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CONFIDENTIAL — TAX EXAMINATION MATERIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law

1735 Market Street, Suite 3100 Philadelphia, PA 19103 Telephone: (215) 496-7200 Facsimile: (215) 496-7201

600 Lexington Avenue New York, NY 10022 Telephone: (212) 848-4000

January 20, 2023

Matter No.: 1018-00009

VIA SECURE FILE TRANSFER AND CERTIFIED MAIL

Revenue Agent Patricia Dunleavy Internal Revenue Service Large Business & International Division Examination Team: LB&I-NE-TP-2022-00641

Re: Penterra Pharmaceuticals Corp. (EIN: 22-3741856) Tax Years Ended December 31, 2017, 2018, 2019, and 2020 Response to Information Document Request No. 22 — Banking Records and Bank Account Statements for Penterra Biopharma International DAC

Dear Revenue Agent Dunleavy:

This firm represents Penterra Pharmaceuticals Corp. ("PPC" or the "Taxpayer") in connection with the above-referenced examination. I write in my capacity as the Responsible Partner in the Tax Department of Calderwood & Harkness LLP ("C&H"), on behalf of PPC. As reflected in IRS Form 2848, Power of Attorney and Declaration of Representative, filed with the Internal Revenue Service on June 8, 2022, Leonard Cross, Sylvia Hartwell, Garrett Simmons, and Leila Nazari of this firm are authorized to represent PPC before the Internal Revenue Service with respect to all matters relating to PPC's federal income tax returns for the tax years ended December 31, 2017, December 31, 2018, December 31, 2019, and December 31, 2020.

On behalf of PPC, we hereby submit this response to Information Document Request No. 22 ("IDR No. 22"), issued by your office on December 5, 2022, and received by this firm on December 7, 2022, which requested banking records and bank account statements for Penterra Biopharma International DAC ("PBI"), a designated activity company organized under the laws of Ireland and a wholly owned indirect subsidiary of PPC. IDR No. 22 is one of forty-seven (47) Information Document Requests issued to PPC during the course of the current examination period, which commenced in June 2022 and is anticipated to continue through September 2023. PPC has responded, or is in the process of responding, to each such IDR in the order of priority agreed upon between this firm and the examination team.

The enclosed documents are being produced without waiver of any applicable privilege, objection, or right, including, without limitation, the attorney-client privilege, the work-product doctrine, any right or objection arising under the Internal Revenue Code, the Treasury Regulations, or any other applicable law. PPC's production of these documents is made solely in response to the specific requests contained in IDR No. 22 and shall not be construed as a waiver of any privilege, right, or objection as to any other documents or communications, whether or not related to the subject matter of IDR No. 22.

Section 1: Documents Produced

1.1 Glenmore Bank Ireland plc Account Statements

PBI's principal Irish banking institution is Glenmore Bank Ireland plc ("Glenmore Bank"), a public limited company organized and existing under the laws of Ireland, regulated by the Central Ridgeway Trust Bank, and headquartered in Dublin. Glenmore Bank has served as PBI's primary banking institution since PBI's incorporation in March 2012, and PBI maintains its principal operating and deposit accounts at Glenmore Bank.

In response to IDR No. 22, PPC is producing complete monthly bank account statements for all accounts held by PBI at Glenmore Bank Ireland plc for the calendar years 2017, 2018, 2019, and 2020, encompassing a total of forty-eight (48) months of statements. The produced statements cover the following account types maintained by PBI at Glenmore Bank:

(a) Operating/Current Accounts. PBI maintained multiple Euro-denominated current accounts at Glenmore Bank during the period under examination. These accounts were used in the ordinary course of PBI's commercial and treasury operations, including the receipt of revenues from non-Americas commercialization activities, disbursement of payments to vendors and distribution partners, settlement of intercompany obligations, payment of employee compensation and benefits, and satisfaction of general operating expenses.

(b) Deposit Accounts. PBI maintained Euro-denominated deposit accounts at Glenmore Bank, which were used for cash management and short-term investment purposes in connection with PBI's treasury operations. These accounts reflect PBI's independent management of its cash position and liquidity, including the placement of excess operating cash in interest-bearing deposit instruments.

The monthly account statements produced herewith have been Bates-stamped consecutively as PPC-IDR22-000001 through PPC-IDR22-001247. Each statement is produced in the form in which it was maintained by Glenmore Bank and furnished to PBI, in the original currency denomination of the Euro (€). PPC has not converted any amounts reflected in the statements to United States dollars; to the extent currency conversion is necessary for purposes of the examination, PPC is prepared to discuss with the examination team the appropriate exchange rates and conversion methodology to be applied.

1.2 Account Opening and Relationship Documentation

In addition to the monthly bank account statements, PPC is producing account opening documentation and banking relationship documentation that reflects PBI's direct, independent banking relationship with Glenmore Bank Ireland plc. This documentation includes the following:

(a) Account Opening Forms and Corporate Resolutions. The account opening documentation submitted to Glenmore Bank at the time of PBI's establishment of its banking relationship, including corporate resolutions of PBI's board of directors authorizing the opening of accounts and designating authorized signatories. This documentation reflects that PBI, acting through its own board of directors and management, independently established and maintained its banking relationship with Glenmore Bank.

(b) Account Signatory Authorizations. Signatory authorization forms and related correspondence reflecting that PBI Managing Director Aidan Naughton and other PBI personnel located in Dublin, Ireland, were designated as the authorized signatories on PBI's accounts at Glenmore Bank. The signatory authorization records demonstrate that the authority to operate PBI's bank accounts — including the authority to initiate and approve payments, transfers, and other transactions — rested with PBI management in Dublin, and not with PPC personnel in the United States. The produced documentation reflects that Mr. Naughton, as PBI Managing Director, held primary signatory authority throughout the 2017–2020 period, along with designated members of PBI's finance team who were also resident in Ireland.

(c) Relationship Management Correspondence. Selected correspondence between PBI and Glenmore Bank's corporate banking division relating to the administration and management of PBI's accounts, including periodic account reviews and relationship management communications. This correspondence further confirms that PBI's banking relationship was managed directly by PBI personnel in Dublin.

The account opening and relationship documentation has been Bates-stamped as PPC-IDR22-001248 through PPC-IDR22-001312 and is included with the enclosed production.

1.3 Summary of Treasury Operations

PPC is also producing a high-level summary of PBI's independent treasury function (the "Treasury Operations Summary"), which has been prepared by PBI's finance team under the direction of PBI Managing Director Aidan Naughton and PBI's Head of Finance. The Treasury Operations Summary provides an overview of PBI's treasury and cash management operations during the 2017–2020 period and is intended to assist the examination team in understanding the context and significance of the transactions reflected in the Glenmore Bank account statements.

PBI's treasury function has been managed from PBI's registered office at 4th Floor, Claremont House, Sandyford Business Park, Dublin D18 K7T4, Ireland, since PBI's incorporation. Throughout the examination period, PBI maintained its own independent treasury operations, which encompassed the following activities:

(a) Cash Management. PBI independently managed its cash position, including monitoring cash balances, forecasting cash requirements, and ensuring adequate liquidity to meet operating obligations. PBI's treasury team, operating from Dublin, made day-to-day decisions regarding the deployment and management of PBI's cash resources.

(b) Payments to Vendors and Distribution Partners. PBI processed payments to third-party vendors, service providers, and distribution partners in connection with PBI's commercialization activities across non-Americas territories. These payments were initiated, approved, and executed by PBI personnel in Dublin.

(c) Receipt of Revenues. PBI received revenues from the commercialization of PPC-group products in non-Americas territories, including direct sales revenues and revenues received from distribution partners and licensees across sixty-eight (68) country markets.

(d) Intercompany Payment Settlements. PBI's treasury function managed the settlement of intercompany obligations between PBI and other PPC-group entities, including cost-sharing payments to PPC under the cost-sharing arrangement effective July 1, 2012, royalty payments to PPC under the pre-existing legacy IP license agreement, and payments to Penterra Manufacturing Ireland Ltd. ("PMI") under the contract manufacturing agreement.

(e) Payroll Disbursements. PBI processed payroll and employee compensation disbursements for PBI's personnel. PBI's headcount grew from fifty-two (52) employees at the time of its incorporation in March 2012 to one hundred eighty-five (185) employees as of December 31, 2020, reflecting the substantial and growing scale of PBI's independent operations in Ireland.

(f) Capital Expenditures and Infrastructure Investments. PBI made capital expenditure payments for equipment, information technology infrastructure, laboratory instrumentation, and other investments necessary to support PBI's operations.

PBI's treasury function independently managed the cash flows associated with PBI's dual role as (i) the intellectual property holding company for non-Americas exploitation rights developed or acquired under the cost-sharing arrangement, and (ii) the commercial principal responsible for the commercialization of PPC-group pharmaceutical products across sixty-eight (68) country markets outside the Americas. The Treasury Operations Summary has been Bates-stamped as PPC-IDR22-001313 through PPC-IDR22-001338.

Section 2: Relevance of Produced Documents to PBI's Economic Substance

PPC respectfully submits that the banking records and related documentation produced in response to IDR No. 22 are directly relevant to, and provide substantial support for, PBI's independent economic substance in Ireland — a key factual issue in the current examination. The Glenmore Bank account statements, account opening documentation, and Treasury Operations Summary collectively demonstrate that PBI operated as an entity with genuine and substantial economic activity in Ireland, exercising independent management and control over its financial operations and resources.

The Glenmore Bank account statements reflect PBI's receipt of significant revenues from the commercialization of PPC-group products in non-Americas territories. Among other things, the statements reflect revenue streams associated with PBI's key products, including:

• Veritaxol, PPC's flagship oncology therapeutic, which generated non-Americas net sales of approximately $1.34 billion in 2020;

• Imvara, PPC's immunology platform product, which generated non-Americas net sales of approximately $790 million in 2020; and

• Cerulon, PPC's specialty neurology product, which generated non-Americas net sales of approximately $280 million in 2020.

The account statements further reflect a broad range of outgoing payments that are consistent with PBI's role as an independent commercial principal and controlled participant in the cost-sharing arrangement with PPC. These payments include, among others:

(a) Cost-Sharing Payments to PPC. The Glenmore Bank statements reflect PBI's outgoing payments to PPC under the cost-sharing arrangement (the "CSA") effective July 1, 2012, pursuant to which PBI shares in qualified research and development costs in exchange for rights to exploit intangible property developed under the CSA in non-Americas territories. PBI's share of total qualified R&D costs ranged from 38.2% to 42.7% during the 2017–2020 period, calculated in accordance with the reasonably anticipated benefit methodology set forth in the CSA. PBI's cost-sharing payments during the examination period were as follows:

(b) Legacy IP Royalty Payments to PPC. The statements also reflect PBI's outgoing royalty payments to PPC under the pre-existing legacy intellectual property license agreement, pursuant to which PBI paid a royalty rate of 4.5% of non-Americas net sales for exploitation of intellectual property that pre-dated the CSA. PBI's legacy IP royalty payments during the examination period were as follows:

The declining trajectory of legacy IP royalty payments is consistent with the natural attrition of pre-CSA intellectual property as newer products developed under the CSA increasingly constituted a larger share of PBI's commercial portfolio.

(c) Payments to Penterra Manufacturing Ireland Ltd. The account statements reflect PBI's payments to Penterra Manufacturing Ireland Ltd. ("PMI"), a separate Irish subsidiary of PPC, under the contract manufacturing agreement between PBI and PMI. Under that agreement, PMI provided contract manufacturing services to PBI at cost plus an eight percent (8%) markup, consistent with arm's-length pricing for routine contract manufacturing services. These payments are reflected in the Glenmore Bank statements as regular intercompany disbursements to PMI.

(d) Regulatory Expenditure Payments. PBI incurred cumulative regulatory expenditures of approximately €47.2 million across sixty-eight (68) country markets during the 2017–2020 period. These expenditures included fees and costs associated with obtaining and maintaining marketing authorizations, regulatory filings, pharmacovigilance activities, and compliance with local regulatory requirements in each jurisdiction in which PBI commercialized PPC-group products. The Glenmore Bank statements reflect PBI's payments of these regulatory costs, which were incurred and managed by PBI's regulatory affairs team in Dublin.

(e) Payroll and Employee Compensation Disbursements. The account statements reflect PBI's regular payroll disbursements for its employees, including base salary, performance-based compensation, social insurance contributions (PRSI), pension contributions, and other employee benefits. As noted above, PBI's employee headcount grew from fifty-two (52) at incorporation to one hundred eighty-five (185) as of December 31, 2020, reflecting the growing scale and complexity of PBI's operations.

(f) Office Lease Payments. The statements reflect PBI's payments under its lease for approximately 18,000 square feet of office space at Sandyford Business Park, Dublin, where PBI maintains its registered office and principal place of business. This office houses PBI's management, finance, regulatory affairs, commercial operations, medical affairs, and other functional teams.

(g) Capital Expenditure Payments. The account statements further reflect PBI's capital expenditure payments for equipment, information technology infrastructure, and other investments made in support of PBI's operations.

(h) Payments to Third-Party Distribution Partners. PBI's account statements reflect payments to third-party distribution partners in non-Americas territories, including distribution fees, logistics costs, and other amounts payable under PBI's distribution arrangements in markets where PBI did not maintain a direct commercial presence.

Taken together, the banking records produced herewith confirm that PBI conducted independent financial operations and exercised autonomous decision-making authority over its treasury and commercial activities in Ireland. The records are consistent with PBI's role as a controlled participant in the cost-sharing arrangement under Treasury Regulation § 1.482-7 and as the intellectual property holder and commercial principal for non-Americas exploitation of PPC-group products. The scope and volume of the transactions reflected in the Glenmore Bank statements demonstrate that PBI was not a mere shell or conduit entity, but rather a substantive enterprise with genuine and substantial economic activity in Ireland throughout the 2017–2020 examination period.

Section 3: Coordination with Irish Tax Advisors

PPC notes that certain of the documents produced in response to IDR No. 22 were obtained in coordination with Thornbury & Keogh, Chartered Tax Advisors, of 22 Fitzwilliam Square, Dublin 2, D02 YH68, Ireland. Thornbury & Keogh serves as PBI's Irish tax advisors, and the coordination with that firm was led by partner Ciarán Thornbury. Mr. Thornbury's team assisted in the identification, collection, and assembly of the Glenmore Bank account statements and related documentation maintained by PBI at its Dublin offices.

In addition, the production of the documents enclosed herewith was coordinated directly with PBI Managing Director Aidan Naughton to ensure the completeness and accuracy of the records produced. Mr. Naughton's participation in the document collection process reflects PBI's cooperative engagement with the examination and PBI's commitment to providing the examination team with a full and accurate record of PBI's banking and treasury operations.

PPC further notes that certain of the produced documents were maintained in formats consistent with Irish regulatory and banking requirements and conventions. To the extent any such formatting conventions differ from those customarily encountered in the United States, PPC is prepared to provide additional context or explanation as may be useful to the examination team.

Section 4: Privilege Reservation and Document Index

4.1 Privilege Reservation

PPC expressly reserves all rights to assert the attorney-client privilege and the work-product protection doctrine over any documents, communications, or other materials that have not been produced in connection with IDR No. 22 or any other Information Document Request issued during this examination. The production of banking records and related documentation in response to IDR No. 22 shall not be deemed or construed as a waiver, in whole or in part, of any applicable privilege or protection.

PPC further notes that this firm is maintaining a master privilege log in connection with all IDR responses during the current examination. To the extent any documents responsive to IDR No. 22 have been withheld on the basis of privilege, such documents have been identified on the master privilege log with sufficient specificity to enable the examination team to evaluate the asserted privilege. PPC reserves the right to supplement the master privilege log as necessary.

Without limiting the generality of the foregoing, PPC specifically notes that the production of banking records in response to IDR No. 22 does not waive any privilege or protection over communications between or among (i) Calderwood & Harkness LLP and PPC or PBI, (ii) Whitmore Valuation Group LLC, which was retained by PPC under a Kovel arrangement (reference number 1018-00009-KV, executed June 20, 2022) to provide valuation and economic analysis services at the direction of this firm in connection with the examination, and PPC, PBI, or this firm, or (iii) Thornbury & Keogh, Chartered Tax Advisors, and PPC, PBI, or this firm. All communications with Whitmore Valuation Group LLC were made at the direction of legal counsel and for the purpose of facilitating the rendition of legal advice, and such communications are protected under the attorney-client privilege and the work-product doctrine as set forth in United States v. Kovel, 296 F.2d 918 (2d Cir. 1961), and its progeny.

4.2 Document Index / Production Log

The following table sets forth a summary index of all documents produced in response to IDR No. 22:

Total pages produced in response to IDR No. 22: 1,338 pages.

All Glenmore Bank account statements (Category 1) and account opening documentation (Category 2) have been produced as PDF copies of the original documents as maintained by PBI. The Treasury Operations Summary (Category 3) has been produced in native format, including the underlying Microsoft Word memorandum and supporting Microsoft Excel workbooks containing transactional summaries and reconciliation schedules, to permit the examination team to review and analyze the data in its original working format.

Section 5: Supplementary Notes

PPC offers to make PBI's finance personnel, including members of PBI's treasury team and the Head of Finance, available for interview or follow-up questions regarding the banking records and treasury operations documented in the enclosed production. PPC recognizes that the volume and complexity of the produced materials may give rise to questions, and PPC is committed to facilitating the examination team's review. Any such interviews or follow-up inquiries may be coordinated through this firm, consistent with the protocols established at the outset of the examination. PPC notes that C&H previously produced, in response to IDR No. 8, detailed information regarding PBI's personnel, including headcount data, organizational charts, and role descriptions for PBI employees across all functional areas, which may provide useful context for the examination team's review of the banking records produced herewith.

PPC also respectfully directs the examination team's attention to the minutes of PBI's forty-two (42) board meetings held in Dublin, Ireland, during the 2017–2020 period, which were produced in response to IDR No. 9. Those board minutes reflect the active and independent governance exercised by PBI's board of directors over PBI's strategic, financial, and operational affairs, including oversight of PBI's treasury and cash management functions, approval of intercompany payment obligations, and review of PBI's financial performance. The banking records produced in response to IDR No. 22 are consistent with, and corroborative of, the governance activities documented in the board minutes previously produced.

Additionally, PPC notes that PBI's audited financial statements for fiscal years 2017 through 2020 were previously produced in response to IDR No. 7. Those financial statements, prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and audited by PBI's statutory auditors, reflect that PBI generated total revenue of approximately €2.14 billion and pre-tax income of approximately €1.06 billion in fiscal year 2020. The Glenmore Bank account statements produced herewith are consistent with the financial results reported in PBI's audited financial statements, and the banking records provide transactional-level detail supporting the revenue, expense, and cash flow figures presented in those statements.

PPC has made a good-faith effort to respond fully and completely to IDR No. 22. PPC believes that the documents enclosed herewith are responsive to the specific requests contained in IDR No. 22. To the extent the examination team identifies any additional categories of banking records or related documentation that it believes are within the scope of IDR No. 22 but have not been produced, PPC requests that the examination team notify this firm promptly so that we may address any such requests.

Should Revenue Agent Dunleavy or Supervisory Revenue Agent Gerald Meskill have any questions regarding this response or the enclosed documents, or wish to discuss any follow-up requests, please do not hesitate to contact me or Garrett Simmons at Calderwood & Harkness LLP's Philadelphia office at the address and telephone number set forth below. We look forward to continuing to work cooperatively with the examination team.

PPC expressly reserves all rights and objections not expressly waived herein, including all rights under the Internal Revenue Code, the Treasury Regulations, and any other applicable law.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Leonard Cross Partner, Tax Department Calderwood & Harkness LLP 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Direct: (215) 496-7218

Email: lcross@calderwoodharkness.com

cc (via email):

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

Garrett Simmons, Partner Calderwood & Harkness LLP

Leila Nazari, Counsel Calderwood & Harkness LLP

Enclosures: As described in Document Index (Section 4.2 above) Total Enclosure Count: 1,338 pages (Bates Nos. PPC-IDR22-000001 through PPC-IDR22-001338)

Tax Year	PBI Cost-Share Percentage	PBI Cost-Sharing Payment
2017	38.2%	$186.15 million
2018	39.6%	$207.42 million
2019	41.1%	$230.65 million
2020	42.7%	$255.52 million
Tax Year	Legacy IP Royalty Payment
2017	$36.66 million
2018	$34.30 million
2019	$31.13 million
2020	$28.08 million
Category	Description	Bates Range	Page Count	Format
1	Glenmore Bank Ireland plc monthly account statements for all PBI accounts — calendar years 2017, 2018, 2019, and 2020 (48 months)	PPC-IDR22-000001 through PPC-IDR22-001247	1,247	PDF copies of original bank statements
2	Account opening documentation, corporate resolutions, signatory authorizations, and relationship management correspondence	PPC-IDR22-001248 through PPC-IDR22-001312	65	PDF copies of original documents
3	Treasury Operations Summary prepared by PBI finance team	PPC-IDR22-001313 through PPC-IDR22-001338	26	Native format (Microsoft Word and Excel)

CONFIDENTIAL — TAX EXAMINATION MATERIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law
1735 Market Street, Suite 3100 Philadelphia, PA 19103 Telephone: (215) 496-7200 Facsimile: (215) 496-7201
600 Lexington Avenue New York, NY 10022 Telephone: (212) 848-4000
January 20, 2023
Matter No.: 1018-00009
VIA SECURE FILE TRANSFER AND CERTIFIED MAIL
Revenue Agent Patricia Dunleavy Internal Revenue Service Large Business & International Division Examination Team: LB&I-NE-TP-2022-00641
Re: Penterra Pharmaceuticals Corp. (EIN: 22-3741856) Tax Years Ended December 31, 2017, 2018, 2019, and 2020 Response to Information Document Request No. 22 — Banking Records and Bank Account Statements for Penterra Biopharma International DAC
Dear Revenue Agent Dunleavy:
This firm represents Penterra Pharmaceuticals Corp. ("PPC" or the "Taxpayer") in connection with the above-referenced examination. I write in my capacity as the Responsible Partner in the Tax Department of Calderwood & Harkness LLP ("C&H"), on behalf of PPC. As reflected in IRS Form 2848, Power of Attorney and Declaration of Representative, filed with the Internal Revenue Service on June 8, 2022, Leonard Cross, Sylvia Hartwell, Garrett Simmons, and Leila Nazari of this firm are authorized to represent PPC before the Internal Revenue Service with respect to all matters relating to PPC's federal income tax returns for the tax years ended December 31, 2017, December 31, 2018, December 31, 2019, and December 31, 2020.
On behalf of PPC, we hereby submit this response to Information Document Request No. 22 ("IDR No. 22"), issued by your office on December 5, 2022, and received by this firm on December 7, 2022, which requested banking records and bank account statements for Penterra Biopharma International DAC ("PBI"), a designated activity company organized under the laws of Ireland and a wholly owned indirect subsidiary of PPC. IDR No. 22 is one of forty-seven (47) Information Document Requests issued to PPC during the course of the current examination period, which commenced in June 2022 and is anticipated to continue through September 2023. PPC has responded, or is in the process of responding, to each such IDR in the order of priority agreed upon between this firm and the examination team.
The enclosed documents are being produced without waiver of any applicable privilege, objection, or right, including, without limitation, the attorney-client privilege, the work-product doctrine, any right or objection arising under the Internal Revenue Code, the Treasury Regulations, or any other applicable law. PPC's production of these documents is made solely in response to the specific requests contained in IDR No. 22 and shall not be construed as a waiver of any privilege, right, or objection as to any other documents or communications, whether or not related to the subject matter of IDR No. 22.
Section 1: Documents Produced
1.1 Glenmore Bank Ireland plc Account Statements
PBI's principal Irish banking institution is Glenmore Bank Ireland plc ("Glenmore Bank"), a public limited company organized and existing under the laws of Ireland, regulated by the Central Ridgeway Trust Bank, and headquartered in Dublin. Glenmore Bank has served as PBI's primary banking institution since PBI's incorporation in March 2012, and PBI maintains its principal operating and deposit accounts at Glenmore Bank.
In response to IDR No. 22, PPC is producing complete monthly bank account statements for all accounts held by PBI at Glenmore Bank Ireland plc for the calendar years 2017, 2018, 2019, and 2020, encompassing a total of forty-eight (48) months of statements. The produced statements cover the following account types maintained by PBI at Glenmore Bank:
(a) Operating/Current Accounts. PBI maintained multiple Euro-denominated current accounts at Glenmore Bank during the period under examination. These accounts were used in the ordinary course of PBI's commercial and treasury operations, including the receipt of revenues from non-Americas commercialization activities, disbursement of payments to vendors and distribution partners, settlement of intercompany obligations, payment of employee compensation and benefits, and satisfaction of general operating expenses.
(b) Deposit Accounts. PBI maintained Euro-denominated deposit accounts at Glenmore Bank, which were used for cash management and short-term investment purposes in connection with PBI's treasury operations. These accounts reflect PBI's independent management of its cash position and liquidity, including the placement of excess operating cash in interest-bearing deposit instruments.
The monthly account statements produced herewith have been Bates-stamped consecutively as PPC-IDR22-000001 through PPC-IDR22-001247. Each statement is produced in the form in which it was maintained by Glenmore Bank and furnished to PBI, in the original currency denomination of the Euro (€). PPC has not converted any amounts reflected in the statements to United States dollars; to the extent currency conversion is necessary for purposes of the examination, PPC is prepared to discuss with the examination team the appropriate exchange rates and conversion methodology to be applied.
1.2 Account Opening and Relationship Documentation
In addition to the monthly bank account statements, PPC is producing account opening documentation and banking relationship documentation that reflects PBI's direct, independent banking relationship with Glenmore Bank Ireland plc. This documentation includes the following:
(a) Account Opening Forms and Corporate Resolutions. The account opening documentation submitted to Glenmore Bank at the time of PBI's establishment of its banking relationship, including corporate resolutions of PBI's board of directors authorizing the opening of accounts and designating authorized signatories. This documentation reflects that PBI, acting through its own board of directors and management, independently established and maintained its banking relationship with Glenmore Bank.
(b) Account Signatory Authorizations. Signatory authorization forms and related correspondence reflecting that PBI Managing Director Aidan Naughton and other PBI personnel located in Dublin, Ireland, were designated as the authorized signatories on PBI's accounts at Glenmore Bank. The signatory authorization records demonstrate that the authority to operate PBI's bank accounts — including the authority to initiate and approve payments, transfers, and other transactions — rested with PBI management in Dublin, and not with PPC personnel in the United States. The produced documentation reflects that Mr. Naughton, as PBI Managing Director, held primary signatory authority throughout the 2017–2020 period, along with designated members of PBI's finance team who were also resident in Ireland.
(c) Relationship Management Correspondence. Selected correspondence between PBI and Glenmore Bank's corporate banking division relating to the administration and management of PBI's accounts, including periodic account reviews and relationship management communications. This correspondence further confirms that PBI's banking relationship was managed directly by PBI personnel in Dublin.
The account opening and relationship documentation has been Bates-stamped as PPC-IDR22-001248 through PPC-IDR22-001312 and is included with the enclosed production.
1.3 Summary of Treasury Operations
PPC is also producing a high-level summary of PBI's independent treasury function (the "Treasury Operations Summary"), which has been prepared by PBI's finance team under the direction of PBI Managing Director Aidan Naughton and PBI's Head of Finance. The Treasury Operations Summary provides an overview of PBI's treasury and cash management operations during the 2017–2020 period and is intended to assist the examination team in understanding the context and significance of the transactions reflected in the Glenmore Bank account statements.
PBI's treasury function has been managed from PBI's registered office at 4th Floor, Claremont House, Sandyford Business Park, Dublin D18 K7T4, Ireland, since PBI's incorporation. Throughout the examination period, PBI maintained its own independent treasury operations, which encompassed the following activities:
(a) Cash Management. PBI independently managed its cash position, including monitoring cash balances, forecasting cash requirements, and ensuring adequate liquidity to meet operating obligations. PBI's treasury team, operating from Dublin, made day-to-day decisions regarding the deployment and management of PBI's cash resources.
(b) Payments to Vendors and Distribution Partners. PBI processed payments to third-party vendors, service providers, and distribution partners in connection with PBI's commercialization activities across non-Americas territories. These payments were initiated, approved, and executed by PBI personnel in Dublin.
(c) Receipt of Revenues. PBI received revenues from the commercialization of PPC-group products in non-Americas territories, including direct sales revenues and revenues received from distribution partners and licensees across sixty-eight (68) country markets.
(d) Intercompany Payment Settlements. PBI's treasury function managed the settlement of intercompany obligations between PBI and other PPC-group entities, including cost-sharing payments to PPC under the cost-sharing arrangement effective July 1, 2012, royalty payments to PPC under the pre-existing legacy IP license agreement, and payments to Penterra Manufacturing Ireland Ltd. ("PMI") under the contract manufacturing agreement.
(e) Payroll Disbursements. PBI processed payroll and employee compensation disbursements for PBI's personnel. PBI's headcount grew from fifty-two (52) employees at the time of its incorporation in March 2012 to one hundred eighty-five (185) employees as of December 31, 2020, reflecting the substantial and growing scale of PBI's independent operations in Ireland.
(f) Capital Expenditures and Infrastructure Investments. PBI made capital expenditure payments for equipment, information technology infrastructure, laboratory instrumentation, and other investments necessary to support PBI's operations.
PBI's treasury function independently managed the cash flows associated with PBI's dual role as (i) the intellectual property holding company for non-Americas exploitation rights developed or acquired under the cost-sharing arrangement, and (ii) the commercial principal responsible for the commercialization of PPC-group pharmaceutical products across sixty-eight (68) country markets outside the Americas. The Treasury Operations Summary has been Bates-stamped as PPC-IDR22-001313 through PPC-IDR22-001338.
Section 2: Relevance of Produced Documents to PBI's Economic Substance
PPC respectfully submits that the banking records and related documentation produced in response to IDR No. 22 are directly relevant to, and provide substantial support for, PBI's independent economic substance in Ireland — a key factual issue in the current examination. The Glenmore Bank account statements, account opening documentation, and Treasury Operations Summary collectively demonstrate that PBI operated as an entity with genuine and substantial economic activity in Ireland, exercising independent management and control over its financial operations and resources.
The Glenmore Bank account statements reflect PBI's receipt of significant revenues from the commercialization of PPC-group products in non-Americas territories. Among other things, the statements reflect revenue streams associated with PBI's key products, including:
• Veritaxol, PPC's flagship oncology therapeutic, which generated non-Americas net sales of approximately $1.34 billion in 2020;
• Imvara, PPC's immunology platform product, which generated non-Americas net sales of approximately $790 million in 2020; and
• Cerulon, PPC's specialty neurology product, which generated non-Americas net sales of approximately $280 million in 2020.
The account statements further reflect a broad range of outgoing payments that are consistent with PBI's role as an independent commercial principal and controlled participant in the cost-sharing arrangement with PPC. These payments include, among others:
(a) Cost-Sharing Payments to PPC. The Glenmore Bank statements reflect PBI's outgoing payments to PPC under the cost-sharing arrangement (the "CSA") effective July 1, 2012, pursuant to which PBI shares in qualified research and development costs in exchange for rights to exploit intangible property developed under the CSA in non-Americas territories. PBI's share of total qualified R&D costs ranged from 38.2% to 42.7% during the 2017–2020 period, calculated in accordance with the reasonably anticipated benefit methodology set forth in the CSA. PBI's cost-sharing payments during the examination period were as follows:
(b) Legacy IP Royalty Payments to PPC. The statements also reflect PBI's outgoing royalty payments to PPC under the pre-existing legacy intellectual property license agreement, pursuant to which PBI paid a royalty rate of 4.5% of non-Americas net sales for exploitation of intellectual property that pre-dated the CSA. PBI's legacy IP royalty payments during the examination period were as follows:
The declining trajectory of legacy IP royalty payments is consistent with the natural attrition of pre-CSA intellectual property as newer products developed under the CSA increasingly constituted a larger share of PBI's commercial portfolio.
(c) Payments to Penterra Manufacturing Ireland Ltd. The account statements reflect PBI's payments to Penterra Manufacturing Ireland Ltd. ("PMI"), a separate Irish subsidiary of PPC, under the contract manufacturing agreement between PBI and PMI. Under that agreement, PMI provided contract manufacturing services to PBI at cost plus an eight percent (8%) markup, consistent with arm's-length pricing for routine contract manufacturing services. These payments are reflected in the Glenmore Bank statements as regular intercompany disbursements to PMI.
(d) Regulatory Expenditure Payments. PBI incurred cumulative regulatory expenditures of approximately €47.2 million across sixty-eight (68) country markets during the 2017–2020 period. These expenditures included fees and costs associated with obtaining and maintaining marketing authorizations, regulatory filings, pharmacovigilance activities, and compliance with local regulatory requirements in each jurisdiction in which PBI commercialized PPC-group products. The Glenmore Bank statements reflect PBI's payments of these regulatory costs, which were incurred and managed by PBI's regulatory affairs team in Dublin.
(e) Payroll and Employee Compensation Disbursements. The account statements reflect PBI's regular payroll disbursements for its employees, including base salary, performance-based compensation, social insurance contributions (PRSI), pension contributions, and other employee benefits. As noted above, PBI's employee headcount grew from fifty-two (52) at incorporation to one hundred eighty-five (185) as of December 31, 2020, reflecting the growing scale and complexity of PBI's operations.
(f) Office Lease Payments. The statements reflect PBI's payments under its lease for approximately 18,000 square feet of office space at Sandyford Business Park, Dublin, where PBI maintains its registered office and principal place of business. This office houses PBI's management, finance, regulatory affairs, commercial operations, medical affairs, and other functional teams.
(g) Capital Expenditure Payments. The account statements further reflect PBI's capital expenditure payments for equipment, information technology infrastructure, and other investments made in support of PBI's operations.
(h) Payments to Third-Party Distribution Partners. PBI's account statements reflect payments to third-party distribution partners in non-Americas territories, including distribution fees, logistics costs, and other amounts payable under PBI's distribution arrangements in markets where PBI did not maintain a direct commercial presence.
Taken together, the banking records produced herewith confirm that PBI conducted independent financial operations and exercised autonomous decision-making authority over its treasury and commercial activities in Ireland. The records are consistent with PBI's role as a controlled participant in the cost-sharing arrangement under Treasury Regulation § 1.482-7 and as the intellectual property holder and commercial principal for non-Americas exploitation of PPC-group products. The scope and volume of the transactions reflected in the Glenmore Bank statements demonstrate that PBI was not a mere shell or conduit entity, but rather a substantive enterprise with genuine and substantial economic activity in Ireland throughout the 2017–2020 examination period.
Section 3: Coordination with Irish Tax Advisors
PPC notes that certain of the documents produced in response to IDR No. 22 were obtained in coordination with Thornbury & Keogh, Chartered Tax Advisors, of 22 Fitzwilliam Square, Dublin 2, D02 YH68, Ireland. Thornbury & Keogh serves as PBI's Irish tax advisors, and the coordination with that firm was led by partner Ciarán Thornbury. Mr. Thornbury's team assisted in the identification, collection, and assembly of the Glenmore Bank account statements and related documentation maintained by PBI at its Dublin offices.
In addition, the production of the documents enclosed herewith was coordinated directly with PBI Managing Director Aidan Naughton to ensure the completeness and accuracy of the records produced. Mr. Naughton's participation in the document collection process reflects PBI's cooperative engagement with the examination and PBI's commitment to providing the examination team with a full and accurate record of PBI's banking and treasury operations.
PPC further notes that certain of the produced documents were maintained in formats consistent with Irish regulatory and banking requirements and conventions. To the extent any such formatting conventions differ from those customarily encountered in the United States, PPC is prepared to provide additional context or explanation as may be useful to the examination team.
Section 4: Privilege Reservation and Document Index
4.1 Privilege Reservation
PPC expressly reserves all rights to assert the attorney-client privilege and the work-product protection doctrine over any documents, communications, or other materials that have not been produced in connection with IDR No. 22 or any other Information Document Request issued during this examination. The production of banking records and related documentation in response to IDR No. 22 shall not be deemed or construed as a waiver, in whole or in part, of any applicable privilege or protection.
PPC further notes that this firm is maintaining a master privilege log in connection with all IDR responses during the current examination. To the extent any documents responsive to IDR No. 22 have been withheld on the basis of privilege, such documents have been identified on the master privilege log with sufficient specificity to enable the examination team to evaluate the asserted privilege. PPC reserves the right to supplement the master privilege log as necessary.
Without limiting the generality of the foregoing, PPC specifically notes that the production of banking records in response to IDR No. 22 does not waive any privilege or protection over communications between or among (i) Calderwood & Harkness LLP and PPC or PBI, (ii) Whitmore Valuation Group LLC, which was retained by PPC under a Kovel arrangement (reference number 1018-00009-KV, executed June 20, 2022) to provide valuation and economic analysis services at the direction of this firm in connection with the examination, and PPC, PBI, or this firm, or (iii) Thornbury & Keogh, Chartered Tax Advisors, and PPC, PBI, or this firm. All communications with Whitmore Valuation Group LLC were made at the direction of legal counsel and for the purpose of facilitating the rendition of legal advice, and such communications are protected under the attorney-client privilege and the work-product doctrine as set forth in United States v. Kovel, 296 F.2d 918 (2d Cir. 1961), and its progeny.
4.2 Document Index / Production Log
The following table sets forth a summary index of all documents produced in response to IDR No. 22:
Total pages produced in response to IDR No. 22: 1,338 pages.
All Glenmore Bank account statements (Category 1) and account opening documentation (Category 2) have been produced as PDF copies of the original documents as maintained by PBI. The Treasury Operations Summary (Category 3) has been produced in native format, including the underlying Microsoft Word memorandum and supporting Microsoft Excel workbooks containing transactional summaries and reconciliation schedules, to permit the examination team to review and analyze the data in its original working format.
Section 5: Supplementary Notes
PPC offers to make PBI's finance personnel, including members of PBI's treasury team and the Head of Finance, available for interview or follow-up questions regarding the banking records and treasury operations documented in the enclosed production. PPC recognizes that the volume and complexity of the produced materials may give rise to questions, and PPC is committed to facilitating the examination team's review. Any such interviews or follow-up inquiries may be coordinated through this firm, consistent with the protocols established at the outset of the examination. PPC notes that C&H previously produced, in response to IDR No. 8, detailed information regarding PBI's personnel, including headcount data, organizational charts, and role descriptions for PBI employees across all functional areas, which may provide useful context for the examination team's review of the banking records produced herewith.
PPC also respectfully directs the examination team's attention to the minutes of PBI's forty-two (42) board meetings held in Dublin, Ireland, during the 2017–2020 period, which were produced in response to IDR No. 9. Those board minutes reflect the active and independent governance exercised by PBI's board of directors over PBI's strategic, financial, and operational affairs, including oversight of PBI's treasury and cash management functions, approval of intercompany payment obligations, and review of PBI's financial performance. The banking records produced in response to IDR No. 22 are consistent with, and corroborative of, the governance activities documented in the board minutes previously produced.
Additionally, PPC notes that PBI's audited financial statements for fiscal years 2017 through 2020 were previously produced in response to IDR No. 7. Those financial statements, prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and audited by PBI's statutory auditors, reflect that PBI generated total revenue of approximately €2.14 billion and pre-tax income of approximately €1.06 billion in fiscal year 2020. The Glenmore Bank account statements produced herewith are consistent with the financial results reported in PBI's audited financial statements, and the banking records provide transactional-level detail supporting the revenue, expense, and cash flow figures presented in those statements.
PPC has made a good-faith effort to respond fully and completely to IDR No. 22. PPC believes that the documents enclosed herewith are responsive to the specific requests contained in IDR No. 22. To the extent the examination team identifies any additional categories of banking records or related documentation that it believes are within the scope of IDR No. 22 but have not been produced, PPC requests that the examination team notify this firm promptly so that we may address any such requests.
Should Revenue Agent Dunleavy or Supervisory Revenue Agent Gerald Meskill have any questions regarding this response or the enclosed documents, or wish to discuss any follow-up requests, please do not hesitate to contact me or Garrett Simmons at Calderwood & Harkness LLP's Philadelphia office at the address and telephone number set forth below. We look forward to continuing to work cooperatively with the examination team.
PPC expressly reserves all rights and objections not expressly waived herein, including all rights under the Internal Revenue Code, the Treasury Regulations, and any other applicable law.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Leonard Cross Partner, Tax Department Calderwood & Harkness LLP 1735 Market Street, Suite 3100 Philadelphia, PA 19103 Direct: (215) 496-7218
Email: lcross@calderwoodharkness.com
cc (via email):
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
Garrett Simmons, Partner Calderwood & Harkness LLP
Leila Nazari, Counsel Calderwood & Harkness LLP
Enclosures: As described in Document Index (Section 4.2 above) Total Enclosure Count: 1,338 pages (Bates Nos. PPC-IDR22-000001 through PPC-IDR22-001338)
Tax Year | PBI Cost-Share Percentage | PBI Cost-Sharing Payment
2017 | 38.2% | $186.15 million
2018 | 39.6% | $207.42 million
2019 | 41.1% | $230.65 million
2020 | 42.7% | $255.52 million
Tax Year | Legacy IP Royalty Payment
2017 | $36.66 million
2018 | $34.30 million
2019 | $31.13 million
2020 | $28.08 million
Category | Description | Bates Range | Page Count | Format
1 | Glenmore Bank Ireland plc monthly account statements for all PBI accounts — calendar years 2017, 2018, 2019, and 2020 (48 months) | PPC-IDR22-000001 through PPC-IDR22-001247 | 1,247 | PDF copies of original bank statements
2 | Account opening documentation, corporate resolutions, signatory authorizations, and relationship management correspondence | PPC-IDR22-001248 through PPC-IDR22-001312 | 65 | PDF copies of original documents
3 | Treasury Operations Summary prepared by PBI finance team | PPC-IDR22-001313 through PPC-IDR22-001338 | 26 | Native format (Microsoft Word and Excel)

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