1018-00007 · Penterra Pharmaceuticals Corp · Pre-Litigation

preliminary-case-assessment-memo.docx DOCUMENT Litigation

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 1 Federal Street, 35th Floor Boston, Massachusetts 02110

MEMORANDUM

PRIVILEGE LEGEND: This memorandum is a privileged and confidential attorney-client communication and attorney work product prepared in anticipation of litigation. It is intended solely for the use of Penterra Pharmaceuticals Corp. and its authorized representatives and should not be disclosed to third parties without the prior written consent of counsel. Disclosure to any third party may result in a waiver of the attorney-client privilege and/or work-product protection.

I. Executive Summary

The purpose of this memorandum is to provide Penterra Pharmaceuticals Corp. ("Penterra" or the "Company") with a preliminary assessment of the merits, risks, and procedural strategy for filing a declaratory-judgment action against Vantage Medical Distribution, LLC ("Vantage") in the Superior Court of Massachusetts, Business Litigation Session. The action would seek a judicial declaration that Vantage's exclusive distribution territory under the Exclusive Distribution Agreement dated July 1, 2017 (the "EDA" or the "Agreement") is limited to the six New England states — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont — as expressly defined in Exhibit A to the Agreement, and does not extend to New York, New Jersey, or Pennsylvania (collectively, the "tri-state area").

Recommendation. Based on our review of the Agreement, the relevant correspondence, applicable Massachusetts law, and the factual record as currently understood, Calderwood & Harkness recommends that Penterra file the declaratory-judgment action promptly. The plain language of the Agreement strongly supports Penterra's position. Exhibit A to the EDA exhaustively enumerates six states, and no amendment expanding the Territory has ever been executed. Vantage's principal arguments — based on the January 12, 2018 email from Steven Kapoor to Donald Farnham (the "Kapoor Email") and an alleged course of dealing — are unlikely to overcome the written-amendment requirement in Section 13.1 and the integration clause in Section 14.8 under well-settled Massachusetts law. The Supreme Judicial Court's decision in Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122 (2000), strongly supports the enforceability of written-modification provisions and counsels against implied or oral modifications of integrated agreements.

Vantage's threatened $35 million counterclaim for breach of contract and tortious interference presents a manageable risk that, in our assessment, should not deter Penterra from filing. The counterclaim theories depend on establishing that the Territory was expanded beyond the six New England states — a proposition that the contractual language and applicable law strongly refute. The damages figure appears inflated and speculative relative to Vantage's actual tri-state revenues to date (approximately $6.4 million).

Time Sensitivity. This matter is time-sensitive for several reasons. First, Vantage has been actively distributing Oncalaris® in the tri-state area since on or about September 14, 2020, generating approximately $6.4 million in unauthorized revenues. Each additional day of unauthorized distribution erodes Penterra's ability to control its channel strategy and creates additional confusion in the marketplace. Second, Vantage's counsel has threatened counterclaims, and the longer Penterra waits to assert its rights, the more Vantage may argue that Penterra acquiesced in the territorial expansion. Third, the term sheet executed on February 15, 2021 with Meridian National Distributors, Inc. ("Meridian") for tri-state distribution of Oncalaris® remains stalled pending resolution of this dispute. Delay in resolving the territorial question jeopardizes Penterra's ability to execute its tri-state distribution strategy and capture significant revenue opportunities for its flagship oncology product.

II. Background and Factual Summary

A. The Parties

Penterra Pharmaceuticals Corp. Penterra is a Delaware corporation, publicly traded on the Nasdaq Stock Market under the ticker symbol PTRA, with its principal executive offices located at 400 Carnegie Center Drive, Suite 600, Princeton, New Jersey 08540. Penterra is a mid-cap specialty pharmaceutical company focused on three core therapeutic areas: oncology, rare diseases, and immunology. For fiscal year 2021, the Company reported consolidated revenue of approximately $1.87 billion. Penterra's senior leadership relevant to this matter includes Dr. Marcus Lindholm, Chief Executive Officer; Jennifer Chao, Esq., General Counsel; Steven Kapoor, Vice President of Commercial Operations; and Rachel Mendez, Director of Distribution & Logistics. Mr. Kapoor and Ms. Mendez are the individuals within Penterra's commercial organization who have had the most direct contact with Vantage regarding the distribution relationship and the events at issue.

Vantage Medical Distribution, LLC. Vantage is a Massachusetts limited liability company with its principal office located at 75 Cabot Road, Suite 310, Medford, Massachusetts 02155. Vantage is a regional specialty pharmaceutical distributor founded in 2009 by Donald R. Farnham, who serves as Managing Member and Chief Executive Officer. Other key personnel include Lisa Petrangelo, Chief Operating Officer, and Brian Kopec, Outside Sales Director. For fiscal year 2021, Vantage reported total revenue of approximately $148 million, of which approximately $67 million — representing roughly 45.3% of Vantage's overall revenue — was derived from sales of Penterra products. The substantial concentration of Vantage's revenue in Penterra products is a relevant consideration in evaluating both the commercial dynamics of the relationship and Vantage's potential motivations in asserting an expanded territorial claim.

B. The Exclusive Distribution Agreement

On July 1, 2017, Penterra (as "Supplier") and Vantage (as "Distributor") entered into the Exclusive Distribution Agreement. The principal terms relevant to this dispute are as follows:

Term. The EDA has an initial term of five years, commencing on July 1, 2017 and expiring on June 30, 2022. The Agreement provides for two successive one-year automatic renewal options (extending the potential term through June 30, 2024), unless either party provides written notice of non-renewal at least 180 days prior to the end of the then-current term.

Products Covered. The EDA covers two Penterra products: (i) Oncalaris® (pegvisomant-axel), available in 20 mg and 40 mg vials, and (ii) Renuvesta® (cilosporin-beta), available in 5 mg capsules. Oncalaris® is by far the more commercially significant of the two products, as discussed further below.

Section 2.1 — Grant of Exclusive Territory. Section 2.1 of the EDA provides:

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

Exhibit A — Territory Definition. Exhibit A to the EDA, titled "Territory," provides in its entirety:

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

The definition is exhaustive. It identifies six specific states by name and collectively labels them "the New England States." There is no catchall language, no reference to "surrounding" or "adjacent" states, no language indicating that the Territory may be expanded by informal agreement, and no indication that the enumerated list is illustrative rather than exclusive.

Section 2.3 — Limitation on Extra-Territorial Activity. Section 2.3 further reinforces the territorial boundary:

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

This provision presupposes that the Territory is a fixed, defined area and that any activity beyond that boundary requires a separate, affirmative, written authorization from Penterra. It is a critical provision because it establishes both that Vantage's distribution rights end at the territorial border and that the mechanism for authorizing extra-territorial activity is "prior written consent" — not informal discussion, not acquiescence, and not silence.

Section 13.1 — Amendments. The EDA contains a standard written-amendment clause:

"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."

This provision requires that any change to the Agreement — including, necessarily, any expansion of the Territory defined in Exhibit A — be memorialized in a written instrument bearing the signatures of both Penterra and Vantage. No such instrument exists.

Section 14.8 — Entire Agreement / Integration Clause. Section 14.8 provides:

"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 is a broad integration clause that establishes the EDA, including Exhibit A, as the complete and final expression of the parties' agreement regarding distribution rights and territorial scope.

Section 14.2 — Governing Law. The Agreement is governed by the laws of the Commonwealth of Massachusetts, without regard to conflicts-of-law principles.

Section 14.5 — Dispute Resolution / Forum Selection. Section 14.5 provides for the exclusive jurisdiction of state or federal courts located in the Commonwealth of Massachusetts for any disputes arising out of or relating to the Agreement.

Section 5.2 — Minimum Annual Purchase Commitment. Section 5.2 establishes a minimum annual purchase commitment for Oncalaris® of $9.5 million per year at wholesale acquisition cost ("WAC"). This commitment provides context for evaluating Vantage's purchase volumes and its financial dependence on the Penterra relationship.

C. Oncalaris® Revenue Significance

Oncalaris® is Penterra's flagship oncology product. It is a next-generation pegylated enzyme therapy indicated for the treatment of refractory colorectal cancer, first launched commercially in 2016. Since launch, Oncalaris® has become one of Penterra's most commercially important products.

For fiscal year 2021, Oncalaris® generated approximately $412 million in net revenue, representing approximately 22% of Penterra's $1.87 billion in consolidated revenue. The commercial significance of Oncalaris® to Penterra's overall financial performance cannot be overstated. Maintaining effective control over the distribution and channel strategy for Oncalaris® is a critical business priority for the Company.

Vantage's Oncalaris® purchases have grown steadily and significantly over the life of the EDA:

In every year since the Agreement's inception, Vantage has exceeded the $9.5 million minimum annual purchase commitment established in Section 5.2. This strong purchase trajectory is consistent with Vantage's position as a capable and growing distributor within the New England Territory. However, it also underscores the concern that a portion of Vantage's recent growth may be attributable to unauthorized tri-state distribution activity.

D. The Dispute

On or about September 14, 2020, Vantage commenced shipping Oncalaris® to hospitals and oncology clinics in New York, New Jersey, and Pennsylvania without Penterra's prior written consent as required by Section 2.3 of the EDA. It is not entirely clear from the record when Penterra first became aware of the full scope of these unauthorized shipments, but by early 2021, the Company's commercial operations team had identified the pattern of tri-state distribution and escalated the issue to the General Counsel's office.

Based on Vantage's sales records and invoicing data obtained during the parties' pre-litigation discussions, Vantage's tri-state revenues for the period from approximately September 2020 through March 2021 totaled approximately $6.4 million. These revenues were generated from Oncalaris® sales to healthcare facilities in the tri-state area that were not part of the contractually defined Territory.

Penterra identified the unauthorized shipments and began exploring alternative distribution arrangements to serve the tri-state market through an authorized channel. On February 15, 2021, Penterra executed a term sheet with Meridian National Distributors, Inc. ("Meridian"), a New York corporation based at 520 Seventh Avenue, 12th Floor, New York, New York 10018 (President: Thomas Welliver), to distribute Oncalaris® in New York, New Jersey, Pennsylvania, and Maryland. The Meridian arrangement would provide Penterra with a dedicated, authorized distribution partner for a substantial geographic market that the Company has identified as a significant growth opportunity for Oncalaris®.

The Meridian term sheet stalled, however, when Vantage asserted that its exclusive distribution rights under the EDA extended to the tri-state area and that Penterra's appointment of a competing distributor would constitute a breach of the Agreement. Vantage communicated this position both informally through its CEO, Donald Farnham, and formally through its outside counsel, as described below. The resulting uncertainty has prevented Penterra from finalizing the Meridian arrangement and has left the Company without an authorized distribution strategy for the tri-state market — a situation that causes ongoing commercial harm and competitive disadvantage.

E. The January 12, 2018 Email (the "Kapoor Email")

Central to Vantage's position is an email sent on January 12, 2018 by Steven Kapoor, Penterra's Vice President of Commercial Operations, to Donald Farnham, Vantage's Managing Member and CEO. The email, in its entirety as relevant here, states:

"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."

Vantage contends that this email constitutes (a) "prior written consent" under Section 2.3 of the EDA, authorizing Vantage to distribute Oncalaris® outside the Territory, and (b) evidence of an agreement — or at minimum a binding commitment — to expand the Territory to include the tri-state area.

Penterra's position, which we believe is the correct reading, is that the Kapoor Email expressed nothing more than a willingness to negotiate a potential future expansion of the distribution territory. The email uses plainly aspirational and forward-looking language — "open to exploring expansion" and "circle back mid-year and see where things stand." It does not grant consent, does not authorize distribution, and does not purport to amend the EDA or Exhibit A. Moreover, no follow-up meeting or "mid-year" discussion occurred, and no expansion was ever formalized.

It bears noting that even if the Kapoor Email could somehow be construed as a substantive proposal (which it cannot), it was never countersigned or formalized by Vantage or any Penterra officer with contractual authority to amend the EDA. There is no record of any written response from Farnham accepting or confirming the terms of any expansion, and no written instrument signed by both parties — as required by Section 13.1 — was ever produced.

F. Pre-Litigation Correspondence

March 8, 2021 — Cease-and-Desist Letter. On March 8, 2021, Jennifer Chao, in her capacity as General Counsel of Penterra, sent a formal cease-and-desist letter to Donald Farnham at Vantage. The letter demanded that Vantage immediately cease distributing Oncalaris® and all other Penterra products outside the six New England states defined in Exhibit A of the EDA. The letter cited Sections 2.1, 2.3, and 13.1 of the Agreement and stated Penterra's position that no valid modification of the Territory had been made. The letter further stated that Penterra reserved all rights and remedies available under the Agreement and applicable law, including but not limited to claims for breach of contract and disgorgement of unauthorized revenues.

March 22, 2021 — Vantage Response. On March 22, 2021, Kenneth M. Rourke of Hargrove, Sinclair & Polk LLP ("HSP"), located at 200 Ashbury Asset Advisors, Suite 1800, Boston, Massachusetts 02109, responded on Vantage's behalf. Mr. Rourke's letter took the position that Vantage had a contractual right to distribute Penterra products in the tri-state area, citing the Kapoor Email and an alleged course of dealing as evidence of an expansion of the Territory. Mr. Rourke characterized Penterra's cease-and-desist letter as a "bad-faith attempt to renege on commitments" and stated that if Penterra proceeded to appoint a competing distributor in the tri-state area, Vantage would assert counterclaims for breach of contract and tortious interference with prospective business relations in an amount "not less than $35 million." The letter did not identify the specific legal theories underlying the $35 million figure or provide any supporting damages analysis.

The exchange of these letters confirms that an actual controversy exists between the parties and that pre-litigation resolution is not reasonably likely without judicial intervention.

III. Legal Analysis

A. Declaratory-Judgment Jurisdiction and Ripeness

Massachusetts General Laws chapter 231A authorizes courts to render declaratory judgments in cases involving actual controversies between parties. Section 1 of the statute provides that any person whose rights, duties, status, or other legal relations "are affected by a statute, municipal ordinance, by-law, or rule" or by a contract or other instrument may bring an action for a declaratory judgment. The purpose of the declaratory-judgment remedy is to enable parties to obtain a judicial determination of their rights and obligations before those rights are violated and damages are sustained, thereby avoiding the uncertainty and potential harm that flow from unresolved legal disputes.

Actual Controversy. An actual controversy plainly exists here. Vantage is actively distributing Oncalaris® in New York, New Jersey, and Pennsylvania, claiming contractual authorization under the EDA. Penterra disputes this claim and contends that the Territory is limited to the six New England states as defined in Exhibit A. Penterra seeks to appoint Meridian as its authorized tri-state distributor, which Vantage asserts would violate Vantage's exclusive rights. Vantage has threatened $35 million in counterclaims. The parties' respective legal positions are squarely adverse, and the dispute implicates concrete, present interests — not hypothetical or advisory questions. This is precisely the type of controversy that the declaratory-judgment statute is designed to address.

Ripeness. The controversy is fully ripe for judicial resolution. Vantage's unauthorized tri-state sales have been ongoing since September 2020, generating approximately $6.4 million in revenues. Penterra's commercial plans — specifically, the Meridian term sheet — are being directly impeded by the unresolved territorial dispute. Vantage's threat of a $35 million counterclaim creates substantial present uncertainty regarding Penterra's contractual rights and commercial decision-making. There is nothing hypothetical, speculative, or premature about this dispute. The controversy is live, concrete, and ripe for adjudication.

Forum. Section 14.5 of the EDA provides for the exclusive jurisdiction of state or federal courts located in the Commonwealth of Massachusetts. The Superior Court of Massachusetts, Business Litigation Session ("BLS"), sitting in Suffolk County, is the proper venue for this action. The BLS is a specialized session of the Superior Court designed to handle complex commercial litigation, including contract disputes of the type at issue here. Filing in the BLS will ensure that the case is assigned to a judge with experience in commercial contract interpretation and will provide the parties with efficient and informed judicial oversight. Penterra could alternatively file in the United States District Court for the District of Massachusetts if diversity jurisdiction were established, but given that the dispute turns on Massachusetts contract law and does not raise federal questions, the state court BLS is the more natural and strategically advantageous forum.

B. Merits Analysis — Contract Interpretation (Territory Scope)

1. Plain Language of Exhibit A

The starting point for any contract-interpretation analysis under Massachusetts law is the language of the agreement itself. Massachusetts courts have consistently held that where contractual language is clear and unambiguous, the court must enforce the contract according to its plain terms and may not consider extrinsic evidence to vary or contradict those terms. The plain-meaning rule is a cornerstone of Massachusetts contract law and reflects the fundamental principle that parties to a written agreement are bound by the words they chose to memorialize their bargain.

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')."

This definition is unambiguous in every respect. It identifies six specific states by name. It groups those six states under the collective label "the New England States" — a geographic designation that is itself universally understood to refer to exactly and only those six states. Critically, the definition does not include New York, New Jersey, or Pennsylvania. It does not contain any catchall language (such as "including but not limited to" or "and surrounding states") that might suggest the enumerated list is illustrative rather than exhaustive. It does not reference any mechanism for automatic expansion or any condition precedent to expansion. It is, in short, a closed list.

Under Massachusetts law, when a contract defines a term by enumerating specific items, the enumeration is presumed to be exclusive under the expressio unius est exclusio alterius canon. The inclusion of six named states and the exclusion of all others is a deliberate definitional choice. A court applying the plain-meaning rule would have no basis for reading New York, New Jersey, or Pennsylvania into Exhibit A.

Section 2.3 of the EDA further reinforces the plain meaning of the territorial limitation. By providing that "Distributor shall not actively solicit orders for, or deliver, the Products outside the Territory without Supplier's prior written consent," Section 2.3 establishes three critical principles: (i) the Territory is a fixed boundary beyond which the Distributor's rights do not extend; (ii) activity outside the Territory is affirmatively prohibited absent a separate authorization; and (iii) the required form of authorization is "prior written consent" — a deliberate, formal act, not an informal expression of interest or willingness to explore. The internal logic of the Agreement thus reinforces Penterra's position: Exhibit A defines the Territory, Section 2.1 grants exclusivity within that Territory, and Section 2.3 prohibits activity outside the Territory absent a specific written consent that Penterra has never provided.

2. The Kapoor Email Does Not Constitute "Prior Written Consent" Under Section 2.3

Vantage's principal argument is that the Kapoor Email of January 12, 2018 constitutes "prior written consent" under Section 2.3, thereby authorizing Vantage to distribute Oncalaris® outside the Territory. This argument is unpersuasive for several independent reasons.

First, the language of the Kapoor Email is plainly aspirational and forward-looking. The operative sentence reads: "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 words "open to exploring" express a willingness to discuss a potential future event — not a present grant of permission. The phrase "once your New England footprint is fully ramped" establishes a precondition that may or may not have been satisfied. The invitation to "circle back mid-year and see where things stand" explicitly defers any decision to a future conversation that, notably, never occurred. This is the language of preliminary interest, not binding authorization.

Second, the email does not use any words of consent, authorization, approval, or permission. It does not state that Vantage "may" distribute in the tri-state area, that Penterra "consents" to tri-state distribution, or that the Territory is "hereby expanded." There is no operative language of grant or authorization.

Third, even if the Kapoor Email could be read — contrary to its plain meaning — as expressing some form of preliminary willingness (which is already a stretch), it falls far short of the "prior written consent" contemplated by Section 2.3. Read in context, Section 2.3 requires a deliberate, formal authorization by the Supplier — not an offhand email between executives after a social conversation. The phrase "prior written consent" in commercial agreements is universally understood to require a purposeful act of authorization, typically documented in a formal letter, amendment, or consent document. An informal email expressing openness to future discussions does not satisfy this standard.

Fourth, Mr. Kapoor's authority to unilaterally expand the Territory through an informal email is questionable at best. The EDA was negotiated and executed at the corporate level and included specific provisions (Section 13.1) requiring written amendments signed by both parties. A single vice president's informal email, even if it expressed more than it actually does, would not constitute corporate authorization to amend a significant commercial agreement.

3. The Written-Amendment Requirement (Section 13.1) Bars Implied Modification

Even if Vantage could point to some agreement — whether the Kapoor Email, a course of dealing, or oral discussions — to expand the Territory, Section 13.1 of the EDA precludes any such modification from being effective. Section 13.1 provides:

"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."

No written instrument signed by both Penterra and Vantage expanding the Territory to include New York, New Jersey, or Pennsylvania has ever been executed. This is undisputed. The absence of such an instrument is dispositive under the plain language of Section 13.1.

Massachusetts law strongly supports the enforceability of written-modification clauses. The leading case is Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122 (2000), in which the Supreme Judicial Court held that a contractual provision requiring modifications to be in writing is generally binding and precludes oral or informal modifications. The Court in Cambridge Biotech emphasized that written-modification clauses serve an important commercial function by protecting parties against claims of informal or inadvertent modification and by ensuring that changes to significant commercial agreements are deliberately and formally documented.

The Cambridge Biotech holding is squarely on point here. Section 13.1 of the EDA is a standard written-modification clause of the type the SJC endorsed. No written amendment has been executed. Under Cambridge Biotech, the Kapoor Email, any oral discussions, and any course of dealing cannot constitute an effective modification of the Territory definition in Exhibit A.

While Massachusetts courts have recognized narrow exceptions to the enforceability of written-modification clauses — principally where a party demonstrates detrimental reliance on an oral or implied modification sufficient to invoke equitable estoppel — these exceptions are disfavored and require a strong evidentiary showing. As discussed below in connection with Vantage's anticipated counterclaims, Vantage is unlikely to satisfy this standard. The Kapoor Email is not a clear and unambiguous promise, and any reliance by Vantage on an informal email — in the face of an express written-amendment requirement — would likely be deemed unreasonable as a matter of law.

4. The Integration Clause (Section 14.8) Reinforces the Territorial Limitation

Section 14.8 of the EDA provides:

This is a broad and unqualified integration clause. Its effect is twofold. First, it establishes the EDA and its Exhibits — including Exhibit A — as the complete and final expression of the parties' agreement regarding the subject matter, including territorial scope. Second, it bars reliance on prior or contemporaneous negotiations, representations, or agreements (whether written or oral) that are inconsistent with or supplementary to the written terms of the EDA.

Under the parol evidence rule as applied in Massachusetts, extrinsic evidence is inadmissible to contradict or vary the terms of a fully integrated agreement. The integration clause in Section 14.8 makes clear that the EDA is a fully integrated instrument. Accordingly, the Kapoor Email — whether characterized as a pre-formation or post-formation communication — is inadmissible to alter the territorial definition in Exhibit A. Vantage cannot rely on extrinsic communications to read New York, New Jersey, and Pennsylvania into a contract that expressly and exclusively defines the Territory as the six New England states.

The interplay between the integration clause (Section 14.8), the written-amendment requirement (Section 13.1), and the plain language of Exhibit A creates a formidable contractual framework that supports Penterra's position. The Territory is defined in the four corners of the Agreement. The Agreement says what it means. And the Agreement provides that it cannot be changed except by a signed writing — which does not exist.

C. Vantage's Anticipated Course-of-Dealing Argument

Vantage's March 22, 2021 response letter, authored by Kenneth Rourke of HSP, also alluded to a course-of-dealing argument. Specifically, Vantage claims that Penterra's failure to object to Vantage's shipments to New York beginning in late 2019 effected a practical modification of Exhibit A. The argument, as we understand it, is that Penterra knew or should have known that Vantage was shipping products to New York-based customers, that Penterra failed to object, and that this silence constituted acquiescence in a de facto expansion of the Territory.

Assessment. This argument faces multiple independent barriers under Massachusetts law:

First, the written-amendment requirement in Section 13.1 precludes modification by course of dealing or acquiescence. The Cambridge Biotech decision makes clear that parties to a commercial agreement who include a written-modification clause are entitled to rely on that clause as a safeguard against informal modification. A course of dealing or pattern of conduct, no matter how prolonged, cannot satisfy the requirement of "a written instrument signed by both parties." If it could, the written-modification clause would be rendered meaningless — a result that Massachusetts courts do not countenance.

Second, the integration clause in Section 14.8 bars reliance on extrinsic conduct to alter the written terms of the Agreement. The parol evidence rule applies not only to prior and contemporaneous communications but also, in the context of a written-amendment clause, to post-formation conduct that is alleged to modify the agreement. Vantage cannot use its own unauthorized shipping activity to rewrite Exhibit A.

Third, Penterra's silence or delay in discovering and objecting to unauthorized shipments does not constitute affirmative consent. Section 2.3 requires "prior written consent" for extra-territorial activity. Failure to object is categorically different from the affirmative grant of written consent that the contract requires. Under Massachusetts law, silence does not ordinarily constitute acceptance or consent, and a party's failure discover a breach does not operate as a waiver of the right to object once the breach is discovered.

Fourth, as a factual matter, Penterra did object promptly once the full scope of Vantage's tri-state distribution activities became clear. The cease-and-desist letter of March 8, 2021 was sent within a reasonable time after the Company's commercial operations team identified and escalated the pattern of unauthorized shipments. Any earlier shipments to New York in late 2019, if they occurred, may have been de minimis in volume and may not have been detected through Penterra's routine reporting systems. We recommend that discovery explore the precise timeline and volume of any pre-September 2020 tri-state shipments to assess this factual issue, but the legal framework strongly favors Penterra's position regardless.

Fifth, even if some course of dealing existed, it would not satisfy the standard for equitable estoppel or waiver under Massachusetts law. Waiver requires the intentional relinquishment of a known right. Estoppel requires a clear representation, reasonable reliance, and detriment. Penterra's mere failure to detect or immediately object to unauthorized shipments does not constitute an intentional relinquishment of its territorial rights, nor does it create a clear representation upon which Vantage could reasonably rely — particularly in light of the written-amendment requirement that Vantage was contractually obligated to follow.

In sum, the course-of-dealing argument is unlikely to succeed. It runs headlong into the written-modification clause, the integration clause, and settled Massachusetts case law. While Vantage may attempt to create factual disputes around the timing of Penterra's knowledge and the extent of pre-September 2020 shipments, the legal framework is strongly in Penterra's favor.

D. Assessment of Vantage's Threatened Counterclaims

Kenneth Rourke's March 22, 2021 letter on behalf of Vantage threatened a $35 million counterclaim. While the letter did not enumerate specific legal theories in detail, we anticipate that Vantage will assert three principal counterclaims: breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory estoppel. We assess each in turn.

1. Breach of Contract ($35 Million Claim)

Vantage's breach-of-contract theory, as we understand it, is that Penterra's appointment of a competing tri-state distributor (Meridian) would violate Vantage's exclusive distribution rights under Section 2.1 of the EDA. The theory necessarily requires Vantage to establish that the "Territory" as defined in the Agreement includes New York, New Jersey, and Pennsylvania — because the grant of exclusivity in Section 2.1 is expressly limited to "the Territory, as defined in Exhibit A."

Assessment. This counterclaim depends entirely on the threshold question of whether the Territory includes the tri-state area. As analyzed in detail above, Exhibit A plainly excludes those states, no valid written amendment expanding the Territory exists, and Massachusetts law enforces written-modification clauses and integration clauses. If the Territory is limited to the six New England states — as the plain language of the Agreement provides — then Penterra has no obligation to refrain from appointing a competing distributor in the tri-state area, and Vantage's breach-of-contract counterclaim lacks a viable foundation.

The $35 million damages figure appears inflated and likely includes speculative lost-profits projections over the remaining term of the EDA plus both one-year renewal periods. Even if Vantage could establish liability (which is unlikely), the damages calculation would face significant scrutiny. Vantage's total fiscal year 2021 revenue is approximately $148 million, and its tri-state revenues from September 2020 through March 2021 — a period of approximately six months — were only approximately $6.4 million. Extrapolating these revenues forward, Vantage's annual tri-state distribution revenue might be in the range of $10 to $13 million, yielding total revenues over the remaining term of the EDA (including renewals) in the range of $30 to $40 million. But gross revenue is not the measure of lost-profits damages. Vantage would need to establish its lost profits — net of cost of goods sold, operating expenses, and other costs — with reasonable certainty. Any damages claim would also be subject to challenge on the grounds of speculation, failure to mitigate, and the inherent uncertainty of projecting revenues for a nascent distribution operation in a new geographic market.

In our assessment, the $35 million figure is a litigation posturing number rather than a defensible damages calculation, and the breach-of-contract counterclaim is unlikely to survive summary judgment given the strength of Penterra's contractual position.

2. Breach of Implied Covenant of Good Faith and Fair Dealing

Vantage may also assert a counterclaim for breach of the implied covenant of good faith and fair dealing. The theory would likely be that Penterra acted in bad faith by encouraging Vantage to invest in tri-state distribution infrastructure (through the Kapoor Email and subsequent interactions) and then refusing to acknowledge the territorial expansion — thereby depriving Vantage of the benefit of its bargain.

Assessment. Under Massachusetts law, every contract implies a covenant of good faith and fair dealing. However, the implied covenant is derived from and limited by the express terms of the contract. It does not create obligations that are inconsistent with the parties' agreement and cannot be used to override or modify express contractual provisions.

If the EDA expressly limits the Territory to the six New England states (which it does), the implied covenant does not create an obligation for Penterra to expand the Territory, to refrain from appointing other distributors in non-Territory states, or to honor alleged informal commitments that were never formalized under the written-amendment clause. The implied covenant is not a free-floating obligation of "fairness" — it is a gap-filling doctrine that operates within the framework of the contract the parties actually made. A claim that Penterra acted in bad faith by enforcing the express territorial limitation of its own agreement is, in our view, untenable.

This counterclaim is derivative of the breach-of-contract theory. It depends on the same threshold question — whether the Territory includes the tri-state area — and should fail for the same reasons.

3. Promissory Estoppel

Finally, Vantage may assert a promissory-estoppel counterclaim, arguing that it relied on the Kapoor Email and Penterra's acquiescence in making substantial investments in tri-state distribution infrastructure (e.g., hiring sales personnel, establishing customer relationships, incurring warehousing and logistics costs).

Assessment. Under Massachusetts law, promissory estoppel requires three elements: (a) a clear and unambiguous promise, (b) reasonable and foreseeable reliance on that promise, and (c) detriment resulting from the reliance. All three elements present significant problems for Vantage.

Clear and Unambiguous Promise. The Kapoor Email is not a clear and unambiguous promise. As discussed above, it is an expression of willingness to explore a potential future expansion — not a definitive commitment to expand the Territory. Massachusetts courts require a high degree of clarity and definiteness for promissory-estoppel claims, and the aspirational, contingent language of the Kapoor Email does not meet this standard.

Reasonable Reliance. Even if the Kapoor Email could be construed as some form of assurance (which it cannot), Vantage's reliance on it would likely be deemed unreasonable as a matter of law. Vantage is a sophisticated commercial party represented by counsel. It was a party to the EDA, which contains an express written-amendment requirement (Section 13.1) and an integration clause (Section 14.8). Vantage knew — or should have known — that any expansion of the Territory required a signed written amendment. Reliance on an informal email to invest in extra-territorial distribution, in the face of these contractual provisions, is the antithesis of reasonable reliance.

Detriment. While Vantage may have incurred some costs in establishing a tri-state presence, the extent and reasonableness of those investments would need to be established with specificity. Vantage chose to begin tri-state distribution without obtaining the formal written consent required by Section 2.3 or the formal written amendment required by Section 13.1. Any investment made in reliance on an informal email rather than on proper contractual authorization was made at Vantage's own risk.

The promissory-estoppel counterclaim is, in our assessment, the weakest of Vantage's three anticipated theories. It is unlikely to survive a motion to dismiss, let alone a motion for summary judgment.

E. Potential Defenses to Counterclaims

In the event Vantage files counterclaims, Penterra will have a robust set of defenses available, including:

• Integration Clause / Parol Evidence Rule. The integration clause in Section 14.8 bars Vantage from relying on extrinsic evidence (including the Kapoor Email and course-of-dealing evidence) to contradict or supplement the express terms of the EDA, including the territorial definition in Exhibit A.

• Written-Amendment Requirement (Section 13.1). No written amendment signed by both parties exists. Section 13.1 precludes informal or implied modifications, and Cambridge Biotech supports the enforceability of this provision under Massachusetts law.

• Failure to Mitigate Damages. To the extent Vantage claims lost profits from the tri-state area, Penterra can argue that Vantage failed to mitigate its damages by, for example, reallocating its resources to grow its business within the authorized New England Territory or by pursuing distribution arrangements with other pharmaceutical manufacturers for the tri-state area.

• Statute of Frauds. To the extent Vantage alleges that any oral or informal agreement to expand the Territory was reached, such an agreement — involving obligations with a term extending beyond one year (given the multi-year EDA structure) — may be subject to the Massachusetts statute of frauds (G.L. c. 259, § 1), which requires certain agreements to be evidenced by a signed writing.

• Lack of a Clear and Definite Promise. For the promissory-estoppel counterclaim, Penterra will argue that the Kapoor Email does not constitute a clear, definite, and unambiguous promise, and that Vantage's reliance on it was unreasonable in light of the contractual framework.

• Speculative and Unsubstantiated Damages. The $35 million damages figure is, on its face, speculative and unsubstantiated. Penterra will challenge Vantage's damages methodology and require Vantage to demonstrate lost profits with reasonable certainty, which will be difficult given the nascent and unauthorized nature of Vantage's tri-state operations.

IV. Recommended Forum and Procedural Strategy

Forum. We recommend filing the Complaint for Declaratory Judgment in the Superior Court of Massachusetts, Business Litigation Session, Suffolk County. Section 14.5 of the EDA provides for the exclusive jurisdiction of state or federal courts in Massachusetts, and the BLS is the appropriate session for this complex commercial contract dispute. The BLS offers experienced judges, efficient case management procedures, and familiarity with the contract-interpretation issues that will be central to this case. Filing in the BLS also avoids the potential uncertainty of federal court removal practice and positions Penterra to move for summary judgment in an environment that is well-suited to dispositive motion practice.

Nature of Action. The complaint will seek a declaratory judgment under Massachusetts General Laws chapter 231A, requesting that the court declare: (i) that the "Territory" under the EDA is limited to the six New England states enumerated in Exhibit A (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont); (ii) that Vantage has no contractual right to distribute Oncalaris® or any other Penterra product in New York, New Jersey, or Pennsylvania under the EDA; (iii) that the Kapoor Email does not constitute "prior written consent" under Section 2.3 or a valid amendment under Section 13.1; and (iv) that Penterra is free to appoint one or more distributors in the tri-state area without violating the EDA. The complaint may also include an affirmative claim for breach of contract based on Vantage's unauthorized tri-state distribution activity and a claim for disgorgement or accounting of the approximately $6.4 million in unauthorized tri-state revenues.

Anticipated Vantage Response. Vantage will likely file an answer denying the material allegations of the complaint and asserting counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory estoppel, consistent with the positions articulated in Kenneth Rourke's March 22, 2021 threat letter. Vantage may also seek a preliminary injunction to prevent Penterra from appointing a tri-state distributor during the pendency of the litigation, although such a motion would face significant hurdles given the strength of Penterra's contractual position. This anticipated response was factored into our recommendation and should not deter Penterra from filing.

discovery Strategy. We recommend a targeted fact-discovery approach focused on the following areas:

(a) The negotiation history of the EDA and Exhibit A, including all drafts, markup versions, and communications between the parties' negotiation teams regarding the definition of the Territory;

(b) All communications between Penterra and Vantage personnel regarding territorial scope, tri-state distribution, and any proposed expansion — including but not limited to the Kapoor Email and any follow-up communications;

(c) The context surrounding the Kapoor Email, including Mr. Kapoor's understanding of the email's significance, whether any follow-up discussions occurred, and whether Mr. Kapoor had authority to modify the EDA;

(d) Vantage's internal decision-making process leading to the commencement of tri-state shipments in September 2020, including any internal memoranda, board minutes, or communications reflecting Vantage's understanding of its territorial rights at the time;

(e) Vantage's sales and financial records for the tri-state area, to evaluate the scope of unauthorized distribution and to challenge the $35 million damages figure asserted in the threatened counterclaim.

We anticipate taking depositions of the key Vantage witnesses, including Donald Farnham (CEO/Managing Member), Lisa Petrangelo (COO), and Brian Kopec (Outside Sales Director). We will also prepare and defend the depositions of the relevant Penterra witnesses, principally Steven Kapoor (VP, Commercial Operations) and Rachel Mendez (Director of Distribution & Logistics). If necessary, additional depositions of lower-level Vantage sales or logistics personnel may be warranted to establish the timeline and scope of tri-state shipments.

Dispositive Motion Strategy. This case is well suited for resolution on summary judgment. If the material facts are undisputed — as we expect they will be, given that the key evidence consists of documentary materials (the EDA, Exhibit A, the Kapoor Email, and the pre-litigation correspondence) — the legal question of contract interpretation can be decided as a matter of law. We recommend targeting a motion for summary judgment on Penterra's declaratory-judgment claims, and a cross-motion for summary judgment on Vantage's counterclaims, following the close of fact discovery. If the BLS's case management order permits, we would seek to file the summary-judgment motion as early as practicable to achieve a prompt resolution.

V. Risk Assessment

Probability of Success on Declaratory Judgment: High. The plain language of Exhibit A is unambiguous. The Territory is defined as six specific states, and the tri-state area is not among them. The written-amendment clause (Section 13.1) and integration clause (Section 14.8) provide strong contractual defenses against any claim of informal modification. Massachusetts law, particularly the Cambridge Biotech decision, is squarely favorable to Penterra's position. We assess the probability of obtaining a favorable declaratory judgment at approximately 80% to 90% on the merits, with the residual uncertainty reflecting the inherent unpredictability of litigation and the possibility that a court might find sufficient factual disputes to deny summary judgment and proceed to trial.

Risk from Counterclaims: Moderate-to-Low. The $35 million figure is attention-grabbing but substantively weak. All three anticipated counterclaim theories — breach of contract, breach of implied covenant, and promissory estoppel — depend on establishing that the Territory was expanded to include the tri-state area. As analyzed above, the contractual language and applicable law strongly refute this proposition. The counterclaims will likely be dismissed on summary judgment in conjunction with the court's ruling on the declaratory-judgment claims. Even in a worst-case scenario where the case proceeds to trial and a factfinder credits some aspect of Vantage's evidence, the actual damages exposure is substantially less than $35 million and would likely be limited to some portion of Vantage's demonstrable lost profits in the tri-state area — a figure that, given the nascent stage of Vantage's tri-state operations, would be far more modest.

Business Risk: Significant but Manageable. Vantage is a significant commercial partner for Penterra. Approximately $67 million in Penterra product purchases (FY 2021) flow through the Vantage relationship, and Vantage's Oncalaris® purchases have grown steadily over the life of the EDA. Filing suit will likely terminate or severely strain the commercial relationship. Penterra should be prepared for the possibility that Vantage will become adversarial in the New England Territory as well — potentially reducing purchase volumes, providing less favorable service to New England customers, or allowing the EDA to expire on June 30, 2022 without electing to renew. Penterra's commercial operations team should develop a contingency plan for the New England Territory in the event that the Vantage relationship deteriorates, including identifying alternative distribution partners who could step in if necessary. Notwithstanding these business risks, the strategic imperative of securing Penterra's distribution rights in the tri-state area — a significant market for Oncalaris® — and resolving the territorial dispute definitively justifies proceeding with the litigation.

Reputational / Public Risk: Low. Penterra is a publicly traded company on the Nasdaq Stock Market (ticker: PTRA). The initiation of litigation and the existence of Vantage's threatened counterclaims may need to be disclosed in Penterra's periodic SEC filings, including the 10-Q and 10-K in the risk factors or legal proceedings sections. However, the exposure is manageable given Penterra's strong merits position, the limited financial risk relative to the Company's $1.87 billion revenue base, and the routine nature of commercial contract disputes in the pharmaceutical distribution industry. The litigation is unlikely to generate significant media attention or adversely affect Penterra's stock price or public reputation.

VI. Budget and Staffing

Calderwood & Harkness proposes the following engagement team and budget framework for the declaratory-judgment action, consistent with the engagement letter dated March 29, 2021:

Engagement Team:

All billing rates are subject to the 7% discount negotiated in the engagement letter dated March 29, 2021. Additional resources, including contract attorneys for document review and paralegal support, may be utilized as needed at applicable rates.

Estimated Budget Range: $750,000 to $1,200,000 for the declaratory-judgment action through trial, as set forth in the engagement letter. This estimate encompasses all anticipated phases of the litigation, including pleading preparation, fact discovery, expert retention (if needed for damages analysis), summary-judgment briefing, and trial preparation.

If the matter is resolved on summary judgment — which is our recommended strategy and the most likely outcome — fees should come in at or below the midpoint of the budget range (i.e., approximately $975,000 or less). The summary-judgment strategy is not only the strongest approach on the merits but also the most cost-effective path to resolution.

Primary Cost Categories:

• Pleading preparation (complaint, answer to counterclaims, discovery-related motions)

• Fact discovery, including document collection, review, and production; preparation and response to interrogatories and requests for admission; depositions of key Vantage witnesses (Farnham, Petrangelo, and Kopec) and preparation and defense of Penterra witnesses (Kapoor and Mendez)

• Legal research memoranda on Massachusetts contract-interpretation law, the enforceability of written-modification clauses, and related issues

• Summary-judgment briefing, including statement of undisputed material facts, memorandum of law, and response to any cross-motion by Vantage

• Potential oral argument on summary judgment and any other contested motions

• Trial preparation and trial, in the event that summary judgment is denied in whole or in part

We will provide monthly invoices with detailed time entries and will communicate proactively with Ms. Chao and her team regarding any material changes in the budget estimate.

VII. Recommendation

Based on the foregoing analysis, Calderwood & Harkness recommends that Penterra Pharmaceuticals Corp. file a Complaint for Declaratory Judgment in the Superior Court of Massachusetts, Business Litigation Session, as soon as practicable. Our target filing date is the week of April 12, 2021, subject to Penterra's authorization and final review of the complaint.

The merits of Penterra's position are strong. The unambiguous territorial definition in Exhibit A, the written-amendment requirement in Section 13.1, the integration clause in Section 14.8, and favorable Massachusetts case law — particularly Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122 (2000) — provide a firm foundation for obtaining a declaratory judgment that the Territory is limited to the six New England states and that Vantage has no contractual right to distribute Oncalaris® in the tri-state area.

Filing will enable Penterra to:

• Resolve the territorial dispute definitively through a binding judicial declaration;

• Proceed with the Meridian National Distributors, Inc. distribution arrangement for the tri-state area, unlocking significant revenue opportunities for Oncalaris® in New York, New Jersey, Pennsylvania, and Maryland;

• Protect the commercial value and channel integrity of Oncalaris®, a $412 million annual revenue product that represents approximately 22% of Penterra's consolidated revenues;

• Establish a clear precedent regarding the enforceability of the EDA's terms, which will be important for Penterra's broader distribution strategy and relationships with other distribution partners.

Vantage's $35 million counterclaim threat, while requiring a defense, does not materially alter the risk calculus. The underlying legal theories are weak, the damages figure is speculative and inflated, and the counterclaims are likely to be resolved on summary judgment alongside the declaratory-judgment claims. The business risk of straining the Vantage relationship is real but manageable, particularly given the approaching June 30, 2022 expiration of the EDA's initial term and Penterra's ability to develop alternative distribution arrangements for the New England Territory if necessary.

We are prepared to proceed upon Penterra's authorization.

VIII. Next Steps

We recommend the following action items, subject to Penterra's review and approval:

1. Authorization to File. Penterra to confirm authorization for Calderwood & Harkness to file the Complaint for Declaratory Judgment. We request authorization no later than April 7, 2021 to meet the target filing date.

2. Complaint Filing. Calderwood & Harkness to finalize and file the Complaint for Declaratory Judgment in the Superior Court of Massachusetts, Business Litigation Session, Suffolk County. Target filing: week of April 12, 2021. A draft complaint will be circulated to Ms. Chao for review by April 5, 2021.

3. Litigation Hold. Penterra to issue litigation hold notices to all relevant custodians immediately upon authorization, including but not limited to: Dr. Marcus Lindholm (CEO), Jennifer Chao (General Counsel), Steven Kapoor (VP, Commercial Operations), Rachel Mendez (Director of Distribution & Logistics), and relevant personnel in IT, commercial operations, finance, and legal who may possess documents or electronically stored information related to the Vantage distribution relationship, the EDA, the Kapoor Email, and the tri-state distribution dispute. Calderwood & Harkness will provide a draft litigation hold notice for Penterra's use.

4. Meridian Notification. Penterra to inform Thomas Welliver of Meridian National Distributors, Inc. that litigation has been initiated to resolve the territorial dispute and that the term sheet execution is being held pending resolution. Penterra should reassure Meridian of its continued interest in the tri-state distribution arrangement while managing expectations regarding the timeline for finalization.

5. Insurance Notification. Penterra should consider whether to provide notice of the threatened counterclaims to the Company's directors' and officers' liability insurer (Atlantic Shield Insurance Co.) and/or commercial general liability insurer (Commonwealth Mutual Assurance Corp.). While the counterclaims are contract-based and may not trigger D&O or CGL coverage, timely notification is prudent to preserve potential coverage rights. We can advise further on this issue upon request.

6. Counterclaim Preparation. Calderwood & Harkness to prepare an answer to any counterclaims filed by Vantage and to develop a comprehensive discovery plan in anticipation of Vantage's response to the complaint. We will also begin drafting a preliminary discovery conference statement and proposed scheduling order for submission to the BLS.

We are available to discuss this memorandum and the recommended course of action at your convenience. Please do not hesitate to contact me directly with any questions or to schedule a call with the engagement team.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Linda Osei, Partner 1 Federal Street, 35th Floor Boston, Massachusetts 02110 Direct: (617) 555-4218

Email: l.osei@calderwoodharkness.com

Enclosures (Referenced)

The following documents have been referenced in this memorandum and are enclosed or available upon request:

1. Exclusive Distribution Agreement dated July 1, 2017, between Penterra Pharmaceuticals Corp. and Vantage Medical Distribution, LLC (with Exhibit A — Territory Definition)

2. Email from Steven Kapoor to Donald Farnham, dated January 12, 2018 (the "Kapoor

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 1 Federal Street, 35th Floor Boston, Massachusetts 02110
MEMORANDUM
PRIVILEGE LEGEND: This memorandum is a privileged and confidential attorney-client communication and attorney work product prepared in anticipation of litigation. It is intended solely for the use of Penterra Pharmaceuticals Corp. and its authorized representatives and should not be disclosed to third parties without the prior written consent of counsel. Disclosure to any third party may result in a waiver of the attorney-client privilege and/or work-product protection.
I. Executive Summary
The purpose of this memorandum is to provide Penterra Pharmaceuticals Corp. ("Penterra" or the "Company") with a preliminary assessment of the merits, risks, and procedural strategy for filing a declaratory-judgment action against Vantage Medical Distribution, LLC ("Vantage") in the Superior Court of Massachusetts, Business Litigation Session. The action would seek a judicial declaration that Vantage's exclusive distribution territory under the Exclusive Distribution Agreement dated July 1, 2017 (the "EDA" or the "Agreement") is limited to the six New England states — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont — as expressly defined in Exhibit A to the Agreement, and does not extend to New York, New Jersey, or Pennsylvania (collectively, the "tri-state area").
Recommendation. Based on our review of the Agreement, the relevant correspondence, applicable Massachusetts law, and the factual record as currently understood, Calderwood & Harkness recommends that Penterra file the declaratory-judgment action promptly. The plain language of the Agreement strongly supports Penterra's position. Exhibit A to the EDA exhaustively enumerates six states, and no amendment expanding the Territory has ever been executed. Vantage's principal arguments — based on the January 12, 2018 email from Steven Kapoor to Donald Farnham (the "Kapoor Email") and an alleged course of dealing — are unlikely to overcome the written-amendment requirement in Section 13.1 and the integration clause in Section 14.8 under well-settled Massachusetts law. The Supreme Judicial Court's decision in Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122 (2000), strongly supports the enforceability of written-modification provisions and counsels against implied or oral modifications of integrated agreements.
Vantage's threatened $35 million counterclaim for breach of contract and tortious interference presents a manageable risk that, in our assessment, should not deter Penterra from filing. The counterclaim theories depend on establishing that the Territory was expanded beyond the six New England states — a proposition that the contractual language and applicable law strongly refute. The damages figure appears inflated and speculative relative to Vantage's actual tri-state revenues to date (approximately $6.4 million).
Time Sensitivity. This matter is time-sensitive for several reasons. First, Vantage has been actively distributing Oncalaris® in the tri-state area since on or about September 14, 2020, generating approximately $6.4 million in unauthorized revenues. Each additional day of unauthorized distribution erodes Penterra's ability to control its channel strategy and creates additional confusion in the marketplace. Second, Vantage's counsel has threatened counterclaims, and the longer Penterra waits to assert its rights, the more Vantage may argue that Penterra acquiesced in the territorial expansion. Third, the term sheet executed on February 15, 2021 with Meridian National Distributors, Inc. ("Meridian") for tri-state distribution of Oncalaris® remains stalled pending resolution of this dispute. Delay in resolving the territorial question jeopardizes Penterra's ability to execute its tri-state distribution strategy and capture significant revenue opportunities for its flagship oncology product.
II. Background and Factual Summary
A. The Parties
Penterra Pharmaceuticals Corp. Penterra is a Delaware corporation, publicly traded on the Nasdaq Stock Market under the ticker symbol PTRA, with its principal executive offices located at 400 Carnegie Center Drive, Suite 600, Princeton, New Jersey 08540. Penterra is a mid-cap specialty pharmaceutical company focused on three core therapeutic areas: oncology, rare diseases, and immunology. For fiscal year 2021, the Company reported consolidated revenue of approximately $1.87 billion. Penterra's senior leadership relevant to this matter includes Dr. Marcus Lindholm, Chief Executive Officer; Jennifer Chao, Esq., General Counsel; Steven Kapoor, Vice President of Commercial Operations; and Rachel Mendez, Director of Distribution & Logistics. Mr. Kapoor and Ms. Mendez are the individuals within Penterra's commercial organization who have had the most direct contact with Vantage regarding the distribution relationship and the events at issue.
Vantage Medical Distribution, LLC. Vantage is a Massachusetts limited liability company with its principal office located at 75 Cabot Road, Suite 310, Medford, Massachusetts 02155. Vantage is a regional specialty pharmaceutical distributor founded in 2009 by Donald R. Farnham, who serves as Managing Member and Chief Executive Officer. Other key personnel include Lisa Petrangelo, Chief Operating Officer, and Brian Kopec, Outside Sales Director. For fiscal year 2021, Vantage reported total revenue of approximately $148 million, of which approximately $67 million — representing roughly 45.3% of Vantage's overall revenue — was derived from sales of Penterra products. The substantial concentration of Vantage's revenue in Penterra products is a relevant consideration in evaluating both the commercial dynamics of the relationship and Vantage's potential motivations in asserting an expanded territorial claim.
B. The Exclusive Distribution Agreement
On July 1, 2017, Penterra (as "Supplier") and Vantage (as "Distributor") entered into the Exclusive Distribution Agreement. The principal terms relevant to this dispute are as follows:
Term. The EDA has an initial term of five years, commencing on July 1, 2017 and expiring on June 30, 2022. The Agreement provides for two successive one-year automatic renewal options (extending the potential term through June 30, 2024), unless either party provides written notice of non-renewal at least 180 days prior to the end of the then-current term.
Products Covered. The EDA covers two Penterra products: (i) Oncalaris® (pegvisomant-axel), available in 20 mg and 40 mg vials, and (ii) Renuvesta® (cilosporin-beta), available in 5 mg capsules. Oncalaris® is by far the more commercially significant of the two products, as discussed further below.
Section 2.1 — Grant of Exclusive Territory. Section 2.1 of the EDA provides:
"Supplier hereby grants to Distributor the exclusive right to distribute the Products within the Territory, as defined in Exhibit A."
Exhibit A — Territory Definition. Exhibit A to the EDA, titled "Territory," provides in its entirety:
"The states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont (collectively, the 'New England States')."
The definition is exhaustive. It identifies six specific states by name and collectively labels them "the New England States." There is no catchall language, no reference to "surrounding" or "adjacent" states, no language indicating that the Territory may be expanded by informal agreement, and no indication that the enumerated list is illustrative rather than exclusive.
Section 2.3 — Limitation on Extra-Territorial Activity. Section 2.3 further reinforces the territorial boundary:
"Distributor shall not actively solicit orders for, or deliver, the Products outside the Territory without Supplier's prior written consent."
This provision presupposes that the Territory is a fixed, defined area and that any activity beyond that boundary requires a separate, affirmative, written authorization from Penterra. It is a critical provision because it establishes both that Vantage's distribution rights end at the territorial border and that the mechanism for authorizing extra-territorial activity is "prior written consent" — not informal discussion, not acquiescence, and not silence.
Section 13.1 — Amendments. The EDA contains a standard written-amendment clause:
"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."
This provision requires that any change to the Agreement — including, necessarily, any expansion of the Territory defined in Exhibit A — be memorialized in a written instrument bearing the signatures of both Penterra and Vantage. No such instrument exists.
Section 14.8 — Entire Agreement / Integration Clause. Section 14.8 provides:
"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 is a broad integration clause that establishes the EDA, including Exhibit A, as the complete and final expression of the parties' agreement regarding distribution rights and territorial scope.
Section 14.2 — Governing Law. The Agreement is governed by the laws of the Commonwealth of Massachusetts, without regard to conflicts-of-law principles.
Section 14.5 — Dispute Resolution / Forum Selection. Section 14.5 provides for the exclusive jurisdiction of state or federal courts located in the Commonwealth of Massachusetts for any disputes arising out of or relating to the Agreement.
Section 5.2 — Minimum Annual Purchase Commitment. Section 5.2 establishes a minimum annual purchase commitment for Oncalaris® of $9.5 million per year at wholesale acquisition cost ("WAC"). This commitment provides context for evaluating Vantage's purchase volumes and its financial dependence on the Penterra relationship.
C. Oncalaris® Revenue Significance
Oncalaris® is Penterra's flagship oncology product. It is a next-generation pegylated enzyme therapy indicated for the treatment of refractory colorectal cancer, first launched commercially in 2016. Since launch, Oncalaris® has become one of Penterra's most commercially important products.
For fiscal year 2021, Oncalaris® generated approximately $412 million in net revenue, representing approximately 22% of Penterra's $1.87 billion in consolidated revenue. The commercial significance of Oncalaris® to Penterra's overall financial performance cannot be overstated. Maintaining effective control over the distribution and channel strategy for Oncalaris® is a critical business priority for the Company.
Vantage's Oncalaris® purchases have grown steadily and significantly over the life of the EDA:
In every year since the Agreement's inception, Vantage has exceeded the $9.5 million minimum annual purchase commitment established in Section 5.2. This strong purchase trajectory is consistent with Vantage's position as a capable and growing distributor within the New England Territory. However, it also underscores the concern that a portion of Vantage's recent growth may be attributable to unauthorized tri-state distribution activity.
D. The Dispute
On or about September 14, 2020, Vantage commenced shipping Oncalaris® to hospitals and oncology clinics in New York, New Jersey, and Pennsylvania without Penterra's prior written consent as required by Section 2.3 of the EDA. It is not entirely clear from the record when Penterra first became aware of the full scope of these unauthorized shipments, but by early 2021, the Company's commercial operations team had identified the pattern of tri-state distribution and escalated the issue to the General Counsel's office.
Based on Vantage's sales records and invoicing data obtained during the parties' pre-litigation discussions, Vantage's tri-state revenues for the period from approximately September 2020 through March 2021 totaled approximately $6.4 million. These revenues were generated from Oncalaris® sales to healthcare facilities in the tri-state area that were not part of the contractually defined Territory.
Penterra identified the unauthorized shipments and began exploring alternative distribution arrangements to serve the tri-state market through an authorized channel. On February 15, 2021, Penterra executed a term sheet with Meridian National Distributors, Inc. ("Meridian"), a New York corporation based at 520 Seventh Avenue, 12th Floor, New York, New York 10018 (President: Thomas Welliver), to distribute Oncalaris® in New York, New Jersey, Pennsylvania, and Maryland. The Meridian arrangement would provide Penterra with a dedicated, authorized distribution partner for a substantial geographic market that the Company has identified as a significant growth opportunity for Oncalaris®.
The Meridian term sheet stalled, however, when Vantage asserted that its exclusive distribution rights under the EDA extended to the tri-state area and that Penterra's appointment of a competing distributor would constitute a breach of the Agreement. Vantage communicated this position both informally through its CEO, Donald Farnham, and formally through its outside counsel, as described below. The resulting uncertainty has prevented Penterra from finalizing the Meridian arrangement and has left the Company without an authorized distribution strategy for the tri-state market — a situation that causes ongoing commercial harm and competitive disadvantage.
E. The January 12, 2018 Email (the "Kapoor Email")
Central to Vantage's position is an email sent on January 12, 2018 by Steven Kapoor, Penterra's Vice President of Commercial Operations, to Donald Farnham, Vantage's Managing Member and CEO. The email, in its entirety as relevant here, states:
"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."
Vantage contends that this email constitutes (a) "prior written consent" under Section 2.3 of the EDA, authorizing Vantage to distribute Oncalaris® outside the Territory, and (b) evidence of an agreement — or at minimum a binding commitment — to expand the Territory to include the tri-state area.
Penterra's position, which we believe is the correct reading, is that the Kapoor Email expressed nothing more than a willingness to negotiate a potential future expansion of the distribution territory. The email uses plainly aspirational and forward-looking language — "open to exploring expansion" and "circle back mid-year and see where things stand." It does not grant consent, does not authorize distribution, and does not purport to amend the EDA or Exhibit A. Moreover, no follow-up meeting or "mid-year" discussion occurred, and no expansion was ever formalized.
It bears noting that even if the Kapoor Email could somehow be construed as a substantive proposal (which it cannot), it was never countersigned or formalized by Vantage or any Penterra officer with contractual authority to amend the EDA. There is no record of any written response from Farnham accepting or confirming the terms of any expansion, and no written instrument signed by both parties — as required by Section 13.1 — was ever produced.
F. Pre-Litigation Correspondence
March 8, 2021 — Cease-and-Desist Letter. On March 8, 2021, Jennifer Chao, in her capacity as General Counsel of Penterra, sent a formal cease-and-desist letter to Donald Farnham at Vantage. The letter demanded that Vantage immediately cease distributing Oncalaris® and all other Penterra products outside the six New England states defined in Exhibit A of the EDA. The letter cited Sections 2.1, 2.3, and 13.1 of the Agreement and stated Penterra's position that no valid modification of the Territory had been made. The letter further stated that Penterra reserved all rights and remedies available under the Agreement and applicable law, including but not limited to claims for breach of contract and disgorgement of unauthorized revenues.
March 22, 2021 — Vantage Response. On March 22, 2021, Kenneth M. Rourke of Hargrove, Sinclair & Polk LLP ("HSP"), located at 200 Ashbury Asset Advisors, Suite 1800, Boston, Massachusetts 02109, responded on Vantage's behalf. Mr. Rourke's letter took the position that Vantage had a contractual right to distribute Penterra products in the tri-state area, citing the Kapoor Email and an alleged course of dealing as evidence of an expansion of the Territory. Mr. Rourke characterized Penterra's cease-and-desist letter as a "bad-faith attempt to renege on commitments" and stated that if Penterra proceeded to appoint a competing distributor in the tri-state area, Vantage would assert counterclaims for breach of contract and tortious interference with prospective business relations in an amount "not less than $35 million." The letter did not identify the specific legal theories underlying the $35 million figure or provide any supporting damages analysis.
The exchange of these letters confirms that an actual controversy exists between the parties and that pre-litigation resolution is not reasonably likely without judicial intervention.
III. Legal Analysis
A. Declaratory-Judgment Jurisdiction and Ripeness
Massachusetts General Laws chapter 231A authorizes courts to render declaratory judgments in cases involving actual controversies between parties. Section 1 of the statute provides that any person whose rights, duties, status, or other legal relations "are affected by a statute, municipal ordinance, by-law, or rule" or by a contract or other instrument may bring an action for a declaratory judgment. The purpose of the declaratory-judgment remedy is to enable parties to obtain a judicial determination of their rights and obligations before those rights are violated and damages are sustained, thereby avoiding the uncertainty and potential harm that flow from unresolved legal disputes.
Actual Controversy. An actual controversy plainly exists here. Vantage is actively distributing Oncalaris® in New York, New Jersey, and Pennsylvania, claiming contractual authorization under the EDA. Penterra disputes this claim and contends that the Territory is limited to the six New England states as defined in Exhibit A. Penterra seeks to appoint Meridian as its authorized tri-state distributor, which Vantage asserts would violate Vantage's exclusive rights. Vantage has threatened $35 million in counterclaims. The parties' respective legal positions are squarely adverse, and the dispute implicates concrete, present interests — not hypothetical or advisory questions. This is precisely the type of controversy that the declaratory-judgment statute is designed to address.
Ripeness. The controversy is fully ripe for judicial resolution. Vantage's unauthorized tri-state sales have been ongoing since September 2020, generating approximately $6.4 million in revenues. Penterra's commercial plans — specifically, the Meridian term sheet — are being directly impeded by the unresolved territorial dispute. Vantage's threat of a $35 million counterclaim creates substantial present uncertainty regarding Penterra's contractual rights and commercial decision-making. There is nothing hypothetical, speculative, or premature about this dispute. The controversy is live, concrete, and ripe for adjudication.
Forum. Section 14.5 of the EDA provides for the exclusive jurisdiction of state or federal courts located in the Commonwealth of Massachusetts. The Superior Court of Massachusetts, Business Litigation Session ("BLS"), sitting in Suffolk County, is the proper venue for this action. The BLS is a specialized session of the Superior Court designed to handle complex commercial litigation, including contract disputes of the type at issue here. Filing in the BLS will ensure that the case is assigned to a judge with experience in commercial contract interpretation and will provide the parties with efficient and informed judicial oversight. Penterra could alternatively file in the United States District Court for the District of Massachusetts if diversity jurisdiction were established, but given that the dispute turns on Massachusetts contract law and does not raise federal questions, the state court BLS is the more natural and strategically advantageous forum.
B. Merits Analysis — Contract Interpretation (Territory Scope)
1. Plain Language of Exhibit A
The starting point for any contract-interpretation analysis under Massachusetts law is the language of the agreement itself. Massachusetts courts have consistently held that where contractual language is clear and unambiguous, the court must enforce the contract according to its plain terms and may not consider extrinsic evidence to vary or contradict those terms. The plain-meaning rule is a cornerstone of Massachusetts contract law and reflects the fundamental principle that parties to a written agreement are bound by the words they chose to memorialize their bargain.
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')."
This definition is unambiguous in every respect. It identifies six specific states by name. It groups those six states under the collective label "the New England States" — a geographic designation that is itself universally understood to refer to exactly and only those six states. Critically, the definition does not include New York, New Jersey, or Pennsylvania. It does not contain any catchall language (such as "including but not limited to" or "and surrounding states") that might suggest the enumerated list is illustrative rather than exhaustive. It does not reference any mechanism for automatic expansion or any condition precedent to expansion. It is, in short, a closed list.
Under Massachusetts law, when a contract defines a term by enumerating specific items, the enumeration is presumed to be exclusive under the expressio unius est exclusio alterius canon. The inclusion of six named states and the exclusion of all others is a deliberate definitional choice. A court applying the plain-meaning rule would have no basis for reading New York, New Jersey, or Pennsylvania into Exhibit A.
Section 2.3 of the EDA further reinforces the plain meaning of the territorial limitation. By providing that "Distributor shall not actively solicit orders for, or deliver, the Products outside the Territory without Supplier's prior written consent," Section 2.3 establishes three critical principles: (i) the Territory is a fixed boundary beyond which the Distributor's rights do not extend; (ii) activity outside the Territory is affirmatively prohibited absent a separate authorization; and (iii) the required form of authorization is "prior written consent" — a deliberate, formal act, not an informal expression of interest or willingness to explore. The internal logic of the Agreement thus reinforces Penterra's position: Exhibit A defines the Territory, Section 2.1 grants exclusivity within that Territory, and Section 2.3 prohibits activity outside the Territory absent a specific written consent that Penterra has never provided.
2. The Kapoor Email Does Not Constitute "Prior Written Consent" Under Section 2.3
Vantage's principal argument is that the Kapoor Email of January 12, 2018 constitutes "prior written consent" under Section 2.3, thereby authorizing Vantage to distribute Oncalaris® outside the Territory. This argument is unpersuasive for several independent reasons.
First, the language of the Kapoor Email is plainly aspirational and forward-looking. The operative sentence reads: "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 words "open to exploring" express a willingness to discuss a potential future event — not a present grant of permission. The phrase "once your New England footprint is fully ramped" establishes a precondition that may or may not have been satisfied. The invitation to "circle back mid-year and see where things stand" explicitly defers any decision to a future conversation that, notably, never occurred. This is the language of preliminary interest, not binding authorization.
Second, the email does not use any words of consent, authorization, approval, or permission. It does not state that Vantage "may" distribute in the tri-state area, that Penterra "consents" to tri-state distribution, or that the Territory is "hereby expanded." There is no operative language of grant or authorization.
Third, even if the Kapoor Email could be read — contrary to its plain meaning — as expressing some form of preliminary willingness (which is already a stretch), it falls far short of the "prior written consent" contemplated by Section 2.3. Read in context, Section 2.3 requires a deliberate, formal authorization by the Supplier — not an offhand email between executives after a social conversation. The phrase "prior written consent" in commercial agreements is universally understood to require a purposeful act of authorization, typically documented in a formal letter, amendment, or consent document. An informal email expressing openness to future discussions does not satisfy this standard.
Fourth, Mr. Kapoor's authority to unilaterally expand the Territory through an informal email is questionable at best. The EDA was negotiated and executed at the corporate level and included specific provisions (Section 13.1) requiring written amendments signed by both parties. A single vice president's informal email, even if it expressed more than it actually does, would not constitute corporate authorization to amend a significant commercial agreement.
3. The Written-Amendment Requirement (Section 13.1) Bars Implied Modification
Even if Vantage could point to some agreement — whether the Kapoor Email, a course of dealing, or oral discussions — to expand the Territory, Section 13.1 of the EDA precludes any such modification from being effective. Section 13.1 provides:
"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."
No written instrument signed by both Penterra and Vantage expanding the Territory to include New York, New Jersey, or Pennsylvania has ever been executed. This is undisputed. The absence of such an instrument is dispositive under the plain language of Section 13.1.
Massachusetts law strongly supports the enforceability of written-modification clauses. The leading case is Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122 (2000), in which the Supreme Judicial Court held that a contractual provision requiring modifications to be in writing is generally binding and precludes oral or informal modifications. The Court in Cambridge Biotech emphasized that written-modification clauses serve an important commercial function by protecting parties against claims of informal or inadvertent modification and by ensuring that changes to significant commercial agreements are deliberately and formally documented.
The Cambridge Biotech holding is squarely on point here. Section 13.1 of the EDA is a standard written-modification clause of the type the SJC endorsed. No written amendment has been executed. Under Cambridge Biotech, the Kapoor Email, any oral discussions, and any course of dealing cannot constitute an effective modification of the Territory definition in Exhibit A.
While Massachusetts courts have recognized narrow exceptions to the enforceability of written-modification clauses — principally where a party demonstrates detrimental reliance on an oral or implied modification sufficient to invoke equitable estoppel — these exceptions are disfavored and require a strong evidentiary showing. As discussed below in connection with Vantage's anticipated counterclaims, Vantage is unlikely to satisfy this standard. The Kapoor Email is not a clear and unambiguous promise, and any reliance by Vantage on an informal email — in the face of an express written-amendment requirement — would likely be deemed unreasonable as a matter of law.
4. The Integration Clause (Section 14.8) Reinforces the Territorial Limitation
Section 14.8 of the EDA provides:
"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 is a broad and unqualified integration clause. Its effect is twofold. First, it establishes the EDA and its Exhibits — including Exhibit A — as the complete and final expression of the parties' agreement regarding the subject matter, including territorial scope. Second, it bars reliance on prior or contemporaneous negotiations, representations, or agreements (whether written or oral) that are inconsistent with or supplementary to the written terms of the EDA.
Under the parol evidence rule as applied in Massachusetts, extrinsic evidence is inadmissible to contradict or vary the terms of a fully integrated agreement. The integration clause in Section 14.8 makes clear that the EDA is a fully integrated instrument. Accordingly, the Kapoor Email — whether characterized as a pre-formation or post-formation communication — is inadmissible to alter the territorial definition in Exhibit A. Vantage cannot rely on extrinsic communications to read New York, New Jersey, and Pennsylvania into a contract that expressly and exclusively defines the Territory as the six New England states.
The interplay between the integration clause (Section 14.8), the written-amendment requirement (Section 13.1), and the plain language of Exhibit A creates a formidable contractual framework that supports Penterra's position. The Territory is defined in the four corners of the Agreement. The Agreement says what it means. And the Agreement provides that it cannot be changed except by a signed writing — which does not exist.
C. Vantage's Anticipated Course-of-Dealing Argument
Vantage's March 22, 2021 response letter, authored by Kenneth Rourke of HSP, also alluded to a course-of-dealing argument. Specifically, Vantage claims that Penterra's failure to object to Vantage's shipments to New York beginning in late 2019 effected a practical modification of Exhibit A. The argument, as we understand it, is that Penterra knew or should have known that Vantage was shipping products to New York-based customers, that Penterra failed to object, and that this silence constituted acquiescence in a de facto expansion of the Territory.
Assessment. This argument faces multiple independent barriers under Massachusetts law:
First, the written-amendment requirement in Section 13.1 precludes modification by course of dealing or acquiescence. The Cambridge Biotech decision makes clear that parties to a commercial agreement who include a written-modification clause are entitled to rely on that clause as a safeguard against informal modification. A course of dealing or pattern of conduct, no matter how prolonged, cannot satisfy the requirement of "a written instrument signed by both parties." If it could, the written-modification clause would be rendered meaningless — a result that Massachusetts courts do not countenance.
Second, the integration clause in Section 14.8 bars reliance on extrinsic conduct to alter the written terms of the Agreement. The parol evidence rule applies not only to prior and contemporaneous communications but also, in the context of a written-amendment clause, to post-formation conduct that is alleged to modify the agreement. Vantage cannot use its own unauthorized shipping activity to rewrite Exhibit A.
Third, Penterra's silence or delay in discovering and objecting to unauthorized shipments does not constitute affirmative consent. Section 2.3 requires "prior written consent" for extra-territorial activity. Failure to object is categorically different from the affirmative grant of written consent that the contract requires. Under Massachusetts law, silence does not ordinarily constitute acceptance or consent, and a party's failure discover a breach does not operate as a waiver of the right to object once the breach is discovered.
Fourth, as a factual matter, Penterra did object promptly once the full scope of Vantage's tri-state distribution activities became clear. The cease-and-desist letter of March 8, 2021 was sent within a reasonable time after the Company's commercial operations team identified and escalated the pattern of unauthorized shipments. Any earlier shipments to New York in late 2019, if they occurred, may have been de minimis in volume and may not have been detected through Penterra's routine reporting systems. We recommend that discovery explore the precise timeline and volume of any pre-September 2020 tri-state shipments to assess this factual issue, but the legal framework strongly favors Penterra's position regardless.
Fifth, even if some course of dealing existed, it would not satisfy the standard for equitable estoppel or waiver under Massachusetts law. Waiver requires the intentional relinquishment of a known right. Estoppel requires a clear representation, reasonable reliance, and detriment. Penterra's mere failure to detect or immediately object to unauthorized shipments does not constitute an intentional relinquishment of its territorial rights, nor does it create a clear representation upon which Vantage could reasonably rely — particularly in light of the written-amendment requirement that Vantage was contractually obligated to follow.
In sum, the course-of-dealing argument is unlikely to succeed. It runs headlong into the written-modification clause, the integration clause, and settled Massachusetts case law. While Vantage may attempt to create factual disputes around the timing of Penterra's knowledge and the extent of pre-September 2020 shipments, the legal framework is strongly in Penterra's favor.
D. Assessment of Vantage's Threatened Counterclaims
Kenneth Rourke's March 22, 2021 letter on behalf of Vantage threatened a $35 million counterclaim. While the letter did not enumerate specific legal theories in detail, we anticipate that Vantage will assert three principal counterclaims: breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory estoppel. We assess each in turn.
1. Breach of Contract ($35 Million Claim)
Vantage's breach-of-contract theory, as we understand it, is that Penterra's appointment of a competing tri-state distributor (Meridian) would violate Vantage's exclusive distribution rights under Section 2.1 of the EDA. The theory necessarily requires Vantage to establish that the "Territory" as defined in the Agreement includes New York, New Jersey, and Pennsylvania — because the grant of exclusivity in Section 2.1 is expressly limited to "the Territory, as defined in Exhibit A."
Assessment. This counterclaim depends entirely on the threshold question of whether the Territory includes the tri-state area. As analyzed in detail above, Exhibit A plainly excludes those states, no valid written amendment expanding the Territory exists, and Massachusetts law enforces written-modification clauses and integration clauses. If the Territory is limited to the six New England states — as the plain language of the Agreement provides — then Penterra has no obligation to refrain from appointing a competing distributor in the tri-state area, and Vantage's breach-of-contract counterclaim lacks a viable foundation.
The $35 million damages figure appears inflated and likely includes speculative lost-profits projections over the remaining term of the EDA plus both one-year renewal periods. Even if Vantage could establish liability (which is unlikely), the damages calculation would face significant scrutiny. Vantage's total fiscal year 2021 revenue is approximately $148 million, and its tri-state revenues from September 2020 through March 2021 — a period of approximately six months — were only approximately $6.4 million. Extrapolating these revenues forward, Vantage's annual tri-state distribution revenue might be in the range of $10 to $13 million, yielding total revenues over the remaining term of the EDA (including renewals) in the range of $30 to $40 million. But gross revenue is not the measure of lost-profits damages. Vantage would need to establish its lost profits — net of cost of goods sold, operating expenses, and other costs — with reasonable certainty. Any damages claim would also be subject to challenge on the grounds of speculation, failure to mitigate, and the inherent uncertainty of projecting revenues for a nascent distribution operation in a new geographic market.
In our assessment, the $35 million figure is a litigation posturing number rather than a defensible damages calculation, and the breach-of-contract counterclaim is unlikely to survive summary judgment given the strength of Penterra's contractual position.
2. Breach of Implied Covenant of Good Faith and Fair Dealing
Vantage may also assert a counterclaim for breach of the implied covenant of good faith and fair dealing. The theory would likely be that Penterra acted in bad faith by encouraging Vantage to invest in tri-state distribution infrastructure (through the Kapoor Email and subsequent interactions) and then refusing to acknowledge the territorial expansion — thereby depriving Vantage of the benefit of its bargain.
Assessment. Under Massachusetts law, every contract implies a covenant of good faith and fair dealing. However, the implied covenant is derived from and limited by the express terms of the contract. It does not create obligations that are inconsistent with the parties' agreement and cannot be used to override or modify express contractual provisions.
If the EDA expressly limits the Territory to the six New England states (which it does), the implied covenant does not create an obligation for Penterra to expand the Territory, to refrain from appointing other distributors in non-Territory states, or to honor alleged informal commitments that were never formalized under the written-amendment clause. The implied covenant is not a free-floating obligation of "fairness" — it is a gap-filling doctrine that operates within the framework of the contract the parties actually made. A claim that Penterra acted in bad faith by enforcing the express territorial limitation of its own agreement is, in our view, untenable.
This counterclaim is derivative of the breach-of-contract theory. It depends on the same threshold question — whether the Territory includes the tri-state area — and should fail for the same reasons.
3. Promissory Estoppel
Finally, Vantage may assert a promissory-estoppel counterclaim, arguing that it relied on the Kapoor Email and Penterra's acquiescence in making substantial investments in tri-state distribution infrastructure (e.g., hiring sales personnel, establishing customer relationships, incurring warehousing and logistics costs).
Assessment. Under Massachusetts law, promissory estoppel requires three elements: (a) a clear and unambiguous promise, (b) reasonable and foreseeable reliance on that promise, and (c) detriment resulting from the reliance. All three elements present significant problems for Vantage.
Clear and Unambiguous Promise. The Kapoor Email is not a clear and unambiguous promise. As discussed above, it is an expression of willingness to explore a potential future expansion — not a definitive commitment to expand the Territory. Massachusetts courts require a high degree of clarity and definiteness for promissory-estoppel claims, and the aspirational, contingent language of the Kapoor Email does not meet this standard.
Reasonable Reliance. Even if the Kapoor Email could be construed as some form of assurance (which it cannot), Vantage's reliance on it would likely be deemed unreasonable as a matter of law. Vantage is a sophisticated commercial party represented by counsel. It was a party to the EDA, which contains an express written-amendment requirement (Section 13.1) and an integration clause (Section 14.8). Vantage knew — or should have known — that any expansion of the Territory required a signed written amendment. Reliance on an informal email to invest in extra-territorial distribution, in the face of these contractual provisions, is the antithesis of reasonable reliance.
Detriment. While Vantage may have incurred some costs in establishing a tri-state presence, the extent and reasonableness of those investments would need to be established with specificity. Vantage chose to begin tri-state distribution without obtaining the formal written consent required by Section 2.3 or the formal written amendment required by Section 13.1. Any investment made in reliance on an informal email rather than on proper contractual authorization was made at Vantage's own risk.
The promissory-estoppel counterclaim is, in our assessment, the weakest of Vantage's three anticipated theories. It is unlikely to survive a motion to dismiss, let alone a motion for summary judgment.
E. Potential Defenses to Counterclaims
In the event Vantage files counterclaims, Penterra will have a robust set of defenses available, including:
• Integration Clause / Parol Evidence Rule. The integration clause in Section 14.8 bars Vantage from relying on extrinsic evidence (including the Kapoor Email and course-of-dealing evidence) to contradict or supplement the express terms of the EDA, including the territorial definition in Exhibit A.
• Written-Amendment Requirement (Section 13.1). No written amendment signed by both parties exists. Section 13.1 precludes informal or implied modifications, and Cambridge Biotech supports the enforceability of this provision under Massachusetts law.
• Failure to Mitigate Damages. To the extent Vantage claims lost profits from the tri-state area, Penterra can argue that Vantage failed to mitigate its damages by, for example, reallocating its resources to grow its business within the authorized New England Territory or by pursuing distribution arrangements with other pharmaceutical manufacturers for the tri-state area.
• Statute of Frauds. To the extent Vantage alleges that any oral or informal agreement to expand the Territory was reached, such an agreement — involving obligations with a term extending beyond one year (given the multi-year EDA structure) — may be subject to the Massachusetts statute of frauds (G.L. c. 259, § 1), which requires certain agreements to be evidenced by a signed writing.
• Lack of a Clear and Definite Promise. For the promissory-estoppel counterclaim, Penterra will argue that the Kapoor Email does not constitute a clear, definite, and unambiguous promise, and that Vantage's reliance on it was unreasonable in light of the contractual framework.
• Speculative and Unsubstantiated Damages. The $35 million damages figure is, on its face, speculative and unsubstantiated. Penterra will challenge Vantage's damages methodology and require Vantage to demonstrate lost profits with reasonable certainty, which will be difficult given the nascent and unauthorized nature of Vantage's tri-state operations.
IV. Recommended Forum and Procedural Strategy
Forum. We recommend filing the Complaint for Declaratory Judgment in the Superior Court of Massachusetts, Business Litigation Session, Suffolk County. Section 14.5 of the EDA provides for the exclusive jurisdiction of state or federal courts in Massachusetts, and the BLS is the appropriate session for this complex commercial contract dispute. The BLS offers experienced judges, efficient case management procedures, and familiarity with the contract-interpretation issues that will be central to this case. Filing in the BLS also avoids the potential uncertainty of federal court removal practice and positions Penterra to move for summary judgment in an environment that is well-suited to dispositive motion practice.
Nature of Action. The complaint will seek a declaratory judgment under Massachusetts General Laws chapter 231A, requesting that the court declare: (i) that the "Territory" under the EDA is limited to the six New England states enumerated in Exhibit A (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont); (ii) that Vantage has no contractual right to distribute Oncalaris® or any other Penterra product in New York, New Jersey, or Pennsylvania under the EDA; (iii) that the Kapoor Email does not constitute "prior written consent" under Section 2.3 or a valid amendment under Section 13.1; and (iv) that Penterra is free to appoint one or more distributors in the tri-state area without violating the EDA. The complaint may also include an affirmative claim for breach of contract based on Vantage's unauthorized tri-state distribution activity and a claim for disgorgement or accounting of the approximately $6.4 million in unauthorized tri-state revenues.
Anticipated Vantage Response. Vantage will likely file an answer denying the material allegations of the complaint and asserting counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory estoppel, consistent with the positions articulated in Kenneth Rourke's March 22, 2021 threat letter. Vantage may also seek a preliminary injunction to prevent Penterra from appointing a tri-state distributor during the pendency of the litigation, although such a motion would face significant hurdles given the strength of Penterra's contractual position. This anticipated response was factored into our recommendation and should not deter Penterra from filing.
discovery Strategy. We recommend a targeted fact-discovery approach focused on the following areas:
(a) The negotiation history of the EDA and Exhibit A, including all drafts, markup versions, and communications between the parties' negotiation teams regarding the definition of the Territory;
(b) All communications between Penterra and Vantage personnel regarding territorial scope, tri-state distribution, and any proposed expansion — including but not limited to the Kapoor Email and any follow-up communications;
(c) The context surrounding the Kapoor Email, including Mr. Kapoor's understanding of the email's significance, whether any follow-up discussions occurred, and whether Mr. Kapoor had authority to modify the EDA;
(d) Vantage's internal decision-making process leading to the commencement of tri-state shipments in September 2020, including any internal memoranda, board minutes, or communications reflecting Vantage's understanding of its territorial rights at the time;
(e) Vantage's sales and financial records for the tri-state area, to evaluate the scope of unauthorized distribution and to challenge the $35 million damages figure asserted in the threatened counterclaim.
We anticipate taking depositions of the key Vantage witnesses, including Donald Farnham (CEO/Managing Member), Lisa Petrangelo (COO), and Brian Kopec (Outside Sales Director). We will also prepare and defend the depositions of the relevant Penterra witnesses, principally Steven Kapoor (VP, Commercial Operations) and Rachel Mendez (Director of Distribution & Logistics). If necessary, additional depositions of lower-level Vantage sales or logistics personnel may be warranted to establish the timeline and scope of tri-state shipments.
Dispositive Motion Strategy. This case is well suited for resolution on summary judgment. If the material facts are undisputed — as we expect they will be, given that the key evidence consists of documentary materials (the EDA, Exhibit A, the Kapoor Email, and the pre-litigation correspondence) — the legal question of contract interpretation can be decided as a matter of law. We recommend targeting a motion for summary judgment on Penterra's declaratory-judgment claims, and a cross-motion for summary judgment on Vantage's counterclaims, following the close of fact discovery. If the BLS's case management order permits, we would seek to file the summary-judgment motion as early as practicable to achieve a prompt resolution.
V. Risk Assessment
Probability of Success on Declaratory Judgment: High. The plain language of Exhibit A is unambiguous. The Territory is defined as six specific states, and the tri-state area is not among them. The written-amendment clause (Section 13.1) and integration clause (Section 14.8) provide strong contractual defenses against any claim of informal modification. Massachusetts law, particularly the Cambridge Biotech decision, is squarely favorable to Penterra's position. We assess the probability of obtaining a favorable declaratory judgment at approximately 80% to 90% on the merits, with the residual uncertainty reflecting the inherent unpredictability of litigation and the possibility that a court might find sufficient factual disputes to deny summary judgment and proceed to trial.
Risk from Counterclaims: Moderate-to-Low. The $35 million figure is attention-grabbing but substantively weak. All three anticipated counterclaim theories — breach of contract, breach of implied covenant, and promissory estoppel — depend on establishing that the Territory was expanded to include the tri-state area. As analyzed above, the contractual language and applicable law strongly refute this proposition. The counterclaims will likely be dismissed on summary judgment in conjunction with the court's ruling on the declaratory-judgment claims. Even in a worst-case scenario where the case proceeds to trial and a factfinder credits some aspect of Vantage's evidence, the actual damages exposure is substantially less than $35 million and would likely be limited to some portion of Vantage's demonstrable lost profits in the tri-state area — a figure that, given the nascent stage of Vantage's tri-state operations, would be far more modest.
Business Risk: Significant but Manageable. Vantage is a significant commercial partner for Penterra. Approximately $67 million in Penterra product purchases (FY 2021) flow through the Vantage relationship, and Vantage's Oncalaris® purchases have grown steadily over the life of the EDA. Filing suit will likely terminate or severely strain the commercial relationship. Penterra should be prepared for the possibility that Vantage will become adversarial in the New England Territory as well — potentially reducing purchase volumes, providing less favorable service to New England customers, or allowing the EDA to expire on June 30, 2022 without electing to renew. Penterra's commercial operations team should develop a contingency plan for the New England Territory in the event that the Vantage relationship deteriorates, including identifying alternative distribution partners who could step in if necessary. Notwithstanding these business risks, the strategic imperative of securing Penterra's distribution rights in the tri-state area — a significant market for Oncalaris® — and resolving the territorial dispute definitively justifies proceeding with the litigation.
Reputational / Public Risk: Low. Penterra is a publicly traded company on the Nasdaq Stock Market (ticker: PTRA). The initiation of litigation and the existence of Vantage's threatened counterclaims may need to be disclosed in Penterra's periodic SEC filings, including the 10-Q and 10-K in the risk factors or legal proceedings sections. However, the exposure is manageable given Penterra's strong merits position, the limited financial risk relative to the Company's $1.87 billion revenue base, and the routine nature of commercial contract disputes in the pharmaceutical distribution industry. The litigation is unlikely to generate significant media attention or adversely affect Penterra's stock price or public reputation.
VI. Budget and Staffing
Calderwood & Harkness proposes the following engagement team and budget framework for the declaratory-judgment action, consistent with the engagement letter dated March 29, 2021:
Engagement Team:
All billing rates are subject to the 7% discount negotiated in the engagement letter dated March 29, 2021. Additional resources, including contract attorneys for document review and paralegal support, may be utilized as needed at applicable rates.
Estimated Budget Range: $750,000 to $1,200,000 for the declaratory-judgment action through trial, as set forth in the engagement letter. This estimate encompasses all anticipated phases of the litigation, including pleading preparation, fact discovery, expert retention (if needed for damages analysis), summary-judgment briefing, and trial preparation.
If the matter is resolved on summary judgment — which is our recommended strategy and the most likely outcome — fees should come in at or below the midpoint of the budget range (i.e., approximately $975,000 or less). The summary-judgment strategy is not only the strongest approach on the merits but also the most cost-effective path to resolution.
Primary Cost Categories:
• Pleading preparation (complaint, answer to counterclaims, discovery-related motions)
• Fact discovery, including document collection, review, and production; preparation and response to interrogatories and requests for admission; depositions of key Vantage witnesses (Farnham, Petrangelo, and Kopec) and preparation and defense of Penterra witnesses (Kapoor and Mendez)
• Legal research memoranda on Massachusetts contract-interpretation law, the enforceability of written-modification clauses, and related issues
• Summary-judgment briefing, including statement of undisputed material facts, memorandum of law, and response to any cross-motion by Vantage
• Potential oral argument on summary judgment and any other contested motions
• Trial preparation and trial, in the event that summary judgment is denied in whole or in part
We will provide monthly invoices with detailed time entries and will communicate proactively with Ms. Chao and her team regarding any material changes in the budget estimate.
VII. Recommendation
Based on the foregoing analysis, Calderwood & Harkness recommends that Penterra Pharmaceuticals Corp. file a Complaint for Declaratory Judgment in the Superior Court of Massachusetts, Business Litigation Session, as soon as practicable. Our target filing date is the week of April 12, 2021, subject to Penterra's authorization and final review of the complaint.
The merits of Penterra's position are strong. The unambiguous territorial definition in Exhibit A, the written-amendment requirement in Section 13.1, the integration clause in Section 14.8, and favorable Massachusetts case law — particularly Cambridge Biotech Corp. v. Pasteur Falveris Diagnostics, 433 Mass. 122 (2000) — provide a firm foundation for obtaining a declaratory judgment that the Territory is limited to the six New England states and that Vantage has no contractual right to distribute Oncalaris® in the tri-state area.
Filing will enable Penterra to:
• Resolve the territorial dispute definitively through a binding judicial declaration;
• Proceed with the Meridian National Distributors, Inc. distribution arrangement for the tri-state area, unlocking significant revenue opportunities for Oncalaris® in New York, New Jersey, Pennsylvania, and Maryland;
• Protect the commercial value and channel integrity of Oncalaris®, a $412 million annual revenue product that represents approximately 22% of Penterra's consolidated revenues;
• Establish a clear precedent regarding the enforceability of the EDA's terms, which will be important for Penterra's broader distribution strategy and relationships with other distribution partners.
Vantage's $35 million counterclaim threat, while requiring a defense, does not materially alter the risk calculus. The underlying legal theories are weak, the damages figure is speculative and inflated, and the counterclaims are likely to be resolved on summary judgment alongside the declaratory-judgment claims. The business risk of straining the Vantage relationship is real but manageable, particularly given the approaching June 30, 2022 expiration of the EDA's initial term and Penterra's ability to develop alternative distribution arrangements for the New England Territory if necessary.
We are prepared to proceed upon Penterra's authorization.
VIII. Next Steps
We recommend the following action items, subject to Penterra's review and approval:
1. Authorization to File. Penterra to confirm authorization for Calderwood & Harkness to file the Complaint for Declaratory Judgment. We request authorization no later than April 7, 2021 to meet the target filing date.
2. Complaint Filing. Calderwood & Harkness to finalize and file the Complaint for Declaratory Judgment in the Superior Court of Massachusetts, Business Litigation Session, Suffolk County. Target filing: week of April 12, 2021. A draft complaint will be circulated to Ms. Chao for review by April 5, 2021.
3. Litigation Hold. Penterra to issue litigation hold notices to all relevant custodians immediately upon authorization, including but not limited to: Dr. Marcus Lindholm (CEO), Jennifer Chao (General Counsel), Steven Kapoor (VP, Commercial Operations), Rachel Mendez (Director of Distribution & Logistics), and relevant personnel in IT, commercial operations, finance, and legal who may possess documents or electronically stored information related to the Vantage distribution relationship, the EDA, the Kapoor Email, and the tri-state distribution dispute. Calderwood & Harkness will provide a draft litigation hold notice for Penterra's use.
4. Meridian Notification. Penterra to inform Thomas Welliver of Meridian National Distributors, Inc. that litigation has been initiated to resolve the territorial dispute and that the term sheet execution is being held pending resolution. Penterra should reassure Meridian of its continued interest in the tri-state distribution arrangement while managing expectations regarding the timeline for finalization.
5. Insurance Notification. Penterra should consider whether to provide notice of the threatened counterclaims to the Company's directors' and officers' liability insurer (Atlantic Shield Insurance Co.) and/or commercial general liability insurer (Commonwealth Mutual Assurance Corp.). While the counterclaims are contract-based and may not trigger D&O or CGL coverage, timely notification is prudent to preserve potential coverage rights. We can advise further on this issue upon request.
6. Counterclaim Preparation. Calderwood & Harkness to prepare an answer to any counterclaims filed by Vantage and to develop a comprehensive discovery plan in anticipation of Vantage's response to the complaint. We will also begin drafting a preliminary discovery conference statement and proposed scheduling order for submission to the BLS.
We are available to discuss this memorandum and the recommended course of action at your convenience. Please do not hesitate to contact me directly with any questions or to schedule a call with the engagement team.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Linda Osei, Partner 1 Federal Street, 35th Floor Boston, Massachusetts 02110 Direct: (617) 555-4218
Email: l.osei@calderwoodharkness.com
Enclosures (Referenced)
The following documents have been referenced in this memorandum and are enclosed or available upon request:
1. Exclusive Distribution Agreement dated July 1, 2017, between Penterra Pharmaceuticals Corp. and Vantage Medical Distribution, LLC (with Exhibit A — Territory Definition)
2. Email from Steven Kapoor to Donald Farnham, dated January 12, 2018 (the "Kapoor

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