1018-00007 · Penterra Pharmaceuticals Corp · Pleadings

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COMMONWEALTH OF MASSACHUSETTS

SUPERIOR COURT BUSINESS LITIGATION SESSION SUFFOLK COUNTY

ANSWER OF PLAINTIFF/COUNTERCLAIM DEFENDANT PENTERRA PHARMACEUTICALS CORP. TO DEFENDANT/COUNTERCLAIM PLAINTIFF VANTAGE MEDICAL DISTRIBUTION, LLC'S COUNTERCLAIMS

Plaintiff/Counterclaim Defendant Penterra Pharmaceuticals Corp. ("Penterra" or "Counterclaim Defendant"), a corporation duly organized and existing under the laws of the State of Delaware, with its principal place of business at 400 Carnegie Center Drive, Suite 600, Princeton, New Jersey 08540, by and through its undersigned attorneys, Calderwood & Harkness LLP, hereby respectfully submits this Answer to the Counterclaims of Defendant/Counterclaim Plaintiff Vantage Medical Distribution, LLC ("Vantage" or "Counterclaim Plaintiff"), which Counterclaims were filed in this action on May 14, 2021 (the "Counterclaims"). In support of this Answer, Penterra states as follows:

Penterra denies each and every allegation of the Counterclaims not expressly admitted herein. To the extent that any allegation contained in the Counterclaims constitutes or contains a conclusion of law, no responsive pleading is required; however, to the extent that a response is deemed required by the Court, such conclusions of law are denied. All responses herein are based upon information presently known to Penterra and its counsel, and Penterra expressly reserves its right to amend or supplement this Answer as warranted by further investigation and discovery.

RESPONSE TO PRELIMINARY AND JURISDICTIONAL ALLEGATIONS OF THE COUNTERCLAIMS

I. IDENTIFICATION OF THE PARTIES

Paragraph 1. Vantage alleges that it is a Massachusetts limited liability company with its principal office at 75 Cabot Road, Suite 310, Medford, Massachusetts 02155. Penterra admits the allegations contained in Paragraph 1.

Paragraph 2. Vantage alleges that Donald R. Farnham is the Managing Member and Chief Executive Officer of Vantage. Penterra admits the allegations contained in Paragraph 2.

Paragraph 3. Vantage alleges that Penterra Pharmaceuticals Corp. is a Delaware corporation that is publicly traded on the Nasdaq Stock Market under the ticker symbol "PTRA," with its principal place of business in Princeton, New Jersey. Penterra admits the allegations contained in Paragraph 3.

Paragraph 4. Vantage alleges that Penterra is registered to do business in the Commonwealth of Massachusetts through its registered agent, CT Statutory Agent Services, located at 155 Federal Street, Suite 700, Boston, Massachusetts 02110. Penterra admits the allegations contained in Paragraph 4.

II. JURISDICTION AND VENUE

Paragraph 5. Vantage alleges that this Court has jurisdiction over the subject matter of the Counterclaims and over the parties hereto. Penterra admits that this Court has jurisdiction over the subject matter and the parties pursuant to Section 14.5 of the Exclusive Distribution Agreement dated July 1, 2017 (the "EDA" or the "Agreement"), which provides for the exclusive jurisdiction of state or federal courts sitting in the Commonwealth of Massachusetts for any action arising out of or relating to the Agreement.

Paragraph 6. Vantage alleges that venue is proper in Suffolk County, Business Litigation Session. Penterra admits that venue is proper in the Suffolk County Superior Court, Business Litigation Session, consistent with Section 14.5 of the EDA and the applicable rules governing the Business Litigation Session.

III. THE EXCLUSIVE DISTRIBUTION AGREEMENT

Paragraph 7. Vantage alleges that on or about July 1, 2017, Penterra, in its capacity as "Supplier," and Vantage, in its capacity as "Distributor," entered into the Exclusive Distribution Agreement. Penterra admits that on July 1, 2017, Penterra and Vantage executed the EDA. The EDA speaks for itself, and Penterra respectfully refers the Court to the full text of that document for a complete and accurate statement of its terms.

Paragraph 8. Vantage alleges that the EDA granted Vantage the exclusive right to distribute certain Penterra pharmaceutical products within the "Territory" as defined in Exhibit A to the Agreement. Penterra admits that the EDA granted Vantage exclusive distribution rights within the Territory as that term is defined in Exhibit A to the Agreement, subject to the terms, conditions, and limitations set forth in the EDA.

Paragraph 9. Vantage alleges that the products covered by the EDA include Oncalaris® (pegvisomant-axel), available in 20 mg and 40 mg vials, and Renuvesta® (cilosporin-beta), available in 5 mg capsules. Penterra admits that the foregoing products are among the products covered by the EDA, as specified in the Agreement and its Exhibits.

Paragraph 10. Vantage alleges that the EDA has a five-year initial term expiring on June 30, 2022, with two successive one-year automatic renewal options contingent upon 180 days' prior written notice of non-renewal by either party. Penterra admits the allegations contained in Paragraph 10 and respectfully refers the Court to the full text of the applicable term and renewal provisions of the EDA.

Paragraph 11. Vantage alleges that Exhibit A to the EDA defines the Territory. Penterra admits that Exhibit A to the EDA defines the Territory as follows: "The states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont (collectively, the 'New England States')." The definition of Territory in Exhibit A speaks for itself, and Penterra respectfully refers the Court to the full text of Exhibit A for a complete and accurate statement thereof. Penterra denies any allegation, whether express or implied, that the Territory encompasses any states beyond the six New England states expressly enumerated in Exhibit A.

Paragraph 12. Vantage alleges that Section 2.3 of the EDA contains certain provisions regarding distribution outside the Territory. Penterra admits that Section 2.3 of the EDA provides, in relevant part: "Distributor shall not actively solicit orders for, or deliver, the Products outside the Territory without Supplier's prior written consent." The EDA speaks for itself, and Penterra respectfully refers the Court to the complete text of Section 2.3 and all related provisions.

Paragraph 13. Vantage alleges that the EDA contains provisions governing amendments and modifications. Penterra admits that Section 13.1 of the EDA requires that any amendment, modification, or waiver of any provision of the Agreement be set forth in a written instrument duly executed by both parties. The EDA speaks for itself, and Penterra respectfully refers the Court to the full text of Section 13.1.

Paragraph 14. Vantage alleges that the EDA contains an integration or entire-agreement clause. Penterra admits that Section 14.8 of the EDA contains an integration clause providing that the Agreement and all Exhibits attached thereto constitute the entire agreement between the parties with respect to the subject matter thereof and supersede all prior negotiations, representations, or agreements relating thereto, whether written or oral. The EDA speaks for itself, and Penterra respectfully refers the Court to the full text of Section 14.8.

IV. VANTAGE'S MINIMUM PURCHASE COMMITMENTS AND PURCHASE HISTORY

Paragraph 15. Vantage alleges that Section 5.2 of the EDA contains a minimum annual purchase commitment for Oncalaris® of $9.5 million per year at wholesale acquisition cost ("WAC"). Penterra admits the allegations contained in Paragraph 15 and respectfully refers the Court to Section 5.2 of the EDA for a complete and accurate statement of the minimum purchase commitment and its terms.

Paragraph 16. Vantage alleges certain figures regarding its actual purchases of Oncalaris® during the term of the EDA. Penterra admits that, based on its records, Vantage's actual Oncalaris® purchases at WAC were approximately as follows: Fiscal Year 2018: approximately $11.2 million; Fiscal Year 2019: approximately $14.8 million; Fiscal Year 2020: approximately $18.3 million; and Fiscal Year 2021 (through March 2021): approximately $16.1 million.

Paragraph 17. Vantage alleges that certain portions of these purchase revenues were attributable to distribution activities in specific geographic areas, including areas outside the six New England states. Penterra states that it lacks sufficient knowledge or information to form a belief as to the truth or accuracy of Vantage's internal characterizations regarding the geographic allocation of its revenues, and therefore denies such allegations to the extent they purport to establish any fact regarding the geographic source or breakdown of Vantage's revenue streams.

RESPONSE TO COUNTERCLAIM COUNT I: BREACH OF CONTRACT

Paragraph 18. To the extent Vantage incorporates by reference the allegations of the preceding paragraphs, Penterra incorporates by reference its responses to those paragraphs as if fully set forth herein.

Paragraph 19. Vantage alleges that on January 12, 2018, Steven Kapoor, then serving as Penterra's Vice President of Commercial Operations, sent an email to Donald R. Farnham (the "Kapoor Email"). Penterra admits that on January 12, 2018, Mr. Kapoor sent an email to Mr. Farnham stating, in its entirety as relevant here: "Don — good catching up yesterday. We're definitely open to exploring expansion into NY/NJ/PA once your New England footprint is fully ramped. Let's circle back mid-year and see where things stand." The Kapoor Email speaks for itself, and Penterra respectfully refers the Court to the full text of the email for a complete and accurate statement of its contents.

Paragraph 20. Vantage alleges that the Kapoor Email constituted "prior written consent" under Section 2.3 of the EDA for Vantage to distribute Oncalaris® and other Products outside the Territory defined in Exhibit A. Penterra denies the allegations contained in Paragraph 20. The Kapoor Email did not constitute "prior written consent" under Section 2.3 of the EDA to distribute Products outside the Territory. By its plain and unambiguous terms, the Kapoor Email expressed a willingness to explore a potential future expansion of Vantage's distribution rights, contingent upon further discussion and evaluation at a later date. It did not grant any authorization, consent, approval, or permission for Vantage to distribute any Products outside the six New England states enumerated in Exhibit A.

Paragraph 21. Vantage further alleges that the Kapoor Email constituted an amendment or modification of Exhibit A or other provisions of the EDA within the meaning of Section 13.1 of the Agreement. Penterra denies the allegations contained in Paragraph 21. The Kapoor Email was not a "written instrument signed by both parties" as required by Section 13.1 of the EDA for any amendment or modification. It was a brief, informal, forward-looking communication from a single Penterra employee that did not purport to amend, modify, or alter any term of the EDA, and it was not signed or countersigned by any authorized representative of Vantage.

Paragraph 22. Penterra further avers that the Kapoor Email, by its plain terms, expressed only a willingness to explore a potential future expansion of Vantage's distribution footprint into the New York, New Jersey, and Pennsylvania markets, explicitly conditioned upon Vantage's New England distribution activities being "fully ramped" and subject to further discussion at a later date. The use of forward-looking, conditional language — including "open to exploring," "once your New England footprint is fully ramped," and "let's circle back mid-year" — demonstrates that no present consent, authorization, or approval was granted by the Kapoor Email.

Paragraph 23. Vantage alleges that a course of dealing, course of performance, or trade usage modified, supplemented, or expanded the Territory defined in Exhibit A to the EDA to include New York, New Jersey, and Pennsylvania. Penterra denies the allegations contained in Paragraph 23. No course of dealing, course of performance, or trade usage modified, supplemented, or expanded the Territory defined in Exhibit A, which expressly and unambiguously limits Vantage's exclusive distribution rights to the six New England states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.

Paragraph 24. Vantage alleges that Penterra's alleged failure to object to certain shipments by Vantage to locations outside the Territory constituted a waiver, modification, or consent to tri-state distribution. Penterra denies the allegations contained in Paragraph 24. Any alleged failure by Penterra to immediately object to unauthorized shipments by Vantage did not constitute a waiver, modification of, or consent to distribution outside the Territory. Section 13.1 of the EDA expressly requires that all amendments and modifications be set forth in a written instrument signed by both parties, and Section 14.8 provides that the Agreement and its Exhibits constitute the entire agreement between the parties, superseding all prior negotiations, representations, or agreements, whether written or oral. Under Massachusetts law, these provisions preclude any claim that the EDA's terms were modified or waived by implication, acquiescence, or course of dealing.

Paragraph 25. Vantage alleges that on or about September 14, 2020, Vantage commenced the shipment and distribution of Oncalaris® to hospitals and oncology clinics in New York, New Jersey, and Pennsylvania. Penterra admits that, on information and belief, Vantage began shipping Oncalaris® to facilities in New York, New Jersey, and Pennsylvania on or about September 14, 2020. Penterra denies that such tri-state distribution was authorized, consented to, or permitted under the EDA.

Paragraph 26. Vantage alleges that it generated approximately $6.4 million in revenues from its tri-state distribution of Oncalaris® from September 2020 through March 2021. Penterra admits that Vantage has reported approximately $6.4 million in tri-state revenues during that period, but Penterra avers that it lacks sufficient knowledge or information to confirm the accuracy of that figure and therefore denies the allegation to the extent it is inaccurate or overstated. Penterra further denies that any such revenues were generated pursuant to authorized distribution under the EDA.

Paragraph 27. Vantage alleges that Penterra breached the EDA by issuing a cease-and-desist letter dated March 8, 2021. Penterra admits that on March 8, 2021, Jennifer Chao, Penterra's General Counsel, sent a cease-and-desist letter to Donald R. Farnham, Managing Member and CEO of Vantage, demanding that Vantage immediately cease distributing Oncalaris® and all other Products covered by the EDA outside the six New England states defined in Exhibit A. Penterra denies that the issuance of the cease-and-desist letter constituted a breach of any provision of the EDA. To the contrary, the cease-and-desist letter was a lawful and appropriate exercise of Penterra's contractual rights in response to Vantage's unauthorized distribution activities outside the Territory.

Paragraph 28. Vantage alleges that Penterra breached the EDA by executing a term sheet with Meridian National Distributors, Inc. ("Meridian") for the distribution of Oncalaris® in New York, New Jersey, Pennsylvania, and Maryland. Penterra admits that on or about February 15, 2021, Penterra executed a non-binding term sheet with Meridian National Distributors, Inc. reflecting the parties' preliminary understanding regarding a potential distribution arrangement covering Oncalaris® in the states of New York, New Jersey, Pennsylvania, and Maryland. Penterra denies that the Meridian term sheet constituted a breach of any provision of the EDA. Penterra avers that it was entitled and had every right to appoint distributors, negotiate distribution arrangements, and otherwise manage the distribution of its Products in territories not covered by Vantage's exclusive distribution rights — that is, in states outside the six New England states expressly defined in Exhibit A. Vantage's exclusive distribution rights under the EDA were limited to the Territory, and Penterra's commercial activities with respect to states outside the Territory did not implicate, infringe upon, or violate any of Vantage's contractual rights.

Paragraph 29. Vantage alleges that it has suffered damages in the amount of $35 million as a result of Penterra's alleged breach of the EDA. Penterra denies that Vantage suffered $35 million or any amount in damages as a result of any action or inaction by Penterra. Penterra further denies that it is liable to Vantage for breach of the EDA in any respect. The damages figure alleged by Vantage is speculative, unsupported, and not recoverable under the terms of the EDA or applicable law.

RESPONSE TO COUNTERCLAIM COUNT II: BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

Paragraph 30. To the extent Vantage incorporates by reference the allegations of the preceding paragraphs, Penterra incorporates by reference its responses to those paragraphs as if fully set forth herein.

Paragraph 31. Vantage alleges that Penterra acted in bad faith or unfairly in connection with the EDA or the parties' commercial relationship by, among other things, enforcing the territorial limitations in Exhibit A, issuing the March 8, 2021 cease-and-desist letter, and negotiating with Meridian National Distributors, Inc. for distribution of Products in states that Vantage contends were part of an expanded territory. Penterra denies the allegations contained in Paragraph 31. Penterra did not act in bad faith or unfairly in connection with the EDA or the parties' commercial relationship at any time. Penterra's enforcement of the territorial limitations set forth in Exhibit A to the EDA, its issuance of the cease-and-desist letter demanding compliance with the express terms of the Agreement, and its negotiations with Meridian regarding distribution in states outside the six New England states were all actions taken consistently with the express terms of the EDA and in lawful protection of Penterra's contractual rights.

Paragraph 32. Vantage alleges that Penterra's actions deprived Vantage of the benefits it reasonably expected to receive under the EDA, including expected revenue from the distribution of Products in New York, New Jersey, and Pennsylvania. Penterra denies the allegations contained in Paragraph 32. Vantage had no contractual right or reasonable expectation to distribute Products outside the six New England states expressly defined in Exhibit A. The implied covenant of good faith and fair dealing under Massachusetts law is concerned with the parties' faithfulness to the scope, purpose, and terms of their contract, and it cannot be used to override or contradict express, unambiguous contractual terms. See Vireo & Co. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). The Territory definition in Exhibit A, the written-amendment requirement of Section 13.1, and the integration clause of Section 14.8 are clear and unambiguous provisions that establish the scope of Vantage's distribution rights, and no implied covenant can expand those rights beyond their express bounds.

Paragraph 33. Vantage alleges that it has suffered damages as a result of Penterra's alleged breach of the implied covenant of good faith and fair dealing. Penterra denies that Vantage suffered any damages as a result of any breach of the implied covenant by Penterra. Penterra acted at all times in a manner consistent with the express provisions of the EDA, and no breach of the implied covenant occurred.

RESPONSE TO COUNTERCLAIM COUNT III: PROMISSORY ESTOPPEL

Paragraph 34. To the extent Vantage incorporates by reference the allegations of the preceding paragraphs, Penterra incorporates by reference its responses to those paragraphs as if fully set forth herein.

Paragraph 35. Vantage alleges that the Kapoor Email of January 12, 2018 constituted a clear and definite promise by Penterra to expand the Territory to include New York, New Jersey, and Pennsylvania. Penterra denies the allegations contained in Paragraph 35. The Kapoor Email did not constitute a clear and definite promise within the meaning required to sustain a claim of promissory estoppel under Massachusetts law. The email, on its face, is forward-looking and conditional in nature, expressing only a general willingness to "explore" a potential future expansion of Vantage's distribution footprint at an unspecified future date. The language employed — "open to exploring," "once your New England footprint is fully ramped," and "let's circle back mid-year" — is plainly aspirational and contingent, not promissory. No reasonable reading of the email supports the conclusion that it constituted a definite commitment to expand the Territory or to grant Vantage any distribution rights outside the six New England states.

Paragraph 36. Vantage alleges that it reasonably relied upon the Kapoor Email and upon an alleged course of dealing with Penterra in commencing distribution activities in New York, New Jersey, and Pennsylvania. Penterra denies the allegations contained in Paragraph 36. Any reliance by Vantage on the Kapoor Email was unreasonable as a matter of law. Vantage, as a party to the EDA, was at all times fully aware of the express written-amendment requirement of Section 13.1, which mandates that all amendments and modifications be set forth in a written instrument signed by both parties, and of the integration clause of Section 14.8, which provides that the Agreement and its Exhibits constitute the entire agreement between the parties. In light of these express contractual provisions, of which Vantage had actual knowledge, any reliance on an informal email or on alleged course-of-dealing evidence as a basis for commencing unauthorized distribution of Products in the tri-state area was objectively unreasonable.

Paragraph 37. Vantage alleges that it reasonably relied on informal communications and alleged assurances from Penterra personnel in expanding its distribution operations into the tri-state area. Penterra denies the allegations contained in Paragraph 37. Penterra further denies that any alleged informal communications, beyond the Kapoor Email specifically admitted above, constituted promises, assurances, or authorizations on which Vantage could reasonably or justifiably rely.

Paragraph 38. Vantage alleges that it suffered detriment as a result of its reliance on the alleged promise and that injustice can be avoided only by enforcement of the alleged promise. Penterra denies the allegations contained in Paragraph 38. Penterra denies that Vantage suffered any cognizable detriment giving rise to a promissory estoppel claim or that injustice can be avoided only by enforcement of the alleged promise. To the extent Vantage incurred costs or made investments in connection with its unauthorized tri-state distribution activities, such expenditures were undertaken voluntarily, without contractual authorization, and in knowing violation of the express terms of the EDA.

Paragraph 39. Vantage alleges that it is entitled to damages in the amount of $35 million on this count. Penterra denies that Vantage is entitled to $35 million or any amount in damages under a theory of promissory estoppel. Penterra denies all liability on this count.

AFFIRMATIVE DEFENSES

Without assuming the burden of proof on any issue for which the burden properly rests with Vantage, Penterra asserts the following affirmative defenses to the Counterclaims:

FIRST AFFIRMATIVE DEFENSE: Failure to State a Claim

Vantage's Counterclaims, including Count I (Breach of Contract), Count II (Breach of Implied Covenant of Good Faith and Fair Dealing), and Count III (Promissory Estoppel), fail to state claims upon which relief can be granted. The EDA unambiguously limits the Territory to the six New England states enumerated in Exhibit A — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. No factual allegations in the Counterclaims, even if taken as true, establish any breach of the EDA by Penterra, any violation of the implied covenant of good faith and fair dealing, or any basis for equitable relief under a theory of promissory estoppel. Accordingly, the Counterclaims should be dismissed with prejudice.

SECOND AFFIRMATIVE DEFENSE: Express Terms of the Agreement / Integration Clause

All of Vantage's Counterclaims are barred by the express, unambiguous terms of the EDA, including but not limited to the following provisions:

(a) Section 2.1 (Grant of Exclusive Territory), which grants Vantage exclusive distribution rights limited to the Territory as defined in Exhibit A;

(b) Exhibit A (Territory Definition), which defines the Territory as the six New England states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, and no others;

(c) Section 2.3 (Prohibition on Distribution Outside the Territory), which expressly prohibits the Distributor from actively soliciting orders for, or delivering, Products outside the Territory without the Supplier's prior written consent;

(d) Section 13.1 (Amendments and Modifications), which requires that all amendments, modifications, or waivers of any provision of the Agreement be set forth in a written instrument signed by both parties; and

(e) Section 14.8 (Integration/Entire Agreement), which provides that the Agreement and all Exhibits attached thereto constitute the entire agreement between the parties with respect to the subject matter thereof and supersede all prior negotiations, representations, or agreements relating thereto, whether written or oral.

These express terms, individually and collectively, foreclose each of Vantage's Counterclaims as a matter of law.

THIRD AFFIRMATIVE DEFENSE: Parol Evidence Rule

To the extent Vantage seeks to introduce extrinsic evidence — including but not limited to the Kapoor Email of January 12, 2018, alleged oral discussions between representatives of the parties, alleged informal assurances, or purported course-of-dealing evidence — to vary, contradict, or supplement the unambiguous written terms of the EDA, such evidence is inadmissible and barred by the parol evidence rule. The EDA is a fully integrated agreement, as evidenced by the integration clause in Section 14.8, and extrinsic evidence may not be used to alter, expand, or contradict its clear and unambiguous terms.

FOURTH AFFIRMATIVE DEFENSE: Written-Modification Clause / No Valid Amendment

Vantage's Counterclaims are barred because there exists no written instrument signed by both Penterra and Vantage amending or modifying Exhibit A to expand the Territory beyond the six New England states, as expressly required by Section 13.1 of the EDA. The Kapoor Email of January 12, 2018, even if it could be construed as reflecting some intent to explore future expansion (which Penterra does not concede), is not a written instrument signed by both parties and therefore cannot constitute an amendment or modification under Section 13.1. Under Massachusetts law, written-modification clauses are generally enforceable and will be given effect according to their terms. See Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122, 131 (2000). No valid amendment to the EDA exists that would support any of Vantage's Counterclaims.

FIFTH AFFIRMATIVE DEFENSE: Statute of Frauds

To the extent Vantage's Counterclaims are predicated on alleged oral agreements, oral promises, or other oral understandings to modify, expand, or supplement the Territory defined in Exhibit A, such claims are barred by the statute of frauds, Mass. Gen. Laws ch. 259, § 1. The EDA is a multi-year contract that, by its terms, was not to be performed within one year from the date of its making, and any modification thereof is subject to the statute of frauds. No writing sufficient to satisfy the statute of frauds exists that would support Vantage's claims of an expanded Territory.

SIXTH AFFIRMATIVE DEFENSE: No Reasonable Reliance / Promissory Estoppel Fails as a Matter of Law

Vantage's Counterclaim for promissory estoppel (Count III) fails as a matter of law because: (a) no clear and definite promise was made by Penterra to expand the Territory or to authorize distribution of Products outside the six New England states; and (b) any reliance by Vantage on the Kapoor Email of January 12, 2018, or on any alleged informal discussions or communications, was unreasonable as a matter of law given the express written-amendment requirement of Section 13.1 and the integration clause of Section 14.8 of the EDA, of which Vantage was fully aware and to which Vantage was a party. A party to a written contract containing a written-amendment clause and an integration clause cannot claim reasonable reliance on an informal, non-binding communication as the basis for a promissory estoppel claim.

SEVENTH AFFIRMATIVE DEFENSE: Unclean Hands

Vantage's Counterclaims are barred, in whole or in part, by the equitable doctrine of unclean hands. Vantage knowingly and deliberately commenced the unauthorized distribution of Oncalaris® in the tri-state area of New York, New Jersey, and Pennsylvania on or about September 14, 2020, in direct violation of the express territorial limitations set forth in Exhibit A and Section 2.3 of the EDA, without having obtained the prior written consent of Penterra as required by Section 2.3 and without having obtained any written amendment to the Territory as required by Section 13.1. Through this unauthorized conduct, Vantage generated approximately $6.4 million in revenues to which it was not entitled under the terms of the EDA. A party that has itself engaged in inequitable conduct in connection with the very subject matter in controversy is not entitled to equitable relief, and Vantage's Counterclaims should be denied on this basis.

EIGHTH AFFIRMATIVE DEFENSE: Waiver and/or Estoppel by Vantage

Vantage is estopped from asserting its Counterclaims, or has waived such claims, by virtue of its own conduct. Vantage entered into the EDA with full knowledge of, and expressly agreed to, the territorial limitations set forth in Exhibit A. Vantage was at all times aware of the written-amendment requirement contained in Section 13.1 and the integration clause contained in Section 14.8. Despite this knowledge, Vantage failed to obtain a written amendment expanding the Territory at any time during the term of the Agreement, yet proceeded to distribute Products outside the Territory in direct contravention of the express terms of the EDA. Having voluntarily assumed the risks attendant to unauthorized distribution without contractual authorization, Vantage cannot now seek to recover damages from Penterra for exercising its lawful contractual rights.

NINTH AFFIRMATIVE DEFENSE: Mitigation of Damages

To the extent Vantage claims to have suffered any damages, which Penterra denies, such damages are barred or must be reduced by Vantage's failure to take reasonable steps to mitigate its alleged losses. Vantage had a duty under applicable law to exercise reasonable diligence to minimize any damages allegedly flowing from Penterra's conduct, and Penterra is entitled to a set-off or reduction for any damages that Vantage could have avoided through the exercise of reasonable care and diligence.

TENTH AFFIRMATIVE DEFENSE: Reservation of Rights

Penterra reserves the right to assert additional affirmative defenses as discovery proceeds, as additional facts become known, and as the circumstances of this case may warrant. This reservation applies to defenses that may become apparent through the review of documents, the taking of depositions, or the disclosure of information by Vantage or third parties during the course of this litigation. Nothing in this Answer shall be construed as a waiver of any defense or objection available to Penterra.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff/Counterclaim Defendant Penterra Pharmaceuticals Corp. respectfully requests that this Court enter an Order:

1. Dismissing each and every one of Vantage Medical Distribution, LLC's Counterclaims (Counts I, II, and III) with prejudice;

2. Entering judgment in favor of Penterra Pharmaceuticals Corp. and against Vantage Medical Distribution, LLC on all Counterclaims;

3. Awarding Penterra its costs of suit, including reasonable attorneys' fees, to the extent permitted by applicable law or the terms of the EDA;

4. Granting such other and further relief as this Court deems just, proper, and equitable.

JURY DEMAND

Pursuant to Mass. R. Civ. P. 38(b), Plaintiff/Counterclaim Defendant Penterra Pharmaceuticals Corp. hereby demands a trial by jury on all issues so triable in this action, including all issues raised by Vantage's Counterclaims.

Respectfully submitted,

PENTERRA PHARMACEUTICALS CORP., Plaintiff/Counterclaim Defendant,

By its attorneys,

CALDERWOOD & HARKNESS LLP

By: ________

Linda Osei (BBO No. 672841) Responsible Partner

Priya Anand (BBO No. 689203) Billing Partner

Hannah Brinkley (BBO No. 701456) Lead Associate

Patrick Gallagher (BBO No. 712389) Working Associate

1 Federal Street, 35th Floor Boston, Massachusetts 02110 Telephone: (617) 555-3200 Facsimile: (617) 555-3201

Email: losei@calderwoodharkness.com

Email: panand@calderwoodharkness.com

Date: June 4, 2021

CERTIFICATE OF SERVICE

I, Linda Osei, hereby certify that on June 4, 2021, a true and correct copy of the foregoing Answer of Plaintiff/Counterclaim Defendant Penterra Pharmaceuticals Corp. to Defendant/Counterclaim Plaintiff Vantage Medical Distribution, LLC's Counterclaims was served upon counsel for Vantage Medical Distribution, LLC at the following address by electronic service via the Court's electronic filing system and by first-class United States mail, postage prepaid:

Kenneth M. Rourke, Esq. Alicia Fontaine, Esq. Hargrove, Sinclair & Polk LLP 200 Ashbury Asset Advisors, Suite 1800 Boston, Massachusetts 02109 Telephone: (617) 555-8400

Email: krourke@hsp-law.com

Email: afontaine@hsp-law.com

________________________________________

Linda Osei (BBO No. 672841)

Note: The responses set forth in this Answer are based upon information presently available to Penterra Pharmaceuticals Corp. and its counsel as of the date of filing. Penterra expressly reserves its right to amend, supplement, or modify this Answer, including its affirmative defenses, as warranted by the results of further investigation and discovery in this matter.

PENTERRA PHARMACEUTICALS CORP.,

Plaintiff/Counterclaim Defendant,

Docket No. 2184-CV-01537-BLS

VANTAGE MEDICAL DISTRIBUTION, LLC,

Defendant/Counterclaim Plaintiff.

COMMONWEALTH OF MASSACHUSETTS
SUPERIOR COURT BUSINESS LITIGATION SESSION SUFFOLK COUNTY
ANSWER OF PLAINTIFF/COUNTERCLAIM DEFENDANT PENTERRA PHARMACEUTICALS CORP. TO DEFENDANT/COUNTERCLAIM PLAINTIFF VANTAGE MEDICAL DISTRIBUTION, LLC'S COUNTERCLAIMS
Plaintiff/Counterclaim Defendant Penterra Pharmaceuticals Corp. ("Penterra" or "Counterclaim Defendant"), a corporation duly organized and existing under the laws of the State of Delaware, with its principal place of business at 400 Carnegie Center Drive, Suite 600, Princeton, New Jersey 08540, by and through its undersigned attorneys, Calderwood & Harkness LLP, hereby respectfully submits this Answer to the Counterclaims of Defendant/Counterclaim Plaintiff Vantage Medical Distribution, LLC ("Vantage" or "Counterclaim Plaintiff"), which Counterclaims were filed in this action on May 14, 2021 (the "Counterclaims"). In support of this Answer, Penterra states as follows:
Penterra denies each and every allegation of the Counterclaims not expressly admitted herein. To the extent that any allegation contained in the Counterclaims constitutes or contains a conclusion of law, no responsive pleading is required; however, to the extent that a response is deemed required by the Court, such conclusions of law are denied. All responses herein are based upon information presently known to Penterra and its counsel, and Penterra expressly reserves its right to amend or supplement this Answer as warranted by further investigation and discovery.
RESPONSE TO PRELIMINARY AND JURISDICTIONAL ALLEGATIONS OF THE COUNTERCLAIMS
I. IDENTIFICATION OF THE PARTIES
Paragraph 1. Vantage alleges that it is a Massachusetts limited liability company with its principal office at 75 Cabot Road, Suite 310, Medford, Massachusetts 02155. Penterra admits the allegations contained in Paragraph 1.
Paragraph 2. Vantage alleges that Donald R. Farnham is the Managing Member and Chief Executive Officer of Vantage. Penterra admits the allegations contained in Paragraph 2.
Paragraph 3. Vantage alleges that Penterra Pharmaceuticals Corp. is a Delaware corporation that is publicly traded on the Nasdaq Stock Market under the ticker symbol "PTRA," with its principal place of business in Princeton, New Jersey. Penterra admits the allegations contained in Paragraph 3.
Paragraph 4. Vantage alleges that Penterra is registered to do business in the Commonwealth of Massachusetts through its registered agent, CT Statutory Agent Services, located at 155 Federal Street, Suite 700, Boston, Massachusetts 02110. Penterra admits the allegations contained in Paragraph 4.
II. JURISDICTION AND VENUE
Paragraph 5. Vantage alleges that this Court has jurisdiction over the subject matter of the Counterclaims and over the parties hereto. Penterra admits that this Court has jurisdiction over the subject matter and the parties pursuant to Section 14.5 of the Exclusive Distribution Agreement dated July 1, 2017 (the "EDA" or the "Agreement"), which provides for the exclusive jurisdiction of state or federal courts sitting in the Commonwealth of Massachusetts for any action arising out of or relating to the Agreement.
Paragraph 6. Vantage alleges that venue is proper in Suffolk County, Business Litigation Session. Penterra admits that venue is proper in the Suffolk County Superior Court, Business Litigation Session, consistent with Section 14.5 of the EDA and the applicable rules governing the Business Litigation Session.
III. THE EXCLUSIVE DISTRIBUTION AGREEMENT
Paragraph 7. Vantage alleges that on or about July 1, 2017, Penterra, in its capacity as "Supplier," and Vantage, in its capacity as "Distributor," entered into the Exclusive Distribution Agreement. Penterra admits that on July 1, 2017, Penterra and Vantage executed the EDA. The EDA speaks for itself, and Penterra respectfully refers the Court to the full text of that document for a complete and accurate statement of its terms.
Paragraph 8. Vantage alleges that the EDA granted Vantage the exclusive right to distribute certain Penterra pharmaceutical products within the "Territory" as defined in Exhibit A to the Agreement. Penterra admits that the EDA granted Vantage exclusive distribution rights within the Territory as that term is defined in Exhibit A to the Agreement, subject to the terms, conditions, and limitations set forth in the EDA.
Paragraph 9. Vantage alleges that the products covered by the EDA include Oncalaris® (pegvisomant-axel), available in 20 mg and 40 mg vials, and Renuvesta® (cilosporin-beta), available in 5 mg capsules. Penterra admits that the foregoing products are among the products covered by the EDA, as specified in the Agreement and its Exhibits.
Paragraph 10. Vantage alleges that the EDA has a five-year initial term expiring on June 30, 2022, with two successive one-year automatic renewal options contingent upon 180 days' prior written notice of non-renewal by either party. Penterra admits the allegations contained in Paragraph 10 and respectfully refers the Court to the full text of the applicable term and renewal provisions of the EDA.
Paragraph 11. Vantage alleges that Exhibit A to the EDA defines the Territory. Penterra admits that Exhibit A to the EDA defines the Territory as follows: "The states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont (collectively, the 'New England States')." The definition of Territory in Exhibit A speaks for itself, and Penterra respectfully refers the Court to the full text of Exhibit A for a complete and accurate statement thereof. Penterra denies any allegation, whether express or implied, that the Territory encompasses any states beyond the six New England states expressly enumerated in Exhibit A.
Paragraph 12. Vantage alleges that Section 2.3 of the EDA contains certain provisions regarding distribution outside the Territory. Penterra admits that Section 2.3 of the EDA provides, in relevant part: "Distributor shall not actively solicit orders for, or deliver, the Products outside the Territory without Supplier's prior written consent." The EDA speaks for itself, and Penterra respectfully refers the Court to the complete text of Section 2.3 and all related provisions.
Paragraph 13. Vantage alleges that the EDA contains provisions governing amendments and modifications. Penterra admits that Section 13.1 of the EDA requires that any amendment, modification, or waiver of any provision of the Agreement be set forth in a written instrument duly executed by both parties. The EDA speaks for itself, and Penterra respectfully refers the Court to the full text of Section 13.1.
Paragraph 14. Vantage alleges that the EDA contains an integration or entire-agreement clause. Penterra admits that Section 14.8 of the EDA contains an integration clause providing that the Agreement and all Exhibits attached thereto constitute the entire agreement between the parties with respect to the subject matter thereof and supersede all prior negotiations, representations, or agreements relating thereto, whether written or oral. The EDA speaks for itself, and Penterra respectfully refers the Court to the full text of Section 14.8.
IV. VANTAGE'S MINIMUM PURCHASE COMMITMENTS AND PURCHASE HISTORY
Paragraph 15. Vantage alleges that Section 5.2 of the EDA contains a minimum annual purchase commitment for Oncalaris® of $9.5 million per year at wholesale acquisition cost ("WAC"). Penterra admits the allegations contained in Paragraph 15 and respectfully refers the Court to Section 5.2 of the EDA for a complete and accurate statement of the minimum purchase commitment and its terms.
Paragraph 16. Vantage alleges certain figures regarding its actual purchases of Oncalaris® during the term of the EDA. Penterra admits that, based on its records, Vantage's actual Oncalaris® purchases at WAC were approximately as follows: Fiscal Year 2018: approximately $11.2 million; Fiscal Year 2019: approximately $14.8 million; Fiscal Year 2020: approximately $18.3 million; and Fiscal Year 2021 (through March 2021): approximately $16.1 million.
Paragraph 17. Vantage alleges that certain portions of these purchase revenues were attributable to distribution activities in specific geographic areas, including areas outside the six New England states. Penterra states that it lacks sufficient knowledge or information to form a belief as to the truth or accuracy of Vantage's internal characterizations regarding the geographic allocation of its revenues, and therefore denies such allegations to the extent they purport to establish any fact regarding the geographic source or breakdown of Vantage's revenue streams.
RESPONSE TO COUNTERCLAIM COUNT I: BREACH OF CONTRACT
Paragraph 18. To the extent Vantage incorporates by reference the allegations of the preceding paragraphs, Penterra incorporates by reference its responses to those paragraphs as if fully set forth herein.
Paragraph 19. Vantage alleges that on January 12, 2018, Steven Kapoor, then serving as Penterra's Vice President of Commercial Operations, sent an email to Donald R. Farnham (the "Kapoor Email"). Penterra admits that on January 12, 2018, Mr. Kapoor sent an email to Mr. Farnham stating, in its entirety as relevant here: "Don — good catching up yesterday. We're definitely open to exploring expansion into NY/NJ/PA once your New England footprint is fully ramped. Let's circle back mid-year and see where things stand." The Kapoor Email speaks for itself, and Penterra respectfully refers the Court to the full text of the email for a complete and accurate statement of its contents.
Paragraph 20. Vantage alleges that the Kapoor Email constituted "prior written consent" under Section 2.3 of the EDA for Vantage to distribute Oncalaris® and other Products outside the Territory defined in Exhibit A. Penterra denies the allegations contained in Paragraph 20. The Kapoor Email did not constitute "prior written consent" under Section 2.3 of the EDA to distribute Products outside the Territory. By its plain and unambiguous terms, the Kapoor Email expressed a willingness to explore a potential future expansion of Vantage's distribution rights, contingent upon further discussion and evaluation at a later date. It did not grant any authorization, consent, approval, or permission for Vantage to distribute any Products outside the six New England states enumerated in Exhibit A.
Paragraph 21. Vantage further alleges that the Kapoor Email constituted an amendment or modification of Exhibit A or other provisions of the EDA within the meaning of Section 13.1 of the Agreement. Penterra denies the allegations contained in Paragraph 21. The Kapoor Email was not a "written instrument signed by both parties" as required by Section 13.1 of the EDA for any amendment or modification. It was a brief, informal, forward-looking communication from a single Penterra employee that did not purport to amend, modify, or alter any term of the EDA, and it was not signed or countersigned by any authorized representative of Vantage.
Paragraph 22. Penterra further avers that the Kapoor Email, by its plain terms, expressed only a willingness to explore a potential future expansion of Vantage's distribution footprint into the New York, New Jersey, and Pennsylvania markets, explicitly conditioned upon Vantage's New England distribution activities being "fully ramped" and subject to further discussion at a later date. The use of forward-looking, conditional language — including "open to exploring," "once your New England footprint is fully ramped," and "let's circle back mid-year" — demonstrates that no present consent, authorization, or approval was granted by the Kapoor Email.
Paragraph 23. Vantage alleges that a course of dealing, course of performance, or trade usage modified, supplemented, or expanded the Territory defined in Exhibit A to the EDA to include New York, New Jersey, and Pennsylvania. Penterra denies the allegations contained in Paragraph 23. No course of dealing, course of performance, or trade usage modified, supplemented, or expanded the Territory defined in Exhibit A, which expressly and unambiguously limits Vantage's exclusive distribution rights to the six New England states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.
Paragraph 24. Vantage alleges that Penterra's alleged failure to object to certain shipments by Vantage to locations outside the Territory constituted a waiver, modification, or consent to tri-state distribution. Penterra denies the allegations contained in Paragraph 24. Any alleged failure by Penterra to immediately object to unauthorized shipments by Vantage did not constitute a waiver, modification of, or consent to distribution outside the Territory. Section 13.1 of the EDA expressly requires that all amendments and modifications be set forth in a written instrument signed by both parties, and Section 14.8 provides that the Agreement and its Exhibits constitute the entire agreement between the parties, superseding all prior negotiations, representations, or agreements, whether written or oral. Under Massachusetts law, these provisions preclude any claim that the EDA's terms were modified or waived by implication, acquiescence, or course of dealing.
Paragraph 25. Vantage alleges that on or about September 14, 2020, Vantage commenced the shipment and distribution of Oncalaris® to hospitals and oncology clinics in New York, New Jersey, and Pennsylvania. Penterra admits that, on information and belief, Vantage began shipping Oncalaris® to facilities in New York, New Jersey, and Pennsylvania on or about September 14, 2020. Penterra denies that such tri-state distribution was authorized, consented to, or permitted under the EDA.
Paragraph 26. Vantage alleges that it generated approximately $6.4 million in revenues from its tri-state distribution of Oncalaris® from September 2020 through March 2021. Penterra admits that Vantage has reported approximately $6.4 million in tri-state revenues during that period, but Penterra avers that it lacks sufficient knowledge or information to confirm the accuracy of that figure and therefore denies the allegation to the extent it is inaccurate or overstated. Penterra further denies that any such revenues were generated pursuant to authorized distribution under the EDA.
Paragraph 27. Vantage alleges that Penterra breached the EDA by issuing a cease-and-desist letter dated March 8, 2021. Penterra admits that on March 8, 2021, Jennifer Chao, Penterra's General Counsel, sent a cease-and-desist letter to Donald R. Farnham, Managing Member and CEO of Vantage, demanding that Vantage immediately cease distributing Oncalaris® and all other Products covered by the EDA outside the six New England states defined in Exhibit A. Penterra denies that the issuance of the cease-and-desist letter constituted a breach of any provision of the EDA. To the contrary, the cease-and-desist letter was a lawful and appropriate exercise of Penterra's contractual rights in response to Vantage's unauthorized distribution activities outside the Territory.
Paragraph 28. Vantage alleges that Penterra breached the EDA by executing a term sheet with Meridian National Distributors, Inc. ("Meridian") for the distribution of Oncalaris® in New York, New Jersey, Pennsylvania, and Maryland. Penterra admits that on or about February 15, 2021, Penterra executed a non-binding term sheet with Meridian National Distributors, Inc. reflecting the parties' preliminary understanding regarding a potential distribution arrangement covering Oncalaris® in the states of New York, New Jersey, Pennsylvania, and Maryland. Penterra denies that the Meridian term sheet constituted a breach of any provision of the EDA. Penterra avers that it was entitled and had every right to appoint distributors, negotiate distribution arrangements, and otherwise manage the distribution of its Products in territories not covered by Vantage's exclusive distribution rights — that is, in states outside the six New England states expressly defined in Exhibit A. Vantage's exclusive distribution rights under the EDA were limited to the Territory, and Penterra's commercial activities with respect to states outside the Territory did not implicate, infringe upon, or violate any of Vantage's contractual rights.
Paragraph 29. Vantage alleges that it has suffered damages in the amount of $35 million as a result of Penterra's alleged breach of the EDA. Penterra denies that Vantage suffered $35 million or any amount in damages as a result of any action or inaction by Penterra. Penterra further denies that it is liable to Vantage for breach of the EDA in any respect. The damages figure alleged by Vantage is speculative, unsupported, and not recoverable under the terms of the EDA or applicable law.
RESPONSE TO COUNTERCLAIM COUNT II: BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING
Paragraph 30. To the extent Vantage incorporates by reference the allegations of the preceding paragraphs, Penterra incorporates by reference its responses to those paragraphs as if fully set forth herein.
Paragraph 31. Vantage alleges that Penterra acted in bad faith or unfairly in connection with the EDA or the parties' commercial relationship by, among other things, enforcing the territorial limitations in Exhibit A, issuing the March 8, 2021 cease-and-desist letter, and negotiating with Meridian National Distributors, Inc. for distribution of Products in states that Vantage contends were part of an expanded territory. Penterra denies the allegations contained in Paragraph 31. Penterra did not act in bad faith or unfairly in connection with the EDA or the parties' commercial relationship at any time. Penterra's enforcement of the territorial limitations set forth in Exhibit A to the EDA, its issuance of the cease-and-desist letter demanding compliance with the express terms of the Agreement, and its negotiations with Meridian regarding distribution in states outside the six New England states were all actions taken consistently with the express terms of the EDA and in lawful protection of Penterra's contractual rights.
Paragraph 32. Vantage alleges that Penterra's actions deprived Vantage of the benefits it reasonably expected to receive under the EDA, including expected revenue from the distribution of Products in New York, New Jersey, and Pennsylvania. Penterra denies the allegations contained in Paragraph 32. Vantage had no contractual right or reasonable expectation to distribute Products outside the six New England states expressly defined in Exhibit A. The implied covenant of good faith and fair dealing under Massachusetts law is concerned with the parties' faithfulness to the scope, purpose, and terms of their contract, and it cannot be used to override or contradict express, unambiguous contractual terms. See Vireo & Co. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). The Territory definition in Exhibit A, the written-amendment requirement of Section 13.1, and the integration clause of Section 14.8 are clear and unambiguous provisions that establish the scope of Vantage's distribution rights, and no implied covenant can expand those rights beyond their express bounds.
Paragraph 33. Vantage alleges that it has suffered damages as a result of Penterra's alleged breach of the implied covenant of good faith and fair dealing. Penterra denies that Vantage suffered any damages as a result of any breach of the implied covenant by Penterra. Penterra acted at all times in a manner consistent with the express provisions of the EDA, and no breach of the implied covenant occurred.
RESPONSE TO COUNTERCLAIM COUNT III: PROMISSORY ESTOPPEL
Paragraph 34. To the extent Vantage incorporates by reference the allegations of the preceding paragraphs, Penterra incorporates by reference its responses to those paragraphs as if fully set forth herein.
Paragraph 35. Vantage alleges that the Kapoor Email of January 12, 2018 constituted a clear and definite promise by Penterra to expand the Territory to include New York, New Jersey, and Pennsylvania. Penterra denies the allegations contained in Paragraph 35. The Kapoor Email did not constitute a clear and definite promise within the meaning required to sustain a claim of promissory estoppel under Massachusetts law. The email, on its face, is forward-looking and conditional in nature, expressing only a general willingness to "explore" a potential future expansion of Vantage's distribution footprint at an unspecified future date. The language employed — "open to exploring," "once your New England footprint is fully ramped," and "let's circle back mid-year" — is plainly aspirational and contingent, not promissory. No reasonable reading of the email supports the conclusion that it constituted a definite commitment to expand the Territory or to grant Vantage any distribution rights outside the six New England states.
Paragraph 36. Vantage alleges that it reasonably relied upon the Kapoor Email and upon an alleged course of dealing with Penterra in commencing distribution activities in New York, New Jersey, and Pennsylvania. Penterra denies the allegations contained in Paragraph 36. Any reliance by Vantage on the Kapoor Email was unreasonable as a matter of law. Vantage, as a party to the EDA, was at all times fully aware of the express written-amendment requirement of Section 13.1, which mandates that all amendments and modifications be set forth in a written instrument signed by both parties, and of the integration clause of Section 14.8, which provides that the Agreement and its Exhibits constitute the entire agreement between the parties. In light of these express contractual provisions, of which Vantage had actual knowledge, any reliance on an informal email or on alleged course-of-dealing evidence as a basis for commencing unauthorized distribution of Products in the tri-state area was objectively unreasonable.
Paragraph 37. Vantage alleges that it reasonably relied on informal communications and alleged assurances from Penterra personnel in expanding its distribution operations into the tri-state area. Penterra denies the allegations contained in Paragraph 37. Penterra further denies that any alleged informal communications, beyond the Kapoor Email specifically admitted above, constituted promises, assurances, or authorizations on which Vantage could reasonably or justifiably rely.
Paragraph 38. Vantage alleges that it suffered detriment as a result of its reliance on the alleged promise and that injustice can be avoided only by enforcement of the alleged promise. Penterra denies the allegations contained in Paragraph 38. Penterra denies that Vantage suffered any cognizable detriment giving rise to a promissory estoppel claim or that injustice can be avoided only by enforcement of the alleged promise. To the extent Vantage incurred costs or made investments in connection with its unauthorized tri-state distribution activities, such expenditures were undertaken voluntarily, without contractual authorization, and in knowing violation of the express terms of the EDA.
Paragraph 39. Vantage alleges that it is entitled to damages in the amount of $35 million on this count. Penterra denies that Vantage is entitled to $35 million or any amount in damages under a theory of promissory estoppel. Penterra denies all liability on this count.
AFFIRMATIVE DEFENSES
Without assuming the burden of proof on any issue for which the burden properly rests with Vantage, Penterra asserts the following affirmative defenses to the Counterclaims:
FIRST AFFIRMATIVE DEFENSE: Failure to State a Claim
Vantage's Counterclaims, including Count I (Breach of Contract), Count II (Breach of Implied Covenant of Good Faith and Fair Dealing), and Count III (Promissory Estoppel), fail to state claims upon which relief can be granted. The EDA unambiguously limits the Territory to the six New England states enumerated in Exhibit A — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. No factual allegations in the Counterclaims, even if taken as true, establish any breach of the EDA by Penterra, any violation of the implied covenant of good faith and fair dealing, or any basis for equitable relief under a theory of promissory estoppel. Accordingly, the Counterclaims should be dismissed with prejudice.
SECOND AFFIRMATIVE DEFENSE: Express Terms of the Agreement / Integration Clause
All of Vantage's Counterclaims are barred by the express, unambiguous terms of the EDA, including but not limited to the following provisions:
(a) Section 2.1 (Grant of Exclusive Territory), which grants Vantage exclusive distribution rights limited to the Territory as defined in Exhibit A;
(b) Exhibit A (Territory Definition), which defines the Territory as the six New England states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, and no others;
(c) Section 2.3 (Prohibition on Distribution Outside the Territory), which expressly prohibits the Distributor from actively soliciting orders for, or delivering, Products outside the Territory without the Supplier's prior written consent;
(d) Section 13.1 (Amendments and Modifications), which requires that all amendments, modifications, or waivers of any provision of the Agreement be set forth in a written instrument signed by both parties; and
(e) Section 14.8 (Integration/Entire Agreement), which provides that the Agreement and all Exhibits attached thereto constitute the entire agreement between the parties with respect to the subject matter thereof and supersede all prior negotiations, representations, or agreements relating thereto, whether written or oral.
These express terms, individually and collectively, foreclose each of Vantage's Counterclaims as a matter of law.
THIRD AFFIRMATIVE DEFENSE: Parol Evidence Rule
To the extent Vantage seeks to introduce extrinsic evidence — including but not limited to the Kapoor Email of January 12, 2018, alleged oral discussions between representatives of the parties, alleged informal assurances, or purported course-of-dealing evidence — to vary, contradict, or supplement the unambiguous written terms of the EDA, such evidence is inadmissible and barred by the parol evidence rule. The EDA is a fully integrated agreement, as evidenced by the integration clause in Section 14.8, and extrinsic evidence may not be used to alter, expand, or contradict its clear and unambiguous terms.
FOURTH AFFIRMATIVE DEFENSE: Written-Modification Clause / No Valid Amendment
Vantage's Counterclaims are barred because there exists no written instrument signed by both Penterra and Vantage amending or modifying Exhibit A to expand the Territory beyond the six New England states, as expressly required by Section 13.1 of the EDA. The Kapoor Email of January 12, 2018, even if it could be construed as reflecting some intent to explore future expansion (which Penterra does not concede), is not a written instrument signed by both parties and therefore cannot constitute an amendment or modification under Section 13.1. Under Massachusetts law, written-modification clauses are generally enforceable and will be given effect according to their terms. See Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122, 131 (2000). No valid amendment to the EDA exists that would support any of Vantage's Counterclaims.
FIFTH AFFIRMATIVE DEFENSE: Statute of Frauds
To the extent Vantage's Counterclaims are predicated on alleged oral agreements, oral promises, or other oral understandings to modify, expand, or supplement the Territory defined in Exhibit A, such claims are barred by the statute of frauds, Mass. Gen. Laws ch. 259, § 1. The EDA is a multi-year contract that, by its terms, was not to be performed within one year from the date of its making, and any modification thereof is subject to the statute of frauds. No writing sufficient to satisfy the statute of frauds exists that would support Vantage's claims of an expanded Territory.
SIXTH AFFIRMATIVE DEFENSE: No Reasonable Reliance / Promissory Estoppel Fails as a Matter of Law
Vantage's Counterclaim for promissory estoppel (Count III) fails as a matter of law because: (a) no clear and definite promise was made by Penterra to expand the Territory or to authorize distribution of Products outside the six New England states; and (b) any reliance by Vantage on the Kapoor Email of January 12, 2018, or on any alleged informal discussions or communications, was unreasonable as a matter of law given the express written-amendment requirement of Section 13.1 and the integration clause of Section 14.8 of the EDA, of which Vantage was fully aware and to which Vantage was a party. A party to a written contract containing a written-amendment clause and an integration clause cannot claim reasonable reliance on an informal, non-binding communication as the basis for a promissory estoppel claim.
SEVENTH AFFIRMATIVE DEFENSE: Unclean Hands
Vantage's Counterclaims are barred, in whole or in part, by the equitable doctrine of unclean hands. Vantage knowingly and deliberately commenced the unauthorized distribution of Oncalaris® in the tri-state area of New York, New Jersey, and Pennsylvania on or about September 14, 2020, in direct violation of the express territorial limitations set forth in Exhibit A and Section 2.3 of the EDA, without having obtained the prior written consent of Penterra as required by Section 2.3 and without having obtained any written amendment to the Territory as required by Section 13.1. Through this unauthorized conduct, Vantage generated approximately $6.4 million in revenues to which it was not entitled under the terms of the EDA. A party that has itself engaged in inequitable conduct in connection with the very subject matter in controversy is not entitled to equitable relief, and Vantage's Counterclaims should be denied on this basis.
EIGHTH AFFIRMATIVE DEFENSE: Waiver and/or Estoppel by Vantage
Vantage is estopped from asserting its Counterclaims, or has waived such claims, by virtue of its own conduct. Vantage entered into the EDA with full knowledge of, and expressly agreed to, the territorial limitations set forth in Exhibit A. Vantage was at all times aware of the written-amendment requirement contained in Section 13.1 and the integration clause contained in Section 14.8. Despite this knowledge, Vantage failed to obtain a written amendment expanding the Territory at any time during the term of the Agreement, yet proceeded to distribute Products outside the Territory in direct contravention of the express terms of the EDA. Having voluntarily assumed the risks attendant to unauthorized distribution without contractual authorization, Vantage cannot now seek to recover damages from Penterra for exercising its lawful contractual rights.
NINTH AFFIRMATIVE DEFENSE: Mitigation of Damages
To the extent Vantage claims to have suffered any damages, which Penterra denies, such damages are barred or must be reduced by Vantage's failure to take reasonable steps to mitigate its alleged losses. Vantage had a duty under applicable law to exercise reasonable diligence to minimize any damages allegedly flowing from Penterra's conduct, and Penterra is entitled to a set-off or reduction for any damages that Vantage could have avoided through the exercise of reasonable care and diligence.
TENTH AFFIRMATIVE DEFENSE: Reservation of Rights
Penterra reserves the right to assert additional affirmative defenses as discovery proceeds, as additional facts become known, and as the circumstances of this case may warrant. This reservation applies to defenses that may become apparent through the review of documents, the taking of depositions, or the disclosure of information by Vantage or third parties during the course of this litigation. Nothing in this Answer shall be construed as a waiver of any defense or objection available to Penterra.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff/Counterclaim Defendant Penterra Pharmaceuticals Corp. respectfully requests that this Court enter an Order:
1.  Dismissing each and every one of Vantage Medical Distribution, LLC's Counterclaims (Counts I, II, and III) with prejudice;
2.  Entering judgment in favor of Penterra Pharmaceuticals Corp. and against Vantage Medical Distribution, LLC on all Counterclaims;
3.  Awarding Penterra its costs of suit, including reasonable attorneys' fees, to the extent permitted by applicable law or the terms of the EDA;
4.  Granting such other and further relief as this Court deems just, proper, and equitable.
JURY DEMAND
Pursuant to Mass. R. Civ. P. 38(b), Plaintiff/Counterclaim Defendant Penterra Pharmaceuticals Corp. hereby demands a trial by jury on all issues so triable in this action, including all issues raised by Vantage's Counterclaims.
Respectfully submitted,
PENTERRA PHARMACEUTICALS CORP., Plaintiff/Counterclaim Defendant,
By its attorneys,
CALDERWOOD & HARKNESS LLP
By: ________
Linda Osei (BBO No. 672841) Responsible Partner
Priya Anand (BBO No. 689203) Billing Partner
Hannah Brinkley (BBO No. 701456) Lead Associate
Patrick Gallagher (BBO No. 712389) Working Associate
1 Federal Street, 35th Floor Boston, Massachusetts 02110 Telephone: (617) 555-3200 Facsimile: (617) 555-3201
Email: losei@calderwoodharkness.com
Email: panand@calderwoodharkness.com
Date: June 4, 2021
CERTIFICATE OF SERVICE
I, Linda Osei, hereby certify that on June 4, 2021, a true and correct copy of the foregoing Answer of Plaintiff/Counterclaim Defendant Penterra Pharmaceuticals Corp. to Defendant/Counterclaim Plaintiff Vantage Medical Distribution, LLC's Counterclaims was served upon counsel for Vantage Medical Distribution, LLC at the following address by electronic service via the Court's electronic filing system and by first-class United States mail, postage prepaid:
Kenneth M. Rourke, Esq. Alicia Fontaine, Esq. Hargrove, Sinclair & Polk LLP 200 Ashbury Asset Advisors, Suite 1800 Boston, Massachusetts 02109 Telephone: (617) 555-8400
Email: krourke@hsp-law.com
Email: afontaine@hsp-law.com
________________________________________
Linda Osei (BBO No. 672841)
Note: The responses set forth in this Answer are based upon information presently available to Penterra Pharmaceuticals Corp. and its counsel as of the date of filing. Penterra expressly reserves its right to amend, supplement, or modify this Answer, including its affirmative defenses, as warranted by the results of further investigation and discovery in this matter.
PENTERRA PHARMACEUTICALS CORP.,
<!-- indent:2 -->Plaintiff/Counterclaim Defendant,<!-- /indent -->
Docket No. 2184-CV-01537-BLS
v.
VANTAGE MEDICAL DISTRIBUTION, LLC,
<!-- indent:2 -->Defendant/Counterclaim Plaintiff.<!-- /indent -->