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UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C. 20549
  FORM 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal
    Year Ended December 31, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Transition Period
    from          to   Commission File Number:
    001-31918
  IDERA PHARMACEUTICALS,
    INC.
 (Exact name of Registrant as
    specified in its charter)
  Delaware

04-3072298(State or other jurisdiction
    of incorporation or organization)

(I.R.S. Employer
    Identification No.)167 Sidney Street
    Cambridge, Massachusetts(Address of principal executive
    offices)

02139(Zip Code)   (617) 679-5500
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act
  Title of Class:

Name of Each Exchange on Which RegisteredCommon Stock, $.001 par value
    (Including Associated Preferred Stock Purchase Rights)

NASDAQ Global Market   Securities registered pursuant to Section 12(g) of the
    Act: None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





IDERA
    PHARMACEUTICALS, INC.
  FORM 10-K
  INDEX
   
 PagePART I.Item 1.


Business


1Item 1A.


Risk Factors


20Item 1B.


Unresolved Staff Comments


36Item 2.


Properties


36Item 3.


Legal Proceedings


36Item 4.


Reserved


36PART II.Item 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


37Item 6.


Selected Financial Data


39Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


39Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


52Item 8.


Financial Statements and Supplementary Data


53Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


54Item 9A.


Controls and Procedures


54Item 9B.


Other Information


56PART III.Item 10.


Directors, Executive Officers, and Corporate
    Governance


56Item 11.


Executive Compensation


56Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


56Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


56Item 14.


Principal Accountant Fees and Services


56PART IV.Item 15.


Exhibits and Financial Statement Schedules


57EX-10.14EX-10.41EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2    ® ® Form 10-K
 i




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FORWARD-LOOKING
    STATEMENTS
  Form 10-K Form 10-K Form 10-K. Form 10-K
 ii




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PART I.  Item 1.
    Business  Overview
        Infectious disease program. IMO-2125
  Autoimmune and inflammatory disease
    program. IMO-3100, IMO-3100
  Cancer program. and/or
  Respiratory disease program.
 1




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Vaccine adjuvant program.
  IMO-2055,
  Our
    Business Strategy
          Overview
    of the Human Immune System
     2




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TLR-based
    Drug Discovery Technology
      TLR9
    Agonists
    TLR7 and
    TLR8 Agonists
  and/or and/or
  TLR7 and
    TLR9 Antagonists
   3




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TLR3
    Agonists
    Research
    and Development Programs
    INTERNAL
    RESEARCH AND DEVELOPMENT PROGRAMS
  Drug candidate(s)

Application

Development StatusInfectious DiseasesIMO-2125 (TLR9 agonist) TLR7, 8, and 9 agonists

Chronic Hepatitis C Virus Infection Viral Infectious Diseases

Phase 2 Planned Second Quarter 2011 ResearchAutoimmune and Inflammatory DiseasesIMO-3100 (dual TLR7/TLR9 antagonist)

Healthy Subjects

Phase 1 Clinical Trial CompletedLupus, Psoriasis, Rheumatoid Arthritis, Hyperlipidemia

ResearchCancerIMO-4200 (dual TLR7, TLR8 agonist)

Hematological Malignancies

Lead CandidateRespiratory DiseasesIMO-2134 (TLR9 agonist)

Asthma, Allergies

Phase 1 Clinical Trial Conducted by Novartis during the
    Collaboration PeriodVaccine AdjuvantsTLR3 agonists

Infectious Diseases, other

Research   COLLABORATIVE
    ALLIANCES
  Drug candidate(s)

Application

Development StatusCancer  Merck KGaAIMO-2055 (EMD 1201081) (TLR9

Head and Neck Cancer, Second-line

Phase 2 Clinical TrialAgonist) in combinations with other anticancer agents

Head and Neck Cancer, First-line Colorectal Cancer
    Lung Cancer

Phase 1b Clinical Trial
    Phase 1b Clinical Trial
    Phase 1b Clinical TrialVaccine Adjuvants  Merck Sharp & Dohme
    Corp.TLR7, 8, and 9 agonists

Cancer, Infectious Diseases, Alzheimers Disease

Research    4




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Internal Research and Development Programs
  Infectious
    Diseases
      Hepatitis C  IMO-2125.
      10 10 10
   5




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10 10 10
    10 10
      Viral Diseases. and/or
 6




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Autoimmune
    and Inflammatory Diseases
          IMO-3100
   7




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Cancer
    IMO-4200
  Respiratory
    Diseases
     8




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Vaccine
    Adjuvants  TLR3 Agonists
    Collaborative
    Alliances
  Cancer 
    Merck KGaA
      Ongoing
    Clinical Trials of IMO-2055 (EMD 1201081)
  Phase 2 Clinical Trial  Squamous Cell Carcinoma of
    the Head and Neck, Second  line. second-line.
  Phase 1b Clinical Trial  Squamous Cell Carcinoma
    of the Head and Neck, First-line. first-line.
  Phase 1b Clinical Trial  Non-small Cell Lung
    Cancer .
  Phase 1b Clinical Trial  Colorectal Cancer
    . IMO-2055 IMO-2055.
 9




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Prior
    Clinical Trials of
    IMO-2055
    (EMD 1201081)
  IMO-2055
  IMO-2055. IMO-2055
  Vaccine
    Adjuvants  Merck Sharp & Dohme
    Corp.
        Collaborative
    Alliances
    Merck
    KGaA
  IMO-2055 IMO-2125,
  
    In February 2008, Merck KGaA paid us a $40.0 million
    upfront license fee in Euros of which we received
    $39.7 million due to foreign currency exchange rates;
    Merck KGaA agreed to reimburse future development costs for
    certain of our on-going
    IMO-2055
    clinical trials, which we continued to conduct on behalf of
    Merck KGaA until September 2009;
    Merck KGaA agreed to pay us up to EUR 264 million in
    development, regulatory approval, and commercial success
    milestone payments if products containing our TLR9 agonist
    compounds are successfully developed and marketed for treatment,
    cure and/or
    delay of the onset or progression of cancer in humans; and 10




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
    Merck KGaA agreed to pay mid single-digit to low double-digit
    royalties on net sales of products containing our TLR9 agonists
    that are marketed.    
    Develop or commercialize any TLR9 agonist for use in treating,
    curing, and delaying the onset or progression of cancer in
    humans; and
    Develop or commercialize
    IMO-2055 for
    use outside treating, curing, and delaying the onset or
    progression of cancer in humans, except as part of vaccine
    products in the fields of oncology, infectious diseases and
    Alzheimers disease, which we are pursuing under our
    collaboration with Merck.  IMO-2055 IMO-2125
  product-by-product country-by-country
  IMO-2055, IMO-2055
  IMO-2055 IMO-2055
  Merck
    Sharp & Dohme Corp. (Merck)
      
    Merck paid us a $20.0 million upfront license fee;
    Merck purchased $10.0 million of our common stock at $5.50
    per share;
    Merck agreed to fund the research and development collaboration
    through its term; 11




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
    Merck agreed to pay us milestone payments as follows:  
    up to $165.0 million if vaccines containing our TLR9
    agonist compounds are successfully developed and marketed in
    each of the oncology, infectious disease and Alzheimers
    disease fields;
    up to $260.0 million if vaccines containing our TLR9
    agonist compounds are successfully developed and marketed for
    follow-on indications in the oncology field and if vaccines
    containing our TLR7 or TLR8 agonists are successfully developed
    and marketed in each of the oncology, infectious disease, and
    Alzheimers disease fields; and
    if Merck develops and commercializes additional vaccines using
    our agonists, we would be entitled to receive additional
    milestone payments; and  
    Merck agreed to pay us mid to upper single-digit royalties on
    net product sales of vaccines using our TLR agonist technology
    that are developed and marketed, with the royalty rates being
    dependent on disease indication and the TLR agonist employed.  product-by-product country-by-country
    Gene
    Silencing Oligonucleotides (GSO)
    Antisense
    Technology
     12




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Out-licenses.
    In-licenses.
    Academic
    and Research Collaborations
    paid-up,
 13




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Research
    and Development Expenses
    Patents,
    Proprietary Rights and Trade Secrets
      
    Novel chemical entities that function as agonists of TLR3, 7, 8
    or 9;
    Novel chemical entities that function as antagonists of TLR7, 8
    or 9; and
    Use of our novel chemical entities and chemical modifications to
    treat and prevent a variety of diseases.  IMO-2055, IMO-2125, IMO-2134, IMO-4200.
         14




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and/or
  Government
    Regulation
      
    nonclinical laboratory tests and animal safety tests under the
    FDAs good laboratory practices, or GLP, regulations;
    the submission to the FDA of an IND application for human
    clinical testing, which must become effective before human
    clinical trials may begin within the United States;
    adequate and well-controlled human clinical trials to establish
    the safety and efficacy of the investigational drug product for
    each indication or the safety, purity and potency of the
    biological product for its intended indication;
    the submission to the FDA of a new drug application, or NDA, or
    a biologics license application, or BLA;
    satisfactory completion of an FDA inspection of the
    manufacturing facility or facilities involved in the production
    of the drug to assess compliance with the FDAs regulations
    on current good manufacturing practices, or cGMPs; and
    FDA approval of the NDA or BLA.   15




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
    In Phase 1, the initial introduction of the drug into human
    subjects, the drug is usually tested to assess metabolism,
    pharmacokinetics and pharmacological actions and safety,
    including side effects associated with increasing doses and, if
    possible, early evidence of effectiveness. Phase 1 trials may
    also involve patients diagnosed with the disease or condition
    for which the study drug is intended and include assessments
    compatible with the proposed mechanism of action;
    Phase 2 usually involves controlled trials in a limited patient
    population to:  
    evaluate preliminarily the efficacy of the drug for a specific,
    targeted condition,
    determine dosage tolerance and appropriate dosage for further
    trials, and
    identify possible adverse effects and safety risks; and  
    Phase 3 trials generally further evaluate clinical efficacy and
    test further for safety within an expanded patient population
    with considerations of statistical design and power, to
    establish the overall risk-benefit relationship of the drug and
    to provide adequate information for the labeling of the drug.    
    unforeseen safety issues in the clinical trials
    and/or in
    the continuing nonclinical toxicology studies;
    inability to recruit or retain subjects or patients at the rate
    we expect;
    failure by the subjects
    and/or the
    investigators to adhere to protocol requirements;
    inability to collect the information required to assess patients
    adequately for safety and efficacy; and
    insufficient evidence of efficacy.   16




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and/or
     17




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Manufacturing
      Competition
    IMO-2125 IMO-2125
     18




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Employees
    Information
    Available on the Internet
  Form 10-K Form 10-K, Form 10-Q, Form 8-K
 19




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Item 1A.
    Risk
    Factors.  RISK
    FACTORS
  Investing in our common stock involves a high degree of risk.
    You should carefully consider the risks and uncertainties
    described below in addition to the other information included or
    incorporated by reference in this Annual Report on
    Form 10-K
    before purchasing our common stock. If any of the following
    risks actually occurs, our business, financial condition or
    results of operations would likely suffer, possibly materially.
    In that case, the trading price of our common stock could fall,
    and you may lose all or part of the money you paid to buy our
    common stock.
  Risks
    Relating to Our Financial Results and Need for
    Financing
  We
    have incurred substantial losses and expect to continue to incur
    losses. We will not be successful unless we reverse this
    trend.
      We
    will need additional financing, which may be difficult to
    obtain. Our failure to obtain necessary financing or doing so on
    unattractive terms could adversely affect our research and
    development programs and other operations.
  IMO-2125 IMO-3100
    
    the success of our clinical and preclinical development programs;
    the success of our existing strategic collaborations with Merck
    KGaA and Merck;
    the cost, timing, and outcome of regulatory reviews;
    competitive and potentially competitive products and
    technologies and investors receptivity to our drug
    candidates and the technology underlying them in light of
    competitive products and technologies; 20




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
    the receptivity of the capital markets to financings by
    biotechnology companies generally and companies with drug
    candidates and technologies such as ours specifically; and
    our ability to enter into additional strategic collaborations
    with biotechnology and pharmaceutical companies and the success
    of such collaborations.  and/or and/or
  Risks
    Relating to Our Business, Strategy and Industry
  We are
    depending heavily on the success of
    IMO-2125,
    IMO-3100,
    and our collaborative alliances. If we or our collaborators are
    unable to successfully develop and commercialize our drug
    candidates, or experience significant delays in doing so, our
    business will be materially harmed.
  IMO-2125, IMO-3100. IMO-2125, IMO-3100
  
    the drug candidates demonstrating an acceptable safety profile
    in nonclinical studies and during clinical trials;
    timely enrollment in our anticipated clinical trials of
    IMO-2125 and
    IMO-3100 and
    other on-going or planned clinical trials, which may be slower
    than we anticipate, potentially resulting in significant delays;
    satisfying conditions imposed on us
    and/or our
    collaborators by the FDA or equivalent foreign regulatory
    authorities regarding the scope or design of our clinical trials;
    the ability to demonstrate to the satisfaction of the FDA, or
    equivalent foreign regulatory authorities, the safety and
    efficacy of the drug candidates through current and future
    clinical trials;
    the ability to combine our drug candidates and the drug
    candidates being developed by our collaborators safely and
    successfully with other therapeutic agents;
    timely receipt of necessary marketing approvals from the FDA and
    equivalent foreign regulatory authorities;
    achieving and maintaining compliance with all regulatory
    requirements applicable to the products;
    establishment of commercial manufacturing arrangements with
    third-party manufacturers; 21




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
    the successful commercial launch of the drug candidates,
    assuming FDA approval is obtained, whether alone or in
    combination with other products;
    acceptance of the products as safe and effective by patients,
    the medical community and third-party payors;
    competition from other companies and their therapies;
    changes in treatment regimes;
    successful protection of our intellectual property rights from
    competing products in the United States and abroad; and
    a continued acceptable safety and efficacy profile of the drug
    candidates following marketing approval.  IMO-2125 IMO-3100
  If our
    clinical trials are unsuccessful, or if they are delayed or
    terminated, we may not be able to develop and commercialize our
    products.
      IMO-2125 IMO-2125
  ® ® IMO-3100
 22




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IMO-3100.
  
    regulators or IRBs may not authorize us to commence a clinical
    trial or conduct a clinical trial at a prospective trial site;
    nonclinical or clinical data may not be readily interpreted,
    which may lead to delays
    and/or
    misinterpretation;
    our nonclinical tests, including toxicology studies, or clinical
    trials may produce negative or inconclusive results, and we may
    decide, or regulators may require us, to conduct additional
    nonclinical testing or clinical trials or we may abandon
    projects that we expect may not be promising;
    the rate of enrollment or retention of patients in our clinical
    trials may be lower than we expect;
    we might have to suspend or terminate our clinical trials if the
    participating subjects experience serious adverse events or
    undesirable side effects or are exposed to unacceptable health
    risks;
    regulators or IRBs may hold, suspend or terminate clinical
    research for various reasons, including noncompliance with
    regulatory requirements, issues identified through inspections
    of manufacturing or clinical trial operations or clinical trial
    sites, or if, in their opinion, the participating subjects are
    being exposed to unacceptable health risks;
    regulators may hold or suspend our clinical trials while
    collecting supplemental information on, or clarification of, our
    clinical trials or other clinical trials, including trials
    conducted in other countries or trials conducted by other
    companies;
    we, along with our collaborators and subcontractors, may not
    employ, in any capacity, persons who have been debarred under
    the FDAs Application Integrity Policy, or similar policy
    under foreign regulatory authorities. Employment of such
    debarred persons, even if inadvertent, may result in delays in
    the FDAs or foreign equivalents review or approval
    of our products, or the rejection of data developed with the
    involvement of such person(s);
    the cost of our clinical trials may be greater than we currently
    anticipate; and
    our products may not cause the desired effects or may cause
    undesirable side effects or our products may have other
    unexpected characteristics.  IMO-2125
  
    the size of the patient population;
    the proximity of patients to clinical sites;
    the eligibility criteria for the study;
    the nature of the study, including the pattern of patient
    enrollment;
    the existence of competitive clinical trials; and
    the availability of alternative treatments.   23




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Delays
    in commencing clinical trials of potential products could
    increase our costs, delay any potential revenues, and reduce the
    probability that a potential product will receive regulatory
    approval.
      
    manufacturing sufficient quantities of drug candidate that
    satisfy the required quality standards for use in clinical
    trials;
    demonstrating sufficient safety to obtain regulatory approval
    for conducting a clinical trial;
    reaching an agreement with any collaborators on all aspects of
    the clinical trial;
    reaching agreement with contract research organizations, if any,
    and clinical trial sites on all aspects of the clinical trial;
    resolving any objections from the FDA or any regulatory
    authority on an IND application or proposed clinical trial
    design;
    obtaining IRB approval for conducting a clinical trial at a
    prospective site; and
    enrolling patients in order to commence the clinical trial.  The
    technologies on which we rely are unproven and may not result in
    any approved and marketable products.
      We
    face substantial competition, which may result in others
    discovering, developing or commercializing drugs before or more
    successfully than us.
   24




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IMO-2125 IMO-2125
         25




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Competition
    for technical and management personnel is intense in our
    industry, and we may not be able to sustain our operations or
    grow if we are unable to attract and retain key
    personnel.
        Regulatory
    Risks
  We may
    not be able to obtain marketing approval for products resulting
    from our development efforts.
  IMO-2125 IMO-3100,
    We are
    subject to comprehensive regulatory requirements, which are
    costly and time consuming to comply with; if we fail to comply
    with these requirements, we could be subject to adverse
    consequences and penalties.
     26




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
    the regulatory agencys delay in approving, or refusal to
    approve, an application for marketing of a product or a
    supplement to an approved application;
    restrictions on our products or the marketing or manufacturing
    of our products;
    withdrawal of our products from the market;
    warning letters;
    voluntary or mandatory product recalls;
    fines;
    suspension or withdrawal of regulatory approvals;
    product seizure or detention;
    refusal to permit the import or export of our products;
    injunctions or the imposition of civil penalties; and
    criminal penalties.  We
    have only limited experience in regulatory affairs and our
    products are based on new technologies; these factors may affect
    our ability or the time we require to obtain necessary
    regulatory approvals.
    Failure
    to obtain regulatory approval in jurisdictions outside the
    United States will prevent us from marketing our products
    abroad.
   27




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Risks
    Relating to Collaborators
  We
    need to establish additional collaborative alliances in order to
    succeed.
    Our
    existing collaborations and any collaborations we enter into in
    the future may not be successful.
      
    our collaborators may control the development of the drug
    candidates being developed with our technologies and compounds
    including the timing of development;
    our collaborators may control the public release of information
    regarding the developments, and we may not be able to make
    announcements or data presentations on a schedule favorable to
    us;
    disputes may arise in the future with respect to the ownership
    of rights to technology developed with our collaborators;
    disagreements with our collaborators could delay or terminate
    the research, development or commercialization of products, or
    result in litigation or arbitration;
    we may have difficulty enforcing the contracts if any of our
    collaborators fail to perform;
    our collaborators may terminate their collaborations with us,
    which could make it difficult for us to attract new
    collaborators or adversely affect the perception of us in the
    business or financial communities;
    our collaboration agreements are likely to be for fixed terms
    and subject to termination by our collaborators in the event of
    a material breach or lack of scientific progress by us;
    our collaborators may have the first right to maintain or defend
    our intellectual property rights and, although we would likely
    have the right to assume the maintenance and defense of our
    intellectual property rights if our collaborators do not, our
    ability to do so may be compromised by our collaborators
    acts or omissions; 28




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
    our collaborators may challenge our intellectual property rights
    or utilize our intellectual property rights in such a way as to
    invite litigation that could jeopardize or invalidate our
    intellectual property rights or expose us to potential liability;
    our collaborators may not comply with all applicable regulatory
    requirements, or may fail to report safety data in accordance
    with all applicable regulatory requirements;
    our collaborators may change the focus of their development and
    commercialization efforts. Pharmaceutical and biotechnology
    companies historically have re-evaluated their priorities
    following mergers and consolidations, which have been common in
    recent years in these industries. For example, we have a
    strategic partnership with Merck, which merged with
    Schering-Plough, which has been involved with certain
    TLR-targeted research and development programs. Although the
    merger has not affected our partnership with Merck to date,
    management of the combined company could determine to reduce the
    efforts and resources that the combined company will apply to
    its strategic partnership with us or terminate the strategic
    partnership. The ability of our products to reach their
    potential could be limited if our collaborators decrease or fail
    to increase spending relating to such products;
    our collaborators may under fund or not commit sufficient
    resources to the testing, marketing, distribution or development
    of our products; and
    our collaborators may develop alternative products either on
    their own or in collaboration with others, or encounter
    conflicts of interest or changes in business strategy or other
    business issues, which could adversely affect their willingness
    or ability to fulfill their obligations to us.    Risks
    Relating to Intellectual Property
  If we
    are unable to obtain patent protection for our discoveries, the
    value of our technology and products will be adversely
    affected.
    
    obtain patents;
    obtain licenses to the proprietary rights of others on
    commercially reasonable terms;
    operate without infringing upon the proprietary rights of others;
    prevent others from infringing on our proprietary
    rights; and
    protect our trade secrets.   29




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IMO-2125, IMO-3100 IMO-2055. IMO-2125, IMO-2125 IMO-3100, IMO-3100 IMO-2055, IMO-2055 IMO-4200, IMO-4200
      Third
    parties may own or control patents or patent applications and
    require us to seek licenses, which could increase our
    development and commercialization costs, or prevent us from
    developing or marketing products.
   30




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We may
    lose our rights to patents, patent applications or technologies
    of third parties if our licenses from these third parties are
    terminated. In such an event, we might not be able to develop or
    commercialize products covered by the licenses.
      We may
    become involved in expensive patent litigation or other
    proceedings, which could result in our incurring substantial
    costs and expenses or substantial liability for damages or
    require us to stop our development and commercialization
    efforts.
        Risks
    Relating to Product Manufacturing, Marketing and Sales, and
    Reliance on Third Parties
  Because
    we have limited manufacturing experience, and no manufacturing
    facilities or infrastructure, we are dependent on third-party
    manufacturers to manufacture drug candidates for us. If we
    cannot rely on third-party manufacturers, we will be required to
    incur significant costs and devote significant efforts to
    establish our own manufacturing facilities and
    capabilities.
     31




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
    reliance on the third party for regulatory compliance and
    quality assurance;
    the possibility of breach of the manufacturing agreement by the
    third party because of factors beyond our control;
    the possibility of termination or nonrenewal of the agreement by
    the third party, based on its own business priorities, at a time
    that is costly or inconvenient for us;
    the potential that third-party manufacturers will develop
    know-how owned by such third party in connection with the
    production of our drug candidates that becomes necessary for the
    manufacture of our drug candidates; and
    reliance upon third-party manufacturers to assist us in
    preventing inadvertent disclosure or theft of our proprietary
    knowledge.      We
    have no experience selling, marketing or distributing products
    and no internal capability to do so.
   32




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If
    third parties on whom we rely for clinical trials do not perform
    as contractually required or as we expect, we may not be able to
    obtain regulatory approval for or commercialize our products and
    our business may suffer.
  IMO-2125 IMO-3100
  The
    commercial success of any drug candidates that we may develop
    will depend upon the degree of market acceptance by physicians,
    patients, third-party payors, and others in the medical
    community.
    
    the prevalence and severity of any side effects, including any
    limitations or warnings contained in the products approved
    labeling;
    the efficacy and potential advantages over alternative
    treatments;
    the ability to offer our drug candidates for sale at competitive
    prices;
    relative convenience and ease of administration;
    the willingness of the target patient population to try new
    therapies and of physicians to prescribe these therapies;
    the strength of marketing and distribution support and the
    timing of market introduction of competitive products; and
    publicity concerning our products or competing products and
    treatments.   33




---



##### Table of Contents



If we
    are unable to obtain adequate reimbursement from third-party
    payors for any products that we may develop or acceptable prices
    for those products, our revenues and prospects for profitability
    will suffer.
          We
    face a risk of product liability claims and may not be able to
    obtain insurance.
   34




---



##### Table of Contents




    decreased demand for our drug candidates and products;
    damage to our reputation;
    regulatory investigations that could require costly recalls or
    product modifications;
    withdrawal of clinical trial participants;
    costs to defend related litigation;
    substantial monetary awards to clinical trial participants or
    patients, including awards that substantially exceed our product
    liability insurance, which we would then have to pay using other
    sources, if available, and would damage our ability to obtain
    liability insurance at reasonable costs, or at all, in the
    future;
    loss of revenue;
    the diversion of managements attention away from managing
    our business; and
    the inability to commercialize any products that we may develop.    Risks
    Relating to an Investment in Our Common Stock
  Our
    corporate governance structure, including provisions in our
    certificate of incorporation and by-laws, our stockholder rights
    plan and Delaware law, may prevent a change in control or
    management that stockholders may consider
    desirable.
    
    a classified board of directors;
    limitations on the removal of directors;
    limitations on stockholder proposals at meetings of stockholders;
    the inability of stockholders to act by written consent or to
    call special meetings; and
    the ability of our board of directors to designate the terms of
    and issue new series of preferred stock without stockholder
    approval.   35




---



##### Table of Contents



Our
    stock price has been and may in the future be extremely
    volatile. In addition, because an active trading market for our
    common stock has not developed, our investors ability to
    trade our common stock may be limited. As a result, investors
    may lose all or a significant portion of their
    investment.
    
    timing and results of clinical trials of our drug candidates or
    those of our competitors;
    the regulatory status of our drug candidates;
    failure of any of our drug candidates, if approved, to achieve
    commercial success;
    the success of competitive products or technologies;
    regulatory developments in the United States and foreign
    countries;
    our success in entering into collaborative agreements;
    developments or disputes concerning patents or other proprietary
    rights;
    the departure of key personnel;
    variations in our financial results or those of companies that
    are perceived to be similar to us;
    our cash resources;
    the terms of any financing conducted by us;
    changes in the structure of healthcare payment systems;
    market conditions in the pharmaceutical and biotechnology
    sectors and issuance of new or changed securities analysts
    reports or recommendations; and
    general economic, industry, and market conditions.      Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.    Item 4.
    Reserved. 36




---



##### Table of Contents



PART II.  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    Information
    mark-up,
  High

Low2009First Quarter

$
9.19


$
4.50Second Quarter


7.46



5.02Third Quarter


8.11



5.20Fourth Quarter


8.50



4.482010First Quarter

$
6.33


$
4.50Second Quarter


7.32



3.02Third Quarter


3.88



3.08Fourth Quarter


3.54



2.35     Dividends
   37




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##### Table of Contents



Comparative
    Stock Performance
  The following performance graph and related information shall
    not be deemed soliciting material or to be
    filed with the SEC, nor shall such information be
    incorporated by reference into any future filing under the
    Securities Act of 1933 or Securities Exchange Act of 1934, each
    as amended, except to the extent that we specifically
    incorporate it by reference into such filing.
      COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN
  
  12/31/05


12/31/06


12/31/07


12/31/08


12/31/09


12/31/10IDERA PHARMACEUTICALS, INC.



100.00




110.45




268.44




157.38




105.94




59.22NASDAQ BIOTECHNOLOGY INDEX



100.00




99.71




103.09




96.34




106.49




114.80RUSSELL 2000 INDEX



100.00




118.37




116.51




77.15




98.11




124.46  38




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##### Table of Contents



Item 6.
    Selected
    Financial Data.    Year Ended December 31,2010


2009


2008


2007


2006(In thousands, except per share data)Statement of Operations Data:Alliance revenue

$
16,110


$
34,518


$
26,450


$
8,124


$
2,425Operating expenses:Research and development


24,226



18,570



16,152



13,195



12,705General and administrative


9,867



8,561



9,798



9,656



6,280Total operating expenses


34,093



27,131



25,950



22,851



18,985(Loss) income from operations


(17,983
)


7,387



500



(14,727
)


(16,560
)Other income (expense):Investment income, net


116



145



1,344



1,668



505Interest expense


(2
)


(3
)


(92
)


(149
)


(425
)Foreign currency exchange loss


(94
)


(27
)


(267
)






(Loss) income before income taxes


(17,963
)


7,502



1,485



(13,208
)


(16,480
)Income tax benefit (provision)






44



24







(45
)Net (loss) income

$
(17,963
)

$
7,546


$
1,509


$
(13,208
)

$
(16,525
)Basic net (loss) income per share

$
(0.71
)

$
0.32


$
0.07


$
(0.62
)

$
(0.99
)Diluted net (loss) income per share

$
(0.71
)

$
0.31


$
0.06


$
(0.62
)

$
(0.99
)Shares used in computing basic net (loss) income per common
    share(1)


25,139



23,420



22,655



21,221



16,625Shares used in computing diluted net (loss) income per common
    share(1)


25,139



24,079



25,331



21,221



16,625Balance Sheet Data:Cash, cash equivalents and investments

$
34,643


$
40,207


$
55,606


$
23,743


$
38,187Working capital


32,100



23,054



32,099



15,908



30,984Total assets


36,881



47,639



59,400



27,714



40,541Capital lease obligations


8



28



49



70



10Note payable














1,143



4% convertible subordinated notes payable


















5,033Accumulated deficit


(351,642
)


(333,679
)


(341,225
)


(342,734
)


(329,526
)Total stockholders equity


33,101



33,105



22,167



7,719



12,237     (1)
    
    Computed on the basis described in Note 13 of notes to
    financial statements appearing elsewhere in this Annual Report
    on
    Form 10-K.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Overview
  Toll-Like
   39




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##### Table of Contents



IMO-2125, IMO-2125 IMO-3100, IMO-3100 IMO-3100
  IMO-2055,
    Critical
    Accounting Policies and Estimates
      
    the nature of the estimate or assumption is material due to the
    level of subjectivity and judgment necessary to account for
    highly uncertain matters or the susceptibility of such matters
    to change; and
    the impact of the estimates and assumptions on financial
    condition or operating performance is material.  Form 10-K.
 40




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##### Table of Contents



Revenue
    Recognition
      
    persuasive evidence of an arrangement exists;
    delivery has occurred, services have been rendered or
    obligations have been satisfied;
    the fee is fixed or determinable; and
    collectability is reasonably assured.               41




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##### Table of Contents



Stock-Based
    Compensation
         42




---



##### Table of Contents



New
    Accounting Pronouncements
  No. 2009-13, No. 2009-13), No. 605-25 No. 2009-13 No. 2009-13 No. 2009-13 No. 2009-13
  No. 2010-17, No. 2010-17), No. 2010-17, No. 2010-17 No. 2010-17 No. 2010-17 No. 2010-17
  Results
    of Operations
  Years
    ended December 31, 2010, 2009 and 2008
  Alliance
    Revenue
      Year Ended December 31,


Annual Percentage Change2010


2009


2008


2010/2009


2009/2008(In millions)License fees

$
12.2


$
22.2


$
21.5



(45
)%


3
%Research and development


0.1



3.9



2.9



(97
)%


34
%Milestones


3.8



8.3



2.0



(54
)%


315
%Other






0.1



0.1



(100
)%


Total alliance revenue

$
16.1


$
34.5


$
26.5



(53
)%


30
%   License Fees.
 43




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##### Table of Contents



Year Ended December 31,Collaborator

2010

2009

2008(In millions)Merck KGaA

$
7.3


$
17.1


$
15.5Merck


4.8



5.0



5.0Novartis










0.8     Research and Development. IMO-2055 IMO-2055
  Milestones. IMO-2055) IMO-2055
  Research
    and Development Expenses
  IMO-2125 IMO-3100.
 44




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##### Table of Contents



IMO-2055 IMO-3100 IMO-3100 IMO-2125.
  Year Ended December 31,


Annual Percentage Change2010


2009


2008


2010/2009


2009/2008(In millions)IMO-2125
    external development expense

$
7.5


$
2.2


$
3.3



241
%


(33
)%IMO-3100
    external development expense


5.2



0.6







767
%


IMO-2055
    external development expense






3.0



1.9



(100
)%


58
%Other drug development expense


3.9



5.6



4.5



(30
)%


24
%Basic discovery expense


7.6



7.2



6.5



6
%


11
%$
24.2


$
18.6


$
16.2



30
%


15
%     IMO-2125
    External Development Expenses. IMO-2125. IMO-2125 IMO-2125
  IMO-2125 IMO-2125 IMO-2125 IMO-2125,
  IMO-2125 IMO-2125 IMO-2125 IMO-2125, IMO-2125
  IMO-2125 IMO-2125 10 10 10 IMO-2125 IMO-2125
 45




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##### Table of Contents



IMO-2125 IMO-2125 IMO-2125 IMO-2125 IMO-2125
  IMO-2125 IMO-2125 IMO-2125 IMO-2125 IMO-2125 IMO-2125 IMO-2125 IMO-2125
  IMO-2125 IMO-2125
  IMO-3100
    External Development Expenses. IMO-3100 IMO-3100. IMO-3100 IMO-3100,
  IMO-3100 IMO-3100 IMO-3100
  IMO-3100 IMO-3100 IMO-3100 IMO-3100. IMO-3100. IMO-3100 IMO-3100. IMO-3100
 46




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##### Table of Contents



IMO-3100. IMO-3100
  IMO-3100
  IMO-3100 IMO-3100, IMO-3100. IMO-3100
  IMO-2055
    External Development
    Expenses. IMO-2055 IMO-2055 IMO-2055 IMO-2055 IMO-2055.
      IMO-2055
  Other Drug Development Expenses.
 47




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##### Table of Contents



IMO-3100 IMO-3100 IMO-3100 IMO-3100 IMO-3100 IMO-3100
  Basic Discovery Expenses.
    General
    and Administrative Expenses
      Investment
    Income, Net
   48




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##### Table of Contents



Interest
    Expense
    Income
    Tax Expense
    Foreign
    Currency Exchange Loss
        Net
    (Loss) Income
    Net
    Operating Loss Carryforwards
   49




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##### Table of Contents



Liquidity
    and Capital Resources
  Sources
    of Liquidity
    
    equity and debt financing;
    license fees, research funding and milestone payments under
    collaborative and license agreements;
    interest income; and
    lease financings.            Cash
    Flows
     50




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##### Table of Contents



Funding
    Requirements
        IMO-2125 IMO-3100
    
    the success of our clinical and preclinical development programs;
    the success of our existing strategic collaborations with Merck
    KGaA and Merck; 51




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##### Table of Contents




    the cost, timing and outcome of regulatory reviews;
    competitive and potentially competitive products and
    technologies and investors receptivity to our drug
    candidates and the technology underlying them in light of
    competitive products and technologies;
    the receptivity of the capital markets to financings by
    biotechnology companies generally and companies with drug
    candidates and technologies such as ours specifically; and
    our ability to enter into new strategic collaborations with
    biotechnology and pharmaceutical companies and the success of
    such collaborations.    Contractual
    Obligations
    Payments Due by PeriodLess thanContractual Commitment

Total


1 year


1-3 years


3-5 years


After 5 years(In thousands)Operating lease

$
4,936


$
1,391


$
2,919


$
626


$
License agreements


310



35



70



70



135Capital lease


8



8











Total

$
5,254


$
1,434


$
2,989


$
696


$
135       Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk.     52




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##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.  Form 10-K
  Quarterly
    Operating Results (Unaudited)
  Form 10-K.
  Three Months EndedDec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,2010


2010


2010


2010


2009


2009


2009


2009(In thousands, except per share data)Statement of Operations Data:Alliance revenues

$
1,058


$
5,089


$
4,386


$
5,577


$
10,180


$
6,538


$
11,497


$
6,303Operating expenses:Research and development


4,893



7,786



6,961



4,586



4,391



4,288



5,413



4,478General and administrative


2,158



2,193



2,784



2,732



2,070



2,210



2,133



2,148Total operating expenses


7,051



9,979



9,745



7,318



6,461



6,498



7,546



6,626(Loss) income from operations


(5,993
)


(4,890
)


(5,359
)


(1,741
)


3,719



40



3,951



(323
)Investment income


30



31



29



26



23



20



31



71Interest expense


(2
)














(3
)










Foreign currency exchange (loss) gain


(48
)


148



34



(228
)


(21
)


(6
)






(Loss) income before income taxes


(6,013
)


(4,711
)


(5,296
)


(1,943
)


3,718



54



3,982



(252
)Income tax benefit (provision)


















214



(30
)


(140
)


Net (loss) income

$
(6,013
)

$
(4,711
)

$
(5,296
)

$
(1,943
)

$
3,932


$
24


$
3,842


$
(252
)Basic net (loss) income per common share

$
(0.22
)

$
(0.18
)

$
(0.23
)

$
(0.08
)

$
0.17






$
0.16


$
(0.01
)Diluted net (loss) income per common share

$
(0.22
)

$
(0.18
)

$
(0.23
)

$
(0.08
)

$
0.17






$
0.16


$
(0.01
)Shares used in computing basic net (loss) income per common
    share(1)


27,587



25,980



23,473



23,462



23,452



23,441



23,407



23,379Shares used in computing diluted net (loss) income per common
    share(1)


27,587



25,980



23,473



23,462



23,808



24,341



23,956



23,379     (1)
    
    Computed on the basis described in Note 13 of notes to
    financial statements appearing elsewhere in this Annual Report
    on
    Form 10-K. 53




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Internal
    Control over Financial Reporting
  a)
    Managements
    Annual Report on Internal Control over Financial
    Reporting  Rule 13a-15(f) 15d-15(f)
  
    Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the Company;
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of the Company are being made
    only in accordance with authorizations of management and
    directors of the Company; and
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on the
    financial statements.    Internal Control  Integrated
    Framework
     54




---



##### Table of Contents



b)
    Attestation
    Report of the Independent Registered Public Accounting
    Firm  Report of
    Independent Registered Public Accounting Firm
                
    55




---



##### Table of Contents



c)
    Changes
    in Internal Controls over Financial Reporting.    Item 9B.
    Other
    Information.   PART III.    Item 10.
    Directors,
    Executive Officers, and Corporate Governance.  Form 8-K
    Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.      Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.   56




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##### Table of Contents



PART IV.  Item 15.
    Exhibits
    and Financial Statement Schedules.  Financial Statements.
  Page number inthis ReportReport of Independent Registered Public Accounting Firm


F-2Balance Sheets at December 31, 2010 and 2009


F-3Statements of Operations for the years ended December 31,
    2010, 2009 and 2008


F-4Statements of Stockholders Equity for the years ended
    December 31, 2010, 2009 and 2008


F-5Statements of Cash Flows for the years ended December 31,
    2010, 2009 and 2008


F-6Notes to Financial Statements


F-7   (2)
    We are not filing any financial statement schedules as part of
    this Annual Report on
    Form 10-K
    because they are not applicable or the required information is
    included in the financial statements or notes thereto.(3)
    The list of Exhibits filed as a part of this Annual Report on
    Form 10-K
    is set forth on the Exhibit Index immediately preceding
    such Exhibits and is incorporated herein by this reference.  (b)
    The list of Exhibits filed as a part of this Annual Report on
    Form 10-K
    is set forth on the Exhibit Index immediately preceding
    such Exhibits and is incorporated herein by this reference.  (c)
    None. 57




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##### Table of Contents



SIGNATURES
      By:
    /s/  Sudhir
    Agrawal   Chairman, President and
 Chief Executive Officer
    Signature

Title

Date/s/  Sudhir
    AgrawalSudhir
    Agrawal, D. Phil.

Chairman, President and Chief Executive Officer (Principal
    Executive Officer)

March 10, 2011/s/  Louis
    J. Arcudi, IIILouis
    J. Arcudi III

Chief Financial Officer, Treasurer and Secretary (Principal
    Financial and Accounting Officer)

March 10, 2011/s/  Youssef
    El ZeinYoussef
    El Zein

Director

March 10, 2011/s/  C.
    Keith HartleyC.
    Keith Hartley

Director

March 10, 2011/s/  Robert
    W. KarrRobert
    W. Karr, M.D.

Director

March 10, 2011/s/  Malcolm
    MacCossMalcolm
    MacCoss, Ph.D.

Director

March 10, 2011/s/  Hans
    MuellerHans
    Mueller, Ph.D.

Director

March 10, 2011/s/  William
    S. ReardonWilliam
    S. Reardon, C.P.A.

Director

March 10, 2011/s/  Eve
    E. SlaterEve
    E. Slater, M.D., F.A.C.C.

Director

March 10, 2011/s/  James
    B. WyngaardenJames
    B. Wyngaarden, M.D.

Director

March 10, 2011  58




---



##### 



IDERA
    PHARMACEUTICALS, INC.
  INDEX TO
    FINANCIAL STATEMENTS
 December 31,
    2010
   
 PageReport of Independent Registered Public
    Accounting Firm


F-2Balance Sheets


F-3Statements of Operations


F-4Statements of Stockholders Equity


F-5Statements of Cash Flows


F-6Notes to Financial Statements


F-7   F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            Ernst &
    Young LLP
    F-2




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  BALANCE
    SHEETS
  December 31,

December 31,(In thousands, except per share amounts)

2010

2009ASSETSCurrent assets:Cash and cash equivalents

$
17,008


$
25,471Short-term investments


17,635



6,270Receivables


2



4,497Prepaid expenses and other current assets


995



1,030Total current assets


35,640



37,268Property and equipment, net


930



1,387Non-current portion of prepaid expenses






104Long-term investments






8,466Restricted cash, net of current portion


311



414Total assets

$
36,881


$
47,639LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
1,757


$
1,166Accrued expenses


1,775



931Current portion of capital lease


8



19Current portion of deferred revenue






12,098Total current liabilities


3,540



14,214Capital lease obligation, net of current portion






9Deferred revenue, net of current portion






67Other liabilities


240



244Total liabilities


3,780



14,534Commitments and contingencies (Note 10)Stockholders equity:Preferred stock, $0.01 par value,Authorized  5,000 sharesSeries A convertible preferred stock,Designated  1,500 shares,Issued and outstanding  1 share






Common stock, $0.001 par value,Authorized  70,000 sharesIssued and outstanding  27,596 and 23,479 shares at
    December 31, 2010 and 2009, respectively


28



23Additional paid-in capital


384,702



366,780Accumulated deficit


(351,642
)


(333,679
)Accumulated other comprehensive income (loss)


13



(19
)Total stockholders equity


33,101



33,105Total liabilities and stockholders equity

$
36,881


$
47,639    F-3




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##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  STATEMENTS
    OF OPERATIONS
  Years Ended December 31,(In thousands, except per share amounts)

2010


2009


2008Alliance revenue

$
16,110


$
34,518


$
26,450Operating expenses:Research and development


24,226



18,570



16,152General and administrative


9,867



8,561



9,798Total operating expenses


34,093



27,131



25,950(Loss) income from operations


(17,983
)


7,387



500Other income (expense):Investment income, net


116



145



1,344Interest expense


(2
)


(3
)


(92
)Foreign currency exchange loss


(94
)


(27
)


(267
)(Loss) income before income taxes


(17,963
)


7,502



1,485Income tax benefit






44



24Net (loss) income

$
(17,963
)

$
7,546


$
1,509Net (loss) income per common share (Note 13):Basic

$
(0.71
)

$
0.32


$
0.07Diluted

$
(0.71
)

$
0.31


$
0.06Shares used in computing basic net (loss) income per common share


25,139



23,420



22,655Shares used in computing diluted net (loss) income per common
    share


25,139



24,079



25,331    F-4




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##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  STATEMENTS
    OF STOCKHOLDERS EQUITY
  AccumulatedCommon Stock


Additional





Other


TotalNumber of


$0.001 Par


Paid-In


Accumulated


Comprehensive


Stockholders(In thousands)

Shares


Value


Capital


Deficit


(Loss/Income)


EquityBalance, December 31, 2007


21,569


$
22


$
350,423


$
(342,734
)

$
8


$
7,719Exercise of common stock options, warrants and employee stock
    purchases


1,849



1



10,029











10,030Issuance of common stock for services


2







22











22Non-employee stock option expense










398











398Stock-based compensation










2,628











2,628Repurchase of common stock


(7
)






(95
)










(95
)Comprehensive income (loss):Unrealized loss on marketable securities


















(44
)


(44
)Net income














1,509







1,509Total comprehensive income






















1,465Balance, December 31, 2008


23,413


$
23


$
363,405


$
(341,225
)

$
(36
)

$
22,167Exercise of common stock options, warrants and employee stock
    purchases


70







297











297Issuance of common stock for services


3







17











17Non-employee stock option expense










9











9Stock-based compensation










3,093











3,093Repurchase of common stock


(7
)






(41
)










(41
)Comprehensive income (loss):Unrealized gain on marketable securities


















17



17Net income














7,546







7,546Total comprehensive income






















7,563Balance, December 31, 2009


23,479


$
23


$
366,780


$
(333,679
)

$
(19
)

$
33,105Sale of common stock and warrants, net of issuance costs


4,071



5



14,084











14,089Exercise of common stock options, warrants and employee stock
    purchases


44







132











132Issuance of common stock for services


2







8











8Non-employee stock option expense










14











14Stock-based compensation










3,684











3,684Comprehensive income (loss):Unrealized gain on marketable securities


















32



32Net loss














(17,963
)






(17,963
)Total comprehensive loss






















(17,931
)Balance, December 31, 2010


27,596


$
28


$
384,702


$
(351,642
)

$
13


$
33,101    F-5




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  STATEMENTS
    OF CASH FLOWS
  Years Ended December 31,(In thousands)

2010


2009


2008Cash Flows from Operating Activities:Net (loss) income

$
(17,963
)

$
7,546


$
1,509Adjustments to reconcile net (loss) income to net cash (used in)provided by operating activities Loss from disposition of assets


2







2Non-employee stock option expense


14



9



398Stock-based compensation


3,684



3,093



2,628Issuance of common stock for services rendered


8



17



22Amortization of investment premiums


253



40



36Depreciation expense


546



563



530Changes in operating assets and liabilities Accounts receivable


4,495



(4,023
)


(181
)Prepaid expenses and other current assets


139



(154
)


218Accounts payable, accrued expenses, and other liabilities


1,431



(383
)


(273
)Deferred revenue


(12,165
)


(22,295
)


18,675Net cash (used in) provided by operating activities


(19,556
)


(15,587
)


23,564Cash Flows from Investing Activities:Purchases of
    available-for-sale
    securities


(10,319
)


(14,768
)


(22,985
)Proceeds from maturity of
    available-for-sale
    securities


7,200



10,450



23,620Decrease in restricted cash


103



102



Purchases of property and equipment


(92
)


(126
)


(393
)Net cash (used in) provided by investing activities


(3,108
)


(4,342
)


242Cash Flows from Financing Activities:Sale of common stock and warrants, net of issuance costs


14,089







Payments on notes payable










(1,143
)Proceeds from exercise of common stock options, warrants and
    employee stock purchases


132



297



10,030Repurchase of common stock






(41
)


(95
)Payments on capital lease


(20
)


(21
)


(21
)Net cash provided by financing activities


14,201



235



8,771Net (decrease) increase in cash and cash equivalents


(8,463
)


(19,694
)


32,577Cash and cash equivalents, beginning of year


25,471



45,165



12,588Cash and cash equivalents, end of year

$
17,008


$
25,471


$
45,165    F-6




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 December 31,
    2010
  (1)
    Organization          IMO-3100,
   F-7




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    (2)
    Summary
    of Significant Accounting Policies  (a)
    Basis of
    Presentation    (b)
    Reclassification
    and Additional Disclosures    (c)
    Cash,
    Cash Equivalents and Short-Term Investments    available-for-sale available-for-sale available-for-sale held-to-maturity held-to-maturity
  available-for-sale other-than-temporary
  (d)
    Restricted
    Cash   F-8




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  (e)
    Depreciation
    and Amortization    (f)
    Revenue
    Recognition      December 31,(In thousands)

2010


2009


2008Merck KGaA

$
11,173


$
28,558


$
16,921Merck


4,768



5,826



7,458Novartis


1



19



1,861Total collaboration revenue


15,942



34,403



26,240Other revenue


168



115



210Total alliance revenue

$
16,110


$
34,518


$
26,450        F-9




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
              (g)
    Financial
    Instruments    (h)
    Comprehensive
    Income (Loss)   F-10




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  (i)
    Net
    Income (Loss) per Common Share    (j)
    Segment
    Reporting    (k)
    Stock-Based
    Compensation      2010

2009

2008Average risk free interest rate


2.1
%


2.5
%


2.4
%Expected dividend yield










Expected lives (years)


4.9



5.0



4.9Expected volatility


68
%


66
%


66
%Weighted average grant date fair value of options granted during
    the period (per share)

$
1.69


$
3.07


$
6.28Weighted average exercise price of options granted during the
    period (per share)

$
2.95


$
5.39


$
11.18      F-11




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      non-director
  2009

2008Average risk free interest rate


3.7
%


3.9
%Expected dividend yield






Expected lives (years)


10.0



10.0Expected volatility


88
%


94
%   non-director non-director
    2010

2009

2008Average risk free interest rate


0.1
%


0.2
%


2.1
%Expected dividend yield










Expected lives (months)


3.0



3.0



3.0Expected volatility


60
%


68
%


70
%     (l)
    Research
    and Development Expenses   F-12




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    (m)
    Concentration
    of Credit Risk    (n)
    Fair
    Value of Assets and Liabilities      F-13




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  QuotedPricesin ActiveMarkets


Significantfor Identical


Other


SignificantAssets or


Observable


UnobservableLiabilities


Inputs


Inputs(In thousands)

Total


(Level 1)


(Level 2)


(Level 3)December 31, 2010AssetsMoney market funds

$
14,789


$
14,789


$



$
Other cash equivalents


2,008







2,008Short-term investments


17,635



11,216



6,419



Long-term investments














Total Assets

$
34,432


$
26,005


$
8,427


$
Liabilities

$



$



$



$
December 31, 2009AssetsMoney market funds

$
25,426


$
25,426


$



$
Short-term investments


6,270



1,993



4,277



Long-term investments


8,466



7,214



1,252



Total Assets

$
40,162


$
34,633


$
5,529


$
Liabilities

$



$



$



$
   and/or available-for-sale
  (o)
    New
    Accounting Pronouncements  No. 2009-13, No. 2009-13), No. 605-25 No. 2009-13 No. 2009-13
 F-14




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  2009-13 No. 2009-13
  No. 2010-17, No. 2010-17), No. 2010-17, No. 2010-17 No. 2010-17 No. 2010-17 No. 2010-17
  (3)
    Marketable
    Securities  available-for-sale
  December 31, 2010Gross


GrossUnrealized


Unrealized


EstimatedCost


(Losses)


Gains


Fair Value(In thousands)Agency bonds due in one year or less

$
3,201


$



$



$
3,201Corporate bonds due in one year or less


3,214







4



3,218U.S. government bonds due in one year or less


11,207







9



11,216Total investments

$
17,622


$



$
13


$
17,635   December 31, 2009Gross


GrossUnrealized


Unrealized


EstimatedCost


(Losses)


Gains


Fair Value(In thousands)Agency bonds due in one year or less

$
4,283


$
(6
)

$



$
4,277U.S. government bonds due in one year or less


1,994



(1
)






1,993Total short-term investments


6,277



(7
)






6,270Agency bonds due in one year or more


1,256



(4
)






1,252U.S. government bonds due in one year or more


7,222



(8
)






7,214Total long-term investments


8,478



(12
)






8,466Total investments

$
14,755


$
(19
)

$



$
14,736      F-15




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  (4)
    Property
    and Equipment    December 31,2010


2009(In thousands)Leasehold improvements

$
515


$
514Laboratory equipment and other


2,889



2,811Total property and equipment, at cost


3,404



3,325Less: Accumulated depreciation


2,474



1,938Property and equipment, net

$
930


$
1,387         (5)
    Accrued
    Expenses    December 31,2010


2009(In thousands)Payroll and related costs

$
164


$
88Clinical and nonclinical trial expenses


1,204



332Professional and consulting fees


286



226Other


121



285$
1,775


$
931   (6)
    Note
    Payable     F-16




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  (7)
    Unrealized
    Losses    Investments in Continuous


TotalUnrealized Loss Positions for


Investments inLess than


More than


Unrealized Loss(In thousands)

12 Months


12 Months


PositionShort-term investments at December 31, 2009Aggregate fair value of investments with unrealized losses
    (includes accrued interest of $6)

$
6,276


$



$
6,276Aggregate amount of unrealized losses

$
7


$



$
7Long-term investments at December 31, 2009Aggregate fair value of investments with unrealized losses
    (includes accrued interest of $36)

$
6,297


$



$
6,297Aggregate amount of unrealized losses

$
12


$



$
12     (8)
    Collaboration
    and License Agreements  (a)
    Collaboration
    and License Agreement with Merck KGaA  and/or and/or
   F-17




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    (b)
    Collaboration
    and License Agreement with Merck Sharp & Dohme
    Corp.          (c)
    Collaboration
    and License Agreement with Novartis International
    Pharmaceutical, Ltd.   F-18




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    and/or
  (d)
    Other
    License Agreements       F-19




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    (9)
    Stockholders
    Equity  (a)
    Common
    Stock      (b)
    Warrants    WeightedAverage ExerciseExpiration Date

Shares


Price Per shareSeptember 24, 2011


2,466,263


$
5.42August 5, 2015


1,628,402



3.71Total


4,094,665



4.74   (c)
    Stock
    Options   F-20




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
          Weighted-AverageRemaining


AggregateStock


Weighted-Average


Contractual Life


IntrinsicOptions


Exercise Price


(in years)


ValueOutstanding at December 31, 2009


4,565


$
7.34Granted


1,087



2.95Exercised






Forfeited


(93
)


6.88Expired


(164
)


8.65Outstanding at December 31, 2010


5,395



6.42



6.80


$
142Exercisable at December 31, 2010


3,136



7.30



5.12



Total exercisable or expected to vest


5,241



6.46



6.73



133   (d)
    Employee
    Stock Purchase Plan     F-21




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      (e)
    Preferred
    Stock      (f)
    Series A
    Convertible Preferred Stock    (10)
    Commitments
    and Contingencies  (a)
    Lease
    Commitments   F-22




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    OperatingDecember 31,

Lease(In thousands)2011

$
1,3912012


1,4362013


1,4832014


626$
4,936   (b)
    External
    Collaborations    (c)
    Contract
    Obligations    (d)
    Related-Party
    Transactions    (11)
    Income
    Taxes     F-23




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      2010


2009(In thousands)Operating loss carryforwards

$
83,040


$
85,655Tax credit carryforwards


8,844



8,487Other


3,292



7,16495,176



101,306Valuation allowance


(95,176
)


(101,306
)$



$
       2010


2009


2008Expected federal income tax rate


(34.0
)%


34.0
%


34.0
%Expiring credits and NOLs


74.2



67.3



269.7Change in valuation allowance


(34.1
)


(111.4
)


(301.2
)Federal credits


(6.4
)


(11.6
)


(36.0
)State income taxes, net of federal benefit


(4.8
)


6.3



3.8Permanent differences


2.6



5.8



22.1State rate change


0.3



6.4



Other


2.2



2.6



6.0Effective tax rate


0.0
%


(0.6
)%


(1.6
)%   ASC 740-10 Accounting for Uncertainty in Income Taxes, an interpretation
    of ASC 740 ASC 740-10
  ASC 740-10.
 F-24




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      (12)
    Employee
    Benefit Plan    (13)
    Net
    (loss) income per Share    December 31,(In thousands, except per share amounts)

2010


2009Numerator for basic and dilutive net (loss) income per share:Net (loss) income

$
(17,963
)

$
7,546Denominator for basic net (loss) income per share:Weighted average common shares outstanding


25,139



23,420Effects of dilutive securities:Effect of restricted stock grant






31Effect of dilutive common stock options and warrants






628Denominator for diluted (loss) income per share


25,139



24,079Basic net (loss) income per share

$
(0.71
)

$
0.32Diluted net (loss) income per share

$
(0.71
)

$
0.31    F-25




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      (14)
    Supplemental
    Disclosure of Cash Flow Information    Year Ended December 31,2010


2009


2008(In thousands)Supplemental disclosure of cash flow information:Cash paid for interest

$
2


$
3


$
92Cash paid for income taxes

$



$
220


$
50Supplemental disclosure of non cash financing and investing
    activities:Issuance of stock options and common stock for services

$
8


$
17


$
22   (15)
    Shareholder
    Rights Plan       F-26




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  (16)
    Warrant
    Redemptions      (17)
    2010
    Financing   F-27




---



##### Table of Contents



Exhibit Index
  Incorporated by Reference toExhibit



Filed



Filing

SEC FileNumber

Description

Herewith

Form

Date

No.3
.1

Restated Certificate of Incorporation of Idera Pharmaceuticals,
    Inc., as amended.



10-Q

August 1, 2008

001-319183
.2

Amended and Restated Bylaws of Idera Pharmaceuticals, Inc.



S-1

November 6, 1995

33-990243
.3

Certificate of Ownership and Merger.



8-K

September 15, 2005

001-319184
.1

Specimen Certificate for shares of Common Stock, $.001 par
    value, of Idera Pharmaceuticals, Inc.



S-1

December 8, 1995

33-990244
.2

Rights Agreement dated December 10, 2001 by and between
    Idera Pharmaceuticals, Inc. and Mellon Investor Services LLC, as
    rights agent.



S-2

October 10, 2003

333-1096304
.3

Amendment No. 1 to Rights Agreement dated as of
    August 27, 2003 between Idera Pharmaceuticals, Inc. and
    Mellon Investor Services LLC, as rights agent.



8-K

August 29, 2003

000-273524
.4

Amendment No. 2 to Rights Agreement dated as of
    March 24, 2006 between Idera Pharmaceuticals, Inc. and
    Mellon Investor Services LLC, as rights agent.



8-K

March 29, 2006

001-319184
.5

Amendment No. 3 to Rights Agreement dated January 16,
    2007 between Idera Pharmaceuticals, Inc. and Mellon Investor
    Services, LLC, as rights agent.



8-K

January 17, 2007

001-3191810
.1

2008 Stock Incentive Plan.



8-K

June 10, 2008

001-3191810
.2

2005 Stock Incentive Plan, as amended



10-Q

August 14, 2006

001-3191810
.3

Amended and Restated 1997 Stock Incentive Plan.



10-Q

May 15, 2001

000-2735210
.4

1995 Director Stock Option Plan.



8-K

June 10, 2008

001-3191810
.5

1995 Employee Stock Purchase Plan, as amended.



8-K

June 10, 2008

001-3191810
.6

Non-Employee Director Nonstatutory Stock Option Agreement
    Granted under 1997 Stock Incentive Plan.



10-K

March 25, 2005

001-3191810
.7

Form of Incentive Stock Option Agreement Granted Under the 2005
    Stock Incentive Plan.



8-K

June 21, 2005

001-3191810
.8

Form of Nonstatutory Stock Option Agreement Granted Under the
    2005 Stock Incentive Plan.



8-K

June 21, 2005

001-3191810
.9

Form of Restricted Stock Agreement Under the 2005 Stock
    Incentive Plan.



10-Q

August 1, 2007

001-3191810
.10

Form of Incentive Stock Option Agreement Granted Under the 2008
    Stock Incentive Plan.



8-K

June 10, 2008

001-3191810
.11

Form of Nonstatutory Stock Option Agreement Granted Under the
    2008 Stock Incentive Plan.



8-K

June 10, 2008

001-31918




---



##### Table of Contents



Incorporated by Reference toExhibit



Filed



Filing

SEC FileNumber

Description

Herewith

Form

Date

No.10
.12

Form of Nonstatutory Stock Option Agreement (Non-Employee
    Directors) Granted Under the 2008 Stock Incentive Plan.



8-K

June 10, 2008

001-3191810
.13

Form of Restricted Stock Agreement Under the 2008 Stock
    Incentive Plan.



8-K

June 10, 2008

001-3191810
.14

Policy on Treatment of Stock Options in the Event of Retirement,
    approved December 14, 2010.

X10
.15

Employment Agreement dated October 19, 2005 between Idera
    Pharmaceuticals, Inc. and Dr. Sudhir Agrawal



10-Q

November 9, 2005

001-3191810
.16

Amendment dated December 17, 2008 to Employment Agreement
    by and between Idera Pharmaceuticals, Inc. and Dr. Sudhir
    Agrawal dated October 19, 2005.



8-K

December 18, 2008

001-3191810
.17

Employment Offer Letter dated November 8, 2007 by and
    between Idera Pharmaceuticals, Inc. and Louis J.
    Arcudi, III.



10-K/A

December 24, 2008

001-3191810
.18

Amendment dated December 17, 2008 to Employment Offer
    Letter by and between Idera Pharmaceuticals, Inc. and Louis J.
    Arcudi, III, Dated November 8, 2007.



8-K

December 18, 2008

001-3191810
.19

Executive Stock Option Agreement for 1,260,000 Shares
    effective as of July 25, 2001 between Idera
    Pharmaceuticals, Inc. and Dr. Sudhir Agrawal.



10-Q

October 24, 2002

000-2735210
.20

Executive Stock Option Agreement for 550,000 Shares
    effective as of July 25, 2001 between Idera
    Pharmaceuticals, Inc. and Dr. Sudhir Agrawal.



10-Q

October 24, 2002

000-2735210
.21

Executive Stock Option Agreement for 500,000 Options effective
    as of July 25, 2001 between Idera Pharmaceuticals, Inc. and
    Dr. Sudhir Agrawal.



10-Q

October 24, 2002

000-2735210
.22

License Agreement dated February 21, 1990 and restated as
    of September 8, 1993 between Idera Pharmaceuticals, Inc.
    and University of Massachusetts Medical Center.



S-1

November 6, 1995

33-9902410
.23

Amendment No. 1 to License Agreement, dated as of
    February 21, 1990 and restated as of September 8,
    1993, by and between University of Massachusetts Medical Center
    and Idera Pharmaceuticals, Inc., dated as of November 26,
    1996.



10-Q

August 14, 1997

000-2735210
.24

Collaboration and License Agreement by and between Isis
    Pharmaceuticals, Inc., and Idera Pharmaceuticals, Inc., dated
    May 24, 2001.



10-Q

August 20, 2001

000-27352




---



##### Table of Contents



Incorporated by Reference toExhibit



Filed



Filing

SEC FileNumber

Description

Herewith

Form

Date

No.10
.25

Amendment No. 1 to the Collaboration and License Agreement,
    dated as of May 24, 2001 by and between Isis
    Pharmaceuticals, Inc. and Idera Pharmaceuticals, Inc., dated as
    of August 14, 2002.



10-K

March 31, 2003

000-2735210
.26

Master Agreement relating to the Cross License of Certain
    Intellectual Property and Collaboration by and between Isis
    Pharmaceuticals, Inc. and Idera Pharmaceuticals, Inc., dated
    May 24, 2001.



10-Q

August 20, 2001

000-2735210
.27

Exclusive License and Research Collaboration Agreement by and
    between Merck, Inc. and Idera Pharmaceuticals, Inc., dated
    December 8, 2006.



8-K

March 6, 2007

001-3191810
.28

License Agreement by and between Merck KGaA and Idera
    Pharmaceuticals, Inc., dated December 18, 2007.



10-K

March 11, 2008

001-3191810
.29

Amendment dated February 12, 2009 to the License Agreement
    by and between Merck KGaA and Idera Pharmaceuticals, Inc., dated
    December 18, 2007.



10-K

March 11, 2009

001-3191810
.30

Unit Purchase Agreement by and among Idera Pharmaceuticals, Inc.
    and certain persons and entities listed therein, dated
    April 1, 1998.



10-K

April 1, 2002

000-2735210
.31

Registration Rights Agreement dated as of May 20, 2005 by
    and among Idera Pharmaceuticals, Inc., Purchasers and Pillar
    Investment Limited.



10-Q

August 9, 2005

001-3191810
.32

Registration Rights Agreement, dated March 24, 2006, by and
    among Idera Pharmaceuticals, Inc. and the Investors named
    therein.



8-K

March 29, 2006

001-3191810
.33

Form of Warrant issued to Investors in Idera Pharmaceuticals,
    Inc.s March 24, 2006 Private Financing.



8-K

March 29, 2006

001-3191810
.34

Registration Rights Agreement, dated March 24, 2006, by and
    among Idera Pharmaceuticals, Inc., Biotech Shares Ltd. and
    Youssef El Zein.



8-K

March 29, 2006

001-3191810
.35

Amendment No. 1 to the Registration Rights Agreement dated
    March 24, 2006, by and among Idera Pharmaceuticals, Inc.
    and Biotech Shares Ltd.



10-Q

August 14, 2006

001-3191810
.36

Warrant issued to Biotech Shares Ltd. on March 24,
    2006.



8-K

March 29, 2006

001-3191810
.37

Form of Warrant issued to Investors in Idera Pharmaceuticals,
    Inc.s August 5, 2010 Financing.



10-Q

November 4, 2010

001-3191810
.38

Consulting Agreement dated as of August 1, 2010 by and
    between Idera Pharmaceuticals, Inc. and Alice Bexon.



10-Q

August 4, 2010

001-31918




---



##### Table of Contents



Incorporated by Reference toExhibit



Filed



Filing

SEC FileNumber

Description

Herewith

Form

Date

No.10
.39

Consulting Agreement dated as of April 1, 2010 between
    Idera Pharmaceuticals, Inc. and Malcolm MacCoss, Ph.D.



10-Q

May 4, 2010

001-3191810
.40

Amendment No. 2 dated December 15, 2009 amending
    Consulting Agreement dated as of January 1, 2008 between
    Idera Pharmaceuticals, Inc. and Karr Pharma Consulting, LLC.



10-Q

May 4, 2010

001-3191810
.41

Director Compensation Program, Effective July 1, 2010

X23
.1

Consent of Independent Registered Public Accounting Firm.

X31
.1

Certification of Chief Executive Officer pursuant to Exchange
    Act
    Rules 13a-14
    and 15d-14, as adopted pursuant to Section 302 of
    Sarbanes-Oxley Act of 2002.

X31
.2

Certification of Chief Financial Officer X pursuant to Exchange
    Act
    Rules 13a-14
    and 15d-14, as adopted pursuant to Section 302 of
    Sarbanes-Oxley Act of 2002.

X32
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.

X32
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.

X     
    
    Confidential treatment granted as to certain portions, which
    portions are omitted and filed separately with the Commission.
    
    Management contract or compensatory plan or arrangement required
    to be filed as an Exhibit to the Annual Report on
    Form 10-K.