HSR ACT PRE-MERGER NOTIFICATION
DRAFT NARRATIVE STATEMENT AND ITEM 4 DOCUMENT COMPILATION
Proposed Acquisition of Veridian Biosciences, Inc. by Penterra Pharmaceuticals Corp.
Prepared by: Calderwood & Harkness LLP and Stonebridge HSW Antitrust Advisors LLP
April 18, 2024
Matter No. 1018-00008
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT. This document and the information contained herein have been prepared by Calderwood & Harkness LLP and Stonebridge HSW Antitrust Advisors LLP at the direction of Penterra Pharmaceuticals Corp. for purposes of seeking legal advice regarding the proposed acquisition of Veridian Biosciences, Inc. This document is protected by the attorney-client privilege and constitutes attorney work product. Unauthorized disclosure, copying, or distribution is strictly prohibited.
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COVER MEMORANDUM
TO: Thomas F. Holbrook, General Counsel & Secretary, Penterra Pharmaceuticals Corp. Oliver Mackenzie, Partner, Calderwood & Harkness LLP
FROM: Martin Prumvane, Partner, Stonebridge HSW Antitrust Advisors LLP Megan Chu, Associate, Calderwood & Harkness LLP
DATE: April 18, 2024
RE: Draft HSR Act Notification Narrative and Item 4 Document Package — Proposed Acquisition of Veridian Biosciences, Inc. by Penterra Pharmaceuticals Corp.
I. Purpose and Summary
Enclosed for your review is the draft narrative statement for the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act," 15 U.S.C. § 18a), pre-merger notification filing in connection with the proposed acquisition by Penterra Pharmaceuticals Corp. ("Penterra") of one hundred percent (100%) of the outstanding capital stock of Veridian Biosciences, Inc. ("Veridian") for aggregate cash consideration of Nine Hundred Million Dollars ($900,000,000) (the "Transaction").
The filing is to be submitted to the Premerger Notification Office of the Federal Trade Commission ("FTC") and the Antitrust Division of the United States Department of Justice ("DOJ"), together constituting the antitrust enforcement agencies with jurisdiction over pre-merger notifications under the HSR Act and the rules promulgated thereunder, 16 C.F.R. Parts 801–803.
Our target filing date is April 22, 2024. The filing fee, based on the $900,000,000 transaction value and the 2024 HSR fee schedule as revised by the Merger Filing Fee Modernization Act of 2022, is $280,500.
The filing is being prepared on behalf of Penterra in its capacity as the "acquiring person" within the meaning of 16 C.F.R. § 801.2. Veridian, as the "acquired person," will make a corresponding notification filing through its outside counsel, Zalcourt Archer & Cole LLP (Rebecca Whitmore, Partner). We have been in contact with Ms. Whitmore's office and expect coordinated submission of both filings on the target date.
This draft includes the following components:
(a) A comprehensive narrative description of the proposed Transaction, including its structure, strategic rationale, and relevant background regarding the parties;
(b) An analysis of relevant product and geographic markets, competitive overlap (or lack thereof), and competitive effects;
(c) A request for early termination of the initial 30-day waiting period;
(d) Identification and compilation of documents responsive to Item 4(c) of the HSR Notification and Report Form, including a document log with descriptions;
(e) Identification and compilation of documents responsive to Item 4(d) of the HSR Notification and Report Form, including a document log with descriptions;
(f) Administrative filing information, including NAICS and SIC code analyses, beneficial ownership and control analysis, and filing mechanics; and
(g) Supporting appendices, including draft transmittal letter, document indices, draft privilege log, organizational charts, revenue data tables, and relevant market participant identification.
This memorandum and its attachments have been prepared jointly by Calderwood & Harkness LLP and Stonebridge HSW Antitrust Advisors LLP pursuant to the coordinated engagement for antitrust matters in connection with the Transaction. Both firms have collaborated on the substantive antitrust analysis, and the work product reflects their combined professional judgment regarding the competitive analysis and filing strategy.
II. Process Notes and Action Items
We respectfully request the following actions to maintain the April 22, 2024 filing timeline:
1. Client Review and Approval of Narrative. We request that Mr. Holbrook, together with Natalie Reiner (SVP, Corporate Development), review and approve the draft narrative statement no later than April 20, 2024. Any substantive comments should be directed to Megan Chu (Calderwood & Harkness) and Martin Prumvane (Stonebridge HSW) simultaneously to permit efficient revisions.
2. Completeness of Item 4(c) and 4(d) Document Collection. We request confirmation from Ms. Reiner and Kevin Driscoll (Managing Director, Garrison Zanthor & Co., LLC) that the Item 4(c) and Item 4(d) documents identified herein represent a complete collection of responsive materials in the files and records of Penterra's officers and directors. If additional responsive documents are identified, they should be forwarded to our offices promptly. We note that the collection process is ongoing as of this draft date, and the document logs set forth in Parts II and III below may be supplemented prior to filing.
3. Filing Fee and Transmittal. The filing will be accompanied by a transmittal letter addressed to the Premerger Notification Office of the FTC and the Antitrust Division of the DOJ, together with a filing fee payment of $280,500. We request that the Treasury Department of Penterra arrange for issuance of the filing fee payment (by wire transfer or certified check) in advance of the April 22, 2024 filing date. Payment instructions will be circulated under separate cover.
4. Waiting Period. The 30-day initial waiting period under 15 U.S.C. § 18a(b)(1) will commence upon the filing of notifications by both parties. Accordingly, coordinated submission on April 22, 2024 is essential. Early termination of the waiting period will be formally requested as part of the filing.
5. Coordination with Veridian's Counsel. Calderwood & Harkness and Stonebridge HSW will continue to coordinate timing and filing logistics with Zalcourt Archer & Cole LLP (Rebecca Whitmore, Partner; Jonathan Pratt, Associate) to ensure that both parties' filings are submitted to the agencies on April 22, 2024.
We are available to discuss the enclosed materials at your convenience and look forward to receiving your comments.
PART I
NARRATIVE DESCRIPTION OF THE PROPOSED TRANSACTION
1. Overview of the Proposed Transaction
1.1 Transaction Summary
Penterra Pharmaceuticals Corp. ("Penterra," "Buyer," or the "Acquiring Person"), a corporation organized and existing under the laws of the State of Delaware and publicly traded on the Nasdaq Global Select Market under the ticker symbol "PPCA," proposes to acquire one hundred percent (100%) of the issued and outstanding capital stock of Veridian Biosciences, Inc. ("Veridian," the "Company," or the "Acquired Person"), a corporation organized and existing under the laws of the State of Delaware and a privately held clinical-stage biotechnology company headquartered in Cambridge, Massachusetts.
The acquisition will be structured as a direct stock purchase transaction pursuant to a definitive Stock Purchase Agreement (the "SPA") currently in advanced negotiation between the parties, with execution of the SPA expected on or about June 10, 2024. Under the terms of the SPA, Penterra will acquire all of the issued and outstanding shares of Veridian's capital stock — including common stock, preferred stock across Series A through Series D, and any shares issuable upon the exercise of outstanding options, warrants, or other convertible securities — directly from Veridian's existing stockholders. The acquisition will not be effected through a merger, consolidation, or tender offer.
The aggregate purchase price for the Transaction is Nine Hundred Million Dollars ($900,000,000) in cash, payable to the Veridian stockholders at closing in accordance with the terms and conditions of the SPA. No contingent consideration, earn-out payments, or non-cash consideration is contemplated as part of the Transaction. The purchase price will be funded through a combination of (a) Five Hundred Million Dollars ($500,000,000) from a committed senior secured term loan facility, with a commitment letter to be executed on or about June 7, 2024 (Reference No. CL-2024-PPCA-0607), from a lending syndicate to be led by Summit Ridge Capital Partners, LP as lead arranger and Ironclad Trust Company, N.A. as administrative agent, bearing interest at a rate of SOFR plus 225 basis points, and (b) Four Hundred Million Dollars ($400,000,000) from Penterra's existing cash on hand, which totaled approximately $2.1 billion as of the end of the second quarter of fiscal year 2024.
Following the closing of the Transaction, Veridian will become a direct, wholly owned subsidiary of Penterra and will continue to exist as a separate legal entity under the laws of the State of Delaware. No divestitures, behavioral remedies, structural changes, or other modifications to the Transaction are contemplated or, in the opinion of the filing person and its antitrust counsel, believed to be required in order to secure regulatory clearance.
The transaction value of $900,000,000 exceeds the applicable jurisdictional thresholds for mandatory pre-merger notification under the HSR Act and the rules promulgated thereunder, and accordingly both parties are required to file notifications and observe the statutory waiting period prior to consummation of the Transaction.
1.2 Transaction Rationale
The strategic rationale underlying Penterra's proposed acquisition of Veridian is centered on the critical need to rebuild and strengthen Penterra's immuno-oncology pipeline following a significant setback in the fourth quarter of 2023. Specifically, in November 2023, Penterra announced the results of a pre-specified interim futility analysis conducted by the independent data monitoring committee for its Phase III registrational trial of PPC-0921, a novel checkpoint inhibitor combination therapy for advanced non-small cell lung cancer ("NSCLC"). The futility analysis determined that PPC-0921 was unlikely to meet its primary efficacy endpoint of overall survival, and the trial was subsequently discontinued. The failure of PPC-0921, which had been Penterra's most advanced immuno-oncology pipeline candidate, created a material gap in Penterra's long-term oncology growth strategy and prompted the Penterra Board of Directors, at its meeting on February 12, 2024, to authorize management to explore strategic alternatives to replenish the company's immuno-oncology pipeline.
The acquisition of Veridian directly addresses this strategic imperative. The Transaction will provide Penterra with access to Veridian's proprietary VeriTCE (Veridian T-Cell Engager) technology platform, a next-generation bispecific T-cell engager platform designed to redirect cytotoxic T cells to tumor cells expressing specific surface antigens. The VeriTCE platform underpins a pipeline of three immuno-oncology product candidates in various stages of development. The most advanced of these candidates, VRD-4187, is a bispecific T-cell engager targeting delta-like ligand 3 ("DLL3"), a protein expressed at high levels on the surface of small cell lung cancer ("SCLC") tumor cells. VRD-4187 is currently in a Phase II clinical trial (designated Marlowe Asset Management-2, ClinicalTrials.gov identifier NCT05837291), which is being conducted at 42 clinical investigator sites across the United States and the European Union and has enrolled 387 patients as of the date of this filing. Penterra's scientific leadership and clinical development personnel believe that VRD-4187 has the potential to become a best-in-class or first-in-class DLL3-targeted bispecific T-cell engager therapy for SCLC, a disease with a significant unmet medical need and limited effective treatment options following initial platinum-based chemotherapy.
Veridian's VeriTCE platform and pipeline are highly complementary to Penterra's existing commercial portfolio, which consists of twelve (12) marketed pharmaceutical products spanning three therapeutic areas: oncology, immunology, and rare diseases. Penterra possesses substantial clinical development infrastructure, extensive regulatory expertise, established relationships with the U.S. Food and Drug Administration and the European Medicines Agency, and a mature commercial organization with marketing and sales capabilities across its therapeutic focus areas. Veridian, by contrast, is a clinical-stage company that lacks commercial infrastructure, marketing capabilities, or the scale of resources necessary to independently advance a late-stage clinical development program and, ultimately, to commercialize a product on a global basis. The combination of Veridian's innovative science and pipeline with Penterra's development and commercial capabilities is expected to accelerate the pathway toward potential regulatory approval and patient access for VRD-4187 and Veridian's other pipeline candidates.
Critically, the Transaction does not raise horizontal competitive concerns. Veridian is a clinical-stage company with no marketed products, no product revenue, and no existing commercial presence in any therapeutic market. Penterra does not currently market, develop, or have any pipeline candidates involving bispecific T-cell engager technology, DLL3-targeted therapeutics, or therapeutics for SCLC. Accordingly, the Transaction is properly characterized as a complementary acquisition that extends Penterra's capabilities into a new modality and therapeutic indication rather than a horizontal combination of competing businesses.
1.3 The Parties
A. Penterra Pharmaceuticals Corp. (Acquiring Person).
Penterra is a mid-cap specialty pharmaceutical company engaged in the discovery, development, manufacturing, and commercialization of innovative therapeutics across three primary therapeutic areas: oncology, immunology, and rare diseases. Penterra's current commercial portfolio consists of twelve (12) marketed products, including branded and specialty therapeutics that generate significant revenue and are distributed through multiple channels in the United States and internationally. Penterra's research and development organization operates clinical programs at various stages of development, with a particular emphasis on oncology and immunology, and the company maintains manufacturing capabilities through both owned facilities and contract manufacturing arrangements.
The following individuals serve in senior leadership capacities relevant to this filing:
• Chief Executive Officer: Dr. Anand Rajagopal
• Chief Financial Officer: Catherine M. Burgess
• General Counsel & Corporate Secretary: Thomas F. Holbrook
• Senior Vice President, Corporate Development: Natalie Reiner
• Chair, Board of Directors: Margaret Liu Whitfield
Penterra's financial advisor for the Transaction is Garrison Zanthor & Co., LLC, with Kevin Driscoll serving as Managing Director on the engagement. Penterra's legal counsel for the Transaction is Calderwood & Harkness LLP, with Oliver Mackenzie, Partner, serving as lead M&A counsel. Penterra's antitrust counsel is Stonebridge HSW Antitrust Advisors LLP, with Martin Prumvane, Partner, serving as lead antitrust counsel.
Penterra is a publicly traded company with a dispersed stockholder base. No single stockholder or group of stockholders holds a controlling interest in Penterra. Penterra's ultimate parent entity ("UPE") for purposes of the HSR Act filing is Penterra Pharmaceuticals Corp. itself; there is no parent holding company or other entity that exercises control over Penterra within the meaning of 16 C.F.R. § 801.1(b).
B. Veridian Biosciences, Inc. (Acquired Person).
Veridian is a privately held, clinical-stage biotechnology company founded in 2016 and focused exclusively on the discovery and development of immuno-oncology therapeutics leveraging its proprietary VeriTCE (Veridian T-Cell Engager) bispecific antibody technology platform. Since its founding, Veridian has raised a total of approximately $420 million across four rounds of venture capital financing (Series A through Series D), and the company has used these proceeds to fund its research and development activities, including the advancement of VRD-4187 into Phase II clinical development. Veridian has never generated product revenue, has no marketed products, and does not possess any commercial or marketing infrastructure.
The following individuals serve in senior leadership capacities at Veridian:
• Chief Executive Officer & Co-Founder: Dr. Julian Marek (approximately 8.4% equity ownership)
• Chief Scientific Officer & Co-Founder: Dr. Priya Chandrasekaran (approximately 6.2% equity ownership)
• Chief Financial Officer: Steven R. Kessler
• Vice President, Regulatory Affairs: Dr. Anne-Marie Fontaine
• General Counsel: Rachel Stein-Goldberg
Veridian's stockholder base is composed primarily of institutional venture capital investors, the company's founders and management team, and an employee stock option pool. The major stockholders are as follows:
Veridian's financial advisor for the Transaction is Ridgeway Partners LLC, with Laura Beckett serving as Managing Director on the engagement. Veridian's legal counsel is Zalcourt Archer & Cole LLP, with Rebecca Whitmore, Partner, serving as lead counsel. Veridian's independent auditor is Northbridge Accounting Group LLP, with Patrick Calloway serving as Engagement Partner.
2. Transaction Structure and Consideration
2.1 Structure. The Transaction will be structured as a stock purchase in which Penterra will acquire directly from the existing stockholders of Veridian all of the issued and outstanding shares of capital stock of Veridian. The shares to be acquired include all outstanding shares of Veridian's common stock, all outstanding shares of each series of Veridian's preferred stock (Series A, Series B, Series C, and Series D), and any shares of capital stock issuable upon the exercise, conversion, or exchange of outstanding stock options, warrants, or other convertible or exchangeable securities of Veridian. It is expected that, in connection with the closing of the Transaction, all outstanding Veridian options and warrants will either be exercised and the underlying shares sold in the Transaction or will be cancelled in exchange for the right to receive a cash payment equal to the positive difference, if any, between the per-share merger consideration and the applicable exercise price.
The Transaction will not involve a merger or consolidation of Penterra and Veridian, nor will it involve a tender offer or exchange offer for Veridian's securities. Rather, the SPA will provide for the simultaneous purchase of all shares of Veridian capital stock from the selling stockholders at closing. Veridian will continue as a surviving legal entity under the laws of the State of Delaware following the closing and will become a direct, wholly owned subsidiary of Penterra.
The SPA will contain customary representations and warranties of the parties, covenants regarding the conduct of Veridian's business during the period between signing and closing, conditions to closing (including regulatory clearances, accuracy of representations and warranties, and compliance with covenants), indemnification provisions, and termination rights. The availability of debt financing is not a condition to Penterra's obligation to consummate the Transaction.
2.2 Consideration and Value
The total consideration to be paid by Penterra in connection with the Transaction is Nine Hundred Million Dollars ($900,000,000) in cash, to be paid at closing in immediately available funds to the Veridian stockholders (or their designated representatives) in accordance with their respective pro rata entitlements as set forth in the SPA and the allocation schedule to be attached thereto.
No contingent consideration, milestone payments, earn-out arrangements, or non-cash consideration (including equity securities, promissory notes, or other instruments) is contemplated as part of the Transaction. The aggregate purchase price is fixed and not subject to adjustment based on working capital, revenue performance, clinical trial outcomes, or any other variable factor, except for customary purchase price adjustments relating to net working capital, indebtedness, and transaction expenses as of the closing date, which are not expected to alter the aggregate transaction value in any material respect.
The transaction value of $900,000,000 triggers mandatory pre-merger notification obligations under Section 7A of the Clayton Act, as added by the HSR Act (15 U.S.C. § 18a), because it exceeds the applicable size-of-transaction threshold for the calendar year 2024. Based on the 2024 filing fee schedule adopted pursuant to the Merger Filing Fee Modernization Act of 2022, the applicable filing fee for a transaction with a value in excess of $500,000,000 but not greater than $1,000,000,000 is $280,500. Penterra will remit this filing fee in connection with the submission of its notification.
2.3 Financing. Penterra intends to finance the acquisition through the following sources:
(a) Term Loan Facility — $500,000,000. Penterra will enter into a committed senior secured term loan facility in the principal amount of $500,000,000. The commitment letter for this facility (Reference No. CL-2024-PPCA-0607) is expected to be executed on or about June 7, 2024, with the lending syndicate led by Ironclad Trust Company, N.A. as administrative agent and Summit Ridge Capital Partners, LP as lead arranger and sole bookrunner. The term loan is expected to bear interest at a floating rate equal to the Secured Overnight Financing Rate ("SOFR") plus a margin of 225 basis points per annum, with a maturity of five years from the closing date. The term loan will be secured by substantially all of the assets of Penterra and its material domestic subsidiaries and will be guaranteed by Penterra's material domestic subsidiaries.
(b) Cash on Hand — $400,000,000. The remaining $400,000,000 of the purchase price will be funded from Penterra's existing cash and cash equivalents, which totaled approximately $2.1 billion as of the end of the second quarter of fiscal year 2024. Penterra's Board of Directors has approved the use of available cash resources for this purpose.
As noted above, the availability of debt financing is not a condition to Penterra's obligation to close the Transaction under the terms of the SPA. Penterra has obtained, or expects to obtain prior to the execution of the SPA, committed financing in amounts sufficient to pay the aggregate purchase price and all related fees and expenses.
2.4 Timeline. The following timeline sets forth the principal milestones for the Transaction:
The parties expect that the initial 30-day waiting period under the HSR Act will expire (or be earlier terminated upon a grant of early termination) well in advance of the expected SPA execution date. In the ordinary course, assuming the filing is accepted for processing on April 22, 2024, the initial waiting period would expire on May 22, 2024 (or earlier if early termination is granted).
3. Identification of Relevant Product and Geographic Markets
3.1 Penterra's Products and Pipeline
Penterra's commercial portfolio currently consists of twelve (12) marketed pharmaceutical products spanning three principal therapeutic areas, as summarized below:
Oncology. Penterra markets a portfolio of branded oncology therapeutics used in the treatment of breast cancer, prostate cancer, and non-small cell lung cancer. These products include both traditional chemotherapy agents and targeted therapies directed at specific molecular pathways implicated in tumor growth and progression. Penterra's oncology products collectively represent the largest revenue-generating segment of the company's commercial portfolio.
Following the Phase III futility analysis of PPC-0921 in November 2023 — which led to the discontinuation of Penterra's most advanced immuno-oncology pipeline candidate — Penterra's remaining oncology pipeline consists of early-stage research candidates in colorectal cancer and melanoma. Notably, Penterra does not currently have any pipeline candidates in development for the treatment of small cell lung cancer ("SCLC"), nor does Penterra have any candidates employing bispecific T-cell engager technology or any other bispecific antibody modality.
Immunology. Penterra markets products for the treatment of rheumatoid arthritis and psoriatic arthritis. These products are established in the marketplace and contribute a significant portion of Penterra's overall revenue.
Rare Diseases. Penterra markets products for the treatment of certain lysosomal storage disorders. The rare disease portfolio addresses niche patient populations with significant unmet medical needs.
Penterra does not currently market or have in development any products that target the delta-like ligand 3 ("DLL3") protein, nor does Penterra possess any proprietary technology platform for the discovery or development of bispecific T-cell engager therapeutics.
3.2 Veridian's Products and Pipeline
Veridian is a clinical-stage biotechnology company with no marketed products and zero product revenue. The entirety of Veridian's business consists of research and development activities focused on its proprietary VeriTCE (Veridian T-Cell Engager) bispecific antibody technology platform and the pipeline of immuno-oncology product candidates derived from that platform.
Veridian's pipeline currently consists of three product candidates at various stages of development:
(a) VRD-4187 (Lead Candidate). VRD-4187 is a bispecific T-cell engager antibody designed to simultaneously bind DLL3 on the surface of tumor cells and CD3 on the surface of cytotoxic T cells, thereby redirecting the patient's own immune system to recognize and destroy DLL3-expressing tumor cells. VRD-4187 is being developed primarily for the treatment of extensive-stage small cell lung cancer ("ES-SCLC") in patients who have progressed following first-line platinum-based chemotherapy. VRD-4187 is currently in a Phase II clinical trial designated Marlowe Asset Management-2 (ClinicalTrials.gov identifier NCT05837291), which is being conducted at 42 clinical investigator sites across the United States and the European Union and has enrolled 387 patients as of the date of this filing. Veridian holds active Investigational New Drug Application ("IND") No. 154832 with the U.S. Food and Drug Administration for VRD-4187. Early clinical data from the Phase I portion of development have demonstrated preliminary evidence of anti-tumor activity and a manageable safety profile.
(b) VRD-5201 (Second Candidate). VRD-5201 is an earlier-stage bispecific T-cell engager candidate based on the VeriTCE platform, directed against an undisclosed tumor-associated antigen. VRD-5201 is currently in IND-enabling preclinical studies, and no IND has been filed. The target indication has not been publicly disclosed.
(c) VRD-6018 (Third Candidate). VRD-6018 is a discovery-stage T-cell engager incorporating a novel molecular format designed to enhance pharmacokinetic properties and reduce the frequency of dosing. VRD-6018 remains in preclinical research, and the target antigen and indication are in the process of being determined.
Veridian does not possess any commercial infrastructure, sales organization, marketing capabilities, or distribution arrangements. Veridian has never generated product revenue and is not expected to generate product revenue prior to the consummation of the Transaction.
3.3 Relevant Product Markets
For purposes of this competitive analysis, the filing person has evaluated the Transaction under several alternative product market definitions, ranging from broad to narrow. In each case, the analysis demonstrates the absence of meaningful horizontal overlap between Penterra and Veridian.
Immuno-Oncology Therapeutics (Broad Market). The broadest potentially relevant product market encompasses the full range of immuno-oncology therapeutics, including immune checkpoint inhibitors (e.g., PD-1, PD-L1, and CTLA-4 inhibitors), chimeric antigen receptor T-cell ("CAR-T") therapies, bispecific antibodies and T-cell engagers, cancer vaccines, oncolytic virus therapies, and other immunotherapy modalities.
• Penterra's participation: Penterra's current oncology portfolio includes primarily chemotherapy agents and targeted therapies rather than immuno-oncology products. Following the discontinuation of PPC-0921, Penterra's immuno-oncology pipeline is limited to early-stage research programs with no near-term competitive significance.
• Veridian's participation: Veridian's three pipeline candidates (VRD-4187, VRD-5201, and VRD-6018) are all immuno-oncology candidates based on T-cell engager technology. However, Veridian has no marketed products in this or any other market.
Bispecific T-Cell Engager (BiTE) Therapeutics (Narrower Market). A narrower potentially relevant product market could be defined to include only bispecific antibody-based T-cell engager therapeutics — a specific class of immuno-oncology agents that redirect T cells to tumor cells through simultaneous binding of a tumor-associated antigen and the CD3 receptor on T cells.
• Penterra: Penterra does not currently market, develop, or possess any proprietary technology relating to bispecific T-cell engager therapeutics. Penterra has no products or pipeline candidates in this space.
• Veridian: Veridian's entire pipeline (VRD-4187, VRD-5201, and VRD-6018) is based on its VeriTCE bispecific T-cell engager platform. However, none of these candidates has been approved for marketing, and Veridian has no commercial presence.
• Overlap: There is no horizontal overlap between the parties in this product market.
Small Cell Lung Cancer (SCLC) Therapeutics (Disease-Specific Market). An alternative product market definition focused on therapeutics for SCLC would encompass all approved and investigational therapies for the treatment of SCLC, including platinum-based chemotherapy, topoisomerase inhibitors, immune checkpoint inhibitors, bispecific antibodies, antibody-drug conjugates, and other modalities.
• Penterra: Penterra does not currently market any products for the treatment of SCLC and does not have any pipeline candidates in development for SCLC.
• Veridian: VRD-4187 is being developed primarily for SCLC and is the only Veridian pipeline candidate currently in clinical development for this indication. VRD-4187 is not yet approved and is not commercially available.
• Overlap: There is no horizontal overlap between the parties in SCLC therapeutics.
DLL3-Targeted Therapeutics (Narrowest Potential Market). The narrowest potentially relevant product market would be defined by the molecular target — DLL3-targeted therapeutics, including all approved and investigational products designed to bind or otherwise exploit the DLL3 protein as a therapeutic target.
• Penterra: Penterra has no products, pipeline candidates, or technology programs targeting DLL3.
• Veridian: VRD-4187 targets DLL3. Veridian's other pipeline candidates (VRD-5201 and VRD-6018) target other antigens.
• Overlap: There is no horizontal overlap between the parties in DLL3-targeted therapeutics.
3.4 Relevant Geographic Markets
For purposes of the HSR Act analysis, the relevant geographic market is the United States. Both Penterra and Veridian are headquartered in the United States, and Penterra's principal commercial operations are conducted within the United States. Veridian's Marlowe Asset Management-2 clinical trial is being conducted at 42 clinical sites across both the United States and the European Union, and Veridian has indicated that it expects to seek regulatory approval for VRD-4187 in the United States and the European Union upon completion of its clinical development program. However, because Veridian has no marketed products in any jurisdiction, geographic market definition does not alter the competitive analysis.
To the extent that the relevant geographic market is defined more broadly to include all countries in which the parties conduct or plan to conduct business (including the European Union), the conclusions regarding the absence of competitive overlap remain unchanged. Penterra's marketed oncology products are commercialized in the United States and certain international markets, but none of these products are used in the treatment of SCLC or constitute T-cell engager therapies, and Veridian has no marketed products in any geography.
3.5 Competitive Overlap Analysis
Conclusion: No meaningful horizontal overlap exists between Penterra and Veridian in any reasonably defined relevant product market or geographic market.
The basis for this conclusion is as follows:
(a) Penterra's existing oncology portfolio is concentrated in breast cancer, prostate cancer, and NSCLC, and consists of chemotherapy agents and targeted therapies. Penterra does not market, develop, or possess any pipeline candidates, technology, or intellectual property relating to bispecific T-cell engagers, DLL3-targeted therapies, or SCLC therapeutics.
(b) Veridian is a clinical-stage company with no marketed products in any therapeutic area, no product revenue, and no commercial infrastructure. Veridian cannot be considered a current competitor to Penterra in any product market because Veridian has no products available for sale or in commercial distribution.
(c) The Transaction is properly characterized as a complementary acquisition in which a commercial-stage pharmaceutical company (Penterra) with established development, regulatory, and commercial capabilities — but a weakened oncology pipeline — is acquiring a clinical-stage biotechnology company (Veridian) with a promising immuno-oncology pipeline and a novel technology platform — but no commercial capabilities. The combination is designed to integrate complementary capabilities rather than to consolidate competing businesses.
(d) The Transaction does not eliminate any current competitive overlap between the parties and does not result in a horizontal combination in any relevant market.
4. Competitive Effects Analysis
4.1 No Horizontal Competitive Concerns
As detailed in Section 3 above, the parties do not compete in any relevant product market. Veridian, as a clinical-stage company with no marketed products and no product revenue, is not a current competitor to Penterra in any therapeutic area. Penterra's twelve marketed products — spanning oncology, immunology, and rare diseases — do not overlap with any product or candidate in Veridian's pipeline. There are no overlapping pipeline candidates at comparable stages of development, and the parties' respective research and development programs are directed at different molecular targets, therapeutic modalities, and disease indications.
The absence of horizontal overlap means that the Transaction will not reduce the number of competitors in any relevant product market, will not eliminate head-to-head competition between the parties, and will not increase Penterra's market share in any relevant market. The Transaction is, in effect, a diversifying acquisition that extends Penterra's presence into a therapeutic modality (bispecific T-cell engagers) and disease indication (SCLC) in which Penterra does not currently participate.
4.2 No Potential Competition Concerns
Penterra and its counsel have considered whether the Transaction could raise concerns under a potential competition theory — i.e., whether the acquisition of Veridian might eliminate a potential future entrant into a market in which Penterra currently participates, or vice versa. We conclude that the potential competition theory does not apply to this Transaction for the following reasons:
(a) Penterra's pipeline does not include any candidates that would compete with Veridian's pipeline. Following the failure of PPC-0921 in November 2023, Penterra's remaining oncology pipeline consists of early-stage candidates in colorectal cancer and melanoma. Penterra does not have any internal programs or pipeline candidates employing bispecific T-cell engager technology, targeting DLL3, or directed at SCLC. There is no basis on which to conclude that Penterra would have independently entered the bispecific T-cell engager or DLL3-targeted SCLC markets absent this Transaction.
(b) Veridian's pipeline does not overlap with Penterra's areas of current commercial activity. Veridian's pipeline candidates are focused on immuno-oncology applications (principally SCLC) in which Penterra does not participate. There is no basis to conclude that Veridian, as a clinical-stage company with limited resources, would have independently entered the breast cancer, prostate cancer, NSCLC, rheumatoid arthritis, psoriatic arthritis, or lysosomal storage disorder markets in which Penterra currently competes.
(c) The bispecific T-cell engager and DLL3-targeted SCLC markets are highly competitive with numerous well-funded participants. Multiple publicly traded and privately held biotechnology and pharmaceutical companies are developing bispecific T-cell engagers, DLL3-targeted therapies, and other immuno-oncology agents for SCLC and related indications. The acquisition of Veridian by Penterra does not eliminate a uniquely positioned future competitor; rather, Veridian is one of several companies pursuing similar scientific approaches, and the Transaction does not meaningfully reduce the number of potential future competitors in any relevant innovation market.
(d) Penterra does not have the internal capabilities to independently develop a T-cell engager program. Penterra's scientific expertise has historically been focused on small molecule and conventional antibody-based therapeutics. Penterra does not possess the specialized bispecific antibody engineering capabilities, proprietary linker and formatting technologies, or T-cell biology expertise that would be required to independently develop a competitive T-cell engager platform. The acquisition of Veridian represents Penterra's most efficient and expedient pathway to entry into this therapeutic space.
4.3 No Vertical Concerns
The Transaction does not raise vertical competitive concerns. Veridian does not supply any input, raw material, component, technology, or service to Penterra or to any of Penterra's competitors. Penterra, in turn, does not control any input, distribution channel, or other bottleneck asset that is required by Veridian or by Veridian's competitors in the bispecific T-cell engager or SCLC therapeutics space. There is no vertical relationship between the parties' respective businesses.
Accordingly, the Transaction does not create any risk of vertical foreclosure — i.e., there is no risk that the combined entity would have the ability or incentive to deny rivals access to critical inputs or to raise rivals' costs through vertical integration. The post-Transaction competitive landscape will be unaffected by any vertical effects.
4.4 Procompetitive Effects
Far from raising competitive concerns, the Transaction is expected to produce significant procompetitive benefits. By combining Veridian's innovative VeriTCE bispecific T-cell engager platform and pipeline with Penterra's established clinical development infrastructure, regulatory expertise, global commercial capabilities, and financial resources, the Transaction is expected to:
(a) Accelerate clinical development. Penterra's experienced clinical operations organization and established relationships with clinical investigators, contract research organizations, and regulatory authorities are expected to accelerate the clinical development of VRD-4187 and Veridian's other pipeline candidates. Penterra's resources may enable the expansion of the Marlowe Asset Management-2 trial to additional clinical sites and patient populations, potentially shortening the path to pivotal data readouts and regulatory submissions.
(b) Enhance the probability of commercialization. Veridian, as a clinical-stage company with limited financial resources and no commercial infrastructure, faces significant uncertainty regarding its ability to independently fund the later stages of clinical development, navigate the regulatory approval process, and establish the sales, marketing, and distribution capabilities necessary to commercialize a product. Penterra's commercial platform eliminates this uncertainty and provides a clear path to market for VRD-4187, if approved.
(c) Benefit patients with SCLC. Patients with extensive-stage small cell lung cancer face a devastating prognosis with limited effective treatment options following initial platinum-based chemotherapy. The acceleration of VRD-4187's development and the increased probability of successful commercialization directly benefits this patient population by potentially making a novel, effective therapy available sooner than would otherwise be possible.
(d) Further innovation in immuno-oncology. The combination of Veridian's VeriTCE platform with Penterra's research and development capabilities creates opportunities for the discovery and development of additional T-cell engager candidates beyond those currently in Veridian's pipeline, potentially expanding the application of this technology to other tumor types and therapeutic indications.
4.5 Market Concentration Analysis
In any reasonably defined relevant product market — whether immuno-oncology therapeutics broadly, bispecific T-cell engagers, SCLC therapeutics, or DLL3-targeted therapeutics — the Transaction does not result in any meaningful increase in market concentration as measured by the Herfindahl-Hirschman Index ("HHI") or any other standard metric.
Bispecific T-Cell Engagers. Veridian has no marketed products and, consequently, holds no market share in any commercial market. Any HHI analysis in the bispecific T-cell engager market would show a delta of zero or de minimis, as Penterra likewise holds no market share in this space. The combination of two entities with zero market share does not alter market concentration.
SCLC Therapeutics. Penterra has no marketed products for SCLC and therefore holds no share of the SCLC therapeutics market. Veridian's VRD-4187 is a clinical-stage candidate with no approved product and no revenue. Accordingly, the Transaction does not result in a horizontal combination in the SCLC market, and the post-Transaction HHI is unchanged from pre-Transaction levels.
Immuno-Oncology Therapeutics (Broad). To the extent that a broad immuno-oncology market is considered, Penterra's current participation is limited to conventional oncology products (chemotherapy agents and targeted therapies) that represent a small fraction of the overall immuno-oncology landscape. Veridian has no marketed products. The Transaction does not result in any meaningful change in market concentration in this broad market.
Under any reasonable market definition, the Transaction does not exceed any concentration thresholds or presumptions identified in the U.S. Department of Justice and Federal Trade Commission Merger Guidelines (2023) that would suggest that the Transaction is likely to substantially lessen competition or tend to create a monopoly.
5. Request for Early Termination
Pursuant to 15 U.S.C. § 18a(b)(1) and 16 C.F.R. § 803.11, Penterra Pharmaceuticals Corp. respectfully requests that the Federal Trade Commission and the Department of Justice grant early termination of the initial 30-day waiting period applicable to this Transaction.
This request is strongly supported by the following considerations:
(a) Absence of competitive overlap. As demonstrated in Sections 3 and 4 above, there is no meaningful horizontal overlap between Penterra and Veridian in any relevant product market or geographic market. The parties do not compete with each other today, and the Transaction does not eliminate any current or potential future competition.
(b) Clinical-stage target. Veridian is a clinical-stage biotechnology company with no marketed products, no product revenue, and no commercial infrastructure. The acquisition of a pre-revenue clinical-stage company by a commercial-stage pharmaceutical company does not raise the competitive concerns typically associated with the combination of two companies with overlapping commercial products.
(c) Complementary combination. The Transaction is a complementary acquisition designed to integrate Penterra's development and commercial capabilities with Veridian's innovative technology platform and pipeline. The combination does not reduce competition in any relevant market.
(d) Conservation of agency resources. Given the absence of competitive issues, early termination of the waiting period would conserve the limited resources of the reviewing agencies and allow them to focus on transactions that present more significant competitive concerns.
(e) Facilitation of patient access. The acceleration of the transaction timeline through early termination would facilitate the timely integration of Veridian's pipeline into Penterra's development organization, potentially advancing the availability of VRD-4187 to patients with SCLC who have limited treatment options.
Penterra is confident that the Transaction raises no competitive concerns warranting extended agency review and respectfully requests that early termination be granted at the earliest practicable date.
PART II
ITEM 4(c) DOCUMENTS
6. Description of Item 4(c) Documents
6.1 Scope of Item 4(c)
Item 4(c) of the HSR Notification and Report Form requires the filing person to produce all documents that were prepared by or for any officer(s) or director(s) of the filing person for the purpose of evaluating or analyzing the proposed acquisition with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets. See 16 C.F.R. § 803.1(b); HSR Form, Item 4(c).
In compliance with this requirement, Penterra has conducted a thorough and diligent search of the files, records, and electronic communications of the following individuals, each of whom is an officer or director of Penterra within the meaning of the HSR Act and the implementing rules:
• Dr. Anand Rajagopal, Chief Executive Officer
• Catherine M. Burgess, Chief Financial Officer
• Thomas F. Holbrook, General Counsel & Corporate Secretary
• Natalie Reiner, Senior Vice President, Corporate Development
• Margaret Liu Whitfield, Chair of the Board of Directors
• All other members of the Penterra Board of Directors
The search was conducted with the assistance of Penterra's legal department and outside counsel. Search terms included, without limitation, "Veridian," "VRD-4187," "VeriTCE," "DLL3," "bispecific," "T-cell engager," "SCLC," "small cell lung cancer," "acquisition," and related variations and abbreviations. The search encompassed email accounts, network file shares, shared drives, collaboration platforms, and physical files of the above-named individuals for the period from January 1, 2024 through the date of this filing.
The documents identified as responsive to Item 4(c) are described below and will be produced in their entirety (subject to applicable privilege claims, as noted in Section 6.3 below).
6.2 Item 4(c) Document Log and Descriptions
The following documents have been identified as responsive to Item 4(c) and will be produced with the filing:
Document 4(c)-1: Penterra Board Presentation — Strategic Rationale for Veridian Acquisition
• Date: February 12, 2024
• Author/Preparer: Natalie Reiner, SVP Corporate Development, and the Penterra Corporate Development team
• Recipient(s): Penterra Board of Directors
• Description: A 47-slide presentation prepared by Penterra's Corporate Development team and delivered to the Penterra Board of Directors at a special meeting held on February 12, 2024. The presentation analyzes the strategic fit of the potential Veridian acquisition in the context of Penterra's immuno-oncology pipeline gap following the Phase III futility analysis of PPC-0921 in November 2023. The presentation includes: (i) an overview of the immuno-oncology competitive landscape, including identification of key competitors and pipeline programs in the bispecific T-cell engager space; (ii) an assessment of Veridian's competitive positioning, including the scientific rationale and clinical differentiation of VRD-4187; (iii) a discussion of the DLL3-targeted therapy competitive landscape, identifying other companies with DLL3-targeted programs; (iv) an analysis of the SCLC market opportunity, including epidemiology data, unmet medical need, and market size projections; (v) an overview of Veridian's VeriTCE platform and full pipeline; and (vi) a preliminary assessment of strategic alternatives, including in-licensing, collaboration, and other M&A targets. This document addresses competition, competitors, markets, and expansion into product markets and is therefore responsive to Item 4(c).
• Bates Range: PPCA-VRD-00001 through PPCA-VRD-00047
Document 4(c)-2: Garrison Zanthor & Co. Preliminary Valuation Analysis
• Date: February 2024 (undated; estimated February 18–22, 2024)
• Author/Preparer: Garrison Zanthor & Co., LLC (Kevin Driscoll, Managing Director)
• Recipient(s): Natalie Reiner, SVP Corporate Development; Catherine M. Burgess, CFO
• Description: Preliminary valuation materials prepared by Penterra's financial advisor, Garrison Zanthor & Co., for the Penterra management team. The materials include: (i) a comparable transactions analysis surveying recent M&A transactions in the immuno-oncology and clinical-stage biotechnology sectors; (ii) a risk-adjusted net present value ("rNPV") analysis of VRD-4187, including probability-of-success assumptions by clinical stage and peak sales estimates; (iii) a preliminary pipeline valuation for VRD-5201 and VRD-6018; (iv) an indicative enterprise valuation range for Veridian; and (v) selected comparable company data. To the extent these materials reference competition, competitors, or market positioning, they are responsive to Item 4(c). In addition, these materials are responsive to Item 4(d) as materials prepared by an investment banker (see Section 7.2 below).
• Bates Range: PPCA-VRD-00048 through PPCA-VRD-00089
Document 4(c)-3: Penterra Corporate Development — Immuno-Oncology Landscape Assessment
• Date: January–February 2024 (iterative drafts; final version dated February 8, 2024)
• Author/Preparer: Natalie Reiner, SVP Corporate Development, and the Penterra Corporate Development team
• Recipient(s): Dr. Anand Rajagopal, CEO; Thomas F. Holbrook, General Counsel
• Description: An internal Penterra analysis of the immuno-oncology competitive landscape prepared in the wake of the PPC-0921 futility analysis. The analysis identifies potential acquisition targets and strategic alternatives for rebuilding Penterra's immuno-oncology pipeline, including Veridian and several other companies (identified by code name). The assessment includes: (i) a comparative analysis of the competitive positioning and clinical data profiles of multiple T-cell engager programs in development by third parties; (ii) an evaluation of the relative strengths and weaknesses of each potential acquisition target; (iii) a market opportunity analysis for key immuno-oncology indications, including SCLC, acute myeloid leukemia, and diffuse large B-cell lymphoma; and (iv) a qualitative assessment of the probability of competitive success for each target's pipeline. This document directly addresses competition, competitors, markets, and potential for expansion into product markets and is responsive to Item 4(c).
• Bates Range: PPCA-VRD-00090 through PPCA-VRD-00128
Document 4(c)-4: Penterra Board Minutes — Authorization to Explore Veridian Acquisition
• Date: February 12, 2024
• Author/Preparer: Thomas F. Holbrook, General Counsel & Corporate Secretary
• Recipient(s): Penterra Board of Directors (board book distribution)
• Description: Excerpt of the official minutes of the special meeting of the Penterra Board of Directors held on February 12, 2024, at which the Board discussed and considered the strategic rationale for the potential acquisition of Veridian. The minutes reflect the Board's discussion of the immuno-oncology competitive landscape, the strategic fit of Veridian's pipeline, the anticipated impact of the acquisition on Penterra's competitive positioning, and the Board's resolution authorizing management to explore and pursue the acquisition, including engagement of financial and legal advisors and commencement of due diligence. To the extent the minutes reflect discussion of competition, competitors, or markets, the relevant excerpts are responsive to Item 4(c).
• Bates Range: PPCA-VRD-00129 through PPCA-VRD-00137