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Contract analysis Extract to table

CONFIDENTIAL — TAX EXAMINATION MATERIALS

CALDERWOOD & HARKNESS LLP Attorneys at Law

1735 Market Street, Suite 3100 Philadelphia, PA 19103 Tel: (215) 864-7200

Fax: (215) 864-7201

600 Lexington Avenue New York, NY 10022 Tel: (212) 479-6000

Fax: (212) 479-6001

www.calderwoodharkness.com

August 1, 2022

C&H Matter No. 1018-00009

VIA HAND DELIVERY AND SECURE ELECTRONIC TRANSMISSION

Revenue Agent Patricia Dunleavy Internal Revenue Service Large Business & International Division Northeast Compliance — Transfer Pricing Practice Area 600 Arch Street, Room 6214 Philadelphia, PA 19106

Re: Examination of Penterra Pharmaceuticals Corp. EIN: 22-3741856 Exam Team ID: LB&I-NE-TP-2022-00641 Tax Years Under Examination: 2017, 2018, 2019, 2020 Response to Information Document Request No. 4 — Contemporaneous Transfer Pricing Documentation

Dear Revenue Agent Dunleavy:

This firm represents Penterra Pharmaceuticals Corp. ("PPC" or the "Company") in connection with the above-referenced examination. I am Leonard Cross, Responsible Partner in the Tax Department at Calderwood & Harkness LLP, writing on behalf of PPC. As you are aware, IRS Form 2848, Power of Attorney and Declaration of Representative, was filed on June 8, 2022, authorizing the undersigned, together with Sylvia Hartwell, Garrett Simmons, and Leila Nazari, each of Calderwood & Harkness LLP, to represent PPC before the Internal Revenue Service in all matters relating to this examination for the tax years at issue.

We write in response to Information Document Request No. 4 ("IDR No. 4"), served on PPC on July 5, 2022, which requested production of PPC's contemporaneous transfer pricing documentation for tax years 2017, 2018, 2019, and 2020 (collectively, the "Tax Years at Issue"). PPC is providing the requested documentation on a timely basis, within the thirty-day response period established by IDR No. 4, as extended by mutual agreement between the undersigned and Revenue Agent Dunleavy in a telephone conference on July 11, 2022. The documentation described herein is being produced concurrently with the delivery of this letter, both in hard-copy binders and via the IRS Secure Messaging Portal, as arranged with your examination team.

Set forth below is a description of the documents being produced, followed by a document production index, applicable privilege reservations, and certain representations and limitations.

I. DESCRIPTION OF DOCUMENTS PRODUCED

A. Overview of PPC's Transfer Pricing Documentation Program

PPC maintained contemporaneous transfer pricing documentation for all four Tax Years at Issue — i.e., tax years 2017, 2018, 2019, and 2020 — pursuant to the requirements of Section 6662(e) of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder. The documentation was prepared and maintained in a manner intended to satisfy the penalty-protection standards set forth in IRC § 6662(e)(3)(B) and Treas. Reg. § 1.6662-6, thereby establishing reasonable cause and good faith for PPC's transfer pricing positions as reported on the Company's federal income tax returns (Forms 1120) for each of the Tax Years at Issue.

The transfer pricing documentation for all four tax years was prepared by Crestfield & Associates LLP ("Crestfield"), PPC's independent auditor and federal and state income tax return preparer, located at 1200 Avenue of the Americas, New York, NY 10036. The transfer pricing studies were prepared under the direction of Susan Lam, Transfer Pricing Partner at Crestfield, and in coordination with Martin Ogilvy, the lead Engagement Partner responsible for the overall PPC audit and tax engagement. Crestfield prepared each annual transfer pricing study on a contemporaneous basis — that is, each report was substantially completed prior to the filing date (including extensions) of PPC's federal income tax return for the applicable tax year — and the studies were updated and finalized in the ordinary course as part of PPC's annual tax compliance process.

PPC's transfer pricing documentation program covers all material intercompany transactions between PPC and its controlled foreign affiliates for each of the Tax Years at Issue. The intercompany transactions documented include, in particular, transactions between PPC and Penterra Biopharma International DAC ("PBI"), a Designated Activity Company organized under the laws of Ireland and registered at 4th Floor, Claremont House, Sandyford Business Park, Dublin D18 K7T4, Ireland. PBI is PPC's principal non-U.S. operating subsidiary, responsible for the commercialization, regulatory oversight, and distribution of PPC's pharmaceutical products in non-Americas territories. As described in greater detail below, the documented intercompany transactions include the qualified cost-sharing arrangement between PPC and PBI, the legacy intellectual property license agreement between PPC and PBI, and the contract manufacturing arrangement between PBI and its wholly owned Irish manufacturing subsidiary, Penterra Manufacturing Ireland Ltd. ("PMI"), located at Unit 7, Ringaskiddy Industrial Estate, Co. Cork T12 PX29, Ireland.

B. Enumeration of Produced Documents by Tax Year

The transfer pricing documentation reports and supporting workpapers produced herewith are organized by tax year, as described in the following subsections.

1. Tax Year 2017 Transfer Pricing Documentation Report. PPC is producing the complete transfer pricing study for tax year 2017, as prepared by Crestfield & Associates LLP. The TY 2017 report addresses each of the following principal categories of intercompany transactions:

Cost-Sharing Arrangement ("CSA"). The CSA between PPC and PBI became effective on July 1, 2012, and remained in effect throughout the Tax Years at Issue. For TY 2017, the transfer pricing documentation reports that PBI's cost-sharing percentage was 38.2% of total qualified research and development costs. Total qualified R&D costs subject to the CSA for TY 2017 were $487,300,000, resulting in PBI's share of the qualified cost pool amounting to $186,150,000. The documentation includes detailed reasonably anticipated benefit ("RAB") calculations and projections supporting the 38.2% allocation to PBI, as well as a comprehensive analysis of the CSA under the provisions of Treas. Reg. § 1.482-7 (governing qualified cost-sharing arrangements). The RAB methodology employed by Crestfield relied on forward-looking revenue projections for both the Americas territories (attributed to PPC) and the non-Americas territories (attributed to PBI), with appropriate adjustments for differences in market size, expected product launch timelines, pricing environments, and regulatory landscapes across the relevant geographies.

Legacy IP License Agreement. The TY 2017 documentation also covers the legacy intellectual property license agreement between PPC (as licensor) and PBI (as licensee), under which PBI pays PPC a royalty of 4.5% of net sales for non-Americas territories with respect to certain legacy compounds whose development was substantially completed prior to the effective date of the CSA. For TY 2017, non-Americas net sales of legacy compounds amounted to $814,600,000, resulting in a royalty payment of $36,657,000. The documentation includes an analysis of the arm's-length nature of the 4.5% royalty rate under Treas. Reg. § 1.482-4 (governing arm's-length consideration for the transfer or use of intangible property), supported by a comparable uncontrolled transaction ("CUT") analysis benchmarking the royalty rate against comparable third-party licensing transactions involving pharmaceutical intangibles of similar nature, stage of development, and therapeutic indication.

PMI Contract Manufacturing Agreement. The TY 2017 report further documents the contract manufacturing arrangement between PBI and PMI, under which PMI manufactures certain pharmaceutical products on a toll-manufacturing basis for PBI. The arrangement operates on a cost-plus basis, with PMI receiving reimbursement of its fully loaded manufacturing costs plus a markup of 8%. The documentation includes an analysis of the arm's-length nature of the 8% cost-plus markup, supported by a transactional net margin method ("TNMM") / comparable profits method ("CPM") benchmarking analysis of comparable contract manufacturers in the European pharmaceutical sector.

Supporting Economic Analyses. The TY 2017 study includes supporting economic analyses consisting of the CUT method for the legacy IP royalty, and the CPM/TNMM for the evaluation of PBI's overall profit margins and PMI's contract manufacturing returns. The documentation further includes a detailed functional analysis of both PBI and PMI, describing the functions performed, assets employed, and risks assumed by each entity.

It is noted for the examination team's reference that the applicable U.S. federal corporate income tax rate for TY 2017 was 35%, as TY 2017 preceded the effective date of the Tax Cuts and Jobs Act of 2017 ("TCJA"), Pub. L. No. 115-97.

2. Tax Year 2018 Transfer Pricing Documentation Report. PPC is producing the complete transfer pricing study for tax year 2018, as prepared by Crestfield & Associates LLP. TY 2018 was the first taxable year under the TCJA, effective January 1, 2018, and accordingly the applicable U.S. federal corporate income tax rate for TY 2018 was 21%.

Cost-Sharing Arrangement. For TY 2018, PBI's cost-sharing percentage increased to 39.6% of total qualified R&D costs. Total qualified R&D costs subject to the CSA for TY 2018 were $523,800,000, yielding PBI's share of $207,420,000. The documentation includes updated RAB calculations reflecting an increased non-Americas revenue share relative to TY 2017, driven principally by the maturation of certain ex-U.S. product launches and expanded market penetration in key European and Asia-Pacific markets. The TY 2018 RAB analysis was prepared in accordance with Treas. Reg. § 1.482-7, consistent with the methodology employed in prior years.

Legacy IP License Agreement. The legacy IP royalty for TY 2018 was computed at 4.5% of non-Americas net sales of $762,300,000, resulting in a royalty of $34,303,500. The decline in legacy compound non-Americas net sales from TY 2017 to TY 2018 reflects the natural lifecycle dynamics of certain legacy products, including the loss of market exclusivity in several European jurisdictions and increased competition from generic entrants. The arm's-length analysis under Treas. Reg. § 1.482-4, including the supporting CUT analysis, was updated to reflect current-year market conditions and comparable transaction data.

PMI Contract Manufacturing Agreement. The PMI cost-plus arrangement continued at cost + 8%, consistent with TY 2017. The documentation includes an updated benchmarking analysis supporting the continued arm's-length nature of the markup.

Supporting Economic Analyses. The TY 2018 study includes updated supporting economic analyses and a functional analysis of PBI and PMI, reflecting any changes in the functions, assets, and risks attributable to each entity during the year.

3. Tax Year 2019 Transfer Pricing Documentation Report. PPC is producing the complete transfer pricing study for tax year 2019, as prepared by Crestfield & Associates LLP.

Cost-Sharing Arrangement. For TY 2019, PBI's cost-sharing percentage further increased to 41.1% of total qualified R&D costs. Total qualified R&D costs subject to the CSA for TY 2019 were $561,200,000, resulting in PBI's share of $230,650,000. The continued increase in PBI's cost-sharing percentage reflects the ongoing shift in the relative proportion of reasonably anticipated benefits toward non-Americas territories, attributable in part to expanded regulatory approvals and market access initiatives for key pipeline products, including Veritaxol (oncology) and Imvara (immunology), in the European Union, Japan, and certain emerging markets. The documentation includes updated RAB calculations and projections prepared in accordance with Treas. Reg. § 1.482-7, with supporting detail on the assumptions and data inputs underlying the RAB model.

Legacy IP License Agreement. The legacy IP royalty for TY 2019 was computed at 4.5% of non-Americas net sales of $691,800,000, resulting in a royalty of $31,131,000. The continued decline in legacy compound non-Americas net sales is consistent with the anticipated product lifecycle trajectory for those compounds, as discussed in the TY 2018 documentation. The arm's-length analysis and CUT benchmarking were updated for the current year.

PMI Contract Manufacturing Agreement. The PMI cost-plus arrangement continued at cost + 8%, with updated benchmarking support.

Supporting Economic Analyses. The TY 2019 study includes updated supporting economic analyses and functional analysis, consistent with prior years.

4. Tax Year 2020 Transfer Pricing Documentation Report. PPC is producing the complete transfer pricing study for tax year 2020, as prepared by Crestfield & Associates LLP.

Cost-Sharing Arrangement. For TY 2020, PBI's cost-sharing percentage increased to 42.7% of total qualified R&D costs. Total qualified R&D costs subject to the CSA for TY 2020 were $598,400,000, yielding PBI's share of $255,520,000. The TY 2020 RAB analysis reflects the continued trajectory of increasing non-Americas revenue share, driven by growth in European and Asia-Pacific markets, including additional regulatory approvals for Cerulon (rare disease) in the European Union and Japan. The documentation includes updated RAB calculations and projections prepared in accordance with Treas. Reg. § 1.482-7.

Legacy IP License Agreement. The legacy IP royalty for TY 2020 was computed at 4.5% of non-Americas net sales of $624,100,000, resulting in a royalty of $28,084,500. The ongoing attrition in legacy compound revenue reflects continued generic competition and volume erosion in the mature legacy portfolio.

PMI Contract Manufacturing Agreement. The PMI cost-plus arrangement continued at cost + 8%, with updated benchmarking support.

Financial Summary Data. For the examination team's reference, the TY 2020 documentation reflects the following consolidated financial data for the relevant entities: PPC reported fiscal year 2020 revenue of $6,820,000,000 and pre-tax income of $1,470,000,000 on a U.S. GAAP basis. PBI reported fiscal year 2020 revenue of €2,140,000,000 and pre-tax income of €1,060,000,000 on an Irish GAAP / IFRS basis. These figures are consistent with PPC's public filings and the financial statements included as supporting schedules in the transfer pricing documentation.

Supporting Economic Analyses. The TY 2020 study includes updated supporting economic analyses and functional analysis, consistent with prior years.

C. Supporting Workpapers and Appendices

For each of the four Tax Years at Issue, the production includes the following supporting materials, each of which was prepared by Crestfield & Associates LLP as part of the annual transfer pricing documentation process:

(i) Detailed Functional Analysis of PPC (U.S.) and PBI (Ireland). Each annual report includes a comprehensive functional analysis describing the functions performed, assets employed, and risks assumed by PPC in the United States and by PBI in Ireland, respectively. The functional analyses were prepared on the basis of interviews with key personnel at both entities, reviews of organizational charts and job descriptions, and analyses of management reporting structures and decision-making authority.

(ii) Description of PBI's Operations. The documentation includes a detailed description of PBI's operations in Ireland, including its regulatory, medical-affairs, commercial-strategy, and supply-chain personnel located in Dublin. PBI was established in 2012 with an initial headcount of 52 employees and has grown its Dublin-based workforce over the examination period, reaching approximately 185 employees by the end of 2020. PBI occupies approximately 18,000 square feet of office space at Sandyford Business Park, Dublin D18 K7T4. The description of PBI's operations reflects the evolution of PBI's operational capabilities and personnel over the four Tax Years at Issue.

(iii) Description of Key Products. The documentation includes product-level revenue data and descriptions for PPC's key pharmaceutical products, including Veritaxol (oncology), Imvara (immunology), and Cerulon (rare disease), with revenue breakdowns by territory (Americas and non-Americas).

(iv) Comparable Company and Comparable Transaction Search Methodology and Results. Each annual study includes a description of the search methodology employed to identify comparable companies and comparable transactions for purposes of the CPM/TNMM and CUT analyses, respectively, including the databases searched (e.g., Bureau van Dijk — Orbis, Fenmore Services Inc., Vireo Health IT, Sundial Health IT), the search criteria and screening filters applied, and the resulting sets of comparable companies and transactions. The results of the comparability analyses, including financial data for comparable companies and terms of comparable license agreements, are presented in appendices to each report.

(v) Financial Data and Computations Supporting RAB Cost-Sharing Percentages. The production includes the detailed financial data and computations underlying the reasonably anticipated benefit ("RAB") cost-sharing percentages for each tax year, including the revenue projection models, discount rate assumptions, and sensitivity analyses prepared by Crestfield.

(vi) R&D Cost Pool Composition and Allocation Methodology. Each annual study includes a detailed description of the composition of the qualified R&D cost pool, including categories of costs included (e.g., personnel costs, laboratory and equipment costs, clinical trial costs, contract research organization fees, regulatory filing costs) and the methodology used to allocate costs between PPC and PBI under the CSA.

(vii) Intercompany Agreement Summaries. The documentation includes summaries of the material intercompany agreements governing the transactions at issue, including the CSA (effective July 1, 2012), the legacy IP license agreement, and the PMI contract manufacturing agreement. Complete copies of these agreements are produced under Tab 5, as described in the Document Production Index below.

(viii) Description of the Platform Contribution Transaction ("PCT"). The documentation includes a description and analysis of the platform contribution transaction under which PBI made a lump-sum payment of $312,000,000 to PPC on July 1, 2012, representing PBI's buy-in to pre-existing intellectual property (including patents, know-how, trade secrets, and clinical data) as of the effective date of the CSA. The PCT payment was analyzed under Treas. Reg. § 1.482-7(g), and the documentation includes a description of the valuation methodology employed to determine the arm's-length amount of the PCT, including the income method valuation, key assumptions, and supporting data.

(ix) Corporate Structure Chart. The documentation includes a corporate structure chart reflecting PPC's ownership chain relevant to the intercompany transactions at issue, as follows:

• Penterra Pharmaceuticals Corp. ("PPC") — incorporated in Delaware, headquartered at 2200 Independence Boulevard, Princeton Junction, NJ 08550 (ultimate U.S. parent)

• Penterra Holdings Luxembourg S.à r.l. ("PHL") — organized under the laws of Luxembourg, registered at 14, rue Aldringen, L-1118 Luxembourg. PHL is a wholly owned subsidiary of PPC and is treated as a disregarded entity for U.S. federal income tax purposes pursuant to Treas. Reg. § 301.7701-3.

• Penterra Biopharma International DAC ("PBI") — organized under the laws of Ireland, registered at 4th Floor, Claremont House, Sandyford Business Park, Dublin D18 K7T4. PBI is a wholly owned subsidiary of PHL.

• Penterra Manufacturing Ireland Ltd. ("PMI") — organized under the laws of Ireland, registered at Unit 7, Ringaskiddy Industrial Estate, Co. Cork T12 PX29. PMI is a wholly owned subsidiary of PBI.

II. DOCUMENT PRODUCTION INDEX

The documents responsive to IDR No. 4 are being produced and organized as follows, with consecutive Bates numbering in the format PPC-TP-000001 through PPC-TP-[final page]:

The total production comprises 2,104 pages across five tabbed sections. Documents have been produced in native electronic format where available (including Excel workpapers and financial models), with corresponding hard copies also provided in three-ring binders. Native electronic files have been organized in folders corresponding to the tab structure set forth above and delivered via the IRS Secure Messaging Portal.

With respect to the intercompany agreements produced under Tab 5, PPC notes that these agreements may also be responsive to other outstanding Information Document Requests — specifically IDR No. 2 (requesting corporate organizational documents and intercompany agreements), IDR No. 3 (requesting documentation of cost-sharing arrangements), and IDR No. 10 (requesting licensing and royalty agreements). The production of these agreements in connection with IDR No. 4 is made without prejudice to PPC's right to supplement its responses to IDR Nos. 2, 3, and 10, and PPC reserves its right to cross-reference this production in any supplemental responses to those IDRs.

III. PRIVILEGE RESERVATION

PPC has conducted a review of all documentation responsive to IDR No. 4 to identify and withhold materials that are protected by the attorney-client privilege, the work-product doctrine, or any other applicable privilege or protection. To the extent that any attorney-client privileged communications, attorney work-product materials, or documents prepared in anticipation of litigation have been identified within the broader universe of materials relating to PPC's transfer pricing positions, those materials have been withheld from this production. Similarly, any materials prepared by or at the direction of Whitmore Valuation Group LLC under the Kovel arrangement established between Calderwood & Harkness LLP and Whitmore Valuation Group LLC — as documented in Kovel letter reference 1018-00009-KV, dated June 20, 2022 — have been withheld to the extent that such materials constitute attorney work product or communications made for the purpose of facilitating the rendition of legal advice. See United States v. Kovel, 296 F.2d 918 (2d Cir. 1961). Any withheld documents will be identified and described on PPC's privilege log, which will be provided to the examination team as and when required under applicable IRS procedures.

PPC notes that the transfer pricing documentation reports and supporting workpapers produced herewith — i.e., the annual studies prepared by Crestfield & Associates LLP for penalty-protection purposes under IRC § 6662(e)(3)(B) — are not being withheld on privilege grounds. PPC's production of these materials is consistent with the purpose for which they were prepared, namely to demonstrate reasonable cause and good faith in the determination of the Company's transfer pricing positions.

The inadvertent production of any privileged or protected document shall not constitute a waiver of any applicable privilege or protection. PPC reserves all rights under Federal Rule of Evidence 502 and any other applicable law with respect to the inadvertent disclosure of privileged materials.

IV. REPRESENTATIONS AND LIMITATIONS

PPC represents that the documents produced herewith constitute PPC's contemporaneous transfer pricing documentation as maintained pursuant to the requirements of IRC § 6662(e)(3)(B) and Treas. Reg. § 1.6662-6 for tax years 2017, 2018, 2019, and 2020. The documentation was prepared on a contemporaneous basis by Crestfield & Associates LLP and has been maintained in PPC's files in the ordinary course of business.

PPC reserves all rights to supplement this production with additional analyses, data, expert reports, or other materials as the examination progresses. Nothing in this production shall be construed as limiting PPC's ability to present additional evidence, arguments, or analysis in support of its transfer pricing positions at any stage of the examination or in any subsequent administrative or judicial proceeding.

The production of these documents does not constitute a concession, admission, or waiver of any legal position, defense, or privilege that PPC may assert in connection with the examination or any subsequent proceeding. PPC specifically reserves the right to challenge any proposed adjustments by the examination team on any available legal, factual, or procedural ground, including but not limited to the applicability of the arm's-length standard under IRC § 482, the appropriate transfer pricing method under the applicable regulations, the accuracy of any economic analysis, and the applicability of any penalty under IRC § 6662 or any other provision of the Code.

For the avoidance of doubt, PPC confirms that it was not a participant in the IRS Compliance Assurance Process ("CAP") for any of the Tax Years at Issue. PPC's Forms 1120, U.S. Corporation Income Tax Return, for tax years 2017, 2018, 2019, and 2020 are the federal income tax returns at issue in this examination.

V. REQUEST FOR CONFIRMATION OF RECEIPT

We respectfully request that Revenue Agent Dunleavy acknowledge receipt of this production by return correspondence or email at her earliest convenience. For any questions regarding this production, or to discuss any aspect of the produced documentation, please contact Garrett Simmons, Lead Associate, at Calderwood & Harkness LLP, 1735 Market Street, Suite 3100, Philadelphia, PA 19103, telephone (215) 864-7248, email gsimmons@calderwoodharkness.com. For matters requiring escalation or partner-level attention, please contact the undersigned, Leonard Cross, Responsible Partner, at (215) 864-7215, email lcross@calderwoodharkness.com.

VI. CLOSING

PPC and its counsel at Calderwood & Harkness LLP remain committed to cooperating fully with the examination team throughout this examination. We are prepared to discuss any questions that Revenue Agent Dunleavy or the examination team may have regarding the transfer pricing documentation produced herewith, including the methodologies employed, the economic analyses performed, or the factual bases for PPC's transfer pricing positions. We are also available to arrange meetings or conference calls with the relevant Crestfield & Associates personnel, as appropriate and subject to applicable scheduling constraints.

PPC reserves all rights under applicable law, including but not limited to its rights under the Internal Revenue Code, Treasury Regulations, applicable tax treaties, and administrative procedures.

We look forward to continuing to work with the examination team in an efficient and productive manner.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Leonard Cross Responsible Partner, Tax Department Calderwood & Harkness LLP 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Tel: (215) 864-7215

Email: lcross@calderwoodharkness.com

cc:

Marcus Whitfield, Vice President, Global Tax, Penterra Pharmaceuticals Corp., 2200 Independence Boulevard, Princeton Junction, NJ 08550

Deborah Staines, General Counsel, Penterra Pharmaceuticals Corp., 2200 Independence Boulevard, Princeton Junction, NJ 08550

Sylvia Hartwell, Billing Partner, Calderwood & Harkness LLP

Garrett Simmons, Lead Associate, Calderwood & Harkness LLP

Leila Nazari, Working Associate, Calderwood & Harkness LLP

Supervisory Revenue Agent Gerald Meskill, Team Manager, IRS Large Business & International Division

Enclosures:

Transfer Pricing Documentation Reports and Supporting Workpapers for Tax Years 2017, 2018, 2019, and 2020 (Tabs 1 through 5), as described herein, comprising 2,104 Bates-numbered pages (PPC-TP-000001 through PPC-TP-002104).

Tab	Description	Bates Range
Tab 1	TY 2017 Transfer Pricing Documentation Report and Supporting Workpapers	PPC-TP-000001 through PPC-TP-000487
Tab 2	TY 2018 Transfer Pricing Documentation Report and Supporting Workpapers	PPC-TP-000488 through PPC-TP-000961
Tab 3	TY 2019 Transfer Pricing Documentation Report and Supporting Workpapers	PPC-TP-000962 through PPC-TP-001438
Tab 4	TY 2020 Transfer Pricing Documentation Report and Supporting Workpapers	PPC-TP-001439 through PPC-TP-001927
Tab 5	Copies of Underlying Intercompany Agreements: (a) CSA effective July 1, 2012; (b) Legacy IP License Agreement; (c) PMI Contract Manufacturing Agreement	PPC-TP-001928 through PPC-TP-002104

CONFIDENTIAL — TAX EXAMINATION MATERIALS
CALDERWOOD & HARKNESS LLP Attorneys at Law
1735 Market Street, Suite 3100 Philadelphia, PA 19103 Tel: (215) 864-7200
Fax: (215) 864-7201
600 Lexington Avenue New York, NY 10022 Tel: (212) 479-6000
Fax: (212) 479-6001
www.calderwoodharkness.com
August 1, 2022
C&H Matter No. 1018-00009
VIA HAND DELIVERY AND SECURE ELECTRONIC TRANSMISSION
Revenue Agent Patricia Dunleavy Internal Revenue Service Large Business & International Division Northeast Compliance — Transfer Pricing Practice Area 600 Arch Street, Room 6214 Philadelphia, PA 19106
Re: Examination of Penterra Pharmaceuticals Corp. EIN: 22-3741856 Exam Team ID: LB&I-NE-TP-2022-00641 Tax Years Under Examination: 2017, 2018, 2019, 2020 Response to Information Document Request No. 4 — Contemporaneous Transfer Pricing Documentation
Dear Revenue Agent Dunleavy:
This firm represents Penterra Pharmaceuticals Corp. ("PPC" or the "Company") in connection with the above-referenced examination. I am Leonard Cross, Responsible Partner in the Tax Department at Calderwood & Harkness LLP, writing on behalf of PPC. As you are aware, IRS Form 2848, Power of Attorney and Declaration of Representative, was filed on June 8, 2022, authorizing the undersigned, together with Sylvia Hartwell, Garrett Simmons, and Leila Nazari, each of Calderwood & Harkness LLP, to represent PPC before the Internal Revenue Service in all matters relating to this examination for the tax years at issue.
We write in response to Information Document Request No. 4 ("IDR No. 4"), served on PPC on July 5, 2022, which requested production of PPC's contemporaneous transfer pricing documentation for tax years 2017, 2018, 2019, and 2020 (collectively, the "Tax Years at Issue"). PPC is providing the requested documentation on a timely basis, within the thirty-day response period established by IDR No. 4, as extended by mutual agreement between the undersigned and Revenue Agent Dunleavy in a telephone conference on July 11, 2022. The documentation described herein is being produced concurrently with the delivery of this letter, both in hard-copy binders and via the IRS Secure Messaging Portal, as arranged with your examination team.
Set forth below is a description of the documents being produced, followed by a document production index, applicable privilege reservations, and certain representations and limitations.
I. DESCRIPTION OF DOCUMENTS PRODUCED
A. Overview of PPC's Transfer Pricing Documentation Program
PPC maintained contemporaneous transfer pricing documentation for all four Tax Years at Issue — i.e., tax years 2017, 2018, 2019, and 2020 — pursuant to the requirements of Section 6662(e) of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder. The documentation was prepared and maintained in a manner intended to satisfy the penalty-protection standards set forth in IRC § 6662(e)(3)(B) and Treas. Reg. § 1.6662-6, thereby establishing reasonable cause and good faith for PPC's transfer pricing positions as reported on the Company's federal income tax returns (Forms 1120) for each of the Tax Years at Issue.
The transfer pricing documentation for all four tax years was prepared by Crestfield & Associates LLP ("Crestfield"), PPC's independent auditor and federal and state income tax return preparer, located at 1200 Avenue of the Americas, New York, NY 10036. The transfer pricing studies were prepared under the direction of Susan Lam, Transfer Pricing Partner at Crestfield, and in coordination with Martin Ogilvy, the lead Engagement Partner responsible for the overall PPC audit and tax engagement. Crestfield prepared each annual transfer pricing study on a contemporaneous basis — that is, each report was substantially completed prior to the filing date (including extensions) of PPC's federal income tax return for the applicable tax year — and the studies were updated and finalized in the ordinary course as part of PPC's annual tax compliance process.
PPC's transfer pricing documentation program covers all material intercompany transactions between PPC and its controlled foreign affiliates for each of the Tax Years at Issue. The intercompany transactions documented include, in particular, transactions between PPC and Penterra Biopharma International DAC ("PBI"), a Designated Activity Company organized under the laws of Ireland and registered at 4th Floor, Claremont House, Sandyford Business Park, Dublin D18 K7T4, Ireland. PBI is PPC's principal non-U.S. operating subsidiary, responsible for the commercialization, regulatory oversight, and distribution of PPC's pharmaceutical products in non-Americas territories. As described in greater detail below, the documented intercompany transactions include the qualified cost-sharing arrangement between PPC and PBI, the legacy intellectual property license agreement between PPC and PBI, and the contract manufacturing arrangement between PBI and its wholly owned Irish manufacturing subsidiary, Penterra Manufacturing Ireland Ltd. ("PMI"), located at Unit 7, Ringaskiddy Industrial Estate, Co. Cork T12 PX29, Ireland.
B. Enumeration of Produced Documents by Tax Year
The transfer pricing documentation reports and supporting workpapers produced herewith are organized by tax year, as described in the following subsections.
1. Tax Year 2017 Transfer Pricing Documentation Report. PPC is producing the complete transfer pricing study for tax year 2017, as prepared by Crestfield & Associates LLP. The TY 2017 report addresses each of the following principal categories of intercompany transactions:
Cost-Sharing Arrangement ("CSA"). The CSA between PPC and PBI became effective on July 1, 2012, and remained in effect throughout the Tax Years at Issue. For TY 2017, the transfer pricing documentation reports that PBI's cost-sharing percentage was 38.2% of total qualified research and development costs. Total qualified R&D costs subject to the CSA for TY 2017 were $487,300,000, resulting in PBI's share of the qualified cost pool amounting to $186,150,000. The documentation includes detailed reasonably anticipated benefit ("RAB") calculations and projections supporting the 38.2% allocation to PBI, as well as a comprehensive analysis of the CSA under the provisions of Treas. Reg. § 1.482-7 (governing qualified cost-sharing arrangements). The RAB methodology employed by Crestfield relied on forward-looking revenue projections for both the Americas territories (attributed to PPC) and the non-Americas territories (attributed to PBI), with appropriate adjustments for differences in market size, expected product launch timelines, pricing environments, and regulatory landscapes across the relevant geographies.
Legacy IP License Agreement. The TY 2017 documentation also covers the legacy intellectual property license agreement between PPC (as licensor) and PBI (as licensee), under which PBI pays PPC a royalty of 4.5% of net sales for non-Americas territories with respect to certain legacy compounds whose development was substantially completed prior to the effective date of the CSA. For TY 2017, non-Americas net sales of legacy compounds amounted to $814,600,000, resulting in a royalty payment of $36,657,000. The documentation includes an analysis of the arm's-length nature of the 4.5% royalty rate under Treas. Reg. § 1.482-4 (governing arm's-length consideration for the transfer or use of intangible property), supported by a comparable uncontrolled transaction ("CUT") analysis benchmarking the royalty rate against comparable third-party licensing transactions involving pharmaceutical intangibles of similar nature, stage of development, and therapeutic indication.
PMI Contract Manufacturing Agreement. The TY 2017 report further documents the contract manufacturing arrangement between PBI and PMI, under which PMI manufactures certain pharmaceutical products on a toll-manufacturing basis for PBI. The arrangement operates on a cost-plus basis, with PMI receiving reimbursement of its fully loaded manufacturing costs plus a markup of 8%. The documentation includes an analysis of the arm's-length nature of the 8% cost-plus markup, supported by a transactional net margin method ("TNMM") / comparable profits method ("CPM") benchmarking analysis of comparable contract manufacturers in the European pharmaceutical sector.
Supporting Economic Analyses. The TY 2017 study includes supporting economic analyses consisting of the CUT method for the legacy IP royalty, and the CPM/TNMM for the evaluation of PBI's overall profit margins and PMI's contract manufacturing returns. The documentation further includes a detailed functional analysis of both PBI and PMI, describing the functions performed, assets employed, and risks assumed by each entity.
It is noted for the examination team's reference that the applicable U.S. federal corporate income tax rate for TY 2017 was 35%, as TY 2017 preceded the effective date of the Tax Cuts and Jobs Act of 2017 ("TCJA"), Pub. L. No. 115-97.
2. Tax Year 2018 Transfer Pricing Documentation Report. PPC is producing the complete transfer pricing study for tax year 2018, as prepared by Crestfield & Associates LLP. TY 2018 was the first taxable year under the TCJA, effective January 1, 2018, and accordingly the applicable U.S. federal corporate income tax rate for TY 2018 was 21%.
Cost-Sharing Arrangement. For TY 2018, PBI's cost-sharing percentage increased to 39.6% of total qualified R&D costs. Total qualified R&D costs subject to the CSA for TY 2018 were $523,800,000, yielding PBI's share of $207,420,000. The documentation includes updated RAB calculations reflecting an increased non-Americas revenue share relative to TY 2017, driven principally by the maturation of certain ex-U.S. product launches and expanded market penetration in key European and Asia-Pacific markets. The TY 2018 RAB analysis was prepared in accordance with Treas. Reg. § 1.482-7, consistent with the methodology employed in prior years.
Legacy IP License Agreement. The legacy IP royalty for TY 2018 was computed at 4.5% of non-Americas net sales of $762,300,000, resulting in a royalty of $34,303,500. The decline in legacy compound non-Americas net sales from TY 2017 to TY 2018 reflects the natural lifecycle dynamics of certain legacy products, including the loss of market exclusivity in several European jurisdictions and increased competition from generic entrants. The arm's-length analysis under Treas. Reg. § 1.482-4, including the supporting CUT analysis, was updated to reflect current-year market conditions and comparable transaction data.
PMI Contract Manufacturing Agreement. The PMI cost-plus arrangement continued at cost + 8%, consistent with TY 2017. The documentation includes an updated benchmarking analysis supporting the continued arm's-length nature of the markup.
Supporting Economic Analyses. The TY 2018 study includes updated supporting economic analyses and a functional analysis of PBI and PMI, reflecting any changes in the functions, assets, and risks attributable to each entity during the year.
3. Tax Year 2019 Transfer Pricing Documentation Report. PPC is producing the complete transfer pricing study for tax year 2019, as prepared by Crestfield & Associates LLP.
Cost-Sharing Arrangement. For TY 2019, PBI's cost-sharing percentage further increased to 41.1% of total qualified R&D costs. Total qualified R&D costs subject to the CSA for TY 2019 were $561,200,000, resulting in PBI's share of $230,650,000. The continued increase in PBI's cost-sharing percentage reflects the ongoing shift in the relative proportion of reasonably anticipated benefits toward non-Americas territories, attributable in part to expanded regulatory approvals and market access initiatives for key pipeline products, including Veritaxol (oncology) and Imvara (immunology), in the European Union, Japan, and certain emerging markets. The documentation includes updated RAB calculations and projections prepared in accordance with Treas. Reg. § 1.482-7, with supporting detail on the assumptions and data inputs underlying the RAB model.
Legacy IP License Agreement. The legacy IP royalty for TY 2019 was computed at 4.5% of non-Americas net sales of $691,800,000, resulting in a royalty of $31,131,000. The continued decline in legacy compound non-Americas net sales is consistent with the anticipated product lifecycle trajectory for those compounds, as discussed in the TY 2018 documentation. The arm's-length analysis and CUT benchmarking were updated for the current year.
PMI Contract Manufacturing Agreement. The PMI cost-plus arrangement continued at cost + 8%, with updated benchmarking support.
Supporting Economic Analyses. The TY 2019 study includes updated supporting economic analyses and functional analysis, consistent with prior years.
4. Tax Year 2020 Transfer Pricing Documentation Report. PPC is producing the complete transfer pricing study for tax year 2020, as prepared by Crestfield & Associates LLP.
Cost-Sharing Arrangement. For TY 2020, PBI's cost-sharing percentage increased to 42.7% of total qualified R&D costs. Total qualified R&D costs subject to the CSA for TY 2020 were $598,400,000, yielding PBI's share of $255,520,000. The TY 2020 RAB analysis reflects the continued trajectory of increasing non-Americas revenue share, driven by growth in European and Asia-Pacific markets, including additional regulatory approvals for Cerulon (rare disease) in the European Union and Japan. The documentation includes updated RAB calculations and projections prepared in accordance with Treas. Reg. § 1.482-7.
Legacy IP License Agreement. The legacy IP royalty for TY 2020 was computed at 4.5% of non-Americas net sales of $624,100,000, resulting in a royalty of $28,084,500. The ongoing attrition in legacy compound revenue reflects continued generic competition and volume erosion in the mature legacy portfolio.
PMI Contract Manufacturing Agreement. The PMI cost-plus arrangement continued at cost + 8%, with updated benchmarking support.
Financial Summary Data. For the examination team's reference, the TY 2020 documentation reflects the following consolidated financial data for the relevant entities: PPC reported fiscal year 2020 revenue of $6,820,000,000 and pre-tax income of $1,470,000,000 on a U.S. GAAP basis. PBI reported fiscal year 2020 revenue of €2,140,000,000 and pre-tax income of €1,060,000,000 on an Irish GAAP / IFRS basis. These figures are consistent with PPC's public filings and the financial statements included as supporting schedules in the transfer pricing documentation.
Supporting Economic Analyses. The TY 2020 study includes updated supporting economic analyses and functional analysis, consistent with prior years.
C. Supporting Workpapers and Appendices
For each of the four Tax Years at Issue, the production includes the following supporting materials, each of which was prepared by Crestfield & Associates LLP as part of the annual transfer pricing documentation process:
(i) Detailed Functional Analysis of PPC (U.S.) and PBI (Ireland). Each annual report includes a comprehensive functional analysis describing the functions performed, assets employed, and risks assumed by PPC in the United States and by PBI in Ireland, respectively. The functional analyses were prepared on the basis of interviews with key personnel at both entities, reviews of organizational charts and job descriptions, and analyses of management reporting structures and decision-making authority.
(ii) Description of PBI's Operations. The documentation includes a detailed description of PBI's operations in Ireland, including its regulatory, medical-affairs, commercial-strategy, and supply-chain personnel located in Dublin. PBI was established in 2012 with an initial headcount of 52 employees and has grown its Dublin-based workforce over the examination period, reaching approximately 185 employees by the end of 2020. PBI occupies approximately 18,000 square feet of office space at Sandyford Business Park, Dublin D18 K7T4. The description of PBI's operations reflects the evolution of PBI's operational capabilities and personnel over the four Tax Years at Issue.
(iii) Description of Key Products. The documentation includes product-level revenue data and descriptions for PPC's key pharmaceutical products, including Veritaxol (oncology), Imvara (immunology), and Cerulon (rare disease), with revenue breakdowns by territory (Americas and non-Americas).
(iv) Comparable Company and Comparable Transaction Search Methodology and Results. Each annual study includes a description of the search methodology employed to identify comparable companies and comparable transactions for purposes of the CPM/TNMM and CUT analyses, respectively, including the databases searched (e.g., Bureau van Dijk — Orbis, Fenmore Services Inc., Vireo Health IT, Sundial Health IT), the search criteria and screening filters applied, and the resulting sets of comparable companies and transactions. The results of the comparability analyses, including financial data for comparable companies and terms of comparable license agreements, are presented in appendices to each report.
(v) Financial Data and Computations Supporting RAB Cost-Sharing Percentages. The production includes the detailed financial data and computations underlying the reasonably anticipated benefit ("RAB") cost-sharing percentages for each tax year, including the revenue projection models, discount rate assumptions, and sensitivity analyses prepared by Crestfield.
(vi) R&D Cost Pool Composition and Allocation Methodology. Each annual study includes a detailed description of the composition of the qualified R&D cost pool, including categories of costs included (e.g., personnel costs, laboratory and equipment costs, clinical trial costs, contract research organization fees, regulatory filing costs) and the methodology used to allocate costs between PPC and PBI under the CSA.
(vii) Intercompany Agreement Summaries. The documentation includes summaries of the material intercompany agreements governing the transactions at issue, including the CSA (effective July 1, 2012), the legacy IP license agreement, and the PMI contract manufacturing agreement. Complete copies of these agreements are produced under Tab 5, as described in the Document Production Index below.
(viii) Description of the Platform Contribution Transaction ("PCT"). The documentation includes a description and analysis of the platform contribution transaction under which PBI made a lump-sum payment of $312,000,000 to PPC on July 1, 2012, representing PBI's buy-in to pre-existing intellectual property (including patents, know-how, trade secrets, and clinical data) as of the effective date of the CSA. The PCT payment was analyzed under Treas. Reg. § 1.482-7(g), and the documentation includes a description of the valuation methodology employed to determine the arm's-length amount of the PCT, including the income method valuation, key assumptions, and supporting data.
(ix) Corporate Structure Chart. The documentation includes a corporate structure chart reflecting PPC's ownership chain relevant to the intercompany transactions at issue, as follows:
• Penterra Pharmaceuticals Corp. ("PPC") — incorporated in Delaware, headquartered at 2200 Independence Boulevard, Princeton Junction, NJ 08550 (ultimate U.S. parent)
• Penterra Holdings Luxembourg S.à r.l. ("PHL") — organized under the laws of Luxembourg, registered at 14, rue Aldringen, L-1118 Luxembourg. PHL is a wholly owned subsidiary of PPC and is treated as a disregarded entity for U.S. federal income tax purposes pursuant to Treas. Reg. § 301.7701-3.
• Penterra Biopharma International DAC ("PBI") — organized under the laws of Ireland, registered at 4th Floor, Claremont House, Sandyford Business Park, Dublin D18 K7T4. PBI is a wholly owned subsidiary of PHL.
• Penterra Manufacturing Ireland Ltd. ("PMI") — organized under the laws of Ireland, registered at Unit 7, Ringaskiddy Industrial Estate, Co. Cork T12 PX29. PMI is a wholly owned subsidiary of PBI.
II. DOCUMENT PRODUCTION INDEX
The documents responsive to IDR No. 4 are being produced and organized as follows, with consecutive Bates numbering in the format PPC-TP-000001 through PPC-TP-[final page]:
The total production comprises 2,104 pages across five tabbed sections. Documents have been produced in native electronic format where available (including Excel workpapers and financial models), with corresponding hard copies also provided in three-ring binders. Native electronic files have been organized in folders corresponding to the tab structure set forth above and delivered via the IRS Secure Messaging Portal.
With respect to the intercompany agreements produced under Tab 5, PPC notes that these agreements may also be responsive to other outstanding Information Document Requests — specifically IDR No. 2 (requesting corporate organizational documents and intercompany agreements), IDR No. 3 (requesting documentation of cost-sharing arrangements), and IDR No. 10 (requesting licensing and royalty agreements). The production of these agreements in connection with IDR No. 4 is made without prejudice to PPC's right to supplement its responses to IDR Nos. 2, 3, and 10, and PPC reserves its right to cross-reference this production in any supplemental responses to those IDRs.
III. PRIVILEGE RESERVATION
PPC has conducted a review of all documentation responsive to IDR No. 4 to identify and withhold materials that are protected by the attorney-client privilege, the work-product doctrine, or any other applicable privilege or protection. To the extent that any attorney-client privileged communications, attorney work-product materials, or documents prepared in anticipation of litigation have been identified within the broader universe of materials relating to PPC's transfer pricing positions, those materials have been withheld from this production. Similarly, any materials prepared by or at the direction of Whitmore Valuation Group LLC under the Kovel arrangement established between Calderwood & Harkness LLP and Whitmore Valuation Group LLC — as documented in Kovel letter reference 1018-00009-KV, dated June 20, 2022 — have been withheld to the extent that such materials constitute attorney work product or communications made for the purpose of facilitating the rendition of legal advice. See United States v. Kovel, 296 F.2d 918 (2d Cir. 1961). Any withheld documents will be identified and described on PPC's privilege log, which will be provided to the examination team as and when required under applicable IRS procedures.
PPC notes that the transfer pricing documentation reports and supporting workpapers produced herewith — i.e., the annual studies prepared by Crestfield & Associates LLP for penalty-protection purposes under IRC § 6662(e)(3)(B) — are not being withheld on privilege grounds. PPC's production of these materials is consistent with the purpose for which they were prepared, namely to demonstrate reasonable cause and good faith in the determination of the Company's transfer pricing positions.
The inadvertent production of any privileged or protected document shall not constitute a waiver of any applicable privilege or protection. PPC reserves all rights under Federal Rule of Evidence 502 and any other applicable law with respect to the inadvertent disclosure of privileged materials.
IV. REPRESENTATIONS AND LIMITATIONS
PPC represents that the documents produced herewith constitute PPC's contemporaneous transfer pricing documentation as maintained pursuant to the requirements of IRC § 6662(e)(3)(B) and Treas. Reg. § 1.6662-6 for tax years 2017, 2018, 2019, and 2020. The documentation was prepared on a contemporaneous basis by Crestfield & Associates LLP and has been maintained in PPC's files in the ordinary course of business.
PPC reserves all rights to supplement this production with additional analyses, data, expert reports, or other materials as the examination progresses. Nothing in this production shall be construed as limiting PPC's ability to present additional evidence, arguments, or analysis in support of its transfer pricing positions at any stage of the examination or in any subsequent administrative or judicial proceeding.
The production of these documents does not constitute a concession, admission, or waiver of any legal position, defense, or privilege that PPC may assert in connection with the examination or any subsequent proceeding. PPC specifically reserves the right to challenge any proposed adjustments by the examination team on any available legal, factual, or procedural ground, including but not limited to the applicability of the arm's-length standard under IRC § 482, the appropriate transfer pricing method under the applicable regulations, the accuracy of any economic analysis, and the applicability of any penalty under IRC § 6662 or any other provision of the Code.
For the avoidance of doubt, PPC confirms that it was not a participant in the IRS Compliance Assurance Process ("CAP") for any of the Tax Years at Issue. PPC's Forms 1120, U.S. Corporation Income Tax Return, for tax years 2017, 2018, 2019, and 2020 are the federal income tax returns at issue in this examination.
V. REQUEST FOR CONFIRMATION OF RECEIPT
We respectfully request that Revenue Agent Dunleavy acknowledge receipt of this production by return correspondence or email at her earliest convenience. For any questions regarding this production, or to discuss any aspect of the produced documentation, please contact Garrett Simmons, Lead Associate, at Calderwood & Harkness LLP, 1735 Market Street, Suite 3100, Philadelphia, PA 19103, telephone (215) 864-7248, email gsimmons@calderwoodharkness.com. For matters requiring escalation or partner-level attention, please contact the undersigned, Leonard Cross, Responsible Partner, at (215) 864-7215, email lcross@calderwoodharkness.com.
VI. CLOSING
PPC and its counsel at Calderwood & Harkness LLP remain committed to cooperating fully with the examination team throughout this examination. We are prepared to discuss any questions that Revenue Agent Dunleavy or the examination team may have regarding the transfer pricing documentation produced herewith, including the methodologies employed, the economic analyses performed, or the factual bases for PPC's transfer pricing positions. We are also available to arrange meetings or conference calls with the relevant Crestfield & Associates personnel, as appropriate and subject to applicable scheduling constraints.
PPC reserves all rights under applicable law, including but not limited to its rights under the Internal Revenue Code, Treasury Regulations, applicable tax treaties, and administrative procedures.
We look forward to continuing to work with the examination team in an efficient and productive manner.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Leonard Cross Responsible Partner, Tax Department Calderwood & Harkness LLP 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Tel: (215) 864-7215
Email: lcross@calderwoodharkness.com
cc:
Marcus Whitfield, Vice President, Global Tax, Penterra Pharmaceuticals Corp., 2200 Independence Boulevard, Princeton Junction, NJ 08550
Deborah Staines, General Counsel, Penterra Pharmaceuticals Corp., 2200 Independence Boulevard, Princeton Junction, NJ 08550
Sylvia Hartwell, Billing Partner, Calderwood & Harkness LLP
Garrett Simmons, Lead Associate, Calderwood & Harkness LLP
Leila Nazari, Working Associate, Calderwood & Harkness LLP
Supervisory Revenue Agent Gerald Meskill, Team Manager, IRS Large Business & International Division
Enclosures:
Transfer Pricing Documentation Reports and Supporting Workpapers for Tax Years 2017, 2018, 2019, and 2020 (Tabs 1 through 5), as described herein, comprising 2,104 Bates-numbered pages (PPC-TP-000001 through PPC-TP-002104).
Tab | Description | Bates Range
Tab 1 | TY 2017 Transfer Pricing Documentation Report and Supporting Workpapers | PPC-TP-000001 through PPC-TP-000487
Tab 2 | TY 2018 Transfer Pricing Documentation Report and Supporting Workpapers | PPC-TP-000488 through PPC-TP-000961
Tab 3 | TY 2019 Transfer Pricing Documentation Report and Supporting Workpapers | PPC-TP-000962 through PPC-TP-001438
Tab 4 | TY 2020 Transfer Pricing Documentation Report and Supporting Workpapers | PPC-TP-001439 through PPC-TP-001927
Tab 5 | Copies of Underlying Intercompany Agreements: (a) CSA effective July 1, 2012; (b) Legacy IP License Agreement; (c) PMI Contract Manufacturing Agreement | PPC-TP-001928 through PPC-TP-002104

CONFIDENTIAL — TAX EXAMINATION MATERIALS

VIA HAND DELIVERY AND SECURE ELECTRONIC TRANSMISSION

I. DESCRIPTION OF DOCUMENTS PRODUCED

II. DOCUMENT PRODUCTION INDEX

III. PRIVILEGE RESERVATION

IV. REPRESENTATIONS AND LIMITATIONS

V. REQUEST FOR CONFIRMATION OF RECEIPT

VI. CLOSING

CALDERWOOD & HARKNESS LLP

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Parties

Dates

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