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                                                                     Exhibit 4.1

                                 AMENDMENT NO. 2
                                       TO
                                RIGHTS AGREEMENT

This AMENDMENT NO. 2 TO RIGHTS AGREEMENT (the "Amendment") is entered into as of
March 24, 2006, between Idera Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), and Mellon Investor Services LLC, a New Jersey limited liability
company, as Rights Agent (the "Rights Agent"). Capitalized terms not otherwise
defined herein shall have the meanings given them in the Rights Agreement, dated
as of December 10, 2001, as amended (the "Rights Agreement"), between the
parties hereto.

                                    RECITALS

WHEREAS, the Board has determined that it is in the best interest of the Company
to amend the Rights Agreement to modify the definition of Exempted Person to
exclude a certain stockholder of the Company from such definition in specified
circumstances; and

WHEREAS, the Company has determined that the Rights Agreement be amended in
accordance with Section 27 of the Rights Agreement, as set forth herein, and the
Rights Agent is hereby directed to join in the amendment to the Rights Agreement
as set forth herein.

                                    AGREEMENT

NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

1. Section 1(oo) of the Rights Agreement is hereby amended to read in its
entirety as follows:

     "(oo) "Exempted Person" shall mean Baker Brothers Investments, together
          with all of its Affiliates and Associates ("Baker Brothers"), unless
          and until such time as Baker Brothers, directly or indirectly, becomes
          the Beneficial Owner of more than 35,000,000 shares (subject to
          appropriate adjustment to reflect any stock split, reverse stock
          split, stock dividend, combination, reclassification or other similar
          recapitalization affecting such shares) of the Common Stock
          (disregarding for purposes of this calculation any shares of Common
          Stock purchased by Baker Brothers pursuant to the participation right
          (the "Participation Right") set forth in Section 5.2 of that certain
          Common Stock Purchase Agreement, dated March 24, 2006, by and among
          the Company and the purchasers listed in Exhibit A thereto (the "CSP
          Agreement")). Notwithstanding the preceding sentence, if following the
          date on which its Participation Right terminates in accordance with
          the CSP Agreement, Baker Brothers, directly or indirectly, is or
          becomes the Beneficial Owner of less than 14% of the Common Stock then
          outstanding, Baker Brothers immediately shall cease to be an Exempted
          Person. The Company acknowledges that the Rights Agent has no
          knowledge of the CSP Agreement.



2. Section 3(a) of the Rights Agreement is hereby amended by deleting the first
sentence of Section 3(a) in its entirety and inserting in lieu thereof the
following sentence:

          "Section 3. Issuance of Rights.

          (a) Until the earlier of (i) the Close of Business on the tenth
     Business Day (or such later date as may be determined by the Board) after
     the Stock Acquisition Date (or, if the tenth Business Day after the Stock
     Acquisition Date occurs before the Record Date, the close of business on
     the Record Date), or (ii) the Close of Business on the tenth Business Day
     (or such later date as may be determined by action of the Board) after the
     date that a tender or exchange offer (other than a Permitted Offer) by any
     Person (other than the Company, any Subsidiary of the Company, any employee
     benefit plan of the Company or of any Subsidiary of the Company, or any
     Person organized, appointed or established by the Company for or pursuant
     to the terms of any such plan) is first published or sent or given within
     the meaning of Rule 14d-2 of the General Rules and Regulations under the
     Exchange Act, if upon consummation thereof, such Person would be the
     Beneficial Owner of 15% or more of the shares of Common Stock then
     outstanding (the earlier of (i) and (ii) being herein referred to as the
     "Distribution Date"), (x) the Rights will be evidenced by the certificates
     for the Common Stock registered in the names of the holders of the Common
     Stock (which certificates for Common Stock shall be deemed also to be
     certificates for Rights) and not by separate certificates, and (y) the
     Rights will be transferable only in connection with the transfer of the
     underlying shares of Common Stock (including a transfer to the Company)."

3. Except as amended hereby, the Rights Agreement shall remain unchanged and
shall remain in full force and effect.

4. This Amendment may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.

5. This Amendment shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of Delaware applicable to contracts made and to be
performed entirely within Delaware; provided, however, that all rights, duties
and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such state.

                  [remainder of page intentionally left blank]



IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by
their respective duly authorized representatives as of the date first above
written.

IDERA PHARMACEUTICALS, INC.


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


MELLON INVESTORS SERVICES LLC,
as Rights Agent


By: /s/ John J. Boryczki
    ---------------------------------
Name: John J. Boryczki
Title: Client Relationship Executive

                                                                    Exhibit 10.1

                           IDERA PHARMACEUTICALS, INC.

                         COMMON STOCK PURCHASE AGREEMENT

                                 March 24, 2006

     This Common Stock Purchase Agreement (this "AGREEMENT") is entered into as
of the date set forth above by and among Idera Pharmaceuticals, Inc., a Delaware
corporation (the "COMPANY"), and the undersigned purchasers (each a "PURCHASER"
and collectively, the "PURCHASERS") set forth on the Schedule of Purchasers
attached hereto as Exhibit A (the "SCHEDULE OF PURCHASERS"). The parties hereby
agree as follows:

                                   ARTICLE 1

                      AUTHORIZATION AND SALE OF SECURITIES

     1.1 Authorization. The Company has duly authorized the sale and issuance to
the Purchasers pursuant to the terms and conditions hereof of (i) up to
22,159,092 shares (the "SHARES") of its common stock, par value $0.001 per share
(the "COMMON STOCK"), and (ii) warrants to purchase up to 16,619,319 shares of
Common Stock in the form attached hereto as Exhibit B (the "WARRANTS").

     1.2 Sale of Securities. Subject to the terms and conditions hereof, at the
Closing (as defined in Section 2.1 below) the Company will issue and sell to
each Purchaser, and each Purchaser agrees, severally and not jointly, to
purchase from the Company, the number of Shares, at a purchase price of $0.44
per share, set forth opposite such Purchaser's name on the Schedule of
Purchasers and for the aggregate purchase price set forth thereon. Payment of
the purchase price for the Shares will be made by the Purchasers by wire
transfer in same day funds. Concurrently with the closing of the purchase and
sale of the Shares, the Company shall issue to each Purchaser a Warrant to
purchase that number of shares of Common Stock equal to 75% of the number of
shares of Common Stock purchased by such Purchaser as reflected on the Schedule
of Purchasers.

                                   ARTICLE 2

                                CLOSING; DELIVERY

     2.1 Closing. The closing of the purchase by the Purchasers and the sale by
the Company of the Shares (the "CLOSING") shall be held at the offices of Wilmer
Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts
02109, as soon as practicable and as agreed to by the parties hereto but in no
event later than three business days following the date of this Agreement, or at
such other time and place as the Company and a majority in interest of the
Purchasers may agree either in writing or orally (the "CLOSING DATE").
Concurrent with the Closing, each Purchaser and the Company shall execute and
deliver the Registration Rights Agreement attached hereto as Exhibit C (the
"RIGHTS AGREEMENT" and, together with this Agreement and the Warrants, the
"TRANSACTION DOCUMENTS").


                                       1.



     2.2 Delivery. At the Closing, the Company will issue to each Purchaser: (i)
a certificate in such Purchaser's name representing the Shares purchased by such
Purchaser, against payment of the purchase price therefor and (ii) a Warrant.

                                    ARTICLE 3

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to each Purchaser that except as
set forth in the Exchange Act Reports (as defined in Section 3.16):

     3.1 Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and the Company is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except
where failure to so qualify would not reasonably be expected to have a Material
Adverse Effect (as defined herein). For purposes of this Agreement, the term
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect upon the
business, financial condition, properties, or results of operations of the
Company. The Company does not have any subsidiaries.

     3.2 Authorized Capital Stock. Immediately prior to Closing, the Company
will have (i) authorized 200,000,000 and outstanding 111,566,993 shares of
Common Stock and (ii) authorized 5,000,000 shares of Preferred Stock, $0.01 par
value per share ("PREFERRED STOCK"), of which 1,500,000 shares have been
designated Series A Convertible Preferred Stock, 655 shares of which are
outstanding, and of which 200,000 shares have been designated Series C Junior
Participating Preferred Stock, none of which are outstanding; the issued and
outstanding shares of the Common Stock and Preferred Stock have been duly
authorized and validly issued, are fully paid and nonassessable, have been
issued in compliance in material respects with all federal and state securities
laws, were not issued in violation of and are not subject to any preemptive
rights or other rights to subscribe for or purchase securities granted by the
Company, and conform (except with respect to the number of authorized, issued
and outstanding shares) in all material respects to the description thereof
contained in the Exchange Act Reports with the Securities and Exchange
Commission (the "COMMISSION" or the "SEC") under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), or in any Registration Statement on Form
8-A filed with the SEC by the Company. Except as disclosed in the Exchange Act
Reports, the Company does not have outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments
requiring the Company to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations, other than options
granted under plans described in the Exchange Act Reports, securities issued
under the common stock purchase agreement dated March 24, 2006 between the
Company and Biotech Shares Ltd. (the "BIOTECH SHARES AGREEMENT") and warrants
issued to Youssef El-Zein as agent of the Company in connection with the Biotech
Shares Agreement. The description of the Company's stock, stock bonus and other
stock plans or arrangements and the options or other rights granted and
exercised thereunder, set forth in the Exchange Act Reports accurately and
fairly presents in all material respects all material information with respect
to such plans, arrangements, options and rights, as of the dates for which such
information is given, that is required by the Exchange Act and the rules and
regulations promulgated thereunder to be so described.


                                       2.



     3.3 Issuance, Sale and Delivery of the Shares. The Shares, Warrants and
shares of Common Stock issuable upon exercise of the Warrants (the "WARRANT
SHARES" and collectively with the Shares and the Warrants, the "SECURITIES")
have been duly authorized and, when issued, delivered and paid for in the manner
set forth in this Agreement and the Warrants, will be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all pledges, liens,
and encumbrances imposed by the Company (other than restrictions on transfer
under state and/or federal securities laws). No preemptive rights or other
rights to subscribe for or purchase from the Company exist with respect to the
issuance and sale of the Securities by the Company pursuant to this Agreement
and the Warrants. Except as disclosed in the Exchange Act Reports, no
stockholder of the Company has any right (which has not been waived or has not
expired by reason of lapse of time following notification of the Company's
intent to file the registration statement to be filed by it pursuant to the
Rights Agreement (the "REGISTRATION STATEMENT")) to require the Company to
register the sale of any shares owned by such stockholder under the Securities
Act of 1933, as amended (the "SECURITIES ACT") in the Registration Statement. No
further approval or authority of the stockholders or the Board of Directors of
the Company will be required for the issuance and sale of the Securities to be
sold by the Company as contemplated herein.

     3.4 Due Execution, Delivery and Performance of this Agreement. The Company
has full legal right, corporate power and authority to enter into the
Transaction Documents and consummate the transactions contemplated hereby and
thereby. The Transaction Documents have been duly authorized, executed and
delivered by the Company. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated herein and therein: (i) will not violate any provision of the
certificate of incorporation or bylaws of the Company, (ii) will not result in
the creation of any lien, charge, security interest or encumbrance upon any
assets of the Company pursuant to the terms or provisions of, and will not
conflict with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under any
agreement, lease, franchise, license, permit or other instrument to which the
Company is a party or by which the Company or any of its properties are bound,
except, in each case, for any lien, charge, security interest, encumbrance,
conflict, breach, violation or default which would not reasonably be expected to
have a Material Adverse Effect, or (iii) conflict with or result in the
violation of any statute or any judgment, decree, order, rule or regulation of
any court or any regulatory body, administrative agency or other governmental
body applicable to the Company or any of its properties except for any such
conflict or violation which would not reasonably be expected to have a Material
Adverse Effect. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is required
for the execution and delivery by the Company of the Transaction Documents or
the consummation by the Company of the transactions contemplated by the
Transaction Documents, except for compliance with the blue sky laws and federal
securities laws, the listing of the Shares and the Warrant Shares on the
American Stock Exchange and the filing of the Registration Statement. Upon the
execution and delivery of the Transaction Documents, and assuming the valid
execution thereof by the Purchasers, each Transaction Document will constitute a
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in


                                       3.



a proceeding in equity or at law) and except to the extent enforcement of the
indemnification obligations of the Company set forth in the Rights Agreement may
be limited by federal or state securities laws or the public policy underlying
such laws.

     3.5 Accountants. The firm of Ernst & Young LLP, which has expressed its
opinion with respect to the financial statements to be included or incorporated
by reference in the Registration Statement and the prospectus which forms a part
thereof (the "PROSPECTUS"), is an independent accountant as required by the
Securities Act and the rules and regulations promulgated thereunder (the "RULES
AND REGULATIONS").

     3.6 No Defaults. The Company is not in violation or default of any
provision of its certificate of incorporation or bylaws, or in breach of or
default with respect to any provision of any agreement, judgment, decree, order,
lease, franchise, license, permit or other instrument to which it is a party or
by which it or any of its properties are bound except for any violation or
default that would not reasonably be expected to have a Material Adverse Effect.

     3.7 Contracts. There is no material contract or agreement required by the
Exchange Act and the rules and regulations promulgated thereunder to be
described in or filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 2004 or any other document that the Company was
required to file with the Commission since December 31, 2004 pursuant to the
reporting requirements of the Exchange Act which is not described or filed
therein as required. Any contracts filed as exhibits to the Exchange Act Reports
that are material to the Company are in full force and effect on the date
hereof.

     3.8 No Actions. Except as disclosed in the Exchange Act Reports, (1) there
are no legal or governmental actions, suits or proceedings pending and (2) to
the Company's knowledge, there are no inquiries or investigations pending, or
any legal or governmental actions, suits, or proceedings threatened, against the
Company or of which property owned or leased by the Company is or may be the
subject (it being understood that the interaction between the Company and the
United States Food and Drug Administration and such comparable governmental
bodies relating solely to the clinical development and product approval process
shall not be deemed proceedings for purposes of this representation), or related
to environmental or discrimination matters, which actions, suits or proceedings,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect; and no labor disturbance by the employees of the
Company exists or, to the Company's knowledge, is imminent which would
reasonably be expected to have a Material Adverse Effect. The Company is not
party to or subject to the provisions of any injunction, judgment, decree or
order of any court, regulatory body, administrative agency or other governmental
body specifically naming the Company that would reasonably be expected to have a
Material Adverse Effect.

     3.9 Properties. The Company has good and marketable title to all properties
and assets that are material to the business and reflected as owned as of
September 30, 2005 in the financial statements included in the Exchange Act
Reports or notes thereto, except those properties and assets that have been
assigned or disposed of in the normal course of business. None of such
properties or assets are subject to any lien, mortgage, pledge, charge or
encumbrance of any kind, except for (i) those, if any, reflected in the
financial statements included in the Exchange Act Reports, (ii) licenses of the
Company's intellectual property


                                       4.



entered into in the ordinary course of business or (iii) those which are not
material in amount and do not materially adversely affect the use of such
property or assets by the Company. The Company holds its leased properties under
valid and binding leases, with such exceptions as would not reasonably be
expected to have a Material Adverse Effect.

     3.10 No Material Change. Since December 31, 2005, and except as described
in the Exchange Act Reports:

          (A) the Company has not incurred any material liabilities or
obligations, indirect, or contingent, or entered into any material oral or
written agreement or other transaction, which was not incurred or entered into
in the ordinary course of business other than the Biotech Shares Agreement and
the placement agent agreement with Youssef El-Zein;

          (B) the Company has not sustained any material loss or interference
with its business or properties from fire, flood, windstorm, accident or other
calamity not covered by insurance;

          (C) the Company has not paid or declared any dividends or other
distributions with respect to its capital stock and the Company is not in
default in the payment of principal or interest on any outstanding debt
obligations;

          (D) there has not been any material change or amendment to a contract
filed as an exhibit to an Exchange Act Report that is material to the Company;

          (E) there has not been any sale, assignment or transfer of all or
substantially all of the Company's rights in any patents, trademarks,
copyrights, trade secrets or other intangible assets or other material assets,
except a sale, assignment or transfer made in the ordinary course of business
that is not material to the assets, properties, financial condition, operating
results or business of the Company;

          (F) there has not been any resignation or termination of any officer,
key employee or group of employees of the Company other than the Vice President
of Clinical of the Company; and the Company, to its knowledge, does not know of
the impending resignation or termination of employment of any such officer, key
employee or group of employees;

          (G) there has not been any waiver by the Company of a material debt
owed to it;

          (H) there has not been any material change in any compensation
arrangement or agreement with any officer or director;

          (I) there has not been any agreement or commitment by the Company to
do any of the acts described in subsections (a) through (h) above; and

          (J) there has not been any event which has caused a Material Adverse
Effect other than continued incurrence of operating losses incurred in the
ordinary course of the Company's business at a rate consistent with the
Company's rate of operating losses for the


                                       5.



quarter ended December 31, 2005 as reflected in the Company's Financial
Statements (as defined below).

     3.11 Intellectual Property. Except as disclosed in the Exchange Act
Reports, (i) the Company owns or has the right to use the inventions, patent
applications, patents, trademarks (both registered and unregistered), trade
names, copyrights and trade secrets used by it in or, to its knowledge,
necessary for the conduct of the Company's business, including the development
and commercialization of products currently under development in the Company's
IMO-2055 program, including IMOxine and any follow compounds, IMO-2125 program
(and any follow-on compounds to 2125) and toll-like receptor antagonist program
(collectively, the "COMPANY INTELLECTUAL PROPERTY"), except where such failure
to own or have the right to use the intellectual property would not reasonably
be expected to have a Material Adverse Effect; and (ii) (a) to the Company's
knowledge, there are no third parties who have any ownership rights to any
Company Intellectual Property that would preclude the Company from conducting
its business as currently conducted and have a Material Adverse Effect, except
for the ownership rights of the owners of the Company Intellectual Property
licensed by the Company; (b) to the Company's knowledge, there are currently no
sales of any products or any other uses that would constitute an infringement by
third parties of any Company Intellectual Property, which infringement would
reasonably be expected to have a Material Adverse Effect; (c) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the rights of the Company in or to any Company
Intellectual Property, which action, suit, proceeding or claim would reasonably
be expected to have a Material Adverse Effect; (d) there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Company Intellectual Property, which
action, suit, proceeding or claim would reasonably be expected to have a
Material Adverse Effect; and (e) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary right (an "INTELLECTUAL PROPERTY RIGHT") of others,
which action, suit, proceeding or claim would reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Company, the Company does not
infringe nor is it in conflict with any Intellectual Property Rights of any
other person. The termination of the Company's ownership of, or right to use,
any single patent of Company Intellectual Property would not result in a
Material Adverse Effect. The Company has not entered into any consent
agreements, forbearance to sue or settlement agreements with respect to the
validity of the Company's ownership or right to use Company Intellectual
Property. To the Company's knowledge, the Company Intellectual Property is valid
and enforceable. No registration relating to Company Intellectual Property has
lapsed, expired or been abandoned or canceled or is the subject of cancellation
or other adversarial proceedings, and all applications therefor are pending and
in good standing. The Company has complied, in all material respects, with its
contractual obligations relating to the protection of the Company Intellectual
Property used pursuant to licenses. All former or current employees, officers
and consultants of the Company have entered into agreements with the Company
providing for the assignment of inventions to the Company, except where the
failure to have entered into an agreement with an employee, officer or
consultant would not reasonably be expected to have a Material Adverse Effect.

     3.12 Compliance. The Company is conducting its business in compliance with
all applicable laws, rules and regulations of the jurisdictions in which it is
conducting its business,


                                       6.



including, without limitation, all applicable local, state and federal
environmental laws and regulations; except where failure to be so in compliance
would not reasonably be expected to have a Material Adverse Effect.

     3.13 Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
issuance and sale of the Shares to be sold to the Purchasers hereunder will be,
or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been complied with.

     3.14 Investment Company. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.

     3.15 Insurance. The Company carries, or is covered by, insurance of the
types and in the amounts that the Company reasonably believes are adequate for
its business as currently conducted and as is customary for similarly sized
companies engaged in similar businesses in similar industries.

     3.16 Disclosure. Neither this Agreement nor any exhibit hereto nor any
certificates, instruments or other documents delivered by the Company to the
Purchasers in connection with the purchase and sale of the Securities (other
than any documents delivered by the Company describing the Company's clinical
development plans and associated budget), when read together, contains any
untrue statement of a material fact. The information contained in the following
documents did not, as of the date of the applicable document, include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, as of their respective
dates:

          (A) the Company's Annual Report on Form 10-K for the year ended
December 31, 2004;

          (B) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2005, June 30, 2005 and September 30, 2005; and

          (C) all other documents, if any, filed by the Company with the
Commission since March 25, 2005 pursuant to the reporting requirements of the
Exchange Act (together with paragraphs (a) and (b), the "EXCHANGE ACT REPORTS").

     3.17 Price of Common Stock. The Company has not taken, and will not take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of the Common Stock to
facilitate the sale or resale of the Securities.

     3.18 Reporting Company; Form S-3. The Company is subject to the reporting
requirements of the Exchange Act and since December 31, 2004 has timely filed
all reports required thereby. As of their respective filing dates, all Exchange
Act Reports complied in all material respects with the requirements of the
Exchange Act. The Company is eligible to register the Shares and the Warrant
Shares for resale by the Purchaser on a registration statement


                                       7.



on Form S-3 under the Securities Act. To the Company's knowledge, there exist no
facts or circumstances that would prohibit or delay the preparation and filing
of a registration statement on Form S-3 with respect to the Registrable
Securities (as defined in the Rights Agreement). The Company does not know of
any basis to believe that its present independent public auditors will withhold
their consent to the inclusion, or incorporation by reference, of their audit
opinion concerning the Company's financial statements that will be included in
the Registration Statement.

     3.19 Use of Proceeds. The Company intends to use the proceeds from the sale
of the Securities for research and clinical development activities,
manufacturing and commercialization of its product candidates, working capital
and general corporate purposes, including for potential acquisitions of
additional technologies and intellectual property rights.

     3.20 Use of Purchaser Name. Except as may be required by applicable law or
regulation and as may be required in the Registration Statement, the Company
shall not use any Purchaser's name or the name of any of its affiliates in any
advertisement, announcement, press release or other similar public communication
in connection with the offering of the Securities contemplated hereby unless it
has received the prior written consent of such Purchaser for the specific use
contemplated or as otherwise required by applicable law or regulation.

     3.21 Related Party Transactions. No transaction has occurred between or
among the Company and its affiliates, officers or directors or any affiliate or
affiliates of any such officer or director that is required to have been
described in the Exchange Act Reports under Item 404 of Regulation S-K as
required by the Exchange Act or otherwise and is not so described in the
Exchange Act Reports.

     3.22 Governmental Permits, Etc. The Company has all franchises, licenses,
certificates and other authorizations from such federal, state or local
government or governmental agency, department or body that are currently
required for the operation of the business of the Company as currently
conducted, except where the failure to posses currently such franchises,
licenses, certificates and other authorizations would not reasonably be expected
to have a Material Adverse Effect. The Company has not received any notice of
proceedings relating to the revocation or modification of any such permit.

     3.23 Financial Statements. The consolidated financial statements of the
Company and the related notes contained in the Exchange Act Reports and the
consolidated financial statements of the Company and the related notes for the
period ended December 31, 2005, which have been delivered to the Purchasers,
(collectively, the "FINANCIAL STATEMENTS") present fairly, in accordance with
United States generally accepted accounting principles ("GAAP"), the
consolidated financial position of the Company as of the dates indicated, and
the results of operations and cash flows for the periods therein specified,
subject, in the case of unaudited financial statements for interim periods, to
normal year-end audit adjustments. The Financial Statements (including the
related notes) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods therein specified, except that unaudited
financial statements are subject to normal year-end audit adjustments and may
not contain all footnotes required by GAAP. Since December 31, 2005, the Company
has not incurred liabilities,


                                       8.



contingent or otherwise in the ordinary course of business which individually or
in the aggregate, are material to the financial condition or operating results
of the Company.

     3.24 Listing. The Common Stock is presently listed on the American Stock
Exchange. The Company has not, in the two years preceding the date hereof,
received any written notice from the American Stock Exchange to the effect that
the Company is not in compliance with the maintenance requirements of such
exchange. The Company has secured or prior to closing will secure the listing of
the Shares and the Warrant Shares upon each national securities exchange or
automated quotation system upon which shares of Common Stock are currently
listed (subject to official notice of issuance).

     3.25 Sarbanes-Oxley Act; Accounting Controls. The Company is in compliance
in all material respects with all provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it. The Company maintains a system of internal
accounting controls that the Company reasonably believes is sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

     3.26 ERISA Compliance. Each employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is maintained, administered or contributed to by the Company or
any entity that is considered a "single employer" with the Company in accordance
with Section 414 of the Internal Revenue Code of 1986, as amended (the "CODE"),
for employees or former employees of the Company has been maintained in all
material respects in compliance with its terms (except that in any case in which
any plan is currently required to comply with a provision of ERISA or of the
Code, but is not yet required to be amended to reflect such provision, it has
been maintained, operated and administered in accordance with such provision)
and the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Code; no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred which would result in a material liability to the Company with respect
to any such plan excluding transactions effected pursuant to a statutory or
administrative exemption; and for each such plan that is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA, no "accumulated
funding deficiency" as defined in Section 412 of the Code has been incurred,
whether or not waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions) exceeds the
present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions.

     3.27 Foreign Corrupt Practices. Neither the Company, nor, to the knowledge
of the Company, any director, officer, agent, employee or other Person acting on
behalf of the Company has, in the course of its actions for, or on behalf of,
the Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation


                                       9.



of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended;
or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.

     3.28 Employee Relations. The Company is not a party to any collective
bargaining agreement and does not employ any member of a union. No executive
officer of the Company (as defined in Rule 501(f) of the Securities Act) has
notified the Company that such officer intends to leave the Company or otherwise
terminate such officer's employment with the Company. No executive officer of
the Company, to the knowledge of the Company, is in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant with the Company, and, to the knowledge of
the Company, the continued employment of each such executive officer does not
subject the Company to any liability with respect to any of the foregoing
matters. To the Company's knowledge, no employee, officer or consultant of the
Company is in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant. Except as set forth in the Exchange Act Reports, no employee of the
Company has been granted the right to any severance following termination of
employment with the Company in excess of $200,000.

     3.29 Securities Law Exemptions. Assuming the accuracy of the
representations and warranties of the Purchasers contained in Section 4 hereof,
the offer, sale and issuance of the Securities are exempt from the registration
requirements of the Securities Act, and the registration, permit or
qualification requirements of any applicable state securities laws. Neither the
Company nor any person acting on its behalf has taken any action to sell, offer
for sale or solicit offers to buy any securities of the Company that would
reasonably be expected to subject the offer, issuance or sale of the Securities,
as contemplated by this Agreement, to the registration requirements of Section 5
of the Securities Act.

     3.30 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause this offering of
Securities to be integrated with any prior or contemporaneous offering of
securities of the Company for purposes of the Securities Act or any applicable
state securities law or any applicable stockholder approval provisions.

     3.31 No Brokers. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by any Purchaser relating to this Agreement or the transactions
contemplated hereby other than fees owed to ThinkEquity.

                                   ARTICLE 4

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Each Purchaser hereby represents and warrants as follows:


                                       10.



     4.1 This Agreement and the Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of such Purchaser and are valid and
binding agreements of such Purchaser enforceable against such Purchaser in
accordance with their terms except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except to the extent enforcement of the Purchaser's indemnification
obligations set forth in the Rights Agreement may be limited by federal or state
securities laws or the public policy underlying such laws.

     4.2 The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
securities representing an investment decision like that involved in the
purchase of the Securities, including investments in securities issued by the
Company and comparable entities, and has had the opportunity to request,
receive, review and consider all information it deems relevant in making an
informed decision to purchase the Securities; (ii) the Purchaser is acquiring
the Securities set forth in Section 1 above in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of such Securities or any arrangement or
understanding with any other persons regarding the distribution of such
Securities (this representation and warranty not limiting the Purchaser's right
to sell pursuant to the Registration Statement or in compliance with the
Securities Act and the Rules and Regulations, or the Purchaser's right to
indemnification under the Rights Agreement); (iii) the Purchaser has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Securities; (iv) the Purchaser has completed or caused to be
completed the Registration Statement Questionnaire attached hereto as part of
Exhibit D, for use in preparation of the Registration Statement, and the answers
thereto are true and correct as of the date hereof and will be true and correct
as of the effective date of the Registration Statement and the Purchaser will
notify the Company promptly of any material change in any such information
provided in the Registration Statement Questionnaire until such time as the
Purchaser has sold all of its Securities or until the Company is no longer
required to keep the Registration Statement effective; (v) the Purchaser has had
an opportunity to discuss this investment with representatives of the Company
and ask questions of them; (vi) the Purchaser is an "accredited investor" within
the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act;
(vii) the Purchaser agrees to notify the Company promptly of any change in any
of the foregoing information until such time as the Purchaser has sold all of
its Securities or the Company is no longer required to keep the Registration
Statement effective; and (viii) the Purchaser will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire to take a pledge of) any of the Shares except
in compliance with the Securities Act, the Rules and Regulations, and applicable
state securities laws.

     4.3 The Purchaser understands that the Securities are being offered and
sold to it in reliance upon specific exemptions from the registration
requirements of the Securities Act, the Rules and Regulations and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to


                                       11.



determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Securities.

     4.4 The Purchaser understands that its investment in the Securities
involves a significant degree of risk, including a risk of total loss of the
Purchaser's investment, and the Purchaser has full cognizance of and understands
all of the risk factors related to the Purchaser's purchase of the Securities.
The Purchaser understands that the market price of the Common Stock has been
volatile and that no representation is being made as to the future value of the
Common Stock. The Purchaser has the knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities and has the ability to bear the economic risks of
an investment in the Securities.

     4.5 The Purchaser understands that no United States federal or state agency
or any other government or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.

     4.6 The Purchaser's principal executive offices are at the address set
forth below the Purchaser's name on the Schedule of Purchasers.

     4.7 The Purchaser further represents and warrants to, and covenants with,
the Company that (i) the Purchaser is in compliance with Executive Order 13224
and the regulations administered by the U.S. Department of the Treasury
("TREASURY") Office of Foreign Assets Control, (ii) the Purchaser, its parents,
subsidiaries, affiliated companies, officers, directors and partners, and to the
Purchaser's knowledge, its shareholders, owners, employees, and agents, are not
on the List of Specially Designated Nationals and Blocked Persons maintained by
Treasury and have not been designated by Treasury as a financial institution of
primary money laundering concern, (iii) to the Purchaser's knowledge after
reasonable investigation, all of the funds to be used to acquire the Securities
are derived from legitimate sources and are not the product of illegal
activities, and (iv) the Purchaser is in compliance with all other applicable
U.S. anti-money laundering laws and regulations and has implemented, if
applicable, an anti-money laundering compliance program in accordance with the
requirements of the Bank Secrecy Act, as amended by the USA PATRIOT Act, Pub. L.
107-56.

     4.8 Except for Section 3.29, nothing in this Section 4 shall lessen or
obviate the representations and warranties of the Company set forth in this
Agreement.

                                    ARTICLE 5

                                    COVENANTS

     5.1 Form D: Blue Sky Laws. The Company shall file with the SEC a Form D
with respect to the Securities as required under Regulation D and provide a copy
thereof to each Purchaser promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to each Purchaser
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States or obtain exemption therefrom, and shall provide
evidence of any such action so taken to each Purchaser promptly after taking
such action. Within two (2)


                                       12.



trading days after the Closing Date, the Company shall file a Form 8-K
concerning this Agreement and the transactions contemplated hereby, which Form
8-K shall attach this Agreement, the Rights Agreement and the form of Warrant as
exhibits to such Form 8-K.

     5.2 Reporting Status. So long as any Purchaser beneficially owns any of the
Securities and so long as the Company is subject to the periodic reporting
obligations of the Exchange Act, the Company shall timely file (within
applicable extension periods) all reports required to be filed with the SEC
pursuant to the Exchange Act.

     5.3 Participation Right.

          (A) In the event that prior to the earlier of (i) March 23, 2008 and
(ii) the date that the Purchasers collectively own fewer than 11,079,545 shares
of Common Stock (such number of shares being subject to adjustment for stock
splits, dividends, combinations, recapitalizations, reclassifications and other
similar events), the Company proposes to sell and issue securities of the
Company (an "ADDITIONAL FINANCING") each Purchaser shall have the option to
purchase, on the same terms and conditions offered by the Company to the other
purchasers of such securities in such Additional Financing, up to that
percentage of the securities sold in such Additional Financing equal to (x) the
proportion that the number of Shares then held by such Purchaser bears to the
total number of Shares then held by all Purchasers, multiplied by (y) the
aggregate percentage set forth in Section 5.3(e) hereof with respect to such
Additional Financing (such percentage being a Purchaser's "PRO RATA AMOUNT").

          (B) No later than 10 business days prior to the anticipated closing of
any such proposed Additional Financing, the Company shall deliver a written
notice (the "OFFER NOTICE") to the Purchasers stating (i) its bona fide
intention to offer securities in an Additional Financing, (ii) the number of
such securities to be offered, (iii) the price and terms, to the extent known,
upon which it proposes to offer such securities, and (iv) the anticipated
closing date of the sale of such securities. The Company shall promptly notify
each Purchaser of (i) the determination of the price and terms upon which it
proposes to offer such securities, to the extent not set forth in the Offer
Notice, and (ii) any material change in any of the information set forth in the
Offer Notice or in the price or other terms previously communicated to such
Purchaser (it being understood that any change in the offering price, the number
of shares to be offered and the warrant coverage and warrant exercise price of
any warrants issued in such Additional Financing, shall be deemed to be
material, regardless of magnitude).

          (C) In order to participate in the Additional Financing, in whole or
in part, a Purchaser must deliver to the Company, on or prior to the latest of
(i) the date 10 business days after the date of delivery of the Offer Notice
(the "Offer Notice Expiration Date"), (ii) the date one business day following
the date on which the final price and terms, to the extent not set forth in the
Offer Notice, are communicated to such Purchaser and (iii) the date one business
day following the date on which any change in any of the information set forth
in the Offer Notice or in the price or any other term of the Additional
Financing is communicated to such Purchaser, a written notice of acceptance
providing a representation letter certifying that such Purchaser is an
accredited investor within the meaning of Rule 501 under the Securities Act and
indicating the portion of the Purchaser's Pro Rata Amount that such Purchaser
elects to purchase and, if such Purchaser shall elect to purchase all of its Pro
Rata Amount, indicating the amount of securities


                                       13.



not subscribed for by the other Purchasers hereunder (the "UNDERSUBSCRIPTION
AMOUNT") that such Purchaser elects to purchase. If the Pro Rata Amounts
subscribed for by all Purchasers are less than the total of all of the Pro Rata
Amounts available for purchase, then each Purchaser who has set forth an
Undersubscription Amount in its notice of acceptance shall be entitled to
purchase, in addition to the Pro Rata Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the
Undersubscription Amounts subscribed for by the Purchasers exceed the available
Undersubscription Amount, each Purchaser who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
available Undersubscription Amount as the Undersubscription Amount subscribed
for by such Purchaser bears to the total Undersubscription Amounts subscribed
for by all Purchasers, subject to rounding by the Board of Directors to the
extent it deems reasonably necessary.

          (D) The Company may conduct the Additional Financing, and in the event
that all of the securities offered to the Purchasers in the Offer Notice are not
purchased hereunder by the Purchasers include such unpurchased securities in the
securities being sold in the Additional Financing, within 60 days of the Offer
Notice Expiration Date on terms and conditions not more favorable to the
purchasers in such Additional Financing than the terms and conditions offered to
the Purchasers hereunder without first offering such securities to the
Purchasers in the manner provided in this Section 5.3.

          (E) The aggregate percentage of any Additional Financing that the
Purchasers shall have the right to purchase under this Section 5.3 shall be
determined as follows:

               (I) if the price at which the securities are sold in the
Additional Financing is equal to or less than $0.88 (as adjusted for any stock
splits, stock dividends, recapitalization, reclassifications or otherwise), the
Purchasers shall collectively be entitled to purchase up to 50% of the
securities to be issued in such Additional Financing;

               (II) if the price at which the securities are sold in the
Additional Financing is greater than $0.88 (as adjusted for any stock splits,
stock dividends, combinations, recapitalization, reclassifications or otherwise)
and equal to or less than $1.32 (as adjusted for any stock splits,
recapitalization, reclassifications or otherwise), the Purchasers shall
collectively be entitled to purchase up to 40% of the securities to be issued in
such Additional Financing;

               (III) if the price at which the securities are sold in the
Additional Financing is greater than $1.32 (as adjusted for any stock splits,
stock dividends, combinations, recapitalization, reclassifications or otherwise)
and equal to or less than $1.76 (as adjusted for any stock splits,
recapitalization, reclassifications or otherwise), the Purchasers shall
collectively be entitled to purchase up to 30% of the securities to be issued in
such Additional Financing; and

               (IV) if the price at which the securities are sold in the
Additional Financing is greater than $1.76 (as adjusted for any stock splits,
stock dividends, combinations, recapitalization, reclassifications or
otherwise), the Purchasers shall collectively be entitled to purchase up to 20%
of the securities to be issued in such Additional Financing.

     For purposes of this clause (e), the price at which the securities are sold
is intended to reflect the price at which a share of Common Stock is sold in the
Additional Financing or the


                                       14.



price of which a unit of securities that includes one share of Common Stock is
sold. In the event that the Additional Financing is of securities convertible
into or exercisable for Common Stock or of a unit of securities that includes
securities convertible into or exercisable for Common Stock, then the price at
which the securities shall be deemed to be sold for purposes of this clause (e)
shall be determined on a fully-exercised, as-converted to Common Stock basis. In
the event that the Additional Financing is of securities not convertible into or
exercisable for Common Stock, the Purchasers shall collectively be entitled to
purchaser up to 50% of the securities to be issued in such Additional Financing.

          (F) In the event that the Company proposes an Additional Financing
that is a public offering made pursuant to a registration statement filed with
the Commission pursuant to the Securities Act, the offering of securities to the
Purchasers pursuant to this Section 5.3 shall be made by the Company in a
concurrent private placement and not in such public offering. In any such
private placement: (i) the offer of the securities in such private placement
shall be made on the same terms and conditions as the offer of the securities in
the public offering, (ii) the closing of the private placement shall occur
concurrently with the closing of the Additional Financing, (iii) the securities
offered to the Purchasers in the private placement shall be deemed to have been
issued in such Additional Financing for the purpose of calculating the
percentages set forth in Section 5.3(e), and (iv) the Company shall provide
registration rights substantially identical to those provided in the Rights
Agreement with respect to the securities purchased in the private placement.

          (G) The following issuances shall not be Additional Financings for
purposes of this Section 5.3 and the Purchasers shall have no rights hereunder
with respect to such issuances of securities: (i) the issuance or sale of shares
of Common Stock (or options therefor) to employees, officers, directors,
consultants or advisers of the Company pursuant to any plan, agreement or
arrangement approved by the Company's Board of Directors (the primary purpose of
which, in the reasonable judgment of the Company's Board of Directors, is not to
raise additional capital); (ii) the issuance of securities in connection with
mergers, acquisitions, strategic business partnerships, joint ventures or
research and development, licensing or similar collaborations or arrangements;
(iii) securities issued upon exercise or conversion of outstanding securities of
the Company; (iv) securities issued to placement agents; (v) securities issued
as payments of interest on notes of the Company; (vi) securities issued as a
stock dividend to holders of Common Stock or upon any subdivision or combination
of shares of Common Stock; and (vii) shares of Common Stock, or the grant of
options or warrants therefor, in connection with any present or future
borrowing, leasing or similar debt financing arrangement (including any line of
credit extended by any commercial lending institution and evidenced by the
issuance of notes by the Company) approved by the Board of Directors of the
Company.

          (H) The participation right in this Section 5.3 shall terminate upon
the earlier of (i) the closing of any Additional Financing in which the Company
issues securities in a single closing for aggregate consideration exceeding $50
million and (ii) the closing of any Additional Financing in which the Company
issues securities for aggregate consideration that, when added together with the
consideration received by the Company for all Additional Financings prior to
such Additional Financing, exceeds $75 million.


                                      15.


          (I) The participation right in this Section 5.3 may not be assigned or
transferred, except that such right is assignable by each Purchaser to any
wholly owned subsidiary or parent of, or to any corporation or entity that is,
within the meaning of the Securities Act, controlling, controlled by or under
common control with, any such Purchaser.

          (J) No Purchaser shall have any right to purchase securities of the
Company hereunder, and the Company shall have no obligation to a Purchaser
hereunder, if (1) the Company has used its reasonable best efforts to ensure
that the sale of such securities to such Purchaser will not violate any Rule or
Regulation and, despite such efforts, the Company reasonably determines in good
faith (based on the written advice of its counsel) that the sale of such
securities to such Purchaser cannot be made without the violation of any Rule or
Regulation or (2) (A) the Company reasonably determines in good faith (based on
the written advice of its counsel) that the sale of such securities to such
Purchaser cannot be made without requiring the approval of the Company's
stockholders for a reason that is related to such Purchaser (or to the
Purchasers as a group) and is not related to the participation of other
participants in the Additional Financing and (B) the Company has used
commercially reasonable efforts (which shall include consulting in good faith
with the participants in the Additional Financing other than the Purchasers) to
structure the Additional Transaction such that that the sale of such securities
to such Purchaser can be made without requiring the approval of the Company's
stockholders; provided, however, the Company shall negotiate in good faith with
such Purchaser to implement a mutually-agreeable alternative to such Purchaser's
participation in such Additional Financing on the same terms as the other
participants with the goal of providing such Purchaser with the opportunity to
purchase securities of the Company on or about the time of the Additional
Financing on terms that are economically equivalent to the terms offered to the
participants in the Additional Financing.

     5.4 Expenses. The Company shall pay to Baker Brothers Investments ("BBI")
at the Closing upon delivery to the Company of an invoice, reimbursement for the
out-of-pocket expenses reasonably incurred by BBI or its advisors in connection
with the negotiation, preparation, execution and delivery of the Transaction
Documents and the other agreements to be executed in connection herewith, and
therewith, including, without limitation, reasonable due diligence and
attorneys' fees and expenses (the "EXPENSES"); provided, however, that BBI shall
be permitted to deduct all Expenses from the purchase price payable by BBI and
purchasers affiliated with BBI hereunder. In addition, from time to time
following the Closing, upon BBI's written request and delivery to the Company of
an invoice, the Company shall pay to BBI such additional Expenses, if any, not
covered by any payments made at Closing. The maximum amount of Expenses for
which the Company shall be responsible pursuant to this section shall be $50,000
and the balance of the expenses of BBI and the other Purchasers shall be borne
by BBI and the other Purchasers.

     5.5 Information. The Company shall send the following to each Purchaser
until such Purchaser transfers, assigns or sells all of its Securities: (i)
unless otherwise available on the SEC's EDGAR system, within ten (10) days after
the filing with the SEC, a copy of its Annual Report on Form 10-K, its Quarterly
Reports on Form 10-Q, its proxy statements and any Current Reports on Form 8-K;
and (ii) within one day of the release, copies of all press releases issued by
the Company.


                                      16.



     5.6 Listing. The Company will use its best efforts to continue the listing
and trading of its Common Stock, including the Shares and Warrant Shares, on the
American Stock Exchange ("AMEX"), the New York Stock Exchange, the Nasdaq
National Market, the Nasdaq Capital Market or other equivalent U.S. national
exchange or automated trading market (a "PERMITTED EXCHANGE") and to comply with
the reporting, filing and other obligations under the bylaws or rules thereof.

     5.7 Corporate Existence. So long as a Purchaser owns any Securities, in the
event of a merger, consolidation or sale of all or substantially all of the
Company's assets, the Company shall ensure that the surviving or successor
entity in such transaction assumes the Company's obligations hereunder and under
the Warrants and the agreements and instruments entered into in connection
herewith regardless of whether or not the Company would have had a sufficient
number of shares of Common Stock authorized and available for issuance upon
exercise of all Warrants outstanding as of the date of such transaction. The
Company covenants and agrees that it will not engage in any liquidation,
dissolution, merger, consolidation or sale of all or substantially all of its
assets at any time prior to the effectiveness of the Registration Statement
required to be filed pursuant to the Rights Agreement without (A) providing each
Purchaser with written notice of such transaction at least 15 days prior to the
consummation of such transaction and (B) obtaining the written consent (such
consent not to be unreasonably withheld) of the Purchasers holding a
majority-in-interest of the then outstanding Shares held by the Purchasers;
provided, however, that the Company shall not have any obligation hereunder to
obtain such consent if the Board of Directors of the Company determines in good
faith (based on the written advice of counsel) that requiring such consent would
be inconsistent with its fiduciary duties under applicable law.

     5.8 Securities Laws; No Integrated Offerings. The Company shall not make
any offers or sales of any security under circumstances that would cause the
offer and sale of the Securities hereunder to violate the Securities Act or the
Rules or Regulations or cause the offer and sale of the Securities to be subject
to any stockholder approval provision applicable to the Company or its
securities.

     5.9 Legal Compliance. So long as any Purchaser beneficially owns at least
5% of the Company's common stock (determined in accordance with Rule 13(d) under
the Exchange Act), the Company shall conduct its business and the business of
its subsidiaries in compliance with all laws, ordinances or regulations of
governmental entities applicable to such businesses, except where the failure to
do so would not have a Material Adverse Effect.

     5.10 Inspection of Properties and Books. So long as BBI beneficially owns
at least 10% of the Company's common stock (determined in accordance with Rule
13(d) under the Exchange Act), BBI and its representatives and agents
(collectively, the "INSPECTORS") shall have the right, at BBI's expense, and
following reasonable notice to visit and inspect any of the properties of the
Company, to examine the books of account and records of the Company and, to
discuss the affairs, finances and accounts of the Company with, and to be
advised as to the same by, its officers, all at such reasonable times and
intervals and to such reasonable extent as BBI may desire. The Company shall not
disclose material nonpublic information to Inspectors, unless prior to
disclosure of such information the Company and BBI agree otherwise and the


                                      17.



Inspectors enter into an appropriate confidentiality agreement with the Company
with respect thereto.

     5.11 Board of Directors. At any time and from time to time until March 23,
2007 (the "EXPIRATION DATE"), BBI will have the right to recommend one
representative or appointee of BBI (the "BBI CANDIDATE") for election to the
Company's Board of Directors. If the BBI Candidate is determined to be a
suitable candidate to serve as a director of the Company by the Company's
nominating committee acting in good faith in accordance with the guidelines
publicly disclosed by the Company and the charter of the nominating committee,
the Company will cause such BBI Candidate to be elected or appointed as a member
of the Company's Board of Directors. If the BBI Candidate's term will expire
prior to the Expiration Date, the Company will evaluate the BBI Candidate in the
same manner as its other directors whose terms are expiring and, if the BBI
Candidate is determined to be a suitable candidate to serve as a director of the
Company by the Company's nominating committee acting in good faith in accordance
with the guidelines publicly disclosed by the Company and the charter of the
nominating committee, will nominate the BBI Candidate for re-election to the
Board upon the expiration of such BBI Candidate's term. The right set forth in
this Section 5.11 is not assignable.

     5.12 Observation Rights. During any period when a BBI Candidate is serving
as a member of the Board, the Company shall allow the BBI Candidate to attend,
in a nonvoting capacity, all meetings of each committee of the Company's Board
of Directors on which the BBI Candidate is not serving, and in connection
therewith, the Company shall give such BBI Candidate copies of all notices,
minutes, consents and other materials, financial or otherwise, which the Company
provides to the members of such committee; provided, however, that the Company
reserves the right to exclude such BBI Candidate from access to any material or
meeting or portion thereof if the Company believes upon advice of counsel that
such exclusion is reasonably necessary to preserve the attorney-client
privilege, to protect highly confidential information or for other similar
reasons, or if such committee believes in good faith (based on the advice of
counsel) that the BBI Candidate has a conflict of interest. The right set forth
in this Section 5.12 is not assignable.

     5.13 Future Financings. On or prior to the earlier of (i) March 23, 2008,
and (ii) the date on which the Purchasers no longer hold at least 50% of the
Shares issued at the Closing (subject to adjustment for stock splits, dividends,
combinations, recapitalizations, reclassifications and other similar events),
the Company shall not sell any shares of preferred stock or consummate any debt
financing without the prior written consent of Purchasers holding at least a
majority of the Shares then held by all Purchasers; provided that no such
approval shall be necessary for the Company to enter into an equipment lease
transaction.

     5.14 Use of Proceeds. The Company shall use the proceeds from the sale of
the Securities for research and clinical development activities, manufacturing
and commercialization of its product candidates, working capital and general
corporate purposes, including for potential acquisitions of additional
technologies and intellectual property rights.

     5.15 No Short Sales. Each Purchaser agrees that beginning on the date
hereof until the earlier to occur of (a) the date 90 days from the Closing Date
and (b) the effective date of the Registration Statement, it will not enter into
any Short Sales. For purposes of this Section 5.15, a


                                      18.



"Short Sale" by a Purchaser means a sale of Common Stock that is marked as a
short sale and that is executed at a time when such Purchaser has no equivalent
offsetting long position in the Common Stock. For purposes of determining
whether a Purchaser has an equivalent offsetting long position in the Common
Stock, all Common Stock that would be issuable upon exercise in full of all
options then held by such Purchaser (assuming that such options were then fully
exercisable, notwithstanding any provisions to the contrary, and giving effect
to any exercise price adjustments scheduled to take effect in the future) shall
be deemed to be held long by such Purchaser.

                                   ARTICLE 6

                CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING

     The obligations of each Purchaser under Section 2 of this Agreement are
subject to the fulfillment or waiver by such Purchaser, on or before the
Closing, of each of the following conditions:

     6.1 Representations and Warranties True. Each of the representations and
warranties of the Company contained in Section 3 shall have been true and
correct when made and shall be true and correct on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date (except for representations and warranties that
speak as of a specific date, which representations and warranties shall be true
and correct in all material respects as of such date).

     6.2 Performance of Obligations; Consents and Waivers. The Company shall
have performed and complied in all material respects with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing Date and shall have
obtained all approvals, consents and qualifications necessary to complete the
purchase and sale described herein.

     6.3 Transaction Documents. The Company shall have executed and delivered
this Agreement, the Warrants and the Rights Agreement.

     6.4 Delivery of Certificates and Warrants. The Company shall have delivered
to such Purchaser duly executed stock certificates and Warrants (each in such
denominations as such Purchaser shall request) representing the Shares and
Warrants being so purchased by such Purchaser at the Closing in accordance with
Section 2.1 above.

     6.5 Authorization of Common Stock. The Common Stock shall be authorized for
quotation and listed on the AMEX and trading in the Common Stock (or the AMEX
generally) shall not have been suspended by the SEC or the AMEX.

     6.6 Legal Opinion. Such Purchaser shall have received an opinion of the
Company's counsel, dated as of the Closing Date, in form, scope and substance
satisfactory to the Purchaser.

     6.7 Compliance Certificate. The Company shall have delivered to the
Purchaser a certificate dated as of the Closing Date, signed by the Company's
Chief Executive or Chief


                                      19.



Financial Officer, certifying that the conditions set forth in Sections 6.1,
6.2, 6.5 and 6.7 have been satisfied.

     6.8 Officer's Certificate. The Purchaser shall have received from an
officer of the Company, a certificate having attached thereto (i) the
Certificate of Incorporation as in effect at the time of the Closing, (ii) the
Company's Bylaws as in effect at the time of the Closing, (iii) resolutions
approved by the Board of Directors authorizing the transactions contemplated
hereby, and (iv) good standing certificates (including tax good standing) with
respect to the Company from the applicable authority(ies) in Delaware and any
other jurisdiction in which the Company is qualified to do business, dated a
recent date before the Closing.

                                   ARTICLE 7

                 CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING

     The Company's obligation to sell and issue the Shares is subject to the
fulfillment of the following conditions, any of which may be waived by the
Company:

     7.1 Representations and Warranties. The representations and warranties made
by the Purchaser in Section 4 hereof shall have been true and correct when made
and shall be true and correct on such Closing Date as if made on and as of such
Closing Date.

     7.2 Securities Exemptions. The offer and sale of the Securities to the
Purchaser pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act, and the registration and/or qualification
requirements of all other applicable securities laws.

                                   ARTICLE 8

                  RESTRICTIONS ON TRANSFERABILITY OF SECURITIES

     8.1 Restrictions on Transferability. The Securities shall not be sold,
transferred, assigned or hypothecated unless (i) there is an effective
registration statement under the Securities Act covering such Securities, (ii)
the sale is made in accordance with Rule 144 under the Securities Act, or (iii)
the Company receives an opinion of counsel for the holder of the Securities
reasonably satisfactory to the Company stating that such sale, transfer,
assignment or hypothecation is exempt from the registration requirements of the
Securities Act, and each such case upon all other conditions specified in this
Section 8. Notwithstanding the provisions of the preceding sentence, no such
registration statement or opinion of counsel shall be required for any transfer
of any Securities by a Purchaser that is a partnership, a limited liability
company or a corporation to (A) a partner of such partnership, a member of such
limited liability company or a stockholder of such corporation, (B) an entity
that controls, or is controlled by, or is under common control with such
partnership, limited liability company or corporation, (C) a retired partner of
such partnership or member of such limited liability company or (D) the estate
of any such partner, member or stockholder; provided that in each of the
foregoing cases the proposed transferee of the Securities held by the Purchaser
agrees in writing to take and hold such Securities subject to the provisions and
upon the conditions specified in this Section 8.


                                      20.



     8.2 Restrictive Legends. Each certificate representing the Securities, and
any other securities issued in respect of the Securities upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event (except
as otherwise permitted by the provisions of this Section 8), shall be stamped or
otherwise imprinted with a legend in substantially the following form:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
     STATE OF THE UNITED STATES OR IN ANY OTHER JURISDICTION. THE SECURITIES
     REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE
     OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
     SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
     AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS."

     8.3 Removal of Legend and Transfer Restrictions. Any legend endorsed on a
certificate pursuant to subsection 8.2 and any stop transfer instructions with
respect to such legended Securities shall be removed and the Company shall issue
a certificate without such legend to the holder of such Securities, or the
Company shall issue a certificate without any legend representing Securities
issued upon the exercise of a Warrant, as the case may be, if (i) the resale of
such Securities are registered under the Securities Act and a prospectus meeting
the requirements of Section 10 of the Securities Act is available with respect
to such Securities and (a) the Purchaser delivers to the Company an opinion by
counsel, reasonably satisfactory to the Company, that a registration statement
under the Securities Act is at that time in effect with respect to the resale of
the legended security or that such security can be freely transferred in a
public sale without such a registration statement being in effect and that such
transfer will not eliminate the exemption or exemptions from registration
pursuant to which the Company issued the Securities, or (b) in connection with a
proposed transfer of the Securities, the Purchaser delivers to the Company a
certificate executed by an officer of, or other person duly authorized by such
Purchaser, in the form attached hereto as EXHIBIT E, (ii) if such holder sells
the Security in accordance with the requirements of Rule 144 under the
Securities Act, or (iii) the Security is eligible to be sold pursuant to Rule
144(k) under the Securities Act. If the Company is required to issue unlegended
certificates pursuant to this Section 8.3 following the sale of some or all of
the Securities evidenced by such certificates, the Company shall use its best
efforts to deliver or cause to be delivered to such Purchaser such unlegended
certificates within four (4) business days of submission by that Purchaser of
legended certificate(s) to the Company's transfer agent, together with any other
documents required by the transfer agent to consummate such transaction;
provided, however, that if such certificates are not delivered within five (5)
business days of the date of submission of such certificates and other
documents, the Company shall pay, as liquidated damages and not as a penalty for
the delay in issuance of the certificates (which remedy shall constitute the
Purchasers exclusive monetary remedy), an amount equal to 1.0% of the aggregate
purchase price of the Securities sold by the Purchaser and evidenced by such
certificate(s) for each thirty (30) day period (or portion thereof) beyond such
four (4) business day period that the unlegended certificates have not been so
delivered.


                                      21.



                                   ARTICLE 9

                                  MISCELLANEOUS

     9.1 Survival of Representations, Warranties and Agreements. Notwithstanding
any investigation made by any party to this Agreement, all covenants,
agreements, representations and warranties made by the Company and the
Purchasers herein shall survive the execution of this Agreement, the delivery to
the Purchasers of the Shares being purchased and the payment therefor; provided,
however, that the representations and warranties made by the Company and the
Purchasers herein shall expire upon the second anniversary of the Closing Date.

     9.2 Broker's Fee. The Company represents that it neither is nor will be
obligated for any finder's or broker's fee or commission in connection with this
transaction, except for the fee payable to ThinkEquity Partners LLC. The Company
agrees to indemnify and hold harmless the Purchaser from any liability for any
commission or compensation in the nature of a finder's or broker's fee (and any
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.

     9.3 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon delivery to the party to
be notified, (ii) when received by confirmed facsimile, or (iii) one (1)
business day after deposit with a nationally recognized overnight carrier,
specifying next business day delivery, with written verification of receipt. All
communications shall be sent to the Company and the Purchasers as follows or at
such other addresses as the Company or the Purchasers may designate upon ten
(10) days' advance written notice to the other party:

          (A) if to the Company, to:

              Idera Pharmaceuticals, Inc.
              345 Vassar Street
              Cambridge, Massachusetts 02139
              Attention: Chief Executive Officer
              Facsimile: (617) 679-5542

              with a copy to:

              Wilmer Cutler Pickering Hale and Dorr LLP
              60 State Street
              Boston, Massachusetts 02109
              Attention: Stuart Falber
              Facsimile: (617) 526-5000

          (B) if to a Purchaser, at its address as set forth on the Schedule of
Purchasers to this Agreement.

     9.4 Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and the Purchasers holding a
majority of the


                                      22.



Shares then outstanding. No provision hereunder may be waived other than in a
written instrument executed by the waiving party.

     9.5 Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.

     9.6 Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

     9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. The Company and the
Purchasers irrevocably consent to the jurisdiction of the United States federal
courts and the state courts located in the State of New York, Borough of
Manhattan, in any suit or proceeding based on or arising under this Agreement
and irrevocably agree that all claims in respect of such suit or proceeding may
be determined in such courts. The Company and the Purchasers irrevocably waive
the defense of an inconvenient forum to the maintenance of such suit or
proceeding. Each party further agrees that service of process upon such party,
mailed by first class mail, shall be deemed in every respect effective service
of process upon such party in any such suit or proceeding. Nothing herein shall
affect a party's right to serve process in any other manner permitted by law.

     9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered (including by facsimile) to the other parties.

     9.9 Entire Agreement. This Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Purchasers make any representation,
warranty, covenant or undertaking with respect to such matters.

     9.10 Assignment. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
parties hereto and their respective permitted successors, assigns, heirs,
executors and administrators. This Agreement and the rights of a Purchaser
hereunder may not be assigned by the Purchaser without the prior written consent
of the Company, except such consent shall not be required in cases of
assignments by a Purchaser as permitted under Section 8.1, provided that such
assignee agrees in writing to be bound by the terms of this Agreement.
Notwithstanding the foregoing, the rights set forth in Sections 5.3, 5.10 and
5.11 may not be assigned or transferred.

     9.11 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurance as may be reasonably requested by any
other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.


                                      23.



     9.12 Publicity. The Company and BBI shall have the right to approve before
issuance any press releases, SEC or other filings, or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company and any Purchaser shall be entitled, without the prior
approval of any other party hereto, to make any press release or SEC or other
filings with respect to such transactions as is required by applicable law and
regulations (although a reasonable time prior to the release or filing of any
such press release or filing the other parties hereto (i) shall be consulted by
the party making such press release or filing in connection with such release or
filing and (ii) shall be provided with a copy of and a reasonable opportunity to
comment on such release or filing); and provided further, however, that neither
the Company nor BBI shall be required to obtain the consent of any other party
hereto in connection with any release or filing to the extent that such other
party has previously approved the disclosure to be provided in such release or
filing in accordance with this Section 9.12.

     9.13 Confidentiality. Each Purchaser agrees that it will keep confidential
and will not disclose or divulge any confidential, proprietary or secret
information which such Purchaser may obtain from the Company pursuant to
reports, notices and other materials submitted by the Company to such Purchaser
pursuant to this Agreement, pursuant to the rights granted under Section 5.10 or
otherwise pursuant to the Rights Agreement, unless (a) such information is
known, or until such information becomes known, to the public or (b) such
information is required to be disclosed in legal proceedings (such as by
deposition, interrogatory, request for documents, subpoena, civil investigation
demand, filing with any governmental authority or similar process), provided,
however, that before making any use or disclosure in reliance on this clause (b)
the Purchaser shall give the Company at least fifteen (15) days prior written
notice (or such shorter period as required by law) specifying the circumstances
giving rise thereto and will furnish only that portion of the non-public
information which is legally required and will exercise its best efforts to
obtain reliable assurance that confidential treatment will be accorded any
non-public information so furnished.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                      24.



     IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date first set forth above.

                                        IDERA PHARMACEUTICALS, INC.


                                        By: /s/ Sudhir Agrawal
                                            ------------------------------------
                                            Sudhir Agrawal
                                            Chief Executive Officer



                                        PURCHASER:

                                        BAKER BROS. INVESTMENTS, L.P.

                                        By: Baker Bros. Capital, L.P.,
                                            its general partner

                                        By: Baker Bros. Capital (GP), LLC,
                                            its general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        BAKER BROS. INVESTMENTS II, L.P.

                                        By: Baker Bros. Capital, L.P.,
                                            its general partner

                                        By: Baker Bros. Capital (GP), LLC,
                                            its general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member



                                        PURCHASER:

                                        BAKER BIOTECH FUND I, L.P.

                                        By: Baker Biotech Capital, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital (GP), LLC,
                                            its general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        BAKER BIOTECH FUND II, L.P.

                                        By: Baker Biotech Capital II, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital II (GP), LLC,
                                            is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        BAKER BIOTECH FUND II (Z), L.P.

                                        By: Baker Biotech Capital II (Z), L.P.,
                                            its general partner

                                        By: Baker Biotech Capital II (Z) (GP),
                                            LLC, is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        BAKER BIOTECH FUND III, L.P.

                                        By: Baker Biotech Capital III, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital III (GP), LLC,
                                            is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member



                                        PURCHASER:

                                        BAKER BIOTECH FUND III (Z), L.P.

                                        By: Baker Biotech Capital III (Z), L.P.,
                                            its general partner

                                        By: Baker Biotech Capital III (Z) (GP),
                                            LLC, is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        14159, L.P.

                                        By: 14159 Capital, L.P.,
                                            its general partner

                                        By: 14159 Capital (GP), LLC,
                                            is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member



                                        PURCHASER:

                                        TANG CAPITAL PARTNERS, LP

                                        By: Tang Capital Management, LLC, its
                                            General Partner


                                        By: /s/ Kevin C. Tang
                                            ------------------------------------
                                            Kevin C. Tang, Manager



                                        PURCHASER:

                                        FINSBURY EMERGING BIOTECHNOLOGY TRUST
                                        PLC


                                        By: /s/ Samuel D. Isaly
                                            ------------------------------------
                                        Name: Samuel D. Isaly
                                        Title: Managing Partner of Investment
                                               Advisor

                                                                    Exhibit 10.2

                           IDERA PHARMACEUTICALS, INC.

                          REGISTRATION RIGHTS AGREEMENT

     REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of March 24,
2006, by and among IDERA PHARMACEUTICALS, INC., a corporation organized under
the laws of the State of Delaware (the "COMPANY"), and the undersigned the
"PURCHASERS".

                                    WHEREAS:

     In connection with the Common Stock Purchase Agreement, dated as of March
24, 2006, by and among the Company and the Purchasers (the "STOCK PURCHASE
AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Purchasers (i) shares
(the "SHARES") of the Company's common stock, par value $0.001 per share (the
"COMMON STOCK"), and (ii) warrants (the "WARRANTS") to acquire shares of Common
Stock. The shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Warrants are referred to herein as the "WARRANT SHARES."

     To induce the Purchasers to execute and deliver the Stock Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "SECURITIES
ACT"), and applicable state securities laws.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchasers
hereby agree as follows:

     1. DEFINITIONS.

          (A) As used in this Agreement, the following terms shall have the
following meanings:

               (I) "PURCHASERS" means the Purchasers and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 10 hereof.

               (II) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").

               (III) "REGISTRABLE SECURITIES" means (a) the Shares, (b) the
Warrant Shares and (c) any shares of capital stock issued or issuable, from time
to time (with any adjustments), in respect of the Shares or the Warrant Shares
by virtue of any stock split, stock dividend, recapitalization or similar event;
provided, however, that shares of Common Stock that are Registrable Securities
shall cease to be Registrable Securities upon the earliest of (A) the date


                                       1.



that such shares are eligible to be sold under Rule 144(k) of the Securities
Act, (B) the date that such shares are sold (I) pursuant to a registration
statement, (II) to or through a broker, dealer or underwriter in a public
securities transaction and/or (III) in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act such
that all transfer restrictions and restrictive legends with respect thereto, if
any, are removed upon the consummation of such sale, or (C) any sale or transfer
to any Person which by virtue of Section 10 of this Agreement is not entitled to
the rights provided by this Agreement. Wherever reference is made in this
Agreement to a request or consent of holders of a certain percentage of
Registrable Securities, the determination of such percentage shall include
shares of Common Stock issuable upon exercise of the Warrants to the extent any
such Warrants are outstanding, even if such exercise has not been effected.

               (IV) "REGISTRATION STATEMENT" means a registration statement of
the Company under the Securities Act.

          (B) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.

     2. REGISTRATION.

          (A) MANDATORY REGISTRATION. The Company shall prepare promptly and
file with the SEC as soon as practicable, but in no event later than the
thirtieth (30th) day following the date hereof (the "FILING DATE"), a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, covering the resale of the
Registrable Securities. The Registration Statement filed hereunder, to the
extent allowable under the Securities Act and the Rules promulgated thereunder
(including Rule 416), shall state that such Registration Statement also covers
such indeterminate number of additional shares of Common Stock as may become
issuable upon exercise of the Warrants to prevent dilution resulting from stock
splits, stock dividends or similar transactions.

          (B) PAYMENTS BY THE COMPANY. The Company shall use its best efforts to
cause the Registration Statement required to be filed pursuant to Section 2(a)
hereof to become effective as soon as practicable after the Filing Date. At the
time of effectiveness, the Company shall ensure that such Registration Statement
covers all of the Registrable Securities (including, if necessary, by filing an
amendment prior to the effective date of the Registration Statement to increase
the number of shares covered thereby). If (i) the Registration Statement
required to be filed by the Company pursuant to Section 2(a) hereof is not filed
with the SEC prior to the Filing Date or declared effective by the SEC on or
before the one hundred twentieth (120th) day after the date hereof (the
"REGISTRATION DEADLINE") or, (ii) if, after any such Registration Statement has
been declared effective by the SEC, sales of any of the Registrable Securities
required to be covered by such Registration Statement cannot be made pursuant to
such Registration Statement because such Registration Statement has been
suspended (by reason of a stop order or the Company's failure to update the
Registration Statement or otherwise) except as a result of a permitted
Suspension under Section 9, then the Company will make payments to the
Purchasers in such amounts and at such times as shall be determined pursuant to
this Section 2(b) as liquidated damages and not as a penalty for such delay in
or reduction of their ability to sell the


                                       2.



Registrable Securities (which remedy shall constitute the Purchasers exclusive
monetary remedy). The Company shall pay to each Purchaser an amount equal to the
product of (i) the aggregate purchase price of the Shares and Warrant Shares
then held by such Purchaser (the "AGGREGATE SHARE PRICE"), multiplied by (ii)
one hundredths (.01), for each thirty (30) day period (or portion thereof) (A)
after the Filing Date and prior to the date the Registration Statement is filed
with the SEC pursuant to Section 2(a), (B) after the Registration Deadline and
prior to the date the Registration Statement filed pursuant to Section 2(a) is
declared effective by the SEC, and (C) during which sales of any Registrable
Securities cannot be made pursuant to any such Registration Statement after the
Registration Statement has been declared effective; provided, however, that
there shall be excluded from each such period any delays which are solely
attributable to changes (other than corrections of Company mistakes with respect
to information previously provided by the Purchasers) required by the Purchasers
in the Registration Statement with respect to information relating to the
Purchasers, including, without limitation, changes to the plan of distribution.
Such amounts shall be paid in cash within five (5) days after the end of each
period that gives rise to such obligation, provided that, if any such period
extends for more than thirty (30) days, interim payments shall be made for each
such thirty (30) day period. Notwithstanding the foregoing, in no event shall
the Company be obligated to pay liquidated damages (a) to more than one
Purchaser in respect of the same Securities for the same period of time or (b)
in an aggregate amount that exceeds 10% of the purchase price paid by such
Purchaser for such Shares and Warrant Shares.

     3. OBLIGATIONS OF THE COMPANY.

     In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:

          (A) The Company shall respond promptly to any and all comments made by
the staff of the SEC to the Registration Statement required by Section 2(a), and
shall submit to the SEC before the close of business on a business day within
five business days after the business day on which the Company learns (either by
telephone or in writing) that no review of such Registration Statement will be
made by the SEC or that the staff of the SEC has no further comments on such
Registration Statement, as the case may be, a request for acceleration of the
effectiveness of such Registration Statement to a time and date as soon as
practicable. The Company shall use its best efforts to keep such Registration
Statement effective pursuant to Rule 415 at all times until no Registrable
Securities remain outstanding (the "REGISTRATION PERIOD"). The Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein and all documents incorporated by reference therein) (i) shall
comply in all material respects with the requirements of the Securities Act and
the rules and regulations of the SEC promulgated thereunder and (ii) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading.

          (B) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all


                                       3.



Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement.

          (C) The Company shall furnish to each Purchaser whose Registrable
Securities are included in the Registration Statement (i) promptly after the
same is prepared and publicly distributed or filed with the SEC, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto, (ii) to the extent not
publicly available on the SEC's EDGAR system, promptly after the same is filed
with the SEC or received by the Company, one copy of each letter written by or
on behalf of the Company to the SEC or the staff of the SEC (including, without
limitation, any request to accelerate the effectiveness of the Registration
Statement or amendment thereto) and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to the Registration Statement (other
than any portion, if any, thereof which contains information for which the
Company has sought or intends to seek confidential treatment); (iii) within 24
hours of the date of effectiveness of the Registration Statement or any
amendment thereto, a notice stating that the Registration Statement or amendment
has been declared effective; and (iv) such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Purchaser may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Purchaser. Notwithstanding the foregoing, the Company shall not send to any
Purchaser any document pursuant to clause (ii) above that the Company determines
contains material nonpublic information unless prior to transmittal of such
document the Company and such Purchaser agree otherwise and such Purchaser
enters into an appropriate confidentiality agreement with the Company with
respect thereto.

          (D) The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as each Purchaser who holds Registrable Securities being offered reasonably
requests, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (b) subject itself to general taxation in any such jurisdiction,
(c) file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or (e)
make any change in its charter or by-laws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of the
Company and its stockholders.

          (E) As promptly as practicable after becoming aware of such event, the
Company shall notify each Purchaser by telephone and facsimile of the happening
of any event, of which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or


                                       4.



omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, shall use its best efforts promptly
to prepare a supplement or amendment to the Registration Statement to correct
such untrue statement or omission, and, following such filing and, if
applicable, the effectiveness of such filing, shall deliver such number of
copies of such supplement or amendment to each Purchaser as such Purchaser may
reasonably request. In no event shall the Company disclose to any Purchaser any
material-non-public information, including without limitation the event, the
untrue statement or the omission.

          (F) The Company shall use its best efforts (i) to prevent the issuance
of any stop order or other suspension of effectiveness of a Registration
Statement, and, if such an order is issued, to obtain the withdrawal of such
order at the earliest practicable moment (including in each case by amending or
supplementing such Registration Statement) and (ii) to notify each Purchaser who
holds Registrable Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such order and the
resolution thereof (and if such Registration Statement is supplemented or
amended, deliver such number of copies of such supplement or amendment to each
Purchaser as such Purchaser may reasonably request).

          (G) The Company shall permit a single firm of counsel designated by
the Purchasers to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to its filing with the SEC
and shall consider in good faith and consult with such counsel regarding any
comment such counsel may reasonably make.

          (H) The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the first
anniversary of the close of the fiscal quarter during which the Registration
Statement was declared effective, an earnings statement (in form complying with
the provisions of Rule 158 under the Securities Act) covering a twelve-month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date of the Registration Statement.

          (I) At the request of any Purchaser in the case of an underwritten
public offering, the Company shall furnish, on the date of effectiveness of the
Registration Statement (i) an opinion, dated as of such date, from counsel
representing the Company addressed to the underwriters and in form, scope and
substance as is customarily given in an underwritten public offering and (ii) a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any.

          (J) For the sole purpose of enabling the Purchasers to conduct an
investigation as to the accuracy of the Registration Statement for the purpose
of reducing or eliminating the Purchasers' liability under the Securities Act,
the Company shall make available for inspection by one firm of attorneys and one
firm of accountants or other agents retained by the Purchasers (collectively,
the "INSPECTORS") following reasonable notice all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause the Company's officers to supply such information which any Inspector
may reasonably request for purposes of


                                       5.



such due diligence. Nothing herein shall be deemed to limit the Purchasers'
ability to sell Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations. The Company shall not disclose material
nonpublic information to the Inspectors unless the Company and the Purchasers
agree and the Purchasers and the Inspectors enter into an appropriate
confidentiality agreement with the Company with respect thereto.

          (K) The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.

          (L) The Company shall cooperate with the Purchasers who hold
Registrable Securities being to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be offered pursuant to
the Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as Purchasers may reasonably
request and registered in such names as the Purchasers may request.

          (M) At the reasonable request of the Purchasers holding a majority in
interest of the Registrable Securities, the Company shall prepare and file with
the SEC such amendments (including post-effective amendments) and supplements to
a Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.

          (N) From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company to
include any of their securities which are not Registrable Securities in the
Registration Statement under Section 2(a) hereof or any amendment or supplement
thereto under Section 3(b) hereof without the consent of the holders of a
majority in interest of the Registrable Securities.

          (O) Prior to the effectiveness of the Registration Statement, the
Company shall take all actions necessary to meet the "registrant eligibility"
requirements set forth in the general instructions to Form S-3 or any successor
form thereto, to continue to be eligible to register the resale of its Common
Stock on a registration statement on Form S-3 under the Securities Act.

     4. OBLIGATIONS OF THE PURCHASERS. In connection with the registration of
the Registrable Securities, the Purchasers shall have the following obligations:

          (A) It shall be a condition precedent to the obligations of the
Company under Sections 2 and 3 with respect to the Registrable Securities of a
particular Purchaser that such Purchaser shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request. At least five trading days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Purchaser of the information the Company requires from each such Purchaser.

          (B) Each Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in


                                       6.



connection with the preparation and filing of the Registration Statement
hereunder, unless such Purchaser has notified the Company in writing of such
Purchaser's election to exclude all of such Purchaser's Registrable Securities
from such Registration Statement.

          (C) Each Purchaser agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Sections 3(e),
3(f) or 9, such Purchaser will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Purchaser's receipt of the copies of the
supplemented or amended prospectus contemplated by Sections 3(e), 3(f) or 9.

     5. EXPENSES OF REGISTRATION. All reasonable expenses incurred by the
Company or the Purchasers in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 above, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, the fees and disbursements of counsel for the Company, the fees
and disbursements of one counsel selected by the Purchasers, and the
underwriting discounts and commissions shall be borne by the Company. In the
event that one party breaches this Agreement, such party shall pay all of the
other party's costs and expenses (including reasonable legal fees) incurred by
such other party in connection with the enforcement of such other party's rights
hereunder.

     6. INDEMNIFICATION. In the event any Registrable Securities are included in
a Registration Statement under this Agreement:

          (A) To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Purchaser who holds such Registrable Securities,
and (ii) the directors, officers, partners, members, employees and agents of
such Purchaser and each person who controls any Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), if any, (each, an "INDEMNIFIED PERSON"),
against any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii),
collectively, "VIOLATIONS"). Subject to the restrictions set forth in Section
6(c) with respect to the number of legal counsel, the Company shall reimburse
the Purchasers and each other Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses


                                       7.



incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon (A) a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by such
Indemnified Person expressly for use in the Registration Statement or any such
amendment thereof or supplement thereto, (B) the failure of a Purchaser to
comply with Section 4(c) or (C) the use by a Purchaser in connection with any
sale or sales of Registrable Securities of a prospectus containing any untrue
statement or omission of a material fact following notification by the Company
that such prospectus contains an untrue statement or omission of a material fact
and receipt by the Purchaser of a corrected prospectus; and (ii) shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Purchasers
pursuant to Section 10 hereof.

          (B) Each Purchaser who holds such Registrable Securities agrees
severally and not jointly to indemnify, hold harmless and defend, to the same
extent and in the same manner set forth in Section 6(a), the Company, each of
its directors, each of its officers who signs the Registration Statement, its
employees, agents and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and any other stockholder selling securities pursuant to the Registration
Statement or any of its directors or officers or any person who controls such
stockholder within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "INDEMNIFIED PARTY"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Purchaser expressly for use in
connection with such Registration Statement; and subject to Section 6(c) such
Purchaser will reimburse any legal or other expenses (promptly as such expenses
are incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that (I) the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Purchaser, which consent shall not be unreasonably
withheld, and (II) the Purchaser shall be liable under this Agreement (including
this Section 6(b) and Section 7) for only that amount as does not exceed the net
proceeds actually received by such Purchaser as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Purchasers pursuant to Section 10 hereof.

          (C) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the threat or commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly


                                       8.



with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall not be entitled to assume such
defense and an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and the
indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines, based upon the reasonable opinion of counsel, that there
may be legal defenses available to such Indemnified Person or Indemnified Party
which are in conflict with those available to such indemnifying party. The
indemnifying party shall pay for only one separate legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such legal
counsel shall be selected by Purchasers holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates (with the approval of the Purchasers if it holds Registrable Securities
included in such Registration Statement), if the Purchasers are entitled to
indemnification hereunder, or by the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action.

          (D) The Indemnified Party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party which relates to such
action or claim.

          (E) No indemnifying party shall, except with the consent of each
Indemnified Party (which consent shall not be unreasonably withheld), consent to
entry of any judgment or enter into any settlement which does not include the
giving by the claimant to such Indemnified Party a release from all liability in
respect to such claim or litigation.

     7. CONTRIBUTION. To the extent any indemnification by an indemnifying party
required by the terms of this Agreement is prohibited or limited by law, the
indemnifying party, in lieu of indemnifying the Indemnified Party, agrees to
contribute with respect to any amounts for which it would otherwise be liable
under Section 6 up to the amount paid or payable by the indemnifying party as a
result of the Claims in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the Indemnified
Person or Indemnified Party, as the case may be, on the other hand, with respect
to the Violation giving rise to the applicable Claim; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii)


                                       9.



contribution (together with any indemnification or other obligations under this
Agreement) by any seller of Registrable Securities shall be limited in amount to
the net amount of proceeds received by such seller from the sale of such
Registrable Securities. The relative fault of the Company and the Purchasers
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of material fact related to information supplied by the
Company or the Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

     8. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the
Purchasers the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit each
Purchaser to sell securities of the Company to the public, so long as the
Registration Statement is effective and such Purchaser holds Registrable
Securities, without registration ("RULE 144"), the Company agrees to:

               (I) file with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein shall limit the
Company's obligations under Section 5.2 of the Common Stock Purchase Agreement)
and the filing and availability of such reports and other documents is required
for the applicable provisions of Rule 144; and

               (II) furnish to each Purchaser so long as such Purchaser owns
shares of Warrants or Registrable Securities, promptly upon request, (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested to permit the Purchasers to sell such securities
under Rule 144 without registration.

     9. SUSPENSION OF USE OF PROSPECTUS. Subject to Section 2(b), the Company
may, by written notice to the Purchasers, for a period not to exceed thirty (30)
days thereafter, (i) delay the filing of, or effectiveness of, the Registration
Statement; or (ii) suspend the Registration Statement after effectiveness and
require that the Purchasers immediately cease sales of Registrable Securities
pursuant to the Registration Statement, if (a) the Company reasonably believes
that there is or may be in existence material nonpublic information or events
involving the Company, the failure of which to be disclosed in the prospectus
included in the registration statement would result in a Violation (as defined
below) and (b) the Company shall furnish to the Purchasers a certificate signed
by the Chairman of the Board of Directors of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would have a
material adverse effect on the Company (which for this purpose shall include a
material adverse effect on a pending transaction) to disclose such material
nonpublic information or events in the prospectus included in the registration
statement (a "SUSPENSION"). The Company shall not disclose such information or
events to any Purchaser. If the Company requires the Purchasers to cease sales
of Registrable Securities pursuant to a Suspension, the Company shall, as
promptly as practicable following the termination of the circumstance which
entitled the Company to do so, take such actions as may be necessary to
reinstate the


                                      10.



effectiveness of the Registration Statement and/or give written notice to the
Purchasers authorizing them to resume sales pursuant to the Registration
Statement. If as a result thereof the prospectus included in the Registration
Statement has been amended to comply with the requirements of the Securities
Act, the Company shall enclose such revised prospectus with the notice to the
Purchasers given pursuant hereto, and the Purchasers shall make no offers or
sales of Registrable Securities pursuant to the Registration Statement other
than by means of such revised prospectus. No more than two such Suspensions, for
a maximum cumulative period of 45 days, shall occur in any 12 month period.

     10. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the Purchasers
hereunder, including the right to have the Company register Registrable
Securities pursuant to this Agreement, shall be automatically assignable by each
Purchaser to any affiliate of the Purchaser to which all or any portion of the
Registrable Securities are transferred if: (i) the Purchaser agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company after such assignment, (ii) the Company is
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) the transferee or assignee agrees in
writing for the benefit of the Company to be bound by all of the provisions
contained herein, and (iv) such transfer shall have been made in accordance with
the applicable requirements of the Stock Purchase Agreement and the Warrants, as
applicable.

     11. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with
written consent of the Company and Purchasers who hold a majority in interest of
the Registrable Securities; provided, however, that no consideration shall be
paid to an Purchaser by the Company in connection with an amendment hereto
unless each Purchaser similarly affected by such amendment receives a pro-rata
amount of consideration from the Company. Unless an Purchaser otherwise agrees,
each amendment hereto must similarly affect each Purchaser. Any amendment or
waiver effected in accordance with this Section 11 shall be binding upon each
Purchaser and the Company.

     12. MISCELLANEOUS.

          (A) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

          (B) All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (i) upon delivery to the party to be
notified, (ii) when received by confirmed facsimile, or (iii) one (1) business
day after deposit with a nationally recognized overnight carrier, specifying
next business day delivery, with written verification of receipt. All
communications shall be sent to the Company and the Purchasers as follows or at
such other


                                      11.



addresses as the Company or the Purchasers may designate upon ten (10) days'
advance written notice to the other party:

          If to the Company:

               Idera Pharmaceuticals, Inc.
               345 Vassar Street
               Cambridge, MA 02139
               Attn: Chief Executive Officer
               Fax: 617-679-5592

               with a copy simultaneously transmitted by like means to:

               Wilmer Cutler Pickering Hale and Dorr LLP
               60 State Street
               Boston, Massachusetts 02109
               Attn: Stuart Falber
               Fax: (617) 526-5000

     If to a Purchaser, at its address as set forth on the Schedule of
Purchasers attached to the Stock Purchase Agreement.

          (C) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

          (D) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. The Company and the Purchasers
irrevocably consent to the jurisdiction of the United States federal courts and
the state courts located in the State of New York, Borough of Manhattan, in any
suit or proceeding based on or arising under this Agreement and irrevocably
agree that all claims in respect of such suit or proceeding may be determined in
such courts. The Company and the Purchasers irrevocably waive the defense of an
inconvenient forum to the maintenance of such suit or proceeding. Each party
further agrees that service of process upon such party, mailed by first class
mail, shall be deemed in every respect effective service of process upon such
party in any such suit or proceeding. Nothing herein shall affect the a party's
right to serve process in any other manner permitted by law.

          (E) This Agreement, the Stock Purchase Agreement (including all
schedules and exhibits thereto) and the Warrants constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the Stock
Purchase Agreement and the Warrants supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.

          (F) Subject to the requirements of Section 10 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.


                                      12.



          (G) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

          (H) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

          (I) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

          (J) All consents, approvals and other determinations to be made by the
Purchasers pursuant to this Agreement shall be made by the Purchasers holding a
majority in interest of the Registrable Securities (determined as if all shares
of Warrants then outstanding had been converted into or exercised for
Registrable Securities) held by all Purchasers.

          (K) Each party to this Agreement has participated in the negotiation
and drafting of this Agreement. As such, the language used herein shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party to
this Agreement.

          (L) For purposes of this Agreement, the term "business day" means any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law, regulation or
executive order to close, and the term "TRADING DAY" means any day on which
AMEX, or if the Common Stock is not then traded on AMEX the principal securities
exchange or trading market where the Common Stock is then listed or traded, is
open for trading.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      13.



     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.

IDERA PHARMACEUTICALS, INC.


By: /s/ Sudhir Agrawal
    ---------------------------------
Name: Sudhir Agrawal
Its: Chief Executive Officer and
     Chief Scientific Officer

                [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]



PURCHASER:

                                        BAKER BROS. INVESTMENTS, L.P.

                                        By: Baker Bros. Capital, L.P.,
                                            its general partner

                                        By: Baker Bros. Capital (GP), LLC,
                                            its general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        BAKER BROS. INVESTMENTS II, L.P.

                                        By: Baker Bros. Capital, L.P.,
                                            its general partner

                                        By: Baker Bros. Capital (GP), LLC,
                                            its general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]



PURCHASER:

TANG CAPITAL PARTNERS, LP

By: Tang Capital Management, LLC,
    its General Partner


By: /s/ Kevin C. Tang
    ---------------------------------
    Kevin C. Tang, Manager


                                       2.



PURCHASER:

FINSBURY EMERGING BIOTECHNOLOGY TRUST
PLC


By: /s/ Samuel D. Isaly
    ---------------------------------
Name: Samuel D. Isaly
Title: Managing Partner of Investment
       Advisor


                                       3.



PURCHASER:

                                        BAKER BIOTECH FUND I, L.P.

                                        By: Baker Biotech Capital, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital (GP), LLC,
                                            its general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        BAKER BIOTECH FUND II, L.P.

                                        By: Baker Biotech Capital II, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital II (GP), LLC,
                                            is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        BAKER BIOTECH FUND II (Z), L.P.

                                        By: Baker Biotech Capital II (Z), L.P.,
                                            its general partner

                                        By: Baker Biotech Capital II (Z) (GP),
                                            LLC, is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        BAKER BIOTECH FUND III, L.P.

                                        By: Baker Biotech Capital III, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital III (GP), LLC,
                                            is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                       4.



PURCHASER:

                                        BAKER BIOTECH FUND III (Z), L.P.

                                        By: Baker Biotech Capital III (Z), L.P.,
                                            its general partner

                                        By: Baker Biotech Capital III (Z) (GP),
                                            LLC, is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                        14159, L.P.

                                        By: 14159 Capital, L.P.,
                                            its general partner

                                        By: 14159 Capital (GP), LLC,
                                            is general partner


                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member


                                       5.

                                                                    Exhibit 10.3

     THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
     BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
     "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
     OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
     OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
     STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS
     OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
     REGISTRATION REQUIREMENTS OF THOSE LAWS.

                                          Right to Purchase __________ Shares of
                                         Common Stock, par value $.001 per share

March 24, 2006

                           IDERA PHARMACEUTICALS, INC.
                             STOCK PURCHASE WARRANT

     THIS CERTIFIES THAT, for value received, _________________________, or its
registered assigns, is entitled to purchase from Idera Pharmaceuticals, Inc., a
corporation organized under the laws of the State of Delaware (the "COMPANY"),
at any time or from time to time during the period specified in Section 2
hereof, _______________________ (__________) fully paid and nonassessable shares
of the Company's common stock, par value $0.001 per share (the "COMMON STOCK"),
at an exercise price per share (the "EXERCISE PRICE") equal to $0.65. The number
of shares of Common Stock purchasable hereunder (the "WARRANT SHARES") and the
Exercise Price are subject to adjustment as provided in Section 4 hereof. The
term "WARRANTS" means this Warrant and the other warrants of the Company issued
pursuant to that certain Common Stock Purchase Agreement, dated as of March 24,
2006, by and among the Company and the other signatories thereto (the "STOCK
PURCHASE AGREEMENT").

     This Warrant is subject to the following terms, provisions and conditions:

     1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, including, without limitation, the limitations
contained in Section 7 hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "EXERCISE
AGREEMENT"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon payment to
the Company in cash, by certified or official bank check or by wire transfer for
the account of the Company, of the Exercise Price for the Warrant Shares
specified in the Exercise Agreement. The Warrant Shares so purchased shall be
deemed to be issued to the holder hereof or such holder's designee, as the
record owner of such shares, as of the close of business on the date on which
this Warrant shall have been surrendered, the completed Exercise Agreement shall
have been delivered, and payment shall have been made for such shares as set
forth above or, if such date is not a business


                                       1.



date, on the next succeeding business date (such date being referred to as the
"Exercise Date"). The Warrant Shares so purchased, representing the aggregate
number of shares specified in the Exercise Agreement, shall be delivered to the
holder hereof as soon as possible, and in no event more than ten (10) days,
after the Exercise Date (the "DELIVERY PERIOD"). If the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, and so long as the certificates therefor are to be
delivered without a legend, the Company shall cause its transfer agent to
electronically transmit the Warrant Shares so purchased to the holder by
crediting the account of the holder or its nominee with DTC through its Deposit
Withdrawal Agent Commission system ("DTC TRANSFER"). If the aforementioned
conditions to a DTC Transfer are not satisfied, the Company shall deliver to the
holder physical certificates representing the Warrant Shares so purchased.
Further, the holder may instruct the Company to deliver to the holder physical
certificates representing the Warrant Shares so purchased in lieu of delivering
such shares by way of DTC Transfer. Any certificates so delivered shall be in
such denominations as may be reasonably requested by the holder hereof, shall be
registered in the name of such holder or such other name as shall be designated
by such holder (upon payment by the holder of any applicable transfer or
withholding taxes) and shall bear a restrictive legend as set forth in Section
8.2 of the Stock Purchase Agreement unless the conditions set forth in Section
8.3 of the Stock Purchase Agreement are met in connection with the exercise. If
this Warrant shall have been exercised only in part, then the Company shall, at
its expense, at the time of delivery of such certificates, deliver to the holder
a new Warrant representing the number of shares with respect to which this
Warrant shall not then have been exercised.

     If, at any time, a holder of this Warrant submits this Warrant, an Exercise
Agreement and payment to the Company of the Exercise Price for each of the
Warrant Shares specified in the Exercise Agreement, and the Company fails for
any reason to deliver, on or prior to the fourth business day following the
expiration of the Delivery Period for such exercise, the number of Warrant
Shares to which the holder is entitled upon such exercise (an "EXERCISE
DEFAULT"), then the Company shall pay to the holder, as liquidated damages and
not a penalty for such Exercise Default (which remedy shall constitute the
holder's exclusive monetary remedy), payments ("EXERCISE DEFAULT PAYMENTS") for
an Exercise Default in the amount of (a) (N/365), multiplied by (b) the amount
by which the Market Price (as defined in Section 4(j) hereof) on the Exercise
Date exceeds the Exercise Price in respect of such Warrant Shares, multiplied by
(c) the number of shares of Common Stock the Company failed to so deliver in
such Exercise Default, multiplied by (d) .12, where N = the number of days from
the last day of the Delivery Period to the date that the Company delivers the
number of Warrant Shares to which the holder was entitled upon such exercise.
The accrued Exercise Default Payment for each calendar month shall be paid in
cash to holder by the fifth day of the month following the month in which it has
accrued.

     Nothing herein shall limit the holder's right to pursue actual damages for
the Company's failure to maintain a sufficient number of authorized shares of
Common Stock as required pursuant to the terms of Section 3(b) hereof, and the
holder shall have the right to pursue all remedies available at law or in equity
(including a decree of specific performance and/or injunctive relief).


                                       2.



     2. PERIOD OF EXERCISE. This Warrant is immediately exercisable, at any time
or from time to time on or after the date six months following the date of
initial issuance of this Warrant (the "ISSUE DATE") and before 5:00 p.m., New
York City time, on the fifth anniversary of the commencement of such five year
period (the "EXERCISE PERIOD"). The Exercise Period shall automatically be
extended by one (1) day for each day on which the Company does not have a number
of shares of Common Stock reserved for issuance upon exercise hereof at least
equal to the number of shares of Common Stock issuable upon exercise hereof.

     3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:

          (A) SHARES TO BE FULLY PAID. The Warrant Shares have been duly
authorized and, when issued, delivered and paid for in the manner set forth in
this Warrant, will be duly authorized, validly issued, fully paid and
nonassessable and free and clear of all pledges, liens, and encumbrances imposed
by the Company (other than restrictions on transfer under state and/or federal
securities laws).

          (B) RESERVATION OF SHARES. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise in full of this Warrant.

          (C) LISTING. The Company acknowledges its obligations under Section
5.6 of the Stock Purchaser Agreement.

          (D) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment of
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the rights of the holder against impairment,
consistent with the tenor and purpose of this Warrant. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this
Warrant.

          (E) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger or consolidation.

     4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise Price
and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 4.

          (A) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company, at any
time during the Exercise Period, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a greater number


                                       3.



of shares, then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company, at any time during the Exercise Period,
combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) its shares of Common Stock into a smaller number
of shares, then, after the date of record for effecting such combination, the
Exercise Price in effect immediately prior to such combination will be
proportionately increased.

          (B) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event
the Company at any time, or from time to time after the date of this Warrant
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Exercise
Price then in effect immediately before such event shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the Exercise
Price then in effect by a fraction:

               (I) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and

               (II) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Exercise Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Exercise Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.

          (C) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of Section 4(a) and (b), the number of
shares of Common Stock issuable upon exercise of this Warrant at each such
Exercise Price shall be adjusted to an amount calculated by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of this Warrant at
such Exercise Price immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.

          (D) ADJUSTMENT FOR REORGANIZATION. If there shall occur any
reorganization, recapitalization, reclassification, consolidation or merger
involving the Company in which the Common Stock is converted into or exchanged
for securities, cash or other property (other than a transaction covered by
subsections 4(a), 4(b) or 4(e)) (collectively, a "REORGANIZATION"), then,
following such Reorganization, the holder shall receive upon exercise hereof the
kind and amount of securities, cash or other property which the holder would
have been entitled to receive pursuant to such Reorganization if such holder had
exercised this Warrant immediately prior to such Reorganization. In any such
case, appropriate adjustment (as determined in good faith by


                                       4.



the Company's Board of Directors shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter
of the registered holder, to the end that the provisions set forth in this
Section 4 (including provisions with respect to changes in and other adjustments
of the Exercise Price) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any securities, cash or other property thereafter
deliverable upon the exercise of this Warrant. The Company will not effect any
consolidations, merger or sale or conveyance unless prior to the consummation
thereof, the successor corporation (if other than the Company) assumes by
written instrument the obligations under this Warrant and the obligations to
deliver to the holder hereof such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the holder may be entitled to acquire.

          (E) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event
the Company at any time, or from time to time after the date of this Warrant
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Company (other than shares of Common Stock) or in cash or
other property (other than regular cash dividends paid out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles), then and in each such event provision shall be made so that the
holder shall receive upon exercise hereof, in addition to the number of shares
of Common Stock issuable hereunder, the kind and amount of securities of the
Company, cash or other property which the holder would have been entitled to
receive had such holder exercised this Warrant immediately prior to the date of
such event and had the holder thereafter, during the Exercise Period, retained
any such securities receivable during such period, giving application to all
adjustments called for during such period under this Section 4 with respect to
the rights of the holder.

          (F) NOTICE OF ADJUSTMENT. Promptly following the occurrence of any
event which requires any adjustment of the Exercise Price, then, and in each
such case, the Company shall give notice thereof to the holder hereof, which
notice shall state the Exercise Price resulting from such adjustment and the
increase or decrease in the number of Warrant Shares purchasable at such price
upon exercise, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based. Such calculation shall be
certified by the chief financial officer of the Company.

          (G) NO FRACTIONAL SHARES. No fractional shares of Common Stock are to
be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.

          (H) OTHER NOTICES. In case at any time:

          (I) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution (other
than dividends or distributions payable in cash out of retained earnings
consistent with the Company's past practices with respect to declaring dividends
and making distributions) to the holders of the Common Stock;


                                       5.



               (II) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;

               (III) there shall be any capital reorganization of the Company,
or reclassification of the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substantially all of its assets to,
another corporation or entity; or

               (IV) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date or estimated date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common Stock
entitled to receive any such dividend, distribution, or subscription rights or
for determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up at least ten (10) days prior to the record date or the
date on which the Company's books are closed in respect thereto and (b) in the
case of any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, notice of the date (or, if not then
known, a reasonable estimate thereof by the Company) when the same shall take
place at least (20) days prior to such date. Such notice shall also specify the
date on which the holders of Common Stock shall be entitled to receive such
dividend, distribution, or subscription rights or to exchange their Common Stock
for stock or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Failure to give any such notice or any defect
therein shall not affect the validity of the proceedings referred to in clauses
(i), (ii), (iii) and (iv) above. Notwithstanding the foregoing, the Company
shall publicly disclose the substance of any notice delivered hereunder prior to
delivery of such notice to the holder hereof.

          (I) CERTAIN EVENTS. If, at any time during the Exercise Period, any
event occurs of the type contemplated by the adjustment provisions of this
Section 4 but not expressly provided for by such provisions, the Company will
give notice of such event as provided in Section 4(h) hereof, and the Company's
Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of shares of Common Stock acquirable upon exercise of this Warrant at
each such Exercise Price so that the rights of the holder shall be neither
enhanced nor diminished by such event.

          (J) CERTAIN DEFINITIONS. "MARKET PRICE," as of any date, (i) means the
average of the closing prices for the shares of Common Stock as reported on the
American Stock Exchange by Bloomberg Financial Markets ("BLOOMBERG") for the ten
(10) consecutive business days immediately preceding such date, or (ii) if the
American Stock Exchange is not the principal trading market for the shares of
Common Stock, the average of the reported closing prices reported by Bloomberg
on the principal trading market for the Common Stock during the same period, or,
if there is no closing price for such period, the last sale price reported by
Bloomberg for such period, or (iii) if the foregoing do not apply, the last sale
price of such security in the over-the-counter market on the pink sheets or
bulletin board for such security as reported by Bloomberg, or if no sale price
is so reported for such security, the last closing price of such security as
reported by Bloomberg, or (iv) if market value cannot be calculated as of such


                                       6.



date on any of the foregoing bases, the Market Price shall be deemed to be the
amount most recently determined by the Company's Board of Directors or an
authorized committee of the Company's Board of Directors to represent the fair
market value per share of the Common Stock (including without limitation a
determination for purposes of granting Common Stock options or issuing Common
Stock under any plan, agreement or arrangement with employees of the Company).
The manner of determining the Market Price of the Common Stock set forth in the
foregoing definition shall apply with respect to any other security in respect
of which a determination as to market value must be made hereunder.

     5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.

     6. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.

     7. TRANSFER, EXCHANGE, REDEMPTION AND REPLACEMENT OF WARRANT.

          (A) RESTRICTION ON TRANSFER. This Warrant and the rights granted to
the holder hereof are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Section 7(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions and provisions of Section 8.1 of the Stock Purchase Agreement.
Each transferee of this Warrant or any portion thereof shall be bound by the
selling restrictions set forth in Section 8.1 of the Stock Purchase Agreement,
which Section is incorporated herein by reference. Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary. Notwithstanding
anything to the contrary contained herein, the registration rights described in
Section 8 hereof are assignable only in accordance with the provisions of the
Registration Rights Agreement, dated as of March 24, 2006, by and between the
Company and the other signatories thereto (the "REGISTRATION RIGHTS AGREEMENT").

          (B) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for a reasonable number
of new Warrants of like tenor of different denominations representing in the
aggregate the right to purchase the number of shares of Common Stock which may
be purchased hereunder, each of such new Warrants to represent the right to
purchase such number of shares (at the Exercise Price therefor) as shall be
designated by the holder hereof at the time of such surrender.


                                       7.



          (C) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

          (D) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Company. In the
event that one party breaches this Warrant, such party shall pay all of the
other party's costs and expenses (including reasonable legal fees) incurred by
such other party in connection with the enforcement of such other party's rights
hereunder.

          (E) WARRANT REGISTER. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.

     8. REGISTRATION RIGHTS. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, to
the extent permitted thereunder.

     9. NOTICES. All notices and other communications from the Company to the
registered holder of this Warrant in connection herewith shall be mailed by
certified or registered mail, postage prepaid, or sent via a reputable overnight
courier service to the address last furnished to the Company in writing by the
Registered Holder. All notices and other communications from the registered
holder to the Company in connection herewith shall be mailed by certified or
registered mail, postage prepaid, or sent via a reputable overnight courier
service to the Company at its principal office set forth:

          Idera Pharmaceuticals, Inc.
          345 Vassar Street
          Cambridge, MA 02139
          Telephone: (617) 679-5500
          Attn: Chief Executive Officer

     with a copy simultaneously transmitted by like means to:

          Wilmer Cutler Pickering Hale and Dorr LLP
          60 State Street
          Boston, Massachusetts 02109
          Attn: Stuart Falber
          Facsimile: (617) 526-5000


                                       8.



If the Company should at any time change the location of its principal office to
a place other than as set forth below, it shall give prompt written notice to
the registered holder and thereafter all references in this Warrant to the
location of its principal office at the particular time shall be as so specified
in such notice. All such notices and communications shall be deemed delivered
(i) upon delivery to the party to be notified, (ii) when received by confirmed
facsimile, or (iii) one (1) business day after deposit with a nationally
recognized overnight carrier, specifying next business day delivery, with
written verification of receipt.

     10. GOVERNING LAW; JURISDICTION. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York. The Company and
the holder each irrevocably consents to the jurisdiction of the United States
federal courts and state courts located in the State of New York, Borough of
Manhattan, in any suit or proceeding based on or arising under this Warrant and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Company and the holder each irrevocably waives
any objection to the laying of venue and the defense of an inconvenient forum to
the maintenance of such suit or proceeding. Each party further agrees that
service of process upon such party mailed by certified or registered mail shall
be deemed in every respect effective service of process upon such party in any
such suit or proceeding. Nothing herein shall affect a party's right to serve
process in any other manner permitted by law.

     11. MISCELLANEOUS.

          (A) AMENDMENT OR WAIVER. This Warrant and any provision hereof may
only be amended, and any provision of this Warrant may only be waived, by an
instrument in writing signed by the Company and the holder hereof.

          (B) DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.

          (C) TRADING DAY. For purposes of this Warrant, the term "trading day"
means any day on which the principal United States securities exchange or
trading market where the Common Stock is then listed is open for trading.

          (D) REDEMPTION OF WARRANT BY COMPANY.

               (I) At any time after March 24, 2010, provided that (x) all
shares of Common Stock issuable upon exercise of the Warrants are then (A)
authorized and reserved for issuance (B) registered under the Securities Act of
1933, as amended, for resale by the holders of the Warrants, and (C) eligible to
be traded on a Permitted Exchange (as defined in the Stock Purchase Agreement),
and (y) the volume weighted average of the closing prices of the Common Stock as
reported on the applicable Permitted Exchange of the Common Stock exceeds 300%
of the Exercise Price as in effect on the Issue Date for fifteen (15) or more
consecutive trading days immediately prior to the delivery by the Company of a
Redemption Notice (as defined below), the Company may elect, upon delivery of at
least twenty (20) days' prior written notice (the "REDEMPTION NOTICE") to the
holder hereof, to redeem all or a portion of the Warrants for a redemption
amount equal to the number of Warrant Shares issuable upon the exercise of all
or a


                                       9.



portion of this Warrant that is being redeemed multiplied by $0.01 (the
"REDEMPTION AMOUNT"). In the event the Company elects to redeem only some of the
outstanding Warrants pursuant to this Section 11(d), such Warrants shall be
redeemed pro rata among all the holders of the Warrants based upon the
percentage of Warrants held by such holders against the total outstanding
Warrants.

               (II) The Company may not deliver a Notice of Redemption unless on
or prior to the date of delivery of a Notice of Redemption, the Company shall
have segregated on the books and records of the Company an amount of cash
sufficient to pay all amounts to which holders of the Warrants that are being
redeemed are entitled pursuant to Section 11(d)(i). Any Notice of Redemption
delivered shall be irrevocable and shall be accompanied by a statement executed
by a duly authorized officer of the Company.

               (III) The Redemption Amount shall be paid to the holder within
three (3) business days of the date of redemption set forth in the Notice of
Redemption; provided, however, that the Company shall not be obligated to
deliver any portion of the Redemption Amount until either this Warrant is
delivered to the Company or the holder notifies the Company that the Warrant has
been lost, stolen or destroyed and delivers the documentation in accordance with
Section 7(c) hereof. In the event only a portion of this Warrant is being
redeemed, the Company shall issue, at its expense, a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
redeemed or exercised.

               (IV) Notwithstanding the delivery of a Redemption Notice, the
holder may exercise all or a portion of this Warrant subject to such Redemption
Notice by the delivery prior to the date of redemption set forth in such notice
of an Exercise Agreement pursuant to the procedures set forth in Section 1.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       10.



     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.

                                        IDERA PHARMACEUTICALS, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       11.



                           FORM OF EXERCISE AGREEMENT

         (TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)

To:  Idera Pharmaceuticals, Inc.
     345 Vassar Street
     Cambridge, MA 92139
     Telephone: (617) 679-5500
     Attn: Chief Executive Officer

     The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of Idera Pharmaceuticals, Inc., a
corporation organized under the laws of the State of Delaware (the "COMPANY"),
evidenced by the attached Warrant, and herewith makes payment of the Exercise
Price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.

     The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any Common Stock obtained on exercise of the Warrant, except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws.

[ ]  The undersigned requests that the Company cause its transfer agent to
     electronically transmit the Common Stock issuable pursuant to this Exercise
     Agreement to the account of the undersigned or its nominee (which is
     _________________) with DTC through its Deposit Withdrawal Agent Commission
     System ("DTC TRANSFER"), provided that such transfer agent participates in
     the DTC Fast Automated Securities Transfer program and the certificates are
     to be delivered without a legend.

[ ]  In lieu of receiving the shares of Common Stock issuable pursuant to this
     Exercise Agreement by way of DTC Transfer, the undersigned hereby requests
     that the Company cause its transfer agent to issue and deliver to the
     undersigned physical certificates representing such shares of Common Stock.

     The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:

Dated:
       ------------------------------   ----------------------------------------
                                        Signature of Holder

                                        ----------------------------------------
                                        Name of Holder (Print)

                                        Address:

                                        ----------------------------------------

                                        ----------------------------------------

                                        ----------------------------------------



                               FORM OF ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:



Name of Assignee   Address   No. of Shares
- ----------------   -------   -------------
                       



, and hereby irrevocably constitutes and appoints ___________________________ as
agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.

Dated: ________________, ____

In the presence of


- -------------------------------------

                                        Name:
                                              ----------------------------------


                                        Signature:
                                                   -----------------------------
                                        Title of Signing Officer or Agent (if
                                        any):

                                        ----------------------------------------
                                        Address:
                                                 -------------------------------

                                        ----------------------------------------

                                        Note: The above signature should
                                              correspond exactly with the name
                                              on the face of the within Warrant.

                                                                    Exhibit 10.4

                         COMMON STOCK PURCHASE AGREEMENT

     This COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into as
of the 24th day of March, 2006, by and between Biotech Shares Ltd., an entity
organized and existing under the laws of the Isle of Man (the "INVESTOR"), and
Idera Pharmaceuticals, Inc., a corporation organized and existing under the laws
of the State of Delaware (the "COMPANY").

     WHEREAS, the Investor and the Company (the "PARTIES") desire that, upon the
terms and subject to the conditions and limitations set forth herein, the
Company may issue and sell to the Investor, from time to time as provided
herein, and the Investor shall purchase from the Company, up to US$9,750,000 of
shares of Common Stock (as defined below) of the Company;

     WHEREAS, in consideration for the Investor's execution and delivery of, and
its performance of its obligations under, this Agreement, the Company is
concurrently with the execution of this Agreement issuing to the Investor
warrants to purchase 6,093,750 shares of Common Stock at an exercise price of
$0.74 per share in the form of Exhibit A hereto, which warrants shall be
exercisable at any time during the five-year period commencing September 24,
2006 (the "WARRANTS");

     WHEREAS, the Parties hereto are concurrently entering into a Registration
Rights Agreement in the form of Exhibit B hereto (the "REGISTRATION RIGHTS
AGREEMENT") pursuant to which the Company shall register the Common Stock issued
and sold to the Investor under this Agreement and issuable pursuant to the
Warrants upon the terms and subject to the conditions set forth therein; and

     WHEREAS, to assure payment of the purchase price for the Common Stock and
the delivery of the certificates for the Common Stock purchased by the Investor
when and if the Company elects in its sole discretion to sell such Common Stock
to the Investor, the Investor is causing concurrently with the execution of this
Agreement First National Bank of Lebanon (the "INVESTOR BANK") to issue a letter
of credit through JP Morgan Chase Bank, N.A. (the "CONFIRMING BANK") in the form
attached hereto as Exhibit C (the "LOC") on behalf of the Company.

     NOW, THEREFORE, the Parties hereto agree as follows:

     1. PURCHASE OBLIGATION. The Investor, intending to be legally bound, hereby
irrevocably agrees to purchase from the Company shares of Common Stock with an
aggregate purchase price of up to US$9,750,000 (the "MAXIMUM PURCHASE PRICE"),
if and when the Company exercises its right to sell to the Investor such shares
of Common Stock in accordance with Section 3 of this Agreement.

     2. INITIAL CLOSING

          (a) The closing of the execution and delivery of this Agreement shall
take place at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts at 10:00 a.m. local time on the date of this
Agreement (the "CLOSING").

          (b) At the Closing:


                                       1



               (i) The Company and the Investor shall execute and deliver this
Agreement;

               (ii) The Company and the Investor shall execute and deliver the
Registration Rights Agreement;

               (iii) The Investor shall cause the delivery of the LOC by the
Investor Bank and the Confirming Bank (the "Banks"); and

               (iv) The Company shall execute and deliver to the Investor the
Warrants.

     3. SUBSEQUENT CLOSINGS

          (a) At any time, on or after June 24, 2006 and prior to December 15,
2006, the Company, may, in its sole discretion, deliver to the Investor one or
more written notices in the form attached hereto as Exhibit D (each, a "PURCHASE
NOTICE") specifying

               (i) The dollar amount of Common Stock (with respect to each
Purchase Notice, the "PURCHASE AMOUNT") it elects to sell to the Investor on the
closing date for such sale;

               (ii) The closing date for such sale (which date shall be 15 days
after the effectiveness of the Purchase Notice);

               (iii) The number of shares of Common Stock to be issued on such
closing date; and

               (iv) The price per share of Common Stock used to calculate the
number of shares of Common Stock to be issued on such closing date.

If the Purchase Notice involves a Purchase Amount, which when aggregated with
the Purchase Amount of Common Stock previously sold to the Investor hereunder
exceeds $2,500,000, the Company shall confirm in such Purchase Notice that a
registration statement (the "PRE-ISSUANCE REGISTRATION STATEMENT") covering the
resale of the shares of Common Stock to be issued on such closing date has been
declared and is effective and that the certificates representing such shares
shall not bear a restricted securities legend.

Notwithstanding the foregoing,

               (A) the Company may not issue more than three Purchase Notices;

               (B) the closing date for a Purchase Notice may not occur within
45 days of the closing date for another Purchase Notice hereunder;

               (C) the Purchase Amount that the Company may elect to sell to the
Investor under a single Purchase Notice on any closing date shall not exceed
$4,000,000;


                                       2



               (D) the aggregate Purchase Amount that the Company may elect to
sell to the Investor under all Purchase Notices may not exceed the Maximum
Purchase Price; and

               (E) any Purchase Amount not sold under this Agreement on or
before December 31, 2006 will lapse if not used.

          (b) The number of shares of Common Stock to be issued in connection
with a Purchase Notice shall be determined by dividing (1) the Purchase Amount
specified in the Purchase Notice by (ii) the greater of (A) $0.64 and (B) 80% of
the volume-weighted average of the Closing Prices (as defined below) of the
Common Stock for the five consecutive Trading Days (as defined below)
immediately preceding the date that the Company sends such Purchase Notice to
the Investor.

          (c) The Investor agrees that payment of the full Purchase Amount with
respect to a Purchase Notice shall be made on the date specified in the Purchase
Notice (the "PAYMENT DATE") through the Letter of Credit. Upon receipt by the
Confirming Bank of the information required by the Letter of Credit, the
Confirming Bank shall wire to the Company's designated account on the Payment
Date the Purchase Amount specified by the Company.

          (d) Notwithstanding the foregoing, the Investor shall have no
obligation hereunder to purchase any shares of Common Stock if the Purchase
Amount of such shares, when aggregated with the Purchase Amount of Common Stock
previously sold to the Investor under this Agreement, exceeds $2,500,000 unless
the Pre-Issuance Registration Statement has been declared and is effective and
the certificates representing such shares will not bear a restricted securities
legend.

          (e) The Investor covenants that during period from the date hereof
until the earlier of (i) December 31, 2006 and (ii) the date the Company is no
longer entitled to sell any additional shares of Common Stock to the Investor
under this Agreement (because the Company has sold the full US$9,750,000
contemplated by this Agreement or otherwise), neither the Investor nor any of
its affiliates nor any entity managed or controlled by the Investor will ever
enter into or execute or cause any person to enter into or execute any "short
sale" of any shares of Common Stock.

          (f) Certain Definitions.

               (i) "CLOSING PRICE" of the Common Stock on any date means the
last reported sales price or, in case no such reported sale takes place on such
date, the average of the reported closing bid and ask prices on the principal
trading market for the Common Stock. If no such prices are available, the
Closing Price shall be the fair value of one share of Common Stock as determined
in good faith by the Board of Directors.

               (ii) "COMMON STOCK" means the common stock, US$0.001 par value,
of the Company as it exists on the date of this Agreement, and any shares of any
class or classes of capital stock of the Company resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company.


                                       3



               (iii) "TRADING DAY" means, with respect to any security, each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which
securities are not generally traded on the principal exchange or market on which
such security is traded.

     4. REPRESENTATIONS AND WARRANTIES. The Investor hereby acknowledges,
represents, warrants and agrees as follows:

          (a) The Investor understands that the offering and sale outside the
United States of the Common Stock, the Warrants and the Common Stock issuable
upon exercise of the Warrants (the "OFFERING ") is intended to be exempt from
registration under the U.S. Securities Act of 1933, as amended (the "SECURITIES
ACT"), in accordance with Regulation S under the Securities Act ("REGULATION
S"), based, in part, upon the representations, warranties and agreements of the
Investor contained in this Agreement and of the shareholders of the Investor
contained in the representation letters that the Company may obtain from time to
time from the shareholders of the Investor;

          (b) The Investor and the Investor's attorney, accountant, Investor
representative and/or tax advisor, if any (collectively, the "ADVISORS"), have
received all documents requested by the Investor and the Investor and its
Advisors, if any, have carefully reviewed them and understand the information
contained therein prior to the execution of this Agreement;

          (c) None of the U.S. Securities and Exchange Commission, any state
securities commission or any other regulatory authority (foreign or otherwise)
has approved the Common Stock, the Warrants or any of the shares of Common Stock
issuable upon exercise of the Warrants, or passed upon or endorsed the merits of
the Offering;

          (d) The Investor and the Advisors, if any, have had a reasonable
opportunity to ask questions of and receive answers from a person or persons
acting on behalf of the Company concerning the Offering and the business,
financial condition, results of operations and prospects of the Company, and all
such questions have been answered to the full satisfaction of the Investor and
the Advisors, if any;

          (e) The Investor has taken no action which would give rise to any
claim by any person against the Company for brokerage commissions, finders' fees
or the like relating to this Agreement or the transactions contemplated hereby;

          (f) The Investor, either alone or together with its Advisors, if any,
have such knowledge and experience in financial, tax, and business matters, and,
in particular, investments in securities, so as to enable them to utilize the
information made available to them in connection with the Offering to evaluate
the merits and risks of an investment in the Common Stock, the Warrants and the
Company and to make an informed investment decision with respect thereto;

          (g) The Investor is not relying on the Company, or any of its agents
or any of their respective employees or agents with respect to the legal, tax,
economic and related considerations of an investment in the Common Stock, the
Warrants or the shares of Common Stock issuable upon exercise of the Warrants,
and the Investor has relied on the advice of, or has consulted with, only its
own Advisors;


                                       4



          (h) The Investor is acquiring the Common Stock, the Warrants and the
Common Stock issuable upon exercise of the Warrants solely for such Investor's
own account for investment and not with a view to resale or distribution
thereof, in whole or in part. Except for arrangements with shareholders of the
Investor as provided in the organizational documents of the Investor, the
Investor has no agreement or arrangement, formal or informal, with any person to
sell or transfer all or any part of the Common Stock, the Warrants or the shares
of Common Stock issuable upon exercise of the Warrants, and the Investor has no
plans to enter into any such agreement or arrangement;

          (i) The purchase of the Common Stock, the Warrants and the Common
Stock issuable upon exercise of the Warrants represents high risk capital and
the Investor is able to afford an investment in a speculative venture having the
risks and objectives of the Company. The Investor must bear the substantial
economic risks of the investment in the Common Stock, the Warrants and the
Common Stock issuable upon exercise of the Warrants indefinitely because none of
the Common Stock, the Warrants or the shares of Common Stock issuable upon
exercise of the Warrants, may be sold, hypothecated or otherwise disposed of
unless (i) such securities are registered under the Securities Act, (ii) an
exemption from such registration is available in a transaction not subject to
the registration requirements of the Securities Act or (iii) in accordance with
Regulation S. The Company has agreed to file a registration statement to
register the resale of the shares of Common Stock to be sold pursuant to this
Agreement and the shares of Common Stock issuable upon exercise of the Warrants
under the Securities Act pursuant to the Registration Rights Agreement and has
agreed in Section 3(a) and 3(d) that it cannot issue and sell more than
$2,500,000 of Common Stock to the Investor hereunder unless the shares of Common
Stock to be issued to the Investor have been registered for resale pursuant to
the Pre-Issuance Registration Statement;

          (j) The Investor has adequate means of providing for such Investor's
current financial needs and foreseeable contingencies and has no need for
liquidity of the investment in the Common Stock, the Warrants and the shares of
Common Stock issuable upon exercise of the Warrants for an indefinite period of
time;

          (k) The Investor is aware that an investment in the Common Stock, the
Warrants and the Common Stock issuable upon exercise of the Warrants involves a
number of very significant risks and has carefully read and considered the
matters set forth under the caption "Risks Factors" and other risk factors of
the Company that are referenced in the most recent Quarterly Report on Form 10-Q
filed by the Company with the SEC;

          (l) The Investor is not a U.S. person (as defined in Securities Act
Rule 902(k)) and is not acquiring the Common Stock, the Warrants or the shares
of Common Stock issuable upon exercise of the Warrants, for the account or
benefit of any U.S. person. None of the Investor's shareholders are a U.S.
person.

          (m) The Investor represents it is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization; the
consummation of the transactions contemplated hereby is authorized by, and will
not result in a violation of any applicable law or its charter or other
organizational documents; it has full power and authority to execute and deliver
this Agreement and all other related agreements or certificates and to carry out
the provisions hereof and thereof and to purchase and hold the Common Stock, the
Warrants and the Common Stock issuable upon exercise of the Warrants; the
execution and delivery of this


                                       5



Agreement has been duly authorized by all necessary action; and this Agreement
has been duly executed and delivered on behalf of such entity and is a legal,
valid and binding obligation of such entity. The execution and delivery of this
Agreement will not violate or be in conflict with any order, judgment,
injunction, agreement or controlling document to which the Investor is a party
or by which it is bound;

          (n) The Investor represents to the Company that any information which
the Investor has heretofore furnished or is furnishing herewith to the Company
is complete and accurate and may be relied upon by the Company in determining
the availability of an exemption from registration under U.S. Federal securities
laws and applicable laws of states and foreign jurisdictions in connection with
the Offering;

          (o) Within five days after receipt of a request from the Company, the
Investor will provide such information and deliver such documents as may
reasonably be necessary to comply with any and all laws and ordinances to which
the Company is subject, including all information regarding the Investor that
the Company requests in connection with the registration statements to be filed
pursuant to the Registration Rights Agreement;

          (p) In evaluating its investment hereby in the Company, the Investor
has not relied upon any representation or other information (oral or written)
provided to the Investor or its Advisors by or on behalf of the Company other
than the information contained in the Company's filings with the U.S. Securities
and Exchange Commission;

          (q) The Investor acknowledges that the Company will not deliver a
Purchase Notice and seek to issue and sell shares of Common Stock hereunder
until such time as the number of authorized shares of Common Stock of the
Company is increased and that the Company plans to seek stockholder approval of
an increase in the number of authorized shares of Common Stock at its next
annual meeting of stockholders;

          (r) As of the date hereof, none of the Common Stock to be issued
hereunder, Warrants or the shares of Common Stock issuable upon exercise of the
Warrants have been registered under The U.S. Securities Act of 1933, as amended,
or under any applicable securities laws of any state or foreign jurisdiction and
such securities are being offered and sold in reliance on exemptions from the
registration requirements of said Act and such laws. The securities are subject
to restrictions on transferability and resale and may not be transferred or
resold except as permitted under said Act and such laws pursuant to registration
or exemption therefrom;

          (s) Each certificate representing shares of Common Stock or Common
Stock issuable upon exercise of the Warrants, and the Warrants shall bear a
legend substantially in the following form:

               "These securities have not been registered under the Securities
               Act of 1933. They may not be offered or transferred by sale,
               assignment, pledge or otherwise unless (i) a registration
               statement for the securities under the Securities Act of 1933 is
               in effect or (ii) the corporation has received an opinion of
               counsel, which opinion is satisfactory to the corporation, to the
               effect that such registration is not required under the
               Securities Act of 1933 or (iii) such offer or transfer is made in
               accordance


                                       6



               with the provisions of Regulation S under the Securities Act of
               1933. Hedging transactions involving these securities may not be
               conducted unless in compliance with the Securities Act of 1933."

     Notwithstanding the foregoing, no certificate representing shares of Common
Stock issued pursuant to this Agreement following the effectiveness of the
Pre-Issuance Registration Statement which are covered by such Registration
Statement shall bear such legend without the prior written consent of the
Investor.

          (t) The Investor hereby confirms, and within five days after receipt
of a request from the Company, shall confirm, that in the event it proposes to
transfer any Common Stock issued to it under Section 3 or upon exercise of the
Warrants it shall comply with all requirements of the Securities Act applicable
to such transfer, including without limitation the requirement of delivering a
current prospectus in a timely manner in connection with the transfer.

     5. IRREVOCABILITY; BINDING EFFECT. The Investor hereby acknowledges and
agrees that the agreements hereunder, including the agreement to purchase shares
of Common Stock if and when the Company exercises its right to sell to the
Investor such shares of Common Stock in accordance with Section 3, are
irrevocable by the Investor, except as required by applicable law, and that this
Agreement shall be binding upon and inure to the benefit of the Parties and
their administrators, successors, legal representatives, and permitted assigns.

     6. MODIFICATION. Except as expressly permitted herein, this Agreement shall
not be modified or waived except by an instrument in writing signed by the Party
against whom any such modification or waiver is sought. The Company may
terminate this Agreement at any time, without consent of the Investor, without
penalty.

     7. NOTICES. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by a reputable overnight delivery service or shall
be delivered against receipt to the Party to whom it is to be given (a) if to
the Company, at the address set forth above, or (b) if to the Investor, at the
address set forth on the signature page hereof (or, in either case, to such
other address as the Party shall have furnished in writing in accordance with
the provisions of this Section 7). Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof and
any notice or other communication given by overnight delivery service shall be
deemed given two business days after deposit with the courier; provided,
however, that a notice changing a Party's address shall be deemed given at the
time of receipt thereof.

     8. ASSIGNABILITY. This Agreement and the rights, interests and obligations
hereunder are not transferable or assignable by the Investor.

     9. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts in the United
States without reference to the principles thereof relating to the conflict of
laws.

     10. BLUE SKY QUALIFICATION. The purchase of the Common Stock and the
Warrants under this Agreement is expressly conditioned upon the exemption from
qualification of the offer and sale of the Common Stock and Warrants from
applicable U.S. Federal securities laws and the


                                       7



applicable laws of states and foreign jurisdictions. The Company shall not be
required to qualify as a foreign corporation or execute a general consent to
service of process in any jurisdiction and, should qualification or execution of
a general consent be necessary, the Company shall be released from any and all
obligations to maintain its offer, and may rescind any sale contracted, in the
jurisdiction.

     11. USE OF PRONOUNS. All pronouns and any variations thereof used herein
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons referred to may require.

     12. CONFIDENTIALITY. The Investor acknowledges and agrees that any
information or data the Investor has acquired from or about the Company, not
otherwise properly in the public domain, was received in confidence. The
Investor agrees not to divulge, communicate or disclose, except as may be
required by law or for the performance of this Agreement, or use to the
detriment of the Company or for the benefit of any other person or persons, or
misuse in any way, any confidential information of the Company, including any
scientific, technical, trade or business secrets of the Company and any
scientific, technical, trade or business materials that are treated by the
Company as confidential or proprietary, including, but not limited to, ideas,
discoveries, inventions, developments and improvements belonging to the Company
and confidential information obtained by or given to the Company about or
belonging to third parties.

     13. MISCELLANEOUS.

          (a) This Agreement, together with the Registration Rights Agreement
and the Warrants, constitute the entire agreement between the Investor and the
Company with respect to the subject matter hereof, except for any confidential
disclosure agreement between the Investor and the Company, and supersede all
prior oral or written agreements and understandings, if any, between the Parties
relating to the subject matter hereof, except for any confidential disclosure
agreement between the Investor and the Company.

          (b) The Investor's representations and warranties made in this
Agreement shall survive the execution and delivery hereof and delivery of the
Common Stock, the Warrants and the Common Stock issuable upon exercise of the
Warrants.

          (c) Each of the Parties hereto shall pay its own fees and expenses
(including the fees of any attorneys, accountants, appraisers or others engaged
by such Party) in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are
consummated.

          (d) This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.

          (e) Each provision of this Agreement shall be considered separable
and, if for any reason any provision or provisions hereof are determined to be
invalid or contrary to applicable law, such invalidity or illegality shall not
impair the operation of or affect the remaining portions of this Agreement.


                                       8



          (f) Paragraph titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the text.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       9



IN WITNESS WHEREOF, the Parties have caused this Common Stock Purchase Agreement
to be duly executed as of the date first set forth above..

                                        IDERA PHARMACEUTICALS, INC.


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


BIOTECH SHARES LTD.


By: /s/ Oussama Salam
    ---------------------------------
Name: Oussama Salam
Title: Director

Address: St. James's Chambers
         64A Athol Street
         Isle of Man IM1 1JE


                                       10

                                                                    Exhibit 10.5


                           IDERA PHARMACEUTICALS, INC.
                                345 Vassar Street
                         Cambridge, Massachusetts 02139

                                    March 24, 2006



Youssef El-Zein
Starco Center
Omar Daouk Street
Bloc B, 1st Floor
Beirut Central District
Beirut 2020-3313
Lebanon

Dear Youssef:

         This letter sets forth the terms and conditions of the engagement of
Youssef El-Zein (the "Advisor") as a non-exclusive financial advisor to Idera
Pharmaceuticals, Inc. (the "Company") in connection with the arrangement and
negotiation of an equity vehicle under which the Company may issue up to
$9,750,000 of its common stock (the "Transaction"). The Advisor, in his capacity
as financial advisor to the Company, has identified and will identify potential
non-U.S. investors and, subject to the Company's prior written approval, has
contacted or will contact such potential investors on behalf of the Company and
has provided and will provide such other services in connection with the
Transaction as the Company may from time to time reasonably request.

         The Advisor has not contacted or initiated and shall not contact or
initiate any discussions with any party or prospective investor without first
identifying such party or prospective investor to the Company and obtaining the
Company's prior written approval to make such contact or initiate such
discussions (such parties and prospective investors that are approved by the
Company are referred to herein as the "Approved Investors"). The Advisor shall
not have authority under this letter to bind the Company in any way to any
party, and nothing contained in this letter shall require the Company to accept
the terms of any proposal or undertake any other action that would result in the
receipt by the Advisor of a fee hereunder.

         The Advisor represents, warrants and covenants to the Company that:

                  (a)      He has not offered, offered to sell or sold and shall
         not offer, offer to sell or sell any securities of the Company on the
         basis of any written communications or documents relating to the
         Company or its business other than written materials furnished by the
         Company or previously approved by the Company in writing, including
         without limitation the Company's filings under the Securities Exchange
         Act of 1934, as amended (the "Offering Materials"). No communications
         (whether oral or written) or documents




         relating to the Company or its business made or delivered by the
         Advisor have been or shall be inconsistent with the Offering Materials.

                  (b)      He has not offered, offered to sell or sold and shall
         not offer, offer to sell or sell any securities of the Company to any
         investor in the United States or to any United States person outside
         the United States.

                  (c)      He has not engaged and shall not engage in any form
         of general solicitation or general advertising which is prohibited by
         Regulation D ("Regulation D") promulgated under the Securities Act of
         1933, as amended (the "Securities Act"), in connection with the
         Transaction or any directed selling efforts in the United States (as
         such term is defined in Regulation S ("Regulation S") promulgated under
         the Securities Act). In addition, such Advisor has not taken and shall
         not take any action that might reasonably be expected to jeopardize the
         availability for the Transaction of the exemption from registration
         provided by Regulation S or the qualification of securities of the
         Company for offer and sale under any applicable foreign securities
         laws.

                  (d)      He shall make reasonable inquiry to determine that
         each investor is acquiring the securities of the Company for his or its
         own account for investment.

                  (e)      In the performance of his services hereunder, he has
         complied and shall comply with the U.S. securities laws and the
         securities laws in effect in any jurisdiction in which securities of
         the Company are offered by it and the rules, regulations and orders of
         any securities administrator existing or adopted thereunder.

                  (f)      He shall not receive, directly or indirectly, any
         remuneration in respect of any issuance and sale by the Company of its
         securities in the United States or to any U.S. person.

         In the event a Transaction with Approved Investors is completed during
the term of this letter, the Company will (i) pay the Advisor a fee in an amount
of $262,500 and (ii) issue to the Advisor three-year warrants (the "Warrant")
(in a form containing antidilution protection for stock splits and other similar
events and other customary provisions as agreed by the Company and the Advisor)
to purchase 1,155,076 shares of common stock of the Company (the "Warrant
Shares") at an exercise price per share equal to $0.96. The Warrants shall be
exercisable for cash only and following the second anniversary of the date of
issuance of the Warrants shall be redeemable by the Company for $.01 per share
following notice to the Advisor if the closing sales prices of the common stock
on each day of a 15 day consecutive trading day period ending within 30 days
prior to the notice is greater than or equals 250% of the exercise price of the
Warrants.

         The Advisor recognizes that the Company is subject to the rules of the
American Stock Exchange, including Section 711 of the American Stock Exchange
Company Guide. Accordingly, the Advisor agrees that notwithstanding the
foregoing the Company shall have no obligation hereunder to pay any fees or
issue any Warrants to the Advisor that would not comply



                                      -2-


with the rules of the American Stock Exchange or that would require the Company
to obtain stockholder approval. In the event of such a conflict, the Company and
the Advisor agree to negotiate in good faith new compensation terms for the
Advisor.

         In addition to any fees payable to the Advisor under the terms of this
letter, the Company agrees to reimburse the Advisor for his reasonable
out-of-pocket expenses and the reasonable out-of-pocket expenses of the investor
in the Transaction, documented in reasonable detail, and incurred in connection
with the Advisor's activities under this letter or the Transaction; provided
that the Company shall not be required to reimburse more than $50,000 in
expenses hereunder, in the aggregate.

         The Company agrees to indemnify the Advisor and his affiliates and
agents (each such person being an "Indemnified Party") from and against any and
all losses, claims, damages and liabilities, joint or several, to which such
Indemnified Party may become subject under any applicable federal or state law,
or otherwise, related to or arising out of the engagement of the Advisor
pursuant to, and the performance by the Advisor of the services contemplated by,
this letter and will, subject to the limitation set forth below, reimburse any
Indemnified Party for all expenses (including reasonable counsel fees and
expenses, whether incurred in connection with third party claims or direct
claims against the Company) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or threatened claim
or any action or proceeding arising therefrom, whether or not such Indemnified
Party is a party. The Company will not be liable under the foregoing
indemnification provision to the extent that any loss, claim, damage, liability
or expense is found in a final judgment by a court of competent jurisdiction to
have resulted from an Indemnified Party's breach of this letter, bad faith,
willful misfeasance, gross negligence or reckless disregard of its obligations
or duties. No Indemnified Party shall settle any claim for which indemnification
may be sought by him or it hereunder without the prior written consent of the
Company. The Company's obligations to indemnify pursuant hereto shall be limited
to the Indemnified Party's actual liabilities, losses, damages or expenses
incurred and shall not include any consequential damages or damages for loss of
business or reputation.

         The Company will have the right, at its option, to assume the defense
of any litigation or proceeding in respect of which indemnity may be sought
hereunder, including the employment of counsel reasonably satisfactory to the
Advisor (the Advisor hereby agrees that Wilmer Cutler Pickering Hale and Dorr
LLP is satisfactory to the Advisor) and the payment of the fees and expenses of
such counsel, in which event, except as provided below, the Company shall not be
liable for the fees and expenses of any other counsel retained by any
Indemnified Person in connection with such litigation or proceeding. In any such
litigation or proceeding the defense of which the Company shall have so assumed,
any Indemnified Person shall have the right to participate in such litigation or
proceeding and to retain its own counsel.

         Upon receipt by an Indemnified Person of actual notice of a claim,
action or proceeding against such Indemnified Person in respect of which
indemnity may be sought hereunder, such Indemnified Person shall promptly notify
the Company with respect thereto. In addition, an Indemnified Person shall
promptly notify the Company after any action is commenced (by the


                                      -3-


way of service with a summons or other legal process giving information as to
the nature and basis of the claim) against such Indemnified Person in respect of
which indemnity may be sought hereunder. In any event, failure to notify the
Company shall not relieve the Company from any liability which the Company may
have on account of this indemnity or otherwise, except to the extent the Company
shall have been prejudiced by such failure.

         In the course of his services, the Advisor has had and will have access
to Confidential Information (as defined below) concerning the Company. The
Advisor agrees that all Confidential Information has been and will be treated by
the Advisor as confidential in all respects. The term "Confidential Information"
shall mean all information, whether written or oral, which is disclosed by the
Company or its affiliates, agents or representatives to the Advisor or is
otherwise learned of by the Advisor in connection with his role as financial
advisor to the Company which information is not in the public domain, but shall
not include: (i) information which, prior to disclosure to the Advisor, was
already in the Advisor's possession and was not otherwise subject to an
obligation of confidentiality; (ii) information which is publicly disclosed
other than by the Advisor in violation of this letter; (iii) information which
is obtained by the Advisor from a third party that (x) the Advisor does not know
to have violated, or to have obtained such information in violation of, any
obligation to the Company or its affiliates with respect to such information,
and (y) does not require the Advisor to refrain from disclosing such
information; and (iv) information which is required to be disclosed by the
Advisor or his outside counsel under compulsion of law (whether by oral
question, interrogatory, subpoena, civil investigative demand or otherwise) or
by order of any court or governmental or regulatory body to whose supervisory
authority the Advisor is subject; provided that, in such circumstance, the
Advisor will give the Company prior written notice of such disclosure and
cooperate with the Company to minimize the scope of any such disclosure. The
Advisor's obligation under this paragraph shall survive the expiration,
termination or completion of this letter or the Advisor's engagement hereunder.

         The Advisor's engagement hereunder and this letter shall terminate on
the earlier of (i) March 24, 2006 or (ii) written notice of termination by the
Company to the Advisor or by the Advisor to the Company, it being understood
that the provisions relating to confidentiality and indemnification will survive
any such termination.

         This letter shall be construed and interpreted in accordance with the
laws of the Commonwealth of Massachusetts. This letter constitutes the entire
agreement of the parties with respect to the subject matter hereof.

         If the foregoing is in accordance with your understanding, please
confirm acceptance by signing and returning to us the duplicate of this letter
attached herewith.



                                      -4-


                                             Sincerely,


                                             IDERA PHARMACEUTICALS, INC.



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

AGREED AND ACCEPTED AS OF
THE DATE SET FORTH ABOVE BY:





By: /s/ Youssef El-Zein
    -------------------------------
    Youssef El-Zein


                                      -5-

                                                                    Exhibit 10.6

                           IDERA PHARMACEUTICALS, INC.

                          REGISTRATION RIGHTS AGREEMENT

                           dated as of March 24, 2006



                           IDERA PHARMACEUTICALS, INC.

                          REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this "AGREEMENT") is entered into as of
March 24, 2006 by and among Idera Pharmaceuticals, Inc., a Delaware corporation
(the "COMPANY"), Biotech Shares Ltd. (the "INVESTOR") and Youssef El-Zein (the
"AGENT").

     WHEREAS, the Company is conducting an offering (the "OFFERING") of up to
$9,750,000 of shares of the Company's common stock, $0.001 par value per share
(the "COMMON STOCK"), pursuant to the Common Stock Purchase Agreement dated as
of March 24, 2006, by and between the Investor and the Company (the "PURCHASE
AGREEMENT");

     WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to
issue to the Investor warrants to purchase Common Stock of the Company (the
"INVESTOR WARRANTS");

     WHEREAS, pursuant to the Purchase Agreement, the Company may, in its sole
discretion, issue up to three Purchase Notices (as defined in the Purchase
Agreement) pursuant to which the Company will issue and sell shares of Common
Stock to the Investor;

     WHEREAS, in connection with the Offering, the Company has engaged the Agent
and may issue to the Agent warrants to purchase shares of Common Stock (the
"AGENT WARRANTS"); and

     WHEREAS, to induce the Investor to enter into the Purchase Agreement and
the Agent to assist the Company in the Offering, the Company has agreed to
provide registration rights under the Securities Act (as defined below) and
applicable state securities laws, as described below;

     NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Agent and the
Investor hereby agree as follows:

     1. Certain Definitions. As used in this Agreement, the following terms
shall have the following meanings:

          (a) "Business Day" means any day other than Saturday, Sunday or any
other day on which commercial banks in The City of New York or in Boston,
Massachusetts are required by law to remain closed.

          (b) "Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.

          (c) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.


                                       1



          (d) "Indemnified Party" means a party entitled to indemnification
pursuant to Section 7.

          (e) "Indemnifying Party" means a party obligated to provide
indemnification pursuant to Section 7.

          (f) "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization or association and governmental entity or any department or agency
thereof.

          (g) "Registrable Securities" means (i) the shares of Common Stock
issued or issuable upon exercise of the Investor Warrants and the Agent
Warrants, (ii) the shares of Common Stock issued or issuable to the Investor
pursuant to Section 3 of the Purchase Agreement, and (iii) any other shares of
Common Stock issued in respect of such shares (as a result of a stock split,
stock dividend, reclassification, recapitalization or other similar transaction
affecting the Common Stock); provided, however, that shares of Common Stock that
are Registrable Securities shall cease to be Registrable Securities upon the
earliest of (A) the date that such shares are eligible to be sold under Rule 144
of the Securities Act, without restriction by the volume limitations of Rule
144(e) of the Securities Act, (B) the date that such shares are sold (I)
pursuant to a registration statement, (II) to or through a broker, dealer or
underwriter in a public securities transaction and/or (III) in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act such that all transfer restrictions and restrictive legends with
respect thereto, if any, are removed upon the consummation of such sale, or (C)
any sale or transfer to any Person which by virtue of Section 9 of this
Agreement is not entitled to the rights provided by this Agreement. Wherever
reference is made in this Agreement to a request or consent of holders of a
certain percentage of Registrable Securities, the determination of such
percentage shall include shares of Common Stock issuable upon exercise of the
Agent Warrants and the Investor Warrants, in each case to the extent any such
warrants are outstanding, even if such exercise has not been effected.

          (h) "Registration Statement" means a registration statement of the
Company filed under the Securities Act and covering Registrable Securities.

          (i) "Rightsholders" means the Investor, the Agent and any persons or
entities to whom the rights granted under this Agreement are transferred by the
Investor, the Agent or his or its successors or assigns pursuant to Section 9 of
this Agreement.

          (j) "Securities Act" means the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.

     2. Registration

          (a) The Company shall use its best efforts to prepare and file with
the Commission within 60 days of the date hereof a Registration Statement (the
"INITIAL REGISTRATION STATEMENT") covering the resale of the Registrable
Securities issued or issuable upon exercise of the Investor Warrants and the
Agent Warrants and such other shares of Common Stock as the Company may desire
to include pursuant to registration rights agreements


                                       2



with other Persons. The Company shall use its best efforts to have the Initial
Registration Statement declared effective by the Commission within 90 days after
the date the Initial Registration Statement is filed or as soon as possible
thereafter.

          (b) The Company shall use its best efforts to prepare and file with
the Commission within 90 days of the date hereof a Registration Statement (the
"PRE-ISSUANCE REGISTRATION STATEMENT") covering the resale of the maximum number
of shares of Common Stock that may be issued to the Investor pursuant to Section
3 of the Purchase Agreement as of the filing of such Pre-Issuance Registration
Statement. The Company shall use its best efforts to have the Pre-Issuance
Registration Statement declared effective by the Commission within 90 days after
the date the Pre-Issuance Registration Statement is filed or as soon as possible
thereafter.

          (c) In the event that any shares of Common Stock are issued to the
Investor pursuant to Section 3 of the Purchase Agreement prior to the date the
Pre-Issuance Registration Statement is declared effective by the Commission (the
"UNREGISTERED SHARES"), the Company shall use its best efforts to prepare and
file with the Commission within 60 days of the date such Unregistered Shares are
issued by the Company a Registration Statement (an "ADDITIONAL REGISTRATION
STATEMENT") covering the resale of such Unregistered Shares. The Company shall
use its best efforts to have an Additional Registration Statement declared
effective by the Commission within 90 days after the date such Additional
Registration Statement is filed or as soon as possible thereafter.

          (d) In the event that the Company receives any comments from the
Commission with respect to a Registration Statement, the Company shall notify
the Rightsholders that it has received such comments and shall respond to the
Commission as to such comments as promptly as practicable.

          (e) The Company shall use its best efforts to cause each Registration
Statement to remain effective until the date on which the Rightsholders do not
hold any Registrable Securities covered by such Registration Statement.

     3. Registration Procedures.

          (a) In connection with the effectiveness of each Registration
Statement, the Company shall furnish to each Rightsholder such reasonable
numbers of copies of the relevant prospectus and such documents incident
thereto, including any amendment of or supplement to such prospectus, as a
Rightsholder from time to time may reasonably request in order to facilitate the
disposition of such Rightsholder's Registrable Securities under such
Registration Statement in conformity with the requirements of the Securities
Act.

          (b) The Company shall use its best efforts to register or qualify the
Registrable Securities covered by a Registration Statement under the securities
laws of such states of the United States as the Rightsholders may reasonably
request; provided, however, that the Company shall not be required in connection
with this paragraph (b) to qualify as a foreign corporation or execute a general
consent to service of process in any jurisdiction.


                                       3



          (c) If the Company has delivered preliminary or final prospectuses to
the Rightsholders and if after having done so the Company determines that such
prospectus and/or the Registration Statement of which such prospectus
constitutes a part needs to be amended or supplemented to comply with the
requirements of the Securities Act, the Company shall promptly notify the
Rightsholders and, if requested by the Company, the Rightsholders shall
immediately cease making offers or sales of shares under such Registration
Statement and shall return all such prospectuses to the Company. The Company
shall as promptly as reasonably practicable prepare and file with the Commission
any required amendment or supplement and following such filing, and, if
applicable, the effectiveness of such filing, shall provide the Rightsholders
with revised or supplemented prospectuses. Following receipt of the revised or
supplemented prospectuses, the Rightsholders shall be free to resume making
offers and sales under such Registration Statement.

          (d) If requested in writing by a Rightsholder in connection with the
transfer by such Rightsholder of Registrable Securities held by such
Rightsholder and the corresponding rights of the Rightsholder under this
Agreement as permitted by Section 9, then the Company shall, subject to
compliance by the transferee with Section 5 as a Rightsholder thereunder,
prepare and file with the Commission an amendment or supplement to the
applicable Registration Statement for the purpose of listing such transferee as
an additional selling stockholder under such Registration Statement.

          (e) The Company shall use its best efforts to cause all Registrable
Securities registered pursuant to this Agreement to be listed on each securities
exchange on which similar securities issued by the Company are then listed.

     4. Limitations on Registration Rights.

          (a) The Company may, by written notice to the Rightsholders, (i) delay
the filing of, or effectiveness of, a Registration Statement (notwithstanding
the provisions of Section 2) or (ii) suspend a Registration Statement after
effectiveness and require that the Rightsholders immediately cease sales of
shares pursuant to such Registration Statement, in the event that the Company is
engaged in any activity or transaction or preparations or negotiations for any
activity or transaction that the Company desires to keep confidential for
business reasons, if the Company determines in good faith that the public
disclosure requirements imposed on the Company under the Securities Act in
connection with such Registration Statement would require disclosure of such
activity, transaction, preparations or negotiations.

          (b) If the Company requires the Rightsholders to cease sales of shares
pursuant to paragraph (a) above, the Company shall, as promptly as practicable
following the termination of the circumstance which entitled the Company to do
so, take such actions as may be necessary to reinstate the effectiveness of such
Registration Statement and/or give written notice to all Rightsholders
authorizing them to resume sales pursuant to such Registration Statement. If as
a result thereof the prospectus included in such Registration Statement has been
amended to comply with the requirements of the Securities Act, the Company shall
enclose such revised prospectus with the notice to Rightsholders given pursuant
to this paragraph (b), and the Rightsholders shall make no offers or sales of
shares pursuant to such Registration Statement other than by means of such
revised prospectus.


                                       4



          (c) Notwithstanding the foregoing, the Company may not (i) delay the
filing of, or the effectiveness of, a Registration Statement or (ii) suspend
such Registration Statement, pursuant to paragraph (a) above on more than two
occasions during any 12-month period or for more than 60 days per such occasion.

     5. Obligations of the Rightsholders.

          (a) The Company shall not be required to include any Registrable
Securities in a Registration Statement unless such Rightsholder shall have
furnished to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required by the Company to effect
the effectiveness of such Registration Statement and unless such Rightsholder
shall have executed such documents in connection with such Registration
Statement as the Company may reasonably request. Each Rightsholder shall
promptly notify the Company of any material change with respect to such
information previously provided to the Company by such Rightsholder, including
without limitation notice of the sale by the Rightsholder of any Registrable
Securities.

          (b) Each Rightsholder agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of each Registration Statement hereunder.

     6. Expenses of Registration. The Company shall pay the expenses incurred by
it in complying with its obligations under this Agreement, including all
registration and filing fees, exchange listing fees, fees and expenses of
counsel for the Company, and fees and expenses of accountants for the Company,
but excluding (a) any brokerage fees, selling commissions or underwriting
discounts incurred by the Rightsholders in connection with sales under the
Registration Statement and (b) the fees and expenses of any counsel retained by
Rightsholders.

     7. Indemnification and Contribution.

          (a) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless each Rightsholder, each of its officers, directors
and partners, and each underwriter of such Registrable Securities, if any, and
each other person, if any, who controls such Rightsholder or underwriter within
the meaning of the Securities Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which such
Rightsholder, underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement registering such Registrable Securities, any preliminary prospectus or
final prospectus contained in such Registration Statement, or any amendment or
supplement to such Registration Statement or (ii) the omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and the Company will reimburse such
Rightsholder, underwriter and each such controlling person for any legal or any
other expenses reasonably incurred by such Rightsholder, underwriter or
controlling person in connection with


                                       5



investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon any untrue statement or omission made in such Registration
Statement, preliminary prospectus or final prospectus, or any such amendment or
supplement, in reliance upon and in conformity with information furnished to the
Company by or on behalf of such Rightsholder, underwriter or controlling person
and stated to be specifically for use in connection with such Registration
Statement; and provided further that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any untrue statement,
alleged untrue statement, omission or alleged omission made in any Registration
Statement, prospectus or amendment or supplement that was eliminated, remedied
or cured by the Company, such indemnity agreement shall not inure to the benefit
of any Rightsholder from whom the Person asserting any loss, claim, damage or
liability purchased the Registrable Securities if a copy of such Registration
Statement, prospectus, amendment or supplement was provided by the Company to
the Rightsholder but was not given or sent to such Person by the Rightsholder
prior to written confirmation of such sale.

          (b) Each Rightsholder, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and officers and each
underwriter (if any) and each person, if any, who controls the Company or any
such underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company, such directors and officers, underwriter or controlling person may
become subject under the Securities Act, Exchange Act, state securities or Blue
Sky laws or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement, any preliminary prospectus or final prospectus contained
in such Registration Statement, or any amendment or supplement to such
Registration Statement, or (ii) any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if and to the extent (and only to the extent) that the
statement or omission was made in reliance upon and in conformity with written
information relating to such Rightsholder furnished to the Company by such
Rightsholder and stated to be specifically for use in connection with such
Registration Statement, prospectus, amendment or supplement; provided, however,
that the obligations of a Rightsholder hereunder shall be limited to an amount
equal to the net proceeds to such Rightsholder of Registrable Securities sold in
connection with such registration.

          (c) Each Indemnified Party shall give notice to the Indemnifying Party
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom; provided,
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose approval
shall not be unreasonably withheld, conditioned or delayed); and, provided,
further, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 7 except to the extent that the Indemnifying Party is adversely affected
by such failure. The Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnifying Party shall pay such
expense if the Indemnified Party reasonably concludes based upon written advice
of its counsel that representation of such Indemnified Party by the counsel
retained by the


                                       6



Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding; provided further that in no event shall the
Indemnifying Party be required to pay the expenses of more than one law firm per
jurisdiction as counsel for the Indemnified Party. The Indemnifying Party also
shall be responsible for the expenses of such defense if the Indemnifying Party
does not elect to assume such defense. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation, and no Indemnified Party shall consent to entry of
any judgment or settle such claim or litigation without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed.

          (d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 7 is due
in accordance with its terms but for any reason is held to be unavailable to an
Indemnified Party in respect to any losses, claims, damages and liabilities
referred to herein, then the Indemnifying Party shall, in lieu of indemnifying
such Indemnified Party, contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities to
which such party may be subject in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Rightsholders on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Rightsholders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of material fact related to information supplied by the Company
or the Rightsholders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Rightsholders agree that it would not be just and equitable
if contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 7(d), (i) in no case shall any one Rightsholder be liable or
responsible for any amount in excess of the gross proceeds received by such
Rightsholder from the offering of Registrable Securities and (ii) the Company
shall be liable and responsible for any amount in excess of such proceeds;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 7(d), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
from whom contribution may be sought shall not relieve such party from any other
obligation it or they may have thereunder or otherwise under this Section 7(d)
except to the extent that the party or parties from whom contribution may be
sought are adversely affected. No party shall be liable for contribution with
respect to any action, suit, proceeding or claim settled without its prior
written consent, which consent shall not be unreasonably withheld, conditioned
or delayed.


                                       7



     8. Reporting. With a view to making available to the Rightsholders the
benefits of Rule 144 promulgated under the Securities Act or any other similar
rule or regulation of the Commission that may at any time permit the
Rightsholders to sell securities of the Company to the public without
registration ("RULE 144"), for so long as Rightsholders continue to own
Registrable Securities, the Company shall use its reasonable efforts to:

          (a) make and keep public information available, as those terms are
understood and defined in Rule 144, and file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and

          (b) furnish to each Rightsholder, for so long as such Rightsholder
owns Registrable Securities, promptly upon request, (i) a written statement by
the Company, if true, that it has complied with the applicable reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Company and (iii) such
other information as may be reasonably requested to permit the Rightsholders to
sell such securities pursuant to Rule 144 without registration.

     9. Assignment of Registration Rights. The rights under this Agreement shall
not be assigned by any Rightsholder except in connection with the transfer of
Registrable Securities by such Rightsholder to an affiliate or shareholder of
such Rightsholder, provided that (i) the Rightsholder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company; (ii) the Company is furnished with written notice of
(a) the name and address of such transferee or assignee, and (b) the securities
with respect to which such rights are being transferred or assigned; (iii) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the obligations of an Rightsholder under this
Agreement; and (iv) such transfer shall have been conducted in accordance with
all applicable federal and state securities laws.

     10. Amendment of Registration Rights. Any provision of this Agreement may
be amended and the observance of any provision of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Rightsholders
who then hold at least a majority of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Rightsholder and the Company. No such amendment shall be effective to the extent
that it applies to less than all of the holders of the Registrable Securities.
No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.

     11. Miscellaneous.

          (a) A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the record owner of such Registrable Securities.


                                       8



          (b) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile; or (iii) two (2) Business
Days after deposit with a reputable overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:

     If to the Company:

                         Idera Pharmaceuticals, Inc.
                         345 Vassar Street
                         Cambridge, MA 02139-4818
                         Telephone: 617-679-5500
                         Facsimile: 617-679-5592
                         Attention: Chief Financial Officer

     with a copy to:

                         Wilmer Cutler Pickering Hale and Dorr LLP
                         60 State Street
                         Boston, MA 02109
                         Telephone: 617-526-6000
                         Facsimile: 617-526-5000
                         Attention: David E. Redlick, Esq.

     If to the Investor:

                         Biotech Shares Ltd.
                         St. James's Chambers
                         64A Athol Street
                         Isle of Man IM1 1JE

     If to the Agent:

                         Youssef El-Zein
                         Starco Center
                         Omar Daouk Street
                         Bloc B, 1st Floor
                         Beirut Central District
                         Beirut 2020-3313
                         Lebanon

     If to a Rightsholder, to its address and facsimile number as set forth
above, or to such other address and/or facsimile number and/or to the attention
of such other Person as the


                                       9



recipient party has specified by written notice given to each other party five
(5) days prior to the effectiveness of such change.

     Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission, or (C)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a reputable overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

          (c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

          (d) All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of
the State of Delaware, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Delaware or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Delaware.

          (e) This Agreement and the documents referenced herein constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement and the documents referenced herein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.

          (f) Subject to the requirements of Section 9 of this Agreement, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

          (g) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

          (h) This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other parties hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

          (i) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.


                                       10



          (j) The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.

          (k) This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                  [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]


                                       11



     IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the day and year first above written.

                                        COMPANY:

                                        IDERA PHARMACEUTICALS, INC.


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


                                        INVESTOR:

                                        BIOTECH SHARES LTD.


                                        By: /s/ Oussama Salam
                                            ------------------------------------
                                        Name: Oussama Salam
                                        Title: Director


                                        AGENT:

                                        YOUSSEF EL-ZEIN


                                        /s/ Youssef El-Zein
                                        ----------------------------------------


                                       12

                                                                    Exhibit 10.7

THIS WARRANT AND THE WARRANT SHARES SHALL NOT BE SOLD OR TRANSFERRED EXCEPT (A)
 IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE SECURITIES ACT OF
   1933, (B) PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR (C)
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933. HEDGING TRANSACTIONS INVOLVING THIS WARRANT AND THE WARRANT SHARES MAY NOT
       BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT OF 1933.

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS EXERCISE ARE SUBJECT
     TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT

Warrant No. 2006-1                                   Number of Shares: 6,093,750
                                                         (subject to adjustment)
Date of Issuance: March 24, 2006

                           IDERA PHARMACEUTICALS, INC.

                          Common Stock Purchase Warrant

                         (Void after September 24, 2011)

     Idera Pharmaceuticals, Inc., a Delaware corporation (the "Company"), for
value received, hereby certifies that Biotech Shares Ltd., or its registered
assigns (the "Registered Holder"), is entitled, subject to the terms and
conditions set forth below, to purchase from the Company, at any time, or from
time to time, on or after September 24, 2006 and on or before 5:00 p.m. (Boston
time) on September 24, 2011, 6,093,750 shares of Common Stock, $0.001 par value
per share, of the Company ("Common Stock"), at a purchase price of $0.74 per
share. The shares purchasable upon exercise of this Warrant, and the purchase
price per share, each as adjusted from time to time pursuant to the provisions
of this Warrant, are hereinafter referred to as the "Warrant Shares" and the
"Purchase Price," respectively.

     1. Exercise.

          (a) Exercise Process. The Registered Holder may, at its option, elect
to exercise this Warrant, in whole or in part and at any time, or from time to
time, by surrendering this Warrant, with the purchase form appended hereto as
Exhibit I duly executed by or on behalf of the Registered Holder, at the
principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full, in lawful money of the
United States, of the Purchase Price payable in respect of the number of Warrant
Shares purchased upon such exercise.

          (b) Exercise Date. Each exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on the day on
which this Warrant shall have been surrendered to the Company as provided in
subsection 1(a) above (the "Exercise Date"). At such time, the person or persons
in whose name or names any certificates for Warrant Shares shall be issuable
upon such exercise as provided in subsection 1(c) below shall be deemed



to have become the holder or holders of record of the Warrant Shares represented
by such certificates.

          (c) Issuance of Common Stock Certificates. As soon as practicable
after the exercise of this Warrant in whole or in part, and in any event within
10 days thereafter, the Company, at its expense, will cause to be issued in the
name of, and delivered to, the Registered Holder, or as the Registered Holder
(upon payment by the Registered Holder of any applicable transfer or withholding
taxes) may direct:

               (i) a certificate or certificates for the number of full Warrant
Shares to which the Registered Holder shall be entitled upon such exercise plus,
in lieu of any fractional share to which the Registered Holder would otherwise
be entitled, cash in an amount determined pursuant to Section 3 hereof; and

               (ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of Warrant Shares equal (without giving
effect to any adjustment therein) to the number of such shares called for on the
face of this Warrant minus the number of Warrant Shares for which this Warrant
was so exercised.

          (d) Exercise by Non-U.S. Person. It shall be a condition to the
exercise of this Warrant by a Registered Holder that is not a U.S. Person (as
defined under the Securities Act of 1933, as amended (the "Securities Act"))
that such Registered Holder certify in writing to the Company that it is not a
U.S. Person and that this Warrant is not being exercised on behalf of a U.S.
Person.

     2. Adjustments.

          (a) Adjustment for Stock Splits and Combinations. If the Company shall
at any time, or from time to time after the date on which this Warrant was first
issued (or, if this Warrant was issued upon partial exercise of, or in
replacement of, another warrant of like tenor, then the date on which such
original warrant was first issued) (either such date being referred to as the
"Original Issue Date") effect a subdivision of the outstanding Common Stock, the
Purchase Price then in effect immediately before that subdivision shall be
proportionately decreased. If the Company shall at any time, or from time to
time, after the Original Issue Date combine the outstanding shares of Common
Stock, the Purchase Price then in effect immediately before the combination
shall be proportionately increased. Any adjustment under this paragraph shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

          (b) Adjustment for Certain Dividends and Distributions. In the event
the Company at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the


                                      -2-



close of business on such record date, by multiplying the Purchase Price then
in effect by a fraction:

               (i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and

               (ii) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Purchase Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Purchase Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.

          (c) Adjustment in Number of Warrant Shares. When any adjustment is
required to be made in the Purchase Price pursuant to subsections 2(a) or 2(b)
above, the number of Warrant Shares purchasable upon the exercise of this
Warrant shall be changed to the number determined by dividing (i) an amount
equal to the number of shares issuable upon the exercise of this Warrant
immediately prior to such adjustment, multiplied by the Purchase Price in effect
immediately prior to such adjustment, by (ii) the Purchase Price in effect
immediately after such adjustment.

          (d) Adjustments for Other Dividends and Distributions. In the event
the Company at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Company (other than shares of Common Stock) or in cash or
other property (other than regular cash dividends paid out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles), then and in each such event provision shall be made so that the
Registered Holder shall receive upon exercise hereof, in addition to the number
of shares of Common Stock issuable hereunder, the kind and amount of securities
of the Company, cash or other property which the Registered Holder would have
been entitled to receive had this Warrant been exercised on the date of such
event and had the Registered Holder thereafter, during the period from the date
of such event to and including the Exercise Date, retained any such securities
receivable during such period, giving application to all adjustments called for
during such period under this Section 2 with respect to the rights of the
Registered Holder.

          (e) Adjustment for Reorganization. If there shall occur any
reorganization, recapitalization, reclassification, consolidation or merger
involving the Company in which the Common Stock is converted into or exchanged
for securities, cash or other property (other than a transaction covered by
subsections 2(a), 2(b) or 2(d)) (collectively, a "Reorganization"), then,
following such Reorganization, the Registered Holder shall receive upon exercise
hereof the kind and amount of securities, cash or other property which the
Registered Holder would have been


                                      -3-



entitled to receive pursuant to such Reorganization if such exercise had taken
place immediately prior to such Reorganization. In any such case, appropriate
adjustment (as determined in good faith by the Board of Directors of the Company
(the "Board")) shall be made in the application of the provisions set forth
herein with respect to the rights and interests thereafter of the Registered
Holder, to the end that the provisions set forth in this Section 2 (including
provisions with respect to changes in and other adjustments of the Purchase
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any securities, cash or other property thereafter deliverable upon
the exercise of this Warrant.

          (f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Purchase Price pursuant to this Section 2, the
Company at its expense shall, as promptly as reasonably practicable but in any
event not later than 30 days thereafter, compute such adjustment or readjustment
in accordance with the terms hereof and furnish to the Registered Holder a
certificate setting forth such adjustment or readjustment (including the kind
and amount of securities, cash or other property for which this Warrant shall be
exercisable and the Purchase Price) and showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, as promptly as
reasonably practicable after the written request at any time of the Registered
Holder (but in any event not later than 30 days thereafter), furnish or cause to
be furnished to the Registered Holder a certificate setting forth (i) the
Purchase Price then in effect and (ii) the number of shares of Common Stock and
the amount, if any, of other securities, cash or property which then would be
received upon the exercise of this Warrant.

     3. Fractional Shares. The Company shall not be required upon the exercise
of this Warrant to issue any fractional shares, but shall pay the value thereof
to the Registered Holder in cash on the basis of the Fair Market Value per share
of Common Stock. The "Fair Market Value" per share of Common Stock shall be
determined as follows:

          (a) If the Common Stock is listed on a national securities exchange,
the Nasdaq National Market, the Nasdaq Capital Market, the OTC Bulletin Board or
another nationally recognized trading system as of the Exercise Date, the Fair
Market Value per share of Common Stock shall be deemed to be the average of the
high and low reported sale prices per share of Common Stock thereon for the five
consecutive trading day period immediately preceding the Exercise Date; provided
that if the Common Stock is not so listed during such period, the Fair Market
Value per share of Common Stock shall be determined pursuant to clause 3(b).

          (b) If the Common Stock is not listed on a national securities
exchange, the Nasdaq National Market, the Nasdaq Capital Market, the OTC
Bulletin Board or another nationally recognized trading system as of the
Exercise Date, the Fair Market Value per share of Common Stock shall be deemed
to be the amount most recently determined by the Board or an authorized
committee of the Board to represent the fair market value per share of the
Common Stock (including without limitation a determination for purposes of
granting Common Stock options or issuing Common Stock under any plan, agreement
or arrangement with employees of the Company).

     4. Redemption of Warrants.


                                      -4-



          (a) Subject to the terms of this Section 4, the Company shall have the
right to redeem this Warrant for a redemption price (the "Redemption Price")
equal to the result obtained by multiplying (i) $0.01 by (ii) the number of
Warrant Shares that the Registered Holder is entitled to purchase upon exercise
of this Warrant immediately prior to the termination of this Warrant under
Section 4(d) below (such Redemption Price being subject to adjustment for stock
splits, stock dividends, combinations, recapitalizations, reclassifications, and
similar transactions affecting the Common Stock).

          (b) The Company shall exercise this redemption right by providing at
least 30 days' prior written notice to the Registered Holder of such redemption
(the "Redemption Notice"). Such Redemption Notice shall be provided to the
Registered Holder in accordance with Section 10 of this Warrant. The Redemption
Notice shall specify the time, manner and place of redemption, including without
limitation the date on which this Warrant shall be redeemed (the "Redemption
Date") and the Redemption Price payable to the Registered Holder (assuming that
this Warrant is not exercised on or prior to the Redemption Date).

          (c) Notwithstanding the foregoing, the Company may not redeem this
Warrant or provide the Redemption Notice to the Registered Holder (i) prior to
March 24, 2010 and (ii) unless the closing sales price of the Common Stock on
each day of a 15 consecutive trading day period ending within 30 days prior to
the date the Company provides the Redemption Notice to the Registered Holder is
greater than or equal to 250% of the Purchase Price then in effect.

          (d) This Warrant shall cease to be exercisable and shall be terminated
and of no further force or effect effective at 5:00 p.m. (Boston Time) on the
Redemption Date. If the Registered Holder does not exercise this Warrant on or
prior to the Redemption Date, the Registered Holder shall surrender this Warrant
to the Company on the Redemption Date for cancellation. From and after the
Redemption Date, the Registered Holder's sole right hereunder shall be to
receive the Redemption Price, without interest, upon presentation and surrender
of this Warrant for cancellation.

     5. Transfers, etc.

          (a) Neither this Warrant nor the Warrant Shares shall be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act, or (ii) the Company first shall have been furnished with an
opinion of legal counsel, reasonably satisfactory to the Company, to the effect
that such sale or transfer is exempt from the registration requirements of the
Securities Act. Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for a transfer made in accordance with Rule 144 under
the Securities Act.

          (b) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:

               "The securities represented by this certificate have not been
               registered under the Securities Act of 1933, as amended, and may
               not be offered, sold or otherwise transferred, pledged or
               hypothecated unless and until such securities are registered
               under such Act or an opinion of counsel


                                      -5-



               satisfactory to the Company is obtained to the effect that such
               registration is not required."

The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Securities Act.

          (c) In the case of a Registered Holder that is a non-U.S. Person:

               (i) THIS WARRANT AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND THIS WARRANT MAY NOT BE EXERCISED BY OR ON
BEHALF OF A U.S. PERSON UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933 OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

               (ii) This Warrant and the Warrant Shares shall not be sold or
transferred except (A) in accordance with the provisions of Regulation S under
the Securities Act, (B) pursuant to registration under the Securities Act or (C)
pursuant to an available exemption from registration under the Securities Act.
Hedging transactions involving this Warrant and the Warrant Shares may not be
conducted unless in compliance with the Securities Act.

               (iii) Notwithstanding Section 5(b) to the contrary, each
certificate representing Warrant Shares issued to a Registered Holder that is a
non-U.S. Person shall bear a legend substantially in the following form:

     "These shares have not been registered under the Securities Act of 1933.
     They may not be offered or transferred by sale, assignment, pledge or
     otherwise unless (i) a registration statement for the shares under the
     Securities Act of 1933 is in effect or (ii) the corporation has received an
     opinion of counsel, which opinion is satisfactory to the corporation, to
     the effect that such registration is not required under the Securities Act
     of 1933 or (iii) such offer or transfer is made in accordance with the
     provisions of Regulation S under the Securities Act of 1933. Hedging
     transactions involving these shares may not be conducted unless in
     compliance with the Securities Act of 1933."

          (d) The Company has agreed pursuant to the Registration Rights
Agreement dated as of March 24, 2006 by and among the Company, Biotech Shares
Ltd. and the Agent (as defined therein) to file a registration statement with
the U.S. Securities and Exchange Commission to register the Warrant Shares under
the Securities Act. The Company shall remove the legend on any certificate
representing Warrant Shares if such Warrant Shares are resold or transferred
pursuant to an effective registration statement under the Securities Act.

          (e) The Company will maintain a register containing the name and
address of the Registered Holder of this Warrant. The Registered Holder may
change its address as shown on the warrant register by written notice to the
Company requesting such change.


                                      -6-



          (f) Notwithstanding Section 5(a) above, a Registered Holder which is
an entity may transfer this Warrant, in whole, to a wholly owned subsidiary or a
shareholder of such entity, a Registered Holder which is a partnership may
transfer this Warrant, in whole, to a partner of such partnership or a retired
partner of such partnership or to the estate of any such partner or retired
partner, a Registered Holder which is a limited liability company may transfer
this Warrant, in whole, to a member of such limited liability company or a
retired member or to the estate of any such member or retired member and a
Registered Holder who is an individual may transfer this Warrant, in whole, to
such individual's spouse, children, parents, siblings, grandchildren or any
trust established exclusively for the benefit of one or more of the foregoing
individuals, or by will or the laws of descent and distribution (in each case, a
"Permitted Transferee"). This Warrant and all rights hereunder are transferable
to a Permitted Transferee, in whole, upon surrender of this Warrant with a
properly executed assignment (in the form of Exhibit II hereto) at the principal
office of the Company (or, if another office or agency has been designated by
the Company for such purpose, then at such other office or agency).

     6. No Impairment. The Company will not, by amendment of its charter or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Registered Holder against impairment.

     7. Notices of Record Date, etc. In the event:

          (a) the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time deliverable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any dividend
or other distribution, or to receive any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right; or

          (b) of any capital reorganization of the Company, any reclassification
of the Common Stock of the Company, any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the surviving entity and its Common Stock is not converted into
or exchanged for any other securities or property), or any transfer of all or
substantially all of the assets of the Company; or

          (c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,

then, and in each such case, the Company will send or cause to be sent to the
Registered Holder a notice specifying, as the case may be, (i) the record date
for such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such other stock or
securities at the time deliverable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such


                                      -7-



reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be sent at least 10 days prior to
the record date or effective date for the event specified in such notice.

     8. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other securities, cash and/or property, as
from time to time shall be issuable upon the exercise of this Warrant.

     9. Exchange or Replacement of Warrants.

          (a) Upon the surrender by the Registered Holder, properly endorsed, to
the Company at the principal office of the Company, the Company will, subject to
the provisions of Section 5 hereof, issue and deliver to or upon the order of
the Registered Holder, at the Company's expense, a new Warrant or Warrants of
like tenor, in the name of the Registered Holder or as the Registered Holder
(upon payment by the Registered Holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock (or other securities, cash and/or property) then issuable
upon exercise of this Warrant.

          (b) Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant and (in the case of
loss, theft or destruction) upon delivery of an indemnity agreement (with surety
if reasonably required) in an amount reasonably satisfactory to the Company, or
(in the case of mutilation) upon surrender and cancellation of this Warrant, the
Company will issue, in lieu thereof, a new Warrant of like tenor.

     10. Notices. All notices and other communications from the Company to the
Registered Holder in connection herewith shall be mailed by certified or
registered mail, postage prepaid, or sent via a reputable overnight courier
service to the address last furnished to the Company in writing by the
Registered Holder. All notices and other communications from the Registered
Holder to the Company in connection herewith shall be mailed by certified or
registered mail, postage prepaid, or sent via a reputable overnight courier
service to the Company at its principal office set forth below. If the Company
should at any time change the location of its principal office to a place other
than as set forth below, it shall give prompt written notice to the Registered
Holder and thereafter all references in this Warrant to the location of its
principal office at the particular time shall be as so specified in such notice.
All such notices and communications shall be deemed delivered (i) two business
days after being sent by certified or registered mail, return receipt requested,
postage prepaid, or (ii) two business days after being sent via a reputable
overnight courier service.

     11. No Rights as Stockholder. Until the exercise of this Warrant, the
Registered Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company. Notwithstanding the foregoing, in the event (i) the
Company effects a split of the Common Stock by means of a stock dividend and the
Purchase Price of and the number of Warrant Shares are adjusted as of the date
of the distribution of the dividend (rather than as of the record date for such
dividend), and (ii) the Registered Holder exercises this Warrant between the
record date and the distribution date for such stock dividend, the Registered
Holder shall be entitled to receive,


                                      -8-



on the distribution date, the stock dividend with respect to the shares of
Common Stock acquired upon such exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

     12. Amendment or Waiver. Any term of this Warrant may be amended or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought. No waivers of any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of any such term, condition or
provision.

     13. Section Headings. The section headings in this Warrant are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.

     14. Governing Law. This Warrant will be governed by and construed in
accordance with the internal laws of the State of Delaware (without reference to
the conflicts of law provisions thereof).

     15. Facsimile Signatures. This Warrant may be executed by facsimile
signature.

     16. Acceptance by Registered Holder. By acquiring and accepting this
Warrant, the Registered Holder shall be deemed to have agreed and accepted the
terms and conditions of this Warrant.

     EXECUTED as of the Date of Issuance indicated above.

                                        IDERA PHARMACEUTICALS, INC.


                                        By: /s/ Sudhir Agrawal
                                            ------------------------------------
                                        Title: Chief Executive Officer


                                      -9-



                                                                       EXHIBIT I

                                  PURCHASE FORM

To: Idera Pharmaceuticals, Inc.                               Dated: ___________

     The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ______), hereby elects to purchase __________ shares of the Common
Stock of Idera Pharmaceuticals, Inc. covered by such Warrant.

     The undersigned herewith makes a payment of $___________ representing the
full purchase price for such shares at the price per share provided for in such
Warrant.


                                        Signature:
                                                   -----------------------------
                                        Address:
                                                 -------------------------------

                                                 -------------------------------


                                      -10-



                                                                      EXHIBIT II

                                 ASSIGNMENT FORM

     FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (No. ____) with respect to all of the shares of Common Stock of Idera
Pharmaceuticals, Inc. covered thereby set forth below, unto:

                       
Name of Assignee   Address   No. of Shares




Dated: ____________________             Signature:
                                                   -----------------------------


Signature Guaranteed:


By:
    ------------------------------------

The signature should be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934.


                                      -11-