<PAGE>

                                                                    Exhibit 10.1

                               [IDERA LETTERHEAD]

May 17, 2007

Mr. Robert G. Andersen
c/o Idera Pharmaceuticals, Inc.
345 Vassar Street
Cambridge, MA 02139

Dear Bob:

     This letter agreement shall confirm our understanding with respect to your
separation from Idera Pharmaceuticals, Inc. (the "Company"). You have agreed to
remain as an employee of the Company until July 31, 2007 or such later date as
is mutually agreed upon by you and the Company (such date being referred to as
the "Effective Date of Termination" and the period from the date hereof to the
Effective Date of Termination being referred to as the "Transition Period") on
the terms and conditions set forth herein. Except as expressly provided herein,
your employment will continue to be subject to the terms of your Employment
Agreement with the Company dated April 13, 2006 (the "Employment Agreement").

1.   TRANSITION PERIOD. During the Transition Period, you agree to continue to
     satisfactorily perform your employment duties as required by your
     Employment Agreement, perform any other task reasonably requested by the
     Company and be available to assist the Company in transitioning your duties
     as and to the extent requested by the Company, including the transition of
     your employment functions to a new Chief Financial Officer, and the Company
     agrees to pay you your salary and provide you with benefits in accordance
     with Section 5 of your Employment Agreement. If you terminate your
     employment, for any reason, prior to the Effective Date of Termination you
     will not be entitled to any severance or other benefits under this letter
     agreement or Section 6 of the Employment Agreement. If your employment is
     terminated prior to the Effective Date of Termination as a result of your
     death or disability or by the Company for any reason, including without
     limitation under Section 6(d) of the Employment Agreement in connection
     with a Change of Control (as defined in the Employment Agreement), the
     terms and conditions of the Employment Agreement shall govern such
     termination. This letter agreement will be deemed to amend the "Employment
     Period" in the Employment Agreement such that the current Employment Period
     provided for therein shall terminate coincident with the Effective Date of
     Termination.

2.   SEVERANCE BENEFITS. Subject to Section 4 of this letter agreement, you will
     receive the severance benefits described in the "Description of Severance
     Benefits" attached as Attachment A (the "severance benefits") (and not the
     severance benefits provided for in the Employment Agreement) if you
     satisfactorily complete the Transition Period and your employment
     terminates on the Effective Date of Termination. In no event shall the
     Company be obligated to pay severance benefits under both this letter
     agreement and under the Employment Agreement. Any compensation derived by
     you from any

<PAGE>

     subsequent employment or self-employment shall not be offset against or
     reduce any amounts to which you are entitled under this letter agreement,
     except as expressly provided herein.

3.   TRANSITION BONUS. During the Transition Period, in addition to performing
     your employment duties and transitioning them in accordance with paragraph
     1 above, you will undertake to meet certain performance objectives as set
     forth on Attachment C hereto. If you remain employed through the Transition
     Period and such objectives are satisfactorily achieved during the
     Transition Period, which determination shall be made by the Board of
     Directors (or a committee thereof) in its sole discretion, then, subject to
     Section 4 of this letter agreement, the Company will pay you a bonus equal
     to between 20% and 50% of your annual base salary on the date hereof (the
     "transition bonus"), as determined by the Board of Directors or a committee
     thereof, in its sole discretion, in addition to any severance benefits
     hereunder. The transition bonus shall be payable within 30 days after the
     Effective Date of Termination in a lump sum subject to applicable taxes and
     withholding.

4.   DELIVERY OF RELEASE OF CLAIMS UPON TERMINATION. The Company shall not
     provide you with any severance benefits or pay the transition bonus to you
     under Sections 2 or 3 hereof unless you sign and return the release of
     claims attached hereto as Attachment B (the "Release") on, but not before,
     the Effective Date of Termination and do not revoke it. You understand that
     you may revoke the Release for a period of seven (7) days after you sign
     it, and it shall not be effective or enforceable (and no payments hereunder
     shall be paid to you) until the expiration of the seven (7) day revocation
     period. YOU UNDERSTAND AND AGREE THAT BY SIGNING THE RELEASE YOU WILL BE
     WAIVING ANY AND ALL RIGHTS OR CLAIMS YOU MIGHT HAVE UNDER THE AGE
     DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED BY THE OLDER WORKERS BENEFIT
     PROTECTION ACT, AND ACKNOWLEDGING THAT YOU HAVE RECEIVED CONSIDERATION
     BEYOND THAT TO WHICH YOU WERE PREVIOUSLY ENTITLED.

5.   UNPAID OBLIGATIONS. The Company will on the Effective Date of Termination
     or promptly thereafter (i) pay you any salary earned but unpaid through
     such date, (ii) reimburse you for any reimbursable expense incurred by you
     through the Effective Date of Termination in accordance with the Company's
     expense reimbursement policy and (iii) pay you for your unused vacation
     time in accordance with Company policy.

6.   CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION OBLIGATIONS. You
     acknowledge and reaffirm your obligations regarding confidentiality,
     non-competition, non-solicitation and assignment of inventions, as set
     forth in paragraphs 7, 8 and 9 of the Employment Agreement, each of which
     are incorporated herein by reference and shall remain in full force and
     effect.

7.   RETURN OF COMPANY PROPERTY. You will be entitled to keep the Dell laptop,
     the docking station and the PDA issued to you by the Company. Except for
     the foregoing, you confirm that, by the Effective Date of Termination, you
     will have returned to the Company all keys, files, records (and copies
     thereof), equipment (including, but not limited to, computer hardware,
     software and printers, wireless handheld devices, cellular


                                        2

<PAGE>

     phones, pagers, etc.), Company identification, Company vehicles and any
     other Company-owned property in your possession or control, and will leave
     intact all electronic Company documents, including, but not limited to,
     those which you developed or helped develop during your employment. You
     further confirm that you will have cancelled all accounts for your benefit,
     if any, in the Company's name, including, but not limited to, credit cards,
     telephone charge cards, cellular phone and/or pager accounts and computer
     accounts.

8.   AMENDMENT. This letter agreement shall be binding upon the parties and may
     not be modified in any manner, except by an instrument in writing of
     concurrent or subsequent date signed by duly authorized representatives of
     the parties hereto. This letter agreement is binding upon and shall inure
     to the benefit of the parties and their respective agents, assigns, heirs,
     executors, successors and administrators.

9.   NO WAIVER. No delay or omission by the Company in exercising any right
     under this letter agreement shall operate as a waiver of that or any other
     right. A waiver or consent given by the Company on any one occasion shall
     be effective only in that instance and shall not be construed as a bar or
     waiver of any right on any other occasion.

10.  VALIDITY. Should any provision of this letter agreement be declared or be
     determined by any court of competent jurisdiction to be illegal or invalid,
     the validity of the remaining parts, terms or provisions shall not be
     affected thereby and said illegal and/or invalid part, term or provision
     shall be deemed not to be a part of this letter agreement.

11.  NATURE OF AGREEMENT. You understand and agree that this letter agreement is
     a severance agreement and does not constitute an admission of liability or
     wrongdoing on the part of the Company.

12.  ACKNOWLEDGMENTS. You acknowledge that you have been given at least
     twenty-one (21) days to consider this letter agreement and its Attachments
     A, B and C, and that the Company advised you to consult with an attorney of
     your own choosing prior to signing this letter agreement and prior to
     signing the Release.

13.  TAX PROVISION. In connection with the severance benefits or transition
     bonus provided to you pursuant to this letter agreement and Attachments A,
     B and C, the Company shall withhold and remit to the tax authorities the
     amounts required under applicable law, and you shall be responsible for all
     applicable taxes with respect to such severance benefits or transition
     bonus under applicable law. You acknowledge that you are not relying upon
     advice or representation of the Company with respect to the tax treatment,
     including without limitation under Internal Revenue Code Section 409A, of
     the transition bonus and any of the severance benefits set forth in
     Attachment A.

14.  VOLUNTARY ASSENT; EXPENSES. You affirm that no other promises or agreements
     of any kind have been made to or with you by any person or entity
     whatsoever to cause you to sign this letter agreement or the Release, and
     that you fully understand the meaning and intent of this letter agreement
     and the Release. You state and represent that you have had


                                        3

<PAGE>

     an opportunity to fully discuss and review the terms of this letter
     agreement and the Release with an attorney. You further state and represent
     that you have carefully read this letter agreement, including Attachments
     A, B and C hereto, understand the contents therein, freely and voluntarily
     assent to all of the terms and conditions hereof, and sign your name of
     your own free act. The Company shall reimburse you for the reasonable fees
     and expenses of your attorney, not to exceed $3,000 in the aggregate, in
     connection with the negotiation of this letter agreement and all related
     matters.

15.  NON-DISPARAGEMENT. You understand and agree that as a condition for payment
     to you of the consideration herein, you shall not make any false,
     disparaging or derogatory statements in public or private to any person or
     media outlet regarding the Company or any of its directors, officers,
     employees, agents, or representatives or the Company's business affairs and
     financial condition. The Company agrees to direct its officers and
     directors not to make any false, disparaging or derogatory statements in
     public or private to any person or media outlet regarding you.

16.  APPLICABLE LAW. This Agreement shall be governed by the laws of the
     Commonwealth of Massachusetts without giving effect to any conflict of law
     rules that would require the application of the laws of any jurisdiction
     other than the internal laws of the Commonwealth of Massachusetts to the
     rights and duties of the parties, except to the extent the laws of the
     Commonwealth of Massachusetts are preempted by federal law.

17.  ENTIRE AGREEMENT; EFFECT ON EMPLOYMENT AGREEMENT. The Employment Agreement
     and this letter agreement, including Attachments A, B and C, contains and
     constitutes the entire understanding and agreement between the parties
     hereto with respect to the Transition Period, your severance benefits
     following the Effective Date of Termination and transition bonus and the
     settlement of claims against the Company and cancels all previous oral and
     written negotiations, agreements, commitments and writings in connection
     therewith.

                                        Very truly yours,

                                        IDERA PHARMACEUTICALS, INC.


                                        By: /s/ Sudhir Agrawal
                                            ------------------------------------
                                        Name: Dr. Sudhir Agrawal
                                        Title: Chief Executive Officer


                                        4

<PAGE>

I hereby agree to the terms and conditions set forth in the letter agreement
above and in Attachments A, B and C thereto. I have been given at least
twenty-one (21) days to consider this letter agreement and Attachments A, B and
C thereto, and I have chosen to execute this letter agreement on the date below.
I understand that provision to me of the severance benefits described in
Attachment A and payment to me of the transition bonus is conditioned upon my
timely execution, return, and non-revocation of the Release and I agree to sign
the Release on, but not before, the Effective Date of Termination.


/s/ Robert G. Andersen                  Date May 17, 2007
------------------------------------
Employee Name: Robert G. Andersen

To be returned to the Company's Chief Executive Officer by May 17, 2007.


                                        5

<PAGE>

                                  ATTACHMENT A

                        DESCRIPTION OF SEVERANCE BENEFITS

1. The Company shall pay you (i) on the date six months and one day after the
Effective Date of Termination a lump sum payment in cash equal to six months of
your base salary in effect immediately prior to the Effective Date of
Termination and (ii) in accordance with the Company's payroll practices
applicable to salaried executives, your base salary as in effect immediately
prior to the Effective Date of Termination for a period commencing on the date
six months and one day after the Effective Date of Termination and ending on the
first anniversary of the Effective Date of Termination.

2. Any stock options or other equity incentive awards previously granted to you
by the Company and held by you on the Effective Date of Termination shall vest
as of such date to the extent such options or equity incentive awards, as
applicable, would have vested had you continued to be an employee of the Company
for a period ending on the first anniversary of the Effective Date of
Termination. You shall be permitted to exercise such stock options until the
first anniversary of the Effective Date of Termination; provided that such
provision shall not affect and shall be subject to (x) the provisions of the
applicable stock option agreement and/or equity incentive plan relating to the
termination of such stock options in connection with an Acquisition Event, a
Change of Control (as such terms are defined in your Employment Agreement) or a
similar transaction involving the Company or (y) the maximum term of any such
stock option. Notwithstanding the foregoing, the stock options to purchase 4,737
shares of common stock of the Company granted to Mr. Andersen on 1 March 1999
shall not be subject to the provisions of this item 2 and instead shall be
subject to the terms of the Company's PE97 Plan under which such options were
granted and the option agreement entered into with the Company evidencing such
options.

3. Effective as of the Effective Date of Termination, you shall be considered to
have elected to continue receiving group medical and dental insurance pursuant
to the federal "COBRA" law, 29 U.S.C. Section 1161 et seq., which insurance
shall be substantially similar to the insurance you were receiving immediately
prior to the Effective Date of Termination. The Company shall, for the period
ending on the first anniversary of the Effective Date of Termination, and at its
sole cost and expense, continue to pay the share of the premium for such
coverage you and your eligible dependents (if any) that is paid by the Company
for active and similarly-situated employees who receive the same type of
coverage. The remaining balance of any premium costs, and all premium costs
after such period, shall be paid by you on a monthly basis for as long as, and
to the extent that, you remain eligible for COBRA continuation and you elect to
continue your coverage. You should consult the COBRA materials to be provided by
the Company for details regarding these benefits. Notwithstanding the foregoing,
the Company shall not be required to pay any COBRA premiums under this item 3 to
the extent you receive medical insurance or dental insurance benefits, as the
case may be, from a new employer.

4. The Company shall provide for the period ending on the first anniversary of
the Effective Date of Termination, and at its sole cost and expense, you and
your eligible dependents (if any) with disability and life insurance benefits
substantially similar to this benefits you and your


                                        6

<PAGE>

dependents (if any) were receiving immediately prior to the Effective Date of
Termination; provided, however, that the Company shall not be required to
provide coverage to the extent you receive comparable death and disability
benefits from a new employer; and provided, further however, that the Company
shall pay the cost of supplemental coverage if the new employer provides less
than comparable coverage, to allow you to purchase coverage to make total
coverage comparable.

All other benefits will cease upon the Effective Date of Termination.


                                        7

<PAGE>

                                  ATTACHMENT B

                                RELEASE OF CLAIMS

In consideration of the benefits provided for in the letter agreement dated May
___, 2007, which I acknowledge I would not otherwise be entitled to receive, I
hereby fully, forever, irrevocably and unconditionally release, remise and
discharge the Company, its officers, directors, stockholders, corporate
affiliates, subsidiaries, parent companies, agents and employees (each in their
individual and corporate capacities) (hereinafter, the "Released Parties") from
any and all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings, covenants,
contracts, agreements, promises, doings, omissions, damages, executions,
obligations, liabilities, and expenses (including attorneys' fees and costs), of
every kind and nature which you ever had or now have against the Released
Parties, including, but not limited to, any claims arising out of my employment
with and/or separation from the Company, including, but not limited to, all
employment discrimination claims under Title VII of the Civil Rights Act of
1964, 42 U.S.C. Section 2000e et seq., the Age Discrimination in Employment Act,
29 U.S.C. Section 621 et seq., the Americans With Disabilities Act of 1990, 42
U.S.C. Section 12101 et seq., the Family and Medical Leave Act, 29 U.S.C.
Section 2601 et seq., the Worker Adjustment and Retraining Notification Act
("WARN"), 29 U.S.C. Section 2101 et seq., and the Rehabilitation Act of 1973, 29
U.S.C. Section 701 et seq., all as amended; all claims arising out of the Fair
Credit Reporting Act, 15 U.S.C. Section 1681 et seq., the Employee Retirement
Income Security Act of 1974 ("ERISA"), 29 U.S.C. Section 1001 et seq., the
Massachusetts Fair Employment Practices Act., M.G.L. c. 151B, Section 1 et seq.,
the Massachusetts Civil Rights Act, M.G.L. c. 12, Sections 11H and 11I, the
Massachusetts Equal Rights Act, M.G.L. c. 93, Section 102 and M.G.L. c. 214,
Section 1C, the Massachusetts Labor and Industries Act, M.G.L. c. 149, Section 1
et seq., the Massachusetts Privacy Act, M.G.L. c. 214, Section 1B, and the
Massachusetts Maternity Leave Act, M.G.L. c. 149, Section 105(d), all as
amended; all common law claims including, but not limited to, actions in tort,
defamation and breach of contract (including without limitation any claims
arising out of my Employment Agreement with the Company dated April 13, 2006);
all claims to any non-vested ownership interest in the Company, contractual or
otherwise, including, but not limited to, claims to stock or stock options
(except for those share/stock option rights and interests set forth in the
letter agreement); and any claim or damage arising out of my employment with or
separation from the Company (including a claim for retaliation) under any common
law theory or any federal, state or local statute or ordinance not expressly
referenced above; provided, however, that nothing in the letter agreement
prevents me from filing, cooperating with, or participating in any proceeding
before the EEOC or a state Fair Employment Practices Agency (except that I
acknowledge that I may not be able to recover any monetary benefits in
connection with any such claim, charge or proceeding). Nothing herein shall bar
actions to enforce the terms of the letter agreement. Moreover, nothing herein
shall be construed so as to limit or restrict any right of indemnification or
insurance available to me in my capacity as an officer and employee of the
Company.

I hereby provide this release of claims as of the current date and acknowledge
that the execution of this Release is in further consideration of the severance
benefits and transition bonus described in Sections 2 and 3 of the letter
agreement, to which I acknowledge I would not be entitled if I did not sign this
release of claims. I acknowledge that I have been given at least twenty-one (21)
days to consider this Release and that I was advised to consult with legal


                                        8

<PAGE>

counsel of my own choosing prior to signing this Release. I understand that I
may revoke this Release for a period of seven (7) days after signing and that it
shall not be effective or enforceable until the expiration of such seven (7) day
period. I understand and agree that I am waiving any and all rights or claims I
might have under the Age Discrimination and Employment Act, as amended, by the
Older Workers Benefit Protection Act.

This release shall be interpreted and construed by the laws of the Commonwealth
of Massachusetts, without regard to conflict of laws provisions. I hereby
irrevocably submit to and acknowledge and recognize the jurisdiction of the
courts of the Commonwealth of Massachusetts, or if appropriate, a federal court
located in Massachusetts (which courts, for purposes of this letter agreement,
are the only courts of competent jurisdiction), over any suit, action or other
proceeding arising out of, under or in connection with this letter agreement or
the subject matter hereof.


       R. Andersen                       Date         31 July 2007
-------------------------------------        -----------------------------------
Employee Name: Robert G. Andersen

TO BE SIGNED AND RETURNED TO THE COMPANY'S CHIEF EXECUTIVE OFFICER ON, BUT NOT
BEFORE, THE EFFECTIVE DATE OF TERMINATION.


                                        9

<PAGE>

                                  ATTACHMENT C

                             PERFORMANCE OBJECTIVES

-    Finance

          -    File Proxy for 2007

          -    Q1 2007 Closing and file Form 10-Q

          -    File Forms 8-K (as required)

          -    Prepare 2007 - 2008 Budget

          -    Q2 2007 Closing and prepare Form 10-Q (as required)

          -    Assist with any financing of the Company (as required)

          -    Engage consulting firm to assist with SOX 404 compliance

-    Relocation

          -    Complete build-out of 167 Sidney St.

          -    Acquire and lease furniture and equipment.

          -    Acquire necessary permits

          -    Install new systems (water treatment, security, bldg. controls)

          -    Move the Company to 167 Sidney St. (target June 2007)

-    Close-Out of Existing Facility (target July 2007)

          -    Clean-up of 345 Vassar Street

          -    Decommission facility

          -    Gain MIT sign-off

-    Information Technology

          -    Develop Information Technology System Upgrades

          -    Manage Internet/Telecom/Network installations for 167 Sidney St.

          -    Develop audio-video systems for new board room

          -    Bring new systems on-line


                                       10