1018-00007 · Penterra Pharmaceuticals Corp · Pleadings

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COMMONWEALTH OF MASSACHUSETTS

SUPERIOR COURT DEPARTMENT BUSINESS LITIGATION SESSION SUFFOLK COUNTY

COMPLAINT FOR DECLARATORY JUDGMENT

Filed: April 12, 2021

INTRODUCTION

Plaintiff Penterra Pharmaceuticals Corp. ("Penterra" or "Plaintiff"), a corporation 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 counsel, brings this action for declaratory judgment pursuant to Massachusetts General Laws chapter 231A against Defendant Vantage Medical Distribution, LLC ("Vantage" or "Defendant"), a Massachusetts limited liability company with its principal office at 75 Cabot Road, Suite 310, Medford, Massachusetts 02155. In support of this Complaint, Penterra states as follows:

Penterra seeks a judicial declaration that the exclusive distribution territory granted to Vantage under the Exclusive Distribution Agreement dated July 1, 2017 (the "Agreement" or "EDA"), which is attached hereto as Exhibit 1 and incorporated herein by reference, is limited to the six New England states — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont — as those states are expressly and unambiguously defined in Exhibit A to the Agreement. Penterra further seeks a declaration that the Territory, as defined in the Agreement, does not encompass the states of New York, New Jersey, or Pennsylvania, and that neither the Agreement nor any duly executed written amendment thereto has ever extended Vantage's exclusive distribution rights to those three states.

In addition, Penterra seeks a declaration that Vantage's distribution of Penterra's pharmaceutical products — specifically, Oncalaris® (pegvisomant-axel) — in the tri-state area of New York, New Jersey, and Pennsylvania, which commenced on or about September 14, 2020, is unauthorized, was undertaken without Penterra's prior written consent as required by Section 2.3 of the Agreement, and constitutes a material breach of the Agreement.

An actual, present, and justiciable controversy exists between the parties concerning the scope of the exclusive Territory under the Agreement. Vantage, through its outside counsel at Hargrove, Sinclair & Polk LLP, has asserted in writing that Vantage's exclusive territory encompasses the tri-state area of New York, New Jersey, and Pennsylvania, relying on an informal email sent by a Penterra executive in January 2018 and an alleged course of dealing. Vantage has further threatened to pursue a counterclaim of no less than $35 million for breach of contract and tortious interference with business relationships if Penterra appoints a competing distributor in those states. This controversy is ripe for adjudication, and a declaratory judgment will serve a useful purpose in resolving the dispute and clarifying the parties' respective rights and obligations under the Agreement.

THE PARTIES

1. Plaintiff Penterra Pharmaceuticals Corp. is a corporation organized and existing under the laws of the State of Delaware. Penterra is publicly traded on the Nasdaq Stock Market under the ticker symbol "PTRA." Penterra's principal place of business is located at 400 Carnegie Center Drive, Suite 600, Princeton, New Jersey 08540. Penterra is a specialty pharmaceutical company focused on the development, manufacture, and commercialization of pharmaceutical products in the therapeutic areas of oncology, rare diseases, and immunology. For fiscal year 2021, Penterra reported consolidated revenue of approximately $1.87 billion. Penterra maintains a registered agent for service of process in the Commonwealth of Massachusetts through CT Statutory Agent Services, located at 155 Federal Street, Suite 700, Boston, Massachusetts 02110.

2. Defendant Vantage Medical Distribution, LLC is a limited liability company organized and existing under the laws of the Commonwealth of Massachusetts. Vantage's principal office is located at 75 Cabot Road, Suite 310, Medford, Massachusetts 02155. Vantage is a regional specialty pharmaceutical distributor that focuses on hospital-based and clinic-based oncology and immunology products throughout the northeastern United States. Vantage was founded in 2009 by its Managing Member and Chief Executive Officer, Donald R. Farnham. For fiscal year 2021, Vantage reported total revenue of approximately $148 million, of which approximately $67 million — representing approximately 45.3% of Vantage's total revenue — was derived from the distribution and sale of Penterra products, including Oncalaris® (pegvisomant-axel) and Renuvesta® (cilosporin-beta).

JURISDICTION AND VENUE

3. This Court has subject-matter jurisdiction over this action pursuant to Massachusetts General Laws chapter 231A, sections 1 through 2, which authorize the Superior Court to make binding declarations of right, duty, status, and other legal relations arising under deeds, wills, contracts, and other written instruments. The declaratory relief sought herein arises directly from the parties' written Exclusive Distribution Agreement dated July 1, 2017, and the controversy concerning the interpretation and scope of the contractual Territory defined therein. A declaratory judgment will terminate the existing uncertainty and controversy between the parties and will serve a useful purpose in guiding the parties' future conduct under the Agreement.

4. This Court has personal jurisdiction over Vantage because Vantage is a limited liability company organized under the laws of the Commonwealth of Massachusetts, maintains its principal office in Medford, Massachusetts, conducts continuous and systematic business operations within the Commonwealth, and has consented to the jurisdiction of the Massachusetts courts. Section 14.5 of the Agreement expressly provides: "Any dispute arising under or in connection with this Agreement shall be submitted to the exclusive jurisdiction of the state or federal courts located in the Commonwealth of Massachusetts." By executing the Agreement, Vantage consented to personal jurisdiction in Massachusetts courts for all disputes arising under or in connection with the Agreement.

5. Venue is proper in the Business Litigation Session of the Superior Court, Suffolk County, because the parties' Agreement designates the courts of the Commonwealth of Massachusetts for the resolution of any disputes arising under or in connection with the Agreement. Moreover, this action involves a complex commercial dispute concerning the interpretation of a multi-year exclusive distribution agreement with significant financial implications for both parties, and it is therefore appropriate for adjudication in the Business Litigation Session pursuant to Superior Court Standing Order 2-04.

FACTUAL ALLEGATIONS

A. The Parties' Business Relationship

6. Penterra is a mid-cap specialty pharmaceutical company that develops, manufactures, and commercializes pharmaceutical products in the therapeutic areas of oncology, rare diseases, and immunology. Penterra markets and sells its products in the United States through a network of regional exclusive distributors and two national specialty pharmacy partners. Penterra's flagship oncology product is Oncalaris® (pegvisomant-axel), a next-generation pegylated enzyme therapy indicated for the treatment of refractory colorectal cancer. Oncalaris® was approved by the United States Food and Drug Administration in 2015 and launched commercially in the first quarter of 2016. For fiscal year 2021, Oncalaris® generated approximately $412 million in net revenue, representing approximately 22% of Penterra's $1.87 billion in consolidated revenue. Oncalaris® is available in both 20 mg and 40 mg single-use vial presentations. Penterra also manufactures and commercializes Renuvesta® (cilosporin-beta), a 5 mg capsule indicated for the treatment of certain immunological conditions. Together, Oncalaris® and Renuvesta® account for a substantial portion of Penterra's specialty pharmaceutical portfolio.

7. Vantage is a regional specialty pharmaceutical distributor founded in 2009 by Donald R. Farnham. Over the past twelve years, Vantage has built its business by focusing on hospital-based and clinic-based oncology and immunology products across the northeastern United States. Vantage has grown significantly through several regional exclusive distribution agreements with mid-tier pharmaceutical manufacturers, and it has developed particular expertise in the cold-chain logistics and regulatory compliance requirements associated with specialty oncology products. As noted above, Vantage's total revenue for fiscal year 2021 was approximately $148 million, of which approximately $67 million was derived from the distribution and sale of Penterra products. The Penterra relationship is, by a significant margin, Vantage's most important commercial partnership.

8. In 2016 and early 2017, Penterra and Vantage entered into negotiations concerning the terms of an exclusive distribution arrangement under which Vantage would serve as the exclusive distributor for certain Penterra products in the New England region. During these negotiations, the parties discussed the geographic scope of the proposed exclusive territory at length. The parties ultimately agreed that Vantage's exclusive territory would be limited to the six New England states. This agreement was memorialized in the Exclusive Distribution Agreement executed on July 1, 2017.

B. The Exclusive Distribution Agreement

9. On July 1, 2017, Penterra (designated as the "Supplier") and Vantage (designated as the "Distributor") entered into the Exclusive Distribution Agreement. A true and correct copy of the Agreement, including all Exhibits thereto, is attached hereto as Exhibit 1 and incorporated herein by reference. The Agreement had an initial term of five (5) years, commencing on July 1, 2017 and expiring on June 30, 2022, with two successive one-year automatic renewal options unless either party provided one hundred eighty (180) days' written notice of non-renewal prior to the expiration of the then-current term. The pharmaceutical products covered by the Agreement (the "Products") are: (a) Oncalaris® (pegvisomant-axel), in both 20 mg and 40 mg single-use vial presentations; and (b) Renuvesta® (cilosporin-beta), in 5 mg capsule presentation.

10. Section 2.1 of the Agreement sets forth the grant of exclusive distribution rights. That section provides, in pertinent part:

"Supplier hereby grants to Distributor the exclusive right to distribute the Products within the Territory, as defined in Exhibit A."

This grant of exclusivity is explicitly tied to, and delimited by, the Territory as defined in Exhibit A to the Agreement.

11. Exhibit A to the Agreement defines the "Territory" as follows:

"The states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont (collectively, the 'New England States')."

The Territory, as expressly and unambiguously defined in Exhibit A, is limited to six specifically enumerated states, all of which are New England states. Exhibit A contains no reference whatsoever to the states of New York, New Jersey, or Pennsylvania. Exhibit A does not contain any language suggesting that the Territory is illustrative or subject to expansion. The Territory definition is clear, precise, and unambiguous on its face.

12. Section 2.3 of the Agreement sets forth a limitation on distribution outside the Territory. That section provides, in pertinent part:

"Distributor shall not actively solicit orders for, or deliver, the Products outside the Territory without Supplier's prior written consent."

This provision expressly prohibits Vantage from actively soliciting orders for, or delivering, Penterra's Products outside the six New England states enumerated in Exhibit A, unless Penterra has provided its prior written consent authorizing such activity. The requirement of "prior written consent" reflects the parties' mutual understanding that distribution outside the Territory was not authorized by the Agreement and could only be undertaken with the Supplier's express, advance, written approval.

13. Section 13.1 of the Agreement governs amendments and modifications. That section provides, in pertinent part:

"No amendment, modification, or waiver of any provision of this Agreement shall be effective unless set forth in a written instrument signed by both parties."

Under this provision, the Territory defined in Exhibit A may not be modified, expanded, amended, or waived except by a written instrument that has been duly executed by both Penterra and Vantage. An informal email, a course of dealing, or oral discussions between the parties' representatives cannot serve as a valid amendment or modification of the Agreement under Section 13.1.

14. Section 14.8 of the Agreement contains an integration clause. That section provides, in pertinent part:

"This Agreement, including all Exhibits, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, or agreements relating thereto, whether written or oral."

This integration clause establishes the EDA, including all of its Exhibits, as the complete and exclusive expression of the parties' agreement with respect to Vantage's distribution of Penterra's Products. The integration clause bars reliance on any prior or contemporaneous negotiations, representations, or agreements — whether written or oral — to supplement, contradict, or modify the express terms of the Agreement.

15. Section 14.2 of the Agreement contains a governing law provision. That section provides, in pertinent part:

"This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to its conflicts of law principles."

The parties agreed that the laws of the Commonwealth of Massachusetts would govern the construction and interpretation of all provisions of the Agreement, including the Territory definition set forth in Exhibit A.

16. Section 14.5 of the Agreement contains a forum selection clause. That section provides, in pertinent part:

"Any dispute arising under or in connection with this Agreement shall be submitted to the exclusive jurisdiction of the state or federal courts located in the Commonwealth of Massachusetts."

The parties agreed to submit any and all disputes arising under or in connection with the Agreement to the exclusive jurisdiction of the state or federal courts located in the Commonwealth of Massachusetts.

17. Under Section 5.2 of the Agreement, Vantage committed to purchase a minimum of $9.5 million of Oncalaris® (pegvisomant-axel) per year, calculated at wholesale acquisition cost ("WAC"), during each year of the Agreement's term. This minimum purchase commitment was a material term of the Agreement, reflecting Penterra's expectation that Vantage would generate a meaningful volume of Oncalaris® sales within the New England Territory. Vantage's actual Oncalaris® purchases exceeded the minimum purchase commitment in each contract year: approximately $11.2 million in fiscal year 2018; approximately $14.8 million in fiscal year 2019; approximately $18.3 million in fiscal year 2020; and approximately $16.1 million through the first nine months of fiscal year 2021, which annualizes to approximately $21.47 million. Penterra acknowledges that Vantage has met and exceeded its minimum purchase commitment in each contract year. However, Vantage's commercial success within the Territory does not authorize, and cannot serve as a basis for, distribution of Penterra's Products outside the Territory absent compliance with the Agreement's express terms.

C. The January 12, 2018 Kapoor Email

18. On January 12, 2018, Steven Kapoor, who at that time served as Penterra's Vice President of Commercial Operations, sent an email to Donald R. Farnham, Vantage's Managing Member and Chief Executive Officer. A true and correct copy of the email is attached hereto as Exhibit 2 and incorporated herein by reference. The email stated, in its entirety:

"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."

This email, on its face, expressed nothing more than a general willingness on the part of a Penterra executive to explore and discuss a potential future expansion of the Territory at some unspecified future date, contingent upon the condition that Vantage's existing New England operations were "fully ramped." The email did not grant Vantage consent to distribute Products in New York, New Jersey, or Pennsylvania. The email did not purport to amend Exhibit A to the Agreement. The email did not constitute "prior written consent" as that term is used in Section 2.3 of the Agreement. The email was informal, forward-looking, and expressly conditional, and it contemplated only that the parties would "circle back" at a later time to further discuss the possibility of a territorial expansion.

19. No written amendment to Exhibit A to the Agreement was ever executed by both Penterra and Vantage following the January 12, 2018 Kapoor Email. At no time following the Kapoor Email did the parties execute a written instrument signed by both parties expanding, modifying, or amending the Territory to include New York, New Jersey, or Pennsylvania. No such written instrument has ever existed. The Kapoor Email was a one-way communication from a single Penterra executive; it was not signed by both parties, did not reference or purport to amend Exhibit A, and does not satisfy the formal requirements of Section 13.1 of the Agreement, which mandates that any amendment or modification be "set forth in a written instrument signed by both parties."

D. Vantage's Unauthorized Tri-State Distribution

20. On or about September 14, 2020, Vantage commenced distributing Oncalaris® (pegvisomant-axel) to hospitals and oncology clinics located in New York, New Jersey, and Pennsylvania. These shipments were directed to healthcare facilities outside the six New England states defined as the Territory in Exhibit A to the Agreement. Penterra did not provide prior written consent, or any other form of consent, under Section 2.3 of the Agreement for Vantage to distribute Oncalaris® or any other Penterra Product in New York, New Jersey, or Pennsylvania. Vantage commenced these tri-state shipments unilaterally and without authorization from Penterra.

21. Between approximately September 14, 2020 and March 2021, Vantage generated approximately $6.4 million in revenues from unauthorized sales of Oncalaris® in the tri-state area of New York, New Jersey, and Pennsylvania. These sales were not incidental or passive; rather, they were the product of active solicitation by Vantage personnel. Specifically, these sales were conducted by Vantage's Outside Sales Director, Brian Kopec, and other Vantage sales representatives who actively solicited orders from hospitals and oncology clinics in New York, New Jersey, and Pennsylvania. Vantage's active solicitation of orders for Penterra Products outside the Territory, without Penterra's prior written consent, directly contravenes the express prohibition set forth in Section 2.3 of the Agreement.

E. Penterra's Efforts to Appoint a Tri-State Distributor

22. On February 15, 2021, Penterra executed a non-binding term sheet with Meridian National Distributors, Inc. ("Meridian"), a corporation organized under the laws of the State of New York with its principal office at 520 Seventh Avenue, 12th Floor, New York, New York 10018. Meridian is a large-scale specialty pharmaceutical distributor, and its president is Thomas Welliver. The term sheet contemplated that Meridian would serve as the exclusive distributor for Oncalaris® in the states of New York, New Jersey, Pennsylvania, and Maryland. Meridian's extensive distribution infrastructure and established relationships with oncology centers in the tri-state area made it an ideal distribution partner for Penterra's expansion efforts in those markets. However, the Meridian arrangement stalled, and the parties were unable to proceed to a definitive agreement, when Vantage, through its outside counsel at Hargrove, Sinclair & Polk LLP, asserted that Vantage's exclusive distribution rights under the Agreement already encompassed the tri-state area. Vantage's assertion, and its threat of substantial litigation, created uncertainty that impeded Penterra's ability to engage Meridian or any other distributor for the tri-state region.

F. The Cease-and-Desist Correspondence

23. On March 8, 2021, Jennifer Chao, Esq., Penterra's Senior Vice President and General Counsel, sent a letter via certified mail to Donald R. Farnham at Vantage's principal office in Medford, Massachusetts. A true and correct copy of that letter is attached hereto as Exhibit 3 and incorporated herein by reference. In the letter, Ms. Chao demanded that Vantage immediately cease and desist from distributing Oncalaris® and all other Penterra Products outside the six New England states defined in Exhibit A to the Agreement. The letter identified Vantage's tri-state shipments as unauthorized, noted that Penterra had never provided prior written consent under Section 2.3 for such shipments, and advised Vantage that its distribution of Penterra Products in New York, New Jersey, and Pennsylvania constituted a material breach of the Agreement.

24. On March 22, 2021, Kenneth M. Rourke, Esq., a partner at Hargrove, Sinclair & Polk LLP, serving as outside counsel for Vantage, responded to Ms. Chao's cease-and-desist letter. A true and correct copy of Mr. Rourke's response is attached hereto as Exhibit 4 and incorporated herein by reference. In the response letter, Vantage, through Mr. Rourke, asserted that Vantage had the right to distribute Oncalaris® in the tri-state area of New York, New Jersey, and Pennsylvania. Vantage based this assertion on two grounds: (a) the January 12, 2018 Kapoor Email, which Vantage characterized as constituting written consent from Penterra to expand the Territory to include New York, New Jersey, and Pennsylvania; and (b) an alleged course of dealing spanning approximately three years, during which Penterra purportedly knew of, and failed to object to, Vantage's shipments of Products to New York beginning in or around late 2019. In the response letter, Mr. Rourke further stated that if Penterra appointed a competing distributor in the tri-state area, Vantage would pursue a counterclaim for breach of contract and tortious interference with advantageous business relationships in an amount of no less than $35 million.

G. The Actual Controversy

25. An actual, present, and justiciable controversy exists between Penterra and Vantage regarding the scope of the exclusive Territory under the Agreement. The nature and contours of this controversy are well-defined. Penterra maintains that the Territory is limited to the six New England states expressly and unambiguously enumerated in Exhibit A to the Agreement — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont — and that Vantage has no exclusive distribution rights, and no authorization of any kind, to distribute Penterra Products in New York, New Jersey, or Pennsylvania. Vantage, on the other hand, contends that the Territory includes, or has been expanded or amended to include, the states of New York, New Jersey, and Pennsylvania, based on the January 12, 2018 Kapoor Email and an alleged course of dealing. As of the date of this Complaint, Vantage continues to distribute Oncalaris® in the tri-state area and has not complied with Penterra's demand that it cease unauthorized distribution outside the Territory. In addition, Vantage's threat of a $35 million counterclaim has impeded Penterra's ability to appoint a new distributor in the tri-state market, causing ongoing commercial harm to Penterra's business operations and market expansion strategy. This controversy is ripe for adjudication, and a declaratory judgment will serve a useful purpose in terminating the uncertainty and controversy between the parties and in clarifying their respective rights and obligations under the Agreement. See Broadhurst v. Dir. of the Div. of Emp. Sec., 373 Mass. 720, 722–23 (1977); Boston Safe Deposit & Trust Co. v. Stratton, 259 Mass. 465, 472 (1927).

COUNT I

DECLARATORY JUDGMENT — SCOPE OF TERRITORY

26. Plaintiff Penterra Pharmaceuticals Corp. repeats and re-alleges each and every allegation contained in Paragraphs 1 through 25 of this Complaint as though fully set forth herein.

27. Pursuant to Massachusetts General Laws chapter 231A, sections 1 and 2, Penterra is entitled to, and respectfully requests, a declaration by this Court that:

(a) The "Territory" under the Exclusive Distribution Agreement dated July 1, 2017, as defined in Exhibit A thereto, is limited to the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, and to no other states;

(b) The Territory does not include, and has never included, the states of New York, New Jersey, or Pennsylvania;

(c) The January 12, 2018 email from Steven Kapoor, Penterra's then-Vice President of Commercial Operations, to Donald R. Farnham, Vantage's Managing Member and CEO, does not constitute "prior written consent" within the meaning of Section 2.3 of the Agreement, and did not authorize Vantage to distribute Penterra's Products in New York, New Jersey, or Pennsylvania;

(d) The January 12, 2018 Kapoor Email does not constitute an amendment to Exhibit A under Section 13.1 of the Agreement, which requires that any amendment, modification, or waiver be set forth in a written instrument signed by both parties;

(e) Vantage's distribution of Oncalaris® (pegvisomant-axel) in the states of New York, New Jersey, and Pennsylvania, which commenced on or about September 14, 2020, is unauthorized and constitutes a violation of Section 2.3 of the Agreement; and

(f) Penterra is free to appoint one or more distributors in New York, New Jersey, Pennsylvania, and any other states not encompassed by the Territory as defined in Exhibit A, without incurring any liability to Vantage.

28. The declaratory relief sought herein is warranted because the plain and unambiguous language of Exhibit A defines the Territory as six specifically enumerated states — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. Neither the Agreement itself, nor any duly executed written amendment thereto, extends the Territory beyond those six states. Under well-established Massachusetts law, where the language of a contract is clear and unambiguous, it must be enforced according to its plain meaning, and the court will not look beyond the four corners of the document to ascertain the parties' intent. See Bank v. Thermo Elemental Inc., 451 Mass. 638, 648 (2008) ("The interpretation of a contract is a question of law, and where the contract terms are clear and unambiguous, they must be enforced in accordance with their plain meaning."); General Convention of the New Jerusalem in the U.S.A., Inc. v. Mackenzie, 449 Mass. 832, 835–36 (2007).

29. Furthermore, the declaratory relief sought herein is supported by the written-modification clause set forth in Section 13.1 of the Agreement, which expressly provides that no amendment, modification, or waiver of any provision of the Agreement shall be effective unless set forth in a written instrument signed by both parties. No written instrument signed by both Penterra and Vantage expanding the Territory to include New York, New Jersey, or Pennsylvania has ever been executed. Under Massachusetts law, written-modification clauses are generally enforceable and serve to preclude oral or implied modifications of the contract. See Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122, 131–32 (2000) (holding that a no-oral-modification clause was enforceable and that a party could not rely on an alleged oral modification where the contract required modifications to be in writing); see also Restatement (Second) of Contracts § 283 (1981). The January 12, 2018 Kapoor Email — an informal, one-directional communication that was never countersigned by Vantage, did not reference or purport to amend Exhibit A, and expressed only a conditional willingness to explore a future expansion — cannot satisfy the requirements of Section 13.1. Vantage's reliance on the Kapoor Email as a basis for claiming expanded territorial rights is therefore legally insufficient.

30. Additionally, the integration clause set forth in Section 14.8 of the Agreement provides that the Agreement, including all Exhibits, constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior negotiations, representations, or agreements, whether written or oral. This integration clause bars Vantage from relying on the January 12, 2018 Kapoor Email, any alleged course of dealing, or any other extrinsic evidence to supplement, vary, or contradict the express terms of Exhibit A. See Robert Indus., Inc. v. Spence, 362 Mass. 751, 755 (1973) ("Where a contract is fully integrated, the parol evidence rule bars the introduction of prior or contemporaneous agreements to vary or contradict its terms."). The Territory is what Exhibit A says it is: the six New England states, and nothing more.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff Penterra Pharmaceuticals Corp. respectfully requests that this Honorable Court enter judgment in favor of Penterra and against Vantage, and grant the following relief:

1. Enter a declaratory judgment, pursuant to G.L. c. 231A, §§ 1–2, declaring that the "Territory" under the Exclusive Distribution Agreement dated July 1, 2017, as defined in Exhibit A thereto, is limited to the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, and does not include the states of New York, New Jersey, or Pennsylvania;

2. Enter a declaratory judgment declaring that the January 12, 2018 email from Steven Kapoor to Donald R. Farnham does not constitute "prior written consent" within the meaning of Section 2.3 of the Agreement and does not constitute an amendment to Exhibit A under Section 13.1 of the Agreement;

3. Enter a declaratory judgment declaring that Vantage's distribution of Penterra's Products, including Oncalaris® (pegvisomant-axel), in the states of New York, New Jersey, and Pennsylvania is unauthorized and constitutes a violation of Section 2.3 of the Agreement;

4. Enter a declaratory judgment declaring that Penterra is free to appoint one or more distributors in New York, New Jersey, Pennsylvania, and any other states outside the Territory as defined in Exhibit A, without incurring any liability to Vantage;

5. Award Penterra its costs of suit in this action, including reasonable attorneys' fees to the extent permitted by applicable law; and

6. Grant such other and further relief as this Court deems just and proper.

JURY DEMAND

Plaintiff Penterra Pharmaceuticals Corp. hereby demands a trial by jury on all issues so triable in this action.

Respectfully submitted,

PENTERRA PHARMACEUTICALS CORP., By its attorneys,

CALDERWOOD & HARKNESS LLP

By: ________

Linda Osei (BBO No. 672841) Priya Anand (BBO No. 698215) Hannah Brinkley (BBO No. 704539) Patrick Gallagher (BBO No. 691027)

1 Federal Street, 35th Floor Boston, Massachusetts 02110 Telephone: (617) 555-4200 Facsimile: (617) 555-4201

Email: losei@calderwoodharkness.com

Email: panand@calderwoodharkness.com

Dated: April 12, 2021

CERTIFICATE OF SERVICE

I, Linda Osei, hereby certify that on April 12, 2021, a true and correct copy of the foregoing Complaint for Declaratory Judgment, together with all exhibits referenced therein, was served upon counsel for Defendant Vantage Medical Distribution, LLC, by first-class mail, postage prepaid, and by electronic mail, addressed as follows:

Kenneth M. Rourke, Esq. Hargrove, Sinclair & Polk LLP 200 Ashbury Asset Advisors, Suite 1800 Boston, Massachusetts 02109 Telephone: (617) 555-7800

Email: krourke@hsplaw.com

________________________________________

Linda Osei

EXHIBIT LIST

The following Exhibits are referenced in the foregoing Complaint and are submitted herewith:

PENTERRA PHARMACEUTICALS CORP.,

Plaintiff,

VANTAGE MEDICAL DISTRIBUTION, LLC,

Defendant.

Exhibit No.	Description
Exhibit 1	Exclusive Distribution Agreement dated July 1, 2017, between Penterra Pharmaceuticals Corp. and Vantage Medical Distribution, LLC (including Exhibit A — Territory Definition)
Exhibit 2	Email from Steven Kapoor (Penterra Vice President of Commercial Operations) to Donald R. Farnham (Vantage Managing Member and CEO) dated January 12, 2018 (the "Kapoor Email")
Exhibit 3	Letter from Jennifer Chao, Esq. (Penterra Senior Vice President and General Counsel) to Donald R. Farnham dated March 8, 2021 (Penterra's Cease-and-Desist Letter)
Exhibit 4	Letter from Kenneth M. Rourke, Esq. (Hargrove, Sinclair & Polk LLP, counsel for Vantage) to Jennifer Chao, Esq. dated March 22, 2021 (Vantage's Response Letter)

COMMONWEALTH OF MASSACHUSETTS
SUPERIOR COURT DEPARTMENT BUSINESS LITIGATION SESSION SUFFOLK COUNTY
COMPLAINT FOR DECLARATORY JUDGMENT
Filed: April 12, 2021
INTRODUCTION
Plaintiff Penterra Pharmaceuticals Corp. ("Penterra" or "Plaintiff"), a corporation 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 counsel, brings this action for declaratory judgment pursuant to Massachusetts General Laws chapter 231A against Defendant Vantage Medical Distribution, LLC ("Vantage" or "Defendant"), a Massachusetts limited liability company with its principal office at 75 Cabot Road, Suite 310, Medford, Massachusetts 02155. In support of this Complaint, Penterra states as follows:
Penterra seeks a judicial declaration that the exclusive distribution territory granted to Vantage under the Exclusive Distribution Agreement dated July 1, 2017 (the "Agreement" or "EDA"), which is attached hereto as Exhibit 1 and incorporated herein by reference, is limited to the six New England states — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont — as those states are expressly and unambiguously defined in Exhibit A to the Agreement. Penterra further seeks a declaration that the Territory, as defined in the Agreement, does not encompass the states of New York, New Jersey, or Pennsylvania, and that neither the Agreement nor any duly executed written amendment thereto has ever extended Vantage's exclusive distribution rights to those three states.
In addition, Penterra seeks a declaration that Vantage's distribution of Penterra's pharmaceutical products — specifically, Oncalaris® (pegvisomant-axel) — in the tri-state area of New York, New Jersey, and Pennsylvania, which commenced on or about September 14, 2020, is unauthorized, was undertaken without Penterra's prior written consent as required by Section 2.3 of the Agreement, and constitutes a material breach of the Agreement.
An actual, present, and justiciable controversy exists between the parties concerning the scope of the exclusive Territory under the Agreement. Vantage, through its outside counsel at Hargrove, Sinclair & Polk LLP, has asserted in writing that Vantage's exclusive territory encompasses the tri-state area of New York, New Jersey, and Pennsylvania, relying on an informal email sent by a Penterra executive in January 2018 and an alleged course of dealing. Vantage has further threatened to pursue a counterclaim of no less than $35 million for breach of contract and tortious interference with business relationships if Penterra appoints a competing distributor in those states. This controversy is ripe for adjudication, and a declaratory judgment will serve a useful purpose in resolving the dispute and clarifying the parties' respective rights and obligations under the Agreement.
THE PARTIES
1. Plaintiff Penterra Pharmaceuticals Corp. is a corporation organized and existing under the laws of the State of Delaware. Penterra is publicly traded on the Nasdaq Stock Market under the ticker symbol "PTRA." Penterra's principal place of business is located at 400 Carnegie Center Drive, Suite 600, Princeton, New Jersey 08540. Penterra is a specialty pharmaceutical company focused on the development, manufacture, and commercialization of pharmaceutical products in the therapeutic areas of oncology, rare diseases, and immunology. For fiscal year 2021, Penterra reported consolidated revenue of approximately $1.87 billion. Penterra maintains a registered agent for service of process in the Commonwealth of Massachusetts through CT Statutory Agent Services, located at 155 Federal Street, Suite 700, Boston, Massachusetts 02110.
2. Defendant Vantage Medical Distribution, LLC is a limited liability company organized and existing under the laws of the Commonwealth of Massachusetts. Vantage's principal office is located at 75 Cabot Road, Suite 310, Medford, Massachusetts 02155. Vantage is a regional specialty pharmaceutical distributor that focuses on hospital-based and clinic-based oncology and immunology products throughout the northeastern United States. Vantage was founded in 2009 by its Managing Member and Chief Executive Officer, Donald R. Farnham. For fiscal year 2021, Vantage reported total revenue of approximately $148 million, of which approximately $67 million — representing approximately 45.3% of Vantage's total revenue — was derived from the distribution and sale of Penterra products, including Oncalaris® (pegvisomant-axel) and Renuvesta® (cilosporin-beta).
JURISDICTION AND VENUE
3. This Court has subject-matter jurisdiction over this action pursuant to Massachusetts General Laws chapter 231A, sections 1 through 2, which authorize the Superior Court to make binding declarations of right, duty, status, and other legal relations arising under deeds, wills, contracts, and other written instruments. The declaratory relief sought herein arises directly from the parties' written Exclusive Distribution Agreement dated July 1, 2017, and the controversy concerning the interpretation and scope of the contractual Territory defined therein. A declaratory judgment will terminate the existing uncertainty and controversy between the parties and will serve a useful purpose in guiding the parties' future conduct under the Agreement.
4. This Court has personal jurisdiction over Vantage because Vantage is a limited liability company organized under the laws of the Commonwealth of Massachusetts, maintains its principal office in Medford, Massachusetts, conducts continuous and systematic business operations within the Commonwealth, and has consented to the jurisdiction of the Massachusetts courts. Section 14.5 of the Agreement expressly provides: "Any dispute arising under or in connection with this Agreement shall be submitted to the exclusive jurisdiction of the state or federal courts located in the Commonwealth of Massachusetts." By executing the Agreement, Vantage consented to personal jurisdiction in Massachusetts courts for all disputes arising under or in connection with the Agreement.
5. Venue is proper in the Business Litigation Session of the Superior Court, Suffolk County, because the parties' Agreement designates the courts of the Commonwealth of Massachusetts for the resolution of any disputes arising under or in connection with the Agreement. Moreover, this action involves a complex commercial dispute concerning the interpretation of a multi-year exclusive distribution agreement with significant financial implications for both parties, and it is therefore appropriate for adjudication in the Business Litigation Session pursuant to Superior Court Standing Order 2-04.
FACTUAL ALLEGATIONS
A. The Parties' Business Relationship
6. Penterra is a mid-cap specialty pharmaceutical company that develops, manufactures, and commercializes pharmaceutical products in the therapeutic areas of oncology, rare diseases, and immunology. Penterra markets and sells its products in the United States through a network of regional exclusive distributors and two national specialty pharmacy partners. Penterra's flagship oncology product is Oncalaris® (pegvisomant-axel), a next-generation pegylated enzyme therapy indicated for the treatment of refractory colorectal cancer. Oncalaris® was approved by the United States Food and Drug Administration in 2015 and launched commercially in the first quarter of 2016. For fiscal year 2021, Oncalaris® generated approximately $412 million in net revenue, representing approximately 22% of Penterra's $1.87 billion in consolidated revenue. Oncalaris® is available in both 20 mg and 40 mg single-use vial presentations. Penterra also manufactures and commercializes Renuvesta® (cilosporin-beta), a 5 mg capsule indicated for the treatment of certain immunological conditions. Together, Oncalaris® and Renuvesta® account for a substantial portion of Penterra's specialty pharmaceutical portfolio.
7. Vantage is a regional specialty pharmaceutical distributor founded in 2009 by Donald R. Farnham. Over the past twelve years, Vantage has built its business by focusing on hospital-based and clinic-based oncology and immunology products across the northeastern United States. Vantage has grown significantly through several regional exclusive distribution agreements with mid-tier pharmaceutical manufacturers, and it has developed particular expertise in the cold-chain logistics and regulatory compliance requirements associated with specialty oncology products. As noted above, Vantage's total revenue for fiscal year 2021 was approximately $148 million, of which approximately $67 million was derived from the distribution and sale of Penterra products. The Penterra relationship is, by a significant margin, Vantage's most important commercial partnership.
8. In 2016 and early 2017, Penterra and Vantage entered into negotiations concerning the terms of an exclusive distribution arrangement under which Vantage would serve as the exclusive distributor for certain Penterra products in the New England region. During these negotiations, the parties discussed the geographic scope of the proposed exclusive territory at length. The parties ultimately agreed that Vantage's exclusive territory would be limited to the six New England states. This agreement was memorialized in the Exclusive Distribution Agreement executed on July 1, 2017.
B. The Exclusive Distribution Agreement
9. On July 1, 2017, Penterra (designated as the "Supplier") and Vantage (designated as the "Distributor") entered into the Exclusive Distribution Agreement. A true and correct copy of the Agreement, including all Exhibits thereto, is attached hereto as Exhibit 1 and incorporated herein by reference. The Agreement had an initial term of five (5) years, commencing on July 1, 2017 and expiring on June 30, 2022, with two successive one-year automatic renewal options unless either party provided one hundred eighty (180) days' written notice of non-renewal prior to the expiration of the then-current term. The pharmaceutical products covered by the Agreement (the "Products") are: (a) Oncalaris® (pegvisomant-axel), in both 20 mg and 40 mg single-use vial presentations; and (b) Renuvesta® (cilosporin-beta), in 5 mg capsule presentation.
10. Section 2.1 of the Agreement sets forth the grant of exclusive distribution rights. That section provides, in pertinent part:
"Supplier hereby grants to Distributor the exclusive right to distribute the Products within the Territory, as defined in Exhibit A."
This grant of exclusivity is explicitly tied to, and delimited by, the Territory as defined in Exhibit A to the Agreement.
11. Exhibit A to the Agreement defines the "Territory" as follows:
"The states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont (collectively, the 'New England States')."
The Territory, as expressly and unambiguously defined in Exhibit A, is limited to six specifically enumerated states, all of which are New England states. Exhibit A contains no reference whatsoever to the states of New York, New Jersey, or Pennsylvania. Exhibit A does not contain any language suggesting that the Territory is illustrative or subject to expansion. The Territory definition is clear, precise, and unambiguous on its face.
12. Section 2.3 of the Agreement sets forth a limitation on distribution outside the Territory. That section provides, in pertinent part:
"Distributor shall not actively solicit orders for, or deliver, the Products outside the Territory without Supplier's prior written consent."
This provision expressly prohibits Vantage from actively soliciting orders for, or delivering, Penterra's Products outside the six New England states enumerated in Exhibit A, unless Penterra has provided its prior written consent authorizing such activity. The requirement of "prior written consent" reflects the parties' mutual understanding that distribution outside the Territory was not authorized by the Agreement and could only be undertaken with the Supplier's express, advance, written approval.
13. Section 13.1 of the Agreement governs amendments and modifications. That section provides, in pertinent part:
"No amendment, modification, or waiver of any provision of this Agreement shall be effective unless set forth in a written instrument signed by both parties."
Under this provision, the Territory defined in Exhibit A may not be modified, expanded, amended, or waived except by a written instrument that has been duly executed by both Penterra and Vantage. An informal email, a course of dealing, or oral discussions between the parties' representatives cannot serve as a valid amendment or modification of the Agreement under Section 13.1.
14. Section 14.8 of the Agreement contains an integration clause. That section provides, in pertinent part:
"This Agreement, including all Exhibits, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, or agreements relating thereto, whether written or oral."
This integration clause establishes the EDA, including all of its Exhibits, as the complete and exclusive expression of the parties' agreement with respect to Vantage's distribution of Penterra's Products. The integration clause bars reliance on any prior or contemporaneous negotiations, representations, or agreements — whether written or oral — to supplement, contradict, or modify the express terms of the Agreement.
15. Section 14.2 of the Agreement contains a governing law provision. That section provides, in pertinent part:
"This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to its conflicts of law principles."
The parties agreed that the laws of the Commonwealth of Massachusetts would govern the construction and interpretation of all provisions of the Agreement, including the Territory definition set forth in Exhibit A.
16. Section 14.5 of the Agreement contains a forum selection clause. That section provides, in pertinent part:
"Any dispute arising under or in connection with this Agreement shall be submitted to the exclusive jurisdiction of the state or federal courts located in the Commonwealth of Massachusetts."
The parties agreed to submit any and all disputes arising under or in connection with the Agreement to the exclusive jurisdiction of the state or federal courts located in the Commonwealth of Massachusetts.
17. Under Section 5.2 of the Agreement, Vantage committed to purchase a minimum of $9.5 million of Oncalaris® (pegvisomant-axel) per year, calculated at wholesale acquisition cost ("WAC"), during each year of the Agreement's term. This minimum purchase commitment was a material term of the Agreement, reflecting Penterra's expectation that Vantage would generate a meaningful volume of Oncalaris® sales within the New England Territory. Vantage's actual Oncalaris® purchases exceeded the minimum purchase commitment in each contract year: approximately $11.2 million in fiscal year 2018; approximately $14.8 million in fiscal year 2019; approximately $18.3 million in fiscal year 2020; and approximately $16.1 million through the first nine months of fiscal year 2021, which annualizes to approximately $21.47 million. Penterra acknowledges that Vantage has met and exceeded its minimum purchase commitment in each contract year. However, Vantage's commercial success within the Territory does not authorize, and cannot serve as a basis for, distribution of Penterra's Products outside the Territory absent compliance with the Agreement's express terms.
C. The January 12, 2018 Kapoor Email
18. On January 12, 2018, Steven Kapoor, who at that time served as Penterra's Vice President of Commercial Operations, sent an email to Donald R. Farnham, Vantage's Managing Member and Chief Executive Officer. A true and correct copy of the email is attached hereto as Exhibit 2 and incorporated herein by reference. The email stated, in its entirety:
"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."
This email, on its face, expressed nothing more than a general willingness on the part of a Penterra executive to explore and discuss a potential future expansion of the Territory at some unspecified future date, contingent upon the condition that Vantage's existing New England operations were "fully ramped." The email did not grant Vantage consent to distribute Products in New York, New Jersey, or Pennsylvania. The email did not purport to amend Exhibit A to the Agreement. The email did not constitute "prior written consent" as that term is used in Section 2.3 of the Agreement. The email was informal, forward-looking, and expressly conditional, and it contemplated only that the parties would "circle back" at a later time to further discuss the possibility of a territorial expansion.
19. No written amendment to Exhibit A to the Agreement was ever executed by both Penterra and Vantage following the January 12, 2018 Kapoor Email. At no time following the Kapoor Email did the parties execute a written instrument signed by both parties expanding, modifying, or amending the Territory to include New York, New Jersey, or Pennsylvania. No such written instrument has ever existed. The Kapoor Email was a one-way communication from a single Penterra executive; it was not signed by both parties, did not reference or purport to amend Exhibit A, and does not satisfy the formal requirements of Section 13.1 of the Agreement, which mandates that any amendment or modification be "set forth in a written instrument signed by both parties."
D. Vantage's Unauthorized Tri-State Distribution
20. On or about September 14, 2020, Vantage commenced distributing Oncalaris® (pegvisomant-axel) to hospitals and oncology clinics located in New York, New Jersey, and Pennsylvania. These shipments were directed to healthcare facilities outside the six New England states defined as the Territory in Exhibit A to the Agreement. Penterra did not provide prior written consent, or any other form of consent, under Section 2.3 of the Agreement for Vantage to distribute Oncalaris® or any other Penterra Product in New York, New Jersey, or Pennsylvania. Vantage commenced these tri-state shipments unilaterally and without authorization from Penterra.
21. Between approximately September 14, 2020 and March 2021, Vantage generated approximately $6.4 million in revenues from unauthorized sales of Oncalaris® in the tri-state area of New York, New Jersey, and Pennsylvania. These sales were not incidental or passive; rather, they were the product of active solicitation by Vantage personnel. Specifically, these sales were conducted by Vantage's Outside Sales Director, Brian Kopec, and other Vantage sales representatives who actively solicited orders from hospitals and oncology clinics in New York, New Jersey, and Pennsylvania. Vantage's active solicitation of orders for Penterra Products outside the Territory, without Penterra's prior written consent, directly contravenes the express prohibition set forth in Section 2.3 of the Agreement.
E. Penterra's Efforts to Appoint a Tri-State Distributor
22. On February 15, 2021, Penterra executed a non-binding term sheet with Meridian National Distributors, Inc. ("Meridian"), a corporation organized under the laws of the State of New York with its principal office at 520 Seventh Avenue, 12th Floor, New York, New York 10018. Meridian is a large-scale specialty pharmaceutical distributor, and its president is Thomas Welliver. The term sheet contemplated that Meridian would serve as the exclusive distributor for Oncalaris® in the states of New York, New Jersey, Pennsylvania, and Maryland. Meridian's extensive distribution infrastructure and established relationships with oncology centers in the tri-state area made it an ideal distribution partner for Penterra's expansion efforts in those markets. However, the Meridian arrangement stalled, and the parties were unable to proceed to a definitive agreement, when Vantage, through its outside counsel at Hargrove, Sinclair & Polk LLP, asserted that Vantage's exclusive distribution rights under the Agreement already encompassed the tri-state area. Vantage's assertion, and its threat of substantial litigation, created uncertainty that impeded Penterra's ability to engage Meridian or any other distributor for the tri-state region.
F. The Cease-and-Desist Correspondence
23. On March 8, 2021, Jennifer Chao, Esq., Penterra's Senior Vice President and General Counsel, sent a letter via certified mail to Donald R. Farnham at Vantage's principal office in Medford, Massachusetts. A true and correct copy of that letter is attached hereto as Exhibit 3 and incorporated herein by reference. In the letter, Ms. Chao demanded that Vantage immediately cease and desist from distributing Oncalaris® and all other Penterra Products outside the six New England states defined in Exhibit A to the Agreement. The letter identified Vantage's tri-state shipments as unauthorized, noted that Penterra had never provided prior written consent under Section 2.3 for such shipments, and advised Vantage that its distribution of Penterra Products in New York, New Jersey, and Pennsylvania constituted a material breach of the Agreement.
24. On March 22, 2021, Kenneth M. Rourke, Esq., a partner at Hargrove, Sinclair & Polk LLP, serving as outside counsel for Vantage, responded to Ms. Chao's cease-and-desist letter. A true and correct copy of Mr. Rourke's response is attached hereto as Exhibit 4 and incorporated herein by reference. In the response letter, Vantage, through Mr. Rourke, asserted that Vantage had the right to distribute Oncalaris® in the tri-state area of New York, New Jersey, and Pennsylvania. Vantage based this assertion on two grounds: (a) the January 12, 2018 Kapoor Email, which Vantage characterized as constituting written consent from Penterra to expand the Territory to include New York, New Jersey, and Pennsylvania; and (b) an alleged course of dealing spanning approximately three years, during which Penterra purportedly knew of, and failed to object to, Vantage's shipments of Products to New York beginning in or around late 2019. In the response letter, Mr. Rourke further stated that if Penterra appointed a competing distributor in the tri-state area, Vantage would pursue a counterclaim for breach of contract and tortious interference with advantageous business relationships in an amount of no less than $35 million.
G. The Actual Controversy
25. An actual, present, and justiciable controversy exists between Penterra and Vantage regarding the scope of the exclusive Territory under the Agreement. The nature and contours of this controversy are well-defined. Penterra maintains that the Territory is limited to the six New England states expressly and unambiguously enumerated in Exhibit A to the Agreement — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont — and that Vantage has no exclusive distribution rights, and no authorization of any kind, to distribute Penterra Products in New York, New Jersey, or Pennsylvania. Vantage, on the other hand, contends that the Territory includes, or has been expanded or amended to include, the states of New York, New Jersey, and Pennsylvania, based on the January 12, 2018 Kapoor Email and an alleged course of dealing. As of the date of this Complaint, Vantage continues to distribute Oncalaris® in the tri-state area and has not complied with Penterra's demand that it cease unauthorized distribution outside the Territory. In addition, Vantage's threat of a $35 million counterclaim has impeded Penterra's ability to appoint a new distributor in the tri-state market, causing ongoing commercial harm to Penterra's business operations and market expansion strategy. This controversy is ripe for adjudication, and a declaratory judgment will serve a useful purpose in terminating the uncertainty and controversy between the parties and in clarifying their respective rights and obligations under the Agreement. See Broadhurst v. Dir. of the Div. of Emp. Sec., 373 Mass. 720, 722–23 (1977); Boston Safe Deposit & Trust Co. v. Stratton, 259 Mass. 465, 472 (1927).
COUNT I
DECLARATORY JUDGMENT — SCOPE OF TERRITORY
26. Plaintiff Penterra Pharmaceuticals Corp. repeats and re-alleges each and every allegation contained in Paragraphs 1 through 25 of this Complaint as though fully set forth herein.
27. Pursuant to Massachusetts General Laws chapter 231A, sections 1 and 2, Penterra is entitled to, and respectfully requests, a declaration by this Court that:
(a) The "Territory" under the Exclusive Distribution Agreement dated July 1, 2017, as defined in Exhibit A thereto, is limited to the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, and to no other states;
(b) The Territory does not include, and has never included, the states of New York, New Jersey, or Pennsylvania;
(c) The January 12, 2018 email from Steven Kapoor, Penterra's then-Vice President of Commercial Operations, to Donald R. Farnham, Vantage's Managing Member and CEO, does not constitute "prior written consent" within the meaning of Section 2.3 of the Agreement, and did not authorize Vantage to distribute Penterra's Products in New York, New Jersey, or Pennsylvania;
(d) The January 12, 2018 Kapoor Email does not constitute an amendment to Exhibit A under Section 13.1 of the Agreement, which requires that any amendment, modification, or waiver be set forth in a written instrument signed by both parties;
(e) Vantage's distribution of Oncalaris® (pegvisomant-axel) in the states of New York, New Jersey, and Pennsylvania, which commenced on or about September 14, 2020, is unauthorized and constitutes a violation of Section 2.3 of the Agreement; and
(f) Penterra is free to appoint one or more distributors in New York, New Jersey, Pennsylvania, and any other states not encompassed by the Territory as defined in Exhibit A, without incurring any liability to Vantage.
28. The declaratory relief sought herein is warranted because the plain and unambiguous language of Exhibit A defines the Territory as six specifically enumerated states — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. Neither the Agreement itself, nor any duly executed written amendment thereto, extends the Territory beyond those six states. Under well-established Massachusetts law, where the language of a contract is clear and unambiguous, it must be enforced according to its plain meaning, and the court will not look beyond the four corners of the document to ascertain the parties' intent. See Bank v. Thermo Elemental Inc., 451 Mass. 638, 648 (2008) ("The interpretation of a contract is a question of law, and where the contract terms are clear and unambiguous, they must be enforced in accordance with their plain meaning."); General Convention of the New Jerusalem in the U.S.A., Inc. v. Mackenzie, 449 Mass. 832, 835–36 (2007).
29. Furthermore, the declaratory relief sought herein is supported by the written-modification clause set forth in Section 13.1 of the Agreement, which expressly provides that no amendment, modification, or waiver of any provision of the Agreement shall be effective unless set forth in a written instrument signed by both parties. No written instrument signed by both Penterra and Vantage expanding the Territory to include New York, New Jersey, or Pennsylvania has ever been executed. Under Massachusetts law, written-modification clauses are generally enforceable and serve to preclude oral or implied modifications of the contract. See Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122, 131–32 (2000) (holding that a no-oral-modification clause was enforceable and that a party could not rely on an alleged oral modification where the contract required modifications to be in writing); see also Restatement (Second) of Contracts § 283 (1981). The January 12, 2018 Kapoor Email — an informal, one-directional communication that was never countersigned by Vantage, did not reference or purport to amend Exhibit A, and expressed only a conditional willingness to explore a future expansion — cannot satisfy the requirements of Section 13.1. Vantage's reliance on the Kapoor Email as a basis for claiming expanded territorial rights is therefore legally insufficient.
30. Additionally, the integration clause set forth in Section 14.8 of the Agreement provides that the Agreement, including all Exhibits, constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior negotiations, representations, or agreements, whether written or oral. This integration clause bars Vantage from relying on the January 12, 2018 Kapoor Email, any alleged course of dealing, or any other extrinsic evidence to supplement, vary, or contradict the express terms of Exhibit A. See Robert Indus., Inc. v. Spence, 362 Mass. 751, 755 (1973) ("Where a contract is fully integrated, the parol evidence rule bars the introduction of prior or contemporaneous agreements to vary or contradict its terms."). The Territory is what Exhibit A says it is: the six New England states, and nothing more.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff Penterra Pharmaceuticals Corp. respectfully requests that this Honorable Court enter judgment in favor of Penterra and against Vantage, and grant the following relief:
1. Enter a declaratory judgment, pursuant to G.L. c. 231A, §§ 1–2, declaring that the "Territory" under the Exclusive Distribution Agreement dated July 1, 2017, as defined in Exhibit A thereto, is limited to the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, and does not include the states of New York, New Jersey, or Pennsylvania;
2. Enter a declaratory judgment declaring that the January 12, 2018 email from Steven Kapoor to Donald R. Farnham does not constitute "prior written consent" within the meaning of Section 2.3 of the Agreement and does not constitute an amendment to Exhibit A under Section 13.1 of the Agreement;
3. Enter a declaratory judgment declaring that Vantage's distribution of Penterra's Products, including Oncalaris® (pegvisomant-axel), in the states of New York, New Jersey, and Pennsylvania is unauthorized and constitutes a violation of Section 2.3 of the Agreement;
4. Enter a declaratory judgment declaring that Penterra is free to appoint one or more distributors in New York, New Jersey, Pennsylvania, and any other states outside the Territory as defined in Exhibit A, without incurring any liability to Vantage;
5. Award Penterra its costs of suit in this action, including reasonable attorneys' fees to the extent permitted by applicable law; and
6. Grant such other and further relief as this Court deems just and proper.
JURY DEMAND
Plaintiff Penterra Pharmaceuticals Corp. hereby demands a trial by jury on all issues so triable in this action.
Respectfully submitted,
PENTERRA PHARMACEUTICALS CORP., By its attorneys,
CALDERWOOD & HARKNESS LLP
By: ________
Linda Osei (BBO No. 672841) Priya Anand (BBO No. 698215) Hannah Brinkley (BBO No. 704539) Patrick Gallagher (BBO No. 691027)
1 Federal Street, 35th Floor Boston, Massachusetts 02110 Telephone: (617) 555-4200 Facsimile: (617) 555-4201
Email: losei@calderwoodharkness.com
Email: panand@calderwoodharkness.com
Dated: April 12, 2021
CERTIFICATE OF SERVICE
I, Linda Osei, hereby certify that on April 12, 2021, a true and correct copy of the foregoing Complaint for Declaratory Judgment, together with all exhibits referenced therein, was served upon counsel for Defendant Vantage Medical Distribution, LLC, by first-class mail, postage prepaid, and by electronic mail, addressed as follows:
Kenneth M. Rourke, Esq. Hargrove, Sinclair & Polk LLP 200 Ashbury Asset Advisors, Suite 1800 Boston, Massachusetts 02109 Telephone: (617) 555-7800
Email: krourke@hsplaw.com
________________________________________
Linda Osei
EXHIBIT LIST
The following Exhibits are referenced in the foregoing Complaint and are submitted herewith:
PENTERRA PHARMACEUTICALS CORP.,
Plaintiff, | Docket No. 2184-CV-01537-BLS
v.
VANTAGE MEDICAL DISTRIBUTION, LLC,
Defendant.
Exhibit No. | Description
Exhibit 1 | Exclusive Distribution Agreement dated July 1, 2017, between Penterra Pharmaceuticals Corp. and Vantage Medical Distribution, LLC (including Exhibit A — Territory Definition)
Exhibit 2 | Email from Steven Kapoor (Penterra Vice President of Commercial Operations) to Donald R. Farnham (Vantage Managing Member and CEO) dated January 12, 2018 (the "Kapoor Email")
Exhibit 3 | Letter from Jennifer Chao, Esq. (Penterra Senior Vice President and General Counsel) to Donald R. Farnham dated March 8, 2021 (Penterra's Cease-and-Desist Letter)
Exhibit 4 | Letter from Kenneth M. Rourke, Esq. (Hargrove, Sinclair & Polk LLP, counsel for Vantage) to Jennifer Chao, Esq. dated March 22, 2021 (Vantage's Response Letter)