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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, 2009ORo

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(State or other jurisdiction
    of incorporation or organization)

04-3072298(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
  Rule 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


19Item 1B.


Unresolved Staff Comments


34Item 2.


Properties


34Item 3.


Legal Proceedings


34Item 4.


Reserved


34PART II.Item 5.


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


35Item 6.


Selected Financial Data


37Item 7.


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


37Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


51Item 8.


Financial Statements and Supplementary Data


52Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


53Item 9A.


Controls and Procedures


53Item 9B.


Other Information


55PART III.Item 10.


Directors, Executive Officers, and Corporate
    Governance


55Item 11.


Executive Compensation


55Item 12.


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


55Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


55Item 14.


Principal Accountant Fees and Services


55PART IV.Item 15.


Exhibits and Financial Statement Schedules


56EX-10.15EX-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.
  Autoimmune and inflammatory disease
    program.
  Cancer program. and/or s i m R A
  Respiratory disease program.
   1




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

Disease Area

Development StatusInfectious DiseasesIMO-2125 (TLR9 agonist)

Chronic Hepatitis C Virus Infection Null responder patients Treatment naïve patients

Phase 1 Clinical Trial Ongoing Phase 1 Clinical Trial OngoingTLR7, 8, and 9 agonists

Viral Infectious Diseases

ResearchAutoimmune and Inflammatory DiseasesIMO-3100 (dual TLR7/TLR9 antagonist)

Healthy Subjects
    Lupus, Rheumatoid Arthritis, Multiple Sclerosis, Psoriasis,
    Colitis, Hyperlipidemia

Phase 1 Clinical Trial Ongoing 
    ResearchCancerTLR7, TLR8 agonists

Hematological Cancers

ResearchRespiratory DiseasesIMO-2134 (TLR9 agonist)

Asthma, Allergies

Phase 1 Clinical Trial Initiated by Novartis during the
    Collaboration Period   COLLABORATIVE
    ALLIANCES
  Drug candidate(s)

Disease Area

Development StatusMerck KGaA  CancerIMO-2055 (EMD 1201081) (TLR9 Agonist)IMO-2055

Squamous Cell Cancer of Head and Neck

Phase 2 Clinical Trial OngoingIMO-2055 in combination with
    Tarceva®

    and
    Avastin®

Non-small Cell Lung Cancer

Phase 1b Clinical Trial OngoingIMO-2055 in combination with
    Erbitux®

    and chemotherapy

Colorectal Cancer

Phase 1b Clinical Trial OngoingMerck & Co.  Vaccine AdjuvantsTLR7, 8, and 9 agonists

Cancer, Infectious Diseases, Alzheimers Disease

Research     Infectious
    Diseases
     4




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Hepatitis C  IMO-2125.
           5




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Viral Diseases. and/or in vivo
  Autoimmune
    and Inflammatory Diseases
          ®
   6




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follow-up
    Cancer
      Respiratory
    Diseases
     7




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Collaborative
    Alliances
  Cancer 
    Merck KGaA
      Ongoing
    Clinical Trials of IMO-2055
  Squamous Cell Carcinoma of the Head and Neck 
    Phase 2 Clinical Trial.
  Non-small Cell Lung Cancer  Avastin and Tarceva
    Combination Phase 1b Clinical Trial.
  Colorectal Cancer  Erbitux and Chemotherapy
    Combination Phase 1b Clinical Trial.
 8




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Prior
    Clinical Trials of IMO-2055.
      Vaccine
    Adjuvants  Merck & Co.
        Collaborative
    Alliances
   9




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Merck
    KGaA
    
    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
    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 & Co.    product-by-product country-by-country
     10




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Merck &
    Co., Inc.
      
    Merck & Co. paid us a $20.0 million upfront
    license fee;
    Merck & Co. purchased $10.0 million of our common
    stock at $5.50 per share;
    Merck & Co. agreed to fund the research and
    development collaboration;
    Merck & Co. 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 & Co. develops and commercializes additional
    vaccines using our agonists, we would be entitled to receive
    additional milestone payments; and  
    Merck & Co. 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
   11




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Antisense
    Technology
        Out-licenses.
    In-licenses.
 12




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Academic
    and Research Collaborations
      Research
    and Development Expenses
    Patents,
    Proprietary Rights and Trade Secrets
      
    Novel chemical entities that function as agonists of TLR7, 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.       13




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and/or
  Government
    Regulation
      
    nonclinical laboratory tests and animal 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; 14




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
    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 at which the product is
    made to assess compliance with the FDAs regulations on
    current good manufacturing practices, or cGMPs; and
    FDA review and approval of the NDA or BLA.      
    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.  
    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 the
    continuing nonclinical toxicology studies;
    inability to recruit or retain subjects or patients at the rate
    we expect; 15




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
    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
        Manufacturing
      Competition
       17




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Employees
    Information
    Available on the Internet
  Form 10-K Form 10-K, Form 10-Q, Form 8-K
 18




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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.
      
    the success of our clinical and preclinical development programs;
    the success of our existing strategic collaborations with Merck
    KGaA and Merck & Co.;
    the cost, timing and outcome of regulatory reviews; 19




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
    the receptivity of the capital markets to financings by
    biotechnology companies; 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.
    
    acceptable safety profile during clinical trials;
    our ability to demonstrate to the satisfaction of the FDA, or
    equivalent foreign regulatory authorities, the safety and
    efficacy of our drug candidates through current and future
    clinical trials;
    ability to combine our drug candidates and 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;
    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;
    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 our drug
    candidates following approval. 20




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If our
    clinical trials are unsuccessful, or if they are delayed or
    terminated, we may not be able to develop and commercialize our
    products.
    ® ®
    
    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; 21




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
    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.    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; 22




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
    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.
       23




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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.
      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.
   24




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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.
   25




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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; 26




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
    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;
    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. 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 underfund 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.   27




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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.
    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.
     28




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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 products 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.
          
    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 products that is necessary for the manufacture
    of our products; and
    reliance upon third-party manufacturers to assist us in
    preventing inadvertent disclosure or theft of our proprietary
    knowledge.   29




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We
    have no experience selling, marketing or distributing products
    and no internal capability to do so.
    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.
    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.
   30




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
    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.    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.
      out-of-pocket
 31




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We
    face a risk of product liability claims and may not be able to
    obtain insurance.
    
    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; 32




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
    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.    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.
    
    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.     33




---



##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.    Item 4.
    Reserved. 34




---



##### 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

Low2008First Quarter

$
13.60


$
7.65Second Quarter


15.60



9.88Third Quarter


15.40



10.90Fourth Quarter


14.50



5.592009First Quarter

$
9.19


$
4.50Second Quarter


7.46



5.02Third Quarter


8.11



5.20Fourth Quarter


8.50



4.48     Dividends
   35




---



##### 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
  
  12/31/04


12/31/05


12/31/06


12/31/07


12/31/08


12/31/09IDERA PHARMACEUTICALS, INC.



100.00




127.08




140.36




341.15




200.00




134.64NASDAQ MARKET INDEX



100.00




101.41




114.05




123.94




73.43




105.89NASDAQ BIOTECHNOLOGY INDEX



100.00




117.54




117.37




121.37




113.41




124.58RUSSELL 2000 INDEX



100.00




104.55




123.76




121.82




80.66




102.58SIC GROUP INDEX



100.00




113.36




104.63




102.64




103.69




99.14  36




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##### Table of Contents



Item 6.
    Selected
    Financial Data.    Year Ended December 31,2009


2008


2007


2006


2005(In thousands, except per share data)Statement of Operations Data:Alliance revenue

$
34,518


$
26,450


$
8,124


$
2,425


$
2,477Operating expenses:Research and development


18,570



16,152



13,195



12,705



11,170General and administrative


8,561



9,798



9,656



6,280



5,130Total operating expenses


27,131



25,950



22,851



18,985



16,300Income (loss) from operations


7,387



500



(14,727
)


(16,560
)


(13,823
)Other income (expense):Investment income, net


145



1,344



1,668



505



369Interest expense


(3
)


(92
)


(149
)


(425
)


(252
)Foreign currency exchange loss


(27
)


(267
)










Income (loss) before income taxes


7,502



1,485



(13,208
)


(16,480
)


(13,706
)Income tax benefit (provision)


44



24







(45
)


Net income (loss)

$
7,546


$
1,509


$
(13,208
)

$
(16,525
)

$
(13,706
)Basic net income (loss) per share

$
0.32


$
0.07


$
(0.62
)

$
(0.99
)

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

$
0.31


$
0.06


$
(0.62
)

$
(0.99
)

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


23,420



22,655



21,221



16,625



13,886Shares used in computing diluted net income (loss) per common
    share(1)


24,079



25,331



21,221



16,625



13,886Balance Sheet Data:Cash, cash equivalents and investments

$
40,207


$
55,606


$
23,743


$
38,187


$
8,376Working capital


23,054



32,099



15,908



30,984



4,998Total assets


47,639



59,400



27,714



40,541



9,989Capital lease obligations


28



49



70



10



17Note payable










1,143







4% convertible subordinated notes payable














5,033



5,033Accumulated deficit


(333,679
)


(341,225
)


(342,734
)


(329,526
)


(313,000
)Total stockholders equity (deficit)


33,105



22,167



7,719



12,237



(335
)     (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
     37




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##### Table of Contents



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.
  Revenue
    Recognition
   38




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##### Table of Contents




    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.                 39




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##### Table of Contents



Stock-Based
    Compensation
      New
    Accounting Pronouncements
  808-10 Prior authoritative literature 07-1, Accounting for Collaborative Arrangements Related to the
    Development and Commercialization of Intellectual Property 808-10 808-10
    825-10 Prior authoritative literature No. FAS 107-1 28-1, Interim Disclosures about Fair Value of Financial
    Instruments
 40




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##### Table of Contents



825-10 825-10
  820-10 Prior authoritative literature No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly) 820-10 820-10 820-10
  320-10 Prior authoritative literature No. FAS 115-2 FAS 124-2, Recognition and Presentation of
    Other-Than-Temporary
    Impairments 320-10 other-than-temporary 320-10
  855-10 Prior authoritative literature Subsequent
    Events) 855-10 855-10
    Results
    of Operations
  Years
    ended December 31, 2009, 2008 and 2007
  Alliance
    Revenue
      Year Ended December 31,


Annual Percentage Change2009


2008


2007


2009/2008


2008/2007(In millions)License fees

$
22.2


$
21.5


$
6.6



3
%


226
%Research and development


3.9



2.9



1.1



34
%


164
%Milestones


8.3



2.0



0.3



315
%


567
%Other


0.1



0.1



0.1







Total alliance revenue

$
34.5


$
26.5


$
8.1



30
%


227
%   License Fees.
 41




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##### Table of Contents



Year Ended December 31,Collaborator

2009


2008


2007(In millions)Merck KGaA

$
17.1


$
15.5



Merck & Co.


5.0



5.0



5.0Novartis






0.8



1.3   two-year-period
  Research and Development.
    Milestones.
  Research
    and Development Expenses
   42




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##### Table of Contents



Year Ended December 31,


Annual Percentage Change2009


2008


2007


2009/2008


2008/2007(In millions)IMO-2055 external development expense

$
3.0


$
1.9


$
1.9



58
%


IMO-2125 external development expense


2.2



3.3



1.2



(33
)%


175
%IMO-3100 external development expense


0.6















Other drug development expense


5.6



4.5



4.5



24
%


Basic discovery expense


7.2



6.5



5.6



11
%


16
%Total research and development expense

$
18.6


$
16.2


$
13.2



15
%


23
%     IMO-2055 External Development
    Expenses.
     43




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##### Table of Contents



IMO-2055
  IMO-2055
       44




---



##### Table of Contents



IMO-2125 External Development Expenses.
  IMO-2125
  IMO-2125
     45




---



##### Table of Contents



IMO-2125
    IMO-3100 External Development Expenses. start-up
    follow-up
  Other Drug Development Expenses.
     46




---



##### Table of Contents



Basic Discovery Expenses.
    General
    and Administrative Expenses
      Investment
    Income, Net
    Interest
    Expense
   47




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##### Table of Contents



Income
    Tax Expense
    Foreign
    Currency Exchange Loss
    Net
    Income (Loss)
    Net
    Operating Loss Carryforwards
    Liquidity
    and Capital Resources
  Sources
    of Liquidity
    
    equity and debt financing;
    license fees and research funding under collaborative and
    license agreements;
    interest income; and
    lease financings. 48




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##### Table of Contents



49




---



##### Table of Contents



Cash
    Flows
        Funding
    Requirements
            
    the success of our clinical and preclinical development programs;
    the success of our existing strategic collaborations with Merck
    KGaA and Merck & Co.;
    the cost, timing and outcome of regulatory reviews; 50




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##### Table of Contents




    the receptivity of the capital markets to financings by
    biotechnology companies; 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 Obligations

Total

1 year

1-3 years

3-5 years

After 5 years(In thousands)Operating lease commitments

$
6,282


$
1,346


$
2,827


$
2,109


$
Capital lease commitments


28



19



9







Total

$
6,310


$
1,365


$
2,836


$
2,109


$
     Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk.       51




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##### Table of Contents



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


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,2009


2009


2009


2009


2008


2008


2008


2008(In thousands, except per share data)Statement of Operations Data:Alliance revenues

$
10,180


$
6,538


$
11,497


$
6,303


$
6,274


$
7,517


$
7,876


$
4,783Operating expenses:Research and development


4,391



4,288



5,413



4,478



4,286



3,580



3,752



4,534General and administrative


2,070



2,210



2,133



2,148



1,805



2,323



3,243



2,427Total operating expenses


6,461



6,498



7,546



6,626



6,091



5,903



6,995



6,961Income (loss) from operations


3,719



40



3,951



(323
)


183



1,614



881



(2,178
)Investment income


23



20



31



71



159



369



410



406Interest expense


(3
)














(2
)


(3
)


(5
)


(82
)Foreign currency exchange loss


(21
)


(6
)






















(267
)Income (loss) before income taxes


3,718



54



3,982



(252
)


340



1,980



1,286



(2,121
)Income tax benefit (provision)


214



(30
)


(140
)






24







50



(50
)Net income (loss)

$
3,932


$
24


$
3,842


$
(252
)

$
364


$
1,980


$
1,336


$
(2,171
)Basic net income (loss) per common share

$
0.17






$
0.16


$
(0.01
)

$
0.02


$
0.09


$
0.06


$
(0.10
)Diluted net income (loss) per common share

$
0.17






$
0.16


$
(0.01
)

$
0.01


$
0.08


$
0.05


$
(0.10
)Shares used in computing basic income (loss) per common share(1)


23,452



23,441



23,407



23,379



23,331



23,022



22,481



21,899Shares used in computing diluted income (loss) per common
    share(1)


23,808



24,341



23,956



23,379



24,822



25,779



25,507



21,899     (1)
    
    Computed on the basis described in Note 13 of notes to
    financial statements appearing elsewhere in this Annual Report
    on
    Form 10-K. 52




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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
     53




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##### Table of Contents



b)
    Attestation
    Report of the Independent Registered Public Accounting
    Firm  Report of
    Independent Registered Public Accounting Firm
                
    54




---



##### 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.  www.iderapharma.com. 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.   55




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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, 2009 and 2008


F-3Statements of Operations for the years ended December 31,
    2009, 2008 and 2007


F-4Statements of Stockholders Equity for the years ended
    December 31, 2009, 2008 and 2007


F-5Statements of Cash Flows for the years ended December 31,
    2009, 2008 and 2007


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. 56




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##### Table of Contents



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

Title

Date/s/  James
    B. WyngaardenJames
    B. Wyngaarden, M.D.

Chairman of the Board of Directors

March 10, 2010/s/  Sudhir
    AgrawalSudhir
    Agrawal, D. Phil.

President, Chief Executive Officer, Chief Scientific Officer and
    Director (Principal Executive Officer)

March 10, 2010/s/  Louis
    J. Arcudi, IIILouis
    J. Arcudi III

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

March 10, 2010/s/  Youssef
    El ZeinYoussef
    El Zein

Director

March 10, 2010/s/  C.
    Keith HartleyC.
    Keith Hartley

Director

March 10, 2010/s/  Robert
    W. KarrRobert
    W. Karr, M.D.

Director

March 10, 2010/s/  Malcolm
    MacCossMalcolm
    MacCoss, Ph.D.

Director

March 10, 2010/s/  Hans
    MuellerHans
    Mueller, Ph.D.

Director

March 10, 2010/s/  William
    S. ReardonWilliam
    S. Reardon, C.P.A.

Director

March 10, 2010/s/  Alison
    Taunton-RigbyAlison
    Taunton-Rigby, Ph.D., OBE

Director

March 10, 2010  57




---



##### 



IDERA
    PHARMACEUTICALS, INC.
  INDEX TO
    FINANCIAL STATEMENTS
 December 31,
    2009
   
 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                F-2




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
 BALANCE
    SHEETS  December 31,

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

2009

2008ASSETSCurrent assets:Cash and cash equivalents

$
25,471


$
45,165Short-term investments


6,270



10,441Receivables


4,497



474Prepaid expenses and other current assets


1,030



876Total current assets


37,268



56,956Property and equipment, net


1,387



1,824Non-current portion of prepaid expenses


104



104Long-term investments


8,466



Restricted cash, net of current portion


414



516Total assets

$
47,639


$
59,400LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
1,166


$
1,345Accrued expenses


931



1,199Current portion of capital lease


19



18Current portion of deferred revenue


12,098



22,295Total current liabilities


14,214



24,857Capital lease obligation, net of current portion


9



31Deferred revenue, net of current portion


67



12,165Other liabilities


244



180Total liabilities


14,534



37,233Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value,
    Authorized  5,000 shares 
    Series A convertible preferred stock,
    Designated  1,500 shares,
    Issued and outstanding  1 share at
    December 31, 2009 and 2008






Common stock, $0.001 par value,
    Authorized  70,000 shares at December 31,
    2009 and 2008
    Issued and outstanding  23,479 and 23,413 shares
    at December 31, 2009 and 2008, respectively


23



23Additional paid-in capital


366,780



363,405Accumulated deficit


(333,679
)


(341,225
)Accumulated other comprehensive loss


(19
)


(36
)Total stockholders equity


33,105



22,167Total liabilities and stockholders equity

$
47,639


$
59,400    F-3




---



##### Table of Contents



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

2009


2008


2007Alliance revenue

$
34,518


$
26,450


$
8,124Operating expenses:Research and development


18,570



16,152



13,195General and administrative


8,561



9,798



9,656Total operating expenses


27,131



25,950



22,851Income (loss) from operations


7,387



500



(14,727
)Other income (expense):Investment income, net


145



1,344



1,668Interest expense


(3
)


(92
)


(149
)Foreign currency exchange loss


(27
)


(267
)


Income (loss) before income taxes


7,502



1,485



(13,208
)Income tax benefit


44



24



Net income (loss)

$
7,546


$
1,509


$
(13,208
)Income (loss) per common share (Note 13):Basic

$
0.32


$
0.07


$
(0.62
)Diluted

$
0.31


$
0.06


$
(0.62
)Shares used in computing basic income (loss) per common share


23,420



22,655



21,221Shares used in computing diluted income (loss) per common share


24,079



25,331



21,221    F-4




---



##### 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, 2006


20,458


$
20


$
341,743


$
(329,526
)

$



$
12,237Exercise of common stock options, warrants and employee stock
    purchases


334



1



1,769











1,770Issuance of stock for services


7







44











44Conversion of notes


707



1



4,766











4,767Non-employee stock option expense










519











519Stock-based compensation


63







1,582











1,582Comprehensive income (loss):Unrealized gain on marketable securities


















8



8Net loss














(13,208
)






(13,208
)Total comprehensive loss






















(13,200
)Balance, 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 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 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
)

$
33,105    F-5




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##### Table of Contents



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

2009


2008


2007Cash Flows from Operating Activities:Net income (loss)

$
7,546


$
1,509


$
(13,208
)Adjustments to reconcile net income (loss) to net cash (used in)
    provided by operating activities Loss from disposition of assets






2



6Non-employee stock option expense


9



398



519Stock-based compensation


3,093



2,628



1,582Issuance of stock for services


17



22



44Amortization expense


40



36



(46
)Depreciation expense


563



530



364Amortization of deferred financing costs










31Changes in operating assets and liabilities Receivables


(4,023
)


(181
)


(230
)Prepaid expenses and other current assets


(154
)


218



(264
)Accounts payable, accrued expenses, and other liabilities


(383
)


(273
)


899Deferred revenue


(22,295
)


18,675



(5,457
)Net cash (used in) provided by operating activities


(15,587
)


23,564



(15,760
)Cash Flows from Investing Activities:Purchases of
    available-for-sale
    securities


(14,768
)


(22,985
)


(50,545
)Proceeds from sale of
    available-for-sale
    securities










37,814Proceeds from maturities of
    available-for-sale
    securities


10,450



23,620



15,220Decrease in restricted cash


102







Purchases of property and equipment


(126
)


(393
)


(1,632
)Net cash (used in) provided by investing activities


(4,342
)


242



857Cash Flows from Financing Activities:Net proceeds from issuance of note payable










1,278Payments on notes payable






(1,143
)


(135
)Proceeds from exercise of common stock options, warrants and
    employee stock purchases


297



10,030



1,770Repurchases of common stock


(41
)


(95
)


Payments on capital lease


(21
)


(21
)


(18
)Net cash provided by financing activities


235



8,771



2,895Net (decrease) increase in cash and cash equivalents


(19,694
)


32,577



(12,008
)Cash and cash equivalents, beginning of period


45,165



12,588



24,596Cash and cash equivalents, end of period

$
25,471


$
45,165


$
12,588    F-6




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 December 31, 2009
  (1)
    Organization              (2)
    Summary
    of Significant Accounting Policies  (a)
    Basis of
    Presentation   F-7




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
  (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
  available-for-sale other-than-temporary
  (d)
    Restricted
    Cash    (e)
    Depreciation
    and Amortization    (f)
    Revenue
    Recognition   F-8




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
    December 31,(In thousands)

2009


2008


2007Merck KGaA

$
28,558


$
16,921


$
Merck & Co.


5,826



7,458



6,078Novartis


19



1,861



1,420Other










250Total collaboration revenue


34,403



26,240



7,748Other revenue


115



210



376Total alliance revenue

$
34,518


$
26,450


$
8,124            F-9




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
          (g)
    Financial
    Instruments    (h)
    Comprehensive
    Income (Loss)    (i)
    Net
    Income (Loss) per Common Share    (j)
    Segment
    Reporting   F-10




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
    (k)
    Stock-Based
    Compensation      2009

2008

2007Average risk free interest rate


2.5
%


2.4
%


4.4
%Expected dividend yield










Expected lives (years)


5.0



4.9



5.9Expected volatility


66
%


66
%


70
%Weighted average grant date fair value of options granted during
    the period (per share)

$
3.07


$
6.28


$
5.81Weighted average exercise price of options granted during the
    period (per share)

$
5.39


$
11.18


$
8.86       non-director
  2009

2008

2007Average risk free interest rate


3.7
%


3.9
%


4.8
%Expected dividend yield










Expected lives (years)


10.0



10.0



10.0Expected volatility


88
%


94
%


98
%  F-11




---



##### Table of Contents



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

2008

2007Average risk free interest rate


0.2
%


2.1
%


4.7
%Expected dividend yield










Expected lives (months)


3.0



3.0



3.0Expected volatility


68
%


70
%


72
%     (l)
    Research
    and Development Expenses    (m)
    Concentration
    of Credit Risk    (n)
    Fair
    Value of Assets and Liabilities   F-12




---



##### 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, 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

$



$



$



$
December 31, 2008AssetsMoney market funds

$
44,842


$
44,842


$



$
Investments


10,441







10,441



Total Assets

$
55,283


$
44,842


$
10,441


$
Liabilities

$



$



$



$
   and/or available-for-sale
  (o)
    Subsequent
    Events  and/or
  (p)
    New
    Accounting Pronouncements  808-10 Prior authoritative literature: 07-1, Accounting for Collaborative Arrangements Related to the
    Development and Commercialization of Intellectual Property) 808-10
 F-13




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
  808-10
    825-10 (Prior authoritative literature: No. FAS 107-1 28-1, Interim Disclosures about Fair Value of Financial
    Instruments). 825-10 825-10
  820-10 Prior authoritative literature No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly) 820-10 820-10 820-10
  320-10 Prior authoritative literature No. FAS 115-2 FAS 124-2, Recognition and Presentation of
    Other-Than-Temporary
    Impairments). 320-10 other-than-temporary 320-10
  855-10 Prior authoritative literature Subsequent
    Events) 855-10 855-10
   F-14




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
   (3)
    Marketable
    Securities  available-for-sale
  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   December 31, 2008Gross

GrossUnrealized

Unrealized

EstimatedCost

(Losses)

Gains

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

$
10,477


$
(44
)

$
8


$
10,441Total investments

$
10,447


$
(44
)

$
8


$
10,441     (4)
    Property
    and Equipment    December 31,2009


2008(In thousands)Leasehold improvements

$
514


$
514Laboratory equipment and other


2,811



2,694Total property and equipment, at cost


3,325



3,208Less: Accumulated depreciation


1,938



1,384Property and equipment,

$
1,387


$
1,824        F-15




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
    (5)
    Accrued
    Expenses    December 31,2009


2008(In thousands)Payroll and related costs

$
88


$
73Clinical and nonclinical trial expenses


332



705Professional and consulting fees


226



230Other


285



191$
931


$
1,199   (6)
    Debt  (a)
    Note
    Payable      (b)
    4% Convertible
    Notes Payable    paid-in-capital
 F-16




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
   (7)
    Unrealized
    Losses    Investments in ContinuousUnrealized Loss Positions


Totalfor


InvestmentsLess than


More than


in Unrealized(In thousands)

12 Months


12 Months


Loss 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


$



$
12Short-term investments at December 31, 2008Aggregate fair value of investments with unrealized losses
    (includes accrued interest of $69)

$
5,269


$



$
5,269Aggregate amount of unrealized losses

$
44


$



$
44     (8)
    Collaboration
    and License Agreements  (a)
    Collaboration
    and License Agreement with Novartis International
    Pharmaceutical, Ltd.       F-17




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
    (b)
    Collaboration
    and License Agreement with Merck & Co., Inc.    two-year-period
     F-18




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
  (c)
    Collaboration
    and License Agreement with Merck KGaA  and/or 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     F-20




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
  (b)
    Warrants    WeightedAverage ExerciseExpiration Date

Shares

Price Per ShareSeptember 24, 2011


2,466,263


$
5.42   (c)
    Stock
    Options       F-21




---



##### 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 2008


3,546


$
7.92Granted


1,138



5.40Exercised


(42
)


4.11Forfeited


(52
)


7.98Expired


(25
)


6.45Outstanding at December 31, 2009


4,565


$
7.34



6.91


$
744Exercisable at December 31, 2009


2,545


$
7.09



5.09


$
720Total exercisable or expected to vest


4,502


$
7.34



6.88


$
743   (d)
    Employee
    Stock Purchase Plan        (e)
    Preferred
    Stock     F-22




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
    (f)
    Series A
    Convertible Preferred Stock    (10)
    Commitments
    and Contingencies  (a)
    Lease
    Commitments    OperatingDecember 31,

Lease(In thousands)2010

$
1,3462011


1,3912012


1,4362013


1,4832014


626$
6,282   (b)
    External
    Collaborations    (c)
    Contract
    Obligations   F-23




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
    (d)
    Related-Party
    Transactions    (11)
    Income
    Taxes        2009


2008(In thousands)Operating loss carryforwards

$
85,655


$
95,680Tax credit carryforwards


8,487



8,361Other


7,164



5,624101,306



109,665Valuation allowance


(101,306
)


(109,665
)$



$
      F-24




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
  740-10 Accounting for Uncertainty in Income Taxes, an interpretation
    of ASC 740 740-10), 740-10 740-10
  740-10.
        (12)
    Employee
    Benefit Plan   F-25




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
   (13)
    Income
    per Share    December 31,(In thousands, except per share amounts)

2009


2008Numerator for basic and dilutive net income per share:Net income

$
7,546


$
1,509Denominator for basic income per share:Weighted average common shares outstanding


23,420



22,655Effects of dilutive securities:Effect of restricted stock grant


31



52Effect of dilutive common stock options and warrants


628



2,624Denominator for diluted income per share


24,079



25,331Basic income per share

$
0.32


$
0.07Diluted income per share

$
0.31


$
0.06       (14)
    Supplemental
    Disclosure of Cash Flow Information    Years Ended December 31,2009


2008


2007(In thousands)Supplemental disclosure of cash flow information:Cash paid for interest

$
3


$
92


$
149Cash paid for income taxes

$
220


$
50


$
45Supplemental disclosure of non cash financing and investing
    activities:Conversion of 4% Convertible Subordinated Notes into Common
    Stock

$



$



$
5,033Issuance of stock options and stock for services

$
17


$
22


$
44Equipment acquired under capital lease

$



$



$
78  F-26




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
   (15)
    Shareholder
    Rights Plan        (16)
    Warrant
    Redemptions     F-27




---



##### Table of Contents



IDERA
    PHARMACEUTICALS, INC.
  NOTES TO
    FINANCIAL STATEMENTS (Continued)
    (17)
    Subsequent
    Events   F-28




---



##### 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 Stock Option Plan.



S-1

November 6, 1995

33-9902410
.5

1995 Director Stock Option Plan.



8-K

June 10, 2008

001-3191810
.6

1995 Employee Stock Purchase Plan, as amended.



8-K

June 10, 2008

001-3191810
.7

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



10-K

March 25, 2005

001-3191810
.8

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



8-K

June 21, 2005

001-3191810
.9

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



8-K

June 21, 2005

001-3191810
.10

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



10-Q

August 1, 2007

001-3191810
.11

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



8-K

June 10, 2008

001-3191810
.12

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
.13

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



8-K

June 10, 2008

001-3191810
.14

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



8-K

June 10, 2008

001-3191810
.15

Director Compensation Program Effective February 1, 2010.

X10
.16

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



10-Q

November 9, 2005

001-3191810
.17

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
.18

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
.19

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
.20

Offer letter by and between Idera Pharmaceuticals, Inc. and
    Dr. Alice Bexon, dated November 27, 2006, as amended.



10-Q

November 5, 2009

001-3191810
.21

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



10-Q

October 24, 2002

000-2735210
.22

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



10-Q

October 24, 2002

000-2735210
.23

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
.24

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
.25

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
.26

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
.27

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
.28

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
.29

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



8-K

March 6, 2007

001-3191810
.30

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



10-K

March 11, 2008

001-3191810
.31

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
.32

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
.33

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
.34

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
.35

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



8-K

March 29, 2006

001-3191810
.36

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
.37

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
.38

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



8-K

March 29, 2006

001-3191823
.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.

X




---



##### Table of Contents



Incorporated by Reference toExhibit



Filed



Filing

SEC FileNumber

Description

Herewith

Form

Date

No.31
.2

Certification of Chief Financial Officer 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