10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 001-33291

OPTIMER PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	33-0830300
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

10110 Sorrento Valley Road, Suite C
San Diego, CA 92121
(Address of principal executive offices, including zip code)

(858) 909-0736
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):  Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer o	Accelerated Filer x
Non-accelerated Filer o	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):  Yes o No x

The number of shares of the registrant’s Common Stock, no par value, outstanding as of October 30, 2009 was 33,103,345 shares.

OPTIMER PHARMACEUTICALS, INC.
FORM 10-Q
For the Quarterly Period Ended September 30, 2009

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets – September 30, 2009 and December 31, 2008	3
Consolidated Statements of Operations – Three months and nine months ended September  30, 2009 and 2008	4
Consolidated Statements of Cash Flows – Nine months ended September 30, 2009 and 2008	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures about Market Risk	28
Item 4. Controls and Procedures	28
PART II – OTHER INFORMATION
Item 1A. Risk Factors	29
Item 5. Other Information	58
Item 6. Exhibits	60
SIGNATURE

2

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

Optimer Pharmaceuticals, Inc.

Consolidated Balance Sheets

	September 30,			December 31,
	2009			2008
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	19,240,782		$	16,778,880
Short-term investments	23,243,958			22,547,515
Research grant and contract receivables	55,368			211,299
Prepaid expenses and other current assets	523,766			533,371
Total current assets	43,063,874			40,071,065
Property and equipment, net	697,328			694,183
Long-term investments	882,000			1,032,000
Other assets	498,644			498,250
Total assets	$	45,141,846		$	42,295,498
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,136,058		$	3,767,831
Accrued expenses	3,890,438			4,045,660
Total current liabilities	8,026,496			7,813,491
Deferred rent	276,484			251,504
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.001, 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively	—			—
Common stock, $0.001 par value, 75,000,000 shares authorized, 33,103,345 shares and 29,716,751 shares issued and outstanding at September 30, 2009 and December 31, 2008 respectively	33,103			29,717
Additional paid-in capital	202,786,484			167,544,806
Accumulated other comprehensive income	57,027			38,088
Accumulated deficit	(166,037,748		)	(133,382,108		)
Total stockholders’ equity	36,838,866			34,230,503
Total liabilities and stockholders’ equity	$	45,141,846		$	42,295,498

See accompanying notes.

3

Optimer Pharmaceuticals, Inc

Consolidated Statements of Operations

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Revenues:
Research grants	$	176,202		$	239,212		$	583,992		$	844,675
Collaborative research agreements	—			—			100,000			50,000
Total revenues	176,202			239,212			683,992			894,675
Operating expenses:
Research and development	7,192,383			7,877,906			26,519,447			21,003,764
Marketing	393,864			415,916			1,179,212			1,695,400
General and administrative	2,030,137			1,544,925			5,949,946			4,803,422
Total operating expenses	9,616,384			9,838,747			33,648,605			27,502,586
Loss from operations	(9,440,182		)	(9,599,535		)	(32,964,613		)	(26,607,911		)
Interest income and other, net	33,935			411,352			308,973			1,426,386
Net loss	$	(9,406,247	)	$	(9,188,183	)	$	(32,655,640	)	$	(25,181,525	)
Basic and diluted net loss per share	$	(0.28	)	$	(0.31	)	$	(1.01	)	$	(0.89	)
Shares used to compute basic and diluted net loss per share	33,103,345			29,253,693			32,250,194			28,377,733

See accompanying notes.

4

Optimer Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended September 30,
	2009			2008
Operating activities
Net loss	$	(32,655,640	)	$	(25,181,525	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	185,615			168,109
Stock based compensation	2,085,556			1,278,830
Deferred rent	24,980			(14,918		)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	9,605			68,259
Research grant and contract receivables	155,931			62,700
Restricted cash	—			(170,000		)
Other assets	(394		)	(26,214		)
Accounts payable and accrued expenses	213,005			(1,858,050		)
Net cash used in operating activities	(29,981,342		)	(25,672,809		)
Investing activities
Purchases of short-term investments	(28,683,091		)	(22,886,304		)
Sales or maturity of short-term investments	28,153,000			54,650,000
Purchase of property and equipment	(188,760		)	(110,760		)
Net cash provided by (used in) investing activities	(718,851		)	31,652,936
Financing activities
Proceeds from sale of common stock	33,159,511			14,950,101
Net cash provided by financing activities	33,159,511			14,950,101
Effect of exchange rate changes on cash and cash equivalents	2,584			(19,296		)
Net increase in cash and cash equivalents	2,461,902			20,910,932
Cash and cash equivalents at beginning of period	16,778,880			3,191,814
Cash and cash equivalents at end of period	$	19,240,782		$	24,102,746
Supplemental disclosure of cash flow information:
Retirement of treasury stock	—			100,000

See accompanying notes.

5

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1.     Interim Financial Information

Organization and Business Activities

Optimer Pharmaceuticals, Inc. (“Optimer” or the “Company”) was incorporated in Delaware on November 18, 1998. The Company has one majority owned subsidiary, Optimer Biotechnology, Inc. (“OBI”), which is incorporated and located in Taiwan. In October 2009, Optimer sold 40% of its equity interest in OBI. Prior to the sale, OBI was a wholly owned subsidiary of Optimer. Refer to the Subsequent Event note in these Consolidated Financial Statements for additional information.

Optimer is a biopharmaceutical company focused on discovering, developing and commercializing anti-infective products.  The Company currently has two anti-infective product candidates, fidaxomicin, for the treatment of Clostridium difficile-infection, and Pruvel™ (prulifloxacin), for the treatment of infectious diarrhea. The Company is developing additional product candidates using its proprietary technology, including its OPopS™ drug discovery platform.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the three and nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which was filed with the Securities and Exchange Commission (“SEC”) on March 12, 2009.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

2.     Summary of Significant Accounting Policies

Cash, Cash Equivalents and Investments

Investments with original maturities of less than 90 days at the date of purchase are considered to be cash equivalents.  All other investments are classified as short-term investments which are deemed by management to be available-for-sale and are reported at fair value with net unrealized gains or losses reported within other comprehensive loss in the consolidated statement of

6

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

stockholders’ equity.  Realized gains and losses, and declines in value judged to be other than temporary, are included in investment income or interest expense.  The cost of securities sold is computed using the specific identification method.

Auction rate preferred securities are classified as noncurrent available-for-sale securities in the consolidated balance sheet because of the Company’s intent and ability to hold these securities until the market for auction rate preferred securities returns or until the issuer refinances the underlying security.

Revenue Recognition

The Company’s license and collaboration agreements contain multiple elements, including non-refundable upfront fees, payments for reimbursement of third-party research costs, payments for ongoing research, payments associated with achieving specific development milestones and royalties based on specified percentages of net product sales, if any.  The Company considers a variety of factors in determining the appropriate method of revenue recognition under these arrangements, such as whether the elements are separable, whether there are determinable fair values and whether there is a unique earnings process associated with each element of a contract. The Company generally recognizes revenue when it is realized or realizable and earned when all of the following criteria are met — 1) persuasive evidence of an arrangement exists; 2) delivery has occurred or services have been rendered; 3) the seller’s price to the buyer is fixed or determinable; and 4) collectibility is reasonably assured.

Cash received in advance of services being performed is recorded as deferred revenue and recognized as revenue as services are performed over the applicable term of the agreement.

When a payment is specifically tied to a separate earnings process, revenues are recognized when the specific performance obligation associated with the payment is completed.  Performance obligations typically consist of significant and substantive milestones pursuant to the related agreement.  Revenues from milestone payments may be considered separable from funding for research services because of the uncertainty surrounding the achievement of milestones for products in early stages of development.  Accordingly, these payments are allowed to be recognized as revenue if and when the performance milestone is achieved if they represent a separate earnings process.

In connection with certain research collaboration agreements, revenues are recognized from non-refundable upfront fees, which the Company does not believe are specifically tied to a separate earnings process, ratably over the term of the agreement.  Research fees are recognized as revenue as the related research activities are performed.

With respect to revenues derived from reimbursement of direct out-of-pocket expenses for research costs associated with grants, where the Company acts as a principal, with discretion to choose suppliers, bears credit risk and performs part of the services required in the transaction, the Company records revenue for the gross amount of the reimbursement. The costs associated with these reimbursements are reflected as a component of research and development expense in the consolidated statements of operations.

7

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

None of the payments that the Company has received from collaborators to date, whether recognized as revenue or deferred, are refundable even if the related program is not successful.

Research and Development Expenses

The Company expenses costs related to research and development until technological feasibility has been established for the product.  Once technological feasibility is established, all product costs are generally capitalized until the product is available for general release to customers.  The Company has determined that technological feasibility for its product candidates will be reached when the requisite regulatory approvals are obtained to make the product available for sale, which, in the United States, generally occurs upon the approval of the new drug application (“NDA”) for such product.  The Company’s research and development expenses consist primarily of license fees, salaries and related employee benefits, costs associated with clinical trials managed by the Company’s contract research organizations and costs associated with non-clinical activities and regulatory approvals.  The Company uses external service providers and vendors to conduct clinical trials, to manufacture supplies of product candidates to be used in clinical trials and to provide various other research and development-related products and services.

When nonrefundable payments for goods or services to be received in the future for use in research and development activities are made, the Company defers and capitalizes these types of payments. The capitalized amounts are expensed when the related goods are delivered or the services are performed.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.  Net income (loss) and other comprehensive income (loss), including foreign currency translation adjustments and unrealized gains and losses on investments, is required to be reported, net of their related tax effect, to arrive at comprehensive income (loss).  The Company’s comprehensive loss was $9.4 million and $9.6 million for the three months ended September 30, 2009 and 2008, respectively. The Company’s comprehensive loss was $32.6 million and $25.5 million for the nine months ended September 30, 2009 and 2008, respectively.

Net Loss Per Share

Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding. Diluted net loss per common share is computed by dividing net loss by the weighted-average number of common shares and dilutive common share equivalents then outstanding. Common equivalent shares consist of common shares issuable upon the exercise of stock options and warrants. Since the Company has a net loss for all periods presented, the effect of all potentially dilutive securities is anti-dilutive. Accordingly, basic and diluted net loss per share is the same for all periods presented.

8

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

For the nine months ended September 30, 2009 and 2008, common shares issuable upon the exercise of stock options and warrants totaling 2,571,383 and 1,981,975 shares, respectively, were excluded from the calculation, as their effect would have been antidilutive.

Income Taxes

The Company follows the FASB guidance issued on January 1, 2007 which clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The FASB guidance also provides for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Future Accounting Requirements

The Financial Accounting Standards Board (“FASB”) issued the following new accounting standards:

In September 2009, the FASB issued ASU No. 2009-12, Fair Value Measurements and Disclosures (“ASU 2009-12”). This standard provides additional guidance on using the net asset value per share, provided by an investee, when estimating the fair value of an alternate investment that does not have a readily determinable fair value and enhances the disclosures concerning these investments. Examples of alternate investments, within the scope of this standard, include investments in hedge funds and private equity, real estate, and venture capital partnerships. This Standard is effective for interim and annual periods ending after December 15, 2009.  The Company is currently evaluating the potential impact of this standard on its financial position and results of operations.

9

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”).  ASU 2009-13, amends existing revenue recognition accounting pronouncements that are currently within the scope of FASB Accounting Standards Codification (“ASC”) Subtopic 605-25 (previously included within EITF 00-21, Revenue Arrangements with Multiple Deliverables (“EITF 00-21”)). ASU 2009-13 guidance eliminates the requirement to establish the fair value of undelivered products and services and instead provides for separate revenue recognition based upon management’s estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. EITF 00-21 previously required that the fair value of the undelivered item be the price of the item either sold in a separate transaction between unrelated third parties or the price charged for each item when the item is sold separately by the vendor. Under EITF 00-21, if the fair value of all of the elements in the arrangement was not determinable, then revenue was deferred until all of the items were delivered or fair value was determined. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the potential impact of this standard on its financial position and results of operations.

In June 2009, the FASB issued authoritative guidance which amends its existing guidance to determine whether an enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity.  The guidance will be effective as of the beginning of the Company’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter.  Earlier application is prohibited. The Company is currently evaluating the impact, if any, of this amended guidance on its financial position and results of operations.

In June 2009, the FASB issued authoritative guidance which amends the existing guidance for Accounting for Transfers of Financial Assets to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets, the effects of a transfer on its financial position, financial performance, and cash flows, and a transferor’s continuing involvement, if any, in transferred financial assets.  The guidance removes the concept of a qualifying special-purpose entity and removes the exception from applying Consolidation of Variable Interest Entities to qualifying special-purpose entities.  The guidance will be effective at the start of the Company’s first fiscal year beginning after November 15, 2009. The Company is currently evaluating the impact, if any, of this amended guidance on its financial position and results of operations.

Recently Adopted Guidance

In August 2009, the FASB issued Accounting Standards Update No. 2009-05, Measuring Liabilities at Fair Value (“ASU 2009-05”). ASU 2009-05 amends Accounting Standards Codification Topic 820, Fair Value Measurements. Specifically, ASU 2009-05 provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following methods: 1) a valuation technique that uses a) the quoted price of the identical liability when traded as an asset or b) quoted prices for similar liabilities or similar liabilities when traded as assets and/or 2) a valuation technique that is consistent with the principles of Topic 820 of the Accounting Standards Codification (e.g. an income approach or market approach). ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to make adjustments to include inputs relating to the existence of transfer restrictions on that liability. The adoption of this standard did not have an impact on the Company’s financial position or results of operations; however, this standard may impact the Company’s in future periods.

Effective for the quarter ending September 30, 2009, the Company adopted ASC which became the single source of all authoritative generally accepted accounting principles in the United States (“GAAP”). The adoption did not have any material impact on the Company’s financial position or results of operations.

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Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

3.   Fair Value of Financial Instruments

The following table summarizes the Company’s assets measured at fair value on a recurring basis as of September 30, 2009:

	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	19,240,782	$	—	$	—	$	19,240,893
Marketable securities	23,243,958		—		—		23,243,958
Auction rate securities	—		—		882,000		882,000

Level 1:Quoted prices in active markets for identical assets and liabilities; or

Level 2:Quoted prices for identical or similar assets and liabilities in markets that are not active, or observable inputs other than quoted prices in active markets for identical assets and liabilities; or

Level 3:Unobservable inputs.

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs is as follows:

	Auction Rate Preferred Securities
Beginning balance at January 1, 2009	$	1,032,000
Transfer from level 3 into level 1	—
Total unrealized losses included in accumulated other comprehensive income	—
Total realized losses included in interest income and other, net	—
Purchases, sales, issuances and settlements	(150,000		)
Ending balance at September 30, 2009	$	882,000
Change in unrealized gains (losses) included in net income related to assets still held	$	—

All of the Company’s investments in available-for-sale securities are recorded at fair value based on quoted market prices. As of September 30, 2009, the Company held one auction rate preferred security (“ARPS”) valued at $882,000 with a perpetual maturity date that resets every 28 days.  Although as of September 30, 2009, the Company’s remaining ARPS continued to pay interest according to its stated terms, the market in these securities continues to be illiquid. Based on valuation models on the individual security, the Company has previously recognized in the consolidated statement of operations an unrealized loss of approximately $118,000 in investment income since the Company had determined that the decline in value was other than temporary. The Company’s remaining ARPS has been classified as a long-term investment on the consolidated balance sheets as the Company does not believe it could liquidate the security in the near term.

11

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

4.     Short-Term Investments

The following is a summary of the Company’s investment securities, all of which are classified as available-for-sale. Determination of estimated fair value is based upon quoted market prices as of the dates presented.

	September 30, 2009
	Gross AmortizedCost		Gross UnrealizedGains		Gross UnrealizedLosses			Market Value
Government obligations	$	23,232,980	$	16,093	$	(5,115	)	$	23,243,958

	December 31, 2008
	Gross AmortizedCost		Gross UnrealizedGains		Gross UnrealizedLosses			Market Value
Corporate debt securities	$	13,464,268	$	3,089	$	(49,257	)	$	13,418,100
Foreign debt securities	1,503,901		5,824		—			1,509,725
Government debt securities	7,584,720		37,106		(2,136		)	7,619,690
Total	$	22,552,889	$	46,019	$	(51,393	)	$	22,547,515

Investments in net unrealized loss positions as of September 30, 2009 are as follows:

		Less Than 12 Months of Temporary Impairment					Greater Than 12 Months of Temporary Impairment				Total Temporary Impairment
	Number of Investments	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government obligations	5	$	5,064,480	$	(5,115	)	$	—	$	—	$	5,064,480	$	(5,115	)

The amortized cost and estimated fair value of securities available-for-sale at September 30, 2009 and December 31, 2008, respectively, by contractual maturity, are as follows:

	As of September 30, 2009				As of December 31, 2008
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	23,232,980	$	23,243,958	$	22,552,889	$	22,547,515
Due after one year through two years	—		—		—		—
Total	$	23,232,980	$	23,243,958	$	22,552,889	$	22,547,515

The weighted average maturity of our short-term investments as of September 30, 2009 and December 31, 2008, was approximately three months.

Evaluating Investments for Other-than Temporary Impairments

Except for the ARPS which the Company recorded as an other than temporary impairment in 2008, the Company considered a number of factors to determine whether the decline in value in its investments is other than temporary, including the length of time and the extent to which the

12

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

market value has been less than cost, the financial condition of the issuer and the Company’s intent to hold and ability to retain these short-term investments.  Based on these factors, the Company believes that the decline in value is temporary and primarily related to the change in market interest rates since purchase.  The Company determined that it does not intend to sell its short-term investments and it is not more likely than not that the Company will be required to sell its short-term investments before recovery of their amortized cost bases, which may not occur until maturity. The Company anticipates that it will fully recover the amortized cost with respect to these securities at maturity or sooner in the event of a change in the market interest rate environment.

5.Stock Based Compensation

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable.  In addition, the Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected stock price volatility.  The following table shows the assumptions used to compute stock-based compensation expense for the stock options granted during the three and nine months ended September 30, 2009 and 2008, using the Black-Scholes option pricing model:

	Three months ended September 30				Nine months ended September 30,
	2009		2008		2009		2008
Risk-free interest rate	2.00	%	2.96	%	2.00	%	2.96	%
Dividend yield	0.00	%	0.00	%	0.00	%	0.00	%
Expected life of options (years)	6.08		6.08		5.27-6.08		6.02-6.08
Volatility	69.93	%	64.95	%	69.93	%	64.95	%

The risk-free interest rate assumption was based on the United States Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.  The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future.  The weighted-average expected life of options was calculated using the simplified method.  This decision was based on the lack of relevant historical data due to the Company’s limited history.  In addition, due to the Company’s limited historical data, the Company used the historical volatility of comparable companies whose share prices are publicly available to estimate the Company’s options volatility rate.

As of September 30, 2009, the total unrecognized compensation expense related to unvested stock options was approximately $5,277,250 and the related weighted-average period over which it is expected to be recognized is approximately 2.75 years.

Total stock-based compensation expense, related to all of the Company’s stock options, stock awards and employee stock purchases, recognized for the three and nine months ended September 30, 2009 and 2008 was comprised as follows:

13

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

	Three months endedSeptember 30,				Nine months endedSeptember 30,
	2009		2008		2009		2008
Research and development	$	327,389	$	134,157	847,806		$	364,664
Marketing	93,519		75,605		279,274		228,901
General and administrative	321,300		221,065		958,476		685,265
Stock-based compensation expense	$	742,208	$	430,827	$	2,085,556	$	1,278,830

6.     Stockholders’ Equity

Stock Options

In November 1998, the Company adopted the 1998 Stock Plan (“1998 Plan”).  The Company terminated and ceased granting options under the 1998 Plan upon the effectiveness of the Company’s initial public offering in February 2007.

In December 2006, the Company’s board of directors approved the 2006 Equity Incentive Plan (“2006 Plan”).  The 2006 Plan became effective upon the effectiveness of the Company’s initial public offering. The Company initially reserved a total of 2,000,000 shares of its common stock for issuance pursuant to the 2006 Plan.  The 2006 Plan provides for annual increases in the number of shares available for issuance thereunder on the first day of each fiscal year, beginning with the Company’s 2008 fiscal year, equal to the lesser of (i) 5% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year; (ii) 750,000 shares; or (iii) such other amount as the board of directors may determine.  As of September 30, 2009, a total of 3,500,000 shares of the Company’s common stock had been reserved for issuance under the 2006 Plan.

Options granted under both the 1998 Plan and the 2006 Plan generally expire no later than ten years from the date of grant (five years for a 10% stockholder) and vest over a period of four years. The exercise price of options granted must at least be equal to the fair market value of the Company’s common stock on the date of grant.  The 2006 Plan is administered by the Compensation Committee of the Company’s Board of Directors. In September 2008, the Company’s board of directors established a New Hire Stock Option Committee consisting of the Chief Executive Officer and the Chief Financial Officer, with authority to grant options to newly-hired non-executive employees within pre-determined limits.

Following is a summary of stock option activity for the nine months ended September 30, 2009:

	Options		Weighted- Average Exercise Price
Balance as of December 31, 2008	1,979,660		$	3.64
Granted	626,250		$	11.24
Exercised	(111,153	)	$	1.11
Canceled	(14,907	)	$	8.45
Balance as of September 30, 2009	2,479,850		$	5.64

14

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

As of September 30, 2009, options were outstanding under the 1998 Plan and the 2006 Plan as follows:

	September 30, 2009
	Options Outstanding				Options Exercisable
Exercise  Price	Number Outstanding	Weighted-Average Remaining Contractual Life (in years)	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
$0.22 - $1.08	832,906	4.21	$	0.90	831,199	$	0.90
$2.17 - $9.70	1,025,194	7.62	$	6.10	579,094	$	5.60
$10.00 - $14.86	621,750	9.31	$	11.24	19,936	$	10.72
$0.22 - $14.86	2,479,850	6.90	$	5.64	1,430,229	$	2.94

Of the options outstanding, options to purchase 1,430,229 shares were vested as of September 30, 2009, with a weighted-average remaining contractual life of 5.6 years and a weighted-average exercise price of $2.94 per share, while options to purchase 1,049,621 shares were unvested.

Employee Stock Purchase Plan

Concurrent with the Company’s initial public offering in February 2007, the Company’s board of directors adopted the employee stock purchase plan (“ESPP”) in December 2006, and the stockholders approved the plan in January 2007.  A total of 200,000 shares of the Company’s common stock were initially made available for sale under the plan.  The ESPP provides for annual increases in the number of shares available for issuance on the first day of each fiscal year, beginning with the Company’s 2008 fiscal year, equal to the lesser of (i) 3% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year; (ii) 300,000 shares; or (iii) such other amount as may be determined by the Company’s board of directors. As of September 30, 2009, a total of 500,000 shares of the Company’s common stock had been reserved for issuance under the ESPP.

Offering periods under the ESPP commence on the first trading day on or after May 15 and November 15 of each year. As of September 30, 2009, 93,484 shares of Company’s common stock had been issued and 406,516 shares were available for issuance under the ESPP.

During the three and nine months ended September 30, 2009, the Company recorded stock-based compensation expense of approximately $33,769 and $114,873, respectively, related to the ESPP.

Warrants

In connection with a registered direct offering which occurred in March 2009, the Company sold a total of 3.3 million shares of its common stock and warrants to purchase up to an aggregate of 91,533 shares of its common stock. The warrants are exercisable at an exercise price of $10.93 per share and will expire on March 9, 2014.

15

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

7.     Revenue and Other Collaborative Agreements

Revenues from Research Grants

The Company has received several research grants from U.S. government agencies since 2003, all of which except for one were completed on or prior to June 30, 2009. The active grant was awarded from National Institute of Allergy and Infectious Diseases (“NIAID”) in September 2007. This grant is renewable for $1 million each year until August 2010, up to a maximum of $3 million. The award is being used to conduct supplementary studies to the ongoing fidaxomicin trials to confirm narrow spectrum activity and potency of fidaxomicin against hypervirulent epidemic strains, to support additional toxicology and microbiological studies to demonstrate the safety and efficacy of the fidaxomicin compound and its major metabolite in CDI patients and to support a surveillance study of C. difficile isolates across North America to compare activity of fidaxomicin with existing CDI treatments.  For the three months ended September 30, 2009 and 2008, the Company recognized revenues related to research grants of $176,202 and $239,212, respectively. For the nine months ended September 30, 2009 and 2008, the Company recognized revenues related to research grants of $583,992 and $844,675, respectively.

Other Collaborative Agreements

Par Pharmaceuticals, Inc.

The Company holds worldwide rights to fidaxomicin.  In February 2007, the Company repurchased the rights to develop and commercialize fidaxomicin in North America and Israel from Par Pharmaceuticals, Inc. (“Par”) under a prospective buy-back agreement.  The Company is also obligated to pay Par a one-time $5.0 million milestone payment, a 5% royalty on net sales by the Company, its affiliates or its licensees of fidaxomicin in North America and Israel, and a 1.5% royalty on net sales by the Company or its affiliates of fidaxomicin in the rest of the world. The one-time $5.0 million milestone payment is required to be paid after the earliest to occur of (i) the successful completion by the Company of its second pivotal Phase 3 trial for fidaxomicin, (ii) the Company’s grant to a third party of the rights to fidaxomicin or (iii) the submission to the FDA of an NDA for fidaxomicin.  In addition, in the event the Company licenses its right to market fidaxomicin in the rest of the world, the Company will be required to pay Par a 6.25% royalty on net revenues received by it related to fidaxomicin.  The Company is obligated to pay each of these royalties, if any, on a country-by-country basis for seven years commencing on the applicable commercial launch in each such country.

Cempra Pharmaceuticals, Inc.

In March 2006, the Company entered into a collaborative research and development and license agreement with Cempra Pharmaceuticals, Inc. (“Cempra”).  The Company granted to Cempra an exclusive worldwide license, except in Association of Southeast Asian Nations (“ASEAN”) countries, with the right to sublicense, the Company’s patent and know-how related to the Company’s macrolide and ketolide antibacterial program.  As partial consideration for granting

16

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

Cempra the licenses, the Company obtained equity of Cempra and the Company assigned no value to such equity.  The Company may receive milestone payments as product candidates are developed and/or co-developed by Cempra, in addition to milestone payments based on certain sublicense revenue.  The aggregate potential amount of such milestone payments is not capped and, based in part on the number of products developed under the agreement, may exceed $24.5 million.  The Company will also receive royalty payments based on a percentage of net sales of licensed products.  The milestone payments will be triggered upon the completion of certain clinical development milestones and in certain instances, regulatory approval of products.  In consideration of the foregoing, Cempra may receive milestone payments from the Company in the amount of $1.0 million for each of the first two products the Company develops which receive regulatory approval in ASEAN countries, as well as royalty payments on the net sales of such products.  The research term of the agreement was completed in March 2008.  Subject to certain exceptions, on a country-by-country basis, the general terms of this agreement continue until the later of: (i) the expiration of the last to expire patent rights of a covered product in the applicable country or (ii) ten years from the first commercial sale of a covered product in the applicable country.  Either party may terminate the agreement in the event of a material breach by the other party, subject to prior notice and the opportunity to cure.  Either party may also terminate the agreement for any reason upon 30 days’ prior written notice provided that all licenses granted by the terminating party to the non-terminating party will survive upon the express election of the non-terminating party.

Nippon Shinyaku, Co., Ltd.

In June 2004, the Company entered into a license agreement with Nippon Shinyaku, Co., Ltd. (“Nippon Shinyaku”).  Under the terms of the agreement, the Company acquired the non-exclusive right to import and purchase Pruvel, and the exclusive right (with the right to sublicense), within the United States, to develop, make, use, offer to sell, sell and license products suitable for consumption by humans containing Pruvel.  Under this agreement, the Company paid Nippon Shinyaku an up-front fee in the amount of $1.0 million and will be required to make one future milestone payment in the amount of $1.0 million upon filing, if any, its first NDA for Pruvel in the United States.  Under the agreement, the Company pays Nippon Shinyaku for certain materials.  If Nippon Shinyaku is unable to supply the Company with the contracted amount of Pruvel, then Nippon Shinyaku is obligated to grant the Company a non-exclusive, worldwide license to make or have made Pruvel, in which event the Company will owe Nippon Shinyaku a royalty based on the amount of net sales of Pruvel generated by the Company and the Company’s subsidiary.  Additionally, the Company will owe Nippon Shinyaku certain royalties based on the amount of net sales of Pruvel less the amount of Pruvel the Company buys from Nippon Shinyaku.  Either party may terminate the agreement 60 days after giving notice of a material breach which remains uncured 60 days after written notice.  If not terminated earlier, the agreement will terminate upon the later of ten years from the date of the first commercial sale of Pruvel in the United States or the date on which the last valid patent claim relating to Pruvel expires in the United States.

17

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

Memorial Sloan-Kettering Cancer Center

In July 2002, the Company entered into a license agreement with Memorial Sloan-Kettering Cancer Center (“MSKCC”) to acquire, together with certain nonexclusive licenses, exclusive, worldwide licensing and sublicensing rights to certain patented and patent-pending carbohydrate-based cancer immunotherapies.  As partial consideration for the licensing rights, the Company paid to MSKCC a one-time fee consisting of both cash and 55,383 shares of its common stock.  Under the agreement, which was amended in June 2005, the Company owes MSKCC milestone payments in the following amounts for each licensed product: (i) $500,000 upon the commencement of Phase 3 clinical studies, (ii) $750,000 upon the filing of the first NDA, (iii) $1.5 million upon obtaining marketing approval in the United States and (iv) $1.0 million upon obtaining marketing approval in each and any of Japan and certain European countries, but only to the extent that the Company, and not a sublicensee, achieves such milestones.  The Company may also owe MSKCC royalties based on net sales generated from the licensed products and income the Company receives from its sublicensing activities, which royalty payments are credited against a minimum annual royalty payment the Company may owe to MSKCC during the term of the agreement.  The term of the agreement continues until the later of July 31, 2017, or the expiration of the last to expire of the patents licensed under this agreement, unless the agreement is earlier terminated.  The agreement can be terminated by MSKCC for a variety of reasons, including (i) upon 60 days’ notice in the event the Company fails to meet a development milestone specified in the agreement or (ii) upon 30 days’ notice, in the event the Company fails to pay any licensing fees, royalties or patent expenses due under the agreement within 30 days of the due date and thereafter fails to pay such deficit in-full within the 30-day notice period.  In anticipation of certain transactions involving OBI and described in the Subsequent Event note, the Company previously assigned and OBI assumed the Company’s rights and obligations under the agreement.  See the Subsequent Event note below for additional information on the transactions involving OBI.

Scripps Research Institute

In July 1999, the Company acquired exclusive, worldwide rights to its OPopS technology from the Scripps Research Institute (“TSRI”).  This agreement includes the license to the Company of patents, patent applications and copyrights related to OPopS technology.  The Company also acquired, pursuant to three separate license agreements with TSRI, exclusive, worldwide rights to over 20 TSRI patents and patent applications related to other potential drug compounds and technologies, including HIV/FIV protease inhibitors, aminoglycoside antibiotics, polysialytransferase, selectin inhibitors, nucleic acid binders, carbohydrate mimetics and osteoarthritis.  Under the four agreements, the Company paid TSRI license fees consisting of an aggregate of 239,996 shares of its common stock with a deemed aggregate fair market value of $46,400, as determined on the dates of each such payment.  Additionally, under each agreement, the Company may owe TSRI royalties based on net sales by the Company, its affiliates and sublicensees of the covered products and royalties based on revenue the Company generates from sublicenses granted pursuant to the agreements.  For the first licensed product under each of the four agreements, the Company will also owe TSRI payments upon achievement of certain milestones.  In three of the four TSRI agreements, the milestones are the initiation of a Phase 2

18

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

trial or its foreign equivalent, the filing of an NDA or its foreign equivalent and government marketing and distribution approval.  In the remaining TSRI agreement, the milestones are the successful completion of a Phase 3 trial or its foreign equivalent, the filing of an NDA or its foreign equivalent and government marketing and distribution approval.  The aggregate potential amount of milestone payments the Company may be required to pay TSRI under all four TSRI agreements is approximately $14.0 million.  Each TSRI agreement terminates in part as follows: (i) with respect to each product which utilizes patent rights licensed under the agreement, on a country-by-country basis concurrently with the expiration of the last to expire of the applicable patent rights, (ii) with respect to each product which utilizes technology licensed under the agreement but which does not utilize patent rights also licensed thereunder, 15 years after the date of the first commercial sale of the product in each country and (iii) with respect to software licensed under the 1999 OPopS agreement, 75 years after the date the applicable copyright is filed in the United States.  In anticipation of certain transactions involving OBI and described in the Subsequent Event note, the Company previously assigned and OBI assumed the Company’s rights and obligations under one of the agreements with TSRI related to osteoarthritis.  See the Subsequent Event note below for additional information on the transactions involving OBI.

8.     Subsequent Event

In October 2009, the Company entered into certain transactions involving its Taiwan subsidiary, OBI, to provide funding for the development of two of the Company’s early-stage, non-core programs.

The transactions with OBI included an Intellectual Property Assignment and License Agreement, pursuant to which the Company assigned to OBI certain patent rights, information and know-how related to a product candidate for the treatment of osteoarthritis, and a product candidate for carbohydrate-based cancer immunotherapy. Under this agreement, the Company is eligible to receive up to $10 million in milestone payments for each product developed under the development programs and is also eligible to receive royalties on net sales of any product which is commercialized under the programs.

The Intellectual and Property Assignment and License Agreement also terminates an existing license agreement between the Company and OBI, including the Company’s previous license to OBI to develop fidaxomicin in certain Asian countries.  Under the agreement, the Company also forgave previous intercompany loans to OBI totaling $3.3 million. The term of the agreement continues until the last to expire of the patents assigned to OBI by the Company and the patents licensed to OBI under the TSRI and MSKCC agreements.

To provide capital for OBI’s product development efforts, the Company and OBI also entered into a financing agreement with a group of new investors.  Simultaneously, the Company sold 40 percent of its existing OBI shares to the same group of new investors for gross proceeds of approximately $2.1 million.  Under the financing agreement, the Company and the new investors invested approximately $3.7 million and $2.5 million, respectively, in new OBI shares.  Also under the financing agreement, if OBI achieves certain development milestones in the future, the Company and the new investors will be obligated to invest approximately an additional $8.6 million and $5.7 million, respectively, in exchange for new OBI shares.  Following the sale of its existing OBI shares and the initial investments in exchange for new OBI shares, the Company maintains a 60 percent ownership interest in OBI.

The Company has evaluated events and transactions that occurred after September 30, 2009 through November 3, 2009, the date the Company issued these financial statements. Except for the transactions with OBI described above, the Company did not have any other material recognizable subsequent events.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and accompanying notes appearing elsewhere in this report, as well as the audited financial statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended December 31, 2008, as filed with the Securities and Exchange Commission, or SEC.  This discussion and other parts of this report may contain forward-looking statements based upon current expectations that involve risks and uncertainties.  Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this report.

Overview

We are a biopharmaceutical company focused on discovering, developing and commercializing innovative anti-infective products. Our current development efforts are focused on products that treat gastrointestinal infections, and related diseases where current therapies have limitations, including limited efficacy, serious adverse side effects, drug-to-drug interactions, difficult patient compliance and bacterial resistance.

We currently have two late-stage anti-infective product candidates, fidaxomicin and Pruvel™ (prulifloxacin).

Fidaxomicin, our lead product candidate, is a narrow spectrum antibiotic with minimal systemic absorption, currently in its second Phase 3 registration trial for the treatment of Clostridium difficile-infection, or CDI, the most common nosocomial, or hospital acquired, diarrhea. In November 2008, we reported positive data from the first fidaxomicin Phase 3 trial, the largest single comparative study ever conducted against Vancocin. The top-line analysis of data from this trial showed that fidaxomicin achieved the primary endpoint of clinical cure and demonstrated a significantly lower recurrence rate compared to Vancocin, the only FDA-approved antibiotic for the treatment of CDI.  Fidaxomicin was also well-tolerated in the trial.  The second fidaxomicin Phase 3 trial is on-going and we anticipate completing enrollment in 2009 and reporting data from this trial in the first quarter of 2010.  We currently hold worldwide rights to fidaxomicin and intend to seek one or more partners for the commercialization of fidaxomicin outside of North America.

Pruvel is a prodrug in the fluoroquinolone class of antibiotics, a widely-used class of broad-spectrum antibiotics. We are developing Pruvel as a treatment for infectious diarrhea.  In July 2008, we reported positive top-line data from the first Phase 3 trial conducted in Mexico and Peru and in February 2009, we reported positive top-line data from the second Phase 3 trial conducted in India, Guatemala and Mexico.  The top-line analysis of data from these studies showed that Pruvel met the primary endpoint of time to last unformed stool, or TLUS, compared to placebo. We intend to conduct a Phase 4 trial of Pruvel subsequent to a new drug application, or NDA, submission to compare Pruvel to ciprofloxacin for the treatment of infectious diarrhea. 

We plan to initially seek approval for Pruvel for the treatment of infectious diarrhea.

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We are developing additional product candidates using our proprietary technology, including our Optimer One-Pot Synthesis, or OPopS™ drug discovery platform. OPopS is a computer-aided technology that enables the rapid and low-cost synthesis of a wide array of carbohydrate-based compounds.  Two components of the OPopS technology that allow us to synthesize new compounds are GlycoOptimization and De Novo Glycosylation.  These technologies are capable of rapidly generating drug candidates for broad therapeutic application.

We previously acquired exclusive rights to two other product candidates: OPT-88, a disease-modifying intra-articular, or within the joint, therapy for osteoarthritis which we licensed from the Scripps Research Institute, or TSRI, and OPT-822/821, a novel carbohydrate-based cancer immunotherapy which we licensed from the Memorial Sloan-Kettering Cancer Center, or MSKCC.  In October 2009, we entered into a number of transactions involving our Taiwanese subsidiary, Optimer Biotechnology, Inc., or OBI, in which we sold 40% of our existing equity in OBI to a group of new investors and, simultaneously, we and the group of new investors purchased approximately $3.7 million and $2.5 million, respectively, of new common shares of OBI.  In connection with these transactions, we assigned to OBI certain of our patent rights and know-how related to OPT-88 and OPT-822/821 and also assigned to OBI our rights and obligations under the TSRI and MSKCC agreements.  We anticipate that OBI will use the proceeds from the sale of new common shares to fund the development of OPT-88 and OPT-822/821.  Following these transactions, we maintain a 60% equity interest in OBI and have the right to receive up to $10 million in future milestone payments for each product incorporating OPT-88 or OPT-822/821 and royalties on net sales of any such products.

We were incorporated in November 1998.  Since inception, we have focused on developing our product candidates, including fidaxomicin and Pruvel.  We have never been profitable and have incurred significant net losses since our inception.  As of September 30, 2009, we had an accumulated deficit of $166.0 million.  These losses have resulted principally from costs incurred in connection with research and development activities, including the costs of clinical trial activities associated with our current lead product candidates, license fees and general and administrative expenses.  We expect to continue to incur operating losses for the next several years as we pursue the clinical development and commercialization of our product candidates, as well as acquire or in-license additional products or product candidates, technologies or businesses that are complementary to our own.

Critical Accounting Policies

Our Management’s Discussion and Analysis of our Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles in the United States.  The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and related disclosures.  Actual results could differ from those estimates. While our significant accounting policies are described in more detail in Note 2 of the Notes to Consolidated Financial Statements appearing elsewhere in this report, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements.

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Revenue Recognition

Our license and collaboration agreements contain multiple elements, including non-refundable upfront fees, payments for reimbursement of third-party research costs, payments for ongoing research, payments associated with achieving specific development milestones and royalties based on specified percentages of net product sales, if any.  We consider a variety of factors in determining the appropriate method of revenue recognition under these arrangements, such as whether the elements are separable, whether there are determinable fair values and whether there is a unique earnings process associated with each element of a contract.

Cash received in advance of services being performed is recorded as deferred revenue and recognized as revenue as services are performed over the applicable term of the agreement.

When a payment is specifically tied to a separate earnings process, revenues are recognized when the specific performance obligation associated with the payment is completed.  Performance obligations typically consist of significant and substantive milestones.  Revenues from milestone payments may be considered separable from funding for research services because of the uncertainty surrounding the achievement of milestones for products in early stages of development.  Accordingly, these milestone payments are allowed to be recognized as revenue if and when the performance milestone is achieved if they represent a substantive earnings process.

In connection with certain research collaboration agreements, revenues are recognized from non-refundable upfront fees, which we do not believe are specifically tied to a separate earnings process, ratably over the term of the agreement or the period over which we have significant involvement or perform services.  Research fees are recognized as revenue as the related research activities are performed.

With respect to revenues derived from reimbursement of direct out-of-pocket expenses for research costs associated with grants, where we act as a principal, with discretion to choose suppliers, bear credit risk and perform part of the services required in the transaction, we record revenue for the gross amount of the reimbursement. The costs associated with these reimbursements are reflected as a component of research and development expense in the consolidated statements of operations.

None of the payments that we have received from collaborators to date, whether recognized as revenue or deferred, are refundable even if the related program is not successful.

Research and Development

Research and development costs are expensed as incurred and consist primarily of costs associated with clinical trials, compensation, including stock-based compensation, and other expenses related to research and development, including personnel costs, facilities costs and depreciation.

When nonrefundable payments for goods or services to be received in the future for use in research and development activities are made, we defer and capitalize these types of payments.

22

The capitalized amounts are expensed when the related goods are delivered or the services are performed.

Accrued Clinical Trial Costs

A substantial portion of our on-going research and development activities are performed under agreements we enter into with external service providers, including clinical research organizations, or CROs, who conduct many of our research and development activities.  We accrue the costs incurred under these contracts based on factors such as estimates of work performed, milestones achieved, patient enrollment and costs historically incurred for similar contracts.  As actual costs become known, we adjust our accruals.  To date, our accruals have been within management’s estimates, and no material adjustments to research and development expenses have been recognized.  Subsequent changes in estimates may result in a material change in our accruals, which could also materially affect our results of operations.

Stock-Based Compensation

The Financial Accounting Standards Board, or FASB, authoritative guidance requires that share-based payment transactions with employees be recognized in the financial statements based on their fair value and recognized as compensation expense over the vesting period.  We used the modified prospective method and accordingly we did not restate the results of operations for the prior periods. Compensation expense of $742,000 and $431,000 was recognized in the three months ended September 30, 2009 and 2008, respectively.  Compensation expense of $2.1 million and $1.3 million was recognized in the nine months ended September 30, 2009 and 2008, respectively.

Stock-based compensation expense is estimated as of the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period. We estimate the fair value of our stock options using the Black-Scholes option-pricing model and the fair value of our stock awards based on the quoted market price of our common stock.

Estimating the fair value for stock options requires judgment, including estimating stock-price volatility, expected term, expected dividends and risk-free interest rates. The expected volatility rates are based on the historical fluctuation in the stock price since inception. The average expected term is calculated using the Simplified Method for Estimating the Expected Term.  Expected dividends are estimated based on our dividend history as well as our current projections. The risk-free interest rate for periods approximating the expected terms of the options is based on the U.S. Treasury yield curve in effect at the time of grant. These assumptions are updated on an annual basis or sooner if there is a significant change in circumstances that could affect these assumptions.

Equity instruments issued to non-employees are recorded at their fair value and are periodically revalued as the equity instruments vest and are recognized as expense over the related service period.

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Results of Operations

Comparison ofThree Months Ended September 30, 2009 and 2008

Total Revenues.  Grant revenues for the three months ended September 30, 2009 and 2008 were $176,000 and $239,000, respectively. The decrease of $63,000, or 26%, was primarily due to lower revenue from a National Institute of Health grant.

Research and Development Expense.  Research and development expense for the three months ended September 30, 2009 and 2008 was $7.2 million and $7.9 million, respectively, a decrease of $686,000, or 9%.   The decrease was primarily due to the completion of clinical trials for Pruvel in the prior year and was partially offset by an increase in expenses to prepare regulatory filings related to fidaxomicin and Pruvel.

Marketing Expense.  Marketing expense of $394,000 for the three months ended September 30, 2009 was relatively consistent with the $416,000 for the three months ended September 30, 2008.

General and Administrative Expense.  General and administrative expense for the three months ended September 30, 2009 and 2008 was $2.0 million and $1.5 million, respectively.  The increase of $485,000, or 31%, was due to higher compensation expenses, including $321,000 of stock compensation expense, an increase of $100,000 over the same period in the prior year, as well as an increase in patent and consulting expenses.

Interest Income and Other, net.  Net interest income and other for the three months ended September 30, 2009 and 2008 was $34,000 and $411,000, respectively.  The decrease was primarily due to lower interest rates on cash, cash equivalents and investments.

Comparison ofNine Months Ended September 30, 2009 and 2008

Total Revenues.  Grant revenues for the nine months ended September 30, 2009 and 2008 were $684,000 and $895,000, respectively. The decrease of $211,000, or 24%, was primarily due to the conclusion of one of two National Institutes of Health grants as well as lower revenue from another grant.

Research and Development Expense.  Research and development expense for the nine months ended September 30, 2009 and 2008 was $26.5 million and $21.0 million, respectively, an increase of $5.5 million, or 26%.   The increase was primarily due to an increase in development expenses, manufacturing scale-up expenses and expenses to prepare regulatory filings related to fidaxomicin and Pruvel.

Marketing Expense.  Marketing expense for the nine months ended September 30, 2009 and 2008 was $1.2 million and $1.7 million, respectively.  The decrease of $516,000, or 30%, was primarily due to lower medical education, tradeshow and consulting expenses.

General and Administrative Expense.  General and administrative expense for the nine months ended September 30, 2009 and 2008 was $5.9 million and $4.8 million, respectively.  The increase of $1.1 million, or 24%, was due to higher compensation expenses, including $958,000 of stock compensation expense, an increase of $275,000 over the same period in the prior year, as well as an increase in patent and consulting expenses.

24

Interest Income and Other, net.  Net interest income and other for the nine months ended September 30, 2009 and 2008 was $309,000 and $1.4 million, respectively.  The decrease was primarily due to lower interest rates on cash, cash equivalents and investments.

Liquidity and Capital Resources

Sources of Liquidity

Since inception, our operations have been financed primarily through the sale of equity securities.  Through September 30, 2009, we received gross proceeds of approximately $202.4 million from the sale of shares of our preferred and common stock as follows:

·in May 2000, we sold a total of 1.6 million shares of Series A preferred stock for proceeds of $3.4 million;

·from March 2001 to December 2001, we sold a total of 4.1 million shares of Series B preferred stock for proceeds of $32.2 million;

·in April 2005, we sold a total of 1.5 million shares of Series C preferred stock for proceeds of $12.0 million;

·from April 2005 to November 2005, we sold a total of 2.9 million shares of Series D preferred stock for proceeds of $22.3 million;

·in February 2007, we sold a total of 7.0 million shares of our common stock in connection with our initial public offering for proceeds of $49.0 million;

·in October 2007, we sold a total of 4.6 million shares of our common stock in connection with a private placement offering for proceeds of $35.9 million;

·in July 2008, we sold a total of 1.7 million shares of our common stock in a registered direct offering for proceeds of $14.7 million; and

·in March 2009, we sold a total of 3.3 million shares of our common stock and warrants to purchase up to an aggregate of 91,533 shares of our common stock in a registered direct offering for proceeds of $32.9 million.

Until required for operations, we invest a substantial portion of our available funds in money market funds, corporate debt securities, United States government instruments and other readily marketable debt instruments, all of which are investment-grade quality.  We have established guidelines relating to diversification and maturities of our investments to preserve principal and maintain liquidity.

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Cash Flows

As of September 30, 2009, cash, cash equivalents and short-term investments totaled approximately $42.5 million as compared to $39.3 million as of December 31, 2008, an increase of approximately $3.2 million.  The increase in our cash, cash equivalents and short-term investments was primarily due to the $32.9 million raised in a registered direct offering of our common stock in March 2009 offset by the use of cash for our operating expenses.

We cannot be certain if, when or to what extent we will receive cash inflows from the commercialization of our product candidates.  We expect our development expenses to be substantial and to increase over the next few years as we advance the development of our product candidates and prepare for regulatory submissions and commercialization.

In February 2007, we regained worldwide rights to fidaxomicin from Par under a prospective buy-back agreement.  We are obligated to pay Par a one-time $5.0 million milestone payment, a 5% royalty on net sales by us or our affiliates of fidaxomicin in North America and Israel, and a 1.5% royalty on net sales by us or our affiliates of fidaxomicin in the rest of the world.  In addition, in the event we license our right to market fidaxomicin in the rest of the world, we will be required to pay Par a 6.25% royalty on net revenues we receive related to fidaxomicin.  We are obligated to pay each of these royalties, if any, on a country-by-country basis for seven years commencing on the applicable commercial launch in each such country.   In connection with the exercise of our rights under the prospective buy-back agreement, Par assigned to us a supply agreement with Biocon. Under this agreement, Biocon is obligated to supply to us our requirements of the fidaxomicin active pharmaceutical ingredients for certain markets.

In June 2004, we entered into a license agreement with Nippon Shinyaku Co., Ltd. to which we acquired the non-exclusive right to import and purchase Pruvel, and the exclusive right (with the right to sublicense), within the United States, to develop, make, use, offer to sell, sell and license products suitable for consumption by humans containing Pruvel.  Under the terms of the agreement, we will be required to pay Nippon Shinyaku a milestone payment in the amount of $1.0 million upon the filing, if any, of a NDA for Pruvel in the United States.

In October 2009, we entered into certain transactions with our subsidiary, OBI, pursuant to which we assigned certain intellectual property rights and license agreements to OBI related to our OPT-88 and OPT-822/821 product candidates.  In connection with these transactions, we entered into a financing agreement with OBI and a group of new investors.  Under the terms of the financing agreement, if OBI achieves certain development milestones with respect to OPT-88 and OPT-822/821, we and the group of new investors may be required to purchase approximately an additional $8.6 million and $5.7 million, respectively, of new OBI common shares.  While we currently cannot anticipate when, if ever, OBI will achieve these development milestones, under the terms of the financing agreement, our obligation to purchase the additional OBI common shares will not occur prior to June 30, 2010.

In October 2008, our Compensation Committee adopted a Severance Benefit Plan covering certain eligible employees of the Company, including executive officers.  Pursuant to the plan, upon an involuntary termination other than for cause, an eligible employee may be entitled to receive specified severance benefits. The benefits may include cash severance payments and acceleration of stock award vesting.  The level of benefits provided under the plan depends upon an eligible employee’s position and years of service, and whether the termination is related to a change in control.

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Funding Requirements

Our future capital uses and requirements depend on numerous factors including, but not limited to, the following:

·the progress of our clinical trials, including expenses to support the trials and the milestone payments that may become payable to Par and Nippon Shinyaku;

·our ability to establish and maintain strategic collaborations, including licensing and other arrangements;

·the costs involved in prosecuting, enforcing or defending patent claims or other intellectual property rights;

·the costs and timing of regulatory approvals;

·the costs of establishing sales or distribution capabilities;

·the success of the commercialization of our products; and

·the extent to which we in-license, acquire or invest in other indications, products, technologies and businesses.

We believe that our existing cash and cash equivalents will be sufficient to meet our capital requirements for at least the next 12 months.

Until we can generate significant cash from our operations, we expect to continue to fund our operations with existing cash resources that were primarily generated from the proceeds of offerings of our equity securities and collaborations and government grants.  In addition, we may finance future cash needs through the sale of additional equity securities, strategic collaboration agreements and debt financing.  However, we may not be successful in completing future equity financings, in entering into additional collaboration agreements, in receiving milestone or royalty payments under new or existing collaboration agreements, in obtaining new government grants or in obtaining debt financing.  In addition, we cannot be sure that our existing cash and investment resources will be adequate, that financing will be available when needed or that, if available, financing will be obtained on terms favorable to us or our stockholders.  Recently, the credit markets and the financial services industry have been experiencing a period of unprecedented turmoil and upheaval characterized by the government take-over, bankruptcy, failure, collapse or sale of various financial institutions.  These events have generally made equity and debt financing more difficult to obtain, and may negatively impact our ability to complete financing transactions.  Having insufficient funds may require us to delay, scale-back or eliminate some or all of our development programs, relinquish some or even all of our rights to product candidates at an earlier stage of development or renegotiate less favorable terms than

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we would otherwise choose.  Failure to obtain adequate financing also may adversely affect our ability to operate as a going concern.  If we raise funds by issuing equity securities, substantial dilution to existing stockholders would likely result.  If we raise funds by incurring additional debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our cash and cash equivalents and short-term investments as of September 30, 2009 consisted primarily of money market funds and United States government instruments and other readily marketable debt instruments.  Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates.  The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from our investments without significantly increasing risk.  A hypothetical ten percent change in interest rates during the quarter ended September 30, 2009 would have resulted in approximately a $4,700 change in net loss. Accordingly, we would not expect our operating results or cash flows to be affected to any significant degree by a sudden change in market interest rates applicable to our securities portfolio.  In general, money market funds are not subject to market risk because the interest paid on such funds fluctuates with the prevailing interest rate.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the rules and regulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Evaluation of disclosure controls and procedures. As required by Exchange Act Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal control over financial reporting. There was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1A. Risk Factors

The risk factors set forth below with an asterisk (*) next to the title are new risk factors or risk factors containing changes, including any material changes, from the risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the SEC.

Risks Related to Our Business

We are a company with limited sources of revenue, and we are largely dependent on the success of our lead product candidate fidaxomicin and, to a lesser degree, our other lead product candidate Pruvel.*

We are a biopharmaceutical company with no products approved for commercial sale and, to date, we have not generated any revenues from product sales.  Our ability to generate future revenues depends heavily on our success in:

·developing and securing U.S. and/or foreign regulatory approvals for fidaxomicin and Pruvel and, to a lesser extent, other product candidates;

·commercializing, alone or with a partner, any product candidates for which we receive approval from the FDA; and/or comparable foreign regulatory authorities; and

·generating a pipeline of innovative product candidates utilizing our drug discovery platform or through licensing strategies.

Our product candidates will generally require extensive clinical study and evaluation, regulatory approval in multiple jurisdictions, substantial investment and significant marketing efforts before we generate any revenues from product sales.  We are not permitted to market or promote our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities.  We have not submitted an NDA, or received marketing approval for either fidaxomicin or Pruvel, and we cannot be certain that either of these product candidates will be successful in on-going or future clinical trials or receive regulatory approval.  If we do not receive regulatory approval for and successfully commercialize fidaxomicin and Pruvel, we will not generate any revenues from product sales for several years, if at all, and we may not be able to continue our operations.

We believe our initial success will be more dependent on fidaxomicin than Pruvel, because we believe that the market for the treatment of CDI is larger than the market for the treatment of infectious diarrhea.  Even if we successfully obtain regulatory approval to market fidaxomicin or Pruvel, our revenues for either drug candidate will be dependent upon the size of the markets in the territories for which we have commercial rights and our ability to successfully commercialize our drug candidates in those markets.  If the markets for the treatment of CDI or infectious diarrhea are not as significant as we estimate or we are otherwise unsuccessful in commercializing our drug candidates, our business and prospects will be harmed.

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We have incurred significant operating losses since inception and anticipate that we will incur continued losses for the foreseeable future.*

We have experienced significant operating losses since our inception in 1998.  As of September 30, 2009, we had an accumulated deficit of approximately $166.0 million.  We have generated no revenues from product sales to date.  We have funded our operations through September 30, 2009 from the sale of approximately $202.4 million of our securities and through research funding pursuant to collaborations with partners or government grants.  We expect to continue to incur substantial additional operating losses for the next several years as we advance our clinical trials and research and development initiatives, prepare submissions for regulatory approval of our lead product candidates and build our marketing and sales capabilities.  Because of the numerous risks and uncertainties associated with developing, obtaining regulatory approval for and commercializing our product candidates, we are unable to predict the extent of any future losses.  We may never successfully commercialize our product candidates and thus may never have any significant future revenues or achieve and sustain profitability.

If we fail to obtain additional financing, we may be unable to commercialize fidaxomicin and Pruvel or develop and commercialize our other product candidates, or continue our other research and development programs.*

We will require additional capital to commercialize our current lead product candidates, fidaxomicin and Pruvel.  We cannot be certain that additional funding will be available on acceptable terms, or at all.  Recently, the credit markets and the financial services industry have been experiencing a period of unprecedented turmoil and upheaval characterized by the government take-over, bankruptcy, failure, collapse or sale of various financial institutions.  These events have generally made equity and debt financing more difficult to obtain, and may negatively impact our ability to complete financing transactions.  To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution.  Any debt financing, if available, may require us to pledge our assets as collateral or involve restrictive covenants, such as limitations on our ability to incur additional indebtedness, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could negatively impact our ability to conduct our business.  If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates or one or more of our other research and development initiatives.  We also could be required to:

·seek collaborators for one or more of our current or future product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available; or

·relinquish or license on unfavorable terms our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves.

Any of the above events could significantly harm our business and prospects and could cause our stock price to decline.

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We do not currently have sufficient resources to commercialize fidaxomicin and Pruvel on our own. If we are unable to raise additional capital or are unable to effectively collaborate with one or more partners for the commercialization of fidaxomicin or Pruvel, we will not generate significant revenues from sales of these products and our business will be materially harmed.

We are dependent on third party collaborators and we may be unable to enter into future collaboration agreements or we may have disagreements with these collaborators.*

We currently plan to build our own marketing and sales force for fidaxomicin in North America and Pruvel in the United States, and we are seeking one or more partners for the commercialization of fidaxomicin outside of North America.  We cannot be certain that we will be successful in attracting any such partners.  If we were not able to find appropriate partners for the continued development and commercialization of fidaxomicin, or our other product candidates, we would either have to delay further development and commercialization initiatives,  which would harm our business and prospects, or raise significant additional funds to develop clinical and commercialization capabilities internally.

We are subject to a number of additional risks associated with our dependence on collaborations with third parties.  Conflicts may arise between us and collaborators, such as conflicts concerning the interpretation of clinical data, the achievement of milestones, the interpretation of financial provisions or the ownership of intellectual property developed during the collaboration.  If any such conflicts arise, a collaborator could act in its own self-interest, which may be adverse to our best interests.  Any such disagreement between us and a collaborator could result in one or more of the following, each of which could delay or prevent the development or commercialization of fidaxomicin, and our other product candidates, and in turn prevent us from generating sufficient revenues to achieve or maintain profitability:

·reductions in the payment of royalties or other payments we believe are due pursuant to the applicable collaboration arrangement or agreement;

·uncertainties regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations and commercializing such rights;

·actions taken by a collaborator inside or outside our collaboration which could negatively impact our rights or benefits under our collaboration; or

·unwillingness on the part of a collaborator to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities.

In addition, a collaborator may not have or devote sufficient resources to develop and commercialize our product candidates, may elect to underfund, discontinue or may not properly perform pre-clinical studies or clinical trials, or may divert resources to other programs that are potentially competitive with our product candidates.

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If we are unable to obtain FDA approval of our product candidates, we will not be able to commercialize them in the United States.*

We need FDA approval prior to marketing our product candidates in the United States.  If we fail to obtain FDA approval to market our product candidates, we will be unable to sell our product candidates in the United States, which will significantly impair our ability to generate any revenues.

This regulatory review and approval process, which includes evaluation of pre-clinical studies and clinical trials of our product candidates as well as the evaluation of our manufacturing processes and our third-party contract manufacturers’ facilities, is lengthy, expensive and uncertain.  To receive approval for a product candidate, we must, among other things, demonstrate with substantial evidence from well-controlled clinical trials that the product candidate is both safe and effective for each indication for which approval is sought.  Satisfaction of the approval requirements typically takes several years and the time needed to satisfy them may vary substantially, based on the type, complexity and novelty of the pharmaceutical product.  We cannot predict if or when we might receive regulatory approvals for any of our product candidates currently under development.  Moreover, any approvals that we obtain may not cover all of the clinical indications for which we are seeking approval, or could contain significant limitations in the form of narrow indications, warnings, precautions or contra-indications with respect to conditions of use.  In such an event, our ability to generate revenues from such products would be greatly reduced and our business would be harmed.

The FDA has substantial discretion in the approval process and may either refuse to consider our applications for substantive review or may form the opinion after review of our data that our applications are insufficient to allow approval of our product candidates.  If the FDA does not consider or approve an application that we submit, it may require that we conduct additional clinical, pre-clinical or manufacturing validation studies and submit that data before it will reconsider our application.  Depending on the extent of these or any other studies, approval of any applications that we submit may be delayed by several years, or may require us to expend more resources than we have available.  For example, we intend to rely in part on certain legacy data from a third party to support an NDA for Pruvel. If we are unable to obtain this data in a timely manner or the FDA deems this data to be insufficient, it may delay our filing of a NDA for Pruvel and could require us to complete additional studies.  It is also possible that additional studies, if performed and completed, may not be successful or considered sufficient by the FDA for approval or even to make our applications approvable.  If any of these outcomes occur, we may be forced to abandon one or more of our future applications for approval, which might significantly harm our business and prospects.

It is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain the appropriate regulatory approvals necessary for us or our collaborators to commence product sales.  Increased scrutiny by regulatory authorities may result in significant delays in obtaining regulatory approvals, as well as more stringent product labeling and post-marketing testing requirements.

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Although the FDA has granted Fast Track status to fidaxomicin and selected it for participation in a CMA Pilot 2 Program, we cannot be certain that we will receive any benefits from these designations or that the designations will expedite regulatory review or approval of fidaxomicin.  Participation in these programs will not eliminate any phase of clinical development.  Moreover, our participation in the CMA Pilot 2 Program will involve frequent scientific discussions and other interactions with the staff of the FDA during the investigational new drug phase of our development of fidaxomicin.  These frequent discussions could subject fidaxomicin to a greater level of scrutiny than it might otherwise have received or require us to make more frequent submissions and endure other burdens that would have been avoided if we had not participated in the program.  Therefore, despite any potential benefits of fidaxomicin’s Fast Track and CMA Pilot 2 Program designations, significant uncertainty remains regarding the clinical development and regulatory approval process for fidaxomicin.

Clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.*

Clinical testing is expensive and can take many years to complete, and its outcome is uncertain.  Failure can occur at any time during the clinical trial process. The results of pre-clinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. For example, results from the first fidaxomicin Phase 3 trial, while positive, may not predict results from the second Phase 3 trial which is on-going.  Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through pre-clinical studies and initial clinical testing.  In addition, the type and amount of clinical data necessary to gain regulatory approval for our product candidates may change or we may inaccurately characterize such requirements.  For example, we are preparing a Marketing Authorization Application, or MAA, for submission to the European Medicines Agency, or EMEA, for fidaxomacin based on the results from our first Phase 3 trial.  Although we currently believe that the EMEA will accept an MAA for fidaxomicin based on only one completed Phase 3 trial, we may be incorrect in this belief and may be required to resubmit our filing following the completion of our second Phase 3 trial.  Such a resubmission would involve additional delay and expense related to any approval of fidaxomicin in Europe.

Even after we complete our planned clinical trials, our product candidates could fail to receive regulatory approval for many reasons, including the following:

·the results of our clinical trials may not demonstrate to the satisfaction of or meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for any indication;

·the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;

·the results of our clinical trials may not demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

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·the results of our clinical trials may not demonstrate that a product candidate presents an advantage over existing therapies, or over placebo in any indications for which the FDA requires a placebo-controlled trial;

·the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from pre-clinical studies or clinical trials;

·the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere; and

·the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

Delays in clinical trials are common and have many causes, and any such delays could result in increased costs to us and jeopardize or delay our ability to achieve regulatory approval and commence product sales as currently contemplated.*

We have experienced and may continue to experience delays in clinical trials of our product candidates.  For example, due to slower patient enrollment rates than we initially predicted in our second of two Phase 3 trials evaluating fidaxomicin for the treatment of CDI, we now anticipate completing enrollment in this trial by the end of 2009 and reporting data in the first quarter of 2010. In addition, we are planning to conduct a registration study for other formulations and proof-of-concept clinical trials for other indications of fidaxomicin.  We also intend to conduct a Phase 4 trial of Pruvel subsequent to NDA submission to compare Pruvel to ciprofloxacin for the treatment of infectious diarrhea. We do not know whether planned clinical trials will begin on time, will need to be redesigned or will be completed on schedule, if at all.  Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval to commence a trial, in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, in obtaining institutional review board approval at each site, in recruiting suitable patients to participate in a trial, in having patients complete a trial or return for post-treatment follow-up, in adding new sites or in obtaining sufficient supplies of clinical trial materials.  Many factors affect patient enrollment, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials, clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating and whether the clinical trial design involves comparison to placebo.

We could encounter delays if prescribing physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our product candidates in lieu of prescribing existing antibiotics that have established safety and efficacy profiles or with administering placebo to patients in our placebo-controlled trials.  Further, a clinical trial may be suspended or terminated by us, our collaborators, the FDA or other regulatory authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements

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or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.  If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates may be harmed, and our ability to generate product revenues from any of these product candidates will be delayed.  In addition, any delays in completing our clinical trials will increase our costs, slow down our product development and approval process and jeopardize our ability to commence product sales and generate revenues.  Any of these occurrences may significantly harm our business, financial condition and prospects.

We may be required to suspend or discontinue clinical trials due to adverse events, adverse side effects or other safety risks that could preclude approval of our product candidates.*

Our clinical trials may be suspended at any time for a number of reasons.  We may voluntarily suspend or terminate our clinical trials if at any time we believe that they present an unacceptable risk to participants.  In addition, regulatory agencies may order the temporary or permanent discontinuation of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements or that they present an unacceptable safety risk to participants.  In the first Phase 3 clinical trial of fidaxomicin, the most common drug-related side effects reported were nausea, vomiting, constipation, anorexia, headache and dizziness.  Patients treated with Pruvel have experienced drug-related side effects including abdominal pain, diarrhea, nausea, renal toxicities, cardiac arrhythmias, photosensitivity, rash, excessive flushing of the skin and central nervous system effects, such as seizures.  The FDA recommended that we conduct a study to determine the effect, if any, of Pruvel on the prolongation of the QT interval, a condition that is associated with potentially life-threatening cardiac arrhythmias.  In response to the FDA’s recommendation, we have completed a QT interval study of Pruvel and we plan to include the data from such QT interval study in our NDA filing to the FDA.  If adverse, drug-related events are encountered or suspected, our trials would be interrupted, delayed or halted and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications.  Even if we believe our product candidates are safe, our data is subject to review by the FDA, which may disagree with our conclusions and delay or deny approval of our product candidates which would significantly harm the commercial prospects of such product candidates.  Moreover, we could be subject to significant liability if any volunteer or patient suffers, or appears to suffer, adverse side effects as a result of participating in our clinical trials.  Any of these occurrences may significantly harm our business and prospects.

We rely on third parties to conduct our clinical trials.  If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we and our collaborators may not be able to obtain regulatory approval for or commercialize our product candidates.*

We have entered into agreements with third-party CROs, such as INC Research, to provide monitors for and to manage data for our on-going clinical programs.

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We and the CROs conducting clinical trials for our product candidates are required to comply with current good clinical practices, or GCPs, regulations and guidelines enforced by the FDA for all of our products in clinical development.  The FDA enforces GCPs through periodic inspections of trial sponsors, principal investigators and trial sites.  If we or the CROs conducting clinical trials of our product candidates fail to comply with applicable GCPs, the clinical data generated in the clinical trials may be deemed unreliable and the FDA may require additional clinical trials before approving any marketing applications.  We cannot assure you that, upon inspection, the FDA will determine that any clinical trials of our product candidates comply with GCPs.  In addition, our clinical trials must be conducted with product produced under cGMP regulations, and will require a large number of test subjects.  Our failure to comply with these regulations may require us to repeat clinical trials, which would be costly and delay the regulatory approval process and commercialization of our product candidates.

Typically, the CROs conducting clinical trials of our product candidates have the right to terminate their agreements with us or our collaborators upon notice in the event of an uncured material breach.  In addition, some CROs have an ability to terminate their respective agreements with us if we fail to perform our obligations, if it can be reasonably demonstrated that the safety of the subjects participating in our clinical trials warrants such termination, if we make a general assignment for the benefit of our creditors or if we are liquidated.  We have relied substantially on INC Research to conduct the clinical trials for fidaxomicin and Pruvel.  INC Research has also subcontracted with other third-party CROs for various aspects of the clinical trials.  If any relationships with INC Research or these other third-party CROs terminate, we or our collaborators may not be able to enter into arrangements with alternative CROs or we may enter into arrangements with alternative CROs that do not have the expertise or relationships that INC Research has with government agencies.

In addition, these third-party CROs are not our employees, and we cannot control whether or not they devote sufficient time and resources to our on-going clinical programs.  These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical studies or other drug development activities, which could harm our competitive position.  If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements, or for other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.  As a result, our financial results and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

If we fail to gain and/or maintain marketing approvals from regulatory authorities in international markets for fidaxomicin and any future product candidates for which we have rights in international markets, our market opportunities will be limited.*

Sales of our product candidates outside of the United States will be subject to foreign regulatory

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requirements governing clinical trials and marketing approval.  Even if the FDA grants marketing approval for a product candidate, comparable regulatory authorities of foreign countries must also approve the marketing of the product candidate in those countries.  This is important for the commercialization of fidaxomicin for which we currently have exclusive worldwide marketing rights.  Obtaining foreign regulatory approvals could result in significant delays, difficulties and costs for us and require additional pre-clinical studies or clinical trials which would be costly and time consuming.  Regulatory requirements can vary widely from country to country and could delay the introduction of our products in those countries.  Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval will be obtained in any other country.  In addition, our failure to obtain regulatory approval in any country may delay or have negative effects on the process for regulatory approval in others.  For example, if our planned MAA for fidaxomicin is rejected or unanticipated concerns are raised by the EMEA during its review, a subsequent NDA submission for fidaxomicin could be negatively impacted. Other than Pruvel, which is sold by other parties in Japan, Italy and certain other European countries, none of our product candidates is approved for sale in any international market for which we have rights. If we fail to comply with regulatory requirements in our international markets or to obtain and maintain required approvals, our target market will be reduced and our ability to generate revenues will be diminished, which would significantly harm our business, results of operations and prospects.

We currently have no sales organization and have no experience as a company in marketing drug products.  If we are unable to expand our marketing capabilities and establish sales capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be able to generate product revenues.*

We currently have a limited marketing organization and do not have a sales organization for marketing, sales and distribution of pharmaceutical products. In order to commercialize any products, we must build our marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. We plan to build our own marketing and sales force to commercialize fidaxomicin in North America and are seeking third-party partners outside North America. We own exclusive rights to commercialize Pruvel in the United States, and we contemplate establishing our own sales force or seeking third-party partners to sell Pruvel in the United States. The establishment and development of our own sales force to market any products we may develop will be expensive and time consuming and could delay any product launch, and we cannot be certain that we will be able to successfully develop this capability. We do not currently have sufficient funds to develop a sales force and other resources that we believe would be necessary to adequately market fidaxomicin and Pruvel in the United States. We will also have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel. To the extent we rely on third parties to commercialize our products, if any, we may receive less revenues than if we commercialized these products ourselves. In addition, we may have little or no control over the sales efforts of any third parties involved in commercializing our products. In the event we are unable to develop our own marketing and sales force or collaborate with a third-party marketing and sales organization, we would not be able to commercialize our product candidates which would negatively impact our ability to generate product revenues.

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We may not be able to enter into acceptable agreements to market and commercialize fidaxomicin outside of North America or if, needed, adequately build our own marketing and sales capabilities.*

If appropriate regulatory approvals are obtained, we intend to commercialize fidaxomicin outside of North America through collaboration arrangements with third parties.  We may be unable to enter into collaboration arrangements in international markets.  In addition, there can be no guarantee that if we enter into these collaboration arrangements with other parties that they will be successful or result in more revenues than we could obtain by marketing fidaxomicin on our own. If we are unable to enter into collaboration arrangements for our products or develop an effective international sales force, our ability to generate product revenues would be limited, which would adversely affect our business, financial condition, results of operations and prospects. If we are unable to enter into such collaboration arrangements, we may need to develop our own marketing and sales force to market fidaxomicin in a number of countries in Europe and Latin America to hospital-based and long-term care physicians.  These efforts may not be successful as we have no relationships among such hospital-based and long-term care physicians and do not currently have sufficient funds to develop an adequate sales force in these regions.  There is no guarantee that we will be able to develop an effective international sales force to successfully commercialize our products in these international markets.  If we cannot commercialize fidaxomicin, we will have to rely solely on Pruvel and earlier stage product candidates for any future revenues, and our ability to achieve and sustain profitability will be materially harmed.

If our product candidates are unable to compete effectively with branded and generic antibiotics, our commercial opportunity would be reduced or eliminated.*

If approved, our lead product candidates will compete against both branded antibiotic therapies, such as Vancocin Pulvules with respect to fidaxomicin and Xifaxan®/rifaxamin with respect to Pruvel, and generic antibiotics such as metronidazole and oral vancomycin with respect to fidaxomicin and ciprofloxacin with respect to Pruvel.  In addition, we anticipate that fidaxomicin will compete with other antibiotic and anti-infective product candidates currently in development for the treatment of CDI, such as Xifaxan®/rifaxamin. Many of these products have been or will be developed and marketed by major pharmaceutical companies, who have significantly greater financial resources and expertise in research and development, pre-clinical testing, conducting clinical trials, obtaining regulatory approvals, manufacturing and marketing approved products than we do.  As a result, these companies may obtain regulatory approval more rapidly than we are able to and may be more effective in selling and marketing their products as well.  Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.

We anticipate that, if approved, fidaxomicin and Pruvel will face increasing competition in the form of generic versions of branded products of competitors that will lose their patent exclusivity.  For example, fidaxomicin, if approved, will immediately face steep competition from an inexpensive generic form of metronidazole.  Fidaxomicin would currently face generic oral vancomycin competition in Europe and in the future may face competition from generic oral vancomycin in the United States as well.  Generic antibiotic therapies typically are sold at lower

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prices than branded antibiotics and are generally preferred by managed care providers of health services.  For example, because metronidazole is sold at such a low price, we believe it will be difficult to sell fidaxomicin as a first-line therapy for the treatment of CDI.  If we are unable to demonstrate to physicians and patients that, based on experience, clinical data, side-effect profiles and other factors, our products are preferable to these generic antibiotic therapies, we may never generate meaningful product revenues.  In addition, many antibiotics experience bacterial resistance over time because of their continued use.  There can be no guarantee that bacteria would not develop resistance to fidaxomicin, Pruvel or any of our other product candidates.  Our commercial opportunity would also be reduced or eliminated if our competitors develop and commercialize generic or branded antibiotics that are safer, more effective, have fewer side effects or are less expensive than our product candidates.

We currently depend, and will in the future continue to depend, on third parties to manufacture our product candidates, including fidaxomicin and Pruvel.  If these manufacturers fail to provide us and our collaborators with adequate supplies of clinical trial materials and commercial product or fail to comply with the requirements of regulatory authorities, we may be unable to develop or commercialize our products.*

We outsource all manufacturing of clinical trial supplies of our product candidates to third parties.  We seek to establish long-term supply arrangements with third-party contract manufacturers.  We intend to continue outsourcing the manufacture of our product candidates to third parties for any future clinical trials and large-scale commercialization of any product candidates that receive regulatory approval and become commercial drugs.

Our ability to develop and commercialize fidaxomicin and Pruvel and any other product candidates depends in part on our ability to arrange for collaborators or other third parties to manufacture our products at a competitive cost, in accordance with strictly enforced regulatory requirements and in sufficient quantities for clinical testing and eventual commercialization.  We have not yet manufactured commercial batches of fidaxomicin, Pruvel or any of our other product candidates.  Collaborators or third-party manufacturers that we select to manufacture our product candidates for clinical testing or on a commercial scale may encounter difficulties with the small- and large-scale formulation and manufacturing processes required for such manufacture.  Such difficulties could result in delays in clinical trials, regulatory submissions and approvals, or commercialization of our product candidates.  The inability of us or our collaborators to enter into and maintain agreements with third-party manufacturers on acceptable terms would cause shortages of clinical trial supplies of our product candidates, thereby delaying or preventing regulatory approval and/or commercialization of the affected product candidate, and adversely affecting our ability to generate revenues.  Further, development of large-scale manufacturing processes will require additional validation studies, which the FDA must review and approve, and the time it will take us or a third party manufacturer to develop such large-scale processes and capabilities may delay any product launch following regulatory approval.  Even if we are able to establish additional or replacement manufacturers, identifying these sources and entering into definitive supply agreements and obtaining regulatory approvals may involve a substantial amount of time and cost and such supply arrangements may not be available on acceptable economic terms.

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In addition, we, our collaborators and other third-party manufacturers of our products must comply with strictly enforced current good manufacturing practices, or cGMP, requirements enforced by the FDA through its facilities inspection program.  These requirements include quality control, quality assurance and the maintenance of records and documentation.  We currently rely on Biocon to manufacture fidaxomicin active pharmaceutical ingredient and rely on Patheon, Inc. to manufacture the drug product supplies.  As such, Biocon and Patheon will be subject to ongoing periodic unannounced inspections by the FDA and other agencies for compliance with current cGMP, and similar foreign standards. We also rely on Nippon Shinyaku, which contracts with Juzen, as well as Angelini and Patheon, to manufacture Pruvel drug supplies.  The manufacturing facilities of Biocon, Juzen and Patheon have been inspected and approved by the FDA for other companies’ drug products; however, none of Biocon’s, Juzen’s nor Patheon’s facilities have yet been inspected by the FDA for the manufacture of our drug supplies.  Angelini’s facilities have not been inspected or approved by the FDA.  We or other third-party manufacturers of our products may be unable to comply with cGMP requirements and with other FDA, state, local and foreign regulatory requirements.  We and our collaborators have little control over third-party manufacturers’ compliance with these regulations and standards.  A failure to comply with these requirements by our third-party manufacturers, including Biocon, Juzen, Angelini, and Patheon could result in the issuance of untitled letters and/or warning letters from authorities, as well as sanctions being imposed on us, including fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall or withdrawal of product approval.  In addition, we have no control over these manufacturers’ ability to maintain adequate quality control, quality assurance and qualified personnel.  If the safety of any quantities supplied by third parties is compromised due to their failure to adhere to applicable laws or for other reasons, we may not be able to obtain or maintain regulatory approval for or successfully commercialize one or more of our product candidates, which would significantly harm our business and prospects.

The commercial success of our product candidates will depend upon attaining significant market acceptance of these product candidates among physicians, patients, healthcare payors and the medical community.*

Even if our product candidates are approved by the appropriate regulatory authorities for marketing and sale, physicians may not prescribe our product candidates, which would prevent us from generating revenues or becoming profitable.  Market acceptance of fidaxomicin, Pruvel and any of our future product candidates by physicians, patients and healthcare payors will depend on a number of factors, many of which are beyond our control, including:

·the clinical indications for which the product candidate is approved;

·acceptance by physicians and patients of each product candidate as a safe and effective treatment;

·perceived advantages over alternative treatments;

·the cost of treatment in relation to alternative treatments, including numerous generic antibiotics;

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·the extent to which the product candidate is approved for inclusion on formularies of hospitals and managed care organizations;

·the extent to which bacteria develops resistance to the product candidate, thereby limiting its efficacy in treating or managing infections;

·whether the product candidate is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy for particular infections;

·the availability of adequate reimbursement by third parties, such as insurance companies and other healthcare payors;

·limitations or warnings contained in a product’s FDA-approved labeling;

·relative convenience and ease of administration; and

·prevalence and severity of adverse side effects.

Because fidaxomicin is a differentiated antibiotic for the treatment of CDI, it may encounter additional hurdles to market acceptance by physicians, who may be skeptical about its clinical benefits, or healthcare payors, who may resist reimbursing a premium-priced therapeutic particularly in light of the availability of generic alternatives.

We plan to target our marketing of Pruvel primarily to high-prescribing physicians of antibiotics for infectious diarrhea, including those at travel clinics.  Because of the number of these physicians in the United States, we will be required to expend significant time and resources to obtain broad market acceptance of Pruvel among these physicians.  We do not have experience in marketing to this population of physicians and do not currently have the resources to be able to conduct such marketing efforts on our own.  As such, we may not be successful in any of these marketing efforts which would limit the commercial success of Pruvel.

In addition, in July 2008 the FDA notified makers of fluoroquinolone antimicrobial drugs for systemic use that a boxed warning is necessary for those products due to the risk of tendonitis and tendon rapture.  As prulifloxacin is a fluoroquinolone antibiotic it may be required to carry a black box warning.  Although these risks have been described for years on the product label of many fluoroquinolones, the increased awareness of this risk may impact the market potential for the fluoroquinolone class of antibiotics, including prulifloxacin.  Furthermore, because prulifloxacin has already been marketed by other companies outside the United States to treat a wide range of bacterial infections, including infectious diarrhea, urinary tract infections and respiratory tract infections, patients may be able to obtain prulifloxacin from these other companies, and not from us, if prulifloxacin is approved in the market where the patient is located.  We have rights to Pruvel only in the United States.  These patients may obtain prulifloxacin in these other markets from other companies even if these patients are from the United States.

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If we fail to develop and commercialize other products or product candidates, we may be unable to grow our business.*

A key element of our strategy is to commercialize a portfolio of new anti-infective products in addition to fidaxomicin and Pruvel.  As a significant part of our growth strategy, we intend to develop and commercialize additional products and product candidates through our discovery research program using our proprietary technology, including OPopS.  The success of this strategy depends upon our ability to identify, select and acquire pharmaceutical product candidates and products that fit into our development plans on terms that are acceptable to us. To supplement this strategy, we may also obtain rights to additional product candidates from third parties through acquisition or in-licensing transactions.

Any product candidate we identify or to which we acquire rights will likely require additional development efforts prior to commercial sale, including pre-clinical studies, extensive clinical testing and approval by the FDA and applicable foreign regulatory authorities.  All product candidates are prone to the risks of failure that are inherent in pharmaceutical product development, including the possibility that the product candidate will not be shown to be sufficiently safe and/or effective for approval by regulatory authorities.  In addition, we cannot assure you that any such products that are approved will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace or be more effective than other commercially available alternatives.

A significant portion of the research that we are conducting involves new and unproven technologies.  Research programs to identify new disease targets and product candidates require substantial technical, financial and human resources whether or not we ultimately identify any candidates.  Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development.

If we are unable to develop suitable potential product candidates through internal research programs or by obtaining rights to novel therapeutics from third parties, our business and prospects will suffer.

Our focus on drug discovery and development using our technology platform, including our patented proprietary OPopS drug discovery platform, is novel and unique.  As a result, we cannot be certain that our product candidates will produce commercially viable drugs that safely and effectively treat infectious diseases or other diseases.  To date, our technology platform has yielded only a small number of anti-infective product candidates.  In addition, we do not have significant clinical data with respect to any of these potential product candidates.  Even if we are successful in completing clinical development and receiving regulatory approval for one commercially viable drug for the treatment of one disease using our technology platform and carbohydrate chemistry focus, we cannot be certain that we will also be able to develop and receive regulatory approval for other drug candidates for the treatment of other forms of that disease or other diseases.  If we fail to develop and commercialize viable drugs using our platform and specialized focus, we will not be successful in developing a pipeline of potential product candidates to follow fidaxomicin and Pruvel, and our business prospects would be significantly harmed.

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Our future growth depends on our ability to identify and acquire or in-license products.  If we do not successfully identify and acquire or in-license related product candidates or integrate them into our operations, we may have limited growth opportunities.*

We in-licensed the U.S. rights to Pruvel from Nippon Shinyaku who, along with Meiji-Seika Kaisha Ltd., conducted the initial development of this product candidate.  An important part of our business strategy is to continue to develop a pipeline of product candidates by acquiring or in-licensing products, businesses or technologies that we believe are a strategic fit for our business.  Future in-licenses or acquisitions, however, may entail numerous operational and financial risks, including:

·exposure to unknown liabilities;

·disruption of our business and diversion of our management’s time and attention to develop acquired products or technologies;

·incurrence of substantial debt or dilutive issuances of securities to pay for acquisitions;

·higher than expected acquisition and integration costs;

·increased amortization expenses;

·difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel;

·impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and

·inability to retain key employees of any acquired businesses.

We have limited resources to identify and execute the acquisition or in-licensing of third-party products, businesses and technologies and integrate them into our current infrastructure.  In particular, we may compete with larger pharmaceutical companies and other competitors in our efforts to establish new collaborations and in-licensing opportunities.  These competitors likely will have access to greater financial resources than us and may have greater expertise in identifying and evaluating new opportunities.  Moreover, we may devote resources to potential acquisitions or in-licensing opportunities that are never completed, or we may fail to realize the anticipated benefits of such efforts.

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Our ability to pursue the development and commercialization of Pruvel, our other product candidates and our future product candidates depends upon the continuation of our licenses from third parties.*

Our license agreement with Nippon Shinyaku provides us with an exclusive license to develop and commercialize Pruvel for any indication in the United States, with a right to sublicense to third parties.  In the event Nippon Shinyaku is not able to supply us with Pruvel, the license agreement provides us with a non-exclusive, worldwide right and license to manufacture or have Pruvel manufactured for us.  Either we or Nippon Shinyaku may terminate the license agreement immediately upon the bankruptcy or dissolution of the other party or upon a breach of any material provision of the agreement if the breach is not cured within 60 days following written notice.  In addition, we are entitled to terminate the agreement in the event that the FDA compels us to cease sales of Pruvel in the United States.  If our license agreement with Nippon Shinyaku terminates, we will lose our rights to develop, manufacture and commercialize Pruvel and our potential revenues would be limited.  Similarly, if our agreement with the Scripps Research Institute, or TSRI, for the license of our OPopS technology is terminated, we will not be able to further develop future product candidates using our OPopS technology.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.

We face an inherent risk of product liability lawsuits related to the testing of our product candidates, and will face an even greater risk if product candidates are introduced commercially.  An individual may bring a liability claim against us if one of our product candidates causes, or merely appears to have caused, an injury.  If we cannot successfully defend ourselves against the product liability claim, we may incur substantial liabilities.  Regardless of merit or eventual outcome, liability claims may result in:

·decreased demand for our product candidates;

·injury to our reputation;

·termination of clinical trial sites or entire clinical trial programs;

·withdrawal of clinical trial participants;

·significant litigation costs;

·substantial monetary awards to or costly settlement with patients;

·product recalls;

·loss of revenues; and

·the inability to commercialize our product candidates.

We may become dependent upon consumer perceptions of us and the safety and quality of our product candidates.  We could be adversely affected if we or our product candidates are subject to negative publicity.  We could also be adversely affected if any of our potential products or any similar products distributed by other companies prove to be, or are asserted to be, harmful to consumers.  Also, because of our dependence upon consumer perceptions, any adverse publicity

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associated with illness or other adverse effects resulting from consumers’ use or misuse of our potential products or any similar products distributed by other companies could have a material adverse impact on our results of operations.

We have global clinical trial liability insurance that covers our clinical trials up to a $10.0 million annual aggregate limit.  Our current or future insurance coverage may prove insufficient to cover any liability claims brought against us.  We intend to expand our insurance coverage to include the sale of commercial products if marketing approval is obtained for our product candidates, which would increase our insurance premiums.  Because of the increasing costs of insurance coverage, we may not be able to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise.

Even if we receive regulatory approval for our product candidates, we will be subject to ongoing significant regulatory obligations and oversight.

Even if we receive regulatory approval to sell our product candidates, the FDA and foreign regulatory authorities will likely impose significant restrictions on the indicated uses or marketing of such products, or impose ongoing requirements for potentially costly post-approval studies.  In addition, following any regulatory approval of our product candidates, we and our collaborators will be subject to continuing regulatory obligations, such as requirements for storage, recordkeeping and safety reporting, and additional post-marketing obligations, including regulatory oversight of the labeling, packaging, promotion and marketing of our products.  If we or our collaborators become aware of previously unknown problems with any of our product candidates in the United States or overseas or at our third-party manufacturers’ facilities, a regulatory agency may impose restrictions on our products, our third-party manufacturers or on us, including requiring us to reformulate our products, conduct additional clinical trials, make changes in the labeling of our products, implement changes to, or obtain re-approvals of, our third-party manufacturers’ facilities, or withdraw the product from the market.  In addition, we or our collaborators may experience a significant drop in the sales of the affected products and our product revenues will be reduced, our reputation in the marketplace may suffer and we may become the target of lawsuits, including class action suits.  Moreover, if we or our collaborators or third-party manufacturers fail to comply with applicable regulatory requirements, we may be subject to civil or criminal fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, costly new manufacturing requirements and criminal prosecution.  Any of these events could harm or prevent sales of the affected products and reduce our related revenues or could substantially increase the costs and expenses of commercializing and marketing these products, which would significantly harm our business, financial condition and prospects.

If we fail to attract and retain senior management and key scientific personnel, we may be unable to successfully develop our product candidates, conduct our clinical trials and commercialize our product candidates.*

Our success depends in part on our continued ability to attract, retain and motivate highly qualified management, clinical and scientific personnel and on our ability to develop and maintain important relationships with leading academic institutions, clinicians and scientists.

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We are highly dependent on our chief executive officer, and the other principal members of our executive and scientific teams. The unexpected loss of the service of any of these persons may significantly delay or prevent the achievement of research, development, commercialization and other business objectives.  Replacing key employees may be difficult and costly and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop and commercialize pharmaceutical products successfully.  We do not maintain “key person” insurance policies on the lives of these individuals or the lives of any of our other employees.  We employ these individuals on an at-will basis and their employment can be terminated by us or them at any time, for any reason and with or without notice.

We will need to hire additional personnel as we expand our clinical development and commercial activities.  We may not be able to attract or retain qualified management and scientific personnel on acceptable terms in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses, particularly in the San Diego, California area.  If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience constraints that will impede significantly the achievement of our research and development objectives, our ability to raise additional capital and our ability to implement our business strategy.  In particular, if we lose any members of our senior management team, we may not be able to find suitable replacements, and our business and prospects may be harmed as a result.

We will need to increase the size of our organization, and we may experience difficulties in managing growth.*

We are a small company with 68 employees as of October 30, 2009.  To continue our clinical trials and commercialize our product candidates, we will need to expand our employee base for managerial, operational, marketing, sales, financial and other resources.  Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees and may take time away from running other aspects of our business, including development and commercialization of our product candidates.  Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.  To that end, we must be able to:

·manage our development efforts effectively;

·manage our current clinical trials effectively;

·integrate additional management, administrative and manufacturing personnel;

·build a marketing and sales organization; and

·maintain sufficient administrative, accounting and management information systems and controls.

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We may not be able to accomplish these tasks, and accordingly, may not achieve our research, development and commercialization goals.  Our failure to accomplish any of these goals could harm our financial results and prospects.

Third-party payor coverage and reimbursement may be insufficient or unavailable altogether for our product candidates, which could diminish our sales or affect our ability to sell our products profitably.

Market acceptance and sales of our product candidates will depend on reimbursement policies and may be affected by future healthcare reform measures.  Government third-party payors, such as the Medicare and Medicaid programs, and private payors, including health maintenance organizations, decide which drugs they will pay for and establish reimbursement levels for these drugs. Because third-party payors increasingly are challenging prices charged and the cost-effectiveness of medical products, significant uncertainty exists as to the ability of our product candidates to receive adequate coverage and reimbursement.  We cannot be sure that third-party payors will place our product candidates on approved formularies or that reimbursement will be available in whole or in part for any of our product candidates.  Also, we cannot be sure that insufficient reimbursement amounts will not reduce the demand for, or the price of, our products, if approved.

Many healthcare providers, such as hospitals, receive a fixed reimbursement amount per procedure or other treatment therapy, and these amounts are not necessarily based on the actual costs incurred.  As a result, these healthcare providers may choose only the least expensive therapies regardless of efficacy.  We cannot guarantee that our product candidates will be the least expensive alternative and thus providers may decide not to use them or buy them for treatment.

We have not commenced efforts to have our product candidates reimbursed by government or third-party payors.  If reimbursement is not available or is available only to limited levels, we may not be able to commercialize our products successfully or at all, which would harm our business and prospects.

Recent proposed legislation may permit re-importation of drugs from foreign countries into the United States, including foreign countries where the drugs are sold at lower prices than in the United States, which could materially adversely affect our operating results and our overall financial condition.

We may face competition for our products from lower priced products from foreign countries that have placed price controls on pharmaceutical products.  Imports from Canada and elsewhere may continue to increase due to market and political forces, and the limited enforcement resources of the FDA, the U.S. Customs Service, and other government agencies.  For example, U.S. Customs Service generally does not prevent individuals from importing from Canada less than a 90-day supply of a prescription drug for personal use, when the drug otherwise complies with the Federal Food, Drug and Cosmetic Act.  Further, several states and local governments have implemented importation schemes for their citizens, and, in the absence of federal action to curtail such activities, we expect other states and local governments to launch importation efforts.  The importation of foreign products that compete with our own product candidates could negatively impact our business and prospects.

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Current healthcare laws and regulations and future legislative or regulatory reforms to the healthcare system may affect our ability to sell our product candidates profitably.*

In both the United States and certain foreign jurisdictions, there have been, and we anticipate there will continue to be, a number of legislative and regulatory changes to the healthcare system that could impact our ability to sell our products profitably.  We cannot be certain that fidaxomicin and Pruvel or other current or future drug candidates will successfully be placed on the list of drugs covered by particular health plan formularies, nor can we predict the negotiated price for our drug candidates, which will be determined by market factors. Many states have also created preferred drug lists and include drugs on those lists only when the manufacturers agree to pay a supplemental rebate.  If fidaxomicin and Pruvel or other current or future drug candidates are not included on these preferred drug lists, physicians may not be inclined to prescribe them to their Medicaid patients, thereby diminishing the potential market for our products.

As a result of legislative proposals and the trend towards cost-effectiveness criteria and managed healthcare in the United States, third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new drugs.  They may also refuse to provide any coverage of uses of approved products for medical indications other than those for which the FDA has granted market approvals.  As a result, significant uncertainty exists as to whether and how much third-party payors will reimburse for newly-approved drugs, which in turn will put pressure on the pricing of drugs.  Further, we do not have experience in ensuring approval by applicable third-party payors outside of the United States for reimbursement of our products.  The availability of numerous generic antibiotics at lower prices than branded antibiotics can also be expected to substantially reduce the likelihood of reimbursement for fidaxomicin and Pruvel.  We also anticipate pricing pressures in connection with the sale of our products due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative proposals.

We must comply with federal and state “fraud and abuse” laws, and, if we are unable to fully comply with such laws, we could face substantial penalties, which may adversely affect our business, financial condition and results of operations.

We are subject to various federal and state laws pertaining to healthcare fraud and abuse, including anti-kickback laws, the False Claims Act, the Foreign Corrupt Practices Act and state laws requiring reporting and certification under comprehensive compliance programs governing our financial relationships with healthcare providers.  Violations of these laws are punishable by criminal and civil sanctions, including, in some instances, exclusion from participation in federal and state healthcare programs, including Medicare and Medicaid, and the curtailment or restructuring of operations.  We believe that our operations are in material compliance with such laws and we are aware of the need to increase our compliance resources if we begin marketing products.  However, because of the far-reaching nature of these laws, there can be no assurance that we would not be required to alter one or more of our practices to be in compliance with these laws.  In addition, there can be no assurance that the occurrence of one or more violations of these laws or regulations would not result in a material adverse effect on our financial condition and results of operations.

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Our business involves the use of hazardous materials and we and our third-party manufacturers must comply with environmental laws and regulations, which can be expensive and restrict how we do business.

Our third-party manufacturers’ activities and, to a lesser extent, our own activities involve the controlled storage, use and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds.  We and our manufacturers are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials.  Although we believe that the safety procedures for handling and disposing of these materials comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials.  We currently have insurance coverage in the amount of approximately $250,000 for damage claims arising from contamination on our property.  These amounts may not be sufficient to adequately protect us from liability for damage claims relating to contamination.  If we are subject to liability exceeding our insurance coverage amounts, our business and prospects would be harmed.  In the event of an accident, state or federal authorities may also curtail our use of these materials and interrupt our business operations.

Our business and operations would suffer in the event of computer, telecommunications or other system failure.*

Despite the implementation of security measures, our internal computer systems are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.  Any system failure, accident or security breach that causes interruptions in our operations could result in a material disruption of our drug development programs.  For example, the loss of clinical trial information from completed or ongoing clinical trials for fidaxomicin or Pruvel, which is maintained by our third-party CRO, could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.  To the extent that any disruption or security breach results in a loss or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we may incur liability and the further development of our product candidates may be delayed.

Risks Related to Our Intellectual Property

It is difficult and costly to protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection.*

Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of the use, formulation and structure of our product candidates, and the methods used to manufacture them, as well as successfully defending these patents against third-party challenges, including those from generic drug manufacturers.  Our ability to protect our product candidates from unauthorized making, using, selling, offering to sell or importing by

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third parties is dependent upon the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.

The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved.  No consistent policy regarding the breadth of claims allowed in biotechnology patents has emerged to date in the United States.  The biotechnology patent environment outside the United States is even more uncertain.  Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property.  Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our licensed patents, our patents or in third-party patents.

The degree of future protection for our proprietary rights is uncertain, because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.  For example:

·others may be able to make compounds that are similar to our product candidates but that are not covered by the claims of our pending patent applications or licensed patents, or for which we are not licensed under our license agreements;

·others may be able to make competing pharmaceutical formulations containing our product candidates or components of our product formulations that are either not covered by the claims of our licensed patents, not licensed to us under our license agreements or are subject to patents that expire;

·we or our licensors might not have been the first to make the inventions covered by our pending patent applications or the pending patent applications and issued patents of our licensors;

·we or our licensors might not have been the first to file patent applications for these inventions;

·others may independently develop similar or alternative technologies or duplicate any of our technologies;

·it is possible that our pending patent applications or our licensed patent applications will not result in issued patents;

·our pending patent applications or the pending patent applications and issued patents of our licensors may not provide us with any competitive advantages, may be designed around by our competitors, including generic drug companies, or may be held invalid or unenforceable as a result of legal challenges by third parties;

·we may not develop additional proprietary technologies that are patentable; or

·the patents of others may have an adverse effect on our business.

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In addition, to the extent we are unable to obtain and maintain patent protection for our product candidates or in the event such patent protection expires, it may no longer be cost effective to extend our portfolio by pursuing additional development of a product candidate for follow-on indications.

We have filed 12 patent applications related to fidaxomicin, one of which has resulted in the issuance of a polymorph patent and one of which has resulted in a manufacturing patent, from the United States Patent and Trademark Office, or U. S. PTO, and ten of which are pending.

These patent applications related to fidaxomicin encompass various topics relating to:

·composition of matter for fidaxomicin (issued in Taiwan);

·composition of matter for fidaxomicin related substances and use for CDI;

·polymorphic forms (issued in U.S.);

·manufacturing processes (issued in U.S. and  in Australia);

·treatment of diseases;

·formulation; and

·fidaxomicin related compounds, including metabolites.

If we are unable to obtain a composition of matter patent, our competitors, including generic drug companies, may be able to design other similar formulations of the active ingredient of fidaxomicin.  Furthermore, even though the manufacturing process patent has issued, and even if the formulation patent application results in an issued patent, our competitors, including generic drug companies, may be able to design around our manufacturing processes or formulation for fidaxomicin.  As a result, our competitors may be able to develop competing products. In addition, we currently plan to submit an NDA for Pruvel for the treatment of infectious diarrhea in 2010.  The composition of matter patent covering Pruvel expired in February 2009. Although in some cases the U.S. PTO will grant an extension of a patent term where the related product is subject to FDA approval, this extension was unavailable to us with respect to the Pruvel composition of matter patent because we did not submit an NDA for Pruvel prior to the expiration of this patent.    There are currently no other active issued patents which would prevent third parties from potentially marketing Pruvel in the United States.  Therefore, we will likely rely on one or more regulatory marketing exclusivities for Pruvel in the United States.  Specifically, if our NDA for Pruvel is approved, we expect to receive a five-year period of marketing exclusivity under the Hatch-Waxman Act. This exclusivity period is available to the first applicant to gain approval of an NDA for a new chemical entity, or NCE, that has not previously been approved as an active ingredient under Section 505(b) of the Food Drug and Cosmetic Act, or FDCA.  While we expect that the NCE exclusivity period will be available for Pruvel, if we or Nippon Shinyaku are unsuccessful in obtaining additional patents related to

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Pruvel, we may face generic competition in the United States five years after our NDA for Pruvel is approved by the FDA. Our partner, Nippon Shinyaku, has recently received a notice of allowance from the U.S. PTO of a Pruvel-related patent, which covers the polymorphic form of the key intermediate in the manufacturing process for Pruvel.  Despite the notice of allowance, Nippon Shinyaku may not ultimately receive the polymorph patent or the patent may later be challenged by a third party or fail to prevent a third part from producing and marketing a generic form of Pruvel in the United States.  If we are unable to obtain marketing exclusivity beyond five years from the approval of our NDA, our potential revenues from Pruvel sales in the U.S. will be limited.

We depend, in part, on our licensors and collaborators to protect a portion of our proprietary rights.  In such cases, our licensors and collaborators may be primarily or wholly responsible for the maintenance of patents and prosecution of patent applications relating to important areas of our business.  For example, Nippon Shinyaku and TSRI are responsible for the maintenance of patents and prosecution of patent applications relating to Pruvel and our OPopS technology, respectively.  We may also be dependent on Par to provide technical support for patent applications relating to fidaxomicin.  If any of these parties fail to adequately protect these product candidates with issued patents, our business and prospects would be significantly harmed.

Under our agreement with Nippon Shinyaku, in the event Nippon Shinyaku fails to take all steps necessary to seek extension of the patents licensed to us in the United States 180 days after we request such action be taken, then we have the right to take all necessary actions to extend the licensed patents.  Our agreements with TSRI and Par do not have explicit provisions regarding our rights to take necessary action with respect to maintenance of patents and prosecution of patent applications nor do such agreements provide us with any legal recourse in the event such parties do not so maintain and/or prosecute.  If any of these parties or others on which we rely for patent maintenance and prosecution fail to adequately maintain patents and prosecute patent applications relating to technology licensed to or from us, we may be required to take further action on our own to protect this technology.  However, we may not be successful in maintaining such patents or prosecuting such patent applications and if so, our business and prospects would be significantly harmed.

We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable.  However, trade secrets are difficult to protect.  Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our information to competitors.  Enforcing a claim that a third-party entity illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable.  In addition, courts outside the United States are sometimes less willing to protect trade secrets.  Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.

If we or our licensors fail to obtain or maintain patent protection or trade secret protection for our product candidates or our technologies, third parties could use our proprietary information, which could impair our ability to compete in the market and adversely affect our ability to generate revenues and attain profitability.

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We may incur substantial costs as a result of litigation or other proceedings relating to our patent, trademark and other intellectual property rights, and we may be unable to protect our rights to, or use, our technology.*

If we choose to go to court to stop someone else from using our inventions, that individual or company has the right to ask the court to rule that the underlying patents are invalid and/or should not be enforced against that third party.  These lawsuits are expensive and would consume time and other resources even if we were successful in stopping the infringement of these patents.  There is also the risk that, even if the validity of these patents is upheld, the court will refuse to stop the other party on the ground that such other party’s activities do not infringe our rights to these patents.

Furthermore, a third party may claim that we or our manufacturing or commercialization partners are using inventions covered by the third party’s patent rights and may go to court to stop us from engaging in our normal operations and activities, including making, using or selling our product candidates.  These lawsuits are costly and could affect our results of operations and divert the attention of managerial and technical personnel.  There is a risk that a court would decide that we or our commercialization partners are infringing the third party’s patents and would order us or our partners to stop the activities covered by the patents.  In addition, there is a risk that a court will order us or our partners to pay the other party damages for having violated the other party’s patents.  We have indemnified our commercial partners against patent infringement claims and thus would be responsible for any of their costs associated with such claims and actions.  The biotechnology industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use.  The coverage of patents is subject to interpretation by the courts and the interpretation is not always uniform.  If we are sued for patent infringement, we would need to demonstrate that our products or methods of use either do not infringe the patent claims of the relevant patent and/or that the patent claims are invalid, and we may not be able to do this.  Proving invalidity, in particular, is difficult since it requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.

Although we have conducted searches of third-party patents with respect to fidaxomicin and Pruvel, these searches may not have identified all third-party patents relevant to those products and we have not conducted an extensive search of patents issued to third parties with respect to our other product candidates.  Consequently, no assurance can be given that third-party patents containing claims covering our products, technology or methods do not exist, have not been filed, or could not be filed or issued.  Because of the number of patents issued and patent applications filed in our technical areas or fields, we believe there is a risk that third parties may allege they have patent rights encompassing our products, technology or methods.  In addition, we have not conducted an extensive search of third-party trademarks, so no assurance can be given that such third-party trademarks do not exist, have not been filed, could not be filed or issued, or could not exist under common trademark law.  While we have filed a trademark application for the names “Optimer”, “Optimer Pharmaceuticals” and “Pruvel”, we are aware that the name “Optimer” has been registered as a trademark with the U.S. PTO by more than one

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third party, including one in the biotechnology space.  As such, we believe there is a significant risk that third parties may allege they have trademark rights encompassing the names for which we have applied for protection.

Because some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our licensors’ issued patents or our pending applications or our licensors’ pending applications, or that we or our licensors were the first to invent the technology.  Our competitors may have filed, and may in the future file, patent applications covering technology similar to ours.  Any such patent application may have priority over our or our licensors’ patent applications and could further require us to obtain rights to issued patents covering such technologies.  If another party has filed a U.S. patent application on inventions similar to ours, we may have to participate in an interference proceeding declared by the U.S. PTO to determine priority of invention in the United States.  The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our U.S. patent position with respect to such inventions.

Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.  In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

Risks Related to the Securities Market and Ownership of Our Common Stock

The market price of our common stock may be highly volatile.*

Before our initial public offering in February 2007, there was no public market for our common stock.  We cannot assure you that an active trading market will exist for our common stock. You may not be able to sell your shares quickly or at the market price if trading in our common stock is not active.

The trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in price in response to various factors, many of which are beyond our control, including:

·general economic and market conditions and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including the current turmoil in the credit market and financial services industry;

·announcement of FDA or comparable foreign regulatory agency approval or non-approval of our product candidates, or specific label indications for their use, or delays in the FDA or comparable foreign regulatory agency review process;

·actions taken by the FDA or other regulatory agencies with respect to our product candidates, clinical trials, manufacturing process or marketing and sales activities;

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·changes in laws or regulations applicable to our products, including but not limited to clinical trial requirements for approvals;

·the success of our development efforts and clinical trials, particularly with respect to fidaxomicin and Pruvel;

·announcements by our collaborators with respect to clinical trial results and communications from the FDA or comparable foreign regulatory agencies;

·the success of our efforts to acquire or in-license additional products or product candidates;

·developments concerning our collaborations and partnerships, including but not limited to those with our sources of manufacturing supply and our commercialization partners;

·actual or anticipated variations in our quarterly operating results;

·announcements of technological innovations by us, our collaborators or our competitors;

·new products or services introduced or announced by us or our commercialization partners, or our competitors and the timing of these introductions or announcements;

·third-party coverage or reimbursement policies;

·actual or anticipated changes in earnings estimates or recommendations by securities analysts;

·conditions or trends in the biotechnology and biopharmaceutical industries;

·announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

·general economic and market conditions and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including the turmoil on the credit markets and financial services industry;

·changes in the market valuations of similar companies;

·sales of common stock or other securities by us or our stockholders in the future;

·additions or departures of key scientific or management personnel;

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·disputes or other developments relating to intellectual property, proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; and

·trading volume of our common stock.

In addition, the stock market in general and the market for biotechnology and biopharmaceutical companies in particular have experienced extreme price and volume fluctuations that have often been unrelated and/or disproportionate to the operating performance of those companies.  These broad market and industry factors may significantly harm the market price of our common stock, regardless of our operating performance.  In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies.  Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could significantly harm our business, financial condition and prospects.

Future sales of our common stock in the public market could cause our stock price to decline.

Persons who were our stockholders prior to our initial public offering continue to hold a substantial number of shares of our common stock. Many of these stockholders are able to sell their shares in the public market. Significant portions of these shares are held by a small number of stockholders. Sales by such stockholders of a substantial number of shares, or the expectation that such sales may occur, could significantly reduce the market price of our common stock.  Moreover, the holders of a substantial number of shares of our common stock have rights, subject to certain conditions, to require us to file registration statements to permit the resale of their shares in the public market or to include their shares in registration statements that we may file for ourselves or other stockholders.

We have also registered all common stock that we have issued under our employee benefits plans. As a result, these shares can be freely sold in the public market upon issuance, subject to any applicable restrictions under the securities laws. In addition, our directors and executive officers may in the future establish programmed selling plans under Rule 10b5-1 of the Securities Exchange Act for the purpose of effecting sales of our common stock. If any of these events cause a large number of our shares to be sold in the public market, the sales could reduce the trading price of our common stock and impede our ability to raise future capital.

Negative conditions in the global credit markets may impair the liquidity of a portion of our investment portfolio.*

Our investment securities consist of money market funds, corporate debt securities and government agency securities. As of September 30, 2009, we held one auction rate preferred security valued at $882,000 with perpetual maturity dates that reset every 28 days.  The negative conditions in the global credit markets have prevented some investors from liquidating their holdings, including their holdings of auction rate securities.  There was insufficient demand at auction for our auction rate preferred security.  As a result, such security is currently not liquid,

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and we could be required to hold it until it is redeemed by the issuer or to maturity.  In the event we need to access the funds that are in an illiquid state, we will not be able to do so without a loss of principal, until a future auction on this investment is successful, the security is redeemed by the issuer or it matures. We have reduced the carrying value of our auction rate security by $118,000 to reflect an estimated change in fair market value due primarily to a lack of liquidity. Although the auction rate security continues to pay interest according to its stated terms, based on valuation models, we have recorded an unrealized loss for an other-than-temporary change in valuation of $118,000.  If the credit ratings of the security issuer deteriorates or if uncertainties in these markets continue and any decline in market value is determined to be other-than-temporary, we would be required to adjust the carrying value of the investment through an impairment charge, which could negatively affect our financial condition, cash flow and reported earnings.

We will continue to incur significant costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.*

As a public company, we will continue to incur significant legal, accounting and other expenses.  In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and the Nasdaq Global Market, or Nasdaq, impose various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices.  Our management and other personnel need to devote a substantial amount of time to these compliance initiatives.  Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.  For example, these rules and regulations make it more difficult and more expensive for us to maintain director and officer liability insurance, and we may be required to incur substantial costs in the future to maintain the same or similar coverage.

The Sarbanes-Oxley Act of 2002 requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. As a result, as of December 31, 2008, we were required to perform an evaluation of our internal controls over financial reporting to allow management to report on the effectiveness of those controls, as required by Section 404 of the Sarbanes-Oxley Act. Additionally, our independent auditors were required to perform a similar evaluation and report on the effectiveness of our internal controls over financial reporting. At December 31, 2008, management and our independent auditors did not identify any material weaknesses in our internal controls over financial reporting. Our efforts to comply with Section 404 and related regulations has required, and continues to require, the commitment of significant financial and managerial resources. While we anticipate maintaining the integrity of our internal controls over financial reporting and all other aspects of Section 404, we cannot be certain that a material weakness will not be identified when we test the effectiveness of our control systems in the future. If a material weakness is identified, we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources, costly litigation or a loss of public confidence in our internal controls, which could have an adverse effect on the market price of our stock.

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Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders, or remove our current management.  These provisions include:

·a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time;

·authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval;

·limiting the removal of directors by the stockholders;

·prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;

·a requirement of approval of not less than 66 2/3% of all outstanding shares of our capital stock entitled to vote to amend any bylaws by stockholder action, or to amend specific provisions of our certificate of incorporation;

·eliminating the ability of stockholders to call a special meeting of stockholders; and

·establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.  In addition, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with a stockholder owning 15% or more of our outstanding voting stock for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our board of directors.  This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders.  Such a delay or prevention of a change of control transaction could cause the market price of our stock to decline.

Item 5.  Other Information

On October 30, 2009, we entered into a number of transactions involving our Taiwan subsidiary, OBI.  The transactions are intended to provide funding for the development of two of our early-stage, non-core programs, while also allowing us to focus on our late-stage anti-infective programs.

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Pursuant to an Intellectual Property Assignment and License Agreement, we assigned to OBI certain patent rights, information and know-how related to OPT-88, our product candidate for the treatment of osteoarthritis, and OPT-822/821, our carbohydrate-based cancer immunotherapy product candidate.   In anticipation of the transactions, we previously assigned and OBI assumed our rights and obligations under certain in-license agreements with the TSRI and MSKCC related to the two programs.  Under the Intellectual Property Assignment and License Agreement, we are eligible to receive milestone payments for each product developed under the OPT-88 and OPT-822/821 programs and we are also eligible to receive royalties on net sales of any products which are commercialized under the programs.

The Intellectual Property Assignment and License Agreement also terminates the existing license agreement between us and OBI, including our previous license to OBI to develop fidaxomicin in certain Asian countries.  Under the agreement, we also forgave previous intercompany loans to OBI.

To provide capital for OBI’s product development efforts, we and OBI also entered into a Financing Agreement with a group of new investors.  Simultaneously, we sold 40 percent of our exiting OBI shares to the same group of new investors for gross proceeds of approximately $2.1 million.  Upon execution of the Financing Agreement, we and the new investors invested approximately $3.7 million and $2.5 million, respectively, in new OBI shares.  Also under the Financing Agreement, if OBI achieves certain development milestones in the future, we and the new investors will be obligated to invest approximately an additional $8.6 million and $5.7 million, respectively, in exchange for new OBI shares.  Following the sale of our existing OBI shares and the initial investments in exchange for new OBI shares, we maintain a 60 percent ownership interest in OBI.

Michael N. Chang, our President and Chief Executive Officer and a member of our board of directors, currently serves as the chairman of the board of directors of OBI.  Youe-Kong Shue, our Vice President of Clinical Development, currently serves as OBI’s interim President and Chief Executive Officer and as a director of OBI.

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Item 6.  Exhibits

Exhibit No.		Description of Document
3.1	(2)	Certificate of Incorporation of Optimer Pharmaceuticals, Inc., as amended and restated.
3.2	(3)	Bylaws of Optimer Pharmaceuticals, Inc., as amended.
4.1	(2)	Common Stock Certificate of Optimer Pharmaceuticals, Inc.
4.2	(1)	Investors’ Rights Agreement by and among Optimer Pharmaceuticals, Inc. and certain stockholders of Optimer Pharmaceuticals, Inc. dated November 30, 2005, as amended and restated.
4.3	(4)	Registration Rights Agreement, dated October 23, 2007, by and between Optimer Pharmaceuticals, Inc. and the purchasers listed on the signature pages thereto.
4.4	(5)	Form of Warrant to Purchase Common Stock issued on March 9, 2009.
10.1	*	Collaboration Research and Development and License Agreement between Optimer Pharmaceuticals, Inc. and Cempra Pharmaceuticals, Inc., dated March 31, 2006, as amended.
10.2	*	Intellectual Property Assignment and License Agreement between Optimer Pharmaceuticals, Inc. and Optimer Biotechnology, Inc., dated October 30, 2009.
10.3		Financing Agreement between Optimer Pharmaceuticals, Inc., Optimer Biotechnology, Inc. and certain investors named therein, dated October 30, 2009.
31.1		Certification of principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2		Certification of principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a).
32		Certification by the Chief Executive Officer and the Chief Financial Officer of the Registrant, as required by Rule 13a-14(b) or 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).

*Confidential treatment has been requested and/or granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC.

(1)Filed with Registrant’s Amendment No. 3 to Registration Statement on Form S-1 November 9, 2006.

(2)Filed with Registrant’s Amendment No. 4 to Registration Statement on Form S-1 on February 5, 2007.

(3)Filed with Registrant’s Current Report on Form 8-K on September 18, 2007.

(4)Filed with Registrant’s Current Report on Form 8-K on October 29, 2007.

(5)Filed with Registrant’s Current Report on Form 8-K on March 5, 2009.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	OPTIMER PHARMACEUTICALS, INC.
Dated: November 3, 2009	By:	/s/ John D. Prunty
	Name:		John D. Prunty
	Title:		Chief Financial Officer
			(Duly Authorized Officer and Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

***Text Omitted and Filed Separately

CONFIDENTIAL TREATMENT REQUESTED

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406

COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT

THIS COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT (the “Agreement”) is entered into as of March 31, 2006 (the “Effective Date”) by and between OPTIMER PHARMACEUTICALS INC., a Delaware corporation with its offices located at 10110 Sorrento Valley Road, Suite C, San Diego, California 92121 (“Optimer”), and CEMPRA PHARMACEUTICALS, INC., a Delaware corporation with its offices located at 170 Southport Drive, Suite 500, Morrisville, NC 27560. Optimer and Cempra may be referred to herein individually as a “Party” or collectively, as the “Parties.”

RECITALS

WHEREAS, Optimer is a biopharmaceutical company engaged in the discovery and development of pharmaceutical products using its proprietary carbohydrate synthesis technology;

WHEREAS, Cempra is a biopharmaceutical company engaged in the discovery and development of novel pharmaceutical products;

WHEREAS, Cempra and Optimer desire to enter into a relationship to identify, develop and commercialize pharmaceutical products comprising novel Macrolide Antibiotics to treat infectious diseases.

WHEREAS, Cempra and Optimer entered into a letter agreement dated November 10, 2005 wherein Optimer and Cempra agreed to execute a detailed agreement regarding the synthesis by Optimer of Macrolide Antibiotics for Cempra; and

WHEREAS, Optimer is willing to synthesize Macrolide Antibiotics using its proprietary carbohydrate synthesis technology, assist Cempra in the development thereof, and is prepared to grant Cempra a license under such technology to allow Cempra to develop and commercialize pharmaceutical products arising from this relationship;

NOW, THEREFORE, in consideration of the foregoing and the covenants and promises contained in this Agreement, the Parties agree as follows:

1.DEFINITIONS

1.1          “Affiliate” means a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with a Party. For the purposes of this Section 1.1, the word “control” (including, with correlative meaning, the terms “controlled by” or “under the common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such entity, whether by the ownership of at least fifty percent (50%) of the voting stock of such entity, or by contract or otherwise.

1.2          “ASEAN Countries” means all member nations of the Association of Southeast Asian Nations as of the Effective Date.

1.3          “Cempra Know-How” means any Know-How which is developed or acquired and Controlled by Cempra or its Affiliates during the term of this Agreement that is necessary and useful for the research, development, manufacture, importation, use, or sale of Cempra Products.

1.4          “Cempra Patents” means any Patents, other than Optimer Patents, which are Controlled by Cempra or its Affiliates during the term of this Agreement and that claim the manufacture, importation, use or sale of Macrolide Antibiotics or Cempra Products.

1.5          “Cempra Product” means a pharmaceutical product (including but not limited to Combination Products or those comprised of one or more Test Products, Macrolide Antibiotics, or any analogs or derivatives of either of the foregoing) for which the use, sale, or manufacture thereof would, but for the licenses granted Cempra hereunder, infringe the Optimer Patents in the country in which such product is sold by Cempra, an Affiliate thereof, or a Third Party sublicensee of either of the foregoing.

1.6          “Collaboration” means all activities performed by or on behalf of Optimer or Cempra in the course of the Research Program with respect to the Development and Commercialization of Test Products and Cempra Products.

1.7          “Combination Product” means a pharmaceutical product (i) containing (x) in the case of Cempra, an active pharmaceutical ingredient for which, if included in a pharmaceutical product as the sole active pharmaceutical ingredient the use, sale, or manufacture thereof would, but for the licenses granted Cempra hereunder, infringe the Optimer Patents in the country in which such product is sold by Cempra, an Affiliate thereof, or a Third Party sublicensee of either of the foregoing, or (y) in the case of Optimer, an active pharmaceutical ingredient which (I) contains a Macrolide Antibiotic, Test Product, or derivative or analog of either of the foregoing, (II) is a Cempra Product, or (III) whose manufacture, sale, or use is covered in any ASEAN Country by a Valid Claim of any Cempra Patent, Joint Invention Patent, or foreign counterpart of any Optimer Patent; and (ii) one or more other pharmaceutically active ingredients for which rights are not included in the license granted to (x) Cempra under this Agreement, with respect to Cempra Products, or (y) Optimer, with respect to Optimer Products.

1.8          “Commence” or “Commencement”, when used to describe a Phase 1 Trial, Phase 2 Trial, Phase 3 Trial, or Phase 4 Trial, means the first dosing of the first patient for such trial.

1.9          “Commercialization” means all activities that are undertaken after Regulatory Approval of an NDA for a particular Product and that relate to the commercial marketing and sale of such Product including advertising, marketing, promotion, distribution, and Phase 4 Trials.

1.10        “Confidential Information” means all Information, and other information and materials, received by either Party from the other Party pursuant to this Agreement that: (i) is designated as confidential at the time of disclosure or promptly thereafter; (ii) under the circumstances surrounding disclosure should be treated as confidential by the receiving Party, or (iii) by reason of its nature would be treated as confidential by a reasonable receiving party, which would include, without limitation, trade secrets..

1.11        “Control” means, with respect to any intellectual property right, that a Party owns or has a license to such item or right, and has the ability to grant a license or sublicense in or to such right as set forth herein without violating the terms of any agreement or other arrangement with any Third Party.

1.12        “Develop” or “Development” means, with respect to a Test Product or Product, engaging in preclinical and clinical drug development activities, which may include but is not limited to research, pre-clinical, clinical and regulatory activities directed towards obtaining Regulatory Approval of a Product, including but not limited to the performance by Optimer of its obligations and Cempra of its responsibilities under the Research Program.

1.13        “Development Plan” has the meaning set forth in Section 4.1.

1.14        “Diligent Efforts” means the carrying out of obligations or tasks in a manner consistent with the efforts a Party devotes to research, development or marketing of a pharmaceutical product or products of similar market potential, profit potential or strategic value resulting from its own research efforts, taking into account technical and regulatory factors, target product profiles, product labeling, past performance, costs, economic return, the regulatory environment and competitive market conditions in the therapeutic area, all based on conditions then prevailing, and subject to and in

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consideration of, in each case, the resources available to such Party and within such Party’s organization for such efforts. Diligent Efforts requires that a Party, at a minimum, assign responsibility for such obligations to specific employees, sets and seeks to achieve specific and meaningful objectives for carrying out such obligations, and consistently makes and implements decisions designed and allocates resources reasonably sufficient to advance progress with respect to such objectives.

1.15        “Fair Market Value” means the fair market value of Cempra capital stock on the date the relevant milestone is achieved under Section 6.2(a) or (b), as applicable, which shall be determined as follows:

(a)           if the Cempra capital stock to be issued under Section 6.2(a) or (b) is traded on a public securities exchange or through the Nasdaq National Market, the fair market value thereof shall be deemed to be the average of the closing prices of such security on such exchange over the 30-day period ending three (3) business days prior to the date such security was received;

(b)           if the Cempra capital stock to be issued under Section 6.2(a) or (b) is actively traded over-the-counter, the fair market value thereof shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the 30-day period ending three (3) business days prior to the date such security was received; or

(c)           If there is no active public market for any Cempra capital stock issued under Section 6.2(a) or (b), the fair market value thereof shall be as determined in good faith by Cempra’s Board of Directors based on a reasonable consideration of all relevant factors.

1.16        “FDA” means the United States Food and Drug Administration, or any successor federal agency thereto.

1.17        “Field” means all human and animal diagnostic and therapeutic uses.

1.18        “First Commercial Sale” means the first sale of commercial quantities of any Product sold to a Third Party by a Party, its Affiliate, or a sublicensee of either of the foregoing in any country after, if and as reasonably necessary or applicable, receipt of Regulatory Approval for such Product in such country. Sales for test marketing, sampling and promotional uses or clinical trial or research purposes or compassionate uses will not be considered to constitute a First Commercial Sale

1.19        “FTE” means the equivalent of one person working full time for one 12-month period in a research, development, commercialization, regulatory or other relevant capacity, approximating 1800 hours per year. In the interests of clarity, though, a single individual who works more than 1800 hours in a single year shall be treated as one FTE regardless of the number of hours worked.

1.20        “Good Clinical Practices” or “GCP” means current Good Clinical Practices as specified in the United States Code of Federal Regulations, at the time of testing, and all FDA and ICH guidelines, including the ICH Consolidated Guidelines on Good Clinical Practices.

1.21        “Good Laboratory Practices” or “GLP” means current Good Laboratory Practices as specified in the United States Code of Federal Regulations at 21 CFR § 58 at the time of testing and all applicable ICH guidelines.

1.22        “Good Manufacturing Practices” or “GMP” means current Good Manufacturing Practices and standards as provided for (and as amended from time to time) in European Community Directive 91/356/EEC (Principles and Guidelines of Good Manufacturing Practice for Medicinal Products) and in the Current Good Manufacturing Practice Regulations of the United States Code of Federal Regulations Title 21 (21 CFR §§ 210-211) in relation to the production of pharmaceutical intermediates and active pharmaceutical ingredients, as interpreted by ICH Harmonized Tripartite Guideline, Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients, and subject to any arrangements, additions or clarifications agreed from time to time between the Parties.

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1.23        “Governmental Authority” means any court, agency, department or other instrumentality of any foreign, federal, state, county, city or other political subdivision.

1.24        “Human Clinical Trial” means any Phase 1 Trial, Phase 2 Trial, Phase 3 Trial or Phase 4 Trial the subject of which includes a Test Product or Product.

1.25        “IND” means an Investigational New Drug Application filed with the FDA or the equivalent application or filing filed with any equivalent agency or government authority outside of the United States (including any supra-national agency such as in the European Union) necessary to Commence human clinical trials in such jurisdiction, and including all regulations at 21 CFR § 312 et. esq., and equivalent foreign regulations.

1.26        “Information” means information, results and data of any type whatsoever, including without limitation, databases, inventions, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and patent and other legal information or descriptions.

1.27        “Invention” means any discovery, invention, improvement, concept or idea, whether or not patentable, conceived or reduced to in the course of the activities conducted pursuant to this Agreement, together with all intellectual property rights relating thereto. Inventions may include, but not be limited to, processes, compounds, compositions, or methods.

1.28        “Know-How” means any non-public, proprietary Information and other data, instructions, processes, methods, formulae, techniques, compositions, materials, expert opinions and information, including without limitation, biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical, safety, manufacturing and quality control data and information. Know-How does not include any rights under Patents.

1.29        “Letter Agreement” means the letter agreement between Optimer and Cempra dated November 11, 2005.

1.30        “Macrolide Antibiotics” means any macrolide or ketolide, including but not limited to any (i) [***] compound that incorporates, is based on, or is described in, or the synthesis of which is in whole or part based on or described in, the Optimer Technology, including but not limited to those synthesized by Optimer under this Agreement or the Letter Agreement, (ii) [***] (including but not limited to [***]), and (iii) any derivatives or analogs of any of the foregoing. For avoidance of doubt, the parties expressly agree that Macrolide Antibiotics shall not mean any 18-membered- lactone-ring-based compound (e.g., Optimer’s OPT-80).

1.31        “NDA” means a New Drug Application filed with the FDA or the equivalent application or filing filed with any equivalent Governmental Authority outside of the United States necessary for approval of a drug in such jurisdiction.

1.32        “Net Sales” means

(a)           with respect to a Product (subject to subsections (b) and (c) below), the amount received by a Party or its Affiliate or a Third Party sublicensee for sales of such Product to Third Parties, excluding reasonable sales returns, allowances and rebates actually paid, granted or accrued, including, without limitation, trade, quantity and cash discounts and any other reasonable adjustments actually allowed, including, but not limited to, those granted on account of price adjustments (including retroactive price adjustments), billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargeback rebates, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers or other institutions, pharmacy benefit management companies, health maintenance organizations or other health care organizations, or any governmental or regulatory authority or agency (including their purchasers and/or reimbursers), adjustments arising from consumer discount programs, customs or excise duties, tariffs, sales tax,

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consumption tax, value added tax, and other taxes (except income taxes) or duties relating to sales, and similar payments respect to the United States government, any state government, any local government, or any foreign government, or to any governmental or regulatory authority in respect of sales, and freight, handling, and insurance; and

(b)           in the case of Combination Products,

(i)            if a Party and/or its Affiliate and/or any Third Party sublicensee of either of the foregoing separately sells in such country during such year when it sells such Combination Product both (1) one or more Products containing solely one particular active pharmaceutical ingredient and (2) products containing other pharmaceutically active ingredient(s) that are also contained in such Combination Product, the Net Sales attributable to such Combination Product during such year shall be calculated by multiplying actual Net Sales of such Combination Product by the fraction A/(A+B) where: A is such Party’s (or its Affiliate’s or Third Party sublicensee’s, as applicable) average Net Sales price per daily dose during such year for each Product(s) in such Combination Product in such country and B is the sum of the average of such Party’s (or its Affiliate’s or Third Party sublicensee’s, as applicable) net sales price per daily dose during such year in such country, for each product(s) containing the other pharmaceutically active ingredient(s) in such Combination Product (other than the Product);

(ii)           if a Party and/or its Affiliate and/or any Third Party sublicensee of either of the foregoing separately sells, in such country during such year when it sells such Combination Product, one or more Products containing solely one particular active pharmaceutical ingredient entity but do not separately sell, in such country, other products containing the other active ingredient(s) that are also contained in such Combination Product, the Net Sales attributable to such Combination Product during such year shall be calculated by multiplying the Net Sales of such Combination Product by the fraction A/C where: A is the applicable Party’s (or its Affiliate’s or Third Party sublicensee’s, as applicable) average Net Sales price per daily dose during such year for each Product in such Combination Product in such country, and C is such Party’s (or its Affiliate’s or Third Party sublicensee’s, as applicable) average Net Sales price per daily dose during such year for the Combination Product in such country; and

(iii)          if a Party and/or its Affiliates and/or their Third Party sublicensees do not separately in such country during such year sell products containing each active pharmaceutical ingredient in the Combination Product, then the Net Sales attributable to such Combination Product may, following mutual agreement of the Parties concerning the applicable fair market values, be determined by multiplying the Net Sales of such Combination Product by the fraction D/(D+E) where D is the fair market value of the portion of the Combination Product that contains the Product with a single active pharmaceutical ingredient and E is the fair market value of the portion of the Combination Product containing the other pharmaceutically active ingredient(s) and the delivery device included in such Combination Product, as such fair market values are reasonably determined by mutual agreement of the Parties in good faith. In the event that the Parties are unable to mutually agree upon appropriate fair market values for D and E as set forth herein, such matter may be referred to arbitration as set forth in Section 12.3 below.

(c)           In the case of discounts on “bundles” of separate products or services which include Products, a Party may with notice to the other Party discount the bona fide list price of a Product by the average percentage discount of all products of such Party (the “Selling Party”) and/or its Affiliates or Third Party sublicensees in a particular “bundle”, calculated as follows:

Average percentage
discount on a	=	1 - (X/Y) × 100
particular “bundle”

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where X equals the total discounted price of a particular “bundle” of products, and Y equals the sum of the undiscounted bona fide list prices of each unit of every product in such “bundle”. The Selling Party shall provide the other Party documentation reasonably supporting such average discount with respect to each “bundle.” If a Product in a “bundle” is not sold separately, and no bona fide list price exists for such Product, the parties shall negotiate in good faith a reasonable imputed list price for such Product and Net Sales with respect thereto shall be based on such imputed list price; provided, however, that in the event that the Parties are unable to mutually agree upon appropriate imputed list price as set forth herein, then such matter may be referred to arbitration as set forth in Section 12.3 below.

1.33        “Optimer Improvements” means any Other Sole Inventions of Optimer and, to the extent owned by Optimer, Other Joint Inventions that, in either case, constitute improvements, enhancements, or modifications of any Macrolide Antibiotics, Cempra Products, or other technology claimed in the Optimer Patents listed on Schedule 1.30, or which would be useful or necessary in the manufacture, use, or sale of Cempra Products.

1.34        “Optimer Know-How” means all Know-How Controlled by Optimer or its Affiliates as of the Effective Date, or which is developed or acquired by and Controlled by Optimer or its Affiliates during the term of this Agreement, including but not limited to any Know-How related to Optimer Improvements, that is necessary or useful for the research, development, manufacture, importation, use or sale of the Macrolide Antibiotics, Test Products or Cempra Products.

1.35        “Optimer Patents” means any Patents Controlled by Optimer or its Affiliates as of the Effective Date or which are developed and Controlled, or licensed to and Controlled, by Optimer or its Affiliates during the term of this Agreement, that are necessary or useful for the research, development, manufacture, importation, use or sale of Macrolide Antibiotics, Test Products, or Cempra Products, including without limitation, the Patents listed on Schedule 1.35 and any Patents (or, with respect to Patents jointly owned by the Parties, Optimer’s rights to any such Patents) claiming any Optimer Improvements.

1.36        “Optimer Product” means any product (including but not limited to Combination Products) developed and/or commercialized by Optimer in any ASEAN Country that (i) contains a Macrolide Antibiotic, Test Product, or derivative or analog of either of the foregoing, (ii) is a Cempra Product, or (iii) whose manufacture, sale, or use is covered in any ASEAN Country by a Valid Claim of any Cempra Patent, Joint Invention Patent, or foreign counterpart of any Optimer Patent. For avoidance of doubt, the parties expressly agree that, for purposes of this Agreement (including, but not limited to, Optimer’s royalty payment obligation set forth in Article 6), Optimer Products shall not include any product which incorporates an 18-membered-lactone-ring-based compound as an active pharmaceutical ingredient (e.g., Optimer’s OPT-80) unless such product incorporates an additional active pharmaceutical ingredient which itself (or the mechanism of action of which) independently renders such product an Optimer Product pursuant to the foregoing definition.

1.37        “Optimer Technology” means Optimer Patents and Optimer Know-How.

1.38        “Patent” means: (a) an issued unexpired United States or foreign patent (including inventor’s certificate) that has not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof; or (b) any pending United States or foreign patent application, including without limitation any continuation, division or continuation-in-part thereof and any provisional application.

1.39        “Phase 1 Trial” means a clinical trial that generally provides for the first introduction into humans of a Product with the primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of the Product, and generally consistent with 21 CFR § 312.21(a).

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1.40        “Phase 2 Trial” means a clinical trial of a Product on patients, including possibly pharmacokinetic studies, the principal purpose of which is to make a preliminary determination that such Product is safe for its intended use and to obtain sufficient information about such Product’s efficacy to permit the design of further clinical trials, and generally consistent with 21 CFR § 312.21(b).

1.41        “Phase 3 Trial” means a clinical trial that provides for a pivotal human clinical trial of a Product, which trial is designed to: (a) establish that a Product is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the Product in the dosage range to be prescribed; (c) support Regulatory Approval of such Product; and (d) generally consistent with 21 CFR § 312.21(c).

1.42        “Phase 4 Trial” means clinical trial of a Product Commenced in a particular country after Regulatory Approval for such Product in such country in order to support commercialization of the Product.

1.43        “Product” means an Optimer Product or Cempra Product, as appropriate.

1.44        “Regulatory Approval” means any and all approvals (including supplements, amendments, pre- and post-approvals, pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, that are necessary for the manufacture, distribution, use or, in the Commercializing Party’s reasonable judgment, sale of a Product in a regulatory jurisdiction.

1.45        “Regulatory Authority” means any Governmental Authority with responsibility for granting any licenses or approvals necessary for the marketing and sale of pharmaceutical products including, without limitation, the FDA and any drug regulatory authority of countries of the European Union, and Japan, and where applicable any ethics committee or any equivalent review board.

1.46        “Regulatory Filing” means the NDA, biologic license application (“BLA”), IND, or any foreign counterparts thereof and any other filings required by regulatory authorities relating to the study, manufacture or commercialization of any Product.

1.47        “Research Program” means the activities conducted by Optimer and Cempra pursuant to the obligations and responsibilities set forth in a Work Plan and Budget established by the Parties pursuant to this Agreement.

1.48        “Research Term” means the period commencing on the Effective Date and continuing until the earlier of (i) completion by Optimer of the tasks assigned to Optimer in the Work Plan and Budget or (ii) the second anniversary of the Effective Date, subject to any extensions thereof agreed to by the Parties in writing.

1.49        “Royalty Term” means, on a country-by-country and Product-by-Product basis:

(a)           For Cempra Products, the period commencing on the First Commercial Sale thereof in a particular country and continuing until the later of (a) the last to expire Valid Claim of an Optimer Patent covering the manufacture, use or sale of such Cempra Product in such country or (b) ten (10) years following the First Commercial Sale of such Cempra Product in such country; and

(b)           For Optimer Products, the period commencing on the First Commercial Sale thereof in a particular country and continuing until the later of (a) the last to expire Valid Claim of a Cempra Patent covering the manufacture, use or sale of such Optimer Product in such country or (b) ten (10) years following the First Commercial Sale of such Optimer Product in such country.

1.50        “Sublicensing Revenue” means net revenue received from Third Party sublicensees, other than royalties or other payments calculated on the basis of sales of Cempra Products, directly and solely as consideration for Cempra’s or its Affiliates’ sublicensing to Third Parties (other than Cempra Affiliates) of the rights to Optimer Patents licensed to Cempra and its Affiliates under this Agreement, including but not limited to upfront and milestone payments, but excluding (i) [***]

1.51        “Term” has the meaning assigned to it in Section 9.1.

1.52        “Territory” means worldwide, excluding ASEAN Countries.

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1.53        “Test Product” means a Macrolide Antibiotic or derivative or analog thereof that has been designated by Cempra to be the subject of Development pursuant to Section 3.4.

1.54        “Third Party” means any entity other than (a) Optimer, (b) Cempra or (c) an Affiliate of either of them.

1.55        “Valid Claim” means a claim of any pending patent application or any issued, unexpired United States or granted foreign patent within any Patent that has not been dedicated to the public, disclaimed, abandoned or held invalid or unenforceable by a court or other body of competent jurisdiction from which no further appeal can be taken, and that has not been explicitly disclaimed, or admitted by the Party Controlling such Patent in writing to be invalid or unenforceable or of a scope not covering Products through reissue, disclaimer or otherwise.

1.56        “Work Plan and Budget” has the meaning set forth in Section 3.1.

1A.JOINT STEERING COMMITTEE

1A.1Joint Steering Committee.  Promptly after the Effective Date, the Parties shall establish a “Joint Steering Committee” as described in this Section 1A. The Joint Steering Committee shall exist during the Research Term. The Joint Steering Committee shall, subject to applicable provisions of this Agreement concerning the Research Program, Work Plan, and Budget, (i) develop, review, approve, and establish all aspects of the Work Plan and Budget and, once the initial Work Plan and Budget have been established, (ii) monitor and oversee the Parties’ progress thereunder, advise the Parties with respect thereto, and develop, review, and approve any changes or amendments to the Work Plan and Budget, such changes and amendments to be effective upon approval thereof by the Joint Steering Committee and agreement by (i) Optimer with respect to obligations of Optimer (such agreement not to be unreasonably withheld) or (ii) Cempra with respect to responsibilities of Cempra, provided that, notwithstanding the foregoing, the Joint Steering Committee shall have no authority to amend the body of this Agreement. Each party shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or not it agrees to its proposed obligations or responsibilities, and, if not agreeing to its proposed obligations or responsibilities, provide its reasonable objections thereto. In the absence of such written notice within such five (5) business day period, a party shall be deemed to have rejected its proposed obligations or responsibilities, and, in the event Optimer rejects its proposed obligations or responsibilities (whether by written notice or the absence thereof), Cempra shall be free to pursue alternative solutions therefor. Notwithstanding anything to the contrary in this Agreement, the Joint Steering Committee shall have no rights or responsibilities, and Cempra shall have no obligations with respect to the Joint Steering Committee, following the Research Term.

1A.2Membership.  The Joint Steering Committee will be comprised of an equal number of representatives from each Party. The exact number of such representatives shall be as agreed upon by the Parties, but no event shall such number be less than two (2) nor more than five (5) for each Party. Each Party shall provide the other with a list of its initial members of the Joint Steering Committee promptly after the Effective Date. Each Party may replace any or all of its representatives on the Joint Steering Committee at any time upon written notice to the other Party. Any member of the Joint Steering Committee may designate a substitute to attend and perform the functions of that member at any meeting of the Joint Steering Committee. Each Party may, in its reasonable discretion, invite non-member representatives of such Party to attend meetings of the Joint Steering Committee.

1A.3Meetings.  During the Research Term, the Joint Steering Committee shall meet at least twice per calendar year, or more frequently as the Parties deem appropriate, on such dates, and at such places and times, as provided herein or as the Parties shall agree, provided, however, that (i) the first meeting shall be held within 30 days of the Effective Date and (ii) the Joint Steering Committee and the Parties shall use best efforts to draft, review, and approve the initial Work Plan and Budget as soon as reasonably practicable following the Effective Date. Meetings of the Joint Steering Committee shall

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alternate between the offices of the Parties or their respective Affiliates, or such other place as the Parties may agree. The members of the Joint Steering Committee also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed necessary or appropriate, provided that the Parties hold at least one face-to-face meeting each year. Each Party shall bear all costs and expenses relating to its members’ attendance at meetings of the Joint Steering Committee.

1A.4Decision-Making.  The Joint Steering Committee shall use good faith efforts to operate and make decisions by consensus, provided that in the event the Joint Steering Committee is unable to reach consensus regarding any matter before the Joint Steering Committee within a reasonable period of time not to exceed ten (10) business days, Cempra shall have the tie-breaking vote to resolve such deadlock and determine the Joint Steering Committee’s final decision regarding such matter, including but not limited to approval of any Work Plan and Budget, or any changes thereto, consistent with the parameters described below, provided that no Work Plan or Budget shall be effective without the written agreement of (i) Optimer with respect to any obligations of Optimer thereunder (such agreement not to be unreasonably withheld) and (ii) Cempra with respect to any responsibilities of Cempra thereunder (such agreement not to be unreasonably withheld). Each party shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or not it agrees to its proposed obligations or responsibilities, and, if not agreeing to its proposed obligations or responsibilities, provide its reasonable objections thereto. In the absence of such written notice within such five (5) business day period, a party shall be deemed to have rejected its proposed obligations or responsibilities, and, in the event Optimer rejects its proposed obligations or responsibilities (whether by written notice or the absence thereof), Cempra shall be free to pursue alternative solutions therefor.

2.MANAGEMENT OF THE RESEARCH PROGRAM

2.1General.  The general purpose of the Collaboration described in Sections 2 and 3 of this Agreement is to synthesize, develop and commercialize Macrolide Antibiotics for sale as Cempra Products. If and as determined by the Joint Steering Committee, Optimer shall synthesize Macrolide Antibiotics and conduct preliminary research and biological testing on such Macrolide Antibiotics according to a Work Plan and Budget that has been developed and approved by the Joint Steering Committee and agreed upon by Optimer and Cempra (such agreement not to be unreasonably withheld). Each party shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or not it agrees to the Work Plan or Budget approved by the Joint Steering Committee and, if not agreeing thereto, provide its reasonable objections thereto. In the absence of such written notice within such five (5) business day period, a party shall be deemed to have agreed to such Work Plan and Budget. Cempra shall, as determined by the Joint Steering Committee, conduct (or have conducted by Third Parties) preclinical and animal testing on such Macrolide Antibiotics synthesized by Optimer. Based on the results of such research, the Joint Steering Committee may designate certain Macrolide Antibiotics as Test Products for preclinical testing and further development by Cempra. Cempra shall be solely responsible, at its expense, for animal testing, preclinical and clinical development of such Test Products, including as may be provided for in a Work Plan and Budget approved by the Joint Steering Committee and agreed upon (i) by Optimer with respect to Optimer’s obligations thereunder (such agreement not to be unreasonably withheld) and (ii) Cempra with respect to Cempra responsibilities thereunder. Each party shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or not it agrees to its proposed obligations or responsibilities, and, if not agreeing to such obligations or responsibilities, provide its reasonable objections thereto. In the absence of such written notice within such five (5) business day period, a party shall be deemed to have rejected its proposed obligations or responsibilities, and in the event Optimer rejects its proposed obligations or responsibilities (whether by written notice or the absence thereof), Cempra shall be free to pursue alternative solutions therefor. For so long as Cempra retains its license hereunder, and except as provided for performance by

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Optimer under any Work Plan and Budget, Cempra shall be responsible for the research, Development, manufacturing, marketing and Commercialization of Cempra Products, subject only to the terms and conditions of this Agreement, including without limitation the payments owed to Optimer for such Cempra Products as set forth in Article 6.

2.2Information Exchange.  During the Research Term, Optimer and Cempra shall keep the Joint Steering Committee fully and regularly informed of their activities (and the activities of their Affiliates and/or sublicensees) in connection with their conduct of the Research Program and the Development and Commercialization of Test Products and Cempra Products, and shall diligently respond to any other reasonable requests by the Joint Steering Committee or the other Party for information. Each Party will provide the Joint Steering Committee (during the Research Term) and the other Party (during the entire term of this Agreement) with formal written progress reports of its activities under this Agreement, no less than twice per year.

2.3Independence.  Subject to the terms of this Agreement and any applicable Work Order and Budget, the activities and resources of each Party shall be managed by such Party, acting independently and in its individual capacity. The relationship between Optimer and Cempra is that of independent contractors and neither Party shall have the power to bind or obligate the other Party in any manner, other than as is expressly set forth in this Agreement.

3.CONDUCT OF THE RESEARCH PROGRAM

3.1Work Plan and Budget.  The Research Program shall be carried out by Optimer and Cempra according to a written work plan setting forth the obligations of Optimer and responsibilities of Cempra (the “Work Plan”) and budget providing for Cempra’s funding of Optimer’s obligations thereunder (the “Budget”). The Work Plan shall set forth in reasonable detail the obligations of Optimer and responsibilities of Cempra with respect to the Research Program, including the identity and number of Macrolide Antibiotics that Optimer shall endeavor to synthesize and formulate for animal testing, and shall include the desired quantities of such Macrolide Antibiotics, timeframe for delivery, technical specifications (the “Specifications”), and the Budget shall set forth the budget for such synthesis and formulation work by Optimer. The Joint Steering Committee shall develop an initial Work Plan and Budget and shall submit such plan to Optimer and Cempra for review and approval, such approval not to be unreasonably withheld, within thirty (30) days following the execution of this Agreement. In the absence of a party’s written approval of or reasonable objection to the Work Plan and Budget within five (5) business days of its submission to the parties by the Joint Steering Committee, a party shall be deemed to have agreed to such Work Plan and Budget. The Work Plan and Budget may be amended from time to time by the Joint Steering Committee during the Research Term, based upon the data obtained in the Research Program or from Cempra’s independent activities, provided such amendments do not violate or contradict any provision of this Agreement. In the event of an inconsistency or disagreement between the Work Plan and Budget and this Agreement, the terms of this Agreement shall prevail.

3.2Work Performed to Date.  The Parties acknowledge that initial research and Macrolide Antibiotics synthesis activities have been conducted by the Parties pursuant to the Letter Agreement (the “Initial Research”). All Initial Research, including any Macrolide Antibiotics, Information, inventions, know-how, data, information, or other intellectual property rights created pursuant to the Initial Research, is deemed included within the scope of this Agreement. No amounts shall be due Optimer by Cempra for the conduct of the Initial Research.

3.3Synthesis of Macrolide Antibiotics and Biological Testing.  The Joint Steering Committee shall, during the Research Term, determine the Macrolide Antibiotics designated for synthesis and Development under this Agreement, and Optimer shall provide its advice and comment with respect thereto. The Joint Steering Committee shall determine which Macrolide Antibiotics will be the subject of synthesis and Development as part of Optimer’s performance under the Research Program, and

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Optimer shall provide its advice and comment with respect thereto, provided that Optimer shall have no obligation to perform such synthesis and Development without its consent (such consent not to be unreasonably withheld). Optimer shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or not it consents, and, if not consenting, provide its reasonable objections to such obligations. In the absence of such written consent or reasonable objection within such five (5) business day period, Optimer shall be deemed to have rejected such obligations and Cempra shall be free to seek alternative solutions therefor. The Joint Steering Committee shall, during the Research Term, designate the initial number of Macrolide Antibiotics for synthesis under this Agreement, provided Optimer shall provide its advice and comment with respect thereto. Optimer shall, if and as included in the Work Plan and Budget, use Diligent Efforts to synthesize Macrolide Antibiotics that have been designated by the Joint Steering Committee for synthesis, to conduct biological testing on such Macrolide Antibiotics, and to provide such Macrolide Antibiotics in reasonable quantities to Cempra as determined by the Joint Steering Committee. If and as included in the Work Plan and Budget, Optimer shall use Diligent Efforts to synthesize and conduct biological testing with respect to each Macrolide Antibiotic according to applicable Specifications for such Macrolide Antibiotics, and to produce and provide to Cempra a sufficient quantity of each Macrolide Antibiotic to allow Cempra to conduct further Development of such Macrolide Antibiotics. Optimer shall use Diligent Efforts to provide additional quantities of each Macrolide Antibiotics to Cempra at Cempra’s reasonable request on an as needed basis. The reasonable, documented direct expense of manufacturing additional quantities of Macrolide Antibiotics will be paid for by Cempra as set forth in the Work Plan and Budget.

3.4Preclinical Testing and Human Clinical Testing.  Cempra may perform, in its sole discretion and at its own expense, after, during the Research Term, providing reasonable opportunity for advice and comment by the Joint Steering Committee, preclinical testing on Macrolide Antibiotics that have been synthesized by Optimer or any other Cempra Products of Cempra’s choosing. Based on the results of any such preclinical testing, the Joint Steering Committee may, subject to the advice and comment of Cempra and Optimer, determine whether additional Macrolide Antibiotics should be synthesized or developed by Optimer for preclinical testing, or whether any existing Macrolide Antibiotics should be reformulated by Optimer (or a Third Party) for further testing. The Joint Steering Committee may, subject to Optimer’s and Cempra’s approval (such approval not to be unreasonably withheld), amend or revise the applicable Work Plan and Budget accordingly to allow for such additional synthesis or reformulation activities. Each party shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or not it approves of such amendment or revision, as applicable, and, if not approving thereof, provide its reasonable objections thereto. In the absence of such a written response from a particular party within such five (5) business day period, a party shall be deemed to have rejected such amendment or revision to the extent it proposes additional obligations or responsibilities for the objecting party, and, in the event Optimer rejects its proposed obligations or responsibilities (whether by written notice or the absence thereof), Cempra shall be free to pursue independent solutions with respect to the subject matter of the rejected amendment or revision. Cempra shall, after, during the Research Term, providing reasonable opportunity for advice and comment by the Joint Steering Committee, have the right to designate one or more of such Macrolide Antibiotics as Test Products for human clinical testing. In the event that Cempra enrolls a patient for human clinical testing of any Macrolide Antibiotics prior to formal designation of such Macrolide Antibiotics as a Test Product, such Macrolide Antibiotics shall be deemed to have been designated as a Test Product upon enrollment of the first such patient. If a Test Product does not achieve desirable results during Phase 1 Trials, then, if and as requested by the Joint Steering Committee, subject to Optimer’s consent (such consent not to be unreasonably withheld), Optimer shall use Diligent Efforts to reformulate such Test Product according to specifications established by the Joint Steering Committee. Any such reformulation activities shall be reflected in a revised Work Plan and Budget to be developed and approved by the Joint Steering Committee, negotiated in good faith, and agreed

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upon by the Parties (such agreement not to be unreasonably withheld), and the reasonable, documented, direct costs incurred by Optimer for such reformulation and related additional testing of a Test Product by Optimer shall be borne by Cempra pursuant to such Budget. Each party shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or not it agrees to such revised Work Plan and Budget, and, if not agreeing to its proposed additional obligations or responsibilities contained therein, provide its reasonable objections thereto. In the absence of providing such written notice within such five (5) business day period, a party shall be deemed to have rejected its proposed obligations or responsibilities, and, in the event Optimer rejects its proposed obligations or responsibilities (whether by written notice or the absence thereof), Cempra shall be free to seek alternative solutions therefor. In the event that Cempra enrolls a patient in a Phase 2 Trial or in a Phase 3 Trial, or obtains Regulatory Approval, for any Macrolide Antibiotics or Test Product prior to formal designation of such Macrolide Antibiotics or Test Product as a Cempra Product, such Macrolide Antibiotics or Test Product shall be deemed to have been designated as a Cempra Product upon the first such event to occur with respect to such Macrolide Antibiotics or Test Product.

3.5Pre-Clinical and Clinical Supply.  As may be provided in any Work Plan and Budget established by the Joint Steering Committee and agreed upon by Optimer, Optimer shall use Diligent Efforts in accordance with such Work Plan and Budget to produce, or have produced, a sufficient quantity of each Test Product to enable Cempra to conduct preclinical testing of such Test Products, and to cooperate with Cempra in preparing formulations, conducting feasibility studies, and facilitating such testing. Optimer shall not have any obligation or responsibility for providing clinical supplies of Test Products or Cempra Products.

3.6Research and Supply Costs.  Cempra shall reimburse Optimer for Optimer’s reasonable, documented internal costs associated with Optimer’s work under the Work Plan and Budget, which shall equal the pro-rated cost of full-time equivalent employees to the extent used by Optimer in performing its portion of the Research Program. Such cost shall (1) be commercially reasonable based on the applicable employees’ role in performing Optimer’s portion of the Research Program, job title and responsibilities with Optimer, training, education, and expertise, which shall, in each case, be reasonably appropriate for the tasks performed thereby, and (2) not exceed US$[***] on an annual basis in any event. Cempra shall reimburse Optimer for the purchasing of key intermediates from Third Parties at Optimer’s cost, which cost shall be commercially reasonable and included in the Budget. Cempra shall also reimburse Optimer for commercially reasonable and documented external out-of-pocket expenses consistent with the Work Plan and Budget that Optimer incurs for performing such work, including without limitation commercially reasonable and documented payments to any Third Party manufacturer for production of Macrolide Antibiotics, Test Products and/or Cempra Products. At the end of each calendar quarter, Optimer shall submit to Cempra an invoice that sets forth in reasonable detail the internal costs and external expenses Optimer has incurred in performing its obligations under the Work Plan and Budget. Cempra shall remit payment to Optimer within thirty (30) days following Cempra’s receipt of such invoice. Any disputes arising between the Parties related to the amounts invoiced under this Section 3.6 shall be resolved in accordance with Article 12. Notwithstanding anything to the contrary, (i) Cempra shall not be obligated to pay Optimer any amounts with respect to Optimer’s performance of its obligations under the Research Program except as specifically described in any Budgets established by the Joint Steering Committee, (ii) Optimer shall not incur any Third Party costs in performing under the Research Program, and Cempra shall not be responsible for the reimbursement of any such Third Party costs, except as approved in advance by the Joint Steering Committee, and (iii) Cempra shall not be obligated to reimburse any costs of Optimer incurred in performing its obligations under the Research Program to the extent such costs are covered by any grant funding provided to Optimer (including but not limited to any SBIR or other government grants).

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3.7Conduct of Research.  The Parties shall use Diligent Efforts to conduct their tasks and responsibilities under the Work Plan and Budget throughout the Research Program. In addition, the Parties shall conduct their tasks and responsibilities under the Research Program in compliance in all material respects with the requirements of applicable laws, rules and regulations and all applicable GLP to attempt to achieve their objectives consistent with industry standards. Optimer shall use commercially reasonable efforts to (i) perform in accordance with, maintain, and obtain any awarded, active, or future grants (including but not limited to any SBIR or other government grants) concerning research or development related to the research and development of Macrolide Antibiotics, Test Products, and/or Cempra Products (collectively, such grants, “Subject Grants”), (ii) ensure payment and receipt of all funds to be provided to Optimer under Subject Grants to the extent covering any of Optimer’s costs of performing of Optimer’s portion of the Research Program, and (iii) ensure that (a) all Optimer Improvements, Optimer Know-How, and results generated, in each case, under the Subject Grants, and all intellectual property rights appurtenant to the foregoing (including but not limited to Optimer Patents) shall be owned by Optimer and included in the licenses granted to Cempra hereunder, subject to any nonexclusive rights the United States government may have in any of the foregoing, by operation of law pursuant to the terms of such Subject Grants.

3.8Acceptance.  If, as set forth in the Work Plan, Cempra has responsibility for performing quality control and/or quality assurance testing on Macrolide Antibiotics and/or Test Products supplied by Optimer, Cempra shall have thirty (30) business days following its receipt of a shipment to confirm that such shipment meets the applicable Specifications. If, as set forth in the Work Plan, Optimer has responsibility for performing quality control and/or quality assurance testing on Macrolide Antibiotics and/or Test Products supplied by Optimer, Cempra shall be deemed to have accepted any delivery of Macrolide Antibiotics and/or Test Products supplied by Optimer unless Cempra gives Optimer written notice of its rejection within fifteen (15) business days of delivery, unless any defect in the Macrolide Antibiotics and/or Test Products could not have been identified by reasonable visual examination, in which event Cempra shall not be deemed to have accepted such Macrolide Antibiotics and/or Test Products until fifteen (15) business days after the date when such defect could first have been reasonably identified by Cempra. If Cempra reasonably rejects in whole or in part any nonconforming shipment at any time following its receipt thereof, Cempra shall provide Optimer written notice of such rejection within the applicable time period described above. If nonconforming Macrolide Antibiotics or Test Products are delivered to Cempra by Optimer in the course of the Research Program, Optimer shall, if and as elected by Cempra in its sole discretion (i) use commercially reasonable efforts to replace in a timely manner the nonconforming Macrolide Antibiotics or Test Products at no additional cost to Cempra or (ii) refund to Cempra any amounts paid to Optimer with respect to the manufacture or supply of such Macrolide Antibiotics or Test Products.

4.DEVELOPMENT AND COMMERCIALIZATION

4.1Development Plan; Reports.  The Development of Cempra Products shall be governed by a development plan developed by Cempra, in consultation with the Joint Steering Committee, subject to amendment at any time by Cempra, that describes the proposed overall program of Development (the “Development Plan”). Cempra shall engage, at its sole expense, a Scientific Advisory Board, which shall, during the Research Term, include one representative of Optimer, initially to be Yoshi Ichikawa, Ph.D., to review and comment on the Development Plan. During the Research Term, Optimer and the Joint Steering Committee shall have the right to comment and make suggestions with respect to the Development Plan; provided, however, that Cempra shall have the sole right and responsibility for determining the Development Plan for Cempra Products. Each Party shall conduct its Development of Products in compliance in all material aspects with the requirements under all applicable laws, rules and regulations, including without limitation applicable GLP, GCP and GMP. Each Party shall keep the other Party and, during the Research Term, the Joint Steering Committee regularly informed on a semiannual basis via summary updates with respect to its material Development and Commercialization

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activities and those of its Affiliates and Third Party sublicensees. Such reports shall be the Confidential Information of a Party and subject to applicable provisions set forth in Article 8.

4.2Regulatory Matters.  Cempra shall have control of and be responsible for all regulatory applications, filings and communications with regulatory authorities regarding Cempra Products, including obtaining Regulatory Approval of Cempra Products, in any jurisdiction in the Territory. Cempra shall keep Optimer regularly informed of its efforts and progress with respect to regulatory matters and approvals on a semiannual basis. Cempra shall own all the Regulatory Filings it makes and Regulatory Approvals it obtains. Optimer shall have the right of access to such regulatory documents and material for its use in obtaining Regulatory Approval in ASEAN Countries (subject to any payment obligations under Sections 6.6 and 6.7). Optimer shall cooperate with Cempra in all such regulatory efforts as reasonably requested by Cempra and provide all reasonable assistance to Cempra. If and as requested by Cempra, Optimer shall be responsible, at the expense of Cempra, which expense shall be reasonable, documented, and agreed upon in advance by the parties, for preparing and providing to Cempra in a timely manner all documents and submissions that relate directly to the manufacturing of Cempra Product, as reasonably required for Regulatory Filings and Regulatory Approval of the Cempra Product in the Territory, including the CMC of any IND or NDA in electronic format, for filing by Cempra.

4.3Manufacture and Supply.  With respect to the Territory, and except as may otherwise be specified in the Work Plan and Budget, Section 3.5, or any separate clinical supply agreement entered into by the Parties, Cempra shall, as between the Parties, be responsible for the manufacture of clinical materials for each Cempra Product, and for the commercial supply of each Cempra Product, and for all costs associated therewith. Cempra shall use Diligent Efforts to make necessary Regulatory Filings to obtain, or cause a Third Party manufacturer to obtain, Regulatory Approval in the Territory for the manufacture of Cempra Products.

4.4Development and Commercialization Costs.  Cempra shall be responsible for all costs associated with its Development and Commercialization of the Cempra Products, including the manufacture, marketing and commercialization of such Cempra Products in the Field and in the Territory, provided that, notwithstanding the foregoing, Cempra’s only obligations to Optimer with respect to any such costs shall solely be as provided for in Section 3 and 4.2, or as otherwise agreed to by the parties in writing.

4.5Third Party Commercialization.  Subject to the terms and conditions set forth in Section 5.2, Cempra may utilize, at its discretion, Third Party contractors, distributors, marketing organizations, agents or sublicensees to research, develop, manufacture, supply, promote, market, distribute, and/or sell Cempra Products in one or more countries or jurisdictions in the Territory.

4.6Pricing.  Cempra shall be solely responsible for pricing and other terms of sale for Cempra Products.

4.7Diligent Efforts; Decision Not to Develop.

(a)Cempra shall, itself and/or through its Affiliates and Third Party sublicensees, use Diligent Efforts to Develop and Commercialize Cempra Products in the Territory. In the event that Cempra makes a determination not to Develop and Commercialize at least one Cempra Product hereunder, Cempra shall promptly notify Optimer in writing of such determination in writing. If Cempra (itself or through its Affiliates or Third Party sublicensees) does not use Diligent Efforts as set forth in this Section 4.7(a), or if Cempra makes a determination not to further Develop and Commercialize at least one Cempra Product hereunder, then Optimer may terminate this Agreement in accordance with Section 9.3(a) below; provided, however, that if Cempra has notified Optimer in writing of a determination not to Develop and Commercialize at least one Cempra Product, then the cure period set forth in Section 9.3(a) shall not apply.

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(b)Optimer shall, itself and/or through its Affiliates and Third Party sublicensees, use Diligent Efforts to develop and commercialize Products in ASEAN Countries. In the event that Optimer makes a determination not to Develop and Commercialize at least one Product hereunder in ASEAN Countries, Optimer shall promptly notify Cempra in writing of such determination in writing. If Optimer (itself or through its Affiliates or Third Party sublicensees) does not use Diligent Efforts as set forth in this Section 4.7(b), or if Optimer makes a determination not to further Develop and Commercialize at least one Product in ASEAN Countries hereunder, then Cempra may terminate this Agreement in accordance with Section 9.3(a) below; provided, however, that if Optimer has notified Cempra in writing of a determination not to Develop and Commercialize at least one Product in ASEAN Countries, then the cure period set forth in Section 9.3(a) shall not apply.

5.LICENSES AND RELATED RIGHTS

5.1License to Cempra.  Optimer hereby grants to Cempra and its Affiliates an exclusive license, with the right to sublicense as set forth in Section 5.2, under the Optimer Technology and the Optimer Improvements to make, have made, use, sell, offer for sale and import Macrolide Antibiotics, Test Products, and Cempra Products in the Field in the Territory. It is understood and agreed that Optimer retains the right under the Optimer Technology to conduct activities allocated to Optimer in the Research Program.

5.2Cempra Sublicensing.  Cempra and its Affiliates shall have the right to sublicense their rights under Section 5.1 to one or more Third Parties. Cempra shall promptly provide Optimer a written copy of each such sublicense (and each amendment thereto, if any), and in no event more than ten (10) days following its execution, provided that Cempra may redact any portions of such sublicenses (or amendments) disclosing sublicensees’ proprietary information, technology, or research and development plans as reasonably necessary to comply with any confidentiality provisions of such sublicense. Each sublicense shall be consistent with the terms and conditions of this Agreement. For purposes of this Agreement, a Third Party to whom Cempra or its Affiliate grants exclusive rights to market one or more Cempra Products in a given territory shall be deemed a “sublicensee” of Cempra hereunder for such territory.

5.3[***] Intellectual Property.  If Optimer licenses any rights to any Macrolide Antibiotics from [***] or any affiliate thereof during the term of this Agreement, it shall provide prompt written notice thereof to Cempra, identifying such licensed intellectual property, and, if and as elected by Cempra in writing its sole discretion, (i) Patents to which Optimer obtains rights under such a license shall be deemed included in Optimer Patents for purposes of this Agreement and (ii) Know-How to which Optimer obtains rights under such a license shall be deemed include in Optimer Know-How.

5.4Optimer Rights in ASEAN Countries.  Cempra hereby grants to Optimer and its Affiliates an exclusive license, with the right to sublicense as set forth in Section 5.5, in the Field under Cempra Patents and Cempra Know-How to make, have made, use, sell, offer for sale and import Optimer Products in ASEAN Countries, which license shall include a right of reference to all Regulatory Filings, Regulatory Approvals, and supporting data and documentation of Cempra with respect to Cempra Products.

5.5Optimer Sublicensing.  Optimer and its Affiliates shall have the right to sublicense their rights under Section 5.4 to one or more Third Parties. Optimer shall promptly provide Cempra a written copy of each such sublicense (and each amendment thereto, if any), and in no event more than ten (10) days following its execution, provided that Optimer may redact any portions of such sublicenses (or amendments) disclosing sublicensees’ proprietary information, technology, or research and development plans as reasonably necessary to comply with any confidentiality provisions of such sublicense. Each sublicense shall be consistent with the terms and conditions of this Agreement. For purposes of this Agreement, a Third Party to whom Optimer or its Affiliate grants exclusive rights to

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market one or more Optimer Products in a given territory shall be deemed a “sublicensee” of Optimer hereunder for such territory

5.6Bankruptcy.  All rights and licenses granted under or pursuant to any section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101(35A) of the U.S. Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the U.S. Bankruptcy Code. The Parties agree that a Party that is a licensee of such rights under this Agreement shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code, and that upon commencement of a bankruptcy proceeding by or against the licensing Party (such Party, the “Involved Party”) under the U.S. Bankruptcy Code, the other Party (such Party, the “Noninvolved Party”) shall be entitled to a complete duplicate of or complete access to (as such Noninvolved Party deems appropriate), any such intellectual property and all embodiments of such intellectual property, provided the Noninvolved Party continues to fulfill its payment or royalty obligations as specified herein in full. Such intellectual property and all embodiments thereof shall be promptly delivered to the Noninvolved Party (a) upon any such commencement of a bankruptcy proceeding upon written request therefore by the Noninvolved Party, unless the Involved Party elects to continue to perform all of its obligations under this Agreement or (b) if not delivered under (a) above, upon the rejection of this Agreement by or on behalf of the Involved Party upon written request therefor by the Noninvolved Party. The foregoing is without prejudice to any rights the Noninvolved Party may have arising under the U.S. Bankruptcy Code or other applicable law.

5.7Disclosure of Information.  Upon execution of this Agreement and thereafter during the term hereof, each party shall disclose to the other party, in confidence under the terms of Article 8 hereof, (a) all relevant Information as shall become available to it relating to the Macrolide Antibiotics, Test Products and Cempra Products, and (b) all relevant Information as shall become available to it relating to the safety and efficacy of each Macrolide Antibiotic, Test Product, and Cempra Product to the extent necessary or useful to develop or manufacture a Cempra Product. Optimer will use reasonable efforts to disclose to Cempra or, if and as requested by Cempra, to the FDA all relevant Information in its possession required for Cempra to register for sale or obtain approval for sale of each Cempra Product.

5.8No Implied Licenses.  Other than those rights and licenses expressly granted herein, no other rights or licenses are granted or shall be deemed granted under this Agreement by either Party.

6.FINANCIAL TERMS

6.1Upfront Payment.  Cempra shall issue Optimer [***] [***] [***] shares of Cempra common stock ([***]% of total number of outstanding shares as determined on a fully-diluted basis as of the Effective Date), within thirty (30) after the Effective Date of this Agreement. The Cempra common stock issued to Optimer pursuant to this Section 6.1 shall not be subject to dilution until after Cempra closes on an Equity Investment (as defined below). Upon closing of an Equity Investment, Cempra shall issue Optimer additional shares of Cempra common stock sufficient to ensure that the total number of shares of Cempra common stock held by Optimer immediately following such Equity

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Investment equals the percentage of Cempra’s total number of outstanding shares (as calculated on a fully-diluted basis immediately following the Equity Investment) noted below:

Gross Proceeds to Cempra in Equity Financing	Percentage of Cempra Common Stock to be Held by Optimer
$[***] to $[***]	[***]%
$[***] to $[***]	[***]%
$[***] to $[***]	[***]%
$[***] to $[***]	[***]%
$[***] or more	[***]%

Following the first such issuance of additional shares, all shares issued to Optimer will be subject to dilution on a pari passu basis with the Cempra common stock held by other holders of Cempra common stock and Optimer shall not be entitled to any further shares of stock under this Section 6.1. For purposes of this Agreement, an “Equity Investment” shall mean Cempra’s issuance and sale of equity securities to venture capital, institutional, corporate, or private investors resulting in aggregate gross proceeds to Cempra of at least [***] [***]. The issuances of stock to Optimer under this Section 6.1 shall be done pursuant to separate Subscription Agreements, a form of which is attached hereto as Schedule 6.1(1), and the Cempra common stock held by Optimer shall be subject to a shareholders agreement, which shall initially be in the form of set forth at Schedule 6.1(2). Optimer agrees to enter into reasonable or customary agreements required by any future equity investors regarding subjecting Optimer’s shares of Cempra common stock to rights of first refusal and co-sale, such rights to terminate on an initial public offering of Cempra stock pursuant to a registration statement filed pursuant to the Securities Act of 1933, as amended.

6.2Milestone Payments to Optimer.

(a)Cempra shall pay to Optimer a milestone payment (the “[***] Milestone Payment”) in the amount of $[***] upon Cempra’s, its Affiliate’s, or their sublicensee’s [***] (the “[***] Milestone”), and the [***] Milestone Payment shall be payable in cash or Cempra capital stock, as further described below. Cempra shall notify Optimer within thirty (30) days of its determination that a [***] Milestone has occurred. Optimer shall indicate in writing, within ten (10) business days of such notice from Cempra, whether it elects the [***] Milestone Payment to be paid in cash or shares of Cempra capital stock having a Fair Market Value, as calculated as of the date the [***] Milestone is achieved, equal to the [***] Milestone Payment; in the absence of such election within such ten (10) business day period, Cempra shall be entitled to make such election in its sole discretion. The [***] Milestone Payment shall be paid (or, if to be paid in Cempra capital stock, such stock shall be issued) no later than twenty (20) days after the earlier of (i) the date on which Optimer provides its written election, as described above, or (ii) the expiration of the ten (10) business day period referenced above. Only one [***] Milestone Payment shall be payable by Cempra under this Agreement, regardless of the number of Cempra Products or indications therefor developed by Cempra, its Affiliates, or their sublicensees under this Agreement.

(b)Cempra shall pay to Optimer a milestone payment (each, a “[***] Milestone Payment”) in the amount of $[***] upon Cempra’s, its Affiliate’s, or their sublicensee’s completion of the first [***] Trial of each Cempra Product resulting in data reasonably sufficient to support the conduct of a [***] Trial with respect to such Cempra Product (the “[***] Milestone”), and the initial [***] Milestone Payment shall be payable in cash or Cempra capital stock, as further described below. Cempra shall notify Optimer within thirty (30) days of its determination that a [***] Milestone has occurred. Optimer shall indicate in writing, within ten (10) business days of the initial such notice from Cempra, whether it elects the initial [***] Milestone Payment to be paid in cash or shares of Cempra capital stock having a Fair Market Value, as calculated as of the date the initial [***] Milestone is achieved, equal to the

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[***] Milestone Payment; in the absence of such election within such ten (10) business day period, Cempra shall be entitled to make such election in its sole discretion. The initial [***] Milestone Payment shall be paid (or, if to be paid in Cempra capital stock, such stock shall be issued) no later than twenty (20) days after the earlier of (i) the date on which Optimer provides its written election, as described above, or (ii) the expiration of the ten (10) business day period referenced above; all other [***] Milestone Payments shall be paid in immediately available funds, pursuant to Section 6.9 below, no later than thirty (30) days following the achievement of such [***] Milestone. Only one [***] Milestone Payment shall be payable by Cempra under this Agreement with respect to each Cempra Product, regardless of the number of indications therefor developed by Cempra, its Affiliates, or their sublicensees under this Agreement.

(c)In addition to the Phase 2 Milestone Payments, in the event that (i) Cempra or an Affiliate thereof sublicenses rights for Development and Commercialization of a Cempra Product to a Third Party sublicensee and (ii) Cempra, an Affiliate, or such sublicensee completes a Phase 3 Trial of such Cempra Product resulting in data sufficient to support Regulatory Approval of such Cempra Product (the date upon which both of the foregoing have been achieved, the “Sublicensee Milestone”), then Cempra shall pay to Optimer (a) the following amounts with respect to each of the first two (2) Cempra Products to achieve the Sublicensee Milestone: (1) $[***] within thirty (30) days after each such Cempra Product achieves the Sublicensee Milestone (the “Initial Sublicensee Milestone Payments”) and (2) [***] percent ([***]%) of all Sublicensing Revenue, if any, received in excess of $[***] with respect to each such Cempra Product from the Third Party sublicensee(s) for such Cempra Product (to be paid to Optimer within thirty (30) days of Cempra’s receipt of each applicable payment of Sublicensing Revenue from such sublicensee(s)) (“Trailing Sublicensee Milestone Payments”) and, with respect to each of the subsequent two Cempra Products to achieve the Sublicensee Milestone, (b) $[***] within thirty (30) days after the date upon which such subsequent Cempra Product achieves the Sublicensee Milestone (“Subsequent Sublicensee Milestone Payments”; collectively, with all of the foregoing payments described in this subsection (c), the “Sublicensee Milestone Payments”). Cempra shall notify Optimer within thirty (30) days of each of the first four occurrences of the Sublicensee Milestone.

Notwithstanding anything to the contrary, (i) the Initial Sublicensee Milestone Payment shall only be payable by Cempra [***] under this Agreement, (ii) an Initial Sublicensee Milestone Payment shall not be due or payable under this Agreement with respect to a particular Cempra Product if the Initial Cempra Milestone Payment (as defined in Section 6.2(d) below) becomes due for such Cempra Product prior to the date upon which the applicable Initial Sublicensee Milestone Payment becomes due for such Cempra Product, (iii) the aggregate, combined, total number of Subsequent Sublicensee Milestone Payments and Subsequent Cempra Milestone Payments due under this Agreement shall be [***] (regardless of the number of Cempra Products or indications therefor), and (iv) a Subsequent Sublicensee Milestone Payment shall not be due or payable under this Agreement with respect to a particular Cempra Product if the Subsequent Cempra Milestone Payment (as defined in Section 6.2(d) below) becomes due with respect to such Cempra Product prior to the date upon which the Subsequent Sublicensee Milestone Payment becomes due with respect thereto. Except with respect to Trailing Sublicensee Milestone Payments, and notwithstanding anything to the contrary in this Agreement, the total possible combined aggregate amount due Optimer under this Section 6.2(c) and Section 6.2(d) below shall not exceed, and Cempra shall not be obligated to pay Optimer any amounts in excess of, $[***].

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(d)In addition to the [***] Milestone Payments, if, prior to the occurrence of a Sublicensee Milestone with respect to a Cempra Product, an [***] is obtained (the “Cempra Milestone”), Cempra shall pay Optimer (i) $[***] with respect to each of the first [***] Cempra Products to achieve the Cempra Milestone (the “Initial Cempra Milestone Payments”) and (ii) $[***] with respect to each of the subsequent two Cempra Products to achieve the Cempra Milestone (the “Subsequent Cempra Milestone Payments”; collectively, with the Initial Cempra Milestone Payment, the “Cempra Milestone Payments”) within, in each case, thirty (30) days of the first anniversary of such Cempra Product’s achievement of the Cempra Milestone.

Notwithstanding anything to the contrary, each Cempra Milestone Payment (i) shall only be payable by Cempra once under this Agreement with respect to a particular Cempra Product, regardless of the number of indications therefor, (ii) an Initial Cempra Milestone Payment shall not be due or payable under this Agreement with respect to a particular Cempra Product if an Initial Sublicensee Milestone Payment (as defined in Section 6.2(c) above) becomes due with respect to such Cempra Product prior to the date upon which the Initial Cempra Milestone Payment becomes due with respect to such Cempra Product, (iii) the aggregate, combined, total number of Subsequent Sublicensee Milestone Payments and Subsequent Cempra Milestone Payments due under this Agreement shall be [***] (regardless of the number of Cempra Products or indications therefor), and (iv) a Subsequent Cempra Milestone Payment shall not be due or payable under this Agreement with respect to a particular Cempra Product if the Subsequent Sublicensee Milestone Payment (as defined in Section 6.2(c) above) becomes due with respect to such Cempra Product prior to the date upon which the Subsequent Cempra Milestone Payment becomes due with respect thereto.

(e)As a condition to the issuance(s) of Cempra capital stock to Optimer pursuant to Sections 6.2(a) and/or 6.2(b), as applicable, Optimer shall enter into reasonable or customary agreements (including but not limited to subscription or purchase agreements) substantially consistent with those entered into by other holders of such shares of stock, including but not limited to investors, as applicable, and which may concern the issuance of such stock, voting provisions, and/or rights of first refusal and co-sale with respect to such shares.

6.3Royalty Payments to Optimer.  For the duration of the applicable Royalty Term for each Cempra Product, Cempra shall pay to Optimer the following royalty payments, subject to adjustment as described in Sections 6.4 and 6.5, based on Net Sales of Cempra Products sold in the Territory by Cempra, its Affiliates, and their Third Party sublicensees:

(i)[***] percent ([***]%) of Net Sales for the first $[***] of aggregate worldwide Net Sales of Cempra Products sold by Cempra, its Affiliates, and their Third Party sublicensees in a particular calendar year; and

(ii)[***] percent ([***]%) of Net Sales for the portion, if any, of aggregate worldwide Net Sales of Cempra Products sold by Cempra, its Affiliates, and their Third Party sublicensees exceeding $[***] in a particular calendar year.

As an example of the royalty calculation contemplated above, if aggregate worldwide Net Sales of Cempra Products by Cempra, its Affiliates, and their Third Party sublicensees in a particular calendar year total $[***], Cempra shall owe Optimer $[***] under this Section 6.3 ([***]% × $[***] = $[***]; [***]% of $[***] = $[***]; $[***] + $[***] = $[***]).

6.4Third Party Royalties on Cempra Products.  In the event that:

(a)a Cempra Product is deemed by a final, unappealable decision of a court of competent jurisdiction to infringe a claim of a patent(s) owned or controlled by a Third Party in any given country of the Territory, and Cempra, an Affiliate thereof, or any sublicensee thereof licenses such patent(s) in settlement of such claims (“Cempra Infringement License”),

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(b)Cempra, an Affiliate thereof, or any sublicensee of either of the foregoing determines that it is commercially, reasonably necessary or advisable to pay royalties to a Third Party to obtain a license to practice any Third Party’s rights in order to manufacture, use, Commercialize or Develop a Cempra Product in any given country of the Territory (“Cempra Necessary License”), or

(c)it would be useful to obtain a license to practice any Third Party’s rights that could improve, enhance, or modify a Cempra Product in any given country of the Territory (“Cempra Improvement License”), as determined reasonably and in good faith by Cempra, an Affiliate thereof, or any sublicense of either of the foregoing,

then Cempra may deduct any fees, milestones or royalties paid for Cempra Infringement Licenses, Cempra Necessary Licenses and Cempra Improvement Licenses due to such Third Parties (or such amounts paid by Cempra, its Affiliate, or any sublicensee of either of the foregoing in settlement of such infringement action) (collectively, all of the foregoing, “Third Party Royalties”) from the royalties otherwise due to Optimer with respect to Net Sales; provided, however, that, notwithstanding the foregoing, the total amount due to Optimer under this Agreement with respect to Net Sales for Cempra Products sold by Cempra and its Affiliates any particular calendar quarter shall not be reduced by more than [***] percent ([***]%) as a result of any such deduction, and any amounts not deducted in a calendar quarter shall be carried forward for deduction in the subsequent calendar quarter(s), subject to such [***] percent ([***]%) limitation in each case.

6.5Cempra Compulsory Licenses.  Should a compulsory license be granted, or be the subject of a possible grant, to a Third Party under the applicable laws of any country in the Territory under the Optimer Patents and/or Optimer Know-How, or to any Cempra Product, the Party receiving notice thereof or otherwise becoming aware thereof shall promptly notify the other Party thereof, including any material information concerning such compulsory license, and the applicable royalty rate payable hereunder for sales of Cempra Products in such country will be adjusted to match any lower royalty rate granted to such Third Party for such country with respect to the sales of such Cempra Products, subject to any adjustments pursuant to Section 6.4 above.

6.6Milestone Payments to Cempra.  For each of the first [***] Optimer Products to achieve the Optimer Milestone (as defined below), Optimer shall, within two (2) years of the earlier of (i) the [***] of an Optimer Product in any ASEAN Country by Optimer, an Affiliate thereof, or any sublicensee of either of the foregoing or (ii) [***] of an Optimer Product in any ASEAN Country, pay Cempra $[***] with respect to such Optimer Product (the first to occur of the foregoing with respect to an Optimer Product, the “Optimer Milestone”). Such payment shall be due with respect solely to each of the first [***] (2) Optimer Products to achieve the Optimer Milestone. Optimer shall notify Cempra in writing within thirty days of each occurrence of the Optimer Milestone.

6.7Royalties to Cempra.  For the duration of the applicable Royalty Term for each Optimer Product, Optimer shall pay to Cempra the following royalty payments based on Net Sales of Optimer Products in ASEAN Countries by Optimer, its Affiliates, and their Third Party sublicensees:

(iii)[***] percent ([***]%) of Net Sales for the first $[***] of aggregate worldwide Net Sales of Optimer Products by Optimer, its Affiliates, and their Third Party sublicensees in a particular calendar year; and

(iv)[***] percent ([***]%) of Net Sales for the portion, if any, of aggregate worldwide Net Sales of Optimer Products by Optimer, its Affiliates, and their Third Party sublicensees exceeding $[***] million in a particular calendar year.

As an example of the royalty calculation contemplated above, if aggregate Net Sales of Optimer Products in a particular calendar year total $[***], Optimer shall owe Cempra $[***] under this Section 6.7 ([***]% × $[***] = $[***]; [***]% of $[***] = $[***]; $[***] + $[***] = $[***]).

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6.8Third Party Royalties on Optimer Products.  In the event that:

(a)a Optimer Product is deemed by a final, unappealable decision of a court of competent jurisdiction to infringe a claim of a patent(s) owned or controlled by a Third Party in any given country of the Territory, and Optimer, an Affiliate thereof, or any sublicensee thereof licenses such patent(s) in settlement of such claims (“Optimer Infringement License”),

(b)Optimer, an Affiliate thereof, or any sublicensee of either of the foregoing determines that it is commercially, reasonably necessary or advisable to pay royalties to a Third Party to obtain a license to practice any Third Party’s rights in order to manufacture, use, Commercialize or Develop an Optimer Product in any given country of the Territory (“Optimer Necessary License”), or

(c)it would be useful to obtain a license to practice any Third Party’s rights that could improve, enhance, or modify a Optimer Product in any given country of the Territory (“Optimer Improvement License”), as determined reasonably and in good faith by Optimer, an Affiliate thereof, or any sublicense of either of the foregoing,

then Optimer may deduct any fees, milestones or royalties paid for Optimer Infringement Licenses, Optimer Necessary Licenses and Optimer Improvement Licenses due to such Third Parties (or such amounts paid by Optimer, its Affiliate, or any sublicensee of either of the foregoing in settlement of such infringement action) (collectively, all of the foregoing, “Third Party Royalties”) from the royalties otherwise due to Cempra with respect to Net Sales; provided, however, that, notwithstanding the foregoing, the total amount due to Cempra under this Agreement with respect to Net Sales for Optimer Products sold by Optimer and its Affiliates any particular calendar quarter shall not be reduced by more than [***] percent ([***]%) as a result of any such deduction, and any amounts not deducted in a calendar quarter shall be carried forward for deduction in the subsequent calendar quarter(s), subject to such [***] percent ([***]%) limitation in each case.

6.9Optimer Compulsory Licenses.  Should a compulsory license be granted, or be the subject of a possible grant, to a Third Party under the applicable laws of any country in the Territory under the Cempra Patents and/or Cempra Know-How, or to any Optimer Product, the Party receiving notice thereof or otherwise becoming aware thereof shall promptly notify the other Party thereof, including any material information concerning such compulsory license, and the applicable royalty rate payable hereunder for sales of Optimer Products in such country will be adjusted to match any lower royalty rate granted to such Third Party for such country with respect to the sales of such Optimer Products, subject to any adjustments pursuant to Section 6.8 above.

6.10Payments and Payment Reports.  Except as otherwise provided herein, all royalties and payments due under this Section 6 shall be paid within ninety (90) days of the end of the relevant calendar quarter for which the applicable Net Sales occur and/or revenues are received, subject, with respect to Net Sales, as applicable, by Third Party sublicensees, to any longer reporting periods which may be reasonably agreed to by Cempra, Optimer, or their Affiliates with respect to such sublicensees. Each royalty payment shall be accompanied by a statement stating (as applicable) the number, description, and aggregate Net Sales, by country, of each Product sold during the relevant calendar quarter by Cempra or Optimer, as applicable, and their respective Affiliates and Third Party sublicensees and detailing the calculation of royalties due for such calendar quarter, as well as, with respect to Cempra’s reporting obligations, an accounting of Sublicense Revenues received in the applicable calendar quarter.

6.11Payment Method.  Except with respect to any milestone payments due under Sections 6.2 (a) and (b) that are paid in Cempra stock in accordance therewith, all payments due under this Agreement shall be made by bank wire transfer in immediately available funds to an account

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designated by the Party owed such payments. All payments hereunder shall be made in the legal currency of the United States of America.

6.12Taxes.  It is understood and agreed between the Parties that any payments made under Section 6.1, 6.2, or 6.6 of this Agreement are inclusive of any value added or similar tax imposed upon such payments. In addition, in the event any of the payments made by either Party (the “Paying Party”) pursuant to Article 6 become subject to withholding taxes under the laws of any jurisdiction, such amounts payable or, in the case of stock to be issued to Optimer pursuant to Sections 6.2(a) or (b), as applicable, shares issuable to the other Party (the “Paid Party”) shall be reduced by the amount of taxes deducted and withheld, and the Paying Party shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to the Paid Party an official tax certificate or other evidence of such tax obligations together with proof of payment from the relevant Governmental Authority of all amounts deducted and withheld sufficient to enable the Paid Party to claim such payment of taxes. Any such withholding taxes required under applicable law to be paid or withheld shall be an expense of, and borne solely by, the Paid Party. The Paying Party will provide the Paid Party with reasonable assistance to enable the Paid Party to recover such taxes as permitted by law.

6.13Blocked Currency.  In each country where the local currency is blocked and cannot be removed from the country under such country’s applicable law, royalties accrued in that country shall be paid to a Party in the country in local currency by deposit in a local bank designated by such Party, unless the Parties otherwise agree.

6.14Sublicenses.  For avoidance of doubt, the Parties agree that in the event that a Party grants licenses or sublicenses to Third Parties to sell Products, the licensing (or sublicensing) Party shall use commercially reasonable efforts to include in such licenses or sublicenses an obligation for the licensee or sublicense to account for and report its sales of Products on a basis reasonably sufficient to enable payment of royalties hereunder with respect to such sales as if such sales of the licensee or sublicensee were Net Sales of the applicable Party.

6.15Foreign Exchange.  Conversion of a Party’s Net Sales recorded in local currencies to U.S. dollars will be performed by such Party in a manner consistent with such Party’s normal practices used to prepare its audited financial statements for external reporting purposes, provided that such practices use a widely accepted source of published exchange rates. Each Party shall notify the other of the conversion method(s) used by it for such purposes.

6.16Interest.  If either Party fails to make any payment when due to the other Party under this Agreement, then interest shall accrue on a daily basis at a rate equal to the thirty (30) day U.S. dollar LIBOR rate effective for the date that payment was due, as published by The Wall Street Journal. The obligation to pay interest on such late payments set forth herein shall not be construed to limit or restrict a Party’s right to terminate this Agreement in accordance with the terms and conditions of Section 9.3.

6.17Records; Audits.  Each Party shall keep or cause to be kept such records as are required to determine, in a manner consistent with generally accepted accounting principles in the United States, the sums or credits due under this Agreement, including, but not limited to Net Sales. At the request (and expense) of either Party, the other Party and its Affiliates and sublicensees shall permit an independent certified public accountant appointed by such Party and reasonably acceptable to the other Party, at reasonable times not more than once a year and upon reasonable notice, to examine only those records as may be necessary to determine, with respect to any calendar year ending not more than three (3) years prior to such Party’s request, the correctness or completeness of any royalty report or payment made under this Agreement. The Party requesting the audit shall bear the full cost of the performance of any such audit, unless such audit discloses a variance adverse to the Party requesting the audit of more than five percent (5%) from the amount of the original invoice, report, royalty or

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payment calculation, in which case the Party being audited shall bear the reasonable, documented cost of the performance of such audit. Each Party shall promptly pay to the other Party the amount of any underpayment of royalties revealed by an examination and review. Any overpayment by a Party of royalties or any other amount paid to the other Party revealed by an examination and review shall, in the overpaying Party’s sole discretion, (i) be fully-creditable against future payments under this Agreement or (ii) refunded to the overpaying Party within sixty (60) business days of its request.

7.Intellectual Property

7.1General Principles.

(a)The Optimer Technology existing as of the Effective Date shall, subject to the rights granted under this Agreement, remain the sole property of Optimer and may be licensed by Optimer for any purpose that is not inconsistent nor in conflict with this Agreement.

(b)All right, title, and interest in any and all Know-How or Inventions generated, conceived or reduced to practice by employees, agents or independent contractors of Optimer or its Affiliates, solely or jointly with employees, agents or independent contractors of Cempra or any Affiliate thereof, in connection with the performance of Optimer’s obligations under this Agreement, or that relate to Cempra Products in any manner, except any such Know-How or Inventions that are generated using grant monies provided by the United States government to Optimer and which are, therefore, subject to the limitations and requirements of such grants with respect to such intellectual property (collectively, all of the foregoing, “Optimer Inventions”), and all right, title, and interest in all intellectual property rights appurtenant thereto, shall vest in Cempra, subject to the terms of the license grant set forth in Article 5 and Optimer’s ownership of the Optimer Technology and sole or joint ownership (as applicable) of Optimer Improvements. Optimer shall notify Cempra promptly in writing and in reasonable detail of any Optimer Inventions. Optimer hereby assigns all right, title, and interest to Optimer Inventions and all intellectual property rights appurtenant thereto to Cempra, and agrees to take all actions and execute all documents, and to cause its Affiliates, employees, agents, and independent contractors to execute all documents and take all actions, requested by Cempra to effect the purposes of the foregoing. Optimer hereby appoints Cempra as it attorney to effect on its behalf any assignment of the Optimer Inventions which Optimer has failed to make to Cempra within 7 days in accordance with the terms of this Section with the right but not the obligation to do any and all acts and things reasonably necessary to effect unconditionally such assignment including the right for Cempra to execute all deeds, documents or instruments and swear any oaths or declarations in the name of and on behalf of Optimer necessary for such purpose. Cempra’s appointment as attorney under this Section is given to secure Cempra’s interest in the Optimer Inventions and intellectual property rights appurtenant thereto and to secure the performance of Optimer’s obligations to assign the Optimer Inventions and intellectual property rights appurtenant thereto in the event of termination and such appointment shall be perpetual and irrevocable, notwithstanding Optimer entering into liquidation, being wound-up or dissolved or having a receiver, manager, administrator, administrative receiver or similar person appointed over any of its assets.

(c)Subject to Section 7.1(d) below, Optimer and Cempra shall each own any inventions conceived solely by its own employees or agents, other than those inventions that are Optimer Inventions (“Other Sole Inventions”), including but not limited to (i) Know-How, conceived or reduced to practice during the term of this Agreement or (ii) such inventions generated using grant monies provided by the United States government to Optimer and which are, therefore, subject to the limitations and requirements of such grants with respect to such intellectual property. Subject to Section 7.1(d) below, Cempra and Optimer shall each own an undivided one-half interest in any inventions conceived jointly by employees or agents of both Cempra and Optimer, other than those inventions that are Optimer Inventions (“Other Joint Inventions”),

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including but not limited to (i) Know-How conceived or reduced to practice during the term of this Agreement and (ii) such inventions generated using grant monies provided by the United States government to Optimer and which are, therefore, subject to the limitations and requirements of such grants with respect to such intellectual property. Subject to Sections 7.1(d), 7.2, and 7.3 below, each Party may use, protect, license and enforce its own Other Sole Inventions in its discretion. The determinations of inventorship, and each Party’s rights and interests with respect to Other Joint Inventions and jointly created Know-How relating to such Other Joint Inventions, shall be the same as provided with respect to patents under United States law, and in particular, subject in all cases to the provisions of this Agreement, either Party may exploit or grant licenses under such Other Joint Inventions and jointly created Know-How without a duty of accounting to the other Party.

(d)Notwithstanding anything to the contrary, the exclusive license granted in Section 5.1 above shall include rights to Optimer Improvements, Optimer’s rights in Other Joint Inventions and Other Sole Inventions, Optimer’s rights in all Patents claiming any of the foregoing, and Optimer’s rights in all Know-How related to all of the foregoing, subject to any nonexclusive rights the United States government may have in any of the foregoing, by operation of law pursuant to the terms of any applicable grants.

(e)Notwithstanding anything to the contrary, the exclusive license granted in Section 5.4 above shall include rights to Cempra’s rights in Other Joint Inventions and Other Sole Inventions, Cempra’s rights in all Patents claiming any of the foregoing, and Cempra’s rights in all Know-How related to all of the foregoing.

7.2Patent Prosecution and Maintenance of Optimer Patents.  Optimer shall be responsible for, and be obligated to the extent it is commercially reasonable to diligently pursue, or to cause Optimer’s licensors to diligently pursue, the preparation, filing, prosecution (including but not limited to, by conducting interferences, oppositions and reexaminations or other similar proceedings), maintenance (by timely paying all maintenance fees, renewal fees and other applicable fees and costs), and extension of Patents within the Optimer Patents (including but not limited to those claiming Optimer’s Other Sole Inventions). Optimer will regularly advise Cempra of the status of all pending Optimer Patent applications, including any related hearings or other proceedings, and, at Cempra request, will provide Cempra with copies of all documentation concerning such applications, including all correspondence to and from any Governmental Authority. Optimer shall consult with and obtain written consent from Cempra prior to abandoning any Optimer Patent, which consent shall not be unreasonably withheld, delayed, or conditioned. Optimer will solicit Cempra’s advice and review of such applications and important prosecution matters related thereto in reasonably sufficient time prior to filing thereof, and will take into account Cempra’s reasonable comments related thereto. The costs of prosecution and maintenance of Optimer Patents shall be borne by Optimer.

7.3Patent Prosecution and Maintenance of Cempra Patents.  Cempra shall be responsible for, and be obligated to the extent it is commercially reasonable to diligently pursue, or to cause Cempra’s licensors to diligently pursue, the preparation, filing, prosecution (including but not limited to, by conducting interferences, oppositions and reexaminations or other similar proceedings), maintenance (by timely paying all maintenance fees, renewal fees and other applicable fees and costs), and extension of Patents within the Cempra Patents (including but not limited to those claiming Cempra’s Other Sole Inventions). Cempra will regularly advise Optimer of the status of all pending Cempra Patent applications, including any related hearings or other proceedings, and, at Optimer’s request, will provide Optimer with copies of all documentation concerning such applications, including all correspondence to and from any Governmental Authority. Cempra shall consult with and obtain written consent from Optimer prior to abandoning any Cempra Patent, which consent shall not be unreasonably withheld, delayed, or conditioned. Cempra will solicit Optimer’s advice and review of such applications and important prosecution matters related thereto in reasonably sufficient time prior to

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filing thereof, and will take into account Optimer’s reasonable comments related thereto. The costs of prosecution and maintenance of Cempra Patents shall be borne by Cempra.

7.4Patent Prosecution and Maintenance of Patents Claiming Other Joint Inventions.  Subject to Sections 7.7 and 7.8, for Patents claiming Other Joint Inventions (“Joint Invention Patents”), Cempra will have, without prejudice to ownership, the first right to prepare, file and prosecute such Patent applications and maintain any resulting Patents; provided, however, that Cempra may request that Optimer undertake such responsibilities upon written notice to Optimer, and Optimer may agree to do so, in its sole discretion. If Optimer does not agree to undertake such responsibilities within ten (10) days of such request with respect to any such Patents, Cempra shall not have any further obligations to prosecute or maintain such Patents. Within nine (9) months after the filing date of a Patent application in respect of an Other Joint Invention, the Party filing such application will request that the other Party identify those non-priority, non-PCT (“foreign”) countries in which the other Party desires that the filing Party file corresponding Patent applications. Within thirty (30) days after receipt of such request, the other Party will provide to the filing Party a written list of such foreign countries in which the other Party wishes to effect corresponding foreign patent application filings. The Parties will then attempt to agree on the particular countries in which such applications will be filed, provided that in the event agreement is not reached, the issue shall be resolved pursuant to Section 12.3 (“Designated Foreign Filings”). Thereafter, the filing Party will effect all such Designated Foreign Filings in a timely manner. It is presumed unless otherwise agreed in writing by the Parties, that a corresponding PCT application will be filed designating all PCT member countries. Should the Party filing the priority application not agree to file or cause to be filed a Designated Foreign Filing, the other Party will have the right to effect such Designated Foreign Filing.

Regardless of which Party is responsible for preparation, prosecution and maintenance of a Joint Invention Patent, the Parties shall share equally all reasonable, documented costs and expenses incurred in connection with procuring Joint Invention Patents (including entering national phase in all agreed countries), including application preparation, filing fees, prosecution, maintenance and all costs associated with reexamination, oppositions and interference proceedings. The filing Party shall invoice the other Party for such costs and expenses, and the other Party will pay such invoices within thirty (30) days after receipt.

7.5Cooperation.  The Parties agree to cooperate in the preparation and prosecution of all Joint Invention Patent applications filed under Section 7.3, including obtaining and executing necessary powers of attorney and assignments by the named inventors, providing relevant technical reports to the filing Party concerning the Other Joint Invention disclosed in such Joint Invention Patent applications, obtaining execution of such other documents which will be needed in the filing and prosecution of such Joint Invention Patent applications, and, as requested, updating each other regarding the status of such Joint Invention Patent applications. The Parties will reasonably cooperate to obtain any export licenses that might be required for such activities.

7.6Disclosure.  Each party shall make available to the other party in confidence all information in its possession necessary or expedient for the filing of Patents arising out of such party’s performance under this Agreement in all countries of the world.

7.7Infringement.  If in the opinion of either Party any issued Patent contained in the Optimer Patents has been infringed by a Third Party, such Party shall give to the other Party prompt written notice of such alleged infringement.

(a) Optimer Patents.  With respect to any alleged infringement of any Optimer Patents with respect to the rights granted to Cempra under this Agreement, Cempra shall have the first and primary right, but not the obligation, to, in its sole discretion, to initiate, prosecute, and control any action or legal proceedings, and/or enter into a settlement, including any declaratory judgment action, on its behalf or in Optimer’s name, if necessary, with respect to such alleged infringement.

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If, within [***] months of the notice above, Cempra (i) shall have been unsuccessful in persuading the alleged infringer to desist, (ii) shall not have brought and shall not be diligently prosecuting an infringement action, or (iii) has not entered into settlement discussions with respect to such infringement, or if Cempra notifies Optimer that it has decided not to undertake any of the foregoing against any such alleged infringer, then Optimer shall then have the right to bring suit to enforce such Optimer Patents at its own expense. In any such litigation brought by Cempra, Cempra shall have the right to use and sue in Optimer’s name, and Optimer shall cooperate reasonably, as requested by Cempra and at Cempra’s expense (which expense shall be reasonable).

(b) Cempra Patents.  With respect to any alleged infringement of any Cempra Patents with respect to the rights granted to Optimer under this Agreement, Optimer shall have the first and primary right, but not the obligation, to, in its sole discretion, to initiate, prosecute, and control any action or legal proceedings, and/or enter into a settlement, including any declaratory judgment action, on its behalf or in Cempra’s name, if necessary, with respect to such alleged infringement. If, within [***] months of the notice above, Optimer (i) shall have been unsuccessful in persuading the alleged infringer to desist, (ii) shall not have brought and shall not be diligently prosecuting an infringement action, or (iii) has not entered into settlement discussions with respect to such infringement, or if Optimer notifies Cempra that it has decided not to undertake any of the foregoing against any such alleged infringer, then Cempra shall then have the right to bring suit to enforce such Cempra Patents at its own expense. In any such litigation brought by Optimer, Optimer shall have the right to use and sue in Cempra’s name, and Cempra shall cooperate reasonably, as requested by Optimer and at Optimer’s expense (which expense shall be reasonable).

(c) Procedure.  The Party pursuing or controlling any action against an alleged infringer pursuant to the foregoing (the “Controlling Party”) shall be free to enter into a settlement, consent judgment, or other voluntary disposition of any such action, provided, however, that (i) the Controlling Party shall consult with the other Party (the “Secondary Party”) prior to entering into any settlement thereof and (ii) any settlement, consent judgment or other voluntary disposition of such actions which (1) materially limits the scope, validity, or enforceability of any Optimer Patents (if Optimer is the Secondary Party) or Patents Controlled by Cempra (if Cempra is the Secondary Party), (2) subjects the Secondary Party to any non-indemnified liability or obligation, or (3) admits fault or wrongdoing on the part of Secondary Party must be approved in writing by Secondary Party, such approval not to be unreasonably withheld. Secondary Party shall provide the Controlling Party notice of its approval or denial of such approval within ten (10) business days of any request for such approval by the Controlling Party, provided that (i) in the event Secondary Party wishes to deny such approval, such notice shall include a written description of Secondary Party’s reasonable objections to the proposed settlement, consent judgment, or other voluntary disposition and (ii) Secondary Party shall be deemed to have approved such proposed settlement, consent judgment, or other voluntary disposition in the event it fails to provide such notice within such ten (10) business day period. Any recovery or damages received by the Controlling Party with respect to the infringement of a Party’s rights under this Agreement shall be used first to reimburse the Parties for unreimbursed reasonable, documented expenses incurred in connection with such action, and the remainder shall be split [***] ([***]%) to Controlling Party and [***] percent ([***]%) to Secondary Party. Notwithstanding the foregoing, the Secondary Party, at its expense, shall have the right to be represented by counsel of its choice in any such proceeding.

7.8Infringement of Third Party Rights.

(a)If a claim is brought by a Third Party alleging patent infringement by Cempra, Optimer, their Affiliates, or their sublicensees with respect to the manufacture, use, sale, offer for sale or importation of Macrolide Antibiotics, Test Products, Cempra Products, or Optimer Products or any third party

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challenges the validity of any claims of any Optimer Patents or Cempra Patents, each Party will give prompt written notice to the other Party of such claim.

(b)As between the parties to this Agreement, Cempra shall have the first and primary right at its own expense to defend, control the defense of, and/or settle any such claim against Cempra, its Affiliates, or its sublicensees in the Territory, using counsel of its own choice. Cempra shall be free to enter into a settlement, consent judgment, or other voluntary disposition of such action, provided that any settlement, consent judgment or other voluntary disposition of such actions which (i) materially limits the scope, validity, or enforceability of patents included in the Optimer Patents, (ii) subjects Optimer to any nonindemnified liability, or (ii) admits fault or wrongdoing on the part of Optimer must be approved in writing by Cempra, such approval not being unreasonably withheld. Optimer shall provide Cempra notice of such approval or denial of such approval within ten (10) business days of any request for such approval by Cempra, provided that (i) in the event Optimer wishes to deny such approval, such notice shall include a written description of Optimer’s reasonable objections to the proposed settlement, consent judgment, or other voluntary disposition and (ii) Optimer shall be deemed to have approved of such proposed settlement, consent judgment, or other voluntary disposition in the event it fails to provide such notice within such ten (10) business day period. Optimer agrees to cooperate with Cempra in any reasonable manner deemed by Cempra to be necessary in defending any such action. Cempra shall reimburse Optimer for any out of pocket expenses incurred in providing such assistance. Any recovery or damages received by Cempra in any action or settlement under this Section 7.7(b) with respect to the rights licensed to Cempra under this Agreement shall be used first to reimburse the Parties for unreimbursed reasonable, documented expenses incurred in connection with such action, and the remainder shall be split [***] percent ([***]%) to Cempra and [***] percent ([***]%) to Optimer. Notwithstanding the foregoing, either Party, at its expense, shall have the right to be represented by counsel of its choice in any such proceeding controlled by the other Party.

(c)As between the parties to this Agreement, Optimer shall have the first and primary right at its own expense to defend, control the defense of, and/or settle any such claim against Optimer, its Affiliates, or its sublicensees in any ASEAN Countries, using counsel of its own choice. Optimer shall be free to enter into a settlement, consent judgment, or other voluntary disposition of such action with respect to any ASEAN Countries, provided that any settlement, consent judgment or other voluntary disposition of such actions which (i) materially limits the scope, validity, or enforceability of any Patents owned or Controlled by Cempra, (ii) subjects Cempra to any nonindemnified liability, or (ii) admits fault or wrongdoing on the part of Cempra must be approved in writing by Cempra, such approval not being unreasonably withheld. Cempra shall provide Optimer notice of such approval or denial of such approval within ten (10) business days of any request for such approval by Optimer, provided that (i) in the event Cempra wishes to deny such approval, such notice shall include a written description of Cempra’s reasonable objections to the proposed settlement, consent judgment, or other voluntary disposition and (ii) Cempra shall be deemed to have approved of such proposed settlement, consent judgment, or other voluntary disposition in the event it fails to provide such notice within such ten (10) business day period. Cempra agrees to cooperate with Optimer in any reasonable manner deemed by Optimer to be necessary in defending any such action. Optimer shall reimburse Cempra for any out of pocket expenses incurred in providing such assistance. Any recovery or damages received by Optimer in any action or settlement under this Section 7.7(c) with respect to the rights licensed to Optimer under this Agreement shall be used first to reimburse the Parties for unreimbursed reasonable, documented expenses incurred in connection with such action, and the remainder shall be split [***] percent ([***]%) to Optimer and [***] percent ([***]%) to Cempra. Notwithstanding the foregoing, either Party, at its expense, shall have the right to be represented by counsel of its choice in any such proceeding controlled by the other Party.

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7.9Reimbursement.  Each Party shall invoice the other Party for any reasonable, documented costs incurred that are to be borne by the other Party pursuant to this Article 7. Each Party shall pay the other Party such amounts within thirty (30) days of its receipt of any such invoice.

7.10Trademarks.  Cempra may, in its sole discretion, select trademarks for Cempra Products and shall own all such trademarks world-wide. To the extent Cempra pursues trademarks for Cempra Products, as between the parties, Cempra shall have the sole responsibility for the filing, prosecution and maintenance of registrations of product trademarks for Cempra Products, at its sole expense. Optimer shall not have any rights to any trademarks of Cempra under this Agreement; provided that, if it is commercially reasonable to do so, Cempra shall, at Optimer’s request, license such trademarks under a separate agreement to Optimer for use in the ASEAN Countries. Optimer may, in its sole discretion, select trademarks for Optimer Products and shall own all such trademarks world-wide. To the extent Optimer pursues trademarks for Optimer Products, as between the parties, Optimer shall have the sole responsibility for the filing, prosecution and maintenance of registrations of product trademarks for Optimer Products, at its sole expense. Cempra shall not have any rights to any trademarks of Optimer under this Agreement; provided that, if it commercially reasonable to do so, Optimer shall, at Cempra’s request, license such trademarks under a separate agreement to Cempra for use in the Territory.

8.CONFIDENTIALITY

8.1Treatment of Confidential Information.  The Parties agree that during the Term, and for a period of five (5) years after the end of the Term, a Party receiving Confidential Information of the other Party will (a) maintain in confidence such Confidential Information to the same extent such Party maintains its own proprietary industrial information of similar kind and value (but at a minimum each Party shall use commercially reasonable efforts), (b) not disclose such Confidential Information to any Third Party without prior consent of the other Party, and (c) not use such Confidential Information for any purpose except those permitted by this Agreement.

8.2Exceptions.  A Party shall not have the obligations set forth in Section 8.1 with respect to any portion of such Confidential Information that it can show by adequate documentation:

(a)is publicly disclosed by the disclosing Party, either before or after it becomes known to the receiving Party;

(b)was known to the receiving Party, without obligation to keep it confidential, prior to when it was received from the disclosing Party, as demonstrated by receiving Party’s written records;

(c)is subsequently disclosed to the receiving Party without obligation of confidentiality or limitation on use by a Third Party lawfully in possession thereof without obligation to keep it confidential;

(d)has been published by a Third Party; or

(e)has been independently developed by the receiving Party without the aid, application or use of Confidential Information.

8.3Authorized Disclosure.  Notwithstanding Section 8.1, a Party may disclose Confidential Information belonging to the other Party to the extent such disclosure is necessary in the following instances:

(a)filing or prosecuting Patents pursuant to Article 7;

(b)Regulatory Filings;

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(c)prosecuting or defending litigation relating to Macrolide Antibiotics, Test Products or Products;

(d)complying with applicable laws and governmental regulations; and

(e)disclosure, in connection with the performance of this Agreement or exercise of the licenses or rights conveyed herein, to Affiliates, licensees, sublicensees, employees, consultants, or agents of either Party, each of whom prior to disclosure must be bound by substantially similar obligations of confidentiality and non-use at least equivalent in scope to those set forth in this Article 8.

8.4Terms of the Agreement.  The Parties acknowledge that the terms of this Agreement shall be treated as Confidential Information of both Parties. Such terms may be disclosed by a Party to individuals or entities covered by 8.3(e) above, each of whom prior to disclosure must be bound by similar obligations of confidentiality and non-use at least equivalent in scope to those set forth in this Article 8. Disclosure of the terms of this Agreement (but not other Confidential Information received from the other Party) may also be made, under obligations of confidentiality and non use at least equivalent in scope to those set forth in this Article 8, to actual or potential bankers, lenders, investors, acquirors, acquisition targets, and strategic partners of either Party.

8.5Publicity.  The public announcement of the execution of this Agreement is set forth on Schedule 8.5 hereto. Each Party shall be entitled, in its sole discretion, to make public announcements regarding its Development and Commercialization of Products, subject to the other Party’s opportunity to review and comment with respect thereto provided below. In addition, either Party may make a public statement, including in analyst meetings, concerning the Agreement or the progress of the Test Products or Products where such statement is required by law, applicable stock exchange regulation or legal proceedings. In connection with any filing described in the foregoing sentence, such Party shall use commercially reasonable efforts to obtain confidential treatment of economic and trade secret information. In any event, the Parties agree to take all reasonable action to avoid disclosure of Confidential Information except as permitted hereunder, and shall cooperate with each other with respect to all such disclosures. The Party that is required to or has otherwise decided to make a public statement pursuant permitted under this Section 8.5 will give the other Party reasonable advance notice of the text of any proposed statement so that the other Party will have the opportunity to comment upon the statement. Either Party may disclose any matter that has previously been publicly disclosed in accordance with this Section 8.5. Except as described above, neither Party will make any public announcement regarding the terms of or events related to the Agreement without the prior consent of the other Party.

8.6Publications.  Neither Optimer nor its employees, contractors or investigators shall publish or present any information, including without limitation the results of the Research Program or preclinical or clinical studies, with respect to any Macrolide Antibiotic, Test Product or Cempra Product without Cempra’s prior consent (which may be withheld in Cempra’s sole and final discretion), except as permitted under Section 8.3(d) or this Section 8.6. Optimer agrees to provide Cempra a copy of any such proposed publication or presentation at least 60 days prior to its submission for publication, and Cempra shall have 60 days in which to review the proposed publication or presentation for the purposes described below. Cempra may request in writing, and the Optimer shall agree to, (i) the deletion of any of Cempra’s Confidential Information, (ii) any reasonable changes requested by Cempra, consistent with scientific practice, or (iii) a delay of such proposed submission for an additional period, not to exceed ninety (90) days, in order to protect the potential patentability of any technology described therein. Cempra, at its election, shall be entitled to receive in any such publication an acknowledgment of its support of and involvement in the Research Program and its rights to Optimer Technology.

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9.TERM AND TERMINATION

9.1Term.  This Agreement shall become effective on the Effective Date and shall continue on a Product-by-Product (Cempra Product or Optimer Product, as applicable) and country-by-country basis until the earlier of (1) the expiration of the Royalty Term with respect to the applicable Product (Cempra Product or Optimer Product, as applicable) in the applicable country; or (2) the effective date of termination pursuant to Section 9.2 or 9.3 (the “Term”). Upon expiration of this Agreement pursuant to clause (1) above with respect to a particular Product in a particular country, the Parties and their Affiliates shall have the perpetual, unrestricted, fully-paid, royalty-free world-wide right, with rights of sublicense, to make, use, sell, offer for sale, and import such Product in such country.

9.2Termination by Cempra or Optimer.  Cempra may terminate this Agreement at any time upon thirty (30) days prior written notice to Optimer. At any time following the end of the Research Term, Optimer may terminate this Agreement upon thirty (30) days prior written notice to Cempra. In either case, the effects of such termination shall be as further described in Section 9.4 below.

9.3Mutual Termination Rights.  Either Party will have the right to terminate this Agreement upon the following:

(a)It believes that the other Party is in material breach of this Agreement, in which case the non-breaching Party may deliver written notice of such material breach to the other Party, such notice to describe in detail the nature of such breach. The allegedly breaching Party shall have [***] days from receipt of such notice to cure such breach. Any such termination shall become effective at the end of such [***] period unless the breaching Party has cured any such breach or default prior to the expiration of such [***] period (or, if such default is capable of being cured but cannot be cured within such [***]-day period, the breaching Party has commenced and diligently continued actions to cure such default provided always that, in such instance, such cure must have occurred within [***] days after notice thereof was provided to the breaching Party by the non-breaching Party to remedy such default); or

(b)the other Party is generally unable to meet its debts when due, or makes a general assignment for the benefit of its creditors, or there shall have been appointed a receiver, trustee or other custodian for such Party for or a substantial part of its assets, or any case or proceeding shall have been commenced or other action taken by or against such Party in bankruptcy or seeking the reorganization, liquidation, dissolution or winding-up of such Party or any other relief under any bankruptcy, insolvency, reorganization or other similar act or law, and any such event shall have continued for sixty (60) days undismissed, unstayed, unbonded and undischarged. In such circumstances, the other Party may, upon notice to such Party, terminate this Agreement, such termination to be effective upon such Party’s receipt of such notice.

9.4Effects of Termination.

(a)Except as set forth in Sections 9.1, 9.4(b), 9.4(c), and 9.4(d), upon any termination of this Agreement, all licenses granted under this Agreement shall terminate, Cempra and its Affiliates shall cease Development and Commercialization of all Macrolide Antibiotics, Test Products and Cempra Products, and Optimer and its Affiliates shall cease development and/or commercialization of Optimer Products, provided that, notwithstanding the foregoing, each Party and its Affiliates shall have the privilege, subject to the payment of royalties as required under Section 6, of (i) completing the manufacture of any Products in the process of manufacture as of the effective date of such termination (the “Termination Date”), (ii) selling such Products and all finished Products in their possession or under their control as of the Termination Date for a period of one year following the Termination Date upon commercially reasonable conditions, and (iii) completing performance of all contracts entered into with third parties prior to the Termination Date (1) for the marketing, sale, or manufacture of Products or (2) requiring the use of Products or technology claimed in the Optimer Patents or Cempra Patents,

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as applicable, for a period of one year following the Termination Date. Notwithstanding any provision herein to the contrary, no termination of this Agreement by either Party shall be construed as a termination of any valid sublicense granted by the other Party, its Affiliates, or its sublicensees with respect to the rights granted under this Agreement. Upon termination of this Agreement by a Party each sublicense of rights granted to a Third Party by the other Party shall, to the extent not imposing obligations on the other Party in excess of those contained herein, be automatically assigned to such Party.

(b)If a Party terminates this Agreement in accordance with Section 9.2, then, at the other Party’s express election upon notice of termination, all licenses granted by the terminating Party to the non-terminating Party shall survive, in which event, the non-terminating Party’s obligations set forth in Article 4 and in Article 6 (including without limitation the obligation to pay to the terminating Party any milestone and/or royalty payments set forth in Article 6 and provide the reports set forth therein), the non-terminating Party’s rights under Section 7, and al other provisions of this Agreement applicable to the foregoing, other than Sections 1A, 2, and 3 (which shall terminate), shall survive. It is understood and agreed that following such a termination, the terminating Party shall retain the right to terminate the other Party’s remaining licenses and rights in accordance with Section 9.3, and the non-terminating Party shall retain the right to subsequently terminate its remaining licenses and rights under this Agreement pursuant to Section 9.2, in which event the applicable provisions of Section 9.4(a) shall apply.

(c)If Cempra terminates this Agreement in accordance with Section 9.3, then at Cempra’s express election upon notice of termination, all licenses and rights granted by Optimer to Cempra shall survive, in which event Cempra’s obligations set forth in Article 4 and in Article 6 (including without limitation the obligation to pay to Optimer the royalty and milestone payments set forth in Article 6 and provide the reports set forth therein), Cempra’s rights under Section 7, and all other provisions of this Agreement applicable to the foregoing, other than Sections 1A, 2, and 3 (which shall terminate), shall survive. It is understood and agreed that following such a termination, Optimer shall retain the right to terminate the remaining licenses and rights of Cempra in accordance with Section 9.3, and Cempra shall retain the right to subsequently terminate its remaining licenses and rights under this Agreement pursuant to Section 9.2, in which event the applicable provisions of Section 9.4(a) shall apply.

(d)If Optimer terminates this Agreement in accordance with Section 9.3, then at Optimer’s express election upon notice of termination, all licenses and rights granted by Cempra to Optimer shall survive, in which event Optimer’s obligations set forth in Article 4 and in Article 6 (including without limitation obligation to pay to Cempra the royalty and milestone payments set forth in Article 6 and provide the reports set forth therein), Optimer’s rights under Article 7, and all other provisions of this Agreement applicable to the foregoing, other than Sections 1A, 2, and 3 (which shall terminate), shall survive. It is understood and agreed that following such a termination, Cempra shall retain the right to terminate the remaining licenses and rights of Optimer in accordance with Section 9.3, and Optimer shall retain the right to subsequently terminate its remaining licenses and rights under this Agreement pursuant to Section 9.2, in which event the applicable provisions of Section 9.4(b) shall apply.

(e)Termination of this Agreement shall not terminate the obligations of a Party to make any payments then owing through the date of termination or the obligations of confidentiality imposed on either Party.

(f)The remedies set forth in this Article 9 are not exclusive, and shall not limit any other legal or equitable remedies that are available to the parties.

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9.5Survival.  The following provisions shall survive any expiration or termination of this Agreement: Sections 5.6, 6.15, 7, 8, 9, 10, 11, 12 and 13, together with any sections referenced in such surviving provisions or necessary to give them effect.

10.REPRESENTATIONS AND WARRANTIES

10.1General Representations and Warranties.  Each Party represents and warrants to the other that, as of the date hereof:

(a)it is duly organized and validly existing under the laws of its state or country of incorporation, and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

(b)it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action;

(c)this Agreement is legally binding upon it and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any Governmental Authority having jurisdiction over it;

(d)it is aware of no action, suit or inquiry or investigation instituted by any governmental agency that questions or threatens the validity of this Agreement;

(e)all necessary consents, approvals and authorizations of all governmental authorities and other Persons required to be obtained by such Party to enter into, or perform its obligations under, this Agreement have been obtained (provided, however, that the foregoing shall not be construed as a representation or warranty concerning governmental authorizations and non-infringement of intellectual property rights of Third Parties disclaimed in Section 10.3 below).

(f)it has not granted, and will not grant during the Term of the Agreement, any right to any Third Party that would conflict with the rights granted to the other Party hereunder. It has (or will have at the time the performance is due) maintained and will maintain and keep in full force and effect all agreements necessary to perform its obligations hereunder;

(g)all products, materials and Information created by the Parties under this Agreement is current and accurate, is such Party’s original work (except for identified third-party materials), and, to such Party’s knowledge, will not infringe upon, violate or misappropriate any intellectual property right of any third party; and

(h)to the extent any third-party materials are incorporated in the products, such Party has obtained from such third party rights (if any) reasonably sufficient to enable the such Party to comply with this Agreement.

10.2Optimer Representations and Warranties.  Optimer represents, warrants, and covenants that:

(a)Optimer has not, and during the term of the Agreement will not, grant any right to any Third Party relating to Optimer Technology which conflicts with the rights granted to Cempra hereunder;

(b)During the Term, Optimer will not, without the prior written consent of Cempra, encumber the Optimer Patents or Optimer Know-How, respectively, with liens, mortgages, security interests or another similar interest that would give the holder the right to convert the interest into ownership, unless the encumbrance is expressly subject to the licenses herein;

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(c)Optimer has (or will have at the time performance is due) maintained and will maintain and keep in full force and effect all agreements necessary to perform its obligations hereunder;

(d)Optimer does not have any present knowledge from which it would reasonably conclude that the Optimer Patents are invalid or that their exercise would infringe patent rights of any Third Party;

(e)The Optimer Patents listed on Schedule 1.30 are, as of the Effective Date, the only patents or patent applications owned, controlled, or licensed by Optimer claiming Macrolide Antibiotics, Test Products, Cempra Products, Optimer Technology, or the manufacture, use or application of any of the foregoing.

(f)To the best of Optimer’s knowledge, each item included in the Optimer Patents that is registered, filed or issued under the authority of an appropriate governmental authority is and at all times has been in compliance with all legal requirements applicable thereto, and all filings, payments, and other actions required to be made or taken to maintain such item of Optimer Patents in full force and effect have been made by the applicable deadline. Furthermore, (1) no patent application or patent included in the Optimer Patents has been abandoned or allowed to lapse and (2) no provisional patent application included therein has expired without the filing of a nonprovisional patent application that claims the benefit of such provisional patent application.

(g)Optimer has, to the knowledge of Optimer’s executive management, furnished to Cempra all tangible manifestations of the Optimer Technology which Optimer owns or possesses as of the Effective Date;

(h)Optimer has taken commercially reasonable measures, using its good faith business judgment, to protect the confidentiality of the Optimer Know How;

(i)None of the Optimer Patents is the subject of any pending interference, opposition, cancellation or other protest proceeding;

(j)Optimer has no knowledge of any claim pending, threatened, or previously made alleging infringement or misappropriation of any patent, trade secret, or other intellectual property right of any Third Party relative to the Optimer Patents, the technology claimed therein, Optimer Know How, Test Products, Macrolide Antibiotics, or Cempra Products; and

(k)Optimer is not aware of any third party activities which would constitute misappropriation or infringement of the Optimer Technology (including but not limited to Optimer Patents);

(l)Optimer owns all right, title, and interest to all Optimer Technology, free and clear of any liens, claims, and encumbrances of any party, and none of the Optimer Technology has been obtained by Optimer pursuant to any license or other agreement with any third party;

(m)Optimer does not presently own or Control any rights to any trademarks, service marks, trade dress, or similar intellectual property rights with respect to Cempra Products or Macrolide Antibiotics.

10.3Cempra Representations and Warranties.  Optimer represents, warrants, and covenants that:

(a)Cempra has not, and during the term of the Agreement will not, grant any right to any Third Party relating to Cempra Patent, Cempra Product, or Cempra Know-How which conflicts with the rights granted to Optimer hereunder;

(b)During the Term, Cempra will not, without the prior written consent of Optimer, encumber the Cempra Patents or Cempra Know-How, respectively, with liens, mortgages, security

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interests or another similar interest that would give the holder the right to convert the interest into ownership, unless the encumbrance is expressly subject to the licenses herein; and

(c)Cempra has (or will have at the time performance is due) maintained and will maintain and keep in full force and effect all agreements necessary to perform its obligations hereunder.

10.4Disclaimer Concerning Technology.  EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, EXCEPT FOR THOSE SET FORTH IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, (A) BOTH PARTIES ACKNOWLEDGE AND AGREE THAT THE ACTIVITIES TO BE CONDUCTED UNDER THE RESEARCH PROGRAM ARE INHERENTLY UNCERTAIN AND, PROVIDED THAT EACH PARTY ENGAGES IN DILIGENT EFFORTS TO PERFORM ITS OBLIGATIONS HEREUNDER, THAT THERE ARE OTHERWISE NO ASSURANCES THAT THE PARTIES WILL SUCCESSFULLY SYNTHESIZE MACROLIDE ANTIBIOTICS MEETING THE SPECIFICATIONS SET FORTH BY CEMPRA AND OPTIMER JOINTLY OR IDENTIFY A TEST PRODUCT, OR SUCCESSFULLY CONDUCT OTHER ACTIVITIES CONTEMPLATED TO BE PERFORMED IN THE RESEARCH PROGRAM, OR THAT ANY MACROLIDE ANTIBIOTICS OR TEST PRODUCT WILL BE SUCCESSFULLY DEVELOPED AND COMMERCIALIZED BY CEMPRA AS A LICENSED PRODUCT, OR THAT REQUIRED GOVERNMENTAL APPROVALS IN CONNECTION WITH THE MANUFACTURE, CLINICAL DEVELOPMENT AND/OR COMMERCIALIZATION OF MACROLIDE ANTIBIOTICS, TEST PRODUCTS AND/OR LICENSED PRODUCTS CAN OR WILL BE OBTAINED; AND (B) EACH PARTY EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, TO THE CONTRARY.

11.INDEMNITIES

11.1Mutual Indemnification.  Subject to Section 11.2, each Party hereby agrees to indemnify, defend and hold the other Party, its Affiliates, its licensees, and its and their officers, directors, employees, consultants, contractors, sublicensees and agents (collectively, “Representatives”) harmless from and against any and all damages or other amounts payable to a Third Party claimant, as well as any reasonable attorneys’ fees and costs of litigation arising out of any such Claim (as defined in this Section 11.1), (collectively, “Damages”) resulting from claims, suits, proceedings or causes of action (“Claims”) brought by a Third Party against a Party or its Representatives based on: (a) material breach by the indemnifying Party of this Agreement, (b) breach of any applicable law, rule, or regulation by such indemnifying Party in connection with the performance of its obligations hereunder or the exercise of licenses or rights conveyed hereunder, (c) gross negligence or willful misconduct by such indemnifying Party, its Affiliates, or their respective employees, contractors or agents, (d) the indemnifying Party’s Development, Commercialization, manufacture, use or sale of Macrolide Antibiotics, Test Products, or Products, except, in each case, to the extent such Damages are subject to indemnification by the other Party under this Section 11.1.

11.2Notification.  In the event that any Third Party asserts a claim with respect to any matter for which a Party (the “Indemnified Party”) is entitled to indemnification hereunder (a “Third Party Claim”), then the Indemnified Party shall promptly notify the Party obligated to indemnify the Indemnified Party (the “Indemnifying Party”) thereof; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then only to the extent that) the Indemnifying Party is prejudiced thereby. Indemnifying Party may assume the complete control of the defense, compromise or settlement of any Third Party Claim (provided that any settlement of any Third Party Claim that (i) subjects Indemnified Party to any non-indemnified liability or (ii) admits fault or wrongdoing on the

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part of Indemnified Party will require the prior written consent of such Indemnified Party, provided such consent will not be unreasonably withheld), including, at its own expense, employment of legal counsel, and at any time thereafter Indemnifying Party will be entitled to exercise, on behalf of Indemnified Party, any rights which may mitigate the extent or amount of such Third Party Claim; provided, however, that if Indemnifying Party has exercised its right to assume control of such Third Party Claim, Indemnified Party (i) may, in its sole discretion and at its own expense, employ legal counsel to represent it (in addition to the legal counsel employed by Indemnifying Party) in any such matter, and in such event legal counsel selected by Indemnified Party will be required to reasonably confer and cooperate with such counsel of Indemnifying Party in such defense, compromise or settlement for the purpose of informing and sharing information with Indemnifying Party; (ii) will, at Indemnifying Party’s own expense, make available to Indemnifying Party those employees, officers, contractors, and directors of Indemnified Party whose assistance, testimony or presence is necessary or appropriate to assist Indemnifying Party in evaluating and in defending any such Third Party Claim; provided, however, that any such access will be conducted in such a manner as not to interfere unreasonably with the operations of the businesses of Indemnified Party; and (iii) will otherwise fully cooperate with Indemnifying Party and its legal counsel in the investigation and defense of such Third Party Claim.

11.3Exclusion of Damages.  IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT, UNLESS SUCH DAMAGES ARE DUE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LIABLE PARTY. NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE FOREGOING SHALL NOT BE CONSTRUED TO LIMIT THE INDEMNITY OBLIGATIONS SET FORTH IN SECTION 11.1 ABOVE OR EITHER PARTY’S LIABILITY FOR PATENT INFRINGEMENT OR BREACH OF SECTIONS 8 (CONFIDENTIALITY), 7 (INTELLECTUAL PROPERTY), 5.1 (WITH RESPECT TO CEMPRA’S BREACH THEREOF), OR 5.4 (WITH RESPECT TO OPTIMER’S BREACH THEREOF).

12.DISPUTE RESOLUTION

12.1Disputes.  The Parties recognize that disputes as to certain matters may from time to time arise during the Term that relate to either Party’s rights and/or obligations hereunder. It is the objective of the Parties to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation or arbitration. To accomplish this objective, the Parties agree that, in the event of any disputes, controversies or differences that may arise between the Parties, out of or in relation to or in connection with this Agreement, or for the breach thereof, upon the request of either Party, the Parties agree to meet and discuss in good faith a possible resolution thereof. If the matter is not resolved within thirty (30) days following the request for discussions, either Party may refer the matter to arbitration              in accordance with Section 12.3 below. Notwithstanding the foregoing, each Party shall be entitled to seek appropriate injunctive relief in any court of competent jurisdiction (i) to preserve such Party’s rights pending resolution of arbitration proceedings under this Agreement, (ii) to avoid irreparable damages, or (iii) with respect to any matters concerning intellectual property rights or confidentiality.

12.2Governing Law.  Resolution of all disputes arising out of or related to this Agreement or the performance, enforcement, breach or termination of this Agreement and any remedies relating thereto, shall be governed by and construed under the substantive laws of the State of California, without regard to conflicts of law rules that would provide for application of the law of a jurisdiction outside California.

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12.3Arbitration.  Except as otherwise expressly provided herein, the Parties agree that any dispute not resolved internally by the Parties, within thirty (30) days after meeting pursuant to Section 12.1, shall be finally resolved, upon notice to the other Party by either Party, by binding arbitration in accordance with the provisions of this Section 12.3. The arbitration shall be conducted by the Judicial Arbitration and Mediation services, Inc. (“JAMS”) under its rules of arbitration then in effect, except as modified in this Agreement. Each Party shall select one (1) independent, neutral arbitrator experienced in the biotechnology/pharmaceutical industry, and the two (2) arbitrators so selected shall choose a third independent, neutral arbitrator experienced in the biotechnology/pharmaceutical industry. In the event a Party fails to select its such arbitrator within fifteen (15) business days of its receipt of the notice provided above, the other Party shall be entitled to select such arbitrator. The arbitrators shall use their best efforts to rule on each disputed issue within sixty (60) calendar days after completion of hearings on the matter(s) in dispute, and the arbitration decision(s) shall be rendered in writing to the Parties and must specify the basis(es) on which the decision(s) was(were) made. Such decision(s) shall be binding and not be appealable to any court in any jurisdiction. Unless otherwise mutually agreed upon by the Parties, the arbitration proceedings shall be conducted in New York, New York. One or more of the Parties to any arbitration proceeding commenced under this Agreement shall be entitled, as a part of the arbitration award, to the costs and expenses (including reasonable attorneys fees and interest on any award) of investigating, preparing and pursuing an arbitration claim to the extent that the arbitrators award such costs and expenses, provided that, notwithstanding the foregoing, the Parties shall bear the costs and expenses incurred in connection with an arbitration under this section in inverse proportion to the award granted to each of them by the arbitrators.

13.MISCELLANEOUS

13.1Entire Agreement; Amendment.  This Agreement, including the exhibits attached hereto, sets forth the complete, final and exclusive agreement and all the covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties hereto and supersedes and terminates all prior agreements and understandings between the Parties, including the Letter Agreement. There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the Parties other than as are set forth herein and therein. No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the Parties unless reduced to writing and signed by an authorized officer of each Party.

13.2Force Majeure.  Both Parties shall be excused from the performance of their obligations under this Agreement to the extent that such performance is prevented by force majeure and the nonperforming Party promptly provides notice of the prevention to the other Party. Such excuse shall be continued so long as the condition constituting force majeure continues and the nonperforming Party takes reasonable efforts to remove the condition. For purposes of this Agreement, force majeure shall include conditions beyond the control of the Parties, including without limitation, an act of God, voluntary or involuntary compliance with any regulation, law or order of any government, war, civil commotion, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm or like catastrophe; provided, however, the payment of invoices due and owing hereunder shall not be delayed by the payer because of a force majeure affecting the payer, unless such force majeure specifically precludes the payment process.

13.3Notices.  Any notices, approvals, or consents required or permitted to be given under this Agreement shall be in writing, shall specifically refer to this Agreement and shall be deemed to have been sufficiently given for all purposes if mailed by first class certified or registered mail, postage

36

prepaid, or by internationally recognized express delivery service or personally delivered. Unless otherwise specified in writing, the mailing addresses of the Parties shall be as described below:

For Optimer:	Optimer Pharmaceuticals, Inc.
	10110 Sorrento Valley Rd., Suite C
	San Diego, CA 92121
	FEIN: 33-0830300
	Fax: (858) 909-0737
	Attention: Michael N. Chang, President/CEO
For Cempra:	Cempra Pharmaceuticals Inc.
	170 Southport Drive, Suite 500
	Morrisville, NC 27560
	Fax: (919) 467-1716
	Attention: Dr. Prabha Fenandes, President/CEO

13.4United States Dollars.  References in this Agreement to “Dollars” or “$” shall mean the legal tender of the United States of America.

13.5No Strict Construction.  This Agreement has been prepared jointly and shall not be strictly construed against either Party.

13.6Assignment.  Neither Party may assign or transfer this Agreement or any rights or obligations hereunder without the prior consent of the other; provided, however, that a Party may make such an assignment without the other Party’s consent (a) to an Affiliate or in conjunction with a merger, acquisition, or sale of all or substantially all of the business or assets of such Party to which this Agreement pertains, or (b) if such Party or its Affiliates is required to, or reasonably believes that it will be required to, divest any Product or a competing product in order to comply with law or the order of any Governmental Authority as a result of a merger or acquisition. This Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the Parties. Any assignment or attempted assignment by either Party in violation of the terms of this Section 13.6 shall be null and void and of no legal effect.

13.7Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

13.8Further Actions.  Each Party agrees to execute, acknowledge and deliver such further instruments (including without limitation patent assignments), and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

13.9Severability.  If any one or more of the provisions of this Agreement is held to be invalid or unenforceable by any court of competent jurisdiction from which no appeal can be or is taken, or in arbitration proceedings between the Parties as set forth in Article 12 of this Agreement, the provision shall be considered severed from this Agreement and shall not serve to invalidate any remaining provisions hereof. The Parties shall make a good faith effort to replace any invalid or unenforceable provision with a valid and enforceable one such that the objectives contemplated by the Parties when entering into this Agreement may be realized.

13.10Headings.  The headings for each article and section in this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section.

13.11No Waiver.  Any delay in enforcing a Party’s rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of such Party’s rights to the future

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enforcement of its rights under this Agreement, excepting only as to an express written and signed waiver as to a particular matter for a particular period of time.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate originals by their proper officers as of the date and year first above written.

CEMPRA PHARMACEUTICALS INC.	OPTIMER PHARMACEUTICALS, INC.
BY:	BY:
NAME:	NAME:
TITLE:	TITLE:

39

Schedule 1.35

Optimer Patents

Macrolide Patent Estate

“Macrolides and Process for Their  Preparation” 8024-006-PR	(3/10/2003)	Lapsed	Provisional	The application has converted to PCT application, 8024-006-WO.
“Novel Antibacterial Agents”, 8024-006-WO	WO2004080381/ 23-Sep-04 (3/5/2004)	Published	PCT	The application claims composition of matter comprising 14 membered macrolide triazole compounds and/or 14 membered macrolide compounds with novel suger or sugar mimic moieties at C5 position. The PCT application was published and has entered national phase in US, Europe and Canada.
8024-006-US	(9/9/2005)	Pending	US	Notice of Acceptance and Filing Receipt received on 1/12/06. Projected publication date 5/11/06.
8024-006-CA	(12/19/2005)	Pending	Canada
8024-006-EP	(1/11/2006)	Pending	Europe

Schedule 6.1(1)

Subscription Agreement

THE SECURITIES SUBJECT TO THIS SUBSCRIPTION AGREEMENT ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

NAME OF PURCHASER:

OPTIMER PHARMACEUTICALS INC.

CEMPRA PHARMACEUTICALS, INC.

SUBSCRIPTION AGREEMENT

The undersigned (the “Purchaser”) hereby subscribes to and agrees to purchase            shares of Common Stock (the “Shares”) of Cempra Pharmaceuticals, Inc., a Delaware corporation (the “Corporation”). The purchase price hereunder shall be considered paid in full upon the execution by Purchaser of that certain Collaborative Research and Development and License Agreement dated March 31, 2006 (the “License Agreement”) between the Corporation and Purchaser, with consideration taking the form of the Purchaser’s agreement to perform certain obligations and grant of various intellectual property rights to the Corporation pursuant to such License Agreement.

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

Section 1.  Stock Subscription.  The Purchaser hereby subscribes for          shares of Corporation Common Stock. The Shares are being issued as consideration under the License Agreement.

Section 2.  Representation and Warranties of the Purchaser.  The Purchaser hereby represents, warrants and agrees as follows:

(a)The Purchaser is a resident of the State of California, is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all the power and authority to enter into, and perform its obligations under this Subscription Agreement.

(b)That the transfer of securities contemplated hereby is made in reliance upon the Purchaser’s representation to the Corporation, which by its acceptance hereof the Purchaser hereby confirms, that the Shares to be received by it will be acquired for investment for its own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof, and that it has no present intention of selling, granting participation in, or otherwise distributing the same. By executing this Subscription Agreement, the Purchaser further represents that it does not have any contract, undertaking, agreement, or arrangement with any person to sell, transfer or grant participations to such person, or to any third person, with respect to any of the Shares.

(c)The Purchaser understands that the Shares have not been registered under the 1933 Act on the grounds that the sale provided for in this Agreement and the issuance of securities hereunder is exempt from registration under the 1933 Act, and that the Corporation’s reliance on such exemption is predicated in part on the Purchaser’s representations set forth herein. The Purchaser realizes that the basis for the exemption may not be present if, notwithstanding such representations, the Purchaser has in mind merely acquiring the Shares for a fixed or determined period in the future, or for a market rise, or for sale if the market does not rise. The Purchaser does not have any such intention.

(d)The Purchaser represents that it is an “Accredited Investor” as such term is defined in Rule 501 or Regulation D promulgated under the Securities Act of 1933, as amended.

(e)The Purchaser represents that it is experienced in evaluating early-stage companies such as the Corporation, is able to fend for itself in the transactions contemplated by this Agreement, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment. The Purchaser further represents that it has had access, during the course of the transactions and prior to its acquisition of Shares, to all such information as it deemed necessary or appropriate (to the extent the Corporation possessed such information or could acquire it without unreasonable effort or expense), and that it has had, during the course of the transactions and prior to its acquisition of Shares, the opportunity to ask questions of, and receive answers from, the Corporation concerning the terms and conditions of the offering and to obtain additional information (to the extent the Corporation possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to him or to which it had access.

(f)The Purchaser understands that the Shares may not be sold, transferred or otherwise disposed of without registration under the 1933 Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Shares or an available exemption from registration under the 1933 Act, the Shares must be held indefinitely. In particular, the Purchaser is aware that the Shares may not be sold pursuant to Rule 144 promulgated under the 1933 Act unless all of the conditions of that Rule are met. Among the conditions for use of Rule 144 is the availability of current information to the public about the Corporation. Such information is not now available and the Corporation has no present plans to make such information available. The Purchaser represents that, in the absence of an effective registration statement covering the Shares it will sell, transfer, or otherwise dispose of the Shares only in a manner consistent with its representations set forth herein.

(g)The Purchaser agrees that in no event will it make a transfer or disposition of any of the Shares (other than pursuant to an effective registration statement under the 1933 Act or, to the Corporation’s reasonable satisfaction, pursuant to Rule 144), unless and until (i) the Purchaser shall have notified the Corporation of the proposed disposition and shall have furnished the Corporation with a statement of the circumstances surrounding the disposition, and (ii) if requested by the Corporation, at the expense of the Purchaser or transferee, it shall have furnished to the Corporation an opinion of counsel, reasonably satisfactory to the Corporation, to the effect that such transfer may be made without registration under the 1933 Act.

(h)The Purchaser understands that each certificate representing the Shares will be endorsed with a legend substantially as follows:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS.”

(i)The Purchaser understands that no public market now exists for any of the securities issued by the Corporation and that there is no assurance that a public market will ever exist for the Shares.

2

Section 3.  Indemnity.  The Purchaser will indemnify the Corporation, its officers, directors, shareholders, employees and agents against any losses or damages suffered by any of them as a result of the failure of the above representations and warranties to be true or the failure of the Purchaser to comply with the agreements set forth herein.

Section 4.  Representations and Warranties of the Corporation.  The Corporation hereby represents and warrants to the Purchaser as follows:

(a)The Corporation is a corporation duly organized and validly existing under the laws of the State of Delaware. The Corporation has the requisite corporate power to own and operate its properties and assets, and to carry on its business as currently conducted.

(b)The Corporation has a requisite legal and corporate power to: (i) execute and deliver this Subscription Agreement; and (ii) to carry out and perform its obligations under this Subscription Agreement.

(c)[The Corporation has no subsidiaries or affiliated companies and does not otherwise own or control, directly or indirectly, any other corporation, association or business entity.](1)

(1)This subsection shall be subject to deletion or revision with respect to issuances made following the Effective Date of the License Agreement as necessary to reflect the facts as they exist as of such date of such issuance.

(d)[The authorized capital stock of the Corporation consists of                shares of Common Stock, of which                shares are issued and outstanding prior to the sale of the stock contemplated hereunder. Other than as set forth above and except for the transactions contemplated by this Agreement and the License Agreement, there are no other outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, for the purchase or acquisition from the Corporation of any of the Corporation’s securities.](2)

(2)This subsection shall be subject to revision with respect to issuances made following the Effective Date of the License Agreement as necessary to reflect the facts as they exist as of such date of such issuances.

(e)The outstanding shares of the capital stock of the Corporation are duly and validly issued, fully paid and non-assessable. The Shares, issuable upon execution of the License Agreement, shall, upon the terms of the License Agreement, be duly and validly issued, fully paid and non-assessable.

(f)The Corporation is not, and will not be by virtue of entering into, and performing its obligations under, this Agreement, in violation of any term of the Corporation’s Certificate of Incorporation, Bylaws or contractual undertakings or the provisions of any material agreement, mortgage, indenture, contract, lease agreement, instrument, judgment or decree to which the Corporation is a party or by which it is bound.

(g)There are no actions, suits, proceedings or investigations pending or, to the knowledge of the Corporation, currently threatened against the Corporation or its properties before any court or governmental body.

(h)No representation or warranty by the Corporation in this Agreement, or in connection with the execution or performance of this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or necessary to make any statement not misleading.

Section 5.  Lock-Up Agreement.  The Purchaser agrees, in connection with the first registration with the United States Securities and Exchange Commission under the Securities Act of 1933, as

3

amended, of the public sale of the Corporation’s Common Stock upon request of the Corporation or any underwriters managing such offering, not to sell, make any short sale of, loan, grant any option for the purchase of or otherwise dispose of any such securities of the Corporation (other than those included in the registration) or the economic risk of the ownership thereof without the prior written consent of the Corporation or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as the Corporation or the underwriters, as the case may be, shall specify; provided each officer and director of the Corporation and all other holders of at least 5% of the Corporation’s voting securities will agree to the same restriction. Each such recipient agrees that the Corporation may instruct its transfer agent to place stop-transfer notations in its records to enforce this paragraph.

Section 5.  Miscellaneous

5.1  Amendment.  This Subscription Agreement may be amended only by written agreement among Purchaser and the Corporation.

5.2  Survival of Representations, Warranties and Agreements.  All representations, warranties and agreements made in this Subscription Agreement, or any other instrument or document delivered in connection herewith or therewith, shall survive the execution and delivery hereof or thereof.

5.3  Further Assurances.  All parties agree to execute any additional documents necessary to carry out the purposes of this Subscription Agreement.

5.4  Notices.  All demands, notices, approvals, consents, requests, and other communications hereunder shall be in writing and shall be deemed to have been given when the writing is delivered, if given or delivered by hand, overnight delivery service or by facsimile (with confirmed receipt), or three (3) days after being mailed, if mailed, by first class, registered or certified mail, postage prepaid, to the applicable address established under Section 13.3 of the License Agreement.

5.5  Governing Law; Successors and Assigns.  This Subscription Agreement shall be governed by the laws of the State of North Carolina. The rights and benefits of this Subscription Agreement shall inure to the benefit of, and be enforceable by, the successors and assigns of the parties.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of this          day of                 200 ..

CORPORATION:

CEMPRA PHARMACEUTICALS, INC.

By:

Name:

Title:

PURCHASER:

OPTIMER PHARMACEUTICALS INC.

Name:

Title:

5

Schedule 6.1(2)

Shareholders Agreement

AGREEMENT TO JOIN AS A PARTY TO STOCKHOLDERS AGREEMENT

OF CEMPRA PHARMACEUTICALS, INC.

THIS AGREEMENT (the “Agreement”) dated as of March 31, 2006 is between CEMPRA PHARMACEUTICALS, INC., a Delaware corporation (the “Company”), and

OPTIMER PHARMACEUTICALS, INC. (the “New Stockholder”).

WITNESSETH:

WHEREAS, the Company and certain holders of capital stock of the Company (the “Existing Stockholders”) are parties to Stockholders Agreement, dated as of January 11, 2006, a copy of which is attached hereto as Exhibit A (the “Stockholders”);

WHEREAS, pursuant to that certain Collaborative Research and Development and License Agreement and Subscription Agreement between the parties, each dated March 31, 2006, New Stockholder has received [***] ([***]) shares of the Company’s Common Stock, $.0001 par value (the “New Shares”); and

WHEREAS, Section 5.12 of the Stockholders Agreement permits any party who acquires shares of the Company’s capital stock to become party to the Stockholders Agreement in the form of a joinder agreement whereby such party agrees to be bound and subject to the terms of the Stockholders Agreement with respect to such shares held by such Company stockholder; and

WHEREAS, the New Stockholder must join as party to the Shareholders Agreement in connection with their receipt of the New Shares.

NOW, THEREFORE, in consideration of the issuance of New Shares to New Stockholder and for the premises, the covenants of the parties set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows.

1.The undersigned New Stockholder hereby joins as party to and thereby agrees to be bound by the terms and conditions of the Stockholders Agreement, effective as of the date hereof.

2.The Company hereby consents to New Stockholder joining as party to the Stockholders Agreement.

3.For all purposes under the Stockholders Agreement the New Stockholder shall be deemed a “Stockholder” and the New Shares shall be deemed to be “Shares.”

4.This Agreement shall be governed by and interpreted in accordance with the laws of the State of North Carolina.

5.This Agreement may be executed in one or more counterparts.

[The Next Page is the Signature Page]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

OPTIMER PHARMACEUTICALS, INC.

By:

Name:

Title:

CEMPRA PHARMACEUTICALS, INC.

By:

Name:

Title:

2

EXHIBIT A

Stockholders Agreement

CEMPRA PHARMACEUTICALS, INC.

STOCKHOLDERS AGREEMENT

This Stockholders Agreement (the “Agreement”) is made as of this 11th day of January, 2006, by and among Cempra Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and the persons owning shares of the capital stock of the Company listed on the Schedule of Stockholders attached hereto as Exhibit A (and any additional stockholder named in any amendment to Exhibit A, referred to herein individually as a “Stockholder” and collectively as the “Stockholders”).

ARTICLE 1 RECITALS

1.1The Stockholders are collectively the owners of all the issued and outstanding capital stock of the Company (the “Shares”), as indicated on Exhibit A (which shall be amended from time to time to reflect purchases or transfers of Shares).

1.2The Company and the Stockholders realize that, in the event of the death or termination of employment of one of the Stockholders, or the sale, transfer or encumbrance of his/its stock in the Company during his/its lifetime, should the stock of the Company owned by such Stockholder pass into the ownership or control of a person or entity other than the remaining Stockholders, it would tend to disrupt the harmonious and successful management and control of the Company.

1.3It is the earnest desire of the Company and the Stockholders to avoid the happening of any such unfortunate contingencies by assuring to the remaining Stockholders a succession to the ownership and control of the Company through the acquisition of the stock of a Stockholder at the time of his death, termination of employment or prior to the sale or encumbrance of such Stockholder’s stock.

In consideration of the mutual covenants contained herein, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE 2 TRANSFER OF SHARES

2.1  Prohibited Transfers.  No Stockholder shall sell, assign, transfer or dispose of all or any of his/its Shares except in compliance with the terms of this Agreement. Notwithstanding anything to the contrary contained in this Agreement, any Stockholder may transfer without the necessity of prior approval all or any of his/its Shares by way of gift to his spouse, to any of his lineal descendants or ancestors, or to any trust for the benefit of any one or more of such Stockholder, his spouse or his lineal descendants or ancestors. The Company shall not be required to transfer on its books any capital stock transferred in violation hereof or to treat any transferee of capital stock transferred in violation hereof as an owner or Stockholder.

2.2  Right of First Refusal on Dispositions.

(a)If at any time a Stockholder (a “Selling Stockholder”) desires to sell or otherwise transfer all or any part of his Shares pursuant to a bona fide offer from a third party (the “Proposed Transferee”), the Selling Stockholder shall submit a written offer (the “Offer”), by delivering the Offer to the Company and the other Stockholders, to sell such Shares (the “Offered Shares”) to the Company on terms and conditions, including price, not less favorable than those on which the Selling Stockholder proposes to sell such Offered Shares to the Proposed Transferee. The Offer shall disclose the identity of the Proposed Transferee, the number of Offered Shares proposed to be sold, the total number of Shares owned by the Selling Stockholder, the terms and conditions, including price, of the proposed sale, and any other material facts relating to the proposed sale.

(b)If the Company does not purchase all of the Offered Shares within 30 days after receipt of notice of an Offer (the “Option Period”), then the other Stockholders shall have a 30-day right, beginning on the day after the expiration of the Option Period, to purchase all such Offered Shares, on the terms and conditions disclosed in the Offer (the “Second Option Period”), on a pro-rata basis based on the total Shares owned by all Stockholders electing to purchase the Offered Shares. Upon the expiration of the Second Option Period or the express rejection of the Offer by both the Company and

other Stockholders, whichever occurs earlier, the Selling Stockholder may sell all of the Offered Shares to the Proposed Transferee at any time within 90 days after such time, subject to the provisions of Section 2.3. Any such sale shall be to the Proposed Transferee, at not less than the price and upon other terms and conditions, if any, not more favorable to the Proposed Transferee than those specified in the Offer. Any remaining Offered Shares not sold within such 90-day period shall again be subject to the requirements of a prior offer pursuant to this Section 2.2. If Offered Shares are sold pursuant to this Section 2.2 to any purchaser who is not a party to this Agreement, the purchaser of such Offered Shares shall execute a counterpart of this Agreement as a precondition of the purchase of such Offered Shares and any Offered Shares sold to such purchaser shall continue to be subject to the provisions of this Agreement, including, without limitation, the provisions of Article II.

2.3  Right of Participation in Sales.

(a)If at any time a Stockholder desires to sell any Shares owned by him to a Proposed Transferee, and those Shares to be transferred have not been purchased by the Company or other Stockholders under Section 2.2, each of the other Stockholders (other than those who have elected to purchase Shares pursuant to Section 2.2) shall have the right to sell to the Proposed Transferee, as a condition to such sale by the Selling Stockholder, at the same price per share and on the same terms and conditions as involved in such sale by the Selling Stockholder, a pro rata portion of the amount of Shares proposed to be sold to the Proposed Transferee. The “pro rata portion” of Shares which a Stockholder shall be entitled to sell to the Proposed Transferee shall be that number of Shares as shall equal the number of Offered Shares proposed to be sold to the Proposed Transferee multiplied by a fraction, the numerator of which is the aggregate of all shares of Common Stock (including shares issuable upon conversion or exercise of Preferred Stock, warrants, options or other convertible securities held by such person) which are then held by the Participating Stockholder (as defined below), and the denominator of which is the aggregate of all shares of Common Stock (including shares issuable upon conversion or exercise of Preferred Stock warrants, options or other convertible securities) which are then held by the Selling Stockholder and all Stockholders wishing to participate in any sale under this Section 2.3.

(b)Each Stockholder who wishes to make a sale to a Proposed Transferee which is subject to this Section 2.3 shall, after complying with the provisions of Section 2.2, give to each other Stockholder notice of such proposed sale, and stating that all Offered Shares were not purchased pursuant to the Offer as discussed in Section 2.2. Such notice shall be given at least 20 days prior to the date of the proposed sale to the Proposed Transferee. Each other Stockholder wishing to participate in such sale (a “Participating Stockholder”) shall notify the Selling Stockholder in writing of such intention within 15 days after such Participating Stockholder’s receipt of the notice described in the preceding sentence.

(c)The Selling Stockholder and each Participating Stockholder shall sell to the Proposed Transferee all, or at the option of the Proposed Transferee, any part of the Shares proposed to be sold by them at not less than the price and upon other terms and conditions, if any, not more favorable to the Proposed Transferee than those in the notice provided by the Selling Stockholder under Section 2.3(b) above; provided, however, that any purchase of less than all of such Shares by the Proposed Transferee shall be made from the Selling Stockholder and each Participating Stockholder pro rata based upon the relative number of the Shares that the Selling Stockholder and each Participating Stockholder is otherwise entitled to sell pursuant to Section 2.3(a).

(d)If any Shares are sold pursuant to this Section 2.3 to any purchaser who is not a party to this Agreement, the purchaser of such Shares shall execute a counterpart of this Agreement as a precondition to the purchase of such Shares and such Shares shall continue to be subject to the provisions of this Agreement.

2.4  Transferee Restrictions.  Any transferee of capital stock under this Agreement must become a party to this Agreement by executing any instruments or documents that may be deemed necessary or

2

advisable by counsel to the Company to make such transferee a party to this Agreement, or such transfer shall be deemed null and void. If and when all the capital stock of the Selling Stockholder shall have been transferred in accordance with the terms and conditions of this Agreement, such person shall cease to be a Stockholder under this Agreement.

ARTICLE 3 VOTING OF SHARES

3.1  Election of Directors.  In any and all elections of directors of the Company (whether at a meeting or by written consent in lieu of a meeting), each Stockholder shall vote or cause to be voted all Shares (as defined in Section 4 below) owned by him or it, or over which he or it has voting control, and to otherwise use his or its best efforts to elect:

(a)Four (4) designees of [***]; and

(b)any additional designee or designees approved by [***].

3.2  Vacancies.  Any vacancy in the office of a director shall be filled by either (a) a unanimous vote of the Board of Directors, or (b) in the manner specified in Section 3.1 hereof.

3.3  Definition of Shares.  The term “Shares” shall mean and include any and all shares of Common Stock and/or shares of Preferred Stock of the Company by whatever name called, which carry voting rights (including voting rights which arise by reason of default) and shall include any shares now owned or subsequently acquired by a Stockholder, however acquired, including without limitation by stock splits and stock dividends.

3.4  Size of Board.  The Stockholders shall vote or cause to be voted (whether by actual vote or by written consent), all shares owned by him, her or it, or over which he, she or it has voting control, and to otherwise use his, her or its best efforts to ensure that the size of the Company’s Board of Directors shall be set at four members, unless otherwise agreed to by [***].

ARTICLE 4 TERMINATION AND REVOCATION

4.1  Termination.  This Stockholders’ Agreement shall continue in effect as long as at least two of the Stockholders are living or in existence and own shares of the Company’s capital stock, and shall terminate upon (i) the death of one of the last remaining two Stockholders and the consummation of the transfer to, and payment for, his shares by the last remaining Stockholder or the Company, as the case may be, (ii) the closing of the Company’s sale of all or substantially all of its assets or the acquisition of the Company by another entity by means of merger or other transaction, or (iii) the closing of the Company’s initial public offering covering the offer and sale of its Common Stock for the account of the Company.

4.2  Revocation.  The voting agreements contained herein are coupled with an interest and may not be revoked, except in accordance with the amendment provisions of Section 5.8 hereof.

ARTICLE 5 MISCELLANEOUS

5.1  Restrictive Legend.  All certificates representing Shares owned or hereafter acquired by the Stockholders or any permitted transferee of any Stockholder bound by this Agreement shall have affixed thereto a legend substantially in the following form:

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND PROVISIONS OF A STOCKHOLDERS AGREEMENT BY AND AMONG THE COMPANY AND ITS STOCKHOLDERS, AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF SUCH AGREEMENT. A COPY OF THE STOCKHOLDERS AGREEMENT IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE SECRETARY OF THE COMPANY.

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5.2  Action as Director.  No party hereto who is or may become a director of the Company either agrees or implies that he will exercise his actions as a director in any manner other than in accordance with his considered judgment at such time with respect to the best interests of the Company and all of its stockholders.

5.3  Transferees; Binding Effect.  This Agreement shall be binding upon the Stockholders and their respective heirs, executors, administrators, legal representatives, successors and assigns.

5.4  Severability.  The provisions of this Agreement are severable, so that the invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other term or provision of this Agreement, which shall remain in full force and effect.

5.5  Specific Enforcement.  Each Stockholder expressly agrees that other Stockholders and the Company may be irreparably damaged if this Agreement is not specifically enforced. Upon a breach or threatened breach of the terms, covenants and/or conditions of this Agreement by any Stockholder, the other Stockholders and the Company shall, in addition to all other remedies, each be entitled to apply for a temporary or permanent injunction, and/or a decree for specific performance, in accordance with the provisions hereof.

5.6  Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of North Carolina.

5.7  Notices.  Any and all notices or elections permitted or required to be made under this Agreement shall be in writing, signed by the party giving such notice or election and shall be delivered personally, or sent by registered or certified mail, return receipt requested, to the other parties at their respective addresses shown below.

5.8  Complete Agreement; Amendments.  This Agreement constitutes the full and complete agreement of the parties hereto with respect to the subject matter hereof. No amendment, modification or termination of any provision of this Agreement shall be valid unless in writing and signed by each of the parties hereto.

5.9  Pronouns.  Whenever the content may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice-versa.

5.10  Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall constitute one Agreement binding on all the parties hereto.

5.11  Captions.  Captions of sections have been added only for convenience and shall not be deemed to be a part of this Agreement.

5.12  Additional Stockholders.  Any parties who acquire shares of the Company’s capital stock after the date hereof who as a condition of such acquisition are required to become party to this Agreement, may do so by executing a form of joinder agreement whereby such party agrees to be bound and subject to the terms of this Agreement with respect to the Shares held by such Company stockholder. Upon execution of such joinder agreement, Exhibit A shall be amended to reflect the addition of such stockholders and its Shares.

[THE NEXT PAGE IS THE SIGNATURE PAGE]

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IN WITNESS WHEREOF, the parties have executed this Stockholders Agreement as of the date first above written.

THE COMPANY:
CEMPRA PHARMACEUTICALS, INC.
By:
Name:
Title:
THE STOCKHOLDERS:
	(SEAL)
	(SEAL)
	(SEAL)

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EXHIBIT A

SCHEDULE OF STOCKHOLDERS

Founders	Number of Shares of Common Stock
[***]	[***	]
[***]	[***	]
[***]	[***	]
[***]	[***	]
TOTAL:	[***	]

Schedule 8.5

Press Release

        [LOGO]

FOR IMMEDIATE RELEASE

Cempra Pharmaceuticals, Inc.

Prabhavathi Fernandes, Ph.D.

+ 1 919 467 1716

CEMPRA PHARMACEUTICALS RECEIVES EXCLUSIVE RIGHTS FROM OPTIMER PHARMACEUTICALS FOR ITS MACROLIDE ANTIBACTERIAL PROGRAM

MORRISVILLE, NC April 4, 2006 Cempra Pharmaceuticals, Inc. announced that Optimer Pharmaceuticals has granted to Cempra exclusive worldwide rights (except ASEAN countries) to patents and know-how related to its macrolide/ketolide antibacterial program. Cempra has licensed rights to discover, develop and commercialize drugs based on the class of compounds called macrolides and ketolides. Optimer will receive an equity position in Cempra, as well as royalties and milestone payments from any drugs and drug candidates developed and/or co-developed by Cempra. The license includes joint drug discovery and development activities at both companies.

Included in the license agreement are several pre-clinical compounds in addition to ground-breaking chemistry technology for creating the next generation of macrolides and ketolides. Pre-clinical candidates derived from this technology have been shown to possess potent activity against multi-drug resistant Streptococcus pnuemoniae and Streptococcus pyogenes. The most advanced lead, is orally active with potent efficacy in animal models after once-a-day administration. This lead will be initially developed for respiratory tract infections in adults and children, including sinusitis, pharyngitis, and community acquired mild to moderate pneumonia.

“We are extremely happy that Optimer has chosen to license their macrolide patents and know-how to Cempra Pharmaceuticals to develop and commercialize new macrolides that could be useful in the armamentarium for treating drug resistant bacteria” said Prabhavathi Fernandes, Ph.D., Cempra’s President and Chief Executive Officer. She added, “This license will be the founding stone of Cempra and will allow us to build a company focused on developing a portfolio of antibacterial compounds.”

Dr. Michael Chang, President and CEO of Optimer said “Optimer is enthusiastic about this opportunity to move some of our earlier stage programs forward. Cempra has recruited leaders in antibacterial drug discovery and development and by licensing these macrolides to Cempra, we are enhancing the potential to realize value from our macrolide program as we focus our resources on other later stage products.”

About Macrolide Antibiotics  Macrolides such Clarithromycin, Azithromycin and Telithromycin are favored by physicians and pediatricians for use in upper and lower respiratory tract infections where the primary pathogens could be S. pneumoniae, S. aureus, S. pyogenes, H. influenzae, M. catarrhalis, and Legionella pneumophila. Macrolides are also used to treat Helicobater pylori gastritis. Many of these pathogens are now resistant to currently available macrolides.

About Optimer Pharmaceuticals

Optimer Pharmaceuticals, Inc. in San Diego, California (www.optimerpharma.com), a privately held biotechnology company and leader in carbohydrate chemistry, has a strong portfolio of late-stage anti-infective products. Older generation antibiotics were mostly derived from natural products and

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these antibiotics have key sugar components that contribute to their antibacterial properties. The sugar components of antibiotics have been generally beyond the reach of medicinal chemistry. Optimer has applied its unique sugar chemistry technology to modify regions of macrolides and ketolides that could not be addressed previously, discovering new antibiotics that are effective against drug-resistant bacteria.

About Cempra Pharmaceuticals

Cempra Pharmaceuticals, Inc., located in Morrisville, North Carolina, is a newly founded biotechnology company focused on anti-infectives. The company was founded in 2006 by Prabhavathi Fernandes, Ph.D. who was the leading microbiologist for Clarithromycin development at Abbott. Cempra is committed to the development of best-in-class antibiotics to meet urgent and unmet needs to treat drug resistant bacteria.

This press release contains statements that constitute “forward-looking statements These statements contain information that is not historical fact and are essentially predictions and are subject to risks and uncertainties, including risks associated with our ability to raise capital, the success of pre-clinical studies and clinical trials, intellectual property risks, the difficulty of predicting FDA filings and approvals, and market acceptance.

# # #

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December 31, 2008

Optimer Pharmaceuticals, Inc.

10110 Sorrento Valley Road, Suite C

San Diego, California 92121

Attention:  John Prunty, Chief Financial Officer

Cempra Pharmaceuticals, Inc. (the “Company”) and Optimer Pharmaceuticals, Inc. (“Optimer”) are parties to that certain Collaborative Research and Development and License Agreement dated March 31, 2006 (the “License Agreement”).  Pursuant to Sections 6.2(a) and 6.2(b) of that License Agreement, Optimer may elect, upon written request to the Company, that it be paid certain milestone payments in shares of Cempra capital stock (“Cempra Capital Stock”) rather than in cash, such Cempra Capital Stock having a Fair Market Value calculated as of the date the respective milestone is achieved equal to the value of the milestone payments, as the case may be.  All capitalized terms not otherwise defined in this Letter Agreement shall have the meanings ascribed to them in the License Agreement.

As you may be aware, the Company plans to engage in a reorganization whereby the Company will merge with Cempra Merger Corp. (“MergeCo”), a Delaware corporation and wholly-owned subsidiary of Cempra Holdings, LLC, a Delaware limited liability company (the “Holding Company”).  Upon such merger, the separate corporate existence of MergeCo will terminate, the Company will remain as the surviving entity and the stockholders of the Company will receive units of the Holding Company (“Holding Company Units”) in exchange for their shares of Cempra Capital Stock (the “Reorganization”).  The rights belonging to each respective class or series of Holding Company Units will be essentially the same as those of the corresponding class or series of Cempra Capital Stock.  Subsequent to the Reorganization, the Company will distribute its shares of CEM-102 Pharmaceuticals, Inc., the Company’s wholly-owned subsidiary that holds assets unrelated to the technology licensed under the License Agreement, to the Holding Company (the “Spin-Off”).

As a result of the Reorganization and Spin-Off, it is currently intended that the equity holdings for the combined company will be held, and the ultimate liquidity for that equity will be realized, at the Holding Company level.  Therefore, the parties find it necessary to modify Sections 1.15, 6.2(a), 6.2(b) and 6.2(e) of the License Agreement, which refer to Cempra Capital Stock in the context of milestone payments described in Sections 6.2(a) and 6.2(b) of the License Agreement, to refer to Holding Company equity.  This letter agreement reflects the parties’ mutual intent to modify those Sections so as to use the term “Holding Company Units” in lieu of “Cempra Capital Stock” in each phase where used or referenced.  Except as specifically modified herein, the License Agreement shall remain in full force and effect as originally executed.

By their execution below, the parties agree that, upon the completion of the Reorganization, the references to “Cempra Capital Stock” in Sections 1.15, 6.2(a), 6.2(b) and 6.2(e) of the License Agreement will be modified to become “Holding Company Units” (as defined in this Letter Agreement).  By its execution below, the Holding Company agrees to issue Holding Company Units to Optimer when, if and as required under the terms of the License Agreement, as modified by this Letter Agreement.

[THE NEXT PAGE IS THE SIGNATURE PAGE]

CEMPRA PHARMACEUTICALS, INC.		OPTIMER PHARMACEUTICALS, INC.
By:	/s/ Prabhavathi Fernandes	By:	/s/ John Prunty
	Prabhavathi Fernandes, Ph.D.		John Prunty
	Chief Executive Officer and President		Chief Financial Officer
CEMPRA HOLDINGS, LLC
By:	/s/ Prabhavathi Fernandes
	Prabhavathi Fernandes, Ph.D.
	Chief Executive Officer and President

EX-10.2

Exhibit 10.2

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4)

and 240.24b-2.

INTELLECTUAL PROPERTY ASSIGNMENT AND

LICENSE AGREEMENT

THIS INTELLECTUAL PROPERTY ASSIGNMENT AND LICENSE AGREEMENT (the “Agreement”) is made and entered into effective as of October 30, 2009 (the “Effective Date”) by and between OPTIMER PHARMACEUTICALS, INC., a Delaware corporation (“Optimer”), and OPTIMER BIOTECHNOLOGY, INC., a Taiwan corporation (“OBI”).

RECITALS

WHEREAS, Optimer and OBI are parties to a License Agreement, dated December 8, 2003, as amended on September 30, 2006 (the “Prior License Agreement”) whereby Optimer licensed certain patents and know-how to OBI;

WHEREAS, Optimer has assigned, and OBI has assumed, Optimer’s rights and obligations under certain license agreements related to the development programs known as OPT-88 and OPT-822/821;

WHEREAS, Optimer has certain other rights related to OPT-88 and OPT-822/821, which OBI now desires to acquire from Optimer;

WHEREAS, Optimer previously made certain intercompany loans to OBI, of which, a total of $3,335,056.01 is currently outstanding; and

WHEREAS, in connection with the sale of OBI stock by Optimer pursuant to that certain Stock Purchase Agreement between Optimer and the purchasers listed on Schedule A thereto (the “Purchasers”) of even date herewith and commitments by Optimer and the Purchasers to purchase an aggregate of 66,000,000 new shares of OBI’s common stock pursuant to that certain Financing Agreement between Optimer, the Purchasers and OBI of even date herewith (the “Financing Agreement”), (i) Optimer is willing to assign to OBI all its right, title and interest in and to certain patent rights and know-how related to its OPT-88 and OPT-822/821 programsand forgive OBI’s outstanding intercompany indebtedness to Optimer, and (ii) OBI is willing to terminate the Prior License Agreement and OBI’s license rights thereunder, all subject to the terms and conditions set forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

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1.DEFINITIONS

1.1“Affiliate” shall mean any company or entity controlled by, controlling, or under common control with a party hereto.  For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to a party means (a) in the case of a corporate entity, direct or indirect ownership of voting securities representing more than 50% of the votes in any election of directors or (b) in the case of a non-corporate entity, direct or indirect ownership of more than 50% of the voting securities with the power to direct the management and policies of such entity.  Notwithstanding the foregoing, for purposes of this Agreement, neither party shall be considered an Affiliate of the other.

1.2“Assigned Patents” shall mean the OPT-88 Patents and the OPT-822/821 Patents.

1.3“Control”or “Controlled” shall mean, with respect to any Information, Patents or other intellectual property rights, possession by an entity of the ability (whether by ownership, license or otherwise) to grant access to, to grant use of, or to grant a license or a sublicense of or under such Information, Patents or other intellectual property rights without violating the terms of any agreement or other arrangement with any third party.

1.4“First Commercial Sale” shall mean, with respect to any Product, the first sale by or on behalf of OBI or any of its Affiliates to a Third Party for end use or consumption of such Product in a country after the governing health regulatory authority of such country has granted Regulatory Approval for such Product.  A sale to an Affiliate shall not constitute a First Commercial Sale.

1.5“Information” shall mean all tangible and intangible (a) techniques, technology, practices, trade secrets, inventions (whether patentable or not), methods, knowledge, know-how, skill, experience, test data and results (including pharmacological, toxicological and clinical test data and results), analytical and quality control data, results or descriptions, software and algorithms and (b) compositions of matter, cells, cell lines, assays, animal models and physical, biological or chemical material.

1.6“License Agreements” shall mean the Scripps Agreement and the MSKCC Agreement.

1.7“Licensed Patents” shall mean the Patents licensed to Optimer (or OBI, as applicable) under the License Agreements.

1.8“MSKCC Agreement” means that certain License Agreement, effective as of July 31, 2002, as amended, between Optimer and the Memorial Sloan-Kettering Cancer Center.

1.9“Net Sales” shall mean the dollar amount determined by deducting from the gross invoiced price billed for Products sold by or on behalf of OBI or its Affiliates (or a licensee, sublicensee, assignee, or successor of any of them), as the case may be, to Third Parties in arm’s length transactions, the following amounts, as allocable to Products: (i) all applicable, actually allowed sales credits accrued in accordance with accounting principals generally accepted in the

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United States, (ii) payments or rebates actually incurred with respect to Products pursuant to federal, state and local government assistance programs, whether in existence now or enacted at any time hereafter, (iii) costs for transit insurance, freight, handling or other transportation as billed to customers (to the extent included in the amount invoiced for Products), (iv) sales, use or excise taxes to the extent not reimbursed and (v) any actually allowed write-offs or credits for inventory or batches unsold by purchasers of the Product. Sales credits accrued in accordance with accounting principles generally accepted in the United States may include credits or discounts related to the following: (i) customer returns, returned goods allowances, rejected goods and damaged goods not covered by insurance, (ii) cash or terms discounts, (iii) customer rebate programs,  (iv) chargebacks and administration fees or similar credits or payments granted to customers pursuant to contract or other purchases, (v) sales promotions, trade show discounts and stocking allowances, (vi) price adjustments, including those on customer inventories following price changes and (vii) product recalls. Net Sales shall also include the fair market value of all non-cash consideration received by OBI or its Affiliates (or a licensee, sublicensee, assignee, or successor of any of them) for sale of Products, including payment in kind, exchange or another form.

1.10“OBI OPT-88 Technology” shall mean to the extent useful for purposes of developing OPT-88 Products or necessary for the manufacture, use or sale of OPT-88 Products, (a) Information that OBI or any of its Affiliates Controls during the term of this Agreement and (b) all Patents that OBI or any of its Affiliates Controls during the term of this Agreement (excluding the Assigned Patents and the Licensed Patents).

1.11“OBI OPT-822/821 Technology” shall mean to the extent useful for purposes of developing OPT-822/821 Products or necessary for the manufacture, use or sale of OPT-822/821 Products, (a) Information that OBI or any of its Affiliates Controls during the term of this Agreement and (b) all Patents that OBI or any of its Affiliates Controls during the term of this Agreement (excluding the Assigned Patents and the Licensed Patents).

1.12“OPT-88” shall mean the compound(s) known as OPT-88, as more fully described in Schedule 1 hereto.

1.13“OPT-88 Patents” shall mean (a) the patents and patent applications identified in Exhibit A hereto; (b) all reissues, reexamination, renewals, extensions, non-provisionals, divisionals, continuations, and continuations-in-part of the foregoing patents and patent applications; (c) any foreign counterparts of any of the foregoing; and (d) any patents which issue on the patent applications described in subsections (a)-(c) or claim priority to the patent applications described in subsections (a)-(c).

1.14“OPT-88 Product” shall mean any product containing or comprising any formulation of OPT-88 or any analog or derivative of OPT-88.

1.15“OPT-822/821” shall mean the compound(s) known as OPT-822/821, as more fully described in Schedule 2 hereto.

1.16“OPT-822/821 Patents” shall mean (a) the patents and patent applications identified in Exhibit B hereto; (b) all reissues, reexamination, renewals, extensions, non-

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provisionals, divisionals, continuations, and continuations-in-part of the foregoing patents and patent applications; (c) any foreign counterparts of any of the foregoing; and (d) any patents which issue on the patent applications described in subsections (a)-(c) or claim priority to the patent applications described in subsections (a)-(c).

1.17“OPT-822/821 Product” shall mean any product containing or comprising any formulation of OPT-822/821 or any analog or derivative of OPT-822/821.

1.18“Patents” shall mean (a) patents and patent applications, (b) all reissues, reexamination, renewals, extensions, non-provisionals, divisionals, continuations, and continuations-in-part of such patents and patent applications, (c) any foreign counterparts of any of the foregoing and (d) any patents which issue on such patent applications described in clauses (a)-(c) or claim priority to the patent applications described in clauses (a)-(c).

1.19“Phase 2 Clinical Trial” shall mean a human clinical trial that satisfies the requirements for a Phase 2 study as defined in 21 C.F.R. 312.21(b) (or its successor regulation).

1.20“Phase 3 Clinical Trials” shall mean a human clinical trial that satisfies the requirements for a Phase 3 study as defined in 21 C.F.R. 312.21(c) (or its successor regulation).

1.21“Product” shall mean any OPT-88 Product or OPT-822/821 Product.

1.22“Regulatory Approval” shall mean any and all approvals (including price and reimbursement approvals, if required), licenses, registrations, or authorizations of any country, federal, supranational, state or local regulatory agency, department, bureau or other government entity that are necessary for the manufacture, use, storage, import, transport and/or sale of a Product in such jurisdiction.

1.23“Royalty Term” shall mean, in the case of any Product, in any country, the period of time commencing on the First Commercial Sale of such Product in such country and ending upon the later of either (a) 10 years after the date of First Commercial Sale of such Product in such country and (b) the expiration of the last to expire of any (i) OPT-88 Patents or Patents licensed to OBI under the Scripps Agreement (with respect to OPT-88 Products) or (ii) OPT-822/821 Patents or Patents licensed to OBI under the MSKCC Agreement (with respect to OPT-822/821 Products).

1.24“Scripps Agreement” means that certain License Agreement, effective as of May 30, 2001, between Optimer and The Scripps Research Institute.

1.25“Third Party” shall mean any person or entity other than the parties or their respective Affiliates.

2.ASSIGNMENT

2.1Assignment to OBI.

(a)Subject to the terms and conditions of this Agreement, Optimer hereby assigns to OBI all of Optimer’s right, title, and interest in and to the Assigned Patents.  Such

4

assignment of the Assigned Patents shall be evidenced by an executed Assignment of Patents and Patent Applications, which shall be prepared by OBI at its sole expense, and filed by OBI at its sole expense, with the U.S. Patent and Trademark Office and its foreign counterparts as soon as reasonably practicable after the Effective Date.  Optimer agrees to undertake any actions and execute and deliver any documents and instruments that are reasonably necessary to perfect OBI’s title in and to the Assigned Patents in a timely manner, if so requested by OBI at OBI’s sole expense.

(b)Subject to the terms and conditions of this Agreement, the parties acknowledge that Optimer has assigned to OBI, and OBI has assumed, all of Optimer’s rights and obligations under (i) the Scripps Agreement pursuant to an Assignment and Assumption Agreement between Optimer, OBI and The Scripps Research Institute (the “Scripps Assignment”) and (ii) the MSKCC Agreement pursuant to an Assignment and Assumption Agreement between Optimer, OBI and Memorial Sloan-Kettering Cancer Center (the “MSKCC Assignment” and together with the Scripps Assignment, the “Assignments”).

2.2Optimer Information.  Promptly after the Effective Date, Optimer shall disclose to OBI such Information in Optimer’s Control and in written, electronic or tangible form that relates directly and specifically to the Assigned Patents or the Licensed Patents.

2.3Rights in Bankruptcy.  The parties agree that in the event OBI becomes a debtor under Title 11 of the U.S. Code (“Title 11”), this Agreement shall be deemed to be, for purposes of Section 365(n) of Title 11, a license to rights to “intellectual property” as defined therein, and Optimer, as a licensee hereunder, shall have the rights and elections as specified in Title 11.  Any agreements supplemental hereto shall be deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of Title 11.

2.4No Other Rights.  Neither party grants to the other party any rights or licenses in or to any intellectual property, whether by implication, estoppel, or otherwise, other than the rights or licenses that are expressly granted under this Agreement.

3.CONSIDERATION

3.1Milestone Payments.

(a)Proof of Principle Trial.  OBI shall pay to Optimer a milestone payment in the amount of $[***] (a “Proof of Principle Trial Milestone Payment”) upon OBI’s or its Affiliates’ (or a licensee, sublicensee, assignee, or successor of any of them) completion of the first Phase 2 Clinical Trial of each Product resulting in data which OBI’s Board of Directors determines in its good faith judgment to be reasonably sufficient to support the conduct of a Phase 3 Clinical Trial with respect to such Product in either the United States or the European Union (a “Proof of Principle Trial Milestone”).  OBI shall notify Optimer promptly of its determination that a Proof of Principle Trial Milestone has occurred and OBI shall pay the associated Proof of Principle Trial Milestone Payment no later than thirty (30) days following the achievement of such Proof of Principle Trial Milestone.  Notwithstanding anything to the contrary, if OBI or its Affiliates (or a licensee, sublicensee, assignee, or successor of any of them) initiates a Phase 3 Clinical Study with respect to a Product, OBI’s Board of Directors shall

*** Confidential Treatment Requested

5

be deemed to have determined that a Proof of Principle Trial Milestone was met with respect to such Product.

(b)Regulatory Approval.  OBI shall pay to Optimer a milestone payment in the amount of $[***] (a “Regulatory Approval Milestone Payment”) upon OBI’s or its Affiliates’ (or a licensee, sublicensee, assignee, or successor of any of them) receipt of Regulatory Approval for each Product in the United States or the European Union (a “Regulatory Approval Milestone”).  OBI shall notify Optimer promptly of its determination that a Regulatory Approval Milestone has occurred and OBI shall pay the associated Regulatory Approval Milestone Payment no later than thirty (30) days following the achievement of such Regulatory Approval Milestone.

(c)Milestone Payment Terms.  A Proof of Principle Trial Milestone Payment and Regulatory Approval Milestone Payment shall be payable one time for each Product when the Proof of Principle Trial Milestone and Regulatory Approval Milestone is achieved for such Product, as applicable, regardless of the number of indications for which such Product is developed or commercialized.  All payments made to Optimer pursuant to this Section 3.1 are non-refundable and may not be credited against any other payments payable by OBI to Optimer under this Agreement.

3.2Royalties.

(a)Royalty Payments.  OBI shall pay to Optimer [***] percent ([***]%) of the aggregate worldwide Net Sales of each Product during the applicable Royalty Term (collectively, “Royalty Payments”).

(b)Payment; Reports.  Royalty Payments shall be calculated and reported for each calendar quarter.  All Royalty Payments shall be paid within forty-five (45) calendar days of the end of each calendar quarter, unless otherwise specifically provided herein.  Each payment shall be accompanied by a report of Net Sales of Products by or on behalf of OBI and its Affiliates in sufficient detail to permit confirmation of the accuracy of the Royalty Payment made, including, without limitation and on a country-by-country basis, the gross sales and Net Sales of each Product, the Royalty Payments payable, the method used to calculate the Royalty Payments, and the exchange rates used, if applicable.  OBI shall keep, and shall cause its Affiliates to keep, complete and accurate records pertaining to the sale or other disposition of Products in sufficient detail to permit Optimer to confirm the accuracy of all Royalty Payments.

(c)Exchange Rate.  When conversion of payments from any foreign currency is required, such conversion shall be at an exchange rate equal to the weighted average of the rates of exchange for the currency of the country from which the Royalty Payments are payable as published by The Wall Street Journal, Eastern U.S. Edition, during the calendar quarter for which a payment is due.

(d)Audits.  Upon thirty (30) days prior written notice from Optimer, OBI shall permit an independent, certified public accounting firm of nationally recognized standing to have access during normal business hours to examine pertinent books and records of OBI or its Affiliates, as appropriate, as may be reasonably necessary to verify the accuracy of royalty

*** Confidential Treatment Requested

6

reports provided pursuant to Section 3.2(b).  An examination under this Section 3.2(d) shall not occur more than twice in any calendar year.  The accounting firm shall disclose to Optimer only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies.  No other information shall be provided to Optimer.  The accounting firm shall provide OBI with a copy of any reports or conclusions made to Optimer.  Any and all such accounting firms shall sign a confidentiality agreement (in a form and substance reasonably acceptable to OBI) as to any of OBI’s or its Affiliate’s confidential information that they are provided, or to which they have access, while conducting any audit hereunder.

(e)Adjustments.  Prompt adjustments shall be made by OBI to compensate or adjust for any confirmed errors or omissions disclosed by and audit conducted pursuant to Section 3.2(d).  Optimer shall bear the full cost of such audit unless such audit discloses an underpayment by OBI of more than five percent (5%) of the amount of Royalty Payments or other payments due under this Agreement, in which case, OBI shall bear the full cost of such audit and shall promptly remit to Optimer the amount of any underpayment.

4.INTELLECTUAL PROPERTY MATTERS

4.1Patent Prosecution.  OBI shall have the sole responsibility for the preparation, filing, prosecution and maintenance of, and conducting or defending any interferences or similar proceedings and obtaining and maintaining any patent extensions, supplementary protection certificates and the like with respect to, the Assigned Patents.  As between the parties, OBI shall bear all costs associated with any such activities undertaken by OBI.

4.2Patent Enforcement.  OBI shall have the sole and exclusive right to bring and control any action or proceeding with respect to infringement of any patents owned by OBI, including without limitation the Assigned Patents, by counsel of its own choice.  As between the parties, OBI shall bear all costs, and be entitled to all recoveries, associated with any such activities undertaken by OBI.

4.3Allegation of Infringement by Third Parties.  Subject to Article 7 hereof, each party shall be solely responsible, at its sole cost, for responding to any claim or allegation of infringement made by a third party against such party based on such party’s actions or activities.

4.4Termination of Prior License Agreement; Forgiveness of Loans.  As of the Effective Date, Optimer and OBI hereby agree that the Prior License Agreement be, and it hereby is, terminated in all respects and of no further force or effect, other than Articles VIII and X of the Prior License Agreement which shall survive in accordance with Section 12.11 thereof.  OBI hereby represents and warrants to Optimer that no sublicenses have been granted under the Prior License Agreement and that any such sublicenses, to the extent existing as of the Effective Date, are hereby terminated in their entirety.  For purposes of clarification, OBI shall not retain any rights to OPT-80/Fidaxomicin under the Prior License Agreement or otherwise.  Those certain intercompany loan obligations of OBI in the aggregate amount of $3,335,056.01, including OBI’s obligations to repay a portion of such intercompany loan obligations in two equal installments on October 1, 2009 and October 1, 2010, as described in the Prior License Agreement, be, and they hereby are, forgiven in their entirety.

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5.DILIGENCE OBLIGATIONS.

5.1Product Development.  OBI shall use commercially reasonable and diligent efforts to pursue the development and commercialization of OPT-88 Products and OPT-822/821 Products, and to maximize sales of such Products.  As used herein, “commercially reasonable and diligent efforts” shall mean those efforts, consistent with the exercise of prudent scientific and business judgment, as applied in the pharmaceutical industry to development and commercialization activities conducted with respect to other products of similar potential and market size.

5.2License Agreement Obligations.  Pursuant to the Assignments, OBI shall perform all of Optimer’s obligations under the License Agreements and shall avoid any condition which would give Scripps or MSKCC the right to terminate the License Agreements or the licenses granted pursuant thereto.

5.3Additional Funding.  For purposes of Section 5.4, the failure of a Purchaser to fulfill its obligations to purchase shares of OBI’s common stock pursuant to the Financing Agreement shall be deemed to be a failure regarding OBI’s obligations with respect to both OPT-88 Products and OPT-822/821 Products.

5.4Reversion of Assignments and License to OBI Technology.  If (a) OBI fails to fulfill any of the foregoing obligations set forth in this Article 5 and such failure is not cured within 30 days notice from Optimer, (b) OBI’s board of directors decides to abandon research and development of OPT-88 Products and/or OPT-822/821 Products, (c) OBI takes any affirmative action to terminate either the Scripps Agreement or MSKCC Agreement or (d) Optimer validly exercises its right to assume all of OBI’s rights and obligations under the MSKCC Agreement pursuant to the MSKCC Assignment, then

(i) OBI shall immediately assign to Optimer, without further consideration, all of OBI’s right, title and interest in and to the OPT-88 Patents (if the condition set forth in clauses (a)-(d) relates to OPT-88 Products or the Scripps Agreement) and/or the OPT-822/821 Patents (if the condition set forth in clauses (a)-(d) relates to OPT-822/821 Products or the MSKCC Agreement) and OBI agrees to undertake any actions and execute and deliver any documents and instruments that are reasonably necessary to perfect Optimer’s title in and to the OPT-88 Patents and/or OPT-822/821 Patents, as applicable, in a timely manner, if so requested by Optimer at Optimer’s sole expense;

(ii) OBI thereupon grants to Optimer an exclusive, royalty-free, fully-paid, worldwide, irrevocable license, with the right to sublicense through multiple tiers, under the OBI OPT-88 Technology (if the condition set forth in clauses (a)-(d) relates to OPT-88 Products or the Scripps Agreement) and/or the OBI OPT-822/821 Technology (if the condition set forth in clauses (a)-(d) relates to OPT-822/821 Products or the MSKCC Agreement), to develop, make, have made, use, sell, offer for sale, have sold and import OPT-88 Products or OPT-822/821 Products, as applicable;

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(iii) Optimer’s obligations under Section 2 related to the OPT-88 Patents and the Scripps Agreement and/or the OPT-822/821 Patents and the MSKCC Agreement, as applicable, shall terminate; and

(iv) OBI shall promptly return to Optimer or destroy (at Optimer’s sole option and expense) all of Optimer’s Confidential Information (as defined below) then in OBI’s Control and related to OPT-88 Products and/or OPT-822/821 Products, as applicable.

6.CONFIDENTIALITY

6.1Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the parties, the parties agree that the receiving party shall keep confidential and shall not publish or otherwise disclose any Information furnished to it by the other party pursuant to this Agreement (collectively, “Confidential Information”).  Each party may use the other party’s Confidential Information only to the extent required to research, develop, market or sell Products.  Each party will use at least the same standard of care as it uses to protect its own proprietary or confidential information and ensure that its employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the other party’s Confidential Information.  Each party will promptly notify the other upon discovery of any unauthorized use or disclosure of the other party’s Confidential Information.

6.2Exceptions.  Confidential Information shall not include any information which the receiving party can prove by competent written evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of the receiving party, generally known or available; (b) is known by the receiving party at the time of receiving such information, as evidenced by its records; (c) is hereafter furnished to the receiving party by a third party, as a matter of right and without restriction on disclosure; (d) is independently discovered or developed by the receiving party without the use of Confidential Information belonging to the disclosing party; or (e) is the subject of a written permission to disclose provided by the disclosing party.

6.3Authorized Disclosure.  Each party may disclose Confidential Information belonging to the other party only as expressly permitted by this Agreement or if and to the extent such disclosure is reasonably necessary in the following instances:

(a)filing or prosecuting patents as permitted by this Agreement;

(b)regulatory filings for Products such party has a license or right to develop hereunder;

(c)prosecuting or defending litigation as permitted by this Agreement;

(d)complying with applicable court orders or governmental regulations, including any applicable rules and regulations of the U.S. Securities and Exchange Commission; or

(e)disclosure to Affiliates, employees, consultants or agents or other third parties in connection with due diligence or similar investigations by such third parties, and disclosure to potential third party investors in confidential financing documents, provided, in

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each case, that any such Affiliate, employee, consultant, agent or third party agrees to be bound by terms of confidentiality and non-use at least as restrictive as those set forth in this Article 6.

Notwithstanding the foregoing, in the event a party is required to make a disclosure of the other party’s Confidential Information pursuant to Section 6.3(c) or (d), it will give reasonable advance notice to the other party of such disclosure and use efforts to secure confidential treatment of such information at least as diligent as such party would use to protect its own confidential information, but in no event less than reasonable efforts.  The parties will consult with each other on the provisions of this Agreement to be redacted in any filings made by the parties with the U.S. Securities and Exchange Commission or as otherwise required by law.  The parties’ obligations pursuant to this Article 6 shall survive for a period of 7 years following the termination of this Agreement.

7.INDEMNIFICATION

7.1Indemnification by OBI.  OBI hereby agrees to save, defend and hold Optimer and its Affiliates and their respective directors, officers, employees and agents (each, an “Optimer Indemnitee”) harmless from and against any and all claims, suits, actions, demands, liabilities, expenses and/or losses, including reasonable legal expenses and attorneys’ fees (collectively, “Losses”), to which any Optimer Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any third party to the extent such Losses arise directly or indirectly out of (a) the gross negligence or willful misconduct of any OBI Indemnitee (defined below), (b) the breach by OBI of any warranty, representation, covenant or agreement made by OBI in this Agreement, or (c) the development, manufacture, use, handling, storage, sale or other disposition of OPT-88 or OPT-822/821 or any Product by OBI or any of its Affiliates, licensees or sublicensees (excluding Optimer); in each case except to the extent such Losses result from the gross negligence or willful misconduct of any Optimer Indemnitee or the breach by Optimer of any warranty, representation, covenant or agreement made by Optimer in this Agreement.

7.2Indemnification by Optimer.  Optimer hereby agrees to save, defend and hold OBI and its Affiliates and their respective directors, officers, employees and agents (each, an “OBI Indemnitee”) harmless from and against any and all Losses to which any OBI Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any third party to the extent such Losses arise directly or indirectly out of (a) the gross negligence or willful misconduct of any Optimer Indemnitee (defined below) or (b) the breach by Optimer of any warranty, representation, covenant or agreement made by Optimer in this Agreement; in each case except to the extent such Losses result from the gross negligence or willful misconduct of any OBI Indemnitee or the breach by OBI of any warranty, representation, covenant or agreement made by OBI in this Agreement.

7.3Control of Defense.  Any entity entitled to indemnification under this Article 7 shall give notice to the indemnifying party of any Losses that may be subject to indemnification, promptly after learning of such Losses, and the indemnifying party shall assume the defense of such Losses with counsel reasonably satisfactory to the indemnified party.  If such defense is assumed by the indemnifying party with counsel so selected, the indemnifying party will not be subject to any liability for any settlement of such Losses made by the indemnified party without

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its consent (but such consent will not be unreasonably withheld or delayed), and will not be obligated to pay the fees and expenses of any separate counsel retained by the indemnified party with respect to such Losses.  The indemnified party shall provide the indemnifying party with all information in its possession and all assistance reasonably necessary to enable the indemnifying party to carry on the defense of any such Losses.

8.TERM AND TERMINATION.

8.1Termination.Subject to Section 8.2, this Agreement shall terminate upon the earlier to occur of (a) the parties’ agreement in writing to terminate this Agreement and (b) the last to expire of the Assigned Patents and the Licensed Patents.

8.2Survival.  The parties’ obligations under Sections 2.4, 6, 7, 8, and 9 shall survive any expiration termination of this Agreement.

9.MISCELLANEOUS

9.1Governing Law; Venue. This Agreement shall be governed by the laws of the State of California, without regard to any conflicts of law principles that would provide for application of the law of a jurisdiction outside California.  The parties agree that any action brought by either party under or in relation to this Agreement, including without limitation to interpret or enforce any provision of this Agreement, shall be brought in, and each party agrees to and does hereby submit to the jurisdiction and venue of, any state or federal court located in the County of San Diego, California, USA.

9.2Entire Agreement; Amendment.  This Agreement, together with the Exhibits hereto and each other agreement entered into by the parties in connection with this Agreement, constitute the entire, final and complete agreement and understanding between the parties with respect to the subject matter hereof and thereof, and replaces and supersedes all prior discussions and agreements between the parties with respect to such subject matter, including, without limitation, the Prior License Agreement.  No amendment, modification or waiver of any terms or conditions hereof shall be effective unless made in writing and signed by a duly authorized officer of each party.

9.3Disclaimer.  Except as expressly set forth in this Agreement or any other agreement entered into by the parties in connection with this Agreement, THE TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS PROVIDED BY EACH PARTY HEREUNDER ARE PROVIDED “AS IS” AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO.

9.4Limitation of Liability.  EXCEPT FOR LIABILITY FOR BREACH OF ARTICLE 6, NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY ASSIGNMENT MADE OR LICENSE

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GRANTED HEREUNDER; provided, however, that this Section 9.4 shall not be construed to limit either party’s indemnification obligations under Article 7.

9.5Non-Waiver.  The failure of a party to insist upon strict performance of any provision of this Agreement or to exercise any right arising out of this Agreement shall neither impair that provision or right nor constitute a waiver of that provision or right, in whole or in part, in that instance or in any other instance.  Any waiver by a party of a particular provision or right shall be in writing, shall be as to a particular matter and, if applicable, for a particular period of time and shall be signed by such party.

9.6Successors and Assigns.  Except as expressly provided hereunder, neither this Agreement nor any rights or obligations hereunder may be assigned, sublicensed or otherwise transferred, by operation of law or otherwise, by either party without the prior written consent of the other party (which consent shall not be unreasonably withheld).  The rights and obligations of the parties under this Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties.  Any assignment not in accordance with this Agreement shall be void.  To the extent OBI is permitted to and does assign, sublicense or transfer any of its rights and obligations under this Agreement, OBI shall ensure that the assignee, sublicensee or transferee expressly assumes all of OBI’s applicable obligations under this Agreement and OBI shall agree to remain liable for such assignee’s, sublicensee’s or transferee’s performance of such obligations.

9.7Headings.  The headings of the several sections are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

9.8Notice.

(a)All notices required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given (a) upon personal delivery to the party to be notified at the address set forth below, (b) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, to the address set forth below, (c) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery to the address set forth below, with written verification of receipt, or (d) upon confirmation of receipt if sent by facsimile to the number set forth below.

To Optimer:

Optimer Pharmaceuticals, Inc.

10110 Sorrento Valley Road, Suite C

San Diego, CA  92121

USA

Attn:  Chief Financial Officer

Fax: (858) 909-0737

To OBI:

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Optimer Biotechnology, Inc.

Room W1907, 19F, 3 Yuan Qu Street

Nankang Software Park, Taipei 115, Taiwan

Attn:  President & CEO

Fax: 02-2655-8798

Any party may, by written notice to the other, designate a new address or fax number to which notices to the party giving the notice shall thereafter be mailed or faxed.

(b)During the term of this Agreement, OBI shall as promptly as possible forward to Optimer any written correspondence (or a written summary of oral correspondence) between OBI and either The Scripps Research Institute or the Sloan-Kettering Institute for Cancer Research which, in either case, relates to the Licensed Patents, an alleged breach by OBI under the License Agreements or the potential termination of the License Agreements or the licenses granted thereby.

9.9Counterparts; Facsimile.  This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall constitute together the same document.  Facsimile signatures shall have the same force and effect as originals.

9.10Severability.  If a court of competent jurisdiction declares any provision of this Agreement invalid or unenforceable, or if any government or other agency having jurisdiction over either OBI or Optimer deems any provision to be contrary to any laws, then that provision shall be severed and the remainder of the Agreement shall continue in full force and effect.  The parties further agree to discuss in good faith an amendment to replace such void, invalid, unenforceable, or unlawful provision with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void, invalid, unenforceable or unlawful provision.

9.11Independent Contractors.  Each party shall act solely as an independent contractor, and nothing in this Agreement shall be construed to give either party the power or authority to act for, bind or commit the other party in any way.  Nothing herein shall be construed to create the relationship of partnership, principal and agent, or joint venture between the parties.

9.12U.S. Dollars.  All references in this Agreement to dollars or $ shall mean United States dollars unless explicitly stated otherwise.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this Intellectual Property Assignment and License Agreement on the Effective Date.

OPTIMER PHARMACEUTICALS, INC.		OPTIMER BIOTECHNOLOGY, INC.
By:	/s/ Michael N. Chang	By:	/s/ Youe-Kong Shue
Name:	Michael N. Chang	Name:	Youe-Kong Shue
Title:	CEO	Title:	President and CEO

[Signature Page to IP Assignment and License Agreement]

SCHEDULE 1

OPT-88

[***]

*** Confidential Treatment Requested

SCHEDULE 2

OPT-822/821

[***]

*** Confidential Treatment Requested

EXHIBIT A

OPT-88 PATENTS

[***]

*** Confidential Treatment Requested

EXHIBIT B

OPT-822/821 PATENTS

[***]

*** Confidential Treatment Requested

EX-10.3

Exhibit 10.3

OPTIMER BIOTECHNOLOGY, INC.

FINANCING AGREEMENT

THIS FINANCING AGREEMENT (this “Agreement”) is made and entered into as of October 30, 2009, by and among OPTIMER BIOTECHNOLOGY, INC., a Taiwan corporation (the “Company”), and each of those persons and entities, severally and not jointly, whose names are set forth on the Schedule of Purchasers attached hereto as EXHIBIT A (which persons and entities are hereinafter collectively referred to as “Purchasers” and each individually as a “Purchaser”).

RECITALS

WHEREAS, the Company has authorized the sale and issuance to Purchasers of up to 66,000,000 shares of its Common Stock (the “Shares”) to be sold by the Company pursuant to the terms and conditions of this Agreement (the “Common Stock Sale”);

WHEREAS, Purchasers desire to purchase the Shares on the terms and conditions set forth herein;

WHEREAS, Optimer Pharmaceuticals, Inc. (“Optimer”) and the other Purchasers are concurrently entering into a Stock Purchase Agreement whereby Optimer will sell to the other Purchasers certain shares of the Company currently held by Optimer and the other Purchasers’ commitments under this Agreement are a material inducement for Optimer to sell such shares; and

WHEREAS, the Company desires to issue and sell the Shares to Purchasers on the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties, and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.AGREEMENT TO SELL AND PURCHASE.

1.1          Authorization of Shares.  The Company has authorized the sale and issuance to Purchasers of the Shares.  The Shares have the rights, preferences, privileges and restrictions set forth in the Company’s charter documents in effect on the date hereof.

1.2          Sale and Purchase.  Subject to the terms and conditions hereof, at the First Closing or the Second Closing, as applicable (each as hereinafter defined, and any such closing referred to herein as a “Closing” and the date on which such Closing takes effect, a “Closing Date”) the Company hereby agrees to issue and sell to each Purchaser, and each Purchaser agrees to purchase from the Company, severally and not jointly, the number of Shares set forth opposite such Purchaser’s name on the Schedule of Purchasers attached hereto as EXHIBIT A

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under the heading “First Closing Shares” and “Second Closing Shares”, as applicable, at a purchase price of 10 New Taiwan Dollars (NT) per share.

2.CLOSING, DELIVERY AND PAYMENT.

2.1          First Closing.  The first closing of the sale and purchase of the Shares under this Agreement (the “First Closing”) shall take place at 5:00 p.m. Pacific Time on the date hereof, at the offices of Cooley Godward Kronish LLP, 4401 Eastgate Mall, San Diego, CA, 92121 or at such other time or place as the Company and Purchasers may mutually agree (such date is hereinafter referred to as the “First Closing Date”).  On the First Closing Date, subject to the terms and conditions hereof, the Company will deliver to each Purchaser a certificate representing the number of Shares to be purchased at the First Closing by such Purchaser, as set forth on the Schedule of Purchasers, against payment of the purchase price therefor by check or wire transfer made payable to the order of the Company, cancellation or conversion of indebtedness or any combination of the foregoing.  In the event that payment by a Purchaser is made, in whole or in part, by cancellation or conversion of indebtedness, then such Purchaser shall surrender to the Company for cancellation or conversion at the First Closing any evidence of such indebtedness or shall execute an instrument of cancellation or conversion in form and substance acceptable to the Company.

2.2          Second Closing.  If at any time prior to December 31, 2010, the Company’s Board of Directors determines in good faith that the Company has achieved each of the milestones set forth on EXHIBIT B attached hereto, the Company shall provide written notice of such determination to the Purchasers (the “Second Closing Notice”), which notice shall not be delivered prior to June 30, 2010.  The Second Closing Notice shall also set forth a date, which shall be no sooner than 5 business days and no later than 15 business days following the date of the Second Closing Notice, on which the second closing of the sale and purchase of the Shares under this Agreement (the “Second Closing”) shall take place.  Following delivery of the Second Closing Notice, the Second Closing shall take place at 5:00 p.m. Pacific Time at the offices of Cooley Godward Kronish LLP, 4401 Eastgate Mall, San Diego, CA, 92121 on the date set forth in the Second Closing Notice, or at such other time as the Company and the Purchasers holding a majority of the Shares then issued hereunder (the “Majority Purchasers”) may mutually agree (the “Second Closing Date”).  On the Second Closing Date, subject to the terms and conditions hereof, the Company will deliver to each Purchaser a certificate representing the number of Shares to be purchased at the Second Closing by such Purchaser, as set forth on the Schedule of Purchasers, against payment of the purchase price therefor by check or wire transfer made payable to the order of the Company, cancellation or conversion of indebtedness or any combination of the foregoing.  In the event that payment by a Purchaser is made, in whole or in part, by cancellation or conversion of indebtedness, then such Purchaser shall surrender to the Company for cancellation or conversion at the Second Closing any evidence of such indebtedness or shall execute an instrument of cancellation or conversion in form and substance acceptable to the Company.

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3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Except as set forth on a Schedule of Exceptions delivered by the Company to Purchasers at an applicable Closing, the Company hereby represents and warrants to each Purchaser as of each Closing Date as set forth below.

3.1          Corporate Power.  The Company has all necessary corporate power to execute and deliver this Agreement and to perform all its obligations hereunder.  Upon its execution and delivery, this Agreement will be a valid and binding obligation of the Company, enforceable in accordance with its terms.

3.2          Capitalization.  Immediately prior to the First Closing, there are 34,000,000 shares of the Company’s common stock outstanding.

3.3          No Subsidiaries.  The Company does not own more than 50% of the outstanding capital stock (or other similar equity interests) of any corporation or other entity that owns any material assets.

3.4          Litigation.  There is no material lawsuit or other material legal proceeding that is pending against the Company before any court or other tribunal and that (a) is likely to result in a final judgment adverse to the Company, and (b) is likely to have a material adverse effect on the Company’s business.

3.5          Authorization.  As of the First Closing Date, the execution, delivery and performance of this Agreement on behalf of the Company will have been duly authorized by all necessary action on the part of the Company and its board of directors.

4.REPRESENTATIONS AND WARRANTIES OF PURCHASERS.

Each Purchaser hereby represents and warrants to the Company, severally and not jointly, on each Closing Date as follows (provided that such representations and warranties do not lessen or obviate the representations and warranties of the Company set forth in this Agreement):

4.1          Power.  Purchaser has all necessary power (corporate or otherwise) to execute and deliver this Agreement and to perform all its obligations hereunder.  Upon its execution and delivery, this Agreement will be a valid and binding obligation of Purchaser, enforceable in accordance with its terms. Purchaser’s financial resources are sufficient to enable it to purchase the Shares as provided herein.

4.2          Access.  Purchaser has been given full access to the assets, books, records, contracts and employees of the Company, and has been given the opportunity to meet with officers and other representatives of the Company for the purpose of investigating and obtaining information regarding the Company’s business, operations and legal affairs.

4.3          Authorization.  The execution, delivery and performance of this Agreement on behalf of Purchaser have been duly authorized by all necessary action on the part of Purchaser and, if applicable, its board of directors.

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4.4          Brokers.  Purchaser has not retained any broker or finder in connection with any of the transactions contemplated by this Agreement, and Purchaser has not incurred or agreed to pay, or taken any other action that would entitle any person or entity to receive, any brokerage fee, finder’s fee or other similar fee or commission with respect to any of the transactions contemplated by this Agreement.

4.5          Acquisition.  Purchaser is acquiring its portion of the Shares for its own account and for investment, and not with a view to, or for sale in connection with, any distribution of the Shares.

5.CONDITIONS TO CLOSING.

5.1          Conditions to Purchasers’ Obligations at each Closing.  Each Purchaser’s obligations to purchase and otherwise consummate the transactions that are to be consummated at each Closing are subject to the satisfaction of the following conditions (any of which may be waived by such Purchaser in whole or in part)

(a)           Accuracy of Representations and Warranties.  The representations and warranties of the Company set forth in Section 3 shall be accurate in all material respects as of each Closing Date, except to the extent that any of such representations and warranties refer specifically to a date other than the applicable Closing Date, and except as set forth on a Schedule of Exceptions.

(b)           Performance.  The Company shall have performed, in all material respects, all obligations required by this Agreement to be performed by the Company on or before the applicable Closing Date.

(c)           No Injunction.  There shall not be in effect at the applicable Closing Date any injunction or other binding order of any court or other tribunal having jurisdiction over Purchaser that prohibits the purchase of the Shares by Purchaser.

(d)           License Agreement.  Optimer and the Company shall have executed and delivered that certain Intellectual Property Assignment and License Agreement between such parties, of even date herewith (the “License Agreement”).

(e)           Stock Purchase Agreement.  Optimer and the other Purchasers shall have executed and delivered that certain Stock Purchase Agreement between such parties, of even date herewith (the “Stock Purchase Agreement”).

(f)            Assignment Agreements.  Optimer, the Company and The Scripps Research Institute shall have executed and delivered the Scripps Assignment (as defined in the License Agreement) and Optimer, the Company and the Memorial Sloan-Kettering Cancer Center shall have executed and delivered the MSKCC Assignment (as defined in the License Agreement).

5.2          Conditions to Obligations of the Company.  The Company’s obligation to issue and sell the Shares at each Closing is subject to the satisfaction, on or prior to the applicable Closing, of the following conditions:

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(a)           Accuracy of Representations and Warranties.  The representations and warranties of each Purchaser set forth in Section 4 shall be accurate in all material respects as of the applicable Closing Date.

(b)           Performance.  Each Purchaser shall have performed, in all material respects, all obligations required by this Agreement to be performed by such Purchaser on or before the applicable Closing Date.

(c)           No Injunction.  There shall not be in effect at the applicable Closing Date any injunction or other binding order of any court or other tribunal having jurisdiction over the Company that prohibits the sale of any of the Shares to Purchasers.

(d)           License Agreement.  Optimer shall have executed and delivered the License Agreement.

(e)           Stock Purchase Agreement.  Optimer and the other Purchasers shall have executed and delivered the Stock Purchase Agreement.

(f)            Assignment Agreements.  The Scripps Research Institute shall have executed and delivered the Scripps Assignment and the Memorial Sloan-Kettering Cancer Center shall have executed and delivered the MSKCC Assignment.

6.MISCELLANEOUS.

6.1          Governing Law; Arbitration.  This Agreement shall be governed by and construed under the laws of the State of California in all respects as such laws are applied to agreements among California residents entered into and performed entirely within California, without giving effect to conflict of law principles thereof.  The parties agree that any action brought by either party under or in relation to this Agreement, including without limitation to interpret or enforce any provision of this Agreement, shall be brought in, and each party agrees to and does hereby submit to the jurisdiction and venue of, any state or federal court located in the County of San Diego, California.  The foregoing notwithstanding, any dispute between the parties that cannot be resolved through good faith discussions shall be submitted to binding arbitration.  Any arbitration pursuant to this Section 6.1 shall be conducted in San Diego, California (or such other location upon which the parties may mutually agree) before a single arbitrator with Judicial Arbitration and Mediation Services, Inc. (“JAMS”) or its successor, pursuant to the applicable JAMS rules and procedures then in effect.  The arbitrator shall have the authority to compel adequate discovery for the resolution of the dispute, including, but not limited to, access to essential documents and witnesses.  The arbitrator shall issue a written arbitration decision setting forth his or her essential findings and conclusions and a statement of the award, which decision shall be final and binding on the parties.

6.2          Survival.  The representations, warranties, covenants and agreements made herein shall survive the closing of the transactions contemplated hereby.  All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.  The representations, warranties, covenants and obligations of the

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Company, and the rights and remedies that may be exercised by the Purchasers, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or knowledge of, any of the Purchasers or any of their representatives.

6.3          Successors and Assigns.  Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon the parties hereto and their respective successors, assigns, heirs, executors and administrators and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Shares from time to time; provided, however, that prior to the receipt by the Company of adequate written notice of the transfer of any Shares specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such Shares in its records as the absolute owner and holder of such Shares for all purposes.

6.4          Entire Agreement.  This Agreement, the exhibits hereto and the exhibits thereto set forth the entire understanding of the parties hereto, and supersede all other agreements and understandings between the parties hereto, relating to the subject matter hereof and thereof.

6.5          Severability.  In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

6.6          Amendment and Waiver. This Agreement may be amended or modified, and the obligations of the Company and the rights of the holders of the Shares under this Agreement may be waived, only upon the written consent of the Company and the Majority Purchasers.

6.7          Delays or Omissions.  It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring.  It is further agreed that any waiver, permit, consent or approval of any kind or character on any party’s part of any breach, default or noncompliance under this Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative.

6.8          Waiver of Conflicts.  Each party to this Agreement acknowledges that Cooley Godward Kronish LLP (“Cooley”), outside general counsel to Optimer, has in the past performed and is or may now or in the future represent the Company in matters unrelated to the transactions contemplated by this Agreement (the “Financing”), including representation of the Company in matters of a similar nature to the Financing.  The applicable rules of professional conduct require that Cooley inform the parties hereunder of this representation and obtain their consent.  Cooley has served as outside general counsel to Optimer and has negotiated the terms of the Financing solely on behalf of Optimer.  Optimer, the Company and each Purchaser other than Optimer (“Other Purchasers”) hereby (a) acknowledge that they have had an opportunity to ask for and

6

have obtained information relevant to such representation, including disclosure of the reasonably foreseeable adverse consequences of such representation; (b) acknowledge that with respect to the Financing, Cooley has represented solely Optimer, and not the Company or any Other Purchasers or any stockholder, director or employee of Optimer, the Company or any Other Purchasers; and (c) gives its informed consent to Cooley’s representation of Optimer in the Financing.

6.9          Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail, telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Company at the address as set forth on the signature page hereof and to any Purchaser at the address set forth on EXHIBIT A attached hereto or at such other address or electronic mail address as the Company or a Purchaser may designate by ten (10) days advance written notice to the other parties hereto.

6.10        Attorneys’ Fees.  In the event that any suit or action is instituted under or in relation to this Agreement, including without limitation to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

6.11        Titles and Subtitles.  The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

6.12        Counterparts; Facsimile.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.  Facsimile signatures shall have the same force and effect as originals.

6.13        Exculpation Among Purchasers.  Each Purchaser acknowledges that it is not relying upon any person, firm, or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company.  Each Purchaser agrees that no Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore taken or omitted to be taken by any of them in connection with the purchase of the Shares.

6.14        Pronouns.  All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have executed this FINANCING AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:
OPTIMER BIOTECHNOLOGY, INC.
By:	/s/ Youe-Kong Shue, Ph.D.
Name:	Youe-Kong Shue, Ph.D.
Title:	President & CEO
Address:		Room W1907, 19F, 3 Yuan Qu Street
		Nankang Software Park
		Taipei 115, Taiwan

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
OPTIMER PHARMACEUTICALS, INC.
By:	/s/ Michael N. Chang
Name:	Michael N. Chang
Title:	CEO

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
OPTIMER PHARMACEUTICALS, INC.10110 Sorrento Valley Rd., Suite C San Diego, CA 92121 Attn: John Prunty	11,880,000	NT $118,800,000	27,720,000	NT $277,200,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
HUEI HONG INVESTMENT CO., LTD.
By:	/s/ Chuan-tai Cheng
Name:	Chuan-tai Cheng
Title:

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
HUEI HONG INVESTMENT CO., LTD.11F, No. 308, Section 2, Bade RoadTaipei 10492, TaiwanAttn: Frank Chen	1,188,000	NT $11,880,000	2,772,000	NT $27,720,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
UNIMED INVESTMENT INC.
合一生技投資股份有限公司
By:	/s/ William Lu
Name:	William Lu
Title:	Chairman

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
UNIMED INVESTMENT INC. 合一生技投資股份有限公司3F, No. 308, Section 2, Bade RoadTaipei 10492, TaiwanAttn: Howard Lee	1,584,000	NT $15,840,000	3,696,000	NT $36,960,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
E.SUN VENTURE CAPITAL CO., LTD.
玉山創業投資股份有限公司
By:	/s/ Nanchou Huang
Name:	Nanchou Huang
Title:	CEO

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
E.SUN VENTURE CAPITAL CO., LTD. 玉山創業投資股份有限公司14F, No. 117, Section 3,Minsheng E. RoadTaipei 10546, TaiwanAttn: Mike Tsai	950,400	NT $9,504,000	2,217,600	NT $22,176,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
HUNG-MEI YEH
葉鴻美
By:	/s/ Hung-Mei Yeh
Name:	Hung-Mei Yeh
Title:

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
HUNG-MEI YEH 葉鴻美14F, No. 117, Section 3,Minsheng E. RoadTaipei 10546, TaiwanAttn: Mike Tsai	237,600	NT $2,376,000	554,400	NT $5,544,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
SINOPAC VENTURE CAPITAL CORPORATION
永豐創業投資股份有限公司
By:	/s/ Kuo Chi Yu
Name:	Kuo Chi Yu
Title:	Chairman

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
SINOPAC VENTURE CAPITAL CORPORATION 永豐創業投資股份有限公司6F, No. 306, Section 2, Bade RoadTaipei 10492, TaiwanAttn: Eric Chin	792,000	NT $7,920,000	1,848,000	NT $18,480,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
Futai Investment Co., Ltd.
富鈦投資股份有限公司
By:	/s/ Wei-hsu Tan
Name:	Wei-hsu Tan
Title:

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
Futai Investment Co., Ltd. 富鈦投資股份有限公司1F., No.321, Sec. 2, Shipai Road Beitou Dist. 11267, Taipei Taiwan Attn: Connie Hsu	792,000	NT $7,920,000	1,848,000	NT $18,480,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
GLOBAL STRATEGIC INVESTMENT INC.
By:	/s/ Shih-Chien Yang
Name:	Shih-Chien Yang
Title:	Chairman

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
GLOBAL STRATEGIC INVESTMENT INC. 9F, No. 65, Tun Hwa South Road, Sec. 2Taipei 106, TaiwanAttn: David Cheng	792,000	NT $7,920,000	1,848,000	NT $18,480,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
FUBON FINANCIAL HOLDING VENTURE CAPITAL CORP.
富邦金控創業投資股份有限公司
By:	/s/ Chu Hsin Lee
Name:	Chu Hsin Lee
Title:	President

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
Fubon Financial Holding Venture Capital Corp. 富邦金控創業投資股份有限公司8F, 108, Section 1, Tun Hwa South RoadTaipei 10557, TaiwanAttn: Mei-Ann Liu	792,000	NT $7,920,000	1,848,000	NT $18,480,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

PURCHASERS:
CHENG HSU JEAN
By:	/s/ Cheng Hsu Jean
Name:	Cheng Hsu Jean
Title:

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
Cheng Hsu Jean4F, No. 6, alley 33, Lane 361, Wu-hsin StreetTaipei 110, Taiwan	792,000	NT $7,920,000	1,848,000	NT $18,480,000

[SIGNATURE PAGE TO FINANCING AGREEMENT]

EXHIBIT A

SCHEDULE OF PURCHASERS

NAME AND ADDRESS	FIRST CLOSING SHARES	FIRST CLOSING AGGREGATE PURCHASE PRICE	SECOND CLOSING SHARES	SECOND CLOSING AGGREGATE PURCHASE PRICE
OPTIMER PHARMACEUTICALS, INC.10110 Sorrento Valley Rd., Suite CSan Diego, CA 92121Attn: John Prunty	11,880,000	NT $118,800,000	27,720,000	NT $277,200,000
HUEI HONG INVESTMENT CO., LTD.11F, No. 308, Section 2, Bade RoadTaipei 10492, TaiwanAttn: Frank Chen	1,188,000	NT $11,880,000	2,772,000	NT $27,720,000
UNIMED INVESTMENT INC. 合一生技投資股份有限公司3F, No. 308, Section 2, Bade RoadTaipei 10492, TaiwanAttn: Howard Lee	1,584,000	NT $15,840,000	3,696,000	NT $36,960,000
E.SUN VENTURE CAPITAL CO., LTD. 玉山創業投資股份有限公司14F, No. 117, Section 3,Minsheng E. RoadTaipei 10546, TaiwanAttn: Mike Tsai	950,400	NT $9,504,000	2,217,600	NT $22,176,000
HUNG-MEI YEH 葉鴻美14F, No. 117, Section 3,Minsheng E. RoadTaipei 10546, TaiwanAttn: Mike Tsai	237,600	NT $2,376,000	554,400	NT $5,544,000

SINOPAC VENTURE CAPITAL CORPORATION 永豐創業投資股份有限公司 6F, No. 306, Section 2, Bade RoadTaipei 10492, TaiwanAttn: Eric Chin	792,000	NT $7,920,000	1,848,000	NT $18,480,000
Futai Investment Co., Ltd. 富鈦投資股份有限公司1F., No.321, Sec. 2, Shipai Road Beitou Dist. 11267, Taipei Taiwan Attn: Connie Hsu	792,000	NT $7,920,000	1,848,000	NT $18,480,000
GLOBAL STRATEGIC INVESTMENT INC. 9F, No. 65, Tun Hwa South Road, Sec. 2Taipei 106, TaiwanAttn: David Cheng	792,000	NT $7,920,000	1,848,000	NT $18,480,000
FUBON FINANCIAL HOLDING VENTURE CAPITAL CORP. 富邦金控創業投資股份有限公司8F, 108, Section 1, Tun Hwa South RoadTaipei 10557, TaiwanAttn: Mei-Ann Liu	792,000	NT $7,920,000	1,848,000	NT $18,480,000
Cheng Hsu Jean4F, No. 6, alley 33, Lane 361, Wu-hsin StreetTaipei 110, Taiwan	792,000	NT $7,920,000	1,848,000	NT $18,480,000
TOTAL:	19,800,000	NT $198,000,000	46,200,000	NT $462,000,000

EXHIBIT B

MILESTONES

1.Filing of an investigational new drug application (“IND”) or equivalent thereof with the appropriate regulatory authority in Taiwan and the initiation of a Phase 2/3 trial for OPT-822/821.

2.             Filing of an IND with the U.S. Food and Drug Administration for OPT-88.

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael N. Chang, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Optimer Pharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)     designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)     all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2009

/s/ Michael N. Chang

Michael N. Chang

President and Chief Executive Officer

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EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John D. Prunty, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Optimer Pharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)     designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)     all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2009

/s/ John D. Prunty

John D. Prunty

Vice-President and Chief Financial Officer

(Principal Financial and Accounting Officer)

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EX-32

Exhibit 32

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), Michael N. Chang, the Chief Executive Officer of Optimer Pharmaceuticals, Inc. (the “Company”), and John D. Prunty, the Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:

1.	The Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, to which this Certification is attached as Exhibit 32 (the “Quarterly Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Quarterly Report and results of operations of the Company for the period covered by the Quarterly Report.

Dated: November 3, 2009

/s/ Michael N. Chang	/s/ John D. Prunty
Michael N. Chang Chief Executive Officer (Principal Executive Officer)	John D. Prunty Chief Financial Officer (Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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