Jonathan and Rebecca,
I hope this message finds you well. I am writing on behalf of Calderwood & Harkness LLP, counsel to Penterra Pharmaceuticals Corp. ("Penterra"), in connection with the proposed out-license of compound PPC-4187 (Penteracitinib) to Meridian Bio Therapeutics Limited ("Meridian").
As you know, following authorization by the Penterra Board of Directors on July 18, 2023, the parties executed the Non-Binding Term Sheet and the Exclusivity Agreement, each dated August 4, 2023. In accordance with those agreements, and in consultation with the Penterra team — including Anita Fremont (General Counsel) and Leland J. Cho (SVP, Business Development) — we have prepared the initial draft of the principal transaction agreement for your review.
Please find attached an initial draft of the **Exclusive License Agreement** between Penterra Pharmaceuticals Corp. (as Licensor) and Meridian Bio Therapeutics Limited (as Licensee) for PPC-4187 (the "Agreement"). The draft is provided in Word format for ease of tracked-changes markup during your review. By way of overview, the draft addresses the following key components, reflecting the terms set forth in the executed term sheet:
- **Exclusive License Grant** — Grant of an exclusive license in the Asia-Pacific Territory, comprising the People's Republic of China (including Hong Kong SAR and Macau SAR), Japan, the Republic of Korea, Australia, New Zealand, Singapore, Thailand, Malaysia, Indonesia, the Philippines, Vietnam, and Taiwan.
- **Financial Terms** — An upfront payment of $18,000,000; development milestone payments totaling up to $32,000,000; regulatory milestone payments totaling up to $25,000,000; and commercial/sales milestone payments totaling up to $45,000,000, for a total potential deal value of up to $120,000,000.
- **Royalties** — A tiered royalty structure on annual net sales: 8% on net sales up to $50 million; 11% on net sales greater than $50 million up to $150 million; and 14% on net sales in excess of $150 million.
- **Most Favored Nation Pricing Provisions**
- **Comprehensive Indemnification Provisions**
- **Representations and Warranties**
- **Sublicensing Framework**
- **Governance Provisions** — Establishment of a Joint Steering Committee and a Joint Patent Committee.
- **Dispute Resolution** — ICC arbitration seated in New York.
- **Governing Law** — New York.
The draft includes the following schedules in substantially complete form:
- **Schedule A — Licensed Patents**: Seven patent families, including U.S. Patent Nos. 11,234,567 and 11,345,678, PCT/US2019/045123 national phase entries, and granted patents in CN, JP, KR, and AU. - **Schedule B — Licensed Know-How**: Clinical data packages (including Study PPC-4187-201), manufacturing process documentation, and analytical methods. - **Schedule C — Licensed Trademarks**: The PENTECLAR mark, U.S. Reg. No. 6,789,012, and corresponding Territory filings. - **Schedule D — Territory** - **Schedule E — Development Plan**: Outline Phase III plan for the Territory. - **Schedule F — MFN Pricing Methodology**
We note that certain schedules may require additional input from the Meridian team. In particular, we would welcome Meridian's comments on the development plan timelines in Schedule E and confirmation of the data package requirements contemplated by Schedule B.
In addition, drafts of the following ancillary agreements are currently in progress and will be circulated separately in the coming days:
- Escrow Agreement (with Velthorn National Bank, N.A. as escrow agent) - API Supply Agreement (cost plus 15% markup; 3-year initial term) - Technology Transfer Agreement (24-month completion timeline) - Quality Agreement (to be executed within 60 days of the Effective Date) - Trademark License Agreement (PENTECLAR mark in the Territory) - Pharmacovigilance Agreement
We would appreciate it if your team could provide comments and/or a redline of the Agreement by **Friday, September 1, 2023**. As you are aware, the parties' mutual exclusivity period under the Exclusivity Agreement is running, and we are working toward a target signing in early October. With that timeline in mind, we want to ensure adequate time for a thorough review and negotiation of the draft.
We would also be happy to schedule a call with the deal teams to walk through the draft or discuss any preliminary questions before your firm begins its detailed review. We have availability early next week and can coordinate a time that works for all parties.
Finally, a brief reminder that the attached draft is confidential and subject to the terms of the Exclusivity Agreement and any applicable confidentiality agreements between the parties. We would ask that distribution be limited accordingly.
Please do not hesitate to reach out if you have any preliminary questions. We look forward to working with you on this transaction.
Best regards,
**Peter Vassiliev** Associate Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022 T: (212) 471-3388 E: pvassiliev@calderwoodharkness.com
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