EX-10.1 EXCLUSIVE LICENSE AND RESEARCH COLLABORATION AGREEMENT, DATED DECEMBER 8, 2006.

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Exhibit 10.1

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

EXCLUSIVE LICENSE AND
RESEARCH COLLABORATION AGREEMENT

BY AND BETWEEN

MERCK & CO., INC.

AND

IDERA PHARMACEUTICALS, INC.

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TABLE OF CONTENTS

1. DEFINITIONS............................................................. 1

2. RESEARCH PROGRAM........................................................ 11

2.1 General........................................................ 11

2.2 Conduct of Research............................................ 11

2.3 Use of Research Funding; FTE Commitments....................... 11

2.4 Principal Scientists........................................... 12

2.5 Joint Research Committee....................................... 12

2.6 Exchange of Information........................................ 13

2.7 Records and Reports............................................ 13

2.8 Disclosure, Evaluation and Selection of Collaboration
Compounds................................................... 14

2.9 Ownership of Materials, Information and Inventions............. 15

2.10 Research Program Term.......................................... 16

2.11 Merck Materials................................................ 16

2.12 Exclusive Efforts.............................................. 16

2.13 Use of Human Materials......................................... 16

3. LICENSES; DEVELOPMENT AND COMMERCIALIZATION............................. 17

3.1 License Grants to Merck........................................ 17

3.2 License Grants to Idera........................................ 18

3.3 No Implied Licenses............................................ 18

3.4 Development and Commercialization.............................. 18

3.5 Excused Performance............................................ 18

3.6 Exclusive Negotiation Period................................... 19

3.7 Adverse Experience Reporting................................... 19

4. CONFIDENTIALITY AND PUBLICATION...................................... 20

4.1 Nondisclosure Obligation....................................... 20

4.2 Idera Know-How................................................. 21

4.3 Publication.................................................... 21

4.4 Publicity/Use of Names......................................... 22

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5. PAYMENTS; ROYALTIES AND REPORTS......................................... 22

5.1 License Fee.................................................... 22

5.2 Research Program FTE Funding; Additional Supply................ 22

5.3 Milestone Payments............................................. 23

5.4 Royalties...................................................... 25

5.5 Reports; Payment of Royalty.................................... 28

5.6 Audits......................................................... 28

5.7 Payment Exchange Rate.......................................... 29

5.8 Income Tax Withholding......................................... 29

6. REPRESENTATIONS AND WARRANTIES; COVENANTS............................... 29

6.1 Representations and Warranties of Idera........................ 29

6.2 Representations and Warranties of Merck........................ 30

6.3 Covenants of Idera............................................. 30

7. PATENT PROVISIONS....................................................... 30

7.1 Filing, Prosecution and Maintenance of Patents................. 30

7.2 Option of Merck to Prosecute and Maintain Patents.............. 31

7.3 Interference, Opposition, Reexamination and Reissue............ 32

7.4 Enforcement and Defense........................................ 32

7.5 Cooperation; Patent Term Extension and Restoration............. 34

8. TERM AND TERMINATION.................................................... 34

8.1 Term and Expiration............................................ 34

8.2 Termination by Merck........................................... 34

8.3 Termination for Cause.......................................... 35

8.4 Effect of Expiration or Termination; Survival.................. 37

9. INDEMNIFICATION......................................................... 37

9.1 Indemnification by Merck....................................... 37

9.2 Indemnification by Idera....................................... 37

9.3 Claims for Indemnification..................................... 37

9.4 Limitation of Liability........................................ 38

10.MISCELLANEOUS........................................................... 38


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10.1 Force Majeure.................................................. 38

10.2 Assignment/ Change of Control.................................. 38

10.3 Severability................................................... 39

10.4 Notices........................................................ 40

10.5 Applicable Law................................................. 40

10.6 Dispute Resolution............................................. 40

10.7 Entire Agreement; Amendments................................... 41

10.8 Affiliates..................................................... 42

10.9 Headings....................................................... 42

10.10 Independent Contractors........................................ 42

10.11 Waiver......................................................... 42

10.12 Cumulative Remedies............................................ 42

10.13 Waiver of Rule of Construction................................. 42

10.14 Counterparts................................................... 42

SCHEDULES

SCHEDULE 1.18 EVALUATION CRITERIA.................................... i

SCHEDULE 1.25 IDERA BACKGROUND PATENT RIGHTS......................... ii

SCHEDULE 1.29 IDERA MATERIALS........................................ ix

SCHEDULE 1.50 MERCK MATERIALS........................................ x

SCHEDULE 1.73 SELECTION CRITERIA..................................... xi

SCHEDULE 2.1 RESEARCH PROGRAM....................................... xii

SCHEDULE 2.3.2 DEPLOYMENT OF FTEs..................................... xvi

SCHEDULE 2.12 IDERA OBLIGATIONS UNDER THE IMMUNE RESPONSE CORPORATION
AGREEMENT........................................... xvii

SCHEDULE 4.4 FORM OF PRESS RELEASE.................................. xviii

SCHEDULE 5.4.4 ROYALTY REDUCTION...................................... xxii

SCHEDULE 6.1(d) SCHEDULE OF EXCEPTIONS................................. xxiii


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EXECUTION COPY

EXCLUSIVE LICENSE AND RESEARCH COLLABORATION AGREEMENT

THIS AGREEMENT (this "Agreement"), effective as of December 8, 2006 (the
"Effective Date"), by and between Merck & Co., Inc., a corporation organized and
existing under the laws of New Jersey ("Merck"), and Idera Pharmaceuticals,
Inc., a corporation organized and existing under the laws of Delaware ("Idera").

RECITALS:

WHEREAS, Idera has expertise and possesses Idera Technology (as hereinafter
defined) relating to certain Toll-like Receptor agonists;

WHEREAS, Merck has expertise and possesses Merck Technology (as hereinafter
defined) relating to the research, development, manufacturing and marketing of
Vaccines and other related biological products;

WHEREAS, Merck and Idera desire to enter into a research collaboration to
develop Collaboration Compounds (as hereinafter defined) for use in Merck's
Vaccines upon the terms and conditions set forth herein;

WHEREAS, Merck desires to obtain a license upon the terms and conditions
set forth herein and Idera desires to grant such a license; and

WHEREAS, Merck and Idera have entered into a Stock Purchase Agreement and
Registration Rights Agreement as of the Effective Date;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties hereby agree as follows:

1. DEFINITIONS

Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:

1.1 "ACT" shall mean, as applicable, the United States Federal Food, Drug and
Cosmetic Act, 21 U.S.C. Sections 301 et seq., and/or the Public Health
Service Act, 42 U.S.C. Sections 262 et seq., as such may be amended from
time to time.

1.2 "ADJUVANT" shall mean a compound, complex or other agent that enhances the
immune response to an Antigen or Antigens and is intended to act as an
agonist to TLR 7, TLR 8, TLR 7/8 and/or TLR 9.

1.3 "AFFILIATE" shall mean, with respect to a Person, any corporation or
business entity of which more than fifty percent (50%) of the securities or
other ownership interests representing the equity, the voting stock or
general partnership interest are owned, controlled or held, directly or
indirectly, by such Person.


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1.4 "ALZHEIMER'S DISEASE FIELD" shall mean the use of Evaluation Collaboration
Compound(s) and Selected Collaboration Compound(s) as an Adjuvant contained
in or administered in conjunction with any prophylactic and/or therapeutic
Vaccine(s) for the prevention and/or treatment of Alzheimer's disease.

1.5 "ANTIGEN" shall mean any ingredient that either alone or as part of a
Vaccine elicits a specific immune response to itself and/or to a pathogenic
micro-organism or a human self molecule, including, without limitation,
live attenuated or modified micro-organisms, whole killed micro-organisms,
proteins, polysaccharides, polysaccharide conjugates, peptides, recombinant
proteins, glycolipids and fragments thereof.

1.6 "CALENDAR QUARTER" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 and
December 31.

1.7 "CALENDAR YEAR" shall mean each successive period of twelve (12) months
commencing on January 1 and ending on December 31.

1.8 "CHANGE OF CONTROL" shall mean with respect to a Party: (i) the sale of all
or substantially all of such Party's assets or business relating to this
Agreement; (ii) the closing of a merger, reorganization or consolidation
involving such Party in which the voting securities of such Party
outstanding immediately prior thereto cease to represent at least fifty
percent (50%) of the combined voting power of the surviving entity
immediately after such merger, reorganization or consolidation; or (iii) a
person or entity, or group of persons or entities, acting in concert to
acquire more than [**] percent ([**]%) of the voting equity securities or
management control of such Party.

1.9 "CLINICAL TRIAL" shall mean a Phase I Clinical Trial, Phase II Clinical
Trial or Phase III Clinical Trial, as applicable.

1.10 "COLLABORATION COMPOUNDS" shall mean (a) any IMO provided by Idera to Merck
under this Agreement, (b) any other IMO created, modified or developed by
the Parties pursuant to the Research Program and (c) any improvement or
enhancement to the IMOs described in (a) or (b).

1.11 "COMPETING PHARMA CHANGE OF CONTROL" means a Change of Control involving a
Person or group of Persons acting in concert (a) with annual worldwide
sales of human pharmaceutical, vaccine and/or biological products greater
than [**] Dollars ($[**]) or (b) having a market capitalization greater
than [**] U.S. Dollars ($[**]) or (c) having an active clinical development
or commercialization program for any prophylactic and/or therapeutic
Vaccine for the prevention and/or treatment of Alzheimer's Disease, any
type of cancer and/or any disease within the Infectious Disease Field.

1.12 "COMBINATION PRODUCT" shall mean, on a country by country basis, with
respect to a given Product, a Product that contains one or more Antigens in
addition to the Antigen(s) contained in the given Product at the time it
achieves First Commercial Sale in such country. For example, if a given
Product in a country, at the time it achieves First Commercial Sale
contains Antigens A and B, a Combination Product with respect to such given
Product in such country would be a Product that contains at least one other
Antigen, in addition to Antigens A and B, and achieves First Commercial
Sale in such country after the given Product has achieved First Commercial
Sale.

1.13 "COMPETING PRODUCT" shall mean, with respect to a Product in a country, a
Vaccine product that (a) contains a compound targeting the same TLR as the
Adjuvant contained in the Product and


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has received Marketing Authorization for the same Indication in a Field for
which the Product has received Marketing Authorization in such country and
(b) has safety and efficacy equivalent or materially similar to the Product
and has or attains on a Calendar Year basis a market share of [**] percent
([**]%) or more in the country as measured by prescriptions or other
similar information.

1.14 "CONTROL," "CONTROLS" OR "CONTROLLED BY" shall mean with respect to any
item or right under Patent Rights, know-how or other intellectual property
right or technology, the possession of (whether by ownership or license,
other than pursuant to this Agreement), or the ability of a Party to grant
access to, or a license or sublicense of, such item or right as provided
for herein without violating the terms of any agreement or other
arrangement with any Third Party existing at the time such Party would be
required hereunder to grant the other Party such access or license or
sublicense.

1.15 "DATA PROTECTION" shall mean the exclusive right to reference data filed in
a Marketing Authorization with a Regulatory Authority in such country for
Selected Collaboration Compound or Product under a pharmaceutical law,
regulation or any other governmental decree or order of such country within
the Territory. For the purposes of clarity, such exclusive right to
reference data shall exclude any party other than Merck or its Related
Parties from referencing such data in such party's own regulatory filings
for authorization to register or sell a generic product in such country
filed with the Regulatory Authority.

1.16 "EMEA" shall mean the European Medicines Agency.

1.17 "EVALUATION COLLABORATION COMPOUND" shall have the meaning given such term
in Section 2.8.1.

1.18 "EVALUATION CRITERIA" shall mean the criteria set forth in Schedule 1.18
attached hereto.

1.19 "FIELDS" shall mean the Oncology Field, the Infectious Disease Field and
the Alzheimer's Disease Field, collectively.

1.20 "FILING" of an IND or NDA shall mean the acceptance by a Regulatory
Authority of an IND or NDA for filing, if such a legally-recognized concept
applies to filings in the applicable jurisdiction or, if such concept does
not apply, the filing of the IND or NDA.

1.21 "FIRST COMMERCIAL SALE" shall mean, with respect to any Product, the first
sale for end use or consumption of such Product in a country, excluding,
however, any sale or other distribution for use in a Clinical Trial.

1.22 "FULL TIME EQUIVALENT" or "FTE" shall mean the equivalent of a full-time
scientist's work time over a twelve (12) month period (including normal
vacations, sick days and holidays), provided that a single person cannot
account for more than one FTE over the course of any Calendar Year. For
example, a single person cannot equal one FTE plus a portion of an
additional FTE resulting in more than one FTE (i.e. 1.5 FTE's) in a given
Calendar Year, regardless of the aggregate number of hours worked by such
person during that Calendar Year. The portion of an FTE year devoted by a
scientist to the Research Program shall be determined by dividing the
number of full days during any twelve-month period devoted by such employee
to the Research Program by the total number of working days during such
twelve-month period.


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1.23 "FTE RATE" shall mean the amount Merck will pay Idera over a consecutive
twelve (12) month period during the Research Program Term to support one
(1) Idera FTE dedicated to the Research Program. The FTE Rate shall be [**]
dollars (USD $[**]) per FTE. The FTE Rate shall include all personnel,
equipment, reagents and all other expenses including support staff and
overhead for or associated with an FTE.

1.24 "GLP" or "GOOD LABORATORY PRACTICE" shall mean the applicable then-current
standards for laboratory activities for pharmaceuticals or biologicals, as
set forth in the Act and any regulations or guidance documents promulgated
thereunder, as amended from time to time, together with any similar
standards of good laboratory practice as are required by any Regulatory
Authority in the country in which the laboratory activities are conducted.

1.25 "IDERA BACKGROUND PATENT RIGHTS" shall mean any and all Patent Rights
Controlled by Idera on the Effective Date that claim or cover (a) the
composition of matter or method of use of an Evaluation Collaboration
Compound or a Selected Collaboration Compound or (b) Idera Materials, and
any divisionals, continuations, continuations-in-part, reissues, renewals,
substitutions, registrations, re-examinations, revalidations, supplementary
protection certificates, pediatric exclusivity periods, any other patent
term extensions and exclusivity periods and the like of any such Patent
Rights, and any and all U.S. and foreign equivalents of the foregoing. As
of the Effective Date, the Idera Background Patent Rights include, without
limitation, the Patent Rights set forth on Schedule 1.25.

1.26 "IDERA FIELD" shall mean the use of Non-Selected Collaboration Compounds
for any and all purposes outside of the Fields.

1.27 "IDERA INFORMATION AND INVENTIONS" shall mean (a) all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas, data, composition of
matter, article of manufacture, know-how and trade secrets, that is
conceived and/or reduced to practice as a result of the Research Program,
whether or not patentable, that is developed or invented solely by
employees of Idera or its Affiliates or other Persons acting on their
behalf (other than Merck, its Affiliates or other Persons acting on their
behalf) and (b) Idera Oligonucleotide Inventions but shall exclude Merck
Materials Inventions.

1.28 "IDERA KNOW-HOW" shall mean all information and materials, including but
not limited to discoveries, improvements, processes, methods, protocols,
formulas, data, inventions (including, without limitation, Idera
Information and Inventions and Idera's rights in Joint Information and
Inventions), know-how and trade secrets, patentable or otherwise, which
during the term of this Agreement (i) are in the Control of Idera, (ii) are
not generally known and (iii) are necessary or useful to Merck with respect
to an Evaluation Collaboration Compound or Selected Collaboration Compound
in the Fields, including without limitation, in connection with the
Research Program and the research, development, manufacture, marketing, use
or sale of Product in the Territory.

1.29 "IDERA MATERIALS" shall mean those IMOs to be provided by Idera as set
forth on Schedule 1.29, which may be amended from time to time.

1.30 "IDERA OLIGONUCLEOTIDE INVENTIONS" shall mean all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas, data, composition of
matter, article of manufacture, know-how and trade secrets, that is
conceived and/or reduced to practice as a result of the Research Program,
whether or not patentable, that are solely related to the modification of,
derivatives of, manufacture or use of immunomodulatory oligonucleotide
structures which do not include Merck Technology, regardless of whether the


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invention is conceived and/or reduced to practice (a) solely by employees
of Idera or its Affiliates or other Persons acting on their behalf (other
than Merck, its Affiliates or a Third Party acting on their behalf); (b)
solely by employees of Merck or its Affiliates or other Persons acting on
their behalf (other than Idera, its Affiliates or a Third Party acting on
their behalf); or (c) jointly by employee(s) of Merck, its Affiliate or a
Third Party acting on behalf of Merck or its Affiliate within the scope of
the Research Program, on the one hand, and employee(s) of Idera, its
Affiliate or a Third Party acting on behalf of Idera or its Affiliate
within the scope of the Research Program, on the other hand.

1.31 "IDERA PATENT RIGHTS" shall mean any Idera Background Patent Rights and
Idera Program Patent Rights.

1.32 "IDERA PROGRAM PATENT RIGHTS" shall mean any and all Patent Rights other
than Idera Background Patent Rights, that (a) during the term of this
Agreement are Controlled by Idera and claim or cover (i) the composition of
matter or method of use of an Evaluation Collaboration Compound or a
Selected Collaboration Compound or (ii) Idera Materials, Idera Information
and Inventions or Joint Information and Inventions; or (b) claim or cover
Idera Oligonucleotide Inventions. For avoidance of doubt, Idera Program
Patent Rights shall not include any Patent Rights that claim or cover Merck
Materials, including, without limitation, any modifications, derivatives,
or methods of manufacture thereof.

1.33 "IDERA TECHNOLOGY" shall mean Idera Patent Rights, Idera Know-How, Idera
Materials and Idera Information and Inventions.

1.34 "IMO" shall mean any and all immune modulatory oligonucleotides, the
primary purpose of which is to induce or modulate an immune response and
that are targeted to and intended to act as agonists of TLR 7, TLR 8, TLR
7/8 or TLR 9, as the case may be.

1.35 "IND" shall mean an Investigational New Drug application, Clinical Study
Application, Clinical Trial Exemption, or similar application or submission
for approval to conduct human clinical investigations filed with or
submitted to a Regulatory Authority in conformance with the requirements of
such Regulatory Authority.

1.36 "INDICATION" shall mean a separate and distinct disease or medical
condition in humans which a Product is intended to treat and/or prevent and
for which the Product has received Marketing Authorization.

1.37 "INFECTIOUS DISEASE FIELD" shall mean the use of Evaluation Collaboration
Compound(s) and Selected Collaboration Compound(s) as an Adjuvant contained
in or administered in conjunction with any prophylactic and/or therapeutic
Vaccine(s) for the prevention and/or treatment of any viral and/or
microbial infectious disease, provided that the following diseases shall be
excluded: (i) [**]; (ii) [**]; (iii) [**]; and (iv) [**].

1.38 "INFORMATION" shall mean any and all information and data, including
without limitation all Merck Know-How, Idera Know-How, and all other
scientific, pre-clinical, clinical, regulatory, manufacturing, marketing,
financial and commercial information or data, whether communicated in
writing or orally or by any other method, which is provided by one Party to
the other Party in connection with this Agreement.

1.39 "JOINT INFORMATION AND INVENTIONS" shall mean all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas,


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data, composition of matter, article of manufacture, know-how and trade
secrets combining Merck Technology and Idera Technology, that is conceived
and/or reduced to practice as a result of the Research Program, whether or
not patentable, and is conceived and/or reduced to practice jointly by
employee(s) of Merck, its Affiliate or a Third Party acting on behalf of
Merck or its Affiliate within the scope of the Research Program, on the one
hand, and employee(s) of Idera, its Affiliate or a Third Party acting on
behalf of Idera or its Affiliate within the scope of the Research Program,
on the other hand. Idera Oligonucleotide Inventions and Merck Materials
Inventions shall be excluded from Joint Information and Inventions.

1.40 "JOINT PATENT RIGHTS" shall mean any and all Patent Rights which claim
Joint Information and Inventions. For avoidance of doubt, Joint Patent
Rights shall exclude Idera Patent Rights and Merck Patent Rights.

1.41 "JOINT PROGRAM TECHNOLOGY" shall mean Joint Patent Rights and Joint
Information and Inventions.

1.42 "JRC" shall mean the joint research committee established to facilitate the
Research Program, as more fully described in Section 2.5.1.

1.43 "KNOW-HOW ROYALTY" shall have the meaning given such term in Section 5.4.1
hereof.

1.44 "MAJOR EU MARKET" shall mean France, Germany, Italy, Spain or the United
Kingdom.

1.45 "MARKETING AUTHORIZATION" shall mean all approvals from the relevant
Regulatory Authority necessary to market and sell a Product in any country
(including without limitation, all applicable pricing and governmental
reimbursement approvals even if not legally required to sell Product in a
country).

1.46 "MAJOR INDICATION" shall mean an Indication for the treatment of the
following solid tumor cancers: non-small cell lung cancer, prostate cancer,
breast cancer and colo-rectal cancer.

1.47 "MERCK ADJUVANT" shall mean a compound, complex or other agent that
enhances the immune response to an Antigen or Antigens that is Controlled
by Merck or its Affiliates other than pursuant to this Agreement.

1.48 "MERCK INFORMATION AND INVENTIONS" shall mean (a) all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas, data, composition of
matter, article of manufacture, know-how and trade secrets, that is
conceived and/or reduced to practice as a result of the Research Program,
whether or not patentable, that is developed or invented solely by
employees of Merck or its Affiliates or other Persons acting on their
behalf (other than Idera, its Affiliates or other Persons acting on their
behalf) and (b) Merck Materials Inventions but shall exclude Idera
Oligonucleotide Inventions.

1.49 "MERCK KNOW-HOW" shall mean any information and materials, including but
not limited to discoveries, improvements, processes, methods, protocols,
formulas, data, inventions (including without limitation Merck's
Information and Inventions and Merck's rights in Joint Information and
Inventions), know-how and trade secrets, patentable or otherwise, which
during the term of this Agreement, (i) are in the Control of Merck or its
Affiliates, (ii) are not generally known and (iii) are necessary to Idera
in the performance of its obligations under the Research Program.

1.50 "MERCK MATERIALS" shall mean [**] and other materials to be provided by
Merck as set forth on


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Schedule 1.50, which may be amended from time to time.

1.51 "MERCK MATERIALS INVENTIONS" shall mean all information and inventions,
including, but not limited to, all discoveries, findings, improvements,
processes, methods, protocols, formulas, data, composition of matter,
article of manufacture, know-how and trade secrets, that is conceived
and/or reduced to practice as a result of the Research Program, whether or
not patentable, that are solely related to the modification of, derivatives
of, manufacture or use of Merck Materials and which do not include Idera
Technology, regardless of whether the inventions are conceived and/or
reduced to practice (a) solely by employees of Idera or its Affiliates or
other Persons acting on their behalf (other than Merck, its Affiliates or a
Third Party acting on their behalf); (b) solely by employees of Merck or
its Affiliates or other Persons acting on their behalf (other than Idera,
its Affiliates or a Third Party acting on their behalf); or (c) jointly by
employee(s) of Merck, its Affiliate or a Third Party acting on behalf of
Merck or its Affiliate within the scope of the Research Program, on the one
hand, and employee(s) of Idera, its Affiliate or a Third Party acting on
behalf of Idera or its Affiliate within the scope of the Research Program,
on the other hand, but shall exclude Idera Oligonucleotide Inventions.

1.52 "MERCK PATENT RIGHTS" shall mean (a) Patent Rights Controlled by Merck or
its Affiliates that are necessary to Idera in the performance of Idera's
obligations under the Research Program and (b) Patent Rights that claim or
cover Merck Materials Inventions.

1.53 "MERCK TECHNOLOGY" shall mean Merck Patent Rights, Merck Know-How, Merck
Materials and Merck Information and Inventions.

1.54 "NDA" shall mean a New Drug Application, Biologics License Application,
Worldwide Marketing Application, Marketing Authorization Application,
filing pursuant to Section 510(k) of the United States Federal Food, Drug
and Cosmetics Act, or similar application or submission for Marketing
Authorization of a Product filed with a Regulatory Authority to obtain
marketing approval for a biological, pharmaceutical or diagnostic product
in that country or in that group of countries.

1.55 "NET SALES" shall mean the gross invoice price of Product sold by Merck or
its Related Parties to the first Third Party after deducting, if not
previously deducted, from the amount invoiced or received:

(A) trade and quantity discounts other than early payment cash discounts;

(B) returns, rebates, chargebacks and other allowances;

(C) retroactive price reductions that are actually allowed or granted; and

(D) a fixed amount equal to [**] percent ([**]%) of the amount invoiced to
cover bad debt, early payment cash discounts, transportation and
insurance, and custom duties.

For the avoidance of doubt, the gross invoice price of Product does not
include value added taxes and other similar taxes on Product.

With respect to sales of Combination Products, Net Sales shall be
calculated using the following formula:


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[**] * Net Sales of = Net Sales for the purpose of calculating
Combination Product royalties for Combination Product

Where:

(I) "A" equals the invoice price of Product containing the same Antigen(s)
sold without containing one or more other Antigens;

(II) "B" equals the invoice price of the Combination Product; and

(III) all invoice prices of the Product and the Combination Product shall
be calculated as the average invoice price during the applicable
accounting period for which the Net Sales are being calculated. The
deductions set forth in paragraphs (a) through (d) above will be
applied in calculating Net Sales for a Combination Product. If,
however, the Product is sold only as a Combination Product, then the
Parties shall negotiate in good faith an appropriate calculation of
Net Sales that is subject to the royalty payment under this Agreement
so as to fairly allocate the relative value of the active ingredients
in the Combination Product.

With respect to a given Product (containing a given Selected Collaboration
Compound) to achieve First Commercial Sale in a country, such Product shall
not be deemed a Combination Product in such country, in which case the
above Combination Product Net Sales formula shall not apply to such given
Product, but only to subsequent Combination Products.

1.56 "NON-SELECTED COLLABORATION COMPOUND" shall have the meaning given such
term in Section 2.8.4.

1.57 "NOVARTIS AGREEMENTS" shall mean the Research Collaboration and Option
Agreement, dated May 31, 2005, by and between Idera (formerly known as
Hybridon, Inc.) and Novartis International Pharmaceutical Ltd. and the
License, Development and Commercialization Agreement, dated May 31, 2005,
by and between Idera (formerly known as Hybridon, Inc.) and Novartis
International Pharmaceutical Ltd., as such agreements may be amended from
time to time.

1.58 "ONCOLOGY FIELD" shall mean the use of Evaluation Collaboration Compound(s)
and Selected Collaboration Compound(s) as an Adjuvant contained in or
administered in conjunction with any prophylactic and/or therapeutic
Vaccine(s) for the prevention and/or treatment of any type of cancer. For
avoidance of doubt, Vaccines for the prevention and/or treatment of human
papilloma virus and other viruses that are considered precursors to cancer
are included in the Oncology Field.

1.59 "PARTY" shall mean Merck and Idera, individually, and "PARTIES" shall mean
Merck and Idera, collectively.

1.60 "PATENT RIGHTS" shall mean any and all issued patents and patent
applications in the Territory (which for the purposes of this Agreement
shall be deemed to include certificates of invention and applications for
certificates of invention) and any divisionals, continuations,
continuations-in-part, reissues, renewals, substitutions, registrations,
re-examinations, revalidations, supplementary protection certificates,
pediatric exclusivity periods, any other patent term extensions and
exclusivity periods and the like of any such patents and patent
applications, and any and all U.S.


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and foreign equivalents of the foregoing.

1.61 "PERSON" shall mean any individual, corporation, joint venture, limited
liability company, partnership, limited partnership, limited liability
partnership, trust or any other private, public or governmental entity.

1.62 "PHASE I CLINICAL TRIAL" shall mean a human clinical trial in the United
States that would satisfy the requirements of 21 CFR 312.21(a) or an
equivalent human clinical trial in any country outside the United States
that would satisfy the requirements applicable to such human clinical trial
in such country.

1.63 "PHASE II CLINICAL TRIAL" shall mean a human clinical trial in the United
States that would satisfy the requirements of 21 CFR 312.21(b) or an
equivalent human clinical trial in any country outside the United States
that would satisfy the requirements applicable to such human clinical trial
in such country.

1.64 "PHASE III CLINICAL TRIAL" shall mean a human clinical trial in the United
States that would satisfy the requirements of 21 CFR 312.21(c) or an
equivalent human clinical trial in any country outside the United States
that would satisfy the requirements applicable to such human clinical trail
in such country.

1.65 "PRODUCT(S)" shall mean any prophylactic or therapeutic Vaccine(s) that
contains Selected Collaboration Compound or is administered in conjunction
with Selected Collaboration Compound, for any and all uses in the Fields,
including without limitation any Combination Product, (i) in final form for
sale by prescription, over-the-counter or any other method, or (ii) for
administration in a Clinical Trial.

1.66 "REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, dated as of the Effective Date, by and between Idera and Merck.

1.67 "REGULATORY AUTHORITY" shall mean any applicable government regulatory
authority involved in granting approvals for the manufacturing, marketing,
reimbursement and/or pricing of a Product in the Territory, including, in
the United States, the United States Food and Drug Administration and any
successor governmental authority having substantially the same function.

1.68 "REGULATORY-BASED EXCLUSIVITY" shall mean, with respect to a Product in a
country in the Territory, that Merck and/or any of the Related Parties has
been granted the exclusive legal right by a Regulatory Authority (or is
otherwise entitled to the exclusive legal right by operation of law) in
such country to market and sell the Product in such country, including,
without limitation, through orphan drug exclusivity or Data Protection.

1.69 "RELATED PARTY" shall mean each of Merck, its Affiliates, and their
respective sublicensees (which term does not include distributors), as
applicable.


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1.70 "RESEARCH PROGRAM" shall mean the research activities undertaken by the
Parties hereto as set forth in Article 2 and Schedule 2.1.

1.71 "RESEARCH PROGRAM TERM" shall have the meaning given such term in Section
2.10. All references to Research Program Term shall be deemed to include
any Research Program Term extension provided pursuant to Section 2.10.

1.72 "SELECTED COLLABORATION COMPOUND" shall have the meaning given such term in
Section 2.8.3.

1.73 "SELECTION CRITERIA" shall mean those criteria set forth on Schedule 1.73
attached hereto.

1.74 "SENSITIVE INFORMATION" shall have the meaning given such term in Section
10.2.3(d).

1.75 "STARTING MATERIAL" shall have the meaning given such term in Section
2.8.1.

1.76 "STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated
as of the Effective Date, by and between Idera and Merck.

1.77 "TERRITORY" shall mean all of the countries in the world, and their
territories and possessions.

1.78 "THE IMMUNE RESPONSE CORPORATION AGREEMENT" shall mean the Collaboration
and License Agreement, dated October 8, 2003, by and between Idera
(formerly known as Hybridon, Inc.) and The Immune Response Corporation, as
such agreement may be amended from time to time.

1.79 "THIRD PARTY" shall mean any Person other than Merck and its Related
Parties, and Idera and its Affiliates.

1.80 "TLR" shall mean Toll-like Receptor.

1.81 "TYPE I PRODUCT" shall mean a Product(s) containing or administered in
conjunction with (i) a Selected Collaboration Compound targeting and which
is intended to act as an agonist of TLR 9; or (ii) a Selected Collaboration
Compound targeting and which is intended to act as an agonist of TLR 9 and
a Selected Collaboration Compound targeting TLR 7 and/or TLR 8.

1.82 "TYPE II PRODUCT" shall mean a Product(s) containing or administered in
conjunction with (i) a Selected Collaboration Compound targeting and which
is intended to act as an agonist of TLR 7; (ii) a Selected Collaboration
Compound targeting and which is intended to act as an agonist of TLR 8; or
(iii) a Selected Collaboration Compound targeting and which is intended to
act as an agonist of both TLR 7 and TLR 8.

1.83 "VACCINE" shall mean any preparation that elicits a cellular mediated
and/or humoral immune response in humans provided that in each case such a
preparation contains an Antigen or Antigens.

1.84 "VALID PATENT CLAIM" shall mean a claim of an issued and unexpired patent
included within the Idera Patent Rights or Joint Patent Rights which claims
a Selected Collaboration Compound as a composition of matter or method of
use, which claim has not been revoked or held unenforceable or invalid by a
decision of a court or other governmental agency of competent jurisdiction
(which decision is not appealable or has not been appealed within the time
allowed for appeal), and which claim has not been disclaimed, denied or
admitted to be invalid or unenforceable through reissue, re-examination or
disclaimer or otherwise.


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2. RESEARCH PROGRAM

2.1 GENERAL

Idera and Merck shall engage in the Research Program upon the terms and
conditions set forth in this Agreement. The activities to be undertaken in
the course of the Research Program are set forth in Schedule 2.1, which may
be amended from time to time upon mutual written agreement of the JRC in
accordance with this Article 2. The objectives of the Research Program are
(a) to discover and synthesize Evaluation Collaboration Compounds that are
intended to act as agonists of TLR 7, TLR 8 or both TLR 7 and TLR 8, from
which Merck will identify Selected Collaboration Compounds for further
development by Merck as Type II Products in the Fields and (b) to evaluate
Evaluation Collaboration Compounds that are intended to act as agonists of
TLR 9, from which Merck will identify Selected Collaboration Compounds for
further development by Merck as Type I Products in the Fields.

2.2 CONDUCT OF RESEARCH

Idera and Merck each shall proceed diligently with the work set out in the
Research Program by using their respective good faith efforts to allocate
sufficient time, effort, equipment and facilities to the Research Program
and to use personnel with sufficient skills and experience as are required
to accomplish the Research Program in accordance with the terms of this
Agreement and Schedule 2.1.

Merck shall be entitled to utilize the services of its Affiliates and Third
Parties to perform its Research Program activities. Idera shall be entitled
to utilize the services of Third Parties to perform its Research Program
activities only upon Merck's prior written consent or as specifically set
forth in Schedule 2.1, provided that Merck shall not unreasonably withhold,
delay or condition its consent to Idera's use of Third Party service
providers. Notwithstanding any such consent, each Party shall remain at all
times fully liable for its respective responsibilities under the Research
Program.

2.3 USE OF RESEARCH FUNDING; FTE COMMITMENTS

2.3.1 Idera shall apply the FTE funding it receives from Merck under this
Agreement pursuant to Section 5.2 solely to carry out its Research
Program activities in accordance with Schedule 2.1 and the terms and
conditions of this Agreement.

2.3.2 During the Research Program Term, Idera shall provide the number of
FTEs that are approved by the Joint Research Committee pursuant to
Section 2.5.2 to work on the Research Program. Such FTEs shall be
funded by Merck in accordance with Section 5.2. The number of FTEs to
be dedicated by Idera to the Research Program during the first two
years is set forth in Schedule 2.3.2. If the Research Program Term is
extended by Merck as provided in Section 2.10 or is otherwise extended
by mutual agreement of the Parties, the Parties shall discuss in good
faith the level of FTE staffing during the extended Research Program
Term. During the Research Program Term, the Joint Research Committee
shall provide Idera with at least 90 days prior written notice of any
required increase or decrease in the number of such FTEs, provided
that the Joint Research Committee cannot increase the number of FTEs
such that the total number of FTEs exceeds [**].


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2.3.3 Idera shall require (i) by written agreement that all FTEs and all
other Idera personnel, employees, and agents involved in the Research
Program have entered into confidentiality and invention assignment
agreements that are consistent with the provisions of this Agreement
and shall be obligated to assign any rights they may have in any Idera
Information and Inventions and Joint Information and Inventions made
during such work to Idera consistent with any rights granted to Merck
in any such Information and Inventions under this Agreement; and (ii)
that each FTE who works on the Research Program is qualified by
appropriate experience and qualifications to perform the Research
Program work assigned to such FTE in a capable and professional
manner.

2.4 PRINCIPAL SCIENTISTS

The principal scientists for the Research Program are [**] for Idera and
[**] for Merck. The Research Program and all work assignments to be
performed by Idera and Merck shall be carried out under the direction and
supervision of the principal scientists noted above. During the first year
of the Research Program Term, [**] shall serve as the principal scientists
for Idera.

After the first year of the Research Program Term, each Party shall notify
the other Party as soon as practicable upon the changing of its principal
scientist and shall require that its principal scientist be qualified by
the appropriate experience and qualifications to direct and supervise its
performance of the Research Program.

2.5 JOINT RESEARCH COMMITTEE

The Parties hereby establish a committee to facilitate the Research Program
as follows:

2.5.1 Composition of the Joint Research Committee. The Research Program
shall be conducted under the direction of a joint research committee
(the "JRC") comprised of three (3) representatives of Merck and three
(3) representatives of Idera. Each Party shall name its JRC
representatives and notify the other Party of its JRC representatives
promptly following the Effective Date. Each Party may change its
representatives to the JRC from time to time, in its sole discretion,
effective upon notice to the other Party of such change. These
representatives shall have appropriate technical credentials,
experience and knowledge, and ongoing familiarity with the Research
Program. Additional representatives or consultants may from time to
time, by mutual consent of the Parties, be invited to attend JRC
meetings, subject to such representatives' or consultants' written
agreement to comply with the requirements of Section 4.1. The JRC
shall be chaired by a representative of Merck. Each Party shall bear
its own expenses related to the attendance at such meetings by its
representatives.

2.5.2 Scope of JRC Oversight. The JRC's oversight responsibilities shall be
limited to the Research Program activities specified in Schedule 2.1
and within such scope the JRC shall (a) confer regularly regarding the
status of the Research Program, (b) review relevant data, consider and
advise on any technical issues that arise, (c) consider issues of
priority, (d) review and approve the efforts of the Parties in the
conduct of the Research Program; (e) review and approve amendments to
the Research Program as set forth in Schedule 2.1; (f) reallocate
resources, including FTEs, within the Research Program; (g) subject to
Section 2.3.2, designate the number of FTEs for each Calendar Quarter,
(h) receive updates on the identity of any Third Party conducting
Research Program work on behalf of either Party in accordance with
Section 2.2 (which each Party shall provide to the JRC), (i) address
such other matters relating to the activities of the Research Program
as either Party may bring before the JRC; and (j) attempt to resolve
any disputes within


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the JRC on an informal basis. Notwithstanding anything to the contrary
in the foregoing, the JRC shall not (i) have any supervisory or
decision making authority beyond the Research Program activities
specified in Schedule 2.1; (ii) without the consent of Idera, require
Idera to commit its FTE resources beyond those set forth in Section
2.3.2; or (iii) except for Schedule 2.1, modify or amend any terms of
this Agreement.

2.5.3 Decision-Making. Decisions of the JRC shall be made unanimously, with
each Party having one vote. In the event that the JRC cannot or does
not, after good faith efforts, reach agreement on an issue, the issue
shall be elevated to a Vice President of MRL for Merck and the Chief
Scientific Officer for Idera. If such executives cannot resolve the
issue, it shall be further elevated to an Executive Vice President or
Franchise Head of MRL for Merck and the Chief Executive Officer of
Idera for Idera. If such executives cannot resolve the issue, the
resolution and/or course of conduct shall be determined by Merck in
good faith, taking Idera's reasonable interests into account.

2.5.4 Meetings. The JRC shall meet in accordance with a schedule
established by mutual written agreement of the Parties, but no less
frequently than once per Calendar Quarter, with the location for such
meetings alternating between Idera and Merck facilities (or such other
location as may be determined by the JRC). Alternatively, the JRC may
meet by means of teleconference, videoconference or other similar
communications equipment.

2.6 EXCHANGE OF INFORMATION

Upon execution of this Agreement, and on an ongoing basis during the
Research Program Term, Idera shall promptly disclose to Merck in writing or
in an electronic format all Idera Know-How not previously disclosed. Merck
shall promptly disclose to Idera during the Research Program Term all Merck
Know-How.

2.7 RECORDS AND REPORTS

2.7.1 Records. Idera shall maintain records, in sufficient detail and in
good scientific manner appropriate for patent and regulatory purposes,
which shall fully and properly reflect all work done and results
achieved in the performance of the Research Program by Idera.

2.7.2 Copies and Inspection of Records. Merck shall have the right, during
normal business hours and upon reasonable notice, to inspect and copy
all such records of Idera referred to in Section 2.7.1. Merck shall
maintain such records and the information disclosed therein in
confidence in accordance with Section 4.1. Merck shall have the right
to arrange for its employees and/or consultants involved in the
activities contemplated hereunder to visit the offices and
laboratories of Idera and any of its Third Party contractors as
permitted under Section 2.2 during normal business hours and upon
reasonable notice, and at reasonable intervals, to discuss in the
presence of Idera's principal scientist the Research Program work and
its results in detail with the technical personnel of Idera involved
in the Research Program. Upon request, Idera shall provide copies of
the records described in Section 2.7.1 above.

2.7.3 Quarterly Reports. Within thirty (30) days following the end of each
Calendar Quarter during the Research Program Term, Idera shall provide
to Merck a written progress report in English which shall describe in
sufficient detail the work performed to date by Idera so that Merck
may evaluate Idera's progress in relation to the goals of the Research


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Program. Further, Idera shall promptly respond to reasonable requests
by Merck for additional information regarding Idera's performance of
Research Program activities.

2.8 DISCLOSURE, EVALUATION AND SELECTION OF COLLABORATION COMPOUNDS

2.8.1 Disclosure of Evaluation Collaboration Compounds and Starting
Material. Following the Effective Date and during the Research Program
Term, Idera shall disclose to Merck in writing all Collaboration
Compounds satisfying the Evaluation Criteria as set forth in Schedule
1.18 ("EVALUATION COLLABORATION COMPOUNDS") in the manner and to the
extent described below. In addition, Idera shall provide Merck with
sufficient samples of such Evaluation Collaboration Compounds, along
with their structures, results of characterization studies on the
Evaluation Collaboration Compounds and such other information as may
be required by Schedule 2.1.

During the first [**] months of the Research Program Term, Idera shall
provide Merck with a total of [**] Evaluation Collaboration Compounds
targeting TLR 9 and a total of [**] Evaluation Collaboration Compounds
targeting TLR 7, TLR 8 and/or TLR 7 and TLR 8 (collectively "STARTING
MATERIAL"). The Starting Material shall not incorporate any Merck
Material. Idera shall use reasonable efforts to deliver Starting
Material according to the following schedule: [**] Evaluation
Collaboration Compounds targeting TLR 9 and [**] Evaluation
Collaboration Compounds targeting TLR 7, TLR 8 and/or TLR 7 and TLR 8
at the beginning of each [**]. Idera may, subject to JRC approval,
change the delivery schedule of Starting Material. Following the
initial delivery of Starting Material, Idera shall use commercially
reasonable efforts to incorporate guidance from Merck regarding the
desired properties of the Starting Material so that Idera can
synthesize and/or modify new Starting Material incorporating such
guidance from Merck or provide Starting Material from Idera's existing
library to address Merck's guidance. The benchmark for synthesizing
Starting Material shall be those Collaboration Compounds listed in
Schedule 1.18. In the event that the JRC determines that the benchmark
Collaboration Compounds should be replaced by different Collaboration
Compounds, Schedule 1.18 shall be amended to reflect the new benchmark
Collaboration Compounds subject to the written consent of both
Parties, which consent shall not be unreasonably withheld. Subject to
Section 2.8.2, Merck covenants and agrees, for itself and its Related
Parties, not to re-create any Starting Material.

2.8.2 Creation and Modification of Evaluation Collaboration Compounds
Targeting TLR 7, TLR 8 and/or TLR 7 and TLR 8. As set forth in
Schedule 2.1, the Parties shall use commercially reasonable efforts to
perform their respective obligations in the creation, modification and
development of Evaluation Collaboration Compounds targeting TLR 7, TLR
8 and/or TLR 7 and TLR 8 throughout the Research Program Term. There
shall be no limit on the number of such Evaluation Collaboration
Compounds that the Parties may create, modify or develop during the
Research Program Term, provided that the number of Starting Materials
as set forth in Section 2.8.1 cannot be changed without the mutual
written consent of both Parties.

2.8.3 Designation of Selected Collaboration Compounds. Upon receipt of
samples of Evaluation Collaboration Compounds and the information set
forth above, Merck shall use reasonable efforts to evaluate such
Evaluation Collaboration Compounds to determine in its sole discretion
whether they satisfy the Selection Criteria. If an Evaluation
Collaboration Compound satisfies the Selection Criteria, Merck shall
promptly notify Idera in writing and such Evaluation Collaboration
Compound shall be deemed a "SELECTED COLLABORATION COMPOUND." Merck
may designate such Selected


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Collaboration Compounds at any time during the Research Program but no
later than [**] following the end of the Research Program Term. With
respect to Evaluation Collaboration Compounds targeting TLR 9, Merck
shall have the right to select up to [**] Selected Collaboration
Compounds for use in the Fields. With respect to Evaluation
Collaboration Compounds targeting TLR 7 and/or TLR 8, Merck shall have
the right to select up to [**] Selected Collaboration Compounds for
use in the Fields.

In the event that a Selected Collaboration Compound fails in
pre-clinical and/or clinical development for reasons due to safety,
tolerability or efficacy, then at Merck's request, Idera shall provide
additional Evaluation Collaboration Compounds for consideration as a
Selected Collaboration Compound in the applicable Field at any time
during the term of the Agreement, provided that Merck may exercise
such right only for a period of [**] from the expiration of the
Research Program Term. In the event that Merck, in its sole
discretion, determines such Evaluation Collaboration Compound
satisfies the Selection Criteria, such Evaluation Collaboration
Compound shall be deemed a Selected Collaboration Compound.

2.8.4 Designation of Non-Selected Collaboration Compounds. Within [**] of
the end of the Research Program Term, Merck shall designate among the
Evaluation Collaboration Compounds which ones shall be deemed
"NON-SELECTED COLLABORATION COMPOUNDS." Idera may develop and
commercialize Non-Selected Collaboration Compounds only in the Idera
Field. For avoidance of doubt, Merck and its Affiliates shall retain
the right to use any Non-Selected Collaboration Compounds that are
claimed in or covered by the Joint Information and Inventions solely
for internal research purposes of Merck or its Affiliates which
includes research carried out by any Third Party on behalf of Merck or
its Affiliates. Internal research purposes expressly excludes use of
any Non-Selected Collaboration Compounds by Merck or its Related
Parties in any Clinical Trial.

2.9 OWNERSHIP OF MATERIALS, INFORMATION AND INVENTIONS

2.9.1 Ownership of Materials. Neither Party shall obtain any ownership
rights in the materials of the other Party by virtue of this
Agreement. Except to the extent licensed herein, Merck shall retain
all right, title and interest in and to the Merck Materials, and Idera
shall retain all right, title and interest to the Idera Materials.
Ownership of materials will remain with the respective Parties
regardless of any modification or derivative thereof made by either
Party solely or by both Parties jointly. Each Party shall have the
right to license or transfer any such modification and/or derivative
thereof, to any Third Party in the Party's sole discretion for any
purpose, provided that such uses do not conflict with the licenses
granted under this Agreement.

2.9.2 Ownership of Information and Inventions. The entire right, title and
interest in:

(A) Idera Information and Inventions shall be owned solely by Idera;

(B) Merck Information and Inventions shall be owned solely by Merck;
and

(C) Joint Information and Inventions shall be owned jointly by Idera
and Merck.

Idera shall promptly disclose to Merck in writing the development,
making, conception or reduction to practice of Idera Information and
Inventions, Joint Information and Inventions and Merck Materials
Inventions. Merck shall promptly disclose to Idera in


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writing the development, making, conception or reduction to practice
of Idera Oligonucleotide Inventions and Joint Information and
Inventions.

2.9.3 Inventorship. Inventorship of inventions, whether or not patentable,
conceived and/or reduced to practice by the Parties in the course of
exercising rights or performing obligations pursuant to this
Agreement, all related intellectual property rights, and all other
information developed in the course of the Parties' exercise of rights
under or performance of this Agreement shall be determined in
accordance with the rules of inventorship under United States patent
laws.

2.9.4 Assignment of Inventions. The Parties shall execute such documents
and perform such acts, at their own expense, as may be reasonably
necessary to effect an assignment of Patent Rights relating to
Oligonucleotide Inventions and Merck Materials Inventions, as the case
may be, to the other Party in a timely manner to allow such Party to
prosecute and maintain Patent Rights relating to such inventions.

2.10 RESEARCH PROGRAM TERM

Except as otherwise provided herein, the initial term of the Research
Program shall commence on the Effective Date and continue for a period of
two (2) years. Merck may extend such term by an additional year by
providing Idera with ninety (90) days written notice, for a total of up to
two (2) renewals. Merck shall provide Idera with written notice of such
one-year renewal and the Parties shall amend Schedule 2.1 as applicable.
The initial term and subsequent extension terms are collectively referred
to in this Agreement as the "RESEARCH PROGRAM TERM."

2.11 MERCK MATERIALS

Merck shall provide Idera with sufficient quantities of the materials set
forth in Schedule 1.50 ("MERCK MATERIALS") solely for the purpose of
enabling Idera to perform its activities under the Research Program in
accordance with the terms of this Agreement. Idera covenants and agrees,
for itself and its Affiliates, not to re-create or modify any Merck
Materials. The Merck Materials are not to be used in humans, nor shall any
of the Merck Materials, or any derivatives, analogs, modifications or
components thereof, be transferred, delivered or disclosed to any Third
Party without the prior written approval of Merck. Any unused Merck
Materials and any derivatives, analogs, modifications or components thereof
shall be, at Merck's option, either returned to Merck, or destroyed in
accordance with instructions by Merck.

2.12 EXCLUSIVE EFFORTS

During the term of the Agreement, except as set forth in Schedule 2.12,
Idera shall work exclusively (even as to Idera itself) with Merck and its
Affiliates in efforts to research, develop and commercialize any
Adjuvant(s) for use in conjunction with Vaccine(s) or Vaccine products
containing such Adjuvant(s), including without limitation, Evaluation
Collaboration Compound(s) and Selected Collaboration Compound(s), for the
prevention and/or treatment of Alzheimer's Disease, any type of cancer
and/or any disease within the Infectious Disease Field.

2.13 USE OF HUMAN MATERIALS

If any human primary cell lines, human tissue, human clinical isolates or
similar human-derived materials ("HUMAN MATERIALS") have been or are to be
collected and/or used in the Research Program, Idera represents and
warrants (i) that it has complied, or shall comply, with all


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applicable laws, guidelines and regulations relating to the collection
and/or use of the Human Materials and (ii) that it has obtained, or shall
obtain, all necessary approvals and appropriate informed consents, in
writing, for the collection and/or use of such Human Materials. Idera shall
provide documentation of such approvals and consents upon Merck's request.
Idera further represents and warrants that such Human Materials may be used
as contemplated in this Agreement without any obligations to the
individuals or entities ("PROVIDERS") who contributed the Human Materials,
including, without limitation, any obligations of compensation to such
Providers or any other Third Party for the intellectual property associated
with the Human Materials or the commercial use thereof for any purposes.

3. LICENSES; DEVELOPMENT AND COMMERCIALIZATION

3.1 LICENSE GRANTS TO MERCK

3.1.1 Exclusive License Grant. Subject to the terms and conditions of this
Agreement, Idera hereby grants to Merck an exclusive license (even as
to Idera) in the Territory under Idera Technology and Idera's interest
in Joint Program Technology, with a right of sublicense, (a) to
research and develop Evaluation Collaboration Compounds in the Fields
and (b) to research, develop, make, have made, use, offer to sell,
sell, have sold, import and export Selected Collaboration Compound(s)
and Product(s) in the Fields. The foregoing exclusive license is
subject to the non-exclusive rights granted to The Immune Response
Corporation as set forth in Schedule 2.12 attached hereto.
Notwithstanding anything to the contrary contained in this Agreement,
Idera retains all rights under Idera Technology and Idera's interest
in Joint Program Technology to research, develop, make, have made,
use, offer to sell, sell, have sold, import and export IMO-2055 and
IMO-2125 outside the Fields, both during and after the Research
Program Term.

3.1.2 Non-Exclusive License Grant. In the event that the researching,
developing, making, having made, use, offer for sale, sale, import or
export by Merck, or Merck's Related Parties, of Evaluation
Collaboration Compound(s), Selected Collaboration Compound(s) or
Product(s) in accordance with the license granted pursuant to Section
3.1.1 would infringe during the term of this Agreement a claim of
issued letters patent which Idera Controls and which patents are not
covered by the grant in Section 3.1.1, Idera hereby grants to Merck,
to the extent Idera is legally able to do so, a non-exclusive,
sublicensable, royalty-free license in the Territory under such issued
letters patent for Merck and Merck's Related Parties to research,
develop, make, have made, use, sell, offer for sale, import and export
such Evaluation Collaboration Compound(s), Selected Collaboration
Compound(s) and Product(s) in the Fields.

3.1.3 Sublicense Rights. Subject to the terms and conditions of this
Agreement, Merck shall have the right to grant sublicenses of the
rights granted to it under this Section 3.1 to (i) its Affiliates,
(ii) Third Parties engaged in research, development and marketing of
Products, and (iii) contract service providers providing services for
Merck or its Affiliates, to the extent such sublicenses are necessary
for the research, development, manufacturing and commercialization of
Evaluation Collaboration Compounds, Selected Collaboration Compounds
and Products in the Fields by or on behalf of Merck or its Affiliates.
Merck shall require each sublicensee to be bound by the applicable
terms of this Agreement.


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3.2 LICENSE GRANTS TO IDERA

3.2.1 Exclusive License Grant. Subject to the terms and conditions of this
Agreement, Merck hereby grants to Idera an exclusive (even as to
Merck), royalty-free license in the Territory under Merck's interest
in Joint Program Technology, with a right of sublicense, to research,
develop, make, have made, use, offer to sell, sell, have sold, import
and export Non-Selected Collaboration Compounds, IMO-2055 and IMO-2125
in the Idera Field. For avoidance of doubt, except for IMO-2055 and
IMO-2125, this exclusive license grant shall not include the grant of
any rights to Idera to research, develop, make, have made, use, offer
to sell, sell, have sold, import and export Selected Collaboration
Compounds for any purpose, including, without limitation, in the Idera
Field.

3.2.2 Non-Exclusive License Grant. Merck hereby grants to Idera a
non-exclusive, non-sublicensable, royalty-free license in the
Territory under Merck Technology for the sole purpose of discharging
Idera's obligations under the Research Program during the Research
Program Term.

3.3 NO IMPLIED LICENSES

Except as specifically set forth in this Agreement, neither Party shall
acquire any license or other intellectual property interest, by implication
or otherwise, in any Information or materials disclosed to it under this
Agreement or under any patents or patent applications owned or Controlled
by the other Party or its Affiliates.

3.4 DEVELOPMENT AND COMMERCIALIZATION

Merck shall use reasonable efforts and resources, including reasonably
necessary personnel and financial resources, consistent with the usual
practice followed by Merck in pursuing the commercialization and marketing
of its other Vaccine products of a similar commercial value, at its own
expense, to develop and commercialize a Product in such countries in the
Territory where in Merck's opinion it is commercially viable to do so. To
the extent reasonable and relevant, Merck shall take into consideration the
following factors: issues of safety and efficacy, Product profile,
difficulty in developing or manufacturing the Product, competitiveness of
alternative Third Party products in the marketplace, the patent or other
proprietary position of the Product, the regulatory structure involved and
market potential of the Product. During the term of the Agreement, Merck
shall keep Idera regularly informed regarding the development of Products
by Merck or its Affiliates. Such information shall be communicated to Idera
through the JRC during the Research Program Term. After the end of the
Research Program Term, and until the First Commercial Sale of a Product,
Merck shall promptly respond to reasonable requests by Idera for
information regarding development activities by Merck and its Related
Parties but no more than twice per year.

3.5 EXCUSED PERFORMANCE

The obligations of Merck with respect to any Product under Section 3.4 are
expressly conditioned upon the continuing absence of any material adverse
condition or event relating to the safety or efficacy of the Product, and
the obligation of Merck to develop or market any such Product shall be
delayed or suspended so long as in Merck's opinion any such condition or
event exists. In resolving or addressing such material adverse condition or
event, Merck shall apply the level of efforts and resources described in
Section 3.4 that Merck typically devotes to overcome similar


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material adverse conditions and events with respect to its own compounds or
products, regardless of whether such compound or product is subject to a
license from a Third Party.

3.6 EXCLUSIVE NEGOTIATION PERIOD

Idera agrees that for a period of three (3) months commencing on the
Effective Date, Idera shall not enter into any negotiations or any
agreement with any Third Party regarding any rights or licenses to develop
and commercialize TLR antagonists in the area of immunosuppression. After
such three (3) month period, Idera shall be free to grant rights and
licenses to Third Parties with respect to the development and
commercialization of TLR antagonists in the area of immunosuppression,
subject to any agreement that the Parties may elect, in each Party's
abso