1018-00006 · Penterra Pharmaceuticals Corp · Engagement

conflict-check-memo.docx DOCUMENT IP / Technology

19 / 39 ← → ✕

Contract analysis Extract to table

CALDERWOOD & HARKNESS LLP

CONFIDENTIAL / ATTORNEY-CLIENT PRIVILEGED

INTERNAL MEMORANDUM — NEW MATTER CONFLICT CHECK

Date: July 10, 2023

TO: Marcus Delgado, Responsible Partner, intellectual Property

FROM: Peter Vassiliev, Lead Associate, intellectual Property

RE: Conflict Check Results — Representation of Penterra Pharmaceuticals Corp. in Out-License of Compound PPC-4187 to Meridian Bio Therapeutics Limited

MATTER NUMBER: To be assigned upon clearance

OFFICE: Calderwood & Harkness LLP, 600 Lexington Avenue, 30th Floor, New York, NY 10022

I. PURPOSE AND SCOPE OF MEMORANDUM

This memorandum documents the results of the conflict of interest check conducted in connection with the proposed engagement of Calderwood & Harkness LLP ("C&H" or the "Firm") by Penterra Pharmaceuticals Corp. ("Penterra" or "PPC") to represent Penterra as licensor's counsel in the out-licensing of its proprietary compound PPC-4187 (Penteracitinib), a selective JAK1 inhibitor indicated for moderate-to-severe atopic dermatitis, to Meridian Bio Therapeutics Limited ("Meridian" or "MBT"). The proposed transaction involves the grant of exclusive rights to PPC-4187 in the Asia-Pacific region and is anticipated to have a total deal value of up to One Hundred Twenty Million U.S. Dollars ($120,000,000), inclusive of upfront payments, development milestones, regulatory milestones, and commercial milestones, together with tiered royalties on net sales.

The conflict check was initiated on July 10, 2023 upon receipt of the engagement request from Anita M. Fremont, Esq., General Counsel of Penterra. Ms. Fremont contacted Marcus Delgado by telephone on July 7, 2023, and a formal engagement request was transmitted to the Firm via email on July 10, 2023, accompanied by the preliminary term sheet and a list of key parties involved in the proposed transaction.

The check was conducted in accordance with Calderwood & Harkness's internal conflict clearance procedures (as set forth in the Firm's Conflicts and Ethics Manual, revised January 2023) and the applicable provisions of the New York Rules of Professional Conduct, including without limitation Rules 1.7 (Conflict of Interest: Current Clients), 1.8 (Current Clients: Specific Conflict of Interest Rules), 1.9 (Duties to Former Clients), and 1.10 (Imputation of Conflicts of Interest). The purpose of this memorandum is to present a comprehensive record of all parties searched, the methodology employed, the results obtained, and the conclusions drawn, so as to confirm that the Firm may properly accept the proposed engagement without any actual or reasonably foreseeable conflict of interest.

II. PROPOSED CLIENT AND MATTER DESCRIPTION

A. Client Information

The following information has been compiled from public filings, Penterra's corporate website, and information provided directly by Ms. Fremont in connection with the engagement request:

Penterra is a publicly traded specialty pharmaceutical company headquartered in Princeton, New Jersey. The company maintains a development pipeline of fourteen (14) compounds in various stages of preclinical and clinical development across multiple therapeutic areas, with a particular focus on immunology, oncology, and rare diseases. PPC-4187 (Penteracitinib), the compound at issue in this engagement, is a selective Janus Kinase 1 (JAK1) inhibitor designed for the treatment of moderate-to-severe atopic dermatitis. Penterra announced topline Phase IIb results for PPC-4187 in both the United States and European Union in June 2023, reporting statistically significant improvements in the primary endpoint of EASI-75 response at Week 16. Penterra holds the global intellectual property rights to PPC-4187, including a family of issued and pending patents covering the compound, its polymorphs, formulations, and methods of treatment.

B. Matter Description

The proposed engagement concerns the out-licensing of exclusive rights to PPC-4187 (Penteracitinib) in the Asia-Pacific region (the "Territory") to Meridian Bio Therapeutics Limited, a Hong Kong-based biopharmaceutical company. Calderwood & Harkness would serve as licensor's counsel, responsible for drafting, negotiating, and closing the definitive license agreement and all ancillary documents, which are expected to include, without limitation:

(a) a definitive Exclusive License Agreement for the Territory;

(b) a Supply Agreement for the provision of active pharmaceutical ingredient (API) and/or finished drug product during the initial development period;

(d) a Pharmacovigilance Agreement establishing adverse event reporting obligations;

(e) a Joint Development Committee Charter, if required;

(f) any required escrow arrangements for milestone payments or manufacturing know-how; and

(g) such other ancillary agreements, side letters, and disclosure schedules as may be necessary to consummate the transaction.

The anticipated total deal value is up to One Hundred Twenty Million U.S. Dollars ($120,000,000), structured as follows: an upfront payment upon execution (amount to be negotiated, estimated in the range of $15 million to $25 million); development milestone payments tied to the initiation and completion of pivotal clinical trials in key Asia-Pacific markets; regulatory milestone payments upon the receipt of marketing authorizations in Japan, China, South Korea, and Australia; and commercial milestone payments triggered by cumulative net sales thresholds. In addition, the license agreement will provide for tiered royalties on net sales of licensed products in the Territory, with royalty rates to be negotiated.

Meridian's outside counsel in the transaction is Lam, Cheung & Firth LLP, a Hong Kong and New York-based law firm. The lead partner on the Meridian side is Jonathan M. Firth, a partner in Lam, Cheung & Firth's intellectual property and licensing practice.

C. Proposed Engagement Team

The following attorneys are proposed to staff the engagement on behalf of Calderwood & Harkness:

Marcus Delgado will serve as the Responsible Partner with overall supervisory responsibility for the engagement. Catherine Bloom will serve as the Billing Partner and will be the primary point of contact for billing and fee arrangement matters. Peter Vassiliev will serve as the Lead Associate and will be responsible for the day-to-day management of the transaction, including the initial drafting of the definitive license agreement and ancillary documents. Wendy Schultz will serve as a Working Associate and will assist with due diligence, patent portfolio analysis, and drafting of disclosure schedules. Sylvia Hartwell will provide specialist tax counsel on the structuring of upfront payments, milestone payments, and royalty flows, with particular attention to cross-border withholding tax considerations in the relevant Asia-Pacific jurisdictions.

III. PARTIES SEARCHED

In accordance with the Firm's conflict clearance procedures, the following entities and individuals were searched in Calderwood & Harkness's centralized conflicts management system ("ConflictCheck"). The search encompassed the proposed client and its key personnel, the counterparty and its affiliates and key personnel, the counterparty's known outside counsel, known financial advisors to both parties, the potential escrow agent, and other known third parties who are expected to play a material role in the proposed transaction.

A. Proposed Client and Affiliates

The following searches were conducted with respect to Penterra and its key officers:

1. Penterra Pharmaceuticals Corp. (including all known subsidiaries, trade names, and former names)

2. Dr. Raymond K. Ostrowski — Chief Executive Officer

3. Anita M. Fremont, Esq. — General Counsel

4. Leland J. Cho — Senior Vice President, Business Development

5. Dr. Priya Nandakumar — Vice President, intellectual Property

6. Garrett T. Holloway — Chief Financial Officer

A subsidiary search was also conducted against publicly available corporate records and SEC filings for Penterra, which disclosed no subsidiaries currently material to the proposed transaction that were not otherwise captured in the search.

B. Counterparty and Affiliates

The following searches were conducted with respect to Meridian and its known affiliates and key personnel:

1. Meridian Bio Therapeutics Limited — Hong Kong, Company Registration No. 2847631

2. Meridian Pharma (Shanghai) Co., Ltd. — wholly foreign-owned enterprise (WFOE) organized under the laws of the People's Republic of China

3. Meridian Japan K.K. — organized under the laws of Japan, with registered offices in Tokyo

4. Meridian Korea Inc. — organized under the laws of the Republic of Korea, with registered offices in Seoul

5. Meridian Bio Australia Pty Ltd — organized under the laws of Australia, with registered offices in Sydney

6. Dr. Henry W.L. Tsang — Chairman and Founder, Meridian Bio Therapeutics Limited

7. Angela C.Y. Fong — Chief Executive Officer, Meridian Bio Therapeutics Limited

8. Dr. Kenji Morimoto — Chief Medical Officer, Meridian Bio Therapeutics Limited

9. David R. Cheung, Esq. — General Counsel, Meridian Bio Therapeutics Limited

10. Patrick S.H. Kwok — Chief Financial Officer, Meridian Bio Therapeutics Limited

C. Counterparty's Known Counsel

The following searches were conducted with respect to the law firm engaged by Meridian as its outside counsel in the proposed transaction:

1. Lam, Cheung & Firth LLP — Hong Kong and New York offices

2. Jonathan M. Firth — Lead Partner, intellectual Property / Licensing

3. Rebecca S. Liang — Associate

D. Known Advisors and Third Parties

The following additional parties were identified by Ms. Fremont and by the preliminary term sheet as having a known or anticipated role in the proposed transaction, and were accordingly included in the conflict search:

1. Prescott Hale & Co. LLC — Financial advisor to Penterra; Senior Managing Director: Victoria R. Chen

2. Eastbridge Partners Limited — Financial advisor to Meridian; Managing Director: Simon K.P. Woo

3. Velthorn National Bank, N.A. — Potential escrow agent for milestone payment escrow arrangements; Escrow Officer: Teresa M. D'Angelo

4. Whitford & Cascade Insurance Brokers — Patent prosecution counsel to Penterra; Lead Patent Attorney: Dr. Alan J. Whitford

5. Clarendon Bates LLP — Independent auditor to Penterra; Engagement Partner: Robert F. Stanhope, CPA

6. Nakamura & Takeda Law Offices — Japan regulatory counsel to Meridian; Lead Partner: Yuki Nakamura

7. Jade Dragon Insurance Limited — Product liability and clinical trial insurer for Meridian; Underwriter: Christine A. Lo

8. Alkerra Manufacturing Inc. — Contract manufacturer of active pharmaceutical ingredient (API) for Penterra; located in Research Triangle Park, North Carolina

Each of the above entities and individuals was searched by full legal name. Where applicable, known short names, abbreviations, acronyms, and variant spellings were also entered as search terms to ensure comprehensive coverage.

IV. CONFLICT CHECK METHODOLOGY

The conflict check was performed in accordance with the procedures set forth in Section 4 of the Calderwood & Harkness Conflicts and Ethics Manual (rev. January 2023). The specific methodology employed is summarized as follows:

Database Searched. All names listed in Section III above were searched in the Firm's centralized conflicts management system ("ConflictCheck"), which is maintained by the Firm's Conflicts and New Business Department under the supervision of the General Counsel's Office. ConflictCheck contains records of all current client representations, all former client representations (dating to the Firm's founding in 1974), all adverse parties identified in connection with current and former matters, and all related or affiliated entities disclosed to the Firm in the course of intake procedures.

Search Parameters. Searches were conducted using the following parameters for each entry:

(a) Full legal name of each entity, including entity-type designators (e.g., "Corp.," "Limited," "K.K.," "Inc.," "Pty Ltd," "LLP," "N.A.");

(b) All known short names, trade names, and abbreviations (e.g., "Penterra," "PPC," "Meridian," "MBT," "LCF," "Velthorn");

(c) Individual names of key personnel, searched in "Last, First" and "First Last" formats, including known middle initials; and

(d) Employer Identification Numbers (EINs) where available.

Temporal Scope. Cross-references were run against all active Calderwood & Harkness matters and all matters closed within the preceding five (5) years (i.e., matters closed on or after July 10, 2018). Additionally, the system was queried for any historical representation of or adverse engagement against the core parties (Penterra, Meridian, and their respective parent entities and subsidiaries) extending beyond the five-year window, covering the full historical database.

Personal Conflict Check. In addition to the database searches, each member of the proposed engagement team was individually contacted and asked to confirm whether he or she has any personal financial interest (direct or indirect) in Penterra, Meridian, or any affiliated entity, and whether he or she has any personal, familial, or prior professional relationship with any officer, director, or key employee of Penterra, Meridian, or any other party listed in Section III that could give rise to a conflict of interest or the appearance thereof. Each team member confirmed in writing (via email to the undersigned) that no such interest or relationship exists.

Supplemental Research. As a supplemental measure, publicly available information was reviewed to identify any additional affiliates, subsidiaries, or related entities of Penterra and Meridian not already captured in the initial party list provided by the client. This review encompassed SEC filings for Penterra (including the most recent Form 10-K and proxy statement), the Hong Kong Companies Registry for Meridian, and corporate website disclosures for both entities. No additional parties requiring search were identified beyond those listed in Section III.

V. RESULTS OF CONFLICT CHECK

The results of the conflict check are set forth below, organized by category of party searched. For each category, I report whether any current or prior representation, adverse relationship, or other potential conflict was identified, and, if so, the nature and disposition of the matter.

A. Penterra Pharmaceuticals Corp.

No current or prior Calderwood & Harkness representation of Penterra Pharmaceuticals Corp. was identified in the Firm's conflicts database. Penterra has never been a client of the Firm, and no matter has been opened on Penterra's behalf at any time during the period covered by the database.

Additionally, Penterra does not appear as an adverse party, counterparty, or related entity in any current Calderwood & Harkness matter. A historical search extending beyond the five-year lookback period likewise returned no results linking Penterra to any Firm matter in any capacity.

No member of the proposed engagement team has any prior professional relationship with Penterra or any of its officers or directors (Dr. Raymond K. Ostrowski, Anita M. Fremont, Leland J. Cho, Dr. Priya Nandakumar, or Garrett T. Holloway) that would give rise to a conflict of interest. No team member holds any financial interest in Penterra or its securities.

Conclusion: No conflict identified with respect to Penterra Pharmaceuticals Corp.

B. Meridian Bio Therapeutics Limited and Affiliates

No current or prior Calderwood & Harkness representation of Meridian Bio Therapeutics Limited or any of its known subsidiaries and affiliates—including Meridian Pharma (Shanghai) Co., Ltd., Meridian Japan K.K., Meridian Korea Inc., and Meridian Bio Australia Pty Ltd—was identified in the Firm's conflicts database. None of these entities has ever been a client of the Firm.

Meridian and its affiliates do not appear as adverse parties, counterparties, or related entities in any current Calderwood & Harkness matter. A historical search extending beyond the five-year lookback period likewise returned no results linking any Meridian entity to any Firm matter in any capacity.

No member of the proposed engagement team has any prior professional relationship with Meridian or any of its officers or directors (Dr. Henry W.L. Tsang, Angela C.Y. Fong, Dr. Kenji Morimoto, David R. Cheung, or Patrick S.H. Kwok) that would give rise to a conflict of interest. No team member holds any financial interest in Meridian or any of its affiliates.

Because Meridian is the counterparty in the proposed transaction and Calderwood & Harkness would be representing Penterra as licensor's counsel in negotiations with Meridian, it is essential that no duty of loyalty or confidentiality runs from the Firm to Meridian. The absence of any current or former client relationship with Meridian confirms that no such duty exists, and the Firm's representation of Penterra adverse to Meridian in this transaction does not implicate Rules 1.7 or 1.9 of the New York Rules of Professional Conduct.

Conclusion: No conflict identified with respect to Meridian Bio Therapeutics Limited or any of its affiliates.

C. Meridian's Counsel — Lam, Cheung & Firth LLP

Lam, Cheung & Firth LLP ("LCF") appears in the Firm's conflicts database in connection with one prior matter: Calderwood & Harkness and LCF served as co-counsel to the same client in a cross-border intellectual property licensing matter that was opened in 2017 and closed in 2019. In that prior matter, the two firms collaborated on behalf of a mutual client and were not adverse to one another. No other matters involving LCF were identified in the database, and no current matter involves LCF in any capacity—whether as co-counsel, opposing counsel, or otherwise.

The prior co-counsel relationship does not create a conflict of interest for the proposed engagement. LCF is not a client or former client of Calderwood & Harkness; it was merely a co-counsel firm engaged by the same client on an unrelated transaction. The Firm owes no duty of loyalty or confidentiality to LCF arising from that prior collaboration. Furthermore, no confidential information of LCF was received by C&H in the course of the prior co-counsel relationship that would be material to the current proposed engagement.

Jonathan M. Firth and Rebecca S. Liang, the identified LCF attorneys on the Meridian side of the proposed transaction, do not appear in the Firm's database in any individual capacity, and no member of the proposed engagement team has any personal relationship with either individual.

Conclusion: No conflict identified with respect to Lam, Cheung & Firth LLP or its identified attorneys.

D. Financial Advisors

Prescott Hale & Co. LLC. Prescott Hale & Co. LLC ("Prescott Hale") appears in the Firm's conflicts database in connection with multiple prior and current matters in which Prescott Hale served as financial advisor to clients of Calderwood & Harkness. In each identified instance, the Firm represented a client in a transaction (e.g., a merger, acquisition, or licensing deal) in which Prescott Hale was retained as the client's own financial advisor or as financial advisor to a third party, but the Firm's representation was not adverse to Prescott Hale in any of those matters. Prescott Hale has never been a client of Calderwood & Harkness, and the Firm has never represented any party in a matter adverse to Prescott Hale's interests. No current adverse relationship exists. Victoria R. Chen, the Senior Managing Director of Prescott Hale identified in connection with this transaction, does not appear in the database in any individual capacity that would raise a concern.

Conclusion: No conflict identified with respect to Prescott Hale & Co. LLC.

Eastbridge Partners Limited. Eastbridge Partners Limited ("Eastbridge") does not appear in the Firm's conflicts database in any capacity—neither as a client, former client, adverse party, counterparty, nor related entity. Simon K.P. Woo, the Managing Director of Eastbridge identified in connection with this transaction, likewise does not appear in the database.

Conclusion: No conflict identified with respect to Eastbridge Partners Limited.

E. Escrow Agent — Velthorn National Bank, N.A.

Velthorn National Bank, N.A. ("Velthorn") appears in the Firm's conflicts database in connection with several prior and current transactions in which Velthorn served as a lender, administrative agent, or escrow agent for clients of Calderwood & Harkness. In each identified instance, the Firm's representation was on behalf of a borrower, issuer, or other party in a financing or escrow arrangement in which Velthorn served in a fiduciary or agency capacity, and no adverse representation of or against Velthorn was identified. Velthorn has not been a client of Calderwood & Harkness, and the Firm has not represented any party in litigation or other adversarial proceedings against Velthorn. Teresa M. D'Angelo, the identified Escrow Officer, does not appear in the database in any individual capacity that would raise a concern.

The role of Velthorn in the proposed transaction is limited to serving as a potential escrow agent for milestone payment escrow arrangements. This role is non-adversarial to all parties and does not give rise to any conflict.

Conclusion: No conflict identified with respect to Velthorn National Bank, N.A.

F. Other Third Parties

Whitford & Cascade Insurance Brokers. Whitford & Cascade Insurance Brokers ("Whitford & Marsh") is identified as patent prosecution counsel to Penterra and is expected to be involved in the transaction in a collaborative role, providing information regarding the PPC-4187 patent portfolio and potentially participating in patent-related disclosure schedules. No adverse relationship between Calderwood & Harkness and Whitford & Marsh has been identified. Whitford & Marsh has not been a client of the Firm, and the Firm has not represented any party adverse to Whitford & Marsh. Dr. Alan J. Whitford does not appear in the database in any capacity that would raise a concern.