Business and Organization	9 Months Ended
Sep. 30, 2022
Business and Organization
Business and Organization	Note 1. Business and Organization Business Overview Idera Pharmaceuticals, Inc. (“Idera” or the “Company”), a Delaware corporation, is a biopharmaceutical company with a business strategy focused on the clinical development, and ultimately the commercialization, of drug candidates for rare disease indications characterized by small, well-defined patient populations with significant unmet medical needs. The Company’s strategic focus has been to identify and acquire rights to novel development and commercial stage rare disease programs through business development opportunities, including additional strategic alternatives. In these notes, the terms “we,” “our,” “our company” and “us” may refer, as the context requires, to Idera or collectively to Idera and its subsidiaries. On September 28, 2022, the Company acquired Aceragen, Inc. (“Aceragen”), a Delaware corporation and its wholly owned subsidiaries. Aceragen is a privately-held biotechnology company addressing severe, rare, and orphan pulmonary and rheumatic diseases for which there are limited or no available treatments. The Company acquired Aceragen as a strategic extension of its rare disease business and focus with the primary objective of further developing Aceragen’s portfolio of rare disease product candidates. Specifically, as a result of the Acquisition (as defined below), the Company will focus on developing ACG-701 to treat pulmonary exacerbations associated with cystic fibrosis and melioidosis, a severe, life-threatening infection, and ACG-801 to treat a rare lysosomal storage disorder known as Farber disease. For additional information on the Acquisition of Aceragen, see Note 4. Tilsotolimod Update Until December 2021, the Company was developing tilsotolimod, via intratumoral injection, for the treatment of solid tumors in combination with nivolumab, an anti-PD1 antibody marketed as Opdivo® by Bristol Myers Squibb Company (“BMS”), and/or ipilimumab, an anti-CTLA4 antibody marketed as Yervoy® by BMS. Due to Phase 3 results in anti-PD-1 refractory advanced melanoma, reported in March 2021, which showed the study failed to meet its primary endpoint, as well as a decision in December 2021 to discontinue enrollment in ILLUMINATE-206, the Company’s Phase 2 study in solid tumors, Company-sponsored development of tilsotolimod has been discontinued. Although clinical trials with tilsotolimod have not yet translated into a new treatment alternative for patients, the Company believes that data supporting tilsotolimod’s mechanism of action and encouraging safety profile from across the array of pre-clinical and clinical work to date, together with its intellectual property protection, are noteworthy. As a result, in December 2021, the Company announced it would consider, and continues to consider, additional development opportunities for the compound in alignment with the Company’s rare disease business and/or out-licensing arrangements such that tilsotolimod’s full potential might continue to be explored on behalf of patients. Nasdaq Compliance As previously disclosed in the Current Report on Form 8-K filed with the SEC on December 1, 2021, on November 26, 2021, Idera received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market, LLC (“Nasdaq”), notifying the Company that it is not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires the Company to maintain a minimum bid price of at least $1 per share for continued listing on The Nasdaq Capital Market (the “Minimum Bid Requirement”). On May 26, 2022, the Company received notice (the “Nasdaq Notice”) from the Staff indicating that, while the Company has not regained compliance with the Minimum Bid Requirement, the Staff has determined that the Company is eligible for an additional 180-day period, or until November 21, 2022, to regain compliance. If at any time during this second 180-day compliance period, the closing bid price of the Company’s common stock is at least $1 per share for a minimum of ten consecutive business days, the Staff will provide the Company with written confirmation of compliance. If compliance cannot be demonstrated by November 21, 2022, the Staff will provide written notification that the Company’s common stock will be subject to delisting. The Company would then be entitled to appeal the Staff’s determination to a Nasdaq hearings panel. The Company intends to monitor the closing bid price of its common stock and consider implementing available options to regain compliance with the Minimum Bid Requirement. Liquidity, Financial Condition and Consideration as a Going Concern The Company has incurred substantial losses and negative cash flows from operations since its inception and has an accumulated deficit of $748.0 million as of September 30, 2022. The Company’s cash and cash equivalents at September 30, 2022 of $26.8 million are expected to fund its operations into the third quarter of fiscal 2023. In connection with the Acquisition of Aceragen, the Company assumed a debt obligation that has a final payment of $6.0 million due in October 2023. In addition, the newly-designated Series Z non-voting convertible preferred stock, par value $0.01 per share (the “Series Z”), issued to Aceragen stockholders could be redeemed for cash in the event the Company is unable to obtain an affirmative stockholder vote within six months following the closing of the Acquisition to convert the shares of Series Z into shares of common stock, there can be no assurance that the Series Z stockholders will not exercise their right to demand redemption. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplate the realization of assets and satisfaction of liabilities in the normal course of business. The unaudited interim condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development. Substantial additional financing will be needed by the Company to fund its operations and to commercially develop its product candidates. Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include, but are not limited to: private placements of equity and/or debt, payments from potential strategic research and development, licensing and/or marketing arrangements with pharmaceutical companies, and public offerings of equity and/or debt securities. There can be no assurance that these future funding efforts will be successful.

Business and Organization

9 Months Ended

Sep. 30, 2022

Note 1. Business and Organization

Business Overview

Idera Pharmaceuticals, Inc. (“Idera” or the “Company”), a Delaware corporation, is a biopharmaceutical company with a business strategy focused on the clinical development, and ultimately the commercialization, of drug candidates for rare disease indications characterized by small, well-defined patient populations with significant unmet medical needs. The Company’s strategic focus has been to identify and acquire rights to novel development and commercial stage rare disease programs through business development opportunities, including additional strategic alternatives. In these notes, the terms “we,” “our,” “our company” and “us” may refer, as the context requires, to Idera or collectively to Idera and its subsidiaries.

On September 28, 2022, the Company acquired Aceragen, Inc. (“Aceragen”), a Delaware corporation and its wholly owned subsidiaries. Aceragen is a privately-held biotechnology company addressing severe, rare, and orphan pulmonary and rheumatic diseases for which there are limited or no available treatments. The Company acquired Aceragen as a strategic extension of its rare disease business and focus with the primary objective of further developing Aceragen’s portfolio of rare disease product candidates. Specifically, as a result of the Acquisition (as defined below), the Company will focus on developing ACG-701 to treat pulmonary exacerbations associated with cystic fibrosis and melioidosis, a severe, life-threatening infection, and ACG-801 to treat a rare lysosomal storage disorder known as Farber disease. For additional information on the Acquisition of Aceragen, see Note 4.

Tilsotolimod Update

Until December 2021, the Company was developing tilsotolimod, via intratumoral injection, for the treatment of solid tumors in combination with nivolumab, an anti-PD1 antibody marketed as Opdivo® by Bristol Myers Squibb Company (“BMS”), and/or ipilimumab, an anti-CTLA4 antibody marketed as Yervoy® by BMS. Due to Phase 3 results in anti-PD-1 refractory advanced melanoma, reported in March 2021, which showed the study failed to meet its primary endpoint, as well as a decision in December 2021 to discontinue enrollment in ILLUMINATE-206, the Company’s Phase 2 study in solid tumors, Company-sponsored development of tilsotolimod has been discontinued.

Although clinical trials with tilsotolimod have not yet translated into a new treatment alternative for patients, the Company believes that data supporting tilsotolimod’s mechanism of action and encouraging safety profile from across the array of pre-clinical and clinical work to date, together with its intellectual property protection, are noteworthy. As a result, in December 2021, the Company announced it would consider, and continues to consider, additional development opportunities for the compound in alignment with the Company’s rare disease business and/or out-licensing arrangements such that tilsotolimod’s full potential might continue to be explored on behalf of patients.

Nasdaq Compliance

As previously disclosed in the Current Report on Form 8-K filed with the SEC on December 1, 2021, on November 26, 2021, Idera received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market, LLC (“Nasdaq”), notifying the Company that it is not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires the Company to maintain a minimum bid price of at least $1 per share for continued listing on The Nasdaq Capital Market (the “Minimum Bid Requirement”).

On May 26, 2022, the Company received notice (the “Nasdaq Notice”) from the Staff indicating that, while the Company has not regained compliance with the Minimum Bid Requirement, the Staff has determined that the Company is eligible for an additional 180-day period, or until November 21, 2022, to regain compliance. If at any time during this second 180-day compliance period, the closing bid price of the Company’s common stock is at least $1 per share for a minimum of ten consecutive business days, the Staff will provide the Company with written confirmation of compliance. If compliance cannot be demonstrated by November 21, 2022, the Staff will provide written notification that the Company’s common stock will be subject to delisting. The Company would then be entitled to appeal the Staff’s determination to a Nasdaq hearings panel. The Company intends to monitor the closing bid price of its common stock and consider implementing available options to regain compliance with the Minimum Bid Requirement.

Liquidity, Financial Condition and Consideration as a Going Concern

The Company has incurred substantial losses and negative cash flows from operations since its inception and has an accumulated deficit of $748.0 million as of September 30, 2022. The Company’s cash and cash equivalents at September 30, 2022 of $26.8 million are expected to fund its operations into the third quarter of fiscal 2023. In connection with the Acquisition of Aceragen, the Company assumed a debt obligation that has a final payment of $6.0 million due in October 2023. In addition, the newly-designated Series Z non-voting convertible preferred stock, par value $0.01 per share (the “Series Z”), issued to Aceragen stockholders could be redeemed for cash in the event the Company is unable to obtain an affirmative stockholder vote within six months following the closing of the Acquisition to convert the shares of Series Z into shares of common stock, there can be no assurance that the Series Z stockholders will not exercise their right to demand redemption. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplate the realization of assets and satisfaction of liabilities in the normal course of business. The unaudited interim condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development. Substantial additional financing will be needed by the Company to fund its operations and to commercially develop its product candidates. Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include, but are not limited to: private placements of equity and/or debt, payments from potential strategic research and development, licensing and/or marketing arrangements with pharmaceutical companies, and public offerings of equity and/or debt securities. There can be no assurance that these future funding efforts will be successful.