Dear Shareholders,

Throughout 2008 Idera continued to build on its success as a drug discovery and development company focused on Toll-like Receptors, or TLRs. Today three of our drug candidates are in clinical evaluation for indications of chronic hepatitis C virus infection, cancer, and asthma/allergies, two of which are being advanced under collaborative programs. Further, we are in the process of completing the preclinical work necessary to progress a fourth drug candidate, targeting autoimmune disease indications, into clinical evaluation.

Our drug discovery strength comes from extensive experience in the design of nucleic acid based drug candidates. We design drug candidates to modulate immune responses mediated through TLRs, a family of key receptors in the immune system. Our pipeline now includes drug candidates that are antagonists of TLRs and have the potential to block harmful immune responses that occur in autoimmune and other diseases, as well as agonists of TLRs that activate immune responses which might be helpful in treating diseases such as viral infections, cancer and asthma/allergies, and for use as vaccine adjuvants.

Our business strategy is designed to enable multiple drug candidates to be developed for a broad range of clinical indications without Idera bearing sole development com­mitment and financial obligations for all the programs. We progress our discoveries into development of lead drug candidates through a balance of proprietary internal pro­grams and collaborative licensed programs with Merck KGaA, Merck & Co., Inc., and Novartis. We are pleased to be working with each of our partners as they bring extensive scientific and developmental expertise and the resources to advance our TLR-targeted drug candidates in specified disease areas. The financial resources we receive under these collaborative agreements help Idera to focus on internal programs in other disease areas, such as infectious diseases and autoimmune diseases.

On behalf of our Board of Directors and my fellow Officers, I thank all Idera employees for the many contributions they make to our success. We also acknowledge the support of our shareholders, and we thank each one of you for your continued commitment.

We believe that the evolution of our science has positioned Idera for future growth. Over the course of the next two years, we expect that data from on-going clinical trials will drive important decisions on subsequent clinical opportunities in multiple therapeu­tic indications.

Sincerely,

Sudhir Agrawal, D. Phil.
President, Chief Executive Officer and Chief Scientific Officer