1018-00009 · Client 1018 · IDR Responses

idr-12-response.docx DOCUMENT M&A / Corporate

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CONFIDENTIAL — TAX EXAMINATION MATERIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Telephone: (215) 864-7200 Facsimile: (215) 864-7201 www.calderwoodharkness.com

October 12, 2022

Revenue Agent Patricia Dunleavy Internal Revenue Service Large Business & International Division 600 Arch Street, Room 6214 Philadelphia, PA 19106

Exam Team ID: LB&I-NE-TP-2022-00641

Re: Penterra Pharmaceuticals Corp. (EIN: 22-3741856) — Response to Information Document Request No. 12 Tax Years Under Examination: 2017, 2018, 2019, 2020 C&H Matter Number: 1018-00009

Dear Revenue Agent Dunleavy:

I am Leonard Cross, Responsible Partner in the Tax Department of Calderwood & Harkness LLP ("C&H"), and I write on behalf of our client, Penterra Pharmaceuticals Corp. ("PPC"), in response to Information Document Request ("IDR") No. 12, issued by your examination team on September 14, 2022. As reflected on the IRS Form 2848 (Power of Attorney and Declaration of Representative) filed with the Internal Revenue Service on June 8, 2022, I am authorized, along with my colleagues Sylvia Hartwell, Garrett Simmons, and Leila Nazari of this firm, to represent PPC in all matters related to the examination of PPC's federal income tax returns for taxable years 2017, 2018, 2019, and 2020. IDR No. 12 requests documentation of the office lease, physical premises, and evidence of physical presence in Ireland of PPC's wholly owned subsidiary, Penterra Biopharma International DAC ("PBI"), a designated activity company incorporated and tax-resident in Ireland. This letter and the accompanying document production are submitted on behalf of PPC and PBI in response to that request.

PPC and PBI take seriously the Service's interest in understanding PBI's physical presence and operational infrastructure in Ireland, and we are pleased to provide the comprehensive documentation set forth below. We trust that the materials produced herein, together with the responses previously furnished in connection with other IDRs in this examination, will demonstrate the substantive nature of PBI's presence and operations at its premises in Dublin, Ireland.

1. Summary of Documents Produced

In response to IDR No. 12, PPC is producing the following categories of documents, each of which is described in greater detail in Sections 2 and 3 below:

(a) PBI's commercial lease agreement for office premises at Sandyford Business Park, Dublin, Ireland;

(b) Lease amendments, expansion agreements, and renewal documentation spanning the period from PBI's establishment in 2012 through and beyond the examination years 2017–2020;

(d) Utility bills, telecommunications records, and related facilities records for the Dublin premises for the examination years 2017–2020;

(e) Commercial property and liability insurance certificates for PBI's premises at Claremont House, covering the examination years 2017–2020; and

(f) Building access badge records and security system records reflecting the regular physical presence of PBI personnel at the Dublin office.

All documents responsive to IDR No. 12 are produced as Bates-numbered copies, bearing the prefix "PPC-IDR12-," and are accompanied by a comprehensive Production Index attached hereto, which identifies each document by Bates number range, document description, date, and document type. The Production Index is described further in Section 5 below.

PPC and PBI expressly reserve all rights, privileges, and objections, including but not limited to the attorney-client privilege, the work-product doctrine, and any other applicable protections, as more fully set forth in Section 6 of this letter. The production of documents in response to IDR No. 12 does not constitute, and shall not be construed as, a waiver of any such privilege, protection, or objection.

2. PBI Office Lease — Description of Produced Documents

2.1 Principal Lease Agreement

The principal document produced in this category is the commercial lease agreement (the "Lease") between PBI, as tenant, and Claremount Property Holdings Limited, an unrelated Irish property management company, as landlord, for office premises comprising approximately 18,000 square feet (approximately 1,672 square meters) of Class A office space located on the 4th Floor, Claremont House, Sandyford Business Park, Dublin D18 K7T4, Ireland. The premises at Claremont House serve as PBI's registered office address and have served in that capacity since PBI's incorporation. The Lease is produced at Bates numbers PPC-IDR12-000001 through PPC-IDR12-000087.

PBI was incorporated as a designated activity company under the laws of Ireland on March 15, 2012, and it entered into the original Lease with Claremount Property Holdings Limited effective as of that same date. PBI has maintained the Claremont House premises continuously since its establishment — a period now exceeding ten years — and the premises have at all relevant times served as the principal location from which PBI conducts its day-to-day commercial, regulatory, and strategic operations.

The Lease provides for an initial term of ten years from the date of commencement, with two successive five-year renewal options exercisable at PBI's election, and contains customary provisions for a Class A commercial office lease in the Dublin market, including provisions governing rent, common area maintenance charges, tenant improvement allowances, permitted alterations, insurance obligations, assignment and subletting restrictions, and termination and default provisions. The rent payable under the Lease is established at arm's-length commercial rates, and the landlord, Claremount Property Holdings Limited, is an unrelated third-party entity with no ownership, governance, or other relationship to PPC, PBI, or any affiliate thereof. The arm's-length character of the Lease terms is further confirmed by the fact that the rental rates reflected in the Lease and its subsequent amendments are consistent with prevailing market rates for comparable Class A office space in the Sandyford Business Park submarket, as reported by independent commercial real estate sources.

2.2 Lease Amendments and Renewals

Over the course of PBI's operations, the Lease has been amended on multiple occasions to accommodate PBI's growth and expanding operational needs. PBI's headcount has grown from 52 employees at the time of its establishment in 2012 to 185 employees as of December 31, 2020. This substantial growth in personnel has necessitated periodic expansions of PBI's leased premises at Claremont House, and the lease amendments produced herein document those expansions.

The following lease amendments are included in the production:

(i) First Amendment to Lease (effective September 1, 2014), expanding PBI's leased premises from the original footprint of approximately 8,500 square feet to approximately 12,000 square feet, to accommodate PBI's growth to approximately 85 employees and the addition of dedicated regulatory-affairs and medical-affairs work areas. This amendment is produced at Bates numbers PPC-IDR12-000088 through PPC-IDR12-000112.

(ii) Second Amendment to Lease (effective February 1, 2017), further expanding PBI's leased premises to approximately 15,500 square feet, corresponding to PBI's headcount of approximately 130 employees at that time and the establishment of a dedicated commercial-strategy team within PBI's Dublin operations. This amendment is produced at Bates numbers PPC-IDR12-000113 through PPC-IDR12-000138.

(iii) Third Amendment to Lease (effective July 1, 2019), expanding PBI's leased premises to their current footprint of approximately 18,000 square feet, to accommodate PBI's continued growth to approximately 170 employees and the addition of expanded supply-chain management and market-access capabilities. This amendment is produced at Bates numbers PPC-IDR12-000139 through PPC-IDR12-000167.

(iv) Lease Renewal Agreement (effective March 15, 2022), documenting PBI's exercise of its first five-year renewal option, extending the Lease term through March 14, 2027. This renewal agreement is produced at Bates numbers PPC-IDR12-000168 through PPC-IDR12-000189. Although the renewal date falls outside the examination years 2017–2020, the document is produced as it confirms PBI's continued and ongoing presence at the Claremont House premises and reflects PBI's long-term commitment to its Dublin operations.

Each of these amendments was negotiated at arm's length with Claremount Property Holdings Limited and reflects market-rate adjustments to the base rent commensurate with the additional square footage leased. The progressive expansion of PBI's premises directly tracks PBI's headcount growth and the broadening scope of its operational responsibilities during the relevant period.

2.3 Rent Payment Records

PPC is producing rent payment records demonstrating PBI's continuous occupancy of and payment for its premises at Claremont House throughout the examination years 2017, 2018, 2019, and 2020. These records include monthly rent invoices issued by Claremount Property Holdings Limited, together with corresponding bank statements and wire transfer confirmations reflecting PBI's payment of those invoices. The rent payment records are produced at Bates numbers PPC-IDR12-000190 through PPC-IDR12-000342.

All rent payments reflected in the produced records were made from PBI's operating accounts maintained at Glenmore Bank Ireland plc, PBI's principal banking institution in Ireland. PBI maintains its own independent treasury operations, including its own bank accounts, and PBI's rent and other operating expenditures are funded from revenues generated by PBI's commercial activities. The rent payment records thus serve as further evidence of PBI's independent financial operations and substantive economic presence in Ireland.

3. Evidence of Physical Presence — Description of Produced Documents

3.1 Photographs and Floor Plans

PPC is producing a series of date-stamped photographs of PBI's offices at Claremont House, Sandyford Business Park, as well as architectural floor plans depicting the layout and configuration of PBI's approximately 18,000-square-foot office space. The photographs and floor plans are produced at Bates numbers PPC-IDR12-000343 through PPC-IDR12-000412.

The photographs include images of the following areas of PBI's office premises:

• The main reception area and lobby of PBI's offices on the 4th Floor of Claremont House, bearing PBI's corporate signage and branding;

• Open-plan office areas housing PBI's regulatory-affairs, medical-affairs, commercial-strategy, and supply-chain management teams;

• The office of PBI's Managing Director, Aidan Naughton, and the adjoining executive suite;

• Conference rooms and meeting facilities used for PBI board meetings, management committee meetings, and other business purposes, including the principal boardroom in which PBI's board of directors has conducted 42 board meetings during the examination period 2017–2020 (consisting of quarterly scheduled meetings as well as special sessions convened as needed);

• The IT server room and telecommunications infrastructure supporting PBI's dedicated communications systems; and

• Common areas, including breakrooms, print and copy centers, and building access entry points.

The architectural floor plans depict the allocation of PBI's approximately 18,000 square feet across functional work areas, and they illustrate the dedicated spaces assigned to each of PBI's principal operational teams. The floor plans reflect the configuration of the premises following the Third Amendment to Lease (effective July 1, 2019), which represents the office layout in effect during the latter portion of the examination period.

3.2 Building Access and Security Records

PPC is producing building access badge records and security system records for PBI employees at Claremont House, Sandyford Business Park. These records are produced at Bates numbers PPC-IDR12-000413 through PPC-IDR12-000578.

Claremont House utilizes an electronic access-control system that requires employees to present proximity-enabled identification badges at building entry points and at elevator access points to reach the upper floors, including PBI's 4th Floor offices. The building access records produced herein include:

• Badge issuance records documenting the assignment of building access badges to PBI employees, corresponding to each employee's date of hire or onboarding at PBI's Dublin offices. These records reflect the issuance of badges to each of PBI's 185 employees (as of December 31, 2020) and track badge issuance in connection with PBI's headcount growth over the examination period;

• Building entry/exit logs generated by the Claremont House access-control system, reflecting the regular daily presence of PBI employees at the premises during the examination years 2017–2020. These logs demonstrate a consistent and substantial pattern of employee attendance at PBI's offices throughout each examination year; and

• Visitor access logs reflecting the registration of external visitors — including business partners, consultants, regulatory advisors, auditors, and other parties — attending meetings at PBI's premises.

These records provide objective, contemporaneous evidence that PBI's offices at Claremont House are actively and regularly occupied by a substantial workforce, and that PBI's operations in Dublin are not nominal or pro forma in nature.

3.3 Utility and Telecommunications Records

PPC is producing utility bills and telecommunications records in PBI's name for the Sandyford Business Park premises for the examination years 2017 through 2020. These records are produced at Bates numbers PPC-IDR12-000579 through PPC-IDR12-000694.

The utility records include monthly billing statements for electricity service provided by Brightwater Group and for natural gas service, each in PBI's name and reflecting consumption levels consistent with an actively occupied commercial office of approximately 18,000 square feet. The telecommunications records include invoices for PBI's dedicated business telephone lines, broadband internet service provided by Halcyon Industries, and PBI's corporate mobile telephone accounts for Dublin-based employees. Additionally, PPC is producing records reflecting PBI's enterprise-level IT infrastructure at the Dublin premises, including a dedicated virtual private network (VPN) connection linking PBI's Dublin systems to its operational databases and enterprise resource planning (ERP) platforms.

3.4 Facilities Management and Service Contracts

PPC is producing contracts with third-party facilities management, cleaning, maintenance, and IT service providers engaged by PBI for the Claremont House premises. These documents are produced at Bates numbers PPC-IDR12-000695 through PPC-IDR12-000798.

The produced records include:

• A facilities management agreement between PBI and Granite Harbor Group, covering routine office cleaning, building maintenance, reception staffing, and related facilities services for PBI's 4th Floor premises;

• An IT managed-services agreement between PBI and Ostrander Partners LLC, an Irish IT services provider, covering the management and maintenance of PBI's on-premises IT infrastructure, including server hardware, network equipment, desktop and laptop equipment, and end-user technical support;

• Equipment inventories listing the IT hardware, telecommunications equipment, office furniture, and other fixed assets deployed at PBI's Dublin office; and

• Maintenance and service records documenting the ongoing provision of facilities management, cleaning, and IT services at the Claremont House premises throughout the examination years 2017–2020.

These contracts and service records further evidence the operational reality and continuity of PBI's physical presence in Dublin.

3.5 Insurance Certificates

PPC is producing commercial property insurance and commercial general liability insurance certificates for PBI's premises at Claremont House, listing PBI as the named insured. These certificates are produced at Bates numbers PPC-IDR12-000799 through PPC-IDR12-000836.

The insurance certificates cover the examination years 2017, 2018, 2019, and 2020, and they reflect PBI's maintenance of comprehensive insurance coverage for its Dublin premises, including coverage for property damage, business interruption, public liability, and employer's liability. The policies were issued by Severin Insurance (Ireland Branch) and were renewed annually throughout the examination period. PBI is identified as the named insured on each certificate, further confirming PBI's status as the occupant and operator of the premises.

4. Additional Context Regarding PBI's Physical Presence and Economic Substance

While the documents produced in response to IDR No. 12 are focused specifically on PBI's office lease, physical premises, and evidence of physical presence in Ireland, PPC respectfully notes that these documents constitute one component of a broader body of evidence demonstrating PBI's substantive operations and genuine economic substance in Ireland. The physical-presence documentation produced herein should be considered in conjunction with the documentation previously furnished in response to other IDRs in this examination, which together establish the comprehensive scope of PBI's Irish operations.

PBI serves as the intellectual-property-holding company and commercial principal for the non-Americas commercialization of PPC's pharmaceutical products. In that capacity, PBI manages contract manufacturing arrangements, distribution logistics, regulatory submissions, and commercial-strategy decisions across the Europe, Middle East, and Africa ("EMEA") and Asia-Pacific ("APAC") regions. PBI's Dublin-based personnel — comprising 185 employees as of December 31, 2020 — include experienced professionals in regulatory affairs, medical affairs, commercial strategy, supply-chain management, finance, and legal and compliance functions. These personnel are responsible for, among other activities, making key commercial decisions including pricing determinations, market-entry strategy, distribution partner selection and management, and regulatory-submission planning across 68 country markets in the non-Americas territories.

During the examination years 2017 through 2020, PBI incurred cumulative regulatory expenditures of approximately €47.2 million in connection with regulatory submissions, marketing authorization applications, and post-marketing regulatory compliance activities across its non-Americas territories. These expenditures reflect PBI's active and substantial engagement in the regulatory processes necessary to commercialize PPC's product portfolio outside the Americas and further evidence the genuineness and materiality of PBI's operations.

PPC respectfully cross-references the following prior IDR responses, which provide complementary evidence relevant to the Service's assessment of PBI's economic substance:

• Response to IDR No. 8 (submitted August 19, 2022): This response provided detailed information regarding PBI's personnel and headcount, including organizational charts, employee rosters, employment contracts, and compensation data. The IDR No. 8 response documented PBI's growth from 52 employees at its establishment in 2012 to 185 employees by the end of 2020, and it identified the specific functions, qualifications, and responsibilities of PBI's Dublin-based workforce.

• Response to IDR No. 9 (submitted September 2, 2022): This response provided the minutes of PBI's board of directors meetings for the examination years 2017–2020. As reflected in those minutes, PBI's board convened 42 meetings during the four-year examination period — including regularly scheduled quarterly meetings and special sessions — all of which were held in Dublin, Ireland. The board minutes document PBI's independent governance and decision-making processes, including the board's active oversight of commercial strategy, pricing decisions, regulatory priorities, and contract-manufacturing arrangements.

PPC reserves the right to supplement this response and to produce additional documentation as may be warranted or as may be requested by the examination team in connection with this or any related IDR.

5. Production Index

Attached hereto as Exhibit A is a Production Index listing all Bates-numbered documents produced in response to IDR No. 12. The Production Index is organized in the following columnar format:

The documents listed in the Production Index correspond to the categories described in Sections 2 and 3 of this letter and are organized in the same sequence. The complete Bates-numbered document production accompanying this response encompasses Bates numbers PPC-IDR12-000001 through PPC-IDR12-000836.

6. Reservation of Rights and Privilege

PPC and PBI expressly reserve all rights, objections, and defenses that have not been expressly waived in connection with this response, including but not limited to any rights, objections, and defenses available under the Internal Revenue Code, the Treasury Regulations, and applicable administrative guidance and procedures. Nothing in this response or in the accompanying document production shall be construed as a concession, admission, or waiver of any position, argument, or defense that PPC or PBI may assert in connection with the examination or any subsequent administrative or judicial proceeding.

Certain documents responsive to IDR No. 12 have been withheld from production on the grounds that they are protected by the attorney-client privilege and/or the work-product doctrine. Any such documents are identified on the privilege log that C&H maintains in connection with this examination. The privilege log is updated on a rolling basis and will be supplemented as appropriate to reflect any documents withheld from the IDR No. 12 production. PPC and PBI reserve all rights with respect to any privileged or protected materials.

In this connection, PPC and PBI note that the privilege protocol established by C&H in connection with this examination includes a Kovel arrangement with Whitmore Valuation Group LLC, pursuant to which Whitmore Valuation Group has been retained by C&H to provide valuation and economic consulting services in connection with the examination. The Kovel engagement letter (reference number 1018-00009-KV, executed June 20, 2022) establishes that communications between PPC, PBI, C&H, and Whitmore Valuation Group in connection with this engagement are protected by the attorney-client privilege and the work-product doctrine. PPC and PBI assert and preserve those protections with respect to all communications and work product generated under the Kovel arrangement.

The production of documents in response to IDR No. 12 is made without prejudice to, and does not constitute a waiver of, any applicable privilege, protection, or immunity, including but not limited to the attorney-client privilege, the work-product doctrine, the tax practitioner privilege under Section 7525 of the Internal Revenue Code, and any other applicable privilege or protection. Production of any document that is or may be subject to any such privilege or protection is inadvertent and does not constitute a waiver of any privilege or protection with respect to that document or any other document.

We trust that the foregoing response and accompanying document production are responsive to IDR No. 12. Should you wish to discuss the produced documents, to request clarification regarding any of the materials produced, or to arrange a time to review the production, please do not hesitate to contact me or my colleague Garrett Simmons at the address and contact information below. We remain available at your convenience and are committed to a cooperative and efficient examination process.

Leonard Cross, Partner Calderwood & Harkness LLP 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Telephone: (215) 864-7218

Email: lcross@calderwoodharkness.com

Garrett Simmons, Associate Calderwood & Harkness LLP 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Telephone: (215) 864-7345

Email: gsimmons@calderwoodharkness.com

The client contact for PPC in connection with this examination is:

Marcus Whitfield, Vice President, Global Tax Penterra Pharmaceuticals Corp. 2200 Independence Boulevard Princeton Junction, NJ 08550 Telephone: (609) 524-3100

Email: mwhitfield@penterra.com

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Leonard Cross Partner Tax Department 1735 Market Street, Suite 3100 Philadelphia, PA 19103

cc: Supervisory Revenue Agent Gerald Meskill, IRS Large Business & International Division (Team Manager) Marcus Whitfield, Vice President, Global Tax, Penterra Pharmaceuticals Corp. Deborah Staines, General Counsel, Penterra Pharmaceuticals Corp. Sylvia Hartwell, Partner, Calderwood & Harkness LLP Garrett Simmons, Associate, Calderwood & Harkness LLP Leila Nazari, Associate, Calderwood & Harkness LLP

Enclosures: Production Index (Exhibit A) Bates-numbered document production responsive to IDR No. 12 (PPC-IDR12-000001 through PPC-IDR12-000836)

Column	Description
Bates Number Range	The beginning and ending Bates numbers for each document or document set
Document Description	A brief description of the document or document set
Date	The date of the document, or the date range covered by a set of records
Document Type	The type or category of document (e.g., lease agreement, amendment, photograph, utility record, insurance certificate)

CONFIDENTIAL — TAX EXAMINATION MATERIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Telephone: (215) 864-7200 Facsimile: (215) 864-7201 www.calderwoodharkness.com
October 12, 2022
Revenue Agent Patricia Dunleavy Internal Revenue Service Large Business & International Division 600 Arch Street, Room 6214 Philadelphia, PA 19106
Exam Team ID: LB&I-NE-TP-2022-00641
Re: Penterra Pharmaceuticals Corp. (EIN: 22-3741856) — Response to Information Document Request No. 12 Tax Years Under Examination: 2017, 2018, 2019, 2020 C&H Matter Number: 1018-00009
Dear Revenue Agent Dunleavy:
I am Leonard Cross, Responsible Partner in the Tax Department of Calderwood & Harkness LLP ("C&H"), and I write on behalf of our client, Penterra Pharmaceuticals Corp. ("PPC"), in response to Information Document Request ("IDR") No. 12, issued by your examination team on September 14, 2022. As reflected on the IRS Form 2848 (Power of Attorney and Declaration of Representative) filed with the Internal Revenue Service on June 8, 2022, I am authorized, along with my colleagues Sylvia Hartwell, Garrett Simmons, and Leila Nazari of this firm, to represent PPC in all matters related to the examination of PPC's federal income tax returns for taxable years 2017, 2018, 2019, and 2020. IDR No. 12 requests documentation of the office lease, physical premises, and evidence of physical presence in Ireland of PPC's wholly owned subsidiary, Penterra Biopharma International DAC ("PBI"), a designated activity company incorporated and tax-resident in Ireland. This letter and the accompanying document production are submitted on behalf of PPC and PBI in response to that request.
PPC and PBI take seriously the Service's interest in understanding PBI's physical presence and operational infrastructure in Ireland, and we are pleased to provide the comprehensive documentation set forth below. We trust that the materials produced herein, together with the responses previously furnished in connection with other IDRs in this examination, will demonstrate the substantive nature of PBI's presence and operations at its premises in Dublin, Ireland.
1. Summary of Documents Produced
In response to IDR No. 12, PPC is producing the following categories of documents, each of which is described in greater detail in Sections 2 and 3 below:
(a) PBI's commercial lease agreement for office premises at Sandyford Business Park, Dublin, Ireland;
(b) Lease amendments, expansion agreements, and renewal documentation spanning the period from PBI's establishment in 2012 through and beyond the examination years 2017–2020;
(c) Photographic evidence and floor plans depicting PBI's physical office facilities;
(d) Utility bills, telecommunications records, and related facilities records for the Dublin premises for the examination years 2017–2020;
(e) Commercial property and liability insurance certificates for PBI's premises at Claremont House, covering the examination years 2017–2020; and
(f) Building access badge records and security system records reflecting the regular physical presence of PBI personnel at the Dublin office.
All documents responsive to IDR No. 12 are produced as Bates-numbered copies, bearing the prefix "PPC-IDR12-," and are accompanied by a comprehensive Production Index attached hereto, which identifies each document by Bates number range, document description, date, and document type. The Production Index is described further in Section 5 below.
PPC and PBI expressly reserve all rights, privileges, and objections, including but not limited to the attorney-client privilege, the work-product doctrine, and any other applicable protections, as more fully set forth in Section 6 of this letter. The production of documents in response to IDR No. 12 does not constitute, and shall not be construed as, a waiver of any such privilege, protection, or objection.
2. PBI Office Lease — Description of Produced Documents
2.1 Principal Lease Agreement
The principal document produced in this category is the commercial lease agreement (the "Lease") between PBI, as tenant, and Claremount Property Holdings Limited, an unrelated Irish property management company, as landlord, for office premises comprising approximately 18,000 square feet (approximately 1,672 square meters) of Class A office space located on the 4th Floor, Claremont House, Sandyford Business Park, Dublin D18 K7T4, Ireland. The premises at Claremont House serve as PBI's registered office address and have served in that capacity since PBI's incorporation. The Lease is produced at Bates numbers PPC-IDR12-000001 through PPC-IDR12-000087.
PBI was incorporated as a designated activity company under the laws of Ireland on March 15, 2012, and it entered into the original Lease with Claremount Property Holdings Limited effective as of that same date. PBI has maintained the Claremont House premises continuously since its establishment — a period now exceeding ten years — and the premises have at all relevant times served as the principal location from which PBI conducts its day-to-day commercial, regulatory, and strategic operations.
The Lease provides for an initial term of ten years from the date of commencement, with two successive five-year renewal options exercisable at PBI's election, and contains customary provisions for a Class A commercial office lease in the Dublin market, including provisions governing rent, common area maintenance charges, tenant improvement allowances, permitted alterations, insurance obligations, assignment and subletting restrictions, and termination and default provisions. The rent payable under the Lease is established at arm's-length commercial rates, and the landlord, Claremount Property Holdings Limited, is an unrelated third-party entity with no ownership, governance, or other relationship to PPC, PBI, or any affiliate thereof. The arm's-length character of the Lease terms is further confirmed by the fact that the rental rates reflected in the Lease and its subsequent amendments are consistent with prevailing market rates for comparable Class A office space in the Sandyford Business Park submarket, as reported by independent commercial real estate sources.
2.2 Lease Amendments and Renewals
Over the course of PBI's operations, the Lease has been amended on multiple occasions to accommodate PBI's growth and expanding operational needs. PBI's headcount has grown from 52 employees at the time of its establishment in 2012 to 185 employees as of December 31, 2020. This substantial growth in personnel has necessitated periodic expansions of PBI's leased premises at Claremont House, and the lease amendments produced herein document those expansions.
The following lease amendments are included in the production:
(i) First Amendment to Lease (effective September 1, 2014), expanding PBI's leased premises from the original footprint of approximately 8,500 square feet to approximately 12,000 square feet, to accommodate PBI's growth to approximately 85 employees and the addition of dedicated regulatory-affairs and medical-affairs work areas. This amendment is produced at Bates numbers PPC-IDR12-000088 through PPC-IDR12-000112.
(ii) Second Amendment to Lease (effective February 1, 2017), further expanding PBI's leased premises to approximately 15,500 square feet, corresponding to PBI's headcount of approximately 130 employees at that time and the establishment of a dedicated commercial-strategy team within PBI's Dublin operations. This amendment is produced at Bates numbers PPC-IDR12-000113 through PPC-IDR12-000138.
(iii) Third Amendment to Lease (effective July 1, 2019), expanding PBI's leased premises to their current footprint of approximately 18,000 square feet, to accommodate PBI's continued growth to approximately 170 employees and the addition of expanded supply-chain management and market-access capabilities. This amendment is produced at Bates numbers PPC-IDR12-000139 through PPC-IDR12-000167.
(iv) Lease Renewal Agreement (effective March 15, 2022), documenting PBI's exercise of its first five-year renewal option, extending the Lease term through March 14, 2027. This renewal agreement is produced at Bates numbers PPC-IDR12-000168 through PPC-IDR12-000189. Although the renewal date falls outside the examination years 2017–2020, the document is produced as it confirms PBI's continued and ongoing presence at the Claremont House premises and reflects PBI's long-term commitment to its Dublin operations.
Each of these amendments was negotiated at arm's length with Claremount Property Holdings Limited and reflects market-rate adjustments to the base rent commensurate with the additional square footage leased. The progressive expansion of PBI's premises directly tracks PBI's headcount growth and the broadening scope of its operational responsibilities during the relevant period.
2.3 Rent Payment Records
PPC is producing rent payment records demonstrating PBI's continuous occupancy of and payment for its premises at Claremont House throughout the examination years 2017, 2018, 2019, and 2020. These records include monthly rent invoices issued by Claremount Property Holdings Limited, together with corresponding bank statements and wire transfer confirmations reflecting PBI's payment of those invoices. The rent payment records are produced at Bates numbers PPC-IDR12-000190 through PPC-IDR12-000342.
All rent payments reflected in the produced records were made from PBI's operating accounts maintained at Glenmore Bank Ireland plc, PBI's principal banking institution in Ireland. PBI maintains its own independent treasury operations, including its own bank accounts, and PBI's rent and other operating expenditures are funded from revenues generated by PBI's commercial activities. The rent payment records thus serve as further evidence of PBI's independent financial operations and substantive economic presence in Ireland.
3. Evidence of Physical Presence — Description of Produced Documents
3.1 Photographs and Floor Plans
PPC is producing a series of date-stamped photographs of PBI's offices at Claremont House, Sandyford Business Park, as well as architectural floor plans depicting the layout and configuration of PBI's approximately 18,000-square-foot office space. The photographs and floor plans are produced at Bates numbers PPC-IDR12-000343 through PPC-IDR12-000412.
The photographs include images of the following areas of PBI's office premises:
•  The main reception area and lobby of PBI's offices on the 4th Floor of Claremont House, bearing PBI's corporate signage and branding;
•  Open-plan office areas housing PBI's regulatory-affairs, medical-affairs, commercial-strategy, and supply-chain management teams;
•  The office of PBI's Managing Director, Aidan Naughton, and the adjoining executive suite;
•  Conference rooms and meeting facilities used for PBI board meetings, management committee meetings, and other business purposes, including the principal boardroom in which PBI's board of directors has conducted 42 board meetings during the examination period 2017–2020 (consisting of quarterly scheduled meetings as well as special sessions convened as needed);
•  The IT server room and telecommunications infrastructure supporting PBI's dedicated communications systems; and
•  Common areas, including breakrooms, print and copy centers, and building access entry points.
The architectural floor plans depict the allocation of PBI's approximately 18,000 square feet across functional work areas, and they illustrate the dedicated spaces assigned to each of PBI's principal operational teams. The floor plans reflect the configuration of the premises following the Third Amendment to Lease (effective July 1, 2019), which represents the office layout in effect during the latter portion of the examination period.
3.2 Building Access and Security Records
PPC is producing building access badge records and security system records for PBI employees at Claremont House, Sandyford Business Park. These records are produced at Bates numbers PPC-IDR12-000413 through PPC-IDR12-000578.
Claremont House utilizes an electronic access-control system that requires employees to present proximity-enabled identification badges at building entry points and at elevator access points to reach the upper floors, including PBI's 4th Floor offices. The building access records produced herein include:
•  Badge issuance records documenting the assignment of building access badges to PBI employees, corresponding to each employee's date of hire or onboarding at PBI's Dublin offices. These records reflect the issuance of badges to each of PBI's 185 employees (as of December 31, 2020) and track badge issuance in connection with PBI's headcount growth over the examination period;
•  Building entry/exit logs generated by the Claremont House access-control system, reflecting the regular daily presence of PBI employees at the premises during the examination years 2017–2020. These logs demonstrate a consistent and substantial pattern of employee attendance at PBI's offices throughout each examination year; and
•  Visitor access logs reflecting the registration of external visitors — including business partners, consultants, regulatory advisors, auditors, and other parties — attending meetings at PBI's premises.
These records provide objective, contemporaneous evidence that PBI's offices at Claremont House are actively and regularly occupied by a substantial workforce, and that PBI's operations in Dublin are not nominal or pro forma in nature.
3.3 Utility and Telecommunications Records
PPC is producing utility bills and telecommunications records in PBI's name for the Sandyford Business Park premises for the examination years 2017 through 2020. These records are produced at Bates numbers PPC-IDR12-000579 through PPC-IDR12-000694.
The utility records include monthly billing statements for electricity service provided by Brightwater Group and for natural gas service, each in PBI's name and reflecting consumption levels consistent with an actively occupied commercial office of approximately 18,000 square feet. The telecommunications records include invoices for PBI's dedicated business telephone lines, broadband internet service provided by Halcyon Industries, and PBI's corporate mobile telephone accounts for Dublin-based employees. Additionally, PPC is producing records reflecting PBI's enterprise-level IT infrastructure at the Dublin premises, including a dedicated virtual private network (VPN) connection linking PBI's Dublin systems to its operational databases and enterprise resource planning (ERP) platforms.
3.4 Facilities Management and Service Contracts
PPC is producing contracts with third-party facilities management, cleaning, maintenance, and IT service providers engaged by PBI for the Claremont House premises. These documents are produced at Bates numbers PPC-IDR12-000695 through PPC-IDR12-000798.
The produced records include:
•  A facilities management agreement between PBI and Granite Harbor Group, covering routine office cleaning, building maintenance, reception staffing, and related facilities services for PBI's 4th Floor premises;
•  An IT managed-services agreement between PBI and Ostrander Partners LLC, an Irish IT services provider, covering the management and maintenance of PBI's on-premises IT infrastructure, including server hardware, network equipment, desktop and laptop equipment, and end-user technical support;
•  Equipment inventories listing the IT hardware, telecommunications equipment, office furniture, and other fixed assets deployed at PBI's Dublin office; and
•  Maintenance and service records documenting the ongoing provision of facilities management, cleaning, and IT services at the Claremont House premises throughout the examination years 2017–2020.
These contracts and service records further evidence the operational reality and continuity of PBI's physical presence in Dublin.
3.5 Insurance Certificates
PPC is producing commercial property insurance and commercial general liability insurance certificates for PBI's premises at Claremont House, listing PBI as the named insured. These certificates are produced at Bates numbers PPC-IDR12-000799 through PPC-IDR12-000836.
The insurance certificates cover the examination years 2017, 2018, 2019, and 2020, and they reflect PBI's maintenance of comprehensive insurance coverage for its Dublin premises, including coverage for property damage, business interruption, public liability, and employer's liability. The policies were issued by Severin Insurance (Ireland Branch) and were renewed annually throughout the examination period. PBI is identified as the named insured on each certificate, further confirming PBI's status as the occupant and operator of the premises.
4. Additional Context Regarding PBI's Physical Presence and Economic Substance
While the documents produced in response to IDR No. 12 are focused specifically on PBI's office lease, physical premises, and evidence of physical presence in Ireland, PPC respectfully notes that these documents constitute one component of a broader body of evidence demonstrating PBI's substantive operations and genuine economic substance in Ireland. The physical-presence documentation produced herein should be considered in conjunction with the documentation previously furnished in response to other IDRs in this examination, which together establish the comprehensive scope of PBI's Irish operations.
PBI serves as the intellectual-property-holding company and commercial principal for the non-Americas commercialization of PPC's pharmaceutical products. In that capacity, PBI manages contract manufacturing arrangements, distribution logistics, regulatory submissions, and commercial-strategy decisions across the Europe, Middle East, and Africa ("EMEA") and Asia-Pacific ("APAC") regions. PBI's Dublin-based personnel — comprising 185 employees as of December 31, 2020 — include experienced professionals in regulatory affairs, medical affairs, commercial strategy, supply-chain management, finance, and legal and compliance functions. These personnel are responsible for, among other activities, making key commercial decisions including pricing determinations, market-entry strategy, distribution partner selection and management, and regulatory-submission planning across 68 country markets in the non-Americas territories.
During the examination years 2017 through 2020, PBI incurred cumulative regulatory expenditures of approximately €47.2 million in connection with regulatory submissions, marketing authorization applications, and post-marketing regulatory compliance activities across its non-Americas territories. These expenditures reflect PBI's active and substantial engagement in the regulatory processes necessary to commercialize PPC's product portfolio outside the Americas and further evidence the genuineness and materiality of PBI's operations.
PPC respectfully cross-references the following prior IDR responses, which provide complementary evidence relevant to the Service's assessment of PBI's economic substance:
•  Response to IDR No. 8 (submitted August 19, 2022): This response provided detailed information regarding PBI's personnel and headcount, including organizational charts, employee rosters, employment contracts, and compensation data. The IDR No. 8 response documented PBI's growth from 52 employees at its establishment in 2012 to 185 employees by the end of 2020, and it identified the specific functions, qualifications, and responsibilities of PBI's Dublin-based workforce.
•  Response to IDR No. 9 (submitted September 2, 2022): This response provided the minutes of PBI's board of directors meetings for the examination years 2017–2020. As reflected in those minutes, PBI's board convened 42 meetings during the four-year examination period — including regularly scheduled quarterly meetings and special sessions — all of which were held in Dublin, Ireland. The board minutes document PBI's independent governance and decision-making processes, including the board's active oversight of commercial strategy, pricing decisions, regulatory priorities, and contract-manufacturing arrangements.
PPC reserves the right to supplement this response and to produce additional documentation as may be warranted or as may be requested by the examination team in connection with this or any related IDR.
5. Production Index
Attached hereto as Exhibit A is a Production Index listing all Bates-numbered documents produced in response to IDR No. 12. The Production Index is organized in the following columnar format:
The documents listed in the Production Index correspond to the categories described in Sections 2 and 3 of this letter and are organized in the same sequence. The complete Bates-numbered document production accompanying this response encompasses Bates numbers PPC-IDR12-000001 through PPC-IDR12-000836.
6. Reservation of Rights and Privilege
PPC and PBI expressly reserve all rights, objections, and defenses that have not been expressly waived in connection with this response, including but not limited to any rights, objections, and defenses available under the Internal Revenue Code, the Treasury Regulations, and applicable administrative guidance and procedures. Nothing in this response or in the accompanying document production shall be construed as a concession, admission, or waiver of any position, argument, or defense that PPC or PBI may assert in connection with the examination or any subsequent administrative or judicial proceeding.
Certain documents responsive to IDR No. 12 have been withheld from production on the grounds that they are protected by the attorney-client privilege and/or the work-product doctrine. Any such documents are identified on the privilege log that C&H maintains in connection with this examination. The privilege log is updated on a rolling basis and will be supplemented as appropriate to reflect any documents withheld from the IDR No. 12 production. PPC and PBI reserve all rights with respect to any privileged or protected materials.
In this connection, PPC and PBI note that the privilege protocol established by C&H in connection with this examination includes a Kovel arrangement with Whitmore Valuation Group LLC, pursuant to which Whitmore Valuation Group has been retained by C&H to provide valuation and economic consulting services in connection with the examination. The Kovel engagement letter (reference number 1018-00009-KV, executed June 20, 2022) establishes that communications between PPC, PBI, C&H, and Whitmore Valuation Group in connection with this engagement are protected by the attorney-client privilege and the work-product doctrine. PPC and PBI assert and preserve those protections with respect to all communications and work product generated under the Kovel arrangement.
The production of documents in response to IDR No. 12 is made without prejudice to, and does not constitute a waiver of, any applicable privilege, protection, or immunity, including but not limited to the attorney-client privilege, the work-product doctrine, the tax practitioner privilege under Section 7525 of the Internal Revenue Code, and any other applicable privilege or protection. Production of any document that is or may be subject to any such privilege or protection is inadvertent and does not constitute a waiver of any privilege or protection with respect to that document or any other document.
We trust that the foregoing response and accompanying document production are responsive to IDR No. 12. Should you wish to discuss the produced documents, to request clarification regarding any of the materials produced, or to arrange a time to review the production, please do not hesitate to contact me or my colleague Garrett Simmons at the address and contact information below. We remain available at your convenience and are committed to a cooperative and efficient examination process.
Leonard Cross, Partner Calderwood & Harkness LLP 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Telephone: (215) 864-7218
Email: lcross@calderwoodharkness.com
Garrett Simmons, Associate Calderwood & Harkness LLP 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Telephone: (215) 864-7345
Email: gsimmons@calderwoodharkness.com
The client contact for PPC in connection with this examination is:
Marcus Whitfield, Vice President, Global Tax Penterra Pharmaceuticals Corp. 2200 Independence Boulevard Princeton Junction, NJ 08550 Telephone: (609) 524-3100
Email: mwhitfield@penterra.com
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Leonard Cross Partner Tax Department 1735 Market Street, Suite 3100 Philadelphia, PA 19103
cc: Supervisory Revenue Agent Gerald Meskill, IRS Large Business & International Division (Team Manager) Marcus Whitfield, Vice President, Global Tax, Penterra Pharmaceuticals Corp. Deborah Staines, General Counsel, Penterra Pharmaceuticals Corp. Sylvia Hartwell, Partner, Calderwood & Harkness LLP Garrett Simmons, Associate, Calderwood & Harkness LLP Leila Nazari, Associate, Calderwood & Harkness LLP
Enclosures: Production Index (Exhibit A) Bates-numbered document production responsive to IDR No. 12 (PPC-IDR12-000001 through PPC-IDR12-000836)
Column | Description
Bates Number Range | The beginning and ending Bates numbers for each document or document set
Document Description | A brief description of the document or document set
Date | The date of the document, or the date range covered by a set of records
Document Type | The type or category of document (e.g., lease agreement, amendment, photograph, utility record, insurance certificate)

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