1018-00008 · Penterra Pharmaceuticals Corp · Regulatory

hsr-early-termination-memo.docx DOCUMENT M&A / Corporate

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PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 200 Park Avenue, 42nd Floor New York, New York 10166

INTERNAL MEMORANDUM

This memorandum is a privileged and confidential attorney work product prepared by Calderwood & Harkness LLP in connection with the representation of Penterra Pharmaceuticals Corp. This memorandum is protected by the attorney-client privilege and the work product doctrine and is intended solely for the use of the individuals identified above and such other authorized recipients as may be designated by Penterra Pharmaceuticals Corp. Do not distribute, copy, or disclose this memorandum without the prior written consent of Calderwood & Harkness LLP.

I. Purpose and Executive Summary

The purpose of this memorandum is to confirm that the Federal Trade Commission (the "FTC") granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), 15 U.S.C. § 18a, with respect to the proposed acquisition by Penterra Pharmaceuticals Corp., a Delaware corporation ("Penterra" or "PPC"), of one hundred percent (100%) of the outstanding capital stock of Veridian Biosciences, Inc., a Delaware corporation ("Veridian"), for an aggregate purchase price of Nine Hundred Million Dollars ($900,000,000) in cash (the "Transaction"). Early termination was granted on May 20, 2024, approximately twenty-eight (28) days after the initial filing date of April 22, 2024, and prior to the expiration of the initial thirty (30)-day statutory waiting period.

As a consequence of the FTC's grant of early termination, the antitrust condition to closing under the definitive Stock Purchase Agreement (currently under negotiation between the parties, with execution anticipated in June 2024) (the "SPA") has been effectively cleared. The HSR Act waiting period will not serve as a barrier to the consummation of the Transaction, and the parties are free to close at any time following satisfaction or waiver of the remaining conditions precedent set forth in the SPA, once executed.

The HSR filing was coordinated between Calderwood & Harkness LLP, as lead transaction counsel to Penterra, and Stonebridge HSW Antitrust Advisors LLP ("Stonebridge HSW") (Martin Prumvane, Partner), which served as antitrust counsel to Penterra in connection with the preparation, submission, and prosecution of the pre-merger notification filings. This memorandum summarizes the filing history, the significance of the early termination grant, and the implications for the Transaction timeline and closing conditions.

II. Background

A. Transaction Overview

Penterra Pharmaceuticals Corp. is a Delaware corporation publicly traded on the Nasdaq Global Select Market under the ticker symbol "PPCA." Penterra is headquartered at 1100 Meridian Boulevard, Suite 400, Princeton, New Jersey 08540. Penterra is a diversified specialty pharmaceutical company with a primary focus on oncology, immunology, and rare disease therapeutics. For the fiscal year ended December 31, 2023, Penterra reported consolidated revenue of approximately $4.87 billion and, as of the anticipated signing date in June 2024, had an approximate market capitalization of $14.2 billion.

Penterra proposes to acquire one hundred percent (100%) of the outstanding capital stock of Veridian Biosciences, Inc., a Delaware corporation and privately held clinical-stage biotechnology company headquartered at 550 Gateway Drive, Cambridge, Massachusetts 02142 (the "Acquisition"). The aggregate purchase price for the Acquisition is $900,000,000 in cash, subject to customary adjustments as will be set forth in the definitive SPA.

Veridian is a clinical-stage biopharmaceutical company focused on the development of next-generation immuno-oncology therapeutics. Veridian's lead product candidate is VRD-4187, a bispecific T-cell engager ("BiTE") targeting delta-like ligand 3 ("DLL3")-expressing tumors, with a principal indication in small cell lung cancer ("SCLC"). VRD-4187 leverages Veridian's proprietary VeriTCE (Veridian T-Cell Engager) platform, a modular antibody engineering technology designed to optimize half-life extension and reduce cytokine release syndrome ("CRS") risk. As a clinical-stage company, Veridian has not generated any product revenue to date. For the fiscal year ended December 31, 2023, Veridian reported revenue of $0 and a net loss of approximately $87.3 million, funded principally through venture capital financing.

The strategic rationale for the Acquisition is driven by Penterra's objective to bolster its immuno-oncology pipeline, which suffered a significant setback following the Phase III futility analysis of PPC-0921, Penterra's internally developed anti-PD-L1/TIGIT bispecific antibody, announced in November 2023. Veridian's VRD-4187 program, which is currently in Phase I/II clinical trials, represents a differentiated mechanism of action and addresses a patient population with limited therapeutic options, making it a compelling strategic fit for Penterra's oncology portfolio.

B. HSR Filing History

The following is a chronological summary of the key events relating to the HSR Act filing process:

1. February 12, 2024. The Board of Directors of Penterra Pharmaceuticals Corp. authorized the exploration of a potential acquisition of Veridian Biosciences, Inc. at a meeting of the Board held on this date. The Board directed management and external advisors to conduct due diligence and prepare a recommendation regarding the strategic merits and financial terms of a potential acquisition.

2. February 14, 2024. Calderwood & Harkness LLP was formally engaged as lead transaction counsel to Penterra in connection with the proposed Acquisition. Simultaneously, Garrison Zanthor & Co. ("Garrison Zanthor"), a registered broker-dealer and investment banking firm, was engaged as financial advisor to Penterra. The engagement was led by Kevin Driscoll, Managing Director, Garrison Zanthor.

3. February 14, 2024 – April 2024. Calderwood & Harkness LLP, working with Garrison Zanthor and Penterra's in-house legal and corporate development teams, conducted extensive business, financial, legal, and regulatory due diligence with respect to Veridian and the proposed Transaction. During this period, Stonebridge HSW Antitrust Advisors LLP ("Stonebridge HSW") was retained as antitrust counsel to Penterra. Stonebridge HSW is a specialized antitrust and competition law firm located at 1440 New York Avenue NW, Suite 700, Washington, DC 20005. The Stonebridge HSW engagement was led by Martin Prumvane, Partner.

4. April 10, 2024. Stonebridge HSW and Calderwood & Harkness jointly prepared and circulated an Antitrust Risk Assessment Memorandum (the "Antitrust Risk Assessment") analyzing the competitive implications of the proposed Transaction. The Antitrust Risk Assessment concluded that the Transaction presented low antitrust risk based on the following principal factors:

(a) Veridian is a clinical-stage company with no approved products and no current product revenue, and accordingly does not compete with Penterra (or any other company) in any relevant product market at this time;

(b) While both Penterra and Veridian are active in the broader immuno-oncology therapeutic area, VRD-4187 targets a distinct biological pathway (DLL3-directed T-cell engagement) from Penterra's existing portfolio and pipeline candidates, and the competitive overlap is minimal;

(c) The SCLC treatment landscape, while concentrated, features multiple competitors at various stages of clinical development with DLL3-targeting programs, including large-cap pharmaceutical companies, such that the Transaction does not meaningfully reduce the number of potential competitors in the relevant pipeline market; and

(d) Veridian does not manufacture or distribute any commercial products, and accordingly the Transaction does not raise vertical integration or supply chain foreclosure concerns.

5. April 22, 2024. HSR Act pre-merger notification forms were prepared by Stonebridge HSW, with coordination and input from Calderwood & Harkness, and submitted to the Premerger Notification Office of the FTC and the Antitrust Division of the Department of Justice (the "DOJ"). The filing included all required information and exhibits, including the notification form, the draft narrative statement describing the Transaction, and all responsive Item 4(c) and Item 4(d) documents (consisting of documents relating to the competitive analysis of the Transaction prepared by or for officers and directors of Penterra and Veridian). A filing fee of $280,500 was paid in connection with the submission, calculated based on the aggregate transaction value of $900,000,000 and the applicable filing fee tier under the 2024 HSR filing fee schedule, as revised pursuant to the Merger Filing Fee Modernization Act of 2022 and the FTC's inflation-adjusted fee schedule effective as of February 2024.

6. April 22, 2024. The initial thirty (30)-day statutory waiting period under Section 7A(b)(1)(B) of the Clayton Act, 15 U.S.C. § 18a(b)(1)(B), commenced upon the filing of the notification forms.

7. April 22, 2024 – May 20, 2024. During the pendency of the initial waiting period, neither the FTC nor the DOJ issued a request for additional information or documentary material (a "Second Request") pursuant to Section 7A(e) of the Clayton Act. Stonebridge HSW monitored the status of the filing throughout this period and maintained contact with the Premerger Notification Office as appropriate.

III. Early Termination Grant

A. FTC Action

On May 20, 2024, the FTC granted early termination of the HSR Act waiting period applicable to the proposed Transaction. The early termination was publicly posted on the FTC's Early Termination Notices page on the FTC's website, under Transaction No. 20241834 (to be confirmed and updated in the final version of this memorandum upon verification with the FTC's published records).

The early termination was granted approximately twenty-eight (28) days after the filing date of April 22, 2024, and two (2) days prior to the scheduled expiration of the initial thirty (30)-day statutory waiting period on May 22, 2024. This timing is consistent with typical FTC processing timelines for transactions that do not raise significant competitive concerns.

Importantly, no Second Request for additional information or documentary material was issued by either the FTC or the DOJ at any point during the waiting period. No conditions, commitments, consent decrees, or other remedial measures were required by either agency as a condition to the grant of early termination.

B. Significance. The grant of early termination of the HSR Act waiting period carries the following legal and practical significance:

First, early termination confirms that the federal antitrust agencies have concluded their initial review of the Transaction under the HSR Act and have determined not to take further enforcement action at this time with respect to the proposed Acquisition. The parties are now free to consummate the Transaction without the HSR waiting period serving as a legal impediment.

Second, it should be noted that the grant of early termination is not an affirmative approval or endorsement of the Transaction by the FTC or the DOJ. The HSR Act clearance process is a notification mechanism, and the agencies' decision not to challenge a transaction during the waiting period does not constitute a determination that the transaction does not violate the antitrust laws. The agencies retain the legal authority to investigate and challenge the Transaction at any time following the expiration or termination of the waiting period, including post-consummation, under Section 7 of the Clayton Act, Section 1 or Section 2 of the Sherman Act, or Section 5 of the FTC Act.

Third, as a practical matter, however, post-clearance antitrust challenges to transactions that have passed through the HSR Act review process without a Second Request are extremely rare, and we are not aware of any precedent in which the FTC or DOJ has challenged a pharmaceutical acquisition following the grant of early termination where no Second Request was issued. In light of the low-risk assessment set forth in the April 10, 2024 Antitrust Risk Assessment Memorandum and the favorable outcome of the HSR review process, we consider the antitrust risk associated with the Transaction to be effectively resolved for all purposes of proceeding to the signing and closing of the definitive SPA.

IV. Satisfaction of Antitrust Closing Condition

A. Relevant SPA Provisions

The draft Stock Purchase Agreement, which is currently being negotiated between Calderwood & Harkness LLP (on behalf of Penterra) and Zalcourt Archer & Cole LLP (on behalf of Veridian and its stockholders; Rebecca Whitmore, Partner), includes customary mutual conditions to closing in what is expected to be Section 7.1 (Mutual Conditions to Closing) of the executed agreement. Among these mutual conditions, the current drafts provide that the obligations of the parties to consummate the Transaction shall be subject to the satisfaction or waiver of each of the following conditions:

(a) HSR Waiting Period. All applicable waiting periods (and any extensions thereof) under the HSR Act with respect to the transactions contemplated by the Agreement shall have expired or been terminated. This condition is now satisfied as a result of the FTC's grant of early termination on May 20, 2024.

(b) No Governmental Restraints. No governmental order, injunction, judgment, decree, or other legal restraint issued by any court of competent jurisdiction or governmental authority of competent jurisdiction shall be in effect that prohibits, restrains, enjoins, or makes illegal the consummation of the transactions contemplated by the Agreement. As of the date of this memorandum, no such order, injunction, or decree has been issued or threatened, and we are not aware of any pending or threatened governmental action that would give rise to such a restraint.

With the FTC's grant of early termination, the HSR waiting period condition set forth in clause (a) above is now fully satisfied. The condition set forth in clause (b) above remains subject to ongoing monitoring through the closing date, but there is no current indication that any governmental restraint is or will be forthcoming.

B. Remaining Regulatory Considerations

We have reviewed the regulatory profile of the Transaction and confirm the following:

Foreign Competition Law Filings. No additional antitrust or competition law filings are required in any jurisdiction outside the United States in connection with the Transaction. Specifically, the Transaction does not trigger the notification thresholds under the European Union Merger Regulation (Council Regulation (EC) No. 139/2004, the "EUMR"), as neither Penterra nor Veridian meets the Community-wide turnover thresholds applicable under the EUMR. Similarly, the Transaction does not trigger mandatory pre-merger notification requirements in any other jurisdiction based on our review of the revenue and asset profiles of the parties and the applicable jurisdictional thresholds. Stonebridge HSW has concurred with this analysis.

Industry-Specific Regulatory Approvals. No industry-specific regulatory approvals, including approvals from the U.S. Food and Drug Administration (the "FDA"), are required as a condition to closing the Transaction. The FDA does not require prior approval for a change of control of a company holding an Investigational New Drug Application ("IND"). Veridian currently holds IND No. 154832 for VRD-4187, and the clinical trial of VRD-4187 is registered on ClinicalTrials.gov under identifier NCT05837291. Following the closing of the Transaction, Penterra will be required to notify the FDA of the change in sponsorship of the IND and update the IND accordingly. These matters are expected to be addressed through operating covenants and transition provisions in the SPA and ancillary transaction documents, and are not conditions to closing.

In summary, the HSR Act clearance milestone is now complete. No additional regulatory approvals or waiting periods must be satisfied prior to the consummation of the Transaction. The parties may proceed to execute the definitive Stock Purchase Agreement following resolution of the remaining open negotiation points, which we currently anticipate will be resolved in early June 2024.

V. Coordination with Transaction Timeline

The grant of early termination of the HSR Act waiting period is a significant milestone in the overall Transaction timeline and removes one of the principal conditions precedent that could have delayed the signing and closing of the SPA. Set forth below is a summary of the key upcoming dates and milestones in the Transaction process:

The early termination of the HSR waiting period is particularly significant in the context of the financing timeline, as it provides assurance to the commitment letter parties (Summit Ridge Capital Partners, LP and Ironclad Trust Company, N.A.) that the principal regulatory condition to the Transaction has been resolved. This should facilitate the finalization of the commitment letter on the contemplated timeline. The removal of the HSR Act condition also de-risks the overall Transaction timeline and provides greater certainty to all parties and their respective advisors as the parties move toward execution and closing.

VI. Action Items

Based on the foregoing, we recommend the following action items be completed promptly:

1. Notify Penterra In-House Team. Confirm that Thomas F. Holbrook, General Counsel of Penterra, and Natalie Reiner, Senior Vice President, Corporate Development, have been notified of the FTC's grant of early termination of the HSR waiting period. We understand that an initial communication was made on May 20, 2024, and request confirmation that this notification has been completed.

2. Confirm with Stonebridge HSW. Coordinate with Martin Prumvane at Stonebridge HSW Antitrust Advisors LLP to confirm that no further antitrust filings, notifications, or other regulatory actions are required in connection with the Transaction, in any jurisdiction, and that Stonebridge HSW considers the antitrust clearance process to be concluded.

3. File FTC Early Termination Notice. Obtain and file a copy of the FTC's early termination notice (including the published Transaction Number) in the transaction closing binder maintained by Calderwood & Harkness LLP. This document will serve as evidence of the satisfaction of the HSR Act condition for purposes of the closing deliverables under the SPA.

4. Update Pre-Closing Conditions Checklist. Update the pre-closing conditions checklist (maintained by the Calderwood & Harkness deal team) to reflect the satisfaction of the HSR waiting period condition. Mark the condition as satisfied with reference to the early termination date of May 20, 2024, and the applicable Transaction Number.

5. Proceed with SPA Finalization. Continue with the finalization and negotiation of the definitive Stock Purchase Agreement and all ancillary transaction documents, including the disclosure schedules, employment and non-competition agreements, escrow agreement, transition services agreement, and other ancillary documents, with a view to executing the SPA on or about June 10, 2024.

VII. Conclusion

The HSR Act antitrust condition applicable to the proposed acquisition by Penterra Pharmaceuticals Corp. of one hundred percent (100%) of the outstanding capital stock of Veridian Biosciences, Inc. has been satisfied by virtue of the FTC's grant of early termination of the HSR Act waiting period on May 20, 2024. No Second Request was issued during the initial waiting period, and no conditions, commitments, consent decrees, or other remedial measures were imposed by either the FTC or the DOJ. The early termination grant is consistent with the low-risk assessment set forth in the Antitrust Risk Assessment Memorandum dated April 10, 2024, jointly prepared by Stonebridge HSW and Calderwood & Harkness.

We recommend that the Transaction team proceed to the execution of the definitive Stock Purchase Agreement on the currently contemplated timeline, targeting an execution date on or about June 10, 2024, and that the action items set forth in Section VI above be completed promptly.

Should you have any questions regarding this memorandum or the matters discussed herein, please do not hesitate to contact us.

Megan Chu, Associate, Mergers & Acquisitions — Calderwood & Harkness LLP Telephone: (212) 558-4200	Email: mchu@calderwoodharkness.com
Derek Okonkwo, Associate, Mergers & Acquisitions — Calderwood & Harkness LLP Telephone: (212) 558-4215	Email: dokonkwo@calderwoodharkness.com
Martin Prumvane, Partner — Stonebridge HSW Antitrust Advisors LLP Telephone: (202) 661-7300	Email: mhaldane@stonebridgehsw.com

Distribution: This memorandum is being distributed solely to the Calderwood & Harkness LLP deal team and authorized Penterra in-house counsel. Any further distribution requires the prior written consent of Calderwood & Harkness LLP.

cc: Leonard Cross, Partner, Tax — Calderwood & Harkness LLP (for file)

Matter No.: 1018-00008

Matter No.:	1018-00008
Date:	May 21, 2024
To:	Oliver Mackenzie, Partner, Mergers & Acquisitions

Harrison Wexford, Partner, Mergers & Acquisitions

From:

Derek Okonkwo, Associate, Mergers & Acquisitions

Re:	Penterra Pharmaceuticals Corp. — Proposed Acquisition of Veridian Biosciences, Inc. / HSR Act Early Termination Granted
Date (On or About)	Milestone
June 7, 2024	Execution of the financing commitment letter from Summit Ridge Capital Partners, LP and Ironclad Trust Company, N.A. for a $500,000,000 senior secured term loan facility to fund a portion of the cash purchase price (Ref. CL-2024-PPCA-0607)
June 9, 2024	Delivery of the fairness opinion from Garrison Zanthor & Co. to the Penterra Board of Directors, opining as to the fairness, from a financial point of view, of the aggregate purchase price to be paid by Penterra in the Transaction
June 10, 2024	Targeted execution date for the definitive Stock Purchase Agreement and ancillary transaction documents
Promptly following SPA execution	Binding of the representations and warranties insurance policy issued by Atlas Indemnity Insurance Co. (Policy No. AIC-RWI-2024-07892), brokered by Prescott Whitfield Insurance Brokers, Inc.
Promptly following SPA execution	Solicitation of written consent of Veridian stockholders in accordance with the applicable provisions of the Delaware General Corporation Law and Veridian's certificate of incorporation and bylaws. Crestline Ventures, LP (holding approximately 28.3% of Veridian's outstanding capital stock), Boreal Health Partners Fund III, LP (holding approximately 19.7%), and Apex Growth Equity Fund II, LP (holding approximately 14.1%) collectively hold in excess of 62% of the outstanding capital stock of Veridian and are expected to deliver their written consents promptly following signing, which, when combined with any additional consents obtained, would satisfy the stockholder approval threshold required under the SPA and applicable law

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 200 Park Avenue, 42nd Floor New York, New York 10166
INTERNAL MEMORANDUM
This memorandum is a privileged and confidential attorney work product prepared by Calderwood & Harkness LLP in connection with the representation of Penterra Pharmaceuticals Corp. This memorandum is protected by the attorney-client privilege and the work product doctrine and is intended solely for the use of the individuals identified above and such other authorized recipients as may be designated by Penterra Pharmaceuticals Corp. Do not distribute, copy, or disclose this memorandum without the prior written consent of Calderwood & Harkness LLP.
I. Purpose and Executive Summary
The purpose of this memorandum is to confirm that the Federal Trade Commission (the "FTC") granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), 15 U.S.C. § 18a, with respect to the proposed acquisition by Penterra Pharmaceuticals Corp., a Delaware corporation ("Penterra" or "PPC"), of one hundred percent (100%) of the outstanding capital stock of Veridian Biosciences, Inc., a Delaware corporation ("Veridian"), for an aggregate purchase price of Nine Hundred Million Dollars ($900,000,000) in cash (the "Transaction"). Early termination was granted on May 20, 2024, approximately twenty-eight (28) days after the initial filing date of April 22, 2024, and prior to the expiration of the initial thirty (30)-day statutory waiting period.
As a consequence of the FTC's grant of early termination, the antitrust condition to closing under the definitive Stock Purchase Agreement (currently under negotiation between the parties, with execution anticipated in June 2024) (the "SPA") has been effectively cleared. The HSR Act waiting period will not serve as a barrier to the consummation of the Transaction, and the parties are free to close at any time following satisfaction or waiver of the remaining conditions precedent set forth in the SPA, once executed.
The HSR filing was coordinated between Calderwood & Harkness LLP, as lead transaction counsel to Penterra, and Stonebridge HSW Antitrust Advisors LLP ("Stonebridge HSW") (Martin Prumvane, Partner), which served as antitrust counsel to Penterra in connection with the preparation, submission, and prosecution of the pre-merger notification filings. This memorandum summarizes the filing history, the significance of the early termination grant, and the implications for the Transaction timeline and closing conditions.
II. Background
A. Transaction Overview
Penterra Pharmaceuticals Corp. is a Delaware corporation publicly traded on the Nasdaq Global Select Market under the ticker symbol "PPCA." Penterra is headquartered at 1100 Meridian Boulevard, Suite 400, Princeton, New Jersey 08540. Penterra is a diversified specialty pharmaceutical company with a primary focus on oncology, immunology, and rare disease therapeutics. For the fiscal year ended December 31, 2023, Penterra reported consolidated revenue of approximately $4.87 billion and, as of the anticipated signing date in June 2024, had an approximate market capitalization of $14.2 billion.
Penterra proposes to acquire one hundred percent (100%) of the outstanding capital stock of Veridian Biosciences, Inc., a Delaware corporation and privately held clinical-stage biotechnology company headquartered at 550 Gateway Drive, Cambridge, Massachusetts 02142 (the "Acquisition"). The aggregate purchase price for the Acquisition is $900,000,000 in cash, subject to customary adjustments as will be set forth in the definitive SPA.
Veridian is a clinical-stage biopharmaceutical company focused on the development of next-generation immuno-oncology therapeutics. Veridian's lead product candidate is VRD-4187, a bispecific T-cell engager ("BiTE") targeting delta-like ligand 3 ("DLL3")-expressing tumors, with a principal indication in small cell lung cancer ("SCLC"). VRD-4187 leverages Veridian's proprietary VeriTCE (Veridian T-Cell Engager) platform, a modular antibody engineering technology designed to optimize half-life extension and reduce cytokine release syndrome ("CRS") risk. As a clinical-stage company, Veridian has not generated any product revenue to date. For the fiscal year ended December 31, 2023, Veridian reported revenue of $0 and a net loss of approximately $87.3 million, funded principally through venture capital financing.
The strategic rationale for the Acquisition is driven by Penterra's objective to bolster its immuno-oncology pipeline, which suffered a significant setback following the Phase III futility analysis of PPC-0921, Penterra's internally developed anti-PD-L1/TIGIT bispecific antibody, announced in November 2023. Veridian's VRD-4187 program, which is currently in Phase I/II clinical trials, represents a differentiated mechanism of action and addresses a patient population with limited therapeutic options, making it a compelling strategic fit for Penterra's oncology portfolio.
B. HSR Filing History
The following is a chronological summary of the key events relating to the HSR Act filing process:
1.  February 12, 2024. The Board of Directors of Penterra Pharmaceuticals Corp. authorized the exploration of a potential acquisition of Veridian Biosciences, Inc. at a meeting of the Board held on this date. The Board directed management and external advisors to conduct due diligence and prepare a recommendation regarding the strategic merits and financial terms of a potential acquisition.
2.  February 14, 2024. Calderwood & Harkness LLP was formally engaged as lead transaction counsel to Penterra in connection with the proposed Acquisition. Simultaneously, Garrison Zanthor & Co. ("Garrison Zanthor"), a registered broker-dealer and investment banking firm, was engaged as financial advisor to Penterra. The engagement was led by Kevin Driscoll, Managing Director, Garrison Zanthor.
3.  February 14, 2024 – April 2024. Calderwood & Harkness LLP, working with Garrison Zanthor and Penterra's in-house legal and corporate development teams, conducted extensive business, financial, legal, and regulatory due diligence with respect to Veridian and the proposed Transaction. During this period, Stonebridge HSW Antitrust Advisors LLP ("Stonebridge HSW") was retained as antitrust counsel to Penterra. Stonebridge HSW is a specialized antitrust and competition law firm located at 1440 New York Avenue NW, Suite 700, Washington, DC 20005. The Stonebridge HSW engagement was led by Martin Prumvane, Partner.
4.  April 10, 2024. Stonebridge HSW and Calderwood & Harkness jointly prepared and circulated an Antitrust Risk Assessment Memorandum (the "Antitrust Risk Assessment") analyzing the competitive implications of the proposed Transaction. The Antitrust Risk Assessment concluded that the Transaction presented low antitrust risk based on the following principal factors:
(a) Veridian is a clinical-stage company with no approved products and no current product revenue, and accordingly does not compete with Penterra (or any other company) in any relevant product market at this time;
(b) While both Penterra and Veridian are active in the broader immuno-oncology therapeutic area, VRD-4187 targets a distinct biological pathway (DLL3-directed T-cell engagement) from Penterra's existing portfolio and pipeline candidates, and the competitive overlap is minimal;
(c) The SCLC treatment landscape, while concentrated, features multiple competitors at various stages of clinical development with DLL3-targeting programs, including large-cap pharmaceutical companies, such that the Transaction does not meaningfully reduce the number of potential competitors in the relevant pipeline market; and
(d) Veridian does not manufacture or distribute any commercial products, and accordingly the Transaction does not raise vertical integration or supply chain foreclosure concerns.
5.  April 22, 2024. HSR Act pre-merger notification forms were prepared by Stonebridge HSW, with coordination and input from Calderwood & Harkness, and submitted to the Premerger Notification Office of the FTC and the Antitrust Division of the Department of Justice (the "DOJ"). The filing included all required information and exhibits, including the notification form, the draft narrative statement describing the Transaction, and all responsive Item 4(c) and Item 4(d) documents (consisting of documents relating to the competitive analysis of the Transaction prepared by or for officers and directors of Penterra and Veridian). A filing fee of $280,500 was paid in connection with the submission, calculated based on the aggregate transaction value of $900,000,000 and the applicable filing fee tier under the 2024 HSR filing fee schedule, as revised pursuant to the Merger Filing Fee Modernization Act of 2022 and the FTC's inflation-adjusted fee schedule effective as of February 2024.
6.  April 22, 2024. The initial thirty (30)-day statutory waiting period under Section 7A(b)(1)(B) of the Clayton Act, 15 U.S.C. § 18a(b)(1)(B), commenced upon the filing of the notification forms.
7.  April 22, 2024 – May 20, 2024. During the pendency of the initial waiting period, neither the FTC nor the DOJ issued a request for additional information or documentary material (a "Second Request") pursuant to Section 7A(e) of the Clayton Act. Stonebridge HSW monitored the status of the filing throughout this period and maintained contact with the Premerger Notification Office as appropriate.
III. Early Termination Grant
A. FTC Action
On May 20, 2024, the FTC granted early termination of the HSR Act waiting period applicable to the proposed Transaction. The early termination was publicly posted on the FTC's Early Termination Notices page on the FTC's website, under Transaction No. 20241834 (to be confirmed and updated in the final version of this memorandum upon verification with the FTC's published records).
The early termination was granted approximately twenty-eight (28) days after the filing date of April 22, 2024, and two (2) days prior to the scheduled expiration of the initial thirty (30)-day statutory waiting period on May 22, 2024. This timing is consistent with typical FTC processing timelines for transactions that do not raise significant competitive concerns.
Importantly, no Second Request for additional information or documentary material was issued by either the FTC or the DOJ at any point during the waiting period. No conditions, commitments, consent decrees, or other remedial measures were required by either agency as a condition to the grant of early termination.
B. Significance.  The grant of early termination of the HSR Act waiting period carries the following legal and practical significance:
First, early termination confirms that the federal antitrust agencies have concluded their initial review of the Transaction under the HSR Act and have determined not to take further enforcement action at this time with respect to the proposed Acquisition. The parties are now free to consummate the Transaction without the HSR waiting period serving as a legal impediment.
Second, it should be noted that the grant of early termination is not an affirmative approval or endorsement of the Transaction by the FTC or the DOJ. The HSR Act clearance process is a notification mechanism, and the agencies' decision not to challenge a transaction during the waiting period does not constitute a determination that the transaction does not violate the antitrust laws. The agencies retain the legal authority to investigate and challenge the Transaction at any time following the expiration or termination of the waiting period, including post-consummation, under Section 7 of the Clayton Act, Section 1 or Section 2 of the Sherman Act, or Section 5 of the FTC Act.
Third, as a practical matter, however, post-clearance antitrust challenges to transactions that have passed through the HSR Act review process without a Second Request are extremely rare, and we are not aware of any precedent in which the FTC or DOJ has challenged a pharmaceutical acquisition following the grant of early termination where no Second Request was issued. In light of the low-risk assessment set forth in the April 10, 2024 Antitrust Risk Assessment Memorandum and the favorable outcome of the HSR review process, we consider the antitrust risk associated with the Transaction to be effectively resolved for all purposes of proceeding to the signing and closing of the definitive SPA.
IV. Satisfaction of Antitrust Closing Condition
A. Relevant SPA Provisions
The draft Stock Purchase Agreement, which is currently being negotiated between Calderwood & Harkness LLP (on behalf of Penterra) and Zalcourt Archer & Cole LLP (on behalf of Veridian and its stockholders; Rebecca Whitmore, Partner), includes customary mutual conditions to closing in what is expected to be Section 7.1 (Mutual Conditions to Closing) of the executed agreement. Among these mutual conditions, the current drafts provide that the obligations of the parties to consummate the Transaction shall be subject to the satisfaction or waiver of each of the following conditions:
(a) HSR Waiting Period. All applicable waiting periods (and any extensions thereof) under the HSR Act with respect to the transactions contemplated by the Agreement shall have expired or been terminated. This condition is now satisfied as a result of the FTC's grant of early termination on May 20, 2024.
(b) No Governmental Restraints. No governmental order, injunction, judgment, decree, or other legal restraint issued by any court of competent jurisdiction or governmental authority of competent jurisdiction shall be in effect that prohibits, restrains, enjoins, or makes illegal the consummation of the transactions contemplated by the Agreement. As of the date of this memorandum, no such order, injunction, or decree has been issued or threatened, and we are not aware of any pending or threatened governmental action that would give rise to such a restraint.
With the FTC's grant of early termination, the HSR waiting period condition set forth in clause (a) above is now fully satisfied. The condition set forth in clause (b) above remains subject to ongoing monitoring through the closing date, but there is no current indication that any governmental restraint is or will be forthcoming.
B. Remaining Regulatory Considerations
We have reviewed the regulatory profile of the Transaction and confirm the following:
Foreign Competition Law Filings. No additional antitrust or competition law filings are required in any jurisdiction outside the United States in connection with the Transaction. Specifically, the Transaction does not trigger the notification thresholds under the European Union Merger Regulation (Council Regulation (EC) No. 139/2004, the "EUMR"), as neither Penterra nor Veridian meets the Community-wide turnover thresholds applicable under the EUMR. Similarly, the Transaction does not trigger mandatory pre-merger notification requirements in any other jurisdiction based on our review of the revenue and asset profiles of the parties and the applicable jurisdictional thresholds. Stonebridge HSW has concurred with this analysis.
Industry-Specific Regulatory Approvals. No industry-specific regulatory approvals, including approvals from the U.S. Food and Drug Administration (the "FDA"), are required as a condition to closing the Transaction. The FDA does not require prior approval for a change of control of a company holding an Investigational New Drug Application ("IND"). Veridian currently holds IND No. 154832 for VRD-4187, and the clinical trial of VRD-4187 is registered on ClinicalTrials.gov under identifier NCT05837291. Following the closing of the Transaction, Penterra will be required to notify the FDA of the change in sponsorship of the IND and update the IND accordingly. These matters are expected to be addressed through operating covenants and transition provisions in the SPA and ancillary transaction documents, and are not conditions to closing.
In summary, the HSR Act clearance milestone is now complete. No additional regulatory approvals or waiting periods must be satisfied prior to the consummation of the Transaction. The parties may proceed to execute the definitive Stock Purchase Agreement following resolution of the remaining open negotiation points, which we currently anticipate will be resolved in early June 2024.
V. Coordination with Transaction Timeline
The grant of early termination of the HSR Act waiting period is a significant milestone in the overall Transaction timeline and removes one of the principal conditions precedent that could have delayed the signing and closing of the SPA. Set forth below is a summary of the key upcoming dates and milestones in the Transaction process:
The early termination of the HSR waiting period is particularly significant in the context of the financing timeline, as it provides assurance to the commitment letter parties (Summit Ridge Capital Partners, LP and Ironclad Trust Company, N.A.) that the principal regulatory condition to the Transaction has been resolved. This should facilitate the finalization of the commitment letter on the contemplated timeline. The removal of the HSR Act condition also de-risks the overall Transaction timeline and provides greater certainty to all parties and their respective advisors as the parties move toward execution and closing.
VI. Action Items
Based on the foregoing, we recommend the following action items be completed promptly:
1.  Notify Penterra In-House Team. Confirm that Thomas F. Holbrook, General Counsel of Penterra, and Natalie Reiner, Senior Vice President, Corporate Development, have been notified of the FTC's grant of early termination of the HSR waiting period. We understand that an initial communication was made on May 20, 2024, and request confirmation that this notification has been completed.
2.  Confirm with Stonebridge HSW. Coordinate with Martin Prumvane at Stonebridge HSW Antitrust Advisors LLP to confirm that no further antitrust filings, notifications, or other regulatory actions are required in connection with the Transaction, in any jurisdiction, and that Stonebridge HSW considers the antitrust clearance process to be concluded.
3.  File FTC Early Termination Notice. Obtain and file a copy of the FTC's early termination notice (including the published Transaction Number) in the transaction closing binder maintained by Calderwood & Harkness LLP. This document will serve as evidence of the satisfaction of the HSR Act condition for purposes of the closing deliverables under the SPA.
4.  Update Pre-Closing Conditions Checklist. Update the pre-closing conditions checklist (maintained by the Calderwood & Harkness deal team) to reflect the satisfaction of the HSR waiting period condition. Mark the condition as satisfied with reference to the early termination date of May 20, 2024, and the applicable Transaction Number.
5.  Proceed with SPA Finalization. Continue with the finalization and negotiation of the definitive Stock Purchase Agreement and all ancillary transaction documents, including the disclosure schedules, employment and non-competition agreements, escrow agreement, transition services agreement, and other ancillary documents, with a view to executing the SPA on or about June 10, 2024.
VII. Conclusion
The HSR Act antitrust condition applicable to the proposed acquisition by Penterra Pharmaceuticals Corp. of one hundred percent (100%) of the outstanding capital stock of Veridian Biosciences, Inc. has been satisfied by virtue of the FTC's grant of early termination of the HSR Act waiting period on May 20, 2024. No Second Request was issued during the initial waiting period, and no conditions, commitments, consent decrees, or other remedial measures were imposed by either the FTC or the DOJ. The early termination grant is consistent with the low-risk assessment set forth in the Antitrust Risk Assessment Memorandum dated April 10, 2024, jointly prepared by Stonebridge HSW and Calderwood & Harkness.
We recommend that the Transaction team proceed to the execution of the definitive Stock Purchase Agreement on the currently contemplated timeline, targeting an execution date on or about June 10, 2024, and that the action items set forth in Section VI above be completed promptly.
Should you have any questions regarding this memorandum or the matters discussed herein, please do not hesitate to contact us.
Megan Chu, Associate, Mergers & Acquisitions — Calderwood & Harkness LLP Telephone: (212) 558-4200 | Email: mchu@calderwoodharkness.com
Derek Okonkwo, Associate, Mergers & Acquisitions — Calderwood & Harkness LLP Telephone: (212) 558-4215 | Email: dokonkwo@calderwoodharkness.com
Martin Prumvane, Partner — Stonebridge HSW Antitrust Advisors LLP Telephone: (202) 661-7300 | Email: mhaldane@stonebridgehsw.com
Distribution: This memorandum is being distributed solely to the Calderwood & Harkness LLP deal team and authorized Penterra in-house counsel. Any further distribution requires the prior written consent of Calderwood & Harkness LLP.
cc: Leonard Cross, Partner, Tax — Calderwood & Harkness LLP (for file)
Matter No.: 1018-00008
Matter No.: | 1018-00008
Date: | May 21, 2024
To: | Oliver Mackenzie, Partner, Mergers & Acquisitions
Harrison Wexford, Partner, Mergers & Acquisitions
From: | Megan Chu, Associate, Mergers & Acquisitions
Derek Okonkwo, Associate, Mergers & Acquisitions
Re: | Penterra Pharmaceuticals Corp. — Proposed Acquisition of Veridian Biosciences, Inc. / HSR Act Early Termination Granted
Date (On or About) | Milestone
June 7, 2024 | Execution of the financing commitment letter from Summit Ridge Capital Partners, LP and Ironclad Trust Company, N.A. for a $500,000,000 senior secured term loan facility to fund a portion of the cash purchase price (Ref. CL-2024-PPCA-0607)
June 9, 2024 | Delivery of the fairness opinion from Garrison Zanthor & Co. to the Penterra Board of Directors, opining as to the fairness, from a financial point of view, of the aggregate purchase price to be paid by Penterra in the Transaction
June 10, 2024 | Targeted execution date for the definitive Stock Purchase Agreement and ancillary transaction documents
Promptly following SPA execution | Binding of the representations and warranties insurance policy issued by Atlas Indemnity Insurance Co. (Policy No. AIC-RWI-2024-07892), brokered by Prescott Whitfield Insurance Brokers, Inc.
Promptly following SPA execution | Solicitation of written consent of Veridian stockholders in accordance with the applicable provisions of the Delaware General Corporation Law and Veridian's certificate of incorporation and bylaws. Crestline Ventures, LP (holding approximately 28.3% of Veridian's outstanding capital stock), Boreal Health Partners Fund III, LP (holding approximately 19.7%), and Apex Growth Equity Fund II, LP (holding approximately 14.1%) collectively hold in excess of 62% of the outstanding capital stock of Veridian and are expected to deliver their written consents promptly following signing, which, when combined with any additional consents obtained, would satisfy the stockholder approval threshold required under the SPA and applicable law

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