ANNUAL REPORT 2 0 1 6 IderaPharma.com 708087cx.pdf 2 4/18/17 3:40 PM FOCUSED FORWARD Fellow Idera Shareholders, Greetings, and I hope your 2017 is off to an outstanding start. I compose this letter with great optimism about Idera’s direction as we continue building on the foundations we have established since I joined Idera in late 2014. Over the past two years, we took important steps to foster an organizational culture deeply rooted in a set of shared values that I believe are paramount to generating success in our business. These values reflect and reinforce our belief that success is delivering to patients approved therapies that address severe unmet needs. To that end, in 2016 we prioritized our portfolio and built strategic development plans that chart a pathway to approval, continued to recruit and hire the best and brightest team members, strengthened our financial resources, and made significant progress on executing our clinical programs. We also forged an agreement licensing our compound IMO-9200 to Vivelix Pharmaceuticals for autoimmune GI conditions, which, though promising, fell outside of our core focus on oncology and rare diseases. The deal provided us with additional capital immediately, along with future milestone payments upon Vivelix’s successful development of IMO-9200. Today, I see Idera as a company well positioned for progress and success in our goal of developing and commercializing treatments to help patients in need. Idera is well positioned for progress and success in developing and commercializing treatments that help patients in need. IMO-2125 Third-Generation Antisense (3GA) Our highest-priority clinical program in 2017 is Idera’s 3GA technology platform is a key pillar upon IMO-2125. In 2016, through our partnership with which we will build for years to come. In 2016, we MD Anderson Cancer Center, we completed the selected a gene target that we plan to take into the dose-escalation portion of our Phase 1 trial with clinic in 2018 to provide proof of concept for the intratumoral IMO-2125 in combination with ipilimumab platform. We have yet to disclose the specifics of our for patients who were refractory to prior PD1 therapy. chosen target and disease indication. Our plan is to We presented the first clinical update from this trial in announce them towards the end of this year, closer to the second half of 2016, and we continue to be excited filing our IND and initiating our first human clinical trial. about the durable results. Achieving these results is particularly meaningful because these patients have, for the most part, run out of viable options. Our partnership with GSK to apply our 3GA platform in the treatment of selected targets in renal disease has also continued to progress, and they are planning to Also in 2016, our team established a full strategic select their first clinical candidate in the early part of development plan for IMO-2125, which serves as a 2018. This collaboration further broadens the utility of guiding path for our activities moving forward. our 3GA platform beyond our areas of focus. We are in the midst of launching preclinical and clinical trials for IMO-2125 to explore expansion opportunities Looking Forward beyond PD1-refractory melanoma, including trials with other checkpoint inhibitors, additional tumor types, and collaborations. IMO-8400 With hard work and diligence on our part in 2017, we believe that each of these programs has the capacity to serve as a springboard for Idera’s growth. Our team is focused, and our path forward is clear. I look forward to keeping you apprised of our progress, and wish you 2017 is a critical year in developing IMO-8400 for the and your families a wonderful and rewarding year. treatment of dermatomyositis (DM), a rare and debilitating condition with limited therapy options. We expect to complete the enrollment of our Phase 2 trial for DM in the United States and Europe in the second half of this year, positioning us for a full data read-out in the first half of 2018. We are hopeful that after Regards, completing this trial, we may be closer to offering Vin Milano patients with DM a potentially life-changing therapy. Chief Executive Officer, Idera Pharmaceuticals 708087cx.pdf 3 4/18/17 3:40 PM ADVANCING A STRATEGICALLY FOCUSED DEVELOPMENT PIPELINE PROGRAM MECHANISM DISCOVERY PHASE 1 PHASE 2 PIVOTAL IMMUNO-ONCOLOGY Refractory PD-1 metastatic melanoma IMO-2125 / CPI combination Additional tumor types IMO-2125 monotherapy Additional tumor types IMO-2125 / CPI combination RARE DISEASES Dermatomyositis IMO-8400 TLR9 agonist TLR9 agonist TLR9 agonist TLR7,8,9 antagonist Undisclosed rare liver condition 3GA 3GA undisclosed target Undisclosed indication 3GA Undisclosed indication 3GA 3GA-NLRP3 3GA-DUX4 PARTNERED PROGRAMS Renal diseases 3GA* Autoimmune diseases IMO-9200† 3GA TLR7,8,9 antagonist PARTNERING OPPORTUNITIES | Idera-sponsored clinical development suspended B-cell lymphoma IMO-8400 TLR7,8,9 antagonist *Commercial rights belong to GSK. †Commercial rights belong to Vivelix. REFLECTING ON 2016: SIGNIFICANT STEPS TOWARD DEVELOPING THERAPIES FOR PATIENTS WITH UNMET NEEDS • Completed enrollment in Phase 1 dose escalation IMO-2125 trial (ipilimumab arm) • Commenced dosing Phase 1 dose-escalation IMO-2125 trial (pembrolizumab arm) • Presented clinical and translational data on IMO-2125 at Society for Immunotherapy of Cancer scientific meeting • Designed clinical program to approval in PD-1 refractory melanoma • Planned additional IMO-2125 trials beyond PD-1 refractory melanoma • Opened IMO-8400 Phase 2 trial in dermatomyositis: >20 sites initiated, enrollment progressing • Increased number of 3GA compounds for potential development to 22 gene targets • Forged out-licensing agreement for IMO-9200 to Vivelix • Strengthened company balance sheet, extending cash runway through second quarter of 2018 708087cx.pdf 4 4/18/17 3:40 PM Idera Pharmaceuticals is a clinical-stage biopharmaceutical company developing novel nucleic acid-based therapies for the treatment of certain cancers and rare diseases. Idera’s proprietary technology involves using a TLR-targeting technology, to design synthetic oligonucleotide-based drug candidates to act by modulating the activity of specific TLRs. In addition to its TLR programs, Idera is advancing a third-generation antisense technology platform using its proprietary technology to inhibit the production of disease-associated proteins by targeting messenger RNA. B OA R D O F D I R EC TO RS Sudhir Agrawal, D Phil, FRSC President of Research Julian C. Baker Managing Partner, Baker Brothers Investments Youssef El Zein Managing Partner, Pillar Investment Limited Mark Goldberg, MD Former Executive Vice President, Global Medical and Regulatory Strategy, Synageva Maxine Gowen, PhD President and Chief Executive Officer, Trevena Vincent Milano Chief Executive Officer Kelvin M. Neu, MD Managing Director, Baker Brothers Investments William S. Reardon, CPA Retired Audit Partner, Pricewaterhouse Coopers, LLP LE A D E RS H I P TE A M Sudhir Agrawal, D Phil, FRSC President of Research Louis J. Arcudi III, MBA Senior Vice President of Operations, Chief Financial Officer and Treasurer Mark J. Casey Senior Vice President, General Counsel and Secretary of the Board of Directors Jill Conwell Vice President, Human Resources Robert Doody Jr. Vice President, Corporate Communications and Investor Relations Clayton Fletcher Senior Vice President, Business Development and Strategic Planning Joanna Horobin, MB, ChB Senior Vice President, Chief Medical Officer Vincent Milano Chief Executive Officer Jonathan Yingling, PhD Senior Vice President, Early Development STO CKH O LD E RS’ M E ETI N G The 2017 Annual Meeting of Shareholders will be held at the Company’s offices at 505 Eagleview Drive, Suite 212, Exton, PA, on June 7, 2017, at 8:30 AM ET. A notice of the meeting, proxy statement and proxy voting card have been mailed to stockholders with this Annual Report. I N V E STO R R E L ATI O N S Additional copies of this Annual Report, which includes the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the Securities and Exchange Commission, are available upon request to: Investor Relations Idera Pharmaceuticals, Inc. 505 Eagleview Boulevard, Suite 212 Exton, PA 19341 Phone: 1-617-679-5515 Email: rdoody@iderapharma.com IderaPharma.com R EG I STR A R & TR A N S FE R AG E NT Computershare P.O. Box 30170 College Station, TX 77842-3170 Computershare.com/investor Overnight Correspondence: Computershare 211 Quality Circle, Suite 210 College Station, TX 77845 Toll-Free Number: 1-877-206-1150 • TDD Hearing Impaired: 1-800-952-9245 • Foreign Stockholders: 1-201-680-6578 • TDD Foreign Stockholders: 1-781-575-4592 LEGA L CO U N S E L WilmerHale 60 State Street Boston, MA 02109 I N D E PE N D E NT AU D ITO RS Ernst & Young, LLP 200 Clarendon Street Boston, MA 02116 CO M M O N STO CK SY M B O L NASDAQ: IDRA FO RWA R D – LO O KI N G STATE M E NT Any statement that we may make in this Annual Report about future expectations, plans and prospects for the Company constitutes forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors including the risks set forth under the caption “Risk Factors” in Idera’s Annual Report on Form 10-K for the year ended December 31, 2016. Idera disclaims any intention or obligation to update any forward-looking statements. 708087cx.pdf 1 4/18/17 3:40 PM “This past year was incredibly important to drive Idera’s future direction and opportunities for success, and I am extremely proud of every member’s contributions throughout 2016. As we enter 2017, we are sharply focused on our core priorities to prepare for what promises to be a pivotal year for our company, our patients and our shareholders.” — Vin Milano 505 Eagleview Boulevard, Suite 212 Exton, PA 19341 167 Sidney Street Cambridge, MA 02139 IderaPharma.com