SELLERS' DISCLOSURE SCHEDULES
TO
STOCK PURCHASE AGREEMENT
Delivered by
VERIDIAN BIOSCIENCES, INC. (a Delaware corporation)
the SELLERS identified on the signature pages of the Stock Purchase Agreement,
and
DAVID NG, as Stockholder Representative
to
PENTERRA PHARMACEUTICALS CORP. (a Delaware corporation)
Pursuant to the Stock Purchase Agreement, dated as of June 10, 2024 (the "Agreement"), by and among Penterra Pharmaceuticals Corp., a Delaware corporation, Veridian Biosciences, Inc., a Delaware corporation, the Sellers identified therein, and David Ng, in his capacity as Stockholder Representative
Date: June 10, 2024
Prepared and Reviewed by:
Calderwood & Harkness LLP 200 Park Avenue, 42nd Floor New York, NY 10166
Oliver Mackenzie, Partner Megan Chu, Partner Derek Okonkwo, Counsel
(Counsel to Penterra Pharmaceuticals Corp.)
Sellers' Counsel:
Zalcourt Archer & Cole LLP One Federal Street, 30th Floor Boston, MA 02110
Rebecca Whitmore, Partner Jonathan Pratt, Partner
(Counsel to Veridian Biosciences, Inc. and the Sellers)
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INTRODUCTORY NOTES AND QUALIFICATIONS
General Qualifications and Limitations
These Disclosure Schedules (these "Schedules") are delivered by Veridian Biosciences, Inc., a Delaware corporation (the "Company"), the Sellers identified on the signature pages of the Agreement, and David Ng, as Stockholder Representative (collectively, the "Disclosing Parties"), to Penterra Pharmaceuticals Corp., a Delaware corporation ("Buyer"), pursuant to and in connection with the Stock Purchase Agreement, dated as of June 10, 2024 (the "Agreement"), by and among Buyer, the Company, the Sellers, and the Stockholder Representative. These Schedules are delivered concurrently with the execution and delivery of the Agreement and form an integral part thereof. All capitalized terms used but not otherwise defined in these Schedules shall have the respective meanings ascribed to such terms in the Agreement.
The section and subsection references set forth in these Schedules correspond to the sections and subsections of the Agreement to which such disclosures relate. Information disclosed in a particular Schedule section is disclosed with reference to the specific representation, warranty, covenant, or other provision of the Agreement to which such Schedule section relates. Notwithstanding the foregoing, the disclosure of any item or matter in any particular Schedule section shall be deemed to be disclosed with respect to, and shall be deemed to qualify, any other section of these Schedules or any other representation, warranty, covenant, or other provision of the Agreement to which the relevance of such item or matter is reasonably apparent on the face of such disclosure, notwithstanding the absence of a specific cross-reference to such other section or provision.
The inclusion of any item, matter, or information in these Schedules shall not be deemed to constitute an acknowledgment or admission by the Company, any Seller, or the Stockholder Representative that such item, matter, or information is material, that such item, matter, or information would constitute a Material Adverse Effect, or that such item, matter, or information is required to be disclosed under the terms of the Agreement. Items and matters are disclosed herein for informational purposes and out of an abundance of caution, and no disclosure herein shall be construed as an admission or indication that such item or matter does or may rise to the level of a breach, violation, default, or event of default under the Agreement or otherwise.
The headings and introductory language contained in these Schedules are included for convenience of reference only and shall not be deemed to modify, limit, or otherwise affect the substance of the disclosures set forth herein.
These Schedules contain brief summary descriptions of certain matters, agreements, documents, and other items. Such summaries are qualified in their entirety by reference to the full text of the agreements, documents, and other items described herein. To the extent that any summary description set forth in these Schedules is inconsistent with or differs from the full text of any document, agreement, or other item referenced herein, the full text of such document, agreement, or other item shall control and govern.
The documents, agreements, and other materials referenced in these Schedules have been made available to Buyer and its representatives (including Calderwood & Harkness LLP, Garrison Zanthor & Co., and Broadleaf Scientific Consulting LLC) in the electronic data room hosted and maintained by the Company in connection with the transactions contemplated by the Agreement (the "Data Room"). The Data Room has been hosted on the Thackeray Solutions platform and has been accessible to Buyer and its authorized representatives commencing on March 11, 2024. A comprehensive index of the Data Room is attached hereto as the Appendix. All references herein to specific Data Room folders are references to the folder structure set forth in such index.
Nothing in these Schedules constitutes, or shall be deemed to constitute, a representation or warranty of the Company, any Seller, or the Stockholder Representative beyond the express representations and warranties set forth in the Agreement, as qualified by these Schedules.
SCHEDULE 1.1 — CERTAIN DEFINED TERMS
Knowledge Persons
The term "Knowledge" as defined in Section 1.1 of the Agreement, when used with respect to the Company, means the actual knowledge, after reasonable inquiry of their respective direct reports, of each of the following individuals:
Each of the foregoing individuals has been informed of the meaning and scope of the "Knowledge" definition set forth in the Agreement and has conducted a reasonable inquiry of his or her respective direct reports in connection with the preparation and delivery of these Schedules.
Permitted Liens
The term "Permitted Liens" as defined in Section 1.1 of the Agreement includes, without limitation, the following:
(a) statutory liens for current Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP on the financial statements of the Company;
(b) mechanics', carriers', workers', repairers', materialmen's, and similar liens arising or incurred in the ordinary course of business consistent with past practice, securing obligations that are not overdue or that are being contested in good faith by appropriate proceedings;
(c) liens arising under workers' compensation, unemployment insurance, social security, retirement, and similar legislation;
(d) purchase money liens and liens securing rental payments under capital lease arrangements, in each case incurred in the ordinary course of business consistent with past practice and disclosed in the Company's financial statements;
(e) liens that do not, individually or in the aggregate, materially affect the use, value, or transferability of the assets or properties to which they relate; and
(f) such other liens as are described in Section 1.1 of the Agreement.
SCHEDULE 3.1 — ORGANIZATION AND GOOD STANDING
Company Organization
Veridian Biosciences, Inc. is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Company was incorporated by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on September 14, 2016. The Company's Certificate of Incorporation has been amended and restated from time to time, most recently by the Sixth Amended and Restated Certificate of Incorporation dated August 12, 2021, which was filed with the Secretary of State of the State of Delaware in connection with the Company's Series D preferred stock financing round. A copy of the Sixth Amended and Restated Certificate of Incorporation, together with all prior amendments thereto, has been made available in Data Room folder 1.0.
The Company's Bylaws, as amended and restated, were most recently amended effective as of August 12, 2021. A copy of the current Bylaws has been made available in Data Room folder 1.0.
The following additional organizational information is provided:
Principal Office: 550 Gateway Drive, Cambridge, MA 02142
Registered Agent in Delaware: Tidewater Registered Agents LLC, 838 Walker Road, Suite 21-2, Dover, DE 19904
Employer Identification Number (EIN): 84-2193047
Date of Incorporation: September 14, 2016
State of Incorporation: Delaware
Qualifications to Do Business
The Company is duly qualified or licensed to do business as a foreign corporation and is in good standing in each of the jurisdictions listed below, which constitute all jurisdictions in which the nature of the Company's business or the ownership, lease, or operation of its properties requires such qualification or licensing:
Certificates of good standing or equivalent documentation from each of the foregoing jurisdictions have been made available in Data Room folder 1.0.
No Subsidiaries
The Company does not have, and has never had, any subsidiaries. The Company does not own, directly or indirectly, any equity interest, membership interest, partnership interest, joint venture interest, or other ownership interest in any other Person (as defined in the Agreement). The Company is not a party to, and has not entered into, any agreement or arrangement to acquire any equity interest, membership interest, partnership interest, joint venture interest, or other ownership interest in any other Person.
SCHEDULE 3.2 — AUTHORIZATION; BINDING EFFECT
No exceptions.
The execution, delivery, and performance by the Company of the Agreement, and the consummation by the Company of the transactions contemplated thereby, have been duly and validly authorized by all necessary corporate action on the part of the Company. Specifically:
(a) The Board of Directors of the Company (the "Board"), at a meeting duly called and held on May 28, 2024, at which a quorum was present and acting throughout, unanimously (i) determined that the Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, the Company and its stockholders, (ii) approved and adopted the Agreement and the transactions contemplated thereby, and (iii) resolved to recommend that the stockholders of the Company approve and adopt the Agreement and the transactions contemplated thereby.
(b) The holders of more than ninety percent (90%) of the outstanding shares of capital stock of the Company entitled to vote thereon have approved and adopted the Agreement and the transactions contemplated thereby by written consent, without a meeting, delivered on June 14, 2024, in accordance with Section 228 of the Delaware General Corporation Law and the Company's Sixth Amended and Restated Certificate of Incorporation and Bylaws. The requisite stockholder approval required under the Company's Certificate of Incorporation, Bylaws, applicable Law, and the Investors' Rights Agreement, the Voting Agreement, and the Right of First Refusal and Co-Sale Agreement has been obtained.
No other corporate proceedings on the part of the Company, and no other vote, consent, or approval of any holder of capital stock of the Company, are necessary to authorize the Agreement or to consummate the transactions contemplated thereby.
SCHEDULE 3.3 — CAPITALIZATION
Authorized Capital Stock
As set forth in the Sixth Amended and Restated Certificate of Incorporation of the Company, dated August 12, 2021, the Company is authorized to issue the following shares of capital stock:
Issued and Outstanding Capital Stock (Fully Diluted Basis)
As of the date of the Agreement, the following table sets forth all issued and outstanding shares of capital stock of the Company on a fully diluted basis, including all shares issuable upon the exercise of outstanding options and the vesting of outstanding restricted stock awards:
A detailed capitalization table setting forth the number of shares held by each stockholder on an as-converted, as-exercised, and fully diluted basis has been made available in Data Room folder 2.0. The capitalization table reflects all equity issuances, exercises, cancellations, and transfers through the date of the Agreement.
Stock Option Plan
The Company has adopted the 2017 Equity Incentive Plan, as amended (the "Plan"), pursuant to which the Company has reserved shares of Common Stock for issuance to employees, officers, directors, and consultants of the Company. As of the date of the Agreement, the total shares reserved under the Plan represent the ESOP pool constituting approximately 9.8% of the Company's capital stock on a fully diluted basis.
A complete schedule of all outstanding stock options and restricted stock awards granted under the Plan is set forth in Data Room folder 2.3, which schedule includes the following information for each outstanding award:
(a) the name and title of each holder;
(b) the type of award (incentive stock option, non-qualified stock option, or restricted stock award);
(c) the date of grant;
(d) the number of shares of Common Stock subject to such award;
(e) the exercise price per share (for stock options);
(f) the vesting commencement date and vesting schedule applicable to such award (including any acceleration provisions);
(g) the expiration date of such award; and
(h) whether such award is subject to early exercise.
All outstanding stock options and restricted stock awards have been granted in accordance with the terms of the Plan and applicable Law, including the requirements of Section 409A of the Internal Revenue Code (with respect to non-qualified stock options) and Section 422 of the Internal Revenue Code (with respect to incentive stock options). The exercise prices of all outstanding stock options were set at not less than the fair market value of the underlying Common Stock on the applicable dates of grant, as determined by the Board in good faith based upon independent 409A valuations conducted by Meridian Valuation Services, LLC.
Stockholder Agreements
The Company is party to the following stockholder agreements, each of which was entered into in connection with the Company's Series D preferred stock financing round and is dated as of August 12, 2021 (as amended from time to time):
(a) Investors' Rights Agreement, dated as of August 12, 2021, as amended, by and among the Company, Crestline Ventures, LP, Boreal Health Partners Fund III, LP, Apex Growth Equity Fund II, LP, and the other investors identified therein (the "IRA"). The IRA provides for, among other things, registration rights, information rights, rights of first offer on future issuances of equity securities, and certain board observer rights. A copy of the IRA has been made available in Data Room folder 2.1.
(b) Right of First Refusal and Co-Sale Agreement, dated as of August 12, 2021, as amended, by and among the Company, the Founders, and the investors identified therein (the "ROFR/Co-Sale Agreement"). The ROFR/Co-Sale Agreement provides for rights of first refusal and co-sale rights in connection with certain transfers of shares of Common Stock by the Founders. A copy of the ROFR/Co-Sale Agreement has been made available in Data Room folder 2.1.
(c) Voting Agreement, dated as of August 12, 2021, as amended, by and among the Company, the Founders, and the investors identified therein (the "Voting Agreement"). The Voting Agreement provides for certain voting arrangements with respect to the election of directors and certain other matters. A copy of the Voting Agreement has been made available in Data Room folder 2.1.
Pursuant to the respective terms of the IRA, the ROFR/Co-Sale Agreement, and the Voting Agreement, and pursuant to the stockholder written consent described in Schedule 3.2, each of the foregoing agreements will terminate upon and effective as of the Closing of the transactions contemplated by the Agreement.
Section 382 Ownership Change
The Company experienced an "ownership change" within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), in the third quarter of 2020 in connection with the Company's Series C preferred stock financing round led by Boreal Health Partners Fund III, LP. As a result of such ownership change, the Company's pre-change net operating losses of approximately One Hundred Forty-Eight Million Dollars ($148,000,000) are subject to an annual limitation under Section 382 of the Code of approximately Five Million Nine Hundred Thousand Dollars ($5,900,000) per year. A detailed analysis of the Section 382 limitation and its impact on the Company's net operating loss carryforwards is set forth in the Section 382 study prepared by Blackmere Tax Advisors LLC dated February 15, 2021, a copy of which has been made available in Data Room folder 9.1. See also Schedule 3.16 (Tax Matters) for additional information regarding the Company's net operating loss carryforwards and tax attributes.
SCHEDULE 3.4 — NO CONFLICTS; CONSENTS
Required Consents
The execution, delivery, and performance by the Company of the Agreement, and the consummation of the transactions contemplated thereby, require the prior or concurrent consent, approval, authorization, or notice to the following Persons:
(a) Landlord Consent. The Lease Agreement dated March 1, 2019, as amended, between the Company (as tenant) and Kendall Square Properties LLC (as landlord), for the premises located at 550 Gateway Drive, Cambridge, MA 02142, contains a change-of-control provision set forth in Section 12.3 thereof. Pursuant to Section 12.3, any "change of control" (as defined therein) of the tenant requires the prior written consent of the landlord, which consent shall not be unreasonably withheld, conditioned, or delayed. The transactions contemplated by the Agreement constitute a "change of control" under the Lease Agreement. The Company has submitted a consent request to the landlord, and such consent is in process as of the date of the Agreement. See also Schedule 3.14 (Real Property) for additional information regarding the Lease Agreement.
(b) CRO Change-of-Control Consent. Certain clinical research organization agreements to which the Company is a party contain change-of-control or assignment provisions that require the consent of the applicable CRO counterparty in connection with a change of control of the Company. Specifically, the Master Services Agreement dated January 15, 2022, between the Company and Paragon Clinical Research, Inc. ("Paragon"), for the management and monitoring of the Marlowe Asset Management-2 Phase II clinical trial (VRD-4187), contains a change-of-control consent requirement set forth in Section 14.2 thereof. The Company has submitted a consent request to Paragon, and such consent is in process as of the date of the Agreement. See also Schedule 3.11 (Material Contracts) for additional information regarding this agreement and other CRO agreements.
(c) FDA Notification. Notification to the U.S. Food and Drug Administration (the "FDA") regarding the change of ownership of IND No. 154832 (VRD-4187) is required pursuant to 21 C.F.R. § 312.31. Such notification will be submitted to the FDA following the Closing. No prior FDA approval or consent is required for the change of ownership of an IND; however, the IND transfer notification must be submitted within thirty (30) days following the effective date of the transfer.
No Violations
Subject to obtaining the consents, approvals, and authorizations described above and subject to the filing of the FDA notification described above, the execution and delivery by the Company of the Agreement, and the consummation of the transactions contemplated thereby, do not and will not (i) conflict with, or result in a breach or violation of, the Company's Sixth Amended and Restated Certificate of Incorporation or Bylaws, (ii) conflict with, result in a breach of, constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, result in the termination, cancellation, or acceleration of, or give rise to any right of termination, cancellation, or acceleration under, any material agreement, contract, lease, license, or other instrument to which the Company is a party or by which any of its properties or assets is bound, (iii) result in the creation or imposition of any Lien (other than Permitted Liens) upon any of the properties or assets of the Company, or (iv) violate any applicable Law, order, judgment, injunction, or decree to which the Company is subject.
SCHEDULE 3.5 — FINANCIAL STATEMENTS
Audited Financial Statements
The Company has delivered to Buyer complete and accurate copies of the audited financial statements of the Company (including the audited balance sheets, statements of operations, statements of stockholders' equity (deficit), and statements of cash flows, together with the notes thereto) for the fiscal years ended December 31, 2021, December 31, 2022, and December 31, 2023 (collectively, the "Audited Financial Statements"). The Audited Financial Statements were audited by Northbridge Accounting Group LLP (engagement partner: Patrick Calloway), with offices at 125 High Street, Suite 3100, Boston, MA 02110. Northbridge Accounting Group LLP issued unqualified audit opinions with respect to each of the Audited Financial Statements, copies of which are included in the financial statements and have been made available in Data Room folder 3.0.
The following summary financial data is provided for informational purposes:
Fiscal Year Ended December 31, 2023:
The Company is a clinical-stage biotechnology company and has not generated any product revenue since its inception. The Company's principal source of cash has been the proceeds from the issuance of equity securities in connection with its Series A, Series B, Series C, and Series D preferred stock financing rounds, which have generated aggregate gross proceeds to the Company of approximately $410,000,000.
Unaudited Interim Financial Statements
The Company has delivered to Buyer complete and accurate copies of the unaudited interim financial statements of the Company, consisting of an unaudited balance sheet and an unaudited statement of operations for the three-month period ended March 31, 2024 (the "Interim Financial Statements"). The Interim Financial Statements have been prepared by the Company's management in accordance with GAAP, applied on a basis consistent with the Audited Financial Statements, subject to (i) normal year-end adjustments (the effect of which would not, individually or in the aggregate, be material) and (ii) the absence of footnotes. The Interim Financial Statements have been made available in Data Room folder 3.0.
The following summary financial data is provided for informational purposes:
Three Months Ended March 31, 2024:
No Undisclosed Liabilities
Except as (a) reflected or reserved against in the Audited Financial Statements or the Interim Financial Statements, (b) otherwise disclosed in these Schedules, or (c) liabilities and obligations incurred in the ordinary course of business consistent with past practice since March 31, 2024, the Company has no liabilities or obligations of any nature (whether accrued, absolute, contingent, or otherwise) that would be required to be reflected on, reserved against, or disclosed in, a balance sheet prepared in accordance with GAAP, that would, individually or in the aggregate, be material to the business, financial condition, or results of operations of the Company.
SCHEDULE 3.6 — ABSENCE OF CERTAIN CHANGES
Since December 31, 2023, and except as otherwise disclosed in these Schedules or as expressly contemplated by the Agreement:
(a) No event, change, effect, development, condition, circumstance, or occurrence has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the business, results of operations, financial condition, or assets of the Company taken as a whole.
(b) The Company has conducted its business in the ordinary course of business consistent with past practice in all material respects.
(c) The Company has not (i) declared, set aside, or paid any dividend or distribution on, or made any other distribution in respect of, any shares of its capital stock, (ii) split, combined, or reclassified any shares of its capital stock, or (iii) redeemed, repurchased, or otherwise acquired any shares of its capital stock.
(d) The Company has not issued or granted any shares of capital stock, options, warrants, or other rights to acquire capital stock, or any securities convertible into or exchangeable for capital stock, other than (i) the issuance of shares of Common Stock upon the exercise of stock options outstanding as of December 31, 2023, in the ordinary course under the Plan, and (ii) grants of stock options and restricted stock awards to newly hired employees in the ordinary course under the Plan.
(e) The Company has not acquired or disposed of any material assets or properties, or entered into, amended, modified, or terminated any Material Contract, other than in the ordinary course of business consistent with past practice.
(f) The Company has not changed any material accounting method, policy, practice, or estimation methodology, except as required by changes in GAAP or applicable Law.
(g) The Company has not incurred any indebtedness for borrowed money or issued any debt securities, or guaranteed any obligations of any third party.
(h) The Company has not made any material change in its cash management practices or policies, including with respect to collection of receivables, payment of payables, or maintenance of cash reserves.
Note Regarding Clinical Trial Activity: The Marlowe Asset Management-2 Phase II clinical trial (ClinicalTrials.gov Identifier: NCT05837291) for the Company's lead drug candidate, VRD-4187, is ongoing. The Company is continuing to enroll patients and conduct clinical activities in the ordinary course consistent with the approved clinical trial protocol. Interim data readouts, protocol amendments, and regulatory interactions that occur during the pendency of clinical trials are customary events in the ordinary course of the Company's business as a clinical-stage biotechnology company. This disclosure is made without prejudice to the Company's position regarding the definition of "Material Adverse Effect" set forth in Section 1.1 of the Agreement, including the exceptions and carve-outs contained therein.
SCHEDULE 3.7 — LITIGATION AND PROCEEDINGS
Pending Litigation
None. As of the date of the Agreement, there are no actions, suits, claims, proceedings, arbitrations, mediations, or investigations (collectively, "Proceedings") pending before any court, tribunal, arbitrator, governmental authority, or other body against the Company or any of its officers, directors, or employees (in their capacities as such), or affecting any of the properties or assets of the Company.
Threatened Litigation
None. As of the date of the Agreement, to the Knowledge of the Company, there are no Proceedings threatened in writing against the Company or any of its officers, directors, or employees (in their capacities as such), or affecting any of the properties or assets of the Company.
Government Investigations
None, other than routine regulatory inquiries, inspections, and information requests received from the FDA and other governmental authorities in the ordinary course of the Company's business in connection with the Company's IND applications and clinical trials. Such routine inquiries and inspections have not resulted in any adverse findings, enforcement actions, or sanctions. See also Schedule 3.10 (Regulatory Matters) for additional information regarding the Company's regulatory interactions with the FDA and other governmental authorities.
Orders/Judgments
The Company is not subject to any outstanding order, judgment, injunction, decree, ruling, writ, assessment, or arbitration award of any court, tribunal, arbitrator, governmental authority, or other body that restricts, impairs, or otherwise affects the business, operations, properties, or assets of the Company.
SCHEDULE 3.8 — COMPLIANCE WITH LAWS
The Company is, and at all times during the past three (3) years has been, in material compliance with all applicable federal, state, and local laws, statutes, ordinances, rules, regulations, orders, and governmental requirements (collectively, "Laws") applicable to its business, properties, and assets, including without limitation the following:
(a) FDA Laws and Regulations. The Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.) and all FDA regulations promulgated thereunder, including without limitation the regulations codified at Title 21 of the Code of Federal Regulations, Parts 11 (Electronic Records; Electronic Signatures), 50 (Protection of Human Subjects), 54 (Financial Disclosure by Clinical Investigators), 56 (Institutional Review Boards), 58 (Good Laboratory Practice for Nonclinical Laboratory Studies), 210 and 211 (Current Good Manufacturing Practice for Finished Pharmaceuticals), 312 (Investigational New Drug Application), 314 (Applications for FDA Approval to Market a New Drug), and all related and applicable regulations.
(b) Good Clinical Practice (GCP). The Company's clinical trials have been and are being conducted in accordance with applicable GCP requirements, including the International Council for Harmonisation (ICH) E6(R2) Guideline for Good Clinical Practice, FDA regulations at 21 C.F.R. Parts 50, 54, 56, and 312, and all applicable institutional review board (IRB) and ethics committee requirements.
(c) Good Laboratory Practice (GLP). The Company's nonclinical laboratory studies have been conducted in accordance with applicable GLP requirements set forth in 21 C.F.R. Part 58.
(d) Good Manufacturing Practice (GMP). The manufacture of the Company's drug candidates has been conducted in accordance with applicable current GMP requirements, including the regulations codified at 21 C.F.R. Parts 210 and 211, by the Company's contract manufacturing organizations.
(e) Clinical Trial Registration and Reporting. The Company is in compliance with the clinical trial registration and results reporting requirements of Section 402(j) of the Public Health Service Act (42 U.S.C. § 282(j)) and the applicable implementing regulations, including the registration and reporting of information on ClinicalTrials.gov.
(f) HIPAA and Privacy Laws. The Company is in compliance with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), the Health Information Technology for Economic and Clinical Health Act ("HITECH"), and all applicable state privacy and data protection laws, to the extent applicable to the Company's collection, use, storage, and disclosure of protected health information and personally identifiable information in connection with its clinical trials and business operations.
(g) Employment Laws. The Company is in material compliance with all applicable federal, state, and local employment and labor laws, including without limitation the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act, the Massachusetts Wage Act (M.G.L. c. 149), the California Labor Code, the California Fair Employment and Housing Act, and the Maryland Healthy Working Families Act, as well as all applicable immigration laws and regulations.
(h) Environmental, Health, and Safety Laws. The Company is in material compliance with all applicable federal, state, and local environmental, health, and safety laws, rules, and regulations applicable to its laboratory operations, including without limitation the Occupational Safety and Health Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, and applicable Massachusetts, California, and Maryland environmental regulations. See also Schedule 3.17 (Environmental Matters).
No notice of material violation or non-compliance has been received by the Company from any governmental authority during the past three (3) years with respect to any applicable Law, except as disclosed in Schedule 3.10 (Regulatory Matters) hereof.
SCHEDULE 3.9 — INTELLECTUAL PROPERTY
Owned intellectual Property — Patents
The Company is the sole and exclusive owner of the following issued patents and pending patent applications (collectively, the "Company Patents"), free and clear of all Liens other than Permitted Liens:
VeriTCE Platform Patents
VRD-4187 Specific Patents
Additional Patent Families
A detailed patent portfolio summary, including complete prosecution histories and all relevant correspondence with patent offices, has been made available in Data Room folder 4.1. All required maintenance fees and annuity payments for the Company Patents are current as of the date of the Agreement.
Owned intellectual Property — Trademarks
The Company is the sole and exclusive owner of the following trademarks:
All required renewal filings and Sections 8 and 15 affidavits for the registered trademarks are current as of the date of the Agreement.
Owned intellectual Property — Trade Secrets
The Company maintains as trade secrets certain proprietary information and know-how material to its business, including without limitation:
(a) proprietary cell line development processes for the VeriTCE bispecific T-cell engager platform;
(b) proprietary manufacturing methods, protocols, and know-how for the production of VeriTCE platform drug candidates, including VRD-4187;
(c) clinical data compilations, analyses, and biomarker data generated in connection with the Company's clinical trials; and
(d) proprietary research data, laboratory notebooks, and experimental results relating to the Company's pre-clinical and clinical programs.
The Company has taken commercially reasonable steps to protect the confidentiality and proprietary nature of its trade secrets, including requiring all employees, consultants, and contractors to execute confidentiality and non-disclosure agreements and implementing access controls and information security measures.
IP Assignment Agreements
The Company has obtained valid and enforceable assignments of all intellectual property rights created by or on behalf of the Company, including the following:
(a) intellectual Property Assignment Agreement between Dr. Julian Marek and the Company, dated September 14, 2016 (the "Marek IP Assignment"), pursuant to which Dr. Marek assigned to the Company all of his right, title, and interest in and to all inventions, discoveries, and intellectual property relating to the VeriTCE platform and all related technology conceived, developed, or reduced to practice by Dr. Marek prior to and in connection with the founding of the Company.
(b) intellectual Property Assignment Agreement between Dr. Priya Chandrasekaran and the Company, dated September 14, 2016 (the "Chandrasekaran IP Assignment"), pursuant to which Dr. Chandrasekaran assigned to the Company all of her right, title, and interest in and to all inventions, discoveries, and intellectual property relating to the VeriTCE platform and all related technology conceived, developed, or reduced to practice by Dr. Chandrasekaran prior to and in connection with the founding of the Company.
(c) Confidential Information and Invention Assignment Agreements (CIIAAs) have been executed by all current employees and former employees of the Company, as well as by all consultants and independent contractors engaged by the Company, pursuant to which each such individual has assigned to the Company all right, title, and interest in and to all inventions, discoveries, works of authorship, and intellectual property conceived, developed, or reduced to practice during the course of such individual's employment or engagement with the Company.
Copies of the Marek IP Assignment, the Chandrasekaran IP Assignment, and representative forms of the CIIAAs have been made available in Data Room folder 4.3.
In-Licensed intellectual Property
None material. The Company's pipeline candidates, including VRD-4187, VRD-5201, and VRD-6330, are based on technology that was internally developed by the Company. The Company does not hold any material exclusive or non-exclusive licenses from third parties for intellectual property that is necessary for the development, manufacture, or commercialization of its drug candidates.
Freedom-to-Operate
The Company has engaged qualified patent counsel to conduct freedom-to-operate analyses with respect to VRD-4187 in the United States, the European Union, and Japan. Based on such analyses, no material third-party patents have been identified that would be infringed by the development, manufacture, use, sale, offer for sale, or importation of VRD-4187 in the United States, the European Union, or Japan. The foregoing is subject to the qualifications, assumptions, and limitations set forth in the relevant opinions of counsel, copies of which have been made available in Data Room folder 4.5. The Company makes no representation or warranty that additional third-party patents may not issue in the future that could be relevant to the Company's freedom to operate.
IP Disputes
No intellectual property disputes are pending or, to the Knowledge of the Company, threatened. The Company has not received any written notice, demand, claim, or cease-and-desist letter from any third party alleging that the Company's business, products, or activities infringe, misappropriate, or otherwise violate any intellectual property right of any third party. The Company has not sent any written notice, demand, claim, or cease-and-desist letter to any third party alleging that such third party's activities infringe, misappropriate, or otherwise violate any intellectual property right of the Company.
SCHEDULE 3.10 — REGULATORY MATTERS
IND Applications
The Company holds or has filed the following Investigational New Drug Applications with the FDA:
The Company's lead drug candidate, VRD-4187, is a bispecific T-cell engager targeting delta-like ligand 3 (DLL3) and CD3, designed for the treatment of small cell lung cancer (SCLC) and other DLL3-expressing malignancies. The IND for VRD-4187 was filed with the FDA and became effective without a clinical hold. As of the date of the Agreement, IND No. 154832 remains active and in good standing with the FDA.
The Company's second pipeline candidate, VRD-5201, is an EpCAM-targeting bispecific T-cell engager for the treatment of colorectal cancer. The Company completed a Pre-IND meeting with the FDA on March 7, 2024, and anticipates filing the IND for VRD-5201 in the first quarter of 2025. Meeting minutes from the Pre-IND meeting have been made available in Data Room folder 5.2.
The Company's third pipeline candidate, VRD-6330, is a PSMA-targeting bispecific T-cell engager for the treatment of prostate cancer. VRD-6330 is in the pre-clinical stage of development, and no IND has been filed for this candidate.
Clinical Trials — VRD-4187
Marlowe Asset Management-1 (Phase I)
The Company has completed a Phase I, open-label, dose-escalation study of VRD-4187 in patients with relapsed or refractory small cell lung cancer (the "Marlowe Asset Management-1" trial). The Marlowe Asset Management-1 trial enrolled a total of 54 patients across six dose-escalation cohorts. The trial was conducted at 12 clinical sites in the United States. The Marlowe Asset Management-1 trial established a recommended Phase II dose of 1.5 mg/kg administered intravenously every three weeks. Summary results from the Marlowe Asset Management-1 trial were presented at the American Society of Clinical Oncology (ASCO) Annual Meeting in June 2023 and have been published in a peer-reviewed journal. The final clinical study report for the Marlowe Asset Management-1 trial has been made available in Data Room folder 5.1.
Marlowe Asset Management-2 (Phase II)
The Company is currently conducting a randomized, open-label Phase II trial of VRD-4187 versus topotecan in patients with relapsed small cell lung cancer after first-line platinum-based chemotherapy (the "Marlowe Asset Management-2" trial). The following information is provided regarding the Marlowe Asset Management-2 trial:
ClinicalTrials.gov Identifier: NCT05837291
Clinical Sites: 42 sites across the United States and the European Union (including sites in Germany, France, Spain, Italy, and the United Kingdom)
Enrollment Status: Active enrollment; as of the date of the Agreement, 387 patients have been enrolled (194 patients in the VRD-4187 treatment arm and 193 patients in the topotecan control arm)
Target Enrollment: Approximately 400 patients
Primary Endpoint: Progression-free survival (PFS)
Key Secondary Endpoints: Overall survival (OS), objective response rate (ORR), duration of response (DOR), and safety/tolerability
Trial Status as of June 10, 2024: Ongoing; enrollment is active; no interim data readout has occurred as of the date of the Agreement
Data Monitoring Committee (DMC): An independent DMC has been established pursuant to the DMC Charter dated July 18, 2022, to monitor patient safety and evaluate interim efficacy data at pre-specified time points. The DMC is composed of three independent members with no financial or other conflicts of interest with the Company. As of the date of the Agreement, the DMC has conducted regularly scheduled meetings and has not recommended any modifications to the trial protocol or early termination of the trial.
FDA Correspondence
The following is a list of material FDA correspondence and meeting minutes in connection with the Company's drug development programs, copies of which have been made available in Data Room folder 5.2:
(a) Pre-IND Meeting Minutes (VRD-4187) — Meeting held on April 14, 2020; minutes received from FDA on May 12, 2020.
(b) End of Phase I Meeting Minutes (VRD-4187) — Meeting held on September 22, 2022; minutes received from FDA on October 25, 2022.
(c) Type B Meeting Request and Minutes Regarding Phase II Trial Design (VRD-4187) — Meeting request submitted November 8, 2022; meeting held on February 7, 2023; minutes received from FDA on March 10, 2023. The FDA provided general agreement with the Company's proposed Phase II trial design for the Marlowe Asset Management-2 trial, including the randomized, open-label design, the primary endpoint of progression-free survival, and the proposed statistical analysis plan.
(d) Routine clinical hold inquiries: None as of the date of the Agreement. The Company has not received any clinical hold, partial clinical hold, or request for voluntary hold from the FDA with respect to any of its IND applications.
(e) Pre-IND Meeting Minutes (VRD-5201) — Meeting held on March 7, 2024; minutes received from FDA on April 5, 2024.
In addition to the foregoing, the Company has engaged in routine correspondence with the FDA relating to annual IND updates, safety reports, protocol amendments, and similar matters in the ordinary course of its clinical development activities. All such correspondence is available in Data Room folder 5.2.
No FDA Actions
As of the date of the Agreement (June 10, 2024), the Company has not received any of the following from the FDA or any other governmental authority with respect to any of its drug candidates, clinical trials, or business operations:
(a) clinical hold or partial clinical hold;
(b) warning letter or untitled letter;