IDERA PHARMACEUTICALS, INC.

505 Eagleview Blvd., Suite 212
Exton, PA 19341
(484) 348-1600

NOTICE OF ~~2022 ANNUAL~~SPECIAL MEETING OF STOCKHOLDERS

To be held January 12, 2023

Notice is hereby given that a special meeting of stockholders (the “Special Meeting”) of Idera Pharmaceuticals, Inc. (the “Company”), will be held virtually, via live webcast at https://www.virtualmeetingportal.com/iderapharma/2023 on January 12, 2023 at 9:00 a.m. Eastern Time. The purpose of the Special Meeting is the following:

To approve, in accordance with Nasdaq Listing Rule 5635(a), the issuance of shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), upon conversion of the Company’s Series Z Non-Voting Convertible Preferred Stock, par value $0.01 per share (“Series Z Preferred Stock”), issued in September 2022 (the “Conversion Proposal” or “Proposal No. 1”);

~~Thursday, June 23,~~2.

To approve an amendment to the Restated Certificate of Incorporation to effect a reverse stock split of the Common Stock at a ratio to be determined by the Company’s Board of Directors (the “Board of Directors”) within a range of one-for-seventeen (1:17) and one-for-twenty-three (1:23) (or any number in between), to be effected in the sole discretion of the Board of Directors at any time within one year of the date of the Special Meeting without further approval or authorization from the Company’s stockholders (the “Reverse Stock Split Proposal” or “Proposal No. 2”);

To approve the Idera Pharmaceuticals, Inc. 2022 Stock Incentive Plan (the “Equity Compensation Plan Proposal” or “Proposal No. 3”); and

To approve the adjournment or postponement of the Special Meeting, if necessary, to continue to solicit votes for Proposal Nos. 1, 2, and/or 3 (the “Adjournment Proposal” or “Proposal No. 4”).

Only Company stockholders of record at the close of business on December 5, 2022 will be entitled to vote at the Special Meeting and any adjournment or postponement thereof.

On November 17, 2022, we announced an issuance of Series B Preferred Stock with multiple votes per share, to be paid to Company stockholders on December 2, 2022, with the intent of increasing the likelihood of receiving sufficient votes at the Special Meeting to approve Proposal 2. Please note that the holders of this Series B Preferred Stock may only vote on Proposals 2 and 4 and their votes may only be cast in direct proportion to the final votes cast by the holders of the Common Stock. As described in the accompanying proxy statement, the Series B Preferred Stock only serves to amplify the Common Stock voted in favor of the Reverse Stock Split Proposal.

	~~Date and Time:~~			~~Thursday, June 23, 2022 at 8:00 a.m., Eastern Time~~
	~~Format:~~			Your vote is important. Whether or not you are able to attend the Special Meeting, it is important that your shares be represented. To ensure that your vote is recorded promptly, please vote as soon as possible, even if you plan to virtually attend the Special Meeting, by submitting your proxy via the Internet at the address listed on the proxy card or by signing, dating, and returning the proxy card. Thank you for your ongoing support and continued interest in Idera Pharmaceuticals, Inc.’s (“Idera,” “our,” “we,” “us,” or the “Company”) 2022 annual meeting of stockholders (the “Annual Meeting”) will be an in-person meeting held at the Company’s headquarters located at:
				~~505 Eagleview Boulevard, Suite 212 Exton,~~ ~~Pennsylvania 19341~~
	~~Items of Business:~~			• ~~Elect two Class III directors to our board of directors for terms to expire at the 2025 annual meeting of stockholders;~~ • ~~Approve, by non-binding vote, the compensation of the Company’s named executive officers for 2021;~~ • ~~Ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022;~~ • ~~Approve the amendment to the 2013 Stock Incentive Plan to increase the number of authorized shares;~~ • ~~Approve the amendment to the 2017 Employee Stock Purchase Plan to increase the number of authorized shares; and~~ • ~~Transact any other business as may properly come before the Annual Meeting or any postponement, continuation or adjournment of the Annual Meeting.~~ ~~The board of directors has no knowledge of any other business to be transacted at the Annual Meeting.~~
	~~Record Date:~~			~~You may vote on the matters to be presented at the Annual Meeting if you were a stockholder of record as of the close of business on April 25, 2022 (the “Record Date”).~~
	~~Proxy Voting:~~			It is important that your shares be represented and voted at the Annual Meeting. Whether or not you plan attend the Annual Meeting, we urge you to vote as promptly as possible by telephone or Internet or by signing, dating, and returning a printed proxy card or voting instruction form, as applicable. If you attend the Annual Meeting, you may vote your shares at the Annual Meeting even if you previously voted by proxy and may revoke your proxy at any time before its exercise at the Annual Meeting. Please vote as soon as possible to ensure that your shares will be represented and counted at the Annual Meeting.

By order of the ~~board~~Board of ~~directors,~~
Directors,

/s/ B~~ryant~~ ~~D. L~~imVincent J. Milano

~~Bryant D. Lim~~Vincent J. Milano
~~Senior Vice President, General Counsel~~Chair of the Board
~~and Corporate Secretary~~

Exton, Pennsylvania
~~April 29,~~December 8, 2022

~~IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 23, 2022~~

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Important Notice Regarding the Availability of Proxy Materials for the Special Stockholders Meeting to Be Held on January 12, 2023:

This proxy statement is available at http://www.edocumentview.com/IDRA and is also available to any stockholder who wishes to receive a paper copy by calling Investor Relations at 484-348-1600 or by emailing ir@iderapharma.com.

~~Idera’s Proxy Statement for the Annual Meeting of Stockholders and 2021 Annual Report to Stockholders for the fiscal year ended December 31, 2021 are available at:~~
~~https://ir.iderapharma.com/shareholder-services/annual-meeting~~

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~~IDERA PHARMACEUTICALS, INC.~~Idera Pharmaceuticals, Inc.

505 Eagleview Blvd., Suite 212
Exton, PA 19341
(484) 348-1600

PROXY STATEMENT

~~FOR THE 2022 ANNUAL~~SPECIAL MEETING OF STOCKHOLDERS

~~TO BE HELD ON THURSDAY, JUNE 23, 2022~~
~~AT 8:00 A.M. EASTERN TIME~~To Be Held on January 12, 2023

INFORMATION CONCERNING SOLICITATION AND VOTING

This proxy statement contains information about the Special Meeting of Stockholders (the “Special Meeting”) of Idera Pharmaceuticals, Inc.~~, a Delaware corporation, which is referred to as~~ (the “Company,” “Idera,” “we,” “us,” or “our”), which will be held virtually, via live webcast at https://www.virtualmeetingportal.com/iderapharma/2023 on January 12, 2023 at 9:00 a.m. Eastern Time. The Company’s Board of Directors (the “Board of Directors” or the ~~“Company,~~“Board”) is using this proxy statement to solicit proxies for the Special Meeting.

All properly submitted proxies will be voted in accordance with the instructions contained in those proxies. If no instructions are specified, the proxies will be voted in accordance with the recommendation of our Board of Directors with respect to each of the matters set forth in the accompanying Notice of Special Meeting. You may revoke your proxy at any time before it is exercised at the Special Meeting by giving our corporate secretary written notice to that effect, delivering to us another signed proxy card with a later date, voting by telephone or over the internet at a later date, or virtually attending the Special Meeting and voting online during the Special Meeting.

At the Special Meeting, the Company will ask stockholders:

To approve, in accordance with Nasdaq Listing Rule 5635(a), the issuance of shares of the common stock, par value $0.001 per share (“Common Stock”), upon conversion of the Company’s Series Z Non-Voting Convertible Preferred Stock, par value $0.01 per share (“Series Z Preferred Stock”), issued in September 2022 (the “Conversion Proposal” or “Proposal No. 1”);

To approve an amendment to the Restated Certificate of Incorporation to effect a reverse stock split of the Common Stock (the “Reverse Stock Split”) at a ratio to be determined by the Board of Directors within a range of one-for-seventeen (1:17) and one-for-twenty-three (1:23) (or any number in between), to be effected in the sole discretion of the Board of Directors at any time within one year of the date of the Special Meeting without further approval or authorization from our stockholders (the “Reverse Stock Split Proposal” or “Proposal No. 2”);

To approve the Idera Pharmaceuticals, Inc. 2022 Stock Incentive Plan (the “Equity Compensation Plan Proposal” or “Proposal No. 3”); and

To approve the adjournment or postponement of the Special Meeting, if necessary, to continue to solicit votes for Proposal Nos. 1, 2, and/or 3 (the “Adjournment Proposal” or “Proposal No. 4” and, together with Proposal Nos. 1, 2, and 3, the “Proposals”).

After careful consideration, the Board of Directors approved the Proposals being submitted to a stockholder vote, and having determined that the Proposals are advisable, fair, and in the best interests of the Company and its stockholders, recommends that stockholders vote “FOR” each of the Proposals.

Your vote is important. Whether or not you expect to virtually attend the Special Meeting, please complete, date, sign, and promptly return the accompanying proxy card in the enclosed postage-paid envelope to ensure that your shares will be represented and voted at the Special Meeting. If you hold your shares in “street name” through a broker, you should follow the procedures provided by your broker.

This proxy statement is dated December 8, 2022 and is first being mailed to stockholders on or about December 9, 2022.

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CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents incorporated by reference into this proxy statement, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: the Company’s strategy, anticipated clinical development milestones, future operations, future financial position, future revenue, projected expenses, prospects, plans and objectives of management or the expected features of or potential indications for the Company’s product candidates, uses of proceeds, projected cash runways, and stockholder approval of the conversion rights of the Series Z Preferred Stock. The use of words such as, but not limited to, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or ~~“Idera”~~“would” and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our clinical results and other future conditions. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. No representations or warranties (expressed or implied) are made about the accuracy of any such forward-looking statements. We may not actually achieve the forecasts disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Such forward-looking statements are subject to a number of material risks and uncertainties including but not limited to those set forth under the caption “Risk Factors” in this proxy statement ~~has made these~~and in the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the SEC, as well as discussions of potential risks, uncertainties, and other important factors in our subsequent filings with the SEC. Any forward-looking statement speaks only as of the date on which it was made. Neither we, nor our affiliates, advisors or representatives, undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date hereof.

WEBSITES

Website addresses referenced in this proxy ~~materials available~~statement are provided for convenience only, and the content on the referenced websites does not constitute a part of this proxy statement.

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OVERVIEW

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

The following section provides answers to frequently asked questions about the Special Meeting. This section, however, only provides summary information. These questions and answers may not address all issues that may be important to you ~~on the Internet, or upon your request, has delivered~~as a ~~printed or email copy~~stockholder. You should carefully read this entire proxy statement, including each of the annexes.

Why am I receiving these materials, and who is soliciting my vote?

We sent you this proxy ~~materials to you,~~statement because our ~~board~~Board of ~~directors (our “board” or the “board”)~~Directors is soliciting your proxy to vote at the Special Meeting that the Company is holding, in part, in order to seek stockholder approval on certain matters in connection with our ~~Annual~~September 2022 acquisition (the “Acquisition”) of Aceragen, Inc. (“Aceragen”) and as described in further detail herein. This proxy statement summarizes the information you need to vote at the Special Meeting. You do not need to attend the Special Meeting of stockholders, or the Annual Meeting. The Annual Meeting will be held on Thursday, June 23, 2022, at 8:00 a.m., Eastern Time, the Company’s headquarters located at 505 Eagleview Boulevard, Suite 212, Exton, Pennsylvania 19341, or at such other time and place to ~~which the meeting may be adjourned, continued, or postponed. If the Annual Meeting is adjourned for any reason, then proxies submitted may be used at any adjournment of the Annual Meeting.~~

~~INFORMATION ABOUT THE ANNUAL MEETING~~vote your shares.

When are this proxy statement and the accompanying materials scheduled to be sent to stockholders?

~~We have elected to provide access to our proxy materials for the Annual Meeting to our stockholders via the Internet. Accordingly, on~~On or about ~~May 2,~~December 9, 2022, we will begin mailing ~~a Notice of Internet Availability of Proxy Materials, or Notice of Internet Availability, and all other~~our proxy materials, including the Notice of ~~Annual~~the Special Meeting, ~~of Stockholders,~~ this proxy statement, and the accompanying proxy ~~card. For~~card or, for shares held in street name ~~(held~~(i.e., shares held for your account by a broker or other nominee), a voting instruction ~~form~~form.

When and where will the ~~Annual Report on Form 10-K for the fiscal year ended December 31, 2021, or the 2021 Annual Report,~~Special Meeting take place?

We will be ~~made available to stockholders on~~hosting the ~~Internet on the same date.~~

~~Why did I receive a Notice of Internet Availability instead of a full set of proxy materials?~~

Pursuant to rules adopted by the U.S. Securities and Exchange Commission, or SEC, we are providing access to our proxy materials over the Internet rather than printing and mailing the proxy materials. We believe electronic delivery will expedite the receipt of materials and will help lower our costs and reduce the environmental impact of our AnnualSpecial Meeting ~~materials. Therefore, a Notice of Internet Availability~~via live webcast only. The Special Meeting will be ~~mailed to holders~~held virtually, via live webcast at https://www.virtualmeetingportal.com/iderapharma/2023 on January 12, 2023, at 9:00 a.m. Eastern Time. Regardless of ~~record and beneficial owners~~whether you are the “record holder” of ~~our common stock starting on~~your shares or around May 2, 2022. The Notice of Internet Availability will provide instructions as to how stockholders may access and review the proxy materials, including the Notice of Annual Meeting, proxy statement, proxy card, and 2021 Annual Report, on the website referred toyour shares are held in the Notice of Internet Availability or, alternatively, how to request that a copy of the proxy materials, including a proxy card, be sent to them by mail. The Notice of Internet Availability also will provide voting instructions. In addition, stockholders of record may request to receive the proxy materials in printed form by mail or electronically by email on an ongoing basis for future stockholder meetings. Please note that while our proxy materials are available at the website referenced in the Notice of Internet Availability, and our Notice of Annual Meeting, proxy statement, and 2021 Annual Report are available on our website, no other information contained on either website is incorporated by reference in, or considered to be a part of, this document.

~~Who may vote?~~

~~Holders of record of our common stock~~street name, if you held your shares as of the close of business on December 5, 2022, you are entitled to attend the ~~Record Date~~Special Meeting. Stockholders may vote, submit questions, and view the stockholders while attending the Special Meeting online. The webcast will open 15 minutes before the start of ~~April 25,~~the Special Meeting. Instructions on how to virtually attend and participate online are also available at https://www.virtualmeetingportal.com/iderapharma/2023. Information on how to vote online at the virtual Special Meeting is discussed below.

When is the record date for the Special Meeting?

The record date for determination of stockholders entitled to vote at the Special Meeting is the close of business on December 5, 2022, which we refer to as the “record date.”

Who is entitled to vote at the Special Meeting?

Only holders of record of our Common Stock and Series B Preferred Stock, par value $0.01 per share (“Series B Preferred Stock”) as of the record date will be entitled to notice of, and to vote at, the Special Meeting or any adjournment or postponement thereof.

How many votes can be cast by all stockholders?

There were 62,355,434 shares of our Common Stock and 62,355 shares of Series B Preferred Stock outstanding on the record date, all of which are entitled to vote ~~on each matter properly brought before~~with respect to all matters to be acted upon at the ~~Annual~~Special Meeting. ~~Holders~~Each outstanding share of ~~our common stock will be~~Common Stock is entitled to one vote on each matter considered at the Special Meeting.

As previously announced, on November 17, 2022, the Board of Directors declared a dividend of one thousandth (1/1,000th) of a share of Series B Preferred Stock, for each outstanding share of ~~common stock held~~Common Stock to stockholders of record as ~~of the record date. As~~ of the close of business on November 28, 2022. The holders of the ~~Record Date, we had 52,966,025 shares~~Series B Preferred Stock have 1,000,000 votes per whole share (i.e., 1,000 votes per one-thousandth of ~~common stock outstanding.~~a share of Series B Preferred Stock) and are entitled to vote with the Common Stock, voting together as a single class, on the Reverse Stock Split Proposal, but are not otherwise entitled to vote on the other proposals to be

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presented at the Special Meeting. Each share of Series B Preferred Stock redeemed pursuant to the Initial Redemption (as defined below) will have no voting power with respect to the Reverse Stock Split Proposal or any other matter. When a holder of Common Stock submits a vote on the Reverse Stock Split Proposal, the corresponding number of fractional shares of Series B Preferred Stock held by such holder will be automatically voted in a mirrored fashion. For example, if a stockholder holds 10 shares of Common Stock (entitled to one vote per share) and votes in favor of the Reverse Stock Split Proposal, then 10,010 votes will be recorded in favor of the Reverse Stock Split Proposal, because the Series B Preferred Stock will automatically be voted in favor of the Reverse Stock Split Proposal alongside the Common Stock.

All shares of Series B Preferred Stock that are not virtually present in person or by proxy at the Special Meeting as of immediately prior to the opening of the polls at the Special Meeting will be automatically redeemed (the “Initial Redemption”). Any outstanding shares of Series B Preferred Stock that have not been redeemed pursuant to the Initial Redemption will be redeemed in whole, but not in part, (i) if and when ordered by our Board or (ii) automatically upon the approval by the Company’s stockholders of the Reverse Stock Split Proposal at any meeting of the stockholders held for the purpose of voting on such proposal.

On the record date, there were 80,656 shares of Series Z Preferred Stock issued and outstanding; the Series Z Preferred Stock is a non-voting class and therefore is not entitled to vote on the matters being considered at the Special Meeting. On the record date, there were five shares of Series X Preferred Stock, par value $0.01 per share (“Series X Preferred Stock”), issued and outstanding; the Series X Preferred Stock is a non-voting class and therefore is not entitled to vote on the matters being considered at the Special Meeting.

Of the shares of Common Stock issued and outstanding and entitled to vote, 7,677,411 shares of Common Stock were issued as consideration in our Acquisition of Aceragen. These 7,677,411 shares of Common Stock are not entitled to vote on Proposal No. 1 for purposes of the listing rules of the Nasdaq Stock Market (“Nasdaq”). The Company anticipates that these 7,677,411 shares of Common Stock will be voted in favor of Proposal No. 1 for purposes of adopting the proposal under Delaware law. However, to comply with Nasdaq rules, the Company will instruct the inspector of elections to conduct a separate tabulation that subtracts 7,677,411 shares of Common Stock from the total number of shares voted in favor of Proposal No. 1 to determine whether that proposal has been adopted in accordance with applicable Nasdaq rules.

How do I ~~vote my shares if I am a stockholder of record?~~vote?

If you are a stockholder of record (meaning that you hold shares in your name in the records of our transfer agent, Computershare Trust Company, N.A. (“Computershare”), and that your shares are not held in “street name” by a bank or brokerage firm), you may vote your shares in any one of the following ways:

•

By internet. To vote over the internet through services provided by Computershare, ~~Trust Company, N.A.,~~ please go to the following website: http://www.investorvote.com/IDRA and follow the instructions at that site for submitting your proxy. If you vote over the internet, you do not need to complete and mail your proxy card.

•

By telephone. To vote by telephone through services provided by Computershare, ~~Trust Company, N.A.,~~ call 1-800-652-VOTE (8683), and follow the instructions provided on the proxy card that accompanies this proxy statement. If you vote by telephone, you do not need to complete and mail your proxy card.

•

By mail. If you requested printed proxy materials, you need to complete, date, and sign the proxy card that accompanies this proxy statement and promptly mail it in the enclosed postage-prepaid envelope. You do not need to put a stamp on the enclosed envelope if you mail it from within the United States. If you are mailed or otherwise receive or obtain a proxy card, and you choose to vote by telephone or by Internet, you do not have to return your proxy card.

•

At the ~~Annual~~Special Meeting. ~~If you~~To vote during the Special Meeting, virtually attend the ~~Annual~~Special Meeting ~~you~~by visiting https://www.virtualmeetingportal.com/iderapharma/2023, where stockholders may submit questions, and view the stockholder list during the Special Meeting. The meeting starts at 9:00 a.m. Eastern Time. You may vote online during the Special Meeting at ~~the Annual Meeting.~~http://www.investorvote.com/IDRA.

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Your proxy will only be valid if you complete and return the proxy card, vote by telephone, vote over the internet before the ~~Annual~~Special Meeting, or vote atonline during the ~~Annual~~Special Meeting. The persons named in the proxy card will vote the shares you own in accordance with your instructions on your proxy card, in your vote by telephone, or in your vote over the internet. If you return the proxy card, vote by telephone, or vote over the internet, but do not give any instructions on a particular matter described in this proxy statement, the persons named in the proxy card will vote the shares you own in accordance with the recommendations of our ~~board.~~Board of Directors.

How do I vote my shares if I hold them in “street name”?

If the shares you own are held in “street name” by a bank or brokerage firm, your bank or brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions that your bank or brokerage firm provides to you. Many banks and brokerage firms solicit voting instructions over the internet or by telephone. Even if your shares are held in street name, you are welcome to attend the ~~Annual Meeting.~~Special Meeting if you have a legal proxy to attend. If your shares are held in street name, you may not vote your shares atonline during the ~~Annual~~Special Meeting unless you obtain a “legal proxy,” executed in your favor, from the holder of record (i.e., your bank or brokerage firm). If you hold your shares in street name and wish to vote atonline during the ~~Annual~~Special Meeting, please contact your bank or brokerage firm before the ~~Annual~~Special Meeting to obtain the necessary proxy from the holder of record. You must then submit the legal proxy to the Company by 5:00 p.m., Eastern Time, on ~~June 22, 2022.~~January 11, 2023. Legal proxies may be ~~submitted:~~submitted by mail to Corporate Secretary, Idera Pharmaceuticals, Inc., 505 Eagleview Boulevard, Suite 212, Exton, Pennsylvania 19341; or by email to legal@iderapharma.com.

If the beneficial owner does not provide voting instructions, banks and brokerage firms cannot vote the shares with respect to “non-routine” matters but can vote the shares with respect to “routine” matters. “Broker non-votes” occur when a beneficial owner of shares held in street name fails to provide instructions to the bank or brokerage firm holding the shares as to how to vote on matters deemed “non-routine.” We believe Proposal Three (the ratification of the selection of our independent registered public accounting firm) is a “routine” matter and, as a result, we do not expect there to be any broker non-votes. Proposal One (the election of directors)No. 1 (Conversion Proposal), Proposal ~~Two (the approval of, by non-binding vote, the compensation of the Company’s named executive officers for 2021)~~No. 2 (Reverse Stock Split Proposal), Proposal ~~Four (the approval of an amendment to our 2013 Stock Incentive Plan)~~No. 3 (Equity Compensation Plan Proposal), and Proposal ~~Five (approval of~~No. 4 (the Adjournment Proposal) are each considered non-routine under applicable New York Stock Exchange rules. Thus, your broker, bank, or other nominee would not be able to vote on such non-routine matters. As noted above, if your shares are held in street name, your broker, bank, or other nominee will provide you with an ~~amendment~~instructional letter on how to ~~our 2017 Employee Stock Purchase Plan) are “non-routine” matters, and banks and brokerage firms cannot~~ vote your shares ~~on such proposals if you have not given voting instructions.~~

without attending the Special Meeting.

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•

~~attending~~attend the ~~Annual~~Special Meeting and ~~voting~~vote online at the ~~Annual~~Special Meeting. Note that virtual attendance at the Special Meeting alone will not revoke your vote; you must vote online during the Special Meeting.

If you own shares in street name, your bank or brokerage firm should provide you with instructions for changing or revoking your vote.

~~What constitutes~~How is a ~~quorum?~~quorum reached?

In order for business to be conducted at the ~~Annual~~Special Meeting, a quorum must be present. A quorum consists of the holders of ~~a majority~~at least one-third of the shares of our ~~common stock~~Common Stock issued and outstanding and entitled to vote at the ~~Annual~~Special Meeting. Shares of Series B Preferred Stock are not counted for purposes of determining whether or not a quorum is present at the Special Meeting.

Shares of ~~common stock~~Common Stock present or represented by proxy (including broker non-votes and shares that are abstained or withheld or with respect to which no voting instructions are provided for one or more of the matters to be voted upon) will be counted for the purpose of determining whether a quorum exists.

If a quorum is not present, the ~~Annual~~Special Meeting will be adjourned until a quorum is obtained.

What proposals will be voted on at the Special Meeting?

There are four proposals scheduled to be voted on at the Special Meeting:

•

Proposal No. 1 — Approval of the issuance of shares of Common Stock upon conversion of the Series Z Preferred Stock.

•

Proposal No. 2 — Approval of the amendment of the Restated Certificate of Incorporation to effect the Reverse Stock Split.

•

Proposal No. 3 — Approval of the Idera Pharmaceuticals, Inc. 2022 Stock Incentive Plan.

•

Proposal No. 4 — Approval of the adjournment or postponement of the Special Meeting, if necessary, to continue to solicit votes for Proposal Nos. 1, 2, and/or 3.

What vote is required to approve each ~~matter and how will votes be counted?~~

~~The table below sets forth the vote required for each matter being submitted to our stockholders~~item at the ~~Annual Meeting to be approved and the effect that abstentions, withheld votes, and broker non-votes:~~

~~Proposal~~	~~Affirmative Vote Required~~	~~Abstentious/~~Special Meeting? ~~Withholds~~	~~Broker~~ ~~Non-Votes~~
~~Election of Directors~~ ~~(Proposal One)~~	~~Plurality of votes cast by holders of common stock entitled to vote~~	~~No effect(1)~~	~~No effect~~
~~Advisory Vote on Named Executive Officer 2021 Compensation~~ ~~(Proposal Two)~~	~~Majority of common stock present or represented and voting on the matter~~	~~No effect~~	~~Not applicable~~
~~Ratification of Selection of Ernst & Young LLP~~ ~~(Proposal Three)~~	~~Majority of common stock present or represented and voting on the matter~~	~~No effect~~	~~No effect~~
~~Approval of Amendment to 2013 Stock Incentive Plan~~ ~~(Proposal Four)~~	~~Majority of common stock present or represented and voting on the matter~~	~~No effect~~	~~No effect~~
~~Approval of Amendment to 2017 Employee Stock Purchase Plan~~ ~~(Proposal Five)~~	~~Majority of common stock present or represented and voting on the matter~~	~~No effect~~	~~No effect~~

~~(1)~~

You may vote ~~FOR all~~“for,” “against,” or “abstain” on each of the ~~director nominees, WITHHOLD your vote from all~~Proposals being presented before our stockholders. Under our Second Amended and Restated Bylaws (“Bylaws”), any proposal other than an election of directors is decided by a majority of the ~~director nominees~~votes present or ~~WITHHOLD your~~represented and voting on the matter, except where a larger vote ~~from any~~is required by law or by our Restated Certificate of Incorporation or our Bylaws.

•

Proposal No. 1 — The affirmative vote of the ~~director nominees.~~

~~Each share~~holders of ~~common stock~~shares of Common Stock representing a majority of the votes present or represented and voting on the matter is required for the approval of the Conversion Proposal. Broker non-votes (if any) and abstentions will not be counted as ~~one vote.~~votes cast on the matter and will have no effect on the outcome of this proposal.

•

Proposal No. 2 — The affirmative vote of the holders of shares of Common Stock and Series B Preferred Stock, voting together as a single class, representing a majority of the Common Stock and Series B Preferred Stock issued and outstanding is required for the approval of the Reverse Stock Split Proposal. Broker non-votes (if any) and abstentions will have the same effect as votes cast against the proposal.

•

Proposal No. 3 — The affirmative vote of the holders of shares of Common Stock representing a majority of the votes present or represented and voting on the matter is required for the approval of the Equity Compensation Plan Proposal. Broker non-votes (if any) and abstentions will not be counted as votes cast on the matter and will have no effect on the outcome of this proposal.

•

Proposal No. 4 — If a quorum is present at the Special Meeting, the affirmative vote of the holders of shares of Common Stock and Series B Preferred Stock representing a majority of the votes present or represented and voting on the matter is required for the approval of the Adjournment Proposal. If a quorum is not present at the Special Meeting, the affirmative vote of the holders of a majority of the shares of Common Stock present at the Special Meeting or represented by proxy is required for

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the approval of the Adjournment Proposal. Broker non-votes (if any) and abstentions will not be counted as votes cast on the matter and will have no effect on the outcome of this proposal.

Please refer to the discussion above under “How many votes can be cast by all stockholders?” for a description of the Series B Preferred Stock, which is entitled to be voted together with the Common Stock as a single class on the Reverse Stock Split Proposal and the Adjournment Proposal. Shares of Series B Preferred Stock that are not present in person or by proxy as of immediately prior to the opening of the polls will be automatically redeemed in the Initial Redemption and, therefore, will not be outstanding or entitled to vote on either the Reverse Stock Split Proposal or the Adjournment Proposal and will be excluded from the calculation as to whether such proposals pass at the Special Meeting. Due to the voting power of the shares of Series B Preferred Stock that are not redeemed pursuant to the Initial Redemption on the Reverse Stock Split Proposal and the Adjournment Proposal, the holders of Common Stock that submit a proxy to vote their shares at the Special Meeting or virtually attend the Special Meeting will effectively have enhanced voting power on the three proposals over holders of Common Stock that are not represented in person or by proxy at the Special Meeting. This means that the Reverse Stock Split Proposal and the Adjournment Proposal could each be approved by the affirmative vote of the holders of less than a majority of the outstanding shares of our Common Stock.

Do I have appraisal rights?

No. Our stockholders are not entitled to dissenters’ or appraisal rights under the Delaware General Corporation Law with respect to any of the Proposals being voted on.

How is the vote counted?

If you are a stockholder of record, you have the right to direct the voting of your shares by voting over the Internet, by telephone, by returning your proxy by mail, or by virtually attending the Special Meeting and voting online during the Special Meeting. In contrast, if you are a beneficial owner and your shares are held in an account at a bank or at a brokerage firm or other nominee hold, you must tell your bank, broker or other nominee how you would like your shares to be voted, which you can do by following the instructions provided to you by the bank, broker, or other nominee.

Who will count the vote?

The votes will be counted, tabulated, and certified by an inspector of elections appointed by the Board of Directors.

How does the ~~board~~Board of Directors recommend that I ~~vote?~~vote on the Proposals?

~~Our board~~The Board of Directors recommends that you ~~vote as follows:~~vote:

•

Proposal No. 1 — FOR ~~each~~the approval of the ~~Class III director nominees (Proposal One); and~~Conversion Proposal.

•

Proposal No. 2 — FOR ~~Proposal Two, Proposal Three, Proposal Four and Proposal Five.~~the approval of the Reverse Stock Split Proposal.

~~Under~~•

Proposal No. 3 — FOR the Securities Exchange Act of 1934, as amended, or the Exchange Act, and related SEC regulations, the vote on executive compensation, as described in greater detail in Proposal Two, set forth elsewhere in this proxy statement, is an advisory vote, meaning it is non-binding. The vote on the ratificationapproval of the ~~selection~~Equity Compensation Plan Proposal.

•

Proposal No. 4 — FOR the approval of ~~Ernst & Young LLP as our independent registered public accounting firm, as described in greater detail in Proposal Three, is also an advisory vote. Our board will carefully consider~~ the ~~outcome of each of these votes, but will not be obligated to take any action as a result of such outcomes.~~

~~Will any other business be conducted at the Annual Meeting?~~Adjournment Proposal.

Our board does not know of any other business to be conducted or matters to be voted upon at the Annual Meeting. If any other matter properly comes before the Annual Meeting, the persons named in the proxy card that accompanies this proxy statement will exercise their judgment in deciding how to vote or otherwise act with respect to that matter at the Annual Meeting.

Who is making and paying for the solicitation of proxies and how is it made?

We are making the solicitation and will bear the costs of soliciting proxies. In addition to solicitations by mail, our directors, officers, and employees, without additional remuneration, may solicit proxies by telephone, text message, facsimile, email, personal interviews, and other means. We have engaged MacKenzie Partners, Inc. (“MacKenzie”) to serve as our proxy solicitor to distribute our proxy materials and solicit proxies, and the estimated fee for these services is ~~$12,500~~$15,000, plus reimbursement for reasonable disbursements. We have requested that brokerage houses, custodians, nominees, and fiduciaries forward copies of the proxy materials to the persons for whom they hold shares and request instructions for voting the proxies. We will reimburse the brokerage houses and other persons for their reasonable out-of-pocket expenses in connection with this distribution.

~~How and when may I submit a proposal for the 2023 annual meeting of stockholders?~~

If you are interested in submitting a proposal for inclusion in the proxy statement and proxy card for our 2023 annual meeting of stockholders, or the 2023 annual meeting, you need to follow the procedures outlined in Rule 14a-8 of the Exchange Act. We must receive your proposal intended for inclusion in the proxy statement at our principal executive offices, 505 Eagleview Blvd., Suite 212, Exton, Pennsylvania 19341, Attention: Secretary, no later than January 2, 2022. SEC rules set standards for the types of stockholder proposals and the information that must be provided by the stockholder making the request.

If you wish to present a proposal at the 2023 annual meeting, but do not wish to have the proposal considered for inclusion in the proxy statement and proxy card or have not complied with the requirements for inclusion of such proposal in our proxy statement under SEC rules, you must also give written notice to us at the address noted above. Our bylaws specify the information that must be included in any such notice, including a brief description of the business to be brought before the annual meeting, the name of the stockholder proposing such business, and stock ownership information for such stockholder. In accordance with our bylaws, we must receive this notice (or the stockholder director nomination, see “Stockholder Nominees”) at least 60 days, but not more than 90 days, prior to the date of the 2023 annual meeting and the notice must include specified information regarding the proposal and the stockholder making the proposal.

Notwithstanding the foregoing, if we provide less than 70 days’ notice or prior public disclosure of the date of the annual meeting to the stockholders, notice by the stockholders must be received by our Secretary no later than the close of business on the tenth day following the date on which the notice of the annual meeting was mailed or such public disclosure was made, whichever occurs first. If a stockholder who wished to present a proposal fails to notify us by this date, the proxies that management solicits for that meeting will have discretionary authority to vote on the stockholder’s proposal if it is otherwise properly brought

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~~PROPOSAL ONE~~

~~ELECTION OF DIRECTORS~~

~~General Information~~

Our board is divided into three classes and currently consists of three Class I directors: Vincent J. Milano, Cristina Csimma, PharmD, MHP, and Michael R. Dougherty; two Class II directors: James A. Geraghty and Maxine Gowen, Ph.D.; and two Class III directors: Mark Goldberg, M.D. and Carol A. Schafer. Each member of a class is elected for a three-year term, with the terms staggered so that approximately one-third of our directors stand for election at each annual meeting of stockholders. The Class I, Class II, and Class III directors were elected to serve until the annual meeting of stockholders to be held in 2023, 2024 and 2022, respectively, and until their respective successors are elected and qualified.

Our board, on the recommendation of the members of our nominating and corporate governance committee, has nominated Dr. Goldberg and Ms. Schafer for election as Class III directors at the Annual Meeting. At the Annual Meeting, stockholders will be asked to consider the election of Dr. Goldberg and Ms. Schafer.

The persons named in the enclosed proxy card will vote to elect Dr. Goldberg and Ms. Schafer to our board unless you indicate that you withhold authority to vote for the election of one or all director nominees. You may not vote for more than two director nominees. Each Class III director will be elected to hold office until our 2025 annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier resignation, death, or removal. Each of the director nominees is presently a director and each has indicated a willingness to serve as a director, if elected. If a director nominee becomes unable or unwilling to serve, however, the persons acting under the proxy may vote for substitute director nominees selected by the board.

~~Information about our Directors~~

Set forth below is information about each member of our board, including (a) the year in which each director first joined the board, (b) their age as of the Annual Meeting, (c) their positions and offices with our Company (if any), (d) their principal occupations and business experience during at least the past five years, and (e) the names of other public companies for which they currently serve, or have served within the past five years, as a director. We have also included information about each director’s specific experience, qualifications, attributes, or skills that led our board to conclude that such individual is qualified to serve as a director on our board. We also believe that all of our directors have a reputation for integrity, honesty, and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to our Company and our board.

~~Recommendation of the Board of Directors~~

~~Our board unanimously recommends that the stockholders vote FOR the election of~~
~~Dr. Goldberg and Ms. Schafer as Class III directors.~~

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~~Class I Directors—Terms to Expire in 2023~~

~~Cristina Csimma, PharmD, MHP~~
~~Director since 2019~~

Dr. Csimma, age 63, is a biopharmaceutical leader and strategic advisor with decades of experience in biotechnology, large pharma and venture capital. Dr. Csimma currently serves on the board of directors of Syncona Partners, LLP (LON:SYNC), having been elected to its board of directors in 2022. She also serves as a board director and a member of the compensation committee of Palisade Bio, Inc. (Nasdaq: PALI), having been elected to its board of directors in 2021. She also serves as the chair of the board of directors of Caraway Therapeutics, Inc. since 2019 (executive chair in 2019). Dr. Csimma also serves on advisory boards, including the Muscular Dystrophy Association Venture Philanthropy Scientific Advisory Committee since 2006; the Harvard and Brigham and Women’s Hospital MRCT Center External Advisory Board since 2015; the TREAT-NMD Advisory Committee for Therapeutics (TACT) since 2009; and the Executive Oversight Board to the National Institutes of Health (NIH) NeuroNext Network since 2013.

Dr. Csimma previously served as chair of the board of directors of Forendo Pharma between May 2020 and December 2021 (executive chair in 2021) when it was acquired by Organon & Co. Dr. Csimma also previously served as a director on the boards of Seneca Biopharma, Inc. (Nasdaq: SNCA; formerly Neuralstem Inc., from 2017 until 2021 when it merged with Leading BioSciences Inc. to form Palisade Bio.), Juniper Pharmaceuticals, Inc. (from 2010 until its acquisition by Catalent, Inc. in 2018), Vtesse Inc. (from 2014 until its acquisition by Sucampo Pharmaceuticals, Inc. in 2017). Dr. Csimma was the executive chair and a senior advisor of Exonics Therapeutics, Inc. (from 2016 to 2017), and was President, founding CEO, and board director of Cydan Inc. from 2012 to 2014. She also served on the board of directors of T1D Exchange (non-profit Type 1 Diabetes) from 2018 to 2020 and the NIH Blueprint Neurotherapeutics Network External Oversight Committee from 2014 to 2018, was Vice President of Drug Development at Virdante Pharmaceuticals Inc. from 2009 to 2011, Principal at Clarus Ventures LLC (now Blackstone Life Science), and held roles of increasing responsibility in Clinical Development and Translational Research at Wyeth (now Pfizer Inc.), Genetics Institute, and Dana Farber Cancer Institute. Dr. Csimma holds both a Doctor of Pharmacy and a Bachelor of Science in Pharmacy from the Massachusetts College of Pharmacy and Allied Health Sciences, as well as a Master of Health Professions from Northeastern University.

~~We believe that Dr. Csimma’s qualifications to sit on our board include her significant public company management and board experience and knowledge of our industry.~~

~~Michael R. Dougherty~~
~~Director since 2019~~

Mr. Dougherty, age 64, currently serves as chair of our board of directors. Mr. Dougherty currently serves on the board of directors of Trevena, Inc. (Nasdaq: TRVN) and Marinus Pharmaceuticals, Inc. (Nasdaq: MRNS). Mr. Dougherty was executive chairman of Celator Pharmaceuticals, Inc., or Celator, from 2015 until its acquisition by Jazz Pharmaceuticals plc in 2016; he also served as a director of Celator from 2013 to 2016. Mr. Dougherty previously served in a variety of senior positions in the biopharmaceutical industry, including as CEO, President, Chief Operating Officer, and Chief Financial Officer. He also previously served as a member of the board of directors of Foundation Medicine, Inc., Adolor Corporation, Genaera Corporation, Aviragen Therapeutics, Inc., Cempra, Inc., and ViroPharma Incorporated. Mr. Dougherty received a Bachelor of Science in Accounting from Villanova University.

~~We believe that Mr. Dougherty’s qualifications to sit on our board include his significant public company management and board experience and knowledge of our industry.~~

~~Vincent J. Milano~~
~~Director since 2014~~

Vincent Milano, age 58, has been our President and CEO, and a member of our board of directors, since 2014. Prior to joining us, Mr. Milano served as Chairman, President, and CEO of ViroPharma Incorporated, or ViroPharma, a pharmaceutical company that was acquired by Shire plc in 2014, from 2008 to 2014, as its Vice President, Chief Financial Officer, and Chief Operating Officer from 2006 to 2008, and

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~~as its Vice President, Chief Financial Officer, and Treasurer from 1996 to 2005. Mr. Milano also served on~~How can I know the board of directors of ViroPharma from 2008 to 2014. Prior to joining ViroPharma, Mr. Milano served in increasingly senior roles, most recently senior manager, at KPMG LLP, an independent registered public accounting firm, from 1985 to 1996.

Mr. Milano currently serves on the board of directors of Aclaris Therapeutics, Inc. (Nasdaq: ACRS) and BioCryst Pharmaceuticals, Inc. (Nasdaq: BCRX), each a publicly traded company, since 2020 and 2021, respectively, and privately held VenatoRx Pharmaceuticals, Inc., since 2013. Mr. Milano previously served as a director of Spark Therapeutics, Inc. and Vanda Pharmaceuticals Inc. from 2014 to 2019 and 2010 to 2019, respectively. Mr. Milano holds a Bachelor of Science degree in Accounting from Rider College.voting results?

We ~~believe Mr. Milano’s qualifications~~plan to ~~sit on our board include his knowledge of our Company as our President~~announce preliminary voting results at the Special Meeting and ~~CEO, knowledge of our industry, including over 20 years of experience serving~~will report the final results in a ~~variety~~Current Report on Form 8-K to be filed with the Securities and Exchange Commission (“SEC”) within four business days following the Special Meeting.

Will stockholders have the ability to unwind the Acquisition if they do not approve the Conversion Proposal?

No, the Acquisition closed on September 28, 2022, and stockholder approval of ~~roles~~the Conversion Proposal was not a condition to the Acquisition. If we do not receive stockholder approval for the Conversion Proposal, the Series Z Preferred Stock will not convert into Common Stock, but this will not have the effect of ~~increasing responsibility~~unwinding the Acquisition. If stockholders have not approved the conversion of the Series Z Preferred Stock into Common Stock by March 28, 2023 (six months from the closing date of the Acquisition), then, upon any attempted conversion, holders of Series Z Preferred Stock may thereafter require the Company to repurchase the Series Z Preferred Stock at the then-current fair value (as such term is defined in the ~~finance department, corporate administration, and operations~~Series Z Certificate of a multinational biopharmaceutical company, and understanding of pharmaceutical research and development, sales and marketing, strategy, and operations in both the United States and overseas. He also has corporate governance experience through service on other public company boards.

~~Class II Directors—Terms to Expire in 2024~~

~~James A. Geraghty~~
~~Director since 2013~~

Mr. Geraghty, age 67, has served on our board since 2013 and as chair of our board from that time until April 2021. Mr. Geraghty is an industry leader with over 35 years of strategic and leadership experience, including more than 25 years as a senior member of executive teams at biotechnology companies developing and commercializing innovative therapies. From 2013 to 2016, Mr. Geraghty was an Entrepreneur in Residence at Third Rock Ventures, a leading biotech venture fund. From 2011 to 2012, he served as a Senior Vice President of Sanofi S.A., a global healthcare company. Prior to that, he served in various senior management roles at Genzyme Corporation, or Genzyme, a biotechnology company, from 1992 to 2011, including as Senior Vice President, International Development and President of Genzyme Europe. Mr. Geraghty currently serves as chairmanDesignation) of the ~~board of Orchard Therapeutics plc and Pieris Pharmaceuticals, Inc. and as a member~~underlying Common Stock.

Will the Common Stock issuable upon the conversion of the ~~board~~Series Z Preferred Stock have preemptive rights?

No, if the Conversion Proposal is approved the addition of ~~Voyager Therapeutics, Inc., and Fulcrum Therapeutics, Inc. He also previously served as a director~~shares of ~~bluebird bio, Inc. and GTC Biotherapeutics, Inc.~~

~~We believe that Mr. Geraghty’s qualifications to sit on our board include his public company board and management experience and his broad and deep knowledge of our industry.~~

~~Maxine Gowen, Ph.D.~~
~~Director since 2016~~

~~Dr. Gowen, age 63, served as~~Common Stock issuable upon the CEO and a board director of TamuroBio Inc., a privately held drug development company, from 2019 to 2021, and she remains on the board of directors. She was the founding President and CEO of Trevena, Inc., or Trevena, (Nasdaq: TRVN), a publicly traded biopharmaceutical company, from 2007 until her retirement in 2018; she remained a member of its board of directors until 2021. Prior to joining Trevena, Dr. Gowen was Senior Vice President for the Center of Excellence for External Drug Discovery at GlaxoSmithKline plc, or GSK, where she held a variety of leadership positions during her tenure of 15 years. Before GSK, Dr. Gowen was Senior Lecturer and Head, Bone Cell Biology Group, Department of Bone and Joint Medicine,conversion of the ~~University~~Series Z Preferred Stock will not have preemptive rights.

Who can provide me with additional information and help answer my questions?

If you would like additional copies, without charge, of Bath, U.K. Dr. Gowen has served as a director of Aclaris Therapeutics, Inc. (Nasdaq: ACRS) since 2019, Passage Bio, Inc. (Nasdaq: PASG), and as its Chairwoman, since 2021, and Merus NV (Nasdaq: MRUS) since 2021, each a publicly traded company. She previously held a board seat inthis proxy statement or if you have questions about the ~~state biotechnology industry association, Life Sciences of Pennsylvania from 2015 until 2021 and in~~proposals being considered at the national biotechnology industry association, BIO, from 2008 until 2018. Dr. Gowen previously served as a director of Human Genome Sciences, Inc., from 2008 until 2012, and Akebia Therapeutics, Inc. (Nasdaq: AKBA) from 2014 until 2021, both publicly traded companies, as well as Panorama Medicine, from 2020 until 2021 a privately held biotechnology company. She received her Ph.D.Special Meeting, including the procedures for voting your shares, you should contact MacKenzie, the Company’s proxy solicitor, by telephone at (212) 929-5500.

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~~from~~RISK FACTOR SUMMARY

The following summarizes the ~~University~~principal factors that make an investment in the Company speculative or risky, all of ~~Sheffield, U.K., a M.B.A.~~which are more fully described in the Risk Factors section below. This summary should be read in conjunction with ~~academic honors from The Wharton School~~the Risk Factors section and should not be relied upon as an exhaustive summary of the ~~University~~material risks facing our business. The occurrence of ~~Pennsylvania,~~any of these risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this proxy statement and ~~a B.Sc. with Honors~~those we may make from time to time. You should consider all of the risk factors described in ~~Biochemistry from the University of Bristol, U.K.~~our public filings when evaluating our business.

Risks Relating to Our Financial Position and Need for Additional Capital

•

We ~~believe~~may not be able to comply with Nasdaq’s initial listing standards, which we are required to meet as a result of the Acquisition.

•

There is no guarantee that ~~Dr. Gowen’s qualifications~~the Acquisition of Aceragen by us will increase stockholder value.

•

Our stock price has been and may continue to ~~sit~~be volatile, and the value of an investment in our Common Stock may decline.

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We will need additional financing, which may be difficult to obtain on terms attractive to us or at all. Raising additional capital may cause dilution to our ~~board include her significant public~~stockholders, restrict our operations, or require us to relinquish rights.

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If we are unable to raise capital when needed, we could be forced to delay, reduce, or eliminate our product development programs or commercialization efforts.

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Holders of our Series X Preferred Stock have rights, preferences, and privileges that are not held by, and are preferential to, the rights of our Common Stock, which could adversely affect our liquidity and financial condition, and may result in the interests of the holders of our Series X Preferred Stock differing from those of the holders of Common Stock.

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We expect that we will continue to incur net losses in the foreseeable future.

Risks Relating to Our Business and Strategy

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As a small biopharmaceutical-focused company with limited resources, we may be unable to attract and retain qualified personnel.

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If we lose any of our officers or key employees, our management and ~~board experience and knowledge of our industry.~~technical expertise could be weakened significantly.

~~Class III Directors—Terms to Expire in 2022~~•

~~Mark Goldberg, M.D.~~
~~Director since 2014~~

Dr. Goldberg, age 67, has served as a member of the board of directors of ImmunoGen, Inc. (Nasdaq: IMGN) since 2011, a member of the board of directors of GlycoMimetics, Inc. (Nasdaq: GLYC) since 2014, a member of the board of directors of Blueprint Medicines Corporation (Nasdaq: BPMC) since 2015, and a member of the board of directors of Avacta Group plc (LON: AVCT) since 2021. In addition, he is a member of the board of directors of the American Cancer Society, a non-profit organization. Dr. Goldberg previously servedWe are depending heavily on the ~~board~~development, regulatory approval, U.S. federal funding, and commercialization of ~~directors of Audentes Therapeutics, Inc. from 2017 until 2020~~drug candidates. If we are unable to successfully develop and ~~aTyr Pharma Inc. from 2015 until 2017.~~commercialize drug candidates, or experience significant delays in doing so, our business may be materially harmed.

Dr. Goldberg served as advisor and medical and regulatory strategist for Synageva BioPharma Corp., a biopharmaceutical company, from 2014 until 2015. Prior to that, he served as the Executive Vice President for Medical and Regulatory Strategy from January 2014 to October 2014 and as the Senior Vice President of Medical and Regulatory Affairs from 2011 to 2014. Dr. Goldberg served in a variety of senior management positions at Genzyme Corporation from 1996 to July 2011, including most recently as Senior Vice President for Clinical Development and Therapeutic Group Head for Oncology and Personalized Genetic Health from 2009 to 2011. Prior to working at Genzyme Corporation, he was a full-time staff physician at Brigham and Women’s Hospital and Dana Farber Cancer Institute. He was an Associate Professor of Medicine at Harvard Medical School from 1996 until 2021 and is currently a Lecturer and part-time faculty at Harvard Medical School. Dr. Goldberg is a board certified medical oncologist and hematologist and has more than 50 published papers.

Dr. Goldberg holds an A.B. from Harvard College and an M.D. from Harvard Medical School. We believe that Dr. Goldberg’s qualifications to sit on our board include his extensive scientific and medical background, public company board experience, and extensive experience in the management and operations of pharmaceutical companies.

~~Carol A. Schafer~~•
~~Director since December 2018~~

~~Ms. Schafer, age 57, has served~~Our recent organizational changes undertaken to align to our focus on the board of directors of Repare Therapeutics, Inc., or Repare, (Nasdaq: RPTX) since 2019, Insmed Incorporated, or Insmed, (Nasdaq: INSM) since 2020 and Kura Oncology Inc., or Kura, (Nasdaq: KURA) since 2021, each a publicly traded company. Ms. Schafer serves on the audit committee and nominating and corporate governance committee at Insmed. Ms. Schafer serves on the audit committee and is the chair of the nominating and corporate governance committee at Repare. Ms. Schafer is the chair of the audit committee at Kura. Additionally, Ms. Schafer has served as a non-fiduciary board member of OneGoal NY, a non-profit entity, since 2019.

Ms. Schafer previously served on the board, as a member of the compensation committee and nominating and corporate governance committee, of Five Prime Therapeutics, Inc., or Five Prime, (Nasdaq: FPRX) from 2019 until 2021 when it was acquired by Amgen Inc.

~~Ms. Schafer has more than 25 years of experience in investment banking and equity capital markets, as well as in corporate finance~~business strategy and business development may not be successful.

•

If we experience delays or difficulties in the ~~biopharmaceutical sector, with~~enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented entirely.

•

If our clinical trials are unsuccessful, delayed, or terminated for any reason, we may not be able to develop and commercialize our drug candidates.

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The technologies on which we rely are unproven and may not result in any approved and marketable products.

•

We face substantial ~~experience financing and facilitating investor access for public and private healthcare companies. Ms. Schafer most recently served~~competition, which may result in others discovering, developing, or commercializing drugs before or more successfully than us.

•

Our business could be adversely affected by the effects of health epidemics, such as ~~Vice Chair, Equity Capital Markets at Wells Fargo Securities LLC. Prior~~the ongoing COVID-19 global pandemic, including disruptions to ~~Wells Fargo, Ms. Schafer served as Vice President~~our clinical trials or the delay of ~~Finance and Business Development at Lexicon Pharmaceuticals, Inc. Earlier in her career, Ms. Schafer served as an Equity Capital Markets Sector Head in~~regulatory approvals.

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~~her role as Managing Director at J.P. Morgan Chase & Co. Ms. Schafer received a B.A.~~Risks Related to Regulatory Approval and Marketing and Other Compliance Matters

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Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming, and uncertain and may prevent us from ~~Boston College~~obtaining approvals for the commercialization of some or all of our drug candidates.

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Our failure to obtain marketing approval in foreign jurisdictions would prevent our drug candidates from being marketed abroad, which subjects us to additional business risks that could adversely affect our operations.

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Even if we, or any future collaborators, obtain marketing approvals for our drug candidates, the terms of approvals and ~~an M.B.A.~~ongoing regulation of our drugs may limit how we, or they, manufacture and market our drugs, which could materially impair our ability to generate revenue.

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Any of our drug candidates for which we, or our future collaborators, obtain marketing approval in the future could be subject to post-approval restrictions or withdrawal from ~~New York University.~~the market and we, and our future collaborators, may be subject to substantial penalties if we, or they, fail to comply with regulatory requirements or if we, or they, experience unanticipated problems with our drugs following approval.

•

We ~~believe~~may not be able to obtain or maintain orphan drug exclusivity for applications of our drug candidates.

•

Breakthrough Therapy Designation (“BTD”), Fast Track designation, or Rare Pediatric Disease designation by the United States Federal Drug Administration (“FDA”), and equivalents granted by other regulatory authorities, even if granted for any of our product candidates developed for therapeutic indications, may not lead to a faster development, regulatory review, or approval process, and it does not increase the likelihood that ~~Ms. Schafer’s qualifications~~any of our product candidates will receive marketing approval in any jurisdiction.

•

We may seek priority review designation for one or more of our product candidates for therapeutic indications, but we might not receive such designation, and even if we do, such designation may not lead to ~~sit~~a faster regulatory review or approval process.

•

A Fast Track designation, Qualified Infectious Disease Product (“QIDP”), BTD, or other expedited designation for our drug candidates may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that those drug candidates will receive marketing approval.

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We have only limited experience in regulatory affairs and our drug candidates are based on new technologies; these factors may affect our ability or the time we require to obtain necessary regulatory approvals.

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We are subject to extensive and costly governmental regulation, the violation of which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits and future earnings.

•

We depend on information technology, infrastructure, and data to conduct our business. Any significant disruption, or cyberattacks, could have a material adverse effect on our ~~board include her extensive financial background~~business.

Risks Relating to Collaborators

•

Our existing collaborations and ~~her many years~~any collaborations we enter into in the future may not be successful.

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If we are unable to establish additional collaborative alliances, our business may be materially harmed.

Risks Relating to Intellectual Property & Exclusivity

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If we are unable to obtain and maintain patent protection for our discoveries, the value of ~~experience providing investment banking, equity capital markets,~~our technology and ~~strategic support~~products will be adversely affected.

•

Third parties may own or control patents or patent applications and require us to ~~companies within the healthcare sector.~~seek licenses, which could increase our development and commercialization costs, or prevent us from developing or marketing products.

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~~DIRECTOR COMPENSATION~~•

Our intellectual property may be infringed by a third party.

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We ~~use a combination of cash~~may not be able to obtain orphan drug designation or obtain or maintain the benefits associated with orphan drug designation, such as orphan drug exclusivity and, ~~equity-based compensation~~even if they do, that exclusivity may not prevent the FDA or other comparable foreign regulatory authorities from approving competing products.

Risks Relating to ~~attract~~Product Manufacturing Marketing and ~~retain~~Sales, and Reliance on Third Parties

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Even if the compounds we may develop are successful in clinical trials and receive regulatory approvals, we or our collaboration partners may not be able to successfully commercialize them.

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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.

•

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

•

If third parties on ~~our board. We~~whom we rely for clinical and preclinical trials do not ~~compensate directors who~~perform as contractually required or as we expect, we may not be able to obtain regulatory approval for or commercialize our drug candidates 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.

•

If we are ~~also~~unable to obtain adequate reimbursement from third-party payors for any products that we may develop or acceptable prices for those products, our ~~employees~~revenues and prospects for profitability will suffer.

•

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

Risks Relating to Ownership of Our Common Stock

•

Pursuant to the terms of the Agreement and Plan of Merger, dated September 28, 2022, by and among the Company, ~~for their service on~~Bell Merger Sub I, Inc., Bell Merger Sub II, LLC and Aceragen, Inc. (the “Merger Agreement”), we are required to recommend that our ~~board. As a result, Mr. Milano does not receive any compensation for his service as a director.~~

~~We generally review our director compensation program every two years with~~stockholders approve the ~~advice~~conversion of an independent compensation consultant. As a result of the review of the director compensation program, in June 2021, we approved increasing the annual equity grant to 26,000 options. With the exception of the foregoing equity compensation increase, no other changes were made to our director compensation program.

Under our director compensation program, we pay our non-employee directors retainers in cash. Each director receives a cash retainer for service on the board and for service on each committee on which the director is a member. The chairperson of each committee receives higher retainers for such service. These fees are paid quarterly in arrears. The fees paid to non-employee directors for service on the board and for service on each committee of the board on which the director was a member during 2021 were as follows:

Member
Annual Fee

Chairperson
Annual Fee

Board of Directors $ 40,000 $ 70,000
Audit Committee $ 7,500 $ 15,000
Compensation Committee $ 6,250 $ 12,500
Nominating and Corporate Governance Committee $ 4,000 $ 8,000
Scientific Advisory Committee $ 4,000 $ 8,000

Our director compensation program includes a stock-for-fees policy, under which directors have the right to elect to receive common stock in lieu of cash fees. These shares of common stock are issued under our 2013 Stock Incentive Plan. The number of shares issued to participating directors is determined on a quarterly basis by dividing the cash fees to be paid through the issuance of common stock by the fair market value of our common stock, which is the closing price of our common stock, on the first business day of the quarter following the quarter in which the fees are earned. In 2021, several of our directors elected to receiveall outstanding shares of our ~~common stock in lieu of cash fees as set forth in the footnotes to the Director Compensation table below.~~

Under our director compensation program, we also reimburse our directors for reasonable travel and other related expenses for attendance at meetings. Additionally, upon their initial election to the board, new non-employee directors receive an initial option grant to purchase 23,000Series Z Preferred Stock into shares of our ~~common stock,~~Common Stock. We cannot guarantee that our stockholders will approve this matter, and ~~all non-employee directors receive an annual option grant~~if they fail to ~~purchase 26,000 shares~~do so, our operations may be materially harmed.

•

Nasdaq may delist our Common Stock from its exchange, which could limit your ability to make transactions in our securities and subject us to additional trading restrictions.

•

Provisions in our Restated Certificate of ~~our common stock. The annual grants are made on the date of our annual meeting of stockholders~~Incorporation and fully vest one year from that date of grant. The initial options granted to our non-employee directors vest with respect to one-third of the underlying shares on the first anniversary of the date of grantBylaws, and the balance of the underlying shares vest in eight equal quarterly installments following the first anniversary of the date of grant, subject to continued service as a director, and are granted under our 2013 Stock Incentive Plan. These options are granted with exercise prices equal to the fair market value of our common stock, which is the closing price of our common stock, on the date of grant and will become immediately exercisable in full if there isDelaware law may prevent a change in control that stockholders may consider desirable.

•

The Company’s Bylaws provide, to the fullest extent permitted by law, that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between the Company and its stockholders, which could increase costs to bring a claim, discourage claims, or limit the ability of the Company’s stockholders to bring a claim in a judicial forum viewed by the stockholders as more favorable for disputes with the Company or the Company’s directors, officers, or other employees.

•

Approximately 16% of our ~~Company.~~outstanding Common Stock is held (19.9% beneficially owned) by one stockholder. If this significant stockholder chooses to act, they could exert substantial influence over our business, and the interests of this stockholder may conflict with those of other stockholders.

•

Our principal stockholders own a significant percentage of our capital stock and will be able to exert significant control over matters subject to stockholder approval.

•

The issuance or sale of shares of our Common Stock could depress the trading price of our Common Stock.

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Because we do not intend to pay dividends on our Common Stock, investor returns will be limited to any increase in the value of our stock.

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~~DIRECTOR COMPENSATION FOR 2021~~DESCRIPTION OF THE TRANSACTIONS

Fees Earned or
Paid in Cash
($)

Option Awards
($)(1)

Total
($)

Cristina Csimma 50,250 24,658 74,908
Michael Dougherty 78,027(2) 24,658 102,685
James A. Geraghty 57,726(3) 24,658 82,384
Mark Goldberg 55,500(4) 24,658 80,158
Maxine Gowen 56,500 24,658 81,158
Carol A. Schafer 59,004(5) 24,658 83,662

~~(1)~~Acquisition of Aceragen, Inc.

~~These amounts represent~~On September 28, 2022 (the “Effective Date”), the ~~aggregate grant~~Company acquired Aceragen, pursuant to the Merger Agreement, after which time Aceragen became a wholly-owned subsidiary of the Company (the “Acquisition”). Following the Acquisition, the Company shifted its focus to advancing transformational therapeutics for rare and orphan diseases, including ACG-701, an oral small molecule candidate for cystic fibrosis pulmonary exacerbations, melioidosis, and potentially other diseases. The Company also plans to focus on developing ACG-801 (rhAC), an investigational enzyme replacement therapy for the treatment of patients with Farber disease and potentially other diseases associated with the dysregulation of ceramide metabolism. Following the Acquisition, the Company’s principal executive offices remain in Exton, Pennsylvania.

Aceragen was incorporated on January 19, 2021. Prior to the Acquisition, Aceragen had seven (7) stockholders. The Company has included a pro forma balance sheet reflecting the net assets acquired as if the net assets were acquired on September 30, 2022 as Annex D to this proxy statement.

The estimated consideration for the Acquisition of Aceragen was approximately $55.7 million.

Under the terms of the Merger Agreement, Idera issued to the common stockholders of Aceragen 7,677,411 shares of Common Stock and 80,656 shares of Series Z Preferred Stock, which was a newly designated series of preferred stock that is intended to have economic rights equivalent to the Common Stock, but with limited voting rights. Additionally, the Company allocated 80,656,000 shares of Common Stock for issuance in connection with the Acquisition. The rights of the Series Z Preferred Stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations that Idera filed with the Secretary of State of the State of Delaware (the “Series Z Certificate of Designation”) on September 28, 2022. Please see “Description of Series Z Preferred Stock” under Proposal No. 1 for a complete description of the Series Z Certificate of Designation and the rights of the Series Z Preferred Stock.

Additionally, under the terms of the Merger Agreement, at the closing of the Acquisition, Idera also issued to NovaQuest Co-Investment Fund XV, L.P., a Delaware limited partnership and stockholder of Aceragen (“NovaQuest”), five shares of Idera’s Series X Non-Voting Preferred Stock. The rights of the Series X Preferred Stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations that Idera filed with the Secretary of State of the State of Delaware (the “Series X Certificate of Designation”) on September 28, 2022.

Conversion of Series Z Preferred Stock

Subject to stockholder approval of Proposal No. 1, each share of Series Z Preferred Stock will be convertible into approximately 1,000 shares of Common Stock. If stockholders have not approved the conversion of the Series Z Preferred Stock into Common Stock by March 28, 2023 (six months from the closing date of the Acquisition), then, upon any attempted conversion, holders of Series Z Preferred Stock may thereafter require the Company to repurchase the Series Z Preferred Stock at the then-current fair value (as such term is defined in the Series Z Certificate of option awards made to each listed director in 2021 as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation,” or ASC 718. These amounts do not representDesignation) of the actual amounts paid to or realized by the directors during 2021. See Note 11 to the financial statements included in our annual report on Form 10-K for the year ended December 31, 2021 regarding assumptions we made in determining the fair value of option awards. As of December 31, 2021, our non-employee directors held options to purchase shares of our common stock as follows: Dr. Csimma: 72,000; Mr. Dougherty: 72,000; Mr. Geraghty: 151,686; Dr. Goldberg: 83,375; Dr. Gowen: 74,625; and Ms. Schafer: 72,000.

underlying Common Stock.

~~(2)~~Regulatory Approval

~~Consists~~No state or federal regulatory approval is required in connection with the terms of ~~cash meeting fees~~the transactions described above or under the terms of ~~$58,314 in lieu of which Mr. Dougherty elected to receive 69,230 shares of our common stock.~~

~~(3)~~

~~Consists of cash meeting fees of $19,500 in lieu of which Mr. Geraghty elected to receive 14,773 shares of our common stock.~~

~~(4)~~

~~Consists of cash meeting fees of $13,875 in lieu of which Mr. Goldberg elected to receive 10,511 shares of our common stock.~~

~~(5)~~

~~Includes cash meeting fees of $14,754 in lieu of which Ms. Schafer elected to receive 11,177 shares of our common stock.~~

the Merger Agreement.

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BACKGROUND AND REASONS FOR THE TRANSACTIONS

During calendar year 2021 through April 2022 (the “2021 Outreach”), Idera evaluated 92 total strategic opportunities, which spanned across a number of therapeutic areas, from oncology, hematology, immunology, and rare diseases, involving a number of technologies, such as cell therapy, vaccines, biologics, and drugs. During this period Idera made several announcements between March and May of 2021 relating to the ILLUMINATE-301, Idera’s pivotal registration trial of tilsotolimod in combination with ipilimumab versus ipilimumab alone in patients with anti-PD-1 refractory advanced melanoma (the “ILLUMINATE-301 Trial”), including that it did not meet its primary endpoint of objective response rate. On each of the opportunities, various levels of assessment were conducted. Although certain parties entered into confidentiality agreements with Idera, conducted two-way due diligence, and/or exchanged term sheets with Idera with respect to these strategic opportunities, all such opportunities were eventually declined (and none resulted in any definitive transaction) by Idera after consultation with its Business Development Committee of the Board for multiple reasons. These reasons ranged from Idera’s lack of clinical conviction, the stage of development, regulatory uncertainty, CMC (manufacturing) concerns, and competition in the therapeutic area being developed, all of which demonstrated that the potential to enhance stockholder value with such opportunities was unlikely.

On March 31, 2022, Idera publicly announced it was evaluating strategic alternatives and that it had engaged JMP Securities LLC (“JMP”) to explore additional strategic alternatives for Idera beyond traditional acquisition or in-licensing opportunities. These additional strategic alternatives included the potential for a reverse merger, a transaction in which one or more Idera subsidiaries would merge with and into another company, with Idera surviving as the parent company and the other company continuing as an Idera subsidiary. A reverse merger was considered as a potential transaction structure, given Idera’s cash position and its status as a public company. Idera engaged JMP, among other reasons, because JMP is nationally recognized as having investment banking professionals with significant experience in investment banking and mergers and acquisitions transactions involving life sciences companies.

JMP commenced initial 2022 outreach activities (the “2022 Outreach”) during the first week of April 2022, with outreach being made to 60 companies (one of which had been contacted previously during the 2021 Outreach), 28 service providers (investment banks, lawyers, accountants, etc.), and 26 institutional investors.

As part of the 2022 Outreach process, Idera and various counterparties entered into a total of 23 nondisclosure agreements containing customary terms regarding protections of confidentiality. All of the nondisclosure agreements included standstill provisions, but, in each instance, such conditions were subject to automatic termination upon the occurrence of certain events and are no longer in effect.

The 2022 Outreach process culminated in 14 first-round proposals submitted on May 13, 2022.

On May 17, 2022, Idera’s management discussed all of the parties that had submitted proposals and selected Aceragen and three other potential targets to advance to the second round of the process.

Starting the week of May 23, 2022, Aceragen and the three other potential targets each presented to Idera’s management on their pipeline product(s), development path to approval and ongoing capital needs. The targets proceeded to conduct a mutual diligence exercise with Idera.

On June 14, 2022, Idera’s management made presentations regarding its assessment of Aceragen and the other three second-round targets’ pipeline product(s), development path and ongoing capital needs to the Board of Directors based on the ongoing diligence processes.

By June 24, 2022, JMP received three second-round proposals, one from Aceragen and two of the other three second-round targets in the form of non-binding letters-of-intent. On July 11, 2022, Idera’s management made presentations regarding its assessment of Aceragen and the two other second-round targets to the Board of Directors based on the ongoing diligence processes.

On July 28, 2022, Idera’s management presented to the Board of Directors their recommendation to select Aceragen as the target of the Acquisition and to enter into exclusivity with Aceragen due to various factors, including but not limited to, its clinical stage of development, lack of near-term requisite capital to

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fund operations, and near-term inflection points. Idera’s management recommended to discontinue discussions with the two remaining other potential targets, only one of which was given serious consideration as a potential reverse merger partner in addition to Aceragen, because Idera’s management did not believe that continuing such discussions would enhance stockholder value. This belief was based on a number of factors, including but not limited to, the required capital to fund operations and the lack of inflection points over a certain duration.

From August 2022 through late-September 2022, Morgan, Lewis & Bockius LLP, counsel to Idera (“MLB”), and Fenwick & West LLP, counsel to Aceragen (“Fenwick”), prepared and exchanged numerous drafts of the Merger Agreement and related transaction documents. During this period, Idera’s management presented three times to the Board of Directors to provide updates on developments and progress relating to the proposed merger with Aceragen. During this period, Idera and Aceragen explored a potential private placement financing transaction with third parties but concluded that such a financing within the parties desired timing and on reasonably acceptable terms was not feasible.

During the course of negotiations on the Merger Agreement during September 2022, the parties engaged in dialogue with the holder of Aceragen’s preferred stock. These negotiations resulted in Idera’s agreement to issue a new series of Series X Preferred Stock to such holder containing several comparable terms to their existing shares of Aceragen preferred stock. On September 23, 2022, MLB exchanged a draft of the Merger Agreement with Fenwick, which added the terms of the issuance of the Series X Preferred Stock.

Between September 23, 2022 and September 28, 2022, the parties finalized the terms of the Merger Agreement and the other related transaction documents and submitted the final Merger Agreement and terms of the Acquisition to the Board of Directors for approval on September 27, 2022 and again on September 28, 2022. In approving the Merger Agreement and the Acquisition, the Board of Directors considered the pros and cons of the Acquisition versus other alternatives, including continuing to focus Idera’s resources on Idera’s legacy research and development pipeline, other potential business development opportunities reviewed by the Board of Directors, and the opportunities and risks presented with the Acquisition. In particular, the Board of Directors took into account the following events, facts and circumstances in approving the Acquisition:

•

In light of the paucity of other potentially compelling opportunities and Idera’s limited capital resources, the Board of Directors initiated a process to explore strategic options intended to maximize stockholder value. The Board of Directors engaged financial advisors to assist in the review and evaluation of strategic options, including an acquisition, merger, business combination, in-licensing, or other strategic transactions.

•

The Board of Directors believes, after a thorough review of strategic alternatives and discussions with Idera senior management, financial advisors and legal counsel, that the Acquisition is more favorable to Idera’s stockholders than the potential value that might have resulted from other strategic options available to Idera, including a liquidation of Idera and the distribution of any available cash. Based on an analysis of estimated cash balances and post-liquidation costs, the liquidation of Idera would result in a payment of $0.20 per fully diluted share, representing $0.17 less per share than the value of the equity split on a per share basis at close on September 28, 2022.

•

The Board of Directors believes that, as a result of arm’s length negotiations with Aceragen, Idera and its management team negotiated the most favorable equity split for Idera stockholders that Aceragen was willing to agree to, and that the terms of the Merger Agreement include the most favorable terms to Idera in the aggregate to which Aceragen was willing to agree.

On September 28, 2022, the Board of Directors approved the Merger Agreement and the terms of the Acquisition and the Merger Agreement was signed and the Acquisition closed.

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~~CORPORATE GOVERNANCE INFORMATION~~MATERIAL CONTRACTS ENTERED INTO AND ASSUMED IN THE ACQUISITION

Lock-up Agreements

Concurrently and in connection with the execution of the Merger Agreement, certain stockholders of Aceragen and of the Company as of immediately prior to the Acquisition, and the directors and officers of the Company (solely in their capacity as stockholders), entered into customary lock-up agreements with the Company and Aceragen, pursuant to which each such stockholder will be subject to a 180-day lock-up on the sale or transfer of shares of Common Stock held by each such stockholder at the closing of the Acquisition, including those shares received by Aceragen stockholders in the Acquisition (the “Lock-up Agreements”), subject to certain customary exceptions (including that Pillar Partners Foundation, L.P. and its affiliates (“Pillar Partners”) shall have, pursuant to its individual Lock-up Agreement, the right to sell up to 450,000 shares of Common Stock in between the execution date of the Merger Agreement and the Special Meeting).

The foregoing description of the Lock-up Agreements does not purport to be complete and is qualified in its entirety by reference to the form of the Lock-up Agreement, which is provided as Exhibit B to the Merger Agreement, which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 30, 2022.

Support Agreements

In connection with the execution of the Merger Agreement, the Company and Aceragen entered into stockholder support agreements (the “Support Agreements”) with the Company’s directors and officers (solely in their capacity as stockholders) and Pillar Partners as of immediately prior to the Acquisition. The Support Agreements provide that, among other things, each of such stockholders has agreed to vote or cause to be voted all of the shares of Common Stock owned by such stockholder in favor of the Conversion Proposal and the Reverse Stock Split Proposal (together, the “Merger Agreement Meeting Proposals”) at the Special Meeting to be held in connection therewith. The Support Agreement with Pillar Partners also contains an exception allowing Pillar Partners to sell up to 450,000 shares of Common Stock in between the execution date of the Merger Agreement and the Special Meeting.

The foregoing description of the Support Agreements does not purport to be complete and is qualified in its entirety by reference to the form of the Support Agreement, which is provided as Exhibit C to the Merger Agreement, which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 30, 2022.

NovaQuest Side Letter

In addition, on the Effective Date, the Company, Bell Merger Sub II, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company, and NovaQuest entered into a side letter agreement (the “NovaQuest Side Letter”), pursuant to which: (i) NovaQuest was granted customary observer rights to have a managing director or investment professional of NovaQuest Capital Management, L.L.C. attend all meetings of the Board of Directors and all meetings of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee thereof in a non-voting capacity until such time as NovaQuest no longer beneficially owns shares of Series X Preferred Stock; (ii) the Company agreed to grant NovaQuest customary registration rights in the event the Company in the future grants registration rights to any investor or equity holder with respect to shares of the Company’s capital stock; and (iii) the Company acknowledged and agreed that pursuant to the terms of the Series X Preferred Stock Certificate of Designation, the Company shall not authorize or issue shares of its capital stock unless the same ranks junior to the Series X Preferred Stock, or increase the authorized number of shares of Series X Preferred Stock or any additional class of capital stock unless the same ranks junior to the Series X Preferred Stock, in each case until such time as NovaQuest no longer beneficially owns shares of Series X Preferred Stock.

The foregoing description of the NovaQuest Side Letter does not purport to be complete and is qualified in its entirety by reference to the NovaQuest Side Letter, which was filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2022.

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Purchase Agreement

Holders of Series X Preferred Stock are entitled to receive distributions on shares of Series X Preferred Stock as set forth in (a) that certain Stock and Warrant Purchase Agreement, dated as of March 24, 2021, by and between Aceragen and NovaQuest, as amended by that Amendment, dated October 25, 2021, and as such agreement may be amended from time to time (the “Purchase Agreement”), and (b) that certain Sales Distribution and PRV Agreement, dated as of October 25, 2021, by and between Aceragen and NovaQuest, as such agreement may be amended from time to time (the “PRV Agreement”), prior and in preference to any declaration or payment of any other distribution or dividend (other than dividends on shares of Common Stock payable in shares of Common Stock).

Pursuant to the terms and conditions of the Purchase Agreement, Aceragen must make a distribution to NovaQuest of 35% of the net proceeds Aceragen receives in connection with a transaction (a “PRV Sale Transaction”), pursuant to which Aceragen sells any of its right, title, and interest in and to a priority review voucher (“PRV”) granted by the FDA in connection with regulatory approval of a Product (as defined therein). Further, in the event that Aceragen does not receive a PRV in connection with regulatory approval of the Product by the FDA, or does not complete a PRV Sale Transaction within 12 months after Aceragen’s receipt of a PRV, then Aceragen shall make a distribution to NovaQuest equal to $35,000,000 in two equal installments, the first of which shall be effected within 45 days after the date Aceragen receives regulatory approval of a Product from the FDA (the “U.S. Approval Date”) and the second of which shall be effected within one year after the U.S. Approval Date.

In addition, pursuant to the terms and conditions of the Purchase Agreement, after first commercial sale of the Product and continuing for each fiscal quarter until the Distribution End Date (as defined therein), Aceragen shall make a distribution to NovaQuest (the “Required Net Sales Distribution”) equal to the product of the Required Net Sales Distribution Rate (as defined below) multiplied by the aggregate total of the net sales of the Product for such fiscal quarter. The Required Net Sales Distribution Rate shall initially be 15%; provided that once the aggregate of all distributions paid to NovaQuest equals $140,000,000, the Required Net Sales Distribution Rate shall decrease to 5%. The Required Net Sales Distribution shall end after the date on which the last of the following has occurred: (i) Aceragen pays $140,000,000 to NovaQuest; (ii) the last valid patent covering the Product in the United States and European Union has expired; and (iii) regulatory exclusivity for the Product in both the United States and the European Union has expired.

Pursuant to the terms and conditions of the Purchase Agreement, Aceragen must use commercially reasonable efforts to (i) develop the Product in a manner that ensures that Aceragen is reasonably likely to obtain regulatory approval from the FDA no later than September 1, 2024 and to obtain regulatory approval from the European Medicines Agency no later than October 1, 2024; (ii) identify a third-party purchaser of a PRV, if Aceragen receives a PRV, and consummate a PRV Sales Transaction (as defined therein) within 12 months of receipt of the PRV; and (iii) commercialize the Product in each jurisdiction in which regulatory approval is received.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which was filed as Exhibits 10.8 and 10.9 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2022.

PRV Agreement

Pursuant to the terms and conditions of the PRV Agreement, Aceragen must make a distribution to NovaQuest of 10% of the net proceeds Aceragen receives in connection with a PRV Sales Transaction pursuant to which Aceragen sells any of its right, title, and interest in and to a PRV in connection with regulatory approval of a Product (as defined therein). Further, in the event that Aceragen does not receive a PRV in connection with regulatory approval of the Product by the FDA, or does not complete a PRV Sales Transaction within 12 months after Aceragen’s receipt of a PRV, then Aceragen must make certain satisfaction milestone payments in favor of NovaQuest.

Pursuant to the terms and conditions of the PRV Agreement, Aceragen must use commercially reasonable efforts to (i) develop the Product in a manner that ensures that Aceragen is reasonably likely to obtain regulatory approval from the FDA for the Product by no later than December 31, 2024, (ii) if Aceragen

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receives a PRV in connection with regulatory approval of a Product, identify a third-party purchaser of the PRV and consummate a PRV Sales Transaction within 12 months of receipt of the PRV, and (iii) commercialize the Product in each jurisdiction for which regulatory approval is received. After first commercial sale of the Product and continuing for each fiscal quarter until the Distribution End Date (as defined therein), Aceragen shall make the Required Net Sales Distribution equal to product of 5% multiplied by the aggregate total of net sales of the Product for such fiscal quarter. The Required Net Sales Distribution shall end after Aceragen pays $50,000,000 to NovaQuest.

The foregoing description of the PRV Agreement does not purport to be complete and is qualified in its entirety by reference to the PRV Agreement, which was filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2022.

Vincent Milano Employee Separation Agreement

In connection with the execution of the Merger Agreement, the Company entered into an employee separation agreement with Vincent Milano, the Company’s former Chief Executive Officer (the “Milano Separation Agreement”). Pursuant to the Milano Separation Agreement, Mr. Milano transitioned from Chief Executive Officer to the role of non-employee Chair of the Board and is entitled to receive: (i) any earned and unpaid base salary through the date of the Acquisition; (ii) any earned and unpaid annual incentive cash bonus payable with respect to any fiscal year that ended prior to the date of the Acquisition; (iii) any accrued but unused personal time off days; (iv) reimbursement for any outstanding expenses for which Mr. Milano has not been reimbursed and which are authorized; and (v) any vested benefits under the Company’s employee benefit plans in accordance with the terms of such plans, as accrued through the date of the Acquisition (collectively, the “Accrued Obligations”). The Accrued Obligations will be paid following the closing of the Acquisition at such times and in accordance with such plans and policies as would normally apply to such amounts or benefits.

In addition, provided that Mr. Milano does not revoke the Milano Separation Agreement (including the general release of claims in favor of the Company as set forth therein) and that Mr. Milano continues to comply with the restrictive covenants incorporated into the Milano Separation Agreement, Mr. Milano is entitled to receive: (i) a cash payment of $225,000, representing a prorated portion of the 2022 calendar year annual cash incentive award, at target, based on the period that Mr. Milano was employed through the date of the Acquisition (paid in a lump sum within 30 days following the Effective Date); (ii) $606,357, payable in substantially equal installments in accordance with the Company’s payroll practices, over the 12 months following the Effective Date and starting with the first payroll date following such date; and (iii) fully vested shares of Common Stock with a value of $800,000, based on the volume-weighted average price of Common Stock on the 20 days prior to the grant date, as soon as practicable, but in no event more than 30 days following the approval of the Reverse Stock Split Proposal.

The foregoing description of the Milano Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the Milano Separation Agreement, which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 30, 2022.

John Taylor Employment Agreement

In connection with the execution of the Merger Agreement, John Taylor’s “at will” employment agreement with Aceragen (the “Taylor Employment Agreement”), dated February 25, 2021, was assumed by the Company on the same terms as entered into by Aceragen except as otherwise described herein. Pursuant to certain approvals by Aceragen prior to the Acquisition, Mr. Taylor’s annual base salary was increased to $450,000, effective as of the Effective Date. In addition, Mr. Taylor is eligible for a discretionary annual incentive bonus, which will be determined by the Board. Additionally, the target bonus will be 50% of Mr. Taylor’s annual base salary. All other terms of the Taylor Employment Agreement remain the same.

Pursuant to the Taylor Employment Agreement, if the Company terminates Mr. Taylor’s employment for any reason other than Cause or Permanent Disability (each as defined by the Taylor Employment Agreement) (such termination, a “Taylor Separation”), provided that Mr. Taylor returns all Company property in his possession and executes a general release of claims in favor of the Company, Mr. Taylor will be entitled to severance benefits in the form of: (i) continued payment of his base salary for a period of up

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to 12 months from the date of Taylor Separation; (ii) if Mr. Taylor elects to continue his health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), payment of the Company portion of the monthly COBRA premiums for the Company’s medical benefit plan for 12 months; and (iii) 12 additional months of service-based vesting (in addition to vesting determined by the actual period of service that has been completed with the Company or with Aceragen, as applicable) on any equity positions in the Company Mr. Taylor owns or controls. Such vested portion of the equity positions will be exercisable by Mr. Taylor for 12 months following the Taylor Separation. In the event of a change of control, any unvested portions of equity position owned or controlled by Mr. Taylor shall, as of the closing of such transaction, accelerate and become fully vested.

Mr. Taylor is also entitled to participate in the Company-sponsored employee benefit plans, including its medical, dental, vision, and 401(k) plans or similar arrangements. Additionally, the Company has agreed to provide an allowance, not to exceed $2,500 per month, for the cost of the health, dental, and vision plans. Mr. Taylor is entitled to use paid time off, in accordance with the Company policies. Mr. Taylor is also entitled to receive equity-based awards under the Company’s equity incentive plans.

The foregoing description of the Taylor Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the Taylor Employment Agreement, which was filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on September 30, 2022.

Daniel Salain Employment Agreement

In connection with the execution of the Merger Agreement, Daniel Salain’s employment agreement with Aceragen (the “Salain Employment Agreement”), dated February 25, 2021, was assumed by the Company on the same terms as entered into by Aceragen except as otherwise described herein. Pursuant to certain approvals by Aceragen prior to the Acquisition, Mr. Salain’s annual base salary was increased to $400,000, effective as of the Effective Date. In addition, Mr. Salain is eligible for a discretionary annual incentive bonus, which will be determined by our Board of Directors. Additionally, the target bonus will be 40% of Mr. Salain’s annual base salary. All other terms of the Salain Employment Agreement remain the same.

Pursuant to the Salain Employment Agreement, if the Company terminates Mr. Salain’s employment for any reason other than Cause or Permanent Disability (each as defined by the Salain Employment Agreement) (such termination, “Salain Separation”), provided that Mr. Salain returns all Company property in his possession and executes a general release of claims in favor of the Company, Mr. Salain will be entitled to severance benefits in the form of: (i) continued payment of his base salary for a period of up to 12 months from the date of the Salain Separation; (ii) if Mr. Salain elects to continue his health insurance coverage under COBRA payment of the company portion of the monthly COBRA premiums for the Company’s medical benefit plan for 12 months; and (iii) 12 additional months of service-based vesting (in addition to the vesting determined by the actual period of service that had been completed with the Company or with Aceragen, as applicable) on any equity positions in the Company Mr. Salain owns or controls. Such vested portion of the equity positions will be exercisable by Mr. Salain for 12 months following the Salain Separation. In the event of a change of control, any unvested portions of equity position owned or controlled by Mr. Salain shall, as of the closing of such transaction, accelerate and become fully vested.

Mr. Salain is entitled to participate in the Company-sponsored employee benefit plans, including its medical, dental, vision, and 401(k) plans or similar arrangements. Additionally, the Company has agreed to provide an allowance, not to exceed $2,500 per month, for the cost of the health, dental, and vision plans. Mr. Salain is entitled to use paid time off, in accordance with the Company policies. Mr. Salain is also entitled to received equity-based awards under the Company’s equity incentive plans.

The foregoing description of the Salain Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the Salain Employment Agreement, which was filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on September 30, 2022.

John Kirby Retention Agreement

In connection with the execution of the Merger Agreement, the Company and John Kirby entered into an employment continuation and retention bonus letter agreement (the “Kirby Employee Retention

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Agreement”), pursuant to which Mr. Kirby’s annual base salary increased to $400,000, less applicable taxes and withholdings, and Mr. Kirby’s current target bonus will be prorated to reflect the increase in his annual base salary. Mr. Kirby had previously entered into an individual severance agreement (the “Kirby Severance Agreement”) with the Company based on the Company’s form Severance and Change of Control Agreement (the “Severance Agreement Form”), pursuant to which he is eligible to receive certain severance payments and benefits upon certain terminations of employment with the Company, including for Good Reason (as defined in the Kirby Severance Agreement). Pursuant to the Kirby Employee Retention Agreement, Mr. Kirby has agreed to waive his right to resign for Good Reason solely in connection with the closing of the Acquisition. The remaining terms of the Kirby Severance Agreement remain in full force and effect.

Pursuant to the Kirby Employee Retention Agreement, Mr. Kirby is eligible to receive an amount in stock and/or cash with an aggregate value equal to $766,500 (the “Kirby Retention Bonus”), which will be paid in two installments. Mr. Kirby will receive fully vested shares of Common Stock in a number of shares calculated by dividing (a) one-third of the Kirby Retention Bonus by (b) the volume-weighted average price of the Common Stock based on the 20 trading days prior to the first business day that is within the next available trading window following the Effective Date under the Company’s applicable trading policies. If Mr. Kirby’s employment with the Company terminates for any reason (other than by the Company for Cause (as defined in the Kirby Severance Agreement)) prior to the six-month anniversary of the approval of the Reverse Stock Split Proposal (the “Six-Month Anniversary”), Mr. Kirby will receive a lump sum amount in cash equal to two-thirds of the Kirby Retention Bonus, less applicable taxes and withholdings (the “Kirby Cash Retention Bonus”). If Mr. Kirby’s employment with the Company continues following such Six-Month Anniversary, or if the Company terminates Mr. Kirby’s employment for Cause (as defined in the Kirby Severance Agreement) prior to such date, Mr. Kirby’s right to receive the Kirby Cash Retention Bonus will terminate.

If Mr. Kirby’s employment with the Company continues past the Six-Month Anniversary, in lieu of the Kirby Cash Retention Bonus, Mr. Kirby will receive: (a) a number of restricted shares of Common Stock calculated by dividing (1) two-thirds of the Kirby Retention Bonus by (2) the volume-weighted average price per share of Common Stock based on the 20 trading days prior to the date of grant, rounded down to the nearest full share (the “Restricted Stock”) or (b) a restricted cash award in an amount equal to two-thirds of the Retention Bonus, less applicable taxes and withholding (“Restricted Cash”) within 30 days of the Six Month Anniversary. The Restricted Stock or Restricted Cash will vest over two years, with 50% vesting upon the first anniversary and the remainder vesting in equal quarterly installments thereafter (each, a “Kirby Vesting Date”). Upon termination of Mr. Kirby’s employment or service with the Company for any reason prior to the final Kirby Vesting Date, Mr. Kirby will forfeit the unvested portion of the Restricted Stock or Restricted Cash, as applicable.

The foregoing description of the Kirby Employee Retention Agreement and Kirby Severance Agreement does not purport to be complete and is qualified in its entirety by reference to the Kirby Employee Retention Agreement and the Severance Agreement Form, which were filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on September 30, 2022 and as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 4, 2017, respectively.

Bryant Lim Retention Agreement

In connection with the execution of the Merger Agreement, the Company and Bryant Lim entered into an employment continuation and retention bonus letter agreement (the “Lim Employee Retention Agreement”), pursuant to which Mr. Lim’s annual base salary increased to $400,000, less applicable taxes and withholdings, and Mr. Lim’s current target bonus will be prorated to reflect the increase in his annual base salary. Mr. Lim and the Company previously entered into a severance agreement (the “Lim Severance Agreement”) based on the Severance Agreement Form, pursuant to which he is eligible to receive certain severance payments and benefits upon certain terminations of employment with the Company, including for Good Reason (as defined in the Lim Severance Agreement). Pursuant to the Lim Employee Retention Agreement, Mr. Lim has agreed to waive his right to resign for Good Reason, as defined in the Lim Severance Agreement, solely in connection with the closing of the Acquisition. The remaining terms of the Lim Severance Agreement remain in full force and effect.

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Pursuant to the Lim Employee Retention Agreement, Mr. Lim will be eligible to receive an amount in stock and/or cash with an aggregate value equal to $766,500 (the “Lim Retention Bonus”), which will be paid in two installments. Mr. Lim will receive fully vested shares of Common Stock in a number of shares calculated by dividing (a) one-third of the Lim Retention Bonus by (b) the volume-weighted average price of the Common Stock based on the 20 trading days prior to the first business day that is within the next available trading window following the Effective Date under the Company’s applicable trading policies. If Mr. Lim’s employment with the Company terminates for any reason (other than by the Company for Cause (as defined in the Lim Severance Agreement)) prior to the Six-Month Anniversary, Mr. Lim will receive a lump sum amount in cash equal to two-thirds of the Lim Retention Bonus, less applicable taxes and withholdings (the “Lim Cash Retention Bonus”). If Mr. Lim’s employment with the Company continues following the Six-Month Anniversary, or if the Company terminates Mr. Lim’s employment for Cause (as defined in the Lim Severance Agreement) prior to such date, Mr. Lim’s right to receive the Lim Cash Retention Bonus will terminate.

If Mr. Lim’s employment with the Company continues past the Six-Month Anniversary, in lieu of the Lim Cash Retention Bonus, Mr. Lim will receive (a) Restricted Stock or (b) Restricted Cash within 30 days of the Six-Month Anniversary. The Restricted Stock or Restricted Cash will vest over two years, with 50% vesting upon the first anniversary and the remainder vesting in equal quarterly installments thereafter (each, a “Lim Vesting Date”). Upon termination of Mr. Lim’s employment or service with the Company for any reason prior to the final Lim Vesting Date, Mr. Lim will forfeit the unvested portion of the Restricted Stock or Restricted Cash, as applicable.

The foregoing description of the Lim Employee Retention Agreement and the Lim Severance Agreement does not purport to be complete and is qualified in its entirety by reference to the Lim Employee Retention Agreement and the Severance Agreement Form, which were filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on September 30, 2022 and as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 4, 2017, respectively.

Daniel Soland Separation Agreement

In connection with the execution of the Merger Agreement, the Company entered into an executive transition and separation agreement (the “Soland Separation Agreement”) with Daniel Soland, who until the Effective Date served as the Company’s Senior Vice President and Chief Operating Officer. Under the Soland Separation Agreement, Mr. Soland will provide certain advisory and transition services to the Company from the Effective Date through the period of 30 days following the approval of the Reverse Stock Split Proposal. Further, Mr. Soland is entitled to receive: (i) any earned and unpaid base salary through the Effective Date; (ii) any earned and unpaid annual incentive bonus payable with respect to any fiscal year that ended prior to the Effective Date; (iii) any accrued but unused personal time-off days; (iv) reimbursement for any outstanding expenses for which Mr. Soland has not been reimbursed and which are authorized; and (v) any vested benefits under the Company’s employee benefit plans in accordance with the terms of such plans, as accrued through the Effective Date.

Under the terms of the Soland Separation Agreement, Mr. Soland has agreed to provide certain advisory and transition services to the Company for a period of 30 days following the approval of the Merger Agreement Meeting Proposals. In consideration for his services during such period, Mr. Soland will be entitled to $500 per hour performed for services requested by the Company in an independent contractor capacity.

In addition, provided that Mr. Soland does not revoke the Soland Separation Agreement (including the general release of claims in favor of the Company as set forth therein) and Mr. Soland continues to comply with the restrictive covenants incorporated into the Soland Separation Agreement, Mr. Soland is entitled to receive (i) a cash payment of $127,500, representing the prorated portion of the 2022 calendar year annual cash incentive award, measured at target performance, based on the period Mr. Soland was employed through the Effective Date (the prorated award will be paid in a lump sum within 30 days following the Effective Date); (ii) $459,754, payable in substantially equal installments over the 12-month period starting on the first payroll date following the Effective Date; and (iii) fully vested shares of Common Stock equal to a number of shares, calculated by dividing $500,000 based on the volume-weighted average price of

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RISK FACTORS

Risks Relating to Our Financial Position and Need for Additional Capital

We may not be able to comply with Nasdaq’s initial listing standards.

Our Common Stock trades on The Nasdaq Capital Market (“Nasdaq”) under the symbol “IDRA.” We cannot assure you that our securities will continue to be listed on Nasdaq.

As previously reported, on November 26, 2021, we received a deficiency letter (the “First Nasdaq Letter”) from the Nasdaq Listing Qualifications Department (the “Staff”), notifying us that we were not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires us to maintain a minimum bid price of at least $1 per share for continued listing (the “Minimum Bid Requirement”). Our failure to comply with the Minimum Bid Requirement was based on the Common Stock per share price being below the $1.00 threshold for a period of 30 consecutive business days. Pursuant to the First Nasdaq Letter, we had 180 calendar days from November 26, 2021 to regain compliance with the Minimum Bid Requirement.

Also as previously reported, on May 26, 2022, we received a second notice (the “Second Nasdaq Letter”) from the Staff indicating that, while we had not regained compliance with the Minimum Bid Requirement, the Staff had determined that we were eligible for an additional 180-day period, or until November 21, 2022, to regain compliance with the Minimum Bid Requirement. Pursuant to the Second Nasdaq Letter, if compliance cannot be demonstrated by November 21, 2022, the Staff would provide written notification that the Common Stock will be subject to delisting, at which point we would then be entitled to appeal the Staff’s determination to a Nasdaq hearings panel.

The Company is currently working with the Staff, but expects to receive a written notification from Nasdaq stating that we had not regained compliance with the Minimum Bid Requirement. We are aware that such written notification will provide the Company with the opportunity to request a hearing before the Nasdaq Hearings Panel (the “Panel”) within a specified date from the written notice. If the Company has not met the Minimum Bid Requirement by November 21, 2022, it fully expects to submit an appeal of such written notification to the Panel as soon as practicable and prior to any deadline. Under Nasdaq rules, the delisting of our Common Stock will be stayed during the pendency of the appeal and during such time our Common Stock will continue to be listed on Nasdaq. There can be no assurance that such an appeal will be successful, or that we will be able to regain compliance with the Minimum Bid Price requirement or maintain compliance with other Nasdaq listing requirements. If our appeal is denied or if we fail to regain compliance with Nasdaq’s continued listing standards during any period granted by the Panel, our Common Stock will be subject to delisting from Nasdaq.

Furthermore, on October 21, 2022, we received a letter from the Staff notifying us that our acquisition of Aceragen will, upon stockholder approval of Proposal No. 1, be considered a “change of control” transaction under Nasdaq rules. As such, the Company must meet Nasdaq’s initial listing requirements. Accordingly, the Company must meet all the requirements set forth in Nasdaq Rule 5505(a) and at least one of the standards set forth in Nasdaq Rule 5505(b).

The listing standards of Nasdaq Rule 5505(a) require the Company to have, among other things:

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a minimum bid price that is greater than or equal to $4.00 per share;

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at least 1,000,000 unrestricted publicly held shares;

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at least 300 round-lot holders, and at least 50% of such round lot holders must each hold unrestricted securities with a market value of at least $2,500;

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at least three registered and active market makers; and

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a minimum average daily trading volume of 2,000 shares over the 30 trading day period prior to listing, with trading occurring on more than half of those 30 days, unless such security is listed on Nasdaq in connection with a firm commitment underwritten public offering of at least $4 million.

The Company must also satisfy at least one of the following Rule 5505(b) requirements:

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stockholders’ equity of at least $5 million, a market value of unrestricted publicly held shares of at least $15 million, and two years of operating history;

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a market value of listed securities of at least $50 million, stockholders’ equity of at least $4 million, and a market value of unrestricted publicly held shares of at least $15 million; or

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net income from continuing operations of $750,000 in the most recently completed fiscal year or in two of the three most recently completed fiscal years, stockholders’ equity of at least $4 million, and a market value of unrestricted publicly held shares of at least $5 million.

There is no assurance that we will be able to comply with the requisite Nasdaq requirements to maintain our listing of Common Stock on Nasdaq. If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on Nasdaq or any other national securities exchange, we could face significant material adverse consequences, including:

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a limited availability of market quotations for our Common Stock;

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reduced liquidity for our Common Stock;

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a determination that our Common Stock is a “penny stock,” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for its securities;

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a limited amount of news and analyst coverage for us;

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a decreased ability to issue additional securities or obtain additional financing in the future; and

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the incurring of additional costs under state blue sky laws in connection with any sales of our securities.

If our Common Stock is delisted by Nasdaq, our Common Stock may be eligible to trade on an over-the-counter quotation system, such as the OTCQB Market, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market value of our Common Stock. In the event our Common Stock is delisted from Nasdaq, we may not be able to list our Common Stock on another national securities exchange or obtain quotation on an over-the counter quotation system.

There is no guarantee that the Acquisition of Aceragen by us will increase stockholder value.

In September 2022, we acquired Aceragen. See “Description of the Transactions” and “Background and Reasons for the Transactions.” We cannot guarantee our integration efforts as a result of the Acquisition and the related transactions will not impair stockholder value or otherwise adversely affect our business. The Acquisition poses significant integration challenges between our businesses and management teams that could result in management and business disruptions, any of which could harm our results of operation, business prospects, and impair the value of such Acquisition to our stockholders.

Our stock price has been and may continue to be volatile, and the value of an investment in our Common Stock may decline.

We historically have experienced significant volatility in our stock price. In the last 52 weeks, our Common Stock has traded as low as $0.30 per share. The realization of any of the risks described in these risk factors or other unforeseen risks could have an adverse effect on the market price of our Common Stock. The trading price of our Common Stock is likely to continue to be highly volatile and could be subject to declines in response to numerous factors, including disappointing results in a clinical program, as was the case following the announcement of topline results for ILLUMINATE-301. Other risk factors include results from clinical trials; FDA regulatory actions; announcements by us or our competitors of acquisitions, regulatory approvals, clinical milestones, new products, significant contracts, commercial relationships, or capital commitments; additions or departures of key personnel; commencement of, or our involvement in, litigation; and any major change in our Board of Directors or management.

From time to time, we estimate the timing of the potential accomplishment of clinical and other development goals or milestones. These estimated milestones may include the commencement or completion of clinical trials. Also, from time to time, we expect that we will publicly announce the anticipated timing of some of these milestones. All these estimated milestones are based on numerous assumptions. These milestones may change and the actual timing of meeting these milestones may vary dramatically from our

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estimates, in some cases for reasons beyond our control. If we do not meet these estimated milestones, or the anticipated timing thereof, as publicly announced, our stock price may decline.

We will need additional financing, which may be difficult to obtain on terms attractive to us or at all. If we are unable to raise capital when needed, we could be forced to delay, reduce, or eliminate our product development programs or commercialization efforts.

We expect that we will need to raise additional funds in order to complete the development of, seek regulatory approvals for, and commercialization of our drug candidates for rare disease and to continue to fund our operations. We are seeking and expect to continue to seek additional funding through financings of equity or debt securities, collaborations, or the sale or license of assets. We believe the key factors that will affect our ability to obtain funding are: (i) the results of our clinical development activities in our drug candidates we develop on the timelines anticipated; (ii) the time and expense required to submit a new drug application (“NDA”) for our drug candidates; (iii) the cost, timing, and outcome of regulatory reviews; (iv) the receptivity of the capital markets to financings by biotechnology companies generally and companies with drug candidates and technologies similar to ours specifically; (v) receptivity of the capital markets to any in-licensing, product acquisition or other transaction we may enter into; and (vi) ability to enter into additional collaborations and the success of such collaborations.

Financing may not be available to us when we need it, or on favorable or acceptable terms, or at all. We could be required to seek funds through collaborative alliances or through other means that may require us to relinquish rights to some of our technologies, drug candidates or drugs that we would otherwise pursue on our own. In addition, if we raise additional funds by issuing equity securities, our existing stockholders may experience dilution, or an equity financing that involves existing stockholders may cause a concentration of ownership. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, and are likely to include rights that are senior to the holders of our Common Stock. Any additional debt or equity financing may contain terms that are not favorable to us or to our stockholders, such as liquidation and other preferences, or liens or other restrictions on our assets. Additional equity financings may also result in cumulative changes in ownership over a three-year period in excess of 50% which would limit the amount of net operating loss and tax credit carryforwards that we may utilize in any one year. If we are unable to obtain adequate funding on a timely basis or at all, we will be required to terminate, modify, or delay clinical trials of our drug candidates, or relinquish rights to portions of our technology, drug candidates, and/or products.

Raising additional capital may cause dilution to our stockholders, restrict our operations, or require us to relinquish rights.

Until such time, if ever, as we can generate substantial revenue from the sale of our product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, and license and development agreements. To the extent that we raise additional capital through the sale of equity securities or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of Common Stock. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

If we raise additional funds through collaborations, strategic alliances, or marketing, distribution, or licensing arrangements with third parties, we may be required to relinquish valuable rights to our research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements with third parties when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to third parties to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

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Our Series X Preferred Stock have rights, preferences and privileges that are not held by, and are preferential to, the rights of our Common Stock, which could adversely affect our liquidity and financial condition, and may result in the interests of the holders of our Series X Preferred Stock differing from those of the holders of Common Stock.

The Series X Preferred Stock ranks senior to our Common Stock with respect to dividend rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution, or winding up of our affairs. The holders of our Series X Preferred Stock are entitled to receive distributions on shares of Series X Preferred Stock as set forth in (a) the Purchase Agreement, and (b) the PRV Agreement (any such distributions under the Purchase Agreement and the PRV Agreement, the “Preferred Distributions”), prior and in preference to any declaration or payment of any other distribution or dividend (other than dividends on shares of Common Stock payable in shares of Common Stock).

In addition, holders of Series X Preferred Stock are entitled to receive a distribution in the event that either (i) Aceragen receives any proceeds from the sale of a PRV granted by the FDA in connection with regulatory approval of an ACG-801 (recombinant human acid ceramidase) or ACG-701 (sodium fusidate) product or (ii) Aceragen does not receive such a PRV or does not complete a PRV sale within a certain period after receipt. The holders of Series X Preferred Stock are also entitled to net sales distributions based upon future net sales of the ACG-801 and ACG-701.

The holders of our Series X Preferred Stock also have the right, subject to certain exceptions, to require us to repurchase all or any portion of the Series X Preferred Stock upon certain change of control events or Product Divestiture (as defined in the PRV Agreement) of an ACG-701 product, and Aceragen may, and NovaQuest may require us to, redeem the Series X Preferred Stock at a price equal to the fair market value thereof or make certain distributions to the holders of Series X Preferred Stock.

These dividend, distribution, and share repurchase obligations could impact our liquidity and reduce the amount of cash flows available for general corporate purposes. Our obligations to the holders of the Series X Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition. These preferential rights could also result in divergent interests between the holders of shares of Series X Preferred Stock and holders of our Common Stock.

We expect that we will continue to incur net losses in the foreseeable future.

As of September 30, 2022, we had an accumulated deficit of $748.0 million and a cash and cash equivalents balance of $26.8 million. We expect to incur substantial operating losses in future periods and will require additional capital as we seek to advance any future drug candidates through development to commercialization. We do not expect to generate product revenue, sales-based milestones, or royalties until we successfully complete development of and obtain marketing approval for any future drug candidates, either alone or in collaboration with third parties, which may not occur or may take a number of years. To commercialize any future drug candidates, we need to complete clinical development and comply with comprehensive regulatory requirements. We are subject to numerous risks and uncertainties similar to those of other companies of the same size within the biotechnology industry, such as uncertainty of clinical trial outcomes, uncertainty of additional funding, and history of operating losses.

Even if we succeed in receiving marketing approval for and commercializing any product candidate, we will continue to incur substantial research and development and other expenditures to develop and market additional potential indications or products. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

Risks Relating to Our Business and Strategy

As a small biopharmaceutical-focused company with limited resources, we may be unable to attract and retain qualified personnel.

We are a small company with 29 full-time employees as of December 8, 2022. Any future growth will require hiring additional qualified personnel. Also, because of the specialized scientific nature of our business,

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we face intense competition for qualified employees and consultants from biopharmaceutical companies, research organizations, and academic institutions. Failure to attract and retain qualified personnel would materially harm our ability to compete effectively and grow our business.

If we lose any of our officers or key employees, our management and technical expertise could be weakened significantly.

Our success largely depends on the skills, experience, and efforts of our executive officers, especially our President and Chief Executive Officer (“CEO”), Mr. John Taylor. In connection with its Acquisition, the Company now holds key man life insurance policies for John Taylor and Daniel Salain in the amount of $1 million each. The Company holds no other key man life insurance policies. The loss of any of our executive officers could weaken our management and technical expertise significantly and harm our business.

We are depending heavily on the development, regulatory approval, U.S. federal funding, and commercialization of drug candidates. If we are unable to successfully develop and commercialize drug candidates, or experience significant delays in doing so, our business may be materially harmed.

We have made and intend to continue to make a significant investment of our time and financial resources in the development and commercialization of our drug candidates. Our ability to generate product revenues will depend heavily on our ability to successfully develop, obtain regulatory approval for, and commercialize our drug candidates. If we fail to obtain regulatory approval and successfully commercialize our drug candidates, our business would be materially and adversely impacted. Even if our drug candidates receive regulatory approval, we will incur significant expenses to support its commercialization and launch, which investment may never be realized if sales are insufficient.

Our recent organizational changes undertaken to align to our focus on business strategy and business development may not be successful.

In April 2021, following the announcement that ILLUMINATE-301 did not meet its primary endpoint of Objective Response Rate (“ORR”), we decided to implement a reduction-in-force affecting approximately 50% of our workforce beginning in the second quarter of 2021. The objective of this workforce reduction was to realign our workforce to meet our needs in light of the outcome of ILLUMINATE-301’s ORR endpoint. In May 2021, we announced that we would not continue ILLUMINATE-301 toward its Overall Survival (“OS”) endpoint. In connection with these actions, we have incurred termination costs, which include severance, benefits, and related costs, totaling $1.3 million in 2021. In September 2022, in connection with the Acquisition, we restructured our operations and reduced the workforce by approximately 38% of the Company’s pre-Acquisition employees.

We believe these changes were needed to streamline our organization and reallocate our resources to better align with our current strategic goals, including our current focus on new portfolio opportunities. However, these restructuring activities may yield unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond our intended reduction-in-force, a reduction in morale among our remaining employees, and the risk that we may not achieve the anticipated benefits, all of which may have an adverse effect on our results of operations or financial condition. In addition, while positions have been eliminated, certain functions necessary to our reduced operations remain, and we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees. We may also discover that the reductions in workforce and cost-cutting measures will make it difficult for us to pursue new opportunities and initiatives and require us to hire qualified replacement personnel, which may require us to incur additional and unanticipated costs and expenses. Moreover, there is no assurance we will be successful in our pursuit of any new business development opportunities, including additional strategic alternatives. Our failure to successfully accomplish any of the above activities and goals may have a material adverse impact on our business, financial condition, and results of operations.

If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented entirely.

We may not be able to initiate or continue clinical trials for our drug candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the United States.

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In addition, some of our competitors have ongoing clinical trials for drug candidates that treat the same indications as our drug candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ drug candidates. Our inability to enroll a sufficient number of patients for our clinical trials could also require us to abandon one or more clinical trials altogether. Enrollment delays may result in increased development costs for our drug candidates, which would cause the value of our Company to decline and limit our ability to obtain additional financing.

If our clinical trials are unsuccessful, delayed, or terminated for any reason, we may not be able to develop and commercialize our drug candidates.

Clinical trials are lengthy, complex, and expensive processes with uncertain results. We may not be able to complete any clinical trial of an investigational product within any specified time period. Moreover, clinical trials may not show our investigational products to have an acceptable safety and efficacy profile. The FDA, independent institutional review boards (“IRBs”), or other equivalent foreign regulatory agencies may not allow us to complete these trials or commence and complete any other clinical trials.

Numerous unforeseen events may occur during, or as a result of, preclinical testing, nonclinical testing or the clinical trial process that could delay or inhibit the ability to receive regulatory approval or to commercialize drug products. For example, setbacks in clinical trials may result in enhanced scrutiny by regulators or IRBs of clinical trials of our drug candidates, which could result in regulators or IRBs prohibiting the commencement of clinical trials, requiring additional nonclinical studies as a precondition to commencing clinical trials or imposing restrictions on the design or scope of clinical trials that could slow enrollment of trials, increase the costs of trials or limit the significance of the results of trials. Such setbacks could also adversely impact the desire of investigators to enroll patients in, and the desire of patients to enroll in, clinical trials of our drug candidates.

Other events that could delay or inhibit conduct of our clinical trials include: (i) nonclinical or clinical data may not be readily interpreted, which may lead to delays and/or misinterpretation; (ii) our nonclinical tests, including toxicology studies, or clinical trials may produce negative or inconclusive results; (iii) 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; (iv) 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; (v) we, along with our collaborators and subcontractors, may not employ, in any capacity, persons who have been debarred under the FDA or similar foreign regulatory authorities; (vi) we or our contract manufacturers may be unable to manufacture sufficient quantities of our drug candidates for use in clinical trials; (vii) the cost of our clinical trials may be greater than we currently anticipate making continuation and/or completion improbable; (viii) our investigators and contract research organizations may not follow the applicable regulatory requirements; and (ix) our drug candidates may not cause the desired effects or may cause undesirable side effects or our drug candidates may have other unexpected characteristics.

In conducting clinical trials, we cannot be certain that any planned clinical trial will begin on time, if at all. Delays in commencing clinical trials of potential products could increase our drug candidate development costs, delay any potential revenues, reduce the potential length of patent exclusivity, and reduce the probability that a potential product will receive regulatory approval. Significant clinical trial delays also could allow our competitors to bring products to market before we do and impair our ability to commercialize our drug candidates.

The technologies on which we rely are unproven and may not result in any approved and marketable products.

Our technologies or therapeutic approaches are relatively new and unproven. Further, the chemical and pharmacological properties of our drug candidates may not be fully recognized in preclinical studies and small-scale clinical trials, and such compounds may interact with human biological systems in unforeseen, ineffective, or harmful ways that we have not yet identified. Preclinical trials and early-stage clinical trials may not be indicative of results that may be obtained in later-stage trials. As a result of these factors, we may never succeed in obtaining regulatory approval to market any product.

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We face substantial competition, which may result in others discovering, developing, or commercializing drugs before or more successfully than us.

There are many other companies, public and private, actively engaged in discovery, development, and commercializing products and technologies that may compete with our drug candidate and program. Some potentially competitive products have been in development or commercialized for years. Many of the marketed products have been accepted by the medical community, patients, and third-party payors. Our ability to compete may be affected by the previous adoption of such products by the medical community, patients, and third-party payors.

We recognize that other companies, including large pharmaceutical companies, may be developing or have plans to develop products and technologies that may compete with ours. Many of our competitors have substantially greater financial, technical, and human resources than we have and/or may have significantly greater experience than we have in undertaking preclinical studies and human clinical trials of new pharmaceutical products, obtaining FDA and other regulatory approvals of products for use in healthcare and manufacturing, and marketing and selling approved products. We anticipate that the competition with our drug candidates and technologies will be based on a number of factors including product efficacy, safety, availability, and price. The timing of market introduction of our drug candidates and competitive products will also affect competition among products. We expect the relative speed with which we can develop products, complete the clinical trials and approval processes, and supply commercial quantities of the products to the market to be important competitive factors.

Our business could be adversely affected by the effects of health epidemics, such as the ongoing COVID-19 global pandemic, including disruptions to our clinical trials or the delay of regulatory approvals.

Our business may be adversely affected by the effects of health epidemics, including the ongoing worldwide COVID-19 pandemic. The COVID-19 pandemic has caused significant volatility and uncertainty globally. This has resulted in an economic downturn and may disrupt our business and delay our clinical trials and regulatory approvals. This may also result in an interruption or issues with respect to the manufacture and supply of our product candidates. Quarantines and similar government orders have been enacted in each of the geographies in which we are conducting our clinical trials and may impact the ability of patients to participate in our trials. The patient populations that are eligible for our clinical trials may be immune-compromised and at higher risk for becoming infected with COVID-19. As COVID-19 affects the parts of the world where we are conducting our clinical trials, and the patients involved with these clinical trials become infected with COVID-19, we may have more adverse events and deaths in our clinical trials. The COVID-19 pandemic may also require that changes be made to any clinical trials or product manufacturing that may ultimately have an adverse impact. Additionally, if global health concerns continue to prevent the FDA from conducting its regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Such concerns could also affect the ability of our personnel to perform their normal responsibilities and could result in temporary closures of our facilities.

The COVID-19 pandemic continues to evolve, with different jurisdictions having higher levels of infections than others and new variants of the SARS-CoV-2 virus (such as the Omicron variant) emerging and spreading more easily and quickly than other variants. As the COVID-19 pandemic continues to ebb and flow, its ultimate impact is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, healthcare systems, or the global economy. However, any one or a combination of these events could have an adverse effect on the operation of and results from our clinical trials, which could prevent or delay us from obtaining approval for our drug candidates, or on our employee resources.

Risks Related to Regulatory Approval and Marketing and Other Compliance Matters

Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming, and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of our drug candidates.

We are not permitted to market our drug candidates in the United States, or in other countries until we, or any future collaborators, receive approval of a new drug application, or NDA, from the FDA or

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marketing approval from applicable regulatory authorities outside of the United States. The approval process is lengthy, often taking a number of years, and it is uncertain, and expensive. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the drug candidate’s safety and efficacy. Information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities is also required. Any delay in obtaining or failure to obtain required approvals could materially adversely affect our ability or that of any collaborators we may have to generate revenue from the particular drug candidate, which likely would result in significant harm to our financial position and adversely impact our stock price.

We, and any future collaborators, must obtain separate marketing approvals and comply with numerous and varying regulatory requirements in foreign jurisdictions. The approval procedure varies among countries and can involve additional studies. The time required to obtain approval may differ substantially from that required to obtain FDA approval. In addition, in many countries outside of the United States, it is required that the drug be approved for reimbursement before the drug can be approved for sale in that country. We, and any future collaborators, may not obtain approvals from regulatory authorities outside of the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in foreign jurisdictions, and approval by one regulatory authority outside of the United States does not ensure approval by regulatory authorities in other jurisdictions or by the FDA.

Even if we, or any future collaborators, obtain marketing approvals for our drug candidates, the terms of approvals and ongoing regulation of our drugs may limit how we, or they, manufacture and market our drugs, which could materially impair our ability to generate revenue.

We, and any future collaborators, must comply with requirements concerning advertising and promotion for any of our drug candidates for which we or they obtain marketing approval. Such promotional communications are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the drug’s approved labeling. Thus, we, and any future collaborators, will not be able to promote any drugs we develop for indications or uses for which they are not approved.

In addition, manufacturers of approved drugs and those manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices (“cGMPs”), which include requirements relating to quality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements. We, our contract manufacturers, our future collaborators, and their contract manufacturers could be subject to periodic unannounced inspections by the FDA, and other regulatory authorities to monitor and ensure compliance with cGMPs.

Accordingly, assuming we, or our future collaborators, receive marketing approval for one or more of our drug candidates, we, and our future collaborators, and our and their contract manufacturers will continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, and quality control.

If we, and our future collaborators, are not able to comply with post-approval regulatory requirements, we, and our future collaborators, could have the marketing approvals for our drugs withdrawn by regulatory authorities and our, or our future collaborators’, ability to market any future drugs could be limited, which could adversely affect our ability to achieve or sustain profitability. Further, the cost of compliance with post-approval regulations may have a negative effect on our operating results and financial condition.

Moreover, legislative and regulatory proposals have been made to expand post-approval requirements and restrict promotional activities relating to our drugs. We cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance, or interpretations will be changed, or what the impact of such changes on the marketing approvals of our drug candidates, if any, may be. In addition, increased scrutiny by Congress of the FDA’s approval process may significantly delay or prevent marketing

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approval, as well as subject us and any collaborators to more stringent product labeling and post-marketing testing and other requirements.

Any of our drug candidates for which we, or our future collaborators, obtain marketing approval in the future could be subject to post-approval restrictions or withdrawal from the market and we, and our future collaborators, may be subject to substantial penalties if we, or they, fail to comply with regulatory requirements or if we, or they, experience unanticipated problems with our drugs following approval.

Any of our drug candidates for which we, or our future collaborators, obtain marketing approval in the future, as well as the manufacturing processes, post-approval studies and measures, labeling, advertising, and promotional activities for such drug, among other things, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a drug candidate is granted, the approval may be subject to limitations on the indicated uses for which the drug may be marketed or to the conditions of approval, including the requirement to implement a Risk Evaluation and Mitigation Strategy, which could include requirements for a restricted distribution system.

The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of a drug. The FDA and other agencies, including the Department of Justice (“DOJ”), closely regulate and monitor the post-approval marketing and promotion of drugs to ensure that they are manufactured, marketed and distributed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use and if we, or our future collaborators, do not market any of our drug candidates for which we, or they, receive marketing approval for only their approved indications, we, or they, may be subject to warnings or enforcement action for off-label promotion.

In addition, later discovery of previously unknown adverse events or other problems with our drugs or their manufacturers or manufacturing processes, or failure to comply with regulatory requirements both before and after product approval, may yield various results, including: (i) litigation involving patients taking our drug; (ii) restrictions on such drugs, manufacturers or manufacturing processes; (iii) restrictions on the labeling or marketing of a drug; (iv) restrictions on drug distribution or use; (v) requirements to conduct post-marketing studies or clinical trials; (vi) warning letters or untitled letters, as well as other enforcement and adverse actions; (vii) withdrawal of the drugs from the market; (viii) refusal to approve pending applications or supplements to approved applications that we submit; (ix) recall of drugs; (x) fines, restitution, or disgorgement of profits or revenues; (xi) suspension or withdrawal of marketing approvals; (xii) damage to relationships with any potential collaborators; (xiii) unfavorable press coverage and damage to our reputation; (xiv) refusal to permit the import or export of drugs; (xv) drug seizure; or (xvi) injunctions or the imposition of civil or criminal penalties.

We may not be able to obtain or maintain orphan drug exclusivity for applications of our drug candidates.

The FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States. Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of seven years of marketing exclusivity. Orphan drug exclusivity may be lost if the FDA determines that the request for designation was materially defective or if the manufacturer is unable to ensure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.

In June 2017, the FDA granted us orphan drug designation for tilsotolimod for the treatment of melanoma Stages IIb to IV. However, there can be no assurance that we will obtain orphan drug designation or exclusivity for any other disease indications for which we develop tilsotolimod, or for any other drug candidates. There is also no guarantee that we will be able to obtain orphan drug exclusivity if any product candidates with orphan designation are approved. Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be

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approved for the same condition or the same drug can be approved for different conditions. Even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.

BTD, Fast Track designation, or Rare Pediatric Disease designation by the FDA, and equivalents granted by other regulatory authorities, even if granted for any of our product candidates developed for therapeutic indications, may not lead to a faster development, regulatory review, or approval process, and it does not increase the likelihood that any of our product candidates will receive marketing approval in any jurisdiction.

We may seek a BTD for some of our product candidates. A breakthrough therapy is defined as a therapy that is intended, alone or in combination with one or more other therapies, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the therapy may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For therapies that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Therapies designated as breakthrough therapies by the FDA may also be eligible for priority review and accelerated approval. Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a BTD for a product candidate may not result in a faster development process, review, or approval compared to therapies considered for approval under conventional FDA procedures and does not ensure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that such product candidates no longer meet the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

We may seek Fast Track designation for some of our product candidates for therapeutic indications. If a therapy is intended for the treatment of a serious or life-threatening condition and the therapy demonstrates the potential to address unmet medical needs for this condition, the therapy sponsor may apply for Fast Track designation. The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation; we cannot assure you that the FDA would decide to grant it. Even if we do receive Fast Track designation, we may not experience a faster development process, review, or approval compared to conventional FDA procedures. The FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development program. Fast Track designation alone does not guarantee qualification for the FDA’s priority review procedures.

We may seek Rare Pediatric Disease designation and conditional designation of our marketing application as a “Rare Pediatric Disease product application” for some of our product candidates for therapeutic indications, which, if granted, could qualify us to receive a rare pediatric priority review voucher. The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it, and determination whether to issue such a voucher is made by the FDA only at the time of its review and approval of a marketing application. A rare pediatric priority review voucher can be redeemed to receive a priority review of a subsequent marketing application for a different product.

If the FDA determines that a product candidate offers a treatment for a serious condition and, if approved, the product would provide a significant improvement in safety or effectiveness, the FDA may designate the product candidate for priority review. A priority review designation means that the goal for the FDA to review an application is six months, rather than the standard review period of 10 months. We may request priority review for our product candidates. The FDA has broad discretion with respect to whether or

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not to grant priority review status to a product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA may decide not to grant it. Moreover, a priority review designation does not necessarily result in an expedited regulatory review or approval process or necessarily confer any advantage with respect to approval compared to conventional FDA procedures. Receiving priority review from the FDA does not guarantee approval within the six-month review cycle or at all.

A Fast Track designation, QIDP, BTD, or other expedited designation for our drug candidates may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that those drug candidates will receive marketing approval.

We may seek a breakthrough therapy, Fast Track, or other designation for appropriate drug candidates. Designations such as these are within the discretion of the FDA. The receipt of a designation for a drug candidate may not result in a faster development process, review, or approval compared to drugs considered for approval under conventional FDA procedures and does not ensure ultimate approval by the FDA. In addition, even if one or more of our drug candidates qualify under one of the FDA’s designation programs, the FDA may later decide that the products no longer meet the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

We have never obtained regulatory approval for, or commercialized, a drug. It is possible that the FDA may refuse to accept any or all of our planned NDAs for substantive review or may conclude, after review of our data, that our applications are insufficient to obtain regulatory approval of any of our drug candidates. The FDA may also require that we conduct additional clinical or manufacturing validation studies, which may be costly and time-consuming, and submit that data before it will reconsider our applications. Depending on the extent of these or any other FDA required studies, approval of any NDA that we submit may be significantly delayed, possibly for years, or may require us to expend more resources than we have available or can secure.

Our product candidates are subject to and any future commercial products will be subject to costly, extensive and rigorous domestic and foreign government regulation. These requirements are continually evolving, which will require us to adapt our practices and processes, which we may not be able to do.

In addition, our future arrangements with third-party payors, healthcare providers, and physicians may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell, and distribute any drugs for which we obtain marketing approval. These include, but are not limited to, the following: the Anti-Kickback Statute; the Foreign Corrupt Practices Act; the False Claims Act; privacy laws such as HIPAA; transparency requirements; and analogous state and foreign laws. Additionally, some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and require drug manufacturers to report information related to drug pricing and to certain payments and other transfers of value to physicians, other healthcare providers, and healthcare entities, or marketing expenditures.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations, or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal, and administrative penalties, damages, fines, imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, suspension and debarment from procurement and non-procurement transactions, and the curtailment or

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restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil, or administrative sanctions, including exclusions from government-funded healthcare programs.

We depend on information technology, infrastructure, and data to conduct our business. Any significant disruption, or cyberattacks, could have a material adverse effect on our business.

We are dependent upon information technology, infrastructure, and data. Computer systems, including ours and those of our suppliers, partners, and service providers, contain sensitive confidential information or intellectual property, and are vulnerable to service interruption or destruction, cyberattacks (both malicious and random) and other natural or man-made incidents or disasters, which may be prolonged or go undetected. Such events are increasing in their frequency, sophistication, and intensity, and have become increasingly difficult to detect. A significant interruption of our information technology could adversely affect our ability to manage and keep our operations running efficiently and effectively. An incident that results in a wider or sustained disruption to our business or products could have a material adverse effect on our business, financial condition, and results of operations.

Likewise, data privacy or security breaches by employees or others may pose a risk that sensitive data, including our intellectual property, trade secrets, or personal information of our employees, patients, or other business partners may be exposed to unauthorized persons or to the public. There can be no assurance that our efforts, or the efforts of our partners and vendors, will prevent service interruptions, or identify breaches in our systems, that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business, or reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks, and other related breaches.

Risks Relating to Collaborators

Our existing collaborations and any collaborations we enter into in the future may not be successful.

Our current collaboration agreements, or any collaborations we may enter into in the future, may not be successful. The success of our collaborative alliances, if any, will depend heavily on the efforts and activities of our collaborators. Our existing collaborations and any potential future collaborations have risks, including the following: (i) our collaborators may control the development (and timing thereof) of the drug candidates being developed with our technologies and compounds and/or the companion diagnostic to be developed for use in conjunction with our drug candidates; (ii) our collaborators may control the public release of information regarding the developments; (iii) disputes may arise in the future with respect to the ownership of or right to use technology and intellectual property developed with our collaborators; (iv) disagreements with our collaborators could delay or terminate the development of our products, or result in litigation or arbitration; (v) we may have difficulty enforcing the contracts if any of our collaborators fail to perform; (vi) 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; (vii) 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; (viii) 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; (ix) our collaborators may not comply with all applicable regulatory requirements; (x) our collaborators may underfund or not commit sufficient resources to the testing or development of our drug candidates; and (xi) 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. Additionally, our collaborators will face the same development risks that we do and may not be successful in their efforts. Given these risks, it is possible that any collaborative alliance into which we enter may not be successful.

If we are unable to establish additional collaborative alliances, our business may be materially harmed.

Collaborators provide the necessary resources and drug development experience to advance our compounds in their programs. We have entered into and expect to continue to seek to enter into collaborative

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alliances with pharmaceutical companies. Upfront payments and milestone payments received from collaborations help to provide us with the financial resources for our internal research and development programs. We believe additional resources will be required to advance compounds. If we do not reach agreements with additional collaborators in the future or if the terms of such a collaborative alliance are not favorable to us, we may not be able to obtain the expertise and resources necessary to achieve our business objectives, our ability to advance our compounds will be jeopardized, and we may fail to meet our business objectives. Moreover, collaborations are complex and time-consuming to negotiate, document, and implement. We may not be successful in our efforts to establish and implement collaborations on a timely basis.

Risks Relating to Intellectual Property & Exclusivity

If we are unable to obtain and maintain patent protection for our discoveries, the value of our technology and products will be adversely affected.

Our ability to develop and commercialize drugs depends in significant part on our ability to: (i) obtain and maintain valid and enforceable patents; (ii) obtain licenses to the proprietary rights of others on commercially reasonable terms; (iii) operate without infringing upon the proprietary rights of others; (iv) prevent others from infringing on our proprietary rights; and (v) protect our trade secrets.

We do not know whether any of our currently pending patent applications or those patent applications that we license will result in the issuance of any patents. Our issued patents and those that may be issued in the future, or those licensed to us, may be challenged, invalidated, held unenforceable, narrowed in the course of a post-issuance proceeding or circumvented, and the rights granted thereunder may not provide us proprietary protection or competitive advantages against competitors with similar technology. Moreover, intellectual property laws may change and negatively impact our ability to obtain issued patents covering our technologies or to enforce any patents that issue. Because of the extensive time required for development, testing, and regulatory review of a potential product, it is possible that, before any of our products can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thus reducing any advantage provided by the patent.

Because patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after filing, or in some cases not at all, and because publications of discoveries in the scientific literature often lag behind actual discoveries, neither we nor our licensors can be certain that we or they were the first to make the inventions claimed in issued patents or pending patent applications, or that we or they were the first to file for protection of the inventions set forth in these patent applications.

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.

Although we have many issued patents and pending patent applications in the United States and other countries, we may not have rights under certain third-party patents or patent applications related to our compounds under development. Third parties may own or control these patents and patent applications in the United States and abroad. In particular, we are aware of certain third-party U.S. patents that contain claims related to immunostimulatory polynucleotides and their use to stimulate an immune response, as well as to antisense technology. Although we do not believe any of our toll-like receptor or antisense compounds under development infringe any valid claim of these patents, we cannot be assured that the holder of such patents would not seek to assert such patents against us or, if the holder did, that the courts would not interpret the claims of such patents more broadly than we believe appropriate and determine that we are in infringement of such patents. In addition, there may be other patents and patent applications related to our current or future drug candidates of which we are not aware. Therefore, in some cases, in order to develop, manufacture, sell, or import some of our drug candidates, we or our collaborators may choose to seek, or be required to seek, licenses under third-party patents issued in the United States and abroad or under third-party patents that might issue from U.S. and foreign patent applications. In such an event, we would be required to pay license fees or royalties or both to the licensor. If licenses are not available to us on acceptable terms, we or our collaborators may not be able to develop, manufacture, sell, or import these products, or may be delayed in doing so. Either of these results could have a material adverse effect on our business.

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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, require us to stop our development and commercialization efforts or result in our patents being invalidated, interpreted narrowly, or limited.

There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the biotechnology industry. We may become a party to various types of patent litigation or other proceedings regarding intellectual property rights from time to time even under circumstances where we are not practicing and do not intend to practice any of the intellectual property involved in the proceedings. In addition to litigation, we may become involved in patent office proceedings, including oppositions, reexaminations, supplemental examinations, and inter partes reviews involving our patents or the patents of third parties. We may initiate such proceedings or have such proceedings brought against us. An adverse determination in any such proceeding, or in litigation, could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop, or commercialize current or future drug candidates. An adverse determination in a proceeding involving a patent in our portfolio could result in the loss of protection or a narrowing in the scope of protection provided by that patent.

The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the cost of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. If any patent litigation or other proceeding is resolved against us, we or our collaborators may be enjoined from developing, manufacturing, selling, or importing our drugs without a license from the other party and we may be held liable for significant damages. We may not be able to obtain any required license on commercially acceptable terms or at all. In a patent office proceeding, such as an opposition, reexamination, or inter partes review, our patents may be narrowed or invalidated. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.

Our intellectual property may be infringed by a third party.

Third parties may infringe one or more of our issued patents or trademarks. We cannot predict if, when, or where a third party may infringe one or more of our issued patents or trademarks. To counter infringement, we may be required to file infringement claims, which can be expensive and time-consuming. Moreover, there is no assurance that we would be successful in proving that a third party is infringing one or more of our issued patents or trademarks. Any claims we assert against perceived infringers could also provoke these parties to assert counterclaims against us, alleging that we infringe their intellectual property. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly and/or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question, any of which may adversely affect our business. Even if we are successful in proving in a court of law that a third party is infringing one or more of our issued patents or trademarks, there can be no assurance that we would be successful in halting their infringing activities.

We may not be able to obtain orphan drug designation or obtain or maintain the benefits associated with orphan drug designation, such as orphan drug exclusivity and, even if they do, that exclusivity may not prevent the FDA or other comparable foreign regulatory authorities from approving competing products.

As part of our business strategy, we may seek orphan drug designation, or ODD, for any eligible product candidates we develop, but we may be unsuccessful in obtaining or maintaining the benefits of such designations.

Regulatory authorities in some jurisdictions, including the United States, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States, or a

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patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing and making available the drug will be recovered from sales in the United States.

In the United States, ODD entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. In addition, if a product that has ODD subsequently receives the first FDA approval for a particular active ingredient for the rare disease for which it has such designation, the product is entitled to orphan drug exclusivity. Orphan drug exclusivity in the United States provides that the FDA may not approve any other applications, including a full NDA or other comparable submission, to market the same drug for the same indication for seven years, except in limited circumstances such as a showing of clinical superiority to the product with orphan product exclusivity, or if the FDA withdraws exclusive approval or revokes orphan drug designation, or if the marketing application (NDA or biologics license application) for the orphan drug is withdrawn for any reason, or if the FDA finds that the holder of the orphan exclusivity has not shown that it can ensure the availability of sufficient quantities of the orphan product to meet the needs of patients with the disease or condition for which the product was designated.

Even if we obtain ODD for a product candidate, we may not be able to obtain or maintain orphan drug exclusivity for that product candidate. We may not be the first to obtain regulatory approval of any product candidate for which we have obtained ODD for the orphan-designated indication due to the uncertainties associated with developing pharmaceutical products. In addition, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective or if we are unable to ensure that we will be able to manufacture sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs with different active ingredients be approved for the same condition, and competitors also potentially could secure approval of the same drug for different non-orphan conditions. Even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care or the manufacturer of the product with orphan exclusivity is unable to maintain sufficient product quantity. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the product candidate any advantage in the regulatory review or approval process.

Risks Relating to Product Manufacturing Marketing and Sales, and Reliance on Third Parties

Even if the compounds we may develop are successful in clinical trials and receive regulatory approvals, we or our collaboration partners may not be able to successfully commercialize them.

Even if the compounds were successful in clinical development and receive regulatory approvals, they may never reach or remain on the market, be successfully developed into commercial products or gain market acceptance among physicians, patients, healthcare payors, or the medical community for a number of reasons including: (i) they may be found ineffective or cause harmful side effects; (ii) they may be difficult to manufacture on a scale necessary for commercialization; (iii) they may experience excessive product loss due to contamination, equipment failure, inadequate transportation or storage, improper installation or operation of equipment, vendor or operator error, natural disasters or other catastrophic events, inconsistency in yields, or variability in product characteristics; (iv) they may be uneconomical to produce; (v) the timing of market introduction of the compounds we may develop and competitive products may be inopportune; (vi) political and legislative changes may make the commercialization of any product candidates we may develop in the future, more difficult; (vii) we may fail to obtain reimbursement approvals or pricing that is cost effective for patients as compared to other available forms of treatment or that covers the cost of production and other expenses; (viii) they may not compete effectively with existing or future alternatives; (ix) we may be unable to develop commercial operations and to sell marketing rights; (x) they may fail to achieve market acceptance; or (xi) we may be precluded from commercialization of a product due to proprietary rights of third parties.

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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.

We have limited manufacturing experience and no manufacturing facilities, infrastructure, or clinical or commercial scale manufacturing capabilities. In order to continue to develop our drug candidates, apply for regulatory approvals, and ultimately commercialize products, we need to develop, contract for, or otherwise arrange for the necessary manufacturing capabilities. We currently rely upon third parties to produce material for nonclinical and clinical testing purposes and expect to continue to do so in the future. We also expect to rely upon third parties to produce materials that may be required for the commercial production of our drug candidates, if approved. Our current and anticipated future dependence upon others for the manufacture of our drug candidates may adversely affect our future profit margins and our ability to develop drug candidates and commercialize any drug candidates on a timely and competitive basis. We currently do not have any long-term supply contracts.

There are a limited number of manufacturers who operate under the FDA’s cGMP regulations capable of manufacturing our drug candidates. As a result, we may have difficulty finding manufacturers for our drug candidates suitable for our needs. If we are unable to arrange for third-party manufacturing of our drug candidates on a timely basis, or on acceptable terms, we may not be able to complete development of our drug candidates or market them.

Any contract manufacturers with which we enter into manufacturing arrangements will be subject to extensive regulatory requirements and ongoing periodic, unannounced inspections by the FDA, or foreign equivalent, and corresponding state and foreign agencies or their designees to ensure compliance with cGMP requirements and other governmental regulations and corresponding foreign standards. Any failure by our third-party manufacturers to comply with such requirements, regulations, or standards could lead to a delay in the conduct of our clinical trials, or a delay in, or failure to obtain, regulatory approval of any of our drug candidates. Such failure could also result in sanctions being imposed, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, product seizures or recalls, imposition of operating restrictions, total or partial suspension of production or distribution, or criminal prosecution.

Additionally, contract manufacturers may not be able to manufacture our drug candidates at a cost or in quantities necessary to make them commercially viable. Furthermore, changes in the manufacturing process or procedure, including a change in the location where the drug substance or drug product is manufactured or a change of a third-party manufacturer, may require prior FDA review and approval in accordance with the FDA’s cGMP and NDA regulations. Contract manufacturers may also be subject to comparable foreign requirements. This review may be costly and time-consuming and could delay or prevent the launch of a drug candidate. The FDA or similar foreign regulatory agencies at any time may also implement new standards or change their interpretation and enforcement of existing standards for manufacture, packaging, or testing of products. If we or our contract manufacturers are unable to comply, we or they may be subject to regulatory action, civil actions, or penalties.

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

Advancing compounds through Phase 3 development and regulatory approval will require us to begin commercialization preparation activities and incur related expenses. These activities will include, among other things, the development of an in-house marketing organization and sales force, a market access and payor reimbursement strategy, and a distribution function, which will require significant capital expenditures, management resources, and time. If we are unable to adequately prepare the market for the potential future commercialization of compounds, we may not be able to generate product revenue once marketing authorization is obtained.

If we are unable or decide not to establish internal sales, marketing, and distribution capabilities, we will pursue collaborative arrangements regarding the sales and marketing of our products; however, there can be no assurance that we will be able to establish or maintain such collaborative arrangements on commercially reasonable terms, or if we are able to do so, that they will have effective sales forces. Any revenue we receive will depend upon the efforts of such third parties, which may not be successful. We may have little or no control over the marketing and sales efforts of such third parties and our revenue from product sales may be lower than if we had commercialized our product candidates ourselves. We also face

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competition in our search for third parties to assist us with the sales and marketing efforts of our product candidates. Finally, regardless of whether we contract out our sales and marketing functions, we will be responsible for the marketing and promotion of our products and may be held responsible should any products be improperly marketed or promoted.

If third parties on whom we rely for clinical and preclinical trials do not perform as contractually required or as we expect, we may not be able to obtain regulatory approval for or commercialize our drug candidates and our business may suffer.

We do not have the ability to independently conduct the clinical or preclinical trials required to obtain regulatory approval for our drug candidates. We depend on independent investigators, contract research organizations (“CROs”), and other third-party service providers in the conduct of the trials of our drug candidates and expect to continue to do so. We expect to contract with CROs for future clinical trials. We rely heavily on these parties for successful execution of our trials, but do not control many aspects of their activities. We are responsible for ensuring that each of our trials is conducted in accordance with the applicable regulations and protocols for the trial. Third parties may not complete activities on schedule, or at all, or may not conduct our trials in accordance with regulatory requirements or our protocols. If these third parties fail to carry out their obligations, we may need to enter into new arrangements with alternative third parties. This could be difficult, costly, or impossible, and our preclinical or clinical trials may need to be extended, delayed, terminated, or repeated, and we may not be able to obtain regulatory approval in a timely fashion, or at all, for the applicable drug candidate, or to commercialize such drug candidate being tested in such trials. If we seek to conduct any of these activities ourselves in the future, we will need to recruit appropriately trained personnel and add to our research, clinical, quality, and corporate infrastructure. Moreover, if we need to replace any third parties, we may not be able to do so in a timely fashion or on commercially reasonable terms.

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.

Any products that we ultimately bring to the market, if they receive marketing approval, may not gain market acceptance by physicians, patients, third-party payors, or others in the medical community. For example, current cancer treatments, including chemotherapy and radiation therapy, are well-established in the medical community, and doctors may continue to rely on these treatments. If our products do not achieve an adequate level of acceptance, we may not generate product revenue and we may not become profitable. The degree of market acceptance of our products, if approved for commercial sale, will depend on a number of factors, including: (i) the prevalence and severity of any side effects; (ii) the efficacy and potential advantages over alternative treatments; (iii) the ability to offer our drug candidates for sale at competitive prices; (iv) relative convenience and ease of administration; (v) the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; (vi) the strength of marketing and distribution support and the timing of market introduction of competitive products; and (vii) publicity concerning our products or competing products and treatments.

Even if a potential product displays a favorable efficacy and safety profile, market acceptance of the product will not be known until after it is launched. Our efforts to educate patients, the medical community, and third-party payors about our drug candidates may require significant resources and may never be successful. Such efforts to educate the marketplace may require more resources than are required by conventional methods used by our competitors.

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.

Most patients rely on Medicare, Medicaid, private health insurers, and other third-party payors to pay for their medical needs, including any drugs we may market. If third-party payors do not provide adequate coverage or reimbursement for any products that we may develop, our revenues and prospects for profitability will suffer.

Third-party payors are challenging the prices charged for medical products and services, and many third-party payors limit reimbursement for newly-approved products. These third-party payors may base

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their coverage and reimbursement on the coverage and reimbursement rate paid by carriers for Medicare beneficiaries. Furthermore, many such payors are investigating or implementing methods for reducing health care costs, such as the establishment of capitated or prospective payment systems. Cost-containment pressures have led to an increased emphasis on the use of cost-effective products by healthcare providers, which could limit the price we might establish for products that we or our current or future collaborators may develop or sell, which would result in lower product revenues or royalties payable to us. In particular, third-party payors may limit the indications for which they will reimburse patients who use any products that we may develop or impose other patient access or utilization controls or limitations.

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

Our business exposes us to the risk of product liability claims that is inherent in the manufacturing, testing, and marketing of prescription drugs. We face a risk of product liability exposure related to the testing of our drug candidates in clinical trials and will face an even greater risk if we commercially sell any products. Regardless of merit or eventual outcome, liability claims and product recalls may result in: (i) decreased demand for our drug candidates and products; (ii) damage to our reputation; (iii) regulatory investigations that could require costly recalls or product modifications; (iv) withdrawal of clinical trial participants; (v) costs to defend related ligation; (vi) substantial monetary awards to clinical trial participants or patients; (vii) loss of revenue; (viii) the diversion of management’s attention away from managing our business; and (ix) the inability to commercialize any products that we may develop.

Although we have product liability and clinical trial liability insurance that we believe is adequate, this insurance is subject to deductibles and coverage limitations. We may not be able to obtain or maintain adequate protection against potential liabilities. If we are unable to obtain insurance at acceptable cost or otherwise protect against potential product liability claims, we will be exposed to significant liabilities, which may materially and adversely affect our business and financial position. These liabilities could also prevent or interfere with our commercialization efforts.

Risks Relating to Ownership of Our Common Stock

Pursuant to the terms of the Merger Agreement, we are required to recommend that our stockholders approve the conversion of all outstanding shares of our Series Z Preferred Stock into shares of our Common Stock. We cannot guarantee that our stockholders will approve this matter, and if they fail to do so our operations may be materially harmed.

Under the terms of the Merger Agreement, we agreed to use reasonable best efforts to call and hold a meeting of our stockholders to obtain the requisite approval for the conversion of all outstanding shares of Series Z Preferred Stock issued in the Acquisition into shares of our Common Stock, as required by the Nasdaq listing rules, within 90 days after the date of the Merger Agreement and, if such approval is not obtained at that meeting, to seek to obtain such approval at an annual or special stockholders meeting to be held at least every six months thereafter until such approval is obtained, which would be time-consuming and costly. Additionally, if our stockholders do not timely approve the conversion of our Series Z Preferred Stock, then the holders of our Series Z Preferred Stock may be entitled to require us to redeem their shares of Series Z Preferred Stock for cash at a price per share equal to the then-current fair value (as such term is defined in the Series Z Certificate of Designation) of the Series Z Preferred Stock, as described in the Series Z Certificate of Designation. If we are forced to redeem a significant amount of shares of Series Z Preferred Stock for cash as described above, such cash settlement could materially affect our results of operations, including raising a substantial doubt about our ability to continue as a going concern.

Nasdaq may delist our Common Stock from its exchange, which could limit your ability to make transactions in our securities and subject us to additional trading restrictions.

If our Common Stock is delisted from Nasdaq, our Common Stock would likely then trade only in the over-the-counter market. If our Common Stock were to trade on the over-the-counter market, selling our Common Stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity with respect to our securities;

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a determination that our shares are a “penny stock,” which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; a reduced amount of news and analyst coverage for our Company; and a decreased ability to issue additional securities or obtain additional financing in the future. These factors could result in lower prices and larger spreads in the bid and ask prices for our Common Stock and would substantially impair our ability to raise additional funds and could result in a loss of institutional investor interest and fewer development opportunities for us.

In addition to the foregoing, if our Common Stock is delisted from Nasdaq and it trades on the over-the-counter market, the application of the “penny stock” rules could adversely affect the market price of our Common Stock and increase the transaction costs to sell those shares. The SEC has adopted regulations which generally define a “penny stock” as an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. If our Common Stock is delisted from Nasdaq and it trades on the over-the-counter market at a price of less than $5.00 per share, our Common Stock would be considered a penny stock. The SEC’s penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that before a transaction in a penny stock occurs, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s agreement to the transaction. If applicable in the future, these rules may restrict the ability of brokers-dealers to sell our Common Stock and may affect the ability of investors to sell their shares, until our Common Stock no longer is considered a penny stock.

Provisions in our Restated Certificate of Incorporation, Bylaws, and Delaware law may prevent a change in control that stockholders may consider desirable.

Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”) and our Restated Certificate of Incorporation and Bylaws contain provisions that might enable our management to resist a takeover of our Company or discourage a third party from attempting a takeover of our Company. These provisions include: (i) a classified Board of Directors; (ii) limitations on the removal of directors; (iii) limitations on stockholder proposals at meetings of stockholders; (iv) the inability of stockholders to act by written consent or to call special meetings; and (v) the ability of our Board of Directors to designate the terms of and issue new series of preferred stock without stockholder approval. These provisions could: (i) have the effect of delay, defer, or prevent a change in control of us or a change in our management that stockholders may consider favorable or beneficial, or (ii) discourage proxy contests and make it more difficult for stockholders to elect directors and take other corporate actions.

Our Bylaws provide to the fullest extent permitted by law that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any: (i) derivative action or proceeding brought on behalf of the Company; (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, other employee, or stockholder of the Company to the Company or its stockholders; (iii) any action arising pursuant to any provision of the DGCL, the Company’s Restated Certificate of Incorporation or the Bylaws; (iv) any action to interpret, apply, enforce, or determine the validity of the Restated Certificate of Incorporation or the Bylaws; or (v) any action asserting a claim governed by the internal affairs doctrine. The choice-of-forum provision may increase costs to bring a claim, discourage claims, or limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers, or other employees, which may discourage such lawsuits against the Company or its directors, officers, and

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other employees. Alternatively, if a court were to find the choice-of-forum provision contained in our Bylaws to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving such action in other jurisdictions. The exclusive forum provision in our Bylaws would not apply to claims brought under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or the Securities Act of 1933, as amended, or any other claim for which the federal courts have exclusive jurisdiction. Additionally, such provision will not relieve us of our duty to comply with the federal securities laws and the rules and regulations thereunder, and stockholders will not be deemed to have waived our compliance with these laws, rules, and regulations.

Approximately 16% of our outstanding Common Stock is held (19.9% beneficially owned) by one stockholder. If this significant stockholder chooses to act, they could exert substantial influence over our business, and the interests of this stockholder may conflict with those of other stockholders.

There is a concentration of ownership of our outstanding Common Stock because approximately 16% of our outstanding Common Stock is owned by one stockholder. As of October 6, 2022, entities affiliated with Pillar Partners (collectively, the “Pillar Investment Entities”) beneficially owned approximately 19.9% of our outstanding Common Stock. If any of the Pillar Investment Entities acted together, they could be able to exert substantial influence over our business. Additionally, the interests of the Pillar Investment Entities may be different from or conflict with the interests of our other stockholders. This concentration of voting power with the Pillar Investment Entities could delay, defer, or prevent a change of control, entrench our management and the Board of Directors, or delay or prevent a merger, consolidation, takeover, or other business combination involving us on terms that other stockholders may desire. In addition, conflicts of interest could arise in the future between us, on the one hand, and the Pillar Investment Entities on the other hand, concerning potential competitive business activities, business opportunities, the issuance of additional securities and other matters.

Our principal stockholders own a significant percentage of our capital stock and will be able to exert significant control over matters subject to stockholder approval.

Our directors, officers, 5% stockholders, and their affiliates currently beneficially own a substantial portion of our outstanding voting capital stock. Therefore, these stockholders have the ability and may continue to have the ability to influence us through this ownership position. These stockholders may be able to determine some or all matters requiring stockholder approval. For example, these stockholders, acting together, may be able to control elections of directors, amendments of organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our Common Stock that you may believe are in your best interest as one of our stockholders.

The issuance or sale of shares of our Common Stock could depress the trading price of our Common Stock.

If (i) we issue additional shares of our Common Stock or rights to acquire shares of our Common Stock in other future transactions, (ii) any of our existing stockholders sells a substantial amount of our Common Stock, or (iii) the market perceives that such issuances or sales may occur, then the trading price of our Common Stock may significantly decrease. In addition, our issuance of additional shares of Common Stock will dilute the ownership interests of our existing common stockholders.

Because we do not intend to pay dividends on our Common Stock, investor returns will be limited to any increase in the value of our stock.

We have never declared or paid any cash dividends on our Common Stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business and do not anticipate declaring or paying any cash dividends on our Common Stock for the foreseeable future.

Certain Risks with the Reverse Stock Split Proposal

Our expected appeal to Nasdaq may not be successful.

There can be no assurance that we will be able to regain compliance with Nasdaq Listing Rule 5550(a)(2), which requires the Company to maintain a minimum bid price of at least $1 per share for continued listing

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on Nasdaq (the “Minimum Bid Requirement”) or maintain compliance with other Nasdaq listing requirements, even if the Reverse Stock Split Proposal is approved by our stockholders. If we are required to appeal any notification of delisting, and such appeal is denied or if we fail to regain compliance with Nasdaq’s continued listing standards during any period granted by Nasdaq, our Common Stock will be subject to delisting from Nasdaq.

We cannot assure you that the proposed Reverse Stock Split will increase the price of the Common Stock.

We expect that the Reverse Stock Split will increase the market price of the Common Stock. However, the effect of the Reverse Stock Split on the market price of the Common Stock cannot be predicted with any certainty, and the history of reverse stock splits for other companies in our industry is varied, particularly since some investors may view a reverse stock split negatively. It is possible that the per share price of the Common Stock after the Reverse Stock Split will not increase in the same proportion as the reduction in the number of outstanding shares of Common Stock following the Reverse Stock Split, and the Reverse Stock Split may not result in a per share price that would attract investors who do not trade in lower priced stocks. In addition, we cannot assure you that the Common Stock will be more attractive to investors. Even if we implement the Reverse Stock Split, the market price of the Common Stock may decrease due to factors unrelated to the Reverse Stock Split, including our future performance. If the Reverse Stock Split is consummated and the trading price of our Common Stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the Reverse Stock Split.

We may not satisfy the Nasdaq continued listing requirements following the Reverse Stock Split.

While we intend to monitor the average closing price of the Common Stock and consider available options if it does not continue to trade at a level likely to result in us maintaining compliance with applicable Nasdaq listing standards, no assurances can be made that we will in fact be able to comply with such applicable Nasdaq listing standards and that our Common Stock will remain listed on Nasdaq. If the Common Stock ultimately were to be delisted from Nasdaq for any reason, in addition to the effects noted above under “Background and Reasons for the Reverse Stock Split — Maintain Listing on Nasdaq,” it could negatively impact us as it would reduce the liquidity and market price of the Common Stock; reduce the number of investors willing to hold or acquire the Common Stock; negatively impact our ability to access equity markets, issue additional securities and obtain additional financing in the future; affect our ability to provide equity incentives to our employees; and negatively impact our reputation and, as a consequence, our business.

The proposed Reverse Stock Split may decrease the liquidity of the Common Stock and result in higher transaction costs.

The liquidity of the Common Stock may be negatively impacted by the Reverse Stock Split, given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the stock price does not increase as a result of the Reverse Stock Split. In addition, if the Reverse Stock Split is implemented, it may increase the number of our stockholders who own “odd lots” of fewer than 100 shares of Common Stock, which may be more difficult to sell. Brokerage commissions and other costs of transactions in odd lots are generally higher than the costs of transactions of more than 100 shares or of even multiples of 100 shares of Common Stock. Accordingly, the Reverse Stock Split may not achieve the desired results of increasing marketability of the Common Stock as described above.

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DESCRIPTION OF BUSINESS OF IDERA PHARMACEUTICALS, INC.

Company Overview

We are a biopharmaceutical company with a business strategy focused on the clinical development, and ultimately the commercialization, of drug candidates for rare disease indications characterized by small, well-defined patient populations with serious unmet medical needs. Our current focus is to identify and potentially acquire rights to novel development and commercial-stage rare disease programs through new business development opportunities, including additional strategic alternatives. We have in the past and may in the future explore collaborative alliances to support development and commercialization of any of our drug candidates.

Until December 2021, we were developing tilsotolimod, via intratumoral injection, for the treatment of solid tumors in combination with nivolumab, an anti-PD1 antibody marketed as Opdivo® by Bristol Myers Squibb Company (“BMS”), and/or ipilimumab, an anti-CTLA4 antibody marketed as Yervoy® by BMS. Due to Phase 3 results in anti-PD-1 refractory advanced melanoma (ILLUMINATE-301), reported in March 2021, which showed the study failed to meet its primary endpoint, as well as a decision in December 2021 to discontinue enrollment in ILLUMINATE-206, our Phase 2 study in solid tumors, Company-sponsored development of tilsotolimod in oncology has been discontinued. Although clinical trials with tilsotolimod have not yet translated into a new treatment alternative for patients, we believe that data supporting tilsotolimod’s mechanism of action and encouraging safety profile from across the array of pre-clinical and clinical work to date, together with its intellectual property protection, are noteworthy. As a result, in December 2021, we announced that we would consider an out-licensing arrangement so that tilsotolimod’s full potential might continue to be explored on behalf of patients who did not respond to traditional immunotherapy, together with other alternatives.

In September 2022, we acquired Aceragen, Inc. (“Aceragen”), a privately-held biotechnology company addressing rare, orphan pulmonary, and rheumatic diseases for which there are limited or no available treatments. Aceragen owned or controlled the intellectual property related to ACG-701 (patented formulation of sodium fusidate) and ACG-801 (recombinant human acid ceramidase (rhAC)). As a result of our acquisition of Aceragen, our business strategy is to develop and optimize commercial value of ACG-701 and ACG-801 for appropriate patients. Accordingly, we are developing ACG-701 to treat cystic fibrosis pulmonary exacerbations (“CF”) and melioidosis, a severe, life-threatening infection, and ACG-801 to treat patients suffering from a genetic mutation in the ASAH 1 gene, also known as Farber disease.

Market Opportunity

We plan to develop ACG-701 for two indications: (1) CF PEx (as defined below) and (2) melioidosis. We are currently focused on developing ACG-801 to treat patients living with Farber disease.

Clinical Development

As discussed above, we are currently developing ACG-701 to treat CF and melioidosis and ACG-801 to treat Farber disease, each of which is discussed in greater detail below.

ACG-701 for Cystic Fibrosis Pulmonary Exacerbations

ACG-701 is a proprietary formulation of sodium fusidate being developed as a potential treatment for acute pulmonary exacerbations (“PEx”) associated with CF. CF is a progressive, genetic disease hallmarked by the inflammatory and infectious pulmonary exacerbations that are the primary cause of morbidity and mortality for CF patients. There are over 70,000 patients living with CF globally, with approximately 30,000 patients in the United States. If approved, ACG-701 would represent the first oral product in the United States indicated for the treatment of CF PEx, a major factor behind lung function decline in patients living with CF.

The Phase 2 trial of ACG-701 in CF PEx (the REPRIEVE study) is a randomized, double-blinded, placebo-controlled study evaluating ACG-701 in newly diagnosed pulmonary exacerbations in CF patients. This study, which is funded in part by an award from the Cystic Fibrosis Foundation, will capture multiple

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clinical events inclusive of patient-reported outcomes, FEV1, and antimicrobial regimen changes through day 14. The REPRIEVE study is expected to begin in the fourth quarter of 2022. The active component of ACG-701, sodium fusidate, has never been approved in the United States, but has been used for 50+ years with an established clinical efficacy and safety profile ex-US, including as part of CF PEx treatment guidelines in the United Kingdom and Australia.

ACG-701 has received Orphan drug and Fast Track designations for the treatment of CF patients from the FDA. In addition, we have also received a Qualified Infectious Disease Product (“QIDP”) designation for ACG-701 for the treatment of CF PEx. If approved, QIDP will provide an additional 5-year extension of regulatory exclusivity.

ACG-701 for Melioidosis

ACG-701 is also being developed for the treatment of melioidosis, a life-threatening infection that can affect numerous organ systems, including the lungs. The pathogen that causes melioidosis, B. pseudomallei, is endemic in Southeast Asia and is classified as a Category A biothreat agent by the U.S. government. The U.S. Department of Defense’s Defense Threat Reduction Agency (“DTRA”) is supporting the development of ACG-701 as a potential medical countermeasure against this pathogen with funding up to $49.7 million, of which $13.2 million has been received by the Company.

We are conducting the TERRA study (NCT05105035), a phase 2 randomized, double-blind, placebo-controlled study for the treatment of melioidosis in hospitalized patients with melioidosis. The TERRA study will capture multiple clinical events inclusive of mortality, organ failure, sepsis, and treatment modifications through day 14. An independent data monitoring committee has responsibility for overseeing the safety and efficacy data from the TERRA study, and will meet by the end of 2022 to determine whether the study should continue as planned or, if efficacy and safety data are compelling, to be unblinded for full analysis.

ACG-801 for Farber Disease

ACG-801, recombinant human acid ceramidase, is an investigational biological enzyme replacement therapy being developed for the treatment of Farber disease. Farber disease is a severe, progressive monogenic lysosomal storage disorder, involving mutations in the acid ceramidase gene that lead to toxic levels of ceramide accumulation. Acid ceramidase acts in the lysosome to metabolize ceramide, a pro-inflammatory lipid. Loss of acid ceramidase function leads to abnormal accumulation of ceramide, causing macrophage-driven inflammation and multi-organ disease affecting bone, cartilage, the immune system, central nervous system, and the lungs. Patients with the most severe phenotype of Farber disease die early in life, most commonly from respiratory failure. The worldwide prevalence of Farber disease is expected to exceed 1,000 patients. We are not aware of any competitive development programs seeking to treat Farber disease and there are no Farber disease-specific treatments currently approved by the FDA.

We are planning a single, harmonized trial for regulatory submission for both FDA and EMA approval, known as the ADVANCE study, which, as discussed in greater detail below, is partially funded by NovaQuest. A randomized, double-blind, placebo-controlled study of Farber patients, the ADVANCE study will measure nodule changes and capture patient-specific disease burden improvement through week 28. We have had regular interactions with the FDA, and most recently, had our request for a clinical-focused Type C meeting granted. Following resolution of the clinical hold pertaining to manufacturing and quality issued, we expect to initiate the ADVANCE clinical study for ACG-801 in Farber disease in the second half of 2023.

The FDA has granted Orphan, Fast Track, and Rare Pediatric Disease designations for ACG-801, which is anticipated to be eligible for a Rare Pediatric Disease priority review voucher. Additionally, ACG-801 was granted Orphan Drug Designation by the EMA for Farber disease.

Tilsotolimod (IMO-2125)

Tilsotolimod is a synthetic phosphorothioate oligonucleotide that acts as a direct agonist of TLR9 to stimulate the innate and adaptive immune systems. It was developed for administration via intratumoral

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injection in combination with systemically administered checkpoint inhibitors and costimulation therapies for the treatment of various solid tumors. We referred to our tilsotolimod development program as the ILLUMINATE development program. All Company-sponsored development in oncology has been discontinued and study-related activities are in the process of being concluded.

ILLUMINATE-301 — Phase 3 Trial of Tilsotolimod (IMO-2125) in Combination with Ipilimumab in Patients with Anti-PD1 Refractory Melanoma

In the first quarter of 2018, we initiated a Phase 3 trial of intratumoral tilsotolimod in combination with ipilimumab in patients with anti-PD-1 refractory melanoma, which we referred to as ILLUMINATE-301. This trial compared the results of the tilsotolimod — ipilimumab combination to those of ipilimumab alone in a 1:1 randomization. The family of primary endpoints of the trial consisted of ORR by blinded independent central review RECIST v1.1 and median OS.

As discussed above, in March 2021, we reported that ILLUMINATE-301 did not meet its primary endpoint of ORR. In May 2021, following evaluation of the full data set, we announced we would not continue ILLUMINATE-301 to its OS primary endpoint.

ILLUMINATE-206 — Phase 2 Trial of Tilsotolimod (IMO-2125) in Combination with Nivolumab and Ipilimumab for the treatment of Solid Tumors

In September 2019, we initiated a Phase 2, open-label, global, multicohort study to evaluate the safety and effectiveness of tilsotolimod administered intratumorally in combination with nivolumab and ipilimumab for the treatment of solid tumors. We refer to this study as ILLUMINATE-206. The first solid tumor investigated under ILLUMINATE-206 was relapsed/refractory Microsatellite-Stable Colorectal Cancer (“MSS-CRC”) in immunotherapy-naïve patients (the “MSS-CRC Study”).

In December 2021, we announced that preliminary data from the second ten patients dosed in the safety cohort of ILLUMINATE-206 showed a safety profile consistent with the first ten patients in ILLUMINATE‑206 and with prior studies. Of the eight patients who had a post-baseline disease assessment evaluated per RECIST v1.1, one experienced SD with disease control for more than six months; the remaining patients experienced Progressive Disease (“PD”).

Clinical Funding and Collaborative Alliances

Our clinical funding and current alliances include collaborations with the Cystic Fibrosis Foundation, DTRA, NovaQuest, and Scriptr Global, Inc. (“Scriptr”). We may seek to enter into new funding arrangements or collaborative alliances to support development and commercialization of additional drug candidates.

Cystic Fibrosis Foundation

In 2021, the Cystic Fibrosis Foundation (“CFF”) provided us a Therapeutic Development Award Agreement in the amount of $3,500,000 of which $1,000,000 has been received to date. Pursuant to this agreement, the CFF will provide us payments in line with certain development program milestones estimated to begin in 2022 and through 2023.

Defense Threat Reduction Agency

As discussed above, in 2021, we were awarded a contract by the DTRA to develop ACG-701 as a potential medical countermeasure against the pathogen that causes melioidosis, B. Pseudomallei. This contract will fund clinical and regulatory development of ACG-701 up to $49.7 million, of which $13.2 million has been received by the Company as of September 30, 2022. The term of this contract extends through December 2026.

NovaQuest

Pursuant to the Purchase Agreement, NovaQuest agreed to provide up to $20 million in capital contributions for development funding relating to the treatment of Farber disease (“Capital Contributions”). The Capital Contributions are to be paid by NovaQuest in quarterly installments for our eligible expenses

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associated with the development of ACG-801 for Farber disease. The NovaQuest transaction includes tiered royalty payments on net sales based on a mid-double-digit percentage which drops to mid-single digits after reaching a predetermined milestone cap, and a required 35% share of the proceeds from the possible sale of a PRV, which may be awarded by the FDA upon regulatory approval in the U.S. for ACG-801.

Collaboration with Scriptr

In February 2021, we entered into a collaboration and option agreement with Scriptr, pursuant to which (i) Scriptr and Idera will conduct a research collaboration utilizing Scriptr Platform Technology (“SPT”) to identify, research and develop gene therapy candidates (each, a “Collaboration Candidate”) for the treatment, palliation, diagnosis or prevention of (a) myotonic dystrophy type 1 (“DM1 Field”) and (b) Friedreich’s Ataxia (“FA Field”) on a Research Program-by-Research Program basis, as applicable, and (ii) we were granted an exclusive option, in our sole discretion, to make effective the Scriptr License Agreement, as defined below, for a given Research Program, as defined below, to make use of Collaboration Candidates and related intellectual property (collectively, the “Scriptr Agreement”).

Pursuant to the Scriptr Agreement, Scriptr will use commercially reasonable efforts to carry out research activities set forth in accordance with the applicable DM1 Field and FA Field research plans, including certain pre-clinical proof of concept studies, to identify research Collaboration Candidates utilizing SPT (each, a “Research Program”). Following the completion of activities under a given Research Program, Scriptr will prepare and submit to us a comprehensive data package (each, a “Data Package”) that summarizes, on a Research Program-by-Research Program basis, any Collaboration Candidates researched under the Research Program, including any data and results. Upon receipt of a Data Package, we have, in our sole discretion, up to two-hundred seventy (270) calendar days to make effective the exclusive license agreement entered into by and between Scriptr and us, pursuant to which, among other things, Scriptr grants us exclusive rights and licenses with respect to the development, manufacture and commercialization of licensed candidates and products, subject to certain conditions and limitations (the “Scriptr License Agreement”), for a given Research Program (each licensed Research Program, a “Licensed Program”). The Scriptr License Agreement provides for customary development milestones on candidates developed under a Licensed Program and royalties on licensed products, if any.

In partial consideration of the rights granted by Scriptr to us under the Scriptr Agreement, we made a one-time, non-creditable and non-refundable payment to Scriptr during the first quarter of 2021. In order to fund the Research Programs, we will reimburse Scriptr for costs incurred by or on behalf of Scriptr in connection with the conduct of each Research Program during the research term in accordance with the applicable Research Program budget and payment schedule.

Academic and Research Collaborations

We have entered into research collaborations with scientists at leading academic research institutions. These research collaborations allow us to augment our internal research capabilities and obtain access to specialized knowledge and expertise. In general, our research collaborations may require us to supply compounds and pay various amounts to support the research. Under these research agreements, if a collaborator, solely or jointly with us, creates any invention, we may own exclusively such invention, have an automatic paid-up, royalty-free non-exclusive license, or have an option to negotiate an exclusive, worldwide, royalty-bearing license to such invention. Inventions developed solely by our scientists in connection with research collaborations are owned exclusively by us. These collaborative agreements are non-exclusive and may be terminated with limited notice.

Recent Developments

Reduction-in-Force

In April 2021, following the announcement that the ILLUMINATE-301 trial did not meet its primary endpoint of ORR, we implemented a reduction-in-force that affected approximately 50% of our workforce through September 30, 2021, primarily in the area of research and development. The decision was made in order to align our workforce with our needs in light of the outcome of ILLUMINATE-301’s ORR endpoint,

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our ongoing ILLUMINATE development program, and other business development activities focused on identifying new portfolio opportunities.

In connection with these actions, we incurred and paid termination costs for the reduction in workforce, which includes severance, benefits and related costs, of approximately $1.3 million during the year ended December 31, 2021. In September 2022, in connection with the Acquisition, we restructured our operations and reduced the workforce by approximately 38% of the Company’s pre-Acquisition employees.

Nasdaq Compliance — Minimum Bid Requirement

We are currently working with the Staff but expect to receive a written notification from Nasdaq stating that we had not regained compliance with the Minimum Bid Requirement. We are aware that such written notification will provide us with the opportunity to request a hearing before the Nasdaq Hearings Panel (the “Panel”) within a specified date from the written notice. If we have not met the Minimum Bid Requirement by November 21, 2022, it fully expects to submit an appeal of such written notification to the Panel as soon as practicable and prior to any deadline. Under Nasdaq rules, the delisting of our Common Stock will be stayed during the pendency of the appeal and during such time our Common Stock will continue to be listed on Nasdaq. There can be no assurance that such an appeal will be successful, or that we will be able to regain compliance with the Minimum Bid Price requirement or maintain compliance with other Nasdaq listing requirements. If our appeal is denied or if we fail to regain compliance with Nasdaq’s continued listing standards during any period granted by the Panel, our Common Stock will be subject to delisting from Nasdaq.

Nasdaq Compliance — Initial Listing Requirements

On October 21, 2022, we received a letter from the Staff notifying us that our acquisition of Aceragen will, upon stockholder approval of Proposal No. 1, be considered a “change of control” transaction under Nasdaq rules. As such, we must meet Nasdaq’s initial listing requirements. Accordingly, we must meet all the requirements set forth in Nasdaq Rule 5505(a) and at least one of the standards set forth in Nasdaq Rule 5505(b).

The listing standards of Nasdaq Rule 5505(a) requires us to have, among other things:

•

a minimum bid price that is greater than or equal to $4.00 per share;

•

at least 1,000,000 unrestricted publicly held shares;

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at least 300 round lot holders, and at least 50% of such round lot holders must each hold unrestricted securities with a market value of at least $2,500;

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at least three registered and active market makers; and

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a minimum average daily trading volume of 2,000 shares over the 30-trading day period prior to listing, with trading occurring on more than half of those 30 days, unless such security is listed on Nasdaq in connection with a firm commitment underwritten public offering of at least $4 million.

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SUMMARY DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION OF ACERAGEN, INC.

Set forth below is a summary of Management’s Discussion and Analysis of Financial Condition and Results of Operations of Aceragen (“MD&A”) for the year ended December 31, 2021 and the periods ended June 30, 2022 and 2021. The complete MD&A for this period is attached to this proxy statement as Annex F. The MD&A should be read in conjunction with the audited financial statements and notes of Aceragen for the period from March 2, 2021 through December 31, 2021, attached as Annex C, and the unaudited financial statements and accompanying notes of Aceragen for the six months ended June 30, 2022 and 2021, attached as Annex D. In addition to historical information, this MD&A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. See “Cautionary Information Regarding Forward-Looking Statements.”

Results of Operations

Aceragen has received two significant contracts for funding up to $49.7 million from the United States government, funded by the Defense Threat Reduction Agency (“DTRA”). Additionally, the Company has received a $3.5 million award from the Cystic Fibrosis Foundation, of which $2.5 million remains available to be billed as certain developmental milestones are achieved.

Since beginning operations, Aceragen has generated approximately $10.4 million in revenues. However, its expenses for research and development and general and administrative activities have been $41.8 million. Research and development expenses for government sponsored and non-government sponsored activities include both outsourced services such as, drug product and substance manufacturing with a contract manufacturing organization, analytical services, and clinical studies related activities and internal personal related costs.

Liquidity and Capital Resources

Similar to other development stage biotechnology companies, Aceragen’s products that are being developed have not generated adequate revenue to achieve profitability. As a result, we have historically suffered recurring losses and we have required significant cash resources to execute Aceragen’s business plans. These losses are expected to continue for the foreseeable future.

Aceragen recognizes that it will need to raise additional capital in order to continue to execute its business plan in the future. There is no assurance that additional financing will be available when needed or that Aceragen will be able to obtain financing on terms acceptable to it or whether Aceragen will become profitable and generate positive operating cash flow. If Aceragen is unable to raise sufficient additional funds, it will have to further scale back its operations. Aceragen believes it has sufficient capital to fund its obligations, as they become due, in the ordinary course of business into the third quarter of 2023. Aceragen based this estimate on assumptions that may prove to be incorrect, and it could use currently available capital resources sooner than currently expected.

The entirety of Management’s Discussion and Analysis of Financial Condition and Results of Operations is attached as Annex F hereto.

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IDERA MANAGEMENT FOLLOWING THE ACQUISITION

Board of Directors

~~Our board~~The following table provides information about those persons who serve as directors of the Company following completion of the Acquisition.

Name

Age

Committees(1)

Class – Election Year

Audit

Comp

N&CG

Vincent J. Milano

Chair of the Board

Class I – 2023

Dr. Cristina Csimma

Director

Class I – 2023

Michael Dougherty

Director

Class I – 2023

James Geraghty

Director

Class II – 2024

Dr. Maxine Gowen

Director

Class II – 2024

Ronald Wooten

Director

Class III – 2025

John C. Taylor

Director

Class III – 2025

(1)

“C” indicates Chair of the applicable committee.

Vincent J. Milano is ~~responsible for establishing our broad corporate policies and overseeing~~ the ~~management~~Chair of our ~~Company. Our chief executive officer~~Board, having previously served as our President and CEO from 2014 to September 2022 and has been a member of our ~~other executive officers are responsible for~~Board of Directors since 2014. Prior to joining us, Mr. Milano served as Chairman, President, and CEO of ViroPharma Incorporated (“ViroPharma”), a pharmaceutical company that was acquired by Shire plc in 2014, from 2008 to 2014, as its Vice President, Chief Financial Officer, and Chief Operating Officer from 2006 to 2008, and as its Vice President, Chief Financial Officer, and Treasurer from 1996 to 2005. Mr. Milano also served on the board of directors of ViroPharma from 2008 to 2014. Prior to joining ViroPharma, Mr. Milano served in increasingly senior roles, most recently senior manager, at KPMG LLP, an independent registered public accounting firm, from 1985 to 1996.

Mr. Milano currently serves on the board of directors of Aclaris Therapeutics, Inc. (Nasdaq: ACRS) and Biocryst Pharmaceuticals, Inc. (Nasdaq: BCRX), each a publicly traded company, since 2020 and 2021, respectively. Mr. Milano previously served as a director of Spark Therapeutics, Inc., Vanda Pharmaceuticals Inc., and privately held VenatoRx Pharmaceuticals, Inc. from 2014 to 2019, from 2010 to 2019, and from 2013 to 2022, respectively. Mr. Milano holds a Bachelor of Science degree in Accounting from Rider College.

We believe that Mr. Milano’s qualifications to sit on our ~~day-to-day operations. Our~~Board of Directors include his significant public company management and board ~~evaluates~~experience and knowledge of our ~~corporate performance~~industry.

Dr. Cristina Csimma is a biopharmaceutical leader and ~~approves, among other things, our corporate strategies~~strategic advisor with decades of experience in biotechnology, large pharma, and ~~objectives, operating plans, major commitments~~venture capital. Dr. Csimma currently serves on the board of ~~corporate resources~~directors of Syncona Partners, LLP (LON: SYNC), having been elected to its board of directors in February 2022. She also serves as a board director and ~~significant policies. Our board also evaluates and appoints our executive officers.~~

~~Our board met eight times during 2021. Each director attended at least 75%~~a member of the ~~total number~~compensation committee of Palisade Bio, Inc. (Nasdaq: PALI), having been elected to its board ~~meetings and committee meetings for~~of directors in 2017. She also serves as the ~~committees on which he or she served during 2021.~~

While we do not have a formal policy regarding director attendance, we strongly encourage and expect our directors to attend our annual meetings of stockholders. All of our directors virtually attended the 2021 annual meeting of stockholders.

~~Board Leadership Structure~~

~~Our board does not have a policy on whether the offices of chairperson~~chair of the board of directors of Caraway Therapeutics, Inc. since 2019 (executive chair in 2019). Dr. Csimma also serves on advisory boards, including the Muscular Dystrophy Association Venture Philanthropy Scientific Advisory Committee since 2006; the Harvard and ~~chief executive officer should be separate~~Brigham and ~~if they are~~Women’s Hospital MRCT Center External Advisory Board since 2015; the TREAT-NMD Advisory Committee for Therapeutics (TACT) since 2009; and the Executive Oversight Board to ~~be separate, whether~~ the ~~chairperson should be selected from among the independent directors or should be an employee~~National Institutes of our Company. Our board believes that it should have the flexibility to make these determinations at any given point in time in the way that it believes best to provide appropriate leadership for our Company. Currently, Mr. Milano serves as our chief executive officer. Mr. Geraghty, an independent director,Health (NIH) NeuroNext Network since 2013.

Dr. Csimma previously served as chair of our board from 2013 until April 28, 2021, at which time Mr. Dougherty, also an independent director, succeeded him as chair. Our board believes that this separation allows our chief executive officer to focus on our day-to-day business, while allowing the chairperson to lead the board of directors of Forendo Pharma between 2020 and 2021 (executive chair in ~~its fundamental role of providing advice to and independent oversight of management.~~

~~Our board recognizes that no single leadership model is right for all companies and at all times and that depending~~2021) when it was acquired by Organon & Co. Dr. Csimma also previously served as a director on the ~~circumstances, other leadership models, such as~~boards of Seneca Biopharma, Inc. (Nasdaq: SNCA; formerly Neuralstem Inc., from 2017 until 2021 when it merged with Leading BioSciences Inc. to form Palisade Bio), Juniper Pharmaceuticals, Inc. (from 2010 until its acquisition by Catalent, Inc. in 2018), and Vtesse Inc. (from 2014 until its acquisition by Sucampo Pharmaceuticals, Inc. in 2017). Dr. Csimma was the executive chair and a ~~combined chairperson~~senior advisor of Exonics Therapeutics, Inc. (from 2016 to 2017), and chief executive officer, might be appropriate. Accordingly, the board periodically reviews its leadership structure. Pursuant to our corporate governance guidelines, if the chairperson is not an independent director, the board may elect a lead director from its independent directors. In such case, the chairpersonwas President, founding CEO, and chief executive officer would consult periodically with the lead director on board matters and on issues facing our Company. In addition, the lead director would serve as the principal liaison between the chairperson of the board and the independent directors and would preside at any executive session of independent directors.

~~Board of Directors’ Role in Risk Oversight~~

Our board, as a whole, has responsibility for risk oversight, with reviews of certain areas being conducted by relevant committees that report directly to the board. The oversight responsibility of the board and its committees is enabled by management reporting processes that are designed to provide visibility to the board about the identification, assessment, and management of critical risks and management’s risk mitigation strategies. These areas of focus include competitive, economic, operational, financial (accounting, credit, liquidity, and tax), legal, regulatory, compliance, health, safety, environmental, political, and reputational risks. Our board regularly reviews information regarding our strategy, operations, credit, and liquidity, as well as the risks associated with each. Our compensation committee is responsible for overseeing risks relating to our executive compensation plans and arrangements. Our audit committee is responsible for overseeing financial risks and risks associated with related party transactions. Our nominating and corporate governance committee is responsible for overseeing risks associated with governance and the independence of the board. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our entire board is regularly informed through committee reports about such risks.

~~Board Committees~~

~~Our board has established three formal standing committees: audit, compensation, and nominating and corporate governance. Each of our audit, compensation, and nominating and corporate governance~~

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~~committees operates under~~board director of Cydan Inc. from 2012 to 2014. She also served on the board of directors of T1D Exchange (non-profit Type 1 Diabetes) from 2018 to 2020 and the NIH Blueprint Neurotherapeutics Network External Oversight Committee from 2014 to 2018, was Vice President of Drug Development at Virdante Pharmaceuticals Inc. from 2009 to 2011, Principal at Clarus Ventures LLC (now Blackstone Life Science), and held roles of increasing responsibility in Clinical Development and Translational Research at Wyeth (now Pfizer Inc.), Genetics Institute, and Dana Farber Cancer Institute. Dr. Csimma holds both a ~~charter~~Doctor of Pharmacy and a Bachelor of Science in Pharmacy from the Massachusetts College of Pharmacy and Allied Health Sciences, as well as a Master of Health Professions from Northeastern University.

We believe that Dr. Csimma’s qualifications to sit on our Board of Directors include her significant public company management and board experience and knowledge of our industry.

Michael Doughertyhas ~~been approved~~served on our Board of Directors since 2019, and as chair of our Board of Directors from 2021 until 2022. Mr. Dougherty currently serves on the board of directors of Trevena, Inc. (Nasdaq: TRVN). Mr. Dougherty was executive chairman of Celator Pharmaceuticals, Inc., or Celator, from 2015 until its acquisition by ~~our board. Our board has~~Jazz Pharmaceuticals plc in 2016; he also ~~adopted corporate governance guidelines~~served as a director of Celator from 2013 to ~~assist our board~~2016. Mr. Dougherty previously served in a variety of senior positions in the ~~exercise of its duties~~biopharmaceutical industry, including as CEO, President, Chief Operating Officer, and responsibilities. Current copies of the charters for the audit, compensation, and nominating and corporate governance committees and the corporate governance guidelines are posted on our website, ir.iderapharma.com/corporate-governance/highlights.

~~Audit Committee~~

Our audit committee’s purpose is to assist the board’s oversight of our accounting and financial reporting processes and the audits of our financial statements. Our audit committee’s responsibilities include:

•

~~appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;~~

•

~~overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of certain reports from such accounting firm;~~

•

~~reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures;~~

•

~~monitoring our internal control over financial reporting, disclosure controls and procedures, and code of business conduct and ethics;~~

•

~~discussing with management and our independent auditor about significant risks or exposures;~~

•

~~establishing procedures for the receipt and retention of accounting related complaints and concerns;~~

•

~~reviewing and approving related party transactions;~~

•

~~meeting independently with our independent registered public accounting firm and management; and~~

•

~~preparing the audit committee report required by SEC rules.~~

The current members of our audit committee are Ms. Schafer (Chair), Mr. Dougherty, and Dr. Goldberg. Our board has determined that Ms. Schafer is an “audit committee financial expert” within the meaning of SEC rules and regulations. EachChief Financial Officer. He also previously served as a member of the ~~audit committee~~board of directors of and Marinus Pharmaceuticals, Inc. (Nasdaq: MRNS), Foundation Medicine, Inc., Adolor Corporation, Genaera Corporation, Aviragen Therapeutics, Inc., Cempra, Inc., and ViroPharma Incorporated. Mr. Dougherty received a Bachelor of Science in Accounting from Villanova University.

We believe that Mr. Dougherty’s qualifications to sit on our Board of Directors include his significant public company management and board experience and knowledge of our industry.

James A. Geraghty has served on our Board of Directors since 2013 and as chair of our Board of Directors from that time until 2021. Mr. Geraghty is ~~independent~~an industry leader with over 35 years of strategic and leadership experience, including more than 25 years as ~~defined under applicable rules~~a senior member of executive teams at biotechnology companies developing and commercializing innovative therapies. From 2013 to 2016, Mr. Geraghty was an Entrepreneur in Residence at Third Rock Ventures, a leading biotech venture fund. From 2011 to 2012, he served as a Senior Vice President of Sanofi S.A., a global healthcare company. Prior to that, he served in various senior management roles at Genzyme Corporation, or Genzyme, a biotechnology company, from 1992 to 2011, including as Senior Vice President of International Development and President of Genzyme Europe. Mr. Geraghty currently serves as chairman of the ~~Nasdaq, including~~board of Orchard Therapeutics plc and Pieris Pharmaceuticals, Inc. and as a member of the ~~independence requirements contemplated by Rule 10A-3 under the Exchange Act. During 2021,~~board of Voyager Therapeutics, Inc., and Fulcrum Therapeutics, Inc. He also previously served as a director of bluebird bio, Inc. and GTC Biotherapeutics, Inc.

We believe that Mr. Geraghty’s qualifications to sit on our ~~audit committee held four meetings.~~

~~Audit Committee Commitments~~

~~Our~~Board of Directors include his public company board ~~pays careful attention to the committee commitments~~and management experience and his broad and deep knowledge of our industry.

Dr. Maxine Gowen served as the CEO and a board director of TamuroBio Inc., a privately held drug development company, from 2019 to 2021, and she remains on the board of directors. ~~We understand that proxy advisory firms set guidelines~~She was the founding President and CEO of Trevena, Inc., or Trevena, (Nasdaq: TRVN), a publicly traded biopharmaceutical company, from 2007 until her retirement in 2018; she remained a member of its board of directors until 2021. Prior to joining Trevena, Dr. Gowen was Senior Vice President for the Center of Excellence for External Drug Discovery at GlaxoSmithKline plc, or GSK, where she held a variety of leadership positions during her tenure of 15 years. Before GSK, Dr. Gowen was Senior Lecturer and Head, Bone Cell Biology Group, Department of Bone and Joint Medicine, of the University of Bath, U.K. Dr. Gowen has served as ~~to the number of public company audit committees on which~~ a director ~~should simultaneously serve. However, we also recognize the importance~~ of ~~evaluating a director’s audit committee commitments on an individual, case-by-case basis to ensure (1) that such director has sufficient time to meaningfully serve on our audit committee~~Aclaris Therapeutics, Inc. (Nasdaq: ACRS) since 2019, Passage Bio, Inc. (Nasdaq: PASG), and ~~(2) that our audit committee is composed of independent, qualified directors with the requisite financial acumen.~~

Currently, our director Carol Schafer sits on four public company audit committees (including our audit committee). The board believes that Ms. Schafer’s experience, expertise, independence, and institutional knowledge, especially with respect to the Company’s auditing processes andas its financial history, planning, and strategy, make her a valuable member of our audit committee. Furthermore, the board believes that Ms. Schafer has demonstrated her commitment and dedication to serving on our audit committee, as she has proven to be a highly-engaged committee chair, attending 100% of all audit committee meetings inChairwoman, since 2021, and ~~100%~~Merus NV (Nasdaq: MRUS) since 2021, each a publicly traded company. She previously held a board seat in the state biotechnology industry association, Life Sciences of ~~all audit committee meetings since being appointed to~~Pennsylvania from 2015 until 2021 and in the ~~committee~~national biotechnology industry association, BIO, from 2008 until 2018. Dr. Gowen previously served as a director of Human Genome Sciences, Inc., from 2008 until 2012, and Akebia Therapeutics, Inc. (Nasdaq: AKBA) from 2014 until 2021, both publicly traded companies, as well as Panorama Medicine, from 2020 until 2021, a privately held biotechnology company. She received her Ph.D. from the University of Sheffield, U.K., an M.B.A. with academic honors from The Wharton School of the University of Pennsylvania, and a B.Sc. with Honors in ~~2018. Accordingly,~~Biochemistry from the ~~board believes that Ms. Schafer’s service on three other public companies’ audit committee does not, and will not, negatively impact her service on our audit committee.~~University of Bristol, U.K.

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~~Compensation Committee~~We believe that Dr. Gowen’s qualifications to sit on our Board of Directors include her significant public company management and board experience and knowledge of our industry.

~~Our compensation committee’s purpose is~~Ronald Wooten was appointed to ~~oversee~~our Board of Directors in connection with the ~~discharge~~closing of the ~~responsibilities~~Acquisition. Prior to the closing of the Acquisition, Mr. Wooten served as a member of the board ~~relating to compensation~~of directors of Aceragen since May 2021. Mr. Wooten has been a partner of NovaQuest Capital Management, L.L.C., an investment firm that focuses on the biopharmaceutical sector, since its inception in 2010. Since 2010, Mr. Wooten has been a member of the ~~Company’s executive officers, employees,~~investment committee of NovaQuest Pharma Opportunities Fund III, NovaQuest Pharma Opportunities Fund IV, NovaQuest Pharma Opportunities Fund V, NovaQuest Private Equity Fund I, and NovaQuest Animal Health Fund I. From 2000 to 2010, he was President of the NovaQuest business unit of Quintiles Inc., a contract research company (“Quintiles”). Mr. Wooten was previously Executive Vice President at Quintiles and served on its board of directors from 2008 to 2010. Mr. Wooten’s previous experience includes nine years with First Union Securities, where he served as a Managing Director of Investment Banking. Mr. Wooten holds a B.A. degree in Chemistry from the University of North Carolina at Chapel Hill and an M.B.A. from Boston University.

We believe that Mr. Wooten’s qualifications to sit on our Board of Directors include his significant public company management and board ~~members. Our compensation committee’s responsibilities include:~~experience and knowledge of our industry.

•John C. Taylor

~~approving~~ was appointed as our Chief Executive Officer and to our Board of Directors in connection with the ~~Company’s long-term strategy of compensation, including the consideration of base compensation, short-term incentive, and long-term incentive targets,~~

•

~~reviewing and approving the compensation~~closing of the ~~Company’s chief executive officer~~Acquisition. Mr. Taylor was a co-founder and previously served as the ~~other executive officers;~~Chief Executive Officer of Aceragen since its founding in 2021. Since 2018, Mr. Taylor has served as the Entrepreneur In Residence for the North Carolina Biotechnology Center. From 2013 to 2018, Mr. Taylor served as the Chief Executive Officer for Spyryx Biosciences, Inc., a company focused on developing therapies targeting novel regulation of ENaC for lung complications associated with cystic fibrosis. Prior to this, Mr. Taylor served as the Vice President, Corporate Development for Synageva BioPharma Corp. from 2009 to 2013 and Vice President, Business Development for Javelin Pharmaceuticals, Inc. from 2008 to 2009. Mr. Taylor holds a Bachelor of Science in Biological Sciences from Clemson University and a Master of Science in Technology Management from the University of Pennsylvania.

We believe that Mr. Taylor’s qualifications to sit on our Board of Directors include his significant public company management and board experience and knowledge of our industry.

•Executive Management

~~overseeing and administering our cash and equity incentive plans;~~

•

~~reviewing and making recommendations to the board with respect to director compensation;~~

•

~~overseeing the evaluation of the Company’s senior executives;~~

•

~~reviewing and discussing annually with management the compensation discussion and analysis required by the SEC rules and included in this proxy statement; and~~

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~~preparing the compensation committee report required by SEC rules.~~

The current members of our compensation committee are Dr. Gowen (Chair), Dr. Csimma, and Mr. Dougherty. During 2021, the compensation committee held five meetings. The compensation committee may delegate to one or morefollowing table provides information about those persons who serve as executive officers of the Company ~~the power to grant operations or stock awards to employees~~following completion of the Company or its subsidiaries who are not directors or executive officers of the Company. The compensation committee may also form and delegate authority to one or more subcommittees as it deems appropriate.

~~The processes and procedures followed by our compensation committee in considering and determining executive compensation are described below under the heading “Executive Compensation.”~~

~~Nominating and Corporate Governance Committee~~

Our nominating and corporate governance committee’s purpose is to identify and recommend to the board persons to be nominated for election as directors, develop and recommend corporate governance principals, and oversee the evaluation of the board. Our nominating and corporate governance committee’s responsibilities include:

•

~~reviewing with the board the requisite skills and criteria for new board members, as well as the composition of the board as a whole;~~

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~~adopting and periodically reviewing procedures regarding director candidates proposed by stockholders;~~

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~~recommending to the board to be appointed to each committee of the board;~~

•

~~reviewing and assessing the adequacy of the corporate governance guidelines;~~

•

~~determining the nature of the self-evaluation of the board, supervising the conduct of the evaluation, and preparing the assessment of the board’s performance; and~~

•

~~overseeing the Company’s succession planning, which includes transitional leadership in the event of an unplanned vacancy.~~

The current members of our nominating and corporate governance committee are Messrs. Geraghty (Chair) and Dougherty, and Ms. Schafer. During 2021, the nominating and corporate governance committee held three meetings.

The processes and procedures followed by our nominating and corporate governance committee in identifying and evaluating director candidates are described below under the heading “Director Nomination Process.”

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~~Director Independence~~

Our securities are listed on the Nasdaq Capital Market and we use the standards of “independence” prescribed by rules set forth by Nasdaq. Under Nasdaq rules, a majority of a listed company’s board of directors must be comprised of independent directors. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit committee and compensation committee be independent and satisfy additional independence criteria set forth in Rules 10A-3 and 10C-1, respectively, under the Exchange Act. Under the applicable Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of our board, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our board determined in early 2021 that each of Dr. Csimma, Mr. Dougherty, Mr. Geraghty, Dr. Goldberg, Dr. Gowen, and Ms. Schafer and all of the members of each of the audit, compensation and nominating and corporate governance committees are independent as defined under applicable rules of the Nasdaq, and, in the case of all members of the audit and compensation committees, the independence requirements contemplated by Rule 10A-3 and Rule 10C-1 under the Exchange Act. As Mr. Milano is our President and Chief Executive Officer, he is not independent.

~~Director Nomination Process~~

The process followed by our nominating and corporate governance committee to identify and evaluate director candidates includes requesting recommendations from members of our board and others, meeting to evaluate biographical information and background material relating to potential candidates and interviewing selected candidates by members of our nominating and corporate governance committee and our board. The nominating and corporate governance committee has from time to time used a third-party recruiting firm to identify and interview potential candidates.

In considering whether to recommend any particular candidate for inclusion in the board’s slate of recommended director nominees, the nominating and corporate governance committee will apply the criteria set forth in our corporate governance guidelines. All candidates, regardless of the source of the candidate’s recommendation, are evaluated using the same criteria. These criteria include assessing the candidate’s:

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~~business acumen;~~

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~~knowledge of our business and industry;~~

•

~~age;~~

•

~~experience;~~

•

~~diligence;~~

•

~~conflicts of interest;~~

•

~~ability to act in the interests of all stockholders; and~~

•

~~in the case of the renomination of existing directors, performance on our board and on any committee of which the director was a member.~~

Our corporate governance guidelines also provide that candidates should not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability, or any other basis proscribed by law and that our nominating and corporate governance committee should consider the value of diversity of the board when evaluating particular candidates. The nominating and corporate governance committee has not adopted any formal or informal diversity policy and treats diversity as one of the criteria to be considered by the committee. The nominating and corporate governance committee does not assign specific weights to particular criteria that the nominating and corporate governance committee reviews and no particular criterion is a prerequisite for the consideration of any prospective director nominee. We believe that the backgrounds and qualifications of our directors, considered as a group, should provide a composite and diverse mix of experience, knowledge, and abilities that will allow the board to fulfill its responsibilities.

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~~Stockholder Nominees~~

Stockholders may recommend individuals to the nominating and corporate governance committee for consideration as potential director candidates by submitting the individuals’ name, together with appropriate biographical information and background materials and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than 5% of our common stock for at least one year as of the date such recommendation is made, to the Nominating and Corporate Governance Committee, c/o Secretary, Idera Pharmaceuticals, Inc., 505 Eagleview Blvd., Suite 212, Exton, PA 19341. Assuming that appropriate biographical and background material has been provided on a timely basis, the nominating and corporate governance committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates provided by other sources. If the board determines to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included in our proxy card for the next annual meeting.

Stockholders also have the right under our bylaws to nominate director candidates directly, without any action or recommendation on the part of the nominating and corporate governance committee or the board, by following the procedures set forth in our bylaws, including advance notice requirements. Candidates nominated by stockholders in accordance with the procedures set forth in our bylaws will not be included in our proxy card for the next annual meeting. See “Information about the Annual Meeting—How and when may I submit a proposal for the 2023 annual meeting of stockholders?” for more information about these procedures and the deadline for submitting director nominations.

~~Board Diversity~~

~~As shown in the table below, three of our seven directors self-identify as diverse.~~

Board Diversity Matrix (as of February 4, 2022)
Total number of Directors 7
Female Male Non-Binary
Did not
Disclose
Gender

Part I: Gender Identity
Directors 3 4 0 0
Part II: Demographic Background
African American or Blank 0 0 0 0
Alaskan Native or Native American 0 0 0 0
Asian 0 0 0 0
Hispanic or Latinx 0 0 0 0
Native Hawaiian or Pacific Islander 0 0 0 0
White 3 4 0 0
Two or More Races or Ethnicities 0 0 0 0
LGBTQ+ 0
Did Not Disclose Demographic Background 0

~~Communicating with our Board of Directors~~

Stockholders and other interested parties may communicate directly with the board (and with independent directors, individually or as a group). Our board will give appropriate attention to written communications that are submitted by stockholders and other interested parties and will respond if and as appropriate. The chairperson of the board (if an independent director) or the lead independent director, if any, is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors, as he or she deems appropriate.

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Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the chairperson of the board or lead independent director, as the case may be, considers to be important for the directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters that involve repetitive or duplicative communications.

Stockholders and other interested parties who wish to send communications on any topic to the board should address such communications to Board of Directors, c/o Secretary, Idera Pharmaceuticals, Inc., 505 Eagleview Blvd., Suite 212, Exton, PA 19341.

~~Each communication from a stakeholder should include the following information, to the extent applicable, and to provide an address to forward a response if deemed appropriate:~~

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~~the name, mailing address, and telephone number of the stakeholder sending the communication;~~

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~~the number of shares, if any, held by the stakeholder; and~~

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~~if the stakeholder is not a record owner of our securities, the name of the record owner of our securities beneficially owned by the stakeholder, if applicable.~~

~~Code of Business Conduct and Ethics~~

We have adopted a written code of business conduct and ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of the Code of Business Conduct and Ethics in the “Investors—~~Corporate Governance” section of our website, which is located at ir.iderapharma.com/corporate-governance/~~highlights. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our code of business conduct and ethics by posting such information on our website at www.iderapharma.com.

~~Hedging Policy~~

Our insider trading policy prohibits our directors and employees (including our executive officers) from hedging or entering into other similar arrangements with respect to the Company’s securities, including, without limitation, short sales of Company securities, including short sales “against the box,” or purchases or sales of puts or calls or other derivative securities based on the Company’s securities.

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~~EXECUTIVE OFFICERS~~

~~Information about our Executive Officers~~

~~Our currently-serving executive officers and their respective ages and positions are described below. Our executive officers serve until they resign or the board terminates their position.~~Acquisition.

Name	Age	~~Position~~Position(s) Held in Company Following the Acquisition
Vincent J. Milano*Andy Jordan	5875	~~President and~~ Chief ~~Executive Officer~~
~~Daniel B. Soland~~	64	~~Senior Vice President, Chief Operating~~Strategy Officer
John J. Kirby	50	~~Senior Vice President,~~ Chief Financial Officer
Dr. Carl Kraus	53	Chief Medical Officer
Bryant D. Lim	51	~~Senior Vice President,~~Chief Business Officer and General Counsel ~~and Corporate Secretary~~
Daniel Salain	55	Chief Operating Officer
John C. Taylor*	52	Chief Executive Officer

Mr. ~~Milano~~Taylor is a member of our ~~board.~~ Board of Directors. See ~~“Information about our Directors”~~ “Idera Management Following the Acquisition — Board of Directors” above for more information about Mr. ~~Milano.~~Taylor.

~~Daniel B. Soland~~Andy Jordan ~~joined~~was appointed as the ~~Company~~Chief Strategy Officer of Idera in ~~January 2021 as our Senior Vice President, Chief Operating Officer. Prior to joining us,~~connection with the closing of the Acquisition. Previously, Mr. ~~Soland most recently~~Jordan served as the Chief ~~Executive~~Financial Officer of ~~uniQure N.V.~~Aceragen from ~~2015 through 2016~~2021 to September 2022. Prior to joining Aceragen, Mr. Jordan founded AR Jordan Consulting, working primarily with biotechnology companies, focusing on bringing to market drugs to treat orphan/rare diseases, serving as its principal from 2008 to 2021. Prior to this, Mr. Jordan held executive-level positions with Guildford Pharmaceuticals, Inc., Odyssey Pharmaceuticals, Inc., and ~~as the Senior Vice President and Chief Operating Officer of ViroPharma~~InfraReDx, Inc. ~~from 2006 through 2014.~~ Mr. ~~Soland previously~~Jordan served as ~~President~~a member of Chiron Corporation, or Chiron, from 2005 through 2006, and helped engineer a turnaround that contributed to the acquisition of Chiron by Novartis International AG. Prior to then, he served as President and Chief Executive Officer of Epigenesis Pharmaceuticals Inc. and as Vice President and Director, Worldwide Marketing Operations at GlaxoSmithKline Biologicals. Earlier in his career, he held positions of increasing responsibility in sales and product management at Pasteur-Merieux’s Connaught Laboratories. Mr. Soland currently serves on the board of directors ~~of KalVista Pharmaceuticals,~~for Gemin X BioPharmaceuticals, Inc. ~~(Nasdaq: KALV), Acadia Pharmaceuticals~~ from 2003 to 2011 and Spyryx Biosciences,

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Inc. ~~(Nasdaq: ACAD), and DBV Pharmaceuticals S.A. (Nasdaq: DBVT), each a publicly traded company.~~from 2013 to 2018. Mr. ~~Soland~~Jordan holds a ~~B.S.~~Bachelor of Arts in ~~Pharmacy~~Liberal Arts from ~~the~~Rutgers University ~~of Iowa.~~and an M.B.A. in Professional Accounting from Rutgers University — Newark.

John J. Kirby has served as the Chief Financial Officer of Idera since 2019. Mr. Kirby joined the Company in 2015 as our Vice President of Corporate Accounting. He served as Vice President of Finance from 2018 to 2019 and has served as Senior Vice President and Chief Financial Officer since 2019 ~~(principal~~(and as principal financial officer and principal accounting officer since 2018). Prior to joining us, Mr. Kirby served as Assistant Controller at Endo Pharmaceuticals, Inc. from 2014 to 2015. From 2012 to 2014, Mr. Kirby served as Vice President, Chief Accounting Officer and Corporate Controller at ViroPharma Incorporated, which was acquired by Shire Plc in 2014. Mr. Kirby began his career at KPMG, LLP in ~~their~~its Healthcare and Life Science Practice and served as a Regional Audit Director at AstraZeneca Pharmaceuticals L.P. prior to joining ViroPharma Incorporated. Mr. Kirby received his B.S. in Accountancy from Villanova University and is a licensed certified public accountant in the Commonwealth of Pennsylvania. Mr. Kirby has also ~~serves~~served on the board of trustees of the Delaware Museum of Nature & Science (formerly the Delaware Museum of Natural History) since 2018.

Dr. Carl Kraus was appointed as the Chief Medical Officer of Idera in connection with the closing of the Acquisition. Prior to this appointment, Dr. Kraus served as the Chief Medical Officer of Aceragen from 2021 to September 2022. Prior to this, in 2017, Dr. Kraus founded Arrevus, Inc. (“Arrevus”), a clinical-stage biotechnology company developing novel therapies for orphan diseases, and served as its Chief Executive Officer from 2017 to 2020. Prior to founding Arrevus, Dr. Kraus served as the Chief Medical Officer of Nanotherapeutics, Inc. from 2013 to 2017, the Vice President, Medical Affairs, Risk Management/REMS of Medscape, LLC from 2010 to 2013, and the Vice President, Infectious Diseases, Scientific Affairs of PRA International from 2008 to 2010. Prior to joining industry, Dr. Kraus was a medical officer in the Center for Drug Evaluation and Research at the Food & Drug Administration from 2002 to 2005. Dr. Kraus holds a Bachelor of Arts in Biology from Washington University in St. Louis, and received his M.D. in Medicine from Washington University School of Medicine in St. Louis.

Bryant D. Lim ~~has been our~~was appointed as the Chief Business Officer and General Counsel of Idera in connection with the closing of the Acquisition. Mr. Lim previously served as the Senior Vice President, Chief Business Officer and General Counsel of Idera from June 2022 to September 2022, and ~~Secretary since 2018.~~Senior Vice President from 2018 to June 2022. Prior to joining us, Mr. Lim served as Vice President, Assistant General Counsel and, prior to that, Global Chief Compliance Officer at Incyte Corporation from 2014 to 2018. Prior to his time at Incyte Corporation, Mr. Lim held roles of increasing responsibility at ViroPharma Incorporated from 2009 until its acquisition by Shire Plc in 2014. Prior to that, Mr. Lim served as Assistant Counsel at Merck & Co., Inc. and ~~also~~ was associated with Morgan, Lewis & Bockius, LLP. Mr. Lim began his legal career as a law clerk for a federal judge. Mr. Lim received his J.D. from Villanova University School of Law, where he ~~serves~~served on its adjunct faculty teaching about the Law of Drugs and Biologics. Mr. Lim received his B.A. from the University of Rochester. Mr. Lim ~~also serves~~has served on the board of directors of the state biotechnology industry association, Life Sciences of Pennsylvania, since 2019.

Daniel Salain was appointed as the Chief Operating Officer of Idera in connection with the closing of the Acquisition. Prior to this appointment, Mr. Salain served as Chief Operating Officer of Aceragen from 2020 to September 2022. Previously, Mr. Salain was the Chief Operating Officer of Graybug Vision, Inc., a clinical-stage biopharmaceutical company focused on developing medicines for ocular diseases, from 2017 to 2020, and was the Senior Vice President, Global Head of Manufacturing & Supply Chain at Ophthotech, a clinical-stage biotechnology company, from 2015 to 2017. Prior to working at Ophthotech, Mr. Salain was the Vice President of Global Operations, Manufacturing & Supply Chain at Aptalis Pharmaceuticals Inc., a company that focused on developing products to treat gastrointestinal diseases and disorders, from 1999 to 2014. Mr. Salain has a Bachelor of Science degree in Chemistry and Marketing from the University of Indianapolis.

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PROPOSALS

PROPOSAL NO. 1:
APPROVAL OF CONVERSION PROPOSAL

Overview

As described above, the Company issued 80,656 shares of Series Z Preferred Stock in the Acquisition. The Series Z Preferred Stock is intended to have rights that are generally equivalent to our Common Stock, provided that the Series Z Preferred Stock does not have the right to vote on most matters (including the election of directors). Upon conversion of the above-described Series Z Preferred Stock, 80,656,000 shares of Common Stock are issuable, assuming approval of this Proposal No. 1 and subject to certain beneficial ownership limitations.

Subject to stockholder approval, each share of Series Z Preferred Stock is convertible into approximately 1,000 shares of Common Stock. This Proposal No. 1 would provide the necessary approval to permit such conversion. In the event that stockholders do not elect to permit conversion of the Series Z Preferred Stock, then the holders of the Series Z Preferred Stock may, commencing in March 2023, elect to have such shares redeemed by the Company at the then-current fair value (as such term is defined in the Series Z Certificate of Designation) of the Series Z Preferred Stock. See “Risk Factors — Risks Relating to Ownership of Our Common Stock.” Pursuant to the terms of the Merger Agreement, we are required to recommend that our stockholders approve the conversion of all outstanding shares of our Series Z Preferred Stock into shares of our Common Stock. We cannot guarantee that our stockholders will approve this matter, and if they fail to do so our operations may be materially harmed.

Shares Issuable Upon Conversion

As described above, the Company issued 80,656 shares of Series Z Preferred Stock in the Acquisition. There are 80,656,000 shares of Common Stock that are potentially issuable upon conversion of the Series Z Preferred Stock. The sale into the public market of the underlying Common Stock could materially and adversely affect the market price of our Common Stock. See “Risk Factors — Risks Relating to Ownership of Our Common Stock.”

Assuming the approval of this Proposal No. 1, the total number of shares of Common Stock issued and outstanding or reserved for issuance (determined on an as-converted basis) will be approximately 143,011,434.

Description of Series Z Preferred Stock

Conversion. Subject to stockholder approval of this Proposal No. 1, the Series Z Preferred Stock is convertible into Common Stock at a rate of approximately 1,000 shares of Common Stock for every one share of Series Z Preferred Stock that is converted. Following stockholder approval of the Conversion Proposal, each share of Series Z Preferred Stock then outstanding shall automatically convert into 1,000 of shares of Common Stock (subject to adjustments set forth in the Series Z Certificate of Designation), subject to certain limitations, including that Idera shall not effect any conversion of shares of Series Z Preferred Stock into shares of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more 19.99% of the total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion.

Voting Rights. Except as otherwise required by law, the Series Z Preferred Stock does not have voting rights. However, as long as any shares of Series Z Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series Z Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series Z Preferred Stock, (b) alter or amend the Series Z Certificate of Designation, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series Z Preferred Stock, (d) issue further shares of Series Z Preferred Stock or increase the number of authorized shares of Series Z Preferred Stock, (e) prior to the stockholder approval of this Conversion Proposal or at any time while at least 30% of the originally issued Series Z Preferred Stock remains issued and outstanding,

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consummate a Fundamental Transaction (as defined in the Series Z Certificate of Designation) or any merger or consolidation of the Company with or into another entity or any stock sale to, or other business combination in which the stockholders of the Company immediately before such transaction do not hold at least a majority of the capital stock of the Company immediately after such transaction, or (f) enter into any agreement with respect to any of the foregoing. The Series Z Preferred Stock shall rank on parity with the Common Stock as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily.

Dividends. Holders of Series Z Preferred Stock are entitled to receive dividends on shares of Series Z Preferred Stock equal, on an as-if-converted-to-Common-Stock basis, and in the same form as dividends actually paid on shares of the Common Stock.

Liquidation and Dissolution. The Series Z Preferred Stock ranks on parity with our Common Stock upon any liquidation, dissolution or winding up of the Company.

Reasons for Stockholder Approval

The Company’s Common Stock is listed on the Nasdaq Capital Market and, as such, the Company is subject to the applicable Nasdaq rules, including Nasdaq Listing Rule 5635(a), which requires stockholder approval in connection with the acquisition of another company if the Nasdaq-listed company will issue more than 20% of its common stock. While stockholder approval of the Acquisition was not required under Nasdaq rules, in order to permit the issuance of Common Stock upon conversion of the Series Z Preferred Stock, the Company must first obtain stockholder approval of this issuance.

Beneficial Ownership Limitations

Assuming that Proposal No. 1 is approved, the Series Z Preferred Stock will continue to have a beneficial ownership conversion limit that would prevent a stockholder from converting their shares if, as a result of such conversion, they would beneficially own a number of shares above their applicable conversion blocker (which cannot exceed 19.9% of the outstanding Common Stock).

Interests of Certain Parties

As a result of the Acquisition, the former stockholders of Aceragen hold all of the shares of Series Z Preferred Stock. The Company’s Chief Executive Officer, Chief Operating Officer, and Chief Strategy Officer all hold Series Z Preferred Stock and may be deemed to have an interest in the outcome of Proposal No. 1. Subject to the conversion blocker if Proposal No. 1 is approved, these three executive officers will hold 57,456,792 shares of Common Stock equaling approximately 40.2% of the issued and outstanding shares of Common Stock.

Ron Wooten, a director of the Company, is a member of the investment committee of NQ POF V GP, Ltd. (“NovaQuest GP”). NovaQuest GP has the power to vote and dispose of any securities directly owned by NovaQuest. NovaQuest GP’s investment committee makes voting and investment decisions regarding securities held by NovaQuest. NovaQuest owns all outstanding shares of the Series X Preferred Stock. The Series X Preferred Stock ranks senior to the Series Z Preferred Stock, the existing Series A Convertible Preferred Stock and Common Stock as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily.

Vote Required; Recommendation of Board of Directors

The affirmative vote of the holders of shares of Common Stock representing a majority of the votes present or represented and voting on the matter is required for the approval of this Proposal No. 1 (subject to the separate tabulation of votes described in “How many votes can be cast by all stockholders?” set forth above). Broker non-votes (if any) and abstentions will not be counted as votes cast on the matter and will have no effect on the outcome of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT IDERA’S STOCKHOLDERS VOTE “FOR” THIS PROPOSAL NO. 1: THE APPROVAL OF, UNDER APPLICABLE NASDAQ LISTING RULES, THE ISSUANCE OF SHARES OF COMMON STOCK UPON CONVERSION OF THE SERIES Z PREFERRED STOCK.

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~~SECURITY OWNERSHIP~~PROPOSAL NO. 2
APPROVAL OF ~~CERTAIN BENEFICIAL OWNERS~~THE AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO EFFECT THE REVERSE STOCK SPLIT (WITHOUT REDUCING THE AUTHORIZED NUMBER OF SHARES OF OUR COMMON STOCK), IF AND ~~MANAGEMENT~~WHEN DETERMINED BY THE IDERA BOARD OF DIRECTORS

Overview

Our Board has deemed it advisable, has approved and is hereby soliciting stockholder approval of, an amendment to our Restated Certificate of Incorporation to effect a reverse stock split (the “Reverse Stock Split”) at a ratio between one-for-seventeen (1:17) and one-for-twenty-three (1:23) (the “Split Ratio Range”), in the form set forth in Annex A to this proxy statement. The Reverse Stock Split Proposal, if approved by stockholders, would not immediately cause a reverse stock split, but rather would grant authorization to our Board to effect a reverse stock split (without reducing the number of authorized shares of our Common Stock), if, and when determined by our Board.

If we receive the required stockholder approval, our Board would have the sole authority to elect, at any time within one year of the date of the Special Meeting, whether or not to effect a reverse stock split. Even with stockholder approval of the Reverse Stock Split Proposal, our Board will not be obligated to pursue the Reverse Stock Split. Rather, our Board will have the flexibility to decide whether or not a reverse stock split (and at what ratio within the Split Ratio Range) is in the best interests of the Company.

If approved by our stockholders and, following such approval, our Board determines that effecting a reverse stock split is in the best interests of the Company and our stockholders, the Reverse Stock Split would become effective upon filing an amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. As filed, the amendment would state the number of outstanding shares to be combined into one share of our Common Stock, at the ratio approved by our Board within the Split Ratio Range. The amendment would not change the par value of our Common Stock and would not impact the total number of authorized shares of our Common Stock. Therefore, upon effectiveness of a reverse stock split, the number of shares of our Common Stock that are authorized and unissued will increase relative to the number of issued and outstanding shares of our Common Stock.

Although we presently intend to effect the Reverse Stock Split to regain compliance with Nasdaq’s minimum bid price requirement, as further described below, under Section 242(c) of the Delaware General Corporation Law, our Board has reserved the right, notwithstanding our stockholders’ approval of the proposed amendment of the Restated Certificate of Incorporation at the annual meeting, to abandon the proposed amendment at any time (without further action by our stockholders) before the amendment of the Certificate of Incorporation is filed with the Secretary of State of the State of Delaware. Our Board may consider a variety of factors in determining whether or not to proceed with the proposed amendment of the Certificate of Incorporation, including overall trends in the stock market, recent changes and anticipated trends in the per-share market price of our common stock, business developments, and our actual and projected financial performance. If the closing bid price of our common stock on the Nasdaq Capital Market reaches a minimum of $4.00 per share and remains at or above that level for a minimum of ten consecutive trading days (or longer, if required by the Nasdaq Listing Qualifications Panel), as discussed more fully below, our Board may decide to abandon the filing of the proposed amendment of the Restated Certificate of Incorporation.

Purpose of the Reverse Stock Split

Our primary objective in effectuating the Reverse Stock Split would be to attempt to raise the per-share trading price of our Common Stock to meet Nasdaq’s initial listing requirements, which requires, among other things, that our Common Stock have a per share bid price that is greater than or equal to $4.00 per share. On December 7, 2022, the closing bid price for our Common Stock on the Nasdaq Capital Market was $0.30 per share. The Board of Directors also believes that a higher stock price may help generate investor interest in Idera and help Idera attract and retain employees.

If the Reverse Stock Split successfully increases the per share price of our Common Stock, the Board of Directors also believes this increase may increase trading volume in our Common Stock and facilitate future financings by the Company.

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Nasdaq Listing Requirements

Minimum Bid Requirement — Continued Listing

As previously reported, on November 26, 2021, we received a deficiency letter (the “First Nasdaq Letter”) from the Nasdaq Listing Qualifications Department (the “Staff”), notifying us that we were not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires us to maintain a minimum bid price of at least $1 per share for continued listing (the “Minimum Bid Requirement”). Our failure to comply with the Minimum Bid Requirement was based on the Common Stock per share price being below the $1.00 threshold for a period of 30 consecutive business days. Pursuant to the First Nasdaq Letter, we had 180 calendar days from November 26, 2021, to regain compliance with the Minimum Bid Requirement.

The Company is currently working with the Staff but expects to receive a written notification from Nasdaq stating that we had not regained compliance with the Minimum Bid Requirement. We are aware that such written notification will provide the Company with the opportunity to request a hearing before the Panel within a specified date from the written notice. If the Company has not met the Minimum Bid Requirement by November 21, 2022, it fully expects to submit an appeal of such written notification to the Panel as soon as practicable and prior to any deadline. Under Nasdaq rules, the delisting of our Common Stock will be stayed during the pendency of the appeal, and during such time our Common Stock will continue to be listed on Nasdaq. There can be no assurance that such an appeal will be successful, or that we will be able to regain compliance with the Minimum Bid Price requirement or maintain compliance with other Nasdaq listing requirements. If our appeal is denied or if we fail to regain compliance with Nasdaq’s continued listing standards during any period granted by the Panel, our Common Stock will be subject to delisting from Nasdaq.

Change of Control — Initial Listing Criteria

On October 21, 2022, we received a letter from the Staff notifying us that our acquisition of Aceragen will, upon stockholder approval of Proposal No. 1, be considered a “change of control” transaction under Nasdaq rules. As such, the Company must meet Nasdaq’s initial listing requirements. Accordingly, the Company must meet all the requirements set forth in Nasdaq Rule 5505(a) and at least one of the standards in set forth in Nasdaq Rule 5505(b).

The listing standards of Nasdaq Rule 5505(a) requires the Company to have, among other things:

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a minimum bid price that is greater than or equal to $4.00 per share;

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at least 1,000,000 unrestricted publicly held shares;

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at least 300 round lot holders, and at least 50% of such round lot holders must each hold unrestricted securities with a market value of at least $2,500;

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at least three registered and active market makers; and

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The Company must also satisfy at least one of the following Rule 5505(b) requirements:

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stockholders’ equity of at least $5 million, a market value of unrestricted publicly held shares of at least $15 million, and two years of operating history;

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a market value of listed securities of at least $50 million, stockholders’ equity of at least $4 million, and a market value of unrestricted publicly held shares of at least $15 million; or

•

Failure to approve the Reverse Stock Split may have serious, adverse effects on the Company and its stockholders. Our Common Stock could be delisted from Nasdaq because shares of our Common Stock may continue to trade below the requisite $4.00 per share price needed to maintain our listing in accordance with Nasdaq Listing Rule 5505(a). Our shares may then be quoted on the OTC Bulletin Board or other small trading markets, which are generally considered to have less volume and be less efficient markets. We believe an investor likely would find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our Common Stock on an over-the-counter market. Many investors likely would not buy or sell our Common Stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange, or other reasons. In that event, the Common Stock could trade thinly as a microcap or penny stock, adversely decrease to nominal levels of trading and may be avoided by retail and institutional investors, resulting in the impaired liquidity of our Common Stock.

As of the record date, our Common Stock closed at $0.32 per share on Nasdaq. The Reverse Stock Split, if effected, should have the immediate effect of increasing the price of our Common Stock as reported on Nasdaq, therefore reducing the risk that our Common Stock could be delisted from Nasdaq.

Our Board strongly believes that the Reverse Stock Split is necessary to maintain our listing on Nasdaq. Accordingly, the Board recommended that our stockholders approve the Reverse Stock Split Proposal to effect the Reverse Stock Split and directed that this proposal be submitted to our stockholders for approval at the Special Meeting.

In addition, an investment in our Common Stock may not appeal to brokerage firms that are reluctant to recommend lower-priced securities to their clients. Investors may also be dissuaded from purchasing lower-priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide research coverage of lower-priced stocks. Also, the Company’s Board of Directors believes that most investment funds are reluctant to invest in lower-priced stocks.

Risks Associated with the Reverse Stock Split

There are risks associated with the Reverse Stock Split, including that the Reverse Stock Split may not result in an increase in the per share price of our Common Stock.

The Company cannot predict whether the Reverse Stock Split will increase the market price for our Common Stock. The history of similar stock split combinations for companies in like circumstances is varied. There is no assurance that:

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the market price per share will achieve the $4.00 minimum bid price requirement for a sufficient period for our Common Stock to be approved for listing by Nasdaq;

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we would otherwise meet the initial listing requirements that would allow continued listing of our Common Stock on Nasdaq;

•

the market price per share of our Common Stock after the Reverse Stock Split will rise in proportion to the reduction in the number of shares of our Common Stock outstanding before the Reverse Stock Split Effective Time;

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the Reverse Stock Split will result in a per share price that will attract brokers and investors who do not trade in lower-priced stocks;

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the Reverse Stock Split will result in a per share price that will increase the ability of the Company to attract and retain employees; and

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the Reverse Stock Split would promote greater liquidity for our stockholders with respect to their shares.

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In addition, the Reverse Stock Split would reduce the number of outstanding shares of our common stock without reducing the number of shares of available but unissued Common Stock, increasing the number of authorized but unissued shares of Common Stock. Therefore, the number of shares of our Common Stock that are authorized and unissued will increase relative to the number of issued and outstanding shares of our Common Stock following the Reverse Stock Split. The Board may authorize the issuance of the remaining authorized and unissued shares without further stockholder action for a variety of purposes, except as such stockholder approval may be required in particular cases by our Restated Certificate of Incorporation, applicable law, or the rules of any stock exchange on which our securities may then be listed. The issuance of additional shares would be dilutive to our existing stockholders and may cause a decline in the trading price of our Common Stock.

The market price of our Common Stock will also be based on the performance of the Company and other factors, some of which are unrelated to the number of shares outstanding. If the Reverse Stock Split is effected and the market price of our Common Stock declines, the percentage decline as an absolute number and as a percentage of the overall market capitalization of the Company may be greater than would occur in the absence of the Reverse Stock Split.

Principal Effects of the Reverse Stock Split on the Market for Our Common Stock

On the record date, the closing bid price for our Common Stock on the Nasdaq Capital Market was $0.32 per share. By decreasing the number of shares of our Common Stock outstanding without altering the aggregate economic interest represented by the shares, we believe the market price would be increased. The greater the market price rises above $4.00 per share, the less risk there would be that we would fail to meet the initial listing requirements and be able to maintain the listing of our Common Stock on the Nasdaq Capital Market. However, there can be no assurance that the market price of the Common Stock would rise to or maintain any particular level or that we would at all times be able to meet the requirements for maintaining the listing of our Common Stock on the Nasdaq Capital Market.

Principal Effects of the Reverse Stock Split on Our Common Stock and Series B Preferred Stock

If our stockholders approve this Proposal No. 2, and if the Board determines to amend our Restated Certificate of Incorporation to effect the Reverse Stock Split, the principal effect of the amendment would be to reduce the number of issued and outstanding shares of our Common Stock, in accordance with the Split Ratio Range, from 62,355,434 shares as of the record date to between and including 3,667,967 shares and 2,711,106 shares. If the Reverse Stock Split is effectuated, the total number of shares of our Common Stock that each stockholder holds would be reclassified automatically into the number of shares of our Common Stock equal to the number of shares of our Common Stock that each stockholder held immediately before the Reverse Stock Split divided by the ratio approved by Board within the Split Ratio Range.

Effecting the Reverse Stock Split will not change the total authorized number of shares of our Common Stock. However, the reduction in the issued and outstanding shares would provide more authorized shares available for future issuance.

All shares of Series B Preferred Stock that are not present in person or by proxy at the Special Meeting as of immediately prior to the opening of the polls at the Special Meeting will be automatically redeemed in the Initial Redemption. Any outstanding shares of Series B Preferred Stock that were not redeemed pursuant to the Initial Redemption will be redeemed in whole, but not in part, (i) if and when ordered by our Board or (ii) automatically upon the approval of the amendment to our Restated Certificate of Incorporation effecting the Reverse Stock Split. Please refer to the discussion in the Questions and Answers About the Special Meeting section under “How many votes can be cast by all stockholders?” and “What vote is required to approve each item at the Special Meeting?” for a description of the voting power of the Series B Preferred Stock.

The Reverse Stock Split will be realized simultaneously for all shares of our Common Stock outstanding immediately prior to the Reverse Stock Split Effective Time. The Reverse Stock Split will affect all holders of shares of our Common Stock outstanding immediately prior to the Reverse Stock Split Effective Time uniformly, and each such stockholder will hold the same percentage of our Common Stock outstanding immediately following the Reverse Stock Split as that stockholder held immediately prior to the Reverse Stock

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Split, except for immaterial adjustments that may result from the treatment of fractional shares as described below. The Reverse Stock Split will not change the par value of our Common Stock or Preferred Stock and will not reduce the number of authorized shares of our Common Stock or Preferred Stock. Our Common Stock issued pursuant to the Reverse Stock Split will remain fully paid and non-assessable. The Reverse Stock Split will not affect the Company’s continuing to be subject to the periodic reporting requirements of the Exchange Act.

Pursuant to the Certificate of Designation of Series B Preferred Stock (the “Certificate of Designation”), each share of Series B Preferred Stock redeemed in any redemption shall be redeemed in consideration for the right to receive an amount equal to $0.01 in cash for each one hundred whole shares of Series B Preferred Stock that are “beneficially owned” by the “beneficial owner” (as such terms are defined in the Certificate of Designation) thereof as of the applicable redemption time and redeemed pursuant to such redemption, payable upon receipt by the Company of a written request submitted by the applicable holder to our corporate secretary (each a “Redemption Payment Request”) following the applicable redemption time. Such Redemption Payment Request shall (i) be in a form reasonably acceptable to the Company, (ii) set forth in reasonable detail the number of shares of Series B Preferred Stock beneficially owned by the holder at the applicable redemption time and include evidence reasonably satisfactory to the Company regarding the same, and (iii) set forth a calculation specifying the amount in cash owed to such holder by the Company with respect to the shares of Series B Preferred Stock that were redeemed at the applicable redemption time.

Principal Effects of the Reverse Stock Split on Outstanding Options and Warrants

As of the record date, we had outstanding (a) stock options to purchase an aggregate of 7,334,129 shares of our Common Stock with exercise prices ranging from $0.13 to $37.36 per share, and (b) warrants to purchase an aggregate of 8,552,214 shares of our Common Stock with exercise prices ranging from $0.08 to $2.71 per share. Under the terms of the stock options and warrants, when the Reverse Stock Split becomes effective, the number of shares of our Common Stock covered by each of them would be divided by the number of shares being combined into one share of our Common Stock in the Reverse Stock Split, and the exercise or conversion price per share would be increased to a dollar amount equal to the current exercise or conversion price, multiplied by the number of shares being combined into one share of our Common Stock in the Reverse Stock Split. This results in the same aggregate price being required to be paid upon exercise as was required immediately preceding the Reverse Stock Split. The number of shares reserved under our 2013 Stock Incentive Plan would decrease by the ratio approved by Board within the Split Ratio Range.

Principal Effects of the Reverse Stock Split on Legal Ability to Pay Dividends

Historically, our Board has not declared, nor does it have any plans to declare in the foreseeable future, any distributions of cash, dividends or other property, and we are not in arrears on any dividends. Therefore, we do not believe that the Reverse Stock Split would have any effect with respect to future distributions, if any, to holders of our Common Stock.

Accounting Matters

The Reverse Stock Split would not affect the par value of our Common Stock or Preferred Stock, which would remain unchanged at $0.001 and $0.01 per share, respectively. As a result, at the Reverse Stock Split Effective Time, the stated capital on our balance sheet attributable to our Common Stock would be reduced by the ratio approved by the Board within the Split Ratio Range. In other words, stated capital would be reduced by the ratio approved by the Board within the Split Ratio Range, and the additional paid-in capital account would be credited with the amount by which the stated capital is reduced. The per-share net income or loss and net book value of our Common Stock would be increased because there would be fewer shares of our Common Stock outstanding.

Procedure for Effecting Reverse Stock Split and Exchange of Stock Certificates

If the Idera stockholders approve the amendment to the Restated Certificate of Incorporation, effecting the Reverse Stock Split, and if the Company’s Board of Directors still believes that the Reverse Stock Split is in the best interests of the Company and its stockholders, the Company will file the amendment

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to the Restated Certificate of Incorporation with the Secretary of State of the State of Delaware following the determination by the Company’s Board of Directors of the appropriate split ratio. The Company has agreed with the purchasers of the Preferred Stock that it will file such amendment with the Secretary of State of the State of Delaware as soon as practicable, but in no event later than one (1) business day following stockholder approval of the amendment. Beginning at the Reverse Stock Split Effective Time, each stock certificate representing pre-split shares will be deemed for all corporate purposes to evidence ownership of post-split shares.

As soon as practicable after the Reverse Stock Split Effective Time, stockholders will be notified that the Reverse Stock Split has been effected. The Company expects that the Company’s transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-split shares will be asked to surrender to the exchange agent stock certificates representing pre-split shares in exchange for stock certificates (or book-entry positions) representing post-split shares in accordance with the procedures to be set forth in a letter of transmittal to be sent by the Company. No new certificates (or book-entry positions) will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent. Shares held in book-entry form will be automatically exchanged. Any pre-split shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise, will automatically be exchanged for post-split shares. Stockholders should not destroy any stock certificate(s) and should not submit any certificate(s) unless and until requested to do so.

Outstanding Shares

Our Restated Certificate of Incorporation currently authorizes us to issue a maximum of 140,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock. Our issued and outstanding securities as of December 8, 2022, are as follows:

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62,355,434 shares of Common Stock;

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655 shares of Series A Preferred Stock;

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80,656 shares of Series Z Preferred Stock;

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Five shares of Series X Preferred Stock; and

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62,355 shares of Series B Preferred Stock.

Fractional Shares

No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders of record who otherwise would be entitled to receive fractional shares because they hold a number of pre-split shares not evenly divisible by the number of pre-split shares for which each post-split share is to be reclassified, will be entitled, upon surrender to the exchange agent of certificates representing such shares, to a cash payment in lieu of any fractional shares they would otherwise be entitled to at a price equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing price of our Common Stock on the Nasdaq on the date of the filing of the amendment to the Restated Certificate of Incorporation effecting the Reverse Stock Split. For the foregoing purposes, all shares of Common Stock held by a holder will be aggregated (thus resulting in no more than one fractional share per holder). The ownership of a fractional interest will not give the holder thereof any voting, dividend, or other rights except to receive payment therefor as described herein.

Stockholders should be aware that, under the escheat laws of the various jurisdictions where stockholders reside, where the Company is domiciled and where the funds will be deposited, sums due for fractional interests that are not timely claimed after the effective date of the split may be required to be paid to the designated agent for each such jurisdiction, unless correspondence has been received by the Company or the exchange agent concerning ownership of such funds within the time permitted in such jurisdiction. Thereafter, stockholders otherwise entitled to receive such funds will have to seek to obtain them directly from the state to which they were paid.

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No Going Private Transaction

Notwithstanding the decrease in the number of outstanding shares following the Reverse Stock Split, our Board of Directors does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Securities Exchange Act of 1934, as amended.

No Appraisal Rights

Under Delaware law, our Restated Articles of Incorporation and our Bylaws, stockholders have no rights to exercise dissenters’ rights of appraisal with respect to the Reverse Stock Split.

Potential Anti-Takeover Effect

Although the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect, for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the Company’s Board of Directors, or contemplating a tender offer or other transaction for the combination of the Company with another company, the Reverse Stock Split Proposal is not being proposed in response to any effort of which the Company is aware to accumulate shares of our Common Stock or obtain control of the Company, nor is it part of a plan by management to recommend a series of similar amendments to the Company’s Board of Directors and stockholders. The Company’s Board of Directors does not currently contemplate recommending the adoption of any actions that could be construed to affect the ability of third parties to take over or change control of the Company.

Material U.S. Federal Income Tax Consequences of the Reverse Stock Split

The following is a discussion of certain material U.S. federal income tax consequences of the Reverse Stock Split that are applicable to U.S. Holders (as defined below) of our Common Stock. This discussion does not purport to be a complete analysis of all potential tax consequences and is based upon current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing Treasury Regulations, judicial decisions and published rulings and administrative pronouncements of the Internal Revenue Service (the “IRS”), all in effect as of the date hereof and all of which are subject to differing interpretations or change. Any such change or differing interpretation, which may be retroactive, could alter the tax consequences to holders of our Common Stock as described in this summary. We have not obtained a ruling from the IRS or an opinion of legal or tax counsel with respect to the tax consequences of the Reverse Stock Split, and there can be no assurance the IRS will not challenge the statements set forth below or that a court would not sustain any such challenge. The following discussion is for information purposes only and is not intended as tax or legal advice.

This discussion does not address all U.S. federal income tax consequences relevant to holders of our Common Stock. In addition, it does not address consequences relevant to holders of our Common Stock that are subject to particular U.S. or non-U.S. tax rules, including, without limitation, to holders of our Common Stock that are:

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persons who do not hold our Common Stock as a “capital asset” within the meaning of Section 1221 of the Code;

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brokers, dealers, or traders in securities, banks, insurance companies, other financial institutions, or mutual funds;

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real estate investment trusts, regulated investment companies, tax-exempt organizations, or governmental organizations;

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pass-through entities such as partnerships, S corporations, disregarded entities for federal income tax purposes and limited liability companies (and investors therein);

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subject to the alternative minimum tax provisions of the Code;

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persons who hold their shares as part of a hedge, wash sale, synthetic security, conversion transaction, or other integrated transaction;

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persons that have a functional currency other than the U.S. dollar;

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traders in securities who elect to apply a mark-to-market method of accounting;

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persons who hold shares of our Common Stock that may constitute “qualified small business stock” under Section 1202 of the Code or as “Section 1244 stock” for purposes of Section 1244 of the Code;

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persons who acquired their shares of Common Stock in a transaction subject to the gain rollover provisions of Section 1045 of the Code;

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persons subject to special tax accounting rules as a result of any item of gross income with respect to Idera stock being taken into account in an “applicable financial statement” (as defined in the Code);

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persons deemed to sell our Common Stock under the constructive sale provisions of the Code;

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persons who actually or constructively own capital stock representing 10% or more of the combined voting power of all classes of our capital stock;

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persons who acquired their shares of our Common Stock pursuant to the exercise of options or otherwise as compensation or through a tax-qualified retirement plan or through the exercise of a warrant or conversion rights under convertible instruments; and

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certain expatriates or former citizens or long-term residents of the United States.

Holders of our Common Stock subject to particular U.S. or non-U.S. tax rules, including those that are described in this paragraph, are urged to consult their own tax advisors regarding the consequences to them of the Reverse Stock Split.

If an entity that is treated as a partnership for U.S. federal income tax purposes holds our Common Stock, the U.S. federal income tax treatment of a partner in the partnership or other pass-through entity will generally depend upon the status of the partner, the activities of the partnership or other pass-through entity and certain determinations made at the partner level.

In addition, the following discussion does not address the tax consequences of the Reverse Stock Split under state, local, and foreign tax laws. Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after or at the same time as the Reverse Stock Split, whether or not they are in connection with the Reverse Stock Split.

STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.

This discussion is limited to holders of our Common Stock that are U.S. Holders. For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Common Stock that, for U.S. federal income tax purposes, is or is treated as:

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an individual who is a citizen or resident of the United States;

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a corporation or any other entity taxable as a corporation created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

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an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

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a trust if either (i) a court within the United States is able to exercise primary supervision over the administration of such trust, and one or more United States persons (within the meaning of Section 7701(a)(30) of the Code) is authorized or has the authority to control all substantial decisions of such trust, or (ii) the trust was in existence on August 20, 1996, and has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes.

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Tax Consequences of the Reverse Stock Split

We believe that the proposed Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the Code. As a result, a U.S. Holder generally should not recognize gain or loss upon the proposed Reverse Stock Split, except with respect to cash received in lieu of a fractional share of our Common Stock, as discussed below. A U.S. Holder’s aggregate adjusted tax basis in the shares of our Common Stock received pursuant to the proposed Reverse Stock Split should equal the aggregate adjusted tax basis of the shares of our Common Stock surrendered (excluding any portion of such basis that is allocated to any fractional share of our Common Stock), and such U.S. Holder’s holding period in the shares of our Common Stock received should include the holding period in the shares of our Common Stock surrendered. U.S. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of our Common Stock surrendered to the shares of our Common Stock received in a recapitalization pursuant to the proposed Reverse Stock Split. U.S. Holders of shares of our Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.

Cash in Lieu of Fractional Shares

A U.S. Holder that receives cash in lieu of a fractional share of our Common Stock pursuant to the proposed Reverse Stock Split should recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. Holder’s tax basis in the shares of our Common Stock surrendered that is allocated to such fractional share of our Common Stock. Such capital gain or loss should be long-term capital gain or loss if the U.S. Holder’s holding period for our Common Stock surrendered exceeded one year at the effective time of the Reverse Stock Split.

Information Reporting and Backup Withholding

Payments of cash made in lieu of a fractional share of our Common Stock may, under certain circumstances, be subject to information reporting and backup withholding. To avoid backup withholding, each holder of our Common Stock that does not otherwise establish an exemption should furnish its taxpayer identification number and comply with the applicable certification procedures.

Backup withholding is not an additional tax. Any amounts withheld will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided the required information is timely furnished to the IRS. Holders of our Common Stock should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.

Vote Required; Recommendation of Board of Directors

The affirmative vote of the holders of shares of Common Stock and Series B Preferred Stock representing a majority of the shares issued and outstanding as of the record date is required to approve the Reverse Stock Split Proposal. The holders of Common Stock have the right to cast one vote per share of Common Stock on this proposal. The holders of Series B Preferred Stock have the right to cast 1,000,000 votes per share of Series B Preferred Stock, or an aggregate of 62,355,000,000 votes, on this proposal, provided, that such votes must be counted by the Company in the same proportion as the aggregate shares of Common Stock that are voted on this proposal, without regard to abstentions by holders of Common Stock or broker non-votes. As an example, if 60% of the votes cast by holders of Common Stock present, by virtual participation or proxy, and entitled to vote are voted at the Special Meeting in favor of this proposal, the Company can count 60% of the votes cast by the holders of the Series B Preferred Stock as votes in favor of this Proposal No. 2. Because the voting standard for this Proposal No. 2 is a majority of the outstanding shares of Common Stock and Series B Preferred Stock entitled to vote on the proposal, voting together and counted as a single class, abstentions and broker non-votes will, in one sense, have the effect of a vote “AGAINST” the proposal. However, if you prefer that this Proposal No. 2 not be approved, you should cast your vote against the proposal. Since the Series B Preferred Stock has 1,000,000 votes per share on this Proposal No. 2 and such votes must be counted by the Company in the same proportion as the aggregate shares of Common Stock that are voted on this Proposal No. 2 at the Special Meeting, the failure of a share of Common Stock to be voted will effectively have no impact on the outcome of the vote of the Series B

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PROPOSAL NO. 3:
APPROVAL OF THE ADOPTION OF THE IDERA PHARMACEUTICAL, INC. 2022 STOCK INCENTIVE PLAN

Overview

At the Special Meeting, our stockholders will be asked to consider and vote upon a proposal to approve by ordinary resolution the Idera Pharmaceuticals, Inc. 2022 Stock Incentive Plan (the “Equity Plan”), a copy of which is attached to this proxy statement/prospectus as Annex B.

A total of 25,518,742 shares of Common Stock will be reserved for issuance under the Equity Plan. As of December 7, 2022, the closing price on Nasdaq Capital Market per share of Common Stock was $0.30. Subject to stockholder approval, the Board of Directors approved the Equity Plan on November 17, 2022. The Equity Plan will be effective upon approval by the Company’s stockholders.

The Equity Plan is intended to replace the Idera Pharmaceuticals, Inc. 2013 Stock Incentive Plan, as amended and restated (the “Prior Plan”). No additional grants shall be made under the Prior Plan after the effective date of the Equity Plan. Outstanding grants under the Prior Plan shall continue in effect according to their terms.

Key Features of the Equity Plan

The following features of the Equity Plan will protect the interests of our stockholders:

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Limitation on terms of stock options and stock appreciation rights. The maximum term of each stock option and stock appreciation right (“SAR”) is ten years.

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No repricing or grant of discounted stock options or SARs. The Equity Plan does not permit the repricing of options or SARs either by amending an existing award or by substituting a new award at a lower price. The Equity Plan prohibits the granting of stock options or SARs with an exercise price less than the fair market value of the Common Stock on the date of grant.

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No single-trigger acceleration. Under the Equity Plan, we do not automatically accelerate vesting of awards in connection with a change in control on the Company.

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Dividends. We do not pay dividends or dividend equivalents on stock options or SARs. We also do not pay dividends or dividend equivalents on unearned restricted stock units or other stock-based awards, except to the extent the award actually becomes vested.

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Clawback. Awards granted under the Equity Plan and the right to receive shares or cash payments with respect to awards are subject to rescission, cancellation or recoupment under any clawback, recoupment or similar policy.

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Director Limits. The Equity Plan imposes an aggregate limit on the value of awards that may be granted, and cash fees that may be paid, to each non-employee director in any year.

The following is a summary of the material features of the Equity Plan. This summary is qualified in its entirety by reference to the complete text of the Equity Plan, which is attached as Annex B. To the extent the description below differs from the text of the Equity Plan, the text of the Equity Plan shall control.

Summary of Equity Plan

Type of Awards

The Equity Plan provides for the issuance of stock options (including non-statutory stock options and incentive stock option), stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), stock bonuses and other stock-based awards to officers, employees, non-employee directors, independent contractors and consultants of Idera or its affiliates.

Purpose and Types of Grants

The purpose of the Equity Plan is to attract and retain employees (including officers), non-employee directors, and certain consultants and advisors. The Equity Plan provides for the issuance of incentive stock

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options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. The Equity Plan is intended to provide an incentive to participants to contribute to our economic success by aligning the economic interests of participants with those of our stockholders.

Administration of the Equity Plan

The Equity Plan will be administered by the Compensation Committee of the Board of Directors (the “Compensation Committee”), and the Compensation Committee will determine all of the terms and conditions applicable to grants under the Equity Plan. The Compensation Committee will also determine who will receive grants under the Equity Plan, the terms applicable to grants under the Equity Plan and the number of shares of Common Stock that will be subject to grants, except that grants to members of the Board of Directors must be authorized by a majority of the Board of Directors. The Compensation Committee may delegate authority under the Equity Plan to one or more subcommittees as it deems appropriate. Subject to compliance with applicable law and stock exchange requirements, the Compensation Committee (or the Board of Directors or a subcommittee, as applicable) may delegate all or part of its authority to our Chief Executive Officer, as it deems appropriate, with respect to grants to employees or key advisors who are not “executive officers” or directors under Section 16 of the Securities Exchange Act of 1934, as amended. The Compensation Committee, the Board of Directors, any subcommittee or the Chief Executive Officer, as applicable, that has authority with respect to a specific grant will be referred to as the “Committee” in this description of the Equity Plan. The Compensation Committee’s interpretations of the Equity Plan and all determinations made by the Compensation Committee will be conclusive and binding on all persons having any interest in the Equity Plan or any awards granted under the Equity Plan.

Shares Subject to the Equity Plan

Subject to the adjustment provisions of the Equity Plan, the Equity Plan authorizes the issuance or transfer of up to 25,518,742 shares of Common Stock, which is equal to the sum of: (i) 23,600,000 shares of Common Stock, plus (ii) 3,806,601 shares of Common Stock, which is the number of shares of Common Stock reserved for issuance under the Prior Plan that remain available for grant under the Prior Plan as of November 4, 2022; provided that such number will be reduced by the number of shares of Common Stock underlying any grants made under the Prior Plan after November 4, 2022 and before the effective date of the Equity Plan. In addition, shares of the Common Stock underlying any outstanding award granted under the Prior Plan that, following the effective date of the Equity Plan, expires, or is terminated, surrendered or forfeited for any reason without issuance of such shares shall be available for new grants under the Equity Plan.

If any options or stock appreciation rights expire or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards, stock units or other stock-based awards are forfeited, terminated, or otherwise not paid in full, the shares of Common Stock subject to such awards will again be available for purposes of the Equity Plan. If shares of Common Stock are surrendered in payment of the exercise price of an option, the number of shares of Common Stock available for issuance under the Equity Plan will be reduced only by the net number of shares actually issued by us upon such exercise and not by the gross number of shares as to which such option is exercised. Upon the exercise of any SAR under the Equity Plan, the number of shares of Common Stock available for issuance will be reduced only by the net number of shares actually issued by us upon such exercise.

If shares of Common Stock are withheld by us in satisfaction of the withholding taxes incurred in connection with the issuance, vesting or exercise of any grant or the issuance of Common Stock under the Equity Plan, the number of shares of Common Stock available for issuance will be reduced by the net number of shares issued, vested or exercised under such grant, calculated in each instance after payment of such share withholding. If any awards are paid in cash, and not in shares of Common Stock, any shares of Common Stock subject to such awards will also be available for future awards. If we repurchase shares of Common Stock on the open market with the proceeds from the exercise price we receive from options, the repurchased shares will not be available for issuance under the Equity Plan.

Individual Limits for Non-Employee Directors

The maximum aggregate grant date value of shares of Common Stock granted to any non-employee director in any one calendar year, taken together with any cash fees earned by such non-employee director for services rendered during the calendar year, shall not exceed $750,000 in total value.

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Adjustments

In connection with stock splits, stock dividends, recapitalizations and certain other events affecting Common Stock, the Committee will make adjustments as it deems appropriate in: the maximum number and kind of shares of Common Stock reserved for issuance as grants; the maximum amount of awards that may be granted to any individual non-employee director in any year; the number and kind of shares covered by outstanding grants; the number and kind of shares that may be issued under the Equity Plan; the price per share or market value of any outstanding grants; the exercise price of options; the base amount of SARs; and the performance goals or other terms and conditions as the Committee deems appropriate. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, grants in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence, and acquisitions and dispositions of businesses and assets) affecting the Company, any subsidiary or business unit, or the financial statements of the Company or any subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.

Eligibility and Vesting

All of our employees (including officers) are eligible to receive grants under the Equity Plan. In addition, our non-employee directors and certain consultants and advisors who perform services for us may receive grants under the Equity Plan. As of December 8, 2022, approximately 29 employees, including six executive officers, and six non-employee directors were eligible to receive awards under the Equity Plan. Because our executive officers and non-employee directors are eligible to receive awards under the Equity Plan, they may be deemed to have a personal interest in the approval of this Proposal No. 3.

The Committee determines the vesting and exercisability terms of awards granted under the Equity Plan.

Options

Under the Equity Plan, the Committee will determine the exercise price of the options granted and may grant options to purchase shares of Common Stock in such amounts as it determines. The Committee may grant options that are intended to qualify as incentive stock options under Section 422 of the Code, or non-qualified stock options, which are not intended to so qualify. Incentive stock options may only be granted to our employees. Anyone eligible to participate in the Equity Plan may receive a grant of non-qualified stock options. The exercise price of a stock option granted under the Equity Plan cannot be less than the fair market value of a share of Common Stock on the date the option is granted. If an incentive stock option is granted to a 10% stockholder of the total combined voting power of all classes of our stock (a “10% Stockholder”), the exercise price cannot be less than 110% of the fair market value of a share of Common Stock on the date the option is granted. The aggregate number of shares of Common Stock that may be issued or transferred under the Equity Plan pursuant to incentive stock options under Section 422 of the Code may not exceed 25,518,742 of the number of shares of Common Stock outstanding on the effective date of the Equity Plan.

The exercise price for any option is generally payable in cash or by check. In certain circumstances as permitted by the Committee, the exercise price may be paid: by the surrender of shares of Common Stock with an aggregate fair market value, on the date the option is exercised, equal to the exercise price; by payment through a broker in accordance with procedures established by the Federal Reserve Board; by withholding shares of Common Stock subject to the exercisable option that have a fair market value on the date of exercise equal to the aggregate exercise price; or by such other method as the Committee approves.

The term of an option cannot exceed ten years from the date of grant, except that if an incentive stock option is granted to a 10% Stockholder, the term cannot exceed five years from the date of grant. In the event that on the last day of the term of a non-qualified stock option, the exercise is prohibited by applicable law, including a prohibition on purchases or sales of Common Stock under our insider trading policy, the term of the non-qualified option will be extended for a period of 30 days following the end of the legal prohibition, unless the Committee determines otherwise.

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Except as provided in the grant instrument, an option may only be exercised while a participant is employed by or providing service to us. The Committee will determine in the grant instrument under what circumstances and during what time periods a participant may exercise an option after termination of employment.

Stock Awards

Under the Equity Plan, the Committee may grant stock awards. A stock award is an award of Common Stock that may be subject to restrictions as the Committee determines. The restrictions, if any, may lapse over a specified period of employment or based on the satisfaction of pre-established criteria, in installments or otherwise, as the Committee may determine, including, but not limited to, restrictions based on the achievement of performance goals. Except to the extent restricted under the grant instrument relating to the stock award, a participant will have all of the rights of a stockholder as to those shares, including the right to vote and the right to receive dividends or distributions on the shares. All unvested stock awards are forfeited if the participant’s employment or service is terminated for any reason, unless the Committee determines otherwise.

Stock Units

Under the Equity Plan, the Committee may grant stock units to anyone eligible to participate in the Equity Plan. Stock units represent hypothetical shares of Common Stock. Stock units become payable on terms and conditions determined by the Committee, including specified performance goals, and will be payable in cash, shares of Common Stock, or a combination thereof, as determined by the Committee. All unvested stock units are forfeited if the participant’s employment or service is terminated for any reason, unless the Committee determines otherwise.

Stock Appreciation Rights

Under the Equity Plan, the Committee may grant SARs, which may be granted separately or in tandem with any option. SARs granted in tandem with a non-qualified stock option may be granted either at the time the non-qualified stock option is granted or any time thereafter while the option remains outstanding. SARs granted in tandem with an incentive stock option may be granted only at the time the grant of the incentive stock option is made. The Committee will establish the base amount of the stock appreciation right at the time the SAR is granted, which will be equal to or greater than the fair market value of a share of Common Stock as of the date of grant.

If an SAR is granted in tandem with an option, the number of SARs that are exercisable during a specified period will not exceed the number of shares of Common Stock that the participant may purchase upon exercising the related option during such period. Upon exercising the related option, the SARs will terminate, and upon the exercise of a stock appreciation right, the related option will terminate to the extent of an equal number of shares of Common Stock. Generally, SARs may only be exercised while the participant is employed by, or providing services to, us. When a participant exercises an SAR, the participant will receive the excess of the fair market value of the underlying Common Stock over the base amount of the SAR. The appreciation of an SAR will be paid in shares of Common Stock, cash or both.

The term of an SAR cannot exceed 10 years from the date of grant. In the event that on the last day of the term of an SAR, the exercise is prohibited by applicable law, including a prohibition on purchases or sales of Common Stock under our insider trading policy, the term of the SAR will be extended for a period of 30 days following the end of the legal prohibition, unless the Committee determines otherwise.

Other Stock-Based Awards

Under the Equity Plan, the Committee may grant other types of awards that are based on, or measured by, Common Stock, and granted to anyone eligible to participate in the Equity Plan. The Committee will determine the terms and conditions of such awards. Other stock-based awards may be payable in cash, shares of Common Stock or a combination of the two, as determined by the Committee.

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Dividend Equivalents

Under the Equity Plan, the Committee may grant dividend equivalents in connection with grants of stock units or other stock-based awards made under the Equity Plan. Dividend equivalents entitle the participant to receive amounts equal to ordinary dividends that are paid on the shares underlying a grant while the grant is outstanding. The Committee will determine whether dividend equivalents will be paid currently or accrued as contingent cash obligations. Dividend equivalents may be paid in cash or shares of Common Stock. The Committee will determine the terms and conditions of the dividend equivalent grants, including whether the grants are payable upon the achievement of specific performance goals. For the avoidance of doubt, dividends or dividend equivalents shall not be granted in connection with options or SARs. Additionally, notwithstanding anything to the contrary in the Equity Plan, any dividends or dividend equivalents granted in connection with grants under the Equity Plan will vest and be paid only if and to the extent the underlying grants vest and are paid.

Prohibition on Repricing

Under the terms of the Equity Plan, the Committee may not (i) amend the terms of any outstanding stock options or SARs to reduce the exercise price or base price, as applicable, (ii) cancel outstanding stock options or SARs in exchange for stock options or SARs with an exercise price or base price, as applicable, that is less than the exercise price or base price of the original stock options or SARs, or (iii) cancel outstanding stock options or SARs with an exercise price or base price, as applicable, above the current stock price in exchange for cash or other securities, except in connection with a corporate transaction involving the Company, without in each such instance obtaining the approval of our stockholders.

Change of Control

If the Company experiences a change of control where it is not the surviving corporation (or survives only as a subsidiary of another corporation), unless the Committee determines otherwise, all outstanding grants that are not exercised or paid at the time of the change of control will be assumed by, or replaced with grants (which may be in respect to cash, securities or a combination thereof) that have comparable terms by, the surviving corporation (or a parent or subsidiary of the surviving corporation). For the purposes of the foregoing, a grant under the Equity Plan will not be treated as continued, assumed, or replaced on comparable terms unless it is continued, assumed, or replaced with substantially equivalent terms, including, without limitation, the same vesting terms. Unless a grant agreement provides otherwise, if a participant’s employment is terminated by us without cause upon or within 12 months following a change in control, the participant’s outstanding grants will become fully vested as of the date of such termination; provided, that any outstanding grants which are subject to performance vesting terms will not accelerate but will be governed by the terms set forth in the applicable grant agreement.

If there is a change of control and all outstanding grants are not assumed by, or replaced with grants that have comparable terms by, the surviving corporation, the Committee may (but is not obligated to) make adjustments to the terms and conditions of outstanding grants, including, without limitation, taking any of the following actions (or combination thereof) without the consent of any participant:

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determine that outstanding options and SARs will accelerate and become fully exercisable and the restrictions and conditions on outstanding stock awards, stock units, other stock-based awards, and dividend equivalents immediately lapse;

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pay participants, in an amount and form determined by the Committee, in settlement of outstanding stock units or dividend equivalents;

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require that participants surrender their outstanding stock options and SARs in exchange for a payment by us, in cash or shares of Common Stock, equal to the difference between the exercise price and the fair market value of the underlying shares of Common Stock; provided, however, if the per share fair market value of Common Stock does not exceed the per share stock option exercise price or SAR base amount, as applicable, we will not be required to make any payment to the participant upon surrender of the stock option or SAR; or

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after giving participants an opportunity to exercise all of their outstanding stock options and SARs, terminate any unexercised stock options and SARs on the date determined by the Committee.

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In general terms, a change of control under the Equity Plan occurs if:

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a person, entity or affiliated group, with certain exceptions, acquires more than 50% of our then- outstanding voting securities;

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we merge into another entity unless the holders of our voting shares immediately prior to the merger have at least 50% of the combined voting power of the securities in the merged entity or its parent;

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we merge into another entity and the members of the Board of Directors prior to the merger would not constitute a majority of the board of the merged entity or its parent;

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we sell or dispose of all or substantially all of our assets;

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we consummate a complete liquidation or dissolution; or

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a majority of the members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the incumbent directors.

Deferrals

The Committee may permit or require participants to defer receipt of the payment of cash or the delivery of shares of Common Stock that would otherwise be due to the participant in connection with a grant under the Equity Plan. The Committee will establish the rules and procedures applicable to any such deferrals, consistent with the requirements of Section 409A of the Code.

Withholding

All grants under the Equity Plan are subject to applicable U.S. federal (including the Federal Insurance Contributions Act (“FICA”)), state and local, foreign or other tax withholding requirements. We may require participants or other persons receiving grants or exercising grants to pay an amount sufficient to satisfy such tax withholding requirements with respect to such grants, or we may deduct from other wages and compensation paid by us the amount of any withholding taxes due with respect to such grant, or we may take such other action as the Committee may deem advisable to enable us to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any grant.

The Committee may permit or require that our tax withholding obligation with respect to grants paid in Common Stock be paid by having shares withheld up to an amount that does not exceed the participant’s minimum applicable withholding tax rate for United States federal (including FICA), state and local tax liabilities, or as otherwise determined by the Committee. In addition, the Committee may, in its discretion, and subject to such rules as the Committee may adopt, allow participants to elect to have such share withholding applied to all or a portion of the tax withholding obligation arising in connection with any particular grant.

Transferability

Except as permitted by the Committee with respect to non-qualified stock options, only a participant may exercise rights under a grant during the participant’s lifetime. Upon death, the personal representative or other person entitled to succeed to the rights of the participant may exercise such rights. A participant cannot transfer those rights except by will or by the laws of descent and distribution or, with respect to grants other than incentive stock options, pursuant to a domestic relations order. The Committee may provide in a grant instrument that a participant may transfer non-qualified stock options and stock award to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws.

Amendment; Termination

The Board of Directors may amend or terminate the Equity Plan at any time, except that our stockholders must approve an amendment if such approval is required in order to comply with the Code, applicable laws or applicable stock exchange requirements. Unless terminated sooner by the Board of Directors or extended with stockholder approval, the Equity Plan will terminate on the day immediately preceding the tenth anniversary of the effective date of the Equity Plan.

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Stockholder Approval

Except in connection with certain corporate transactions, including stock dividends, stock splits, a recapitalization, a change in control, a reorganization, a merger and a spin-off, stockholder approval is required (i) to reduce the exercise price or base price of outstanding stock options or SARs, (ii) to cancel outstanding stock options or SARs in exchange for the same type of grant with a lower exercise price or base price, and (iii) to cancel outstanding stock options or SARs that have an exercise price or base price above the current price of a share of Common Stock, in exchange for cash or other securities, each as applicable.

Establishment of Sub-Plans

The Board of Directors may, from time to time, establish one or more sub-plans under the Equity Plan to satisfy applicable blue sky, securities or tax laws of various jurisdictions. The Board of Directors may establish such sub-plans by adopting supplements to the Equity Plan setting forth limitations on the Committee’s discretion and such additional terms and conditions not otherwise inconsistent with the Equity Plan as the Board of Directors deems necessary or desirable. All such supplements will be deemed part of the Equity Plan, but each supplement will only apply to participants within the affected jurisdiction, and we will not be required to provide copies of any supplement to such unaffected participants.

Clawback

Subject to applicable law, the Committee may provide in any grant instrument that if a participant breaches any restrictive covenant obligation or agreement between the participant and us, or otherwise engages in activities that constitute cause (as defined in the Equity Plan) either while employed by, or providing services to, us or within a specified period of time thereafter, all grants held by the participant will terminate, and we may rescind any exercise of an option or SAR and the vesting of any other grant and delivery of shares upon such exercise or vesting, as applicable on such terms as the Committee will determine, including the right to require that in the event of any rescission:

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the participant must return the shares received upon the exercise of any option or SAR or the vesting and payment of any other grants; or

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if the participant no longer owns the shares, the participant must pay to us the amount of any gain realized or payment received as a result of any sale or other disposition of the shares (if the participant transferred the shares by gift or without consideration, then the fair market value of the shares on the date of the breach of the restrictive covenant agreement or activity constituting cause), net of the price originally paid by the participant for the shares.

The Committee may also provide for clawbacks pursuant to a clawback policy, which the Board of Directors may in the future adopt and amend from time to time. Payment by the participant will be made in such manner and on such terms and conditions as may be required by the Committee. We will be entitled to set off against the amount of any such payment any amounts that we otherwise owe to the participant.

Certain United States Federal Income Tax Aspects

The following is a summary of certain U.S. federal income tax consequences of awards under the Equity Plan. It does not purport to be a complete description of all applicable rules, and those rules (including those summarized here) are subject to change.

Options

An optionee generally will not recognize taxable income upon the grant of a non-statutory option. Rather, at the time of exercise of the option, the optionee will recognize ordinary income for income tax purposes in an amount equal to the excess, if any, of the fair market value of the shares purchased over the exercise price. We generally will be entitled to a tax deduction at such time and in the same amount, if any, that the optionee recognizes as ordinary income. The optionee’s tax basis in any shares received upon exercise of an option will be the fair market value of the shares on the date of exercise, and if the shares are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of such shares on the date of exercise will generally be taxable as long-term or short-term capital

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gain or loss (if the shares are a capital asset of the optionee) depending upon the length of time such shares were held by the optionee.

Incentive stock options are eligible for favorable U.S. federal income tax treatment if certain requirements are satisfied. An incentive stock option must have an option price that is not less than the fair market value of the stock at the time the option is granted and must be exercisable within ten years from the date of grant. An employee granted an incentive stock option generally does not realize compensation income for U.S. federal income tax purposes upon the grant of the option. At the time of exercise of an incentive stock option, no compensation income is realized by the optionee other than tax preference income for purposes of the federal alternative minimum tax on individual income. If the shares acquired on exercise of an incentive stock option are held for at least two years after grant of the option and one year after exercise, the excess of the amount realized on the sale over the exercise price will be taxed as capital gain. If the shares acquired on exercise of an incentive stock option are disposed of within less than two years after grant or one year of exercise, the optionee will realize taxable compensation income equal to the lesser of (i) the excess of the fair market value of the shares on the date of exercise over the option price or (ii) the excess of the amount realized on the sale over the option price. Any additional amount realized will be taxed as capital gain.

Stock Awards

A participant generally will not be taxed upon the grant of stock awards subject to restrictions, but rather will recognize ordinary income in an amount equal to the fair market value of the shares at the time the shares are no longer subject to a “substantial risk of forfeiture” (within the meaning of the Code). We generally will be entitled to a deduction at the time when, and in the amount that, the participant recognizes ordinary income on account of the lapse of the restrictions. A participant’s tax basis in the shares will equal their fair market value at the time the restrictions lapse, and the participant’s holding period for capital gains purposes will begin at that time. Any cash dividends paid on the restricted stock before the restrictions lapse will be taxable to the participant as additional compensation (and not as dividend income). Under Section 83(b) of the Code, a participant may elect to recognize ordinary income at the time the shares of stock are awarded in an amount equal to their fair market value at that time, notwithstanding the fact that such shares of stock are subject to restrictions and a substantial risk of forfeiture. If such an election is made, no additional taxable income will be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the shares equal to their fair market value on the date of their award, and the participant’s holding period for capital gains purposes will begin at that time. We generally will be entitled to a tax deduction at the time when, and to the extent that, ordinary income is recognized by such participant.

Stock Units

In general, the grant of stock units will not result in income for the participant or in a tax deduction for us. Upon the settlement of such an award in cash or shares, the participant will recognize ordinary income equal to the aggregate value of the payment received, and we generally will be entitled to a tax deduction at the same time and in the same amount.

Stock Appreciation Rights

A participant who is granted a SAR generally will not recognize ordinary income upon receipt of the SAR. Rather, at the time of exercise of such SAR, the participant will recognize ordinary income for U.S. federal income tax purposes in an amount equal to the value of any cash received and the fair market value on the date of exercise of any shares received. We generally will be entitled to a tax deduction at such time and in the same amount, if any, that the participant recognizes as ordinary income. The participant’s tax basis in any shares received upon exercise of a SAR will be the fair market value of the shares on the date of exercise, and if the shares are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of such shares on the date of exercise will generally be taxable as long-term or short-term capital gain or loss (if the shares are a capital asset of the participant) depending upon the length of time such shares were held by the participant.

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Other Awards

With respect to other stock-based awards granted under the Equity Plan, generally when the participant receives payment with respect to an award, the amount of cash and/or the fair market value of any shares or other property received will be ordinary income to the participant, and we generally will be entitled to a tax deduction at the same time and in the same amount.

Impact of Section 409A

Section 409A of the Code applies to deferred compensation, which is generally defined as compensation earned currently, the payment of which is deferred to a later taxable year. Awards under the Equity Plan are intended to be exempt from the requirements of Section 409A or to satisfy its requirements. An award that is subject to Section 409A and fails to satisfy its requirements will subject the holder of the award to immediate taxation, interest and an additional 20% tax on the vested amount underlying the award.

Section 162(m) of the Code

Prior to 2018, Section 162(m) of the Code imposed a $1 million limit on the amount that a public company may deduct for compensation paid to a company’s chief executive officer or any of the company’s three other most highly compensated executive officers (other than the chief financial officer) who are employed as of the end of the year. This limitation did not apply to compensation that meets the tax code requirements for “qualifying performance-based” compensation (i.e., compensation paid only if the individual’s performance meets pre-established objective goals based on performance criteria approved by stockholders, including stock options).

The performance-based compensation exemption and the exemption of the chief financial officer from Section 162(m)’s deduction limit have been repealed, among other changes, effective for taxable years beginning after December 31, 2017, such that awards paid to our covered executive officers (including our chief executive officer) in excess of $1 million will not be deductible in future years, unless they qualify for transition relief applicable to certain arrangements that were in effect as of November 2, 2017 and are not materially modified thereafter. As in prior years, while deductibility of executive compensation for federal income tax purposes is among the factors the Committee considers when structuring our executive compensation arrangements, it is not the sole or primary factor considered. We retain the flexibility to authorize compensation that may not be deductible if we believe it is in the best interests of the Company.

New Plan Benefits

Future benefits under the Equity Plan generally will be granted at the discretion of the Committee and are therefore not currently determinable.

Because future grants of awards under the Equity Plan, if approved, would be subject to the discretion of the Board of Directors or Compensation Committee, the amount and terms of future awards to particular participants or groups of participants are not determinable at this time. No awards have been previously granted that are contingent on the approval of the Equity Plan.

Vote Required; Recommendation of Board of Directors

The affirmative vote of the holders of shares of Common Stock representing a majority of the votes present or representing and voting on the matter is required for approval of this Proposal No. 3. Broker non-votes (if any) and abstentions will not be counted as votes cast on the matter and will have no effect on the outcome of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT IDERA’S STOCKHOLDERS VOTE “FOR” THIS PROPOSAL NO. 3: TO APPROVE OF THE EQUITY COMPENSATION PLAN.

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OTHER INFORMATION

DESCRIPTION OF COMMON STOCK

The following description sets forth certain material terms and provisions of the Company’s securities that are registered under Section 12 of the Securities Exchange Act of 1934, as amended.

The following description is a summary and does not purport to be complete. It is subject to, and qualified in its entirety by reference to, the Company’s Restated Certificate of Incorporation, as amended, and our Bylaws. The terms of these securities also may be affected by the DGCL.

Unless otherwise indicated, any share and per share amounts included in the description of our securities, reflect, as applicable, the occurrence of a 1-for-8 reverse split of our Common Stock that occurred on June 29, 2006, and a 1-for-8 reverse split of our Common Stock that occurred on July 27, 2018.

Authorized Capital Stock

We are authorized to issue a total of 145,000,000 shares of capital stock consisting of 140,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.01. Our Common Stock is listed on the Nasdaq Capital Market under the trading symbol “IDRA.”

As of the date of this proxy statement, 62,355,434 shares of Common Stock are issued and outstanding and shares of Common Stock were reserved for the issuance upon the exercise of outstanding warrants and options to purchase Common Stock, outstanding restricted stock units, the conversion of the Series A Preferred Stock and the Series Z Preferred Stock, shares required to be reserved pursuant to the Merger Agreement, shares available for grant under our 2013 Stock Incentive Plan, shares available for purchase under our 2017 Employee Stock Purchase Plan, and the assumed Aceragen 2021 Stock Incentive Plan.

Description of Common Stock

Voting

Each outstanding share of Common Stock is entitled to one vote per share on all matters submitted to a vote of our stockholders, except as set forth in the Restated Certificate of Incorporation. Holders of Common Stock do not have cumulative voting rights.

Dividends; Liquidation and Dissolution

Subject to the preferences that may be applicable to any then-outstanding shares of preferred stock, holders of Common Stock are entitled to receive ratably on a per share basis such dividends and other distributions in cash, stock, or property of Idera as may be declared by our Board of Directors from time to time out of the legally available assets or funds of Idera. Upon our voluntary or involuntary liquidation, dissolution or winding up, holders of Common Stock are entitled to receive ratably all assets of Idera available for distribution to its stockholders after payment of any amounts due to creditors and any amounts due to the holders of our preferred stock.

Other Rights and Restrictions

Holders of our Common Stock have no preemptive rights and no right to convert their Common Stock into any other securities. There are no redemption or sinking fund provisions applicable to our Common Stock. The Restated Certificate of Incorporation and Bylaws do not restrict the ability of holders of Common Stock to transfer their shares of Common Stock. Our Board of Directors may authorize the issuance of preferred stock with voting, conversion, dividend, liquidation, and other rights that may adversely affect the rights of the holder of our Common Stock.

Put Right

Pursuant to the terms of that certain Unit Purchase Agreement, dated May 5, 1998 (the “UPA”), we issued and sold a total of 149,960 shares of Common Stock (the “Put Shares”) at a price of $128.00 per

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share. Under the UPA, the initial purchasers of the Put Shares (the “Put Holders”) have the right to require us to repurchase the put shares (the “Put Right”). In order for the Put Right to be exercised by any Put Holder, all of the following must occur: (1) we liquidate, dissolve or wind up our affairs pursuant to applicable bankruptcy law, whether voluntarily or involuntarily; (2) all of our indebtedness and obligations, including without limitation the indebtedness under our outstanding notes, has been paid in full; and (3) all rights of the holders of any series or class of capital stick raking prior and senior to the Common Stock with respect to liquidation have been satisfied in full. We may terminate the Put Right upon written notice to the Put Holders if the closing sales price of our Common Stock exceeds $256.00 per share for the 20 consecutive trading days prior to the date of notice of termination. Because the Put Right is not transferable, in the event that a Put Holder has transferred Put Shares since May 5, 1998, the Put Right with respect to those Put Shares has terminated. As a consequence of the Put Right, in the event we are liquidated, holders of shares of Common Stock that do not have a Put Right with respect to such shares may receive smaller distributions per share upon our liquidation than if there was no Put Right outstanding. As of the date of this proxy statement, we had repurchased or received documentation of the transfer of 49,993 Put Shares and 4,472 of the Put Shares continued to be held in the name of the Put Holders. We cannot determine at this time what portion of the Put Rights of the remaining 95,494 Put Shares have terminated.

Description of Preferred Stock and Preferred Stock Convertible Into Common Stock

We are authorized to issue 5,000,000 shares of preferred stock, of which 1,500,000 shares have been designated Series A Preferred Stock, 200,000 shares have been designated Series B Preferred Stock, 150,000 shares have been designated Series Z Preferred Stock, and five shares have been designated as Series X Preferred Stock.

Shares of Series A Preferred Stock, in whole or in part, at the option of the holder, are convertible into fully paid and nonassessable shares of Common Stock at $272.00 per share, subject to adjustment. Subject to the Conversion Proposal discussed in this proxy statement, shares of Series Z Preferred Stock, in whole or in part, at the option of the holder, are convertible into fully paid and nonassessable shares of 1,000 shares of Common Stock, subject to adjustment. Shares of Series X Preferred Stock are not convertible into Common Stock.

The holders of Series B Preferred Stock have 1,000,000 votes per whole share of Series B Preferred Stock (i.e., 1,000 votes per one one-thousandth of a share of Series B Preferred Stock) and are entitled to vote with the Common Stock, together as a single class, on the Reverse Stock Split Proposal and Adjournment Proposal, but are not otherwise entitled to vote on the other proposals to be presented at the Special Meeting. All shares of Series B Preferred Stock that are not present in person or by proxy at the Special Meeting as of immediately prior to the opening of the polls at the Special Meeting will be automatically redeemed. Any outstanding shares of Series B Preferred Stock that have not been redeemed pursuant to the Initial Redemption will be redeemed in whole, but not in part, (i) if and when ordered by our Board or (ii) automatically upon the approval by the Company’s stockholders of the Reverse Stock Split at any meeting of the stockholders held for the purpose of voting on such proposal.

As of the date of this proxy statement, there were 655 shares of Series A Preferred Stock outstanding, 62,355 shares of Series B Preferred Stock outstanding, 80,656 shares of Series Z Preferred Stock outstanding, and five shares of Series X Preferred Stock outstanding. No other shares of preferred stock were outstanding.

Common Stock Issuable Upon Exercise of Warrants

In connection with the Merger Agreement, we have agreed to assume all issued and outstanding warrants, held by certain former stockholders of Aceragen, to purchase shares of Common Stock and Series Z Preferred Stock on the same terms and conditions as applied to such warrants immediately prior to the Acquisition (but with such changes as Idera in good faith determined was necessary to reflect such assumption and conversion).

As of the date of this proxy statement, there were 8,552,214 warrants to purchase shares of Common Stock outstanding and 14,215 warrants to purchase shares of Series Z Preferred Stock outstanding.

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Certain Anti-Takeover Provisions of Our Restated Certificate Incorporation and Bylaws

The following is a summary of certain provisions of our Restated Certificate of Incorporation and Bylaws that may have the effect of delaying, deterring, or preventing hostile takeovers or changes in control or management of Idera. Such provisions could deprive our stockholders of opportunities to realize a premium on their stock. At the same time, these provisions may have the effect of inducing any persons seeking to acquire or control us to negotiate terms acceptable to our Board of Directors.

Undesignated Preferred Stock

Our Restated Certificate of Incorporation authorizes our Board of Directors to issue shares of preferred stock and set the voting powers, designations, preferences, and other rights related to that preferred stock without stockholder approval. Any such designation and issuance of shares of preferred stock could delay, defer, or prevent any attempt to acquire or control us.

Staggered Board of Directors

Our Restated Certificate of Incorporation and our Bylaws provide for the division of our Board of Directors into three classes as nearly equal in size as possible with staggered three-year terms. The classification of the Board of Directors could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, control of us. Our Restated Certificate of Incorporation and Bylaws require the affirmative vote of the holders of at least 75% of the shares of our capital stock issued and outstanding and entitled to vote to amend or repeal this provision.

Vacancies on the Board of Directors; Removal of Directors

Our Restated Certificate of Incorporation and our Bylaws provide that, subject to any rights of holders of our preferred stock, any vacancies in our Board of Directors for any reason will be filled only by a majority of our directors remaining in office, and directors so elected will hold office until the next election of directors. The inability of our stockholders to fill vacancies on the Board of Directors may make it more difficult to change the composition of our Board of Directors. Additionally, our Restated Certificate of Incorporation and Bylaws provide that a director may be removed from office by our stockholders only for cause and by the affirmative vote of at least two-thirds of our outstanding voting stock. Our Restated Certificate of Incorporation and Bylaws require the affirmative vote of the holders of at least 75% of the shares of our capital stock issued and outstanding and entitled to vote to amend or repeal these provisions.

Cumulative Voting

Our Restated Certificate of Incorporation and Bylaws do not provide for cumulative voting. Accordingly, the holders of a majority of the shares of Common Stock entitled to vote in any election of directors may elect all of the directors standing for election. As a result, subject to the voting rights, of which there currently are none, of any outstanding preferred stock, persons who hold more than 50% of the outstanding Common Stock entitled to elect members of our Board of Directors can elect all of the directors who are up for election in a particular year.

Business Combinations

We are subject to Section 203 of the DGCL. Subject to certain exceptions, Section 203 prevents a publicly-held Delaware corporation from engaging in a “business combination” with any “interested stockholder” for three years following the date that such person became an interested stockholder, unless either the interested stockholder attained such status with the approval of our Board of Directors, the business combination was approved by our Board of Directors and stockholders in a prescribed manner or the interested stockholder acquired at least 85% of our outstanding voting stock in the transaction in which such person became an interested stockholder. A “business combination” includes, among other things, a merger or consolidation involving us and the “interested stockholder” and the sale of more than 10% of our assets. In general, an “interested stockholder” is any entity or person beneficially owning 15% or more of our outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person.

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PRINCIPAL STOCKHOLDERS

The following table sets forth ~~as of April 1, 2022 (except as otherwise indicated below),~~ information, ~~we know about~~to the extent known by us or ascertainable from public filings, with respect to the beneficial ownership of our ~~common stock~~Common Stock as of December 4, 2022 by:

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each ~~person or entity, including any “group” as that term is used in Section 13(d)(3) of the Exchange Act, who is known by us to own beneficially more than 5% of the issued and outstanding shares~~ of our ~~common stock;~~directors;

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each of our ~~current directors and director nominees;~~

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~~each of our named~~ executive ~~officers, as set forth in the Summary Compensation Table set forth in this proxy; and~~officers;

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all of our ~~current~~ directors and executive officers as a ~~group.~~group; and

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each person, or group of affiliated persons, who is known by us to beneficially own greater than 5.0% of our Common Stock.

The column titled “Shares Beneficially Owned” is based on a total of 62,355,434 shares of our Common Stock outstanding as of December 4, 2022.

We have determined beneficial ownership in accordance with the rules of the SEC, and the information in the table below is not necessarily indicative of beneficial ownership for any other purpose. The SEC has defined “beneficial” ownership of a security to mean the possession, directly or indirectly, of voting power and/or investment power. In computing the percentage ownership of each person, shares of ~~common stock~~Common Stock subject to options, warrants, or rights held by that person that are currently exercisable, or exercisable within 60 days of ~~April 15,~~December 4, 2022, are deemed to be outstanding and beneficially owned by that person. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

To our knowledge and except as indicated in the notes to this table and pursuant to applicable community property laws, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder’s name. ~~The percentage of ownership is based on 52,924,870 shares of our common stock issued and outstanding on April 1, 2022.~~ All fractional common share amounts have been rounded to the nearest whole number. To our knowledge, except as noted below, no person or entity is the beneficial owner of more than 5% of the voting power of the Company’s stock.

	Shares beneficially owned
Name and Address of Beneficial Owner(1)	Number		Percentage
5% Stockholders:
Pillar Investment Entities		16,748,500(2)		19.99
co/ Stuarts Corporate Services Ltd. Kensington House, 69 Dr. Roy’s Drive Georgetown, Grand Cayman KY1-1104 Cayman Islands
Company Officers and Directors:
John Taylor		2,171,214		3.5
Daniel Salain		2,171,214		3.5
Vincent J. Milano		1,091,983(3)		1.8
Andrew Jordan		651,364		1.0
John J. Kirby		370,666(4)		*
Bryant D. Lim		443,996(5)		*
Ronald Wooten		1,343,547(6)		2.2
Carl Kraus		203,551(7)		*
Michael R. Dougherty		355,116(8)		*
Cristina Csimma		72,000(9)		*
James A. Geraghty		271,229(10)		*
Maxine Gowen		75,500(11)		*
All current directors and executive officers as a group (12 individuals)		9,221,380(12)		14.8

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~~Number of Shares~~
~~Beneficially Owned~~

~~Percentage of~~
~~Outstanding~~
~~Shares~~

~~Name and Address of Beneficial Owner(1)~~

~~5% Stockholders~~

~~Pillar Investment Entities~~

~~11,111,671(2)~~

~~19.99~~

~~c/o Stuarts Corporate Services Ltd.~~
~~Kensington House, 69 Dr. Roy’s Drive~~
~~Georgetown, Grand Cayman KY1-1104~~
~~Cayman Islands~~

~~Named Executive Officers and Directors~~

~~Vincent J. Milano~~

~~891,044(3)~~

~~1.68~~

~~John J. Kirby~~

~~328,479(4)~~

~~Bryant D. Lim~~

~~386,184(5)~~

~~Daniel Soland~~

~~278,843(6)~~

~~Elizabeth Tarka~~

~~13,237(7)~~

~~Cristina Csimma~~

~~46,000(8)~~

~~Michael R. Dougherty~~

~~237,875(9)~~

~~James A. Geraghty~~

~~245,229(10)~~

~~Mark Goldberg~~

~~105,985(11)~~

~~Maxine Gowen~~

~~49,500(12)~~

~~Carol A. Schafer~~

~~105,665(13)~~

~~All current directors and executive officers as a group (10 individuals)~~

~~2,674,804(14)~~

~~5.05~~

Denotes less than 1% beneficial owner.

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(1)

Except as otherwise noted, the address for each person listed above is c/o Idera Pharmaceuticals, Inc., 505 Eagleview Boulevard, Suite 212, Exton, PA 19341.

(2)

On ~~June 1, 2021,~~October 5, 2022, Pillar Pharmaceuticals 6, L.P. (“Pillar 6”), together with Pillar Invest Corporation (“Pillar GP”), Pillar Partners Foundation, L.P. (“Pillar Foundation,” and, together with Pillar 6 and Pillar GP, the “Pillar Entities”), Abude Umari and Youssef El Zein (together with the Pillar Entities and Mr. Umari, the “Reporting Persons”) filed Amendment No. 1013 to a Schedule 13D with the SEC reporting the following beneficial ownership: (i) sole voting power with respect to zero shares; (ii) shared voting power with respect to 16,748,500 shares; (iii) sole dispositive power with respect to zero shares; and (iv) shared dispositive power with respect 16,748,500 shares. The percentage reported for the shares of ~~common stock~~Common Stock is capped at 19.99% as a result of blocker provisions that limit the number of warrants exercisable for shares of ~~common stock~~Common Stock that are held by certain of the Pillar Entities.

The Reporting Persons expressly disclaim status as a “group” for purposes of Amendment No. 10 to the Schedule 13D. The Pillar Entities exercise no voting or dispositive power over and expressly disclaim beneficial ownership of any shares held directly by Messrs. Umari and El Zein, and Messrs. Umari and El Zein expressly disclaim beneficial ownership of any shares of ~~common stock~~Common Stock held directly by Pillar 6 or Pillar Foundation and indirectly by Pillar GP.

(3)

Includes ~~709,371~~910,310 shares of ~~common~~Common Stock subject to outstanding stock options and restricted shares that are exercisable within 60 days after December 4, 2022.

(4)

Includes 333,034 shares of Common Stock subject to outstanding stock options that are exercisable within 60 days after ~~April 1,~~December 4, 2022.

~~(4)~~(5)

Includes ~~290,847~~413,562 shares of ~~common stock~~Common Stock subject to outstanding stock options that are exercisable within 60 days after ~~April 1,~~December 4, 2022.

~~(5)~~(6)

Includes ~~355,750~~1,343,547 shares of ~~common stock~~Common Stock subject to outstanding warrants held by NovaQuest. Mr. Wooten, a director of the Company, is a member of the investment committee of NovaQuest GP. NovaQuest GP has the power to vote and dispose of any securities directly owned by NovaQuest. NovaQuest GP’s investment committee makes voting and investment decisions regarding securities held by NovaQuest.

(7)

Includes 203,551 shares of Common Stock subject to outstanding stock options that are exercisable within 60 days after ~~April 1,~~December 4, 2022.

~~(6)~~(8)

Includes ~~200,000~~72,000 shares of ~~common stock~~Common Stock subject to outstanding stock options that are exercisable within 60 days after ~~April 1,~~December 4 2022.

~~(7)~~

Dr. Tarka served as our Senior Vice President, Chief Medical Officer until May 28, 2021. As the Company no longer has any affiliation with Dr. Tarka and was unable to obtain beneficial ownership information for Dr. Tarka as of April 1, 2022, the number of shares beneficially owned represents Dr. Tarka’s beneficial ownership as of March 29, 2021.

~~(8)~~(9)

Includes ~~46,000~~72,000 shares of ~~common stock~~Common Stock subject to outstanding stock options that are exercisable within 60 days after ~~April 1,~~December 4, 2022.

~~(9)~~(10)

Includes ~~46,000~~151,686 shares of ~~common stock~~Common Stock subject to outstanding stock options that are exercisable within 60 days after ~~April 1,~~December 4, 2022.

~~(10)~~(11)

Includes ~~125,686~~74,625 shares of ~~common stock~~Common Stock subject to outstanding stock options that are exercisable within 60 days after ~~April 1, 2022.~~

~~(11)~~

~~Includes 57,375 shares of common stock subject to outstanding stock options that are exercisable within 60 days after April 1,~~December 4, 2022.

(12)

Includes ~~48,625~~2,230,768 shares of common stock subject to outstanding stock options that are exercisable within 60 days after April 1, 2022, and 875 shares of common stock held in the name Brian Macdonald for Maxine Gowen Trust, for which Dr. Gowen is a beneficiary and trustee.

~~(13)~~

~~Includes 46,000 shares of common stock subject to outstanding stock options that are exercisable within 60 days after April 1, 2022.~~

~~(14)~~

~~Includes 1,925,654 shares of common stock~~Common Stock subject to outstanding stock options held by the directors and executive officers as a group that are exercisable within 60 days after ~~April 1, 2022.~~December 4, 2022 and 1,343,547 shares of Common Stock subject to outstanding warrants.

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~~EXECUTIVE COMPENSATION~~

~~Compensation Discussion and Analysis~~

~~This Compensation Discussion and Analysis (“CD&A”) should be read in conjunction with the compensation tables and narratives that immediately follow this section.~~

~~Overview and Outlook~~

We are focused on the acquisition, development, and ultimate commercialization of drug candidates for rare disease indications characterized by small, well-defined patient populations with serious unmet needs. As such, we operate in an environment that is very competitive from both a business and talent perspective. We believe our competitive compensation program is key element of our employee value proposition that allows us to attract and retain the talent and leadership resources we need to drive our business success.

We are actively identifying and evaluating new development or commercial-stage assets for our portfolio through acquisition or in-licensing opportunities, as well as pursuing additional strategic alternatives.

~~Purpose~~

The purpose of this CD&A is to provide our stockholders with an overview and understanding of the philosophy, objectives, process, components, and decision-making of our 2021 executive compensation program. This analysis focuses on the compensation paid to our named executive officers (“NEOs”):

•

~~Vincent J. Milano, President and Chief Executive Officer~~

•

~~John J. Kirby, Senior Vice President and Chief Financial Officer~~

•

~~Bryant D. Lim, Senior Vice President, General Counsel and Corporate Secretary~~

•

~~Daniel B. Soland, Senior Vice President and Chief Operating Officer~~

•

~~Elizabeth Tarka, M.D., former Senior Vice President and Chief Medical Officer(1)~~

~~(1)~~

~~Dr. Tarka served as our Senior Vice President, Chief Medical Officer until May 28, 2021; thereafter, she provided consulting services to the Company until October 12, 2021.~~

~~Business Update~~

~~Our executive compensation program is designed to, among other goals, align executive compensation with the achievement of measurable corporate objectives. During 2021, the Company:~~

•

~~concluded the ILLUMINATE-301 trial in anti-PD 1 refractory melanoma through its primary endpoints;~~

•

~~reported top line data for the second cohort of ten patients in our phase 2 trial of tilsotolimod in microsatellite-stable colorectal cancer (“MSS-CRC”);~~

•

~~entered into a collaboration with Scriptr Global, Inc. (“Scriptr”) for the development of gene therapy technologies in certain rare diseases; and~~

•

~~enhanced our financial position through financing activities.~~

~~Further detail regarding our 2021 goals and performance can be found in the section entitled “Annual Cash Incentive Award.”~~

~~Key Compensation Decisions and Actions~~

Taking into consideration our compensation philosophy and objectives, the needs and performance of our Company, individual performance, and other factors such as market data and industry best practices, our compensation committee took the following actions in 2021:

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•

~~Base Salary~~. The compensation committee reviewed the base salaries of our NEOs in January 2021. No adjustments were made to the base salaries of Messrs. Milano or Soland. With respect to Mr. Milano, the compensation committee determined that his base salary was market competitive in connection with its benchmark analysis. As Mr. Soland was hired in January 2021, he did not receive a salary increase in 2021. Messrs. Kirby and Lim and Dr. Tarka each received salary adjustments to maintain reasonable positioning relative to the 50th percentile of the base salary compensation of like positions among our peer companies. Further detail regarding the compensation committee’s base salary review and decision-making process is provided below in the section entitled “Base Salary.”

•

~~Annual Cash Incentive Award.~~ In January 2021, the compensation committee approved corporate goals as part of our 2021 bonus program. The corporate goals consisted of three primary corporate objectives, each with its own weighting to reflect their importance relative to our business. To the extent goals are partially met or exceeded, the compensation committee may exercise discretion and ascribe a partial achievement or overachievement percentage to each goal, as applicable. In addition, the compensation committee may exercise discretion and ascribe an additional percentage for achievements that were not contemplated when goals were originally set. The compensation committee also reviews individual performance to determine whether the potential bonus should be increased or decreased.

In January 2022, the compensation committee reviewed our 2021 performance against our 2021 corporate objectives and agreed to attribute a corporate performance score of 50%. Further detail relating to this program, including information regarding our 2021 corporate goals and the weighting thereof, is provided below in the section entitled “Annual Cash Incentive Award.”

•

~~Long-Term Equity Incentive Awards~~. In January 2021, the compensation committee approved the grant of the first tranche of the biannual option awards to our NEOs, and in July 2021, the compensation committee approved the grant of the second tranche of biannual option awards to our NEOs. Further detail relating to our stock incentive program is provided in the section “Long-Term Equity Compensation.”

~~Compensation Philosophy and Objectives~~

Our general executive compensation philosophy has been established by our compensation committee, which acts pursuant to authority delegated to it by our board and as set forth in its charter. Our compensation committee is comprised solely of independent directors as defined by applicable rules and regulations of Nasdaq and the SEC. See “Board Committees—Compensation Committee” for further detail regarding the composition, independence, and responsibilities of our compensation committee.

~~Our executive compensation program is designed to achieve the following broad goals:~~

•

~~attract, retain, and motivate the best possible executive talent;~~

•

~~ensure executive compensation is aligned with our corporate strategies and business objectives, including our short-term operating goals and longer-term strategic objectives;~~

•

promote the achievement of key strategic and financial performance measures by linking short- and long-term cash and equity incentives to the achievement of measurable corporate and individual performance goals; and

•

~~align executives’ incentives with the creation of stockholder value.~~

~~To achieve these objectives, the compensation committee:~~

•

sets short- and long-term compensation at levels the compensation committee believes are competitive with those of other companies in our industry and our region that compete with us for executive talent;

•

conditions a substantial portion of each NEO’s overall cash compensation on the achievement of key strategic, financial, research, and operational goals, such as clinical trial and regulatory progress, intellectual property portfolio development, establishment and maintenance of key strategic

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~~relationships, and exploration of business development opportunities, as well as our financial and operational performance; and~~

•

provides a portion of our executive compensation in the form of equity awards that vest (i) over time from the date of grant of the awards and/or, when applicable, (ii) upon the achievement of performance milestones, which we believe helps retain our NEOs and align their interests with those of our stockholders by allowing them to participate in the longer-term success of our Company as reflected in stock price appreciation.

~~Advisory Vote on Executive Compensation~~

We conducted an advisory vote on executive compensation, commonly referred to as a “say-on-pay” proposal, at our 2021 Annual Meeting of Stockholders. While this advisory vote was not binding, we value the opinions of our stockholders and, to the extent there is any significant vote against the compensation of our NEOs, we will consider our stockholders’ concerns and our board and compensation committee will evaluate whether any actions are necessary to address those concerns.

At our 2021 Annual Meeting of Stockholders, approximately 97% of the votes cast on the advisory vote on executive compensation approved the 2020 compensation paid to our NEOs as disclosed in the proxy statement for that meeting. The board and compensation committee considered the results of this advisory vote, together with the other factors and data, in determining executive compensation for 2021. Specifically, the compensation committee viewed the outcome of the say-on-pay vote as overwhelming approval of the Company’s executive compensation program and therefore did not make any significant changes to the structure or elements of the executive compensation program. The board and the compensation committee will continue to consider the outcome of our say-on-pay votes when making future compensation decisions for our NEOs.

~~Executive Compensation Process~~

~~Role of Our Compensation Committee and Our Chief Executive Officer~~

In order to accomplish its objectives consistent with its philosophy for executive compensation and determine compensation for our NEOs, our compensation committee reviews competitive information on executive compensation practices from peer companies as well as an assessment of overall corporate performance and individual performance. In connection therewith, our compensation committee typically takes the following actions annually:

•

~~reviews chief executive officer performance;~~

•

~~seeks input from our chief executive officer on the performance of the other NEOs;~~

•

reviews all components of our executive compensation program, including base salary, cash bonus targets and awards, equity compensation, and the estimated payout obligations under severance and change in control scenarios;

•

~~considers historic compensation and amounts realizable from prior awards;~~

•

~~consults with its independent compensation consultant;~~

•

~~holds executive sessions (without our management present);~~

•

~~reviews information regarding the executive compensation of its peer companies;~~

•

~~considers the say-on-pay vote from the prior year; and~~

•

~~reviews the outcomes from the foregoing with the board.~~

Our chief executive officer does not submit an assessment of his own performance and does not participate in the compensation committee’s deliberations or the determination of his own compensation. Our compensation committee reviews and approves, or recommends for approval by the board, the compensation of our NEOs, including our chief executive officer.

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~~Under our annual performance review program, annual performance goals are determined for our Company as a whole and for each individual NEO.~~

•

~~Annual corporate goals~~ are proposed by management and approved by the board. These corporate goals target the achievement of specific research, clinical, operational, and financial milestones. The compensation committee determines the weighting of and how the components of our annual corporate goals will contribute to the overall performance evaluation.

•

~~Annual individual goals~~ focus on contributions that facilitate the achievement of our corporate goals. Individual goals are proposed at the start of each year by each NEO and approved by the chief executive officer (except with respect to himself) and, in the case of the chief executive officer and as appropriate for the other NEOs, the compensation committee. Typically, the compensation committee sets the chief executive officer’s goals and reviews and discusses with the chief executive officer the goals for the other NEOs. The individual performance goals of each NEO consist primarily of the key objectives and goals from our annual business plan that relate to the functional area for which such NEO is responsible. As the chief executive officer oversees all aspects of our business, the individual performance goals for the chief executive officer are largely coextensive with the corporate goals.

~~At the end of each year, the compensation committee evaluates corporate and individual NEO performance.~~

In assessing corporate performance, the compensation committee evaluates corporate performance relative to the approved corporate goals for the applicable year, as well as other aspects of corporate performance, including progress and achievement of milestones outside of the corporate goals.

The compensation committee evaluates individual performance with respect to the areas that fall within each NEO’s responsibility. In doing so, the compensation committee relies on the chief executive officer’s evaluation of the other NEOs. The chief executive officer prepares evaluations of the other NEOs, which includes comparing such individual’s performance to his or her individual performance goals. The chief executive officer recommends annual executive salary increases, annual stock option awards, and bonuses, if any, for the other NEOs; the compensation committee then reviews and approves, as appropriate, the chief executive officer’s recommendations. In the case of the chief executive officer, the compensation committee independently conducts his individual performance evaluation and determines his compensation accordingly.

During this process, the compensation committee consults with its independent compensation consultant. In connection with the compensation committee’s annual performance and compensation review in the fourth quarter of each year, the independent compensation consultant provides the compensation committee with a blend of the data from the peer group (identified below for 2021 compensation decisions) and relevant compensation survey data from the Radford Global Life Sciences Survey. We refer to this blended data as the “market compensation data.”

For all NEOs, annual base salary increases, if any, are awarded during the first quarter following the end of the fiscal year. Equity awards and bonuses, if any, are granted as determined by the compensation committee. Annual target bonuses and performance goals are typically established in the first quarter of the fiscal year, with payout for such bonuses in January of the following fiscal year upon the compensation committee’s determination of the achievement of the applicable performance goals. Equity awards are typically given in two biannual tranches, generally in the first and third quarters of the fiscal year. Special equity awards, if any, are granted on an ad hoc basis as determined by the compensation committee.

~~Role of the Compensation Committee’s Independent Consultant~~

In the third quarter of 2020, our compensation committee engaged Pearl Meyer & Partners, LLC (“Pearl Meyer”) in connection with our 2021 annual compensation assessment to review our executive compensation practices and to provide the compensation committee with an assessment of our compensation program against competitive market data. See “Use of Market Compensation Data” below for a discussion of the competitive market compensation data compiled by Pearl Meyer. Based on this assessment, Pearl

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Meyer made recommendations to our compensation committee regarding the amount and form of executive officer compensation, including the ratio of cash to equity compensation and “at risk” and variable compensation.

Pearl Meyer did not provide any additional services to our Company during 2021 other than pursuant to their respective engagement by the compensation committee, which was limited to the aforementioned assessment of our executive officer compensation program.

Our compensation committee analyzed whether the engagement of Pearl Meyer as our compensation consultant raised any conflict of interest, taking into consideration the following factors: (a) the provision of other services to us by Pearl Meyer; (b) the amount of fees received from us by Pearl Meyer, as a percentage of the total revenue of Pearl Meyer; (c) Pearl Meyer’s policies and procedures that are designed to prevent conflicts of interest; (d) any business or personal relationship with Pearl Meyer or the individual advisors employed by Pearl Meyer and a member of the compensation committee or any executive officer; and (e) any shares of our stock owned by Pearl Meyer or the individual advisors employed by Pearl Meyer. Our compensation committee determined, based on its analysis of the above factors, that the work of Pearl Meyer and the individual compensation advisors employed by Pearl Meyer as compensation consultants did not create any conflict of interest. Accordingly, the compensation committee determined that Pearl Meyer is independent. Going forward, the compensation committee intends to assess the independence of any of our compensation advisers by reference to the foregoing factors, consistent with applicable rules and regulations of Nasdaq and the SEC.

~~Benchmarking: Use of Market Compensation Data~~

In making compensation decisions, our compensation committee reviewed competitive market compensation data compiled by Pearl Meyer. As part of its engagement, Pearl Meyer worked with the compensation committee in the fourth quarter of 2020 to create a peer group of publicly traded companies to be used in connection with our 2021 compensation decisions, including stock options granted during 2021, fiscal year 2021 salary adjustments, and fiscal year 2021 target bonus percentages. In selecting this peer group, the compensation committee and Pearl Meyer generally targeted mid- to late-development stage companies in the pharmaceutical and biotechnology sectors that generally met the following screening criteria:

•

~~Company Size~~: pre-commercial companies, small or micro-cap companies (under $1 billion in market capitalization), companies with a last twelve months’ (“LTM”) operating expense of less than $100 million, and companies with fewer than 100 employees;

•

~~Business Operations: companies with five or fewer Phase 2 or Phase 3 assets focused on cancer/~~~~oncology/immune-oncology, and with no or few other areas of research and development; and~~

•

~~Other: exclude subsidiaries, companies with business challenges, and companies that have recently conducted an initial public offering.~~

~~The following table lists the companies included in the peer group used in connection with our 2021 compensation decisions referred to above:~~

~~Aeglea BioTherapeutics, Inc.~~	Marker Therapeutics, Inc.*	~~Syndax Pharmaceuticals, Inc.~~
~~Calithera Biosciences, Inc.~~	~~MEI Pharma, Inc.~~	~~Syros Pharmaceuticals, Inc.~~
Diffusion Pharmaceuticals Inc.*	~~Miragen Therapeutics, Inc.~~	~~Tyme Technologies, Inc.~~
~~Galectin Therapeutics, Inc.~~	OncoSec Medical Incorporated*	~~ZIOPHARM Oncology, Inc.~~
GlycoMimetics, Inc.*	~~Selecta Biosciences, Inc.~~
~~Leap Therapeutics, Inc.~~	~~Sunesis Pharmaceuticals, Inc~~

Newly added company to the peer group used in connection with our 2021 compensation decisions. Such addition(s) replaced the following peer companies used in connection with our 2020 compensation decisions: Molecular Templates, Inc., NewLink Genetics Corp., Sensen Bio, Inc., and Spring Bank Pharmaceuticals, Inc.

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The foregoing peer group companies were recommended by Pearl Meyer and approved by our compensation committee because they have similar business profiles with respect to number of employees, market value, and stage of development. Based on application of the screening criteria, certain companies were excluded from or added to the peer group used for the 2021 compensation decisions.

Our compensation committee intends that if we achieve our corporate goals and the NEO performs at the level expected, the NEO should have the opportunity to receive compensation that is competitive with industry norms. Accordingly, our compensation committee generally targets overall compensation for NEOs around the 50th percentile of the market data. However, the compensation committee does not apply those targets formulaically and allows for NEOs to be positioned at different percentiles based on each individual NEO’s experience, performance level, and duties and responsibilities.

~~Components of Executive Compensation~~

~~The primary elements of our executive compensation program are:~~

•

~~base salary;~~

•

~~annual cash bonuses;~~

•

~~long-term equity awards (i.e., stock option);~~

•

~~severance and change in control benefits; and~~

•

~~broad-based benefits and limited perquisites.~~

Base salaries are an important part of the NEOs’ total compensation package and are intended to reflect their respective positions, duties, and responsibilities. Base salary provides a baseline compensation level, serving as a stable, fixed component of compensation that delivers cash income to each NEO. Annual base salaries have historically been based on, among other factors, a NEO’s knowledge, experience, expertise, perceived abilities, and expected contributions. The factors considered are not assigned specific weights.

Our variable or “at-risk,” performance-based compensation consists of short-term compensation in the form of an annual cash bonus and long-term compensation in the form of equity awards that vest over time from the date of grant of the award or from the time of achievement of performance milestones. The annual cash bonus is intended to provide an incentive to our NEOs to achieve short-term operational objectives, while equity awards are intended to incentivize our NEOs to achieve longer-term strategic business goals, which should ultimately lead to higher stock prices and increased stockholder value. We do not have any formal or informal policy or target for allocating compensation between short- and long-term compensation, between cash and non-cash compensation, or among the different forms of non-cash compensation. Instead, the compensation committee, after reviewing industry information, including the compensation practices of our peer companies, and our cash resources, determines subjectively what it believes to be the appropriate level and mix of the various compensation components.

We do not have any defined benefit pension plans or non-qualified deferred compensation plans. We maintain broad-based benefits, including health, dental, and vision insurance, life and disability insurance, and a 401(k) plan, that are provided to all employees. Our NEOs may also participate in our employee stock purchase plan, which is generally available to all employees who work over 20 hours per week, so long as they own less than 5% of our common stock, including for this purpose vested and unvested stock options and restricted stock units (RSUs). We provide limited perquisites consisting of certain relocation benefits.

We are party to employment agreements and employment offer letters with each of our NEOs. Employment agreements and employment offer letters with our NEOs are described below under the caption “Employment Agreements with Our NEOs.”

~~Base Salary~~

~~In establishing base salaries for our NEOs, our compensation committee typically:~~

•

~~reviews the market compensation data provided by the compensation consultant;~~

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•

~~considers historic salary levels of the NEO and the nature of the NEO’s responsibilities;~~

•

~~compares each NEO’s base salary with the salaries of our other NEOs; and~~

•

~~considers the NEO’s experience, performance, and contributions.~~

The compensation committee also typically considers the challenges involved in hiring and retaining executive talent in our industry and region. In assessing the NEO’s performance, the compensation committee considers his or her role in achieving the annual corporate goals, as well as, in the case of our NEOs other than our chief executive officer, the performance evaluation prepared by our chief executive officer with respect to such NEO. The chief executive officer’s evaluation provides the compensation committee insight as to whether each individual NEO’s performance was generally consistent with our expectations.

As part of our 2020 annual performance and compensation review, the compensation committee approved annual base salaries for our executive officers for 2021. In setting these annual base salaries, the compensation committee reviewed the 2020 market compensation data presented by Pearl Meyer. The compensation committee approved the following base salaries:

NEO
2020
Base Salary

2021
Base Salary
% Increase
Mr. Milano $ 600,000 $ 600,000 —
Mr. Kirby $ 336,000 $ 365,000 8.6
Mr. Lim $ 336,000 $ 365,000 8.6
Mr. Soland(1) — $ 425,000 —
Dr. Tarka(2) $ 375,000 $ 413,000 10.1

~~(1)~~

~~Mr. Soland joined Idera as Senior Vice President and Chief Commercial Officer in January 2021.~~

~~(2)~~

~~Dr. Tarka served as our Senior Vice President and Chief Medical Officer, until May 28, 2021; thereafter, she provided consulting services to the Company until October 12, 2021.~~

As discussed above, no adjustments were made to the base salaries of Messrs. Milano or Soland. With respect to Mr. Milano, the compensation committee determined that his base salary was market competitive in connection with its benchmark analysis. As Mr. Soland was hired in January 2021, he did not receive a salary increase in 2021. Messrs. Kirby and Lim and Dr. Tarka each received salary adjustments to maintain reasonable positioning relative to the 50th ~~percentile of the compensation of like positions relative to our peer companies.~~

~~Annual Cash Incentive Award~~

The annual cash incentive award provides an opportunity for additional compensation to NEOs if pre-established annual performance goals are attained. The compensation committee generally links cash awards to the achievement of the annual corporate goals, including unexpected corporate performance outside of the corporate goals and individual performance. The amount of the bonus paid, if any, varies among the NEOs depending on individual performance, individual contribution to the achievement of our annual corporate goals, and corporate performance generally and the compensation committee may exercise discretion in its determinations. The annual cash incentive award targets are based on a target percentage of each NEO’s salary. In determining the target bonus percentages for each of our NEOs, the compensation committee concluded that the target bonus percentages should be competitive with the 50th percentile of the market compensation data and that the target bonus percentage for each NEO, with the exception of our chief executive officer, be the same. The target bonus percentage was established by the compensation committee for each NEO at the time of hire, with the exception of Mr. Kirby, whose target bonus was adjusted concurrent with his promotion to Chief Financial Officer in 2019. Each year, the compensation committee reviews the individual bonus target percentages against the market data to ensure its competitiveness.

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~~The following table sets forth the individual bonus target percentages for each of our NEOs for 2021.~~

~~NEO~~	~~2021 Target~~ ~~Cash Bonus~~ ~~(% of Base~~ ~~Salary)~~
~~Mr. Milano~~		50%
~~Mr. Kirby~~		40%
~~Mr. Lim~~		40%
~~Mr. Soland~~		40%
~~Dr. Tarka~~		40%

Consistent with our Company-wide annual incentive plan applicable to all employees, including our NEOs, both a corporate performance score and individual performance score factored into the determination of each NEO’s cash bonus award for 2021.

Under the terms of our incentive plan, the corporate performance score is based on the degree to which corporate performance objectives have been achieved. This score is determined by the compensation committee and may range from 0-125%. The individual performance score also may range from 0-125% and is based on:

•

~~the degree to which individual performance objectives have been achieved;~~

•

~~the competencies and behaviors, such as leadership, judgment, decision-making, management, and collaboration, demonstrated in achieving results;~~

•

~~the technical skills required by the position; and~~

•

~~the completion of the ongoing responsibilities required by the position.~~

~~The corporate performance score and the individual performance score is approved by the compensation committee. The individual’s actual award is then calculated as follows:~~

	~~Annual Base Salary ($)~~
	X
	~~Individual Target Bonus %~~
	X
	~~Corporate Performance Score~~ ~~(0-125%)~~
	X
	~~Individual Performance Score~~ ~~(0-125%)~~
	=
	~~Annual Incentive Award ($)~~ ~~(Individual Payout)~~

In setting corporate goals in the first quarter of 2021, the compensation committee agreed to group the business objectives into one of three primary categories, each of which would contribute toward the overall assessment of our corporate performance. In assessing our achievement of the 2021 corporate goals, and determining the corporate performance score, the compensation committee considered the extent to which the Company achieved the business objectives in each of the categories, and assigned a score for each category, as summarized in the following table:

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Primary Goals
Contribution
toward
Corporate
Performance
Score(1)

Weighted
Achievement of
Performance
Goal(2)

Highlights of
Performance on
Key Objectives

Continue moving Tilsotolimod (IMO-2125) program toward registration 80% 25%
•
Delivered ILLUMINATE-301 topline results, which failed to meet primary endpoint.

•
Completed cohort expansion in the first phase of MSS-CRC cohort for ILLUMINATE-206.

Continue business development initiatives through rare disease exploration 10% 10%
•
Active due diligence on multiple strategic business development options.

Enhance ability to be successful through relevant foundational objectives 10% 10%
•
On target with respect to financial budget.

•
Maintained strong corporate compliance.

Modifier(3) n/a 5%
•
Entered collaboration with Scriptr Global for discovery of gene therapy techniques.

•
Improved cash position.

TOTAL 100% 50%

~~(1)~~

~~Percentages shown in this column represent the weight allocated to each performance goal.~~

~~(2)~~

~~Amounts represent the weighted achievement of each performance goal.~~

~~(3)~~

~~The modifier may be applied based on compensation committee discretion to reflect additional outcomes not contemplated when goals were set.~~

~~Based on these achievements and resulting category scores, in January 2022, the compensation committee approved a corporate performance score of 50%.~~

~~In assessing each NEO’s individual performance score, the compensation committee determined:~~

•

Mr. Milano’s overall score was equivalent to the corporate performance score of 50%; however, Mr. Milano voluntarily declined to accept his bonus in light of the Company’s business circumstances.

•

In recognition of his achievement against his personal objectives, including his role in contributing to improvement in our cash position through execution of financing vehicles and to business development activities as well as his overall leadership contributions, Mr. Kirby’s individual performance score was 100%. Using the broader corporate score of 50%, as noted above, this resulted in an overall bonus equal to 50% of his bonus target.

•

Recognizing his achievement against his personal objectives, including legal support to the ILLUMINATE program, the Scriptr collaboration, business development activities, and corporate governance-related matters, along with his overall leadership contributions, Mr. Lim’s individual performance score was 100%. Using the broader corporate score of 50% as noted above, this resulted in an overall bonus equal to 50% of his bonus target.

•

Recognizing his achievement against his personal objectives, including commercial activities related to tilsotolimod and commercial input to business development activities, along with his overall leadership contributions, Mr. Soland’s individual performance score was 100%. Using the broader corporate score of 50% as noted above, this resulted in an overall bonus equal to 50% of his bonus target. However, Mr. Soland voluntarily declined to accept his bonus in light of the Company’s business circumstances.

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•

~~Dr. Tarka’s employment was terminated before an individual performance score was awarded for the year. Accordingly, Dr. Tarka did not receive an annual cash incentive award for 2021.~~

~~The following table sets forth the target bonus amounts, the corporate and individual performance scores, the overall scores, and the resulting bonus amounts for each NEO.~~

NEO
Target
Bonus

Overall
Score

Bonus
Earned

Bonus
Payout(1)

Mr. Milano $ 300,000 50% $ 150,000 $ 0
Mr. Kirby $ 146,000 50% $ 73,000 $ 73,000
Mr. Lim $ 146,000 50% $ 73,000 $ 73,000
Mr. Soland $ 170,000 50% $ 85,000 $ 0
Dr. Tarka(2) $ 165,200 — — —

~~(1)~~

As discussed above, Messrs. Milano and Soland voluntarily declined to accept their respective bonuses. Accordingly, neither Mr. Milano nor Mr. Soland received an annual cash incentive award for 2021.

~~(2)~~

~~As Dr. Tarka’s employment terminated on May 28, 2021, she did not receive an annual cash incentive award for 2021.~~

~~Long-Term Equity Compensation~~

Our equity award program is the primary vehicle for offering long-term incentives to our NEOs. We believe that equity awards provide our NEOs with a strong link to our long-term performance, create an ownership culture, and help to align the interests of our NEOs with those of our stockholders. Equity grants are intended as both a reward for contributing to our long-term success and an incentive for future performance. Additionally, the vesting feature of our equity awards is intended to further our goal of retention by providing an incentive to our NEOs to remain in our employ during the vesting period. In determining the size of equity awards to our NEOs, our compensation committee considers:

•

~~the achievement of our annual corporate goals;~~

•

~~individual performance;~~

•

~~the previous awards granted to each executive officer, including the exercise price of such previous awards;~~

•

~~the recommendations of management;~~

•

~~the market compensation data presented by the compensation committee’s independent compensation consultant; and~~

•

~~the combined components of the NEO’s compensation.~~

The compensation committee approves all equity awards to our NEOs. Our equity awards have historically been in the form of stock options. However, under the terms of our 2013 Stock Incentive Plan, as amended (the “2013 Plan”), we may grant equity restricted stock awards, stock appreciation rights, and RSUs.

The compensation committee typically makes initial stock option awards to our NEOs upon commencement of their employment. Thereafter, the compensation committee grants annual stock option awards, and as it deems appropriate, may occasionally grant retention or recognition awards, usually in the form of RSUs. Annual stock option awards for all employees, including our NEOs, are granted in two biannual tranches in order to increase the recognition and retention related aspect of the awards. Determination of the total annual award amount typically occurs at the regularly scheduled meeting of the compensation committee held in the first quarter of each fiscal year. The second biannual grant is approved by the compensation committee before distributed. In general, 25% of the stock option grant vests on the first anniversary of the date of grant with the balance of the shares subject to the option vesting in 12-equal quarterly installments over the three-year period thereafter. The exercise price of stock options equals the fair market value of our common stock on the date of grant, which is typically equal to the closing price of

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our common stock on Nasdaq on the date of compensation committee approval, except in the case of new hire grants, which are approved in advance by the compensation committee and granted on the first day of employment.

In December 2020, as part of its annual executive compensation and performance review, the compensation committee reviewed the 2020 market compensation data regarding annual stock option grants. In January 2021, the compensation committee approved the grant of the first tranche of the biannual option awards to our NEOs and in July 2021, the compensation committee approved the grant of the second tranche of biannual option awards to our NEOs.

~~The following table sets forth the number of options granted to our NEOs in 2021:~~

NEO
January 2021
Grants

July 2021
Grants
Total

Stock Options
(# options)

Stock Options
(# options)

Stock Options
(# options)

Mr. Milano 95,000 124,000 219,000
Mr. Kirby 51,000 66,500 117,500
Mr. Lim 51,000 66,500 117,500
Mr. Soland 200,000(1) 66,500 266,500
Dr. Tarka 51,000 —(2) 51,000

~~(1)~~

Mr. Soland did not receive an annual grant in January 2021. Such amount represents the initial grant that Mr. Soland received in connection with the commencement of his employment on January 04, 2021.

~~(2)~~

~~Dr. Tarka did not receive an annual grant in July 2021 because her employment terminated in May 2021.~~

~~Broad-Based Benefits.~~ We maintain broad-based benefits, including health and dental insurance, life and disability insurance, and a 401(k) plan, that are provided to all employees. During 2021, we matched 100% of the employee contributions to our 401(k) plan up to a maximum of 5% of the participating employee’s annual salary, subject to annual IRS limitations. Our NEOs are eligible to participate in all our employee benefit plans, in each case, on the same basis as other employees and subject to any limitations in such plans. In 2021, each of our NEOs contributed to our 401(k) plan and their contributions were matched by us.

~~Retirement Policy Regarding the Treatment of Equity Awards.~~ Our board has adopted a retirement policy to address the treatment of options and RSUs in the event of an employee’s retirement that applies to all employees, including all officers and NEOs. For purposes of this policy, an employee will be deemed to have retired if (i) the employee terminates his or her employment with us, (ii) has been an employee of ours for more than 10 years, and (iii) is older than 65 upon termination of employment. Under the policy, if an employee retires, then:

•

~~all outstanding, unvested equity awards held by the employee will automatically vest in full; and~~

•

~~the period during which the employee may exercise the options will be extended to the expiration of the term of the option under the applicable option agreement.~~

Our board adopted this policy for our employees in recognition of the importance of equity awards to the compensation of employees and in order to provide each of our employees with the opportunity to get the full benefit of the options and RSUs held by the employee in the event of his or her retirement after making 10 years of contributions to our Company.

~~ESPP.~~ Our NEOs may also participate in our employee stock purchase plan (the “ESPP”), which is generally available to all employees who work over 20 hours per week, so long as they own less than 5% of our common stock, including for this purpose vested and unvested stock options and unvested RSUs. None of our NEOs participated in the ESPP in 2021.

~~Perquisites.~~ ~~Apart from the discussed benefits, we do not provide our NEOs with perquisites.~~

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~~Severance and Change in Control Benefits and Agreements with NEOs~~

We believe providing severance and/or change in control benefits as a component of our compensation structure can help us compete for executive talent and attract and retain highly talented executive officers whose contributions are critical to our long-term success. In that regard, we periodically review our severance and/or change in control practices. We believe that our severance and change in control benefits are appropriate.

~~Severance and Change in Control Agreements~~

In 2017, the board approved a form of Severance and Change of Control Agreement (the “Form Severance/CIC Agreement”), which the Company subsequently entered into with each of our NEOs. The severance benefits terms contained in the Form Severance/CIC Agreements entered with each of our NEOs are controlling and superseded the severance and change of control terms provided for under any NEO’s pre-existing employment agreement or employment offer letter.

The Form Severance/CIC Agreement provides that if we consummate a change of control (as defined therein), we will employ the NEO for a period of 24 months from the date of the consummation of the change of control. Pursuant to the Form Severance/CIC Agreement, during such period:

~~(i)~~

the NEO’s position and duties for the Company will be commensurate with the most significant of the duties and positions held by the NEO during the 90-day period preceding the date of the change of control;

~~(ii)~~

~~the NEO’s annual base salary will equal at least 12 times the highest monthly base salary paid to the NEO during the 12 months prior to the date of the change of control;~~

~~(iii)~~

the NEO will be entitled to an annual bonus equal to at least the greatest of (a) the average bonus paid to the NEO in respect of the three years immediately preceding the year in which the change of control occurs, (b) the annual bonus paid for the year immediately preceding the year in which the change of control occurs, and (c) 100% of the target bonus for (1) the year immediately preceding the year in which the change of control occurs, (2) the year in which the change of control occurs, or (3) any year following the year in which the change of control occurs and prior to the then-current year, whichever is highest; and

~~(iv)~~

~~the NEO will be entitled to certain other benefits as are consistent with the benefits paid to the NEO during the year prior to the change of control.~~

The Form Severance/CIC Agreement also provides that if a NEO is terminated without “cause” or resigns for “good reason” (as such terms are defined therein) in either case, within 24 months following a change of control, subject to the NEO’s timely execution and non-revocation of a general release of claims in a form provided by us and the NEO’s continued compliance with the invention, non-disclosure, and non-competition agreement previously entered into in connection with the commencement of NEO’s employment, the NEO would receive a lump sum cash payment payable within 30 days after the date of termination equal to:

~~(i)~~

~~the NEO’s target bonus for the year of termination prorated for the portion of the year worked;~~

~~(ii)~~

150% of the sum of (a) such NEO’s annual base salary for the year immediately preceding the year of termination and (b) the greatest of (1) the average bonus paid or earned and accrued, but unpaid to the NEO in respect of the three years immediately preceding the year of termination, (2) the annual bonus paid for the year immediately preceding the year of termination, and (3) the target bonus for the year of termination; and

~~(iii)~~

~~150% of the Company’s share of the annual premium for group medical and/or dental insurance coverage that was in place for the NEO immediately prior to the date of termination.~~

In addition, all unvested options, restricted stock, RSUs, or stock appreciation rights held by the NEO as of the date of termination will be immediately and automatically vested and/or exercisable in full as of the date of termination, and the NEO will have the right to exercise any such options or stock appreciation

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rights for the longer of (A) the period of time provided for in the applicable equity award agreement or plan, or (B) the shorter of one year after the date of termination or the remaining term of the applicable equity award.

If the NEO is terminated without “cause” or resigns for “good reason,” without regard to whether a change of control has occurred, such NEO will be entitled to the following under the Form Severance/CIC Agreement (collectively, the “Without Cause/For Good Reason Benefits”), subject to the NEO’s timely execution and non-revocation of a general release of claims in a form provided by us and the NEO’s continued compliance with the invention, non-disclosure, and non-competition agreement previously entered into in connection with the commencement of NEO’s employment:

~~(i)~~

a lump sum cash payment payable within 30 days after the date of termination in an amount equal to the greater of (x) the average bonus paid or earned and accrued, but unpaid to the NEO in respect of the three years immediately preceding the year of termination, and (y) the annual bonus paid for the year immediately preceding the year of termination prorated for the portion of the year worked;

~~(ii)~~

~~continued payment of the NEO’s base salary payable in accordance with our standard payroll practices over the one-year period following termination; and~~

~~(iii)~~

if the NEO elects to continue receiving group medical and/or dental insurance under COBRA (to the extent the NEO previously participated in such group insurance plans immediately prior to the date of termination), payment by us of our share of the premium for such coverage that we pay for active and similarly-situated employees who receive the same type of coverage for the one-year period following termination.

~~Employment Agreements with Our NEOs~~

~~We have entered into employment agreements with each of our NEOs. All the NEOs are at-will employees.~~

~~Vincent J. Milano~~

We are a party to an Employment Agreement, dated as of December 1, 2014, with Mr. Milano, our President and Chief Executive Officer (the “Milano Employment Agreement”). Under the Milano Employment Agreement, Mr. Milano is entitled to receive an annual base salary of $600,000 or such higher amount as our compensation committee or our board may determine. In addition, pursuant to the Milano Employment Agreement, Mr. Milano is eligible to receive an annual bonus of 50% of his base salary, subject to adjustment, based on the achievement of both individual and Company performance objectives as developed and determined by our board.

~~Mr. Milano’s severance and change in control benefits are governed by the Form Severance/CIC Agreement.~~

~~John J. Kirby~~

We are a party to an Employment Offer Letter, dated October 15, 2015, with Mr. Kirby, our Senior Vice President and Chief Financial Officer (the “Kirby Employment Agreement”). Under the terms of the Kirby Employment Agreement, Mr. Kirby is entitled to receive an annual base salary of $225,000 or such higher amount as our compensation committee or our board may determine. In addition, under the Kirby Employment Agreement, Mr. Kirby is eligible to receive an annual bonus of 30% of his base salary, subject to adjustment, based on the achievement of both individual and Company performance objectives. Concurrent with his promotion to Chief Financial Officer in 2019, Mr. Kirby’s base salary and bonus target were adjusted to $336,000 and 40%, respectively, or such higher amount as our compensation committee or our board may determine.

~~Mr. Kirby’s severance and change in control benefits are governed by the Form Severance/CIC Agreement.~~

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~~Bryant D. Lim~~

We are a party to an Employment Offer Letter, dated as of August 20, 2018, with Mr. Lim, our Senior Vice President, General Counsel, and Secretary (the “Lim Employment Agreement”). Under the terms of the Lim Employment Agreement, Mr. Lim is entitled to receive an annual base salary of $330,000 or such higher amount as our compensation committee or our board may determine. In addition, under the Lim Employment Agreement, Mr. Lim is eligible to receive an annual bonus of 40% of his base salary, subject to adjustment, based on the achievement of both individual and Company performance objectives.

~~Mr. Lim’s severance and change in control benefits are governed by the Form Severance/CIC Agreement.~~

~~Daniel B. Soland~~

We are a party to an Employment Offer Letter, dated as of November 16, 2020, with Mr. Soland, our Senior Vice President and Chief Operating Officer (the “Soland Employment Agreement”), which was effective for Mr. Soland’s employment commencing January 4, 2021. Under the terms of the Soland Employment Agreement, Mr. Soland is entitled to receive an annual base salary of $425,000 or such higher amount as our compensation committee or our board may determine. In addition, under the Soland Employment Agreement, Mr. Soland is eligible to receive an annual bonus of 40% of his base salary, subject to adjustment, based on the achievement of both individual and Company performance objectives.

~~Mr. Soland’s severance and change in control benefits are governed by the Form Severance/CIC Agreement.~~

~~Elizabeth Tarka~~

Dr. Tarka served as our Senior Vice President and Chief Medical Officer until May 28, 2021. The terms of her employment were set forth in an Employment Offer Letter, dated as of June 26, 2019 (the “Tarka Employment Agreement”). Under the terms of the Tarka Employment Agreement, Dr. Tarka was entitled to receive an annual base salary of $375,000 or such higher amount as our compensation committee or our board may determine. In addition, under the Tarka Employment Agreement, Dr. Tarka was eligible to receive an annual bonus of 40% of her base salary, subject to adjustment, based on the achievement of both individual and Company performance objectives.

Dr. Tarka’s severance and change in control benefits were governed by the Form of Severance/CIC Agreement; provided, however, in connection with her departure in May 2021, the Company entered into an Amendment to the Severance and Change of Control Agreement, dated as of May 18, 2021, with Dr. Tarka (the “Consulting Agreement”), pursuant to which Dr. Tarka agreed to provide certain consulting services to the Company. Dr. Tarka was entitled (1) to receive the Without Cause/For Good Reason Severance Benefits and, in exchange for the consulting services, (2) her unvested stock options and RSUs continued to vest during the Consultancy Term (as defined below). Further, under the Consulting Agreement, any options that were vested as of the end of the Consultancy Term were exercisable until the later of: (i) March 31, 2022 or (ii) ninety days from the end of the Consultancy Term. The Consulting Agreement terminated on October 12, 2021 (the “Consultancy Term”).

~~Indemnification Agreements~~

In March 2017, the board approved a form of Indemnification Agreement (the “Form Indemnification Agreement”) to be entered into between the Company and each of our officers. Each of Messrs. Milano, Kirby, Lim, and Soland and Dr. Tarka entered into the Form Indemnification Agreement with the Company. In general, the Indemnification Agreements provide that the Company will indemnify the NEO to the fullest extent permitted by law for claims arising in his or her capacity as an officer of the Company or in connection with his or her service at our request for another corporation or entity. The Indemnification Agreements also provide for procedures that will apply in the event that the NEO makes a claim for indemnification and establish certain presumptions that are favorable to the NEO.

~~Formal Clawback Policy~~

~~In April 2015, ahead of any such requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act, our compensation committee adopted a formal clawback policy, which applies in the event~~

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~~Summary Compensation Table~~

~~The table below summarizes compensation paid to or earned by our NEOs for 2021, 2020, and 2019.~~

~~Summary Compensation Table~~

NAME AND PRINCIPAL
POSITION YEAR
SALARY
($)

STOCK
AWARDS
($)(1)

OPTION
AWARDS
($)(2)

NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)

ALL OTHER
COMPENSATION
($)(3)

TOTAL
($)

Vincent J. Milano
President and Chief Executive Officer
2021 600,000 — 340,189 150,000(4) 44,244 1,134,433
2020 24,786 764,713(5) 234,642 �� 285,000 37,929 1,347,070
2019 600,000 105,975 279,160 315,000 37,082 1,337,217
John J. Kirby
Senior Vice President,
Chief Financial
Officer
2021 365,000 — 182,575 73,000 39,408 659,983
2020 336,000 123,755 127,523 140,448 37,519 765,245
2019 308,000 32,185 113,955 114,660 36,849 605,649
Bryant D. Lim
Senior Vice President,
General Counsel and
Corporate Secretary
2021 365,000 — 182,575 73,000 42,965 663,540
2020 336,000 39,679 127,523 140,448 37,779 681,429
2019 336,000 56,834 150,317 155,232 33,412 731,795
Daniel B. Soland
Senior Vice President,
Chief Commercial
Officer
2021 423,390 — 534,621 85,000(4) 44,437 1,087,448
Elizabeth Tarka
Senior Vice President,
Chief Medical Officer
2021 172,594 — 131,407 — 489,502 793,503
2020 375,000 35,800 127,523 142,500 17,082 697,905

~~(1)~~

Represents the aggregate grant date fair value of RSUs as computed in accordance with ASC 718. See Note 11 to the financial statements included in our annual report on Form 10-K for the year ended December 31, 2021 regarding assumptions we made in determining these values. The grant date fair value of RSUs is determined using the fair value of our common stock on the date of grant. The equity incentive awards included in this column were all awarded under the Company’s 2013 Stock Incentive Plan, as amended and restated.

~~(2)~~

Represents the aggregate grant date fair value of options granted to each of the NEOs as computed in accordance with ASC 718. These amounts do not represent the actual amounts paid to or realized by the NEOs. See Note 11 to the financial statements included in our annual report on Form 10-K for the year ended December 31, 2021 regarding assumptions we made in determining the fair value of option awards. The equity incentive awards included in this column were all awarded under the Company’s 2013 Stock Incentive Plan, as amended and restated.

~~(3)~~

~~“All Other Compensation” for 2021 for each of the NEOs includes the following:~~

Premiums Paid
by us for all
Insurance Plans
($)

Company Match
on 401(K)
($)

Severance
($)

Total
($)

Mr. Milano 29,744 14,500 — 44,244
Mr. Kirby 24,908 14,500 — 39,408
Mr. Lim 28,465 14,500 — 42,965
Mr. Soland 29,937 14,500 — 44,437
Dr. Tarka 1,180 14,500 473,822 489,502

~~(4)~~

~~Messrs. Milano and Soland voluntarily declined to accept their respective earned 2021 bonuses. Accordingly, neither Mr. Milano nor Mr. Soland received an annual cash incentive award for 2021.~~

~~(5)~~

Approximately $575,218 of Mr. Milano’s base salary was paid in the form of a RSU award which was granted to Mr. Milano on December 18, 2020, as more fully described under the caption “Employment Agreements with our NEOs.”

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~~Grants of Plan-Based Awards~~

~~The following table sets forth information regarding grants of plan-based awards to our NEOs during 2021.~~

~~Grants of Plan-Based Awards for Fiscal Year 2021~~

Name Grant Date
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(1)

Exercise
or Base
Price of
Option
Awards
($/Sh)

Grant Date
Fair Value
of Stock
and Option
Awards
($)(2)

Target
($)

Maximum
($)

Vincent J. Milano N/A 300,000 468,750 — — —
1/8/2021(3)(4) 95,000 4.28 244,788
7/8/2021(3)(4) 124,000 1.11 95,411
John J. Kirby N/A 146,000 228,125 — — —
1/8/2021(3)(4) 51,000 4.28 131,407
7/8/2021(3)(4) 66,500 1.11 51,168
Bryant D. Lim N/A 146,000 228,125 — — —
1/8/2021(3)(4) 51,000 4.28 131,407
7/8/2021(3)(4) 66,500 1.11 51,168
Daniel B. Soland N/A 170,000 265,625 — — —
1/4/2021(3)(5) 200,000 4.02 483,453
7/8/2021(3)(4) 66,500 1.11 51,168
Elizabeth Tarka N/A 165,200 258,125 — — —
1/8/2021(3)(4) 51,000 4.28 131,407

~~(1)~~

The term of these options is ten years. The vesting of these stock options is time-based. See “Compensation Discussion and Analysis—Components of Executive Compensation—Long-Term Equity Compensation” for a full description of the vesting terms for these options. See “Employment Agreements with our NEOs” for further information about acceleration of vesting of options in the event of the termination of employment and/or a change of control.

~~(2)~~

Represents the aggregate grant date fair value of awards made to the NEOs in 2021 as computed in accordance with ASC 718. These amounts do not represent the actual amounts paid to or realized by the NEOs during 2021. See Note 11 to the financial statements included in our annual report on Form 10-K for the year ended December 31, 2021 regarding assumptions we made in determining the fair value of equity awards.

~~(3)~~

~~Granted pursuant to our 2013 Stock Incentive Plan, as amended and restated.~~

~~(4)~~

Represents the biannual option awards, 25% of which vest on the first anniversary of the date of grant with the balance of the shares subject to the option vesting in 12 equal quarterly installments over the three-year period thereafter.

~~(5)~~

Represents Mr. Soland’s initial grant in connection with the commencement of his employment. The stock option vests and becomes exercisable over a four-year period commencing on the date of grant, with 25% of the stock option vesting and becoming exercisable on the first anniversary of the date of grant and the balance vesting in 12 equal quarterly installments over the three-year period thereafter.

~~Outstanding Equity Awards at Fiscal Year-End~~

~~The following table sets forth information regarding the outstanding equity held by our NEOs as of December 31, 2021.~~

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~~Option Awards~~

~~Stock Awards~~

~~Name~~

~~Number of~~
~~Securities~~
~~Underlying~~
~~Unexercised~~
~~Options~~
~~Exercisable~~
~~(#)~~

~~Number of~~
~~Securities~~
~~Underlying~~
~~Unexercised~~
~~Options~~
~~Unexercisable~~
~~(#)~~

~~Option~~
~~Exercise~~
~~Price~~
~~($)~~

~~Option~~
~~Expiration~~
~~Date~~

~~Number of~~
~~Shares or~~
~~Units of~~
~~Stock That~~
~~Have Not~~
~~Vested~~
~~(#)~~

~~Market Value~~
~~of Shares or~~
~~Units of~~
~~Stock That~~
~~Have Not~~
~~Vested~~
~~($)(1)~~

~~Equity~~
~~Incentive~~
~~Plan~~
~~Awards:~~
~~Number~~
of
~~Unearned~~
~~Shares,~~
~~Units or~~
~~Other~~
~~Rights~~
~~that have~~
~~Not~~
~~Vested~~
~~(#)(20)~~

~~Equity~~
~~Incentive~~
~~Plan~~
~~Awards:~~
~~Market or~~
~~Payout~~
~~Value of~~
~~Unearned~~
~~Shares,~~
~~Units or~~
~~Other~~
~~Rights~~
~~Not~~
~~Vested~~
~~($)~~

~~Daniel B. Soland~~

~~200,000(10)~~

—~~(18)~~

~~4.02~~

~~01/4/2031~~

—

~~66,500(9)~~

~~1.11~~

~~07/8/2031~~

~~Elizabeth Tarka~~

~~130,000(10)~~

—

~~2.54~~

~~07/22/2029~~

~~50,000~~ ~~(10)~~

—

~~1.79~~

~~01/10/2030~~

~~50,000~~ ~~(10)~~

—

~~2.48~~

~~07/21/2030~~

~~51,000~~ ~~(10)~~

—

~~4.28~~

~~01/8/2031~~

~~(1)~~

~~Market Value is calculated based on a price per share of $0.57, which was the closing price of our common stock on December 31, 2021.~~

~~(2)~~

Represents unvested portion of stock option award that will vest 25% on the first anniversary date following the January 3, 2018 grant date, with the remainder vesting in 12 equal quarterly installments thereafter (until January 3, 2022), provided the NEO is still employed with us on each vesting date.

~~(3)~~

Represents unvested portion of stock option award that will vest 25% on the first anniversary date following the August 13, 2018 grant date, with the remainder vesting in 12 equal quarterly installments thereafter (until August 13, 2022), provided the NEO is still employed with us on each vesting date.

~~(4)~~

Represents unvested portion of stock option award that will vest 25% on the first anniversary date following the January 3, 2019 grant date, with the remainder vesting in 12 equal quarterly installments thereafter (until January 3, 2023), provided the NEO is still employed with us on each vesting date.

~~(5)~~

Represents unvested portion of stock option award that will vest 25% on the first anniversary date following the July 9, 2019 grant date, with the remainder vesting in 12 equal quarterly installments thereafter (until July 9, 2023), provided the NEO is still employed with us on each vesting date.

~~(6)~~

Represents unvested portion of stock option award that will vest 25% on the first anniversary date following the January 10, 2020 grant date, with the remainder vesting in 12 equal quarterly installments thereafter (until January 10, 2024), provided the NEO is still employed with us on each vesting date.

~~(7)~~

Represents unvested portion of stock option award that will vest 25% on the first anniversary date following the July 21, 2020 grant date, with the remainder vesting in 12 equal quarterly installments thereafter (until July 21, 2024), provided the NEO is still employed with us on each vesting date.

~~(8)~~

Represents unvested portion of stock option award that will vest 25% on the first anniversary date following the January 8, 2021 grant date, with the remainder vesting in 12 equal quarterly installments thereafter (until January 8, 2025), provided the NEO is still employed with us on each vesting date.

~~(9)~~

Represents unvested portion of stock option award that will vest 25% on the first anniversary date following the July 8, 2021 grant date, with the remainder vesting in 12 equal quarterly installments thereafter (until July 8, 2025), provided the NEO is still employed with us on each vesting date.

~~(10)~~

In March 2021, the compensation committee approved the acceleration of the vesting terms of all outstanding, unvested options that had a value equal to less than $5.00 and RSUs (the “2021 Acceleration”). The 2021 Acceleration applied to all employees, including the NEOs, except Mr. Milano; however, in January 2022, for the NEOs, the compensation committee implemented a holding period (the ‘‘Holding Period’’) prohibiting the sale of shares associated with the 2021 Acceleration according to a schedule not more favorable than the original vesting schedule (i.e., 6.25% of the total option grant

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every quarter and 25% of the total RSU grant every year). No NEOs exercised any options that became exercisable as a result of the 2021 Acceleration or sold any shares that related to the RSUs that vested in connection with the 2021 Acceleration during the intervening period of March 2021 to January 2022.

~~(11)~~

~~8,000 options are subject to the Holding Period.~~

~~(12)~~

~~19,906 options are subject to the Holding Period.~~

~~(13)~~

~~28,2125 options are subject to the Holding Period.~~

~~(14)~~

~~34,875 options are subject to the Holding Period.~~

~~(15)~~

~~51,000 options are subject to the Holding Period.~~

~~(16)~~

Represents unvested portion of stock option award that will vest 25% on the first anniversary date following the September 10, 2018 grant date, with the remainder vesting in 12 equal quarterly installments thereafter (until September 10, 2022), provided the NEO is still employed with us on each vesting date.

~~(17)~~

~~14,219 options are subject to the Holding Period.~~

~~(18)~~

~~200,000 options are subject to the Holding Period.~~

~~(19)~~

~~Includes the unvested portion of RSUs granted to Mr. Milano on January 3, 2019 and January 10, 2020, which vest in four equal installments over the four-year period following the grant date.~~

~~(20)~~

Represents unvested, performance-based RSUs granted to Messrs. Milano, Kirby, and Lim, on July 21, 2020, which vest subject to and on the date the market capitalization of the Company equals or exceeds $500,000,000.

~~Option Exercised and Stock Vested~~

~~The following table sets forth information regarding our NEOs’ awards of restricted stock units that vested during 2021.~~

~~Option Exercised and Stock Vested~~

Name Stock Awards

Number of Shares
Acquired on Vesting(1)
(#)

Value Realized
on Vesting(2)
($)

Vincent Milano 17,688 70,557
John Kirby 27,688(3) 61,597
Bryant Lim 33,575(4) 74,803
Elizabeth Tarka 20,000 44,350

~~(1)~~

Amounts in this column represent the number of RSUs that vested in accordance with the terms of the applicable award agreements and in connection with the 2021 Acceleration (except with respect to Mr. Milano, whose RSUs were not accelerated in connection with the 2021 Acceleration).

~~(2)~~

Stock awards value realized is determined by multiplying (i) the closing market price of the Company’s common stock on the vesting date by (ii) the number of shares of common stock that vested on that date.

~~(3)~~

~~Includes 20,125 shares that vested pursuant to the 2021 Acceleration and are subject to the Holding Period.~~

~~(4)~~

~~Includes 24,050 shares that vested pursuant to the 2021 Acceleration and are subject to the Holding Period.~~

~~Potential Payments Upon Termination or Change in Control~~

As discussed above, we entered into the Form Severance/CIC Agreement with each of Messrs. Milano, Kirby, Lim, and Soland and Dr. Tarka. These agreements are described above under the caption “Severance and Change in Control Benefits and Agreements with NEOs.”

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~~Termination of Employment Not in Connection with or Following a Change in Control~~

The following table sets forth the estimated potential benefits that our NEOs would be entitled to receive upon their termination of employment with our Company (other than a termination in connection with or following a change in control of our Company) if the NEO’s employment was terminated on December 31, 2021 (except in the case of Dr. Tarka). This table represents estimates only and does not necessarily reflect the actual amounts that would be paid to our NEOs (except in the case of Dr. Tarka), which would only be known at the time that they become eligible for payment following their termination. With respect to Dr. Tarka, the below disclosure describes the actual amounts and benefits she received in connection with her termination on May 28, 2021.

Name
Cash
Severance(1)
($)

Benefits(2)
($)

Total
($)

Vincent J. Milano 800,000 38,458 838,458
John J. Kirby 474,369 27,657 502,026
Bryant D. Lim 487,893 35,748 523,641
Daniel B. Soland 510,000 38,745 548,745
Elizabeth Tarka(3) 473,822 — 473,822

~~(1)~~

Cash severance under the Form Severance/CIC Agreements would be payable to Messrs. Milano, Kirby, Lim, and Soland upon a termination of the NEO’s employment by the NEO for “good reason” or by us without “cause,” in either case, subject to the NEO’s timely execution and non-revocation of a general release of claims in a form provided by the Company and the NEO’s continued compliance with the invention, non-disclosure, and non-competition agreement previously entered into in connection with the commencement of NEO’s employment. In such an event, NEOs would receive:

~~(i)~~

a lump sum cash payment payable within 30 days after the date of termination equal to the greater of (1) the average bonus paid or earned and accrued, but unpaid to the NEO in respect of the three fiscal years immediately preceding the year of termination ($200,000 for Mr. Milano, $109,370 for Mr. Kirby, $122,894 for Mr. Lim, and $85,000 For Mr. Soland), and (2) the annual bonus earned for the year immediately preceding the year of termination; and

~~(ii)~~

salary continuation payments at the NEO’s base salary on termination date for a period of 12 months paid in accordance with the Company’s normal payroll practices and subject to applicable tax withholding ($600,000 for Mr. Milano, $365,000 for Mr. Kirby, $365,000 for Mr. Lim, and $425,000 for Mr. Soland).

~~(2)~~

Under the Form Severance/CIC Agreements, upon a qualifying termination by Messrs. Milano, Kirby, Lim, and Soland, to the extent the NEOs participated in our group medical/dental insurance immediately prior to the termination date, if NEOs elect to continue receiving group medical and/or dental insurance under the continuation coverage rules known as COBRA, the Company will pay the Company’s share of the premium for such coverage that it pays for active and similarly-situated employees who receive the same type of coverage until the end of the period for which the Company is paying the salary continuation payments described within note (1)(ii), above.

~~The payments described in this column include an estimated value of the employer share of the premiums for our insurance plans as follows:~~

Name
Medical Insurance
Premiums
($)

Dental Insurance
Premiums
($)

Total
($)

Vincent J. Milano 36,526 1,932 38,458
John J. Kirby 25,725 1,932 27,657
Bryant D. Lim 33,816 1,932 35,748
Daniel B. Soland 36,813 1,932 38,745
Elizabeth Tarka(a) — — —

~~(a)~~

~~Dr. Tarka did not participate in our group medical/dental insurance plans.~~

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~~(3)~~

Dr. Tarka’s employment with the Company terminated effective May 28, 2021. Pursuant to the terms of her Severance and Change in Control Agreement, as amended by the Consulting Agreement, Dr. Tarka received a severance payment of $473,822 in connection with her termination of employment. Additionally, as discussed above under “Employment Agreements with Our NEOs,” and any options that were vested as of the end of the Consultancy Term were exercisable until the later of: (i) March 31, 2022 or (ii) ninety days from the end of the Consultancy Term, which ended on October 12, 2021. Dr. Tarka did not participate in our group medical/dental insurance plans prior to her termination and therefore, did not receive any benefits relating thereto following her termination.

~~Termination of Employment in Connection with or Following a Change in Control~~

The following table sets forth the estimated potential benefits that our NEOs would be entitled to receive upon their termination of employment with our Company in connection with or following a change in control of our Company if the NEO’s employment was terminated on December 31, 2021 (except in the case of Dr. Tarka). The amounts indicated below are estimates based on the material assumptions described in the notes to the table below, which may or may not actually occur. Some of these assumptions are based on information currently available and, as a result, the actual amounts, if any, that may become payable to a NEO (except in the case of Dr. Tarka) may differ in material respects from the amounts set forth below. Furthermore, for purposes of calculating such amounts, we have assumed:

•

~~a change of control date of December 31, 2021;~~

•

~~each NEO’s employment is terminated by us without “cause” or by the NEO for “good reason,” in each case on the date of the change of control; and~~

•

the value of the accelerated vesting of any equity award is calculated assuming a market price per share of our common stock equal to $0.57 (which equals the closing price of a share of our common stock on the Nasdaq on December 31, 2021).

This table represents estimates only and does not necessarily reflect the actual amounts that would be paid to our NEOs (except in the case of Dr. Tarka (see footnote 5)), which would only be known at the time that they become eligible for payment following their termination.

Name
Cash
Severance(1)
($)

Equity(2)(3)
($)

Benefits(4)
($)
Total ($)
Vincent J. Milano 1,650,000 82,436 57,691 1,790,127
John J. Kirby 912,500 32,606 41,491 986,597
Bryant D. Lim 912,500 1,438 53,623 967,561
Daniel B. Soland 1,062,500 — 58,123 1,120,623
Elizabeth Tarka(5) — — — —

~~(1)~~

Cash severance under the Form Severance/CIC Agreements would be payable to Messrs. Milano, Kirby, Lim, and Soland upon a termination of the NEO’s employment by the NEO for “good reason” or by us without “cause,” in either case, within 24 months following a change of control (i.e., pursuant to a “double-trigger” arrangement), subject to the NEO’s timely execution and non-revocation of a general release of claims in a form provided by the Company and the NEO’s continued compliance with the invention, non-disclosure, and non-competition agreement previously entered into in connection with the commencement of NEO’s employment. In such an event, NEOs would receive a lump sum cash payment payable within 30 days after the date of termination equal to:

~~(i)~~

the NEO’s target bonus for the year of termination prorated for the portion of the year worked ($300,000 for Mr. Milano, $146,000 for Mr. Kirby, $146,000 for Mr. Lim, and $170,000 for Mr. Soland); and

~~(ii)~~

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~~target bonus for the year in which the termination occurs ($1,350,000 for Mr. Milano, $766,500 for Mr. Kirby, $766,500 for Mr. Lim, and $892,500 for Mr. Soland).~~

~~(2)~~

Amounts in this column quantify the intrinsic value of the unvested stock options and/or unvested RSUs held by the NEO that would accelerate upon a qualifying termination of employment in connection with a change in control based on the assumptions described above.

~~(3)~~

Under the Form Severance/CIC Agreements, upon a qualifying termination by Messrs. Milano, Kirby, Lim, and Soland within 24 months following a change of control, all outstanding stock options and unvested RSUs (including the performance-based Special Awards) held by the NEO as of the date of termination will be automatically vested in full as of the date of termination, and the NEO will have the ability to exercise any such options until the three year anniversary of such NEO’s termination and/or be entitled to receive shares underlying such RSUs, but in no event past the remaining term of the applicable equity award.

~~(4)~~

Under the Form Severance/CIC Agreements, upon a qualifying termination by Messrs. Milano, Kirby, Lim, and Soland within 24 months following a change of control, the NEO will be eligible to receive 150% of the Company’s share of the annual premium for group medical and/or dental insurance coverage that was in place for the NEO immediately prior to the date of termination, payable in a lump sum cash payment within 30 days after the date of termination.

~~The payments described in this column include an estimated value of the employer share of the premiums for our insurance plans as follows:~~

Name
Medical Insurance
Premiums
($)

Dental Insurance
Premiums
($)

Total
($)

Vincent J. Milano 54,792 2,899 57,691
John J. Kirby 38,592 2,899 41,491
Bryant D. Lim 50,724 2,899 53,623
Daniel B. Soland 55,224 2,899 58,123
Elizabeth Tarka(a) — — —

~~(a)~~

~~Dr. Tarka did not participate in our group medical/dental insurance plans.~~

~~(5)~~

As discussed above, Dr. Tarka’s employment with the Company terminated on May 28, 2021. See “Termination of Employment Not In Connection With or Following a Change in Control” for a description of the actual amounts and benefits she received in connection with her termination.

~~CEO Pay Ratio~~

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the ratio of the annual total compensation of our CEO, on December 31, 2021, to that of our median employee. In making this pay ratio disclosure, other companies may use assumptions, estimates, and methodologies different than ours; as a result, the following information may not be directly comparable to the information provided by other companies in our peer group or otherwise. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.

The following is a reasonable estimate, prepared in accordance with applicable SEC rules, of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other employees. We determined our median employee based on annualized 2021 base salary and annualized 2021 bonus awards for each of our 12 employees (excluding the CEO) as of December 31, 2021. We did not make any other assumptions, adjustments, or estimates with respect to total cash compensation. The annual total cash compensation of our median employee (other than the CEO) for 2021 was $592,830. As disclosed in the Summary Compensation Table included in this CD&A, our CEO’s annual total compensation for 2021 was $1,134,433. Based on the foregoing, the ratio of the 2021 annual total compensation of our CEO to the median of the annual total compensation of all other employees was 2 to 1.

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~~PROPOSAL TWO~~
~~APPROVAL, BY NON-BINDING VOTE, OF THE NAMED EXECUTIVE OFFICER 2021 COMPENSATION~~

We are providing our stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our NEOs for 2021 as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act. The advisory vote on executive compensation will occur every year until the next vote on the frequency of stockholder votes on executive compensation, which will occur at the Company’s 2023 annual meeting of stockholders.

The “Executive Compensation” section set forth elsewhere in this proxy statement, including the “Compensation Discussion and Analysis,” describes in detail our executive compensation programs and the decisions made by the compensation committee and the board with respect to the fiscal year ended December 31, 2021.

~~Our board is asking stockholders to approve a non-binding advisory vote on the following resolution:~~

“RESOLVED, that the 2021 compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation discussion and analysis, the compensation tables, and any related material disclosed in this proxy statement, is hereby approved.”

As an advisory vote, this proposal is not binding. The outcome of this advisory vote will not overrule any decision by us or our board (or any committee thereof), create or imply any change to our fiduciary duties or the fiduciary duties of our board (or any committee thereof), or create or imply any additional fiduciary duties on us or our board (or any committee thereof). However, our compensation committee and board value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.

~~Recommendation of the Board of Directors~~

~~Our board unanimously recommends that stockholders vote to approve the 2021 compensation of our named executive officers by voting FOR this proposal.~~

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~~PROPOSAL FOUR~~
~~APPROVAL OF AMENDMENT TO 2013 STOCK INCENTIVE PLAN~~

~~Overview~~

We are asking you to approve an amendment (the “Amendment”) to the Stock Incentive Plan, which amendment was approved by the board on April 15, 2022, acting on the recommendation of the compensation committee and subject to stockholder approval at the Annual Meeting. The Stock Incentive Plan originally was adopted by our board in May 2013 and approved by our stockholders in July 2013, and subsequently amended by the board in April 2014, April 2015, March 2017, and April 2019, which amendments were thereafter approved by our stockholders.

The board believes that equity awards are a critical part of our compensation program. Our compensation philosophy emphasizes equity-based awards because they align the interests of our employees (including our executive officers), directors, consultants, and advisors with those of our stockholders, encourage long-term retention and incentivize long-term value creation. To enable us to continue offering meaningful equity-based incentives to our employees, officers, and directors, as well as consultants and advisors, the board believes that it is both necessary and appropriate to increase the number of shares available for these purposes.

Accordingly, the board is seeking stockholder approval of the Amendment in order to authorize an additional 4,600,000 new shares for issuance thereunder. If approved by stockholders at the Annual Meeting, the Amendment will be effective upon such approval (the “Effective Date”).

A copy of the Amendment is attached as Appendix A to this proxy statement and is incorporated herein by reference. All other provisions of the Stock Incentive Plan will remain in full force and effect. A copy of the Stock Incentive Plan as amended by the Amendment, is attached as Appendix B to this proxy statement.

~~Background for Request to Increase the Number of Shares Reserved for Equity Incentive Awards~~

Equity compensation is a vital component of our executive compensation philosophy. The board believes it is in the best interests of the Company and its stockholders to approve the Amendment in order to continue to motivate outstanding performance by our executive officers, employees, consultants, and non-employee directors. If this proposal is not approved, we believe that our efforts to motivate these individuals would be negatively impacted and that we would be at a disadvantage against our competitors for recruiting, retaining, and motivating those individuals who are critical to our success. We could be forced to increase cash compensation, thus reducing resources available to meet our business needs.

In consideration of the limited number of shares remaining available for issuance under the Stock Incentive Plan and our need for equity compensation to maintain a competitive position in attracting, retaining, and motivating key personnel, our board adopted the Amendment, subject to stockholder approval. In calculating the size of the increase in the authorized number of shares issuable under the Stock Incentive Plan, our board considered, among other things, our hiring plans and expected number of employees, our historic share usage under our stock incentive plans, our “burn rate,” our current overhang in shares issuable upon exercise of outstanding awards granted under our stock incentive plans or as inducement grants, the existing terms of such outstanding awards, and assumptions regarding stock option exercise activity and forfeiture rates. On April 1, 2022, the last reported sale price of our common stock on the Nasdaq Capital Market was $0.54 per share.

If stockholders approve the Amendment, we will have 4,794,994 shares of common stock available for issuance pursuant to future awards under the Stock Incentive Plan (plus such additional number of shares of common stock as is equal to the number of shares of common stock subject to awards granted under our 2008 Stock Incentive Plan which awards expire, terminate, or are otherwise surrendered, cancelled, forfeited, or repurchased by us at their original issuance price pursuant to a contractual repurchase right). We expect that this number of shares available for issuance, given our historical and projected utilization and assuming relative stock price stability, will meet our grant needs until approximately the first half of 2025. This is only an estimate, and circumstances could cause the share reserve to be used more quickly or more

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slowly. These circumstances include, but are not limited to, the future price of shares of our common stock, the mix of cash, options, and full value awards provided as long-term incentive compensation, grant amounts provided by our competitors, payout of performance-based awards in excess of target in the event of superior performance, hiring activity, and promotions during the next few years.

~~Dilution Analysis~~

As of April 1, 2022, our capital structure consisted of 52,966,025 shares of common stock outstanding. As of April 1, 2022, 194,994 shares remained available for awards under the Stock Incentive Plan. The proposed share authorization is a request for 4,600,000 new shares of common stock to be available for awards under the Stock Incentive Plan.

Overhang provides a measure of the potential dilutive effect of all outstanding equity awards and shares available for future grant. We calculated overhang as the total number of options outstanding, plus shares available to be granted, divided by the total shares of common stock outstanding. Our overhang at December 31, 2021 was 11.3%, and our overhang at April 1, 2022 was 11.1%. If the 4,600,000 additional shares proposed to be authorized for issuance under our Stock Incentive Plan are included in the calculations our overhang would have been 20.0% at December 31, 2021 and 19.8% at April 1, 2022. If we also add the shares of common stock issuable upon exercise of our pre-funded warrants to our total shares of common stock outstanding, our overhang would have been 19.5% at December 31, 2021 and 19.2% at April 1, 2022. See Note 8 to the financial statements in our annual report on Form 10-K for the year ended December 31, 2021 for more information regarding our pre-funded warrants.

The board believes that this number of shares represents a reasonable amount of potential equity dilution, which will allow us to continue granting equity awards, which are an important component of our equity compensation program.

~~Burn Rate~~

Burn rate provides a measure of the potential dilutive impact of the equity awards we grant. Set forth below is a table that reflects our burn rate for 2019, 2020, and 2021, as well as the average over those years.

Fiscal Year
Equity
Awards
Granted

Basic Weighted
Average Number
of Shares of
Common Stock
Outstanding

Gross Burn
Rate(1)

2021 1,356,700 49,203,000 2.8%
2020 1,581,227 33,821,000 4.7%
2019 1,473,566 28,545,000 5.2%
Three-Year Average 1,470,498 37,189,667 4.0%

~~(1)~~

~~“Gross Burn Rate” is defined as the number of equity awards granted in the year divided by the basic weighted average of shares of common stock outstanding.~~

The only equity compensation plans from which we may currently issue new awards are our 2017 Employee Stock Purchase Plan and our Stock Incentive Plan. We may also issue new awards as inducement grants. The following table summarizes information regarding all of our outstanding options under all of our equity compensation plans and shares available for future awards under all of our equity plans as of April 1, 2022.

April 1, 2022*
Total shares of common stock underlying all outstanding options and RSUs 5,677,159
Weighted-average exercise price of outstanding options $ 7.92
Weighted-average remaining contractual life of outstanding options (in years) 6.71
Total shares available for future awards 194,994

~~Excludes inducement awards granted pursuant to Nasdaq Listing Rule 5635(c)(4).~~

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~~Promotion of Sound Corporate Governance Practices~~

We have designed the Stock Incentive Plan to include a number of features that reinforce and promote alignment of equity compensation arrangements for employees, officers, non-employee directors, and consultants with the interests of our stockholders. These features include, but are not limited to, the following:

•

~~Limitation on Awards to Non-Employee Directors.~~ ~~The limit for the aggregate number of shares with respect to which awards that may be granted to non-employee directors of the Company under the Stock Incentive Plan is 2,050,611.~~

•

~~No Discounted Stock Options or Stock Appreciation Rights.~~ ~~Stock options and Stock Appreciation Rights (“SAR(s)”) may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date.~~

•

~~Prohibition on Repricing.~~ ~~The exercise price of a stock option or SAR may not be reduced, directly or indirectly, without the prior approval of stockholders, including by a cash repurchase of “underwater” awards.~~

•

~~Minimum Vesting Requirements.~~ ~~Subject to certain limited exceptions, awards granted under the Stock Incentive Plan will be subject to a minimum vesting period of one year.~~

•

~~No Liberal Share Recycling.~~ Shares retained by or delivered to the Company to pay the exercise price of a stock option or SAR or to satisfy tax withholding taxes in connection with the exercise or settlement of an award count against the number of shares remaining available under the Stock Incentive Plan.

•

~~No Dividends on Unearned or Unvested Awards.~~ ~~The Stock Incentive Plan prohibits the current payment of dividends or dividend equivalent rights on unearned or unvested awards.~~

•

~~Awards Subject to Clawback Policy.~~ ~~Awards under the Stock Incentive Plan are subject to the Company’s compensation recoupment policy as described above under the caption “Formal Clawback Policy.”~~

•

~~No Tax Gross-Ups.~~ ~~The Stock Incentive Plan does not provide for any tax gross-ups.~~

•

~~No Liberal Change in Control Definition.~~ ~~The Stock Incentive Plan defines “reorganization event” based on the consummation of the transaction rather than the announcement or stockholder approval of the transaction.~~

~~Description of the Stock Incentive Plan~~

~~References to the Board in this summary include the compensation committee of the Board or any similar committee appointed by the Board to administer the Stock Incentive Plan.~~

~~Types of Awards; Shares Available for Issuance~~

The Stock Incentive Plan allows for the issuance of Incentive Stock Options (“ISO(s)”) intended to qualify under Section 422 of the Internal Revenue Code (the “Code”), Nonstatutory Stock Options (“NSO(s)”), SARS, restricted stock awards, restricted stock units, other stock-based awards, and performance awards (collectively, “Awards”). Subject to adjustment in the event of stock splits, stock dividends, or similar events, and assuming the Amendment is approved by our stockholders, Awards may be made under the Stock Incentive Plan for up to 10,253,057 shares of common stock, plus such additional number of shares of common stock (up to 155,968 shares) as is equal to the number of shares of common stock subject to awards granted under our 2008 Stock Incentive Plan which awards expire, terminate, or are otherwise surrendered, cancelled, forfeited, or repurchased by us at their original issuance price pursuant to a contractual repurchase right (subject, however, in the case of ISOs to any limitations under the Code). In addition, if any Award granted under the Stock Incentive Plan expires or is terminated, surrendered, cancelled, forfeited, or otherwise results in any common stock not being issued, the unused common stock covered by such Award will again be available for the grant of Awards under the Stock Incentive Plan (subject, in the case of ISOs, to any limitations under the Code). However, shares of common stock delivered to us by a participant to purchase common stock upon exercise of an Award or to satisfy tax withholding obligations (including

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shares retained from the Award creating the tax obligation) will not be added back to the number of shares of common stock available for the future grant of Awards under the Stock Incentive Plan. In addition, common stock repurchased by us on the open market using proceeds from the exercise of an Award will not increase the number of shares of common stock available for future grant of Awards under the Stock Incentive Plan.

All shares of common stock covered by SARs, if any, will be counted against the number of shares available for grant under the Stock Incentive Plan and the sub-limitations on Awards to non-employee directors. However, SARS that may be settled only in cash will not be so counted, and if a SAR is granted in tandem with an option for the same number of shares of common stock and the grant provides that only one such Award may be exercised, or tandem SAR, only the shares covered by the option will be counted, and the expiration of one in connection with the other’s exercise will not restore shares to the Stock Incentive Plan. The shares covered by a tandem SAR will not again become available for grant under the Stock Incentive Plan upon the expiration or termination of the tandem SAR. In the case of the exercise of a SAR, the number of shares counted against the shares available under the Stock Incentive Plan and the sub-limitation on Awards to non-employee directors (described below) and will be the full number of shares subject to the SAR multiplied by the percentage of the SAR actually exercised, regardless of the number of shares actually used to settle the SAR upon exercise.

Subject to adjustment in the event of changes in capitalization and reorganization events (as defined below), any Award granted under the Stock Incentive Plan that is not a “full-value award” will be counted against the number of shares available for grant under the Stock Incentive Plan and the sub-limitation on Awards to non-employee directors as one share for each share of common stock subject to such Award, and any Award that is a “full-value award” will be counted as 1.25 shares for each share of common stock subject to such Award. “Full-value award” means any Award of restricted stock or restricted stock units or any other stock-based Award with a per share price or per unit purchase price lower than 100% of the fair market value of our common stock on the date of grant. To the extent a share that was subject to an Award that counted as one share is returned to the plan as described above, each applicable share reserve will be credited with one share, and to the extent a share that was subject to an Award that counted as 1.25 shares is returned to the plan as described above, each applicable share reserve will be credited with 1.25 shares.

Certain sub-limitations apply to the shares of common stock available for issuance under the Stock Incentive Plan. The maximum number of shares with respect to which Awards may be granted to any participant under the Stock Incentive Plan is 1,500,000 shares per calendar year. The maximum number of shares with respect to which Awards may be granted to directors who are not employees of Idera at the time of grant will be 20% of the maximum number of authorized shares under the Stock Incentive Plan. Performance Awards can also provide for cash payments of up to a maximum of $1,500,000 per fiscal year per individual.

In connection with a merger or consolidation of an entity with us or our acquisition of property or stock of an entity, our board may grant Awards under the Stock Incentive Plan in substitution for an option or other stock or stock-based Awards granted by such entity or an affiliate thereof on such terms as our board determines appropriate in the circumstances, notwithstanding any limitation on Awards contained in the Stock Incentive Plan. Substitute Awards granted under the Stock Incentive Plan in connection with a merger or consolidation of an entity with Idera or the acquisition by Idera of property or stock of an entity will not count against the overall share limits and sub-limitations described above, except as required by reason of Section 422 and related provisions of the Code.

~~Shares issued under the Stock Incentive Plan may consist in whole or in part of authorized but unissued shares or treasury shares.~~

~~Descriptions of Awards~~

~~Options.~~ Optionees receive the right to purchase a specified number of shares of common stock at a specified option price and subject to such other terms and conditions as are specified in connection with the option grant. Only our employees or employees of our subsidiaries, if any, may receive ISOs as defined in Section 422 of the Code. An option that is not intended to be an ISO is an NSO. Options may not be granted

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at an exercise price that is less than 100% of the fair market value of the common stock on the effective date of grant; provided, however, that if our Board approves the grant of an option with an exercise price to be determined on a future date, the exercise price may not be less than 100% of the fair market value of the common stock on such future date. Under present law, ISOs may not be granted at an exercise price less than 110% of the fair market value in the case of stock options granted to optionees holding more than 10% of the total combined voting power of all classes of our stock. Under the terms of the Stock Incentive Plan, stock options may not be granted for a term in excess of 10 years (and, under present law, five years in the case of ISOs granted to optionees holding greater than 10% of the total combined voting power of all classes of our stock). Any or all of the Awards available under the Stock Incentive Plan may be in the form of ISOs. The Stock Incentive Plan permits participants to pay the exercise price of options using one or more of the following manners of payment: (i) payment by cash, check, or wire transfer, or, except as may otherwise be provided in the applicable option agreement or approved by our board, in connection with a “cashless exercise” through a broker, (ii) to the extent provided in the applicable option agreement or approved by our board, and subject to certain conditions, by surrender to us of shares of common stock owned by the participant valued at their fair market value, (iii) to the extent provided in an applicable NSO agreement or approved by our board, and subject to certain conditions, by delivery of a notice of “net exercise” as a result of which we will retain a number of shares of common stock otherwise issuable pursuant to the stock option equal to the aggregate exercise price for the portion of the option being exercised divided by the fair market value of our common stock on the date of exercise, (iv) to the extent provided by applicable law and provided for in the applicable option agreement or approved by our board, by any other lawful means, or (v) any combination of the foregoing.

~~Stock Appreciation Rights.~~ A SAR is an award entitling the holder, upon exercise, to receive a number of shares of common stock or cash (or a combination thereof) determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of our common stock over the measurement price. SARs may be granted independently or in tandem with stock options granted under the Stock Incentive Plan. When a SAR is granted in tandem with a stock option, the SAR will be exercisable only at such time or times, and to the extent, that the related stock option is exercisable (except to the extent designated by our board in connection with a reorganization event), will terminate and no longer be exercisable upon the termination or exercise of the related option (except to the extent designated by our board in connection with a reorganization event), and will be transferable only with the related stock option. The related stock option will terminate and no longer be exercisable upon the exercise of the SAR. The Stock Incentive Plan provides that the measurement price of an SAR may not be less than 100% of the fair market value of our common stock on the effective date of grant (provided, however, that if our board approves the grant of a SAR effective as of a future date, the measurement price will not be less than 100% of the fair market value on such future date) and that SARs granted under the Stock Incentive Plan may not have a term in excess of 10 years.

~~Limitation on Repricing of Options or SARs; No Reload Rights or Dividend Equivalents.~~ With respect to options and SARs, unless such action is approved by stockholders or otherwise permitted under the terms of the Stock Incentive Plan in connection with certain changes in capitalization and reorganization events, we may not (i) amend any outstanding option or SAR granted under the Stock Incentive Plan to provide an exercise price or measurement price per share that is lower than the then-current exercise price or measurement price per share of such outstanding option or SAR, (ii) cancel any outstanding option or SAR (whether or not granted under the Stock Incentive Plan) and grant in substitution therefor new Awards under the Stock Incentive Plan (other than certain substitute Awards described above) covering the same or a different number of shares of common stock and having an exercise price or measurement price per share lower than the then-current exercise price or measurement price per share of the cancelled option or SAR, (iii) cancel in exchange for a cash payment any outstanding option or SAR with an exercise price or measurement price per share above the then-current fair market value of our common stock, or (iv) take any other action under the Stock Incentive Plan that constitutes a “repricing” within the meaning of the rules of the Nasdaq Stock Market. No option or SAR granted under the Stock Incentive Plan will contain any provision entitling the grantee to the automatic grant of additional options or SARs in connection with any exercise of the original option or SAR or provide for the payment or accrual of dividend equivalents.

~~Restricted Stock Awards.~~ ~~We may issue Awards entitling recipients to acquire shares of our common stock subject to our right to repurchase all or part of such shares at their issue price or other stated or formula~~

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price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the board in the applicable Award are not satisfied prior to the end of the applicable restriction period established for such Award. We refer to these Awards as Restricted Stock. Unless otherwise provided in the applicable Award agreement, any dividend declared and paid by us with respect to a share of Restricted Stock will be paid to the participant (without interest) only if and when such shares of Restricted Stock become free from any applicable restrictions on transferability and forfeitability.

~~Restricted Stock Units.~~ We may also grant Awards entitling the recipient to receive shares of our common stock (or cash equal to the fair market value of such shares) to be delivered at the time such Award vests. We refer to these Awards as Restricted Stock Units. Our board may, in its discretion, provide that settlement of Restricted Stock Units will be deferred, on a mandatory basis or at the election of the participant in a manner that complies with Section 409A of the Code. A participant has no voting rights with respect to any Restricted Stock Units. A grant of Restricted Stock Units may provide the participant with a right to receive dividend equivalents, which will be subject to the same restrictions on transfer and forfeitability as the underlying Restricted Stock Units.

~~Other Stock-Based Awards.~~ Under the Stock Incentive Plan, our board may grant other Awards of shares of common stock and other Awards that are valued in whole or in part by reference to, or are otherwise based upon our common stock or other property, having such terms and conditions as the board may determine. We refer to these types of Awards as Other Stock-Based Awards. Other Stock-Based Awards may be available as a form of payment in the settlement of other Awards granted under the Stock Incentive Plan or as payment in lieu of compensation to which a participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of our common stock or cash, as our Board determines. Unless otherwise provided in the applicable Award agreement, any dividend declared and paid by us with respect to a share of common stock granted under an Other Stock-Based Award will be paid to the participant (without interest) only if and when such shares become free from any applicable restrictions on transferability and forfeitability. A grant of an Other Stock-Based Award may provide the participant with a right to receive dividend equivalents, which will be subject to the same restrictions on transfer and forfeitability as the underlying Other Stock-Based Award.

~~Performance Awards.~~ Restricted Stock, Restricted Stock Units, and Other Stock-Based Awards granted under the Stock Incentive Plan may be made subject to achievement of performance goals. We refer to these types of Awards as Performance Awards. Performance Awards may also provide for cash payments of up to $1,500,000 per fiscal year per individual. With respect to Performance Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the compensation committee of our board will specify, at the time of grant, that such Performance Award will be granted, vest and/or pay out solely upon the achievement of specified objective performance criteria that are based on the relative or absolute attainment of specified levels of one or any combination of the following, which may be determined pursuant to generally accepted accounting principles, or GAAP, or on a non-GAAP basis, as determined by the compensation committee:

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~~earnings per share;~~

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~~return on average equity or average assets with respect to a pre-determined peer group;~~

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~~earnings;~~

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~~earnings growth;~~

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~~revenues;~~

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~~expenses;~~

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~~stock price;~~

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~~market share;~~

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~~return on sales, assets, equity or investment;~~

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~~regulatory compliance;~~

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~~achievement of balance sheet or income statement objectives;~~

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~~total shareholder return;~~

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~~net operating profit after tax;~~

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~~pre-tax or after tax income;~~

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~~cash flow;~~

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~~achievement of research, development, clinical or regulatory milestones;~~

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~~product sales;~~

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~~business development activities;~~

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the entry into an arrangement or agreement with a third party for the development, commercialization, marketing or distribution of products, services or technologies, or for conducting a research program to discover and develop a product, service or technology, and/or the achievement of milestones under such arrangement or agreement, including events that trigger an obligation or payment right;

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achievement of domestic and international regulatory milestones, including the submission of filings required to advance products, services and technologies in clinical development and the achievement of approvals by regulatory authorities relating to the commercialization of products, services and technologies;

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~~the achievement of discovery, preclinical and clinical stage scientific objectives, discoveries or inventions for products, services and technologies under research and development;~~

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~~the entry into or completion of a phase of clinical development for any product, service or technology, such as the entry into or completion of Phase 1, 2, and/or 3 clinical trials;~~

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~~the consummation of debt or equity financing transactions, or acquisitions of business, technologies and assets;~~

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~~new product or service releases;~~

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specified levels of product sales, net income, earnings before or after discontinued operations, interest, taxes, depreciation and/or amortization, operating profit before or after discontinued operations and/or taxes, sales, sales growth, earnings growth, cash flow or cash position, gross margins, stock price, market share, return on sales, assets, equity or investment; and

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~~improvement of financial ratings.~~

The preceding performance criteria may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of selected performance criteria and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly, or otherwise situated. The compensation committee may specify that such performance measures will be adjusted to exclude any one or more of:

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~~extraordinary items;~~

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~~gains or losses on the dispositions of discontinued operations;~~

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~~the cumulative effects of changes in accounting principles;~~

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~~the write-down of any asset;~~

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~~fluctuation in foreign currency exchange rates; and~~

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~~charges for restructuring and rationalization programs.~~

Such performance measures (i) may vary by participant and may be different for different Awards; (ii) may be particular to a participant or the department, branch, line of business, subsidiary, or other unit in which the participant works and may cover such period as may be specified by the compensation committee; and (iii) will be set by the compensation committee within the time period prescribed by, and will otherwise comply with the requirements of, Section 162(m). The compensation committee may adjust downwards,

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but not upwards, the cash or number of shares payable pursuant to such Awards and may not waive the achievement of the applicable performance measures except in the case of the death or disability of the participant or a change in control of Idera. Performance Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) may be based on these or other performance measures as determined by our board. Dividend equivalents with respect to Performance Awards will be subject to the same restrictions on transfer and forfeitability as the underlying Performance Award.

~~Transferability of Awards~~

Except as the board may otherwise determine or provide in an Award in connection with certain gratuitous transfers, Awards may not be sold, assigned, transferred, pledged, or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an ISO, pursuant to a qualified domestic relations order. During the life of the participant, Awards are exercisable only by the participant.

~~Eligibility to Receive Awards~~

Employees, officers, directors, consultants, and advisors of Idera and of our present or future parent or subsidiary corporations and any other business venture in which Idera has a controlling interest (as determined by our board) are eligible to be granted Awards under the Stock Incentive Plan. However, ISOs may only be granted to our employees, employees of our present or future parent or subsidiary corporations, and employees of any other entities the employees of which are eligible to receive ISOs under the Code. The granting of Awards under the Stock Incentive Plan is discretionary, and we cannot now determine the number or type of Awards to be granted in the future to any particular person or group, except that Awards are subject to the limitations described above. Because our executives and non-employee directors are eligible to receive awards under the Stock Incentive Plan, they may be deemed to have a personal interest in the approval of this Proposal. As of April 1, 2022, approximately 13 employees, including four executive officers, six non-employee directors, and zero consultants and advisors were eligible to receive Awards under the Stock Incentive Plan.

~~Administration~~

Our board administers the Stock Incentive Plan and is authorized to grant Awards and to adopt, amend, and repeal the administrative rules, guidelines and practices relating to the Stock Incentive Plan and to construe and interpret the provisions of the Stock Incentive Plan and any Award agreements entered into under the Stock Incentive Plan. Our board may correct any defect, supply any omission or reconcile any inconsistency in the Stock Incentive Plan or any Award in the manner and to the extent it will deem expedient and it will be the sole and final judge of such expediency.

Pursuant to the terms of the Stock Incentive Plan, our board may delegate authority under the Stock Incentive Plan to one or more committees or subcommittees of our board. Our board has authorized the compensation committee to administer certain aspects of the Stock Incentive Plan, including the granting of awards to non-employee directors and executive officers. The compensation committee, with the input of management, selects the recipients of Awards and determines, in addition to other items, and subject to the terms of the Stock Incentive Plan:

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the number of shares of common stock, cash, or other consideration covered by Awards and the terms and conditions of such Awards, including the dates upon which such Awards become exercisable or otherwise vest;

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~~the exercise or measurement price of Awards, if any;~~

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~~the effect on Awards of a change in control of Idera; and~~

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~~the duration of Awards.~~

To the extent permitted by applicable law, our board may delegate to one or more of our officers the power to grant stock options and certain Awards to our employees or non-executive officers and to exercise such other powers under the Stock Incentive Plan as the board may determine, provided that the board will fix the terms of the Awards to be granted by such officers (including the exercise price of such Awards,

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which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to Awards that the officers may grant. No officer will be authorized to grant Awards to any of our executive officers. The board has delegated to our chief executive officer the authority under the Stock Incentive Plan to grant stock options and restricted stock units to our non-executive employees subject to certain specified limitations and oversight by the compensation committee.

~~Awards to non-employee directors will only be granted and administered by a committee, all the members of which are independent as defined by Section 5605(a)(2) of the Nasdaq Listing Rules.~~

Except as otherwise provided under the Stock Incentive Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and our board need not treat participants uniformly. Our board will determine the effect on an Award of the disability, death, retirement, termination, or other cessation of employment, authorized leave of absence or other change in the employment or other status of a participant and the extent to which, and the period during which, the participant (or the participant’s legal representative, conservator, guardian or designated beneficiary) may exercise rights under the Award.

We are required to make equitable adjustments (in the manner determined by our board) to the number and class of securities available under the Stock Incentive Plan and any outstanding awards under the Stock Incentive Plan and the share counting rules and sub-limits set forth in the Stock Incentive Plan to reflect stock splits, stock dividends, recapitalizations, combinations of shares, reclassifications of shares, spin-offs, and other similar changes in capitalization or events or any dividends or distributions to holders of our common stock other than ordinary cash dividends.

All decisions by the board will be made in the board’s sole discretion and will be final and binding on all persons having or claiming any interest in the Stock Incentive Plan or in any Award. We will indemnify and hold harmless each director, officer, employee, or agent to whom any duty or power relating to the administration or interpretation of the Stock Incentive Plan has been or will be delegated against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the board’s approval) arising out of any act or omission to act concerning the Stock Incentive Plan unless arising out of such person’s own fraud or bad faith.

~~Minimum Vesting.~~ No Award granted after April 13, 2015 under the Stock Incentive Plan may vest earlier than the first anniversary of its date of grant. This vesting limitation does not apply to (i) Awards granted on or prior to April 13, 2015 and (ii) Awards granted after April 13, 2015 representing an aggregate of up to 5% of the maximum number of authorized shares available for issuance under the Stock Incentive Plan. In addition, the Stock Incentive Plan prohibits our board from amending any Award granted after April 13, 2015 to make such Award immediately exercisable in whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be, except (i) to the extent required under any contractual obligation or other policy of Idera in effect on April 13, 2015, (ii) upon the death or disability of the participant, or (iii) upon the merger, consolidation, reorganization, or change in control of Idera or as a result of any other circumstance described below under the heading “Reorganization Events.”

~~Amendment of Awards.~~ Except as otherwise provided under the Stock Incentive Plan with respect to repricing outstanding stock options or SARs, Performance Awards, the minimum vesting rules and exclusions thereto, the prohibitions on acceleration of vesting and exclusions thereto, or actions requiring stockholder approval, our board may amend, modify, or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an ISO to a NSO, provided that the participant’s consent to any such action will be required unless our board determines that the action, taking into account any related action, does not materially and adversely affect the participant’s rights under the Stock Incentive Plan or the change is otherwise permitted under the terms of the Stock Incentive Plan in connection with a change in capitalization or reorganization event.

~~Reorganization Events~~

~~Definitions.~~ ~~The Stock Incentive Plan contains provisions addressing the consequences of any reorganization event. A “reorganization event” is defined under the terms of the Stock Incentive Plan to~~

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mean (a) any merger or consolidation of us with or into another entity as a result of which all of our common stock is converted into or exchanged for the right to receive cash, securities or other property, or is cancelled, (b) any transfer or disposition of all of our common stock for cash, securities, or other property pursuant to a share exchange or other transaction, or (c) our liquidation or dissolution.

~~Awards Other than Restricted Stock; Options Available to the Board.~~ Under the Stock Incentive Plan, if a reorganization event occurs, our board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock on such terms as the board determines (except to the extent specifically provided otherwise in an applicable Award agreement or another agreement between a participant and us): (A) provide that such Awards will be assumed, or substantially equivalent Awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (B) upon written notice to a participant, provide that all of the participant’s unexercised Awards will terminate immediately prior to the consummation of such reorganization event unless exercised by the participant (to the extent then exercisable) within a specified period following the date of such notice, (C) provide that outstanding Awards will become exercisable, realizable, or deliverable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon such reorganization event, (D) in the event of a reorganization event under the terms of which holders of common stock will receive upon consummation thereof a cash payment for each share surrendered in the reorganization event, which we refer to as the Acquisition Price, make or provide for a cash payment to participants with respect to each Award held by a participant equal to (X) the number of shares of common stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such reorganization event) multiplied by (Y) the excess, if any, of (I) the Acquisition Price over (II) the exercise, measurement, or purchase price of such Award and any applicable tax withholdings, in exchange for the termination of such Award, (E) provide that, in connection with our liquidation or dissolution, Awards will convert into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable tax withholdings), and (F) any combination of the foregoing. Our board is not obligated to treat all Awards, all Awards held by a participant, or all Awards of the same type, identically.

The Stock Incentive Plan also provides, however, that for Restricted Stock Units that are subject to Section 409A of the Code: (A) if the applicable Restricted Stock Unit agreement provides that the Restricted Stock Units will be settled upon a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i), and the reorganization event constitutes such a “change in control event,” then no assumption or substitution of the Restricted Stock Unit will be permitted, and the Restricted Stock Units will instead be settled in accordance with the terms of the applicable Restricted Stock Unit agreement; and (B) the board may only undertake the actions set forth in clauses (C), (D), or (E) above if the reorganization event is a “change in control event” as so defined under the Treasury Regulation and such action is permitted or required by Section 409A of the Code. If the reorganization event does not constitute a “change in control event” as defined in the Treasury Regulation or such action is not permitted or required by Section 409A of the Code, and the acquiring or succeeding corporation does not assume or substitute the Restricted Stock Units pursuant to clause (A) above, then the unvested Restricted Stock Units will terminate immediately prior to the consummation of the reorganization event without any payment in exchange therefor.

~~Provisions Applicable to Restricted Stock.~~ Upon the occurrence of a reorganization event other than our liquidation or dissolution, our repurchase and other rights with respect to outstanding Restricted Stock will inure to the benefit of our successor and will, unless the board determines otherwise, apply to the cash, securities or other property which the common stock was converted into or exchanged for pursuant to such reorganization event in the same manner and to the same extent as they applied to such Restricted Stock; provided, however, that the board may provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing any Restricted Stock or any other agreement between a participant and us, either initially or by amendment.

Upon the occurrence of a reorganization event involving our liquidation or dissolution, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock or any other agreement between the participant and us, all restrictions and conditions on all Restricted Stock then outstanding will automatically be deemed terminated or satisfied.

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~~Amendment or Termination~~

Our board may amend, suspend, or terminate the Stock Incentive Plan or any portion thereof at any time provided that (i) to the extent required by Section 162(m) of the Code, no Award granted to a participant that is intended to comply with Section 162(m) after the date of such amendment will become exercisable, realizable or vested, as applicable to such Award, unless and until our stockholders approve such amendment in the manner required by Section 162(m); (ii) no amendment that would require stockholder approval under the rules of the Nasdaq Stock Market may be made effective unless and until our stockholders approve such amendment; and (iii) if the Nasdaq Stock Market amends the rules of the Nasdaq Stock Market so that such rules no longer require stockholder approval of material amendments to equity compensation plans, then, from and after the effective date of such amendment to the rules of the Nasdaq Stock Market, no amendment to the Stock Incentive Plan (A) materially increasing the number of shares authorized under the Stock Incentive Plan (other than as provided for in the Stock Incentive Plan in connection with substitute Awards, changes in capitalization or reorganization events), (B) expanding the types of Awards that may be granted under the Stock Incentive Plan, or (C) materially expanding the class of participants eligible to participate in the Stock Incentive Plan will be effective unless and until our stockholders approve such amendment. In addition, if at any time the approval of our stockholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to ISOs, the board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Stock Incentive Plan adopted in accordance with the procedures described above will apply to, and be binding on the holders of, all Awards outstanding under the Stock Incentive Plan at the time the amendment is adopted, provided that the Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of participants under the Stock Incentive Plan.

~~Effective Date and Term of Stock Incentive Plan~~

The Stock Incentive Plan became effective on July 26, 2013, the date the plan was approved by our stockholders. No Awards will be granted under the Stock Incentive Plan after the expiration of 10 years from the effective date, but Awards previously granted may extend beyond that date. Approval of the Amendment at the Annual Meeting will extend the term of the Stock Incentive Plan for ten years after the date of the Annual Meeting, which is June 23, 2022.

~~Federal Income Tax Consequences~~

The following generally summarizes the United States federal income tax consequences that generally will arise with respect to Awards granted under the Stock Incentive Plan. This summary is based on the federal tax laws in effect as of the date of this proxy statement. In addition, this summary assumes that all Awards are exempt from, or comply with, the rules under Section 409A of the Code regarding nonqualified deferred compensation. Changes to these laws or assumptions could alter the tax consequences described below.

~~Incentive Stock Options.~~ A participant will not have income upon the grant of an ISO. Also, except as described below, a participant will not have income upon exercise of an ISO if the participant has been employed by us or our corporate parent or 50% or more-owned corporate subsidiary at all times beginning with the option grant date and ending three months before the date the participant exercises the option. If the participant has not been so employed during that time, then the participant will be taxed as described below under “Nonstatutory Stock Options.” The exercise of an ISO may subject the participant to the alternative minimum tax.

A participant will have income upon the sale of the stock acquired under an ISO, which we refer to as ISO stock, at a profit (if sales proceeds exceed the exercise price). The type of income will depend on when the participant sells the ISO stock. If a participant sells the ISO stock more than two years after the option was granted and more than one year after the option was exercised, then all of the profit will be long-term capital gain. If a participant sells the ISO stock prior to satisfying these waiting periods, then the participant will have engaged in a disqualifying disposition and a portion of the profit will be ordinary income and a portion may be capital gain. This capital gain will be long-term if the participant has held the ISO stock for more than one year and otherwise will be short-term. If a participant sells the ISO stock at a loss (sales

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proceeds are less than the exercise price), then the loss will be a capital loss. This capital loss will be long-term if the participant held the ISO stock for more than one year and otherwise will be short-term.

~~Nonstatutory Stock Options.~~ A participant will not have income upon the grant of a NSO. A participant will have compensation income upon the exercise of a NSO equal to the fair market value of the stock on the day the participant exercised the option less the exercise price. Upon sale of the stock, which we refer to as NSO stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the fair market value of the NSO stock on the day the option was exercised. This capital gain or loss will be long-term if the participant has held the NSO stock for more than one year and otherwise will be short-term.

~~Stock Appreciation Rights.~~ A participant will not have income upon the grant of an SAR but generally will recognize compensation income upon the exercise of an SAR equal to the amount of the cash and the fair market value of any stock received. Upon the sale of the stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the fair market value of the stock on the day the SAR was exercised. This capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.

~~Restricted Stock.~~ A participant will not have income upon the grant of Restricted Stock unless an election under Section 83(b) of the Code is made within 30 days of the date of grant. If a timely Section 83(b) election is made, then a participant will have compensation income equal to the fair market value of the stock less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the difference between the sales proceeds and the fair market value of the stock on the date of grant. If the participant does not make a Section 83(b) election, then when the shares of Restricted Stock vest the participant will have compensation income equal to the fair market value of the stock on the vesting date less the purchase price. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the fair market value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.

~~Restricted Stock Units.~~ A participant will not have income upon the grant of a Restricted Stock Unit. A participant is not permitted to make a Section 83(b) election with respect to a Restricted Stock Unit. When the Restricted Stock Unit vests, the participant will have compensation income on the vesting date in an amount equal to the fair market value of the stock on the vesting date less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the fair market value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.

~~Other Stock-Based Awards.~~ The tax consequences associated with any Other Stock-Based Award granted under the Stock Incentive Plan will vary depending on the specific terms of the Award. Among the relevant factors are whether or not the Award has a readily ascertainable fair market value, whether or not the Award is subject to forfeiture provisions or restrictions on transfer, the nature of the property to be received by the participant under the Award and the participant’s holding period and tax basis for the Award or underlying common stock.

~~Tax Consequences to Idera.~~ There will be no tax consequences to us except that we will be entitled to a deduction when a participant has compensation income. Any such deduction will be subject to the limitations of Section 162(m) of the Code.

~~New Plan Benefits~~

The Board has full discretion to determine the amount of any future awards to be made to participants under the Stock Incentive Plan, subject to the limits described above. Additionally, no awards have been made under the Stock Incentive Plan that are contingent upon stockholder approval of the Stock Incentive Plan. Therefore, it is not possible to determine the benefits or amounts that will be received by or allocated to participants under the Stock Incentive Plan.

~~Existing Plan Benefits~~

~~The following table sets forth information with respect to awards previously granted under the Stock Incentive Plan as of April 1, 2022:~~

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~~PROPOSAL FIVE~~
~~APPROVAL OF AMENDMENT TO 2017 EMPLOYEE STOCK PURCHASE PLAN~~WHERE YOU CAN FIND ADDITIONAL INFORMATION

~~Overview~~

~~Our 2017 Employee Stock Purchase Plan (the “2017 ESPP”) was adopted by our board in March 2017~~We file annual and ~~approved by our stockholders in June 2017,~~quarterly reports and ~~subsequently amended by~~other reports and information with the ~~board in April 2019, which amendment was thereafter approved by our stockholders.~~SEC. The ~~board believes~~SEC maintains an Internet web site that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the ~~future success of~~SEC. The public can obtain any documents that we file electronically with the ~~Company depends, in large part,~~SEC at http://www.sec.gov. We will provide without charge to you, upon ~~our ability to maintain~~written or oral request, a competitive position in attracting, retaining, and motivating key personnel, and the board believes that the ability to participate in the 2017 ESPP is an attractive feature for our employees and potential employees. Participation in the 2017 ESPP is entirely voluntary.

On April 15, 2022, the board adopted an amendment (the “Amendment”) to the 2017 ESPP, subject to stockholder approval, to increase the number of shares of common stock authorized for issuance under the 2017 ESPP by 600,000 shares. If the Amendment is approved, the total number of shares of common stock authorized for issuance under the 2017 ESPP would be 1,450,000 shares. A copy of the ~~Amendment is attached as Appendix C~~reports and other information filed with the SEC.

Any requests for copies of information, reports or other filings with the SEC should be directed to Idera Pharmaceuticals, Inc., 505 Eagleview Blvd., Suite 212, Exton, Pennsylvania 19341, Attention: Corporate Secretary.

In order to receive timely delivery of the documents in advance of the Special Meeting, you must make your request for information no later than January 5, 2023.

HOUSEHOLDING

Some banks, brokers, and other nominee record holders may be participating in the practice of “house holding” proxy statements and annual reports. This means that only one copy of our proxy statement, may have been sent to multiple stockholders sharing the same household. We will promptly deliver a separate copy of the proxy statement to you upon written request to Idera Pharmaceuticals, Inc., 505 Eagleview Blvd., Suite 212, Exton, Pennsylvania 19341, Attention: Corporate Secretary. If you want to receive separate copies of the proxy statement or annual reports to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker, or other nominee record holder, or you may contact us at the above address and phone number.

OTHER MATTERS

Our Board of Directors does not know of any other matters to be brought before the Special Meeting. If any other matters not mentioned in this proxy statement ~~and is incorporated herein by reference. All other provisions of~~are properly brought before the ~~2017 ESPP will remain~~Special Meeting, the individuals named in ~~full force and effect. A copy of~~ the ~~2017 ESPP is attached as Appendix D~~enclosed proxy intend to ~~this proxy statement.~~

~~Summary of the Material Provisions of the 2017 ESPP, as amended~~

The following is a summary of the material features of the 2017 ESPP. This summary is qualified in its entirety by the full text of the 2017 ESPP and the Amendment, as found on Appendix C and Appendix D.

The 2017 ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 (“Section 423”) of the Code. The 2017 ESPP is not subject to the provisions of the Employee Retirement Income Security Act of 1974, nor is it qualified as a pension, profit-sharing, or stock bonus plan under Section 401(a) of the Code.

~~Plan Administration~~

~~The 2017 ESPP will be administered by the board or by a committee appointed by the board (for purposes of this Proposal Five, the “committee”).~~

~~The board or the committee will have full~~use their discretionary voting authority ~~to interpret and construe any provision of the 2017 ESPP and to adopt such rules and regulations for administering the 2017 ESPP as it may deem necessary in order to bring one or more offerings~~ under the ~~2017 ESPP into compliance~~proxy to vote the proxy in accordance with ~~the requirements of Section 423.~~

~~Shares Subject to the 2017 ESPP~~

As of April 1, 2022, approximately 695,975 shares of common stock had been issued under the 2017 ESPP. Thus, as amended, the 2017 ESPP will provide participants with the opportunity to purchase an aggregate of 754,025 If Idera’s capital structure changes because of a stock dividend, stock split, or similar event, the number of shares that can be issued under the 2017 ESPP will be appropriately adjusted.

~~Eligibility~~

Any employee of the Company or of any subsidiary of the Company (as defined in Section 424(f) of the Code) designated by the board or the committee from time to time (a “Designated Subsidiary”), are eligible to participate in any one or more of the offerings of Options (as defined below) to purchase common stock under the 2017 ESPP provided that:

•

~~they are customarily employed by the Company or a Designated Subsidiary for more than 20 hours a week and for more than five months in a calendar year;~~

•

~~they have been employed by the Company or a Designated Subsidiary for at least three months prior to enrolling in the 2017 ESPP; and~~

their best judgment on those matters.

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•

~~they are employees of the Company or a Designated Subsidiary on the first day of the applicable offering period.~~

~~The Company retains the discretion to determine which eligible employees may participate in an offering pursuant to and consistent with Treasury Regulation Sections 1.423-2(e) and (f)~~

Although non-employee directors are not eligible to participate in the 2017 ESPP, employee directors and executive officers who satisfy the above requirements are eligible to participate in the 2017 ESPP. As of April 1, 2022, approximately 13 employees, including four executive officers (which includes one employee director), of the Company were eligible to participate in the 2017 ESPP.

~~Participation; Payroll Deductions~~

Eligible employees may participate in an offering period by completing and forwarding either a written or electronic payroll deduction authorization form to the employee’s appropriate payroll office at least 14 days prior to the applicable offering period. The participant must authorize a payroll deduction of a minimum of 1% of base pay and a maximum of 10% of his or her Compensation. For the purposes of the 2017 ESPP, “Compensation” means the amount of money reportable on the employee’s Federal Income Tax Withholding Statement, excluding overtime, shift premium, incentive or bonus awards, allowances and reimbursements for expenses such as relocation allowances for travel expenses, income or gains associated with the grant or vesting of restricted stock, income or gains on the exercise of Company stock options or stock appreciation rights, and similar items, whether or not shown or separately identified on the employee’s Federal Income Tax Withholding Statement, but including, in the case of salespersons, sales commissions to the extent determined by the board or the committee.

Once an employee becomes a participant in the 2017 ESPP, that employee will automatically participate in successive offering periods, with his or her deductions and purchases continuing at the same rate for successive offering periods under the 2017 ESPP as long as the 2017 ESPP remains in effect, until such time as that participant files a new form or withdraws from the 2017 ESPP, becomes ineligible to participate in the 2017 ESPP, or his or her employment ceases. Upon the termination of the participant’s purchase right, all payroll deductions or other contributions will automatically cease.

~~Deduction Changes~~

A participant may decrease or discontinue his or her payroll deduction once during any offering period, by filing either a written or electronic new payroll deduction authorization form. However, a participant may not increase his or her payroll deduction during an offering period. If a participant elects to discontinue his or her payroll deductions during an offering period, but does not elect to withdraw his or her funds previously deducted, funds deducted prior to his or her election to discontinue will be applied to the purchase of common stock on the Exercise Date (as defined below).

~~Offering Periods~~

Shares of common stock will be offered for purchase under the 2017 ESPP through a series of successive offering periods, as determined by the board or the committee, until such time as (i) the maximum number of shares of common stock available for issuance under the 2017 ESPP have been purchased or (ii) the 2017 ESPP has been sooner terminated. Each offering period will commence at such time and be of such duration as determined by the board or the committee prior to the start of the applicable offering period. The first day of such offering period being the offering commencement date (“Offering Commencement Date”). The board or the committee may, at is discretion, choose an offering period of twelve months or less for offerings.

~~Option; Option Price~~

On the Offering Commencement Date of each offering period, a participant will be granted an option (an “Option”) to purchase on the last business day of such offering period (the “Exercise Date”) at the applicable purchase price (the “Option Price”) up to a whole number of shares of common stock determined by multiplying $2,083 by the number of full months of the offering period and dividing the result by the

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closing price on the Offering Commencement Date, subject to certain limitations set forth in the 2017 ESPP. The board or the committee shall determine the applicable purchase price (the “Option Price”) for each offering period. In the absence of a determination by the board or the committee, the Option Price will be 85% of the lesser of the closing price of the common stock on (i) the first business day of the offering period and (ii) the Exercise Date.

Each participant who continues to participate in the 2017 ESPP on the Exercise Date shall be deemed to have exercised his or her Option at the Option Price on such date and shall be deemed to have purchased from the Company the number of whole shares of common stock reserved for the purpose of the 2017 ESPP that his or her accumulated payroll deductions on such date will pay for, but not in excess of the maximum numbers determined in the manner set forth above.

~~Withdrawal~~

A participant may at any time prior to the close of business on the last business day in an offering period and for any reason permanently draw out the balance accumulated in the participant’s account and thereby withdraw from participation in an offering period.

Partial withdrawals are not permitted. The employee may not begin participation again during the remainder of the offering period during which the employee withdrew his or her balance. The employee may participate in any subsequent offering period in accordance with terms and conditions established by the board or the committee.

~~Limitations~~

No purchase of shares under the 2017 ESPP will exceed any statutory limits imposed under Section 423(b)(8) of the Code, which generally limits the accrual of the right of any participant to purchase shares under employee stock purchase plans to an annual rate of $25,000 in fair market value (determined at the date such Option is granted) for each calendar year in which the Option is outstanding at any time. No participant may be granted an Option hereunder if such participant, immediately after the Option is granted, owns 5% or more of the total combined voting power or value of all classes of stock of the Company or any subsidiary.

~~Merger or Reorganization Events~~

Our board or the committee may take any one or more of the following actions as to outstanding options to purchase shares of our common stock under the 2017 ESPP on such terms as our board or committee determines:

•

~~provide that options shall be assumed, or substantially equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof);~~

•

upon written notice to participants, provide that all outstanding options will be terminated immediately prior to the consummation of such reorganization event and that all such outstanding options will become exercisable to the extent of accumulated payroll deductions as of a date specified by our board or committee in such notice, which date shall not be less than ten days preceding the effective date of the reorganization event;

•

upon written notice to participants, provide that all outstanding options will be cancelled as of a date prior to the effective date of the reorganization event and that all accumulated payroll deductions will be returned to participants on such date;

•

in the event of a reorganization event under the terms of which holders of our common stock will receive upon consummation thereof a cash payment for each share surrendered in the reorganization event, change the last day of the offering period to be the date of the consummation of the reorganization event and make or provide for a cash payment to each participant equal to (1) the cash payment for each share surrendered in the reorganization event times the number of shares of our common stock that the participant’s accumulated payroll deductions as of immediately prior to the reorganization event could purchase at the applicable purchase price, where the acquisition price is treated as the fair market value of our common stock on the last day of the applicable offering

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~~period~~ANNEX A

CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION

IDERA PHARMACEUTICALS, INC.

Idera Pharmaceuticals, Inc. (the “Corporation”), organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows:

By action of the Board of Directors of the Corporation (the “Board”) at a meeting held on September 21, 2022, the Board duly adopted a resolution, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth a proposed amendment to the Restated Certificate of Incorporation of the Corporation, as amended to date (the “Certificate of Incorporation”) and declaring said amendment to be advisable. The stockholders of the Corporation duly approved said proposed amendment in accordance with Section 242 of the General Corporation Law of the State of Delaware at a meeting of stockholders held on , 2023. The resolution setting forth the amendment is as follows:

RESOLVED: That the first paragraph of Article FOURTH of the Certificate of Incorporation be and hereby is amended and restated in its entirety so that the same shall read as follows:

“FOURTH. That, effective at , eastern time, on the filing date of this Certificate of Amendment of Restated Certificate of Incorporation, as amended, (the “Effective Time”), a one-for- reverse stock split of the Corporation’s Common Stock (as defined below) shall become effective, pursuant to which each shares of Common Stock outstanding and held of record by each stockholder of the Corporation (including treasury shares) immediately prior to the Effective Time shall be reclassified and combined into one share of Common Stock automatically and without any action by the holder thereof upon the Effective Time and shall represent one share of Common Stock from and after the Effective Time. No fractional shares of Common Stock shall be issued as a result of such reclassification and combination. In lieu of any fractional shares to which the stockholder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the average of the high and low trading prices of the Common Stock on the Nasdaq Capital Market during regular trading hours for ~~purposes of determining~~ the ~~purchase price and where~~five trading days immediately preceding the Effective Time.

The total number of shares ~~that could be purchased~~of all classes of stock which the Corporation shall have authority to issue is ~~subject to the applicable limitations under the 2017 ESPP minus (2) the result~~( ) shares, consisting of ~~multiplying such number~~(i) ( ) shares of Common Stock, $.001 par value per share (“Common Stock”), and (ii) Five Million (5,000,000) shares ~~by the purchase price; and/or~~

•

~~provide that, in connection with our liquidation or dissolution, options shall convert into the right to receive liquidation proceeds (net~~ of ~~the purchase price thereof).~~

~~Rights on Retirement, Death or Termination of Employment~~

If a participant’s employment ends before the last business day of an offering period, no additional payroll deductions will be made and the balance in the participant’s account will be paid to the participant. In the event of the participant’s death before the last business day of an offering period, the Company will pay the balance of the participant’s account (a) to the executor or administrator of the participant’s estate or (b) if no such executor or administrator has been appointed to the knowledge of the Company, to such other person(s) as the Company may, in its discretion, designate. If, before the last business day of the offering period, the Designated Subsidiary byPreferred Stock, $.01 par value per share (“Preferred Stock”), which a participant is employed ceases to be a subsidiary of the Company, or if the participant is transferred to a subsidiary of the Company that is not a Designated Subsidiary, the participant will be deemed to have terminated employment for the purposes of the 2017 ESPP.

~~Transferability~~

Options under the 2017 ESPP are not transferable by a participant other than by will or the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant.

~~Stockholder Rights~~

A participant will not have any stockholder rights with respect to the shares subject to his or her outstanding purchase right until the shares are purchased on the participant’s behalf and the participant has become a holder of record of the purchased shares.

~~Amendment and Termination of the 2017 ESPP~~

~~The 2017 ESPP~~ may be terminated at any time by the board, and will terminate on the date on which all purchase rights are exercised, assumed, terminated, or canceled in connection with a reorganization event. Upon termination of the 2017 ESPP, all amounts in the accounts of the participants will be promptly refunded.

~~The board may at any time, and~~issued from time to time ~~amend~~in one or ~~suspend~~more series as set forth in Part B of this Article FOURTH.”

IN WITNESS WHEREOF, the ~~2017 ESPP or any portion thereof, except that (a) if the approval~~Corporation has caused this Certificate of any such amendment by the stockholders of the Company is required by Section 423 of the Code, such amendment shall not be effected without such approval, and (b) in no event may any amendment be made that would cause the 2017 ESPP to fail to comply with Section 423 of the Code.

~~Summary of U.S. Federal Income Tax Consequences~~

The following is only a summary of the effect of the U.S. income tax laws and regulations upon a participant and Idera with respect to a participant’s participation in the 2017 ESPP. This summary does not purportAmendment to be ~~a complete description~~signed by its duly authorized officer this day of all federal tax implications or participation in the 2017 ESPP, nor does it discuss the income tax laws of any municipality, state or foreign country in which a participant may reside or otherwise be subject to tax., 202 .

A participant in the 2017 ESPP will be taxed on amounts withheld for the purchase of shares as if such amounts were actually received. A participant will recognize ordinary income in the year in which the participant makes a disposition of the shares purchased under the 2017 ESPP, which amount will depend on whether such disposition is made (i) more than two years after the start date of the offering period in which those shares were purchased and (ii) more than one year after the actual purchase date of such shares. If the participant is employed by Idera or a Company affiliate, that income will be subject to applicableIDERA PHARMACEUTICALS, INC.

By:

Chief Executive Officer

65A-1

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~~ACCOUNTING MATTERS~~

~~Report of the Audit Committee~~

The audit committee has reviewed our audited financial statements for the fiscal year ended December 31, 2021 and discussed them with our management and our independent registered public accounting firm.

~~The audit committee has also received from, and discussed with, our independent registered public accounting firm various communications that our independent registered public accounting firm~~”) is ~~required to provide to the audit committee, including the matters required to be discussed by the AS 1301:~~ ~~Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board.~~

The audit committee has received from Ernst & Young LLP the letter and other written disclosures required by applicable requirements of the Public Company Accounting Oversight Board regarding its communication with the audit committee concerning independence, and has discussed with Ernst & Young LLP its independence from the Company. The audit committee has also considered whether the provision of other non-audit services by Ernst & Young LLP is compatible with maintaining their independence.

Based on the review and discussions referred to above, the audit committee recommended to our board that the audited financial statements be included in our annual report on Form 10-K for the year ended December 31, 2021.

~~By the audit committee of the board of directors,~~

~~Carol Schafer, Chair~~
~~Michael R. Dougherty~~
~~Mark Goldberg, M.D.~~hereby established.

The ~~report~~purpose of the ~~Audit Committee~~Plan is ~~not “soliciting material,” is not deemed “filed”~~to provide employees of Idera Pharmaceuticals, Inc., a Delaware corporation (together with its successors, the ~~SEC~~“Company”), and ~~is not to be incorporated by reference into any filing of~~its subsidiaries, certain consultants and advisors who perform services for the Company ~~under the Securities Act of 1933~~ or ~~the Securities Exchange Act of 1934, both as amended.~~

~~Independent Registered Public Accounting Firm Fees~~

~~The following table sets forth all fees paid or accrued by us for professional services rendered by Ernst & Young LLP during the years ended December 31, 2021~~its subsidiaries, and ~~2020:~~

Fee Category 2021 2020
Audit Fees $ 475,000 $ 475,000
Audit-Related Fees $ 15,000 $ 89,000
Tax Fees — $ 25,235
Total Fees $ 490,000 $ 598,235

~~Audit Fees~~

Audit fees represent the aggregate fees billed for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements and internal controls over financial reporting, review of financial statements included in our quarterly reports on Form 10-Q, and services that are normally provided in connection with statutory and regulatory filings or engagements.

~~Audit-Related Fees~~

Audit-related fees represent the aggregate fees billed for assurance and related professional services rendered by our independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and that are not reported under “Audit Fees” including consultations regarding internal controls, financial accounting and reporting standards; the issuance of consents in connection with registration statement filings with the SEC and comfort letters in connection with securities offerings.

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~~TRANSACTIONS WITH RELATED PERSONS~~

Since January 1, 2020 we have not entered into or engaged in any related party transactions, as defined by the SEC, with our directors, officers, and stockholders who beneficially owned more than 5% of our outstanding common stock (‘‘5% holders’’), as well as affiliates or immediate familynon-employee members of those directors, officers, and 5% holders, except with respect to the transactions described below. As discussed in Note 15 of the Notes to Financial Statements included in the 2021 Annual Report, during March 2021, affiliates of Baker Brothers Advisors, LLC (collectively, ‘‘Baker Brothers’’) exercised warrants to purchase 2,708,812 shares of the Company’s common stock at an exercise price of $0.08 per share for a total exercise price of approximately $0.2 million. At the time of such transaction, Baker Brothers was a 5% holder. As discussed in further detail in Item 5 and Note 8 of the Notes to Financial Statements included in our annual report on Form 10-K for the year ended December 31, 2020, on April 7, 2020, we entered into the April 2020 Securities Purchase Agreement and on July 13, 2020, we entered into the July 2020 Securities Purchase Agreement, each with the Pillar Entities, pursuant to which we issued and sold shares of our common stock, par value $0.01 per share, warrants and prefunded warrants to purchase shares of our common stock, for aggregate gross proceeds of approximately $15.1 million.

~~Policies and Procedures for Related Person Transactions~~

Our board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, as a general matter, it is our preference to avoid related party transactions.

In accordance with our audit committee charter, members of the audit committee, all of whom are independent directors, review and approve all related party transactions for which approval is required under applicable laws or regulations, including SEC and the Nasdaq Listing Rules. Current SEC rules define a related party transaction for smaller reporting companies to include any transaction, arrangement, or relationship in which we are a participant and the amount involved is the lesser of $120,000 or 1% of total assets, and in which any of the following persons has or will have a direct or indirect interest:

•

~~our executive officers, directors, or director nominees;~~

•

~~any person who is known to be the beneficial owner of more than 5% of our common stock;~~

•

any person who is an immediate family member, as defined under Item 404 of Regulation S-K, of any of our executive officers, directors, or director nominees or beneficial owners of more than 5% of our common stock; or

•

any firm, corporation, or other entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person, together with any other of the foregoing persons, has a 5% or greater beneficial ownership interest.

Under our code of business conduct and ethics, our directors, officers, and employees are expected to avoid any relationship, influence or activity that would cause or even appear to cause a conflict of interest. Under our code of business conduct and ethics, a director is required to promptly disclose to our board any potential or actual conflict of interest involving him or her. In accordance with our code of business conduct and ethics, the board will determine an appropriate resolution on a case-by-case basis. All directors must recuse themselves from any discussion or decision affecting their personal, business, or professional interests. In addition, the audit committee is responsible for reviewing with our primary counsel the results of their review of the monitoring of compliance with our code of business conduct and ethics.

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~~APPENDIX A~~

~~AMENDMENT TO THE~~
~~IDERA PHARMACEUTICALS, INC.~~
~~2013 STOCK INCENTIVE PLAN~~

WHEREAS, Idera Pharmaceuticals, Inc. (the “Company”) desires to amend the Idera Pharmaceuticals, Inc. 2013 Stock Incentive Plan, as amended (the “2013 Plan”), in the manner set forth below (the “Amendment”); and

~~WHEREAS, on April 15, 2022, subject to stockholder approval,~~ the Board of Directors of the Company, ~~approved~~with the ~~Amendment;~~opportunity to receive grants of equity awards in the form of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units, and other stock-based awards. Capitalized terms used in the Plan and not therein defined shall have the meaning assigned to them in Section 2.

~~NOW THEREFORE, in accordance with Section 11(d)~~The Company believes that the Plan will encourage the participants to contribute materially to the growth of the ~~2013 Plan,~~Company, thereby benefitting the ~~2013~~Company’s stockholders, and will align the economic interests of the participants with those of the stockholders.

The Plan is ~~hereby amended as follows:~~

~~1. Section 4(a) of~~intended to replace the ~~2013 Plan is hereby amended by deleting subsection (1) thereof in its entirety and substituting the following in lieu thereof:~~

~~“(1)~~

~~Authorized Number of Shares. Subject to adjustment under Section 9, Awards may~~Prior Plan. No additional grants shall be made under the Prior Plan on or after the Effective Date. Outstanding grants under the Prior Plan shall continue in effect according to their terms.

Section 2. Definitions.

The following terms shall have the meanings set forth below for purposes of the Plan:

(a) “Affiliate” means, when used with reference to any Person, any other Person that directly or ~~all~~indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, or owns greater than fifty percent (50%) of ~~which Awards may be~~the voting power in, the ~~form of Incentive Stock Options (as defined in Section 5(b)),~~specified Person (the term “control” for ~~up to such number~~this purpose means the ability, whether by the ownership of shares ~~of common stock, $0.001 par value per share,~~or other equity interest, by contract or otherwise, to elect a majority of the ~~Company (the “Common Stock”) as is equal~~directors of a corporation, independently to select the ~~sum of:~~

~~(A)~~

~~10,253,057 shares~~managing partner of ~~Common Stock; plus~~

~~(B)~~

~~such additional number of shares of Common Stock (up to 155,968 shares) as is equal to~~a partnership or the ~~sum~~managing member or the majority of the ~~number~~managers, as applicable, of ~~shares~~a limited liability company, or otherwise to have the power independently to remove and then select a majority of Common Stock subject to awards granted under the Company’s 2008 Stock Incentive Plan (the “Existing Plan”) which awards expire, terminate, or are otherwise surrendered, canceled, forfeited, or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject, however,those Persons exercising governing authority over an entity, and control shall be conclusively presumed in the case of ~~Incentive Stock Options to any limitations~~the direct or indirect ownership of fifty percent (50%) or more of the ~~Code).~~

~~Shares issued under~~voting equity interests in the ~~Plan may consist in whole or in part of authorized but unissued shares or treasury shares.”~~

~~2. Section 11(c) of the 2013 Plan is hereby amended by deleting Section 11(c) in its entirety and substituting the following in lieu thereof:~~

~~“(c)~~

Effective Date and Term of Plan. The Plan shall become effective if, and at such time as, the stockholders of the Company have approved the Plan in accordance with applicable law and stock exchange requirements (such date, the “Effective Date”)specified Person). Unless earlier terminated by action of the Board, the authority of the Committee to make grants under the Plan shall terminate on the date that is ten years after the latest date upon which stockholders of the Company have approved the Plan or an amendment thereto, and the Plan will remain in effect until such time as no shares of Common Stock remain available for delivery under the Plan or as set forth above and the Company has no further rights or obligations under the Plan with respect to outstanding Awards under the Plan.”

The Amendment shall be effective upon approval of the stockholders of the Company at the Company’s 2022 annual meeting of stockholders and shall only be applicable with respect to Awards granted after such approval. If the Amendment is not so approved at such meeting, then the amendment to the 2013 Plan set forth herein shall be void ab initio.

~~Except as herein above provided, the 2013 Plan is hereby ratified, confirmed, and approved in all respects.~~

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~~APPENDIX B~~

~~IDERA PHARMACEUTICALS, INC.~~

~~2013 STOCK INCENTIVE PLAN~~

~~Purpose~~

~~The purpose of this 2013 Stock Incentive Plan (the~~(b) “~~Plan”) of Idera Pharmaceuticals, Inc., a Delaware corporation (the “Company~~”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders. Except where the context otherwise requires, the term “~~Company~~Board” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “~~Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by~~means the Board of Directors of the ~~Company (the~~Company.

(c) “~~Board~~Cause”). has the meaning given to that term in any written employment agreement, offer letter or severance agreement between the Employer and the Participant, or if no such agreement exists or if such term is not defined therein, and unless otherwise defined in the Grant Instrument, Cause means a finding by the Committee that the Participant (i) has breached his or her employment or service contract with the Employer, (ii) has engaged in disloyalty to the Employer, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty, (iii) has disclosed trade secrets or confidential information of the Employer to Persons not entitled to receive such information, (iv) has breached any written non-competition, non-solicitation, invention assignment or confidentiality agreement between the Participant and the Employer or (v) has engaged in such other behavior detrimental to the interests of the Employer as the Committee determines.

~~Eligibility~~

All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company (as such terms are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933, as amended (the(d) “~~Securities Act”), or any successor form) are eligible to be granted Awards under the Plan. Each person who is granted an Award under the Plan is deemed a “Participant.” “Award~~CEO” means ~~Options (as~~the Chief Executive Officer of the Company.

(e) “Change of Control” means, unless otherwise set forth in a Grant Instrument, the occurrence of any of the following:

(i) Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act) becomes a “beneficial owner” (as defined in ~~Section 5), SARs (as defined in Section 6), Restricted Stock (as defined in Section 7), Restricted Stock Units (as defined in Section 7) and Other Stock-Based Awards (as defined in Section 8).~~

~~Administration and Delegation~~

~~(a)~~ ~~Administration by Board of Directors~~. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award.

~~(b)~~ ~~Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board~~” shall mean the Board or a Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officers.

~~(c)~~ ~~Delegation to Officers~~. To the extent permitted by applicable law, the Board may delegate to one or more officers of the Company the power to grant Options and other Awards that constitute rights under Delaware law (subject to any limitations under the Plan) to employees or officers of the Company and to exercise such other powers under the Plan as the Board may determine, ~~provided~~ that the Board shall fix the terms of such Awards to be granted by such officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to such Awards that the officers may grant; ~~provided further, however, that no officer shall be authorized to grant such Awards to any “executive officer” of the Company (as defined by~~ Rule ~~3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1~~13d-3 under the Exchange Act)~~. The Board may not delegate authority under this Section 3(c) to grant Restricted Stock, unless Delaware law then permits such delegation.~~

~~(d)~~ ~~Awards to Non-Employee Directors~~. Discretionary Awards to non-employee directors may be granted and administered only by a Committee, all of the members of which are independent directors as defined by Section 5605(a)(2) of the NASDAQ Marketplace Rules., directly or

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4.indirectly, of securities of the Company representing more than 50% of the voting power of the then outstanding securities of the Company;
provided that a Change of Control shall not be deemed to occur as a result of a transaction in which the Company becomes a direct or indirect subsidiary of another Person and in which the stockholders of the Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares of such other Person representing more than 50% of the voting power of the then outstanding securities of such other Person.

(ii) The consummation of (A) a merger or consolidation of the Company with another Person where, immediately after the merger or consolidation, the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, in substantially the same proportion as ownership immediately prior to the merger or consolidation, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the surviving Person would be entitled in the election of directors, or where the members of the Board, immediately prior to the merger or consolidation, will not, immediately after the merger or consolidation, constitute a majority of the board of directors of the surviving Person or (B) a sale or other disposition of all or substantially all of the assets of the Company.

(iii) A change in the composition of the Board over a period of 12 consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections, or threatened election contests, for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

(iv) The consummation of a complete dissolution or liquidation of the Company.

The Committee may modify the definition of Change of Control for a particular Grant as the Committee deems appropriate to comply with section 409A of the Code or otherwise. Notwithstanding the foregoing, if a Grant constitutes deferred compensation subject to section 409A of the Code and the Grant provides for payment upon a Change of Control, then, for purposes of such payment provisions, no Change of Control shall be deemed to have occurred upon an event described in items (i) – (iv) above unless the event would also constitute a change in ownership or effective control of, or a change in the ownership of a substantial portion of the assets of, the Company under section 409A of the Code.

~~Stock Available for Awards~~

~~(a)~~ (f) “~~Number~~Code” means the Internal Revenue Code of ~~Shares; Share Counting~~.1986, as amended, and the regulations promulgated thereunder.

~~(1)~~ (g) “~~Authorized Number~~Committee” means the Compensation Committee of ~~Shares. Subject~~the Board or another committee appointed by the Board to ~~adjustment~~administer the Plan. The Committee shall consist of directors who are “non-employee directors” as defined under ~~Section 9, Awards may be made~~Rule 16b-3 promulgated under the ~~Plan, any or all of~~Exchange Act and “independent directors,” as determined in accordance with the independence standards established by the stock exchange on which ~~Awards may be in~~ the ~~form of Incentive~~Company Stock ~~Options (as defined in Section 5(b)) for up to such number of shares of~~is at the time primarily traded.

(h) “Company Stock” means common stock, ~~$0.001~~ par value $0.001 per share, of the Company, ~~(the~~and such other securities as may be substituted for Company Stock pursuant to Section 5(c).

(i) “~~Common Stock~~Disability”~~) as is equal~~ or “Disabled” means, unless otherwise set forth in the Grant Instrument, a Participant’s becoming disabled within the meaning of the Employer’s long-term disability plan applicable to the ~~sum of:~~Participant.

~~(A) 10,000,000 shares of Common Stock; plus~~

~~(B) such additional number of shares of Common Stock (up to 5,945,000 shares) as is equal to the sum of (x)~~(j) “Dividend Equivalent” means an amount determined by multiplying the number of shares of ~~Common Stock reserved for issuance under the Company’s 2008 Stock Incentive Plan (the “Existing Plan”) that remain available for grant under the Existing Plan immediately prior to the date this Plan is approved by the Company’s stockholders and (y) the number of shares of Common~~Company Stock subject to ~~awards granted under the Existing Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to~~ a ~~contractual repurchase right (subject, however, in the case of Incentive Stock Options to any limitations of the Code).~~

~~Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.~~

~~(2)~~ ~~Fungible Share Pool~~. Subject to adjustment under Section 9, any Award that is not a Full-Value Award shall be counted against the share limits specified in Sections 4(a)(1) and 4(b)(2) as one share for each share of Common Stock subject to such Award and any Award that is a Full-Value Award shall be counted against the share limits specified in Sections 4(a)(1) and 4(b)(2) as 1.25 shares for each one share of Common Stock subject to such Full-Value Award. “Full-Value Award” means any Award of Restricted Stock, Restricted Stock Unit ~~Award~~ or Other Stock-Based Award ~~(as defined below) with a per share price~~by the per-share cash dividend paid by the Company on its outstanding Company Stock, or ~~per unit purchase price lower than 100% of~~the per-share Fair Market Value ~~(as defined below)~~of any dividend paid on its outstanding Company Stock in consideration other than cash. If interest is credited on accumulated divided equivalents, the ~~date of grant. To~~term “Dividend Equivalent” shall include the extent a share that was subject to an Award that counted as one share is returned to the Plan pursuant to Section 4(a)(3), each applicable share reserve will be credited with one share. To the extent that a share that was subject to an Award that counts as 1.25 shares is returned to the Plan pursuant to Section 4(a)(3), each applicable share reserve will be credited with 1.25 shares.

~~(3)~~ ~~Share Counting. For purposes of counting the number of shares available for the grant of Awards under the Plan and under the sublimits contained in Section 4(b)(2):~~

(A) all shares of Common Stock covered by SARs shall be counted against the number of shares available for the grant of Awards under the Plan and against the sublimit listed in the first clause of this Section 4(a)(3); ~~provided, however~~, that (i) SARs that may be settled only in cash shall not be so counted and (ii) if the Company grants an SAR in tandem with an Option for the same number of shares of Common Stock and provides that only one such Award may be exercised (a “~~Tandem SAR~~”), only the shares covered by the Option, and not the shares covered by the Tandem SAR, shall be so counted, and the expiration of one in connection with the other’s exercise will not restore shares to the Plan;

(B) if any Award (i) expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or (ii) results in any Common Stock not being issued (including as a result of an SAR that was settleable either in cash or in stock actually being settled in cash), the unused Common Stock covered by such Award shall again be available for the grant of Awards; ~~provided, however~~, that (1) in the case of Incentive Stock Options, the foregoing shall be subject to any limitations under the Code, (2) in the case of the exercise of an SAR, the number of shares counted against the shares available under the Plan and against the sublimit listed in the first clause of this Section 4(a)(3) shall be the full number of shares subject to the SAR multiplied by the percentage of the SAR actually exercised, regardless of the number of shares actually used toaccrued interest.

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~~settle such SAR upon exercise and (3) the shares covered by a Tandem SAR shall not again become available for grant upon the expiration or termination of such Tandem SAR;~~

(C) shares of Common Stock delivered (either by actual delivery, attestation, or net exercise) to the Company by a Participant to (i) purchase shares of Common Stock upon the exercise of an Award or (ii) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation) shall not be added back to the number of shares available for the future grant of Awards; and

(D) shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grant of Awards.

~~(b)~~ ~~Sub-limits. Subject to adjustment under Section 9, the following sub-limits on the number of shares subject to Awards shall apply:~~

~~(1)~~ ~~Section 162(m) Per-Participant Limit~~. The maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan shall be 1,500,000 per calendar year. For purposes of the foregoing limit, (i) the combination of an Option in tandem with an SAR shall be treated as a single Award and (ii) each share of Common Stock subject to an Award (including each share of Common Stock subject to a Full-Value Award) shall be counted as one share of Common Stock. The per Participant limit described in this Section 4(b)(1) shall be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“~~Section 162(m)”).~~

~~(2)~~ ~~Limit on Awards to Directors~~. The maximum number of shares with respect to which Awards may be granted to directors who are not employees of the Company at the time of grant shall be 20% of the maximum number of authorized shares set forth in Section 4(a)(1).

~~(c)~~ ~~Substitute Awards~~. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4(a)(1) or any sublimits contained in the Plan, except as may be required by reason of Section 422 and related provisions of the Code.

~~Stock Options~~

~~(a)~~ ~~General. The Board may grant options to purchase Common Stock (each, an “Option~~”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.

~~(b)~~ ~~Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option~~”) shall only be granted to employees of Idera Pharmaceuticals, Inc., any of Idera Pharmaceuticals, Inc.’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. An Option that is not intended to be an Incentive Stock Option shall be designated a “~~Nonstatutory Stock Option~~.” The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory Stock Option.

~~(c)~~ ~~Exercise Price~~. The Board shall establish the exercise price of each Option and specify the exercise price in the applicable Option agreement. The exercise price shall be not less than 100% of the fair market value per share of Common Stock as determined by (or in a manner approved by) the Board (“~~Fair Market Value”) on the date the Option is granted;~~ ~~provided~~ ~~that if the Board approves the grant of an~~

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~~Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date.~~

~~(d)~~ ~~Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement;~~ ~~provided, however, that no Option will be granted with a term in excess of 10 years.~~

~~(e)~~ ~~Exercise of Options~~. Options may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with payment in full (in the manner specified in Section 5(f)) of the exercise price for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise.

~~(f)~~ ~~Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:~~

~~(1) in cash, by check or by wire transfer, payable to the order of the Company;~~

(2) except as may otherwise be provided in the applicable Option agreement or approved by the Board, in its sole discretion, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

(3) to the extent provided for in the applicable Option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their Fair Market Value, provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(4) to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board in its sole discretion, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (i) the number of shares underlying the portion of the Option being exercised, less (ii) such number of shares as is equal to (A) the aggregate exercise price for the portion of the Option being exercised divided by (B) the Fair Market Value on the date of exercise;

(5) to the extent permitted by applicable law and provided for in the applicable Option agreement or approved by the Board, in its sole discretion, by payment of such other lawful consideration as the Board may determine; or

~~(6) by any combination of the above permitted forms of payment.~~

~~(g)~~ ~~Limitation on Repricing~~. Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 9): (1) amend any outstanding Option granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option, (2) cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(c)) covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled option, (3) cancel in exchange for a cash payment any outstanding Option with an exercise price per share above the then-current Fair Market Value, other than pursuant to Section 9, or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the NASDAQ Stock Market (“~~NASDAQ”).~~

~~(h)~~ ~~No Reload Options. No Option granted under the Plan shall contain any provision entitling the Participant to the automatic grant of additional Options in connection with any exercise of the original Option.~~

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(k) “Effective Date” means the date the Plan is approved by the Company’s stockholders.

(l) “Employed by, or providing service to, the Employer” means employment or service as an Employee, Key Advisor or member of the Board (so that, for purposes of exercising Options and SARs and satisfying conditions with respect to Stock Awards, Stock Units, and Other Stock-Based Awards, a Participant shall not be considered to have terminated employment or service until the Participant ceases to be an Employee, Key Advisor and member of the Board), unless the Committee determines otherwise. If a Participant’s relationship is with a subsidiary of the Company and that entity ceases to be a subsidiary of the Company, the Participant will be deemed to cease employment or service when the entity ceases to be a subsidiary of the Company, unless the Participant transfers employment or service to an Employer. If a Participant has military, sick leave or other bona fide leave, the Participant will not be deemed to cease employment or service solely as a result of such leave; provided that such leave does not exceed the longer of 90 days or the period during which the absent Participant’s reemployment rights, if any, are guaranteed by statute or contract. To the extent consistent with applicable law, the Committee may provide that Grants continue to vest for all or a portion of the period of such leave, or that vesting shall be tolled during such leave and only recommence upon the Participant’s return from such leave.

(m) “Employee” means an employee of the Employer (including an officer or director who is also an employee), but excluding any person who is classified by the Employer as a “contractor” or “consultant,” no matter how characterized by the Internal Revenue Service, other governmental agency or a court. Any change of characterization of an individual by the Internal Revenue Service or any court or government agency shall have no effect upon the classification of an individual as an Employee for purposes of this Plan, unless the Committee determines otherwise.

(n) “Employer” means the Company and its subsidiaries.

(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(p) “Exercise Price” means the per share price at which shares of Company Stock may be purchased under an Option, as designated by the Committee.

(q) “Fair Market Value” means:

(i) ~~No Dividend Equivalents. No option~~If the Company Stock is publicly traded, the Fair Market Value per share shall ~~provide~~be determined as follows: (A) if the principal trading market for the ~~payment~~Company Stock is a national securities exchange, the closing sales price during regular trading hours on the relevant date or, ~~accrual~~if there were no trades on that date, the latest preceding date upon which a sale was reported, or (B) if the Company Stock is not principally traded on any such exchange, the last reported sale price of ~~Dividend Equivalents (as defined below).~~a share of Company Stock during regular trading hours on the relevant date, as reported by the OTC Bulletin Board.

(ii) If the Company Stock ~~Appreciation Rights~~

~~(a)~~ ~~General. The Board may grant Awards consisting of stock appreciation rights (“SARs”) entitling~~is not publicly traded or, if publicly traded, is not subject to reported transactions as set forth above, the ~~holder, upon exercise, to receive an amount of Common Stock or cash or a combination thereof (such form to~~Fair Market Value per share shall be determined by the ~~Board) determined by reference to appreciation, from and after~~Committee through any reasonable valuation method authorized under the ~~date of grant, in the Fair Market Value of a share of Common~~Code.

(r) “Grant” means an Option, SAR, Stock ~~over the measurement price established pursuant to Section 6(c). The date as of which such appreciation is determined shall be the exercise date.~~

~~(b)~~ ~~Grants. SARs may be granted in tandem with,~~Award, Stock Unit or ~~independently of, Options~~Other Stock-Based Award granted under the Plan.

~~(1)~~ (s) “~~Tandem Awards.~~Grant Instrument ~~When SARs are expressly granted in tandem with Options, (i)~~” means the ~~SAR will be exercisable only at such time or times, and to~~written agreement that sets forth the extent, that the related Option is exercisable (except to the extent designated by the Board in connection with a Reorganization Event) and will be exercisable in accordance with the procedure required for exercise of the related Option; (ii) the SAR will terminate and no longer be exercisable upon the termination or exercise of the related Option, except to the extent designated by the Board in connection with a Reorganization Event and except that a SAR granted with respect to less than the full number of shares covered by an Option will not be reduced until the number of shares as to which the related Option has been exercised or has terminated exceeds the number of shares not covered by the SAR; (iii) the Option will terminate and no longer be exercisable upon the exercise of the related SAR; and (iv) the SAR will be transferable only with the related Option.

~~(2)~~ ~~Independent SARs.~~ ~~A SAR not expressly granted in tandem with an Option will become exercisable at such time or times, and on such conditions, as the Board may specify in the SAR Award.~~

~~(c)~~ ~~Measurement Price~~. The Board shall establish the measurement price of each SAR and specify it in the applicable SAR agreement. The measurement price shall not be less than 100% of the Fair Market Value on the date the SAR is granted; ~~provided~~ ~~that if the Board approves the grant of an SAR effective as of a future date, the measurement price shall be not less than 100% of the Fair Market Value on such future date.~~

~~(d)~~ ~~Duration of SARs. Each SAR shall be exercisable at such times and subject to such~~ terms and conditions asof a Grant, including all amendments thereto.

(t) “Incentive Stock Option” means an Option that is intended to meet the requirements of an incentive stock option under section 422 of the Code.

(u) “Key Advisor” means a consultant or advisor of the Employer.

(v) “Non-Employee Director” means a member of the Board ~~may specify in the applicable SAR agreement;~~ ~~provided, however, that no SAR will be granted with a term in excess of 10 years.~~who is not an Employee.

~~(e)~~ (w) “~~Exercise of SARs~~Nonqualified Stock Option~~. SARs may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with any other documents required by the Board.~~

~~(f)~~ ~~Limitation on Repricing~~. Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 9): (1) amend any outstanding SAR granted under the Plan to provide a measurement price per share” means an Option that is ~~lower than the then-current measurement price per share of such outstanding SAR, (2) cancel any outstanding SAR (whether or~~ not ~~granted~~intended to be taxed as an incentive stock option under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(c)) covering the same or a different number of shares of Common Stock and having an exercise or measurement price per share lower than the then-current measurement price per sharesection 422 of the cancelled SAR, (3) cancel in exchange for a cash payment any outstanding SAR with a measurement price per share above the then-current Fair Market Value, other than pursuant to Section 9, or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of NASDAQ.

~~(g)~~ ~~No Reload Rights. No SAR granted under the Plan shall contain any provision entitling the grantee to the automatic grant of additional SARs in connection with any exercise of the original SAR.~~

~~(h)~~ ~~No Dividend Equivalents. No SAR shall provide for the payment or accrual of Dividend Equivalents.~~Code.

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(x) “Option” means an option to purchase shares of Company Stock, as described in Section 7.

~~Restricted Stock; Restricted~~(y) “Other Stock-Based Award” means any Grant based on, measured by or payable in Company Stock ~~Units~~(other than an Option, Stock Unit, Stock Award, or SAR), as described in Section 11.

(z) “Participant” means an Employee, Key Advisor or Non-Employee Director designated by the Committee to participate in the Plan.

(aa) “Performance Goals” means the business criteria selected by the Company to measure the level of performance of the Company or an Affiliate during a performance period, which may include, but are not limited to, one or more of the following criteria: cash flow; free cash flow; earnings (including gross margin, earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and charges for stock-based compensation, earnings before interest, taxes, depreciation and amortization, adjusted earnings before interest, taxes, depreciation and amortization and net earnings); earnings per share; growth in earnings or earnings per share; book value growth; stock price; return on equity or average stockholder equity; total stockholder return or growth in total stockholder return either directly or in relation to a comparative group; return on capital; return on assets or net assets; revenue, growth in revenue or return on sales; sales; expense reduction or expense control; expense to revenue ratio; income, net income or adjusted net income; operating income, net operating income, adjusted operating income or net operating income after tax; operating profit or net operating profit; operating margin; gross profit margin; return on operating revenue or return on operating profit; regulatory filings; regulatory approvals, litigation and regulatory resolution goals; other operational, regulatory or departmental objectives; budget comparisons; growth in stockholder value relative to established indexes, or another peer group or peer group index; development and implementation of strategic plans and/or organizational restructuring goals; development and implementation of risk and crisis management programs; improvement in workforce diversity; compliance requirements and compliance relief; safety goals; productivity goals; workforce management and succession planning goals; economic value added (including typical adjustments consistently applied from generally accepted accounting principles required to determine economic value added performance measures); measures of customer satisfaction, employee satisfaction or staff development; development or marketing collaborations, formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance the Company’s revenue or profitability or enhance its customer base; merger and acquisitions; strategic goals or objectives (including objectives related to qualitative or quantitative environmental, social or governance metrics); and other similar criteria as determined by the Committee. Performance Goals applicable to a Grant shall be determined by the Committee, and may be established on an absolute or relative basis and may be established on a corporate-wide basis or with respect to one or more business units, divisions, subsidiaries or business segments. Relative performance may be measured against a group of peer companies, a financial market index or other objective and quantifiable indices.

(bb) “Person” means any natural person, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other legal entity of any nature whatsoever.

(cc) “Prior Plan” means the Company’s 2013 Stock Incentive Plan, as amended through the Effective Date.

(dd) “SAR” means a stock appreciation right, as described in Section 10.

(ee) “Stock Award” means an award of Company Stock, as described in Section 8.

(ff) “Stock Unit” means an award of a contractual right to receive one or more shares of Company Stock, cash or combination thereof, as described in Section 9, and denominated in a number of shares of Company Stock specified in a Grant Instrument.

Section 3. Administration.

(a) ~~General~~Committee. The ~~Board may grant Awards entitling recipients~~Plan shall be administered and interpreted by the Committee; provided, however, that any Grants to ~~acquire shares of Common Stock (“Restricted Stock”), subject to the right~~members of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specifiedBoard must be authorized by ~~the Board in the applicable Award are not satisfied prior to the end~~a majority of the ~~applicable restriction period or periods established by the Board for such Award.~~Board. The ~~Board may also grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered at the time such Award vests (“Restricted Stock Units”) (Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).~~

~~(b)~~ ~~Terms and Conditions for All Restricted Stock Awards. The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.~~

~~(c)~~ ~~Additional Provisions Relating to Restricted Stock~~.

~~(1)~~ ~~Dividends~~. Unless otherwise provided in the applicable Award agreement, any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Stock (“~~Accrued Dividends~~”) shall be paid to the Participant only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. Each payment of Accrued Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock.

~~(2)~~ ~~Stock Certificates~~. The Company may require that any stock certificates issued in respect of shares of Restricted Stock, as well as dividends or distributions paid on such Restricted Stock, shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to his or her Designated Beneficiary. “~~Designated Beneficiary~~” means (i) the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death or (ii) in the absence of an effective designation by a Participant, the Participant’s estate.

~~(d)~~ ~~Additional Provisions Relating to Restricted Stock Units~~.

~~(1)~~ ~~Settlement~~. Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each Restricted Stock Unit, the Participant shall be entitled to receive from the Company one share of Common Stock or (if so provided in the applicable Award agreement) an amount of cash equal to the Fair Market Value of one share of Common Stock. The Board may, in its discretion, provide that settlement of Restricted Stock Units shall be deferred, on a mandatory basis or at the election of the Participant in a manner that complies with Section 409A of the Code.

~~(2)~~ ~~Voting Rights. A Participant shall have no voting rights with respect to any Restricted Stock Units.~~

~~(3)~~ ~~Dividend Equivalents~~. The Award agreement for Restricted Stock Units may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding shares of Common Stock (“~~Dividend Equivalents”). Dividend Equivalents will be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units with respect to which such Dividend Equivalents were granted.~~

~~Other Stock-Based Awards~~

~~(a)~~ ~~General~~. Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“~~Other Stock-Based-Awards”). Such Other Stock-Based Awards shall also~~

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~~be available~~Committee may delegate authority to one or more subcommittees, as it deems appropriate. Subject to compliance with applicable law and the applicable stock exchange rules, the Board, in its discretion, may perform any action of the Committee hereunder. To the extent that the Board, the Committee, a ~~form of payment~~subcommittee or the CEO, as described below administers the Plan, references in the ~~settlement of other Awards granted under~~Plan to the ~~Plan or as payment in lieu of compensation~~“Committee” shall be deemed to ~~which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as~~refer to the Board, ~~shall determine.~~Committee, or such subcommittee or the CEO.

(b) ~~Terms and Conditions~~Delegation to CEO. Subject to compliance with applicable law and applicable stock exchange requirements, the Committee may delegate all or part of its authority and power to the CEO, as it deems appropriate, with respect to Grants to Employees or Key Advisors who are not executive officers or directors under section 16 of the Exchange Act.

(c) Committee Authority. The Committee shall have the sole authority to (i) determine the individuals to whom Grants shall be made under the Plan, (ii) determine the type, size, terms and conditions of the Grants to be made to each such individual, (iii) determine the time when the Grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, (v) amend the terms of any previously issued Grant, subject to the provisions of Section 18 below, (vi) determine and adopt terms, guidelines, and provisions, not inconsistent with the Plan and applicable law, that apply to individuals residing outside of the United States who receive Grants under the Plan, and (vii) deal with any other matters arising under the Plan.

(d) Committee Determinations. The Committee shall have full power and express discretionary authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals.

(e) Indemnification. No member of the Committee or the Board, and no employee of the Company or any Affiliate shall ~~determine~~be liable for any act or failure to act with respect to the Plan, except in circumstances involving his or her bad faith or willful misconduct, or for any act or failure to act hereunder by any other member of the Committee or employee or by any agent to whom duties in connection with the administration of this Plan have been delegated. The Company shall indemnify members of the Committee and the Board and any agent of the Committee or the Board who is an employee of the Company or a subsidiary against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Plan, except in circumstances involving such person’s bad faith or willful misconduct.

Section 4. Grants.

(a) General. Grants under the Plan may consist of Options as described in Section 7, Stock Awards as described in Section 8, Stock Units as described in Section 9, SARs as described in Section 10, and Other Stock-Based Awards as described in Section 11. All Grants shall be subject to the terms and conditions ~~of each Other Stock-Based Award, including any purchase price applicable thereto. Dividend Equivalents will be subject~~set forth herein and to such other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the Committee to the ~~same restrictions~~individual in the Grant Instrument. All Grants shall be made conditional upon the Participant’s acknowledgement, in writing or by acceptance of the Grant, that all decisions and determinations of the Committee shall be final and binding on ~~transfer~~the Participant, his or her beneficiaries and ~~forfeitability as the Other Stock-Based Awards with respect to which~~any other person having or claiming an interest under such ~~Dividend Equivalents were granted.~~

~~Adjustments for Changes in Common Stock and Certain Other Events~~

~~(a)~~ ~~Changes in Capitalization. In the event~~Grant. Grants under a particular Section of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan ~~(ii)~~need not be uniform as among the share counting rules and sublimits set forth in Sections 4(a) and 4(b), (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share and per-share provisions and the measurement price of each outstanding SAR, (v) the number of shares subject to and the repurchase price per share subject to each outstanding Restricted Stock Award and (vi) the share and per-share-related provisions and the purchase price, if any, of each outstanding Other Stock-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.Participants.

(b) ~~Reorganization Events~~.

~~(1)~~ ~~Definition~~Dividends and Dividend Equivalents. ~~A “Reorganization Event” shall mean: (a)~~Notwithstanding anything to the contrary herein, any ~~merger~~dividends or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any transfer or disposition of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange or other transaction or (c) any liquidation or dissolution of the Company.

~~(2)~~ ~~Consequences of a Reorganization Event on Awards Other than Restricted Stock~~.

~~(A) In~~Dividend Equivalents granted in connection with ~~a Reorganization Event,~~Grants under the ~~Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock on such terms as the Board determines (except~~Plan shall vest and be paid only if and to the extent ~~specifically provided otherwise in an applicable Award agreement or another agreement between~~ the ~~Company~~underlying Grants vest and the Participant): (i) provide that such Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that all of the Participant’s unexercised Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant (to the extent then exercisable) within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “~~Acquisition Price~~”), make or provide for a cash payment to Participants with respect to each Award held by a Participant equal to (A) the number of shares of Common Stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such Reorganization Event) multiplied by (B) the excess, if any, of (I) the Acquisition Price over (II) the exercise, measurementare paid.

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or purchase price of such Award and any applicable tax withholdings, in exchange for the termination of such Award, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. In taking any of the actions permitted under this Section 9(b)(2), the Board shall not be obligated by the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically.

(B) Notwithstanding the terms of Section 9(b)(2)(A), in the case of outstanding Restricted Stock Units that are subject to Section 409A of the Code: (i) if the applicable Restricted Stock Unit agreement provides that the Restricted Stock Units shall be settled upon a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i), and the Reorganization Event constitutes such a “change in control event”, then no assumption or substitution shall be permitted pursuant to Section 9(b)(2)(A)(i) and the Restricted Stock Units shall instead be settled in accordance with the terms of the applicable Restricted Stock Unit agreement; and (ii) the Board may only undertake the actions set forth in clauses (iii), (iv) or (v) of Section 9(b)(2)(A) if the Reorganization Event constitutes a “change in control event” as defined under Treasury Regulation Section 1.409A-3(i)(5)(i) and such action is permitted or required by Section 409A of the Code; if the Reorganization Event is not a “change in control event” as so defined or such action is not permitted or required by Section 409A of the Code, and the acquiring or succeeding corporation does not assume or substitute the Restricted Stock Units pursuant to clause (i) of Section 9(b)(2)(A), then the unvested Restricted Stock Units shall terminate immediately prior to the consummation of the Reorganization Event without any payment in exchange therefor.

(C) For purposes of Section 9(b)(2)(A)(i), an Award (other than Restricted Stock) shall be considered assumed if, following consummation of the Reorganization Event, such Award confers the right to purchase or receive pursuant to the terms of such Award, for each share of Common Stock subject to the Award immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); ~~provided, however~~, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise or settlement of the Award to consist solely of such number of shares of common stock of the acquiring or succeeding corporation (or an affiliate thereof) that the Board determined to be equivalent in value (as of the date of such determination or another date specified by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

~~(3)~~ ~~Consequences of a Reorganization Event on Restricted Stock~~. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company with respect to outstanding Restricted Stock shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to such Restricted Stock; ~~provided~~, ~~however~~, that the Board may provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, either initially or by amendment. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock then outstanding shall automatically be deemed terminated or satisfied.

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~~10.~~

~~General Provisions Applicable~~Section 5. Shares Subject to ~~Awards~~the Plan

(a) ~~Transferability of Awards~~Shares Authorized. ~~Awards~~Subject to adjustment as described below in Sections 5(b) and 5(e) below, the aggregate number of shares of Company Stock that may be issued or transferred under the Plan shall be 25,518,742 shares of Company Stock, which is equal to the sum of: (i) 23,600,000 shares of Company Stock, plus (ii) 3,806,601 shares of Company Stock, which is the number of shares of Company Stock reserved for issuance under the Prior Plan that remain available for grant under the Prior Plan as of November 4, 2022; provided that such number will be reduced by the number of shares of Company Stock underlying any Grants made under the Prior Plan after 2022 and before the Effective Date. In addition, shares of the Company Stock underlying any outstanding award granted under the Prior Plan that, following the Effective Date, expires, or is terminated, surrendered or forfeited for any reason without issuance of such shares shall be available for the award of new Grants under this Plan. Subject to adjustment as described below in Sections 5(b) and 5(e) below, the aggregate number of shares of Company Stock that may be issued or transferred under the Plan pursuant to Incentive Stock Options shall not exceed 25,518,742 shares of Company Stock.

(b) Source of Shares; Share Counting. Shares issued or transferred under the Plan may be ~~sold, assigned, transferred, pledged~~authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan. If and to the extent Options or SARs granted under the Plan, expire or are canceled, forfeited, exchanged or surrendered without having been exercised, or if any Stock Awards, Stock Units or Other Stock-Based Awards are forfeited, terminated or otherwise ~~encumbered by~~not paid in full, the ~~person~~shares subject to ~~whom they~~such Grants shall again be available for purposes of the Plan. If shares of Company Stock otherwise issuable under the Plan are ~~granted, either voluntarily or by operation~~surrendered in payment of ~~law, except by will or~~ the ~~laws of descent and distribution or, other than in the case~~Exercise Price of an ~~Incentive~~Option, then the number of shares of Company Stock ~~Option, pursuant to a qualified domestic relations order, and, during~~available for issuance under the ~~life of the Participant,~~Plan shall be ~~exercisable~~reduced only by the ~~Participant;~~ ~~provided, however, that~~net number of shares actually issued by the ~~Board may permit or provide~~Company upon such exercise and not by the gross number of shares as to which such Option is exercised. Upon the exercise of any SAR under the Plan, the number of shares of Company Stock available for issuance under the Plan shall be reduced by only by the net number of shares actually issued by the Company upon such exercise. If shares of Company Stock otherwise issuable under the Plan are withheld by the Company in ~~an Award for the gratuitous transfer~~satisfaction of the ~~Award~~withholding taxes incurred in connection with the issuance, vesting or exercise of any Grant or the issuance of Company Stock thereunder, then the number of shares of Company Stock available for issuance under the Plan shall be reduced by the ~~Participant to~~net number of shares issued, vested or ~~for~~exercised under such Grant, calculated in each instance after payment of such share withholding. To the ~~benefit~~extent any Grants are paid in cash, and not in shares of Company Stock, any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if the Company would be eligible to use a Form S-8 under the Securities Act for the registration of the sale of the Common Stockshares previously subject to such ~~Award to such proposed transferee;~~ ~~provided further, that~~Grants shall again be available for issuance or transfer under the Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.Plan. For the avoidance of doubt, ~~nothing contained in this Section 10(a) shall~~if shares are repurchased by the Company on the open market with the proceeds of the Exercise Price of Options, such shares may not again be ~~deemed to restrict a transfer to the Company.~~

~~(b)~~ ~~Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in~~made available for issuance under the Plan.

(c) ~~Board Discretion~~Substitute Awards. ~~Except as otherwise provided~~Shares issued or transferred under Grants made pursuant to an assumption, substitution or exchange for previously granted awards of a company acquired by the Company in a transaction (“Substitute Awards”) shall not reduce the number of shares of Company Stock available under the Plan ~~each Award~~and available shares under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the transaction) may be ~~made alone or in addition or in relation~~used for Grants under the Plan and shall not reduce the Plan’s share reserve (subject to ~~any other Award. The terms of each Award need not be identical,~~applicable stock exchange listing and ~~the Board need not treat Participants uniformly.~~Code requirements).

(d) ~~Termination of Status~~Individual Limits for Non-Employee Directors. ~~The Board~~Subject to adjustment as described below in Section 5(e), the maximum aggregate grant date value of shares of Company Stock subject to Grants granted to any Non-Employee Director during any calendar year, taken together with any cash fees earned by such Non-Employee Director for services rendered during the calendar year, shall ~~determine~~not exceed $750,000 in total value. For purposes of this limit, the ~~effect~~value of such Grants shall be calculated based on ~~an Award~~the grant date fair value of the disability, death, retirement, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.such Grants for financial reporting purposes.

(e) ~~Withholding~~Adjustments. ~~The Participant must satisfy all applicable federal, state, and local~~If there is any change in the number or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an Award or at the same time as payment of the exercise or purchase price, unless the Company determines otherwise. If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery (either by actual delivery or attestation)kind of shares of ~~Common~~Company Stock ~~including~~outstanding by reason of (i) a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares, ~~retained from~~(ii) a merger, reorganization or consolidation, (iii) a reclassification or change in par value, or (iv) any other extraordinary or unusual event affecting the ~~Award creating the tax obligation, valued at their Fair Market Value;~~ ~~provided, however, except~~outstanding Company Stock as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

~~(f)~~ ~~Amendment of Award~~. Except as otherwise provided in Section 5(g) with respect to repricings, Section 10(i) with respect to Performance Awards or Section 11(d) with respect to actions requiring stockholder approval, the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option. The Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 9.

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~~(g)~~ ~~Conditions on Delivery~~class without the Company’s receipt of ~~Stock. The Company will not be obligated to deliver any~~consideration, or if the value of outstanding shares of ~~Common~~Company Stock ~~pursuant to~~is substantially reduced as a result of a spinoff or the ~~Plan~~Company’s payment of an extraordinary dividend or ~~to remove restrictions from~~distribution, the maximum number and kind of shares ~~previously issued or delivered~~of Company Stock available for issuance under the Plan, ~~until (i) all~~the maximum amount of Grants which a Non-Employee Director may receive in any year, the number and kind of shares covered by outstanding Grants, the number and kind of shares issued and to be issued under the Plan, and the price per share or the applicable market value of such Grants shall be equitably adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, the issued shares of Company Stock to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under the Plan and such outstanding Grants; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the ~~Award have been met~~criteria included in, Grants in recognition of unusual or ~~removed to~~nonrecurring events (including, without limitation, events described in the ~~satisfaction~~preceding sentence, and acquisitions and dispositions of businesses and assets) affecting the Company, any subsidiary or any business unit, or the financial statements of the Company ~~(ii)~~or any subsidiary, or in response to changes in applicable laws, regulations, or accounting principles. In addition, in the ~~opinion~~event of a Change of Control, the provisions of Section 13 of the ~~Company’s counsel, all~~Plan shall apply. Any adjustments to outstanding Grants shall be consistent with section 409A or 424 of the Code, to the extent applicable. Subject to Section 18(b), the adjustments of Grants under this Section 5(e) shall include adjustment of shares, Exercise Price of Options, base amount of SARs, Performance Goals or other ~~legal matters~~terms and conditions, as the Committee deems appropriate. The Committee shall have the sole discretion and authority to determine what appropriate adjustments shall be made and any adjustments determined by the Committee shall be final, binding and conclusive.

Section 6. Eligibility for Participation

(a) Eligible Persons. All Employees and Non-Employee Directors shall be eligible to participate in the Plan. Key Advisors shall be eligible to participate in the Plan if the Key Advisors render bona fide services to the Employer, the services are not in connection with the ~~issuance~~offer and ~~delivery~~sale of ~~such shares have been satisfied, including any applicable~~ securities ~~laws~~in a capital-raising transaction and ~~regulations and any applicable stock exchange~~the Key Advisors do not directly or ~~stock~~indirectly promote or maintain a market ~~rules and regulations, and (iii)~~for the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.Company’s securities.

~~(h)~~(b) ~~Acceleration~~Selection of Participants. The ~~Board may at any time provide that any Award~~Committee shall ~~become immediately exercisable~~select the Employees, Non-Employee Directors and Key Advisors to receive Grants and shall determine the number of shares of Company Stock subject to a particular Grant in ~~whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part,~~such manner as the ~~case may be.~~Committee determines.

~~(i)~~Section 7. Options

The Committee may grant Options to an Employee, Non-Employee Director or Key Advisor upon such terms as the Committee deems appropriate. The following provisions are applicable to Options:

(a) ~~Performance Awards~~Number of Shares. The Committee shall determine the number of shares of Company Stock that will be subject to each Grant of Options to Employees, Non-Employee Directors and Key Advisors.

(b) Type of Option and Exercise Price.

~~(1)~~ ~~Grants. Restricted~~(i) The Committee may grant Incentive Stock ~~Awards and Other Stock-Based Awards under the Plan may be made subject to the achievement of performance goals pursuant to this Section 10(i) (“Performance Awards”). Performance Awards can also provide for cash payments of up to $1,500,000 per fiscal year per individual.~~

~~(2)~~ ~~Committee. Grants of Performance Awards to any Covered Employee (as defined below) intended to qualify as “performance-based compensation” under Section 162(m) (“Performance-Based Compensation”) shall be made only by a Committee (or a subcommittee of a Committee) comprised solely of two~~Options or more directors eligible to serve on a committee making Awards qualifying as “performance-based compensation” under Section 162(m). In the case of such Awards granted to Covered Employees, references to the Board or to a Committee shall be treated as referring to such Committee (or subcommittee). “~~Covered Employee” shall mean any person who is, or whom the Committee, in its discretion, determines may be, a “covered employee” under Section 162(m)(3) of the Code.~~

~~(3)~~ ~~Performance Measures~~. For any Award that is intended to qualify as Performance-Based Compensation, the Committee shall specify that the degree of granting, vesting and/or payout shall be subject to the achievement of one or more objective performance measures established by the Committee, which shall be based on the relative or absolute attainment of specified levels of oneNonqualified Stock Options or any combination of the ~~following, which~~two, all in accordance with the terms and conditions set forth herein. Incentive Stock Options may be ~~determined pursuant~~granted only to ~~generally accepted accounting principles (“GAAP~~”)employees of the Company or ~~on a non-GAAP basis,~~its parent or subsidiary corporations, as defined in section 424 of the Code. Nonqualified Stock Options may be granted to Employees, Non-Employee Directors and Key Advisors.

(ii) The Exercise Price of Company Stock subject to an Option shall be determined by the ~~Committee: (a) earnings per share, (b) return on average equity~~Committee and shall be equal to or average assets with respect to a pre-determined peer group, (c) earnings, (d) earnings growth, (e) revenues, (f) expenses, (g) stock price, (h) market share, (i) return on sales, assets, equity or investment, (j) regulatory compliance, (k) achievement of balance sheet or income statement objectives, (l) total shareholder return, (m) net operating profit after tax, (n) pre-tax or after tax income, (o) cash flow, (p) achievement of research, development, clinical or regulatory milestones, (q) product sales, (r) business development activities, (s)greater than the entry into an arrangement or agreement with a third party for the development, commercialization, marketing or distribution of products, services or technologies, or for conducting a research program to discover and develop a product, service or technology, and/or the achievement of milestones under such arrangement or agreement, including events that trigger an obligation or payment right, (t) achievement of domestic and international regulatory milestones, including the submission of filings required to advance products, services and technologies in clinical development and the achievement of approvals by regulatory authorities relating to the commercialization of products, services and technologies, (u) the achievement of discovery, preclinical and clinical stage scientific objectives, discoveries or inventions for products, services and technologies under research and development, (v) the entry into or completionFair Market Value of a ~~phase~~share of ~~clinical development for~~Company Stock on the date the Option is granted. However, an Incentive Stock Option may not be granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, or any ~~product, service~~parent or technology, such as the entry into or completion of phase 1, 2 and/or 3 clinical trials, (w) the consummation of debt or equity financing transactions, or acquisitions of business, technologies and assets, (x) new product or service releases, (y) specified levels of product sales, net income, earnings before or after discontinued operations, interest, taxes, depreciation and/or amortization, operating profit before or after discontinued operations and/or taxes, sales, sales growth, earnings growth, cash flow or cash position, gross margins, stock price, market share, return on sales, assets, equity or investment and (z) improvement of financial ratings. Such goals may reflect absolutesubsidiary

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~~entity or business unit performance or a relative comparison to~~corporation of the ~~performance~~Company, as defined in section 424 of the Code, unless the Exercise Price per share is not less than 110% of the Fair Market Value of a ~~peer group~~share of entities or other external measure of the selected performance criteria and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The Committee may specify that such performance measures shall be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or lossesCompany Stock on the ~~dispositions~~date of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, (v) fluctuation in foreign currency exchange rates, and (vi) charges for restructuring and rationalization programs. Such performance measures: (i) may vary by Participant and may be different for different Awards; (ii) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Committee; and (iii) shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m). Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board may determine.grant.

~~(4)~~(c) ~~Adjustments~~. Notwithstanding any provision of the Plan, with respect to any Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may adjust downwards, but not upwards, the cash or number of shares payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance measures except in the case of the death or disability of the Participant or a change in control of the Company.

~~(5)~~ ~~Other~~Option Term. The Committee shall determine the term of each Option. The term of any Option shall not exceed ten years from the date of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, or any parent or subsidiary corporation of the Company, as defined in section 424 of the Code, may not have a term that exceeds five years from the ~~power~~date of grant. Notwithstanding the foregoing, in the event that on the last business day of the term of an Option (other than an Incentive Stock Option), the exercise of the Option is prohibited by applicable law, including a prohibition on purchases or sales of Company Stock under the Company’s insider trading policy, the term of the Option shall be extended for a period of 30 days following the end of the legal prohibition, unless the Committee determines otherwise.

(d) Exercisability of Options. Options shall become exercisable in accordance with such terms and conditions, consistent with the Plan, as may be determined by the Committee and specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding Options at any time for any reason.

(e) Grants to ~~impose such other restrictions on Performance Awards~~Non-Exempt Employees. Notwithstanding the foregoing, Options granted to persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as itamended, may ~~deem necessary or appropriate to ensure~~not be exercisable for at least six months after the date of grant (except that such ~~Awards satisfy all requirements~~Options may become exercisable, as determined by the Committee, upon the Participant’s death, Disability or retirement, or upon a Change of Control or other circumstances permitted by applicable regulations).

(f) Termination of Employment or Service. Except as provided in the Grant Instrument, an Option may only be exercised while the Participant is employed by, or providing services to, the Employer. The Committee shall determine in the Grant Instrument under what circumstances and during what time periods a Participant may exercise an Option after termination of employment or service.

(g) Exercise of Options. A Participant may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company. The Participant shall pay the Exercise Price for ~~Performance-Based Compensation. Dividend Equivalents will be~~an Option as specified by the Committee (i) in cash or by check, (ii) unless the Committee determines otherwise, by delivering shares of Company Stock owned by the Participant and having a Fair Market Value on the date of exercise at least equal to the Exercise Price or by attestation (on a form prescribed by the Committee) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise at least equal to the Exercise Price, (iii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, (iv) if permitted by the Committee, by withholding shares of Company Stock subject to the ~~same restrictions~~exercisable Option, which have a Fair Market Value on ~~transfer and forfeitability~~the date of exercise equal to the Exercise Price, or (v) by such other method as the ~~Performance Awards~~Committee may approve. Shares of Company Stock used to exercise an Option shall have been held by the Participant for the requisite period of time necessary to avoid adverse accounting consequences to the Company with respect to the Option. Payment for the shares to be issued or transferred pursuant to the Option, and any required withholding taxes, must be received by the Company by the time specified by the Committee depending on the type of payment being made, but in all cases prior to the issuance or transfer of such shares.

(h) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the Company Stock on the date of the grant with respect to which ~~such Dividend Equivalents were granted.~~

~~11.~~

~~Miscellaneous~~

~~(a)~~ ~~No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award~~Incentive Stock Options are exercisable for the first time by ~~virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving~~ a Participant ~~the right to continued employment or~~during any ~~other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim~~calendar year, under ~~the Plan, except as expressly provided in the applicable Award.~~

~~(b)~~ ~~No Rights As Stockholder~~. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares.

~~(c)~~ ~~Effective Date and Term of Plan. The Plan shall become effective on the date the Plan is approved by the Company’s stockholders (the “Effective Date”). No Awards shall be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.~~

~~(d)~~ ~~Amendment of Plan. The Board may amend, suspend or terminate~~ the Plan or any ~~portion thereof at any time provided that (i)~~other stock option plan of the Company or a parent or subsidiary, exceeds $100,000, then the Option, as to the ~~extent required by~~ excess, shall be treated as a Nonqualified Stock Option.

Section ~~162(m), no~~8. Stock Awards

The Committee may issue or transfer shares of Company Stock to an Employee, Non-Employee Director or Key Advisor under a Stock Award, ~~granted to a Participant that is intended to comply with Section 162(m) after~~upon such terms as the ~~date of such amendment shall become exercisable, realizable or vested, as~~Committee deems appropriate. The following provisions are applicable to such Award, unless and until the Company’s stockholders approve such amendment in the manner required by Section 162(m); (ii) no amendment that would require stockholder approval under the rules of NASDAQ may be made effective unless and until the Company’s stockholders approve such amendment; and (iii) if the NASDAQ amends its corporate governance rules so that such rules no longer require stockholder approval of NASDAQ “material amendments” to equity compensation plans, then, from and after the effective date of such amendment to the NASDAQ rules, no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Section 4(c) or 9), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan shall be effective unless and until the Company’s stockholders approve such amendment. In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendmentStock Awards:

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(a) General Requirements. Shares of Company Stock issued or transferred pursuant to Stock Awards may be issued or transferred for consideration or for no consideration, and subject to restrictions or no restrictions, as determined by the Committee. The Committee may, but shall not be required to, establish conditions under which restrictions on Stock Awards shall lapse over a period of time or according to such other criteria as the Committee deems appropriate, including, without limitation, restrictions based on the achievement of specific Performance Goals. The period of time during which the Stock Awards will remain subject to restrictions will be designated in the Grant Instrument as the “Restriction Period.”

(b) Number of Shares. The Committee shall determine the number of shares of Company Stock to be issued or transferred pursuant to a Stock Award and the restrictions applicable to such shares.

(c) Requirement of Employment or Service. If the Participant ceases to be employed by, or provide service to, the Employer during a period designated in the Grant Instrument as the Restriction Period, or if other specified conditions are not met, the Stock Award shall terminate as to all shares covered by the Grant as to which the restrictions have not lapsed, and those shares of Company Stock must be immediately returned to the Company. The Committee may, however, provide for complete or partial exceptions to this requirement as it deems appropriate.

(d) Restrictions on Transfer and Legend on Stock Certificate. During the Restriction Period, a Participant may not sell, assign, transfer, pledge or otherwise dispose of the shares of a Stock Award except under Section 16 below. Unless otherwise determined by the Committee, the Company will retain possession of certificates for shares of Stock Awards until all restrictions on such shares have lapsed. Each certificate for a Stock Award, unless held by the Company, shall contain a legend giving appropriate notice of the restrictions in the Grant. The Participant shall be entitled to have the legend removed from the stock certificate covering the shares subject to restrictions when all restrictions on such shares have lapsed. The Committee may determine that the Company will not issue certificates for Stock Awards until all restrictions on such shares have lapsed.

(e) Right to Vote and to Receive Dividends. Unless the Committee determines otherwise, during the Restriction Period, the Participant shall have the right: (i) to vote shares of Stock Awards and (ii) subject to Section 4(b), to receive any dividends or other distributions paid on such shares, subject to any restrictions deemed appropriate by the Committee, including, without limitation, the achievement of specific Performance Goals.

(f) Lapse of Restrictions. All restrictions imposed on Stock Awards shall lapse upon the expiration of the applicable Restriction Period and the satisfaction of all conditions, if any, imposed by the Committee. The Committee may determine, as to any or all Stock Awards, that the restrictions shall lapse without regard to any Restriction Period.

Section 9. Stock Units

The Committee may grant Stock Units, each of which shall represent one hypothetical share of Company Stock, to an Employee, Non-Employee Director or Key Advisor upon such terms and conditions as the Committee deems appropriate. The following provisions are applicable to Stock Units:

(a) Crediting of Units. Each Stock Unit shall represent the right of the Participant to receive a share of Company Stock or an amount of cash based on the value of a share of Company Stock, if and when specified conditions are met. All Stock Units shall be credited to bookkeeping accounts established on the Company’s records for purposes of the Plan.

(b) Terms of Stock Units. The Committee may grant Stock Units that vest and are payable if specified Performance Goals or other conditions are met, or under other circumstances. Stock Units may be paid at the end of a specified performance period or other period, or payment may be deferred to a date authorized by the Committee. The Committee may accelerate vesting or payment, as to any or all Stock Units at any time for any reason, provided such acceleration complies with section 409A of the Code. The Committee shall determine the number of Stock Units to be granted and the requirements applicable to such Stock Units.

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(c) Requirement of Employment or Service. If the Participant ceases to be employed by, or provide service to, the Employer prior to the vesting of Stock Units, or if other conditions established by the Committee are not met, the Participant’s Stock Units shall be forfeited. The Committee may, however, provide for complete or partial exceptions to this requirement as it deems appropriate.

(d) Payment With Respect to Stock Units. Payments with respect to Stock Units shall be made in cash, Company Stock or any combination of the foregoing, as the Committee shall determine.

Section 10. Stock Appreciation Rights

The Committee may grant SARs to an Employee, Non-Employee Director or Key Advisor separately or in tandem with any Option. The following provisions are applicable to SARs:

(a) General Requirements. The Committee may grant SARs to an Employee, Non-Employee Director or Key Advisor separately or in tandem with any Option (for all or a portion of the applicable Option). Tandem SARs may be granted either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option, SARs may be granted only at the time of the grant of the Incentive Stock Option. The Committee shall establish the base amount of the SAR at the time the SAR is granted. The base amount of each SAR shall be equal to or greater than the Fair Market Value of a share of Company Stock as of the date of grant of the SAR. The term of any SAR shall not exceed ten years from the date of grant. Notwithstanding the foregoing, in the event that on the last business day of the term of a SAR, the exercise of the SAR is prohibited by applicable law, including a prohibition on purchases or sales of Company Stock under the Company’s insider trading policy, the term shall be extended for a period of 30 days following the end of the legal prohibition, unless the Committee determines otherwise.

(b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to a Participant that shall be exercisable during a specified period shall not exceed the number of shares of Company Stock that the Participant may purchase upon the exercise of the related Option during such period. Upon the exercise of an Option, the SARs relating to the Company Stock covered by such Option shall terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal number of shares of Company Stock.

(c) Exercisability. A SAR shall be exercisable during the period specified by the Committee in the Grant Instrument and shall be subject to such vesting and other restrictions as may be specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding SARs at any time for any reason. SARs may only be exercised while the Participant is employed by, or providing service to, the Employer or during the applicable period after termination of employment or service as specified by the Committee. A tandem SAR shall be exercisable only during the period when the Option to which it is related is also exercisable.

(d) Grants to Non-Exempt Employees. Notwithstanding the foregoing, SARs granted to persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except that such SARs may become exercisable, as determined by the Committee, upon the Participant’s death, Disability or retirement, or upon a Change of Control or other circumstances permitted by applicable regulations).

(e) Value of SARs. When a Participant exercises SARs, the Participant shall receive in settlement of such SARs an amount equal to the value of the stock appreciation for the number of SARs exercised. The stock appreciation for a SAR is the amount by which the Fair Market Value of the underlying Company Stock on the date of exercise of the SAR exceeds the base amount of the SAR as described in Section 10(a).

(f) Form of Payment. The appreciation in a SAR shall be paid in shares of Company Stock, cash or any combination of the foregoing, as the Committee shall determine. For purposes of calculating the number of shares of Company Stock to be received, shares of Company Stock shall be valued at their Fair Market Value on the date of exercise of the SAR.

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Section 11. Other Stock-Based Awards

The Committee may grant Other Stock-Based Awards, which are awards (other than those described in Sections 7, 8, 9 and 10 of the Plan) that are based on or measured by Company Stock, to any Employee, Non-Employee Director or Key Advisor, on such terms and conditions as the Committee shall determine. Other Stock-Based Awards may be awarded subject to the achievement of Performance Goals or other criteria or other conditions and may be payable in cash, Company Stock or any combination of the foregoing, as the Committee shall determine.

Section 12. Dividend Equivalents

The Committee may grant Dividend Equivalents in connection with Stock Units or Other Stock-Based Awards. Dividend Equivalents, subject to Section 4(b), may be paid currently or accrued as contingent cash obligations and may be payable in cash or shares of Company Stock, and upon such terms and conditions as the Committee shall determine. For the avoidance of doubt, dividends or Dividend Equivalents shall not be granted in connection with Options or SARs.

Section 13. Consequences of a Change of Control

(a) Assumption of Outstanding Grants. Upon a Change of Control where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), unless the Committee determines otherwise, all outstanding Grants that are not exercised or paid at the time of the Change of Control shall be assumed by, or replaced with grants (which may be in respect to cash, securities, or a combination thereof) that have comparable terms by, the surviving corporation (or a parent or subsidiary of the surviving corporation). After a Change of Control, references to the “Company” as they relate to employment matters shall include the successor employer in the transaction, subject to applicable law. For purposes of the foregoing, a Grant under the Plan shall not be treated as continued, assumed, or replaced on comparable terms unless it is continued, assumed, or replaced with substantially equivalent terms, including, without limitation, the same vesting terms.

(b) Vesting Upon Certain Terminations of Employment. Unless the Grant Instrument provides otherwise, if a Participant’s employment or services with the Employer is terminated by the Employer without Cause upon or within 12 months following a Change of Control, the Participant’s outstanding Grants shall become fully vested as of the date of such termination; provided that if the vesting of any such Grants is based, in whole or in part, on performance, the applicable Grant Instrument shall specify how the portion of the Grant that becomes vested pursuant to this Section 13(b) shall be calculated.

(c) Other Alternatives. In the event of a Change of Control, if any outstanding Grants are not assumed by, or replaced with grants that have comparable terms by, the surviving corporation (or a parent or subsidiary of the surviving corporation), the Committee may (but is not obligated to) make adjustments to the terms and conditions of outstanding Grants, including, without limitation, taking any of the following actions (or combination thereof) with respect to any or all outstanding Grants, without the consent of any Participant: (i) the Committee may determine that outstanding Options and SARs shall automatically accelerate and become fully exercisable and the restrictions and conditions on outstanding Stock Awards, Stock Units, Other Stock-Based Awards and Dividend Equivalents shall immediately lapse; (ii) the Committee may determine that Participants shall receive a payment in settlement of outstanding Stock Units or Dividend Equivalents, in such amount and form as may be determined by the Committee; (iii) the Committee may require that Participants surrender their outstanding Options and SARs in exchange for a payment by the Company, in cash or Company Stock as determined by the Committee, in an amount equal to the amount, if any, by which the then Fair Market Value of the shares of Company Stock subject to the Participant’s unexercised Options and SARs exceeds the Option Exercise Price or SAR base amount, and (iv) after giving Participants an opportunity to exercise all of their outstanding Options and SARs, the Committee may terminate any or all unexercised Options and SARs at such time as the Committee deems appropriate. Such surrender, termination or payment shall take place as of the date of the Change of Control or such other date as the Committee may specify. Without limiting the foregoing, if the per share Fair Market Value of the

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Company Stock does not exceed the per share Option Exercise Price or SAR base amount, as applicable, the Company shall not be required to make any payment to the Participant upon surrender of the Option or SAR.

Section 14. Deferrals

The Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of shares that would otherwise be due to such Participant in connection with any Grant. If any such deferral election is permitted or required, the Committee shall establish rules and procedures for such deferrals and may provide for interest or other earnings to be paid on such deferrals. The rules and procedures for any such deferrals shall be consistent with applicable requirements of section 409A of the Code.

Section 15. Withholding of Taxes

(a) Required Withholding. All Grants under the Plan shall be subject to applicable United States federal (including FICA), state and local, foreign country or other tax withholding requirements. The Employer may require that the Participant or other person receiving Grants or exercising Grants pay to the Employer an amount sufficient to satisfy such tax withholding requirements with respect to such Grants, or the Employer may deduct from other wages and compensation paid by the Employer the amount of any withholding taxes due with respect to such Grants, or the Employer may take such other action as the Committee may deem advisable to enable the Employer to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Grant.

(b) Share Withholding. The Committee may permit or require the Employer’s tax withholding obligation with respect to Grants paid in Company Stock to be satisfied by having shares withheld up to an amount that does not exceed the Participant’s applicable withholding tax rate for United States federal (including FICA), state and local, foreign country or other tax liabilities. The Committee may, in its discretion, and subject to such rules as the Committee may adopt, allow Participants to elect to have such share withholding applied to all or a portion of the tax withholding obligation arising in connection with any particular Grant. Unless the Committee determines otherwise, share withholding for taxes shall not exceed the Participant’s minimum applicable tax withholding amount.

Section 16. Transferability of Grants

(a) Nontransferability of Grants. Except as described in subsection (b) below, only the Participant may exercise rights under a Grant during the Participant’s lifetime. A Participant may not transfer those rights except (i) by will or by the laws of descent and distribution or (ii) with respect to Grants other than Incentive Stock Options, pursuant to a domestic relations order. When a Participant dies, the personal representative or other person entitled to succeed to the rights of the Participant may exercise such rights. Any such successor must furnish proof satisfactory to the Company of his or her right to receive the Grant under the Participant’s will or under the applicable laws of descent and distribution.

(b) Transfer of Nonqualified Stock Options and Stock Awards. Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument or at such other time after the grant of an award, that a Participant may transfer Nonqualified Stock Options or Stock Awards to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with the applicable securities laws, according to such terms as the Committee may determine; provided that the Participant receives no consideration for the transfer of an Option or Stock Award and the transferred Option or Stock Award shall continue to be subject to the same terms and conditions as were applicable to the Option or Stock Award immediately before the transfer.

Section 17. Requirements for Issuance or Transfer of Shares

No Company Stock shall be issued or transferred in connection with any Grant hereunder unless and until all legal requirements applicable to the issuance or transfer of such Company Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Grant on the Participant’s undertaking in writing to comply with such restrictions on his or her subsequent disposition

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of the shares of Company Stock as the Committee shall deem necessary or advisable, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Company Stock issued or transferred under the Plan may be subject to such stop-transfer orders and other restrictions as the Committee deems appropriate to comply with applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon.

Section 18. Amendment and Termination of the Plan

(a) Amendment. The Board may amend or terminate the Plan at any time; provided, however, that the Board shall not amend the Plan without stockholder approval if such approval is required in order to comply with the Code or other applicable law, or to comply with applicable stock exchange requirements.

(b) No Repricing of Options or SARs. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, Company Stock, other securities or property), stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of Company Stock or other securities, or similar transactions), the Company may not, without obtaining stockholder approval, (i) amend the terms of outstanding Options or SARs to reduce the Exercise Price of such outstanding Options or base price of such SARs, (ii) cancel outstanding Options or SARs in exchange for Options or SARs with an Exercise Price or base price, as applicable, that is less than the Exercise Price or base price of the original Options or SARs or (iii) cancel outstanding Options or SARs with an Exercise Price or base price, as applicable, above the current stock price in exchange for cash or other securities.

(c) Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary of its Effective Date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the stockholders.

(d) Termination and Amendment of Outstanding Grants. A termination or amendment of the Plan that occurs after a Grant is made shall not materially impair the rights of a Participant with respect to such Grant unless the Participant consents or unless the Committee acts under Section 19(f) below. The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may be terminated or amended under Section 19(f) below or may be amended by agreement of the Company and the Participant consistent with the Plan.

Section 19. Miscellaneous

(a) Grants in Connection with Corporate Transactions and Otherwise. Nothing contained in the Plan shall be construed to (i) limit the right of the Committee to make Grants under the Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including Grants to employees thereof who become Employees, or (ii) limit the right of the Company to grant stock options or make other awards outside of the Plan. The Committee may make a Grant to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company, in substitution for a stock option or stock awards grant made by such corporation. Notwithstanding anything in the Plan to the contrary, the Committee may establish such terms and conditions of the new Grants as it deems appropriate, including setting the Exercise Price of Options or the base price of SARs at a price necessary to retain for the Participant the same economic value as the prior options or rights.

(b) Governing Document. The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.

(c) Funding of the Plan. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under the Plan.

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(d) Rights of Participants. Nothing in the Plan shall entitle any Employee, Non-Employee Director, Key Advisor or other person to any claim or right to receive a Grant under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employ of the Employer or any other employment rights.

(e) No Fractional Shares. No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Grant. Except as otherwise provided under the Plan, the Committee shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

(f) Compliance with Law.

(i) The Plan, the exercise of Options and SARs and the obligations of the Company to issue or transfer shares of Company Stock under Grants shall be subject to all applicable laws and regulations, and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Company that Incentive Stock Options comply with the applicable provisions of section 422 of the Code, and that, to the extent applicable, Grants comply with the requirements of section 409A of the Code. To the extent that any legal requirement of section 16 of the Exchange Act or section 422 or 409A of the Code as set forth in the Plan ceases to be required under section 16 of the Exchange Act or section 422 or 409A of the Code, that Plan provision shall cease to apply. The Committee may revoke any ~~successor provision~~Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory government regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Participants. The Committee may, in its sole discretion, agree to limit its authority under this Section.

(ii) The Plan is intended to comply with the requirements of section 409A of the Code, to the extent applicable. Each Grant shall be construed and administered such that the Grant either (A) qualifies for an exemption from the requirements of section 409A of the Code or (B) satisfies the requirements of section 409A of the Code. If a Grant is subject to section 409A of the Code, (I) distributions shall only be made in a manner and upon an event permitted under section 409A of the Code, (II) payments to be made upon a termination of employment or service shall only be made upon a “separation from service” under section 409A of the Code, (III) unless the Grant specifies otherwise, each installment payment shall be treated as a separate payment for purposes of section 409A of the Code, and (IV) in no event shall a Participant, directly or indirectly, designate the calendar year in which a distribution is made except in accordance with section 409A of the Code.

(iii) Any Grant that is subject to section 409A of the Code and that is to be distributed to a Key Employee (as defined below) upon separation from service shall be administered so that any distribution with respect to ~~Incentive Stock Options,~~such Grant shall be postponed for six months following the ~~Board may~~date of the Participant’s separation from service, if required by section 409A of the Code. If a distribution is delayed pursuant to section 409A of the Code, the distribution shall be paid within 15 days after the end of the six-month period. If the Participant dies during such six-month period, any postponed amounts shall be paid within 90 days of the Participant’s death. The determination and identification of “Key Employees”, including the number and identity of persons considered Key Employees and the identification date, shall be made by the Committee or its delegate each year in accordance with section 416(i) of the Code and the “specified employee” requirements of section 409A of the Code.

(iv) Notwithstanding anything in the Plan or any Grant agreement to the contrary, each Participant shall be solely responsible for the tax consequences of Grants under the Plan, and in no event shall the Company or any subsidiary or Affiliate of the Company have any responsibility or liability if a Grant does not ~~effect such modification~~meet any applicable requirements of section 409A of the Code. Although the Company intends to administer the Plan to prevent taxation under section 409A of

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the Code, the Company does not represent or ~~amendment without such approval. Unless otherwise~~warrant that the Plan or any Grant complies with any provision of federal, state, local or other tax law.

(g) Grants in Foreign Countries; Establishment of Subplans. The Committee has the authority to award Grants to Participants who are foreign nationals or employed outside the United States on any different terms and conditions than those specified in the ~~amendment, any amendment~~Plan that the Committee, in its discretion, believes to be necessary or desirable to accommodate differences in applicable law, tax policy, or custom, while furthering the ~~Plan adopted in accordance with this Section 11(d) shall apply to, and be binding on the holders~~purposes of all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of Participants under the Plan.

~~(e)~~ ~~Authorization of Sub-Plans (including for Grants to non-U.S. Employees)~~. The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities ~~tax~~ or ~~other~~tax laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to the Plan ~~containing~~setting forth (i) such limitations on the ~~Board’s~~Committee’s discretion under the Plan as the Board deems necessary or desirable orand (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the ~~Company~~Employer shall not be required to provide copies of any supplement to Participants in any jurisdiction ~~which~~that is not affected. Notwithstanding the ~~subject of such supplement.~~

~~(f)~~ ~~Compliance~~foregoing, the Committee may not approve any sub-plan inconsistent with ~~Section 409A of~~ the ~~Code. Except as provided~~terms or share limits in ~~individual Award agreements initially or by amendment, if and to the extent (i) any portion of any payment, compensation or other benefit provided to a Participant pursuant to~~ the Plan ~~in connection with his~~ or ~~her employment termination constitutes “nonqualified deferred compensation” within~~which would otherwise cause the meaning of Section 409A of the Code and (ii) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determinedPlan to cease to satisfy any conditions under ~~Section 409A of the Code) (the “New Payment Date~~”), except as Section 409A of the Code may then permit. The aggregate of any payments that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule.

~~The Company makes no representations or warranty and shall have no liability to the Participant or any other person if any provisions of or payments, compensation or other benefits~~Rule 16b-3 under the ~~Plan are determined to constitute nonqualified deferred compensation subject to Section 409A of the Code but do not to satisfy the conditions of that section.~~

~~(g)~~ ~~Limitations on Liability~~. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, employee or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, employee or agent of the Company. The Company will indemnify and hold harmless each director, officer, employee or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith.1934 Act.

(h) Clawback Rights. Subject to the requirements of applicable law, the Committee may provide in any Grant Instrument that, if a Participant breaches any restrictive covenant obligation or agreement between the Participant and the Employer (which may be set forth in any Grant Instrument) or otherwise engages in activities that constitute Cause either while employed by, or providing service to, the Employer or within a specified period of time thereafter, all Grants held by the Participant shall terminate, and the Company may rescind any exercise of an Option or SAR and the vesting of any other Grant and delivery of shares upon such exercise or vesting (including pursuant to dividends and Dividend Equivalents), as applicable on such terms as the Committee shall determine, including the right to require that in the event of any such rescission, (i) the Participant shall return to the Company the shares received upon the exercise of any Option or SAR and/or the vesting and payment of any other Grant (including pursuant to dividends and Dividend Equivalents) or, (ii) if the Participant no longer owns the shares, the Participant shall pay to the Company the amount of any gain realized or payment received as a result of any sale or other disposition of the shares (or, in the event the Participant transfers the shares by gift or otherwise without consideration, the Fair Market Value of the shares on the date of the breach of the restrictive covenant agreement (including a Participant’s Grant Instrument containing restrictive covenants) or activity constituting Cause), net of the price originally paid by the Participant for the shares. Payment by the Participant shall be made in such manner and on such terms and conditions as may be required by the Committee. The Employer shall be entitled to set off against the amount of any such payment any amounts otherwise owed to the Participant by the Employer. In addition, all Grants under the Plan shall be subject to any applicable clawback or recoupment policies, share trading policies and other policies that may be implemented by the Board from time to time.

(i) Governing ~~Law~~Law; Jurisdiction. The ~~provisions~~validity, construction, interpretation and effect of the Plan and ~~all Awards made hereunder~~Grant Instruments issued under the Plan shall be governed and construed by and ~~interpreted~~determined in accordance with the laws of the State of Delaware, ~~excluding choice-of-law principles~~without giving effect to the conflict of laws provisions thereof. Any action arising out of, or relating to, any of the ~~law of such state that would require the application~~provisions of the ~~laws~~Plan and Grants made hereunder shall be brought only in the United States District Court for the District of aDelaware, or if such court does not have jurisdiction ~~other than~~or will not accept jurisdiction, in any court of general jurisdiction in the State of ~~Delaware.~~Delaware, and the jurisdiction of such court in any such proceeding shall be exclusive.

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~~APPENDIX C~~Independent Auditor’s Report

~~AMENDMENT TO THE~~Board of Directors
~~IDERA PHARMACEUTICALS, INC.~~
~~2017 EMPLOYEE STOCK PURCHASE PLAN~~Aceragen, Inc.

~~WHEREAS, Idera Pharmaceuticals,~~Opinion

We have audited the consolidated financial statements of Aceragen, Inc. (the “Company”) ~~desires~~which comprise the consolidated balance sheet as of December 31, 2021, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the period from March 2, 2021 (inception) to ~~amend~~December 31, 2021, and the ~~Idera Pharmaceuticals, Inc. 2017 Employee Stock Purchase Plan (the “ESPP”),~~related notes to the financial statements. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the ~~manner set forth below (the “Amendment”); and~~

~~WHEREAS, on April 15, 2022, subject to stockholder approval, the Board of Directors~~financial position of the Company ~~approved~~as of December 31, 2021, and the ~~Amendment;~~results of its operations and

~~NOW THEREFORE,~~ its cash flows for the period from March 2, 2021 (inception) to December 31, 2021 in accordance with ~~Section 16~~accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the ~~ESPP, the ESPP is hereby amended as follows:~~

~~1. The first paragraph~~Consolidated Financial Statements section of our report. We are required to be independent of the ~~ESPP~~Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is ~~hereby amended~~sufficient and appropriate to provide a basis for our audit opinion.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company incurred significant net losses during the period from March 2, 2021 (inception) to December 31, 2021 resulting in a significant accumulated deficit and has used significant cash from operating activities. The Company anticipates a need for additional funds to meet its obligations. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plan regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.

Responsibilities of Management for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date of issuance of the consolidated financial statements.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not absolute assurance, and, therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if

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Aceragen, Inc.

Notes to the Consolidated Financial Statements
December 31, 2021

Nature of Business

Aceragen, Inc., together with its ~~entirety~~wholly-owned subsidiaries, Aceragen GmbH and ~~substituting~~Arrevus, Inc. (collectively, “the Company”), is a therapeutic development company focusing on rare and orphan diseases that frequently have limited or no treatment options. The Company’s goal is to deliver therapies that will be important to patients and their families in addressing unmet medical needs utilizing the Company’s distinct proprietary platforms. The Company was incorporated in Delaware in January 2021 and began operations in March 2021.

Summary of Significant Accounting Policies

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has losses from operations and negative cash flows from operations and anticipates that it will continue to do so for the foreseeable future as it continues to invest in advancing its later-stage product candidates.

The Company has plans in place to obtain sufficient additional fundraising to fulfill its operating and capital requirements for the next 12 months. The Company’s plans include continuing to fund its operating losses and capital funding through private equity financing, product development financing, government contracts and/or grants or other possible financing arrangements. Although management believes such plans, if executed, should provide the Company sufficient financing to meet its needs, successful completion of such plans is dependent on factors outside the Company’s control. As such, management cannot conclude that such plans will be effectively implemented within one year after the date that the consolidated financial statements are issued or issuable. As a result, management has concluded that the aforementioned conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued or may be issuable.

If the Company is unable to raise additional capital in sufficient amounts or on acceptable terms, the Company may have to significantly delay, scale back or discontinue the development and/or commercialization of one or more of its product candidates. The consolidated financial statements do not reflect any adjustments that might be necessary if the Company is unable to continue as a going concern.

If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders could result. If the Company raises additional funds by incurring debt financing, the terms of the debt instrument may involve significant cash payment obligations as well as possible financial and other covenants that may restrict the Company’s ability to effectively operate its business.

Risks and Uncertainties

There are many uncertainties regarding the novel coronavirus (COVID-19) pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how the pandemic is impacting its employees, suppliers, vendors, clinical trials, and distribution channels. The Company is unable to predict the impact that COVID-19 will have on its financial position and operating results in future periods due to numerous uncertainties. The Company will continue to assess the evolving impact of the COVID-19 pandemic and make adjustments to its operations and consolidated financial statements, as necessary.

The following is a summary of the Company’s significant accounting policies and practices:

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of the above mentioned wholly-owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

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The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. The reported amounts of revenues and expenses may be affected by estimates that the Company is required to make. Estimates that are critical to the accompanying consolidated financial statements relate principally to stock-based compensation expense (which is derived from a formula that uses various assumptions including the underlying fair value of the Company’s common stock), acquisition accounting and revenues recognized using the cost-to-cost method for measuring progress. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period that they are determined to be necessary. It is at least reasonably possible that the Company’s estimates could change in the near term with respect to these matters.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents for the purposes of reporting cash flows.

Restricted Cash

The Company had $125,000 of restricted cash held on December 31, 2021. The restricted cash balances as of December 31, 2021 represent cash deposited with two financial institutions which are held as collateral for the Company’s corporate credit card programs. The restricted funds are maintained in traditional bank accounts.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheet.

	2021
Cash and cash equivalents		$	5,010,224
Restricted cash			125,000
Total cash, cash equivalents, and restricted cash		$	5,135,224

Contract and Grant Receivables — Billed and Unbilled

Accounts receivable are contract and grant receivables that are carried at their estimated collectible amounts. An allowance for doubtful accounts is based on specific analysis of the receivables. At December 31, 2021, the Company had no allowance for doubtful accounts. Unbilled accounts receivable relate to various contracts and grants for which work has been performed, though invoicing has not yet occurred.

Credit Risk

The Company maintains cash balance deposit accounts that frequently exceed limits insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts. The Company does not believe it is exposed to any significant credit risk on cash and cash equivalents.

Funding Receivable

Funding receivable represents eligible expenses to be reimbursed by NovaQuest Co-Investment Fund XV, L.P. (“NovaQuest”). The eligible expenses have been incurred and are associated with the development of a treatment for Farber disease (Note 6).

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist primarily of prepaid materials, prepaid insurance, prepaid research fees, prepaid rent, and prepaid licenses. Prepaid materials and prepaid research fees consist

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of advances for the Company’s product development activities, including contracts and materials for pre-clinical studies, clinical trials and studies, product development, and regulatory affairs. Items are removed from prepaid expenses as the related goods are utilized or the related services are performed.

Fair Value of Financial Instruments

The carrying amount of the Company’s short-term financial instruments, which include cash and cash equivalents, accounts receivable and accounts payable, approximate their fair value due to their short maturities. The fair value of the Company’s acquisition obligation approximates carrying value given the nature of the agreement.

Acquisitions

The Company accounts for business combinations using the acquisition method of accounting, which required the assets acquired, including in-process research and development (IPR&D), and liabilities assumed be recorded at fair value as of the acquisition date. Any excess of the purchase price over the fair value of net assets acquired is recorded as goodwill. The determination of the estimated fair value of these items requires significant estimates and assumptions. Transaction costs associated with business combination are recorded in general and administrative expense as they are incurred.

If the Company determines the acquisition does not meet the definition of a business combination under the acquisition method of accounting, the transaction is accounted for as an asset acquisition. In an asset acquisition, up-front payments allocated to IPR&D are recorded in research and development expense if it is determined that there is no alternative future use, and subsequent milestone payments are recorded in research and development expense when achieved.

Intangible Asset

In conjunction with the asset acquisition of Arrevus, Inc. (“Arrevus”) (Note 3), the Company recognized an indefinite-lived intangible asset relating to an assembled workforce in the amount of $165,600. Indefinite-lived intangible assets are reviewed at least annually as of the fourth quarter each calendar year and earlier if an event occurs or other circumstances occur indicating that the Company may not recover the carrying value of the asset. If a qualitative assessment indicates that it is not more likely than not that the fair value of the indefinite-lived intangible asset exceeds its carrying amount, the Company compares the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. No impairment charges have been recognized on intangible assets.

Preferred Stock

The Company applies ASC 480 when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity.

The Series X Preferred Stock is classified as temporary equity under ASC 480-10-S99 due to certain contingent redemption rights that are not solely within the Company’s control. The carrying value of the Series X Preferred Stock is not being accreted to redemption value as redemption is not deemed probable at this time.

Foreign Currencies

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rates for the period. Transactions which are not in the functional currency of the entity are remeasured into the functional currency and gains and losses resulting from the remeasurement are recorded in other income (expense).

Income Taxes

Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement amounts and tax basis of existing assets and liabilities. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company is required to assess its needs for a valuation allowance at each balance sheet date and this assessment is based on the relative impact of all available evidence, both positive and negative, and requires management to exercise judgment and make assumptions regarding the weight given to potential effect of such negative and positive evidence.

The Company recognizes the benefit of uncertain tax positions taken on its return at the largest amount that is more likely than not to be sustained upon examination based on the technical merit of each position.

Revenue Recognition and Direct Costs of Revenue

The Company derives its revenue from services provided to commercial and government clients under two types of contracts: cost-plus-fixed-fee and time and material consulting agreements. The Company assesses each contract at its inception to determine whether it should be combined with other contracts when the contracts are executed with the same customer. When making this determination, the Company considers factors such as whether two or more contracts were negotiated and executed at or near the same time or were negotiated with an overall profit objective. The Company recognizes revenue when the Company’s customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services by analyzing the following five steps: (1) identify the contract with a customer(s); (2) identify the performance obligations in ~~lieu thereof~~the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. To indicate the transfer of control for the Company’s cost-plus-fixed-fee arrangements and time and material consulting contracts, it must have a present right to payment, legal title must have passed to the customer, and the customer must have the significant risks and rewards of ownership. Revenue for cost-plus-fixed-fee development contracts is ~~hereby amended~~generally recognized based upon the cost-to-cost measure of progress relative to total estimated contract costs, provided that the Company meets the criteria associated with transferring control of the goods or services over time. On a cost-plus-fixed-fee contract, the Company is paid direct costs incurred to satisfy contractual scope, allowable incurred indirect costs, plus a profit, which is fixed, up to funding levels predetermined by our customers. On cost-plus-fixed-fee type contracts, we do not bear the risks of unexpected cost overruns, provided incurred costs do not exceed predetermined contractual price ceilings. Revenue for time and materials consulting contracts is generally recognized utilizing the input method of measuring progress (cost to cost) towards complete satisfaction of the identified performance obligation, provided that the Company meets the criteria associated with transferring control of the goods or services over time.

Transaction price and variable consideration:

Once the performance obligations in the contract have been identified, the Company estimates the transaction price of the contract. The estimate includes amounts that are fixed as well as those that can vary based on expected outcomes of the activities or contractual terms.

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enforceable. Contracts are often subsequently modified to ~~read~~include changes in specifications, requirements or price, which may create new or change existing enforceable rights and obligations. Depending on the nature of the modification, the Company considers whether to account for the modification as ~~follows:~~an adjustment to the existing contract or as a separate contract. Generally, modifications to the Company’s contracts are not distinct from the existing contract due to the significant integration and interrelated tasks provided in the context of the contract. Therefore, such modifications are accounted for as if they were part of the existing contract and recognized as a cumulative adjustment to revenue.

“Cost-Plus-Fixed-Fee Development Contracts:

The ~~purpose~~Company generates contract revenue primarily from cost-plus-fixed-fee contracts associated with development of certain product candidates. Revenues from cost-plus-fixed-fee contracts are recognized as costs are incurred, generally based on allowable costs incurred during the period, plus any recognizable earned fee. Billings by the Company to customers under cost-plus-fixed-fee contracts generally occur every month and include payment terms of 30 days. The Company uses this ~~Plan~~input method to measure progress as the customer has the benefit of access to the development research under these projects and therefore benefits from the Company’s performance incrementally as research and development activities occur under each project. The Company considers fixed fees under cost-plus-fixed-fee contracts to be earned in proportion to the allowable costs incurred in performance of the contract. Revenue for long-term development contracts is considered variable consideration because the deliverable is dependent on the successful completion of development and is generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with satisfying the performance obligation over time. The U.S. Government contracts for the development of the government sponsored product development candidates in agreements that span multiple years because they contain options for the U.S. Government to ~~provide eligible~~continue development of the project over the course of more than one year.

Revenue associated with costs incurred yet not billed to the customer are presented as unbilled accounts receivable on the consolidated balance sheet as of December 31, 2021.

Time and Material Consulting Contracts:

The Company generates consulting service revenue primarily from fixed rate contracts with third parties associated with regulatory consulting for product development. Revenues from fixed rate contracts are recognized as services are provided on an as needed basis. The transaction price for consulting services is based on a cost build-up model inclusive of a mark-up. These contracts, with a duration that varies depending on the contracted scope, generally include a single performance obligation as the customer benefits from our performance as consulting services are provided on an as needed basis.

Customer Concentration Risk

The U.S. Government accounted for approximately 89% of the Company’s revenues for the period ended December 31, 2021. Approximately 98% of contract receivables invoiced as of December 31, 2021, were due from the U.S. Government.

Research and Development Expenses

The Company expenses the cost of research and development as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including clinical trial costs, manufacturing costs for both clinical and preclinical materials as well as other contracted services and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather when payment is made, in accordance with FASB ASC Topic 730, Research and Development.

In-Process Research and Development Expense

The Company has acquired, and may continue to acquire, the rights to develop and commercialize new drug candidates. The upfront payments to acquire new drug compounds are immediately expensed as

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IPR&D, provided that the drug candidates have not achieved regulatory approval for marketing, and absent obtaining such approval, have no alternative use. For 2021, the Company expensed $11,809,631 through the Enyzvant and Arrevus asset acquisitions (Note 3) which is included in IPR&D expense in the consolidated statement of operations and comprehensive loss.

Upon marketing clearance of the relevant research and development project, the Company will amortize capitalized IPR&D’s milestones over its estimated useful life.

General and Administrative Expenses

General and administrative expenses consist of personnel costs, including salaries, benefits, and non-cash stock-based compensation, for our employees in finance, human resources, executive, and other administrative functions, legal and consulting fees and recruiting costs not otherwise included in research and development expenses. Legal fees include those related to corporate and patent matters.

Stock-Based Compensation

The Company accounts for stock-based awards to employees and directors in accordance with the provisions of ~~Idera Pharmaceuticals, Inc. (the “Company”)~~ASC 718, “Compensation — Stock Compensation”. Under ASC 718, stock-based awards are valued at fair value on the date of grant and ~~certain~~that fair value is recognized over the requisite service period on a straight-line basis, net of estimated forfeitures. The Company values its ~~subsidiaries with opportunities~~stock options using the Black-Scholes option pricing model. This valuation model requires the Company to ~~purchase shares~~make assumptions and judgments about variables used in the calculation. These variables and assumptions include the fair value of the Company’s common stock, ~~$0.001 par~~weighted average period of time that options are expected to be outstanding, the estimated volatility of comparable companies, the risk-free interest rate and the estimated forfeitures of unvested stock options. Forfeitures are estimated at the time of grant and adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company generally utilizes the simplified method calculation of expected life and estimates the Company’s stock volatility based on an average of historic volatilities of several entities with similar characteristics.

Determination of Fair Value of Common Stock

As there has been no public market for the Company’s common stock to date, the estimated fair value of the Company’s common stock has been determined by our board of directors as of the date of grant of each option or restricted stock award, with input from management, considering our most recently available third-party valuations of common stock and our board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide,Valuation of Privately-Held-Company Equity Securities Issued as Compensation. In order to arrive at a fair value for the total stockholders’ equity of the Company, the third-party valuation firm considered the value indication provided by a discounted cash flow analysis.

Leases

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (ASC 842). The new guidance requires lessees to recognize assets and liabilities arising from leases with a term of greater than 12 months on the balance sheet and certain qualitative and quantitative disclosures are required. The Company adopted this standard on the date of incorporation in January 2021. The adoption of ASC 842 resulted in the recognition of an operating lease right-of-use (ROU) asset and operating lease liability of $96,212 on the Company’s consolidated balance sheet.

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the amount of the lease payments, on a collateralized basis, for a similar term and economic environment. The lease terms may include the impact of options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. Assumptions made by the Company at the commencement date are re-evaluated upon the occurrence of certain events, including a lease modification. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease. ROU assets represent the right to use the underlying asset identified in the lease for the term of the agreement. The calculation of the ROU asset incorporates the value of the lease liability and excludes any lease incentives received and initial direct costs incurred.

The Company’s lease portfolio consists of operating leases related to its facilities for its offices in Raleigh, North Carolina and Basel, Switzerland. The Company does not have any financing leases. Leases with a term of 12 months or less are considered short-term, and do not require recognition under ASC 842 on the consolidated balance sheet, and payments associated with short-term leases are expensed as incurred. Rent expense for operating leases is recognized on a straight-line basis over the lease term.

Acquisitions

Arrevus, Inc.

In October 2021, the Company entered into an Agreement and Plan of Merger (the ~~“Common Stock”~~“Merger Agreement”) with Arrevus, Inc. (“Arrevus”), pursuant to which Aceragen Merger Sub, Inc., a wholly-owned subsidiary of the Company, merged with and into Arrevus, with Arrevus being the surviving entity. The $11,606,061 of consideration consisted of cash paid at closing of $3,739,377 which included professional fees of $109,576, a deferred amount of $7,500,000 and a working capital adjustment of $366,684 (Note 9). ~~One Million Four Hundred Fifty Thousand (1,450,000)~~The deferred consideration of $6,000,000 and working capital adjustment of $366,684 is due on the day after the first anniversary of the Merger Agreement and the remaining $1,500,000 is due in January 2023.

The primary asset acquired in the acquisition was IPR&D related to Arrevus’s sodium fusidate program, which could potentially be used for treatments of melioidosis, cystic fibrosis exacerbations and other potential indications.

The Company evaluated the acquisition and determined the screen test represented substantially all of the fair value of the gross assets acquired (excluding cash), as permitted under ASC 805, Business Combinations, was met as the $11,606,061 consideration paid represented a group of similar identifiable assets related to the compound sodium fusidate. The Company has concluded that, in accordance with U.S. GAAP, that the merger of Arrevus into Aceragen, Inc. did not qualify as a business combination and accordingly was considered an asset acquisition. In part, the Company considered the alternative uses of sodium fusidate and determined that other potential clinical indications were not currently approved and involved significant risk before achieving potential marketing approval by the U.S FDA. The transaction was accounted for as an asset acquisition and the allocated purchase price related to the IPR&D of $10,233,868 was recorded as IPR&D expense.

Enzyvant Therapeutics GmbH

In March 2021, the Company entered into an asset purchase agreement with Enzyvant Therapeutics GmbH (“Enzyvant”) to acquire ACG-801, formerly known as RVT-801, a lipid hydrolase acid ceramidase. The Company made an up-front payment of $1,500,000 and incurred $75,763 in professional transaction costs as part of the acquisition, for a total consideration of $1,575,763.

The primary asset acquired in the acquisition was IPR&D related to Enzyvant’s compound, ACG-801, which is an investigational enzyme replacement therapy (ERT) for acid ceramidase deficiency presenting as Farber disease, a lysosomal storage disease with a unique, severe inflammatory phenotype for which no disease-specific therapy exists.

The Company evaluated the acquisition and determined the screen test represented substantially all of the fair value of the gross assets acquired (excluding cash), was met as the $1,575,763 consideration paid represented a group of similar identifiable assets related to the compound acid ceramidase. The Company has concluded that, in accordance with U.S. GAAP, that the asset purchase agreement with Enzyvant did not

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qualify as a business combination and accordingly was considered an asset acquisition. In part, the Company considered the alternative uses of acid ceramidase and determined that other potential clinical indications were not currently approved and involved significant risk before achieving potential marketing approval by the U.S FDA. The transaction was accounted for as an asset acquisition and the purchase price of $1,575,763 was recorded in IPR&D expense.

The Enzyvant acquisition includes certain commercial and development milestone obligations up to $172,500,000, tiered royalty payments on net sales based on percentages between mid-single digits to low double digits, and a required 50% share of proceeds from a possible sale of a priority review voucher (PRV) which may be awarded by the FDA upon regulatory approval in the U.S. for ACG-801. In addition, there is a milestone associated with dosing the first patient in a clinical study under an approved clinical protocol that would result in a payment from the Company in the amount of $1,500,000. Other possible milestone payments include a consummation of a go-public transaction or a program sale up to $5,000,000. Royalty obligations and a share of proceeds from a possible sale of a PRV will be treated as periodic events in the future should such costs be incurred. No contingent consideration was recorded as of December 31, 2021, since the related regulatory approval milestones are not deemed probable until they actually occur.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following as of December 31:

	2021
Prepaid materials		$	614,319
Prepaid licenses			61,581
Prepaid research fees			37,013
Prepaid insurance			23,984
Prepaid rent			11,352
Other			50,127
Total prepaid expenses and other current assets		$	798,376

Leases

The Company leases office space in Raleigh, North Carolina and Basel, Switzerland under operating agreements expiring at various dates through 2024. Certain lease agreements include options for the Company to extend the lease for multiple renewal periods and also provide for annual increases in rent, based on a consumer price index. In the determination of the operating lease right-of-use asset and the operating lease liability, the Company considered it reasonably certain that the lease in Basel, Switzerland would be extended for 2 additional 12-month periods. The Company recognizes lease expense on a straight-line basis over the non-cancelable term of its operating leases.

The components of lease expense consisted of operating lease expense in the amount of $15,795.

Future minimum lease payments under non-cancelable leases as of December 31, 2021 were as follows:

	2021
2022		$	47,502
2023			47,502
2024			11,876
Total lease payments		$	106,880
Less: imputed interest			(10,668)
Total operating lease liabilities		$	96,212

Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. As of December 31, 2021, the weighted-average remaining operating lease terms was 2.25 years, and the weighted-average discount rates used to determine the lease liability for operating leases was 9.2%.

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NovaQuest Transaction

In March 2021, the Company executed a Stock and Warrant Purchase Agreement (“SWPA”) with NovaQuest to sell five shares of ~~Common Stock~~Series X preferred stock and a warrant to purchase up to 618,800 shares of common stock for an aggregate purchase price of $15,000,000 (“Purchase Price”). In addition, NovaQuest will provide up to $20,000,000 in capital contributions for development funding relating to the treatment of Farber disease (“Capital Contributions”). For each fiscal quarter, the Company submits a quarterly report to NovaQuest that includes the amount of eligible expenses incurred. The Capital Contributions are to be paid by NovaQuest in quarterly installments for the Company’s eligible expenses associated with the development of a treatment for Farber disease. As of December 31, 2021, the remaining Capital Contributions to be provided by NovaQuest is $11,208,487, of which $6,315,637 of eligible expenses were incurred in Q4 of 2021 and recorded in the funding receivable on the consolidated balance sheet. As of December 31, 2021, the Purchase Price and Capital Contributions, less issuance costs and the fair market value of the warrant which was $1,422,836, was recorded in preferred stock on the consolidated balance sheet.

The NovaQuest transaction includes tiered royalty payments on net sales based on a mid-double-digit percentage which drops to mid-single digits after reaching a predetermined milestone cap, and a required 35% share of the proceeds from the possible sale of a priority review voucher (PRV) which may be awarded by the FDA upon regulatory approval in the U.S. for ACG-801. In addition, there are other financial and non-financial covenants including the Company’s need to maintain a minimum aggregate ~~have been~~cash balance of $2,000,000.

In October 2021, the Company entered into an amendment to the SWPA. This amendment provided approval from NovaQuest in order to allow the Company to use a portion of the Purchase Price and Capital Contributions provided by NovaQuest to acquire Arrevus. The Company accounted for the amendment as an extinguishment of the preferred shares which resulted in the Company recording a deemed dividend of $7,151,040.

In conjunction with the execution of the amendment to the SWPA, the Company entered into a Sales Distribution and PRV Agreement. As a result, the Company will be required to provide a minimum $10,000,000 share of the proceeds from the possible sale of a PRV which may be awarded by the FDA upon regulatory approval in the U.S. for ACG-701 as well as royalty payments on net sales based on a mid-single digit percentage up to $50,000,000.

Stock Option Plan

In March 2021, the Company’s board of directors approved ~~for this purpose,~~the Aceragen, Inc. 2021 Stock Incentive Plan (“Plan”). The terms of the Plan are determined by the Company’s board of directors subject to ~~any adjustment pursuant~~provisions of the Plan. The Plan provides for the grant of incentive stock options, non-incentive stock options, restricted stock, restricted stock units and other stock-based awards to ~~Section 15 hereof. This~~eligible recipients. Eligible recipients include employees, officers, directors, and individual consultants and advisors. Generally, awards granted by the Company have an exercise price equal to the estimated fair value of the common stock as determined by the board of directors with consideration given to contemporaneous valuations of the Company’s common stock prepared by an independent third-party valuation firm in accordance with the guidance provided by the AICPA Guide. The maximum term of options granted under the Plan is ~~intended~~ten years. Employee option grants generally vest 25% on the first anniversary of grant date, with the balance vesting proportionally for a duration of 36 months thereafter. Generally, non-employee option holders vest in quarterly increments over 24 months. As of December 31, 2021, there were 285,000 shares available for future issuance under the Plan.

In 2021, the Company recorded stock-based compensation expense related to ~~qualify~~the award and vesting of stock options totaling $59,008, net of estimated forfeitures. As of December 31, 2021, there was $566,352 of total unrecognized compensation cost related to unvested time vesting awards under the Plan, which is expected to be recognized over the remaining period up to 45 months.

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As determined by an independent third-party valuation firm, the fair value of each option granted during 2021 were estimated on the date of grant using the Black-Scholes option-pricing valuation model with the following assumptions:

			2021
Expected stock price volatility			85.75% – 86.62%
Risk-free interest rate			0.84% – 1.22%
Expected term			5 years – 6 years
Estimated value of stock per share			$3.07
Estimated forfeiture rate			10%

Assumptions Were Determined as Follows

Expected Stock Price Volatility

Since there is no active market for the Company’s common stock, the Company utilizes the average historical volatility of comparable publicly traded companies from the primary industry sector in which the Company operates over similar expected option terms.

Risk-Free Interest Rate

The Company based the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the expected option term.

Expected Term of Options

The expected term of options represents the period of time options are expected to be outstanding. For options awarded during calendar year 2021, the Company has chosen to use the simplified method for computing the expected term. Under the simplified method, the expected option term is based on a formula which averages the vesting periods of the options and their remaining contractual terms.

The following is a summary of activity in options for the period ended December 31, 2021:

	Incentive Stock Options					Nonqualified Stock Options
	Number of Shares		Weighted Average Exercise Prices			Number of Shares		Weighted Average Exercise Prices
Outstanding at December 31, 2020		—					—
Granted		244,240		$	3.07		70,760		$	3.07
Exercised		—			—		—			—
Forfeited		—			—		—			—
Outstanding at December 31, 2021		244,240		$	—		70,760		$	—
Exercisable at December 31, 2021		—					6,250

The weighted average remaining contractual life for the options outstanding and exercisable is 9 to 10 years.

The total fair value of stock options granted during the period ended December 31, 2021, was approximately $694,000.

As of December 31, 2021, the aggregate intrinsic value of all stock options outstanding and expected to vest was $2,901,150 and the aggregate intrinsic value of currently exercisable stock options was $57,563. The intrinsic value of each option is the difference between the fair market value of the common stock and the exercise price of such option to the extent it is “in-the-money”.

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Investment Banking Firm Transactions

In March 2021, the Company entered into an ~~“employee~~agreement with an investment banking firm to identify and introduce possible investors. As part of this agreement, the investment banking firm was paid a placement fee (consistent with industry standards for such engagements) on gross proceeds. The minimum placement fee is $1,000,000. As part of their compensation, the investment bank was issued a warrant to purchase 4,420 shares of common stock. The initial term of this engagement was for a period of 12 months after which the agreement could be terminated by either party. The result of these efforts led to the financing arrangement with NovaQuest (Note 6).

As of December 31, 2021, the Company has incurred $2,107,501 of placement fees under the aforementioned agreement and has made payments to the investment banking firm in the amount of $1,665,406. Additionally, at December 31, 2021, the Company recorded accrued placement fees in the amount of $442,095. All of these transaction costs were recorded as a reduction to additional paid in capital in the consolidated balance sheet.

Anticipating a second round of equity and/or product development financing, the Company, in November 2021, entered into a new agreement with the investment banking firm with similar terms and conditions but at a lower fee arrangement.

Acquisition Obligation

In October 2021, the Company entered into a Merger Agreement with Arrevus (Note 3). As a result of the Merger, the Company has an obligation to pay Arrevus’s former shareholders deferred purchase consideration totaling $7,500,000, $6,000,000 of which is payable in October 2022 less any adjustments and $1,500,000 to be paid in January 2023. In addition to the deferred purchase consideration, the Company has an obligation to pay a working capital adjustment totaling $366,684 in October 2022. The Company imputed interest on the deferred purchase consideration at the date of the Merger Agreement in the amounts of $687,812. The Company will amortize the discount on a straight-line basis until the obligation becomes due. As of December 31, 2021, the Company had a total of $109,223 in amortization expense. As of December 31, 2021, the Company had $5,798,919 classified as short-term and $1,489,176 classified as long-term.

	Amounts
Years Ending December 31
2022		$	6,366,684
2023			1,500,000
Total			7,866,684
Less: Unamortized acquisition discount			(578,589)
Total acquisition obligation		$	7,288,095

10.

Income Taxes

No provision for U.S. federal or state income tax expense or benefit has been recorded as the Company has incurred net operating losses since inception.

Deferred income tax assets and liabilities are recognized for temporary differences between financial statement amounts and tax basis of existing assets and liabilities. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company is required to assess its needs for a valuation allowance at each balance sheet date and this assessment is based on the relative impact of all available evidence, both positive and negative, and requires management to exercise judgment and make assumptions regarding the weight given to potential effect of such negative and positive evidence.

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At December 31, 2021, the tax attributes giving rise to deferred tax assets and liabilities consisted of the following items:

	2021
Deferred tax assets
Tax loss carryforwards		$	3,041,100
Tax credits			391,500
Stock Compensation			10,400
Intangible asset			388,300
Total deferred tax assets			3,831,300
Valuation allowance			(3,698,400)
Net deferred tax assets			132,900
Deferred tax liabilities
Debt discount			(132,900)
Total deferred tax liabilities			(132,900)
Net deferred tax assets		$	—

Income taxes computed at the statutory federal income tax rate of 21% are reconciled to the provision (benefit) for income taxes as follows:

	2021
	Amount			Pretax Earnings
U.S. federal tax at statutory rate		$	(5,020,400)		21.0%
State taxes, net of federal benefit			(455,300)		1.9%
Non-deductible expenses			4,500		0.0%
Non-deductible IPR&D expense			2,351,200		(9.9)%
Foreign rate differential			33,700		(0.1)%
Credits			(391,500)		1.6%
Other			100		0.0%
Change in valuation allowance			3,477,700		(14.5)%
Provision (benefit) for income taxes		$	—		0.0%

As of December 31, 2021, the Company provided a full valuation allowance against its net deferred tax assets since at that time, the Company could not assert that it was more likely than not that these deferred tax assets would be realized. The valuation allowance increased by $3,477,700 during 2021. The increase in 2021 was primarily due to an increase in the Company’s net operating loss and R&D credits.

As of December 31, 2021, the Company had federal, state, and foreign net operating loss tax carryforwards of approximately $12,601,400, $12,597,300, and $855,800, respectively. $703,700 of the federal net operating losses begin to expire in 2037, while $11,897,700 carry forward indefinitely. The state net operating losses begin to expire in 2036. Foreign net operating losses begin to expire in 2028. As of December 31, 2021, the Company had U.S. federal credit carryforwards of $391,500, which begin to expire in 2041. The utilization of the federal and state net operating loss and credit carryforwards will depend on the Company’s ability to generate sufficient taxable income prior to the expiration of the carryforwards. In addition, the maximum annual use of net operating loss and research credit carryforwards is limited in certain situations where changes occur in stock ~~purchase plan” as defined~~ownership.

In general, if the Company experiences a greater than 50% aggregate change in ownership of certain significant stockholders over a three-year period (a Section ~~423~~382 ownership change), utilization of its pre-change net operating loss and credit carryforwards is subject to an annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended ~~(the “Code”), and the regulations issued thereunder, and shall be interpreted consistent therewith.”~~

(and similar state laws). The ~~Amendment shall be effective upon approval of the stockholders of the Company at the Company’s 2022~~ annual ~~meeting of stockholders and shall only be applicable with respect to Awards granted after such approval. If the Amendment~~limitation generally is ~~not so approved at such meeting, then the amendment to the ESPP set forth herein shall be void ab initio.~~

~~Except as herein above provided, the ESPP is hereby ratified, confirmed, and approved in all respects.~~

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determined by multiplying the value of the Company’s stock at the time of such ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the net operating loss and credit carryforwards before utilization and may be substantial. The ability of the Company to use its net operating loss and credit carryforwards may be limited or lost if the Company experiences a Section 382 ownership change in connection with offerings or as a result of future changes in its stock ownership. Losses from a specific period may be subject to multiple limitations and would generally be limited by the lowest of those limitations. As of December 31, 2021, the Company has not completed a Section 382 study to determine the amount of any potential limitations.

Fiscal year 2021 remains subject to examination by major tax jurisdictions, and the Company has not been informed by any tax authorities for any jurisdiction that its current fiscal year is under examination. As of December 31, 2021, there are no known items which would result in a material accrual related to uncertain tax positions. The Company’s policy is that any interest or penalties related to uncertain tax positions would be reported as a component of income tax expense.

11.

Related Party Transactions

NovaQuest

In March 2021, the Company entered into a Stock and Warrant Purchase Agreement with NovaQuest (Note 6). As a result, the Company has incurred $15,107,150 of eligible expenses and has been reimbursed for $8,791,513 as of December 31, 2021, which resulted in a funding receivable from NovaQuest in the amount of $6,315,637 as of December 31,2021.

Board Members

In March 2021, the Company entered into a consulting agreement with Dr. Atul Chopra, a founder and a member of the Company’s board of directors, pursuant to which Dr. Chopra will provide consulting and advisory services in exchange for (i) $16,667 per month and (ii) a right to purchase 1,000,000 fully vested shares of the Company’s common stock at a price equivalent to par value $0.001 per share. Subsequent to the executed consulting agreement, Dr. Chopra purchased the 1,000,000 shares. The term of the agreement is to remain in effect for a period of one year and will automatically renew for successive one-year terms.

12.

Active Awards

Cystic Fibrosis Foundation Award

In December 2021, the Cystic Fibrosis Foundation (“CFF”) provided the Company a Therapeutic Development Award Agreement in the amount of $3,500,000 intended to support the clinical trial for cystic fibrosis pulmonary exacerbations. The CFF will provide the Company payments in line with certain development program milestones estimated to begin in 2022 and through 2023.

Government Awards

As of December 31, 2021, the Company has six active contracts with various agencies of the United States Government. The total contractual value of the active contracts as of December 31, 2021, is $52.3 million while the remaining and unused contractual value is $47.1 million. The Company anticipates consuming the remaining contractual values over the applicable lives of the active contracts. Of the $47.1 million in total contractual value remaining as of December 31, 2021, $45.4 million is attributable to a contract awarded by the Defense Threat Reduction Agency (DTRA) with a contractual term through December 2026.

13.

Commitments and Contingencies

The Company is not a party to any outstanding material litigation and management is currently not aware of any legal proceedings that, individually or in the aggregate, are deemed to be material to the Company’s financial condition or results of operations. Accordingly, the Company does not have contingency reserves established for any litigation liabilities as of December 31, 2021.

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~~APPENDIX D~~14.

Subsequent Events

~~IDERA PHARMACEUTICALS, INC.~~

~~2017 EMPLOYEE STOCK PURCHASE PLAN~~

The ~~purpose of this Plan is~~Company has evaluated all subsequent events through November 18, 2022, the date the consolidated financial statements were available to ~~provide eligible employees of~~be issued and determined that there were no subsequent events or transactions that required recognition or disclosure in the consolidated financial statements.

On September 28, 2022, the Company merged with Idera Pharmaceuticals, Inc. ~~(the “Company”~~(“Idera”) ~~and certain~~. The merger was structured as a stock-for-stock transaction whereby all of ~~its subsidiaries with opportunities to purchase~~the Company’s outstanding equity interests were exchanged for a combination of shares of Idera’s common stock, shares of newly designated convertible Series Z preferred stock, and shares of the Company’s common stock, $0.001 par value (the “Common Stock”). Five hundred thousand (500,000) shares of Common Stock in the aggregate have been approved for this purpose, subject to any adjustment pursuant to Section 15 hereof. This Plan is intended to qualify as an “employee stock purchase plan” as defined in Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations issued thereunder, and shall be interpreted consistent therewith.

1. ~~Administration~~. The Plan will be administered by the Company’s Board of Directors (the “Board”) or by a Committee appointed by the Board (the “Committee”). The Board or the Committee has authority to make rules and regulations for the administration of the Plan and its interpretation and decisions with regard thereto shall be final and conclusive.

2. ~~Eligibility. All employees of the Company and all employees of any subsidiary of the Company (as defined in Section 424(f) of the Code)~~newly designated by the Board or the Committee from time to time (a “Designated Subsidiary”), are eligible to participate in any one or more of the offerings of Options (as defined in Section 9) to purchase Common Stock under the Plan provided that:

~~(a) they are customarily employed by the Company or a Designated Subsidiary for more than 20 hours a week and for more than five months in a calendar year;~~

~~(b) they have been employed by the Company or a Designated Subsidiary for at least three months prior to enrolling in the Plan; and~~

~~(c) they are employees of the Company or a Designated Subsidiary on the first day of the applicable Plan Period (as defined below).~~

No employee may be granted an Option hereunder if such employee, immediately after the Option is granted, owns 5% or more of the total combined voting power or value of the stock of the Company or any subsidiary. For purposes of the preceding sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of an employee, and all stock that the employee has a contractual right to purchase shall be treated as stock owned by the employee.

~~The Company retains the discretion to determine which eligible employees may participate in an offering pursuant to and consistent with Treasury Regulation Sections 1.423-2(e) and (f).~~

3. ~~Offerings~~. The Company will make one or more offerings (“Offerings”) to employees to purchase stock under this Plan. Offerings will begin on the dates determined by the Board or the Committee or the first business day thereafter (the “Offering Commencement Dates”). Each Offering Commencement Date will begin a plan period (a “Plan Period”) during which payroll deductions will be made and held for the purchase of Common Stock at the end of the Plan Period. The Board or the Committee may, at its discretion, choose a Plan Period of twelve (12) months or less for subsequent Offerings and/or choose a different commencement date for Offerings under the Plan.

4. ~~Participation~~. An employee eligible on the Offering Commencement Date of any Offering may participate in such Offering by completing and forwarding either a written or electronic payroll deduction authorization form to the employee’s appropriate payroll office at least 14 days prior to the applicable Offering Commencement Date. The form will authorize a regular payroll deduction from the Compensation received by the employee during the Plan Period. Unless an employee files a new form or withdraws from the Plan, his or her deductions and purchases will continue at the same rate for future Offerings under the Plan as long as the Plan remains in effect. The term “Compensation” means the amount of money reportable on the employee’s Federal Income Tax Withholding Statement, excluding overtime, shift premium, incentive or bonus awards, allowances and reimbursements for expenses such as relocation allowances for travel expenses, income or gains associated with the grant or vesting of restricted stock, income or gains on theSeries X preferred stock.

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exercise of Company stock options or stock appreciation rights, and similar items, whether or not shown or separately identified on the employee’s Federal Income Tax Withholding Statement, but including, in the case of salespersons, sales commissions to the extent determined by the Board or the Committee.

5. ~~Deductions~~. The Company will maintain payroll deduction accounts for all participating employees. With respect to any Offering made under this Plan, an employee may authorize a payroll deduction in any dollar amount up to a maximum of 10% of the Compensation he or she receives during the Plan Period or such shorter period during which deductions from payroll are made. Payroll deductions may be at the rate of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9% or 10% of Compensation with any change in compensation during the Plan Period to result in an automatic corresponding change in the dollar amount withheld. The minimum payroll deduction is such percentage of Compensation as may be established from time to time by the Board or the Committee.

6. ~~Deduction Changes~~. An employee may decrease or discontinue his or her payroll deduction once during any Plan Period, by filing either a written or electronic new payroll deduction authorization form. However, an employee may not increase his or her payroll deduction during a Plan Period. If an employee elects to discontinue his or her payroll deductions during a Plan Period, but does not elect to withdraw his or her funds pursuant to Section 8 hereof, funds deducted prior to his or her election to discontinue will be applied to the purchase of Common Stock on the Exercise Date (as defined below).

7. ~~Interest~~. Interest will not be paid on any employee accounts, except to the extent that the Board or the Committee, in its sole discretion, elects to credit employee accounts with interest at such rate as it may from time to time determine.

8. ~~Withdrawal of Funds~~. An employee may at any time prior to the close of business on the last business day in a Plan Period and for any reason permanently draw out the balance accumulated in the employee’s account and thereby withdraw from participation in an Offering. Partial withdrawals are not permitted. The employee may not begin participation again during the remainder of the Plan Period during which the employee withdrew his or her balance. The employee may participate in any subsequent Offering in accordance with terms and conditions established by the Board or the Committee.

9. ~~Purchase of Shares~~.

~~(a)~~ ~~Number of Shares~~. On the Offering Commencement Date of each Plan Period, the Company will grant to each eligible employee who is then a participant in the Plan an option (an “Option”) to purchase on the last business day of such Plan Period (the “Exercise Date”) at the applicable purchase price (the “Option Price”) up to a whole number of shares of Common Stock determined by multiplying $2,083 by the number of full months in the Plan Period and dividing the result by the closing price (as determined below) on the Offering Commencement Date; provided, however, that no employee may be granted an Option which permits his or her rights to purchase Common Stock under this Plan and any other employee stock purchase plan (as defined in Section 423(b) of the Code) of the Company and its subsidiaries, to accrue at a rate which exceeds $25,000 of the fair market value of such Common Stock (determined at the date such Option is granted) for each calendar year in which the Option is outstanding at any time.

~~(b)~~ ~~Option Price~~. The Board or the Committee shall determine the Option Price for each Plan Period, including whether such Option Price shall be determined based on the lesser of the closing price of the Common Stock on (i) the first business day of the Plan Period or (ii) the Exercise Date, or shall be based solely on the closing price of the Common Stock on the Exercise Date; provided, however, that such Option Price shall be at least 85% of the applicable closing price. In the absence of a determination by the Board or the Committee, the Option Price will be 85% of the lesser of the closing price of the Common Stock on (i) the first business day of the Plan Period and (ii) the Exercise Date. The closing price shall be (a) the closing price (for the primary trading session) on any national securities exchange on which the Common Stock is listed or (b) the average of the closing bid and asked prices in the over-the-counter-market, whichever is applicable, as published in ~~The Wall Street Journal~~ or another source selected by the Board or the Committee. If no sales of Common Stock were made on such a day, the price of the Common Stock shall be the reported price for the next preceding day on which sales were made.

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~~(c)~~ ~~Exercise of Option~~. Each employee who continues to be a participant in the Plan on the Exercise Date shall be deemed to have exercised his or her Option at the Option Price on such date and shall be deemed to have purchased from the Company the number of whole shares of Common Stock reserved for the purpose of the Plan that his or her accumulated payroll deductions on such date will pay for, but not in excess of the maximum numbers determined in the manner set forth above.CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~(d)~~ ~~Return of Unused Payroll Deductions. Any balance remaining in an employee’s payroll deduction account at the end of a Plan Period will be automatically refunded~~We hereby consent to the employee, except that any balance that is less than the purchase price of one share of Common Stock will be carried forward into the employee’s payroll deduction account for the following Offering, unless the employee elects not to participateincorporation by reference in the following ~~Offering under the Plan, in which case the balance in the employee’s account shall be refunded.~~Registration Statements:

~~10.~~ (1)~~Issuance of Certificates~~. Certificates representing shares of Common Stock purchased under the Plan may be issued only in the name of the employee, in the name of the employee and another person of legal age as joint tenants with rights of survivorship, or (in the Company’s sole discretion) in the name of a brokerage firm, bank, or other nominee holder designated by the employee. The Company may, in its sole discretion and in compliance with applicable laws, authorize the use of book entry registration of shares in lieu of issuing stock certificates.

~~11.~~ ~~Rights on Retirement, Death or Termination of Employment. If a participating employee’s employment ends before the last business day of a Plan Period, no payroll deduction shall be taken from any pay then due and owing~~Registration Statement (Form S-8 No. 333-152669) pertaining to the ~~employee and the balance in the employee’s account shall be paid~~2008 Stock Incentive Plan of Idera Pharmaceuticals, Inc.

(2)

Registration Statement (Form S-8 No. 333-176067) pertaining to the ~~employee. In the event~~2008 Stock Incentive Plan and 1995 Employee Stock Purchase Plan of ~~the employee’s death before the last business day of a Plan Period, the Company shall, upon notification of such death, pay the balance of the employee’s account (a)~~Idera Pharmaceuticals, Inc.

(3)

Registration Statement (Form S-8 No. 333-191076) pertaining to the ~~executor or administrator~~2013 Stock Incentive Plan of ~~the employee’s estate or (b) if no such executor or administrator has been appointed~~Idera Pharmaceuticals, Inc.

(4)

Registration Statement (Form S-8 No. 333-197062) pertaining to the ~~knowledge~~2013 Stock Incentive Plan of the Company, to such other person(s) as the Company may, in its discretion, designate. If, before the last business day of the Plan Period, the Designated Subsidiary by which an employee is employed ceases to be a subsidiary of the Company, or if the employee is transferred to a subsidiary of the Company that is not a Designated Subsidiary, the employee shall be deemed to have terminated employment for the purposes of this Plan.Idera Pharmaceuticals, Inc.

~~12.~~ (5)

Registration Statement (Form S-8 No. 333-202691) pertaining to Inducement Stock Option Awards of Idera Pharmaceuticals, Inc.

~~Optionees Not Stockholders~~(6)~~. Neither~~

Registration Statement (Form S-8 No. 333-206129) pertaining to the ~~granting~~2013 Stock Incentive Plan, as amended, of ~~an Option~~Idera Pharmaceuticals, Inc.

(7)

Registration Statement (Form S-8 No. 333-210090) pertaining to an ~~employee nor the deductions from his or her pay shall make such employee a stockholder~~Inducement Stock Option Award of ~~the shares~~Idera Pharmaceuticals, Inc.

(8)

Registration Statement (Form S-1 as amended by Form S-3/A No. 333-136610) of ~~Common~~Idera Pharmaceuticals, Inc.

(9)

Registration Statement (Form S-1 as amended by Form S-3/A No. 333-187155) of Idera Pharmaceuticals, Inc.

(10)

Registration Statement (Form S-2 as amended by Form S-3/A No. 333-109630) of Idera Pharmaceuticals, Inc.

(11)

Registration Statement (Form S-3 No. 333-119943) of Idera Pharmaceuticals, Inc.

(12)

Registration Statement (Form S-3 No. 333-126634) of Idera Pharmaceuticals, Inc.

(13)

Registration Statement (Form S-3 No. 333-131804) of Idera Pharmaceuticals, Inc.

(14)

Registration Statement (Form S-3 No. 333-133455) of Idera Pharmaceuticals, Inc.

(15)

Registration Statement (Form S-3 No. 333-133456) of Idera Pharmaceuticals, Inc.

(16)

Registration Statement (Form S-3 No. 333-139830) of Idera Pharmaceuticals, Inc.

(17)

Registration Statement (Form S-3 as amended by Form S-3/A No. 333-185392) of Idera Pharmaceuticals, Inc.

(18)

Registration Statement (Form S-3 No. 333-186312) of Idera Pharmaceuticals, Inc.

(19)

Registration Statement (Form S-3 No. 333-189700) of Idera Pharmaceuticals, Inc.

(20)

Registration Statement (Form S-3 No. 333-210140) of Idera Pharmaceuticals, Inc.

(21)

Registration Statement (Form S-8 No. 333-217665) pertaining to an Inducement Stock ~~covered by an~~ Option ~~under this Plan until he or she has purchased and received such shares.~~Award of Idera Pharmaceuticals, Inc.

~~13.~~ (22)~~Options Not Transferable~~. Options under this Plan are not transferable by a participating employee other than by will or the laws of descent and distribution, and are exercisable during the employee’s lifetime only by the employee.

~~14.~~ ~~Application of Funds. All funds received or held by the Company under this Plan may be combined with other corporate funds and may be used for any corporate purpose.~~

~~15.~~ ~~Adjustment for Changes in Common Stock and Certain Other Events.~~

~~(a)~~ ~~Changes in Capitalization~~. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under this Plan, (ii) the share limitations set forth in Section 9, and (iii) the Option Price shall be equitably adjustedRegistration Statement (Form S-8 No. 333-219740) pertaining to the ~~extent determined by~~2017 Employee Stock Purchase Plan of Idera Pharmaceuticals, Inc.

(23)

Registration Statement (Form S-8 No. 333-219741) pertaining to the ~~Board or the Committee.~~2013 Stock Incentive Plan, as amended, of Idera Pharmaceuticals, Inc.

~~(b)~~ ~~Reorganization Events~~.

~~(1)~~ ~~Definition~~. A “Reorganization Event” shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any transfer or disposition of all of the Common Stock of the Company for cash,

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~~securities or other property pursuant to a share exchange or other transaction or (c) any liquidation or dissolution of the Company.~~

~~(2)~~ ~~Consequences of a Reorganization Event on Options~~. In connection with a Reorganization Event, the Board or the Committee may take any one or more of the following actions as to outstanding Options on such terms as the Board or the Committee determines: (i) provide that Options shall be assumed, or substantially equivalent Options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to employees, provide that all outstanding Options will be terminated immediately prior to the consummation of such Reorganization Event and that all such outstanding Options will become exercisable to the extent of accumulated payroll deductions as of a date specified by the Board or the Committee in such notice, which date shall not be less than ten (10) days preceding the effective date of the Reorganization Event, (iii) upon written notice to employees, provide that all outstanding Options will be cancelled as of a date prior to the effective date of the Reorganization Event and that all accumulated payroll deductions will be returned to participating employees on such date, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), change the last day of the Plan Period to be the date of the consummation of the Reorganization Event and make or provide for a cash payment to each employee equal to (A) (i) the Acquisition Price times (ii) the number of shares of Common Stock that the employee’s accumulated payroll deductions as of immediately prior to the Reorganization Event could purchase at the Option Price, where the Acquisition Price is treated as the fair market value of the Common Stock on the last day of the applicable Plan Period for purposes of determining the Option Price under Section 9(b) hereof, and where the number of shares that could be purchased is subject to the limitations set forth in Section 9(a), minus (B) the result of multiplying such number of shares by such Option Price, (v) provide that, in connection with a liquidation or dissolution of the Company, Options shall convert into the right to receive liquidation proceeds (net of the Option Price thereof) and (vi) any combination of the foregoing.

For purposes of clause (i) above, an Option shall be considered assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of such number of shares of common stock of the acquiring or succeeding corporation (or an affiliate thereof) that the Board determines to be equivalent in value (as of the date of such determination or another date specified by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

~~16.~~ ~~Amendment of the Plan~~. The Board may at any time, and from time to time, amend or suspend this Plan or any portion thereof, except that (a) if the approval of any such amendment by the shareholders of the Company is required by Section 423 of the Code, such amendment shall not be effected without such approval, and (b) in no event may any amendment be made that would cause the Plan to fail to comply with Section 423 of the Code.

~~17.~~ ~~Insufficient Shares~~. If the total number of shares of Common Stock specified in elections to be purchased under any Offering plus the number of shares purchased under previous Offerings under this Plan exceeds the maximum number of shares issuable under this Plan, the Board or the Committee will allot the shares then available on a pro-rata basis.

~~18.~~ ~~Termination of the Plan. This Plan may be terminated at any time by the Board. Upon termination of this Plan all amounts in the accounts of participating employees shall be promptly refunded.~~

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~~19.~~ (24)~~Governmental Regulations~~. The Company’s obligation to sell and deliver Common Stock under this Plan is subject to listing on a national stock exchange (to the extent the Common Stock is then so listed or quoted) and the approval of all governmental authorities required in connection with the authorization, issuance or sale of such stock.

~~20.~~ ~~Governing Law. The Plan shall be governed by Delaware law except~~Registration Statement (Form S-8 No. 333-232609) pertaining to the ~~extent that such law is preempted by federal law.~~2017 Employee Stock Purchase Plan of Idera Pharmaceuticals, Inc.

~~21.~~ (25)~~Issuance~~

Registration Statement (Form S-8 No. 333-232610) pertaining to the 2013 Stock Incentive Plan, as amended, of ~~Shares~~Idera Pharmaceuticals, Inc.

(26)~~. Shares may be issued upon exercise~~

Registration Statement (Form S-3 No. 333-238868) of ~~an Option from authorized but unissued Common~~Idera Pharmaceuticals, Inc.

(27)

Registration Statement (Form S-3 No. 333-240361) of Idera Pharmaceuticals, Inc.

(28)

Registration Statement (Form S-3 No. 333-240366) of Idera Pharmaceuticals, Inc.

(29)

Registration Statement (Form S-3 No. 333-248560) of Idera Pharmaceuticals, Inc.

(30)

Registration Statement (Form S-3 and S-3/A No. 333-253804) of Idera Pharmaceuticals, Inc.

(31)

Registration Statement (Form S-8 No. 333-266038) pertaining to the 2013 Stock ~~from shares held in~~Incentive Plan, as amended, of Idera Pharmaceuticals, Inc.

(32)

Registration Statement (Form S-8 No. 333-266039) pertaining to the ~~treasury~~2017 Employee Stock Purchase Plan of ~~the Company, or from any other proper source.~~Idera Pharmaceuticals, Inc.

~~22.~~ ~~Notification upon Sale~~

of ~~Shares. Each employee agrees, by entering the Plan,~~our report dated April 15, 2022 (except for Notes 2 and 6 related to ~~promptly give the Company notice~~Series X Preferred Stock and Note 14 which are dated as of ~~any disposition of shares purchased under the Plan where such disposition occurs within two years after the date of grant of the Option pursuant to which such shares were purchased.~~

~~23.~~ ~~Grants to Employees in Foreign Jurisdictions~~. The Company may, to comply with the laws of a foreign jurisdiction, grant Options to employees of the Company or a Designated Subsidiary who are citizens or residents of such foreign jurisdiction (without regard to whether they are also citizens of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) with terms that are less favorable (but not more favorable) than the terms of Options granted under the Plan to employees of the Company or a Designated Subsidiary who are resident in the United States. Notwithstanding the preceding provisions of this Plan, employees of the Company or a Designated Subsidiary who are citizens or residents of a foreign jurisdiction (without regard to whether they are also citizens of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from eligibility under the Plan if (a) the grant of an Option under the Plan to a citizen or resident of the foreign jurisdiction is prohibited under the laws of such jurisdiction or (b) compliance with the laws of the foreign jurisdiction would cause the Plan to violate the requirements of Section 423 of the Code. The Company may add one or more appendices to this Plan describing the operation of the Plan in those foreign jurisdictions in which employees are excluded from participation or granted less favorable Options.

~~25.~~ ~~Authorization of Sub-Plans. The Board may from time to time establish one or more sub-plans under the Plan~~November 18, 2022), with respect to ~~one or more Designated Subsidiaries, provided~~the consolidated financial statements as of December 31, 2021 and for the period from March 2, 2021 (inception) to December 31, 2021 of Aceragen, Inc., included in this Proxy Statement on Schedule 14A of Idera Pharmaceuticals, Inc. Our audit report for the period from March 2, 2021 (inception) to December 31, 2021 contains an explanatory paragraph describing conditions that ~~such sub-plan complies with Section 423 of~~raise substantial doubt about Aceragen, Inc.’s ability to continue as a going concern as described in Note 2 to the ~~Code.~~consolidated financial statements.

/s/ FORVIS, LLP
(Formerly, Dixon Hughes Goodman LLP)

~~26.~~ Raleigh, North Carolina
~~Withholding~~. If applicable tax laws impose a tax withholding obligation, each affected employee shall, no later than the date of the event creating the tax liability, make provision satisfactory to the Board for payment of any taxes required by law to be withheld in connection with any transaction related to Options granted to or shares acquired by such employee pursuant to the Plan. The Company may, to the extent permitted by law, deduct any such taxes from any payment of any kind otherwise due to an employee.

~~27.~~ ~~Effective Date and Approval of Shareholders~~. The Plan shall take effect on June 7, 2017 subject to approval by the shareholders of the Company as required by Section 423 of the Code, which approval must occur within twelve months of the adoption of the Plan by the Board.December 8, 2022

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Aceragen, Inc.

C123456789000004ENDORSEMENTLINESACKPACK000000000.000000ext000000000.000000ext000000000.000000ext000000000.000000ext000000000.000000ext000000000.000000extMRASAMPLEDESIGNATION(IFANY)ADD1ADD2ADD3ADD4ADD5ADD6Usingablackinkpen,markyourvoteswithanXasshowninthisexample.Pleasedonotwriteoutsidethedesignatedareas.Yourvotematters–here’showtovote!Youmayvoteonlineorbyphoneinsteadofmailingthiscard.VotessubmittedelectronicallymustbereceivedbyJune22,2022at11:59P.M.,EasternTime.OnlineGotohttp://www.investorvote.com/IDRAorscantheQRcode—logindetailsarelocatedintheshadedbarbelow.PhoneCalltollfree1-800-652-VOTE(8683)withintheUSA,USterritories,andCanada.Savepaper,time,andmoney!Signupforelectronicdeliveryathttp://www.investorvote.com/IDRA1.ElectionofDirectorsqIFVOTINGBYMAIL,SIGN,DETACHANDRETURNTHEBOTTOMPORTIONINTHEENCLOSEDENVELOPE.qForWithholdForWithhold+01-MarkGoldberg,M.D.02-CarolA.Schafer2.ApprovaloftheadvisoryvoteonthecompensationoftheCompany’snamedexecutiveofficersfor2021.ForAgainstAbstain3.RatificationoftheselectionofErnst&YoungLLPastheCompany’sindependentregisteredpublicaccountingfirmforthefiscalyearendingDecember31,2022.ForAgainstAbstain4.ApprovalofanAmendmenttotheCompany’s2013StockIncentivePlantoincreasethenumberofauthorizedshares.5.ApprovalofanAmendmenttotheCompany’s2017EmployeeStockPurchasePlantoincreasethenumberofauthorizedshares.Pleasesignthisproxyexactlyasyournameappearshereon.Jointownersshouldeachsignpersonally.Trusteesandotherfiduciariesshouldindicatethecapacityinwhichtheysign.Ifacorporationorpartnership,thissignatureshouldbethatofanauthorizedofficerwhoshouldstatehisorhertitle.Date(mm/dd/yyyy)—Pleaseprintdatebelow.Signature1—Pleasekeepsignaturewithinthebox.Signature2—Pleasekeepsignaturewithinthebox.C1234567890JNT24CV541831MRASAMPLE(THISAREAISSETUPTOACCOMMODATE140CHARACTERS)MRASAMPLEANDMRASAMPLEANDMRASAMPLEANDMRASAMPLEANDMRASAMPLEANDMRASAMPLEANDMRASAMPLEANDMRASAMPLEAND03N07CUnaudited Condensed Consolidated Financial Statements
Six Months Ending June 30, 2022

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Aceragen, Inc.

Unaudited Condensed Consolidated Balance Sheets

	As of
	June 30, 2022			December 31, 2021
				(audited)
Assets
Current assets
Cash and cash equivalents		$	7,934,183		$	5,010,224
Restricted cash			125,000			125,000
Accounts receivable			1,312,248			268,166
Unbilled accounts receivable			1,451,330			328,012
Funding receivable			701,249			6,315,637
Prepaid expenses and other current assets			564,128			798,376
Total current assets			12,088,138			12,845,415
Operating lease right-of-use asset			32,740			96,212
Intangible asset			165,600			165,600
Total assets		$	12,286,478		$	13,107,227
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable		$	2,488,899		$	313,355
Accrued expenses			307,782			75,115
Accrued placement fee			49,087			442,095
Accrued bonuses			688,579			883,747
Operating lease liability			32,740			40,323
Acquisition obligation, less unamortized discount of $250,919 and $567,765 as of June 30, 2022 and December 31, 2021			7,615,765			5,798,919
Total current liabilities			11,182,852			7,553,554
Operating lease liability, less current portion			—			55,889
Acquisition obligation, less current portion, less unamortized discount of $0 and $10,824 as of June 30, 2022 and December 31, 2021			—			1,489,176
Total liabilities			11,182,852			9,098,619
Commitments and Contingencies (Note 6)			—			—
Preferred equity
Preferred stock, 5 shares authorized, $0.001 par value; 5 shares issued and outstanding with a liquidation preference of $38,134,262 as of June 30, 2022			38,134,262			33,583,912
Stockholders’ deficit
Common stock, 10,000,000 shares authorized, $.001 par value; 3,536,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021			3,536			3,536
Additional paid-in capital			494,759			—
Accumulated deficit			(37,525,332)			(29,576,083)
Accumulated other comprehensive loss			(3,599)			(2,757)
Total stockholders’ equity			(37,030,636)			(29,575,304)
Total liabilities, preferred equity and stockholders’ deficit		$	12,286,478		$	13,107,227

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Aceragen, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements
Period Ended June 30, 2022

1. Nature of Business

Aceragen, Inc.,EasternTime505EagleviewBoulevard,Suite212Exton,Pennsylvania19341Uponarrival,pleasepresentthisadmissionticketandphotoidentificationattheregistrationdesk.IFVOTINGBYMAIL,SIGN,DETACHANDRETURNTHEBOTTOMPORTIONINTHEENCLOSEDENVELOPE.q2022AnnualMeetingofStockholdersofIderaPharmaceuticals, together with its wholly-owned subsidiaries, Aceragen GmbH and Arrevus, Inc.+June23,2022at8:00a.m.EasternTime505EagleviewBoulevard,Suite212Exton,Pennsylvania19341ThisproxyissolicitedbytheBoardofDirectorsforuseattheAnnualMeetingofStockholders.TheundersignedherebyappointsMr.VincentJ.MilanoandMr.JohnJ.Kirby,andeachofthem,withfullpowerofsubstitution,tovote,asdesignatedbelow,allthesharesofIderaPharmaceuticals,Inc.(the“ (Arrevus) (collectively, “the Company”)~~commonstockheldofrecordbytheundersignedatthecloseofbusinessonApril25,2022,atthe2022AnnualMeetingofStockholders(the"AnnualMeeting"~~, is a therapeutic development company focusing on rare and orphan diseases that frequently have limited or no treatment options for patients. The Company’s goal is to deliver therapies that will be important to patients and their families in addressing unmet medical need(s) utilizing the Company’s distinct proprietary programs. The Company was incorporated in Delaware in January 2021 and began operations in March 2021.

Liquidity

Although the Company does generate revenue from cost reimbursement programs with the U.S. Government, the Company has no products approved for commercial sale, has not generated any revenue from product sales, and cannot guarantee when or if it will generate any revenue from product sales associated with its development programs. Substantially all the Company’s operating losses resulted from expenses incurred in connection with its research and development programs and from general and administrative costs associated with its operations. The Company expects to incur significant expenses and operating losses for at least the next several years as it continues the development of, and seeks regulatory approval for, its product candidates. It is expected that operating losses will fluctuate significantly from quarter to quarter and year to year due to timing of development programs and efforts to achieve regulatory approval.

On September 28, 2022, the Company merged with Idera Pharmaceuticals, Inc. (see Note 7).

2. Summary of Significant Accounting Policies

The following is a summary of the Company’s significant accounting policies and practices:

Basis of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and the Company’s wholly-owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation. The unaudited condensed consolidated financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s audited financial statements for the period ended December 31, 2021.

All adjustments contained in the accompanying unaudited condensed consolidated financial statements are of a normal recurring nature and are necessary for the fair statement of the Company’s financial position as of June 30, 2022, and its result of operations and cash flows for the six months ended June 30, 2022 and for the period from March 2, 2021 (inception) through June 30, 2021. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year.

Significant Accounting Policies

During the six months ended June 30, 2022, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s annual audited consolidated financial statements other than what is disclosed below.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets

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Aceragen, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements
Period Ended June 30, 2022

and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements. The reported amounts of revenues and expenses may be affected by estimates that the Company is required to make. Estimates that are critical to the accompanying unaudited condensed consolidated financial statements relate principally to stock-based compensation expense (which is derived from a formula that uses various assumptions including the underlying fair value of the Company’s common stock), acquisition accounting and revenues recognized using the cost-to-cost method for measuring progress. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period that they are determined to be necessary. It is at least reasonably possible that the Company’s estimates could change in the near term with respect to these matters.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents for the purposes of reporting cash flows.

Restricted Cash

The Company had $125,000 of restricted cash held on June 30, 2022, and December 31, 2021. The restricted cash balances represent cash deposited with two financial institutions which are held as collateral for the Company’s corporate credit card programs. The restricted funds are maintained in traditional bank accounts.

Contract and Grant Receivables — Billed and Unbilled

Accounts receivable are contract and grant receivables that are carried at their estimated collectible amounts. An allowance for doubtful accounts is based on specific analysis of the receivables. At June 30, 2022, and December 31, 2021, the Company had no allowance for doubtful accounts. Unbilled accounts receivable relate to various contracts and grants for which work has been performed, though invoicing has not yet occurred.

Credit Risk

Funding Receivable

Funding receivable represents eligible expenses to be reimbursed by NovaQuest Co-Investment Fund XV, L.P. pursuant to the Stock and Warrant Purchase Agreement (SWPA) executed in March 2021 and amended in October 2021. The eligible expenses have been incurred and are associated with the development of a treatment for Farber disease. As of June 30, 2022, the Company has submitted reimbursements for eligible expenditures to the contractual limitation of the SWPA.

Fair Value of Financial Instruments

The carrying amount of the Company’s short-term financial instruments, which include cash and cash equivalents and restricted cash, accounts receivable and accounts payable, approximate their fair value due to their short maturities. The fair value of the Company’s acquisition obligation approximates carrying value given the nature of the agreement.

Acquisitions

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Aceragen, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements
Period Ended June 30, 2022

be recorded at fair value as of the acquisition date. Any excess of the purchase price over the fair value of net assets acquired is recorded as goodwill. The determination of the estimated fair value of these items requires significant estimates and assumptions. Transaction costs associated with business combination are recorded in general and administrative and expensed as incurred.

Intangible Asset

In conjunction with the asset acquisition of Arrevus, Inc. (“Arrevus”),tobeheldonJune23,2022at8:00a.m.EasternTime,andatanyandalladjournments,continuations,orpostponementsthereof.TheundersignedherebyrevokesanyandallearlierdatedproxieswithrespecttotheAnnualMeeting.Thisproxy,whenproperlyexecuted,willbevotedinthemannerdirectedhereinbytheundersigned.Ifnodirectionismade,thisproxywillbevotedFOReachofthedirectornomineesforelectionasaClassIIImemberoftheBoardofDirectors,FORtheapprovaloftheadvisoryvoteonthecompensationoftheCompany’snamedexecutiveofficersfor2021,FORtheratificationoftheselectionofErnst&YoungLLPastheCompany'sindependentregisteredpublicaccountingfirmforthefiscalyearendingDecember31,2022,FORtheapprovalofanAmendmenttotheCompany’s2013StockIncentivePlantoincreasethenumberofauthorizedshares,andFORtheapprovalofanAmendmenttotheCompany’s2017EmployeeStockPurchasePlantoincreasethenumberofauthorizedshares.IfanyotherbusinessispresentedattheAnnualMeeting,includingmattersincidentaltotheconductofthemeetingorotherwise,thisproxywillbevotedbythosenamedinthisproxyintheirbestjudgment.Atthepresenttime,theBoardofDirectorsknowsofnootherbusinesstobepresentedattheAnnualMeeting.THISPROXYWHENPROPERLYEXECUTEDWILLBEVOTEDASDIRECTEDOR,IFNODIRECTIONISGIVEN,WILLBEVOTEDASTHEBOARDOFDIRECTORSRECOMMENDS.Seereverseforvotinginstructions.ChangeofAddress—Pleaseprintnewaddressbelow.MeetingAttendanceMarkboxtotherightifyouplantoattendtheAnnualMeeting.+ the Company recognized an indefinite-lived intangible asset relating to an assembled workforce in the amount of $165,600. Indefinite-lived intangible assets are reviewed at least annually as of the fourth quarter each calendar year and earlier if an event occurs or other circumstances occur indicating that the Company may not recover the carrying value of the asset. If a qualitative assessment indicates that it is not more likely than not that the fair value of the indefinite-lived intangible asset exceeds its carrying amount, the Company compares the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. No impairment charges have been recognized on intangible assets.

Preferred Stock

Foreign Currencies

Assets and liabilities of foreign subsidiaries that operate in a local currency environment, where the local currency is the functional currency, are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive income. Income and expense accounts are translated at average exchanged rates for the period. Transactions which are not in the functional currency of the entity are remeasured into the functional currency and gains and losses resulting from the remeasurement are recorded in other income (expense).

Income Taxes

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Aceragen, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements
Period Ended June 30, 2022

evidence, both positive and negative, and requires management to exercise judgment and make assumptions regarding the weight given to potential effect of such negative and positive evidence.

Revenue Recognition and Direct Costs of Revenue

The Company derives its revenue from services provided to commercial and government clients under two types of contracts: cost-plus-fixed-fee and time and material consulting agreements. The Company assesses each contract at its inception to determine whether it should be combined with other contracts when the contracts are executed with the same customer. When making this determination, the Company considers factors such as whether two or more contracts were negotiated and executed at or near the same time or were negotiated with an overall profit objective. The Company recognizes revenue when the Company’s customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services by analyzing the following five steps: (1) identify the contract with a customer(s); (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. To indicate the transfer of control for the Company’s cost-plus-fixed-fee arrangements and time and material consulting contracts, it must have a present right to payment, legal title must have passed to the customer, and the customer must have the significant risks and rewards of ownership. Revenue for cost-plus-fixed-fee development contracts is generally recognized based upon the cost-to-cost measure of progress relative to total estimated contract costs, provided that the Company meets the criteria associated with transferring control of the goods or services over time. On a cost-plus-fixed-fee contract, the Company is paid direct costs incurred to satisfy contractual scope, allowable incurred indirect costs, plus a profit, which is fixed, up to funding levels predetermined by our customers. On cost-plus-fixed-fee type contracts, we do not bear the risks of unexpected cost overruns, provided incurred costs do not exceed predetermined contractual price ceilings. Revenue for time and materials consulting contracts is generally recognized utilizing the input method of measuring progress (cost to cost) towards complete satisfaction of the identified performance obligation, provided that the Company meets the criteria associated with transferring control of the goods or services over time.

Transaction price and variable consideration:

When a contract’s transaction price includes variable consideration, the Company evaluates the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, the Company includes the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. At the inception of a contract, the Company estimates the transaction price based on its current rights and does not contemplate future modifications (including unexercised options) or follow-on contracts until they become legally enforceable. Contracts are often subsequently modified to include changes in specifications, requirements or price, which may create new or change existing enforceable rights and obligations. Depending on the nature of the modification, the Company considers whether to account for the modification as an adjustment to the existing contract or as a separate contract. Generally, modifications to the Company’s contracts are not distinct from the existing contract due to the significant integration and interrelated tasks provided in the

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Aceragen, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements
Period Ended June 30, 2022

context of the contract. Therefore, such modifications are accounted for as if they were part of the existing contract and recognized as a cumulative adjustment to revenue.

Cost-Plus-Fixed-Fee Development Contracts:

The Company generates contract revenue primarily from cost-plus-fixed-fee contracts associated with development of certain product candidates. Revenues from cost-plus-fixed-fee contracts are recognized as costs are incurred, generally based on allowable costs incurred during the period, plus any recognizable earned fee. Billings by the Company to customers under cost-plus-fixed-fee contracts generally occur every month and include payment terms of 30 days. The Company uses this input method to measure progress as the customer has the benefit of access to the development research under these projects and therefore benefits from the Company’s performance incrementally as research and development activities occur under each project. The Company considers fixed fees under cost-plus-fixed-fee contracts to be earned in proportion to the allowable costs incurred in performance of the contract. Revenue for long-term development contracts is considered variable consideration because the deliverable is dependent on the successful completion of development and is generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with satisfying the performance obligation over time. The U.S. Government contracts for the development of the government sponsored product development candidates in agreements that span multiple years because they contain options for the U.S. Government to continue development of the project over the course of more than one year.

Revenue associated with costs incurred yet not billed to the customer are presented as unbilled accounts receivable on the consolidated balance sheet as of June 30, 2022 and December 31, 2021.

Customer Concentration Risk

The U.S. Government accounted for approximately 89% of the Company’s revenues for the six months ended June 30, 2022. Approximately 100% and 98% of contract receivables invoiced as of June 30, 2022, and December 31, 2021, respectively, were due from the U.S. Government.

Research and Development Expenses

In-Process Research and Development Expense

The Company has acquired, and may continue to acquire, the rights to develop and commercialize new drug candidates. The upfront payments to acquire new drug compounds are immediately expensed as IPR&D, provided that the drug candidates have not achieved regulatory approval for marketing, and absent obtaining such approval, have no alternative use.

Upon marketing clearance of the relevant research and development project, the Company will amortize capitalized IPR&D’s milestones over its estimated useful life.

General and Administrative Expenses

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Aceragen, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements
Period Ended June 30, 2022

administrative functions, legal and consulting fees and recruiting costs not otherwise included in research and development expenses. Legal fees include those related to corporate and patent matters.

Stock-Based Compensation

The Company accounts for stock-based awards to employees and directors in accordance with the provisions of ASC 718, “Compensation — Stock Compensation”. Under ASC 718, stock-based awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service period on a straight-line basis, net of estimated forfeitures. The Company values its stock options using the Black-Scholes option pricing model. This valuation model requires the Company to make assumptions and judgments about variables used in the calculation. These variables and assumptions include the fair value of the Company’s common stock, weighted average period of time that options are expected to be outstanding, the estimated volatility of comparable companies, the risk-free interest rate and the estimated forfeitures of unvested stock options. Forfeitures are estimated at the time of grant and adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company generally utilizes the simplified method calculation of expected life and estimates the Company’s stock volatility based on an average of historic volatilities of several entities with similar characteristics.

Determination of Fair Value of Common Stock

As there has been no public market for the Company’s common stock to date, the estimated fair value of the Company’s common stock has been determined by the Company’s board of directors as of the date of grant of each option or restricted stock award, with input from management, considering the Company’s most recently available third-party valuations of common stock and our board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. To arrive at a fair value for the total stockholders’ equity of the Company, the third-party valuation firm considered the value indication provided by a discounted cash flow analysis.

Leases

At the inception of the arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Lease liabilities represent an obligation to make payments arising from a lease and are measured at the present value of the remaining future lease payments over the term of the lease. The present value of the lease payments is determined using an incremental borrowing rate (IBR) which reflects the fixed rate at which the Company could borrow the amount of the lease payments, on a collateralized basis, for a similar term and economic environment. The lease terms may include the impact of options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. Assumptions made by the Company at the commencement date are re-evaluated upon the occurrence of certain events, including a lease modification. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease. Right of use (ROU) assets represent the right to use the underlying asset identified in the lease for the term of the agreement. The calculation of the ROU asset incorporates the value of the lease liability and excludes any lease incentives received and initial direct costs incurred.

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Aceragen, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements
Period Ended June 30, 2022

The Company’s lease portfolio consists of operating leases related to its facilities for its offices in Raleigh, North Carolina and Basel, Switzerland. The Company does not have any financing leases. Leases with a term of 12 months or less are considered short-term, and do not require recognition under ASC 842 on the condensed consolidated balance sheet, and payments associated with short-term leases are expensed as incurred. Rent expense for operating leases is recognized on a straight-line basis over the lease term.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB that the Company has or will adopt as of a specified date. Unless otherwise noted, the Company does not believe that any other recently issued accounting pronouncements issued by the FASB had, or is expected to have, a material impact on the Company’s present or future financial statements.

3. Stock-Based Compensation

During the six months ended June 30, 2022, the Company granted 534,500 stock options under the Company’s 2021 Stock Incentive Plan (the “2021 Plan”). Typically, employee option grants generally vest 25% on the first anniversary of grant date, with the balance vesting proportionally for a duration of 36 months thereafter. During the six months ended June 30, 2022, and the period of March 2, 2021, to June 30, 2021, the Company recognized $494,759 and $1,000 in stock option compensation expenses, respectively. All stock-based compensation expenses are included in general and administrative expenses.

The following weighted average assumptions apply to the options to purchase 534,500 shares of common stock granted to employees during the six months ended June 30, 2022.

			2022
Expected stock price volatility			82.98%
Risk-free interest rate			2.00% – 2.84%
Expected term			6 years – 7 years
Estimated value of stock per share			$12.28

The following is a summary of activity in options for the six months ended June 30, 2022:

	Incentive Stock Options					Nonqualified Stock Options
	Number of Shares		Weighted Average Exercise Prices			Number of Shares		Weighted Average Exercise Prices
Outstanding at December 31, 2021 (audited)		244,240		$	3.07		70,760		$	3.07
Granted		225,741		$	12.28		308,759		$	12.28
Exercised		—			—		—			—
Forfeited		—			—		—			—
Outstanding at June 30, 2022		469,981		$	7.49		379,519		$	10.56
Exercisable at June 30, 2022		20,936		$	3.07		16,458		$	3.07

As of June 30, 2022, there was approximately $3.9 million in unrecognized stock-based compensation expenses associated with outstanding awards which is expected to vest over the next 3.9 years.

4. Income taxes

Income taxes have been accounted for using the asset and liability method in accordance with ASC 740 “Income Taxes”. The Company computes its interim provision for income taxes by applying the estimated

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Aceragen, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements
Period Ended June 30, 2022

annual effective tax rate method. The Company estimates an annual effective tax rate of (0.49)% for the year ending December 31, 2022. This rate does not include the impact of any discrete items. The Company’s effective tax rate for the six months ended June 30, 2022 and 2021 was (0.47)% and 0.0%, respectively.

The Company incurred losses for the six-month ended June 30, 2022, and is forecasting additional losses through the year, resulting in an estimated net loss for financial statement purposes for the year ending December 31, 2022. Due to the Company’s history of losses, there is not sufficient evidence to record a net deferred tax asset associated with the U.S. or Swiss operations. Accordingly, a full valuation allowance has been recorded related to the net deferred tax assets in those jurisdictions.

The total tax expense during the six months ended June 30, 2022, and the period from March 2, 2021, to June 30, 2021, was approximately $37,000 and $0, respectively.

At June 30, 2022, the Company had no unrecognized tax benefits that would affect the Company’s effective tax rate.

The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income (“GILTI”), states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI as a period expense in the year the tax is incurred. The Company does not expect a GILTI inclusion for 2022; no GILTI tax has been recorded for the eight months ended August 31, 2022, and the period from March 2, 2021 to June 30, 2021.

5. Acquisition Obligation

In October 2021, the Company entered into a Merger Agreement with Arrevus, Inc. (the “Merger”), whereby Arrevus became a wholly-owned subsidiary of the Company. As a result of the Merger, the Company has an obligation to pay former Arrevus shareholders deferred purchase consideration totaling $7,500,000, $6,000,000 of which is payable in October 2022 less any adjustments, as defined within the Merger Agreement, and $1,500,000 to be paid in January 2023. In addition to the deferred purchase consideration, the Company has an obligation to pay a working capital adjustment totaling $366,684 in October 2022. The Company imputed interest on the deferred purchase consideration at the date of the Merger Agreement in the amounts of $687,812. The Company will amortize the discount on a straight-line basis until the obligation becomes due. As of June 30, 2022, the Company had recognized a total of $327,670 in amortization expense. As of June 30, 2022, all amounts owed pursuant to the Arrevus transaction were classified as short term.

	Amounts
Years Ending December 31
2022		$	6,366,684
2023			1,500,000
Total			7,866,684
Less: Unamortized acquisition discount			(250,919)
Total acquisition obligation		$	7,615,765

6. Contingencies

The Company is not a party to any outstanding material litigation and management is currently not aware of any legal proceedings that, individually or in the aggregate, are deemed to be material to the Company’s financial condition or results of operations. The Company does not have contingency reserves established for any liabilities as of June 30, 2022.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”) and presents the combined historical consolidated financial position and consolidated results of operations of Idera Pharmaceuticals, Inc (“Idera” or the “Company”) and the historical combined financial position and results of operations of Aceragen, Inc (“Aceragen”), adjusted to give effect to (i) the September 28, 2022 (“Closing Date”) acquisition of Aceragen as further described in Note 1 — Description of the Transaction (the “Transaction”); (ii) the merger of Arrevus, Inc. (“Arrevus”) with Aceragen on October 24, 2021 which is accounted for as asset acquisition under the US Generally Accepted Accounting Principles (“US GAAP”) (the “Arrevus merger”); (iii) Aceragen’s acquisition of ACG-801 (formerly known as RVT-801) from Enzyvant Therapeutics GmbH (“Enzyant”) in March 2021, which is accounted for as an asset acquisition under the US GAAP (the “ACG-801 acquisition”) and (iv) the pro forma effects of certain assumptions and adjustments described in “Notes to the Unaudited Pro Forma Condensed Combined Financial Information” below.

The following unaudited pro forma combined financial information is presented to illustrate the estimated effects of the Transaction, the mandatory conversion of outstanding Series Z convertible preferred stock into common stock and related warrants and stock options for Series Z convertible preferred stock into warrants and options for common stock, the Arrevus Merger and the ACG-801 acquisition, based on the historical financial statements and accounting records of Idera and Aceragen after giving effect to these transactions and the related pro forma adjustments as described in the notes included below.

The unaudited pro forma combined statement of operations for the nine months ended September 30, 2022 and for the year ended December 31, 2021, combine the historical statements of operations of Idera and Aceragen, giving effect to the Transaction as if it had occurred on January 1, 2021. For the year ended December 31, 2021, the unaudited pro forma combined statement of operations data also assumed the Arrevus merger took place as of January 1, 2021. The operations data of ACG-801 for the one month ended January 1, 2021 were considered immaterial, and accordingly, were not included in the unaudited pro forma combined statement of operations for the year ended December 31, 2021.

The historical financial statements of Idera and Aceragen have been adjusted to give pro forma effect to events that are (1) directly attributable to the Transaction, (2) factually supportable, and (3) with respect to the unaudited pro forma combined statements of operations, expected to have a continuing impact on the combined results of operations of the combined company. The unaudited pro forma combined financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma combined financial statements.

The following unaudited pro forma condensed combined financial information and related notes are based on and should be read in conjunction with:

(i)

the historical unaudited condensed consolidated financial statements of the Company and the related notes included in the Company’s Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2022;

(ii)

the historical audited consolidated financial statements of the Company and the related notes included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2021;

(iii)

the historical unaudited condensed consolidated financial statements of Aceragen and the related notes as of and for the six months ended June 30, 2022; and

(iv)

the historical audited consolidated financial statements of Aceragen and the related notes as of and the period from March 2, 2021 (inception) to December 31, 2021.

(v)

the historical audited financial statements of Arrevus and the related notes as of October 24, 2021 and the related statements of operations for the period from January 1, 2021 to October 24, 2021.

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With respect to the Transaction, the unaudited pro forma combined financial information has been prepared by Idera using the acquisition method of accounting in accordance with U.S. generally accepted accounting principles. Idera has been treated as the acquirer in the Transaction for accounting purposes as Aceragen is deemed to be a variable interest entity to which Idera is the primary beneficiary. The assets acquired and liabilities assumed by Idera in the Transaction have been preliminarily measured at their respective estimated fair values as of September 28, 2022. Differences between these preliminary estimates of fair value and the final acquisition accounting will occur, and those differences could have a material impact on the accompanying unaudited pro forma combined financial statements and the combined company’s future results of operations and financial position. Idera will finalize the acquisition accounting (including the necessary valuation and other studies) as soon as practicable within the required measurement period, but in no event later than one year following completion of the Transaction.

The pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma combined financial information prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).

The unaudited pro forma combined financial information has been presented for informational purposes only. The unaudited pro forma combined financial information does not purport to represent the actual results of operations that Idera and Aceragen would have achieved had the companies been combined during the periods presented in the unaudited pro forma combined financial statements and is not intended to project the future results of operations that the combined company may achieve after the Transaction. The unaudited pro forma combined financial information does not reflect any potential cost savings that may be realized as a result of the Transaction and also does not reflect any restructuring or integration-related costs to achieve those potential cost savings.

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Unaudited Pro Forma Combined Statement of Operations
Year Ended December 31, 2021
(in thousands, except per share data)

	Idera Pharmaceuticals, Inc. (Historical)			Aceragen, Inc. (Historical)			Arrevus, Inc. Historical for the Period from January 1, 2021 through October 24, 2021			Other Transaction Accounting Adjustments			Notes		Pro Forma Aceragen, Inc.			Transaction Accounting Adjustments			Notes		Pro Forma Combined
Government contracts revenue		$	—		$	1,005		$	2,867		$	—				$	3,872		$	—				$	3,872
Operating expenses:
Research and development			16,375			21,007			2,010			—					23,017			—					39,392
General and administrative			9,976			3,794			589			(104)		A			4,279			—					14,255
Restructuring charge			1,322			—			—			—					—			—					1,322
Total operating expenses			27,673			24,801			2,599			(104)					27,296			—					54,969
Loss from operations			(27,673)			(23,796)			268			104					(23,424)			—					(51,097)
Non-operating income (expense):
Interest income (expense)			2			(109)			(36)			36		G			(109)			(89)		B			(196)
Warrant revaluation gain			6,983			—			—			—					—			—					6,983
Future tranche right revaluation gain			118,803			—			—			—					—			—					118,803
Foreign currency exchange loss			(24)			(2)			—			—					(2)			—					(26)
Change in fair value of Series X preferred stock liability			—			—			—			—					—			(2,734)		D			(2,734)
Other income			—			—			54			—					54			—					54
Net income (loss) before income tax benefit			98,091			(23,907)			286			140					(23,481)			(2,823)					71,787
Income tax benefit			—			—			—			—					—			6,039		E			6,039
Net income (loss)		$	98,091		$	(23,907)		$	286		$	140				$	(23,481)		$	3,216				$	77,826
Undistributed earnings to preferred stockholders			(1,150)			—			—			—					—			—					(1,150)
Net income (loss) attributable to common stockholders		$	96,941		$	(23,907)		$	286		$	140				$	(23,481)		$	3,216				$	76,676
Net income (loss) per share applicable to common stockholders
Basic		$	1.97		$	(8.15)																		$	0.71
Diluted		$	(0.58)		$	(8.15)																		$	(0.67)
Weighted-average number of common shares used in computing net income (loss) per share applicable to common stockholders
Basic			49,203			2,933														55,424		F			107,560
Diluted			50,127			2,933														55,424		F			108,484
Net loss – diluted			(28,845)			(23,907)			286			140					(23,481)			3,216					(72,591)

See accompnaying Notes to Unaudited Pro Forma Condensed Combined Financial Information

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Notes to Unaudited Pro Forma Condensed Combined Financial Information

1. Description of the Transactions and Basis of Presentation

Description of the Transaction

On September 28, 2022, Idera Pharmaceuticals, Inc. (“Idera”) acquired Aceragen, Inc. (“Aceragen”), a Delaware corporation and its wholly owned subsidiaries. Aceragen is a privately-held biotechnology company addressing severe, rare, and orphan pulmonary and rheumatic diseases for which there are limited or no available treatments. The Company acquired Aceragen as a strategic extension of its rare disease business and focus with the primary objective of further developing Aceragen’s portfolio of rare disease product candidates. Specifically, as a result of the Acquisition (as defined below). the Company will focus on developing ACG-701 to treat pulmonary exacerbations associated with cystic fibrosis and melioidosis, a severe, life-threatening infection, and ACG-801 to treat a rare lysosomal storage disorder known as Farber disease.

In accordance with the terms of an Agreement and Plan of Merger (the “Merger Agreement”), Idera acquired 100% of the outstanding security interests of Aceragen in a “stock-for-stock” transaction whereby all Aceragen outstanding equity interests were exchanged for a combination of shares of Idera common stock, shares of Idera Series Z convertible preferred stock (“Series Z”), and shares of the newly designated Idera Series X non-voting preferred stock (“Series X”). Under the terms of the Merger Agreement, Aceragen stockholders received (i) 4,398,762 shares of the Company’s common stock, (ii) 80,656 shares of Series Z and (iii) five shares of Series X. In addition, all outstanding restricted shares subject to repurchase, options and warrants to purchase Aceragen common stock were converted into restricted shares, stock options and warrants to purchase shares of Idera’s common stock and Series Z on terms substantially identical to those in effect prior to the acquisition except for adjustments to the underlying number of shares and the exercise price based on the Merger Agreement exchange ratio.

Subject to stockholder approval of the conversion and an increase in authorized shares and certain beneficial ownership limitations set by each holder, each share of Series Z will automatically convert into 1,000 shares of common stock. Holders of shares of Series X are entitled to receive distributions on shares of Series X.

Pursuant to the Merger Agreement, Idera has agreed to hold a stockholders’ meeting (the “Special Meeting”) to submit certain matters to its stockholders for their consideration, including: (i) the approval of the conversion of the Series Z preferred stock into shares of common stock in accordance with Nasdaq Listing Rule 5635(a) (the “Conversion Proposal”) and (ii) the approval to effect a reverse stock split of all of Idera’s issued and outstanding shares of common stock (the “Reverse Stock Split Proposal” and, together with the Conversion Proposal, the “Merger Agreement Meeting Proposals”).

Pursuant to the Merger, Aceragen entered into a binding term sheet with the representative of certain former stockholders of Arrevus, Inc. pursuant to which Aceragen and the Arrevus former stockholders agreed to defer certain payments owed by Aceragen to the Arrevus former stockholders in an aggregate amount of $6.3 million until October 24, 2023. The deferred payments will bear annual interest at 12%, paid quarterly, beginning on April 1, 2023. Prepayments in full amount of the Deferred Payment plus accrued interest is allowed provided the holders of each Convertible Notes are given written notice and the option to convert the principal balance into shares of Common Stock pursuant to the terms of the Convertible Note. The Deferred Payments will be memorialized in an unsecured promissory note to be issued by Idera.

The foregoing summary of the transactions contemplated by the Merger Agreement is subject to, and qualified in its entirety by, the full text of the Merger Agreement, a copy of which was attached as Exhibit 2.1 to the Current Report on Form 8-K filed by Idera with the SEC on September 30, 2022.

Basis of Presentation

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and is based on the historical financial statements of Idera, Aceragen and Arrevus.

The acquisition method of accounting is based on Accounting Standards Codification (“ASC”) 805, Business Combinations, with the Company as the accounting acquirer, and uses the fair value concepts defined in ASC 820, Fair Value Measurement.

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ASC 805 requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. In addition, ASC 805 requires that the consideration transferred be measured at the date the acquisition is completed at the then-current market price.

ASC 820 defines the term “fair value,” sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result of these standards, Idera may be required to record the fair value of assets which are not intended to be used or sold and/or to value assets at fair value measures that do not reflect Idera’s intended use of those assets. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Under the acquisition method of accounting, the assets acquired and liabilities assumed are recorded, as of the completion of the Acquisition, primarily at their respective fair values, with the excess of the purchase consideration over the fair value of Aceragen’s net assets, allocated to goodwill, if any, and added to those of Idera. Financial statements and reported results of operations of Idera issued after completion of the Acquisition will reflect these values but will not be retroactively restated to reflect the historical financial position or results of operations of Aceragen. The pro forma allocation of the purchase price reflected in the unaudited pro forma condensed combined financial information is preliminary and thus subject to adjustment and may vary materially from the final purchase price allocation that will be completed within the measurement period, but in no event later than one year following the Closing Date since, among other reasons, prior to the closing of the Transaction, both companies were limited in their ability to share information.

Under ASC 805, acquisition-related transaction costs (e.g., advisory, legal and other professional fees) are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred. Total acquisition-related transaction costs expected to be incurred by Idera and Aceragen are estimated to be $5.0 million and incurred during the nine months ended September 30, 2022. These acquisition related transaction costs are reflected as a pro forma adjustment to the unaudited pro forma combined statements of income for those same periods as a reduction in acquisition-related costs because those net costs are not expected to have a continuing impact on the combined company’s results. In addition, Idera incurred $2.8 million in severance related costs in connection with the acquisition and have been reflected as a pro forma adjustment.

The unaudited pro forma combined financial statements do not include any adjustments to the realization of any costs (or cost savings) from operating efficiencies, synergies, or other restructuring activities that might result from the Transaction. Further, there may be additional charges (or costs savings) related to restructuring or other integration activities resulting from the Transaction, the timing, nature, and amount of which the Company’s management cannot currently identify, and thus, such charges (or cost savings) are not reflected in the unaudited pro forma condensed combined financial statements. The restructuring and integration-related costs will be expensed in the appropriate accounting periods after completion of the acquisition as incurred. The pro forma adjustments represent management’s best estimates and are based upon currently available information and certain assumptions that the Company believes are reasonable under the circumstances.

The unaudited pro forma combined financial information is presented for informational purposes only and does not necessarily indicate the financial results of the combined company had the companies been combined at the beginning of the period presented, nor does it necessarily indicate the results of operations in future periods or the future financial position of the combined company.

2. Accounting Policies

As part of preparing the pro forma condensed combined financial information, the Company conducted a preliminary review of the accounting policies of Aceragen in order to determine if any differences require

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adjustment or reclassification of Aceragen’s financial position and results of operations to conform to Idera’s accounting policies and classifications. See Note 5 for additional information.

3. Consideration Transferred

The components of consideration transferred to effect the acquisition of Aceragen are as follows (in thousands):

Fair value of Idera common stock issued to Aceragen stockholders	$	1,672
Fair value of Idera Series Z convertible preferred stock issued to Aceragen stockholders		26,971
Fair value of Idera Series X preferred stock issued to Aceragen stockholders		20,400
Fair value of Aceragen stock options and warrants assumed and allocated to consideration paid		6,670
Total consideration paid	$	55,713

4. Preliminary estimate of Assets Acquired and Liabilities Assumed

The following summarizes a preliminary estimate of the assets acquired and the liabilities assumed by Idera as of the acquisition date, and includes a reconciliation to the total consideration transferred:

Assets acquired:
Cash, cash equivalents and restricted cash	$	5,482
Receivables		1,914
Prepaid expenses and other assets		575
In-process research and development assets		63,067
Goodwill		9,934
		80,972
Liabilities assumed:
Accounts payable and accrued expenses		7,827
Assumed debt obligations		7,476
Operating lease liabilities		22
Deferred tax liability		9,934
		25,259
Net assets acquired	$	55,713

As of the completion of the acquisition, identifiable intangible assets are required to be measured at fair value, and these acquired assets could include assets that are not intended to be used or sold or that are intended to be used in a manner other than their highest and best use. For purposes of these unaudited pro forma combined financial statements and consistent with the ASC 820 requirements for fair value measurements, it is assumed that all acquired assets will be used, and that all acquired assets will be used in a manner that represents the highest and best use of those acquired assets.

The fair value of IPR&D was capitalized as of the Acquisition date and accounted for as indefinite-lived intangible assets until completion or disposition of the assets or abandonment of the associated research and development efforts. Upon successful completion of the development efforts, the useful lives of the IPR&D assets will be determined based on the anticipated period of regulatory exclusivity and will be amortized within operating expenses. Until that time, the IPR&D assets will be subject to impairment testing and will not be amortized. The goodwill recorded related to the acquisition is the excess of the fair value of the consideration transferred by the acquirer over the fair value of the net identifiable assets acquired and liabilities assumed at the date of acquisition. The goodwill recorded is not deductible for tax purposes.

5. Pro Forma Adjustments

The unaudited pro forma combined financial information includes pro forma adjustments that are (1) directly attributable to the Transaction (2) factually supportable, and (3) with respect to the unaudited

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pro forma combined statements of operations, expected to have a continuing impact on the results of operations of the combined company.

The pro forma adjustments reflecting the completion of the transaction are based upon the accounting analysis conclusion that the Transaction should be accounted for under the acquisition method of accounting and upon the assumptions set forth below.

The pro forma adjustments, based on preliminary estimates that may change significantly as additional information is obtained, are as follows:

Elimination of severance costs within general and administrative expenses, transaction costs and restructuring costs incurred in connection with the Aceragen acquisition and the acquisition of Arrevus that are not expected to have a continuing impact on the results of the combined entity.

To record the amortization of the debt discount related to the deferred payment by Aceragen to Arrevus in connection with the acquisition of Arrevus.

To record the elimination of the warrant revaluation gain upon shareholder approval to convert Series Z into common stock and related warrants are equity classified and not subject to remeasurement.

To record the change in fair value of the Series X preferred stock liability that is accounted for under the fair value option and remeasured at each reporting period.

To record the elimination of the income tax benefit resulting from the Aceragen acquisition during the nine months ended September 30, 2022 and record the benefit on January 1, 2021 as if the acquisition of Aceragen was completed on January 1, 2021.

The pro forma combined basic income (loss) per share have been adjusted to reflect the pro forma net income for the nine months ended September 30, 2022 and for the year ended December 31, 2021. In addition, the number of shares used in calculating the pro forma combined basic and diluted net income per share has been adjusted to reflect the estimated total number of shares of common stock of the combined company that would be outstanding as of the acquisition of Arrevus:

	Nine Months Ended September 30, 2022		Year Ended December 31, 2021
Issuance of Idera common stock to Aceragen stockholders		57,716		58,357
Vesting of equity awards issued to Aceragen stockholders		914		—
Elimination of historical Aceragen basic weighted average shares outstanding		(3,373)		(2,933)
Pro forma adjustment		55,257		55,424

Elimination of interest expense incurred in connection with the acquisition of Arrevus and not expected to have a continuing impact on the results of the combined entity.

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ANNEX F

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Prior to its acquisition by the Company, Aceragen, Inc., together with its wholly-owned subsidiaries, Aceragen GmbH and Arrevus, Inc. (collectively, “Aceragen”), was a privately-held biotechnology company focused on addressing rare, orphan pulmonary, and rheumatic diseases for which there are limited or no available treatments. Aceragen owned or controlled the intellectual property and has varying period of exclusivity related to both ACG-701 (patented formulation of sodium fusidate) and ACG-801 (recombinant human acid ceramidase (rhAC)). Aceragen’s strategy of developing and optimizing commercial value of ACG-701 and ACG-801 for appropriate patients underpinned its work developing:

•

ACG-701 to treat cystic fibrosis pulmonary exacerbations (“CF”) and melioidosis, a severe, life-threatening infection; and

•

ACG-801 to treat patients suffering from a genetic mutation in the ASAH 1 gene, also known as Farber disease.

Aceragen was incorporated in Delaware in January 2021 and began operations in March 2021.

Aceragen Acquisition Activity

In March 2021, Aceragen entered into an asset purchase agreement with Enzyvant Therapeutics GmbH (“Enzyvant”) to acquire ACG-801, formerly known as RVT-801, a lipid hydrolase acid ceramidase. The primary asset acquired in the acquisition was in-process research and development related to Enzyvant’s compound, ACG-801, which is an investigational enzyme replacement therapy (ERT) for acid ceramidase deficiency presenting as Farber disease, a lysosomal storage disease with a unique, severe inflammatory phenotype for which no disease-specific therapy exists.

In October 2021, Aceragen entered into an Agreement and Plan of Merger (the “Arrevus Merger Agreement”) with Arrevus, Inc. (“Arrevus”), pursuant to which Aceragen Merger Sub, Inc., a wholly- owned subsidiary of Aceragen, merged with and into Arrevus, with Arrevus being the surviving entity operating as a wholly-owned subsidiary of Aceragen. The primary asset acquired in the acquisition was in-process research and development related to Arrevus’s sodium fusidate program, which could potentially be used for treatments of melioidosis, cystic fibrosis pulmonary exacerbations and other potential indications.

Aceragen Governmental Contracts and Awards

Aceragen has received two significant contracts for funding up to $49.7 million from the United States government, funded by the Defense Threat Reduction Agency (“DTRA”). Additionally, Aceragen has received a $3.5 million award from the Cystic Fibrosis Foundation of which $2.5 million remains available to be earned as certain developmental milestones are achieved.

Results of Operations for the Period from March 2, 2021 (inception) through December 31, 2021

Revenues

(in thousands)	For the period from March 2, 2021 (inception) through December 31, 2021
Revenues:
Government sponsored product development		$	897
Consulting services			108
Total revenues			1,005

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Revenue was $1.0 million for the period from March 2, 2021 (inception) through December 31, 2021, consisting of $0.9 million in government sponsored product development, primarily associated with the programs funded by DTRA, and $0.1 million in consulting services associated with regulatory consulting for product development provided by Aceragen. Prior to Aceragen’s acquisition of Arrevus, Aceragen provided development consulting services in support of the DTRA funded programs.

Research and Development Expenses

(in thousands)	For the period from March 2, 2021 (inception) through December 31, 2021
Direct costs by program:
Government sponsored product development:		$	624
Non-sponsored research and development:			8,542
Consulting Services			31
In-process research and development			11,810
Total Research and Development Costs		$	21,007

Research and development expenses for government sponsored and non-government sponsored activities were $9.2 million for the period from March 2, 2021 (inception) through December 31, 2021. These expenses include $6.6 million in outsourced services inclusive of, but not limited to, drug product and substance manufacturing with a contract manufacturing organization, analytical services, and clinical studies related activities. Of the outsourced services, $6.2 million relates to ACG-801 activities and $0.4 million relates to ACG-701 activities. Furthermore, total research and development expense included $1.9 million in personnel-related costs. Of the personnel-related costs, $1.7 million related to ACG 801 activities and $0.2 million relates to ACG-701 activities. Research and development costs associated consulting services consisted of labor and other direct charges in connection with product development consulting services provided by Aceragen. In-process research and development expenses consisted of $10.2 million in acquisition-related charges of AGC-701 from Arrevus and $1.6 million in acquisition-related charges of ACG-801 from Enzyvant in accordance with ASC 730.

General and Administrative Expenses

(in thousands)			For the period from March 2, 2021 (inception) through December 31, 2021
General and administrative expenses				$	3,794

General and administrative expenses were $3.8 million for the period from March 2, 2021 (inception) through December 31, 2021. These expenses include $2.2 million of personnel-related costs, $0.7 million of professional services and legal related fees, and $0.4 million in consultant costs.

Results of Operations for the Three Months Ended June 30, 2022 and 2021

Revenues

(in thousands)	Three Months Ended June 30, 2022			Three Months Ended June 30, 2021			$ Variance			% Variance
Government sponsored product development		$	3,705		$	—		$	3,705		—
Non-government sponsored product development			—			—			—		—
Total Revenues		$	3,705		$	—		$	3,705		—

Aceragen generates revenues through its government sponsored and non-government sponsored product development programs. Government sponsored product development revenues principally relates to

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the DTRA funded programs, which were acquired through the Arrevus acquisition in October 2021. The increase of $3.7 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 is attributed primarily to the revenues generated pursuant to the programs funded by DTRA, approximately $3.7 million, for the development of ACG-701 for the treatment of Melioidosis. In the prior period, Aceragen was focused on business start-up activities and did not have any revenue generating activities.

Research and Development Expenses

(in thousands)	Three Months Ended June 30, 2022			Three Months Ended June 30, 2021			$ Variance			% Variance
Government and non-government sponsored product development		$	2,745		$	—		$	2,745		—
Non-sponsored research and development		$	3,768		$	662		$	3,102		469%
Total research and development expenses		$	6,513		$	662		$	5,851		884%

Aceragen incurs both government and non-government sponsored product development expenses as well as non-sponsored research and development expenses. The increase in government and non-government sponsored product development of $2.7 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 is primarily attributable to the initiation of the clinical trial for ACG-701 to treat Melioidosis pursuant to the DTRA funded programs acquired from Arrevus. Additionally, Aceragen initiated product development activities for its ACG-701 compound to treat CF during the fourth quarter of 2021. The increase in non-sponsored research and development expenses of $3.1 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 is attributed to (i) $1.3 million increase for the manufacturing of ACG-801 drug substance for use in clinical trials to treat Farber disease; (ii) $0.7 million clinical related costs for ACG-801 to treat Farber disease; and (iii) $0.9 million of personnel related costs.

General and Administrative Expenses

(in thousands)			Three Months Ended June 30, 2022						Three Months Ended June 30, 2021						$ Variance						% Variance
General and administrative expenses				$	1,735					$	851					$	884						104%

The increase in general and administrative expenses of $0.9 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 is primarily attributed to the following: (i) $0.3 million of non-cash stock-based compensation expense; (ii) $0.3 million of personnel-related costs; and (iii) $0.2 million of professional accounting and legal services.

Interest Expense, Net

(in thousands)			Three Months Ended June 30, 2022						Three Months Ended June 30, 2021						$ Variance						% Variance
Interest expense (income), net				$	167					$	—					$	167						—

The increase in interest expense, net of $0.2 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, was due to the imputed interest on the acquisition obligation to the Arrevus shareholders as a result of the Arrevus acquisition.

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Six months ended June 30, 2022 compared to the period from March 2, 2021 (Inception) to June 30, 2021

Revenues

(in thousands)	Six Months Ended June 30, 2022			Period from March 2, 2021 (inception) to June 30, 2021			$ Variance			% Variance
Government sponsored product development		$	8,393		$	—		$	8,393		—
Non-government sponsored product development			1,000			—			1,000		—
Total Revenues		$	9,393		$	—		$	9,393		—

The increase of $8.4 million for the six months ended June 30, 2022 compared to the period from March 2, 2021 (inception) to June 30, 2021 is attributed to activities on the DTRA funded programs of $8.2 million, which were acquired from Arrevus in October 2021. The non-government sponsored product development revenues relate to the grant received from the Cystic Fibrosis Foundation described above, of which $1 million was earned during the three months ended March 31, 2022.

Research and Development Expenses

(in thousands)	Six Months Ended June 30, 2022			Period from March 2, 2021 (inception) to June 30, 2021			$ Variance			% Variance
Government and non-government sponsored product development		$	6,363		$	—		$	6,363		—
Non-sponsored research and development			7,378			1,702			5,676		333%
In-Process Research and Development			—			1,576			(1,576)		—
Total research and development expenses		$	13,741		$	3,278		$	10,463		319%

Aceragen incurs both government and non-government sponsored product development expenses as well as non-sponsored research and development expenses. The increase in government and non-government sponsored product development of $6.4 million for the six months ended June 30, 2022 compared to the period from March 2, 2021 (inception) to June 30, 2021 is attributed primarily to the DTRA funded programs acquired from Arrevus in October 2021. The increase in non-sponsored research and development expenses of $4.1 million for the six months ended June 30, 2022 compared to the period from March 2, 2021 (inception) to June 30, 2021 is attributable to a $2.0 million increase in development and manufacturing costs of ACG-801 drug product, a $0.8 million increase in analytical services in support of the development and manufacturing activities, a $1.0 million increase in clinical trial related costs, a $1.3 million increase in personnel- related expenses, and $0.6 million other development costs because of longer operations in the period. In-Process Research and Development expense decrease of $1.6 million is due to a one-time charge in relation to the asset acquisition of Enzyvant in March 2021.

General and Administrative Expenses

(in thousands)			Six Months Ended June 30, 2022						Period from March 2, 2021 (inception) to June 30, 2021						$ Variance						% Variance
General and administrative expenses				$	3,233					$	1,190					$	2,044						172%

The increase in general and administrative expenses of $2.0 million for the six months ended June 30, 2022 compared to the period from March 2, 2021 (inception) to June 30, 2021 is primarily attributable a $0.5 million increase of non-cash stock-based compensation expense, a $0.4 million increase in consulting, accountant, and audit related fees, $0.2 million of insurance costs, and a $0.9 million increase in personnel-related costs because of longer operations in the period.

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Interest Expense, Net

(in thousands)			Six Months Ended June 30, 2022						Period from March 2, 2021 (inception) to June 30, 2021						$ Variance						% Variance
Interest expense, net				$	331					$	—					$	331						—

The increase in interest expense, net of $0.3 million for the six months ended June 30, 2022 compared to the period from March 2, 2021 to June 30, 2021 was due to the imputed interest on the acquisition obligation to the Arrevus’ shareholders as a result of the Arrevus asset acquisition.

Liquidity and Capital Resources

Management’s Plans

To date, Aceragen’s operations have been financed primarily by its DTRA funded government contracts, product financing, net proceeds from the sale of preferred and common stock, and cash received from grants. As of June 30, 2022, Aceragen had cash of $7.9 million, consisting of readily available cash in bank accounts. While Aceragen’s management believes its cash is not subject to excessive risk, Aceragen maintains significant amounts of cash at one or more financial institutions that are in excess of federally insured limits.

In addition, in the course of normal business operations, Aceragen has agreements with contract service providers to assist in the performance of its research and development and manufacturing activities. Aceragen can generally elect to discontinue the work under these agreements, sometimes subject to a cancelation charge. Aceragen could also enter into additional collaborative research, contract research, manufacturing and supplier agreements in the future, which may require upfront payments and even long-term commitments of cash.

Aceragen recognizes that it will need to raise additional capital in order to continue to execute its business plan in the future. There is no assurance that additional financing will be available when needed or that Aceragen will be able to obtain financing on terms acceptable to it or whether Aceragen will become profitable and generate positive operating cash flow. If Aceragen is unable to raise sufficient additional funds, it will have to further scale back its operations. Aceragen believes it has sufficient capital to fund its obligations, as they become due, in the ordinary course of business into the third fiscal quarter of 2023. Aceragen based this estimate on assumptions that may prove to be incorrect, and it could use currently available capital resources sooner than currently expected.

Cash Flows

Operating Activities.

Net cash used in operating activities was $22.5 million from March 2, 2021 (inception) through December 31, 2021 and was primarily due to our net loss of $23.9 million, adjusted for non-cash expenses in connection with the Arrevus acquisition of $6.9 million amortization of discount on Arrevus acquisition obligation of $0.1 million, partially offset by a $5.6 million decrease in our operating assets and liabilities.

Net cash used in operating activities of $6.8 million for the six months ended June 30, 2022 was primarily due to our net loss of $7.9 million, partially offset by non-cash items consisting of stock-based compensation and amortization of the acquisition discount totaling $0.8 million, and net increase in cash from changes in operating assets and liabilities of $0.3 million. Additionally, cash used in operating activities of $4.4 million for the period from March 2, 2021 (inception) to June 30, 2021 consisted primarily of our net loss of $4.5 million, partially offset by a net increase in cash from changes in operating assets and liabilities

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of $0.1 million. The variance in cash used in operating activities for the six months ended June 30, 2022 versus the period from March 2, 2021 (inception) to June 30, 2021 is attributable to increased development and manufacturing costs associated with the advancements of ACG-701 and AGC-801 programs during the six months ended June 30, 2022 whereas operations from March 2, 2021 (inception) to June 30, 2021 primarily focused on start-up related activities and had a shortened period of operations.

Investing activities.

Net cash used by investing activities was $165,600 the period from March 2, 2021 (inception) through December 31, 2021, respectively, is related to assembled workforce acquired pursuant to the Arrevus Acquisition.

There was no cash provided by or used in Aceragen’s investing activities for the six months ended June 30, 2022 and the period from March 2, 2021 to June 30, 2021.

Financing Activities.

Net cash provided by financing activities was $27.9 million for the period of March 2, 2021 (inception) to December 31, 2022 consisted primarily of cash received under a Stock and Warrant Purchase Agreement (“SWPA”) for the development of ACG-801 to treat Farber disease.

Net cash provided by financing activities of $9.8 million for the six months ended June 30, 2022 was primarily due to cash received under a SWPA. Net cash provided by financing activities of $16.3 million for the period from March 2, 2021 (inception) to June 30, 2021 primarily due to cash received under a SWPA. The variance in cash provided by financing activities for the six months ended June 30, 2022 versus the period from March 2, 2021 (inception) to June 30, 2021 is due to the receipt of $15 million pursuant to issuance of Series X preferred shares under the SWPA during the period of March 2, 2021 (inception) to June 30, 2021 whereas the proceeds pursuant to the SWPA during the six months ended June 30, 2022 were limited to the reimbursement of eligible expenditures as defined in the SWPA.

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Using a black ink pen, mark your votes with an X as shown in this example.Please do not write outside the designated areas.03PYUD++Proposals — The Board of Directors recommends a vote A FOR Proposals 1, 2, 3 and 4.1. Proposal to approve the issuance of shares of the Company’scommon stock upon conversion of the Company’s Series Z Non-Voting Convertible Preferred Stock issued in September 2022.2. Proposal to approve an amendment to the Restated Certificateof Incorporation to effect a reverse stock split of the CommonStock at a ratio to be determined by the Company’s Board ofDirectors within a range of one-for-seventeen (1:17) and onefor-twenty-three (1:23) (or any number in between), to beeffected in the sole discretion of the Board of Directors at anytime within one year of the date of the Special Meeting withoutfurther approval or authorization from the Company’sstockholders.For Against AbstainPlease sign this proxy exactly as your name appears hereon. Joint owners should each sign personally. Trustees and other fiduciaries should indicate the capacity in which they sign. If a corporationor partnership, this signature should be that of an authorized officer who should state his or her title.Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below.qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qSpecial Shareholder Meeting Proxy CardFor Against Abstain3. Proposal to approve the Idera Pharmaceuticals, Inc. 2022 StockIncentive Plan.4. Proposal to approve the adjournment or postponement of theSpecial Meeting, if necessary, to continue to solicit votes forProposal Nos. 1, 2, and/or 3.000004MR A SAMPLEDESIGNATION (IF ANY)ADD 1ADD 2ADD 3ADD 4ADD 5ADD 6ENDORSEMENT_LINE______________ SACKPACK_____________1234 5678 9012 345MMMMMMMMMMMMMMMMMMMMMMMM5 5 9 0 6 8MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE ANDC 1234567890 J N TC123456789MMMMMMMMMMMMMMMMMMM000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 extIf no electronic voting,delete QR code and control #You may vote online or by phone instead of mailing this card.OnlineGo to http://www.investorvote.com/IDRAor scan the QR code — login details arelocated in the shaded bar below.Save paper, time, and money!Sign up for electronic delivery athttp://www.investorvote.com/IDRA

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Special Shareholder Meeting of Stockholders of Idera Pharmaceuticals, Inc. will be held virtually, via live webcast at https://www.virtualmeetingportal.com/iderapharma/2023 on January 12, 2023 at 9:00 a.m. Eastern Time.Help the environment by consenting to receive electronicdelivery, sign up at http://www.investorvote.com/IDRAProxy — Idera Pharmaceuticals, Inc.qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qC Non-Voting Items++Meeting AttendanceMark box to the right ifyou plan to attend theSpecial ShareholderMeeting.Change of Address — Please print new address below.Special Shareholder Meeting of Stockholders of Idera Pharmaceuticals, Inc.January 12, 2023 at 9:00 a.m. Eastern TimeThis proxy is solicited by the Board of Directors for use at the Special Shareholder Meeting of Stockholders.The undersigned hereby appoints John Kirby and John Taylor, and each of them, with full power of substitution, to vote, as designated below, all the shares ofIdera Pharmaceuticals, Inc. (the “Company”) common stock held of record by the undersigned at the close of business on December 5, 2022, at the Special Shareholder Meetingof Stockholders (the “Special Shareholder Meeting”), to be held on January 12, 2023 at 9:00 a.m. Eastern Time, and at any and all adjournments, continuations, or postponementsthereof. The undersigned hereby revokes any and all earlier dated proxies with respect to the Special Shareholder Meeting. This proxy, when properly executed, will be voted inthe manner directed herein by the undersigned. If no direction is made, this proxy will be voted FOR Proposal to approve the issuance of shares of the Company’s common stockupon conversion of the Company’s Series Z Non-Voting Convertible Preferred Stock issued in September 2022, FOR Proposal to approve an amendment to the Restated Certificateof Incorporation to effect a reverse stock split of the Common Stock at a ratio to be determined by the Company’s Board of Directors within a range of one-for-seventeen (1:17)and one- for-twenty-three (1:23) (or any number in between), to be effected in the sole discretion of the Board of Directors at any time within one year of the date of the SpecialMeeting without further approval or authorization from the Company’s stockholders, FOR Proposal to approve the Idera Pharmaceuticals, Inc. 2022 Stock Incentive Plan, andFOR Proposal to approve the adjournment or postponement of the Special Meeting, if necessary, to continue to solicit votes for Proposal Nos. 1, 2, and/or 3.If any other business is presented at the Special Shareholder Meeting, including matters incidental to the conduct of the meeting or otherwise, this proxy will be voted by those namedin this proxy in their best judgment. At the present time, the Board of Directors knows of no other business to be presented at the Special Shareholder Meeting.THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS.See reverse for voting instructions.

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Special Shareholder Meeting of Stockholders of Idera Pharmaceuticals, Inc.January 12, 2023 at 9:00 a.m. Eastern TimeThis proxy is solicited by the Board of Directors for use at the Special Shareholder Meeting of Stockholders.The undersigned hereby appoints John Kirby and John Taylor, and each of them, with full power of substitution, to vote, as designated below, all the shares ofIdera Pharmaceuticals, Inc. (the “Company”) common stock held of record by the undersigned at the close of business on December 5, 2022, at the Special Shareholder Meetingof Stockholders (the “Special Shareholder Meeting”), to be held on January 12, 2023 at 9:00 a.m. Eastern Time, and at any and all adjournments, continuations, or postponementsthereof. The undersigned hereby revokes any and all earlier dated proxies with respect to the Special Shareholder Meeting. This proxy, when properly executed, will be voted inthe manner directed herein by the undersigned. If no direction is made, this proxy will be voted FOR Proposal to approve the issuance of shares of the Company’s common stockupon conversion of the Company’s Series Z Non-Voting Convertible Preferred Stock issued in September 2022, FOR Proposal to approve an amendment to the Restated Certificateof Incorporation to effect a reverse stock split of the Common Stock at a ratio to be determined by the Company’s Board of Directors within a range of one-for-seventeen (1:17)and one- for-twenty-three (1:23) (or any number in between), to be effected in the sole discretion of the Board of Directors at any time within one year of the date of the SpecialMeeting without further approval or authorization from the Company’s stockholders, FOR Proposal to approve the Idera Pharmaceuticals, Inc. 2022 Stock Incentive Plan, andFOR Proposal to approve the adjournment or postponement of the Special Meeting, if necessary, to continue to solicit votes for Proposal Nos. 1, 2, and/or 3.If any other business is presented at the Special Shareholder Meeting, including matters incidental to the conduct of the meeting or otherwise, this proxy will be voted by those namedin this proxy in their best judgment. At the present time, the Board of Directors knows of no other business to be presented at the Special Shareholder Meeting.THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS.See reverse for voting instructions

		~~Pages~~
~~PROXY STATEMENT~~INFORMATION CONCERNING SOLICITATION AND VOTING			1
	CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS			2
	QUESTIONS AND ANSWERS ABOUT THE ~~ANNUAL~~SPECIAL MEETING			13
	~~When are this proxy statement and the accompanying materials scheduled to be sent to stockholders?~~RISK FACTOR SUMMARY			19
	~~Why did I receive a Notice of Internet Availability instead of a full set of proxy materials?~~DESCRIPTION OF THE TRANSACTIONS			113
	~~Who may vote?~~BACKGROUND AND REASONS FOR THE TRANSACTIONS			114
	~~How do I vote my shares if I am a stockholder of record?~~MATERIAL CONTRACTS ENTERED INTO AND ASSUMED IN THE ACQUISITION			216
	~~How do I vote my shares if I hold them in “street name”?~~RISK FACTORS			223
	~~How may I change or revoke my vote?~~DESCRIPTION OF BUSINESS OF IDERA PHARMACEUTICALS, INC.			344
	~~What constitutes a quorum?~~SUMMARY DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION OF ACERAGEN, INC.			350
	~~What vote is required to approve each matter and how will votes be counted?~~IDERA MANAGEMENT FOLLOWING THE ACQUISITION			351
	~~How does the board recommend that I vote?~~PROPOSALS			455
	~~Will any other business be conducted at the Annual Meeting?~~PROPOSAL NO. 1: APPROVAL OF CONVERSION PROPOSAL			455
	~~Who is making and paying for the solicitation of proxies and how is it made?~~PROPOSAL NO. 2 APPROVAL OF THE AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO EFFECT THE REVERSE STOCK SPLIT			457
	~~How and when may I submit a proposal for the 2023 annual meeting of stockholders?~~PROPOSAL NO. 3: APPROVAL OF THE ADOPTION OF THE IDERA PHARMACEUTICAL, INC. 2022 STOCK INCENTIVE PLAN			467
	~~Are annual meeting materials householded?~~PROPOSAL NO. 4: APPROVAL OF ADJOURNMENT OF THE SPECIAL MEETING			576
~~PROPOSAL ONE ELECTION OF DIRECTORS~~			6
~~General Information~~			6
~~Information about our Directors~~			6
~~DIRECTOR COMPENSATION~~			11
~~CORPORATE GOVERNANCE~~OTHER INFORMATION			1477
	~~Board of Directors~~DESCRIPTION OF COMMON STOCK			1477
	~~Board Leadership Structure~~PRINCIPAL STOCKHOLDERS			1481
	~~Board of Directors’ Role in Risk Oversight~~WHERE YOU CAN FIND ADDITIONAL INFORMATION			1483
	~~Board Committees~~HOUSEHOLDING			1483
	~~Director Independence~~OTHER MATTERS			1783
	~~Director Nomination Process~~ANNEX A CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF IDERA PHARMACEUTICALS, INC.			17A-1
	~~Stockholder Nominees~~ANNEX B IDERA PHARMACEUTICALS, INC. 2022 STOCK INCENTIVE PLAN			18B-1
	~~Communicating with our Board of Directors~~ANNEX C AUDITED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES OF ACERAGEN, INC. (March 2, 2021 through December 31, 2021)			18C-1
	~~Code of Business Conduct~~ANNEX D UNAUDITED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES OF ACERAGEN, INC. (Six Months Ended June 30, 2022 and ~~Ethics~~2021)			19D-1
	~~Hedging Policy~~ANNEX E UNAUDITED PRO FORMA FINANCIAL STATEMENTS AND ACCOMPANYING NOTES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022			19E-1
	~~EXECUTIVE OFFICERS~~ANNEX F MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			20F-1
~~Information about our Executive Officers~~			20
~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT~~			21
~~EXECUTIVE COMPENSATION~~			23
~~Compensation Discussion and Analysis~~			23
~~Severance and Change in Control Benefits and Agreements with NEOs~~			34
~~Indemnification Agreements~~			36
~~Formal Clawback Policy~~			36
~~Compensation Committee Report~~			37
~~Summary Compensation Table~~			38

	Option Awards								Stock Awards
Name	Number of Securities Underlying Unexercised Options Exercisable (#)		Number of Securities Underlying Unexercised Options Unexercisable (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)(1)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#)(20)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights Not Vested ($)
Vincent J. Milano		250,000		—		24.96		12/1/2024
		37,499		—		23.04		1/6/2026
		37,500		—		12.72		1/4/2027
		70,311		4,688(2)		17.92		1/3/2028
		52,812		12,188(3)		7.39		8/13/2028
		58,093		26,407(4)		3.14		1/3/2029
		47,531		36,969(5)		2.52		7/9/2029
		40,250		51,750(6)		1.79		1/10/2030
		28,750		63,250(7)		2.48		7/21/2030
		—		95,000(8)				1/8/2031
		—		124,000(9)				7/8/2031
										44,625(19)		25,436
														100,000		57,000
John J. Kirby		18,750		—		24.88		11/2/2025
		11,249		—		23.04		1/6/2026
		12,499		—		12.72		1/4/2027
		15,819		1,055(2)		17.92		1/3/2028
		8,125		1,875(3)		7.39		8/13/2028
		25,600(10)		—(11)		3.14		1/3/2029
		45,500(10)		—(12)		2.52		7/9/2029
		50,000(10)		—(13)		1.79		1/10/2030
		50,000(10)		—(14)		2.48		7/21/2030
		51,000(10)		—(15)		4.28		1/8/2031
		—		66,500(9)		1.11		7/8/2031

														57,203		32,606
Bryant D. Lim		105,625		24,375(16)		9.29		9/10/2028
		45,500(10)		—(17)		3.14		1/3/2029
		45,500(10)		—(12)		2.52		7/9/2029
		50,000(10)		—(13)		1.79		1/10/2030
		50,000(10)		—(14)		2.48		7/21/2030						��
		51,000(10)		—(15)		4.28		01/8/2031
		—		66,500(9)		1.11		07/8/2031

														2,523		1,438

~~Name and Position(1)~~	~~Number of Shares of~~ ~~Common Stock~~ ~~Underlying Options and~~ ~~RSUs Granted under the~~ ~~Stock Incentive Plan~~
~~Named Executive Officers~~
~~Vincent J. Milano~~ ~~(President and Chief Executive Officer)~~		~~1,209,918~~
~~John J. Kirby~~ ~~(Senior Vice President, Chief Financial Officer)~~		~~511,925~~
~~Bryant D. Lim~~ ~~(Senior Vice President General Counsel, and Secretary)~~		~~545,623~~
~~Daniel B. Soland~~ ~~(Senior Vice President, Chief Operating Officer)~~		~~333,333~~
~~Elizabeth A. Tarka~~ ~~(Former Senior Vice President, Chief Medical Officer)~~		~~301,000~~
~~All current executive officers as a group(2)~~		~~2,600,799~~
~~All current directors (who are not executive officers) as a group(3)~~		~~469,436~~
~~Nominees for director~~
~~Mark Goldberg, M.D.~~		~~83,375~~
~~Carol A. Schafer~~		~~72,000~~
~~All other employees, including all current officers who are not executive officers, as a~~ ~~group~~		~~5,287,767~~

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)			Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plans approved by stockholders(1)		5,158,269		$	8.38		1,084,142
Equity compensation plans not approved by stockholders(2)		359,375		$	26.35		—
Total		5,517,644		$	9.78		1,084,142

	Page(s)
Independent Auditors’ Report		C-4
Consolidated Financial Statements
Consolidated Balance Sheet		C-6
Consolidated Statement of Operations and Comprehensive Loss		C-7
Consolidated Statement of Preferred Equity and Stockholders’ Deficit		C-8
Consolidated Statement of Cash Flows		C-9
Notes to Consolidated Financial Statements		C-10 – C-23

	Member Annual Fee			Chairperson Annual Fee
Board of Directors		$	40,000		$	70,000
Audit Committee		$	7,500		$	15,000
Compensation Committee		$	6,250		$	12,500
Nominating and Corporate Governance Committee		$	4,000		$	8,000
Scientific Advisory Committee		$	4,000		$	8,000

	Fees Earned or Paid in Cash ($)		Option Awards ($)(1)		Total ($)
Cristina Csimma		50,250		24,658		74,908
Michael Dougherty		78,027(2)		24,658		102,685
James A. Geraghty		57,726(3)		24,658		82,384
Mark Goldberg		55,500(4)		24,658		80,158
Maxine Gowen		56,500		24,658		81,158
Carol A. Schafer		59,004(5)		24,658		83,662

Board Diversity Matrix (as of February 4, 2022)
Total number of Directors	7
	Female		Male		Non-Binary		Did not Disclose Gender
Part I: Gender Identity
Directors		3		4		0		0
Part II: Demographic Background
African American or Blank		0		0		0		0
Alaskan Native or Native American		0		0		0		0
Asian		0		0		0		0
Hispanic or Latinx		0		0		0		0
Native Hawaiian or Pacific Islander		0		0		0		0
White		3		4		0		0
Two or More Races or Ethnicities		0		0		0		0
LGBTQ+	0
Did Not Disclose Demographic Background	0

NEO	2020 Base Salary			2021 Base Salary			% Increase
Mr. Milano		$	600,000		$	600,000		—
Mr. Kirby		$	336,000		$	365,000		8.6
Mr. Lim		$	336,000		$	365,000		8.6
Mr. Soland(1)			—		$	425,000		—
Dr. Tarka(2)		$	375,000		$	413,000		10.1

Primary Goals	Contribution toward Corporate Performance Score(1)	Weighted Achievement of Performance Goal(2)	Highlights of Performance on Key Objectives
Continue moving Tilsotolimod (IMO-2125) program toward registration	80%	25%	• Delivered ILLUMINATE-301 topline results, which failed to meet primary endpoint. • Completed cohort expansion in the first phase of MSS-CRC cohort for ILLUMINATE-206.
Continue business development initiatives through rare disease exploration	10%	10%	• Active due diligence on multiple strategic business development options.
Enhance ability to be successful through relevant foundational objectives	10%	10%	• On target with respect to financial budget. • Maintained strong corporate compliance.
Modifier(3)	n/a	5%	• Entered collaboration with Scriptr Global for discovery of gene therapy techniques. • Improved cash position.
TOTAL	100%	50%

NEO	Target Bonus			Overall Score	Bonus Earned			Bonus Payout(1)
Mr. Milano		$	300,000	50%		$	150,000		$	0
Mr. Kirby		$	146,000	50%		$	73,000		$	73,000
Mr. Lim		$	146,000	50%		$	73,000		$	73,000
Mr. Soland		$	170,000	50%		$	85,000		$	0
Dr. Tarka(2)		$	165,200	—			—			—

NEO	January 2021 Grants		July 2021 Grants		Total
NEO	Stock Options (# options)		Stock Options (# options)		Stock Options (# options)
Mr. Milano		95,000		124,000		219,000
Mr. Kirby		51,000		66,500		117,500
Mr. Lim		51,000		66,500		117,500
Mr. Soland		200,000(1)		66,500		266,500
Dr. Tarka		51,000		—(2)		51,000

NAME AND PRINCIPAL POSITION	YEAR		SALARY ($)		STOCK AWARDS ($)(1)		OPTION AWARDS ($)(2)		NON-EQUITY INCENTIVE PLAN COMPENSATION ($)			ALL OTHER COMPENSATION ($)(3)		TOTAL ($)
Vincent J. Milano President and Chief Executive Officer		2021		600,000		—		340,189			150,000(4)		44,244		1,134,433
		2020		24,786		764,713(5)		234,642		��	285,000		37,929		1,347,070
		2019		600,000		105,975		279,160			315,000		37,082		1,337,217
John J. Kirby Senior Vice President, Chief Financial Officer		2021		365,000		—		182,575			73,000		39,408		659,983
		2020		336,000		123,755		127,523			140,448		37,519		765,245
		2019		308,000		32,185		113,955			114,660		36,849		605,649
Bryant D. Lim Senior Vice President, General Counsel and Corporate Secretary		2021		365,000		—		182,575			73,000		42,965		663,540
		2020		336,000		39,679		127,523			140,448		37,779		681,429
		2019		336,000		56,834		150,317			155,232		33,412		731,795
Daniel B. Soland Senior Vice President, Chief Commercial Officer		2021		423,390		—		534,621			85,000(4)		44,437		1,087,448
Elizabeth Tarka Senior Vice President, Chief Medical Officer		2021		172,594		—		131,407			—		489,502		793,503
		2020		375,000		35,800		127,523			142,500		17,082		697,905

	Premiums Paid by us for all Insurance Plans ($)		Company Match on 401(K) ($)		Severance ($)		Total ($)
Mr. Milano		29,744		14,500		—		44,244
Mr. Kirby		24,908		14,500		—		39,408
Mr. Lim		28,465		14,500		—		42,965
Mr. Soland		29,937		14,500		—		44,437
Dr. Tarka		1,180		14,500		473,822		489,502

Name	Grant Date		Estimated Possible Payouts Under Non-Equity Incentive Plan Awards				All Other Option Awards: Number of Securities Underlying Options (#)(1)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)(2)
Name	Grant Date		Target ($)		Maximum ($)				Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)(2)
Vincent J. Milano		N/A		300,000		468,750		—		—		—
		1/8/2021(3)(4)						95,000		4.28		244,788
		7/8/2021(3)(4)						124,000		1.11		95,411
John J. Kirby		N/A		146,000		228,125		—		—		—
		1/8/2021(3)(4)						51,000		4.28		131,407
		7/8/2021(3)(4)						66,500		1.11		51,168
Bryant D. Lim		N/A		146,000		228,125		—		—		—
		1/8/2021(3)(4)						51,000		4.28		131,407
		7/8/2021(3)(4)						66,500		1.11		51,168
Daniel B. Soland		N/A		170,000		265,625		—		—		—
		1/4/2021(3)(5)						200,000		4.02		483,453
		7/8/2021(3)(4)						66,500		1.11		51,168
Elizabeth Tarka		N/A		165,200		258,125		—		—		—
		1/8/2021(3)(4)						51,000		4.28		131,407

Name	Cash Severance(1) ($)		Benefits(2) ($)		Total ($)
Vincent J. Milano		800,000		38,458		838,458
John J. Kirby		474,369		27,657		502,026
Bryant D. Lim		487,893		35,748		523,641
Daniel B. Soland		510,000		38,745		548,745
Elizabeth Tarka(3)		473,822		—		473,822

Name	Medical Insurance Premiums ($)		Dental Insurance Premiums ($)		Total ($)
Vincent J. Milano		36,526		1,932		38,458
John J. Kirby		25,725		1,932		27,657
Bryant D. Lim		33,816		1,932		35,748
Daniel B. Soland		36,813		1,932		38,745
Elizabeth Tarka(a)		—		—		—

Name	Cash Severance(1) ($)		Equity(2)(3) ($)		Benefits(4) ($)		Total ($)
Vincent J. Milano		1,650,000		82,436		57,691		1,790,127
John J. Kirby		912,500		32,606		41,491		986,597
Bryant D. Lim		912,500		1,438		53,623		967,561
Daniel B. Soland		1,062,500		—		58,123		1,120,623
Elizabeth Tarka(5)		—		—		—		—

Fiscal Year	Equity Awards Granted		Basic Weighted Average Number of Shares of Common Stock Outstanding		Gross Burn Rate(1)
2021		1,356,700		49,203,000		2.8%
2020		1,581,227		33,821,000		4.7%
2019		1,473,566		28,545,000		5.2%
Three-Year Average		1,470,498		37,189,667		4.0%

	April 1, 2022*
Total shares of common stock underlying all outstanding options and RSUs			5,677,159
Weighted-average exercise price of outstanding options		$	7.92
Weighted-average remaining contractual life of outstanding options (in years)			6.71
Total shares available for future awards			194,994

Fee Category	2021			2020
Audit Fees		$	475,000		$	475,000
Audit-Related Fees		$	15,000		$	89,000
Tax Fees			—		$	25,235
Total Fees		$	490,000		$	598,235

	Preferred Equity					Stockholders’ Deficit
	Preferred Stock – Series X					Common Stock					Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total
	Shares		Amount			Shares		Amount			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total
Series X preferred stock, net of issuance costs		5		$	12,527,164		—		$	—		$	1,422,836		$	—		$	—		$	1,422,836
Preferred shareholder contributions, net of issuance costs		—			13,905,708		—			—			—			—			—			—
Preferred shares modification		—			7,151,040		—			—			(1,481,844)			(5,669,196)			—			(7,151,040)
Stock-based compensation		—			—		—			—			59,008			—			—			59,008
Issuance of common stock		—			—		3,536,000			3,536			—			—			—			3,536
Currency translation adjustment		—			—		—			—			—			—			(2,757)			(2,757)
Net loss		—			—		—			—			—			(23,906,887)			—			(23,906,887)
Balances at December 31, 2021		5		$	33,583,912		3,536,000		$	3,536		$	—		$	(29,576,083)		$	(2,757)		$	(29,575,304)

	2021
Cash flows from operating activities
Net loss		$	(23,906,887)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of acquisition obligation discount			109,223
Amortization of right-of-use asset			12,609
Non-cash expense in connection with asset acquisition			6,918,772
Foreign currency transaction loss			(2,721)
Stock-based compensation			59,008
Changes in operating assets and liabilities:
Accounts receivable			(237,177)
Unbilled accounts receivable			361,713
Funding receivable			(6,315,637)
Prepaid expenses and other current assets			(715,638)
Accounts payable			(83,951)
Accrued expenses and other liabilities			1,254,875
Operating lease liability, net			(12,609)
Net cash used in operating activities			(22,558,420)
Cash flows from investing activities
Purchase of intangible asset			(165,600)
Net cash used in investing activities			(165,600)
Cash flows from financing activities
Proceeds from issuance of preferred stock, net			27,855,708
Proceeds from issuance of common stock			3,536
Net cash provided by financing activities			27,859,244
Net change in cash, cash equivalents, and restricted cash			5,135,224
Cash and cash equivalents
Consolidated cash and restricted cash at beginning of year			—
Consolidated cash and restricted cash at end of year		$	5,135,224
Supplemental disclosure of cash flow information
Cash paid for interest		$	—
Supplemental disclosure of noncash investing and financing activities
Preferred stock modification dividend		$	7,151,040

	Page(s)
Unaudited Condensed Consolidated Financial Statements
Unaudited Condensed Consolidated Balance Sheets		D-4
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss		D-5
Unaudited Condensed Consolidated Statements of Preferred Equity and Stockholders’ Deficit		D-6
Unaudited Condensed Consolidated Statements of Cash Flows		D-7
Notes to the Unaudited Condensed Consolidated Financial Statements		D-8 – D-16

	Six Months Ended June 30, 2022			Period from March 2, 2021 to June 30, 2021
Revenues
Government sponsored product development		$	8,393,491		$	—
Non-government sponsored product development			1,000,000			—
Total revenues			9,393,491			—
Research and development expenses:
Government and non-government sponsored product development			6,363,077			—
Non-sponsored research and development			7,377,712			1,702,145
In-process research and development expenses			—			1,575,763
Total research and development expenses			13,740,789			3,277,908
General and administrative expenses			3,233,282			1,189,506
Total operating expenses			16,974,071			4,467,414
Operating loss			(7,580,580)			(4,467,414)
Other expense
Interest expense, net			(330,513)			157
Foreign currency transaction loss			(1,292)			(523)
Total other expense			(331,805)			(366)
Loss before income taxes			(7,912,385)			(4,467,780)
Provision for income taxes			(36,864)			—
Net loss			(7,949,249)			(4,467,780)
Other comprehensive loss
Currency translation adjustment			(842)			4,184
Comprehensive loss		$	(7,950,091)		$	(4,463,596)

	Preferred Equity					Stockholders’ Deficit
	Preferred Stock — Series X					Common Stock					Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			Total Stockholders’ Equity
	Shares		Amount			Shares		Amount			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			Total Stockholders’ Equity
Balances at March 2, 2021 (Inception)		—		$	—		—		$	—		$	—		$	—		$	—		$	—
Series X preferred stock, net of issuance costs		5			12,527,167		—			—			1,422,836			—			—			1,422,836
Preferred shareholder contributions, net of issuance costs		—			5,080,705		—			—			—			—			—			—
Stock-based compensation		—			—		—			—			1,000			—			—			1,000
Issuance of common stock		—			—		3,536,000			3,536			—			—			—			3,536
Currency translation adjustment		—			—		—			—			—			—			4,184			4,184
Net loss		—			—		—			—			—			(4,467,780)			—			(4,467,780)
Balances at June 30, 2021		5		$	17,607,872		3,536,000		$	3,536		$	1,423,836		$	(4,467,780)		$	4,184		$	(3,036,224)

	Idera Pharmaceuticals, Inc. (Historical)			Aceragen, Inc. Historical for the Period from January 1, 2022 through September 28, 2022			Transaction Accounting Adjustments			Notes		Pro Forma Combined
Government contracts revenue		$	49		$	13,209			—				$	13,258
Operating expenses:
Research and development			5,960			21,556			—					27,516
General and administrative			7,325			7,978			(2,966)		A			12,337
Acquisition-related costs			2,836			—			(2,836)		A			—
Restructuring and other costs			2,802			—			(2,802)		A			—
Total operating expenses			18,923			29,534			(8,604)					39,853
Loss from operations			(18,874)			(16,325)			8,604					(26,595)
Non-operating income (expense):
Interest income (expense), net			156			(482)			(67)		B			(393)
Warrant revaluation gain			116			—			(116)		C			—
Foreign currency exchange and other gains (losses)			(21)			(2)			—					(23)
Change in fair value of Series X preferred stock liability			—			—			(1,536)		D			(1,536)
Loss before income tax benefit			(18,623)			(16,809)			6,885					(28,547)
Income tax benefit			6,039			(37)			(6,039)		E			(37)
Net loss		$	(12,584)		$	(16,846)		$	846				$	(28,584)
Net loss per share, basic and diluted		$	(0.24)		$	(4.99)							$	(0.26)
Weighted average common shares outstanding, basic and diluted			53,052			3,373			55,257		F			111,682