorandum. This near-final draft forms the baseline for the resolutions documented in Sections III through V of this memorandum.
III. Issue 1: Termination Wind-Down Payment Obligations
A. Nature of the Issue
The near-final draft of the MCTA (dated June 16, 2023) included a one hundred twenty (120)-day wind-down period following any termination of the agreement, whether such termination is for cause (material breach), for convenience (upon ninety (90) days' prior written notice), or upon mutual written agreement of the parties. The wind-down period was agreed upon early in the negotiation process as a necessary mechanism to protect subject safety and to provide an orderly transition of clinical trial activities, consistent with FDA guidance on study termination and Good Clinical Practice ("GCP") requirements.
The open question, which was identified in the June 16 draft by bracketed placeholder language, concerned the scope and calculation of the financial obligations owed by Penterra to Veridian and participating Network sites during and following the 120-day wind-down period. The MCTA's financial structure is complex, encompassing multiple categories of payments that accrue on different bases and at different intervals, and the parties had not yet reached agreement on the treatment of each category in the termination context.
Veridian's Position. As articulated by Allison Whitmore during the negotiation and as reflected in WJC's comments on the near-final draft, Veridian maintained that Penterra should bear the full financial burden of the wind-down period, given that termination — particularly termination for convenience — is within the Sponsor's control. Specifically, Veridian argued that Penterra should be obligated to pay: (i) all per-patient milestone payments for subjects already enrolled and actively receiving treatment or in follow-up during the wind-down period, regardless of whether those subjects actually reach the applicable milestone assessment point within the 120-day period; (ii) full annual site maintenance fees for any partial year remaining in the wind-down period, on the theory that sites must maintain their research infrastructure throughout the wind-down regardless of patient volume; and (iii) a pro-rata portion of the network coordination fee through the end of the wind-down period, calculated on at least a quarterly basis.
Penterra's Position. As articulated by Miriam Calloway and Rebecca Liang, Penterra's position was that the wind-down payment obligations should be tied to actual work performed and milestones actually achieved, rather than to projected or anticipated milestones. Penterra argued that paying for milestones not yet reached would constitute a windfall to sites and would be inconsistent with the milestone-based payment structure that is fundamental to the MCTA's design. With respect to site maintenance fees, Penterra maintained that monthly proration was appropriate and equitable, as it would compensate sites for the actual period during which they are required to maintain trial-related infrastructure. Penterra expressed willingness to pay the full network coordination fee for any complete quarter falling within the wind-down period, with proration for partial quarters.
B. Agreed Resolution (June 19, 2023 Call)
During the June 19, 2023 call, Miriam Calloway and Allison Whitmore reached agreement on the treatment of each category of payment during the wind-down period. The agreed resolution is as follows:
Per-Patient Milestone Fees. Penterra will continue to pay per-patient milestone fees at the rate of Thirteen Thousand Dollars ($13,000) per milestone for all subjects who are enrolled and randomized as of the date the termination notice is delivered (the "Termination Notice Date"). However, such payments will be made only for milestones actually reached by each subject during the 120-day wind-down period. Specifically, a subject who reaches one of the four scheduled protocol assessment points — randomization, Week 12 assessment, Week 24 assessment, or study completion/final visit — during the wind-down period will trigger the corresponding $13,000 milestone payment. No prospective or accelerated payments will be made for milestones that a subject has not yet reached as of the conclusion of the wind-down period. This resolution is consistent with the fundamental milestone-based architecture of the MCTA and ensures that Penterra pays only for clinical activities and assessments that are actually performed.
Site Maintenance Fees. Annual site maintenance fees, which are set at Forty Thousand Dollars ($40,000) per site per year, will be prorated on a monthly basis during the wind-down period. The monthly proration amount is Three Thousand Three Hundred Thirty-Three Dollars and Thirty-Three Cents ($3,333.33) per site per month. If termination notice is given mid-year and a site has already received prepayment of the full annual maintenance fee, the site will be entitled to retain the prorated amount attributable to months falling within the wind-down period, and Penterra will receive a prorated refund for any prepaid maintenance fees attributable to months after the wind-down period concludes. Conversely, if the annual maintenance fee has not been prepaid for the period corresponding to the wind-down, Penterra will pay the additional prorated monthly amounts as they accrue. Sites are expected to maintain their clinical trial infrastructure, including trained personnel, regulatory files, and study drug storage, throughout the wind-down period.
Network Coordination Fee. The quarterly network coordination fee of Three Hundred Thousand Dollars ($300,000), payable to Veridian's central coordinating office, will be prorated on a daily basis within the quarter in which the wind-down period concludes. Payments for full calendar quarters that fall entirely within the wind-down period will be paid in full without proration. For the final partial quarter, the daily rate will be calculated by dividing $300,000 by the number of calendar days in the applicable quarter, and Penterra will pay for each day from the first day of the quarter through the last day of the wind-down period, inclusive. This approach provides Veridian with full compensation for the coordination services it is required to provide during the wind-down while avoiding overpayment for periods after the wind-down concludes.
Start-Up Fees. Any start-up fees previously paid by Penterra — whether the initial fifty percent (50%) deposit payable upon site activation or the full one hundred percent (100%) if the first patient has been enrolled at the applicable site — are non-refundable regardless of the termination event. Start-up fees compensate sites for the considerable investment in regulatory submissions, staff training, equipment procurement, and operational readiness required to initiate trial activities, and the parties agreed that these costs are sunk costs that should not be subject to recoupment. No additional start-up fees will accrue during the wind-down period for sites that have not yet been activated as of the Termination Notice Date.
Investigator Grants. Investigator publication grants for manuscripts based on data generated prior to the Termination Notice Date remain payable upon manuscript acceptance by a peer-reviewed journal, consistent with the terms of the publication rights provisions of the MCTA. The total allocation for investigator grants is One Million Five Hundred Thousand Dollars ($1,500,000), and individual grant amounts will be determined in accordance with the grant schedule set forth in Exhibit C to the MCTA. The termination of the MCTA does not extinguish investigators' rights to publish trial results, subject to the agreed 60-day review and 90-day patent delay periods.
Technology/EDC Integration Costs. The costs associated with integration of the Pinnacle Data Solutions EDC platform, which have been established at a fixed amount of One Million Two Hundred Thirty Thousand Dollars ($1,230,000), are non-refundable to the extent already invoiced and paid as of the Termination Notice Date. Any remaining integration work that has not been completed as of the Termination Notice Date will cease, and Penterra will pay only for work performed by Pinnacle Data Solutions through the conclusion of the wind-down period. Invoices for such work must be submitted in accordance with the standard payment procedures set forth in the MCTA and are subject to the same Net 45 payment terms.
Contingency/Change Order Reserve. The Two Million Five Hundred Thousand Dollars ($2,500,000) contingency and change order reserve established under the MCTA remains available to cover legitimate wind-down costs, including but not limited to unbudgeted monitoring visits, additional data cleaning or query resolution activities, and regulatory submission costs associated with the termination. Requests against the contingency reserve during the wind-down period must be submitted through the established change order process and are subject to approval by the Joint Steering Committee (or, following termination, by the designated representatives of each party).
Payment Terms. All wind-down payments remain subject to the standard payment terms of the MCTA, which provide for payment within forty-five (45) days of receipt of a proper and complete invoice (Net 45). Veridian and its participating sites must continue to submit invoices in the format and through the channels specified in the MCTA during the wind-down period.
Allison Whitmore confirmed Veridian's acceptance of this comprehensive wind-down payment framework during the June 19 call, noting that the milestone-based approach for per-patient fees was acceptable provided that all other payment categories were treated as described above. Ms. Whitmore indicated that she would circulate a summary of the agreed terms to Gregory Callahan and Patricia Dunne for internal confirmation but did not anticipate any objection from Veridian's leadership.
C. Conforming Draft Language
Christopher Aiken will prepare revised language for Section [●] (Termination — Financial Obligations Upon Wind-Down) of the MCTA to reflect the agreed resolution described above. The revised section will include a detailed table of payment categories, applicable rates, and proration methodologies to ensure clarity and to minimize the potential for disputes during any future wind-down period. The revised language will be circulated to Miriam Calloway for review prior to incorporation into the final agreed draft. As noted in the Action Items table in Section VIII below, the target completion date for this drafting assignment is June 21, 2023.
IV. Issue 2: Subject Transition Procedures Upon Early Termination
A. Nature of the Issue
Although the near-final draft of the MCTA established the 120-day wind-down period and set forth certain general principles regarding the orderly conclusion of trial activities, it did not fully specify the procedures for transitioning subjects who are mid-treatment at the time of termination. This gap was identified as a critical open item in the June 10, 2023 memorandum because the treatment of subjects who may be deriving clinical benefit from penterafenib raises significant ethical, regulatory, and practical concerns that must be addressed in the governing agreement.
Veridian's Position. Allison Whitmore, on behalf of Veridian and its Network investigators, took the position that subjects actively receiving penterafenib who are deriving clinical benefit should not be abruptly cut off from the investigational product solely because of a sponsor-initiated termination. Ms. Whitmore argued that investigators have an ethical obligation to their patients — an obligation grounded in the Declaration of Helsinki, ICH GCP principles, and applicable FDA regulations — to ensure continuity of care and that the MCTA should require Penterra to continue supplying penterafenib beyond the 120-day wind-down period where the treating investigator determines that the subject is benefiting from continued treatment and where no adequate alternative therapy is immediately available. Veridian initially sought open-ended post-termination access, with no fixed time cap, on the theory that subject safety should take priority over the Sponsor's economic interests in a clean termination.
Penterra's Position. Penterra recognized and acknowledged the ethical imperative of protecting subjects in ongoing treatment but expressed serious concern about the operational, financial, and regulatory implications of an open-ended post-termination supply obligation. Rebecca Liang noted that indefinite drug supply obligations would impose substantial costs for drug manufacturing, packaging, labeling, distribution, and cold-chain logistics, as well as ongoing monitoring and pharmacovigilance obligations that would persist long after the trial has otherwise concluded. Additionally, Penterra was concerned that an indefinite post-termination access period would create uncertainty regarding the termination date for purposes of financial obligations, regulatory filings, and potential future litigation. Penterra proposed that the 120-day wind-down period should be sufficient for investigators to transition subjects to commercially available therapy or to enroll them in other clinical trials.
B. Agreed Resolution (June 19–20, 2023 Calls)
The parties reached a comprehensive agreement on subject transition procedures over the course of the June 19 and June 20 calls. The agreed framework balances the ethical obligation to subjects in ongoing treatment with Penterra's legitimate interest in establishing a definite end point for its post-termination obligations. The key elements of the agreed resolution are as follows:
Subjects in Active Treatment at the Termination Notice Date. Subjects who are actively receiving penterafenib as of the Termination Notice Date and who have not yet reached their next scheduled protocol assessment point will be permitted to complete their current treatment cycle. For purposes of this provision, a "current treatment cycle" is defined as the period through the subject's next scheduled protocol assessment, i.e., through the Week 12 assessment or the Week 24 assessment, whichever is next. This ensures that no subject is removed from treatment at an arbitrary point in their treatment cycle, and that investigators have the opportunity to evaluate treatment response at a clinically meaningful interval before making any transition decision.
The determination of whether a subject should complete the current treatment cycle, and whether the subject is deriving clinical benefit from penterafenib, will be made on an individualized basis by the site investigator in consultation with the Penterra medical monitor. Penterra has designated Dr. Elaine Whitford, Chief Medical Officer, as the primary medical monitor for this purpose, with Dr. Marcus Yun, Senior Vice President, Clinical Development, serving as her designee. The consultation is intended to be collaborative and to take into account the subject's overall clinical status, tumor response, tolerability, available alternative therapies, and the subject's own preferences.
Extended Access for Subjects Deriving Clinical Benefit. Subjects who are determined to be deriving clinical benefit from penterafenib at the conclusion of their current treatment cycle may continue to receive penterafenib for up to an additional ninety (90) days beyond the 120-day wind-down period. This means that the maximum total duration of post-termination treatment for any subject is two hundred ten (210) days from the Termination Notice Date. During the extended access period, the site investigator must actively pursue transition of the subject to commercially available therapy (including approved alternative therapies for advanced HCC) or enrollment in another clinical trial, and must document these efforts in the subject's medical record.
Penterra will supply penterafenib at no cost to the subject or to the site during the extended access period. Penterra will bear all costs associated with the manufacture, packaging, labeling, and distribution of the investigational product for extended access use. Penterra will also continue to pay per-patient milestone fees at the rate of $13,000 per milestone for any milestones actually achieved during the extended access period, consistent with the milestone-based payment framework agreed upon for the wind-down period (as described in Section III.B above).
Extended Access Certification. A subject's eligibility for extended access is conditioned upon the site investigator providing written certification to Penterra that continued treatment with penterafenib is medically necessary and in the subject's best interest. The certification must include, at a minimum: (i) a statement that the investigator has evaluated the subject's clinical response to penterafenib and has determined that the subject is deriving clinical benefit; (ii) a summary of the clinical basis for this determination, including relevant tumor response assessments, symptom evaluations, and laboratory findings; (iii) a statement that no adequate alternative therapy is immediately available to the subject; (iv) a description of the investigator's plan for transitioning the subject to alternative therapy within the extended access period; and (v) the investigator's attestation that the certification is made in good faith and is based on the investigator's reasonable medical judgment. The form of the Extended Access Certification will be prepared as a sub-exhibit to Exhibit D (Subject-Injury Indemnification Provisions) and will be attached to the executed MCTA.
Subjects Randomized to Placebo. Subjects who have been randomized to the placebo arm of the CLARION trial will be unblinded at the investigator's discretion following the Termination Notice Date, in consultation with Penterra's medical monitor, and consistent with the Protocol and GCP requirements. The decision to unblind should be made promptly and in a manner that protects the subject's interests and the integrity of the trial data to the greatest extent possible. No extended access obligations apply to placebo subjects, as there is no investigational product being administered and therefore no continuity-of-care concern analogous to that for subjects receiving penterafenib.
Safety Follow-Up. All subjects — whether on active treatment or placebo — will complete a safety follow-up visit within thirty (30) days of their last dose of study drug (or placebo), consistent with the safety follow-up requirements of Protocol PPC-4871-III. This requirement applies regardless of whether the subject's last dose occurs during the 120-day wind-down period or during the extended access period. The safety follow-up visit will include the assessments specified in the Protocol, including but not limited to vital signs, laboratory evaluations, adverse event review, and concomitant medication review.
Serious Adverse Event ("SAE") reporting obligations will continue throughout the safety follow-up period. Site investigators must report any SAEs to Penterra within twenty-four (24) hours of the site's becoming aware of the event, consistent with 21 C.F.R. § 312.32 and the Penterra SAE reporting guidelines. Penterra's IND safety reporting obligations (seven (7)-day reports for fatal or life-threatening unexpected suspected adverse reactions; fifteen (15)-day reports for other serious, unexpected suspected adverse reactions) will likewise continue through the safety follow-up period, consistent with IND 157823 requirements and FDA regulations.
Additionally, sites must continue to enter all relevant clinical data into the Pinnacle Data Solutions EDC platform during the extended access and safety follow-up periods. Data entry must be timely and complete, and sites must respond to data queries generated by the EDC system or by the clinical data management team. Meridian CRO's monitoring obligations — including source data verification, protocol compliance monitoring, and regulatory file review — will continue throughout the extended access and follow-up period, and Penterra will continue to compensate Meridian CRO for these services under the separate Penterra-Meridian agreement.
IRB Notification. Each participating site must notify its Institutional Review Board ("IRB") of record of the termination and the subject transition plan within ten (10) business days of the Termination Notice Date. For Graystone University, the applicable IRB is the Graystone University IRB (Registration No. IRB00012847). For non-Pennsylvania sites within the Veridian Network, the applicable IRB is the Veridian Central IRB. The notification must include a description of the termination event, the wind-down timeline, the extended access provisions for subjects deriving clinical benefit, and any modifications to the informed consent form that may be necessary to inform subjects of the change in trial status. Sites must promptly provide Penterra with copies of all IRB notifications and any IRB responses or conditions.
Maximum Duration Cap. In no event shall Penterra's obligations to supply penterafenib or to pay per-patient milestone fees extend beyond two hundred ten (210) days from the Termination Notice Date. This 210-day cap represents the sum of the 120-day wind-down period and the 90-day extended access period, and constitutes the absolute outer limit of Penterra's post-termination obligations with respect to investigational product supply and per-patient payments. After the expiration of the 210-day period, all remaining subjects will be transitioned to standard of care, and the site investigator will be solely responsible for the subject's ongoing clinical management, including selection and provision of alternative therapy.
Allison Whitmore confirmed Veridian's acceptance of the 120-day plus 90-day framework during the June 20 call. Ms. Whitmore noted that the 210-day maximum was acceptable to Veridian and its investigators, provided that the extended access certification mechanism described above is included in the MCTA as a meaningful safeguard to ensure that the medical judgment of the treating investigator is respected and documented. Ms. Whitmore also expressed satisfaction that the framework appropriately balances sponsor and investigator interests and is consistent with FDA guidance on the ethical treatment of subjects upon early termination of clinical trials.
C. Conforming Draft Language
Sean Morrissey will draft revised language for Section [●] (Termination — Subject Transition and Extended Access) of the MCTA, incorporating all elements of the agreed resolution described above. In addition, Mr. Morrissey will prepare the form of Extended Access Certification to be appended as a sub-exhibit to Exhibit D (Subject-Injury Indemnification Provisions). The draft language and certification form will be circulated internally for review by Rebecca Liang (Penterra, Associate General Counsel, Clinical Affairs) and Jennifer Holt (Penterra, VP, Clinical Operations) before incorporation into the final agreed draft of the MCTA. The target completion date for this drafting assignment is June 21, 2023.
V. Issue 3: Medically Necessary Protocol Deviations and Indemnification Carve-Out Interplay
A. Nature of the Issue
The near-final draft of the MCTA contained a standard sponsor indemnification provision, under which Penterra agrees to indemnify, defend, and hold harmless Veridian, its participating sites, and their respective investigators, officers, directors, employees, and agents from and against losses, damages, claims, liabilities, and expenses arising out of or related to the conduct of the CLARION trial, subject to specified carve-outs. One of the carve-outs — set forth in Section [●] of the body of the MCTA and in corresponding detail in Exhibit D (Subject-Injury Indemnification Provisions) — excluded from the scope of Penterra's indemnification any losses arising from a "deviation from the Protocol not authorized by Penterra or required for subject safety" (the "Indemnification Carve-Out").
Separately, the June 9, 2023 in-person negotiation session at WJC's Philadelphia offices established a framework for medically necessary protocol deviations. Under this framework, an investigator may deviate from the Protocol without prior Penterra authorization when, in the investigator's reasonable medical judgment, such deviation is necessary to protect the life or safety of a study subject. This framework was incorporated into the Protocol Compliance section of the near-final draft and is consistent with the regulatory requirements applicable to investigators under 21 C.F.R. § 312.60, which provide that an investigator "shall not make any changes in or additions to the protocol without Sponsor agreement, except where necessary to protect the safety, the rights, or the welfare of subjects."
The remaining drafting issue identified in the June 16 near-final draft concerned the interplay between these two provisions. Specifically, the phrase "required for subject safety" in the Indemnification Carve-Out was identified by WJC as ambiguous with respect to the standard by which a deviation qualifies as safety-related and therefore falls outside the carve-out (and within the scope of Penterra's indemnification). Two competing readings were possible:
(a) Narrow/Objective Reading (Favorable to Penterra): The phrase "required for subject safety" could be read to exclude from the carve-out only those deviations that are objectively and demonstrably required for subject safety — i.e., deviations that, viewed in hindsight or by an external standard, were in fact necessary to prevent imminent harm to the subject. Under this reading, an investigator's subjective belief that a deviation was required would not be sufficient if the deviation was not objectively necessary.
(b) Broad/Subjective Reading (Favorable to Veridian): The phrase could alternatively be read to exclude from the carve-out any deviation that the investigator, in his or her judgment, determined was required for subject safety, regardless of whether an objective standard would support the determination. Under this reading, the investigator's good-faith belief that subject safety required the deviation would be sufficient to keep the deviation within the scope of Penterra's indemnification.
Veridian, through Allison Whitmore, argued that the broader reading was essential to protect investigators from the risk that a deviation undertaken in good faith to protect a patient's life could subsequently be second-guessed by the Sponsor's litigation counsel and used to deny indemnification. Penterra, through Miriam Calloway, expressed concern that a purely subjective standard would create an overly broad exception to the carve-out that could effectively swallow the rule, allowing investigators to claim safety justifications for deviations that were in fact motivated by convenience, administrative expediency, or other non-safety considerations.
B. Agreed Resolution (June 20, 2023 Call)
During the June 20, 2023 call, Miriam Calloway and Allison Whitmore reached agreement on a formulation that bridges the gap between the objective and subjective readings. The parties agreed on the following terms:
"Reasonable Exercise of Medical Judgment" Standard. The Indemnification Carve-Out for protocol deviations will not apply where the deviation is "undertaken by the investigator in the reasonable exercise of medical judgment to protect the safety or well-being of a study subject." This formulation adopts neither a purely objective standard nor a purely subjective standard, but rather a hybrid "reasonable medical judgment" standard that respects the investigator's clinical expertise and decision-making authority while maintaining an objective reasonableness check. Under this standard, an investigator's decision to deviate from the Protocol will be evaluated based on whether a reasonable physician in the investigator's position, possessing the same information and facing the same circumstances, would have determined that the deviation was necessary to protect the subject's safety or well-being.
This "reasonable exercise of medical judgment" standard is well-established in clinical trial practice and is consistent with the regulatory framework governing investigator obligations. In particular, it aligns with 21 C.F.R. § 312.60, which recognizes the investigator's authority and obligation to protect subject safety, and with the ICH E6(R2) Guideline for Good Clinical Practice, which provides that "[t]he investigator may implement a deviation from, or a change of, the protocol to eliminate an immediate hazard(s) to trial subjects without prior IRB/IEC approval/favourable opinion" (ICH E6(R2) § 4.5.2). The agreed formulation gives appropriate deference to investigator judgment while ensuring that the indemnification carve-out retains its function as a meaningful limitation on Sponsor liability for deviations that are not safety-related.
Contemporaneous Documentation Requirement. The investigator must document the deviation and the medical rationale for the deviation contemporaneously in the subject's source documents. This documentation must include, at a minimum, a description of the deviation, the date and time of the deviation, the clinical circumstances that gave rise to the need for the deviation, the investigator's assessment of the risk to the subject if the deviation had not been undertaken, and a summary of the investigator's medical reasoning. Contemporaneous documentation is important both for regulatory compliance (ICH E6(R2) requires that deviations be documented in the source records) and for the practical purpose of creating a contemporaneous record that can be reviewed in any subsequent indemnification dispute.
48-Hour Reporting Obligation. The investigator must report the medically necessary protocol deviation to Penterra and to Meridian CRO within forty-eight (48) hours of the deviation. The report must include the information documented in the subject's source records, as well as any additional information reasonably requested by Penterra's medical monitor. The report may be submitted via the Pinnacle Data Solutions EDC platform, by email to Penterra's designated protocol deviation mailbox, or by telephone to Penterra's clinical operations hotline, provided that any telephone report is followed by written confirmation within the 48-hour period.
Procedural vs. Substantive Nature of Reporting Obligation. The parties expressly agreed that the 48-hour reporting obligation is a procedural requirement only and does not affect the indemnification analysis. Specifically, an investigator's failure to report a medically necessary protocol deviation within the 48-hour window does not convert the deviation into a non-indemnified deviation, provided that the deviation itself was undertaken in the reasonable exercise of medical judgment to protect subject safety or well-being. This distinction is critical: if the reporting obligation were treated as a condition precedent to indemnification, investigators could face the perverse result of losing indemnification coverage for a legitimate safety-related deviation simply because administrative circumstances (such as a weekend, a site holiday, or the investigator's absence from the site) prevented timely reporting. The parties agreed that such a result would be inequitable and contrary to the policy of encouraging investigators to prioritize subject safety.
However, the parties also agreed that repeated or systematic failure to comply with the 48-hour reporting obligation may be addressed through the Protocol Compliance mechanisms of the MCTA, including the right of Penterra to issue corrective action requests to the site and, in extreme cases, to terminate the site's participation in the trial for material non-compliance.
Preservation of the Carve-Out for Non-Safety Deviations. The agreed resolution preserves the Indemnification Carve-Out for protocol deviations that are not undertaken for subject safety purposes. This includes, without limitation, deviations motivated by investigator or site convenience, administrative or scheduling errors, deviations undertaken for the purpose of accelerating enrollment or increasing revenue, and deviations motivated by reasons other than the protection of subject safety or well-being. In such cases, the Indemnification Carve-Out will apply, and Penterra will have no obligation to indemnify the site, investigator, or Veridian for losses arising from the deviation. The burden of establishing that a deviation was undertaken in the reasonable exercise of medical judgment rests with the party seeking indemnification.
Allison Whitmore confirmed Veridian's acceptance of the "reasonable exercise of medical judgment" formulation during the June 20 call. Ms. Whitmore indicated that the formulation was consistent with Veridian's understanding of the investigator's role and obligations under GCP and that the inclusion of the procedural-only characterization of the 48-hour reporting requirement addressed Veridian's principal concern about the risk of inadvertent forfeiture of indemnification rights.
C. Conforming Draft Language
Christopher Aiken will revise the Indemnification Carve-Out language in Section [●] of the MCTA and the corresponding provision in Exhibit D (Subject-Injury Indemnification Provisions) to incorporate the "reasonable exercise of medical judgment" standard, the contemporaneous documentation requirement, the 48-hour reporting obligation, and the express characterization of the reporting obligation as procedural only. The revised indemnification language will be cross-referenced with the medically necessary protocol deviation definition in the Protocol Compliance section of the MCTA to ensure consistency and to avoid any ambiguity arising from the use of different formulations in different sections of the agreement. The target completion date for this drafting assignment is June 21, 2023.
VI. Summary of All Resolved Issues and MCTA Status
A. Comprehensive Issue Resolution Table
The following table provides a comprehensive summary of all substantive issues that were raised during the negotiation of the MCTA, the positions of the respective parties, the agreed resolution, and the date on which each issue was resolved. This table is intended to serve as a reference document for the negotiation history and to confirm that all open items have been addressed.
B. Confirmation That All Brackets Are Resolved
With the resolution of the three issues described in Sections III, IV, and V above, all bracketed provisions, open-item notations, and placeholder language in the near-final draft of the MCTA (dated June 16, 2023) have been fully resolved. There are no remaining open issues, disputed provisions, or deferred items requiring further negotiation between the parties.
All previously resolved issues — including the indemnification scope, insurance levels, publication rights, payment milestones, and reciprocal site indemnity caps — remain reflected in the near-final draft and are not subject to reopening. Both Miriam Calloway and Allison Whitmore confirmed during the June 20 call that the parties consider the negotiation of the MCTA to be substantively complete.
VII. Next Steps and Timeline to Execution
The following timeline sets forth the key milestones for finalization and execution of the MCTA. All dates are target dates and are subject to adjustment based on the availability of the authorized signatories and the timely delivery of conditions precedent.
June 21–22, 2023: Christopher Aiken and Sean Morrissey will prepare conforming revisions to the MCTA, incorporating the agreed resolutions on: (a) termination wind-down payment obligations (Section [●]); (b) subject transition procedures, including extended access provisions and the form of Extended Access Certification (Section [●] and Exhibit D sub-exhibit); and (c) indemnification carve-out language incorporating the "reasonable exercise of medical judgment" standard (Section [●] and Exhibit D). All revised provisions will be prepared in redline format against the June 16 near-final draft to facilitate review.
June 22, 2023: Miriam Calloway will conduct an internal review of the revised draft to confirm that all conforming revisions accurately reflect the agreed resolutions and are consistent with the overall structure and drafting conventions of the MCTA. Following internal review, Ms. Calloway will circulate the revised draft to Rebecca Liang (Penterra, Associate General Counsel, Clinical Affairs) and Nathaniel Briggs (Penterra, VP & General Counsel) for client review and approval. The circulation will be accompanied by a cover memorandum summarizing the revisions and requesting client sign-off.
June 23, 2023: Target date for circulation of the final agreed draft of the MCTA to WJC (Allison Whitmore and David Kesselman) and to Veridian (Gregory Callahan and Patricia Dunne) for final confirmation. The circulated draft will be a clean version reflecting all agreed revisions, accompanied by a redline showing changes from the June 16 near-final draft. Both parties will be asked to confirm that the draft accurately reflects the agreed terms and that no further revisions are necessary.
June 23–27, 2023: Preparation of the execution version of the MCTA, including final formatting, pagination, and cross-reference verification. Sean Morrissey and Christopher Aiken will also prepare signature pages for all signatories, as well as final versions of all exhibits and schedules, including:
• Exhibit A — Protocol PPC-4871-III (CLARION) Synopsis
• Exhibit B — Budget and Payment Schedule (including per-patient milestone table, site maintenance fee schedule, network coordination fee schedule, start-up fee schedule, and EDC integration cost allocation)
• Exhibit C — Publication Rights and Investigator Grant Schedule
• Exhibit D — Subject-Injury Indemnification Provisions (including Extended Access Certification sub-exhibit)
• Exhibit E — Insurance Requirements and Certificate of Insurance Form
• Schedule 1 — List of Participating Sites
• Schedule 2 — Authorized Investigators
• Schedule 3 — IRB of Record Designations
June 28, 2023: Target signing date. The MCTA is to be executed by the following authorized signatories:
• Penterra Pharmaceuticals Corp.: Nathaniel Briggs, Vice President & General Counsel
• Veridian Health Research Network, Inc.: Dr. Franklin Osei, President & Chief Scientific Officer
• Graystone University (as lead site): Dr. William Corwin, Vice President for Research
Signature logistics will be coordinated by Samantha Novak (Penterra, contracts administration) and Sean Morrissey (Calderwood & Harkness). The parties have agreed that the MCTA may be executed in counterparts, including by electronic signature via Brightwater Software, with each counterpart constituting an original.
July 5, 2023: Target closing date. The closing is conditioned upon satisfaction of the following conditions precedent:
• Delivery of certificates of insurance from Briarcliff Mutual (Policy BM-CTL-2023-04182) confirming $25,000,000 per occurrence / $75,000,000 aggregate coverage and naming Veridian and its participating sites as additional insureds;
• Delivery of certificates of insurance from site carriers confirming $5,000,000 per occurrence / $10,000,000 aggregate coverage for reciprocal site indemnification obligations;
• IRB approvals for lead sites, including approval from Graystone University IRB (IRB00012847) and the Veridian Central IRB;
• Executed investigator signature pages from all lead investigators, including Dr. Catherine Aldridge (Graystone University, Principal Investigator) and Dr. Howard Matsuoka (Veridian Central, Co-Principal Investigator); and
• Delivery of fully executed copies of the MCTA to all parties.
July 18, 2023: Target effective date of the MCTA. All rights and obligations of the parties under the MCTA, including financial obligations, indemnification obligations, and confidentiality provisions, will commence as of this date.
August 14, 2023: Target date for First Patient In ("FPI") for Protocol PPC-4871-III (CLARION), ClinicalTrials.gov Identifier NCT05928174, IND 157823. Achievement of the FPI milestone is contingent upon site activation, IRB approval, and investigator readiness at the lead sites.
VIII. Action Items
The following table sets forth all outstanding action items required to finalize and execute the MCTA. Each action item is assigned to a responsible individual with a corresponding deadline.
IX. Conclusion
All substantive and drafting issues in the Master Clinical Trial Agreement between Penterra Pharmaceuticals Corp. and Veridian Health Research Network, Inc. for Protocol PPC-4871-III (CLARION) have been resolved through the telephone conferences of June 19 and June 20, 2023, between Miriam Calloway of Calderwood & Harkness LLP and Allison Whitmore of Whitmore, Jansen & Callahan LLP. The three final open issues — termination wind-down payment obligations, subject transition procedures upon early termination, and the formulation of the indemnification carve-out as it relates to medically necessary protocol deviations — have been resolved on terms that are consistent with Penterra's negotiation objectives and authority parameters as communicated by Rebecca Liang and Nathaniel Briggs throughout the course of this engagement.
The agreed resolutions appropriately balance the interests of the Sponsor and the Network with respect to termination economics, ensuring that Penterra pays only for milestones actually achieved and services actually rendered during the wind-down period while providing Veridian and its sites with reasonable financial protections. The subject transition framework respects the ethical obligation to patients who are deriving clinical benefit from penterafenib while establishing a definite 210-day outer limit on Penterra's post-termination supply and payment obligations. The indemnification carve-out formulation — incorporating the "reasonable exercise of medical judgment" standard — maintains the integrity of the indemnification framework by protecting investigators who act in good faith to protect subject safety while preserving the carve-out for deviations that are not safety-related.
Subject to client approval of the conforming draft language, which will be prepared by June 21–22 and circulated for client review on June 22, the MCTA is on track for execution on June 28, 2023, closing on July 5, 2023, and an effective date of July 18, 2023. First Patient In is anticipated on August 14, 2023, consistent with the clinical development timeline for the CLARION trial.
This memorandum should be retained as attorney work product documenting the negotiation history and the rationale for the final agreed terms of the MCTA. Copies have been provided to Rebecca Liang (Penterra) and Joel Strauss (Calderwood & Harkness) for their files.
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT This memorandum is not intended to constitute legal advice to any person or entity other than the addressee and copy recipients identified above. Unauthorized disclosure, copying, or distribution is prohibited.
| Issue | Penterra Position | Veridian Position | Agreed Resolution | Date Resolved |
| Subject-injury indemnification scope | Per-subject cap $500,000; aggregate cap $15,000,000 for medical care costs; uncapped for product-defect claims | Uncapped indemnification for all subject injuries, without per-subject or aggregate caps | Per-subject cap of $500,000; aggregate cap of $15,000,000 for medical care costs; uncapped indemnification for product-defect claims | May 5, 2023 (indemnification term sheet) |
| Insurance per-occurrence limit | $25,000,000 per occurrence / $75,000,000 aggregate | $50,000,000 per occurrence / no stated aggregate position | $25,000,000 per occurrence / $75,000,000 aggregate (Briarcliff Mutual Policy BM-CTL-2023-04182) | June 9, 2023 (in-person session) |
| Publication rights / academic freedom | 90-day Sponsor review period + 90-day patent delay period | Unrestricted publication rights with no Sponsor review or delay | 60-day Sponsor review period + 90-day patent delay period | June 9, 2023 (in-person session) |
| Payment milestones (per-patient) | 25%/25%/25%/25% milestone-based at $13,000 each ($52,000 total per patient) | Front-loaded 50%/25%/25% structure | 25%/25%/25%/25% at randomization, Week 12, Week 24, and study completion ($13,000 per milestone) | May 19, 2023 (second draft) |
| Reciprocal site indemnity caps | $5,000,000 per site/per occurrence; $20,000,000 aggregate | $10,000,000 per site/per occurrence; no stated aggregate position | $5,000,000 per site/per occurrence; $20,000,000 aggregate | May 19, 2023 (second draft) |
| Medically necessary protocol deviations framework | Safety-related deviations exempt from indemnification carve-out (narrow/objective reading) | Broad investigator discretion; any deviation the investigator deems safety-related is exempt | "Reasonable exercise of medical judgment" standard; 48-hour reporting as procedural requirement only | June 9, 2023 (framework) and June 20, 2023 (final formulation) |
| Termination wind-down payment obligations | Pay only for milestones actually reached during 120-day wind-down; monthly proration of maintenance fees | Full payment for all enrolled subjects through projected study completion; full-year maintenance fees | Per-patient fees for milestones actually reached during wind-down; monthly proration of maintenance fees; daily proration of coordination fees; non-refundable start-up fees | June 19, 2023 |
| Subject transition upon early termination | 120-day wind-down with no extended access beyond wind-down period | Unlimited continued access for subjects on active treatment deriving clinical benefit | 120-day wind-down + 90-day extended access (max 210 days) for subjects deriving clinical benefit; investigator certification required; no extended access for placebo subjects | June 19–20, 2023 |
| Indemnification carve-out formulation (protocol deviations) | "Required for subject safety" (objective standard) | "In the investigator's judgment" (subjective standard) | "Undertaken by the investigator in the reasonable exercise of medical judgment to protect the safety or well-being of a study subject" (hybrid/reasonable standard) | June 20, 2023 |
| # | Action Item | Responsible | Deadline | |
| 1 | Draft revised termination wind-down payment provisions (Section [●]), including payment category table and proration methodology | Christopher Aiken | June 21, 2023 | |
| 2 | Draft revised subject transition / extended access provisions (Section [●]) and Extended Access Certification form (Exhibit D sub-exhibit) | Sean Morrissey | June 21, 2023 | |
| 3 | Revise indemnification carve-out language (Section [●] and Exhibit D) to incorporate "reasonable exercise of medical judgment" standard, contemporaneous documentation requirement, 48-hour reporting obligation, and procedural-only characterization | Christopher Aiken | June 21, 2023 | |
| 4 | Internal review of all conforming revisions to ensure accuracy, consistency, and proper cross-referencing | Miriam Calloway | June 22, 2023 | |
| 5 | Circulate revised draft to Rebecca Liang and Nathaniel Briggs for client review and approval | Miriam Calloway | June 22, 2023 | |
| 6 | Circulate final agreed draft to WJC (Allison Whitmore, David Kesselman) and Veridian (Gregory Callahan, Patricia Dunne) for final confirmation | Miriam Calloway | June 23, 2023 | |
| 7 | Prepare execution version of the MCTA, signature pages, and all exhibits and schedules (Exhibits A–E, Schedules 1–3) | Sean Morrissey / Christopher Aiken | June 23–27, 2023 | |
| 8 | Coordinate signature logistics with Penterra (Nathaniel Briggs), Veridian (Dr. Franklin Osei), and Graystone (Dr. William Corwin); arrange Brightwater Software routing | Samantha Novak (Penterra) / Sean Morrissey (C&H) | June 26–28, 2023 | |
| 9 | Confirm Briarcliff Mutual additional insured endorsement and delivery of certificate of insurance (Policy BM-CTL-2023-04182) | Christopher Aiken | By July 5, 2023 | |
| 10 | Follow up on Veridian site insurance certificates ($5,000,000 per occurrence / $10,000,000 aggregate) due within 15 business days of execution | Christopher Aiken | By July 19, 2023 |