10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2011

or

oTRANSITION 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 x  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, par value $0.001 per share, outstanding as of July 29, 2011 was 46,603,301 shares.

OPTIMER PHARMACEUTICALS, INC.
FORM 10-Q
For the Quarterly Period Ended June 30, 2011

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets — June 30, 2011 and December 31, 2010	3
Consolidated Statements of Operations — Three months and six months ended June 30, 2011 and 2010	4
Consolidated Statements of Cash Flows — Six months ended June 30, 2011 and 2010	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures about Market Risk	38
Item 4. Controls and Procedures	39
PART II — OTHER INFORMATION
Item 1A. Risk Factors	40
Item 6. Exhibits	77
SIGNATURE

2

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements

Optimer Pharmaceuticals, Inc.

Consolidated Balance Sheets

	June 30,			December 31,
	2011			2010
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	61,402,529		$	19,861,924
Short-term investments	96,391,742			29,553,506
Research grant and other receivables	78,957			53,552
Inventory	1,369,482			—
Prepaid expenses and other current assets	5,843,511			463,307
Total current assets	165,086,221			49,932,289
Property and equipment, net	2,172,443			697,683
Long-term investments	882,000			882,000
Other assets	1,242,523			508,190
Total assets	$	169,383,187		$	52,020,162
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,738,492		$	2,307,820
Accrued expenses	5,080,679			2,385,046
Total current liabilities	11,819,171			4,692,866
Deferred rent	183,515			141,138
Stockholders’ equity:
Preferred stock, par value $0.001, 10,000,000 shares authorized, no shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively	—			—
Common stock, $0.001 par value, 75,000,000 shares authorized, 46,602,501 shares and 39,278,965 shares issued and outstanding at June 30, 2011 and December 31, 2010 respectively	46,603			39,279
Additional paid-in capital	351,215,431			267,665,732
Accumulated other comprehensive income	543,480			298,850
Accumulated deficit	(201,920,383		)	(222,814,407		)
Total Optimer Pharmaceuticals, Inc. stockholders’ equity	149,885,131			45,189,454
Noncontrolling interest	7,495,370			1,996,704
Total stockholders’ equity	157,380,501			47,186,158
Total liabilities and stockholders’ equity	$	169,383,187		$	52,020,162

See accompanying notes.

3

Optimer Pharmaceuticals, Inc.

Consolidated Statements of Operations

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,		June 30,
	2011			2010			2011		2010
Revenues:
Licensing	$	—		$	—		$	69,165,000	$	—
Research grants	33,294			357,436			144,933		654,873
Total revenues	33,294			357,436			69,309,933		654,873
Cost and expenses:
Cost of licensing	—			—			4,273,532		—
Research and development	10,570,636			6,419,251			19,041,145		17,780,830
Marketing	6,974,322			656,464			10,407,915		925,058
General and administrative	7,506,525			3,686,442			15,786,707		6,075,154
Total operating expenses	25,051,483			10,762,157			49,509,299		24,781,042
Income (loss) from operations	(25,018,189		)	(10,404,721		)	19,800,634		(24,126,169		)
Interest income and other, net	95,860			53,719			119,102		78,497
Consolidated net income (loss)	$	(24,922,329	)	$	(10,351,002	)	$	19,919,736	$	(24,047,672	)
Net loss attributable to noncontrolling interest	683,483			290,105			974,288		491,020
Net income (loss) attributable to Optimer Pharmaceuticals, Inc.	$	(24,238,846	)	$	(10,060,897	)	$	20,894,024	$	(23,556,652	)
Net income (loss) per share - basic	$	(0.52	)	$	(0.26	)	$	0.47	$	(0.64	)
Net income (loss) per share - diluted	$	(0.52	)	$	(0.26	)	$	0.46	$	(0.64	)
Weighted average number of shares used to compute net income (loss) per share - basic	46,479,395			38,306,910			44,581,010		36,663,380
Weighted average number of shares used to compute net income (loss) per share - diluted	46,479,395			38,306,910			45,447,261		36,663,380

See accompanying notes.

4

Optimer Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(unaudited)

	Six Months Ended June 30,
	2011			2010
Operating activities
Net income (loss)	$	19,919,736		$	(24,047,672	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	206,406			141,869
Stock based compensation	4,687,680			3,151,267
Issuance of common stock for consulting services	2,793,514			—
Deferred rent	42,377			(53,295		)
Changes in operating assets and liabilities:
Prepaids expenses and other current assets	(5,380,204		)	(418,806		)
Research grant and other receivables	(25,405		)	18,682
Inventory	(1,369,482		)	—
Other assets	(734,333		)	(4,979		)
Accounts payable and accrued expenses	7,126,305			(2,089,485		)
Net cash provided (used) in operating activities	27,266,594			(23,302,419		)
Investing activities
Purchases of short-term investments	(91,899,393		)	(35,058,358		)
Sales or maturity of short-term investments	25,165,000			21,000,000
Purchases of property and equipment	(1,681,166		)	(272,965		)
Net cash used in investing activities	(68,415,559		)	(14,331,323		)
Financing activities
Proceeds from sale of common stock	82,270,022			51,774,170
Net cash provided by financing activities	82,270,022			51,774,170
Effect of exchange rate changes on cash and cash equivalents	419,548			182,860
Net increase in cash and cash equivalents	41,540,605			14,323,288
Cash and cash equivalents at beginning of period	19,861,924			17,054,328
Cash and cash equivalents at end of period	$	61,402,529		$	31,377,616

See accompanying notes.

5

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(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.

Optimer is a biopharmaceutical company focused on discovering, developing and commercializing innovative hospital specialty products.  The Company currently has one approved anti-infective product, DIFICID™ (fidaxomicin), for the treatment of Clostridium difficile-associated diarrhea (“CDAD”), and one anti-infective product candidate, 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.

In May 2011, the U.S. Food and Drug Administration (“FDA”), granted marketing approval for DIFICID for the treatment of CDAD in adults 18 years of age and older.

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 months and six months ended June 30, 2011 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, 2010, which was filed with the Securities and Exchange Commission (“SEC”) on March 10, 2011.

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

6

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

be cash equivalents.  Except for one auction rate preferred security (“ARPS”), 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 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.

Inventory

Inventory is stated at the lower of cost or market.  Cost is determined in a manner which approximates the first-in, first-out (FIFO) method. The Company capitalizes inventory produced in preparation for product launches upon FDA approval when costs are expected to be recoverable through the commercialization of the product.  The Company reserves for potentially excess, dated or obsolete inventories based on an analysis of inventory on hand compared to forecasts of future sales.

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.

Revenue recognition for agreements with multiple deliverables is based on the individual units of accounting determined to exist in the agreement. A delivered item is considered a separate unit of accounting when the delivered item has value to the customer on a stand-alone basis. Items are considered to have stand-alone value when they are sold separately by any vendor or when the customer could resell the item on a stand-alone basis.

For multiple deliverable agreements entered into after December 31, 2010, consideration is allocated at the inception of the agreement to all deliverables based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence (“VSOE”), of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, the Company uses its best estimate of the selling price for the deliverable.

The Company recognizes revenue for delivered elements only when it determines there are no uncertainties regarding customer acceptance. Changes in the allocation of the sales price between delivered and undelivered elements can impact revenue recognition but do not change the total revenue recognized under any agreement.

7

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

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.

When determining whether or not to account for transactions under the milestone method, the Company makes a determination of whether or not each milestone is considered substantive. During this assessment the Company considers if achievement of the milestone is based in whole or in part on the Company’s performance or on the occurrence of a separate outcome resulting from the Company’s performance, if there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and if achievement will result in additional payments being due.

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.

In February 2011, the Company entered into a collaboration and license agreement with Astellas Pharma Europe Ltd. (“Astellas”).  Under the term of the license agreement with Astellas, Astellas paid the Company an upfront fee of $69.2 million.  The Company is also  eligible to receive additional payments under the collaboration and license agreement upon the achievement of specified regulatory and commercial milestones.  The Company has assessed the revenue recognition method for the achievement of the milestones at the inception of the arrangement using the milestone method.

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.

8

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

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.  In November 2010, the Company paid a $1.5 million filing fee to the FDA associated with the NDA for DIFICID.  The filing fee is potentially refundable for companies that qualify as a small business which is defined by the Small Business Association (“SBA”) as a company with 250 employees or less.  The Company asserted that it qualifies as a small business and submitted data to the SBA to support its assertion.  As the small business determination was uncertain, the Company recorded the $1.5 million NDA fee as research and development expense.  In March  2011, the Company received a letter from the SBA concurring with the Company’s assessment that it is a small business. Consequently, the Company recorded the $1.5 million fee as a receivable and reduced the research and development expenses in March 2011. In June 2011, the Company was refunded the $1.5 million fee from the SBA.

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).  Consolidated comprehensive loss was ($24.6) million and ($10.3) million for the three months ended June 30, 2011 and 2010, respectively. Consolidated comprehensive income (loss) was $20.4 million and ($23.9) million for the six months ended June 30, 2011 and 2010, respectively.  As of June 30, 2011, the cumulative unrealized loss on investments and the cumulative gain on foreign currency translation adjustment was $100,823 and $442,657, respectively. As of December 31, 2010, the cumulative unrealized loss on investments and the cumulative gain on foreign currency translation adjustment was $3,020 and $301,870, respectively.

9

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

Net Income (Loss) Per Share Attributable to Common Stockholders

Basic net income (loss) per common share is computed by dividing net loss by the weighted-average number of common shares outstanding. Diluted net income (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.

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date.  The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized.

Recently Issued Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an update to existing guidance on fair value measurement and disclosure requirements under U.S. GAAP and International Financial Reporting Standards.  The amendments in this update change the wording used to describe many of the requirements under U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in this update will be effective for interim and annual periods beginning after December 15, 2011 and should be applied retrospectively. The adoption of these amendments is not expected to have a material impact on the Company’s financial position, cash flow or results of operations.

In June 2011, the FASB issued an update which amends the presentation of comprehensive income. The objective of this update is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  Under this update, an entity has the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under either choice, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The amendments in this update will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied prospectively. The adoption of these amendments is not expected to have a material impact on the Company’s financial position, cash flow or results of operations.

10

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

3.   Fair Value of Financial Instruments

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements as of June 30, 2011:

	Quoted Prices in Active Markets(Level 1)		Other Observable Inputs(Level 2)		Unobservable Inputs(Level 3)		Total
Cash equivalents	$	61,402,529	$	—	$	—	$	61,402,529
Marketable securities	96,391,742		—		—		96,391,742
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, 2011	$	882,000
Total gains and losses:
Realized net income	—
Unrealized in accumulated other comprehensive income	—
Purchases, sales, issuances and settlements	—
Transfers in (out) of Level 3	—
Ending balance at June 30, 2011	$	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 June 30, 2011, the Company held one ARPS valued at $882,000 with a perpetual maturity date that resets every 28 days.  Although as of June 30, 2011, this ARPS continued to pay interest according to its stated terms, the market in these securities continues to be illiquid. Based on a discounted cash flow model used to determine the estimated fair value of its investment in the ARPS, 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 assumptions used for the discontinued cash flow model include estimates for interest rates, timing and amount of cash flows and expected holding period of the ARPS.  The Company’s ARPS is classified as a long-term investment on the consolidated balance sheets, as the Company does not believe it could liquidate its security in the near term.

11

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

4.     Investment Securities

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.

	June 30, 2011
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Government agencies	$	85,769,294	$	106,229	$	(4,322	)	$	85,871,201
Corporate bonds	10,521,625		2,660		(3,744		)	10,520,541
	$	96,290,919	$	108,889	$	(8,066	)	$	96,391,742

	December 31, 2010
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Government agencies	$	26,542,210	$	2,311	$	(4,924	)	$	26,539,597
Corporate bonds	3,014,319		23		(433		)	3,013,909
	$	29,556,529	$	2,334	$	(5,357	)	29,553,506

Investments in net unrealized loss positions as of June 30, 2011 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 agencies	6	$	13,714,315	$	(4,322	)	$	—	$	—	$	13,714,315	$	(4,322	)
Corporate bonds	3	5,074,683		(3,744		)	$	—	$	—	5,074,683		(3,744		)
		$	18,788,998	(8,066		)	$	—	$	—	$	18,788,998	$	(8,066	)

The amortized cost and estimated fair value of securities available-for-sale at June 30, 2011, by contractual maturity, are as follows:

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	39,645,708	$	39,654,678
Due in one year to two years	56,645,211		56,737,064
	$	96,290,919	$	96,391,742

The weighted-average maturity of our short-term investments as of June 30, 2011 and 2010, was approximately thirteen months and four months, respectively.

12

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

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 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 anticipates full recovery of amortized cost with respect to these securities at maturity or sooner in the event of a change in the market interest rate environment.

5.     Stockholders’ Equity

Noncontrolling Interest

In October 2009, the Company sold 40% of its equity interest in OBI and in February 2011, pursuant to an amendment to the October 2009 financing agreement, OBI sold newly-issued shares of its common stock for gross proceeds of approximately 462.0 million New Taiwan Dollars (approximately $15.5 million based on then-current exchange rates).  The Company purchased 277.2 million New Taiwan Dollars (approximately $9.3 million based on then-current exchange rates) of the shares issued in the financing, such that the Company continued to maintain a 60% equity interest in OBI.  Pursuant to authoritative guidance, the Company accounts and reports for minority interests, the portion of OBI not owned by the Company, as noncontrolling interests and classifies them as a component of stockholders’ equity on the consolidated balance sheets of the Company.  The Company includes the net loss attributable to noncontrolling interests as part of its consolidated net loss.

The following table reconciles equity attributable to noncontrolling interest:

	For the Six Months Ended June 30, 2011
Noncontrolling interest, January 1, 2011	$	1,996,704
Additional financing	6,194,193
Net loss attributable to noncontrolling interest	(974,288		)
Translation adjustments	278,761
Noncontrolling interest, June 30, 2011	$	7,495,370

Warrants

In connection with a registered direct offering which occurred in March 2009, the Company sold warrants to purchase up to an aggregate of 91,533 shares of its common stock.  These warrants had an exercise price of $10.93 per share and were exercised in June 2011.

13

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

6.Net Income (Loss) Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net income per share for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011		2010
Numerator:
Net income (loss) — basic and diluted	$	(24,238,846	)	$	(10,060,897	)	$	20,894,024	$	(23,556,652	)
Denominator:
Weighted average number of shares of common stock outstanding - basic	46,479,395			38,306,910			44,581,010		36,663,380
Effect of dilutive securities:
Restricted stock	—			—			43,560		—
ESPP shares	—			—			39,381		—
Stock award common share equivalents	—			—			783,310		—
Weighted average number of shares of common stock outstanding - diluted	46,479,395			38,306,910			45,447,261		36,663,380
Net income (loss) per share - basic	$	(0.52	)	$	(0.26	)	$	0.47	$	(0.64	)
Net income (loss) per share - diluted	$	(0.52	)	$	(0.26	)	$	0.46	$	(0.64	)

For the three months ended June 30, 2011 and 2010, 5.8 million and 3.9 million, respectively, potentially dilutive shares of common stock were not included in the diluted net income per share calculations because they would have been antidilutive.

For the six months ended June 30, 2011 and 2010, 4.1 million and 3.9 million, respectively, potentially dilutive shares of common stock were not included in the diluted net income per share calculations because they would have been antidilutive.

7.Stock Based Compensation

Optimer Pharmaceuticals, Inc.

Stock Options

In November 1998, the Company adopted the 1998 Stock Plan (the “1998 Plan”).  The Company terminated and ceased granting options under the 1998 Plan upon the closing 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 closing of the Company’s initial public offering. A total of 2,000,000 shares of the Company’s common stock were initially made available for sale under the 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 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. Pursuant to this provision, 750,000 additional shares of the Company’s common stock were reserved for issuance under the 2006 Plan on January 1, 2011, 2010 and 2009.  Under the 2006 Plan, 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.

14

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

In March and in June 2011, the Company’s Board of Directors approved amendments to the 2006 Plan to provide for the reservation of an additional 1,750,000 shares and 1,000,000 shares, respectively, of the Company’s common stock to be used exclusively for the grant of awards to individuals not previously an employee or non-employee director of the Company (or following a bona fide period of non-employment with the Company), as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules.

Options granted under both the 1998 Plan and the 2006 Plan generally expire 10 years from the date of grant (five years for a 10% or greater 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.

Performance-Based Stock Options, Performance-Based Restricted Stock Units, and Stock Awards

On May 5, 2010, the Company’s Board of Directors appointed Pedro Lichtinger as its President and CEO and as a member of its Board of Directors.  Pursuant to Mr. Lichtinger’s offer letter, he received performance-based stock options to purchase up to an aggregate of 480,000 shares of common stock and performance-based restricted stock units covering up to an aggregate of 120,000 shares of common stock, which vest over time beginning on the dates the Company achieves specified development and commercialization goals.  In February 2011, one of the performance criteria was met, and, in May 2011, another one of the performance criteria was met. As a result of the accomplishment of these goals, 1/4th of the performance-based stock options and performance-based restricted stock units related to each goal will vest on the one-year anniversary of the achievement of such goal and the remaining shares will vest in 36 equal monthly installments thereafter.

Simultaneously with Mr. Lichtinger’s appointment, Michael Chang resigned as the Company’s President and CEO.  The Company entered into a consulting agreement with Dr. Chang to provide general consulting services. Pursuant to his consulting agreement and as part of his compensation, Dr. Chang received performance-based stock options to purchase up to an aggregate of 400,000 shares of common stock which vest over time beginning on the dates certain regulatory filings are accepted and approved. Dr. Chang has continued to serve as the Chairman of the Company’s Board of Directors. In January 2011, one of the performance criteria was met, and, in May 2011, another one of the performance criteria was met. As a result of the accomplishment of these goals,1/4th of the option shares related to each goal vested upon the accomplishment of such goal. The remaining shares will vest in 24 equal monthly installments over the subsequent two-year period.

Employee Stock Purchase Plan

Optimer also grants stock awards under its employee stock purchase plan (“ESPP”). Under the terms of the ESPP, eligible employees may purchase shares of Optimer’s common stock at the lesser of 85% of the fair market value of Optimer’s common stock on the offering date or the purchase date.

15

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

Valuations

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options and stock awards, 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 of the underlying stock.  The following table shows the assumptions used to compute stock-based compensation expense for the stock options, performance-based stock options, performance-based restricted stock units, and ESPP purchase rights during the three and six months ended June 30, 2011 and 2010, using the Black-Scholes option pricing model:

	Three months endedJune 30,				Six months endedJune 30,
Stock Options	2011		2010		2011		2010
Risk-free interest rate	2.10-3.46	%	2.66-3.53	%	2.10-3.46	%	2.66-3.53	%
Dividend yield	0.00	%	0.00	%	0.00	%	0.00	%
Expected life of options (years)	6.08-9.08		6.05-10.00		5.27-9.49		5.02-10.00
Volatility	69.13-72.20	%	71.24-79.07	%	69.13-73.63	%	71.24-79.07	%

	Three months endedJune 30,				Six months endedJune 30,
ESPP	2011		2010				2010
Risk-free interest rate	0.14-0.16	%	0.19-0.20	%	0.14-0.18	%	0.17-0.20	%
Dividend yield	0.00	%	0.00	%	0.00	%	0.00	%
Expected life of options (years)	0.5		0.5		0.5		0.5
Volatility	41.05-44.29	%	34.23-39.62	%	40.01-44.29	%	34.08-39.62	%

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.

Total stock-based compensation expense related to all of the Company’s stock options, restricted stock units, stock awards issued to employees and consultants, and employee stock purchases, recognized for the three months and six months ended June 30, 2011 and 2010, was comprised as follows:

16

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Research and development	$	637,374	$	406,145	$	1,312,897	$	790,142
Marketing	215,413		94,997		258,278		188,308
General and administrative	1,604,209		1,623,761		3,017,054		2,091,006
Stock-based compensation expense	$	2,456,996	$	2,124,903	$	4,588,229	$	3,069,456

At June 30, 2011, the total unrecognized compensation expense related to unvested stock options and restricted stock units issued to employees was approximately $24.0 million and the related weighted-average period over which such expense is expected to be recognized is approximately 3.5 years.

Optimer Biotechnology, Inc.

Stock Options

In March 2010, OBI’s board of directors approved a Stock Option Plan and reserved 8.0 million shares of OBI common stock for issuance of equity awards thereunder. The Stock Option Plan provides for the issuance of stock options, restricted stock awards and stock appreciation rights to employees of OBI. The options generally vest over four years and have a maximum contractual term of ten years.

Valuations

The following table shows the assumptions used to compute stock-based compensation expense for the stock options granted by OBI during the three months and six months ended June 30, 2011 and 2010, using the Black-Scholes option pricing model:

	Three months endedJune 30,				Six months endedJune 30,
Stock Options	2011		2010		2011		2010
Risk-free interest rate	1.75	%	1.38	%	1.63-1.750	%	1.25-1.38	%
Dividend yield	0.00	%	0.00	%	0.00	%	0.00	%
Expected life of options (years)	6.08		6.08		6.08		6.08
Volatility	88.35	%	92.14	%	88.12-88.35	%	91.65-92.14	%

The risk-free interest rate assumption was based on the Central Bank of China interest rates.  The assumed dividend yield was based on OBI’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 OBI’s limited history.  Due to OBI’s limited historical data, OBI used the historical volatility of OBI’s peers whose share prices are publicly available to estimate the volatility rate of OBI stock options.

17

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table summarizes the stock-based compensation expense for OBI included in each operating expense line item in Optimer’s consolidated statements of operations for the three months and six months ended June 30, 2011 and 2010:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Research and development	$	15,303	$	11,592	$	27,727	$	19,026
Marketing	791		—		791		—
General and administrative	36,165		30,325		70,933		62,785
Stock-based compensation expense	$	52,259	$	41,917	$	99,451	$	81,811

At June 30, 2011, the total unrecognized compensation expense related to unvested stock options issued to OBI employees was approximately $607,000 and the related weighted-average period over which this expense is expected to be recognized was approximately 2.8 years.

8.     Revenue and Other Collaborative Agreements

Revenues from Research Grants

The Company has one active grant from the National Institute of Allergy and Infectious Diseases (“NIAID”). This $3.0 million grant was awarded in September 2007 for three years and was extended to August 2011. The award has been used to conduct supplementary studies to the DIFICID trials to confirm narrow spectrum activity and potency of DIFICID against hypervirulent epidemic strains and to support additional toxicology studies.  The award is currently being used for microbiological studies to demonstrate the safety and efficacy of DIFICID and its major metabolite in CDAD patients and to support surveillance studies of C. difficile isolates across North America to compare the activity of DIFICID with existing CDAD treatments.  For the three months ended June 30, 2011 and 2010, the Company recognized revenues related to research grants of $33,294, and $357,436, respectively. For the six months ended June 30, 2011 and 2010, the Company recognized revenues related to research grants of $144,933, and $654,873, respectively.

Other Collaborative Agreements

Cubist Pharmacueticals, Inc.

On April 5, 2011, the Company entered into a co-promotion agreement with Cubist Pharmaceuticals, Inc. (“Cubist”) pursuant to which the Company engaged Cubist as its exclusive partner for the promotion of DIFICID in the United States.  Under the terms of the agreement, the Company and Cubist have agreed to co-promote DIFICID to physicians, hospitals, long-term care facilities and other healthcare institutions as well as jointly provide medical affairs support for DIFICID. In conducting their respective co-promotion activities, each party is obligated under the agreement to commit minimum levels of personnel, and Cubist is obligated to tie a portion of the incentive compensation paid to its sales representatives to the promotion of DIFICID in the United States.  Under the terms of the agreement, the Company will be

18

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

responsible for the distribution of DIFICID in the United States and for recording revenue from sales of DIFICID, and agreed to use commercially reasonable efforts to maintain adequate inventory and third party logistics support for the supply of DIFICID in the United States.  In addition, Cubist agreed to not promote competing products in the United States during the term of the agreement and, subject to certain exceptions, for a specified period of time thereafter. The initial term of the agreement is two years from the date of first commercial sale of DIFICID in the United States, subject to renewal or early termination as described below.

In exchange for Cubist’s co-promotion activities and personnel commitments, the Company will pay a quarterly fee of approximately $3.75 million to Cubist ($15.0 million per year) beginning upon the commencement of the sales program of DIFICID in the United States. Cubist is also eligible to receive an additional $5.0 million in the first year after first commercial sale and $12.5 million in the second year after first commercial sale if mutually agreed upon annual sales targets are achieved, as well as a portion of the Company’s gross profits derived from net sales above the specified annual targets, if any.

The agreement may be renewed by mutual agreement of the parties for additional, consecutive one-year terms.  The Company and Cubist may terminate the agreement prior to expiration upon the uncured material breach of the agreement by the other party, upon the bankruptcy or insolvency of the other party, or in the event that actual net sales during the first year of commercial sales of DIFICID in the United States are below specified levels, subject to certain limitations.  In addition, the Company may terminate the agreement, subject to certain limitations, if (i) the Company withdraws DIFICID from the market in the United States, (ii) Cubist fails to comply with applicable laws in performing its obligations, (iii) Cubist undergoes a change of control, (iv) certain market events occur related to Cubist’s product CUBICIN® (daptomycin for injection) in the United States, or (v) Cubist undertakes certain restructuring activities with respect to its sales force.  In addition, Cubist may terminate the agreement, subject to certain limitations, if (i) the Company experiences certain supply failures in relation to the demand for DIFICID in the United States, (ii) the Company is acquired by certain types of entities, including competitors of Cubist, (iii) certain market events occur related to CUBICIN in the United States, or (iv) the Company fails to comply with applicable laws in performing its obligations.

In June 2011, the Company paid Cubist $3.75 million for the first quarterly payment which the Company will record as a marketing expense beginning in the third quarter of 2011 in connection with the launch of DIFICID.

Astellas Pharma Europe Ltd.

In February 2011, the Company entered into a collaboration and license agreement with Astellas pursuant to which the Company granted to Astellas an exclusive, royalty-bearing license under certain of the Company’s know-how and intellectual property to develop and commercialize DIFICID in Europe, and certain other countries in the Middle East, Africa and the CIS. In March 2011, the parties amended the agreements with Astellas to include certain additional countries in the CIS and all additional territories in Africa (all such countries and territories, the Astellas territories). Under the terms of the agreement, Astellas has agreed to use commercially

19

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

reasonable efforts to develop and commercialize DIFICID in the Astellas territory at its expense, and is obligated to achieve certain additional regulatory and commercial diligence milestones with respect to DIFICID in the Astellas territory.  The Company and Astellas may also agree to collaborate in, and share data resulting from, global development activities with respect to DIFICID, in which case we and Astellas will be obligated to co-fund such activities.  In addition, under the terms of the agreement, Astellas granted the Company an exclusive, royalty-free license under know-how and intellectual property generated by Astellas and its sublicensees in the course of developing DIFICID and controlled by Astellas or its affiliates for use by the Company and any of the Company’s sublicensees in the development and commercialization of DIFICID outside the Astellas territory and, following termination of the agreement and subject to payment by the Company of single-digit royalties, in the Astellas territory.  In addition, under the terms of a supply agreement entered into by the Company and Astellas on the same date, the Company will be the exclusive supplier of DIFICID to Astellas for Astellas’ development and commercialization activities in the Astellas territory during the term of the supply agreement, and Astellas is obligated to pay the Company an amount equal to cost plus an agreed mark-up for such supply.

Under the terms of the license agreement with Astellas, in March 2011, Astellas paid the Company an upfront fee of $69.2 million. The Company is eligible to receive additional cash payments totaling up to 115.0 million Euros upon the achievement by Astellas of specified regulatory and commercial milestones.  When determining whether or not to account for the additional cash payments under the milestone method, the Company makes a determination of whether or not each milestone is considered substantive. During this assessment the Company considers if the milestone is achieved based in whole or in part on the Company’s performance or on the occurrence of a separate outcome resulting from the Company’s performance, if there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and if achievement will result in additional payments being due.  Based on the Company’s assessment process it was determined that additional payments due related to regulatory approval and product launch will be accounted for under the milestone method as technological hurdles create uncertainty of whether or not they will be met and are based in part on the occurrence of a separate outcome resulting from the Company’s performance.  In addition, the Company will be entitled to receive escalating double-digit royalties ranging from the high teens to low twenties on net sales of DIFICID products in the Astellas territory, which royalties are subject to reduction in certain, limited circumstances.  Such royalties will be payable by Astellas on a product-by-product and country-by-country basis until a generic product accounts for a specified market share of the applicable DIFICID product in the applicable country.

The Company assessed the deliverables under the authoritative guidance for multiple element arrangements. Analyzing the arrangement to identify deliverables requires the use of judgment, and each deliverable may be an obligation to deliver services, a right or license to use an asset, or another performance obligation.  Once the Company identified the deliverables under the arrangement, the Company determined whether or not the deliverables can be accounted for as separate units of accounting, and the appropriate method of revenue recognition is for each element. Based on the results of the Company’s analysis,  the Company determined that the upfront payment was earned upon the delivery of the license and related know-how, which occurred by March 31, 2011.

20

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

The agreements with Astellas will continue in effect on a product-by-product and country-by-country basis until expiration of Astellas’ obligation to pay royalties with respect to each DIFICID product in each country in the Astellas territory, unless terminated early by either party as more fully described below.  Following expiration, Astellas’ license to develop and commercialize the applicable DIFICID product in the applicable country will become non-exclusive.  The Company and Astellas may each terminate either of the agreements prior to expiration upon the material breach of such agreement by the other party, or upon the bankruptcy or insolvency of the other party.  In addition, the Company may terminate the agreements prior to expiration in the event Astellas or any of its affiliates or sublicensees commences an interference or opposition proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any patent licensed to it, and Astellas may terminate the agreements prior to expiration for any reason on a product-by-product and country-by-country basis upon 180 days’ prior written notice to the Company.  Upon any such termination, the license granted to Astellas (in total or with respect to the terminated product or terminated country, as applicable) will terminate and revert to the Company.

Par Pharmaceutical, Inc.

The Company holds worldwide rights to DIFICID.  In February 2007, the Company repurchased the rights to develop and commercialize DIFICID in North America and Israel from Par Pharmaceutical, Inc. (“Par”) under a prospective buy-back agreement.  The Company paid Par a one-time $5.0 million milestone payment in June 2010 for the successful completion by the Company of its second pivotal Phase 3 trial for DIFICID.  The Company is obligated to pay Par a 5% royalty on any net sales by the Company, its affiliates or its licensees of DIFICID in North America and Israel, including Cubist, and a 1.5% royalty on any net sales by the Company or its affiliates of DIFICID in the rest of the world.  In addition, in the event the Company licenses its right to market DIFICID in the rest of the world, such as the license granted to Astellas, the Company will be required to pay Par a 6.25% royalty on net revenues received by it related to DIFICID.  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. In March 2011, the Company paid Par $4.3 million in royalties for net revenues received by the Company under the Astellas agreement.

Biocon Limited

In May 2010, the Company entered into a long-term supply agreement with Biocon for the commercial manufacture of DIFICID’s active pharmaceutical ingredient (“API”).   Pursuant to the agreement, Biocon agreed to manufacture and supply to the Company, up to certain limits, DIFICID API and, subject to certain conditions, the Company agreed to purchase from Biocon at least a portion of its requirements for DIFICID API in the United States and Canada. The Company previously paid to Biocon $2.5 million for certain equipment purchases and

21

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

manufacturing scale-up activities, and the Company may be entitled to recover up to $1.5 million of this amount under the supply agreement in the form of discounted prices for DIFICID API.   The Company expensed the entire $2.5 million in the second quarter of 2009 because at the time of payment the recovery of up to $1.5 million could not be assured.  The Company may be obligated to make additional payments to Biocon if it fails to meet the minimum purchase requirements after Biocon has dedicated certain manufacturing capacity to the production of DIFICID API and if Biocon is unable to manufacture alternative products with the dedicated capacity.  Unless both the Company and Biocon agree to extend the term of the supply agreement, it will terminate seven and a half years from the date the Company obtains marketing authorization for DIFICID in the United States or Canada.  The supply agreement will be terminated earlier in the event that the Company does not obtain marketing authorization for DIFICID in the United States or Canada prior to December 31, 2013.  In addition, the supply agreement may be earlier terminated (i) by either party by giving two and a half years notice after the fifth anniversary of the Effective Date or upon a material breach of the supply agreement by the other party, (ii) by the Company upon the occurrence of certain events, including Biocon’s failure to supply requested amounts of DIFICID API, or (iii) by Biocon upon the occurrence of certain events, including the Company’s failure to purchase amounts of DIFICID API indicated in binding forecasts.

Patheon Inc.

In June 2011, the Company entered into a commercial manufacturing services agreement with Patheon Inc. (“Patheon”) to manufacture and supply fidaxomicin drug products, including DIFICID, in North America, Europe and other countries, subject to agreement by the parties to any additional fees for such countries. The Company has agreed to purchase a specified percentage of its fidaxomicin product requirements for North America and Europe from Patheon or its affiliates.

The term of the agreement extends through December 31, 2016 and will automatically renew for subsequent two year terms unless either party provides a timely notice of its intent not to renew or unless the Agreement is terminated early pursuant to its terms. The Company and Patheon may terminate the Agreement prior to expiration upon the uncured material breach of the agreement by the other party or upon the bankruptcy or insolvency of the other party. In addition, the agreement will terminate with respect to any fidaxomicin product if the Company provides notice to Patheon that it no longer requires manufacturing services for such product because the product has been discontinued. Additionally, the Company may terminate the agreement, subject to certain limitations, (i) with respect to any fidaxomicin product, if any regulatory authority takes any action or raises any objection that prevents the Company from importing, exporting, purchasing or selling such product, or if the Company determines to discontinue development or commercialization of such product for safety or efficacy reasons, (ii) if any regulatory authority takes an enforcement action against Patheon’s manufacturing site that relates to fidaxomicin products or that could reasonably be expected to adversely affect Patheon’s ability to supply fidaxomicin products to the Company, (iii) if Patheon is unable to deliver or supply any firm orders for any two calendar quarters during any four consecutive calendar quarters, (iv) if Patheon uses any debarred or suspended person in the performance of its service obligations under the agreement, or (v) if Patheon fails to meet certain production yield requirements in relation to fidaxomicin API.

22

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

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 submission, if any, of 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.

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, to the Company’s patent and know-how related to the Company’s macrolide and ketolide antibacterial program.  As partial consideration for granting Cempra the license, 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 may 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

23

Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

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.

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.  In anticipation of the various transactions involving OBI which the Company completed in October 2009, the Company assigned its rights and obligations under this agreement with OBI. 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 OBI, and not a sublicensee, achieves such milestones.  OBI may owe MSKCC royalties based on net sales generated from the licensed products and income OBI sources from its sublicensing activities, which royalty payments are credited against a minimum annual royalty payment OBI owes to MSKCC during the term of the agreement.

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 with TSRI, 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.  In October 2009, the Company assigned to OBI one of the agreements with TSRI related to the Company’s OPT-88 product candidate, which after further evaluation OBI decided not to pursue.  In February 2011, the license agreement related to OPT-88 was terminated and OBI returned the patents related to OPT-88. Under each of the three remaining agreements, the Company owes 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

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Optimer Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements (continued)

(unaudited)

agreements.  For the first licensed product under each of the three agreements, the Company also will owe TSRI payments upon achievement of certain milestones.  In two of the three TSRI agreements, the milestones are the successful completion of a Phase 2 trial or its foreign equivalent, the submission of an NDA or its foreign equivalent and government marketing and distribution approval.  In the remaining TSRI agreement, the milestones are the initiation of a Phase 3 trial or its foreign equivalent, the submission 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 the remaining TSRI agreements is approximately $11.1 million.

Optimer Biotechnology, Inc.

In October 2009, the Company entered into certain transactions involving OBI, then the Company’s wholly-owned subsidiary, 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 OPT-88 and OPT-822/821.  In anticipation of these transactions, the Company also assigned, and OBI assumed, the Company’s rights and obligations under related license agreements with MSKCC and TSRI.  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 term of the Intellectual Property Assignment and License Agreement continues until the last to expire of the patents assigned by the Company to OBI and the patents licensed to OBI under the TSRI and MSKCC agreements. After further evaluation, OBI determined not to pursue additional development of OPT-88 and in February 2011, OBI and TSRI agreed to terminate the license agreement and OBI returned the related  OPT-88 patents to TSRI. 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, and the Company and the new investors also purchased new OBI shares.  The financing agreement also contemplated an additional financing pursuant to which the Company and the new investors would invest approximately an additional $184.8 million New Taiwan Dollars and $277.2 million New Taiwan Dollars, respectively, in exchange for new OBI shares. In February 2011, pursuant to an amendment to the October 2009 financing agreement, OBI completed the second financing and sold newly-issued shares of its common stock for gross proceeds of approximately 462.0 million New Taiwan Dollars (approximately $15.5 million based on then-current exchange rates).  The Company  purchased 277.2 million New Taiwan Dollars (approximately $9.3 million based on then-current exchange rates) of the shares issued in the second financing, such that the Company maintained its 60% equity interest in OBI.

9.     Subsequent Event

In July 2011, we commenced commercial sales of DIFICID in the U.S.

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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, 2010, 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 hospital specialty products that have positive impact on society.  We focus on products that have the potential to make a significant difference in the lives of patients and reduce the burden of disease. We have one approved product, DIFICID™ (fidaxomicin), and one late-stage anti-infective product candidate, Pruvel™ (prulifloxacin).

DIFICID is a macrolide antibacterial drug indicated in adults 18 years and older for the treatment of Clostridium difficile-associated diarrhea, or CDAD. We currently hold rights to DIFICID in all regions of the world except for territories where we have licensed such rights to Astellas Pharma Europe Ltd., or Astellas.

In May 2011, the U.S. Food and Drug Adminstration, or FDA, approved DIFICID for the treatment of CDAD in adults 18 years of age and older. In July 2011, we commenced commercial sales of DIFICID in the U.S. We have committed to conducting a microbiological surveillance program to identify the potential for decreased susceptibility of C. difficile to DIFICID, as well as two post-marketing studies in pediatric patients.  We also plan to conduct a randomized trial to evaluate the efficacy of DIFICID in the treatment of patients with multiple CDAD recurrences.

In July 2010, we filed, and in August 2010 the European Medicines Agency, or EMA, accepted for review, an MAA to permit marketing of DIFICID in Europe.

In February 2011, we entered into an exclusive collaboration and license agreement with Astellas to develop and commercialize DIFICID in Europe, Africa and certain other countries in the Middle East and the Commonwealth of Independent States, or CIS, which we refer to as the Astellas territory. In return for an exclusive license to DIFICID in the Astellas territory, Astellas paid to us an upfront cash payment of $69.2 million and we are eligible to receive additional cash payments totaling up to 115 million Euros upon the achievement of certain regulatory and commercial milestones.  Furthermore, we will be entitled to receive escalating double-digit royalties ranging from the high teens to low twenties on net sales of DIFICID in the Astellas territory, if approved.  Astellas will be responsible for all future costs associated with the development and commercialization of DIFICID in the Astellas territory including the costs

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associated with the MAA for DIFICID in Europe.  In connection with the collaboration and license agreement, we also entered into a supply agreement with Astellas pursuant to which we will be the exclusive supplier of DIFICID to Astellas in the Astellas territory and Astellas is obligated to pay us an amount equal to cost plus an agreed mark-up for such supply.

In April 2011, we entered into a co-promotion agreement with Cubist pursuant to which we engaged Cubist as our exclusive partner for the promotion of DIFICID in the United States.  Under the terms of the agreement, we and Cubist have agreed to co-promote DIFICID to physicians, hospitals, long-term care facilities and other healthcare institutions as well as jointly provide medical affairs support for DIFICID. Under the terms of the agreement, we will be responsible for the distribution of DIFICID in the United States and for recording revenue from sales of DIFICID, and we agreed to use commercially reasonable efforts to maintain adequate inventory and third party logistics support for the supply of DIFICID in the United States.  The initial term of the agreement is two years from the date of first commercial sale of DIFICID in the United States, subject to renewal or early termination.

In exchange for Cubist’s co-promotion activities and personnel commitments, we will pay a quarterly fee of approximately $3.75 million to Cubist ($15.0 million per year) upon the commencement of the DIFICID sales program in the United States.  Cubist is also eligible to receive an additional $5.0 million in the first year after first commercial sale and $12.5 million in the second year if mutually agreed upon annual sales targets are achieved, as well as a portion of our gross profits derived from net sales above the specified annual targets, if any. In June 2011, we paid Cubist $3.75 million for the first quarterly payment which we will record as a marketing expense beginning in the third quarter of 2011 in connection with the launch of DIFICID.

In June 2011, we entered into a manufacturing services agreement with Patheon to manufacture and supply fidaxomicin drug products, including DIFICID, in North America, Europe and other countries, subject to agreement by the parties to any additional fees for such countries. We have agreed to purchase a specified percentage of our fidaxomicin product requirements for North America and Europe from Patheon or its affiliates. The term of the agreement extends through December 31, 2016 and will automatically renew for subsequent two year terms unless either party provides a timely notice of its intent not to renew or unless the agreement is terminated early pursuant to its terms.

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. On November 9, 2010, due to a higher than expected incidence of cutaneous rash during the course of a study of the possible interaction between Pruvel and antacids, we informed the FDA that we were voluntarily terminating the research study.  All reported events of cutaneous rash from the drug interaction study were mild or moderate in severity and required little or no treatment and all resolved completely.   We have conducted an investigation into the cause of the rash and the results were inconclusive.  Rashes are a known and infrequent side

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effect of fluoroquinolone antibiotics, such as Pruvel, and rashes occurred at or below the rate generally expected for other fluoroquinolones in both of our previous Pruvel Phase 3 clinical trials.  We are evaluating the commercial feasibility of Pruvel and are not currently able to estimate if or when we will initiate any new study or further investigation or the extent of the delay in our planned submission of an NDA for Pruvel. We currently hold rights to commercialize Pruvel in the United States, and it is sold by other parties in Japan, Italy and certain European countries.

We are developing additional product candidates using our proprietary technology, including our OPopS drug discovery platform. OPopS is a computer-aided technology that allows the development of potential drug candidates through carbohydrate mediated medicinal chemistry and enables the rapid synthesis of a wide variety of proprietary molecules. It includes GlycoOptimization, which enables the modification of a carbohydrate group on an existing drug to improve its properties, and De Novo Glycosylation, which introduces new carbohydrate groups on existing drugs to create new patentable compounds with improvement of pharmacokinetics.

We previously acquired exclusive rights to OPT-822/821, a combination of a novel carbohydrate-based cancer immunotherapy together with an adjuvant, which we licensed from Memorial Sloan-Kettering Cancer Center, or MSKCC.  In October 2009, we assigned to OBI certain of our patent rights and know-how related to OPT-822/821 and also assigned to OBI our rights and obligations under a related license agreement with MSKCC. In April 2010, OBI filed an investigational new drug application, or IND, in Taiwan for OPT-822/821, and in January 2011, OBI initiated a Phase 2/3 clinical trial for the treatment of metastatic breast cancer and is currently conducting the clinical trial in Taiwan and Hong-Kong.  Other potential indications for OPT-822/821 are being evaluated.  We have the right to receive up to $10 million from OBI in future milestone payments related to the development of OPT-822/821 as well as royalties on net sales of this product candidate.  In February 2011, pursuant to an amendment to an October 2009 financing agreement, OBI sold newly-issued shares of its common stock for gross proceeds of approximately 462.0 million New Taiwan Dollars (approximately $15.5 million based on then- current exchange rates).  We purchased 277.2 million New Taiwan Dollars (approximately $9.3 million based on then-current exchange rates) of the shares issued in the financing, and we currently maintain a 60% equity interest in OBI.

We were incorporated in November 1998.  Since inception, we have focused on developing and commercializing  DIFICID and developing our Pruvel product candidate.  We have never been profitable in any fiscal year and have incurred significant net losses since our inception.  As of June 30, 2011, we had an accumulated deficit of $201.9 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 DIFICID and Pruvel, license fees and general and administrative expenses.  We expect to continue to incur operating losses for the next several years as we pursue the commercialization of DIFICID and the clinical development and regulatory approval 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.

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Critical Accounting Policies

Our Management’s Discussion and Analysis of 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.

Inventory

Inventory is stated at the lower of cost or market.  Cost is determined in a manner which approximates the first-in, first-out (FIFO) method. We capitalize inventory produced in preparation for product launches upon FDA approval when costs are expected to be recoverable through the commercialization of the product.  We reserve for potentially excess, dated or obsolete inventories based on an analysis of inventory on hand compared to forecasts of future sales.

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. Revenue recognition for agreements with multiple deliverables is based on the individual units of accounting determined to exist in the agreement. A delivered item is considered a separate unit of accounting when the delivered item has value to the customer on a stand-alone basis. Items are considered to have stand-alone value when they are sold separately by any vendor or when the customer could resell the item on a stand-alone basis.

For multiple deliverable agreements entered into after December 31, 2010, consideration is allocated at the inception of the agreement to all deliverables based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence, or VSOE, of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, we use our best estimate of the selling price for the deliverable.

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

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because of the uncertainty surrounding the achievement of milestones for products in early stages of development.  When determining whether or not to account for transactions under the milestone method, we make a determination of whether or not each milestone is considered substantive. During this assessment we consider if achievement of the milestone is based in whole or in part on our performance or on the occurrence of a separate outcome resulting from our performance, if there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and if achievement will result in additional payments being due.  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. The capitalized amounts are expensed when the related goods are delivered or the services are performed.

Stock-Based Compensation

The 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.

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Total consolidated stock-based compensation expense of $2.5 million and $2.2 million was recognized in the three months ended June 30, 2011 and 2010, respectively.  Total consolidated stock-based compensation expense of $4.7 million and $3.2 million was recognized in the six months ended June 30, 2011 and 2010, respectively.  The stock-based compensation expense recognized during the three months and six months ended June 30, 2011 included expense from performance-based stock options and restricted stock units.

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. Due to Optimer’s and OBI’s limited historical data, the expected volatility incorporates the historical volatility of comparable companies whose share prices are publicly available. The average expected term is calculated using the Simplified Method for Estimating the Expected Term.  Expected dividends are estimated based on Optimer’s and OBI’s dividend history as well as Optimer’s and OBI’s current projections. The risk-free interest rate for Optimer is based on the United States Treasury rate for U.S. Treasury zero-coupon bonds with maturities similar to the periods approximating the expected terms of the options. The risk-free rate for OBI is based on the Central Bank of China interest rates. 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.

Income taxes

We estimate income taxes based on the jurisdictions where we conduct business.  Significant judgment is required in determining our worldwide income tax provision.  We estimate our current tax liability and assess temporary differences that result from differing treatments of certain items for tax and accounting purposes.  These differences result in net deferred tax assets and liabilities.   We then assess the likelihood that deferred tax assets will be realized.  A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized.  We review the need for a valuation allowance each interim period to reflect uncertainties about whether we will be able to utilize deferred tax assets before they expire.  The valuation allowance analysis is based on estimates of taxable income for the jurisdictions in which we operate and the periods over which our deferred tax assets may be realized.  Changes in our valuation allowance could result in material increases or decreases in our income tax expense in the period such changes occur, which could have a material impact on our operating results.

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We estimate that our federal and state taxable income for the current year will be fully offset by net operating losses and research and development credit carryovers.  As such, no current tax provision has been recorded.  We also have recorded a full valuation allowance for the remaining net deferred tax benefits.

We have completed a section 382/383 analysis regarding the limitation of the net operating losses and credit carryovers and have considered the annual limitation when determining the amount available for utilization in the current year.

We recognize and measure benefits for uncertain tax positions using a two-step approach.  The first step is to evaluate the tax position taken and expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained upon audit, including resolution of any related appeals or litigation processes.  For tax positions that are more likely than not to be sustained upon audit, the second step is to measure the tax benefit as the largest amount that has more than a 50% chance of being realized upon settlement.  Significant judgment is required to evaluate uncertain tax positions.  We evaluate uncertain tax positions on a quarterly basis.  The evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues.  Changes in recognition or measurement of uncertain tax positions could result in material increases or decreases in our income tax expense in the period such changes occur, which could have a material impact on our effective tax rate and operating results.

Results of Operations

Comparison ofThree Months Ended June 30, 2011 and 2010

Total revenues.  Total revenues for the three months ended June 30, 2011 and 2010 were $33,000 and $357,000, respectively. The decrease of $324,000 was due to a decrease in NIH research efforts.

Research and development expense.  Research and development expense for the three months ended June 30, 2011 and 2010 was $10.6 million and $6.4 million, respectively, an increase of $4.2 million. The increase was primarily due to higher health economics research, pharmacovigilance, medical affairs, and publication expenses, as well as higher research and development expenses by OBI for its Phase 2/3 breast cancer clinical trial.

Marketing expense.  Marketing expense for the three months ended June 30, 2011 and 2010 was $7.0 million and $656,000 respectively, an increase of $6.3 million. The increase was related to our efforts to establish our commercial infrastructure and prepare for the commercial launch of DIFICID. We hired approximately 100 hospital account managers and marketing personnel and thus significantly increased our compensation expenses and related personnel costs. We also incurred increased training expenses as well as public relations expenses related to the commercial launch of DIFICID.

General and administrative expense.  General and administrative expense for the three months ended June 30, 2011 and 2010 was $7.5 million and $3.7 million, respectively.  The increase of $3.8 million was because of higher compensation expense due to additional headcount as well as higher recruitment, consulting, facilities and legal expenses.

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Interest income and other, net.  Interest income and other, net of $96,000 for the three months ended June 30, 2011 was relatively consistent with the $54,000 for the three months ended June 30, 2010.

Income taxes. We did not record a provision for income taxes during the three months ended June 30, 2011 due to our anticipated ability to utilize existing net operating losses and credit carryovers.

Comparison ofSix Months Ended June, 2011 and 2010

Total revenues.  Total revenues for the six months ended June 30, 2011 and 2010 were $69.3 million and $655,000, respectively. The increase of $68.6 million was due to the upfront payment we received from Astellas under the DIFICID collaboration and license agreement. The payment was earned upon delivery of the license and related know-how which occurred in the quarter ended March 31, 2011.

Cost of licensing.  Cost of licensing for the six months ended June 30, 2011 was $4.3 million.  This amount represents a 6.25% royalty payment we made to Par based on net revenue from the Astellas upfront payment. We did not have cost of licensing expense in the same period of the prior year.

Research and development expense.  Research and development expense for the six months ended June 30, 2011 and 2010 was $19.0 million and $17.8 million, respectively, an increase of  approximately $1.3 million.   The increase was primarily due to higher health economics research, pharmacovigilance, medical affairs, publication expenses as well as higher research and development expenses by OBI for its Phase 2/3 breast cancer clinical trial. The increase was offset by the inclusion in the prior year period of a $5.0 million milestone payment due to Par for the successful completion of the second DIFICID Phase 3 trial.

Marketing expense.  Marketing expense for the six months ended June 30, 2011 and 2010 was $10.4 million and $925,000 respectively, an increase of $9.5 million.   The increase was related to our efforts to establish our commercial infrastructure and prepare for the commercial launch of DIFICID. We hired approximately 100 hospital account managers and marketing personnel and thus significantly increased our compensation expenses and related personnel costs. We also incurred increased training expenses as well as public relations expenses relating to the commercial launch of DIFICID.

General and administrative expense.  General and administrative expense for the six months ended June 30, 2011 and 2010 was $15.8 million and $6.1 million, respectively.  The increase of $9.7 million was due to higher compensation expenses, including $3.0 million of stock compensation expense, an increase of $915,000 over the same period in the prior year, as well as higher consulting expenses including advisory fees related to the Astellas collaboration, recruitment, facilities and legal expenses.

Interest income and other, net.  Interest income and other, net of $119,000 for the six months ended June 30, 2011 was relatively consistent with the $78,000 for the six months ended June 30, 2010.

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Income taxes. We did not record a provision for income taxes during the six months ended June 30, 2011 due to our anticipated ability to utilize existing net operating losses and credit carryovers.

Liquidity and Capital Resources

Sources of Liquidity

Since inception, our operations have been financed primarily through the sale of equity securities.  Through June 30, 2011, we received gross proceeds of approximately $333.8 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;

·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;

·in March 2010, we sold a total of 4.9 million shares of our common stock in a public offering for proceeds of $53.8 million; and

·in February 2011, we sold a total of 6.9 million shares of our common stock in a public offering for proceeds of $77.6 million.

In addition, in March 2011, pursuant to our collaboration and license agreement with Astellas, we received approximately $69.2 million as an upfront payment from Astellas.

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Until required for operations, we invest a substantial portion of our available funds in money market funds, corporate debt securities, U.S. 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.

Cash Flows

As of June 30, 2011, our consolidated cash, cash equivalents and short-term investments totaled approximately $157.8 million as compared to $49.4 million as of December 31, 2010, an increase of approximately $108.4 million.  The increase in our cash, cash equivalents and short-term investments was primarily due to our receipt of net proceeds of $73.1 million in February 2011 in a public common stock offering and a $69.2 million upfront payment from Astellas in March 2011 in connection with a collaboration and license agreement for DIFICID. Additionally, in February 2011 OBI raised approximately $15.5 million in gross proceeds in a private placement of common shares. Of our consolidated cash, cash equivalents and short-term investments, $17.2 million was held by OBI as of June 30, 2011.

Although we started selling DIFICID in July 2011, we cannot be certain if, when or to what extent we will receive meaningful cash inflows from our commercialization activities.  We expect our commercialization expenses to be substantial and to increase over the next few years. We also expect to continue to incur development expenses as we pursue life cycle management opportunities and build our pipeline.

On April 5, 2011, we entered into a co-promotion agreement with Cubist pursuant to which we engaged Cubist as our exclusive partner for the promotion of DIFICID in the United States.  Under the terms of the agreement, we and Cubist have agreed to co-promote DIFICID to physicians, hospitals, long-term care facilities and other healthcare institutions as well as jointly provide medical affairs support for DIFICID. In exchange for Cubist’s co-promotion activities and personnel commitments, we will pay a quarterly fee of approximately $3.75 million to Cubist ($15.0 million per year) upon the commencement of the DIFICID sales program in the United States. In June 2011, we paid the first quarterly payment of $3.75 million to Cubist. Cubist is also eligible to receive an additional $5.0 million in the first year after first commercial sale and $12.5 million in the second year after first commercial sale if mutually agreed upon annual sales targets are achieved, as well as a portion of our gross profits derived from net sales above the specified annual targets, if any.

In February 2011, we entered into a collaboration and license agreement with Astellas pursuant to which we granted to Astellas an exclusive, royalty-bearing license under certain of our know-how and intellectual property to develop and commercialize DIFICID in the Astellas territory. Under the terms of the license agreement with Astellas, Astellas paid to us an upfront fee of $69.2 million, and we are eligible to receive additional cash payments totaling up to 115.0 million Euros upon the achievement by Astellas of specified regulatory and commercial milestones.  In addition, we will be entitled to receive escalating double-digit royalties ranging from the high teens to low twenties on net sales of DIFICID products in the Astellas territory, which royalties are subject to reduction in certain, limited circumstances.  Such royalties will be payable by Astellas on a product-by-product and country-by-country basis until a generic product accounts for a specified market share of the applicable DIFICID product in the applicable country.

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In July 2010, we received a $500,000 milestone payment from Cempra under the terms of a licensing agreement.   The milestone payment was made as a result of Cempra’s continuing development of a next-generation macrolide (CEM-101) for the treatment of respiratory infections. Cempra licensed CEM-101 from us and has successfully completed a Phase 1 study.

In May 2010, we entered into a long-term supply agreement with Biocon for the commercial manufacture of DIFICID’s active pharmaceutical ingredient, or API. Pursuant to the agreement, Biocon agreed to manufacture and supply to us, up to certain limits, DIFICID API and, subject to certain conditions, we agreed to purchase from Biocon at least a portion of our requirements for DIFICID API in the United States and Canada.  We previously paid to Biocon $2.5 million for certain equipment purchases and manufacturing scale-up activities, and we may be entitled to recover up to $1.5 million of this amount under the supply agreement in the form of discounted prices for DIFICID API.  We may be obligated to make additional payments to Biocon if we fail to meet minimum purchase requirements after Biocon has dedicated certain manufacturing capacity to the production of DIFICID API and if Biocon is unable to manufacture alternative products with the dedicated capacity.

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-822/821 product candidate.  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-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.  In February 2011, pursuant to an amendment to an October 2009 financing agreement, OBI sold newly-issued shares of its common stock for gross proceeds of approximately 462.0 million New Taiwan Dollars (approximately $15.5 million based on then-current exchange rates).  We purchased 277.2 million New Taiwan Dollars (approximately $9.3 million based on then-current exchange rates) of the shares issued in the financing, and we currently maintain a 60% equity interest in OBI.

In October 2008, our Compensation Committee adopted a Severance Benefit Plan covering certain eligible employees of the Company, including executive officers.  In May 2010, the Severance Benefit Plan was amended and restated.  Pursuant to the plan, upon an involuntary termination other than for cause or a constructive termination, 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.

In February 2007, we regained worldwide rights to DIFICID from Par under a prospective buy-back agreement.  We paid Par a one-time $5.0 million milestone payment in June 2010 for our successful completion of the second Phase 3 trial for DIFICID.  We are obligated to pay Par a 5% royalty on net sales by us or our affiliates of DIFICID in North America and Israel, and a

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1.5% royalty on net sales by us or our affiliates of DIFICID in the rest of the world.  In addition, we are required to pay Par a 6.25% royalty on net revenues we receive from licensees of our right to market DIFICID in the rest of the world.  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 March 2011, we paid Par a $4.3 million royalty payment associated with the upfront payment we received under the Astellas agreement.

In June 2004, we entered into a license agreement with Nippon Shinyaku 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 submission, if any, of a NDA for Pruvel in the United States.

Funding Requirements

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

·our ability to successfully market and sell DIFICID;

·the costs of establishing, maintaining and managing our commercial infrastructure including our sales or distribution capabilities and the timing of such efforts;

·the amount and timing of payments we may receive or be required to make under strategic collaborations, including licensing, co-promotion and other arrangements;

·our decision to conduct future clinical trials, including the timing and progress of such clinical trials;

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

·the costs of preparing and pursuing applications for regulatory approvals and the timing of such approvals;

·the costs involved in prosecuting, enforcing or defending patent claims or other intellectual property rights; 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 18 months.

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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.  The credit markets and the financial services industry have been experiencing a period of unprecedented turmoil which has 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 planned commercialization activities and 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 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

Cash Equivalents and Marketable Securities Risk

Our cash and cash equivalents and short-term investments as of June 30, 2011 consisted primarily of money market funds, corporate debt securities  and U.S. 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 June 30, 2011 would have resulted in approximately an $11,500 change in net income. 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.

Fair Value Measurements

All of our investment securities are available-for-sale securities and are reported on the consolidated balance sheet at market value except for one auction rate preferred security, or ARPS, with a par value of approximately $1.0 million. As a result of the negative conditions in the global credit markets, our ARPS is currently not liquid.  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 the security is redeemed by the issuer or it matures.

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Foreign Currency Risk

We have operated primarily in the United States and most transactions during the quarter ended June 30, 2011 have been made in U.S. dollars except that, under our agreement with Astellas, all milestone payments we may receive from Astellas are in Euros, though we receive payment in U.S. dollars based on an average exchange rate. Accordingly, other than with respect to these payments under the Astellas agreement, we have not had any material exposure to foreign currency rate fluctuations.

In addition, certain transactions related to us and our subsidiary, OBI, are denominated primarily in Taiwan dollars.  As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets where we conduct business, including the impact of the existing crisis in the global financial markets in such countries and the impact on both the U.S. dollar and the Taiwan dollars.

We do not use derivative financial instruments for speculative purposes. We do not engage in exchange rate hedging or hold or issue foreign exchange contracts for trading purposes. Currently, we do not expect the impact of fluctuations in the relative fair value of other currencies to be material.

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 our 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. In connection with entering the Astellas collaboration agreement in February 2011, we have developed and will continue developing additional internal controls over our revenue recognition process.  In connection with the FDA approval of DIFICID in May 2011, we have developed and will continue developing internal controls over inventory processes. Except for the development of the additional

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internal controls over revenue recognition and inventory, 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.

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, 2010, as filed with the SEC.

Risks Related to Our Business

Our success largely depends on our ability to successfully commercialize our only product, DIFICID.*

Our success depends on our ability to effectively commercialize our only product, DIFICID, which was approved by the FDA in May 2011, for the treatment of CDAD in adults 18 years of age and older.

We launched DIFICID in July 2011, and our ability to effectively commercialize and generate revenues from DIFICID will depend on several factors, including:

·our ability to create market demand for DIFICID through our own marketing and sales activities as well as through our co-promotion agreement with Cubist;

·our ability to train, deploy and support a qualified sales force;

·our ability to secure formulary approvals for DIFICID at a substantial number of targeted hospitals and long-term care facilities;

·adequate coverage or reimbursement for DIFICID by government healthcare programs and third-party payors, including private health coverage insurers and health maintenance organizations;

·the performance of our third-party manufacturers and our ability to ensure that our supply chain for DIFICID efficiently and consistently delivers DIFICID to our customers;

·the ability to implement and maintain agreements with wholesalers and distributors on commercially reasonable terms; and

·our ability to maintain and defend our patent protection and regulatory exclusivity for DIFICID.

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Any disruption in our ability to generate revenues from the sale of DIFICID or lack of success in its commercialization will have a substantial adverse impact on our results of operations.

Our efforts to successfully commercialize DIFICID in the U.S. are subject to many internal and external challenges and if we cannot overcome these challenges in a timely manner, our future revenues and profits could be materially and adversely impacted.*

As DIFICID is a newly marketed drug, none of the members of our or Cubist’s sales forces had ever promoted DIFICID prior to its launch in July 2011. As a result, we and Cubist are required to expend significant time and resources to train our respective sales forces to be credible and persuasive in convincing physicians, pharmacists, long-term care facilities and hospitals to use DIFICID. In addition, we and Cubist also must train our respective sales forces to ensure that a consistent and appropriate message about DIFICID is being delivered to our potential customers. In addition, we must effectively collaborate and coordinate with Cubist sales force representatives in co-promoting DIFICID, including training therefor.  If we or Cubist are unable to effectively train our respective sales forces and equip them with effective materials, including medical and sales literature to help them inform and educate potential customers about the benefits and risks of DIFICID and its proper administration, our efforts to successfully commercialize DIFICID could be put in jeopardy, which could have a material adverse effect on our financial condition, stock price and operations.

In addition to extensive internal efforts, the successful commercialization of DIFICID will depend on whether many third-parties, over whom we have no control, determine to utilize DIFICID. These third parties include physicians, pharmacists, long-term care facilities and hospital pharmacies. The sale of DIFICID to hospitals is dependent upon addition of DIFICID to that hospital’s list of approved drugs, or formulary list by the hospital’s Pharmacies and Therapeutics, or P&T, committee. A hospital’s P&T committee typically governs all matters pertaining to the use of medications within the institution, including review of medication formulary data and recommendations for the appropriate use of drugs within the institution to the medical staff. The frequency of P&T committee meetings at various hospitals varies considerably, and P&T committees often require additional information to aide in their decision-making process, so we may experience substantial delays in obtaining formulary approvals. Additionally, hospital pharmacists may be concerned that the cost of acquiring DIFICID for use in their institutions will adversely impact their overall pharmacy budgets, which could cause pharmacists to resist efforts to add DIFICID to the formulary, or to implement restrictions on the usage of the drug in order to control costs. We cannot guarantee that we will be successful in getting the approvals we need from enough P&T committees quickly enough to optimize hospital sales of DIFICID.

Even if we obtain hospital formulary approval for DIFICID, physicians must still prescribe DIFICID for its commercialization to be successful. Because DIFICID is a new drug with no track record of sales in the U.S., any inability to timely supply DIFICID to our customers, or any unexpected side effects that develop from use of the drug, particularly early in product launch, may lead physicians to not accept DIFICID as a viable treatment alternative.

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Although DIFICID has received regulatory approval from the FDA, it remains subject to substantial, ongoing regulatory requirements.*

DIFICID remains subject to ongoing FDA requirements with respect to manufacturing, labeling, packaging, storage, distribution, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug. The FDA has the authority to regulate the claims we make in marketing DIFICID to ensure that such claims are true, not misleading, supported by scientific evidence and consistent with the approved label for the drug. In addition, the discovery of previously unknown problems with DIFICID, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, may result in the imposition of additional restrictions, including withdrawal of the product from the market.

For example, as a condition of the approval of DIFICID, we are required to conduct a microbiological surveillance program to identify the potential for decreased susceptibility of C.difficile to DIFICID, as well as two post-marketing studies in pediatric patients. We also plan to conduct a randomized trial to evaluate the efficacy of DIFICID in the treatment of patients with multiple CDAD recurrences.  Depending on the outcome of the studies, we may be unable to expand the indications for DIFICID or we may be required to include specific warnings or limitations on dosing this product, which could negatively impact our sales of DIFICID.

We have implemented a comprehensive compliance program and related infrastructure, but we cannot provide absolute assurance that we are or will be in compliance with all potentially applicable laws and regulations. If our operations in relation to DIFICID fail to comply with applicable regulatory requirements, the FDA or other regulatory agencies may:

·issue warning letters or untitled letters;

·impose consent decrees, which may include the imposition of various fines, reimbursement for inspection costs, due dates for specific actions and penalties for noncompliance;

·impose fines or other civil or criminal penalties;

·suspend regulatory approval;

·suspend any ongoing clinical trials;

·refuse to approve pending applications or supplements to approved applications filed by us;

·impose restrictions on operations, including costly new manufacturing requirements;

·exclude us from participating in U.S. federal healthcare programs, including Medicaid or Medicare; or

·seize or detain products or require a product recall.

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In addition to FDA restrictions, numerous other federal, state and local laws and regulations apply to the promotion and sale of pharmaceutical products, such as federal anti-kickback and false claims statutes. For example, the federal healthcare program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other. Violations of the anti-kickback statute are punishable by imprisonment, criminal fines, civil monetary penalties and exclusion from participation in federal healthcare programs. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe harbor. Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability.

Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid. Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly inflating drug prices they report to pricing services, which in turn are used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. In addition, certain marketing practices, including off-label promotion, may also violate false claims laws. The majority of states also have statutes or regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Sanctions under these federal and state laws may include civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under government programs, criminal fines and imprisonment.

Because of the breadth of these laws and the narrowness of the safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of such laws. Such a challenge could have a material adverse effect on our business, financial condition and results of operations.

Our product sales depend on adequate coverage and reimbursement from third-party payers.*

Our and our collaborators’ sales of DIFICID are dependent on the availability and extent of coverage and reimbursement from third-party payers, including government healthcare programs and private insurance plans. We and our collaborators rely in large part on the reimbursement coverage by federal and state sponsored government programs such as Medicare and Medicaid in the United States. We have licensed rights to develop and commercialize DIFICID in Europe and certain other countries to Astellas.  In the event we or our collaborators, including Astellas, seek approvals to market DIFICID in other non-U.S. territories, we or our collaborators including

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Astellas, will need to work with the government-sponsored healthcare in Europe and each other foreign countries, as applicable, that are the primary payers of healthcare costs in such regions.  Certain government payers may regulate prices, reimbursement levels and/or access to DIFICID to control costs or to affect levels of use of our product.  We cannot predict the availability or level of coverage and reimbursement for DIFICID and the level of reimbursement for DIFICID could have a material adverse effect on our product sales and results or operations.

Regulatory approval for any approved product is limited by the FDA to those specific indications and conditions for which clinical safety and efficacy have been demonstrated as listed in the approved labeling.*

Any regulatory approval is limited to those specific diseases and indications for which a product is deemed to be safe and effective by the FDA. In addition to the FDA approval required for new formulations, any new indication for an approved product also requires FDA approval. If we are not able to obtain FDA approval for any desired future indications for our products, our ability to effectively market and sell our products may be reduced and our business may be adversely affected.

While physicians may choose to prescribe drugs for uses that are not described in the product’s labeling and for uses that differ from those tested in clinical studies and approved by the regulatory authorities, our ability to promote the products is limited to those indications that are specifically approved by the FDA. Regulatory authorities in the U.S. generally do not regulate the behavior of physicians in their choice of treatments, and such off-label uses by healthcare professionals are common. Regulatory authorities do, however, restrict communications by pharmaceutical companies on the subject of off-label use. If our promotional activities fail to comply with these regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities. In addition, our failure to follow FDA rules and guidelines relating to promotion and advertising may cause the FDA to suspend or withdraw an approved product from the market, require a recall or institute fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could harm our business.

If we or our collaborators fail to gain and/or maintain marketing approvals from regulatory authorities in international markets for DIFICID and any future product candidates for which we have or license 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 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 DIFICID for which we have granted an exclusive license to Astellas in the Astellas territory and for which we retain commercialization rights in the rest of the world.  We could experience significant delays and difficulties and incur significant costs in obtaining foreign regulatory approvals in the territories for which we retain commercialization rights.  Regulatory requirements can vary widely from country to country and could delay the

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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 or our collaborators’ 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 unanticipated concerns are raised by the EMA of the MAA for DIFICID, these concerns could negatively impact applications for marketing approval of DIFICID in a different country or territory. We have received correspondence from the EMA accepting our MAA for filing, as well as a list of questions setting forth the EMA’s requests for additional information pursuant to its review of our MAA submission. We submitted our  response in April 2011 to the EMA’s requests and recommendations. Pursuant to our collaboration and license agreement with Astellas,  and although we and Astellas are working together to prepare responses to the EMA’s requests, Astellas is ultimately responsible for providing additional information to the EMA. In June 2011, we received the List of Outstanding Issues from the EMA.  If Astellas’ response, prepared in collaboration with us, fails to satisfy the EMA, approval of the DIFICID MAA may be delayed or ultimately withheld.

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 or have licensed rights. If we or our collaborators fail to comply with regulatory requirements with respect to our product candidates in international markets or to obtain and maintain required approvals, our market opportunities and ability to generate revenues will be diminished, which would significantly harm our business, results of operations and prospects.

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 for commercial products, such as DIFICID; or product candidates which we plan to introduce commercially.  An individual may bring a liability claim against us if one of our products or 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;

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·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 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.

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.*

In the United States, we are subject to healthcare fraud and abuse regulation and enforcement by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:

·the federal healthcare programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;

·federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

·the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any health care benefit program or making false statements relating to health care matters;

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·federal “sunshine” laws that require transparency regarding financial arrangements with health care providers, such as the reporting and disclosure requirements imposed by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively, PPACA, on drug manufacturers regarding any “transfer of value” made or distributed to prescribers and other health care providers; and

·state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.

Some states, such as California, Massachusetts and Vermont, mandate implementation of comprehensive compliance programs to ensure compliance with these laws.

The risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by applicable regulatory authorities or the courts, and their provisions are open to a variety of interpretations.  Moreover, recent healthcare reform legislation has strengthened these laws.  For example, the recently enacted PPACA, among other things, amends the intent requirement of the federal anti-kickback and criminal health care fraud statutes such that a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it.  In addition, PPACA provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes.  We also expect there will continue to be federal and state laws and/or regulations, proposed and implemented, that could impact our operations and business.  The extent to which future legislation or regulations, if any, relating to healthcare fraud abuse laws and/or enforcement, may be enacted or what effect such legislation or regulation would have on our business remains uncertain. 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 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.

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 June 30, 2011, we had an accumulated deficit of approximately $201.9 million.  We have generated minimal revenues from product sales to date and we expect our expenses to increase substantially in the near term as we execute the commercial launch of DIFICID due to, among other things, increases to our headcount and anticipated payments to Cubist pursuant to our co-promotion agreement,  and as we pursue additional research and development activities,

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including potential additional indications for DIFICID. We have funded our operations through June 30, 2011 from the sale of approximately $333.8 million of our securities and through payments received under collaborations with partners or government grants. Because of the numerous risks and uncertainties associated with commercializing DIFICID and with developing, obtaining regulatory approval for and commercializing our product candidates, we are unable to predict the extent of any future losses.  We or our collaborators may never successfully commercialize our product candidates and thus we may never have any significant future revenues or achieve and sustain profitability.

The success of our efforts to commercialize DIFICID in the United States will be partially dependent on our co-promotion agreement with Cubist.*

Pursuant to our co-promotion agreement with Cubist, we engaged Cubist as our exclusive partner for the promotion of DIFICID in the United States. We have limited control over the amount and timing of resources that Cubist may devote to the co-promotion of DIFICID. If Cubist fails to adequately promote DIFICID, or if Cubist’s efforts are not effective for any other reason, our business may be negatively affected.  In particular, we are relying on our co-promotion agreement with Cubist to reach a broader segment of the CDAD market than we could otherwise reach on our own.  If Cubist is unsuccessful or the co-promotion agreement is terminated earlier than we expect, we may not be able to address these broader CDAD market segments, and the revenues we may generate from sales of DIFICID in the United States will be limited.

We are subject to a number of other risks associated with our dependence on our co-promotion agreement with Cubist, including:

·Cubist could fail to devote sufficient resources to the promotion of DIFICID, including by failing to maintain or train sufficient sales or medical affairs personnel to promote or provide information regarding DIFICID;

·Cubist may not comply with applicable regulatory guidelines with respect to the promotion of DIFICID, which could adversely impact sales of DIFICID in the United States;

·Cubist may not provide us with timely and accurate information regarding promotion activities with respect to DIFICID, which could adversely impact our ability to comply with our ability to supply and manage our own inventory of DIFICID in the United States, as well as our ability to generate accurate financial forecasts;

·we and Cubist may not be successful in coordinating our respective sales and promotion activities under the co-promotion agreement, which could lead to inefficiencies, the failure to maximize DIFICID sales in the Unites States, and/or disagreements between us and Cubist; or

·business combinations or significant changes in Cubist’s business strategy, including the acquisition or development by Cubist of other products, may adversely affect Cubist’s ability or willingness to perform its obligations under our co-promotion agreement.

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Our co-promotion agreement with Cubist is subject to early termination, including through Cubist’s right to terminate if we experience certain supply failures in relation to the demand for DIFICID in the United States or if we are acquired by certain types of entities, including competitors of Cubist.  If the agreement is terminated early, we may not be able to find another partner to co-promote DIFICID in the United States on acceptable terms, or at all, and we may be unable to sufficiently promote and commercialize DIFICID in the United States on our own.

We are dependent on our collaboration agreement with Astellas to commercialize and further develop DIFICID in the Astellas territory.  The failure to maintain this agreement or the failure of Astellas to perform its obligations under this agreement, could negatively impact our business.*

Pursuant to the terms of our collaboration agreement with Astellas, we granted to Astellas exclusive rights to develop and commercialize DIFICID in the Astellas territory, and pursuant to the terms of our supply agreement with Astellas, we are obligated to supply to Astellas all of its requirements of DIFICID for such development and commercialization activities.  Consequently, our ability to generate any revenues from DIFICID in the Astellas territory depends on Astellas’ ability to obtain regulatory approvals for and successfully commercialize DIFICID in the Astellas territory.  We have limited control over the amount and timing of resources that Astellas will dedicate to these efforts.

We are subject to a number of other risks associated with our dependence on our collaboration agreement with Astellas, including:

·Astellas may not comply with applicable regulatory guidelines with respect to developing or commercializing DIFICID, which could adversely impact sales or future development of DIFICID in the Astellas territory;

·we and Astellas could disagree as to future development plans and Astellas may delay future clinical trials or stop a future clinical trial;

·there may be disputes between us and Astellas, including disagreements regarding the collaboration agreement, that may result in (1) the delay of or failure to achieve regulatory and commercial objectives that would result in milestone or royalty payments, (2) the delay or termination of any future development or commercialization of DIFICID, and/or (3) costly litigation or arbitration that diverts our management’s attention and resources;

·because the milestone and royalty payments in the collaboration agreement are stated in terms of Euros but paid to us in U.S. Dollars, the amounts of any milestone or royalty payments that may be paid to us under the collaboration agreement could be less than what we expect, depending on the applicable exchange rate at the time of such payments;

·Astellas may not provide us with timely and accurate information regarding sales and marketing activities and supply forecasts, which could adversely impact our ability to comply with our supply obligations to Astellas and manage our own inventory of DIFICID, as well as our ability to generate accurate financial forecasts;

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·business combinations or significant changes in Astellas’ business strategy may adversely affect Astellas’ ability or willingness to perform its obligations under our collaboration and supply agreements;

·Astellas may not properly maintain or defend our intellectual property rights in the Astellas territory or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential litigation;

·the royalties we are eligible to receive from Astellas may be reduced or eliminated based upon Astellas’ and our ability to maintain or defend our intellectual property rights and the presence of generic competitors in the Astellas territory;

·limitations on our or an acquiror’s ability to maintain or pursue development or commercialization of products that are competitive with DIFICID could deter a potential acquisition of us that our stockholders may otherwise view as beneficial; and

·if Astellas is unsuccessful in obtaining regulatory approvals for or commercializing DIFICID in the Astellas territory, we may not receive any additional milestone or royalty payments under the collaboration agreement and our business prospects and financial results may be materially harmed.

The collaboration and supply agreements are subject to early termination, including through Astellas’ right to terminate without cause upon advance notice to us.  If the agreements are terminated early, we may not be able to find another collaborator for the commercialization and further development of DIFICID in the Astellas territory on acceptable terms, or at all, and we may be unable to pursue continued commercialization or development of DIFICID in the Astellas territory on our own.

We may enter into additional agreements for the commercialization of DIFICID or other of our drug candidates, and may be similarly dependent on the performance of third parties with similar risk.

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

We may require additional capital to commercialize our current lead product candidates, DIFICID and Pruvel.  We cannot be certain that additional funding will be available on acceptable terms, or at all.  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

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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.

To the extent we require addition resources to successfully commercialize our product candidates, and we are unable to raise additional capital or are unable to effectively collaborate with additional partners for the commercialization of DIFICID or Pruvel, we will not generate significant revenues from sales of these products and our business will be materially harmed.

Our management team has recently undergone significant change and expansion and we may experience difficulties or delays integrating our new executive level employees into our organization.*

Our success as an organization depends in part on our ability to successfully integrate new employees into our organization.  We may experience delays in the execution of our business strategy as our new management team members become familiar with our company and integrate with our longer-term employees.  This process may be further complicated by the fact that certain of our newly-hired management team members will reside on the East Coast, while the majority of our personnel are located in San Diego, California.

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

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

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We will need to hire additional personnel as we expand our commercial activities.  We may not be able to attract or retain qualified management, sales and marketing 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 and New Jersey areas.  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 commercialization and 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 recently established a sales and marketing organization and have no experience as a company in marketing drug products.*

Our strategy is to build a fully-integrated U.S.-focused biopharmaceutical company to successfully execute the commercial launch of DIFICID in the U.S. market.  Although we have engaged Cubist as our exclusive partner to co-promote DIFICID in the United States, we do not have any experience commercializing pharmaceutical products on our own. In order to commercialize any products, in addition to our engagement of Cubist as our exclusive co-promotion partner for DIFICID in the United States, we have established our own marketing, sales, distribution, pharmacovigilence, managerial and other non-technical capabilities. We established the commercial organization primarily in New Jersey, and our bicoastal organizational structure could create management challenges.  We own exclusive rights to commercialize Pruvel in the United States, and are evaluating our commercialization options for Pruvel in the United States. The establishment and development of our own sales force to market DIFICID and any other 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. Although we have engaged Cubist to assist in the promotion of DIFICID in the United States, our agreement with Cubist could terminate early, and our commercial presence may not be sufficient to adequately market DIFICID in the United States on our own. 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, including those of Astellas in the Astellas territory and Cubist in the United States. In the event we are unable to fully develop our own marketing and sales capabilities 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 substantially increased the size of our organization, and we may experience difficulties in managing growth.*

We are a relatively small company with 252 employees as of July 29, 2011.  The commercial launch of DIFICID required us to expand our managerial, operational, marketing, sales, financial and other resources.  For example, in anticipation of the commercial launch of DIFICID, we hired approximately 100 sale representatives during the period from May 2011 through July 2011.  Our management, personnel, systems and facilities currently in place may not be adequate to support this recent growth, and we may not be able to retain or recruit qualified personnel in the future due to competition for personnel among pharmaceutical businesses, and the failure to do so could have a significant negative impact on our future product revenue and business results.  Our need to effectively manage our operations growth and various projects requires that we:

·effectively train and manage a significant number of new employees, in particular our sales force, who have no prior experience with our company or DIFICID, and establish appropriate systems, policies and infrastructure to support our commercial organization;

·ensure that our consultants and other service providers successfully carry out their contractual obligations, provide high quality results, and meet expected deadlines;

·continue to carry out our own contractual obligations to our licensors and other third parties; and

·continue to improve our operational,  financial and management controls, reporting systems and procedures.

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

We currently depend, and will in the future continue to depend, on third parties to manufacture our products and product candidates, including DIFICID 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 have outsourced all manufacturing of supplies of our products and product candidates to third parties.  We seek to establish long-term supply arrangements with third-party contract manufacturers. For example, in May 2010, we entered into a long-term supply agreement with Biocon for the commercial manufacturing of the active pharmaceutical ingredient, or API, for DIFICID and in June 2011, we entered into a manufacturing services agreement with Patheon to manufacture and supply certain fidaxomicin products, including DIFICID.   We intend to continue outsourcing the manufacture of our products and 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, such as DIFICID.

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Our ability and that of our collaborators to develop and commercialize DIFICID and Pruvel and any other product candidates will depend in part on our ability and that of our collaborators to arrange for third parties to manufacture our products at a competitive cost, in accordance with strictly enforced regulatory requirements and in sufficient quantities for regulatory approval, commercialization and any future clinical trials.  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.  Further, development of large-scale manufacturing processes will require additional validation studies, which the FDA must review and approve.  Difficulties in establishing these required manufacturing processes could result in delays in clinical trials, regulatory submissions and approvals, or commercialization of our product candidates.

While we work closely with our current suppliers to try to ensure continuity of supply while maintaining high quality and reliability, we cannot guarantee that these efforts will be successful.  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.

A reduction or interruption in our supply of DIFICID API or drug product from our current suppliers, and an inability to develop alternative sources for such supply, could adversely affect our ability to manufacture DIFICID in a timely or cost effective manner to make our related product sales, and could result in a breach of our supply agreement with Astellas or our co-promotion agreement with Cubist, which could result in either or both of those parties terminating their respective agreements with us.

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 DIFICID API 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 Chemical Corporation, or Juzen, as well as Angelini Francesco Acraf SpA, or 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 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

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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 and our collaborators 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.

Other than our collaboration agreement with Astellas, we may not be able to enter into acceptable agreements to commercialize DIFICID outside of the United States or if, needed, adequately build our own marketing and sales capabilities.*

We intend to pursue the development of and potentially commercialize DIFICID outside of the United States through collaboration arrangements with third parties, such as our collaboration with Astellas.  We may be unable to enter into additional collaboration arrangements in international markets outside of the Astellas territory.  In addition, there can be no guarantee that Astellas or any other parties that we may enter into collaboration arrangements with will be successful or result in more revenues than we could obtain by marketing DIFICID on our own. If we are unable to enter into additional 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 for development of DIFICID in areas outside of the United States and outside of the Astellas territory, we may need to develop our own marketing and sales force to market DIFICID in these territories 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 DIFICID in any territory that represents a significant market opportunity, our ability to achieve and sustain profitability will be substantially limited.

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

Our products and product candidates compete or will compete against both branded antibiotic therapies, such as Vancocin Pulvules with respect to DIFICID and Xifaxan®/rifaxamin with respect to Pruvel, and generic antibiotics such as metronidazole and oral vancomycin with respect to DIFICID and ciprofloxacin with respect to Pruvel.  In addition, we anticipate that DIFICID will compete with other antibiotic and anti-infective product candidates currently in development for the treatment of CDAD. 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

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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 pharmaceutical or other companies.

We anticipate that DIFICID and, if approved, Pruvel will face increasing competition in the form of generic versions of branded products of competitors that will lose their patent exclusivity.  For example, DIFICID will immediately face steep competition from an inexpensive generic form of metronidazole.  DIFICID currently faces generic oral vancomycin competition in Europe and in the future may face competition from generic oral vancomycin in the United States as well.  In addition, our internal market research suggests that there is increasing use of oral reconstituted intravenous vancomycin “slurry” in the hospital setting.  Generic antibiotic therapies typically are sold at lower prices than branded antibiotics and are generally preferred by managed care providers of health services.  For example, because metronidazole and generic vancomycin “slurry” are available at such a low price, we believe it may be difficult to sell DIFICID as a first-line therapy for the treatment of CDAD other than in certain limited circumstances, such as in patients at high risk of recurrence.  If we or our collaborators 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 DIFICID, 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 lower recurrence rates, have fewer side effects or are less expensive than our product candidates.

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 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:

·timing of market introduction of our product candidates as well as of competitive drugs;

·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;

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

·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.

If we decide to continue development of Pruvel and it is  subsequently approved, we would 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 would 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, the generic name for Pruvel, 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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Third-party payor coverage and reimbursement may be insufficient or unavailable altogether for our product candidates, which could diminish our or our collaborators’ sales or affect our or our collaborators’ 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 based on a prospective payment system, and these amounts are not necessarily based on the actual costs incurred.  As a result, these healthcare providers may be inclined to choose the least expensive therapies.  We cannot guarantee that our potential customers will find the reimbursement amounts sufficient to cover the costs of our product candidates or that our product candidates will be cost competitive compared to alternatives.

We have not commenced efforts to have our product candidates covered and 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.

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 innovative hospital specialty products in addition to DIFICID and Pruvel.  As a significant part of our growth strategy, we intend to develop and commercialize, independently and/or through collaboration partners, 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

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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 or our collaborators 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 or our collaborators 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, independently and/or through collaborators, viable drugs using our platform and specialized focus, we will not be successful in developing a pipeline of potential product candidates to follow DIFICID and Pruvel, and our business prospects would be significantly harmed.

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;

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·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.

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

Even if we and our collaborators 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 testing, storage, recordkeeping and safety reporting, and additional post-marketing obligations, including regulatory oversight of the labeling, packaging, advertising, 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 warning letters, civil or criminal fines, suspension or

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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.

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 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, and our third party licensees may be unable to continue development of our existing out-licensed product candidates.

We rely on our majority-owned subsidiary, OBI, for the development of one of our product candidates.

In October 2009, we completed a number of transactions involving our subsidiary, OBI, including the sale of 40% of our ownership interest in OBI to various third party investors.  In connection with these transactions, we assigned to OBI, and OBI assumed from us, our rights and obligations under our license agreement with MSKCC related to our OPT-822/821 product candidate.  We also assigned to OBI certain of our intellectual property and know-how related to this product candidate. In exchange for these assignments, we have the right to receive certain milestone or royalty payments relating to OPT-822/821.

We cannot assure you that OBI will successfully advance the development of OPT-822/821.  In addition, if OBI does not comply with its obligations under the agreement with MSKCC, the agreement may be terminated and we may not be able to re-assume our rights under the agreement.  If the agreement with MSKCC was terminated and we were unable to re-assume our rights, we would not be able to pursue further development of OPT-822/821.  Moreover, the addition of third party investors in OBI has also diminished our ability to control OBI, which is now subject in some respects to the rights of the third party minority stockholders.  In the future, additional equity financings or other issuances of equity securities or securities convertible into equity by OBI may further reduce our ownership position in OBI and we may not maintain a controlling interest in OBI.  To the extent that we do not maintain a controlling equity interest in

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OBI in the future, we would have to rely on OBI’s contractual obligations, including under our Intellectual Property Assignment and License Agreement, to ensure that OBI continues development of OPT-822/821 and complies with its obligations under the MSKCC agreement.  Finally, OBI will need additional funds to further develop and commercialize OPT-822/821, and OBI may not be able to secure adequate funding or be able to do so on terms you or we believe are favorable.  If OBI is unable to raise additional funds to continue operations, or otherwise fails to advance the development of OPT-822/821, we will not receive milestone or royalty payments with respect to this product candidate, and the value of our OBI equity position would likely diminish. To the extent we provide funds to OBI through additional equity investments or otherwise, we may need to divert funds away from our other product candidate programs which could adversely affect the development and/or commercialization of those other product candidates.

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 inherently 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. 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, sub-analysis of clinical trial data may reveal limitations of our product candidates even though top-line results are positive.  The type and amount of clinical data necessary to gain regulatory approval for our product candidates may also change during or after completion of our clinical trials or we may inaccurately characterize such requirements. Moreover, we cannot guarantee that the FDA or comparable foreign regulatory authorities will agree with our interpretation of clinical trial data, or find such data sufficient to grant product 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 in the past experienced delays in clinical trials of our product candidates and we may experience delays in future clinical trials.  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 clinical research organizations, or 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.

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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 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 or negatively affect sales of any marketed product.*

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.  For example, in November 2010, due to a higher than expected incidence of cutaneous rash during the course of a study of the possible interaction between Pruvel and antacids, we informed the FDA that we were voluntarily terminating the research study.  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 our Phase 3 clinical trials of DIFICID, 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.  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.  Adverse events encountered in any post-approval studies may also harm our efforts and those of our collaborators to market our product candidates or could result in withdrawal of regulatory approvals.  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.

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We have relied and in the future may 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 in the past entered into agreements with third-party CROs, such as INC Research, to provide monitors for and to manage data for our clinical programs.

We and any 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 that conduct 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 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.

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 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 or may have to be repeated, 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.

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.*

The U.S. and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably. Among policy makers and payors in the U.S. and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the U.S., the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.

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In March 2010, PPACA became law in the U.S. PPACA substantially changes the way healthcare is financed by both governmental and private insurers and significantly affects the pharmaceutical industry. Among the provisions of PPACA of greatest importance to the pharmaceutical industry are the following:

·an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs;

·an increase in the rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for branded and generic drugs, respectively;

·a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their overage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

·extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

·expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals which began in April 2010 and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the Federal Poverty Level beginning in 2014, thereby potentially increasing manufacturers’ Medicaid rebate liability;

·expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

·new requirements to report certain financial arrangements with physicians, including reporting any “transfer of value” made or distributed to prescribers and other healthcare providers, effective March 30, 2013, and reporting any investment interests held by physicians and their immediate family members during the preceding calendar year;

·a new requirement to annually report drug samples that manufacturers and distributors provide to physicians, effective April 1, 2012;

·a licensure framework for follow-on biologic products; and

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·a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

We anticipate that the PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and an additional downward pressure on the price that we receive for any approved product, and could seriously harm our business. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

We also cannot be certain that DIFICID 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 DIFICID 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 the PPACA 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 coverage and 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 DIFICID 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.

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

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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 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 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:

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·others may be able to make compounds that are similar to our product candidates but that are not covered by the claims of our issued patents and pending patent applications or licensed patents and pending patent applications, 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 issued patents or 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 issued patents and 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 issued patents and 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.

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 four issued patents and ten pending patent applications related to DIFICID in the U.S.  We also have six issued foreign patents related to DIFICID.

The patent and patent applications related to DIFICID encompass various topics relating to:

·composition of matter;

·pharmaceutical composition and methods of use;

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·polymorphic forms and pharmaceutical compositions thereof;

·manufacturing processes;

·treatment of diseases;

·formulation;

·selected indications in CDAD patients; and

·primary metabolites.

If we are unable to obtain sufficient patent protection encompassing DIFICID, our competitors, including generic drug companies, may be able to design other similar formulations of the active ingredient of DIFICID.  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 DIFICID.  As a result, our competitors may be able to develop competing products without infringing our patents.

We plan to evaluate our commercialization options for Pruvel which we expect would be marketed to high-prescribing physicians of antibiotics for infectious diarrhea.  The primary patent covering Pruvel expired in February 2009.  In 2009, our licensor, Nippon Shinyaku, received an additional patent in the U.S. which relates to a key intermediate in the manufacturing process for Pruvel.  Despite its issuance, this patent may later be challenged by a third party or fail to prevent a third party from producing and marketing a generic form of Pruvel in the United States.   If the available protection afforded by this patent is insufficient, we will likely rely on one or more regulatory marketing exclusivities for Pruvel in the United States.  Specifically, if an 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 the recent patent is insufficient to maintain exclusivity in the United States with respect to Pruvel, we may face generic competition in the United States five years after our NDA for Pruvel is approved by the FDA. 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 is responsible for the maintenance of patents and prosecution of patent applications relating to Pruvel.  We may also be dependent on Par to provide technical support for patent applications relating to DIFICID.  If any of these parties fail to adequately protect these product candidates with issued patents, our business and prospects would be significantly harmed.

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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 agreement with Par does 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.

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 or, as applicable, our commercialization partners, including Astellas pursuant to its first right to enforce the patents licensed to it in the Astellas territory, 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 or our commercialization partner 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.

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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 commercialization partners, including Astellas, 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 DIFICID 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 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

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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;

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

·any adverse development or perceived adverse development with respect to the the EMA’s review of our MAA for DIFICID, including a request for additional information;

·failure of DIFICID to achieve commercial success;

·developments our ability to submit an NDA for Pruvel to the FDA, including as a result of our pending investigation of the safety of Pruvel;

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

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

·announcements by our collaborators with respect to clinical trial results, regulatory submissions 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 development and commercialization partners;

·our dependence on our collaborators, such as Astellas, to commercialize and further develop our products in foreign countries in compliance with foreign regulatory schemes;

·our failure to successfully execute our commercialization strategy with respect to our products following marketing approval thereof;

·the success of our continuing efforts to establish and build marketing and sales capabilities;

·inability to obtain adequate commercial supply for any product following marketing approval thereof, or inability to do so at acceptable prices;

·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;

·the development of generic product alternatives to our or our competitors’ products;

·third-party coverage or reimbursement policies;

·changes in government regulations affecting product approvals, reimbursement or other aspects of our or our competitors’ business;

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

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·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;

·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;

·our ability to successfully integrate our new executive personnel into our organization;

·difficulties associated with the expansion of our domestic operations into a bicoastal organization;

·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.

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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 of 1934, as amended, 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.

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 of 2002, or the Sarbanes-Oxley Act, as well as rules subsequently implemented by the Securities and Exchange Commission, or SEC, and the Nasdaq Stock 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 result in increased 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 requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. We are 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, 2010, 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 have required, and continue 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;

·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.

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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	(4)	Bylaws of Optimer Pharmaceuticals, Inc., as amended.
4.1	(3)	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	(5)	Registration Rights Agreement, dated October 23, 2007, by and between Optimer Pharmaceuticals, Inc. and the purchasers listed on the signature pages thereto.
10.1		Amendment Agreement between Optimer Pharmaceuticals, Inc. and Astellas Pharma Europe, Ltd., dated March 29, 2011.
10.2	*	Co-Promotion Agreement between Optimer Pharmaceuticals, Inc. and Cubist Pharmaceuticals, Inc., dated April 5, 2011.
10.3	(6)+	Summary of Optimer Pharmaceuticals, Inc. 2011 Incentive Compensation Plan.
10.4		First Amendment to Office Lease between Optimer Pharmaceuticals, Inc. and 101 Hudson Leasing Associates, dated May 4, 2011.
10.5	*	Manufacturing Services Agreement between Optimer Pharmaceuticals, Inc. and Patheon Inc., dated June 1, 2011.
10.6	(7)+	2006 Equity Incentive Plan of Optimer Pharmaceuticals, Inc., as amended
10.7	+	2006 Equity Incentive Plan Form of Notice of Grant of Restricted Stock Units.
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).
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

+Indicates management contract or compensatory plan.

*Confidential treatment has been requested with respect to certain portions of this exhibit.  Omitted portions have been filed separately with the Securities and Exchange Commission.

(1)Filed with Registrant’s Registration Statement on Form S-1 November 9, 2006.

(2)Filed with Registrant’s Amendment No. 3 to Registration Statement on Form S-1 January 22, 2007.

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

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

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

(6)Filed with Registrant’s Current Report on Form 8-K on April 29, 2011.

(7)Filed with Registrant’s Current Report on Form 8-K on June 10, 2011

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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: August 4, 2011	By:	/s/ John D. Prunty
	Name:	John D. Prunty
	Title:	Chief Financial Officer
		(Duly Authorized Officer and Principal Financial and Accounting Officer)

78

EX-10.1

Exhibit 10.1

AMENDMENT AGREEMENT

to the Collaboration and License Agreement, dated February 2, 2011 and the Supply Agreement, dated February 2, 2011

by and between

OPTIMER PHARMACEUTICALS, INC.

10110 Sorrento Valley Rd., Suite C

San Diego, California 92121

(hereinafter referred to as “Optimer”),

and

ASTELLAS PHARMA EUROPE LTD.

Lovett House, Lovett Road, Staines, Middlesex

TW18 3AZ, United Kingdom

(hereinafter referred to as “Partner”),

Optimer and Partner are hereinafter also referred to as the “Parties”.

WITNESSETH:

WHEREAS, Optimer and Partner executed a Collaboration and License Agreement,   dated February 2, 2011, for Products (as defined therein) (hereinafter referred to as the “Collaboration and License Agreement”) and also a Supply Agreement, dated February 2, 2011, for Product (as defined therein) (hereinafter referred to as the “Supply Agreement”) (for the purpose of this Amendment Agreement, the Collaboration and License Agreement and the Supply Agreement are referred to together as the “Agreements”); and

WHEREAS, Optimer and Partner wish to amend certain terms and conditions set out in the Agreements;

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants set forth herein, the Parties have agreed as follows:

1.Definition

1.1 Unless otherwise provided, capitalized terms shall have the meanings ascribed to them in the Agreements.

2.Change in Territory

2.1 “Albania”, “Bosnia-Herzegovina”, “Croatia”, “Macedonia”, “Montenegro”, “Serbia (including Kosovo)”, “Georgia”, “Mongolia” and “all additional territories in Africa”

shall be added to the Territory, and the definition of the Territory as set out in Section 1.103 of the Collaboration and License Agreement shall be revised accordingly.

2.2. “Albania”, “Bosnia-Herzegovina”, “Croatia”, “Macedonia”, “Montenegro”, “Serbia (including Kosovo)”, “Georgia”, “Mongolia” and “all additional territories in Africa” shall be added to the Territory, and the definition of Territory as set out in Section 1.61 of the Supply Agreement shall be revised accordingly.

2.3  For the sake of clarity, the Territory, as revised hereunder, shall correspond to the countries listed below:

“Albania, Austria, Belgium, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Republic of Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Macedonia, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Serbia (including Kosovo), Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Turkey, South Africa, Russia, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Mongolia. Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Middle East (Bahrain, Gaza Strip, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates, West Bank (Palestine) and Yemen), North Africa (Algeria, Egypt, Libya, Morocco and Tunisia) and all additional territories in Africa”

3.Other

3.1 Except as specifically provided herein, the Agreements shall remain unchanged and in full force and effect without amendment or modification.

[The next page is the signature page]

IN WITNESS WHEREOF, the Parties have caused this instrument to be executed by their duly authorised representatives.

OPTIMER PHARMACEUTICALS, INC.		ASTELLAS PHARMA EUROPE LTD
By:	/s/ Kurt Hartman	By:	/s/ Jenny Temko
Name:	Kurt Hartman	Name:	/s/ Jenny Temko
Title:	General Counsel and SVP	Title:	SVP and General Counsel
Date:	3/17/11	Date:	29/03/11

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.

Execution Copy

CO-PROMOTION AGREEMENT

by and between

CUBIST PHARMACEUTICALS, INC.

and

OPTIMER PHARMACEUTICALS, INC.

Dated as of April 5, 2011

TABLE OF CONTENTS

1.	DEFINITIONS AND CONSTRUCTION		1
	1.1	Definitions	1
	1.2	Construction	14
2.	PROGRAMS GENERALLY		14
	2.1	Engagement of Cubist	14
	2.2	Program Commencement Dates	14
	2.3	Launch	14
	2.4	Launch Meeting	15
	2.5	Sales Force	15
	2.6	Medical Affairs Force	15
	2.7	Responsibility for Forces	15
3.	SALES PROMOTION ACTIVITIES		15
	3.1	Sales Program Plan	15
	3.2	Sales Force Activities	15
	3.3	Promotional Medical Education Programs	16
	3.4	Incentive Compensation by Cubist	16
	3.5	Sales Materials	17
	3.6	Sales Force Training	18
	3.7	Samples	19
4.	MEDICAL AFFAIRS PROGRAM		19
	4.1	Medical Affairs Program Plan	19
	4.2	Medical Affairs Force Activities	19
	4.3	Performance Goals for Cubist Medical Affairs Force	20
	4.4	Medical Affairs Materials	20
	4.5	Medical Affairs Force Training	21
	4.6	Information Requests	22
	4.7	Studies	22
	4.8	Expenses	22
	4.9	Additional Services	22
5.	GOVERNANCE		23
	5.1	Alliance Manager	23
	5.2	Joint Steering Committee	23
	5.3	Joint Clearance Committee	25
6.	OPTIMER RESPONSIBILITIES		26
	6.1	Manufacture and Supply	26
	6.2	Stockout Notice	26
	6.3	Other Responsibilities	26
	6.4	Contracting Matters	27
7.	REPORTING AND AUDITS		27
	7.1	Reporting by Cubist	27
	7.2	Reporting by Optimer	28
	7.3	Other Information	29

i

	7.4	Information Technology	29
	7.5	Audit Rights	29
8.	CONSIDERATION		29
	8.1	Service Fee	29
	8.2	Sales Target Bonuses	30
	8.3	Promotion Profit Share	30
	8.4	Consequences of a New Cubist Product	30
	8.5	Payments; Records; Audits	30
9.	ADVERSE EVENT REPORTING, REGULATORY MATTERS, PRODUCT INFORMATION AND COMPLIANCE		31
	9.1	Regulatory Reporting and Related Matters	31
	9.2	Threatened Agency Action	34
	9.3	Compliance Program	34
	9.4	Product Information	35
	9.5	Compliance with Laws and Policies	36
10.	RETURNED/RECALLED PRODUCT		36
	10.1	Returned Product	36
	10.2	Recalled Product	37
11.	INDEPENDENT CONTRACTOR STATUS OF CUBIST, INCLUDING THE SALES FORCES		37
12.	NONCOMPETITION; NONSOLICITATION		37
	12.1	Noncompetition	37
	12.2	Non-Solicitation	38
13.	CONFIDENTIALITY		38
	13.1	Confidential Information	38
	13.2	Exceptions to Confidentiality	38
	13.3	Residual Knowledge and Inadvertent Disclosure	39
	13.4	Authorized Disclosure	39
	13.5	Notification	40
	13.6	Remedies	40
	13.7	Use of Names	40
	13.8	Confidential Treatment	40
14.	TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS		41
	14.1	Product Trademarks; Optimer House Marks; and Cubist Trademarks	41
	14.2	Ownership	41
	14.3	Trademark Maintenance	41
	14.4	Trademark Infringement	42
15.	WARRANTIES; INDEMNITIES; INSURANCE		42
	15.1	Representations, Warranties and Covenants	42
	15.2	Optimer Indemnification	44
	15.3	Cubist Indemnification	45
	15.4	Indemnification Procedure	45
	15.5	Insurance	47

ii

16.	TERM AND TERMINATION		47
	16.1	Term	47
	16.2	Termination	48
	16.3	Effect of Expiration or Termination	50
	16.4	Accrued Rights; Surviving Obligations	51
17.	MISCELLANEOUS		51
	17.1	Governing Law, Jurisdiction, Venue and Service of Process	52
	17.2	Force Majeure	52
	17.3	Waiver	52
	17.4	Notices	53
	17.5	Entire Agreement	53
	17.6	Successors; Assigns; Subcontracting	54
	17.7	Exhibits	55
	17.8	Counterparts	55
	17.9	Severability	55
	17.10	Affiliates	55
	17.11	Expenses	55
	17.12	Further Assurances	56
	17.13	Construction	56
	17.14	No Joint Venture	56

iii

EXHIBITS

Exhibit 1.1.29	Cubist Trademarks
Exhibit 1.1.47	Initial Medical Affairs Program Terms
Exhibit 1.1.48	Initial Sales Program Terms
Exhibit 1.1.72	Optimer House Marks
Exhibit 7.1	Form of Cubist Report
Exhibit 17.6.1	Cubist Affiliates

iv

CO-PROMOTION AGREEMENT

This Co-Promotion Agreement (the “Agreement”) is entered into as of April 5, 2011 (the “Effective Date”), by and between Cubist Pharmaceuticals, Inc., a Delaware corporation (“Cubist”) and Optimer Pharmaceuticals, Inc., a Delaware corporation (“Optimer”). Cubist and Optimer are each referred to in this Agreement as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, Optimer intends to market that certain pharmaceutical compound known as fidaxomicin in prescription form;

WHEREAS, Optimer acknowledges Cubist’s experience in commercializing and otherwise promoting pharmaceutical products and wishes to engage the services of Cubist to Promote (as defined herein) and provide other services related to the Product (as defined herein) in the Territory (as defined herein); and

WHEREAS, the Parties hereto wish to jointly Promote (as defined herein) the Product in the Territory (as defined herein) and perform certain other activities, all on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the respective covenants, representations, warranties and agreements set forth herein, and intending to be legally bound hereby, the Parties hereby agree as follows:

1.DEFINITIONS AND CONSTRUCTION

1.1Definitions.

Unless specifically set forth to the contrary herein, the following terms shall have their indicated meanings when used in this Agreement (including the exhibits):

1.1.1“Act” means the Federal Food, Drug, and Cosmetic Act, as amended, and the rules, regulations and guidelines of the FDA promulgated thereunder, as may be in effect from time to time.

1.1.2“Adverse Event” means any adverse drug experience described in the FDA’s New Drug Application postmarketing reporting regulations, 21 C.F.R. 314.80, as they may be amended from time to time.

1.1.3“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by or is under Common Control with such first Person.

1.1.4“Agency” means any governmental authority or Regulatory Authority in the Territory.

1.1.5“Agreement” is defined in the Preamble.

1

1.1.6“Alliance Manager” is defined in Section 5.

1.1.7“Annual Gross Profit Share Amount Due” is defined in Section 8.3.

1.1.8“Applicable Law” means all federal, state and local laws, and the rules, regulations, guidelines and guidances of all Agencies, in effect from time to time, applicable to the marketing, promotion, distribution and sale of the Product in the Territory, including, to the extent applicable, (i) the American Medical Association Guidelines on Gifts to Physicians from Industry, (ii) the PhRMA Code on Interactions with Healthcare Professionals, (iii) the Health Insurance Portability and Accountability Act of 1996, including the Privacy Standards (45 C.F.R. Parts 160 and 164), as amended by the American Recovery and Reinvestment Act of 2009 and any regulations promulgated thereunder, (iv) the Social Security Act and any regulations promulgated thereunder, (v) the Act, (vi) the PDMA, and (vii) state and federal anti-kickback statutes, false claims statutes, statutes that govern price reporting and reimbursement, and statutes that govern marketing disclosure and physician payments, and all rules and regulations promulgated thereunder, in each case in the Territory.

1.1.9“Business Day” shall mean a day other than a Saturday or Sunday or any public holiday in the United States. For the avoidance of doubt, references in this Agreement to “days” shall mean calendar days.

1.1.10“Business Policies” means the Cubist Business Policies and the Optimer Business Policies.

1.1.11“Call” means an interactive in-person visit to and discussion with a medical professional by a pharmaceutical sales representative that consists of one or more details of a product.

1.1.12“Change in Control” means, with respect to a Party, an event or series of related events in which:

(a)Any Person or group (as such term is defined in the Securities Exchange Act of 1934, as amended) (other than one or more Affiliate(s) of such Party that were Affiliates immediately prior to such event (any such Affiliate with respect to such Party, an “Existing Affiliate”)), acquires beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of securities of such Party or any Affiliate thereof that directly, or indirectly through one or more intermediaries, Controls such Party (any such Affiliate with respect to such Party, a “Controlling Entity”) representing more than 50% of the voting power of the then outstanding securities of such Party or its Controlling Entity, if any, with respect to the election of members of the Board of Directors or similar governing body of such Party or its Controlling Entity, if any;

(b)Such Party or its Controlling Entity, if any, enters into a merger, consolidation or similar transaction with another Person (other than an Existing Affiliate of such Party) and (A) the members of the Board of Directors of such Party or Controlling Entity, as applicable, immediately prior to such transaction constitute (i) less than one half of the members of the Board of Directors of such Party or Controlling Entity, as applicable, following such transaction, or (ii) less than one half of the Board of Directors of any new Controlling Entity

2

resulting from such transaction; or (B) the Persons who beneficially owned the outstanding voting securities of such Party or Controlling Entity, as applicable, immediately prior to such transaction cease to beneficially own securities of such Party or Controlling Entity, as applicable, representing more than 50% of the voting power of the then outstanding securities of such Party or Controlling Entity, as applicable, with respect to the election of members of the Board of Directors immediately after such transaction in substantially the same proportions as their ownership of securities of such Party or Controlling Entity, as applicable, immediately prior to such transaction;

(c)Such Party or its Controlling Entity, if any, sells or transfers to any Person(s) (other than a transfer by a Controlling Entity to Existing Affiliate(s) of such Party) in one or more related transactions, properties or assets (A) representing more than 50% of such Party’s or Controlling Entity’s, as applicable, consolidated total assets as reflected on its most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, (B) from which more than 50% of such Party’s or Controlling Entity’s, as applicable, consolidated operating income for its most recent fiscal year as reflected on its most recent Annual Report on Form 10-K was derived or (C) representing substantially all of the properties or assets related to such Party’s obligations under this Agreement; or

(d)Such Party or its Controlling Entity, if any, fails to maintain its corporate existence or liquidates (unless, in connection with the foregoing, the assets of such Party or Controlling Entity, as applicable, are acquired by an Existing Affiliate of such Party and the liabilities of such Party or Controlling Entity (including, if applicable, the Party’s obligations under this Agreement) are assumed by such Existing Affiliate of such Party).

1.1.13“Combination Promotional Medical Education Program” is defined in Section 3.3.2.

1.1.14“Commercially Reasonable Efforts” of a Party mean (i) with respect to Cubist, those efforts that are consistent with Applicable Law and with industry standards and practices followed by a similarly situated pharmaceutical company in the Promotion of pharmaceutical products with a potential market comparable to the Product, and (ii) with respect to Optimer, those efforts that are consistent with Applicable Law and with industry standards and practices followed by a similarly situated pharmaceutical company in connection with the manufacture, Promotion, distribution and sale of pharmaceutical products in a similar stage in product life as the Product and with a potential market and profit potential comparable to the Product (based on conditions then prevailing). For clarity, if a Party is required hereunder to use Commercially Reasonable Efforts with respect to a given activity and such activity is performed by an Affiliate of such Party, rather than such Party, such Party shall cause such Affiliate to use Commercially Reasonable Efforts to perform such activity.

1.1.15“Competing Product” means any product, other than the Product, that has […***…] in the Territory, […***…].

***Confidential Treatment Requested

3

1.1.16“Competing Program” is defined in Section 13.3.

1.1.17“Confidential Information” means (i) any and all information or material, that, at any time before or after the Effective Date has been or is provided or communicated to the Receiving Party by or on behalf of the Disclosing Party, including by or on behalf of any of its Affiliates, pursuant to this Agreement or in connection with the transactions contemplated hereby or any discussions or negotiations with respect thereto (including any information disclosed pursuant to the Mutual Non-Disclosure Agreement between the Parties effective as of July 9, 2009, as amended); (ii) any data, ideas, concepts or techniques contained in any of the foregoing; and (iii) any modifications of any of the foregoing or derivations of any of the foregoing. Confidential Information may be disclosed orally, visually, in writing, by delivery of materials containing Confidential Information, or in any other form now known or hereafter invented; provided, however, that any information or material specifically relating to the Product, including the Promotion thereof (but excluding, without limitation, (a) the identity of and information regarding the Target Accounts and Target Prescribers and the allocation of Cubist’s Sales Force thereto, and (b) information relating to the Disease State generally), shall be the Confidential Information of Optimer regardless of which Party first disclosed such information, and Optimer and Cubist shall be deemed the Disclosing Party and Receiving Party, respectively, with respect thereto. The terms of this Agreement shall be the Confidential Information of both Parties.

1.1.18“Control” and, with correlative meanings, the terms “Controlled by” and “under Common Control with,” means (i) the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract, resolution, regulation or otherwise or (ii) the ownership, directly or indirectly, of more than 50% of the voting securities or other ownership interest of a Person (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity).

1.1.19“Controlling Entity” is defined in Section 1.1.12(a).

1.1.20“Cost of Goods Sold” means the standard cost of goods for the Product sold in the applicable time period, which standard cost shall be determined and allocated by Optimer in accordance with GAAP, including Optimer’s good faith estimate of (A) Optimer’s and its Affiliates’ […***…], (B) all of Optimer’s and its Affiliates’ […***…], (C) […***…], and (D) […***…]. Notwithstanding the foregoing, Cost of Goods Sold for Product from […***…] shall be determined in accordance with clauses (A) through (D) above whether or not […***…].

1.1.21“Cubicin” means that certain pharmaceutical compound known as daptomycin in prescription form for injection that has received Regulatory Approval from the FDA to be marketed in the Territory under the Cubist Trademark Cubicin.

***Confidential Treatment Requested

4

1.1.22“Cubist” is defined in the Preamble.

1.1.23“Cubist Business Policies” means Cubist’s business policies, standard business procedures, and coaching sheets, that in each case, govern the Promotion and the Medical Affairs Program activities and, in each case, to the extent such business policies, standard business procedures, and coaching sheets are consistent with Applicable Law and this Agreement, copies of which have been provided by Cubist to Optimer prior to the Effective Date (as such business policies, standard business procedures and coaching sheets may be amended from time to time by Cubist, provided that Cubist provides amended copies thereof to Optimer).

1.1.24“Cubist Competitor” means any Third Party that is developing or marketing […***…] (which, for clarification, shall not include an [...***…]) for the treatment of […***…]. For clarity, developing, in this definition, refers to development of […***…].

1.1.25“Cubist Indemnified Parties” is defined in Section 15.2.

1.1.26“Cubist Medical Affairs Force” means the Cubist Medical Affairs Representatives (including their direct supervisors, managers, and trainers) and other Cubist employees performing Medical Affairs Program activities under this Agreement.

1.1.27“Cubist Report” is defined in Section 7.1.

1.1.28“Cubist Sales Force” means the Cubist Sales Representatives (including their direct supervisors, managers, and trainers) and other Cubist employees performing Sales Program activities under this Agreement.

1.1.29“Cubist Trademarks” means (i) the Trademarks of Cubist and its Affiliates set forth on Exhibit 1.1.29, and any existing, pending or future Trademark registrations, applications and unregistered Trademark rights, in each case relating to such Trademarks, and (ii) any current or future modifications or variants of any of the foregoing rights.

1.1.30“Detail” means a face-to-face (a) one-on-one discussion with a Target Prescriber or (b) discussion with a group consisting of no more than […***…] Target Prescribers at the same time, in each case during which a Sales Representative makes a presentation of certain of the Product’s attributes, such as describing the FDA-approved indicated uses, safety, effectiveness, contraindications, side effects, warnings or other relevant characteristics of the Product, consistent with the requirements of this Agreement and Applicable Law and in a manner that is customary in the industry for the purpose of promoting a prescription pharmaceutical product. When used as a verb, “Detail” means to engage in a Detail. For the avoidance of doubt, (i) a reminder presentation or a sample drop shall not constitute a Detail; and (ii) presentations to groups consisting of more than […***…] people or containing more than […***…] Target Prescribers, medical conventions or institutions shall not constitute Details.

***Confidential Treatment Requested

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1.1.31“Disclosing Party” means the Party disclosing Confidential Information.

1.1.32“Disease State” means Clostridium difficile infection in humans.

1.1.33“Effective Date” is defined in the Preamble.

1.1.34“Employment Law” means all federal, state, or local statutes, laws, ordinances, regulations or guidelines relating to (i) employment, (ii) safety and health, and (iii) the payment of taxes and required taxes and payments with respect to employees.

1.1.35“Existing Affiliate” is defined in Section 1.1.12(a).

1.1.36“FDA” means the United States Food and Drug Administration and any successor agency having substantially the same functions.

1.1.37“Field Alert” is defined in Section 9.1.9.

1.1.38“First Commercial Sale” means the first bona fide sale of the Product in the Territory to an end consumer (including any pharmacy, hospital, skilled nursing facility or similar institution) following receipt of Regulatory Approval of the Product in the Territory. For clarity, First Commercial Sale shall not include any sale, transfer or disposition of the Product as promotional samples or for charitable or pre-clinical, clinical or post-approval studies purposes.

1.1.39“First Sales Year” means the 12 month period starting on the date of the First Commercial Sale and ending on the last day of the month in which the first anniversary of the First Commercial Sale date occurs.

1.1.40“Force Majeure Event” is defined in Section 17.2.

1.1.41“GAAP” means the United States generally accepted accounting principles, applied on a consistent basis, or any successor accounting principles generally accepted for public companies in the United States (such as International Financial Reporting Standards).

1.1.42“Gross Profit” means, with respect to any period, Net Sales for such period, less the […***…].

1.1.43“Gross Sales” means, for a given period, all sales of the Product during such period ([…***…]) by or on behalf of Optimer or its Affiliates to Third Parties in the Territory (regardless of whether Optimer or its Affiliates have received more or less than the […***…]). For purposes of determining Gross Sales, (i) the Product shall be deemed to be sold at the point of shipment, and (ii) sales, transfers or dispositions of the Product as promotional samples or for charitable or pre-clinical, clinical or post-approval studies purposes shall be excluded from Gross Sales, and (iii) sales or transfers of the Product among Optimer and its Affiliates shall be excluded from Gross Sales, provided that any subsequent sale to a Third Party in the Territory shall be included.

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1.1.44“Indemnification Claim Notice” is defined in Section 15.4.1.

1.1.45“Indemnified Party” is defined in Section 15.4.1.

1.1.46“Indemnifying Party” is defined in Section 15.4.1.

1.1.47“Initial Medical Affairs Program Terms” means the key terms of the Medical Affairs Program Plan set forth in Exhibit 1.1.47 attached to this Agreement as of the Effective Date.

1.1.48“Initial Sales Program Terms” means the key terms of the Sales Program Plan (including the Promotional Medical Education Program) set forth in Exhibit 1.1.48 attached to this Agreement as of the Effective Date.

1.1.49“Initial Term” is defined in Section 16.1.

1.1.50“Joint Clearance Committee” is defined in Section 5.3.1.

1.1.51“Joint Steering Committee” is defined in Section 5.2.1.

1.1.52“Key Opinion Leader” means a medical professional recognized as a leading expert in his or her respective field, including any person set out on a list of such medical professionals developed jointly and agreed to in writing by the Parties.

1.1.53“Know-How” means all technical knowledge, expertise, skill, practice, market research data, marketing and sales data and any other marketing-related data, proprietary rights, regulatory approvals, discoveries, inventions, improvements, trade secrets, copyrights and processes relating to the Product and all pre-clinical, clinical, stability and other data relating to the Product.

1.1.54“Knowledge” means, when referring to the knowledge of Cubist or Optimer, the actual, unaided knowledge of the following individuals: (a) for Cubist, Cubist’s […***…] and (b) for Optimer, Optimer’s […***…].

1.1.55“Losses” is defined in Section 15.2.

1.1.56“Medical Affairs Force” means each of the Cubist Medical Affairs Force and the Optimer Medical Affairs Force.

1.1.57“Medical Affairs Materials” is defined in Section 4.4.3.

1.1.58“Medical Affairs Program” is defined in Section 4.2.

1.1.59“Medical Affairs Program Commencement Date” means the date set forth in the Medical Affairs Program Plan on which the Medical Affairs Program shall commence.

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1.1.60“Medical Affairs Program Plan” is defined in Section 4.1.

1.1.61“Medical Affairs Representative” means a scientific or medical representative who (i) is primarily focused on infectious diseases and therapeutic areas related thereto in the Territory, (ii) has relevant clinical experience and sufficient health care experience (including at least a four-year degree and clinical, residency or fellowship experience or other highly specialized training relevant to Medical Affairs Program activities, including any such professional with a Ph.D., Pharm.D. or M.D. degree) to engage in in-depth dialogues with physicians regarding medical issues associated with the Product, (iii) is employed by a Party or any of its Affiliates on a full-time basis, and (iv) is not a Sales Representative or otherwise engaged in direct Promotion of the Product. For clarity, (a) Cubist Medical Affairs Representatives would include Cubist Clinical Scientific Directors (CSDs) and (b) Optimer Medical Affairs Representatives would include Optimer Medical Education Research Liaisons (MERLs).

1.1.62“Medical Affairs Training Materials” is defined in Section 4.5.2(b).

1.1.63“Medical Affairs Training Plan” means that certain plan with respect to training the Medical Affairs Forces that shall be prepared by the Parties as soon as practicable after the Effective Date, as such plan may be modified from time to time by the Joint Steering Committee in accordance with this Agreement.

1.1.64“National Sales Meeting” is defined in Section 3.6.3.

1.1.65“NDA” means a “New Drug Application,” as defined in the Act.

1.1.66“Net Sales” means, with respect to any period, Gross Sales for such period less deductions, to the extent recognized in accordance with GAAP, and not for promotional purposes for: (i) […***…], including (A) […***…], (B) […***…], (C) […***…] and (D) […***…]; (ii) […***…]; (iii) […***…]; (iv) […***…] (including […***…]) […***…]; (v) […***…] (but not including […***…]); (vi) […***…]; and (vii) […***…] in accordance with GAAP […***…]. Any of the deductions specified in this definition that involves a payment or credit shall be taken as a deduction in the Sales Quarter in which the payment or credit is accrued by Optimer or its applicable Affiliate, in accordance with GAAP. If, as part of any managed care program or arrangement, the Product is sold with other products such that it is not possible to determine which of the deductions set forth above are specifically attributable to

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the Product, then Optimer shall apportion the deductions across the bundle of products on a relative fair value basis. Notwithstanding anything contained herein, in no event shall any category of expense, to the extent included in Optimer’s determination of the Cost of Goods Sold for a given period, be taken as a deduction in the calculation of Net Sales for such period.

1.1.67“Noncompete Period” is defined in Section 12.1.1.

1.1.68“Notice” means any notice, request, report, statement or other communication to either Party by the other Party pursuant to, in connection with, or relating to, this Agreement.

1.1.69“Off-Label Information” means any written, printed, graphic or oral information with respect to the Product that is inconsistent with, or outside the scope of, the FDA-approved labeling for the Product in the Territory.

1.1.70“Optimer” is defined in the Preamble.

1.1.71“Optimer Business Policies” means Optimer’s business policies, standard business procedures, and coaching sheets, that in each case, relate to the Programs and the manufacture of the Product and, in each case, to the extent consistent with Applicable Law and this Agreement (as such business policies, standard business procedures and coaching sheets may be amended from time to time by Optimer).

1.1.72“Optimer House Marks” means (i) the Trademarks of Optimer set forth on Exhibit 1.1.72 and any pending or future Trademark registrations, applications and unregistered Trademark rights, in each case relating to such Trademarks, and (ii) any current or future modifications or variants of any of the foregoing rights.

1.1.73“Optimer Indemnified Parties” is defined in Section 15.3.

1.1.74“Optimer Medical Affairs Force” means the Optimer Medical Affairs Representatives (including their direct supervisors, managers, and trainers) and other Optimer employees performing Medical Affairs Program activities under this Agreement.

1.1.75“Optimer Report” is defined in Section 7.2.

1.1.76“Optimer Sales Force” means the Optimer Sales Representatives (including their direct supervisors, managers, and trainers) and other Optimer employees performing Sales Program activities under this Agreement.

1.1.77“Other Fidaxomicin Product” means any form of fidaxomicin other than a Product.

1.1.78“Party” and “Parties” is defined in the Preamble.

1.1.79“PDMA” means the Prescription Drug Marketing Act of 1987, as amended, and the rules, regulations and guidelines promulgated thereunder and in effect from time to time.

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1.1.80“Permitted Uses” is defined in Section 14.1.1.

1.1.81“Person” means any individual or entity, including a government or political subdivision, department or agency of a government.

1.1.82“Primary Position Detail” means a Detail in which the Product (i) is the first product Detailed, (ii) is emphasized […***…] and (iii) is the primary focus of such Detail, primary focus meaning […***…].

1.1.83“Proceeding(s)” is defined in Section 15.1.3(d).

1.1.84“Product” means that form of fidaxomicin in prescription form intended to be marketed by Optimer under the Product NDA.

1.1.85“Product Gross Margin Percentage” means, with respect to any period, (a) […***…], divided by (b) […***…].

1.1.86“Product Information Request” is defined in Section 9.4.5.

1.1.87“Product Labels and/or Inserts” means (i) all FDA-approved labels and other written, printed or graphic matter affixed to any container, packaging or wrapper utilized in connection with the Product, or (ii) any written material physically accompanying the Product, including Product package inserts.

1.1.88“Product NDA” means NDA 201,699 for Dificid™ (fidaxomicin tablets).

1.1.89“Product Quality Complaint” means any and all manufacturing or packaging-related complaints related to the Product, including (i) any complaint involving the possible failure of the Product to meet any of the specifications for the Product; (ii) any dissatisfaction with the design, package or labeling of the Product; or (iii) any Adverse Event that may involve the quality of the Product.

1.1.90“Product Trademarks” means (i) the Trademark Dificid™ and the registrations thereof, (ii) any pending or future Trademark registration applications relating to the Product, (iii) any unregistered Trademark rights relating to the Product as may exist through use prior to or as of the Effective Date, (iv) any current or future modifications or variants of any of the foregoing rights, and (v) any future Trademarks adopted by Optimer or its Affiliates for use in connection with the Product. For the avoidance of doubt, “Product Trademarks” shall not include any Optimer House Marks.

1.1.91“Program” means, collectively, the Sales Program and the Medical Affairs Program.

1.1.92“Program Employees” means all members of the Cubist Sales Force, Cubist Medical Affairs Force, Optimer Sales Force, and Optimer Medical Affairs Force.

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1.1.93“Promotion” means Detailing and those other activities normally undertaken by a pharmaceutical company’s sales force, and its supervisors and managers, to implement marketing plans and strategies aimed at encouraging the appropriate use of a particular prescription pharmaceutical product. When used as a verb, “Promote” means to engage in such activities.

1.1.94“Promotional Medical Education Program Materials” is defined in Section 3.3.3.

1.1.95“Promotional Medical Education Programs” is defined in Section 3.3.1.

1.1.96“Public Announcement” means public announcements, press releases, investor calls, or advertising, recruiting and other public documents.

1.1.97“Quarterly Amount Due” is defined in Section 8.1.

1.1.98“Receiving Party” means the Party receiving or having access to Confidential Information of the other Party.

1.1.99“Recipients” is defined in Section 13.1.

1.1.100“Regulatory Approval” means any and all approvals (including price and reimbursement approvals, if required), licenses, registrations, or authorizations of Regulatory Authorities in the Territory that are necessary for the marketing and sale of a product in the Territory for the treatment, prevention, modulation, or diagnosis of any disease, disorder or condition in humans.

1.1.101“Regulatory Authority” shall mean any national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity whose review and/or approval is necessary for the manufacture, packaging, use, storage, import, export, distribution, promotion, marketing, offer for sale and sale of a product in a country for the treatment, prevention, modulation, or diagnosis of any disease, disorder or condition in humans. For countries where governmental approval is required for pricing or reimbursement for a Product, “Regulatory Authority” shall also include any national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity whose review and/or approval of pricing or reimbursement is required.

1.1.102“Residual Knowledge” is defined in Section 13.3.

1.1.103“Sales Force” means each of the Cubist Sales Force and the Optimer Sales Force.

1.1.104“Sales Materials” is defined in Section 3.5.3.

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1.1.105“Sales Program” means the program of Promoting (including Detailing) the Product, including all supervision, management and training with respect thereto, conducted by the Parties under Section 3.

1.1.106“Sales Program Commencement Date” means the date set forth in the Sales Program Plan on which the Sales Program shall commence.

1.1.107“Sales Program Plan” is defined in Section 3.1.

1.1.108“Sales Quarter” means each full calendar quarter during the Term, provided that (a) the first Sales Quarter shall commence on the first day of the first full calendar quarter immediately following the first day of the First Sales Year (or, if the first day of the First Sales Year is the first day of a calendar quarter, the first Sales Quarter shall commence on the first day of the First Sales Year), and (b) the last Sales Quarter shall end on the last day of the last Sales Year and, provided further, that if the first day of the First Sales Year is not the first day of a calendar quarter, the Parties’ finance contacts shall meet and in good faith discuss and attempt to agree upon adjustments and reconciliations to terms of this Agreement pertaining to payments and reporting, including adjustments to the Sales Targets, if and as necessary to account for the discrepancy between the first and last Sales Quarters and Sales Years. If the Parties’ finance contacts cannot agree upon any such adjustments and reconciliations, then “Sales Quarter” shall mean each consecutive three-month period during each Sales Year, provided that (i) the first Sales Quarter shall run from the first day of the First Sales Year to the end of the last day of the third full month after first day of the First Sales Year, and (ii) each subsequent Sales Quarter shall end on the last day of every third month thereafter.

1.1.109“Sales Representative” means a sales representative (i) who is primarily focused on infectious diseases and therapeutic areas related thereto in the Territory, (ii) whose skills, training and experience are consistent with (a) industry standards applicable to the promotion, marketing and sale of a prescription pharmaceutical product and (b) the qualifications or requirements set forth in the Sales Program Plan, (iii) who is responsible for Promoting the Product in the Territory, and (iv) who is employed by a Party or any of its Affiliates on a full-time basis. For clarity, Cubist Sales Representatives would include Cubist Clinical Business Managers (CBMs)).

1.1.110“Sales Target” means the target amount of Net Sales of the Product in the Territory for each of the First Sales Year and the Second Sales Year, as set forth on a Sales Quarterly basis in a side letter between the Parties, dated as of the Effective Date, as such target amount may be amended from time to time by mutual agreement of the Parties in writing.

1.1.111“Sales Target Bonus” is defined in Section 8.2.

1.1.112“Sales Training Materials” is defined in Section 3.6.2(c).

1.1.113“Sales Training Plan” means that certain plan with respect to training the Sales Forces that shall be prepared by the Parties as soon as practicable after the Effective Date, as such plan may be modified from time to time by the Joint Steering Committee in accordance with this Agreement.

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1.1.114“Sales Year” means each of the First Sales Year and the Second Sales Year, as well as any subsequent 12 month periods for which the Agreement is extended pursuant to Section 16.1.

1.1.115“Second Sales Year” means the 12 month period starting on the first day following the end of the First Sales Year and ending on the first anniversary of such starting date.

1.1.116“Secondary Position Detail” means a Detail in which the Product is the second product discussed and the secondary focus of such Detail, wherein “secondary focus” means at least […***…] and the Product is emphasized […***…] other than […***…].

1.1.117“Stockout” means:

(a)any failure by Optimer to fulfill at least […***…] and, as a result of such failure, […***…] of (i) […***…] or (ii) […***…]; or

(b)any notice or other communication by or on behalf of Optimer or its Affiliates to Target Prescribers and other Third Party medical professionals in the Territory that the Product in the Territory is or will be subject to rationing, limited availability or supply constraints.

1.1.118“Systems” is defined in Section 7.4.

1.1.119“Target Accounts” mean those certain institutions selected from among the institutions that Cubist has targeted as of the Effective Date or thereafter and that are identified in a side letter between the Parties, dated as of the Effective Date, as such list may be amended from time to time by amendment of the Sales Program Plan in accordance with Section 5.2.5.

1.1.120“Target Prescriber” means a physician who is licensed to prescribe drugs and is in a position to directly influence or recommend the prescription or purchase of the Product and who (a) is an infectious disease physician, or (b) has already been targeted by Cubist in connection with its other promotional activities, and in each case, who practices, is employed by or otherwise provides services at a Target Account.

1.1.121“Term” is defined in Section 16.1.

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1.1.122“Territory” means the United States of America and its territories and possessions, including Puerto Rico and the District of Columbia.

1.1.123“Third Party” means any Person other than the Parties and their respective Affiliates.

1.1.124“Third Party Claim” is defined in Section 15.2.

1.1.125“Trademark” means any trademark, trade dress, brand mark, trade name, brand name, corporate name, logo or business symbol.

1.1.126“Training Materials” means, collectively, the Sales Training Materials and the Medical Affairs Training Materials.

1.1.127“Training Plans” means, collectively, the Sales Training Plan and the Medical Affairs Training Plan.

1.1.128“Wholesale Acquisition Cost” means, with respect to a product, a published list price for such product (which list price, for clarity, does not include prompt pay or other discounts, rebates or reductions in price) for the month in which the applicable sale of such product occurred, as such list price is publicly reported by the selling Person.

1.2Construction.

Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (d) the terms “Article,” “Section,” “Schedule” or “Exhibit” refer to the specified Article, Section, Schedule or Exhibit of this Agreement; (e) the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”; and (f) the term “including” or “includes” means “including without limitation” or “includes without limitation.”

2.PROGRAMS GENERALLY

2.1Engagement of Cubist. Subject to the terms and conditions of this Agreement, Optimer hereby engages Cubist, and Cubist hereby accepts such engagement, as Optimer’s exclusive partner in Promoting the Product in the Territory, and conducting the Sales Program and the Medical Affairs Program with respect to the Product in the Territory.

2.2Program Commencement Dates. The Parties shall mutually select and agree upon a Sales Program Commencement Date and a Medical Affairs Program Commencement Date, which shall be set forth in the Sales Program Plan and Medical Affairs Program Plan, respectively.

2.3Launch. Optimer will use Commercially Reasonable Efforts to effect a full launch of the Product (as opposed to a soft launch) where such launch would occur only when the distribution network for the Product (including, for example, Optimer’s and its wholesalers’ and

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distributors’ capability of receiving and fulfilling orders for the Product throughout the Territory) is substantially established.

2.4Launch Meeting. If the Parties so mutually agree, Cubist will participate in relevant portions of Optimer launch meetings for the Product in the Territory. […***…] will bear the cost of […***…] personnel attending such meetings.

2.5Sales Force. By the Sales Program Commencement Date, each of Cubist and Optimer, respectively, will establish the Cubist Sales Force and the Optimer Sales Force in accordance with the Sales Program Plan. Without limiting the foregoing and notwithstanding anything to the contrary herein or in the Sales Program Plan, at all times during the Term (a) Cubist shall maintain a Sales Force consisting of at least […***…] Sales Representatives and (b) Optimer shall maintain a Sales Force consisting of at least […***…] Sales Representatives, in each case, at full capacity, subject to fluctuation in the ordinary course of business for vacancies, leave, and other ordinary absences; provided, however, that each Party shall use Commercially Reasonable Efforts to fill vacancies within a reasonable period of time.

2.6Medical Affairs Force. By the Medical Affairs Program Commencement Date, each of Cubist and Optimer, respectively, will establish the Cubist Medical Affairs Force and the Optimer Medical Affairs Force in accordance with the Medical Affairs Plan. Without limiting the foregoing and notwithstanding anything to the contrary herein or in the Medical Affairs Program Plan, at all times during the Term (a) Cubist shall maintain a Medical Affairs Force consisting of at least […***…] Medical Affairs Representatives, and (b) Optimer shall maintain a Medical Affairs Force consisting of at least […***…] Medical Affairs Representatives, in each case, at full capacity, subject to fluctuation in the ordinary course of business for vacancies, leave, and other ordinary absences; provided, however, that each Party shall use Commercially Reasonable Efforts to fill vacancies within a reasonable period of time.

2.7Responsibility for Forces. Except as otherwise set forth in this Agreement, each Party shall be legally responsible and liable for the actions, omissions and conduct of all of the members of its Sales Force and Medical Affairs Force. Each Party shall also be exclusively responsible for supervising the members of its Sales Force and Medical Affairs Force in all respects.

3.SALES PROMOTION ACTIVITIES

3.1Sales Program Plan. As soon as practicable after the Effective Date, the Parties shall prepare the Sales Program Plan for the Product (the “Sales Program Plan”). The Sales Program Plan shall be consistent with, and shall include, at a minimum, the Initial Sales Program Terms. The Sales Program Plan may be amended by the Joint Steering Committee in accordance with Section 5.2.2.

3.2Sales Force Activities. Commencing on the Sales Program Commencement Date and for the remainder of the Term, each Party shall use Commercially Reasonable Efforts to ensure that its respective Sales Force Promotes the Product in accordance with the Sales Program Plan, including Detailing the Product to the Target Prescribers. Optimer shall also use Commercially Reasonable Efforts to cause its Sales Representatives to Promote (including

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Detailing) the Product to institutions and physicians (other than Target Accounts and Target Prescribers) reasonably likely to be Product customers. In the event that both the Cubist Sales Force and the Optimer Sales Force will Detail the same Target Prescribers pursuant to the Sales Program Plan, personnel from each Sales Force will coordinate their activities with respect to such Target Prescribers in accordance with account plans jointly created by the Parties. Without limiting the foregoing and notwithstanding anything to the contrary herein or in the Sales Program Plan, at all times during the Term: Cubist will direct each of Cubist’s Sales Representatives: (a) to Detail the Product in […***…] made to Target Prescribers, (b) to dedicate […***…], and (c) to Detail the Product […***…]. Cubist will use Commercially Reasonable Efforts to ensure that the Cubist Sales Force […***…].  Notwithstanding anything in this Agreement to the contrary, if Cubist maintains a Sales Force consisting of more Sales Representatives than is required under Section 2.5, Cubist’s obligations under this Section 3.2 shall only apply to the number of Sales Representatives that is required under Section 2.5.

3.3Promotional Medical Education Programs.

3.3.1The Parties may each implement JSC-approved promotional speaker programs concerning the Product directed to Target Prescribers or other medical professionals (“Promotional Medical Education Programs”) in accordance with the Sales Program Plan. […***…] shall bear the expense of any JSC-approved Promotional Medical Education Program that concerns solely the Product.

3.3.2Cubist may implement JSC-approved Promotional Medical Education Programs that are conducted prior to or after a promotional medical education program with respect to Cubicin, which programs are on the same day at the same location (“Combination Promotional Medical Education Programs”); […***…].  […***…] shall […***…] bear the expense of any JSC-approved Combination Promotional Medical Education Program.

3.3.3Neither Party may use any written, printed, electronic, graphic or other material in a Promotional Medical Education Program or in the Product portion of a Combination Promotional Medical Education Program other than (a) the Sales Materials and (b) any other content produced for such a program and approved in advance by the Joint Clearance Committee (clause (b), the “Promotional Medical Education Program Materials”).

3.4Incentive Compensation by Cubist. Subject to Applicable Law, Cubist shall provide to the Cubist Sales Representatives who Detail the Product in the Territory product incentive compensation with respect to the Product. Such Product incentive compensation shall be paid to a Cubist Sales Representative if such Cubist Sales Representative achieves his or her performance target in the Territory with respect to the Product that has been established by Cubist for a given Sales Year. Each Cubist Sales Representative’s Product incentive compensation for a given Sales Year shall be […***…] incentive compensation for such Sales Year, subject to adjustment in

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accordance with Section 8.4. The Parties shall endeavor in good faith, using Commercially Reasonable Efforts, to agree upon a single (i.e., same) sales forecast for the Product to be used by both Parties to establish incentive compensation for their respective Sales Representatives; provided, however, if following good faith negotiations, the Parties have not agreed on such forecast for the Product, then in no event shall the sales forecast for the Product used by either Party in establishing incentive compensation for their respective Sales Representatives be less than the Sales Target for the applicable Sales Year. Notwithstanding anything to the contrary in Section 7.5, in the event Optimer conducts an audit of Cubist records, Optimer shall have the right to review books and records relating to the aggregate incentive compensation for the Sales Representatives, but shall not have the right to review books and records relating to each Sales Representative’s individual incentive compensation.

3.5Sales Materials.

3.5.1Optimer, at its sole expense, will (a) create, develop, produce or obtain, and provide materials to be used by the Sales Forces in connection with their interactions with Third Parties with respect to the Product, including Product-specific Promotional Medical Education Program Materials and (b) submit all such proposed materials that are intended to be used by the Cubist Sales Force to the Joint Clearance Committee for review and approval prior to their use. Optimer agrees to submit materials that are intended to be used exclusively by the Optimer Sales Force to the Joint Clearance Committee for comment as provided in Section 5.3.1. Optimer shall be solely liable and responsible for the content of such materials and for ensuring that such materials comply with Optimer Business Policies.

3.5.2Cubist may, but is not required to, at its sole expense, create, develop, produce or obtain, and provide materials to be used by the Sales Forces in connection with their interactions with Third Parties with respect to the Product; provided, that Cubist shall submit all such proposed materials to the Joint Clearance Committee for review and all such proposed materials must be approved by the Joint Clearance Committee prior to their use by any of the Sales Forces. Cubist shall be solely liable and responsible for the content of such materials (excluding any Optimer Trademark) and for ensuring that such materials comply with Cubist Business Policies.

3.5.3Any materials described in Section 3.5.1 or Section 3.5.2 that are approved by the Joint Clearance Committee in accordance with Section 5.3.4, together with the Product Labels and Inserts, shall be referred to as the “Sales Materials.” Each Party may use any of the Sales Material in connection with Promoting the Product under this Agreement, provided such use is in compliance with the terms of this Agreement and the Sales Program Plan or is otherwise approved by the Joint Clearance Committee. If Optimer elects to use any Sales Material created by Cubist under Section 3.5.2, Optimer shall reimburse Cubist for its reasonable, documented, out-of-pocket cost of producing or obtaining and providing such Sales Material for the Optimer Sales Force. Except as provided in Section 5.3.1, the Parties shall not use any materials in Promoting the Product other than the Sales Materials approved by the Joint Clearance Committee.

3.5.4Optimer shall own all copyright and other right, title and interest in and to all Sales Materials, and Cubist hereby assigns to Optimer any and all interest that Cubist

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may have in the Sales Materials; provided, that Optimer hereby grants to Cubist a non-exclusive, royalty-free license under all copyrights that cover the Sales Materials solely for the purpose of copying, displaying and distributing such Sales Materials to the extent permitted under this Agreement. This license shall automatically and immediately terminate upon the expiration or earlier termination of this Agreement for any reason and shall be non-transferable and non-sublicensable.

3.6Sales Force Training.

3.6.1Sales Training Plan. Each Party shall train all of its Sales Representatives in accordance with the Sales Training Plan (including with respect to Applicable Law and relevant requirements under this Agreement) prior to such Sales Representative performing any Sales Program activities. Except as set forth in Section 3.6.2, […***…] shall be responsible for the costs and expenses of training […***…] Sales Representatives in accordance with this Section 3.6.1.

3.6.2Training Materials.

(a)Optimer, at its sole expense, will (i) create, develop, produce or obtain, and provide, and continually update materials to be used to train the Sales Forces with respect to Promoting the Product and (ii) submit all such proposed materials that are intended to be used by the Cubist Sales Force to the Joint Clearance Committee for review and approval prior to their use. Optimer agrees to submit materials that are intended to be used exclusively by the Optimer Sales Force to the Joint Clearance Committee for comment as provided in Section 5.3.1. Optimer shall be solely liable and responsible for the content of such materials and for ensuring that such materials comply with Optimer Business Policies.

(b)Cubist may, but is not required to, at its sole expense, create, develop, produce or obtain, and provide materials to be used to train the Sales Forces with respect to Promoting the Product; provided, that Cubist shall submit all such proposed materials to the Joint Clearance Committee for review and all such proposed materials must be approved by the Joint Clearance Committee prior to their use by any of the Sales Forces. Cubist shall be solely liable and responsible for the content of such materials (excluding any Optimer Trademark) and for ensuring that such materials comply with Cubist Business Policies.

(c)Any materials described in Section 3.6.2(a) or Section 3.6.2(b) that are approved by the Joint Clearance Committee in accordance with Section 5.3.4 shall be referred to as the “Sales Training Materials.” Each Party may use any of the Sales Training Materials in connection with training its Sales Force under this Agreement, provided such use is in compliance with the terms of this Agreement and the Sales Training Plan or is otherwise approved by the Joint Clearance Committee. If Optimer elects to use any Sales Training Material created by Cubist under Section 3.6.2(b), Optimer shall reimburse Cubist for its reasonable, documented, out-of-pocket cost of producing or obtaining and providing such Sales Training Material for the Optimer Sales Force. Except as provided in Section 5.3.1, the Parties shall not use any materials in training the Sales Forces with respect to Promoting the Product other than the Sales Training Materials approved by the Joint Clearance Committee.

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(d)Optimer shall own all copyright and other right, title and interest in and to all Sales Training Materials, and Cubist hereby assigns to Optimer any and all interest that Cubist may have in the Sales Training Materials; provided, that Optimer hereby grants to Cubist a non-exclusive, royalty-free license under all copyrights that cover the Sales Training Materials solely for the purpose of copying, displaying and distributing such Sales Training Materials to the extent permitted under this Agreement. This license shall automatically and immediately terminate upon the expiration or earlier termination of this Agreement for any reason and shall be non-transferable and non-sublicensable.

3.6.3National Meeting. Without limitation of any other provisions of this Section 3.6, the Parties shall coordinate to provide training of the Sales Forces with respect to the Product. Each Party may participate in Product training conducted at the other Party’s national sales meeting (each, a “National Sales Meeting”) anticipated to be held annually. Such training is intended to be in addition to, not in lieu of, training required by Section 3.6.1. Except as otherwise agreed by the Parties in writing or specified in the Sales Training Plan, […***…] shall bear […***…] costs and expenses associated with preparing for, conducting and participating in a National Sales Meeting, including the costs and expenses associated with the attendance by […***…] Sales Representatives and other personnel at such National Sales Meeting. In the event a Party elects to have its Sales Force attend the other Party’s National Sales Meeting, Optimer and Cubist shall cooperate to prepare and conduct the portion of such meeting relating to the Product.

3.7Samples. The Parties acknowledge and agree that the Sales Program contemplated as of the Effective Date does not include a program for the distribution of samples of the Product and no Cubist Sales Representative shall distribute samples of the Product. If the Parties mutually agree to establish a program for the distribution of samples of the Product, then the Parties shall prepare a Product sample plan that complies with Applicable Law and that will be agreed to in writing by the Parties and, thereafter, the Parties shall distribute samples of the Product only in accordance with such Product sample plan and in compliance with Applicable Law.

4.MEDICAL AFFAIRS PROGRAM

4.1Medical Affairs Program Plan. As soon as practicable after the Effective Date, the Parties shall prepare the Medical Affairs Program Plan for the Product (the “Medical Affairs Program Plan”). The Medical Affairs Program Plan shall be consistent with, and shall include, at a minimum, the Initial Medical Affairs Program Terms. The Medical Affairs Program Plan may be amended by the Joint Steering Committee in accordance with Section 5.2.2.

4.2Medical Affairs Force Activities. Commencing as of the Medical Affairs Program Commencement Date and for the remainder of the Term, the Parties will engage in a field-based medical affairs collaboration focusing on providing scientific support for the Product in accordance with the Medical Affairs Program Plan (the “Medical Affairs Program”) in which each Party shall use Commercially Reasonable Efforts to ensure that their respective Medical Affairs Forces conduct the Medical Affairs Program activities in accordance with the Medical Affairs Program Plan. For regions that will be targeted by both the Cubist Medical Affairs Force and the Optimer Medical Affairs Force pursuant to the Medical Affairs Program Plan, the Parties

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will use Commercially Reasonable Efforts to ensure that personnel from each Medical Affairs Force coordinate their activities with respect to calling on Key Opinion Leaders and other scientific targets within the medical community. Medical Affairs Representatives will use Commercially Reasonable Efforts to call on such targets and will discuss the Product or the Disease State as appropriate in interactions with such targets.

4.3Performance Goals for Cubist Medical Affairs Force. Cubist shall establish, together with its Medical Affairs Representatives, annual field-based goals, and no less than […***…] % of such goals shall relate to the Medical Affairs Program for the Product. Any bonus compensation awarded by Cubist to a Medical Affairs Representative shall be linked to the achievement of such field-based goals of such Medical Affairs Representatives. Notwithstanding anything to the contrary in Section 7.5, in the event Optimer conducts an audit of Cubist records, Optimer shall have the right to review books and records relating to the aggregate bonus compensation amounts awarded to Cubist Medical Affairs Representatives, but shall not have the right to review books and records relating to each Medical Affairs Representative’s individual compensation amounts or bonus compensation.

4.4Medical Affairs Materials.

4.4.1Optimer, at its sole expense, will (a) create, develop, produce or obtain, and provide materials to be used by the Medical Affairs Forces in connection with their interactions with Third Parties with respect to the Product, including a Product slide library, medical information letters, and Product-specific reprints and bibliographies and (b) submit all such proposed materials that are intended to be used by the Cubist Medical Affairs Force to the Joint Clearance Committee for review and approval prior to their use. Optimer agrees to submit materials that are intended to be used exclusively by the Optimer Medical Affairs Force to the Joint Clearance Committee for comment as provided in Section 5.3.1. Optimer shall be solely liable and responsible for the content of such materials and for ensuring that such materials comply with Optimer Business Policies.

4.4.2Cubist may, but is not required to, at its sole expense, create, develop, produce or obtain, and provide materials to be used by the Medical Affairs Forces in connection with their interactions with Third Parties with respect to the Product; provided, that Cubist shall submit all such proposed materials to the Joint Clearance Committee for review and all such proposed materials must be approved by the Joint Clearance Committee prior to their use by any of the Medical Affairs Forces. Cubist shall be solely liable and responsible for the content of such materials (excluding any Optimer Trademark) and for ensuring that such materials comply with Cubist Business Policies.

4.4.3Any materials described in Section 4.4.1 and Section 4.4.2 that are approved by the Joint Clearance Committee in accordance with Section 5.3.4 shall be referred to as the “Medical Affairs Materials.” Each Party may use any of the Medical Affairs Material in connection with the Medical Affairs Program activities under this Section 4, provided such use is in compliance with the terms of this Agreement and the Medical Affairs Program Plan or is otherwise approved by the Joint Clearance Committee. If Optimer elects to use any Medical Affairs Material created by Cubist under Section 4.4.2, Optimer shall reimburse Cubist for its reasonable, documented, out-of-pocket cost of producing or obtaining and providing such

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Medical Affairs Material for the Optimer Medical Affairs Force. Except as provided in Section 5.3.1, the Parties shall not use any materials in conducting Medical Affairs Program activities other than the Medical Affairs Materials approved by the Joint Clearance Committee.

4.4.4Optimer shall own all copyright and other right, title and interest in and to all Medical Affairs Materials, and Cubist hereby assigns to Optimer any and all interest that Cubist may have in the Medical Affairs Materials; provided, that Optimer hereby grants to Cubist a non-exclusive, royalty-free license under all copyrights that cover the Medical Affairs Materials solely for the purpose of copying, displaying and distributing such Medical Affairs Materials to the extent permitted under this Agreement. This license shall automatically and immediately terminate upon the expiration or earlier termination of this Agreement for any reason and shall be non-transferable and non-sublicensable.

4.5Medical Affairs Force Training.

4.5.1Medical Affairs Training Plan. Each Party shall train all of its Medical Affairs Representatives in accordance with the Medical Affairs Training Plan (including with respect to Applicable Law and relevant requirements under this Agreement) prior to such Medical Affairs Representative performing any Medical Affairs Program activities. Except as set forth in Section 4.4.2, […***…] shall be responsible for the costs and expenses of training […***…] Medical Affairs Representatives in accordance with this Section 4.4.1.

4.5.2Training Materials.

(a)Optimer, at its sole expense, will (i) create, develop, produce or obtain, and provide, and continually update materials to be used to train the Medical Affairs Forces with respect to Product and (ii) submit all such proposed materials that are intended to be used by the Cubist Medical Affairs Force to the Joint Clearance Committee for review and approval prior to their use. Optimer agrees to submit materials that are intended to be used exclusively by the Optimer Medical Affairs Force to the Joint Clearance Committee for comment as provided in Section 5.3.1. Optimer shall be solely liable and responsible for the content of such materials and for ensuring that such materials comply with Optimer Business Policies.

(b)Cubist may, but is not required to, at its sole expense, create, develop, produce or obtain, and provide materials to be used to train the Medical Affairs Forces with respect to the Product; provided, that Cubist shall submit all such proposed materials to the Joint Clearance Committee for review and all such proposed materials must be approved by the Joint Clearance Committee prior to their use by the Medical Affairs Forces. Cubist shall be solely liable and responsible for the content of such materials (excluding any Optimer Trademark) and for ensuring that such materials comply with Cubist Business Policies.

(c)Any materials described in Section 4.4.2 or Section 4.5.2(b) that are approved by the Joint Clearance Committee in accordance with Section 5.3.4 shall be referred to as the “Medical Affairs Training Materials.” Each Party may use any of the Medical Affairs Training Materials in connection with conducting the Medical Affairs Program activities under this Section 4, provided such use is in compliance with the terms of this

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Agreement and the Medical Affairs Training Plan or is otherwise approved by the Joint Clearance Committee. If Optimer elects to use any Medical Affairs Training Material created by Cubist under Section 4.5.2(b), Optimer shall reimburse Cubist for its reasonable, documented, out-of-pocket cost of producing or obtaining and providing such Medical Affairs Training Material for the Optimer Medical Affairs Force. Except as provided in Section 5.3.1, the Parties shall not use any materials in training the Medical Affairs Forces with respect to Promoting the Product other than the Medical Affairs Training Materials approved by the Joint Clearance Committee.

(d)Optimer shall own all copyright and other right, title and interest in and to all Medical Affairs Training Materials, and Cubist hereby assigns to Optimer any and all interest that Cubist may have in the Medical Affairs Training Materials; provided, that Optimer hereby grants to Cubist a non-exclusive, royalty-free license under all copyrights that cover the Medical Affairs Training Materials, solely for the purpose of copying, displaying and distributing such Medical Affairs Training Materials to the extent permitted under this Agreement. This license shall automatically and immediately terminate upon the expiration or earlier termination of this Agreement for any reason and shall be non-transferable and non-sublicensable.

4.6Information Requests. Each Party shall respond, as promptly as practicable, to the other Party’s reasonable requests for scientific data, clinical study reports and other information relating to the Product and in the control of such Party, to the extent that the requesting Party reasonably requires such information (a) to answer scientific questions regarding the Product, or (b) to otherwise perform its obligations under this Section 4.

4.7Studies. Optimer shall retain all rights and responsibilities with respect to matters relating to the support for or conduct of investigator initiated studies or any clinical studies, including post-approval studies, or other studies, including health economics and outcomes research and Phase 4 studies, with respect to the Product; provided, that Cubist’s Medical Affairs Representatives may propose or facilitate proposals for investigator-initiated studies and/or health economics and outcomes research for review and consideration by Optimer. Optimer shall, in a timely and reasonable manner, including as reasonably requested by Cubist, keep Cubist informed of the conduct and results of such studies and provide information and data, in each case (i) that is reasonably required by the Medical Affairs Forces in connection with performance of Medical Affairs Program activities under this Section 4 and (ii) solely to the extent that Optimer has the right to provide such results, information and data to Cubist; provided, however, that Optimer shall have no obligation to provide to Cubist any information or data relating to […***…]. If a Cubist Alliance Manager, Cubist Sales Representative, or Cubist Medical Affairs Representative receives any inquiry regarding any such matter described in this Section 4.6, Cubist shall refer the Person making the inquiry to Optimer, in a manner directed by Optimer from time to time.

4.8Expenses. Except as otherwise set forth herein, […***…] shall bear […***…] expenses in conducting activities pursuant to this Section 4.

4.9Additional Services. Subject to mutual agreement by the Parties and an additional funding commitment from Optimer, the Parties may consider the following additional activities

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for the Medical Affairs Representatives to perform during the Term: (a) managing and funding educational grants and registry research support by the Medical Affairs Representatives, (b) providing scientific training services, slide libraries, or publications to Optimer, or (c) administering a drug information service, including development of comprehensive response letters.

5.GOVERNANCE

5.1Alliance Manager.  The Parties shall each designate a single person (each, an “Alliance Manager”) through whom all significant communications (other than regulatory reporting, which shall be governed by Section 9) shall be channeled. The Alliance Manager appointed by each of the Parties shall, itself or in the event that the Alliance Manager is unavailable, through a designee, (a) function as a single point of contact in all substantive communications with the other Party relative to the Program, (b) coordinate all Program activities, (c) represent their respective Parties in matters pertaining to the Program, (d) attend Program coordination meetings between the Parties, and (e) assist the Joint Steering Committee in coordinating meetings of the Joint Steering Committee. Notwithstanding the foregoing, however, the Parties may communicate directly, through each Party’s General Counsel or Chief Compliance Officer, or his or her designee (respectively), with respect to legal and regulatory compliance matters relative to the Program. Each Party may replace its Alliance Manager at any time, upon at least one week’s prior written notice to the other Party.

5.2Joint Steering Committee.

5.2.1The Parties will establish a joint steering committee (the “Joint Steering Committee”) to oversee the activities of the Parties pursuant to this Agreement.

5.2.2The Joint Steering Committee shall be responsible for oversight of the Parties’ activities under this Agreement with respect to the Promotion and Medical Affairs Program activities of the Product in Territory. Without limiting the foregoing, subject to Section 5.2.5, the Joint Steering Committee shall: (i) review and approve any proposed updates or amendments to the Sales Program Plan (including amending the Target Accounts) or the Medical Affairs Program Plan; (ii) have the right to modify or suspend the Parties’ obligations to Promote the Product in accordance with Section 3 in the event that a Stockout occurs (e.g., requiring Program Employees to modify Calls to explain the Stockout to, and manage the expectations of, Target Accounts); (iii) review and approve the number, general content and targeting approach of Promotional Medical Education Programs, (iv) review and approve the number and targeting approach of Combination Promotional Medical Education Programs and review and approve the general content of the Product portion of such programs, (v) review and approve any updates or amendments to the Training Plans; (vi) resolve any disputes arising among the Sales Forces or the Medical Affairs Forces; (vii) provide a forum for discussion and information exchange regarding the Promotion of the Product; and (viii) undertake all other responsibilities deemed necessary in connection with the management of the activities of the Parties hereunder.

5.2.3The Joint Steering Committee will be comprised of (a) one senior commercial executive from each Party, (b) one senior medical affairs executive from each Party,

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and (c) one other senior executive from each Party. Each Party may change its Joint Steering Committee members at any time by written notice to the other Party. […***…] shall appoint one of its Joint Steering Committee members as chairman of the Joint Steering Committee, whose role shall be to convene and preside at meetings of the Joint Steering Committee, but the chairman shall not be entitled to prevent items that are within the purview of the Joint Steering Committee’s responsibilities from being discussed or to cast any tie-breaking vote.

5.2.4The Joint Steering Committee will hold meetings at such frequency as determined by the Joint Steering Committee members, but no less than […***…] during the Term. Such meetings may be in person, via videoconference, or via teleconference; provided that at least […***…] of such meetings shall be held in person. The location of in-person Joint Steering Committee meetings will alternate between Optimer’s offices in Jersey City, New Jersey and Cubist’s offices in Lexington, Massachusetts, unless the Parties otherwise agree. At least seven days prior to each Joint Steering Committee meeting, each Party shall provide written notice to the other Party of agenda items proposed by such Party for discussion or decision at such meeting, together with appropriate information related thereto. Reasonably detailed written minutes of each Joint Steering Committee meeting will be kept by an Optimer member of the Joint Steering Committee and a Cubist member of the Joint Steering Committee, on a rotating basis, and will reflect material decisions made at such meeting. Meeting minutes will be sent to each member of the Joint Steering Committee for review and approval within ten days after a meeting. The Parties will agree on the minutes of each meeting promptly, but in no event later than the next meeting of the Joint Steering Committee. Each Party’s Alliance Manager may attend any meeting of the Joint Steering Committee in a non-voting capacity. Each Party may, with the consent of the other Party, such consent not to be unreasonably withheld or delayed, invite other non-member, non-voting representatives of such Party to attend meetings of the Joint Steering Committee.

5.2.5The Joint Steering Committee shall take action by consensus of its members present at a meeting (provided that at least one member from each Party is present at such meeting), with Optimer and Cubist each having, collectively, among its respective members, one vote irrespective of the number of members in attendance. If the Joint Steering Committee cannot reach consensus with regard to any matter to be decided by the Joint Steering Committee within ten days after such matter has been brought to the Joint Steering Committee’s attention, then such matter shall be referred to the Chief Executive Officer of Optimer and the Chief Operating Officer of Cubist, or their designees (the “Executives”) for resolution. If the Executives cannot resolve the issue within ten days after the matter has been brought to their attention, then, subject to Section 9.5.2, […***…] with respect to all matters relating to the Sales Program activities (including Promotion) and Medical Affairs Program activities and all other matters relating to the Product in the Territory, including the marketing strategy for the Product (e.g., decisions regarding use of the Product Trademarks, Product packaging, and other brand positioning and messaging), and the decision of […***…] with respect to any such matter shall be […***…] (subject to Section 9.5.2) and shall […***…], except that […***…] may not (a) amend the Sales Program Plan or the Medical Affairs Program Plan in such a manner as would impose any performance or financial obligations on […***…] that were not present in or contemplated by the Initial Sales Program Terms or the Initial Medical Affairs Program Terms without the consent of […***…], or (b) impose any obligation on […***…]

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that would be in violation of the […***…] Business Policies. Notwithstanding the foregoing, if […***…] requests and […***…] does not consent to support a portion of the Sales Program Plan that would otherwise be […***…] responsibility under the Initial Sales Program Terms, […***…] will use Commercially Reasonable Efforts to provide such support, subject to written agreement by the Parties as to reasonable […***…] efforts which will be specified in the Sales Program Plan.

5.2.6Each Party shall bear all its own costs, including expenses incurred by the members nominated by it, in connection with their activities as members of the Joint Steering Committee.

5.3Joint Clearance Committee.

5.3.1The Parties will establish a Joint Clearance Committee (the “Joint Clearance Committee”) that will be responsible for reviewing and approving all Sales Materials, Sales Training Materials, Medical Affairs Materials and Medical Affairs Training Materials that, in each case, are intended to be used by any of Cubist’s Program Employees, and for ensuring that such materials comply with Applicable Law. With respect to any Sales Program materials or Medical Affairs Program materials (including training materials) that are intended to be used exclusively by Optimer’s Program Employees, and not by any of Cubist’s Program Employees, Optimer shall submit such materials to the Joint Clearance Committee for review and comment, but no such materials need be approved by the Joint Clearance Committee or the Joint Steering Committee, and Optimer’s Program Employees may use, in Optimer’s sole discretion, any such materials approved internally by Optimer.

5.3.2The Joint Clearance Committee will be comprised of an equal number of representatives from each Party, and each meeting of the Joint Clearance Committee will include representatives from each Party who have the requisite experience and seniority to make decisions on behalf of such Party with respect to the matters being considered at such meeting (whether related to Sales Program materials or Medical Affairs Program materials) including, as applicable, representatives from each Party’s legal, regulatory affairs, medical and/or marketing teams. Each Party may change its Joint Clearance Committee members at any time by written notice to the other Party. […***…] shall appoint one of its Joint Clearance Committee members as chairman of the Joint Clearance Committee.

5.3.3The Joint Clearance Committee will hold meetings on an as-needed basis in order to promptly review and approve Sales Materials, Sales Training Materials, Medical Affairs Materials and Medical Affairs Training Materials. Such meetings may be in person, via videoconference, or via teleconference. The location of in-person Joint Clearance Committee meetings will alternate between Optimer’s offices in Jersey City, New Jersey and Cubist’s offices in Lexington, Massachusetts, unless the Parties otherwise agree.

5.3.4The Joint Clearance Committee shall take action by consensus of its members present at a meeting (provided that at least one member from each Party is present at such meeting), with Optimer and Cubist each having, collectively, among its respective members, one vote irrespective of the number of members in attendance. If the Joint Clearance Committee cannot reach consensus with regard to any matter to be decided by the Joint

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Clearance Committee within ten days after such matter has been brought to the Joint Clearance Committee’s attention, then such matter shall be referred to the Joint Steering Committee and shall be decided in accordance with the procedures set forth in Section 5.2.5.

5.3.5Each Party shall bear all its own costs, including expenses incurred by the members nominated by it, in connection with their activities as members of the Joint Clearance Committee.

6.OPTIMER RESPONSIBILITIES.

6.1Manufacture and Supply. Optimer shall, at its sole cost and expense, have the sole responsibility for the manufacture and supply of the Product in the Territory. Optimer shall use Commercially Reasonable Efforts to manufacture or have manufactured and to supply or have supplied the quantities of the Product required to meet market demand in the Territory during the Term. Optimer shall ensure that Product for sale or distribution in the Territory is manufactured, filled, finished, packaged, labeled, tested, stored, distributed, imported, sold and offered for sale in material compliance with the Product NDA, Applicable Law, Optimer’s applicable Business Policies and the requirements of this Agreement (including, with respect to the manufacture of the Product, in compliance with good manufacturing practices (the current standards for manufacture, as set forth in the Act)).

6.2Stockout Notice. Optimer shall notify in writing Cubist as promptly as practicable of the occurrence of any Stockout.

6.3Other Responsibilities. At all times following the beginning of the First Sales Year, the following Provisions shall apply:

6.3.1Logistics Provider. Optimer shall use Commercially Reasonable Efforts to engage a third party logistic provider capable of receiving orders from wholesalers and other customers (including via electronic data interchange, telephone, and fax) and shipping product to customers within performance standards (including with respect to delivery, and pick, pack and ship errors) customary for an oral prescription medication with similar expected sales volume and growth potential.

6.3.2Inventory. Optimer shall use Commercially Reasonable Efforts to maintain the Product stocked in inventory at a network of major wholesalers capable of supplying hospital, retail, and institutional pharmacy customers in the Territory by the next Business Day following order receipt.

6.3.3Alternative Supply Programs. Optimer shall use Commercially Reasonable Efforts to maintain a program that supports continuity of Product supply for patients who would not be able to fill a retail prescription following discharge from a hospital where they had been receiving the Product (e.g., through a specialty pharmacy or a sample program).

6.3.4Website. During the Term, Optimer shall maintain a website for the Product in the Territory that is consistent with the Sales Materials and the Sales Program Plan. Optimer shall update such website, in a reasonably timely manner, so that such website remains consistent with the then current Sales Materials and the then current Sales Program Plan. The

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Joint Clearance Committee will review and approve all content for such website. Cubist shall have the right at its option to include a hyperlink to such website addresses for the Product on Cubist’s website.

6.3.5Orders for Product; Terms of Sale. Optimer shall have the sole responsibility and right to fill orders with respect to the Product. Cubist shall not take orders for the Product, but if for any reason Cubist should receive sales orders for the Product, Cubist shall promptly forward such orders to Optimer or to Optimer’s designee, as instructed by Optimer. Subject to Optimer’s obligation set forth in the second sentence of Section 6.1, all orders for the Product shall be subject to Optimer’s acceptance, in its sole discretion, and Optimer may cancel any order for the Product, or any part thereof, at any time after acceptance without thereby incurring any liability to Cubist. (Nothing in the foregoing is intended to limit Optimer’s obligations or Cubist’s rights under Section 15.2.) Optimer shall be solely responsible for responding to requests from physicians for individual patients who need the Product but are unable to afford it. Any such request received by Cubist should be forwarded to Optimer for processing in such manner as may be reasonably requested by Optimer in writing from time to time. Except as provided in the immediately preceding sentence, Cubist shall have no obligation with respect to any patient assistance program of Optimer with respect to the Product. Optimer shall have the sole right and responsibility for establishing and modifying the terms and conditions of the sale of the Product, including the price at which the Product will be sold, whether the Product shall be subject to any trade or quantity discounts, whether any discount shall be provided for payments on accounts receivable, whether the Product shall be subject to rebates, returns and allowances or retroactive price reductions, the channels of distribution of the Product, and whether credit is to be granted or refused in connection with the sale of the Product.

6.4Contracting Matters. Without limitation of Section 6.3.5, Optimer shall be solely responsible for all contracting with respect to the sale of the Product, including the setting of pricing for the Product; provided that Optimer shall notify in writing Cubist promptly following any change in the […***…] of the Product. Optimer shall be solely responsible for complying with pricing requirements with respect to the Product in the Territory under Applicable Law (and related reporting, as set forth in Section 9.1.2) and Cubist shall have no liability or responsibility with respect thereto. Optimer shall be responsible for activities relating to government or managed care market segments, including (i) contract strategy, (ii) contract creation, (iii) government reporting and rebate processing, (iv) contract compliance, monitoring and audits, (v) contract administration and claims processing, and (vi) any other matters related to managed care. Optimer shall maintain reasonably adequate field coverage by its group purchasing organization consisting of at least […***…], subject to fluctuation in the ordinary course of business for vacancies, leave, and other ordinary absences; provided, however, that Optimer shall use Commercially Reasonable Efforts to fill vacancies within a reasonable period of time.

7.REPORTING AND AUDITS

7.1Reporting by Cubist. Subject to Section 7.3, within […***…] days following the end of each Sales Quarter, Cubist shall furnish Optimer with a written report that provides information about Cubist’s Promotion and Medical Affairs Program activities for such Sales Quarter, including the following information substantially in the form set forth in Exhibit 7.1: (a) the […***…]

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[…***…] made by the Cubist Sales Force, […***…] made by the Cubist Sales Force to […***…], (b) the […***…] conducted by Cubist, including in each case, the […***…], and (c) the […***…] the Cubist Medical Affairs Force and […***…] (each, a “Cubist Report”). In addition, Cubist shall furnish Optimer with a written report, substantially in the form set forth in Exhibit 7.1 of the aggregate Product incentive compensation paid to Cubist’s Sales Representatives within […***…] days following the date on which such incentive compensation is paid to such Sales Representatives.

7.2Reporting by Optimer.  Within […***…] after the end of each of the applicable time periods specified below (or, with respect to any time period less than […***…], […***…] days after the end of each of the applicable time periods specified below), Optimer shall furnish Cubist with a report (in any format or on any medium used by Optimer in its ordinary course of business) containing the following information with respect to the Territory and with respect to such time period (each, an “Optimer Report”):

7.2.1on a weekly basis (subject to reasonable delays due to holidays and delays in receipt of data by Optimer), to the extent tracked and reported by Optimer for its internal management purposes, the quantity of any Product shipped from any factory by Optimer and the destinations of any such shipments;

7.2.2on a monthly basis, the Product unit sales by Optimer or any of its Affiliates to distributors and other Third Parties;

7.2.3on a monthly basis, the amount and a detailed calculation of the Gross Sales and Net Sales (including all deductions (by category) included in the calculation thereof);

7.2.4on a Sales Yearly basis, the amount and a detailed calculation of the Annual Gross Profit Share Amount Due; and

7.2.5on a Sales Quarterly basis, (a) the […***…] made by the Optimer Sales Force, […***…] made by the Optimer Sales Force […***…], in each case, to the extent […***…], (b) the […***…], including in each case, the […***…], (c) […***…], and (d) […***…] the Optimer Medical Affairs Force and […***…], in each case, to the extent […***…].

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7.3Other Information. Each Party shall use Commercially Reasonable Efforts to respond to any reasonable requests from the other Party made through the Joint Steering Committee for other relevant data and information relating to this Agreement, to the extent such information is tracked by Optimer.

7.4Information Technology. Cubist shall have the sole right and responsibility to determine and provide, at its expense, the information technology systems (the “Systems”) to be employed by the Cubist Sales Force in the performance of Cubist’s responsibilities under this Agreement with respect to the Promotion of the Product. Cubist shall use Commercially Reasonable Efforts to implement Systems with the capacity and ability to collect the information required to comply with Cubist’s reporting obligations pursuant to Section 7.1 hereunder as promptly as practicable following the Effective Date.

7.5Audit Rights.

7.5.1Each Party shall maintain complete and accurate books and records in accordance with standard industry practice regarding its activities pursuant to this Agreement, for three years from the date of the creation of the applicable records.

7.5.2Upon reasonable advance notice to the other Party, each Party shall be entitled, at its expense, not more than […***…] in any […***…], to have access to the foregoing records of the other Party, solely if and to the extent necessary to review such books and records to determine whether the other Party has performed its obligations pursuant to this Agreement. An audit shall take place under this Section 7.5 during normal business hours, on such days and at such times as mutually agreed upon by the Parties, and in a manner not disruptive to the business operations of the audited Party. Should the auditing Party discover information indicating, in its reasonable opinion, an inaccuracy in any report provided by the other Party pursuant to this Agreement or a material breach of either Party’s obligations under this Agreement, the auditing Party shall so notify the other Party in writing thereof (and shall set out its preliminary conclusions in reasonable detail), provided that such notice shall not constitute notice of a material breach for purposes of Section 16 unless such notice is expressly sent pursuant to Section 16. The audited Party shall advise the auditing Party in writing within 30 days of receiving such notice should the audited Party disagree with the determination of the auditing Party. The auditing Party shall bear all expenses in connection with any audit under this Section 7.5 unless such audit reveals a […***…] by the audited Party, in which case the audited Party shall bear such expenses. For clarification, this Section 7.5 shall not apply to audits of Optimer’s financial books and records which shall be subject to the provisions of Section 8.4.

8.CONSIDERATION

8.1Service Fee.  Within ten days following the Sales Program Commencement Date, Optimer will pay to Cubist a non-refundable amount of $3,750,000 (the “Quarterly Amount Due”). Commencing on the first day of the second Sales Quarter of the First Sales Year, and on the first day of each subsequent Sales Quarter during the First Sales Year and the Second Sales Year, Optimer will pay to Cubist a non-refundable amount equal to the Quarterly Amount Due.

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8.2Sales Target Bonuses. If Net Sales of the Product in the Territory for a given Sales Year meet or exceed the Sales Target for such Sales Year, then Optimer will pay to Cubist the following sales bonuses for such Sales Year (each, a “Sales Target Bonus”) within 15 days following the end of such Sales Year:

	Sales Target Bonus
First Sales Year	$	5,000,000
Second Sales Year	$	12,500,000

8.3Promotion Profit Share.  Within 30 days following the end of the First Sales Year and the Second Sales Year, Optimer will pay to Cubist […***…] of Gross Profit attributable to any Net Sales in excess of the Sales Target for such Sales Year (“Annual Gross Profit Share Amount Due”). Concurrently with paying the Annual Gross Profit Share Amount Due, Optimer will submit to Cubist the report required by Section 7.2.4.

8.4Consequences of a New Cubist Product. Beginning upon the date that is […***…] following the first day of the First Sales Year, if Cubist engages in the promotion of a product other than Cubicin or the Product, Cubist […***…]. In the event that Cubist […***…] set forth in this Section 8.4, […***…]. For example, if Cubist […***…] to […***…] (a relative […***…]), the […***…].

8.5Payments; Records; Audits.

8.5.1Payments due to a Party under this Agreement shall be made in U.S. dollars by, at such other Party’s option, check or wire transfer in immediately available funds to an account designated by such other Party.

8.5.2Each Party shall pay interest on any amounts overdue under this Agreement at a rate of […***…] percent of the overdue payment per month, or, if lower than […***…] percent of the overdue payment per month, the highest interest rate permitted under Applicable Law.

8.5.3Optimer shall keep and maintain complete and accurate books and records sufficient to support and confirm the calculation of Annual Gross Profit Share Amount Due, Gross Sales and Net Sales hereunder and shall retain such books and records for a period of at least three years after the end of the applicable Sales Year.

8.5.4Not more than […***…] every […***…], Cubist may elect to have an audit conducted with respect to Optimer’s determination of the Annual Gross Profit Share Amount Due, Gross Sales and Net Sales for a given Sales Year; provided, that such audit may not be conducted for any Sales Year more than […***…] years after the end of such Sales Year. In

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connection with an audit, Cubist shall engage an independent nationally recognized accounting firm mutually acceptable to Optimer and to Cubist. The expenses of any independent accounting firm engaged in connection with this Section 8.5.4 shall be borne by Cubist, except that Optimer shall bear such expenses in the case in which the amount of the Annual Gross Profit Share Amount Due for the applicable period, as reported by Optimer, is less than […***…] of the amount of the Annual Gross Profit Share Amount Due, as determined by such accounting firm. Optimer shall provide such accounting firm conducting any audit pursuant to this Section 8.5.4 access to Optimer’s books and records and its calculations solely to the extent necessary to confirm the amounts of the Annual Gross Profit Share Amount Due, Gross Sales or Net Sales and the calculations thereof, including for determining the amounts payable to Cubist under this Agreement. The decision of the independent accounting firm shall be final and binding.

9.ADVERSE EVENT REPORTING, REGULATORY MATTERS, PRODUCT INFORMATION AND COMPLIANCE

9.1Regulatory Reporting and Related Matters.

9.1.1Optimer shall be solely responsible for the Product NDA during the Term. Except to the extent required by Applicable Law, Cubist shall not take any action concerning any application, registration, authorization or approval under which the Product is sold.

9.1.2Optimer shall be solely responsible for preparing and making all reports, submissions and responses to Agencies, including DDMAC (the FDA’s Division of Drug Marketing, Advertising, and Communications), concerning the Product, including reporting Adverse Events and Field Alerts and other pharmacovigilance reports and including price reporting with respect to the Product required by Applicable Law, each in conformance with Applicable Law.

9.1.3Notwithstanding Sections 9.1.1 and 9.1.2, at Cubist’s expense and with respect to the Product:

(a)Cubist shall have the right to make such reports as are necessary for Cubist to comply with all applicable laws, rules, regulations and requirements of the FDA or any other Agencies applicable to it, and

(b)Cubist shall be responsible for making any reports required by any Applicable Law (including any law in any state, territory or possession in the Territory) that requires the reporting of expenditures by or on behalf of Cubist or its Affiliates under this Agreement, including the reporting of gifts, fees, payments, and other items of value provided by or on behalf of Cubist or its Affiliates, including for the purpose of promoting, marketing or advertising the Product; provided however, that upon the request of Cubist, Optimer shall provide to Cubist, in a timely manner, such information in the control of Optimer that is required to be included in any such report. Optimer shall be responsible for making any reports required by any Applicable Law (including any law in any state, territory or possession in the Territory) that requires the reporting of expenditures by or on behalf of Optimer or its Affiliates under this Agreement, if any, including the reporting of gifts, fees, payments, and other items of value

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provided by or on behalf of Optimer or its Affiliates, including for the purpose of promoting, marketing or advertising the Product.

9.1.4Without limitation of the Parties’ obligations under Section 9.1.3(b), upon the request of a Party, the other Party shall provide to the requesting Party, in a timely fashion, such information and data concerning the Product in its control that is requested by the requesting Party and is required for the requesting Party to meet its reporting obligations under Applicable Law; provided that the other Party has the right to disclose such information to the requesting Party.

9.1.5Except with respect to communications with Agencies concerning the Product in connection with the reports that Cubist is required to make under Section 9.1.3(b), to the extent permitted by Applicable Law, and to the extent practicable given the time period within which any such communication is required to be made, Cubist shall provide Optimer with reasonable advance written notice of, and an opportunity to discuss in good faith, any communications concerning the Product with any Agency proposed to be made by Cubist in advance thereof. Cubist shall promptly provide notice to Optimer of any communications that it has with any Agency concerning the Product and if reasonably requested by Optimer, shall, to the extent permitted by Applicable Law, send Optimer copies of written communications or meeting minutes with respect to such communications (but, for clarity, Cubist may exclude any minutes or information contained therein that are subject to attorney client privilege).

9.1.6Except as otherwise set forth in or contemplated by this Agreement, Optimer shall be solely responsible for (i) taking all actions and conducting all communication with all Third Parties with respect to the Product, including responding to all Product Quality Complaints with respect thereto, including complaints related to tampering or contamination, and (ii) investigating all Product Quality Complaints, Adverse Events and Field Alerts with respect to the Product. Cubist may notify a Third Party that it will report information regarding Product Quality Complaints, Adverse Events and Field Alerts about the Product to Optimer, but, subject to Section 9.1.3, may not otherwise communicate with any Third Party regarding any such matter. Cubist shall, at Optimer’s expense, cooperate with Optimer’s reasonable requests and use its reasonable efforts to assist Optimer, as may be reasonably requested by Optimer, in connection with (A) preparing any and all reports with respect to the Product in the Territory for submission to any Agency, (B) preparing and disseminating communications with respect to the Product in the Territory to Third Parties, to the extent relating to Cubist’s obligations hereunder, and (C) investigating and responding to any Product Quality Complaint or Adverse Event related to the Product in the Territory.

9.1.7Each Party shall comply with Applicable Law in connection with collection of information regarding, and reporting of, Adverse Events.

9.1.8Cubist shall direct its Program Employees to provide notice to Optimer by the end of the […***…] after the time they become aware of an Adverse Event associated with use of the Product (whether or not the reported effect is (i) described in the Product Labels and Inserts or the published literature with respect to the Product or (ii) determined to be attributable to the Product) of any information in or coming into their possession or control concerning such Adverse Event by contacting such number as Optimer

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may designate from time to time (which unpublished number is not to be provided by Cubist to Third Parties) 8:00 a.m. — 6:00 p.m. ET, Monday through Friday, excluding holidays (or such other time periods as Optimer may designate from time to time), or by completing the Adverse Event Report Form(s) provided by Optimer and submitting such form to Optimer (which form, at the election of Optimer, may be provided and or required to be submitted in electronic form). Cubist may also provide a published number as Optimer may designate from time to time to Third Parties for such Third Parties to contact the Optimer Information Center directly (provided that the foregoing shall not limit Cubist’s obligations set out above in this Section in the event that it becomes aware of an Adverse Event).

9.1.9Cubist shall direct its Program Employees to notify Optimer by the end of the […***…] after the time they become aware of any information that might necessitate the filing by Optimer of a field alert report, as required under 21 C.F.R. § 314.81(b)(1), as such regulation may be amended from time to time, (a “Field Alert”) by contacting such number as Optimer may designate from time to time (which unpublished number is not to be provided by Cubist to Third Parties) 8:00 a.m. — 6:00 p.m. ET, Monday through Friday, excluding holidays (or such other time periods as Optimer may designate from time to time). Cubist may also provide a published number as Optimer may designate from time to time to Third Parties for such Third Parties to contact the Optimer Information Center directly (provided that the foregoing shall not limit Cubist’s obligations set out above in this Section in the event that it becomes aware of any information that might necessitate the filing by Optimer of a Field Alert).

9.1.10Cubist shall direct its Program Employees to notify Optimer by the end of the […***…] after they become aware of any Product Quality Complaint associated with use of the Product of any information in or coming into their possession or control concerning such Product Quality Complaint by contacting such number as Optimer may designate from time to time) (which unpublished number is not to be provided by Cubist to Third Parties) 8:00 a.m. — 6:00 p.m. ET, Monday through Friday, excluding holidays (or such other time periods as Optimer may designate from time to time). Cubist may also provide a published number as Optimer may designate from time to time to Third Parties for such Third Parties to contact the Optimer Information Center directly (provided that the foregoing shall not limit Cubist’s obligations set out above in this Section in the event that it becomes aware of an Adverse Event).

9.1.11Optimer shall provide adverse drug experience information regarding the Product to Cubist to the extent Optimer provides such information to its own Sales Representatives and Medical Affairs Representatives or it is required to do so by Applicable Law. Optimer shall also notify Cubist in writing by the end of the […***…] after receipt of any formal communication received by Optimer from the FDA or any other Agency regarding any threatened or pending action that may affect the safety or efficacy claims of the Product or the continued marketing of the Product. Optimer shall provide to Cubist all safety information with respect to the Product in the possession of Optimer or its Affiliates and mutually agreed by the Parties to be necessary or useful for the Cubist Sales Force to Promote the Product pursuant to this Agreement or to respond to requests for medical information pursuant to Section 9.4.5.

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9.1.12Optimer shall provide to Cubist copies of any drug information standard response letters that relate to the Product in the Territory and any updates made to such response letters reasonably promptly after such letters and updates are generated, which response letters and updates may be used by Cubist’s Medical Affairs Representatives and Sales Representatives in connection with the Program activities under this Agreement. Without limitation of Section 13 (including with respect to the exceptions set forth in Section 13.2 and authorized disclosures pursuant to Section 13.3), in no event shall Cubist provide any such letters (or updates) to any Third Party except as contemplated by this Agreement.

9.1.13Notwithstanding anything in Section 3.6 to the contrary, each Party shall be responsible for training, at its expense, its own Sales Representatives and Medical Affairs Representatives regarding Adverse Event, Field Alert, Product Quality Complaint and Product Information Request reporting requirements of Optimer with respect to the Product in accordance with this Agreement and shall maintain records regarding such training.

9.1.14Cubist shall put in place procedures and protocols that shall be actively managed by Cubist to ensure that all relevant information regarding the matters referred to in this Section 9.1 that come to the attention of any member of the Cubist Sales Force or Cubist Medical Affairs Force is promptly conveyed to Cubist so that Cubist can comply with its reporting obligations hereunder.

9.1.15Optimer shall have sole discretion regarding safety matters with respect to the Product, including determining whether to conduct a Product recall or withdrawal.

9.2Threatened Agency Action. Each Party shall give written notice to the other Party’s Regulatory Affairs Department, with a copy to the other Party’s General Counsel, as promptly as practicable (but in no event later than […***…] Business Days) after becoming aware of the applicable occurrence, of (a) any threatened or pending investigation by an Agency, including the FDA, Federal Trade Commission, U.S. Department of Health and Human Services, or (b) any threatened or pending claims or actions by any Third Parties, including any Agency, including any such claims or actions that (i) relate to any product liability claim, or sales or promotional activities, or (ii) allege violations of (A) the Act or other Applicable Law, including any federal or state anti-kickback laws, or (B) the federal False Claims Act, in each case (a) and (b), that relate to the Product in the Territory and may affect the safety or efficacy claims of the Product or the continued marketing and Promotion of the Product. Upon receipt of any such information, the other Party may consult with such notifying Party in an effort to arrive at a mutually acceptable procedure for taking appropriate action; provided, however, that nothing in this Section 9.2 shall restrict such notifying Party’s ability to make a timely report of such matter to any Agency or take other action that it deems to be required by Applicable Law, subject to Section 9.1.

9.3Compliance Program. Each Party, consistent with good practice, shall maintain a corporate compliance program that will include a mechanism for its employees to report, anonymously if they choose, any concerns about potential illegal activity, and that such Party will investigate any such reports. Each Party shall give written notice to the other Party’s Chief Compliance Officer, with a copy to the other Party’s General Counsel, of the substance of any such report that relates to the subject of this Agreement within a reasonable time (but in no event

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later than […***…] Business Days) after it is received, and before reporting any such activity to any Agency, unless such Party concludes in good faith that doing so would violate Applicable Law or would compromise such Party’s ability to complete an appropriate investigation. Each Party shall in any case inform the other Party of the result of the investigation (unless such Party concludes in good faith that doing so would violate Applicable Law) within 5 Business Days after learning of the result. Without limiting the foregoing, each Party’s corporate compliance program shall also include, and in addition to the training required pursuant to Section 3.6 and Section 4.4, each Party shall carry out, a broad training program in ethics and compliance with Applicable Law.

9.4Product Information.

9.4.1Each Party shall respond, as promptly as practicable, to the other Party’s requests for information relating to Product and in the control of such Party, to the extent that the requesting Party reasonably requires such information to comply with Applicable Law or to perform its obligations under this Agreement.

9.4.2Optimer shall provide to Cubist information sufficient to allow the Sales Representatives to discuss Product pricing consistent with the Training Materials and Applicable Law.

9.4.3Each Party shall direct (a) its Sales Representatives and Medical Affairs Representatives to make only those statements and claims regarding the Product, including as to efficacy and safety, that are consistent with and within the scope of the Sales Program Materials and the Medical Affairs Materials, (b) its Sales Representatives to Detail the Product in a fair and balanced manner, (c) its Sales Representatives and Medical Affairs Representatives to use the Sales Program Materials and Medical Affairs Materials, respectively, in each case as approved by the Joint Clearance Committee and without any addition, deletion or other modification and in a manner consistent with the Sales Program Plan, the Medical Affairs Program Plan and all Applicable Law, and (d) its Program Employees to not provide any Off-Label Information to any Third Party, other than as permitted under Section 9.4.4. Neither Party shall, and each Party shall instruct its Sales Representatives and Medical Affairs Representatives not to, make any knowingly untrue or misleading statements or comments about (i) the Product, or (ii) the other Party or its Affiliates or any of their respective employees.

9.4.4Notwithstanding anything in this Agreement to the contrary, no Program Employee may respond to or otherwise communicate with any Target Prescriber or other Third Party with respect to any Off-Label Information (except that Program Employees may respond to say that the information the Third Party desires to discuss is Off-Label Information or that they cannot respond) with the exception that that the Medical Affairs Representatives may respond to unsolicited inquiries made to a Party by medical professionals with respect to any Off-Label Information in a manner consistent with Applicable Law and such Party’s Business Policies.

9.4.5Optimer shall have the exclusive right to respond in the ordinary course of its business to all questions or requests for information about the Product made by any medical professionals or any other Person to the Sales Representatives or Medical Affairs

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Representatives, that (i) warrant a response beyond the understanding or knowledge of the Sales Representatives or Medical Affairs Representatives, as applicable, or (ii) are outside the scope of the Sales Materials or Medical Affairs Materials (including any questions or requests for information relating to any Off-Label Information) (each, a “Product Information Request”). Cubist shall promptly communicate all Product Information Requests to Optimer as follows: by telephone at such number as Optimer may designate from time to time (which unpublished number is not to be provided by Cubist to Third Parties), 8:00 a.m. — 6:00 p.m. ET, Monday through Friday, excluding holidays (or such other time periods as Optimer may designate from time to time), or by completing an electronic information request form at such website address as Optimer may designate from time to time. Cubist shall have the right at its option to include a hyperlink to such website address on Cubist’s internal website for the Product in a form and manner to be mutually agreed upon by the Parties (such agreement not to be unreasonably withheld, conditioned or delayed). Cubist may also provide a published number as Optimer may designate from time to time to medical professionals (and any other Persons who make any Product Information Requests) for such Persons to contact Optimer directly (provided that the foregoing shall not limit Cubist’s obligations set out above in this Section 9.4.5 with respect to any Product Information Requests). Cubist may at its option require a signed document from any Person making an unsolicited inquiry before accepting the inquiry.

9.4.6In connection with the Program, including the Promotion of the Product, Cubist may inform Target Prescribers or other medical professionals that they may contact Optimer at such number as Optimer may designate from time to time regarding questions or requests for information about the Product.

9.5Compliance with Laws and Policies.

9.5.1Each Party shall perform all of its obligations under this Agreement in compliance with (i) Applicable Law, (ii) applicable Employment Law, (iii) Regulatory Approvals for the Product, (iv) Product Labels and Inserts, and (iii) the Business Policies of such Party.

9.5.2Notwithstanding anything in this Agreement to the contrary, neither Party shall be required to take any action if such Party reasonably determines, based on the advice of legal counsel or other appropriate experts, that such action would violate any Applicable Law, including any such action involving the use or dissemination of any Sales Materials or Medical Affairs Materials.

10.RETURNED/RECALLED PRODUCT

10.1Returned Product. Optimer shall have the sole responsibility and right to accept returned Product. Except as directed by Optimer pursuant to Section 10.2, Cubist shall not solicit the return of Product. If Cubist receives an inquiry from a Third Party regarding Product returns, Cubist shall instruct such Third Party to return the Product in accordance with Optimer’s return policy for the Product, as such policy is provided to Cubist from time to time. If, for any reason, Cubist should receive any returned Product, Cubist shall promptly notify Optimer in writing. Any Product returned to Cubist shall be shipped by Cubist to Optimer’s designated facility, with shipping costs to be reimbursed to Cubist by Optimer. Cubist may advise the customer who

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made the return that the Product has been returned to Optimer. Cubist shall fully complete and deliver to Optimer the Optimer Return Authorization Form provided by Optimer to Cubist with respect to any returned Product received by Cubist and shipped to Optimer pursuant to this Section 10.1.

10.2Recalled Product. At Optimer’s reasonable request, Cubist shall assist Optimer in obtaining and receiving the Product in the event the Product is recalled or withdrawn from the market, and Optimer shall reimburse Cubist for all documented out-of-pocket costs and expenses incurred by Cubist in taking such actions.

11.INDEPENDENT CONTRACTOR STATUS OF CUBIST, INCLUDING THE SALES FORCES

The status of Cubist under this Agreement shall be that of an independent contractor. Cubist shall not have the right to enter into any agreements on behalf of Optimer, nor shall it represent to any Person that it has any such right or authority. The Cubist Sales Force and the Cubist Medical Affairs Force shall not be, and shall not be considered to be, “employees” or “joint employees” of Optimer for any purpose. Cubist shall be solely responsible for determining all conditions of employment of the Cubist Sales Force and Medical Affairs Force. Cubist shall be responsible for the means, manner, mode and methods of performing its activities hereunder, subject to and consistent with the terms of this Agreement, the Sales Program Plan and the Medical Affairs Program Plan. Cubist acknowledges and agrees that no Cubist Sales Representative or Medical Affairs Representative shall receive any employee benefits of any kind from Optimer.

12.NONCOMPETITION; NONSOLICITATION

12.1Noncompetition.

12.1.1Subject to this Section 12.1 and the other terms and conditions of this Agreement, during the Term and for […***…] thereafter (other than in the event of […***…]) (the “Noncompete Period”), Cubist shall not, and shall cause its Affiliates not to, directly or indirectly, (i) market, Promote, sell, distribute or accept orders for the sale of any Competing Product in the Territory, or (ii) assist or cooperate in any way with any other Person in connection with the marketing, Promotion, selling, distribution (other than for pre-clinical or clinical study purposes) or acceptance of orders for the sale of any Competing Product in the Territory. For the avoidance of doubt, nothing in this Agreement shall restrict Cubist’s right, (a) during the Noncompete Period, to develop and manufacture for development, and (b) after the Noncompete Period, to develop, manufacture and commercialize, in each case, the oral lipopeptide currently under development by Cubist with respect to the Disease State known as CB-183,315, including any follow-ons and backups with respect thereto.

12.1.2Each Party acknowledges and agrees that the temporal and geographic limitations set forth in this Section 12.1 are reasonable and necessary to protect the legitimate interests of the other Party and agrees not to contest such limitations in any proceeding.

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12.2Non-Solicitation. During the Term […***…], neither Party will recruit, solicit, or induce any […***…] of the other Party to terminate such […***…] employment with such other Party and become employed by or consult for such Party. For purposes of the foregoing, “recruit”, “solicit” or “induce” shall not include: (a) circumstances where a […***…] of a Party initiates contact with the other Party with regard to possible employment; or (b) general solicitations of employment not specifically targeted at employees of a Party, including responses to general advertisements. Notwithstanding the foregoing, the Parties may agree in writing on an […***…] basis that this Section 12.2 does not apply.

13.CONFIDENTIALITY

13.1Confidential Information. Except to the extent permitted by this Agreement and subject to Sections 13.2 and 13.3, at all times during the Term and for five years following the expiration or earlier termination of this Agreement, the Receiving Party (a) shall keep completely confidential and shall not publish or otherwise disclose any Confidential Information of the Disclosing Party, except to those of the Receiving Party’s employees, Affiliates, subcontractors or consultants who have a need to know such information (collectively, “Recipients”) to perform the Receiving Party’s obligations hereunder (and who shall be advised of the Receiving Party’s obligations hereunder) and who are bound by written confidentiality obligations with respect to such Confidential Information no less stringent than those set forth in this Agreement and (b) shall not use any Confidential Information directly or indirectly for any purpose other than performing its obligations hereunder. The Receiving Party shall be fully liable for any breach by any of its Recipients of the restrictions set forth in this Agreement.

13.2Exceptions to Confidentiality.

The Receiving Party’s obligations set forth in this Agreement shall not extend to any Confidential Information of the Disclosing Party that:

13.2.1is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like through no wrongful act, fault or negligence on the part of the Receiving Party or any Recipients;

13.2.2is received from a Third Party without restriction and without breach of any agreement between such Third Party and the Disclosing Party or any of its Affiliates;

13.2.3the Receiving Party can demonstrate by competent evidence was already in its or its Affiliates’ possession without any limitation on use or disclosure prior to its receipt from the Disclosing Party or any of its Affiliates;

13.2.4is generally made available to Third Parties by the Disclosing Party or any of its Affiliates without restriction on disclosure; or

13.2.5the Receiving Party can demonstrate by competent evidence was independently developed by the Receiving Party or any Recipients without the aid, use or application of any Confidential Information of the Disclosing Party.

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13.3Residual Knowledge and Inadvertent Disclosure. The Disclosing Party understands and acknowledges that the Receiving Party has and may have present or future initiatives or opportunities involving similar products, programs, technologies or processes that may compete with a product, program, technology or process of the Disclosing Party. Except as otherwise provided in Section 12.1, the Disclosing Party acknowledges and agrees that nothing in this Agreement will be construed as a representation, warranty, covenant or inference that the Receiving Party will not itself develop, manufacture or market or enter into business relationships with one or more third parties to develop, manufacture or market products, programs, technologies or processes that are similar to or that may compete with any product, program, technology or process of the Disclosing Party (a “Competing Program”), provided that the Receiving Party will not use the Disclosing Party’s Confidential Information in breach of this Agreement. Anything to the contrary notwithstanding, it shall not be a breach of this Agreement for an officer, director, employee, consultant or advisor of the Receiving Party to use his or her Residual Knowledge while performing services for the Receiving Party where such use cannot be reasonably be avoided due to the nature of such officer’s, director’s, employee’s, consultant’s or advisor’s duties to the Receiving Party, and provided that the Residual Knowledge is not knowingly and intentionally used to advance a Competing Program. “Residual Knowledge” means knowledge, techniques, experience and know-how that would otherwise be considered Confidential Information and is (i) owned or controlled by the Disclosing Party and (ii) retained in the unaided memory of an officer, director, employee, consultant or advisor of the Receiving Party after he or she had access to the Disclosing Party’s Confidential Information. Any use made by the Receiving Party of Residual Knowledge is on an “as is, where is” basis, with all faults and all representations and warranties disclaimed and at its sole risk.

13.4Authorized Disclosure. Each Party and its Recipients may disclose Confidential Information of the other Party to the extent that such disclosure is:

13.4.1made in response to a valid order of a court of competent jurisdiction or other Agency of a country or any political subdivision thereof of competent jurisdiction; provided, however, that the Receiving Party shall, if legally permissible and reasonably practicable, first have given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity to quash such order or to obtain a protective order requiring that the Confidential Information or documents that are the subject of such order be held in confidence by such court or Agency or, if disclosed, be used only for the purposes for which the order was issued; and provided further that if a disclosure order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such court or governmental order shall be limited to that information which is legally required to be disclosed in such response to such court or governmental order;

13.4.2made pursuant to Section 13.6 or Section 13.7;

13.4.3made to 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 each case, (a) that any such Third Party shall be subject, in writing, to non-use and non-disclosure obligations with respect to the information disclosed to it pursuant to this Section 13.4.3, which obligations shall be at least as restrictive with respect to such information as the provisions of this Agreement, and (b) with respect to

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disclosure by Optimer of Cubist Confidential Information to any Cubist Competitor pursuant to this Section 13.4.3, Optimer has (i) entered into a non-binding term sheet with such Cubist Competitor with respect to such matter, or (ii) entered into a binding agreement to exclusively negotiate such matter with such Cubist Competitor; or

13.4.4otherwise required by Applicable Law, based on advice of legal counsel to the Receiving Party or its Recipients.

13.5Notification. The Receiving Party shall notify the Disclosing Party in writing immediately, and cooperate with the Disclosing Party as the Disclosing Party may reasonably request, upon the Receiving Party’s discovery of any loss or compromise of the Disclosing Party’s Confidential Information.

13.6Remedies. Each Party acknowledges that the failure of the Receiving Party or any of its Recipients to comply with any of the provisions of this Section 13 will result in irreparable injury and continuing damage to the Disclosing Party for which there will be no adequate remedy at law. In the event of a breach or threatened breach of any provision of this Section 13 by the Receiving Party, the Disclosing Party shall be authorized and entitled to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, specific performance and other equitable remedies, including an equitable accounting of all earnings, profits and other benefits arising from such violation, which remedies shall be cumulative and in addition to any other rights or remedies to which the Disclosing Party may be entitled in law or equity. The Receiving Party agrees to waive any requirement that the Disclosing Party (a) post a bond or other security as a condition for obtaining any such relief or (b) show irreparable harm, balancing of harms, consideration of the public interest or inadequacy of monetary damages as a remedy. Nothing in this Section 13.5 is intended, or shall be construed, to limit a Party’s right to equitable relief or any other remedy for a breach of any provision of this Agreement.

13.7Use of Names. Except as required by law or regulation, or as expressly permitted under any written agreement between the Parties or any of their respective Affiliates, subject to Section 13.7 if applicable, neither Party shall make a Public Announcement regarding the Program or this Agreement or use the name of the other in any Public Announcement without the prior written approval of the other Party. Each Party shall provide the other with the proposed text of any such Public Announcement for review and approval, as early as possible, but in no event less than three Business Days in advance of the making of such Public Announcement. Notwithstanding anything in this Section 13.6 to the contrary, the foregoing provisions of this Section 13.6 shall not apply to (a) either Party’s disclosure of its unaudited financials made in its ordinary course of business, or (b) Public Announcements made by either Party that are substantially similar to statements that were previously reviewed and approved by the other Party pursuant to this Section 13.6.

13.8Confidential Treatment. If either Party is required to file or disclose this Agreement or any portion thereof with the United States Securities and Exchange Commission or any other Agency, such Party shall notify the other Party in writing and shall provide the other Party with at least […***…] Business Days to request redactions thereof prior to making such filing or disclosure. The Disclosing Party shall use its reasonable efforts to procure confidential treatment of the Agreement pursuant to the Securities Act of 1933 or the Securities Exchange

***Confidential Treatment Requested

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Act of 1934, in each case as amended, and the rules, regulations and guidelines promulgated thereunder, or any other applicable law or regulation. If the Disclosing Party cannot procure confidential treatment of the entire Agreement, it will use its reasonable efforts to procure confidential treatment for such portions of the Agreement as may be reasonably requested in a timely manner by the other Party.

14.TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS

14.1Product Trademarks; Optimer House Marks; and Cubist Trademarks.

14.1.1Cubist shall Promote the Product only under the Product Trademarks without any co-branding, and in no event shall any of the Cubist Trademarks be included in any Sales Materials, Medical Affairs Materials or any other materials, information or documentation relating to the Product. Without limiting the foregoing, Cubist shall have no right to include the Product Trademarks or the Optimer House Marks on business cards, stationery, trade show announcements and similar materials of Cubist and its Affiliates, and Cubist shall only be entitled to use approved Sales Program Materials and approved Medical Affairs Materials bearing the Product Trademarks (and, if approved by Optimer, the Optimer House Marks), without co-branding with any Cubist Trademarks, in connection with the Program.

14.1.2Optimer hereby grants to Cubist a non-exclusive, royalty-free license to use the Product Trademarks and the Optimer House Marks in the Territory solely as necessary to conduct the Program, including for use in the approved Sales Materials and Medical Affairs Materials, in each case in accordance with this Agreement, which license shall automatically and immediately terminate upon the expiration or earlier termination of this Agreement for any reason. Such license shall be non-transferable and non-sublicensable.

14.2Ownership. Except for the non-exclusive license expressly set forth in Section 14.1.2, nothing in this Agreement shall give a Party any rights, title or interest in or to the Trademarks that the other Party or any of its Affiliates, as the case may be, own, license or maintain. Each Party acknowledges and agrees that the other Party or its Affiliates, as the case may be, are the owners of all rights, title and interest in and to the Trademarks of such Party, including any form or embodiment thereof, and the goodwill now and hereafter associated therewith. For clarity, Optimer is the owner of all right, title and interest in and to the Product and the Product Trademarks and the goodwill now and hereafter associated therewith and all use of the Product and the Product Trademarks by Cubist shall at all times inure to the benefit of Optimer.  […***…] own any and all data, information, results and analyses specifically related to the Product and generated by […***…] performance under this Agreement (but excluding, without limitation, (a) the identity of and information regarding the Target Accounts and Target Prescribers and the allocation of […***…] Sales Force thereto, and (b) information relating to the Disease State generally), and […***…] shall have the unrestricted right to use any and all such data, information, results and analyses for any purpose whatsoever.

14.3Trademark Maintenance. Neither Party shall undertake any action to register or renew any of the Trademarks of the other Party or to defend against or pursue an infringement claim based on or relating to any of the Trademarks of the other Party, except upon the reasonable written request of the other Party and at the other Party’s expense, which request shall

***Confidential Treatment Requested

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be permitted only to the extent relating specifically to the Territory and this Agreement. If a registration or renewal of any of the Trademarks of a Party is secured by the other Party, whether or not in its name, such registration or renewal, as the case may be, shall be effected solely for the benefit of the first Party. Upon termination of this Agreement or upon earlier request of a Party, any such registrations or renewals (or any pending application therefor) shall either be assigned to such Party, or surrendered by the other Party for cancellation, as the requesting Party shall direct in writing, and the other Party shall file with appropriate Agencies any statement required in connection with such assignment, surrender or cancellation.

14.4Trademark Infringement. Each Party shall advise the other Party of those cases of actual or potential infringement of the Product Trademarks or, if and to the extent such Party determines that such actual or potential infringement relates to the Promotion or other exploitation of the Product, the Optimer House Marks, in the Territory that come to such Party’s attention and Cubist shall, at Optimer’s cost, render such assistance as may be reasonably requested by Optimer in writing in connection with any action taken by Optimer in connection therewith (which action, if any, shall be in Optimer’s sole discretion). Optimer shall have sole control of such action. Optimer shall be liable for reasonable expenses and reasonable attorneys’ fees incurred by Cubist at the specific written request of Optimer in connection with such actions.

15.WARRANTIES; INDEMNITIES; INSURANCE

15.1Representations, Warranties and Covenants.

15.1.1Each Party represents and warrants to the other Party as of the Effective Date as follows:

(a)it is a duly organized and validly existing corporation under the laws of its jurisdiction of incorporation or formation;

(b)it has full corporate power and authority and has taken all corporate action necessary to enter into and perform this Agreement;

(c)this Agreement is its legal, valid and binding obligation, enforceable in accordance with the terms and conditions hereof; and

(d)the execution, delivery and performance of this Agreement by such Party and the transactions contemplated herein, including the rights granted hereunder or the exercise of such rights as contemplated by this Agreement, do not (A) violate, conflict with, or constitute a breach of or under, its charter or similar organization document, its by-laws or any order, award, judgment, decree, agreement or instrument to which such Party or any of its Affiliates is a Party or by which it is bound, or (B) require the consent of, or notice to, any Person or the authorization of (by notice or otherwise) any Agency.

15.1.2Cubist represents and warrants, as of the Effective Date, and covenants to Optimer that:

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(a)neither it nor its Affiliates has been debarred or is subject to debarment and neither it nor its Affiliates will use in any capacity, in connection with the performance of its obligations under this Agreement, any person who is debarred pursuant to Section 306 of the Act or who is the subject of a conviction described in such section. Cubist will notify Optimer in writing immediately if it or any Cubist Sales Representative or Cubist Medical Affairs Representative is debarred or is the subject of a conviction described in Section 306 of the Act, or if any action, suit, claim, investigation, or legal or administrative proceeding is pending or, to the best of Cubist’s knowledge, is threatened, relating to the debarment or conviction of Cubist or any Cubist Sales Representative or Cubist Medical Affairs Representative pursuant to Section 306 of the Act; and

(b)to the Knowledge of Cubist, except as would not reasonably be expected to have a material adverse effect on the Promotion of the Product in the Territory, (A) Cubist and its Affiliates have Promoted its products in the Territory in compliance with Applicable Law in all material respects, (B) as of the Effective Date, neither Cubist nor any of its Affiliates (x) is being investigated, and there are no ongoing investigations by, any Agency in the Territory specifically or primarily relating to the Promotion of any product in the Territory, nor (y) has Cubist or any of its Affiliates received written notice that any Agency in the Territory intends to conduct any such investigation, and (C) neither Cubist nor any of its Affiliates (x) is a party or the subject of any action, suit or other proceeding (collectively, “Proceeding”) that is pending as of the Effective Date or was pending or filed at any time during the two year period prior to the Effective Date, that alleges that Cubist or any of its Affiliates have violated any Applicable Law in the Territory in connection with the Promotion of any product in the Territory, nor (y) has Cubist or any of its Affiliates received any threats in writing of any such Proceeding as of the Effective Date or at any time during the two year period prior to the Effective Date.

15.1.3Optimer represents and warrants that, as of the Effective Date:

(a)to the Knowledge of Optimer, neither the manufacture or importation of the Product for sale in the Territory nor the use, sale or offer for sale of the Product in the Territory infringes or misappropriates any valid claims of any Third Party’s patent rights or any trademark, copyright or trade secret of a Third Party that is not licensed to or otherwise controlled by Optimer or its Affiliates;

(b)to the Knowledge of Optimer, Optimer has not been subject to any action, suit, claim, hearing or other proceeding, at law or equity, in or before any court or arbitrator in which the counterparty alleged that (A) the manufacture, use, distribution, import, sale, or offer for sale of the Product in the Territory infringes or misappropriates any patent, trademark, copyright or trade secret right of any Third Party, or (B) the use of the Product in the Territory resulted in any death, personal injury or other harm to any Person;

(c)to the Knowledge of Optimer, (A) neither Optimer nor any of its Affiliates (x) is being investigated, and there are no ongoing investigations, by any Agency in the Territory specifically or primarily relating to any allegation that the Promotion of the Product in the Territory violates Applicable Law, or (y) has received written notice that any Agency in the Territory intends to conduct any such investigation, and (B) neither Optimer nor any of its

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Affiliates is a party or the subject of any Proceeding that is pending as of the Effective Date or was pending or filed at any time during the two year period prior to the Effective Date, that alleges that Optimer or any of its Affiliates have violated any Applicable Law in the Territory in connection with the Promotion of the Product in the Territory, nor has Optimer or any of its Affiliates received any threats in writing of any such Proceeding as of the Effective Date or at any time during the two year period prior to the Effective Date;

(d)any in-license agreements pursuant to which a Third Party granted to Optimer or any of its Affiliates the right to manufacture, use, distribute, import, sell, or offer for sale the Product in the Territory are valid and in force; and

(e)neither Optimer nor any of its Affiliates has granted any license or sublicense to any Third Party to sell any Product (other than Product sold by Optimer or its Affiliates) in the Territory.

(f)In addition, Optimer covenants to Cubist that, during the Term, Optimer (or its applicable Affiliate) will, if Regulatory Approval for the Product in the Territory is obtained, hold the Product NDA and otherwise obtain all other licenses, authorizations, permissions, consents and approvals from any Agency necessary to use, Promote, sell and offer for sale the Product in the Territory, and all licenses, authorizations, permissions, consents and approvals from any Agency (or applicable foreign equivalent) to manufacture the Product for sale in the Territory, in each case except as would not reasonably be expected to have a material adverse effect on the Promotion of the Product in the Territory.

15.1.4EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY HERETO MAKES, AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS, ANY AND ALL REPRESENTATIONS, GUARANTEES, OR WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, IN CONNECTION WITH THIS AGREEMENT, THE PRODUCT (INCLUDING THE SAFETY OR EFFICACY THEREOF) OR OTHERWISE WITH RESPECT TO THE SUBJECT MATTER HEREOF, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT OR COVERAGE OF ANY PRODUCT BY OR VALIDITY OF ANY PATENTS, AND ANY AND ALL WARRANTIES THAT MAY ARISE OUT OF COURSE OF DEALING, COURSE OF PERFORMANCE, OR USAGE OF TRADE.

15.2Optimer Indemnification. Optimer shall indemnify Cubist, its Affiliates and its and their respective directors, officers, employees and agents (the “Cubist Indemnified Parties”), and defend and save each of them harmless, from and against any and all losses, damages, liabilities, penalties, costs and expenses (including reasonable attorneys’ fees and disbursements) (collectively, “Losses”) incurred by any of them in connection with, arising from or occurring as a result of any suit, investigation, or claim by, or demand of, a Third Party (a “Third Party Claim”) (including for death, personal injury or product liability) arising from (i) the breach by Optimer of any of its obligations under this Agreement, including any violation of Applicable Law by Optimer, (ii) the breach or inaccuracy of any representation or warranty made by Optimer in this Agreement, (iii) the negligence or intentional misconduct of any Optimer Indemnified Parties in connection with the performance of Optimer’s obligations under this Agreement, (iv) the manufacture, use, distribution, import, sale, or offer for sale of the

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Product in the Territory (including any death, personal injury or product liability), (v) any actual or alleged infringement or misappropriation of any Third Party intellectual property arising from the commercialization of the Product in the Territory (including use of any Product Trademark or Optimer House Mark but excluding, for clarification, use of intellectual property of Cubist including, without limitation, any Cubist Trademark), (vi) any agreement between Optimer and a Third Party, and (vii) use by Cubist of the Sales Materials, Sales Training Materials, Medical Affairs Materials, or Medical Affairs Training Materials provided by Optimer to Cubist, in each case as authorized and instructed in such materials, the Sales Plan, the Sales Training Plan, the Medical Affairs Plan ,or the Medical Affairs Training Plan; except, in each case (subsections (i) through (vii)), for those Losses for which Cubist has an obligation to indemnify Optimer pursuant to Section 15.3, as to which Losses each Party shall indemnify the other to the extent of its respective liability for such Losses.

15.3Cubist Indemnification. Cubist shall indemnify Optimer, its Affiliates and its and their respective directors, officers, employees and agents (the “Optimer Indemnified Parties”), and defend and save each of them harmless, from and against any and all Losses incurred by any of them in connection with, arising from or occurring as a result of any Third Party Claim (including for death, personal injury or product liability) arising from (i) the breach by Cubist of any of its obligations under this Agreement, including any violation of Applicable Law by Cubist, (ii) the breach or inaccuracy of any representation or warranty made by Cubist in this Agreement, (iii) the negligence or intentional misconduct of any Cubist Indemnified Parties in connection with the performance of Cubist’s obligations under this Agreement, or (iv) use by Optimer of the Sales Materials provided to Optimer under Section 3.5.2 or the Sales Training Materials provided to Optimer under Section 3.6.2(b), in each case as authorized and instructed in such Sales Materials, the Sales Training Materials or the Sales Training Plan, or (v) use by Optimer of the Sales Materials, Sales Training Materials, Medical Affairs Materials, or Medical Affairs Training Materials provided by Cubist to Optimer, in each case as authorized and instructed in such materials, the Sales Plan, the Sales Training Plan, the Medical Affairs Plan ,or the Medical Affairs Training Plan; except in each case (subsections (i) through (v)), for those Losses for which Optimer has an obligation to indemnify Cubist pursuant to Section 15.2, as to which Losses each Party shall indemnify the other to the extent of its respective liability for such Losses.

15.4Indemnification Procedure.

15.4.1Notice of Claim. The indemnified Party (the “Indemnified Party”) shall give the indemnifying Party (the “Indemnifying Party”) prompt written notice (an “Indemnification Claim Notice”) of any Losses or discovery of facts upon which such Indemnified Party intends to base a request for indemnification under Section 15.2 or Section 15.3, but in no event shall the Indemnifying Party be liable for any Losses that result directly from any delay in providing such notice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss are known at such time). The Indemnified Party shall furnish promptly to the Indemnifying Party copies of all papers and official documents received in respect of any Losses.

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15.4.2Other Procedures. The obligations of an Indemnifying Party under Section 15.2 or Section 15.3 shall be governed by and be contingent upon the following additional terms and conditions:

(a)Control of Defense. At its option, the Indemnifying Party may assume the defense of any Third Party Claim by giving written notice to the Indemnified Party within 30 days after the Indemnifying Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Third Party Claim by the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying Party is liable to indemnify any Indemnified Party in respect of the Third Party Claim, nor shall it constitute a waiver by the Indemnifying Party of any defenses it may assert against any Indemnified Party’s claim for indemnification. Upon assuming the defense of a Third Party Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel selected by the Indemnifying Party which shall be reasonably acceptable to the Indemnified Party. In the event the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall immediately deliver to the Indemnifying Party all original notices and documents (including court papers) received by any Indemnified Party in connection with the Third Party Claim. Subject to clause (b) below, if the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Third Party Claim. In the event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify, defend or hold harmless an Indemnified Party from and against the Third Party Claim, the Indemnified Party shall reimburse the Indemnifying Party for any and all costs and expenses (including attorneys’ fees and costs of suit and the Indemnified Party’s expenses as described in clause (e) below) and any Losses incurred by the Indemnifying Party in its defense of the Third Party Claim with respect to such Indemnified Party.

(b)Right to Participate in Defense. Without limiting Section 15.4.2(a), any Indemnified Party shall be entitled to participate in, but not control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided, however, that such employment shall be at the Indemnified Party’s own expense unless (A) the employment thereof has been specifically authorized by the Indemnifying Party in writing, or (B) the Indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 15.4.2(a) (in which case the Indemnified Party shall control the defense).

(c)Settlement. With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and that will not result in the Indemnified Party’s becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnified Party in any manner, and as to which the Indemnifying Party shall have acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, the Indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its sole discretion, shall deem appropriate. With respect to all other Losses in connection with Third Party Claims, where the Indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 15.4.2(a), the Indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss

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provided that it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed). The Indemnifying Party shall not be liable for any settlement or other disposition of a Loss by an Indemnified Party that is reached without the prior written consent of the Indemnifying Party. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnified Party shall admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).

(d)Cooperation. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the Indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith.

(e)Expenses. Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any Third Party Claim shall be reimbursed on a Sales Quarter basis by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.

15.5Insurance. Each Party shall, at its own expense, provide and keep in full force and effect during the Term and for […***…] thereafter insurance policies that are reasonable and customary for the industry that are underwritten by a reputable insurance company or self-insurance and providing adequate coverage for its respective obligations and activities hereunder. A certificate of insurance evidencing the coverage described in this Section 15.5 shall be submitted to each Party by the other Party prior to the earlier of the Sales Program Commencement Date and the Medical Affairs Program Commencement Date and shall bear a certification that the coverage specified therein will not be cancelled without at least 30 days’ prior written notice to the other Party.

16.TERM AND TERMINATION

16.1Term. The term of this Agreement shall commence on the Effective Date and shall conclude on the last day of the Second Sales Year (the “Initial Term”), unless earlier terminated pursuant to Section 16.2 or any other applicable provision of this Agreement; provided, however, that the term may be extended for consecutive 12-month periods by mutual agreement of the Parties in writing at least […***…] months prior to the end of the Initial Term or the then-current extension term, as applicable (collectively, the “Term”).

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16.2Termination. Without limitation of any other right of termination (or automatic termination) set forth elsewhere in this Agreement:

16.2.1This Agreement may be terminated by either Party pursuant to any of the following clauses:

(a)Within […***…] following the end of the First Sales Year by providing written notice to the other Party in the event that the actual Net Sales of the Product in the Territory in the First Sales Year are […***…] of the Sales Target for the First Sales Year; provided, however, that neither Party may terminate this Agreement under this Section 16.2.1(a) (i) prior to engaging in good faith discussions with the other Party regarding the possibility of terminating the Agreement under this Section 16.2.1(a), or (ii) if the actual Net Sales of the Product in the Territory in the […***…] of the First Sales Year are […***…] of the amount allocated to such […***…] in the Sales Target for the First Sales Year.

(b)Immediately upon written notice to the other Party, in the event of a material breach of this Agreement by the other Party (other than those breaches and events described in Sections 16.2.2 or 16.2.3, which shall be governed by those Sections), which breach remains uncured […***…] after written notice thereof is given to the breaching Party (except in the case of a breach by either Party of its obligations under Section […***…], the cure period shall be […***…] instead of […***…]).

(c)Immediately upon written notice to the other Party, (A) if the other Party files in any court or Agency, pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of that Party or of its assets; (B) if the other Party proposes a written agreement of composition or extension of its debts; (C) if the other Party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within 60 days after the filing thereof; (D) if the other Party consents to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Party or for any substantial part of its property or make any assignment for the benefit of creditors; (E) if the other Party admits in writing its inability to pay its debts generally as they become due; or (F) if any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against property of the other Party which represents a substantial portion of its property.

16.2.2This Agreement may be terminated by Optimer pursuant to any of the following clauses:

(a)Immediately upon written notice to Cubist, if Optimer withdraws the Product from the market in the Territory.

(b)Upon […***…] prior written notice to Cubist, if Cubist or any of its Affiliates has failed to comply with Applicable Law in connection with the performance of its obligations under this Agreement, which failure would reasonably be expected to have a material adverse effect on the Promotion of the Product in the Territory, which notice must be delivered

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no later than […***…] following the date on which Optimer becomes aware of such failure to comply.

(c)In the event of a Change of Control of Cubist (i) effective upon written notice to Cubist delivered within […***…] following the provision of notice by Cubist to Optimer of such Change of Control, or (ii) effective upon the occurrence of such Change of Control if Optimer provides written notice to Cubist within […***…] following the provision of notice by Cubist to Optimer of such Change of Control and such notice from Optimer provides that the termination notice is contingent upon the actual occurrence of the Change of Control.

(d)Immediately upon written notice to Cubist, if Cubist’s right to […***…] market and sell Cubicin in the Territory is or will be […***…] at any time within […***…] of the Effective Date, which notice must be delivered no later than […***…]following the provision of notice by Cubist to Optimer of such event.

(e)Immediately, upon written notice to Cubist, upon any restructuring of the Cubist Sales Force (except where approved in advance by Optimer) resulting […***…] during the Term, which notice must be delivered no later than […***…] following the provision of notice by Cubist to Optimer of such restructuring.

In each case under this Section 16.2.2 in which Optimer’s right to terminate this Agreement is limited to a specified time period following provision by Cubist of notice of an event, Cubist shall provide written notice of such event to Optimer as promptly as practicable.

16.2.3This Agreement may be terminated by Cubist pursuant to any of the following clauses:

(a)Immediately upon written notice to Optimer if the First Sales Year does not begin within 12 months following the Effective Date, which notice must be delivered no later than 13 months following the Effective Date.

(b)Immediately upon written notice to Optimer, in the event that a Stockout occurs, which notice must be delivered no later than […***…] following the date Optimer provides notice to Cubist of such Stockout pursuant to Section 6.2.

(c)In the event of a Change of Control of Optimer resulting in the direct or indirect acquisition of Optimer by a Cubist Competitor or resulting in the direct or indirect acquisition of Optimer by an entity (including the entity’s Affiliates) that, at such time, is […***…], (i) effective upon written notice to Optimer delivered within […***…] following the provision of notice by Optimer to Cubist of such Change of Control, or (ii) effective upon the occurrence of such Change of Control if Cubist provides written notice to Optimer within […***…] following the provision of notice by Optimer to Cubist of such Change of Control and such notice from Cubist provides that the termination notice is contingent upon the actual occurrence of the Change of Control.

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(d)Immediately upon written notice to Optimer, if Cubist’s right to […***…] market and sell Cubicin in the Territory is or will […***…] at any time within […***…] of the Effective Date, which notice must be delivered no later than 30 days following the provision of notice by Cubist to Optimer of such event.

(e)Upon […***…] days’ prior written notice to Optimer, if Optimer or any of its Affiliates has failed to comply with Applicable Law in connection with the performance of its obligations under this Agreement, which failure would reasonably be expected to have a material adverse effect on the Promotion of the Product in the Territory, which notice must be delivered no later than […***…] following the date on which Cubist becomes aware of such failure to comply.

(f)Immediately upon written notice to Optimer if FDA-approved label for the Product (i) does not include comparative data on recurrence rates versus […***…], or (ii) includes a black box safety warning, which notice must be delivered no later than […***…] following the receipt of Regulatory Approval for the Product.

In each case under this Section 16.2.3 in which Cubist’s right to terminate this Agreement is limited to a specified time period following provision by Optimer of notice of an event, Optimer shall provide written notice of such event to Cubist as promptly as practicable.

16.3Effect of Expiration or Termination.

16.3.1Following early termination of this Agreement during the First Sales Year or the Second Sales Year, other than termination by Optimer pursuant to […***…], Optimer will pay to Cubist, within […***…] following such termination:

(a)for all full Sales Quarters in such Sales Year (during which early termination occurred) preceding such early termination in which the actual aggregate Net Sales of the Product in the Territory met or exceeded […***…], Optimer will pay to Cubist […***…] of the applicable Sales Target Bonus set forth in Section 8.2 for such Sales Year for each such full Sales Quarter (and, for clarity, the foregoing shall not apply with respect to any prior Sales Years for which the Sales Target Bonus has already been paid pursuant to Section 8.2); and

(b)for all full Sales Quarters in such Sales Year (during which early termination occurred) preceding such early termination in which the actual aggregate Net Sales of the Product in the Territory exceeded […***…], Optimer will pay Cubist […***…] of the Gross Profit attributable to the amount of aggregate Net Sales in excess of […***…] (and, for clarity, the foregoing shall not apply with respect to any prior Sales Years for which the share of Gross Profit has already been paid pursuant to Section 8.3).

16.3.2Upon the termination or expiration of this Agreement for any reason, the Parties shall negotiate in good faith to conduct an orderly wind down of Cubist’s Promotion and Medical Affairs Program activities and Cubist shall provide to Optimer such account

***Confidential Treatment Requested

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information as is regularly maintained by Cubist and is reasonably required to transition Promotion, including Detailing, from Cubist to Optimer in the Territory. Each Party agrees that, during such wind down period, neither it nor any of its employees shall engage in any activities that negatively impact (i) the promotion or goodwill of the Product, or (ii) the name, reputation or goodwill of the other Party or any of its Affiliates. Upon the effective date of the expiration or termination of this Agreement, except as otherwise agreed by Optimer and Cubist in writing with respect to any wind-down activities, Cubist shall promptly (a) cease, and cause its Sales Representatives to cease, all Promotion of the Product, including Detailing, (b) cease, and cause its Medical Affairs Representatives to cease, all Medical Affairs Program activities, (c) discontinue the use of, and as requested by Optimer, either return to Optimer or destroy (and certify to the destruction of), all Sales Materials, Sales Training Materials, Medical Affairs Materials, Medical Affairs Training Materials and all other materials related to the Product provided by Optimer for use in the Territory pursuant to this Agreement, and (c) discontinue the use of the Product Trademarks. Notwithstanding the foregoing, one copy of the foregoing materials may be retained in non-electronic form by Cubist’s general counsel solely for archival purposes.

16.3.3Except as otherwise expressly provided herein, termination of this Agreement in accordance with the provisions hereof shall not limit remedies that may otherwise be available in law or equity.

16.4Accrued Rights; Surviving Obligations.

16.4.1Termination or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration. Such termination or expiration shall not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement.

16.4.2The following provisions of this Agreement shall survive the expiration or earlier termination of this Agreement for any reason (if specified, for the period of time set forth therein): Section 1 (Definitions and Construction), Section 3.5.4 (with respect to Optimer’s ownership of Sales Material only), Section 3.6.2(d) (with respect to Optimer’s ownership of Sales Training Materials only), Section 4.4.4 (with respect to Optimer’s ownership of Medical Affairs Materials only), Section 4.5.2(d) (with respect to Optimer’s ownership of Medical Affairs Training Materials only), Section 7.1 (Reporting by Cubist) (with respect to reporting for the final Sales Quarter), Section 7.2 (Reporting by Optimer) (with respect to reporting for the final Sales Quarter or other period of time, as applicable), Section 7.5 (Audit Rights), Section 8.5.3 (Optimer Records), Section 8.5.4 (Payment Audit Rights), Section 11 (Independent Contractor Status of Cubist, Including the Sales Forces), Section 12 (Noncompetition; Nonsolicitation), Section 13 (Confidentiality), Section 14.2 (Ownership), Section 15.2 (Optimer Indemnification), Section 15.3 (Cubist Indemnification), Section 15.4 (Indemnification Procedure), Section 15.5 (Insurance), Section 16.3 (Effect of Expiration or Termination), Section 16.4 (Accrued Rights; Survival Obligations), and Section 17 (Miscellaneous).

17.MISCELLANEOUS

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17.1Governing Law, Jurisdiction, Venue and Service of Process. The interpretation and construction of this Agreement, and all matters relating hereto, shall be governed by the laws of the State of New York applicable to agreements executed and to be performed solely within such state excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. Each Party hereby irrevocably and unconditionally (a) consents to the exclusive jurisdiction of the courts of the State of New York or in the United States District Court for New York for any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement, and agree not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such courts, (b) waives its right to a jury trial, (c) waives any objection to the laying of venue of any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the courts of the State of New York or in the United States District Court for New York, (d) agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum, and (e) agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 17.4 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.

17.2Force Majeure. Neither Party shall be liable for delay in delivery or nonperformance in whole or in part, nor shall the other Party have the right to terminate this Agreement except as otherwise specifically provided in this Section 17.2, where delivery or performance has been affected by a condition beyond a Party’s reasonable control, including inability to obtain labor, materials or manufacturing facilities (“Force Majeure Event”); provided, that the Party affected by a Force Majeure Event shall, within ten days after its occurrence, give notice to the other Party stating the nature of the condition, its anticipated duration and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is reasonably required and the nonperforming Party shall use its reasonable efforts to remedy its inability to perform; provided, however, that if the suspension of performance continues for 60 days after the date of the occurrence of the Force Majeure Event, and such failure to perform would constitute a material breach of this Agreement in the absence of such Force Majeure Event, the nonaffected Party may terminate this Agreement immediately upon written notice to the other Party.

17.3Waiver. A Party’s failure to enforce, at any time or for any period of time, any provision of this Agreement, or to exercise any right or remedy, does not constitute a waiver of such provision, right or remedy, or prevent such Party thereafter from enforcing any or all provisions and exercising any or all other rights and remedies. The exercise of any right or remedy does not constitute an election or prevent the exercise of any or all rights or remedies, all rights and remedies being cumulative. In no event shall Optimer’s (or the Joint Clearance Committee’s) approval (or deemed approval) of any (a) materials to be used by Cubist or its Affiliates in connection with the Program, or (b) acts or omissions of Cubist or its Affiliates in connection with the Program, constitute a waiver of Optimer’s rights, or otherwise be deemed to limit Cubist’s obligations, under this Agreement, including with respect to any breach of this Agreement by Cubist. In no event shall Cubist’s approval (or deemed approval) of any (x) materials provided by Optimer or its Affiliates in connection with its activities under this Agreement or (y) acts or omissions of Optimer or its Affiliates in connection with its activities under this Agreement, constitute a waiver of Cubist’s rights, or otherwise be deemed to limit

52

Optimer’s obligations, under this Agreement, including with respect to any breach of this Agreement by Optimer.

17.4Notices. Unless otherwise expressly provided for herein, all Notices shall be in writing, shall refer specifically to this Agreement and shall be hand delivered or sent by express courier service, costs prepaid, or by facsimile, to the respective addresses specified below (or to such other address as may be specified by Notice to the other Party):

If to Optimer, to:	Optimer Pharmaceuticals, Inc. 10110 Sorrento Valley Rd., Suite C San Diego, California 92121 Attention: Chief Executive Officer Facsimile No.: 858-909-0737
With a copy to:	Optimer Pharmaceuticals, Inc. 101 Hudson Street, 35th Floor Suite 3501 Jersey City, New Jersey 07302 Attention: General Counsel Facsimile No.: 201-333-8870
If to Cubist, to:	Cubist Pharmaceuticals, Inc. 65 Hayden Avenue Lexington, Massachusetts 02421 Attention: General Counsel Facsimile No.: 781-860-1407
With a copy to:	Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, Massachusetts 02199 Attention: Marc A. Rubenstein, Esq. Facsimile No.: 617-235-0706

Any Notice delivered by facsimile or similar means shall be confirmed by a hard copy delivered as soon as practicable thereafter. The effective date of any Notice shall be: (a) the date of the addressee’s receipt, if delivered by hand or express courier; or (b) the date of receipt if received by 5:00 p.m. local time on a Business Day or, if not, the first Business Day after receipt, if sent by facsimile. It is understood and agreed that this Section 17.4 is not intended to govern the day-to-day business communications necessary between the Parties in performing their duties, in due course, under the terms of this Agreement.

17.5Entire Agreement. This Agreement, including the exhibits attached hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior or contemporaneous understandings or agreements, whether written or oral, with respect to the subject matter hereof, including, with respect to such subject matter, that

53

certain Mutual Non-Disclosure Agreement between the Parties effective as of July 9, 2009, as amended. Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth herein. No amendment or modification hereof shall be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties.

17.6Successors; Assigns; Subcontracting.

17.6.1The terms and provisions hereof shall inure to the benefit of, and be binding upon, Optimer, Cubist and their respective successors and permitted assigns. Subject to Section 17.10, neither Party shall assign or transfer this Agreement, or assign or transfer any of its rights or obligations hereunder, without the prior written consent of the other Party; provided, however, that Cubist shall have the right, without the consent of Optimer (a) to assign or transfer this Agreement, or to assign, transfer or delegate any of its rights and obligations hereunder, to its Affiliates […***…] for only so long as such […***…] Persons remain Affiliates of Cubist, or (b) to assign or transfer this Agreement in connection with a Change in Control of Cubist; and provided, further, however, that Optimer shall have the right, without the consent of Cubist, (i) to assign or transfer this Agreement, or to assign, transfer or delegate any of its rights and obligations hereunder, to its Affiliates for only so long as they remain Affiliates of Optimer, (ii) to assign or transfer this Agreement to any successor in interest in any manner to all or substantially all of the business of Optimer to which this Agreement relates, except that Optimer may not assign or transfer this Agreement pursuant to this clause (ii) without Cubist’s written consent if the successor entity (or the entity’s Affiliates) to which the Agreement would be assigned or transferred is, at such time, […***…] (but, for clarity, the foregoing exception shall not apply, and Optimer shall have no obligation to obtain Cubist’s consent, in the case of assignment or transfer of this Agreement in connection with a Change of Control of Optimer), or (iii) to assign or transfer this Agreement in connection with a Change in Control of Optimer. Subject to Section 17.10, either Party may delegate or subcontract any of its rights or obligations hereunder, […***…] Sales Program activities performed by Sales Representatives or Medical Affairs Program activities performed by Medical Affairs Representatives, without the prior written consent of the other Party, provided that such Party shall remain responsible for such obligations to the extent it would be responsible for its own performance of such obligations. Notwithstanding the foregoing, (x) Optimer shall have the right, without the consent of Cubist, to delegate or subcontract up to […***…], and (y) Optimer shall have the right to delegate or subcontract […***…]. For the avoidance of doubt, Optimer may at any time during the Term, without the prior consent of Cubist, increase its Sales Force and Medical Affairs Force and nothing herein shall restrict or prohibit Optimer from increasing its number of Program Employees. Any attempt to assign, transfer, subcontract or delegate this

***Confidential Treatment Requested

54

Agreement, or any rights or obligations hereunder, in violation of this Section 17.6.1 shall be null and void. Each Party shall notify the other Party as promptly as possible of (A) any assignment or transfer of any of its rights or obligations hereunder, or any assignment or transfer of this Agreement by such Party, or (B) any Change in Control with respect to such Party.

17.6.2Without limiting the foregoing, and for the avoidance of doubt, Cubist may not […***…], without the prior written consent of Optimer in each case. If, with the written permission of Optimer, […***…], Cubist will require […***…].

17.7Exhibits. All exhibits referred to in this Agreement are intended to be, and hereby are, specifically incorporated into and made a part of this Agreement; provided that, in the event of any conflict or any inconsistency between any term or condition of this Agreement and any term or condition of any exhibit or other attachment hereto, the terms and conditions of this Agreement shall control.

17.8Counterparts. This Agreement may be executed in one or more counterpart copies, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same instrument. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.

17.9Severability. If any provision hereof should be invalid, illegal or unenforceable in any respect, then, to the fullest extent permitted by applicable law, (a) all other provisions hereof shall remain in full force and effect and shall be liberally construed in order to carry out the intent of the Parties as nearly as may be possible, and (b) the Parties shall use their best efforts to negotiate a provision, in replacement of the provision held invalid, illegal or unenforceable, that is consistent with applicable law and accomplishes, as nearly as possible, the original intention of the Parties with respect thereto. To the fullest extent permitted by applicable law, each Party hereby waives any provision of law that would render any provision hereof prohibited or unenforceable in any respect.

17.10Affiliates. Each Party shall cause its respective Affiliates to comply fully with the provisions of this Agreement to the extent such provisions relate, or are intended to relate to such Affiliates, as if such Affiliates were expressly named as joint obligors hereunder. Without limiting the generality of the foregoing or Section 17.6.1, if any obligations of a Party hereunder are delegated to or performed by any of such Party’s Affiliate as permitted under Section 17.6, such obligations will be deemed satisfied upon performance by such Affiliate.

17.11Expenses. Each of the Parties shall pay the fees and expenses of its respective counsel and other experts and all other expenses, except as otherwise expressly set forth herein, incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.

***Confidential Treatment Requested

55

17.12Further Assurances. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other Party may reasonably request to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other Party its rights and remedies under this Agreement. Each Party shall respond, as promptly as practicable, to the other Party’s requests for information in the control of such Party to the extent that the requesting Party reasonably requires such information to comply with Applicable Law or to perform its obligations under this Agreement.

17.13Construction. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party hereto.

17.14No Joint Venture. Nothing contained in this Agreement shall be construed as creating a partnership, joint venture or agency relationship between the Parties hereto or, except as otherwise expressly provided herein, as granting to either Party the authority to bind or contract any obligation in the name of or on the account of the other Party, or to make any statements, representations, guarantees or warranties on behalf of the other Party.

(The remainder of this page has been intentionally left blank. The signature page follows.)

56

IN WITNESS WHEREOF, the Parties have caused this Co-Promotion Agreement to be executed by their representatives thereunto duly authorized as of the Effective Date.

OPTIMER PHARMACEUTICALS, INC.		CUBIST PHARMACEUTICALS, INC.
By:	/s/ Pedro Lichtinger	By:	/s/ Robert J. Perez
Name:	Pedro Lichtinger	Name:	Robert J. Perez
Title:	President and CEO	Title:	Chief Operating Officer

Signature Page to Co-Promotion Agreement

EXHIBIT 1.1.29

CUBIST TRADEMARKS

·CUBIST

·CUBIST PHARMACEUTICALS

·CUBICIN

·CORE

·CUBE

·CALIXA THERAPEUTICS

·IDMEDS

·FOUR SQUARE (LOGO):

·RAPID INJECTION (LOGO):

EXHIBIT 1.1.47

INITIAL MEDICAL AFFAIRS PROGRAM TERMS

Cubist

[…***…]

Optimer

[…***…]

***Confidential Treatment Requested

EXHIBIT 1.1.48

INITIAL SALES PROGRAM TERMS

Cubist

[…***…]

***Confidential Treatment Requested

[…***…]

Optimer

[…***…]

***Confidential Treatment Requested

EXHIBIT 1.1.72

OPTIMER HOUSE MARKS

·OPTIMER

·OPTIMER PHARMACEUTICALS

·OPTIMER (stylized):

EXHIBIT 7.1

FORM OF CUBIST REPORT

(a) Quarterly […***…] Report:

[…***…]

***Confidential Treatment Requested

EXHIBIT 7.1

FORM OF CUBIST REPORT (CONT’D)

(b) Quarterly […***…] Report:

[…***…]

***Confidential Treatment Requested

EXHIBIT 7.1

FORM OF CUBIST REPORT (CONT’D)

(c) Medical Affairs:

·[…***…]

***Confidential Treatment Requested

EXHIBIT 7.1

FORM OF CUBIST REPORT (CONT’D)

[…***…] Report:

[…***…]

***Confidential Treatment Requested

EXHIBIT 17.6.1

CUBIST AFFILIATES

Cubist Affiliates

·Cubist Pharmaceuticals Holdings, Inc.

·Cubist Pharmaceuticals, US

·Illumigen BioSciences, Inc.

·Cubist Pharmaceuticals (UK) Ltd

·Cubist Pharmaceuticals GmbH

·Calixa Therapeutics, Inc.

·Calixa Therapeutics (UK) Ltd

EX-10.4

Exhibit 10.4

FIRST AMENDMENT TO LEASE

1.0)PARTIES

THIS AGREEMENT made the 4thday of May, 2011 is by and between 101 HUDSON LEASING ASSOCIATES (hereinafter “Landlord”) New Jersey general partnership, whose address is c/o Mack-Cali Realty Corporation, 343 Thornall Street, 8th Floor, Edison, New Jersey 08837-2206 and OPTIMER PHARMACEUTICALS, INC. (hereinafter “Tenant”), a Delaware corporation, whose address is 10110 Sorrento Valley Road, Suite C, San Diego, California 92121.

2.0STATEMENT OF FACTS

2.1Landlord and Tenant entered into a Lease dated February 9, 2011 (hereinafter “Lease”) setting forth the terms of occupancy by Tenant of 14,196 rentable square feet on the thirty-fifth (35th) floor (hereinafter “Premises”) at 101 Hudson Street, Jersey City, New Jersey (hereinafter “Building”); and

2.2The Term of the Lease commences on the Commencement Date as defined in the Reference Page and ends on the last day of the month in which occurs the day immediately before the fifth (5th) anniversary of the Rent Commencement Date as defined in Paragraph (s) of the Reference Page; and

2.3It has been determined that March 7, 2011 is the Commencement Date of the Term of the Lease.

3.0STATEMENT OF TERMS

NOW, THEREFORE, in consideration of the Premises and the covenants hereinafter set forth, it is agreed:

3.1The Commencement Date of the Term of the Lease is March 7, 2011 and the Expiration Date of the Term is June 30, 2016 and Paragraph (e) of the Reference Page is modified accordingly. The Rent Commencement Date is June 7, 2011.

3.2Tenant hereby represents to Landlord that (i) there exists no default under the Lease either by Tenant or Landlord; and (ii) there exists no offset, defense or counterclaim to Tenant’s obligations under the Lease.

3.3This Agreement is executed by the parties hereto for the purpose of providing a record of the Commencement Date, the Rent Commencement Date and Expiration Date of the Lease.

3.4Tenant’s failure to sign this Agreement and return same to Landlord within ten (10) days after Tenant’s receipt of this Agreement shall be deemed to be Tenant’s acceptance of the Commencement Date, the Rent Commencement Date and Expiration Date as stated in this Agreement.

EXCEPT as modified herein, the Lease covering the Premises shall remain in full force and effect as if the same were set forth in full herein and Landlord and Tenant hereby ratify and confirm all the terms and conditions thereof.

THIS AGREEMENT shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns.

EACH PARTY AGREES that it will not raise or assert as a defense to any obligation under the Lease or this Agreement or make any claim that the Lease or this Agreement is invalid or unenforceable due to any failure of this document to comply with ministerial requirements including, but not limited to, requirements for corporate seals, attestations, witnesses, notarizations, or other similar requirements, and    each party hereby waives the right to assert any such defense or make any claim of invalidity or unenforceability due to any of the foregoing.

This Agreement may be executed in multiple counterparts, each of which, when assembled to include an original signature for each party contemplated to sign this Agreement, will constitute a complete and fully executed original. All such fully executed counterparts will collectively constitute a single agreement. Tenant expressly agrees that if the signature of Landlord and/or Tenant on this Agreement is not an original, but is a digital, mechanical or electronic reproduction (such as, but not limited to, a photocopy, fax, e-mail, PDF, Adobe image, JPEG, telegram, telex or telecopy), then such digital, mechanical or electronic reproduction shall be as enforceable, valid and binding as, and the legal equivalent to, an authentic and traditional ink-on-paper original wet signature penned manually by its signatory.

IN WITNESS THEREOF, Landlord and Tenant have hereunto set their hands the date and year first above written and acknowledge one to the other they possess the requisite authority to enter into this transaction and to sign this Agreement.

LANDLORD:				TENANT:
101 HUDSON LEASING ASSOCIATES				OPTIMERPHARMACEUTICALS, INC.
By:	MC Hudson Holding L.L.C., general partner
	By:	Mack-Cali Realty, L.P., sole member
		By:	Mack-Cali Realty Corporation,
			General partner

By:	/s/ Christopher M. DeLorenzo	By:	/s/ John Prunty
	Christopher M. DeLorenzo		Name:	John Prunty
	Vice President of Leasing			(please print)
			Title:	CFO
				(please print)

EX-10.5

Exhibit 10.5

***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

Standard Form

Manufacturing Services Agreement

June 1, 2011

Table of Contents

ARTICLE 1		1
INTERPRETATION		1
1.1	DEFINITIONS	1
1.2	CURRENCY	5
1.3	SECTIONS AND HEADINGS	5
1.4	SINGULAR TERMS; INCLUDING	6
1.5	SCHEDULES	6
ARTICLE 2		6
PATHEON’S MANUFACTURING SERVICES		7
2.1	MANUFACTURING SERVICES	7
ARTICLE 3		11
CLIENT’S OBLIGATIONS		11
3.1	PAYMENT	11
ARTICLE 4		12
CONVERSION FEES AND COMPONENT COSTS		12
4.1	FIRST YEAR PRICING	12
4.2	PRICE ADJUSTMENTS — SUBSEQUENT YEARS’ PRICING	12
4.3	ADJUSTMENTS — CURRENT YEAR PRICING	13
4.4	ADJUSTMENTS DUE TO TECHNICAL CHANGES	14
4.5	MULTI-COUNTRY PACKAGING REQUIREMENTS	15
ARTICLE 5		15
ORDERS, SHIPMENT, INVOICING, PAYMENT		15
5.1	ORDERS AND FORECASTS	15
5.2	RELIANCE BY PATHEON	16
5.3	MINIMUM ORDERS; ANNUAL VOLUME	17
5.4	SHIPMENTS	17
5.5	ON TIME DELIVERY	17
5.6	INVOICES AND PAYMENT	18
ARTICLE 6		18
PRODUCT CLAIMS AND RECALLS		18
6.1	PRODUCT CLAIMS	18
6.2	PRODUCT RECALLS AND RETURNS	19
6.3	PATHEON’S RESPONSIBILITY FOR DEFECTIVE AND RECALLED PRODUCTS	19

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6.4	DISPOSITION OF DEFECTIVE OR RECALLED PRODUCTS	20
6.5	HEALTHCARE PROVIDER OR PATIENT QUESTIONS AND COMPLAINTS	20
6.6	SOLE REMEDY	21
ARTICLE 7		21
CO-OPERATION		21
7.1	QUARTERLY REVIEW	21
7.2	GOVERNMENTAL AGENCIES	21
7.3	RECORDS AND ACCOUNTING BY PATHEON	21
7.4	INSPECTION	22
7.5	ACCESS	22
7.6	NOTIFICATION OF REGULATORY INSPECTIONS	22
7.7	REPORTS	23
7.8	REGULATORY FILINGS	23
ARTICLE 8		24
TERM AND TERMINATION		24
8.1	INITIAL TERM	24
8.2	TERMINATION FOR CAUSE	24
8.3	PRODUCT DISCONTINUATION OR NON-APPROVAL	24
8.4	FURTHER TERMINATION RIGHTS OF CLIENT	25
8.5	OBLIGATIONS ON TERMINATION	25
ARTICLE 9		26
REPRESENTATIONS, WARRANTIES AND COVENANTS		26
9.1	AUTHORITY	26
9.2	CLIENT WARRANTIES	26
9.3	PATHEON WARRANTIES	27
9.4	DEBARRED PERSONS	27
9.5	PERMITS	28
9.6	NO WARRANTY	28
ARTICLE 10		28
REMEDIES AND INDEMNITIES		28
10.1	CONSEQUENTIAL DAMAGES	28
10.2	LIMITATION OF LIABILITY	28
10.3	INDEMNIFICATION BY PATHEON	29
10.4	INDEMNIFICATION BY CLIENT	29
ARTICLE 11		30
CONFIDENTIALITY		30

ii

11.1	CONFIDENTIALITY OBLIGATION	30
11.2	DEFINITION	30
11.3	AUTHORIZED DISCLOSURE	30
11.4	THIRD PARTY CONFIDENTIAL INFORMATION	31
ARTICLE 12		31
DISPUTE RESOLUTION		31
12.1	COMMERCIAL DISPUTES	31
12.2	TECHNICAL DISPUTE RESOLUTION	31
ARTICLE 13		31
MISCELLANEOUS		31
13.1	INVENTIONS	31
13.2	INTELLECTUAL PROPERTY	32
13.3	INSURANCE	32
13.4	INDEPENDENT CONTRACTORS	32
13.5	NO WAIVER	33
13.6	ASSIGNMENT	33
13.7	FORCE MAJEURE	33
13.8	ADDITIONAL PRODUCT	33
13.9	NOTICES	34
13.10	SEVERABILITY	34
13.11	ENTIRE AGREEMENT	35
13.12	OTHER TERMS	35
13.13	NO THIRD PARTY BENEFIT OR RIGHT	35
13.14	EXECUTION IN COUNTERPARTS	35
13.15	USE OF CLIENT NAME	35
13.16	GOVERNING LAW	36

iii

MANUFACTURING SERVICES AGREEMENT

THIS MANUFACTURING SERVICES AGREEMENT (the “Agreement”) is made as of June 1, 2011 (the “Effective Date”)

B E T W E E N:

PATHEON INC.,
a corporation existing under the laws of Canada,

(“Patheon”),

- and -

OPTIMER PHARMACEUTICALS, INC.,
a corporation existing under the laws of the State of Delaware,

(“Client”).

THIS AGREEMENT WITNESSES THAT in consideration of the rights conferred and the obligations assumed herein, and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each party), and intending to be legally bound the parties agree as follows:

ARTICLE 1

INTERPRETATION

1.1Definitions.

The following terms will have the respective meanings set out below and grammatical variations of these terms will have corresponding meanings:

“Active Materials”, “Active Pharmaceutical Ingredients” or “API” means the materials listed on Schedule D;

“Active Materials Credit Value” means the value of the Active Materials for certain purposes of this Agreement, as set forth on Schedule D;

“Affiliate” means:

(a)a business entity which owns, directly or indirectly, a controlling interest in a party to this Agreement, by stock ownership or otherwise; or

(b)a business entity which is controlled by a party to this Agreement, either directly or indirectly, by stock ownership or otherwise; or

(c)a business entity, the controlling interest of which is directly or indirectly common to the controlling interest of a party to this Agreement;

For this definition, “control” (with correlative meanings for the terms “controlling interest” and “controlled by”) means the ownership of shares carrying at least a majority of the outstanding voting or equity interests or the ability to elect a majority of the board of directors or other managing authority of the entity or the other ability to manage and direct the business of the applicable entity.

“Annual Report” means the annual report to the FDA prepared by Client regarding the Product as described in Title 21 of the United States Code of Federal Regulations, Section 314.81(b)(2);

“Annual Product Review Report” means the annual product review report prepared by Patheon as described in Title 21 of the United States Code of Federal Regulations, Section 211.180(e);

“Applicable Laws” means the applicable provisions of any and all national, supranational, regional, state, provincial, county and local laws, treaties, statutes, rules, regulations, administrative codes, guidance, ordinances, judgments, decrees, directives, injunctions, orders, permits (including marketing approvals) of or from any court, arbitrator, Regulatory Authority or governmental agency or authority having jurisdiction over or related to the subject item;

“Authority” means any governmental or regulatory authority, department, body or agency or any court, tribunal, bureau, commission or other similar body, whether national, supranational, regional, state, provincial, county or local;

“Bill Back Items” means the reasonable expenses for all third party supplier fees for the purchase of columns, standards, tooling, PAPR or PPE suits (where applicable), RFID tags if requested by Client and supporting equipment, and other Product-specific items, in each case necessary for Patheon to perform the Manufacturing Services, and which are not included as Components;

“Business Day” means a day other than a Saturday, Sunday or a day that is a statutory holiday in the Province of Ontario, Canada or the United States of America;

“cGMPs” means current good manufacturing practices as described in:

(a)Division 2 of Part C of the Food and Drug Regulations (Canada);

(b)Parts 210 and 211 of Title 21 of the United States’ Code of Federal Regulations; and

(c)EC Directive 2003/94/EC,

together with the latest Health Canada, FDA, and EMA guidance documents pertaining to manufacturing and quality control practice, all as updated, amended and revised from time to time, and any foreign equivalents to any such regulations which may apply to the Manufacturing Site or be applicable to Products sold outside of the United States, Canada or the European Union;

“Client Intellectual Property” means Intellectual Property generated or derived by Client before entering into this Agreement or independent of this Agreement, or by Patheon while performing any Manufacturing Services or otherwise generated or derived by Patheon in its business which Intellectual Property is directly related to, specific to, or dependent upon, Client’s Active Materials or Product;

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“Components” means, collectively, all packaging components, raw materials, and ingredients (including labels, product inserts and other labelling for the Products), required to manufacture the Products in accordance with the Specifications, other than the Active Materials;

“Confidentiality Agreement” means the agreement about the non-disclosure of confidential information between Patheon and Client dated June 25, 2004;

“Deficiency Notice” has the meaning specified in Section 6.1(a);

“Delivery Date” means the date scheduled for shipment of Product under a Firm Order as set forth in Section 5.1(e);

“EMA” means the European Medicines Agency or any successor agency thereto which may regulate pharmaceutical products;

“FDA” means the United States Food and Drug Administration or any successor agency thereto which may regulate pharmaceutical products;

“Firm Orders” has the meaning specified in Section 5.1;

“First Firm Order” has the meaning specified in Section 5.1;

“Force Majeure Event” has the meaning specified in Section 13.7;

“Health Canada” means the section of the Canadian Government known as Health Canada and includes, among other departments, the Therapeutic Products Directorate and the Health Products and Food Branch Inspectorate or any successor agency thereto which may regulate pharmaceutical products;

“Initial Manufacturing Month” has the meaning specified in Section 5.1;

“Initial Manufacturing Period” has the meaning specified in Section 5.1;

“Initial Set Exchange Rate” means 1.0:1.0 as of the Effective Date of the Agreement, being the initial exchange rate to convert one unit of the local currency where the Manufacturing Site is located to one unit of the billing currency, calculated as the average interbank exchange rate for conversion of one unit of the local currency where the Manufacturing Site is located to one unit of the billing currency during the 90-day period immediately preceding the Effective Date as published by OANDA.com “The Currency Site” under the heading “FxHistory: historical currency exchange rates” at http://www.oanda.com/convert/fxhistory, or such successor or other website or other heading as the parties may mutually agree;

“Intellectual Property” includes, without limitation, rights in patents, patent applications, formulae, trade-marks, trade-mark applications, trade-names, Inventions, copyrights, industrial designs, trade secrets, and know how;

“Information” means any information, results, data, innovation, improvement, development, discovery, computer program, device, trade secret, method, know-how, process, technique and the like, whether or not written or otherwise fixed in any form or medium, regardless of the media on which it is contained and whether or not patentable or copyrightable;

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“Inventory” means all inventories of Components and work-in-process produced or held by Patheon for the manufacture of the Products but, for greater certainty, does not include the Active Materials;

“Late Delivery” has the meaning specified in Section 5.5;

“Manufacturing Services” means the process validation, manufacturing, quality control, quality assurance, stability testing, packaging, labelling and related services provided by Patheon  with regard to Product pursuant to this Agreement;

“Manufacturing Site” means the facility or facilities owned and operated by Patheon and at which Patheon will be performing the Manufacturing Services under this Agreement, and that is/are located at 2100 Syntex Court, Mississauga, Ontario, Canada L5N 7K9 and at 977 Century Drive, Burlington, Ontario, Canada L7L 5J8.

“Maximum Credit Value” means the maximum value of Active Materials that may be credited by Patheon under this Agreement, as set forth on Schedule D;

“Minimum Run Quantity” means the minimum number of units of a Product to be produced during the same cycle of manufacturing as set forth in Schedule B;

“Patheon Intellectual Property” means Intellectual Property generated or derived by Patheon before performing any Manufacturing Services, Intellectual Property developed by Patheon while performing the Manufacturing Services, or otherwise generated or derived by Patheon in its business, which Intellectual Property is not Client Intellectual Property;

“Price” means the price measured in US Dollars to be charged by Patheon for performing the Manufacturing Services, and includes, without limitation, the cost of Components, certain cost items as set forth in Schedule B, and annual stability testing costs as set forth in Schedule C;

“Product” means the product listed on Schedule A;

“Product Forecast” and “Extended Product Forecast” have the meanings specified in Section 5.1;

“Quality Agreement” means that certain [Quality Agreement] between the parties dated as of April 27, 2011 as amended in writing from time to time, setting out the quality assurance standards for the Manufacturing Services to be performed by Patheon for Client;

“Regulatory Authority” means the FDA, EMA, and Health Canada and any other regulatory agencies competent to grant marketing approvals for pharmaceutical products including the Products in the Territory;

“Reset Date” means, with reference to any particular full calendar Year, the date on which Patheon is to provide Client with updated pricing for the Product for the next Year; which date will be not less than three months prior to the beginning of that Year;

“RFID” means Radio Frequency Identification Devices which (at present or in the future) may be affixed to Products or Active Materials to assist in inventory control, tracking, and identification;

“Second Source Facility” has the meaning specified in Section 2.1(j).

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“Set Exchange Rate” means the exchange rate to convert one unit of Patheon facility local currency to one unit of the billing currency for each Year, calculated as the average interbank exchange rate for conversion of one unit of Patheon facility local currency to one unit of the billing currency during the three month period immediately preceding the Reset Date by one month as published by OANDA.com “The Currency Site” under the heading “FxHistory: historical currency exchange rates” at , or such successor or other website or other heading as the parties may mutually agree;

“Specifications” means the file, for the Product, which is given by Client to Patheon in accordance with the procedures listed in Schedule A and which contains documents relating to each Product, including, without limitation:

(d)specifications for Active Materials and Components;

(e)manufacturing specifications, directions, and processes;

(f)storage requirements;

(d)all environmental, health and safety information for the Product including material safety data sheets; and

(e)the finished Product specifications, packaging specifications and shipping requirements for each Product;

all as updated, amended and revised from time to time by Client in accordance with the terms of this Agreement;

“Technical Dispute” has the meaning specified in Section 12.2;

“Territory” means the geographic area of North America and Europe;

“Third Party Rights” means the Intellectual Property of any party, other than Client or Patheon or an Affiliate of Client or Patheon;

“Year” means, in the first year of this Agreement, the period from the Effective Date up to and including December 31 of the same calendar year, and in the last year of this Agreement, the period from January 1 of such calendar year until the date of termination or expiration of this Agreement, and will otherwise mean a calendar year.

1.2Currency.

Unless otherwise indicated, all monetary amounts are expressed in this Agreement in the lawful currency of the United States of America.

1.3Sections and Headings.

The division of this Agreement into Articles, Sections, Subsections, and Schedules and the insertion of headings are for convenience of reference only and will not affect the interpretation of this Agreement.  Unless otherwise indicated, any reference in this Agreement to a Section or Schedule refers to the specified Section or Schedule to this Agreement.  In this Agreement, the terms “this Agreement”,

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“hereof”, “herein”, “hereunder” and similar expressions refer to this Agreement as a whole and not to any particular part, Section or Schedule of this Agreement.

1.4Singular Terms; Including.

Except as otherwise expressly stated or unless the context otherwise requires, all references to the singular will include the plural and vice versa, and all references to “includes” or “including” will mean “includes without limitation” or “including without limitation.”

1.5Schedules.

The following Schedules are attached to, incorporated in, and form part of this Agreement:

Schedule A	—	Product List and Specifications
Schedule B	—	Minimum Run Quantity and Price
Schedule C	—	Annual Stability Testing and Annual Product Review
Schedule D	—	Active Materials and Active Materials Credit Value and Maximum Credit Value
Schedule E	—	Technical Dispute Resolution
Schedule F	—	Shipping Logistics Protocol
Schedule G	—	Monthly Active Materials Inventory Report
Schedule H	—	Report of Annual Active Materials Inventory Reconciliation and Calculation of Actual Annual Yield
Schedule I	—	Example of Price Adjustment due to Currency Fluctuation

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ARTICLE 2

PATHEON’S MANUFACTURING SERVICES

2.1Manufacturing Services.

Patheon will perform the Manufacturing Services for the Territory for the fees specified in Schedules B and C and any additional countries outside the Territory subject to Section 4.5 for the fees specified in applicable amendments entered into by the parties.  Schedule B sets forth a list of cost items that are included in the Price for Products.  Patheon shall not perform any Manufacturing Services at any location other than at the Manufacturing Site located at 2100 Syntex Court, Mississauga, Ontario, Canada L5N 7K9 without the express written consent of Client, except that Patheon may perform certain analytical release and stability testing activities as agreed by the Parties at the Manufacturing Site located at 977 Century Drive, Burlington, Ontario, Canada L7L 5J8. Patheon shall perform the Manufacturing Services in strict compliance with this Agreement, the Specifications, the Quality Agreement, cGMP and Applicable Laws, Patheon may not change the Specifications, Manufacturing Site (including facility modification), site of stability testing or any other aspect of the manufacturing process used to perform the Manufacturing Services with respect to the Products without the prior written consent of Client, this consent not to be unreasonably withheld.  If Manufacturing Services have not started within 12 months of the date of execution of this Agreement (other than as a result of Patheon’s acts or omissions or a Force Majeure Event), Patheon may propose an amendment of the fees set out in Schedules B and C, which shall be subject to Client’s approval.  Patheon’s right to manufacture Products offered for sale by Client in the Territory shall be non-exclusive.  However, Client shall procure at least […***…]percent ([…***…]%) of its annual Product requirements for the Territory from Patheon or its Affiliates.  In performing the Manufacturing Services, Patheon and Client agree that:

(a)Conversion of Active Materials and Components.  Patheon will use the Active Materials and Components to manufacture Products in accordance with this Agreement.  Patheon shall not use Active Materials, or any Components or Bill Back Items supplied by or paid for or reimbursed by Client, for any other use or purpose.

(b)Quality Control and Quality Assurance.  Patheon will perform the quality control and quality assurance testing specified in the Quality Agreement.  Batch review and release to Client will be the responsibility of Patheon’s quality assurance group.  Patheon will perform its batch review and release responsibilities in accordance with Patheon’s standard operating procedures, which Patheon will make available to Client for its review as reasonably requested by Client, and the Quality Agreement.  Each time Patheon ships Products to Client or a designee of Client, it will give Client a certificate of analysis and certificate of compliance including a statement that the batch has been manufactured and tested in accordance with Specifications, the Quality Agreement, cGMPs and Applicable Laws.  Client will have sole responsibility for the release of Products to the market.  The batch documents, including, but not limited to, batch production records, lot packaging and labelling records, equipment set up control, operating parameters, and data printouts, raw material data, and analytical data and results regarding the Manufacture of Products (including any such information contained in laboratory notebooks) shall be the exclusive property of Client, provided, that any intellectual property comprised of the form and style of such batch documents are the exclusive property of Patheon, and provided further, that Patheon will not be obligated to disclose to Client confidential or proprietary information of third parties contained in any such lab notebooks that is unrelated to the Manufacturing Services performed pursuant to this Agreement.  Specific Product-related information contained in those batch documents is Client property.

*** Confidential Treatment Requested

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(c)Components.  Patheon will purchase and test all Components (with the exception of those that are supplied by Client, if any) at Patheon’s expense and as required by the Specifications and the Quality Agreement.

(d)Stability Testing.  Patheon will conduct stability testing on the Products as part of the Manufacturing Services provided hereunder.  Patheon will perform such testing in accordance with the protocols set out in the Specifications for the separate fees and during the time periods set out in Schedule C, if applicable.  Patheon will not make any changes to these testing protocols without prior written approval from Client.  If a confirmed stability test failure occurs, Patheon will notify Client within one Business Day, after which Patheon and Client will jointly determine the proceedings and methods to be undertaken to investigate the cause of the failure, including which party will bear the cost of the investigation.  Patheon will not be liable for these costs unless it has failed to perform the Manufacturing Services in accordance with the Specifications, cGMPs, or Applicable Laws.  Patheon will give Client all stability test data and results (including a final approved report) at Client’s request and promptly upon completion of such testing.

(e)Packaging.  Patheon will package the Products as set out in the Specifications and the Quality Agreement.  Client will be responsible for the cost of artwork development, as applicable.  Patheon will determine and imprint the batch numbers and expiration dates for each Product shipped.  Such expiration dates must be determined in accordance with the Specifications.  The batch numbers and expiration dates will be affixed on the Products and on the shipping carton of each Product as outlined in the Specifications and as required by cGMPs and Applicable Laws.  Client may, in its sole discretion, make changes to labels, product inserts, and other packaging for the Products.  Those changes will be submitted by Client to all applicable Regulatory Authorities and other third parties responsible for issuing marketing approval of the Products.  Client will be responsible for the cost of related Components which are no longer usable to package Products hereunder due to changes requested by Client, as contemplated in Section 4.3.  Patheon’s name will not appear on the label or anywhere else on the Products unless: (i) required by any Applicable Laws; or (ii) Client requests, and Patheon consents in writing to, the use of its name in such manner.

(f)Active Materials and Client-Supplied Components Importing.  At least […***…]days before the scheduled production date, Client will deliver the Active Materials to the Manufacturing Site where the Manufacturing Services are to be performed, […***…](Incoterms 2010), in quantity sufficient for Patheon to manufacture the desired quantities of Product and to ship Product on the Delivery Date.  If the Active Materials are not received at least […***…]days before the scheduled production date, Patheon will use all reasonable efforts to meet the scheduled production date nonetheless; provided, however, that if Patheon is unable to meet the scheduled production date despite using all reasonable efforts to do so, it may delay the shipment of Product by up to the same number of days as the delay in receipt of the Active Materials.  But if Patheon is unable to manufacture Product to meet this new shipment date due to prior third party production commitments, Patheon may delay the shipment until a later date if agreed to by the parties.  All shipments of Active Materials will be accompanied by certificate(s) of analysis from the Active Materials manufacturer or the Client, confirming the identity and purity of the Active Materials and their compliance with the Active Materials specifications.  Patheon will inspect and test the Active Materials at the Manufacturing Site prior to manufacturing Product using such Active Materials, and will notify Client in the event any

*** Confidential Treatment Requested

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Active Materials do not comply with the Active Materials specifications, each in accordance with the Quality Agreement.

(g)Bill Back Items.  Bill Back Items acquired by Patheon will be charged to Client at Patheon’s actual and reasonable cost plus a […***…]% handling fee; provided, however, that the prior written approval of Client shall be required for all Bill Back Items valued above $[…***…]. All Bill Back Items shall be the sole and exclusive property of Client.

(h)Validation Activities.  At Client’s written request, Patheon may assist in the development and approval of the validation protocols for analytical methods and manufacturing procedures (including packaging procedures) for the Products.  The fees associated with Patheon’s assistance in providing validation development assistance are set out in Schedule C.

(i)Internal process specifications.  Internal process specifications will be defined and mutually agreed upon by the parties.

(j)Second Source Facility.  Within […***…]months after Client provides notice to Patheon requesting that Patheon commence qualification and validation of an additional manufacturing facility, Patheon shall, at Client’s expense, qualify and validate, and thereafter keep qualified and validated, an additional manufacturing facility at Patheon’s manufacturing site located at 111 Consumers Drive, Whitby, Ontario, Canada L1N 5Z5 (a “Second Source Facility”), in addition to the existing Manufacturing Site, for the manufacture of Product to ensure a second source of supply of Product to Client.   The Second Source Facility must be a second facility operated by Patheon with quality and reliability in manufacturing comparable to the Manufacturing Site and shall comply with all obligations and limitations of this Agreement to the same extent as Manufacturing Site.  Without limiting the generality of the foregoing, such Second Source Facility must be approved by the FDA, EMA and other relevant Regulatory Authorities such that the Product manufactured by the Second Source Facility may be commercialized by Client under the applicable Regulatory Approvals for Product.

2.2Active Materials Yield.

(a)Reporting.  Patheon will give Client a monthly inventory report of the Active Materials held by Patheon using the inventory report form set out in Schedule G, which will contain the following information for the month:

Quantity Received:  The total quantity of Active Materials that complies with the Specifications and is received at the Manufacturing Site during the applicable period.

Quantity Dispensed:  The total quantity of Active Materials dispensed at the Manufacturing Site during the applicable period.  The Quantity Dispensed is calculated by […***…].  The Quantity Dispensed will not include any (i) Active Materials that must be retained by Patheon as samples in accordance with this Agreement, (ii) Active Materials contained in Product that must be retained as samples in accordance with this Agreement, (iii) Active Materials used in testing (if applicable) in accordance with this Agreement, and (iv) Active

*** Confidential Treatment Requested

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Materials received or dispensed in technical transfer activities or development activities during the applicable period, including without limitation, any regulatory, stability, validation or test batches manufactured during the applicable period.

Quantity Converted:  The total amount of Active Materials contained in the Products manufactured with the Quantity Dispensed (including any additional Products produced in accordance with Section 6.1 or 6.2) delivered by Patheon,  and not  rejected, recalled or returned in accordance with Section 6.1 or 6.2 because of Patheon’s failure to perform the Manufacturing Services in accordance with Specifications, cGMPs, and Applicable Laws, but excluding Mishandled Active Materials, as defined below.

Within […***…]days after the end of each Year, Patheon will prepare an annual reconciliation of Active Materials on the reconciliation report form set forth in Schedule H including the calculation of the “Actual Annual Yield” or “AAY” for the Product at the Manufacturing Site during the Year.  AAY is the percentage of the Quantity Dispensed that was converted to Products and is calculated as follows:

[…***…]

After Patheon has produced a minimum of  […***…]commercial production batches of Product (which shall include any validation production batches) and has produced commercial production batches (including validation production batches) for at least […***…]months at the Manufacturing Site (collectively, the “Target Yield Determination Batches”), the parties will mutually agree in good faith on the target yield for the Product at the Manufacturing Site which, (i) for the first […***…] batches following the first […***…]commercial production batches of Product referenced above shall be equal to the average yield of the first […***…]commercial production batches of Product referenced above; and (ii) for all remaining batches, shall be equal to the average yield of the […***…]commercial production batches following the first […***…]commercial batches of Product referenced above; provided, in each case, that such determination shall exclude any batch(es) which have  yield(s) that the parties mutually agree are abnormally low or high  (such average, in each case, as applicable, the “Target Yield”); provided, further, that within 30 days following January 1st of each Year the Parties shall calculate the average yield of the […***…]commercial production batches immediately preceding such date and if such average yield is greater than the  then-current Target Yield, the Target Yield shall be increased to equal such average yield effective as of such January 1st; and provided, further, that for all batches of Product produced prior to calculation of the first Target Yield pursuant to this paragraph, the Target Yield shall be […***…]%.

(b)Shortfall Calculation.  If the Actual Annual Yield falls more than […***…]percent below the applicable Target Yield in a Year, then the shortfall for the Year (the “Shortfall”) will be calculated as follows:

[…***…]

(c)Credit for Shortfall.  If there is a Shortfall for a Product in a Year, then Patheon will credit Client’s account for the amount of the Shortfall not later than 60 days after the end of the Year.

*** Confidential Treatment Requested

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Each credit under this Section 2.2(c) will be detailed on the reconciliation report form set forth in Schedule H.  Upon expiration or termination of this Agreement, any remaining credit owing under this Section 2.2 will be paid to Client.  The Shortfall, if any, will be disclosed by Patheon on the reconciliation report form.

(d)Maximum Credit.  Patheon’s liability for Active Materials calculated in accordance with this Section 2.2 for any Product, including Mishandled Active Material, in a Year will not exceed, in the aggregate, the Maximum Credit Value set forth in Schedule D.

(e)Material Breach.  Without limiting any of Client’s other rights or remedies under this Agreement, it will be considered a material breach of this Agreement by Patheon under Section 8.2(a) if, for any Year, Actual Annual Yield is less than […***…]% of the applicable Target Yield.

(f)Mishandled Active Material.  In each report provided by Patheon pursuant to Section 2.2(a), Patheon will include, if applicable, the amount of Active Material that were lost, destroyed or damaged by Patheon after receipt at the Manufacturing Site including, without limitation, as a result of Patheon’s failure to comply with the storage and handling obligations set forth in the Quality Agreement (“Mishandled Active Material”).  No later than 60 days after the end of the Year, Patheon will reimburse Client for all costs incurred by Client in purchasing and shipping the Active Material that became Mishandled Active Material that Year subject to the aggregate Maximum Credit Value.

ARTICLE 3

CLIENT’S OBLIGATIONS

3.1Payment.

Client will pay Patheon for Product manufactured as a result of performing the Manufacturing Services in accordance with this Agreement, cGMP, the Specifications and Applicable Laws and delivered in accordance with this Agreement, according to the Prices specified in Schedules B and C.  These Prices may be subject to adjustment under Section 4.2 and Section 4.3 of this Agreement.  Client will also pay Patheon for any Bill Back Items purchased and provided by Patheon in accordance with this Agreement.

3.2Active Materials, Components and Bill Back Items.

The Active Materials, Components and Bill Back Items will be held by Patheon on behalf of Client as set forth in this Agreement.  All Active Materials, Components and Bill Back Items will at all times remain the property of Client and will at all times be free and clear of any and all encumbrances, liens, or other third party claims.  Any Active Materials, Components and Bill Back Items received by Patheon will only be used by Patheon to perform the Manufacturing Services.

*** Confidential Treatment Requested

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ARTICLE 4

CONVERSION FEES AND COMPONENT COSTS

4.1First Year Pricing.

The Price and annual stability Price for the Products are listed in Schedules B and C.  The Prices for Products are subject to the adjustments set forth in Sections 4.2, 4.3, 4.4 and 4.5.

4.2Price Adjustments — Subsequent Years’ Pricing.

After December 31, 2011, Patheon or Client may adjust the Price for the Products effective January 1st of each subsequent Year as follows:

(a)Manufacturing Costs. Patheon or Client may adjust the Price for inflation, based upon the preliminary number for any increase or decrease in the Producer Price Index pcu325412325412 for Pharmaceutical Preparation Manufacturing published by the United States Department of Labor, Bureau of Labor Statistics (“PPI”) in August of the preceding Year compared to the final number for the same month of the Year prior to that, unless the parties otherwise agree in writing.  If the PPI for a given Year reflects a change from the PPI on the Effective Date, then the adjustment to be made pursuant to this Section 4.2(a) will proportionately reflect the increase or decrease, if any, compared to the PPI on the Effective Date, as the case may be.  On or about November 1st of each Year starting with 2012, Patheon will give Client a statement setting forth the calculation for the inflation adjustment to be applied in calculating the Price for the next Year; provided, that Client shall have the right to dispute any such calculation in good faith, and for the duration of such dispute the existing Prices shall continue to apply.

(b)Component Costs.  If Patheon incurs an increase (as adjusted for inflation) in costs for Components during the Year due to Client’s direction or other factors outside of Patheon’s reasonable control, it may increase the Price for the next Year to pass through the additional Component costs; provided, however, that the Price increase shall be no greater than the actual additional Component costs incurred, as adjusted for inflation.  On or before November 1st of each Year starting with 2011, Patheon will give Client detailed information about and support for the increase in Component costs which will be applied to the calculation of the Price for the next Year to reasonably demonstrate that the Price increase is justified, but Patheon will not be required to give information to Client that is subject to obligations of confidentiality between Patheon and its suppliers.  However, at the Client’s request, Patheon shall allow an independent third party auditor to review the information supporting the increase in Component costs and confirm that such information reasonably demonstrates that the Price increase is justified.

(c)Pricing Basis.  Client acknowledges that the Price in any Year is quoted based upon the Minimum Run Quantity specified in Schedule B.  The Price is subject to change if the specified Minimum Run Quantity changes.  For greater certainty, if Patheon and Client agree that the Minimum Run Quantity will be reduced, whether as a result of a decrease in estimated annual volume or otherwise and, as a result of the reduction, Patheon demonstrates to Client’s reasonable satisfaction that its costs to perform the Manufacturing Services for the Product will increase on a per unit basis (including the amount of the increase), then Patheon may increase the Price for the following Year by an amount sufficient to absorb the demonstrated increased costs.  On or about

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November 1st of each Year Patheon will give Client a statement setting forth the information to be applied in calculating those cost increases for the next Year, but Patheon will not be required to give information to Client that is subject to obligations of confidentiality between Patheon and its suppliers.  However, at the Client’s request, Patheon shall allow an independent third party auditor to review the information supporting the increase in Component costs and confirm that such information reasonably demonstrates that the Price increase is justified.  If Client places orders for quantities permitting Patheon to manufacture in larger production runs, then the parties shall review the then-current fees for Manufacturing Services for such Product in accordance with Section 4.2(d) below, and Patheon shall reduce such fees on a per-unit basis by a reasonable amount to reflect savings in Patheon’s costs relating to such Product as a result of such increase, if any.

(d)Adjustments Due to Currency Fluctuations.  The Price for Product that is manufactured outside the United States or Puerto Rico shall be adjusted once per year to reflect currency fluctuations in accordance with this Section 4.2(d).  The adjustment will be calculated after all other annual Price adjustments under this Section 4.2 have been made.  In the event the Set Exchange Rate for a given Year has changed the adjustment will proportionately reflect the increase or decrease, if any, in the Set Exchange Rate compared to the Set Exchange Rate established for the prior Year or the Initial Set Exchange Rate, as the case may be.  An example of the calculation of the price adjustment is set forth in Schedule I.

(e)Audit Costs.  If Client requests that an auditor review information supporting an increase in Price pursuant to Section 4.2(b) or (c) or pursuant to Section 4.3 below, such review shall be at the expense of Client unless the auditor determines that Patheon’s reported cost increase is greater than the actual cost increase by an amount equal to five percent (5%) or more of the prior cost of such Component or Manufacturing Services, as applicable, in which case (i) all costs related to the auditor’s review shall be paid by Patheon, (ii) the Prices shall automatically revert to the price determined by Client in accordance with the auditor’s findings with respect to such cost increases (or, if based on the auditor’s findings, Client determines that no Price increase should have occurred, the Price shall revert to the prior level), and (iii) Patheon shall promptly refund to Client any excess amounts paid by Client based on such incorrect cost increase.

For all Price adjustments under this Section 4.2, Patheon will deliver to Client on or about November 1st of each Year suggested revisions to Schedule B based upon this Section 4.2 to be effective for the next Year, which revised Schedule B must be approved in writing by Client before it becomes binding on either party.

4.3Adjustments — Current Year Pricing.

During any Year of this Agreement, the Prices set out in Schedule B will be adjusted as follows:

Extraordinary Increases in Component Costs.  If, at any time, market conditions result in Patheon’s cost of Components being materially greater than the cost on which the current fee is based, then Patheon will be entitled to an adjustment to the Price for any affected Product to compensate it for these increased Component costs; provided, however, that in no event shall

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Patheon be permitted to increase the Price by an amount equal to […***…]percent ([…***…]%) or more of the current Price pursuant to this Section 4.3.  Changes materially greater than the cost on which the current fee is based will have occurred if: (i) the cost of a Component increases by […***…]% of the cost for that Component upon which the most recent fee quote was based; or (ii) the aggregate cost for all Components required to manufacture a Product increases by […***…]% of the total Component costs for the Product upon which the most recent fee quote was based.  If Component costs have been previously adjusted to reflect an increase in the cost of one or more Components, the adjustments set out in (i) and (ii) above will operate based on the last cost adjustment for the Components.

For a Price adjustment under this Section 4.3, Patheon will deliver to Client a revised Schedule B and budgetary pricing information, adjusted Component costs or other documents reasonably sufficient to demonstrate that a Price adjustment is justified, but Patheon will have no obligation to deliver any supporting documents that are subject to obligations of confidentiality between Patheon and its suppliers.  However, at the Client’s request, Patheon shall allow an independent third party auditor to review the information supporting the increase in Component costs and confirm that such information reasonably demonstrates that the Price increase is justified.  The revised Price will be effective for any Product delivered on or after the first day of the month following Client’s receipt of the revised Schedule B.

4.4Adjustments Due to Technical Changes.

Material amendments to the Specifications or the Quality Agreement requested by Client will only be implemented following a technical and cost review by Patheon and are subject to Client and Patheon reaching agreement on Price changes (if any) required because of the amendment.  Amendments to the Specifications, the Quality Agreement or the Manufacturing Site requested by Patheon will only be implemented following the written approval of Client.  Upon receiving notice of a  request by Client for any such amendments, Patheon shall promptly advise Client in writing of any scheduling adjustments, any cost increases or decreases or other changes that may result from such change, and (a) will use its best efforts to make any change identified in such Client request that is in response to a regulatory or safety issue pertaining to the Product, and (b) will use commercially reasonable efforts to implement any other change identified in a Client request by the date requested by Client, or as soon thereafter as it is commercially reasonable.  If Client accepts a proposed Price change (if any) in response to such Client-proposed material amendment, the proposed change in the Specifications or the Quality Agreement will be implemented, and the Price change (if any) will become effective, only for those orders of Products that are manufactured under the revised Specifications or revised Quality Agreement.  In addition, Client agrees to purchase, at Patheon’s actual cost (including all reasonable costs incurred by Patheon for the purchase and handling of the Inventory), all Inventory used under the “old” Specifications and purchased or maintained by Patheon and necessary in order to fill Firm Orders or under Section 5.2, solely to the extent the Inventory can no longer be used under the revised Specifications or be returned to the vendor for a refund or credit.  Open purchase orders for Components no longer required under any revised Specifications that were placed by Patheon with suppliers and necessary in order to fill Firm Orders or under Section 5.2 will be cancelled where possible, and if the orders may not be cancelled without penalty, will be, at Client’s sole discretion, either (i) assigned to and satisfied by Client, or (ii) cancelled by Patheon, and Client will reimburse Patheon for the penalty it incurs as a result of such cancellation.

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4.5Multi-Country Packaging Requirements.

If Client decides to have Patheon perform Manufacturing Services for the Product for countries outside North America (other than Manufacturing Services for bulk tablet Product which is unpackaged and unlabeled), then Client will inform Patheon of the packaging requirements for each such country and Patheon will prepare a quotation for consideration by Client of any additional Component costs and the change over fees for the Product destined for each new country.  The agreed additional packaging requirements and related packaging costs and change over fees will be set out in a written amendment to this Agreement.

ARTICLE 5

ORDERS, SHIPMENT, INVOICING, PAYMENT

5.1Orders and Forecasts.

(a)Rolling […***…]Month Forecast.  When this Agreement is executed, Client will give Patheon a non-binding […***…]month forecast of the volume of Product that Client expects to order in the first […***…]months of commercial manufacture of the Product.  This forecast will then be routinely updated by Client on or before the 10th day of each month on a rolling forward basis and will be known as the Product Forecast.  Client will update the Product Forecast forthwith if it determines that the volumes estimated in the most recent Product Forecast have changed by more than […***…]%.  The most recent […***…]month Product Forecast will prevail.

(b)Firm Orders for Initial Manufacturing Month.  Client will update the Product Forecast for the first […***…]months of manufacture of the Product (the “Initial Manufacturing Period”).  The first month of this updated Product Forecast (“Initial Manufacturing Month”) will constitute a firm written order in the form of a purchase order or otherwise (“First Firm Order”) by Client to purchase and, when accepted by Patheon, for Patheon to manufacture the quantity of the Product.  If manufacturing has not started, Client may cancel any Batches from the First Firm Order at no cost if notice of cancellation is received by Patheon sixty (60) days or more before the scheduled Delivery Date under the First Firm Order.  If manufacturing has not started, Client may cancel any Batches from the First Firm Order if notice of cancellation is received by Patheon more than thirty (30) days but fewer than sixty (60) days before the scheduled Delivery Date under the First Firm Order, but Client will pay Patheon $[…***…]for each cancelled batch.  The parties agree that this payment will be considered liquidated damages for Patheon’s loss of manufacturing capacity due to the Client’s cancellation of manufacturing and will be Patheon’s sole and exclusive remedy for such cancellation, and will not be considered a penalty.  If the First Firm Order is changed or adjusted as described above, then the initial Product Forecast will also be adjusted as necessary. The cancellation rights in this section are subject to Client retaining responsibility for any reasonable, documented costs or expenses actually incurred or irrevocably committed by Patheon in accordance with this Agreement and related to such cancelled Batches before it received notice of the cancellation.

(c)Firm Orders Thereafter.  After the Initial Manufacturing Month, on a rolling basis during the term of this Agreement, and on or before the 10th day of each month, Client will issue an updated Product Forecast and the first […***…]months of that updated forecast willconstitute a firm written order in the form of a purchase order or otherwise (“Firm Order”)

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by Client to purchase and, when accepted by Patheon, for Patheon to manufacture and deliver the agreed quantity of the Products on a date not less than […***…]months from the first day of the month immediately following the date that the Firm Order is submitted.   Firm Orders submitted to Patheon will specify Client’s Manufacturing Services purchase order number, quantities by Product type, monthly delivery schedule, and any other elements necessary to ensure the timely manufacture and shipment of the Products.  Upon Patheon’s acceptance of a Firm Order, the quantities of Products ordered will be firm and binding on Client and Patheon and may not be reduced by Client or Patheon (unless the parties mutually agree otherwise in writing).

(d)[…***…]Year Forecast.  On or before the […***…]of each Year, Client will give Patheon a written non-binding […***…]-year forecast, broken down by quarters for the […***…]and […***…]years of the forecast, of the volume of each Product Client then anticipates will be required to be manufactured and delivered to Client during the […***…]-year period (the “Extended Product Forecast”).  For clarification, the Extended Product Forecast shall in no event be binding on Client.

(e)Acceptance of Firm Order.  Patheon shall accept all Firm Orders that are placed by Client in accordance with Client’s obligations under this Section 5.1.  Patheon will accept Firm Orders by sending an acknowledgement to Client within five Business Days of its receipt of the Firm Order.  The acknowledgement will include, subject to confirmation from the Client, the Delivery Date for the Product ordered. The Delivery Date may be amended by written agreement of the parties or as set forth in Sections 2.1(f) or 5.1(b).

5.2Reliance by Patheon.

(a)Client understands and acknowledges that Patheon will use the Firm Orders and Product Forecasts submitted under Sections 5.1(a), (b), and (c) in reasonably ordering the Components required to meet the Firm Orders (recognizing that Product Forecasts other than Firm Orders are non-binding).  In addition, Client understands that to ensure an orderly supply of the Components, Patheon may want to purchase the Components in reasonable volumes to meet the production requirements for Products during part or all of the forecasted periods referred to in Section 5.1(a) or to meet the production requirements of any longer period agreed to by Patheon and Client.  Accordingly, Client authorizes Patheon to purchase Components in quantities needed to satisfy the Manufacturing Services requirements for Products for the first […***…]months contemplated in the most recent Product Forecast.  Patheon may make other purchases of Components to meet Manufacturing Services requirements for longer periods only if agreed to in advance in writing by the parties.  Client will give Patheon written authorization to order Components for any launch quantities of Product requested by Client which will be considered a Firm Order when accepted by Patheon.  Patheon will use a […***…]method with regard to the Components it uses to manufacture Products.  If Components ordered by Patheon under Firm Orders or this Section 5.2 are not included in finished Products manufactured for Client within twelve (12) months after the forecasted month for which the purchases have been made (or for a longer period as the parties may agree) or if the Components have expired during the period, then Client will pay to Patheon its costs therefor (including all costs incurred by Patheon for the purchase and handling of the Components).   If these Components are used in Products subsequently manufactured for Client or in third party products manufactured by Patheon, Client will promptly, in Client’s discretion, either (i) receive credit for any costs of those Components previously paid to Patheon by Client, or (ii) receive a full refund from Patheon in an amount equal to costs of those Components previously paid to Patheon by Client.

(b)If Client fails to take possession or arrange for the destruction of Components reasonably purchased by Patheon pursuant to Section 5.2(a) above or fails to take possession or arrange for the

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destruction of Active Materials within 12 months of purchase or, in the case of finished Product, within three months of manufacture, Client will pay Patheon $[…***…]per pallet, per month thereafter for storing the Components, Active Materials or finished Product.  Storage fees for Components, Active Materials or Product which contain controlled substances or require refrigeration will be charged at $[…***…]per pallet per month.  Storage fees are subject to a one pallet minimum charge per month.  Patheon may ship finished Product held by it longer than 3 months to the Client at Client’s expense on 14 days advance written notice to the Client.  Additional storage requirements for Components, Active Materials and Products shall be specified in the Quality Agreement or otherwise specified in writing by Client.

5.3Minimum Orders; Annual Volume.

Client may only order Manufacturing Services for batches of Products in multiples of the Minimum Run Quantities as set out in Schedule B.  For clarification, Client will in no event be obligated to order any minimum annual volume of Products unless and until the FDA grants marketing approval of the Product.

5.4Shipments.

Shipments of Products will be made […***…](INCOTERMS 2010) Patheon’s shipping point unless otherwise mutually agreed by the parties in writing.  Risk of loss or of damage to Products will remain with Patheon until Patheon loads the Products onto the carrier’s vehicle for shipment at the shipping point at which time risk of loss or damage will transfer to Client.  Patheon will, in accordance with Client’s instructions and as agent for Client, (i) arrange for shipping to be paid by Client and (ii) at Client’s risk and expense, obtain any export licence or other official authorization necessary to export the Products.  Client will arrange for insurance and will select the freight carrier used by Patheon to ship Products and may monitor Patheon’s shipping and freight practices as they pertain to this Agreement.  Products will be transported in accordance with the Specifications.

5.5On Time Delivery.

(a)Patheon shall deliver Product ordered under a Firm Order on the applicable Delivery Date.    The parties agree that they will work together closely to expedite deliveries of Product, including, without limitation, any samples of Product and Product for initial launch, and manage the scheduling of the initial Product launch.

(b)If, after the Initial Manufacturing Period,  Patheon is unable to deliver the quantity of Product ordered under a Firm Order on the Delivery Date due to an act or omission by Patheon (a “Late Delivery”), Client will receive a credit from Patheon for the Late Delivery that will be applied against the purchase price under the next Firm Order.  The credit will be […***…] percent ([…***…]%) of the Price of the quantities of Product not delivered by Patheon under the Firm Order on the Delivery Date ([…***…]%).   This credit shall not limit any other rights or remedies that Client may have under this Agreement or otherwise for such Late Delivery.

(c)Without limiting Client’s other rights or remedies in this Agreement, (i) a late delivery by more than[…***…], and (ii) […***…]or more Late Deliveries within a […***…]period, regardless of the number of days by which any such Late Delivery is late, will, in each case, be a material breach of this Agreement by Patheon for the purposes of Section 8.2, provided that Client shall deliver a Breach Notice to Patheon as soon as practicable but in any case within 14 days of the occurrence of the breach, and provided further that a breach under (i) above shall be subject to remediation within a thirty (30) day Remediation Period for the purposes of Section 8.2,

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whereas a breach under (ii) above shall be deemed to be not remediable and therefore the Remediation Period shall not apply.   For clarity, a Late Delivery will not include any delay in shipment of Product caused by a Force Majeure Event, which may include a delay in delivery of Active Materials, a delay in Product release approval from Client, receipt of non-conforming API or Components supplied by Client or any market driven delays in deliveries from Client-approved vendors, in each case not within Patheon’s reasonable control, in which case the provisions of Section 13.7 shall apply.  Notwithstanding anything to the contrary in this Agreement, a delay in shipment of Product due to a Product quality investigation in accordance with the Quality Agreement and due to product non-conformance shall not be deemed to be a Late Delivery, unless the investigation determines that the quality problem was as a result of Patheon’s breach of this Agreement.

5.6Invoices and Payment.

Invoices will be sent by fax or email to the fax number or email address given by Client to Patheon in writing.  Invoices will be sent when the Product is manufactured and released by Patheon for shipment.  Patheon will also submit to Client, with each shipment of Products, a duplicate copy of the invoice covering the shipment.  Patheon will also give Client an invoice covering any Inventory or Components which are to be purchased by Client under Section 5.2 of this Agreement.  Each invoice will, to the extent applicable, identify Client’s Manufacturing Services purchase order number, Product numbers, names and quantities, unit price, freight charges, and the total amount to be paid by Client.  Client will pay all invoices within 30 days of the date thereof.  Interest on accounts that are past due for longer than thirty (30) days will accrue at 1.0% per month which is equal to an annual rate of 18% (or at the highest percentage allowed by Applicable Laws, whichever is less).  The Late Delivery credits set forth in this Section 5 are only available to Client if all outstanding undisputed invoices have been paid in full or are within 45 days outstanding from the invoice date when the Late Delivery arose.

ARTICLE 6

PRODUCT CLAIMS AND RECALLS

6.1Product Claims.

(a)Product Claims.  Client has the right to reject any shipment of Products or portion thereof that deviates from the warranties set forth in Section 9.3 below (“Defective Product”).  Client will inspect the Products supplied by Patheon upon receipt and will give Patheon written notice (a “Deficiency Notice”) of all claims for Defective Products based on such inspection within 30 days after Client’s receipt thereof (or, in the case of any defects not reasonably susceptible to discovery upon receipt of the Product, within 30 days after discovery by Client or its Affiliate or licensee, or any third party consumer, but not after the expiration date of the Product).  Should Client fail to give Patheon the Deficiency Notice within the applicable 30 day period, then the delivery will be deemed to have been accepted by Client on the 30th day after delivery or discovery, as applicable.  Except as set out in Section 6.3, Patheon will have no liability for any deviations for which it has not received notice within the applicable 30 day period.

(b)Determination of Deficiency.  Upon receipt of a Deficiency Notice, Patheon will have ten days to advise Client by notice in writing that it disagrees with the contents of the Deficiency Notice.  If Client and Patheon fail to agree within ten days after Patheon’s notice to Client as to whether any Products identified in the Deficiency Notice are Defective Products, then the parties will mutually select an

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independent laboratory to evaluate if the Products are Defective Products.  This evaluation will be binding on the parties. If the independent laboratory determines that any Products are Defective Products, Client may reject those Products in the manner contemplated in this Section 6.1 and Patheon will be responsible for the cost of the evaluation.  If the independent laboratory determines that the Products are not Defective Products, then Client will be deemed to have accepted delivery of the Products on the date of such final determination by the laboratory and Client will be responsible for the cost of the evaluation.

(c)Shortages. Claims for shortages in the amount of Products shipped by Patheon will be dealt with by reasonable agreement of the parties.  For clarification, this Section 6.1(c) shall not limit any other rights or remedies of the parties under this Agreement or otherwise.

6.2Product Recalls and Returns.

(a)Records and Notice.  Patheon and Client will each maintain records necessary to permit a Recall of any Products delivered to Client or customers of Client.  Each party will promptly notify the other by telephone (to be confirmed in writing) of any information which might affect the marketability, safety or effectiveness of the Products or which might result in the Recall or seizure of the Products.  Upon receiving this notice or upon this discovery, each party will stop making any further shipments of any Products in its possession or control until a decision has been made whether a Recall or some other corrective action is necessary.  The decision to initiate a Recall or to take some other corrective action, if any, will be made and implemented by Client.  “Recall” will mean any action (i) by Client and/or its Affiliates or licensees to recover title to or possession or stop distribution, prescription or consumption of quantities of the Products sold or shipped to third parties (including, without limitation, the voluntary withdrawal of Products from the market); or (ii) by any Regulatory Authorities to detain or destroy any of the Products.  Recall will also include any action by Client or its Affiliates or licensees to refrain from selling or shipping quantities of the Products to third parties which would have been subject to a Recall if sold or shipped.

(b)Recalls.  If (i) any Regulatory Authority issues a directive, order or, following the issuance of a safety warning or alert about a Product, a written request that any Product be Recalled, (ii) a court of competent jurisdiction orders a Recall, or (iii) Client determines that any Product should be Recalled or that a “Dear Doctor” letter is required relating the restrictions on the use of any Product, Patheon will co-operate as reasonably required by Client, having regard to all Applicable Laws.

(c)Product Returns.  Client will have the responsibility for handling customer returns of the Products.  Patheon will give Client any assistance that Client may reasonably require to handle the returns.

6.3Patheon’s Responsibility for Defective and Recalled Products.

(a)Defective Product.  Subject to Section 6.3(c), if Client rejects Products under Section 6.1, Client shall not be required to pay for such Product under Section 3.1.  Patheon will promptly, at Client’s election, either: (i) refund the amount paid for the defective Products, if Client previously paid for such Products, and the cost incurred by Client for the Bill Back Items, and Client-supplied Components used in such Products; (ii) offset the amount paid for the defective Products, if Client previously paid for such Products, and the cost incurred by Client for the Bill Back Items, and Client-supplied Components used in such Products, against other amounts due to Patheon hereunder; or (iii) at Patheon’s sole expense (excluding expense to incur replacement Active Materials, but including the replacement of Client-supplied Components and Bill Back Items), replace the Products with conforming Products as promptly as practical without Client being liable for payment therefor under Section 3.1, contingent upon the receipt from Client of all Active Materials required for the manufacture of the replacement Products.  For

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clarification, any refund of the amount paid by Client for the defective Products that is paid by Patheon pursuant to this Section 6.3(a) shall not be considered a liability under, and shall therefore not be subject to, Section 10.2(a).

(b)Recalled Product.  If a Recall or return of Product results from, or arises out of, a failure by Patheon to perform the Manufacturing Services in accordance with the terms of this Agreement, including warranties set forth in Section 9.3 or 9.4, or other negligence or willful misconduct of Patheon, Patheon will be responsible for all costs and documented out-of-pocket expenses of the Recall or return of Product and will promptly, at the election of Client, either: (i) refund the amount paid for the Recalled or returned Products and the cost incurred by Client for the Bill Back Items, Active Materials and Client-supplied Components used in such Products; (ii) offset the amount paid for the Recalled or returned Products and the cost incurred by Client for the Bill Back Items, Active Materials and Client-supplied Components used in such Products, against other amounts due to Patheon hereunder; or (iii) replace the Recalled or returned Products with conforming Products, at Patheon’s sole expense (including the expense to obtain replacement Active Materials, Bill Back Items and Client-supplied Components), as promptly as practical without Client being liable for payment therefor under Section 3.1, contingent upon the receipt from Client of all Active Materials required for the manufacture of the replacement Products.  In all other circumstances, Recalls, returns, or other corrective actions will be made at Client’s cost and expense.  For clarification, any refund of the amount paid by Client for the defective Products that is paid by Patheon pursuant to this Section 6.3(b) shall not be considered a liability under, and shall therefore not be subject to, Section 10.2(a).

(c)Patheon will not be liable to Client nor have any responsibility to Client for any deficiencies in, or other liabilities associated with, any Product manufactured by it (collectively, “Product Claims”), to the extent the Product Claim (i) is caused by deficiencies in the Specifications, the safety, efficacy, or marketability of the Products manufactured in accordance with this Agreement and conforming to the Specifications or any distribution thereof, (ii) results from a defect in a Component that is not reasonably discoverable by Patheon using the test methods set forth in the Specifications or as otherwise this Agreement, (iii) results from a defect in the Active Materials or Components supplied by Client that is not reasonably discoverable by Patheon using the test methods set forth in the Specifications or as otherwise set forth in this Agreement, (iv) is caused by actions of third parties occurring after the Product is shipped by Patheon under Section 5.4, (v) is due to packaging design or labelling defects or omissions not attributable to Patheon or its Affiliates or its or their employees, agents or subcontractors, or (vi) is due to any breach by Client of its obligations under this Agreement.

6.4Disposition of Defective or Recalled Products.

Client will not dispose of any damaged, defective, returned, or Recalled Products for which it intends to assert a claim against Patheon without Patheon’s prior written authorization to do so, which shall not be unreasonably withheld or delayed.  Alternatively, Patheon may instruct Client to return the Products to Patheon.  Patheon will bear the cost of disposition (including any applicable storage fees) for any damaged, defective, returned or Recalled Products for which it bears responsibility under Section 6.1 or 6.3.  In all other circumstances, Client will bear the cost of disposition, including all applicable fees for Manufacturing Services, for any damaged, defective, returned, or Recalled Products.

6.5Healthcare Provider or Patient Questions and Complaints.

Client will have the sole responsibility for responding to questions and complaints from its customers.  Questions or complaints received by Patheon from Client’s (and its Affiliate’s and licensee’s) customers, healthcare providers or patients will be promptly referred to Client.  Patheon will co-operate as reasonably required to allow Client to determine the cause of and resolve any questions and complaints.

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This assistance will include follow-up investigations, including testing and any other assistance reasonably requested by Client.  In addition, Patheon will promptly give Client all mutually agreed upon information that will enable Client to respond properly to questions or complaints about the Products as set forth in the Quality Agreement.  Client shall bear costs incurred under this Section 6.5 except to the extent the complaint resulted from a failure by Patheon to perform the Manufacturing Services in accordance with this Agreement, in which case all costs incurred under this Section 6.5 will be borne by Patheon.

6.6Sole Remedy.

Except for the indemnity set forth in Section 10.3 and subject to the limitations set forth in Sections 10.1 and 10.2 (or as expressly set forth in this Agreement), the remedies described in this Article 6 will be Client’s sole remedy for any failure by Patheon to supply Products in accordance with the warranties set forth in Section 9.3.

ARTICLE 7

CO-OPERATION

7.1Quarterly Review.

Each party will forthwith upon execution of this Agreement appoint one of its employees to be a relationship manager responsible for liaison between the parties.  The relationship managers will meet not less than quarterly to review the current status of the business relationship and manage any issues that have arisen.

7.2Governmental Agencies.

Subject to Section 7.8, Patheon may communicate with any Regulatory Authority, including but not limited to governmental agencies responsible for granting regulatory approval for the Products, regarding the Products only if, (i) in the opinion of Patheon’s counsel, the communication is necessary to comply with the terms of this Agreement or the requirements of any Applicable Laws and (ii) a representative of Client is present for such communication, in the event of a verbal communication, or has reviewed and approved such communication, in the event of a written communication.  Patheon shall notify Client immediately upon and in any event within 24 hours after receiving any request from a Regulatory Authority for communication related to a Product.

7.3Records and Accounting by Patheon.

Patheon will keep records of the manufacture, testing, and shipping of the Products, and retain samples of the Products as are necessary to comply with applicable manufacturing regulatory requirements, as well as to assist with resolving Product complaints and other similar investigations.  Copies of the records and samples will be retained for a period of one year following the date of Product expiry, or longer if required by Applicable Law, at which time Client will be contacted concerning the delivery and destruction of the documents and/or samples of Products.  Client is responsible for retaining samples of the Products necessary to comply with the legal/regulatory requirements applicable to Client.

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7.4Inspection.

Client or a third party on behalf of Client may inspect Patheon reports and records relating to this Agreement during normal business hours and with reasonable advance notice, but a Patheon representative must be present during the inspection.  In addition, Client shall have the right to have its representatives visit the Manufacturing Site with reasonable advance notice during normal business hours to audit Patheon’s manufacturing operations as relating to the manufacture, packaging, labelling, shipping and storage of Product, including to assess Patheon’s compliance with this Agreement and the Quality Agreement (which will include the right to audit financial records related thereto in order to confirm compliance with the calculations set forth in this Agreement, provided that such audit is conducted by an independent third party), and to discuss any related issues with Patheon’s manufacturing and management personnel as relating to the manufacture and supply of Products.

7.5Access.

Patheon will give Client reasonable access at mutually agreeable times to the areas of the Manufacturing Site in which the Products are manufactured, stored, handled, or shipped to permit Client to verify that the Manufacturing Services are being performed in accordance with the Specifications, cGMPs, and Applicable Laws.  But, with the exception of “For-Cause Audits”, Client will be limited each Year to one cGMP-type audit, lasting no more than two (2) Business Days per Manufacturing Site, and involving no more than two auditors; provided, that if such audit becomes a For Cause Audit as a result of issues discovered during such audit, then the limits set forth herein with respect to such audit shall not apply.  Client may request additional cGMP-type audits, additional audit days, or the participation of additional auditors, subject to payment to Patheon of a fee of $[…***…]for each additional audit day and $[…***…]per audit day for each additional auditor.  However, in the event any of the following circumstances arise, Client may elect and Patheon shall permit Client to conduct additional audits (each, a “For Cause Audit”) in a timely manner: (i) where there is the occurrence of a condition or event relating to the API or any Product which constitutes a serious health risk; (ii) where either party has received correspondence or a report from a Regulatory Authority pointing out a deficiency by or on behalf of Patheon; (iii) where the Specifications have not been complied with or there is otherwise evidence that compliance with the Specifications is at risk; or (iv) in the event of a Recall related to the Product. The right of access set forth in this Section 7.5 will not include a right to access or inspect Patheon’s financial records.  In addition, upon the request of any Regulatory Authority having jurisdiction over the manufacture of Product hereunder, such Regulatory Authority shall have access to observe, audit and inspect any Manufacturing Site and Patheon’s procedures used for the manufacture, release and stability testing, and/or warehousing of Product and to audit such facilities and procedures for compliance with cGMP and/or other regulatory requirements.  Patheon specifically agrees to cooperate with any inspection by a Regulatory Authority, whether prior to or after Regulatory Approval of a Product, and to provide Client a copy of any inspection or audit report resulting from any such inspection.

7.6Notification of Regulatory Inspections.

Patheon will notify Client within one Business Day of any inspections by any governmental agency specifically involving the Products.  Patheon will also notify Client of receipt of any form 483’s or warning letters or any other significant regulatory action which Patheon’s quality assurance group determines could impact the regulatory status of or Patheon’s ability to manufacture and supply to Client the Products.  Within one (1) Business Day of receipt, Patheon will provide Client with a reasonable description of any such notifications and inspections and all supporting documentation, including, as applicable, all form 483’s and warning letters or similar warning or objection of the applicable Regulatory Authority, which may be redacted to protect the confidential information of third parties.  Patheon shall discuss with Client and consider in good faith any comments provided by Client on the proposed

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response.  Patheon shall in any event use best efforts to address and rectify any issues or problems in its manufacturing facility or procedures and any objections or warnings raised by Regulatory Authorities, as soon as practicable and such that Patheon may continue to manufacture and supply to Client, in compliance with all Applicable Laws and the terms of this Agreement, the Products ordered by Client.  After the filing of a response with the FDA or other Regulatory Authority, Patheon shall notify Client of any further contacts with such Regulatory Authority relating to the subject matter of the response.

7.7Reports.

Patheon will supply on an annual basis all Product data in its control, including release test results, complaint test results, and all investigations (in manufacturing, testing, and storage), that Client reasonably requires in order to complete any filing under any applicable regulatory regime, including any Annual Report that Client is required to file with the FDA or other Regulatory Authority in the relevant jurisdiction.  At the Client’s request, Patheon will provide a copy of the Annual Product Review Report to the Client at no additional cost.  Any additional report requested by Client beyond the scope of cGMPs and customary FDA or other Regulatory Authority requirements will be subject to an additional fee to be agreed upon between Patheon and the Client.

7.8Regulatory Filings.

(a)Regulatory Authority.  Client will have the sole right and responsibility for filing all documents with all Regulatory Authorities and taking any other actions that may be required for the receipt and/or maintenance of Regulatory Authority approval for the manufacture, import, distribution, marketing and sale of the Products.  Patheon will assist Client, to the extent consistent with Patheon’s obligations under this Agreement, to obtain Regulatory Authority approval for the commercial manufacture of all Products as quickly as reasonably possible.

(b)Verification of Data.  At least 15 days prior to filing any documents with any Regulatory Authority that incorporate data generated by Patheon or describe processes performed by Patheon, Client will give Patheon a copy of the documents incorporating this data to give Patheon the opportunity to verify the accuracy and regulatory validity of those documents as they relate to Patheon generated data.  Patheon agrees to review and provide feedback, as requested by Client, within 10 days of receipt of draft regulatory submissions.  Notwithstanding the foregoing, in the event that Client has prepared documents in response to an urgent request from a Regulatory Authority, Client may provide such document for Patheon’s review within 24 hours prior to filing.  Such documents shall be Confidential Information of Client.

(c)Deficiencies.  If, in Patheon’s sole discretion, acting reasonably, Patheon determines that any of the information given by Client under clause (b) above is materially inaccurate or deficient in any manner whatsoever (the “Deficiencies”), Patheon will notify Client in writing of the Deficiencies within 24 hours of discovery of such Deficiencies by Patheon, but in any case, within the time limit set forth in clause (b) above.  The parties will work together to have the Deficiencies resolved prior to any filing or pre-approval inspection, as applicable.

(d)Client Responsibility.  For clarity, the parties agree that in reviewing the documents referred to in clause (b) above, Patheon’s role will be limited to verifying the accuracy of the description of the work undertaken or to be undertaken by Patheon.  Subject to the foregoing, Patheon will not assume any responsibility for the accuracy of any application for receipt of an approval by a Regulatory Authority.  The Client is solely responsibility for the preparation and filing of the application for approval by the Regulatory Authorities and any relevant costs will be borne by the Client.

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7.9Quality Agreement.  For clarification, in the event of any conflict between the terms and conditions of this Agreement, including this Article 7, and the terms and conditions of the Quality Agreement, the terms and conditions of the Quality Agreement shall control with regard to topics related to quality and compliance only.

ARTICLE 8

TERM AND TERMINATION

8.1Initial Term.

This Agreement will become effective as of the Effective Date and will continue until December 31, 2016 (the “Initial Term”), unless terminated earlier by one of the parties in accordance herewith.  This Agreement will automatically continue after the Initial Term for successive terms of two years each unless either party gives written notice to the other party of its intention to terminate this Agreement at least twelve (12) months prior to the end of the then current term, and unless otherwise terminated early as permitted under this Article 8.  The Initial Term and all successive terms (if any) shall be referred to herein as the “Term.”

8.2Termination for Cause.

(a)Either party at its sole option may terminate this Agreement upon written notice where the other party has failed to remedy a material breach of any of its representations, warranties, or other obligations under this Agreement within 60 days following receipt of a written notice (the “Remediation Period”) of the breach that expressly states that it is a notice under this Section 8.2(a) (a “Breach Notice”).

(b)Either party at its sole option may immediately terminate this Agreement upon written notice, but without prior advance notice, to the other party if: (i) the other party is declared insolvent or bankrupt by a court of competent jurisdiction; (ii) a voluntary petition of bankruptcy is filed in any court of competent jurisdiction by the other party; or (iii) the other party makes an assignment for the benefit of creditors.

(c)Client may terminate this Agreement as to any Product upon 30 days’ prior written notice if any Authority takes any action, or raises any objection, that prevents Client from importing, exporting, purchasing, or selling the Product, or Client (or its Affiliate or licensee) determines that for safety or efficacy reasons Client is not going to continue to develop or commercialize such Product.  But if this occurs, Client will still fulfill all of its obligations under Section 8.4 below.

(d)Without limiting Client’s other rights or remedies under this Agreement, Client may immediately terminate this Agreement upon written notice, but without prior advance notice, to Patheon if (i) any Authority takes any enforcement action regarding the Manufacturing Site, and such enforcement action relates to the Product or could reasonably be expected to adversely affect the ability of Patheon to supply the Product; or (ii) for any two calendar quarters during any continuous four calendar quarter period, Patheon is unable to deliver or supply any Firm Order in accordance with this Agreement.

8.3Product Discontinuation or Non-Approval.

During the Term, Client will give at least six months’ advance notice if it intends to no longer order Manufacturing Services for a Product due to this Product’s discontinuance in the market.  Upon expiration of the applicable six-month notice period, this Agreement shall terminate with respect to

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such Product or, if such Product is the only Product subject to this Agreement, this Agreement shall terminate in its entirety.

8.4Further Termination rights of Client.

Client shall have the right to terminate this Agreement immediately upon written notice to Patheon (a) in accordance with Section 9.4 of this Agreement, (b) in the event the Product is not approved by the FDA for marketing in the United States by January 1, 2012, or (c) if at any time the Target Yield falls below […***…]%.

8.5Obligations on Termination.

If this Agreement is completed, expires, or is terminated in whole or in part for any reason (other than by Client pursuant to Section 8.2), then:

(a)Client will take delivery of and pay for all undelivered conforming Products that are manufactured and/or packaged under a Firm Order, at the Price in effect at the time the Firm Order was placed.

(b)Client will purchase, at Patheon’s actual cost (including all costs incurred by Patheon for the purchase and handling of the Inventory), the Inventory applicable to the Products which was purchased, produced and maintained by Patheon in contemplation of filling Firm Orders or in accordance with Section 5.2.

(c)Client will reimburse Patheon the purchase price actually paid by Patheon under Patheon’s non-cancellable orders with suppliers of Components, if the orders were made by Patheon in reliance on Firm Orders or in accordance with Section 5.2; and

Patheon will, at Client’s option, either return to Client all unused Active Materials (with shipping and related expenses, if any, to be borne by Client) or destroy all unused Active Materials in accordance with Client’s directions and at Client’s expense; and

Client acknowledges that no contract manufacturer that is a direct competitor of Patheon will be permitted access to the Manufacturing Site unless otherwise agreed in writing by the parties.

(d)Client will make commercially reasonable efforts, at its own expense, to remove from Patheon site(s), within 30 Business Days, all of Client’s Components, Inventory and Active Materials (whether current or obsolete), supplies, undelivered Product, chattels, equipment or other moveable property owned by Client, related to the Agreement and located at a Patheon site or that is otherwise under Patheon’s care and control (“Client Property”).  If Client fails to remove the Client Property within 30 Business Days following the completion, termination, or expiration of the Agreement Client will pay Patheon $[…***…] per pallet, per month, one pallet minimum ($[…***…] per pallet, per month, one pallet minimum, for any of the Client Property that contains controlled substances or requires refrigeration) thereafter for storing the Client Property and will assume any reasonable, documented third party storage charges invoiced to Patheon regarding the Client Property.  Patheon will invoice Client for the storage charges as set forth in Section 5.6 of this Agreement.

*** Confidential Treatment Requested

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In addition, upon any expiration or termination of this Agreement, Patheon will immediately cease all Manufacturing Services (unless otherwise instructed by Client) and return to Client all Confidential Information, unused Active Materials, Client-supplied Components and Bill Back Items (with reasonable shipping and related expenses, if any, to be borne by Client).

Any termination or expiration of this Agreement will not affect any outstanding obligations or payments due hereunder prior to the termination or expiration, nor will it prejudice any other remedies that the parties may have under this Agreement.  For greater certainty, expiration or termination of this Agreement for any reason will not affect the obligations and responsibilities of the parties under Articles 10, 11 and 12 and Sections 5.4, 5.5(a), 5.6, 7.3, 7.4, 8.5, 13.1, 13.2, 13.3, 13.11, 13.15 and 13.16, all of which survive any expiration or termination.

ARTICLE 9

REPRESENTATIONS, WARRANTIES AND COVENANTS

9.1Authority.

Each party covenants, represents, and warrants to the other party that, as of the Effective Date, (a) it has the full right and authority to enter into this Agreement and to perform its obligations hereunder and has taken all necessary action on its part to authorize the performance of such obligations; (b) the execution and delivery of this Agreement and the performance of such party’s obligations hereunder (i) do not conflict with or violate any requirement of Applicable Laws or regulations and (ii) do not conflict with, or constitute a default or require any consent under, any contractual obligation of such party; (c) it is duly organized, validly existing and in good standing under the laws of the state or country in which it is organized; and (d) this Agreement has been duly executed and delivered on behalf of such party, and constitutes a legal, valid, binding obligation, enforceable against such party in accordance with its terms.

9.2Client Warranties.

Client covenants, represents, and warrants that:

(a)Non-Infringement.

(i)the Specifications for each of the Products are its or its Affiliate’s property and that Client may lawfully disclose the Specifications to Patheon;

(ii)any Client Intellectual Property generated or derived by Client before entering into this Agreement or independent of this Agreement that is necessary for Patheon to perform the Manufacturing Services according to the Specifications (A) is Client’s or its Affiliate’s unencumbered property or is otherwise controlled by Client or its Affiliate (by license or otherwise), (B) may be lawfully used by Patheon as directed by Client, and (C) does not infringe and will not infringe any Third Party Rights in relation to the Products or their manufacture; and

(iii)as of the Effective Date, there are no actions or other legal proceedings to which Client is a party or of which Client is aware, concerning the infringement of Third Party Rights related to any of the Specifications, or any of the Active Materials

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and the Components supplied by Client, or the sale, use, or other disposition of any Product made in accordance with the Specifications; and on the date of shipment to the Manufacturing Site, the Active Materials will conform to the specifications for the Active Materials that Client has given to Patheon (provided, however, that Patheon acknowledges that it is obligated to test Active Materials in accordance with the Quality Agreement before beginning manufacture of Products using such Active Material).

9.3Patheon Warranties.

Patheon covenants, represents, and warrants that:

(a)all Product delivered hereunder shall (i) conform to the applicable Specifications; (ii) be free and clear of any and all encumbrances, liens, or other third party claims; (iii) be manufactured, packaged, labelled and delivered in compliance with the Quality Agreement and applicable cGMP, all regulatory approvals for the Product, and Applicable Laws and in accordance with manufacturing procedures described in the applicable master batch records for such Product; (iv) not be adulterated or misbranded within the meaning of the United States Food, Drug and Cosmetic Act, as amended, and any regulations promulgated thereunder, or any analogous law or regulation in the applicable jurisdiction (the “Act”); (v) not be articles that, under the provisions of the Act, may not be introduced into interstate commerce and (vi) subject to Client’s representation in Section 9.2(a)(ii)(C), the manufacture of the Product in accordance with this Agreement will not infringe any Third Party Rights;

(b)(i) it will perform the Manufacturing Services in accordance with the Specifications, cGMPs, all regulatory approvals for the Product and Applicable Laws, and (ii) the Components, Active Materials and the Bill Back Items will at all times be free and clear of any and all encumbrances, liens, or other third party claims; and

(c)any Patheon Intellectual Property used by Patheon to perform the Manufacturing Services (i) is Patheon’s or its Affiliate’s unencumbered property, (ii) may be lawfully used by Patheon, and (iii) does not infringe and will not infringe any Third Party Rights.

9.4Debarred Persons.

Patheon covenants that it will not in the performance of its obligations under this Agreement use the services of any person debarred or suspended under 21 U.S.C. §335(a) or (b) or any analogous provision under any other applicable jurisdiction.  Patheon represents that it does not currently have, and covenants that it will not hire, as an officer or an employee any person who has been convicted of a felony under the laws of the United States for conduct relating to the regulation of any drug product under the Act. In the event that Patheon or any officer, employee or agent of Patheon:  (a) becomes debarred; or (b) receives notice of action or threat of action with respect to its debarment, during the Term of this Agreement, Patheon agrees to notify Client immediately.  In the event that Patheon or any of its officers, employees or agents becomes debarred as set forth in clause (a) above or receives notice of

27

action or threat of action as set forth in clause (b) above, Client shall have the right to terminate this Agreement upon written notice to Patheon.

9.5Permits.

Client will be solely responsible for obtaining or maintaining, on a timely basis, any permits or other regulatory approvals for the Products or the Specifications, including, without limitation, all marketing and post-marketing approvals.

Patheon will maintain at all relevant times all governmental permits, licenses, approval, and authorities required to enable it to lawfully and properly perform the Manufacturing Services in accordance with this Agreement.

9.6No Warranty.

EACH PARTY MAKES NO WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, BY FACT OR LAW, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT.  PATHEON MAKES NO WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY FOR THE PRODUCTS MANUFACTURED BY PATHEON IN ACCORDANCE WITH THIS AGREEMENT.

ARTICLE 10

REMEDIES AND INDEMNITIES

10.1Consequential Damages.

Except for liability for breach by Patheon of its obligations under Article 11, under no circumstances whatsoever will either party be liable to the other in contract, tort, negligence, breach of statutory duty, or otherwise for (i) any (direct or indirect) loss of profits, of production, of anticipated savings, of business, or goodwill or (ii) for any other liability, damage, costs, or expense of any kind incurred by the other party of an indirect or consequential nature, regardless of any notice of the possibility of these damages; provided, however, that this shall not be deemed to limit either party’s indemnification obligations under this Article 10.

10.2Limitation of Liability.

(a)Active Materials.  Except as expressly set forth in Section 2.2 and Article 6, under no circumstances will Patheon be responsible for any loss or damage to the Active Materials, except to the extent resulting from Patheon’s negligence or willful misconduct or failure to comply with this Agreement or the Quality Agreement.  Patheon’s maximum responsibility per Year for loss or damage to the Active Materials will not exceed the Maximum Credit Value set forth in Schedule D.

(b)Maximum Liability.  Subject to 10.2(c), and except for any liability arising under Section 10.3, Patheon’s maximum liability to Client per Year under this Agreement for any reason whatsoever, including, without limitation, any liability arising under Article 6 hereof or resulting from any and all breaches of its representations, warranties, or any other obligations under this Agreement will not exceed […***…]percent ([…***…]%) of Patheon’s revenues under this Agreement in the aggregate per Year.

*** Confidential Treatment Requested

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(c)Death, Personal Injury and Fraudulent Misrepresentation. Nothing contained in this Agreement shall act to exclude or limit either party’s liability for personal injury, death or fraudulent misrepresentation.

10.3Indemnification by Patheon.

Patheon agrees to defend, indemnify, and hold Client, its Affiliates and licensees, and each of their respective directors, officers, employees, and agents (“Client Indemnitees”) harmless against any and all losses, damages, costs, liabilities, fees and expenses (including reasonable attorneys’ fees) (collectively, “Losses”) resulting from any suit, claim, demand, judgment or action brought by a third party (excluding Affiliates) (each, a “Claim”) including, without limitation, any Claim of personal injury or property damage, to the extent that such Loss is the result of (a) a failure by Patheon or any other Patheon Indemnitee to perform the Manufacturing Services in accordance with the Specifications, cGMPs or Applicable Laws, (b) Patheon’s breach of any of its obligations, representations or warranties under this Agreement, or (c) the negligence or willful misconduct of any Patheon Indemnitee, except to the extent that the Losses are due to the negligence or willful misconduct of any Client Indemnitee.

If a claim occurs, Client will: (a) promptly notify Patheon of the Claim; (b) use commercially reasonable efforts to mitigate the effects of the Claim; (c) reasonably cooperate with Patheon in the defence of the Claim; and (d) permit Patheon to control the defence and settlement of the Claim, all at Patheon’s cost and expense.  Notwithstanding the foregoing, Patheon shall not compromise or settle any Claim for any damages other than monetary damages without Client’s prior written consent, which shall not be unreasonably withheld.

10.4Indemnification by Client.

Client agrees to defend, indemnify, and hold Patheon, its Affiliates and each of their respective directors, officers, employees, and agents (“Patheon Indemnitees”) harmless against any and all Losses resulting from any Claim of infringement or alleged infringement of any Third Party Rights in the Products, or any portion thereof, or any Claim of personal injury or property damage, each to the extent that the Loss is the result of a breach of this Agreement by Client, including, without limitation, a breach by Client of any representation or warranty contained herein, or the negligence or willful misconduct of any Client Indemnitee, except to the extent that the Losses are due to the negligence or willful misconduct of any Patheon Indemnitee.

If a claim occurs, Patheon will: (a) promptly notify Client of the Claim; (b) use commercially reasonable efforts to mitigate the effects of the Claim; (c) reasonably cooperate with Client in the defence of the Claim; and (d) permit Client to control the defence and settlement of the Claim, all at Client’s cost and expense.  Notwithstanding the foregoing, Client shall not compromise or settle any Claim for any damages other than monetary damages without Patheon’s prior written consent, which shall not be unreasonably withheld.

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ARTICLE 11

CONFIDENTIALITY

11.1Confidentiality Obligation.

During the Term of this Agreement and for a period of ten (10) years thereafter, Patheon will maintain all Confidential Information (as defined below) as confidential and will not disclose any Confidential Information or use any Confidential Information for any purpose, except (a) as expressly authorized by this Agreement, (b) as permitted by Section 11.3, or (c) to its employees, Affiliates and Client-approved subcontractors who require access to such information to accomplish the purposes of this Agreement so long as such persons and entities are under obligations regarding the confidentiality of the Confidential Information that are consistent with and no less protective to Client than the terms of this Agreement.  Patheon may use the Confidential Information only to the extent required to accomplish the purposes of this Agreement.  Patheon will use at least the same standard of care as it uses to protect its own confidential information to ensure that its employees, Affiliates and Client-approved subcontractors do not disclose or make any unauthorized use of the Confidential Information.  Patheon shall be responsible for any breach of this Agreement by any of its employees, Affiliates or subcontractors.  Patheon will promptly notify Client upon discovery of any unauthorized use or disclosure of the Confidential Information.

11.2Definition.

For purpose of this Agreement, “Confidential Information” means all information provided by or on behalf of Client to Patheon pursuant to this Agreement or the Confidentiality Agreement, and all Information and Client Intellectual Property, whether in oral, written, graphic or electronic form.  Notwithstanding the foregoing, Confidential Information will not include any information which Patheon can demonstrate by competent written evidence:  (a) is or becomes publicly known other than as a result of any breach of this Agreement by Patheon; (b) is disclosed to Patheon on a non-confidential basis by a third party who rightfully possesses the information and is not under an obligation of confidentiality with respect thereto; or (c) was known to Patheon prior to its first receipt from Client (whether such first receipt occurred before or during the term of this Agreement), except in the case of Information and Client Intellectual Property, which shall not be subject to the exception in this clause (c).  For purposes of clause (a) of this Section 11.2, no combination of elements within the Confidential Information shall be deemed to be publicly known merely because the individual elements of such combination are publicly known, unless the entire combination itself, or the entire principle of use or operation of such combination (if any), is publicly known.  In addition, no element within the Confidential Information shall be deemed to be publicly known merely because it is embraced by more general information or data that is publicly known.

11.3Authorized Disclosure.

Notwithstanding the provisions of Section 11.1, Patheon may disclose Confidential Information, without violating its obligations under this Agreement, to the extent the disclosure is required by a valid order of a court or other governmental body having jurisdiction or is otherwise required by law or regulation, provided that Patheon shall reasonable prior written notice to Client of such required disclosure and, at Client’s request and expense, shall cooperate with Client’s efforts to contest such requirement, to obtain a protective order requiring that the Confidential Information so disclosed be used only for the purposes for which the order was issued or the law or regulation required, or to obtain other confidential treatment of such Confidential Information.

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11.4Third Party Confidential Information.

Patheon shall not disclose to Client any confidential or proprietary information that belongs to any third party during its performance under this Agreement.

ARTICLE 12

DISPUTE RESOLUTION

12.1Commercial Disputes.

If any dispute arises out of this Agreement (other than a dispute under Section 6.1(b) or a Technical Dispute, as defined herein), the parties will first try to resolve it amicably.  In that regard, any party may send a notice of dispute to the other, and each party will appoint, within ten Business Days from receipt of the notice of dispute, a single representative having full power and authority to resolve the dispute.  The representatives will meet as necessary in order to resolve the dispute.  If the representatives fail to resolve the matter within one month from their appointment, or if a party fails to appoint a representative within the ten Business Day period set forth above, the dispute will immediately be referred to the Chief Operating Officer (or another officer as he/she may designate) of Patheon and the Chief Executive Officer of Client who will meet and discuss as necessary to try to resolve the dispute amicably.  Should the parties fail to reach a resolution under this Section 12.1, the dispute will be referred to a court of competent jurisdiction in accordance with Section 13.15.

12.2Technical Dispute Resolution.

If a dispute arises (other than disputes under Sections 6.1(b) or 12.1) between the parties that is exclusively related to technical aspects of the manufacturing, packaging, labelling, quality control testing, handling, storage, or other activities under this Agreement (a “Technical Dispute”), the parties will make all reasonable efforts to resolve the dispute by amicable negotiations.  In that regard, senior representatives of each party will, as soon as practicable, and in any event no later than ten Business Days after a written request from either party to the other, meet in good faith to resolve any Technical Dispute.  If, despite this meeting, the parties are unable to resolve a Technical Dispute within a reasonable time, and in any event within 30 Business Days of the written request, the Technical Dispute will, at the request of either party, be referred for determination to an expert in accordance with Schedule E.  If the parties cannot agree that a dispute is a Technical Dispute, Section 12.1 will prevail.  For greater certainty, the parties agree that the release of the Products for sale or distribution under the applicable marketing approval for the Products will not by itself indicate compliance by Patheon with its obligations for the Manufacturing Services and further that nothing in this Agreement (including Schedule E) will remove or limit the authority of the relevant qualified person (as specified by the Quality Agreement) to determine whether the Products are to be released for sale or distribution.

ARTICLE 13

MISCELLANEOUS

13.1Inventions.

(a)For the Term, Client hereby grants to Patheon a non-exclusive, paid-up, royalty-free, non-transferable license under the Client Intellectual Property solely to the extent necessary to perform the Manufacturing Services in accordance with this Agreement, and for no other purpose.

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(b)All Information generated or derived by Patheon while performing the Manufacturing Services, to the extent it relates specifically to the development, manufacture, use, and sale of Product that is the subject of the Manufacturing Services, and all Client Intellectual Property, will be the exclusive property of Client. Patheon agrees to assign and hereby does assign all of its right, title and interest in and to all such Information and Client Intellectual Property to Client and agrees to take all further acts reasonably required to evidence and/or perfect such assignment to Client, at Client’s expense. Patheon shall notify Client in writing, as promptly as practicable, of all Information and any Client Intellectual Property made, created, discovered, generated or derived by Patheon in the course of performing the Manufacturing Services.  Patheon may retain one copy of records relating to Client Intellectual Property to the extent required under Applicable Laws.

(c)All Patheon Intellectual Property will be the exclusive property of Patheon. Patheon hereby grants to Client a perpetual, irrevocable, non-exclusive, paid-up, royalty-free, transferable license to use the Patheon Intellectual Property used by Patheon to perform the Manufacturing Services to enable Client to research, develop, make, have made, use, sell, offer for sale, import and otherwise commercialize the Product(s).

(d)Each party will be solely responsible for the costs of filing, prosecution, and maintenance of patents and patent applications on its own inventions.

13.2Intellectual Property.

All Client Intellectual Property will be owned by Client and all Patheon Intellectual Property will be owned by Patheon.  Neither party has, nor will it acquire, any interest in any of the other party’s Intellectual Property unless otherwise expressly agreed to in writing or expressly set forth herein.  Neither party will use any Intellectual Property of the other party, except as specifically authorized by the other party or as required for the performance of its obligations under this Agreement.

13.3Insurance.

Each party will maintain commercial general liability insurance, including blanket contractual liability insurance covering the obligations of that party under this Agreement through the term of this Agreement and for a period of three years thereafter.  This insurance will have policy limits of not less than (i) $[…***…]for each occurrence for personal injury or property damage liability; and (ii) $[…***…]in the aggregate per annum for product and completed operations liability.  If requested each party will give the other a certificate of insurance evidencing the above and showing the name of the issuing company, the policy number, the effective date, the expiration date, and the limits of liability.  The insurance certificate will further provide for a minimum of 30 days’ written notice to the insured of a cancellation of the insurance, except that for cancellation due to non-payment, a minimum of 10 days’ written notice to the insured will be provided.  If a party is unable to maintain the insurance policies required under this Agreement through no fault of its own, then the party will forthwith notify the other party in writing and the parties will in good faith negotiate appropriate amendments to the insurance provision of this Agreement in order to provide adequate assurances.

13.4Independent Contractors.

The parties are independent contractors and this Agreement will not be construed to create between Patheon and Client any other relationship such as, by way of example only, that of

*** Confidential Treatment Requested

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employer-employee, principal agent, joint-venturer, co-partners, or any similar relationship, the existence of which is expressly denied by the parties.

13.5No Waiver.

Either party’s failure to require the other party to comply with any provision of this Agreement will not be deemed a waiver of the provision or any other provision of this Agreement.

13.6Assignment.

(a)Patheon may not assign this Agreement or any of its rights or obligations hereunder, or subcontract any of its rights or obligations hereunder, without the written consent of Client, this consent not to be unreasonably withheld; provided, that Patheon may arrange for subcontractors to perform specific testing services arising under this Agreement without the written consent of Client to the extent such subcontractors are specifically named and agreed in the Quality Agreement.

(b)Client may assign this Agreement or any of its rights or obligations hereunder without approval from Patheon.  Client will give Patheon written notice of any assignment, and any assignee will covenant in writing with Patheon to be bound by the terms of this Agreement.

(c)Despite the foregoing provisions of this Section 13.6, either party may assign this Agreement to any of its Affiliates or to a successor or purchaser of all or substantially all of its business to which this Agreement relates, but the assignee must execute an agreement with the non-assigning party whereby it agrees to be bound hereunder.

13.7Force Majeure.

Neither party will be liable for the failure to perform its obligations under this Agreement if the failure is caused by an event beyond that party’s reasonable control, including, but not limited to, strikes or other labour disturbances, lockouts, riots, quarantines, communicable disease outbreaks, wars, acts of terrorism, fires, floods, storms, interruption of or delay in transportation, lack of or inability to obtain fuel, power or components, or compliance with any order or regulation of any government entity acting within colour of right (a “Force Majeure Event”).  A party claiming a right to excused performance under this Section 13.7 will immediately notify the other party in writing of the extent of its inability to perform, which notice will specify the event beyond its reasonable control that prevents the performance.  Neither party will be entitled to rely on a Force Majeure Event to relieve it from an obligation to pay money (including any interest for delayed payment) which would otherwise be due and payable under this Agreement. If the performance of any obligation under this Agreement is delayed due to for a Force Majeure Event for a continuous period of more than 60 days, the other party may terminate this Agreement without penalty upon written notice to the other party under such event.

13.8Additional Product.

Additional products may be added to this Agreement and the additional products will be governed by the general conditions hereof with any special terms (including, without limitation, price) governed by amendments to Schedules A, B, and C as applicable.

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13.9Notices.

Any notice, approval, instruction or other written communication required or permitted hereunder will be sufficient if made or given to the other party by personal delivery, by telecopy, facsimile communication, or confirmed receipt electronic mail or by sending the same by first class mail, postage prepaid to the respective addresses, telecopy or facsimile numbers or electronic mail addresses set forth below:

If to Client:

Optimer Pharmaceuticals, Inc.

10110 Sorrento Valley Rd., Suite C

San Diego, CA 92121

Attention:  Chief Operating Officer and Vice President of Manufacturing

Telecopier No.: 858.909.0737

If to Patheon:

Patheon Inc.

2100 Syntex Court

Mississauga, Ontario L5N 7K9

Canada

Attention:  Law Department

Telecopier No.: 905.812.6613

With a copy to:

Patheon Inc.

4721 Emperor Boulevard

Research Triangle Park,

NC 27703

Attention: General Counsel

Telecopier No.: 919-474-2269

or to any other addresses, telecopy or facsimile numbers or electronic mail addresses given to the other party in accordance with the terms of this Section 13.9.  Notices or written communications made or given by personal delivery, telecopy, facsimile, or electronic mail will be deemed to have been sufficiently made or given when sent, or if mailed, five days after being deposited in the United States, Canada, or European Union mail, postage prepaid or upon receipt, whichever is sooner, or one Business Day after being sent by overnight courier.

13.10Severability.

If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, that determination will not impair or affect the validity, legality, or enforceability of the remaining provisions hereof, because each provision is separate, severable, and distinct.

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13.11Entire Agreement.

This Agreement, together with all Schedules hereto, and the Quality Agreement, constitute the full, complete, final and integrated agreement between the parties relating to the subject matter hereof and supersedes all previous written or oral negotiations, commitments, agreements, transactions, or understandings concerning the subject matter hereof, including, without limitation, the Confidentiality Agreement as it relates to the subject matter hereof.  Any modification, amendment, or supplement to this Agreement must be in writing and signed by authorized representatives of both parties.  In case of conflict, the prevailing order of documents will be this Agreement first and the Quality Agreement second.

13.12Other Terms.

No terms, provisions or conditions of any purchase order or other business form or written authorization used by Client or Patheon will have any effect on the rights, duties, or obligations of the parties under or otherwise modify this Agreement, regardless of any failure of Client or Patheon to object to the terms, provisions, or conditions unless the document specifically refers to this Agreement and is signed by both parties.

13.13No Third Party Benefit or Right.

For greater certainty, nothing in this Agreement will confer or be construed as conferring on any third party any benefit or the right to enforce any express or implied term of this Agreement.

13.14Execution in Counterparts.

This Agreement may be executed in two or more counterparts, by original or facsimile signature, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

13.15Use of Client Name.

Patheon will not make any use of Client’s name, trademarks or logo or any variations thereof, alone or with any other word or words, without the prior written consent of Client, which consent will not be unreasonably withheld.  Despite this, Client agrees that Patheon may include Client’s name and logo in customer lists or related marketing and promotional material for the purpose of identifying users of Patheon’s Manufacturing Services.

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13.16Governing Law.

This Agreement will be construed and enforced in accordance with the laws of the State of New York.  The UN Convention on Contracts for the International Sale of Goods will not apply to this Agreement.

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

PATHEON INC.
by	/s/ Eric Evans
by
OPTIMER PHARMACEUTICALS, INC.
by	/s/ John D. Prunty
by

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SCHEDULE A

PRODUCT LIST AND SPECIFICATIONS

[…***…]

*** Confidential Treatment Requested

SCHEDULE B

MINIMUM RUN QUANTITY AND PRICE

[…***…]

*** Confidential Treatment Requested

SCHEDULE C

ANNUAL STABILITY TESTING & ANNUAL PRODUCT REVIEW

[…***…]

*** Confidential Treatment Requested

2

2011-2012 Annual Product Review Pricing

If Client is not generating the Annual Product Review (“APR”), Patheon’s Quality Assurance department will complete a comprehensive review which Client will use to file an Annual Product Report.  Patheon offers three levels of APR depending on the client requirements.

The following table outlines charges that will be billed to Client, depending on the Level of APR agreed upon.

[…***…]

*** Confidential Treatment Requested

3

SCHEDULE D

ACTIVE MATERIALS

Active Materials	Supplier
[…***…]	[…***…]

ACTIVE MATERIALS CREDIT VALUE

The Active Materials Credit Value will be as follows:

PRODUCT	ACTIVE MATERIALS	ACTIVE MATERIALSCREDIT VALUE
[…***…]	[…***…]	[…***…]

MAXIMUM CREDIT VALUE

Patheon’s liability for Active Materials calculated in accordance with Section 2.2 of the Agreement for any Product in a Year will not exceed, in the aggregate, the maximum credit value set forth below:

PRODUCT	MAXIMUM CREDIT VALUE
Fidaxomicin	[…***…]percent ([…***…]%) of Patheon’s revenues under this Agreement, in the aggregate per Year.

*** Confidential Treatment Requested

SCHEDULE E

TECHNICAL DISPUTE RESOLUTION

Technical Disputes which cannot be resolved by negotiation as provided in Section 12.2 will be resolved in the following manner:

1.Appointment of Expert. Within ten Business Days after a party requests under Section 12.2 that an expert be appointed to resolve a Technical Dispute, the parties will jointly appoint a mutually acceptable expert with experience and expertise in the subject matter of the dispute.  If the parties are unable to so agree within the ten Business Day period, or in the event of disclosure of a conflict by an expert under Paragraph 2 hereof which results in the parties not confirming the appointment of the expert, then an expert (willing to act in that capacity hereunder) will be appointed by an experienced arbitrator on the roster of ADR Chambers who will be a retired judge of the Ontario Superior Court of Justice or on the roster of the American Arbitration Association.

2.Conflicts of Interest.  Any person appointed as an expert will be entitled to act and continue to act as an expert even if at the time of his appointment or at any time before he gives his determination, he has or may have some interest or duty which conflicts or may conflict with his appointment if before accepting the appointment (or as soon as practicable after he becomes aware of the conflict or potential conflict) he fully discloses the interest or duty and the parties will, after the disclosure, have confirmed his appointment.

3.Not Arbitrator.  No expert will be deemed to be an arbitrator and the provisions of the Arbitration Act (Ontario) or of any other applicable statute (foreign or domestic) and the law relating to arbitration will not apply to the expert or the expert’s determination or the procedure by which the expert reaches his determination under this Schedule E.

4.Procedure.  Where an expert is appointed:

(a)Timing.  The expert will be so appointed on condition that (i) he promptly fixes a reasonable time and place for receiving representations, submissions or information from the parties and that he issues the authorizations to the parties and any relevant third party for the proper conduct of his determination and any hearing and (ii) he renders his decision (with full reasons) within 15 Business Days (or another other date as the parties and the expert may agree) after receipt of all information requested by him under Paragraph 4(b) hereof.

(b)Disclosure of Evidence.  The parties undertake one to the other to give to any expert all the evidence and information within their respective possession or control as the expert may reasonably consider necessary for determining the matter before him which they will disclose promptly and in any event within five Business Days of a written request from the relevant expert to do so.

(c)Advisors.  Each party may appoint any counsel, consultants and advisors as it feels appropriate to assist the expert in his determination and so as to present their respective cases so that at all times the parties will co-operate and seek to narrow and limit the issues to be determined.

(d)Appointment of New Expert.  If within the time specified in Paragraph 4(a) above the expert will not have rendered a decision in accordance with his appointment, a new expert may (at the request of either party) be appointed and the appointment of the

existing expert will thereupon cease for the purposes of determining the matter at issue between the parties save this if the existing expert renders his decision with full reasons prior to the appointment of the new expert, then this decision will have effect and the proposed appointment of the new expert will be withdrawn.

(e)Final and Binding.  The determination of the expert will, except for fraud or manifest error, be final and binding upon the parties.

(f)Costs.  Each party will bear its own costs for any matter referred to an expert hereunder and, in the absence of express provision in the Agreement to the contrary, the costs and expenses of the expert will be shared equally by the parties.

For greater certainty, the release of the Products for sale or distribution under the applicable marketing approval for the Products will not by itself indicate compliance by Patheon with its obligations for the Manufacturing Services and further that nothing in this Agreement (including this Schedule E) will remove or limit the authority of the relevant qualified person (as specified by the Quality Agreement) to determine whether the Products are to be released for sale or distribution.

2

SCHEDULE F

[FORM OF] SHIPPING LOGISTICS PROTOCOL

[NTD: regional variations in the instructions etc. may be necessary while maintaining the […***…]principle and the export principles outlined below]

Shipping will be carried out under the following terms and conditions:

[NOTE TO DRAFT:  Use this section if we are only shipping within the country of manufacture.]

Shipping terms will be […***…](INCOTERMS 2000), the Manufacturing Site.

[NOTE TO DRAFT: Use this section if we are exporting to the US]

Exports of Products from Canada to the United States

1.Shipping terms will be […***…](INCOTERMS 2000), the Manufacturing Site.

2.Client, as the importer of record into the United States, will advise Patheon prior to export of the Products from Canada of Client’s designated customs broker and freight forwarder to enable Patheon to complete all applicable shipping documentation.

[NOTE TO DRAFT: Use this section if we are exporting outside of North America]

International Exports of Products from Canada (other than to the United States)

[NOTE TO DRAFT: Use next 3 clauses if we are exporting […***…]to outside of North America.  We can only ship […***…]to outside of North America if Client has a Canadian affiliate that can act as the “exporter of record” from Canada.  Many Clients do not have Canadian affiliates, in which case export to outside of North America must be[…***…].]

[…***…]

1.Shipping terms will be […***…](INCOTERMS 2000), the Manufacturing Site.

2.Client will designate its Canadian affiliate as the exporter of record from Canada and will advise Patheon of the name and address of that affiliate.

3.Client will instruct its Canadian affiliate to advise Patheon prior to export of the Products from Canada of the affiliate’s designated customs broker and freight forwarder to enable Patheon to complete all applicable shipping documentation.

[NOTE TO DRAFT: Use this section if we are exporting outside of North America and if the shipment is not […***…]— see prior note to draft.  In most cases, we will use […***…]so the following 3 clauses will apply rather than the prior 3 clauses.]

[…***…]

1.Shipping terms will be […***…](INCOTERMS 2000), Manufacturing Site.

2.Patheon, as the exporter of record from Canada, will carry out all customs formalities necessary to export the Products including declaring the value of the Products being exported from Canada by completing a B-13 Export Declaration form which will be completed showing Patheon as the exporter of record of the Products with a value equivalent to Patheon’s selling price of the Products to Client plus assists. The assist value will be calculated in a manner consistent with the method of calculation used in calculating the values provided under Section 2.1(f) of the

*** Confidential Treatment Requested

Agreement and as may be specified in the instructions of Canada Revenue Agency at time of export.  For the purposes hereof, “assists” means (a) materials, components, parts, and other goods incorporated in the Products; (b) tools, dies, moulds, and other goods utilised in the production of the Products; (c) any materials consumed in the productions of the Products; (d) engineering, development work, art work, plans and sketches undertaken by Patheon for the production of the Products.

3.Patheon will report exports directly to Canada Revenue Agency and Statistics Canada at the time of shipment from the Manufacturing Site.

2

[CLIENT LETTERHEAD]

Form of Logistics Routing Guide

Patheon Inc.

[INSERT ADDRESS]

Attention:                               , A/M

1.Routine Routing/Shipping Instructions

The following lists the recommended agents and procedures for shipments of [PRODUCT NAME] from Patheon’s manufacturing site at [INSERT SITE ADDRESS], Ontario, Canada to [INSERT DESTINATION NAME AND ADDRESS].

AGENTS:

·Freight forwarder                               Contact:                               PH: (     )

·Customs broker                               Contact:                               PH: (     )

Questions concerning transport logistics should be directed to [CLIENT CONTACT INFO].

The following documents must be provided to the carrier for transport and customs purposes:

·Proforma Invoice

·Bill of Lading (“B/L”)

·Applicable Permits/Declarations

·Packing List

·If eligible, NAFTA Certificate of Origin will be provided in blanket form yearly to [INSERT CLIENT’S NAME] or [INSERT CLIENT’S NAME] broker.

Upon shipment departure from Patheon, a full set of documents must also be faxed to the following individuals:

·[INSERT CLIENT CONTACT FAX OR EMAIL]

Freight is shipped to:

[INSERT DESTINATION NAME AND ADDRESS]

Information to be provided on Proforma Invoice.

·Net Quantity

·Patheon Code & Lot Number

·Client Lot Number/ Purchase Order (“PO”)Number

·$ / Unit Including Assist Value (Active Materials Usage) & Toll Manufacturing Charge

·HTS (Harmonize Tariff Schedule)#

·NDC/IND/ANDA

·FDA Product Code

·Ship Date

·Patheon Bill of Lading Number

·Gross Weight

·Number of Pallets

Assist Values:

·[INSERT ACTIVE MATERIALS NAME] $/kg.

Note: [INSERT CLIENT NAME] will provide updated values during the first month of each calendar year.  If a change occurs throughout the year, Patheon will be notified within 30 days. Method of valuation for API will be provided in writing to Patheon Inc.

Information to be provided on Bill of Lading:

·B/L Number

·Carrier

·Origin Point

·Shipper Information

·Consignee

·Consignee Address

·Ship Date

·Number of Pallets

·Gross Weight

·PO Number for each Product/Lot

·Description of Goods Indication PC, Lot Number Quantity

·Seal Number

·Freight Terms ([…***…])

·Carrier Signature

Information to be provided on Packing List:

·Ship date

·Bill of Lading Number

·Number of Pallets

·Weight

·Product Description

·Patheon Code Number, if applicable

·Patheon Lot Number, if applicable

·Number of Full Cartons (drums if bulk) x Quantity Per Carton

·Number of Partial Cartons (drums if bulk) x Quantity Per Carton

·Total Number of Cartons with Total Quantity Shipped

2.Non-Routine Routing/Shipping Instructions

As non-standard shipments are unique, the specific situations are to be discussed and agreed to by both Patheon and [INSERT CLIENT NAME] prior to shipment.  Examples of non-standard shipments are shipping study samples, clinical/development batches, etc.

Yours truly,

AUTHORIZED SIGNATORY

CLIENT NAME

*** Confidential Treatment Requested

2

SCHEDULE G

MONTHLY ACTIVE MATERIALS INVENTORY REPORT

TO:Optimer Pharmaceuticals, Inc.

FROM:PATHEON INC.

RE:Active Materials quarterly inventory report under Section 2.2(a) of the Manufacturing Services Agreement dated · (the “Agreement”)

Reporting quarter:
Active Materials on hand
at beginning of month:	kg	(A)
Active Materials on hand
at end of month:	kg	(B)
Quantity Received during month:	kg	(C)
Quantity Dispensed(1) during month:	kg
(A + C — B)
Quantity Converted during month:	kg
(total Active Materials in Products produced
and not rejected, recalled or returned)

Capitalized terms used in this report have the meanings given to the terms in the Agreement.

PATHEON INC.	DATE:
Per:
Name:
Title:

(1)  Excludes any (i) Active Materials that must be retained by Patheon as samples, (ii) Active Materials contained in Product that must be retained as samples, (iii) Active Materials used in testing (if applicable), and (iv) Active Materials received or consumed in technical transfer activities or development activities, including, without limitation, any regulatory, stability, validation, or test batches manufactured during the month.

SCHEDULE H

REPORT OF ANNUAL ACTIVE MATERIALS INVENTORY RECONCILIATION

AND CALCULATION OF ACTUAL ANNUAL YIELD

TO:Optimer Pharmaceuticals, Inc.

FROM:PATHEON INC.

RE:Active Materials annual inventory reconciliation report and calculation of Actual Annual Yield under Section 2.2(a) of the Manufacturing Services Agreement dated · (the “Agreement”)

[…***…]

*** Confidential Treatment Requested

Based on the foregoing reimbursement calculation Patheon will reimburse Client the amount of $                                     .

Capitalized terms used in this report have the meanings given to the terms in the Agreement.

DATE:

PATHEON INC.

Per:

Name:

Title:

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SCHEDULE I

EXAMPLE OF PRICE ADJUSTMENT DUE TO CURRENCY FLUCTUATION

Section 4.2(d)

EX-10.7

Exhibit 10.7

OPTIMER PHARMACEUTICALS, INC.

2006 EQUITY INCENTIVE PLAN

NOTICE OF GRANT OF RESTRICTED STOCK UNITS

Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Notice of Grant.

Name: [                          ]

You have been granted [                    ] Restricted Stock Units.  Each such Unit is equivalent to one Share of Common Stock of the Company for purposes of determining the number of Shares subject to this award.  None of the Restricted Stock Units will be issued (nor will you have the rights of a stockholder with respect to the underlying shares) until the vesting conditions described below are satisfied.  Additional terms of this grant are as follows:

Date of Grant:[                        ]

Vesting Schedule:Subject to accelerated vesting, if any, which may be provided below, in the Plan, any severance benefit plan adopted by the Company, or in any other written agreement between the Company and you, these Restricted Stock Units shall vest, in whole or in part, in accordance with the following schedule:

[One fourth (1/4) of the Restricted Stock Units shall vest twelve months after the Vesting Commencement Date (as defined below), and one thirty-sixth (1/36) of the remaining Restricted Stock Units shall vest each full month thereafter, subject to you continuing to be a Service Provider on such dates].

The “Vesting Commencement Date” shall be [                      ].

You acknowledge and agree that this Notice of Grant and the vesting schedule set forth herein does not constitute an express or implied promise of continued engagement as a Service Provider for the vesting period, for any period, or at all, and shall not interfere with your right or the Company’s right to terminate your relationship as a Service Provider at any time, with or without cause.

You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and this Award.

By your signature and the signature of the Company’s representative below, you and the Company agree that this Notice of Grant, the form of Restricted Stock Unit Agreement attached as Exhibit A hereto and the 2006 Equity Incentive Plan constitute your entire agreement with respect to this Award and may not be modified adversely to your interest except by means of a writing signed by the Company and you.

GRANTEE:	OPTIMER PHARMACEUTICALS, INC.
Signature	By
Print Name	Title

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EXHIBIT A

OPTIMER PHARMACEUTICALS, INC.

2006 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

1.Grant.  The Company hereby grants to the Participant an award of Restricted Stock Units (“RSUs”), as set forth in the Notice of Grant of Restricted Stock Units and subject to the terms and conditions in this Agreement and the Company’s 2006 Equity Incentive Plan (the “Plan”).  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Restricted Stock Unit Agreement (the “Agreement”).

2.Company’s Obligation.  Each RSU represents the right to receive a Share on the vesting date.  Unless and until the RSUs vest, the Participant will have no right to receive Shares under such RSUs.  Prior to actual distribution of Shares pursuant to any vested RSUs, such RSUs will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.

3.Vesting Schedule.  Subject to paragraph 4, the RSUs awarded by this Agreement will vest according to the vesting schedule specified in the Notice of Grant.

4.Forfeiture upon Termination as Service Provider.  Notwithstanding any contrary provision of this Agreement, but subject to the Notice of Grant and any accelerated vesting provisions referenced therein, if the Participant terminates service as a Service Provider for any or no reason prior to vesting, the unvested RSUs awarded by this Agreement will thereupon be forfeited at no cost to the Company.

5.Payment after Vesting.  Any RSUs that vest in accordance with paragraph 3 will be paid to the Participant (or in the event of the Participant’s death, to his or her estate) in Shares; provided that to the extent determined appropriate by the Administrator, pursuant to paragraph 12, the minimum statutorily required federal, state and local withholding taxes with respect to such RSUs will be paid by reducing the number of vested RSUs actually paid to the Participant.

6.Payments after Death.  Any distribution or delivery to be made to the Participant under this Agreement will, if the Participant is then deceased, be made to the administrator or executor of the Participant’s estate.  Any such administrator or executor must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

7.Rights as Stockholder.  Neither the Participant nor any person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant or Participant’s broker.

8.No Effect on Employment.  This Agreement does not have any effect on the terms of the Participant’s employment with the Company and its Subsidiaries or the Company’s or the Participant’s ability to terminate such employment.

9.Address for Notices.  Any notice to be given to the Company under the terms of this Agreement will be addressed to the Company at 10110 Sorrento Valley Rd., Suite C, San Diego, California 92121, Attn: Stock Administration, or at such other address as the Company may hereafter designate in writing or electronically.

10.Grant is Not Transferable.  Except to the limited extent provided in paragraph 6, this grant and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process.  Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void.

11.Binding Agreement.  Subject to the limitation on the transferability of this grant contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

12.Withholding of Taxes.  When the Shares are issued as payment for vested RSUs, the Participant will recognize immediate U.S. taxable income if the Participant is a U.S. taxpayer.  If the Participant is a non-U.S. taxpayer, the Participant will be subject to applicable taxes in his or her jurisdiction.  The Company will withhold a portion of the Shares otherwise issuable in payment for vested RSUs that have an aggregate market value sufficient to pay the minimum federal, state and local income, employment and any other applicable taxes required to be withheld by the Company with respect to the Shares.  No fractional Shares will be withheld or issued pursuant to the grant of RSUs and the issuance of Shares hereunder.  The Company may instead, in its discretion, withhold any amount necessary to pay the applicable taxes from the Participant’s salary or other amounts payable to the Participant, with no withholding in Shares.  In the event the withholding requirements are not satisfied through withholding Shares (or, through the Participant’s salary or other amounts payable to the Participant), no Shares will be issued to the Participant (or his or her estate) in settlement of the RSU unless and until satisfactory arrangements (as determined by the Administrator) have been made by the Participant with respect to the payment of any income and other taxes which the Company determines must be withheld or collected with respect to such RSUs.  By accepting this RSU, the Participant expressly consents to the withholding of Shares and/or cash as provided for in this paragraph 12.  All income and other taxes related to the RSU and any Shares delivered in payment thereof are the sole responsibility of the Participant.

13.Additional Conditions to Issuance of Stock.  If at any time the Company will determine, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to the Participant (or his or her estate), such issuance will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained free of

2

any conditions not acceptable to the Company.  The Company will make all reasonable efforts to meet the requirements of any such state or federal law or securities exchange and to obtain any such consent or approval of any such governmental authority.

14.Plan Governs.  This Agreement and the Notice of Grant are subject to all terms and provisions of the Plan.  In the event of a conflict between one or more provisions of this Agreement or the Notice of Grant and one or more provisions of the Plan, the provisions of the Plan will govern.

15.Administrator Authority.  The Administrator will have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any RSUs have vested).  All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons.  No member of the Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement.

16.Modifications to the Agreement.  The Participant expressly warrants that he or she is not accepting this Agreement in reliance on any promises, representations, or inducements other than those contained herein.  Modifications to this Agreement or the Plan can be made only in an express written amendment executed by a duly authorized officer of the Company.  Notwithstanding anything to the contrary in the Plan or this Agreement, the Company reserves the right to revise the Agreement as it deems necessary or advisable, in its sole discretion and without the consent of the Participant, to comply with Section 409A of the Code or to otherwise avoid imposition of any additional tax or income recognition under Section 409A of the Code prior to the actual payment of Shares pursuant to this award of RSUs.

17.Notice of Governing Law.  This grant of RSUs shall be governed by, and construed in accordance with, the laws of the State of California without regard to principles of conflict of laws.

3

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Pedro Lichtinger, 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: August 4, 2011

/s/ Pedro Lichtinger

Pedro Lichtinger

President and Chief Executive Officer

(Principal Executive Officer)

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: August 4, 2011

/s/ John D. Prunty

John D. Prunty

Vice-President and Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32

Exhibit 32

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), Pedro Lichtinger, 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 June 30, 2011, 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: August 4, 2011

/s/ Pedro Lichtinger	/s/ John D. Prunty
Pedro Lichtinger Chief Executive Officer	John D. Prunty Chief Financial Officer
(Principal Executive 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 the 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.

XML



Consolidated Statements of Operations (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues:
Licensing			$ 69,165,000
Research grants	33,294	357,436	144,933	654,873
Total revenues	33,294	357,436	69,309,933	654,873
Cost and expenses:
Cost of licensing			4,273,532
Research and development	10,570,636	6,419,251	19,041,145	17,780,830
Marketing	6,974,322	656,464	10,407,915	925,058
General and administrative	7,506,525	3,686,442	15,786,707	6,075,154
Total operating expenses	25,051,483	10,762,157	49,509,299	24,781,042
Income (loss) from operations	(25,018,189)	(10,404,721)	19,800,634	(24,126,169)
Interest income and other, net	95,860	53,719	119,102	78,497
Consolidated net income (loss)	(24,922,329)	(10,351,002)	19,919,736	(24,047,672)
Net loss attributable to noncontrolling interest	683,483	290,105	974,288	491,020
Net income (loss) attributable to Optimer Pharmaceuticals, Inc.	$ (24,238,846)	$ (10,060,897)	$ 20,894,024	$ (23,556,652)
Net income (loss) per share - basic (in dollars per share)	$ (0.52)	$ (0.26)	$ 0.47	$ (0.64)
Net income (loss) per share - diluted (in dollars per share)	$ (0.52)	$ (0.26)	$ 0.46	$ (0.64)
Weighted average number of shares used to compute net income (loss) per share - basic (in shares)	46,479,395	38,306,910	44,581,010	36,663,380
Weighted average number of shares used to compute net income (loss) per share - diluted (in shares)	46,479,395	38,306,910	45,447,261	36,663,380

XML



Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Operating activities
Net loss	$ 19,919,736	$ (24,047,672)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	206,406	141,869
Stock based compensation	4,687,680	3,151,267
Issuance of common stock for consulting services	2,793,514
Deferred rent	42,377	(53,295)
Changes in operating assets and liabilities:
Prepaids expenses and other current assets	(5,380,204)	(418,806)
Research grant and other receivables	(25,405)	18,682
Inventory	(1,369,482)
Other assets	(734,333)	(4,979)
Accounts payable and accrued expenses	7,126,305	(2,089,485)
Net cash provided (used) in operating activities	27,266,594	(23,302,419)
Investing activities
Purchases of short-term investments	(91,899,393)	(35,058,358)
Sales or maturity of short-term investments	25,165,000	21,000,000
Purchases of property and equipment	(1,681,166)	(272,965)
Net cash used by investing activities	(68,415,559)	(14,331,323)
Financing activities
Proceeds from sale of common stock	82,270,022	51,774,170
Net cash provided by financing activities	82,270,022	51,774,170
Effect of exchange rate changes on cash and cash equivalents	419,548	182,860
Net increase in cash and cash equivalents	41,540,605	14,323,288
Cash and cash equivalents at beginning of period	19,861,924	17,054,328
Cash and cash equivalents at end of period	$ 61,402,529	$ 31,377,616

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Consolidated Balance Sheets (USD $)	Jun. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 61,402,529	$ 19,861,924
Short-term investments	96,391,742	29,553,506
Research grant and other receivables	78,957	53,552
Inventory	1,369,482
Prepaid expenses and other current assets	5,843,511	463,307
Total current assets	165,086,221	49,932,289
Property and equipment, net	2,172,443	697,683
Long-term investments	882,000	882,000
Other assets	1,242,523	508,190
Total assets	169,383,187	52,020,162
Current liabilities:
Accounts payable	6,738,492	2,307,820
Accrued expenses	5,080,679	2,385,046
Total current liabilities	11,819,171	4,692,866
Deferred rent	183,515	141,138
Stockholders' equity:
Preferred stock, par value $0.001, 10,000,000 shares authorized, no shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively
Common stock, $0.001 par value, 75,000,000 shares authorized, 46,602,501 shares and 39,278,965 shares issued and outstanding at June 30, 2011 and December 31, 2010 respectively	46,603	39,279
Additional paid-in capital	351,215,431	267,665,732
Accumulated other comprehensive income	543,480	298,850
Accumulated deficit	(201,920,383)	(222,814,407)
Total Optimer Pharmaceuticals, Inc. stockholders' equity	149,885,131	45,189,454
Noncontrolling interest	7,495,370	1,996,704
Total stockholders' equity	157,380,501	47,186,158
Total liabilities and stockholders' equity	$ 169,383,187	$ 52,020,162

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Revenue and Other Collaborative Agreements

6 Months Ended

Jun. 30, 2011

Revenue and Other Collaborative Agreements

Revenue and Other Collaborative Agreements

8.     Revenue and Other Collaborative Agreements

Revenues from Research Grants

The Company has one active grant from the National Institute of Allergy and Infectious Diseases (“NIAID”). This $3.0 million grant was awarded in September 2007 for three years and was extended to August 2011. The award has been used to conduct supplementary studies to the DIFICID trials to confirm narrow spectrum activity and potency of DIFICID against hypervirulent epidemic strains and to support additional toxicology studies.  The award is currently being used for microbiological studies to demonstrate the safety and efficacy of DIFICID and its major metabolite in CDAD patients and to support surveillance studies of C. difficile isolates across North America to compare the activity of DIFICID with existing CDAD treatments.  For the three months ended June 30, 2011 and 2010, the Company recognized revenues related to research grants of $33,294, and $357,436, respectively. For the six months ended June 30, 2011 and 2010, the Company recognized revenues related to research grants of $144,933, and $654,873, respectively.

Other Collaborative Agreements

Cubist Pharmacueticals, Inc.

On April 5, 2011, the Company entered into a co-promotion agreement with Cubist Pharmaceuticals, Inc. (“Cubist”) pursuant to which the Company engaged Cubist as its exclusive partner for the promotion of DIFICID in the United States.  Under the terms of the agreement, the Company and Cubist have agreed to co-promote DIFICID to physicians, hospitals, long-term care facilities and other healthcare institutions as well as jointly provide medical affairs support for DIFICID. In conducting their respective co-promotion activities, each party is obligated under the agreement to commit minimum levels of personnel, and Cubist is obligated to tie a portion of the incentive compensation paid to its sales representatives to the promotion of DIFICID in the United States.  Under the terms of the agreement, the Company will be responsible for the distribution of DIFICID in the United States and for recording revenue from sales of DIFICID, and agreed to use commercially reasonable efforts to maintain adequate inventory and third party logistics support for the supply of DIFICID in the United States.  In addition, Cubist agreed to not promote competing products in the United States during the term of the agreement and, subject to certain exceptions, for a specified period of time thereafter. The initial term of the agreement is two years from the date of first commercial sale of DIFICID in the United States, subject to renewal or early termination as described below.

In exchange for Cubist’s co-promotion activities and personnel commitments, the Company will pay a quarterly fee of approximately $3.75 million to Cubist ($15.0 million per year) beginning upon the commencement of the sales program of DIFICID in the United States. Cubist is also eligible to receive an additional $5.0 million in the first year after first commercial sale and $12.5 million in the second year after first commercial sale if mutually agreed upon annual sales targets are achieved, as well as a portion of the Company’s gross profits derived from net sales above the specified annual targets, if any.

The agreement may be renewed by mutual agreement of the parties for additional, consecutive one-year terms.  The Company and Cubist may terminate the agreement prior to expiration upon the uncured material breach of the agreement by the other party, upon the bankruptcy or insolvency of the other party, or in the event that actual net sales during the first year of commercial sales of DIFICID in the United States are below specified levels, subject to certain limitations.  In addition, the Company may terminate the agreement, subject to certain limitations, if (i) the Company withdraws DIFICID from the market in the United States, (ii) Cubist fails to comply with applicable laws in performing its obligations, (iii) Cubist undergoes a change of control, (iv) certain market events occur related to Cubist’s product CUBICIN® (daptomycin for injection) in the United States, or (v) Cubist undertakes certain restructuring activities with respect to its sales force.  In addition, Cubist may terminate the agreement, subject to certain limitations, if (i) the Company experiences certain supply failures in relation to the demand for DIFICID in the United States, (ii) the Company is acquired by certain types of entities, including competitors of Cubist, (iii) certain market events occur related to CUBICIN in the United States, or (iv) the Company fails to comply with applicable laws in performing its obligations.

In June 2011, the Company paid Cubist $3.75 million for the first quarterly payment which the Company will record as a marketing expense beginning in the third quarter of 2011 in connection with the launch of DIFICID.

Astellas Pharma Europe Ltd.

In February 2011, the Company entered into a collaboration and license agreement with Astellas pursuant to which the Company granted to Astellas an exclusive, royalty-bearing license under certain of the Company’s know-how and intellectual property to develop and commercialize DIFICID in Europe, and certain other countries in the Middle East, Africa and the CIS. In March 2011, the parties amended the agreements with Astellas to include certain additional countries in the CIS and all additional territories in Africa (all such countries and territories, the Astellas territories). Under the terms of the agreement, Astellas has agreed to use commercially reasonable efforts to develop and commercialize DIFICID in the Astellas territory at its expense, and is obligated to achieve certain additional regulatory and commercial diligence milestones with respect to DIFICID in the Astellas territory.  The Company and Astellas may also agree to collaborate in, and share data resulting from, global development activities with respect to DIFICID, in which case we and Astellas will be obligated to co-fund such activities.  In addition, under the terms of the agreement, Astellas granted the Company an exclusive, royalty-free license under know-how and intellectual property generated by Astellas and its sublicensees in the course of developing DIFICID and controlled by Astellas or its affiliates for use by the Company and any of the Company’s sublicensees in the development and commercialization of DIFICID outside the Astellas territory and, following termination of the agreement and subject to payment by the Company of single-digit royalties, in the Astellas territory.  In addition, under the terms of a supply agreement entered into by the Company and Astellas on the same date, the Company will be the exclusive supplier of DIFICID to Astellas for Astellas’ development and commercialization activities in the Astellas territory during the term of the supply agreement, and Astellas is obligated to pay the Company an amount equal to cost plus an agreed mark-up for such supply.

Under the terms of the license agreement with Astellas, in March 2011, Astellas paid the Company an upfront fee of $69.2 million. The Company is eligible to receive additional cash payments totaling up to 115.0 million Euros upon the achievement by Astellas of specified regulatory and commercial milestones.  When determining whether or not to account for the additional cash payments under the milestone method, the Company makes a determination of whether or not each milestone is considered substantive. During this assessment the Company considers if the milestone is achieved based in whole or in part on the Company’s performance or on the occurrence of a separate outcome resulting from the Company’s performance, if there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and if achievement will result in additional payments being due.  Based on the Company’s assessment process it was determined that additional payments due related to regulatory approval and product launch will be accounted for under the milestone method as technological hurdles create uncertainty of whether or not they will be met and are based in part on the occurrence of a separate outcome resulting from the Company’s performance.  In addition, the Company will be entitled to receive escalating double-digit royalties ranging from the high teens to low twenties on net sales of DIFICID products in the Astellas territory, which royalties are subject to reduction in certain, limited circumstances.  Such royalties will be payable by Astellas on a product-by-product and country-by-country basis until a generic product accounts for a specified market share of the applicable DIFICID product in the applicable country.

The Company assessed the deliverables under the authoritative guidance for multiple element arrangements. Analyzing the arrangement to identify deliverables requires the use of judgment, and each deliverable may be an obligation to deliver services, a right or license to use an asset, or another performance obligation.  Once the Company identified the deliverables under the arrangement, the Company determined whether or not the deliverables can be accounted for as separate units of accounting, and the appropriate method of revenue recognition is for each element. Based on the results of the Company’s analysis,  the Company determined that the upfront payment was earned upon the delivery of the license and related know-how, which occurred by March 31, 2011.

The agreements with Astellas will continue in effect on a product-by-product and country-by-country basis until expiration of Astellas’ obligation to pay royalties with respect to each DIFICID product in each country in the Astellas territory, unless terminated early by either party as more fully described below.  Following expiration, Astellas’ license to develop and commercialize the applicable DIFICID product in the applicable country will become non-exclusive.  The Company and Astellas may each terminate either of the agreements prior to expiration upon the material breach of such agreement by the other party, or upon the bankruptcy or insolvency of the other party.  In addition, the Company may terminate the agreements prior to expiration in the event Astellas or any of its affiliates or sublicensees commences an interference or opposition proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any patent licensed to it, and Astellas may terminate the agreements prior to expiration for any reason on a product-by-product and country-by-country basis upon 180 days’ prior written notice to the Company.  Upon any such termination, the license granted to Astellas (in total or with respect to the terminated product or terminated country, as applicable) will terminate and revert to the Company.

Par Pharmaceutical, Inc.

The Company holds worldwide rights to DIFICID.  In February 2007, the Company repurchased the rights to develop and commercialize DIFICID in North America and Israel from Par Pharmaceutical, Inc. (“Par”) under a prospective buy-back agreement.  The Company paid Par a one-time $5.0 million milestone payment in June 2010 for the successful completion by the Company of its second pivotal Phase 3 trial for DIFICID.  The Company is obligated to pay Par a 5% royalty on any net sales by the Company, its affiliates or its licensees of DIFICID in North America and Israel, including Cubist, and a 1.5% royalty on any net sales by the Company or its affiliates of DIFICID in the rest of the world.  In addition, in the event the Company licenses its right to market DIFICID in the rest of the world, such as the license granted to Astellas, the Company will be required to pay Par a 6.25% royalty on net revenues received by it related to DIFICID.  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. In March 2011, the Company paid Par $4.3 million in royalties for net revenues received by the Company under the Astellas agreement.

Biocon Limited

In May 2010, the Company entered into a long-term supply agreement with Biocon for the commercial manufacture of DIFICID’s active pharmaceutical ingredient (“API”).   Pursuant to the agreement, Biocon agreed to manufacture and supply to the Company, up to certain limits, DIFICID API and, subject to certain conditions, the Company agreed to purchase from Biocon at least a portion of its requirements for DIFICID API in the United States and Canada. The Company previously paid to Biocon $2.5 million for certain equipment purchases and manufacturing scale-up activities, and the Company may be entitled to recover up to $1.5 million of this amount under the supply agreement in the form of discounted prices for DIFICID API.   The Company expensed the entire $2.5 million in the second quarter of 2009 because at the time of payment the recovery of up to $1.5 million could not be assured.  The Company may be obligated to make additional payments to Biocon if it fails to meet the minimum purchase requirements after Biocon has dedicated certain manufacturing capacity to the production of DIFICID API and if Biocon is unable to manufacture alternative products with the dedicated capacity.  Unless both the Company and Biocon agree to extend the term of the supply agreement, it will terminate seven and a half years from the date the Company obtains marketing authorization for DIFICID in the United States or Canada.  The supply agreement will be terminated earlier in the event that the Company does not obtain marketing authorization for DIFICID in the United States or Canada prior to December 31, 2013.  In addition, the supply agreement may be earlier terminated (i) by either party by giving two and a half years notice after the fifth anniversary of the Effective Date or upon a material breach of the supply agreement by the other party, (ii) by the Company upon the occurrence of certain events, including Biocon’s failure to supply requested amounts of DIFICID API, or (iii) by Biocon upon the occurrence of certain events, including the Company’s failure to purchase amounts of DIFICID API indicated in binding forecasts.

Patheon Inc.

In June 2011, the Company entered into a commercial manufacturing services agreement with Patheon Inc. (“Patheon”) to manufacture and supply fidaxomicin drug products, including DIFICID, in North America, Europe and other countries, subject to agreement by the parties to any additional fees for such countries. The Company has agreed to purchase a specified percentage of its fidaxomicin product requirements for North America and Europe from Patheon or its affiliates.

The term of the agreement extends through December 31, 2016 and will automatically renew for subsequent two year terms unless either party provides a timely notice of its intent not to renew or unless the Agreement is terminated early pursuant to its terms. The Company and Patheon may terminate the Agreement prior to expiration upon the uncured material breach of the agreement by the other party or upon the bankruptcy or insolvency of the other party. In addition, the agreement will terminate with respect to any fidaxomicin product if the Company provides notice to Patheon that it no longer requires manufacturing services for such product because the product has been discontinued. Additionally, the Company may terminate the agreement, subject to certain limitations, (i) with respect to any fidaxomicin product, if any regulatory authority takes any action or raises any objection that prevents the Company from importing, exporting, purchasing or selling such product, or if the Company determines to discontinue development or commercialization of such product for safety or efficacy reasons, (ii) if any regulatory authority takes an enforcement action against Patheon’s manufacturing site that relates to fidaxomicin products or that could reasonably be expected to adversely affect Patheon’s ability to supply fidaxomicin products to the Company, (iii) if Patheon is unable to deliver or supply any firm orders for any two calendar quarters during any four consecutive calendar quarters, (iv) if Patheon uses any debarred or suspended person in the performance of its service obligations under the agreement, or (v) if Patheon fails to meet certain production yield requirements in relation to fidaxomicin API.

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 submission, if any, of 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.

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, to the Company’s patent and know-how related to the Company’s macrolide and ketolide antibacterial program.  As partial consideration for granting Cempra the license, 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 may 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.

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.  In anticipation of the various transactions involving OBI which the Company completed in October 2009, the Company assigned its rights and obligations under this agreement with OBI. 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 OBI, and not a sublicensee, achieves such milestones.  OBI may owe MSKCC royalties based on net sales generated from the licensed products and income OBI sources from its sublicensing activities, which royalty payments are credited against a minimum annual royalty payment OBI owes to MSKCC during the term of the agreement.

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 with TSRI, 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.  In October 2009, the Company assigned to OBI one of the agreements with TSRI related to the Company’s OPT-88 product candidate, which after further evaluation OBI decided not to pursue.  In February 2011, the license agreement related to OPT-88 was terminated and OBI returned the patents related to OPT-88. Under each of the three remaining agreements, the Company owes 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 three agreements, the Company also will owe TSRI payments upon achievement of certain milestones.  In two of the three TSRI agreements, the milestones are the successful completion of a Phase 2 trial or its foreign equivalent, the submission of an NDA or its foreign equivalent and government marketing and distribution approval.  In the remaining TSRI agreement, the milestones are the initiation of a Phase 3 trial or its foreign equivalent, the submission 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 the remaining TSRI agreements is approximately $11.1 million.

Optimer Biotechnology, Inc.

In October 2009, the Company entered into certain transactions involving OBI, then the Company’s wholly-owned subsidiary, 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 OPT-88 and OPT-822/821.  In anticipation of these transactions, the Company also assigned, and OBI assumed, the Company’s rights and obligations under related license agreements with MSKCC and TSRI.  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 term of the Intellectual Property Assignment and License Agreement continues until the last to expire of the patents assigned by the Company to OBI and the patents licensed to OBI under the TSRI and MSKCC agreements. After further evaluation, OBI determined not to pursue additional development of OPT-88 and in February 2011, OBI and TSRI agreed to terminate the license agreement and OBI returned the related  OPT-88 patents to TSRI. 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, and the Company and the new investors also purchased new OBI shares.  The financing agreement also contemplated an additional financing pursuant to which the Company and the new investors would invest approximately an additional $184.8 million New Taiwan Dollars and $277.2 million New Taiwan Dollars, respectively, in exchange for new OBI shares. In February 2011, pursuant to an amendment to the October 2009 financing agreement, OBI completed the second financing and sold newly-issued shares of its common stock for gross proceeds of approximately 462.0 million New Taiwan Dollars (approximately $15.5 million based on then-current exchange rates).  The Company  purchased 277.2 million New Taiwan Dollars (approximately $9.3 million based on then-current exchange rates) of the shares issued in the second financing, such that the Company maintained its 60% equity interest in OBI.

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Investment Securities

6 Months Ended

Jun. 30, 2011

Investment Securities

Investment Securities

4.     Investment Securities

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.

	June 30, 2011
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Government agencies	$	85,769,294	$	106,229	$	(4,322	)	$	85,871,201
Corporate bonds	10,521,625		2,660		(3,744		)	10,520,541
	$	96,290,919	$	108,889	$	(8,066	)	$	96,391,742

	December 31, 2010
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Government agencies	$	26,542,210	$	2,311	$	(4,924	)	$	26,539,597
Corporate bonds	3,014,319		23		(433		)	3,013,909
	$	29,556,529	$	2,334	$	(5,357	)	29,553,506

Investments in net unrealized loss positions as of June 30, 2011 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 agencies	6	$	13,714,315	$	(4,322	)	$	—	$	—	$	13,714,315	$	(4,322	)
Corporate bonds	3	5,074,683		(3,744		)	$	—	$	—	5,074,683		(3,744		)
		$	18,788,998	(8,066		)	$	—	$	—	$	18,788,998	$	(8,066	)

The amortized cost and estimated fair value of securities available-for-sale at June 30, 2011, by contractual maturity, are as follows:

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	39,645,708	$	39,654,678
Due in one year to two years	56,645,211		56,737,064
	$	96,290,919	$	96,391,742

The weighted-average maturity of our short-term investments as of June 30, 2011 and 2010, was approximately thirteen months and four months, respectively.

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 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 anticipates full recovery of amortized cost with respect to these securities at maturity or sooner in the event of a change in the market interest rate environment.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2011	Jul. 29, 2011
Document and Entity Information
Entity Registrant Name	OPTIMER PHARMACEUTICALS INC
Entity Central Index Key	0001142576
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		46,603,301
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2

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Subsequent Event

6 Months Ended

Jun. 30, 2011

Subsequent Event

Subsequent Event

9.     Subsequent Event

In July 2011, we commenced commercial sales of DIFICID in the U.S.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

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.  Except for one auction rate preferred security (“ARPS”), 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 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.

Inventory

Inventory is stated at the lower of cost or market.  Cost is determined in a manner which approximates the first-in, first-out (FIFO) method. The Company capitalizes inventory produced in preparation for product launches upon FDA approval when costs are expected to be recoverable through the commercialization of the product.  The Company reserves for potentially excess, dated or obsolete inventories based on an analysis of inventory on hand compared to forecasts of future sales.

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.

Revenue recognition for agreements with multiple deliverables is based on the individual units of accounting determined to exist in the agreement. A delivered item is considered a separate unit of accounting when the delivered item has value to the customer on a stand-alone basis. Items are considered to have stand-alone value when they are sold separately by any vendor or when the customer could resell the item on a stand-alone basis.

For multiple deliverable agreements entered into after December 31, 2010, consideration is allocated at the inception of the agreement to all deliverables based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence (“VSOE”), of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, the Company uses its best estimate of the selling price for the deliverable.

The Company recognizes revenue for delivered elements only when it determines there are no uncertainties regarding customer acceptance. Changes in the allocation of the sales price between delivered and undelivered elements can impact revenue recognition but do not change the total revenue recognized under any agreement.

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.

When determining whether or not to account for transactions under the milestone method, the Company makes a determination of whether or not each milestone is considered substantive. During this assessment the Company considers if achievement of the milestone is based in whole or in part on the Company’s performance or on the occurrence of a separate outcome resulting from the Company’s performance, if there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and if achievement will result in additional payments being due.

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.

In February 2011, the Company entered into a collaboration and license agreement with Astellas Pharma Europe Ltd. (“Astellas”).  Under the term of the license agreement with Astellas, Astellas paid the Company an upfront fee of $69.2 million.  The Company is also  eligible to receive additional payments under the collaboration and license agreement upon the achievement of specified regulatory and commercial milestones.  The Company has assessed the revenue recognition method for the achievement of the milestones at the inception of the arrangement using the milestone method.

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.  In November 2010, the Company paid a $1.5 million filing fee to the FDA associated with the NDA for DIFICID.  The filing fee is potentially refundable for companies that qualify as a small business which is defined by the Small Business Association (“SBA”) as a company with 250 employees or less.  The Company asserted that it qualifies as a small business and submitted data to the SBA to support its assertion.  As the small business determination was uncertain, the Company recorded the $1.5 million NDA fee as research and development expense.  In March  2011, the Company received a letter from the SBA concurring with the Company’s assessment that it is a small business. Consequently, the Company recorded the $1.5 million fee as a receivable and reduced the research and development expenses in March 2011. In June 2011, the Company was refunded the $1.5 million fee from the SBA.

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).  Consolidated comprehensive loss was ($24.6) million and ($10.3) million for the three months ended June 30, 2011 and 2010, respectively. Consolidated comprehensive income (loss) was $20.4 million and ($23.9) million for the six months ended June 30, 2011 and 2010, respectively.  As of June 30, 2011, the cumulative unrealized loss on investments and the cumulative gain on foreign currency translation adjustment was $100,823 and $442,657, respectively. As of December 31, 2010, the cumulative unrealized loss on investments and the cumulative gain on foreign currency translation adjustment was $3,020 and $301,870, respectively.

Net Income (Loss) Per Share Attributable to Common Stockholders

Basic net income (loss) per common share is computed by dividing net loss by the weighted-average number of common shares outstanding. Diluted net income (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.

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date.  The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized.

Recently Issued Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an update to existing guidance on fair value measurement and disclosure requirements under U.S. GAAP and International Financial Reporting Standards.  The amendments in this update change the wording used to describe many of the requirements under U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in this update will be effective for interim and annual periods beginning after December 15, 2011 and should be applied retrospectively. The adoption of these amendments is not expected to have a material impact on the Company’s financial position, cash flow or results of operations.

In June 2011, the FASB issued an update which amends the presentation of comprehensive income. The objective of this update is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  Under this update, an entity has the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under either choice, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The amendments in this update will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied prospectively. The adoption of these amendments is not expected to have a material impact on the Company’s financial position, cash flow or results of operations.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2011

Stockholders' Equity

Stockholders' Equity

5.     Stockholders’ Equity

Noncontrolling Interest

In October 2009, the Company sold 40% of its equity interest in OBI and in February 2011, pursuant to an amendment to the October 2009 financing agreement, OBI sold newly-issued shares of its common stock for gross proceeds of approximately 462.0 million New Taiwan Dollars (approximately $15.5 million based on then-current exchange rates).  The Company purchased 277.2 million New Taiwan Dollars (approximately $9.3 million based on then-current exchange rates) of the shares issued in the financing, such that the Company continued to maintain a 60% equity interest in OBI.  Pursuant to authoritative guidance, the Company accounts and reports for minority interests, the portion of OBI not owned by the Company, as noncontrolling interests and classifies them as a component of stockholders’ equity on the consolidated balance sheets of the Company.  The Company includes the net loss attributable to noncontrolling interests as part of its consolidated net loss.

The following table reconciles equity attributable to noncontrolling interest:

	For the Six Months Ended June 30, 2011
Noncontrolling interest, January 1, 2011	$	1,996,704
Additional financing	6,194,193
Net loss attributable to noncontrolling interest	(974,288		)
Translation adjustments	278,761
Noncontrolling interest, June 30, 2011	$	7,495,370

Warrants

In connection with a registered direct offering which occurred in March 2009, the Company sold warrants to purchase up to an aggregate of 91,533 shares of its common stock.  These warrants had an exercise price of $10.93 per share and were exercised in June 2011.

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Net Income (Loss) Per Share Attributable to Common Stockholders

6 Months Ended

Jun. 30, 2011

Net Income (Loss) Per Share Attributable to Common Stockholders

Net Income (Loss) Per Share Attributable to Common Stockholders

6. Net Income (Loss) Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net income per share for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011		2010
Numerator:
Net income (loss) — basic and diluted	$	(24,238,846	)	$	(10,060,897	)	$	20,894,024	$	(23,556,652	)
Denominator:
Weighted average number of shares of common stock outstanding - basic	46,479,395			38,306,910			44,581,010		36,663,380
Effect of dilutive securities:
Restricted stock	—			—			43,560		—
ESPP shares	—			—			39,381		—
Stock award common share equivalents	—			—			783,310		—
Weighted average number of shares of common stock outstanding - diluted	46,479,395			38,306,910			45,447,261		36,663,380
Net income (loss) per share - basic	$	(0.52	)	$	(0.26	)	$	0.47	$	(0.64	)
Net income (loss) per share - diluted	$	(0.52	)	$	(0.26	)	$	0.46	$	(0.64	)

For the three months ended June 30, 2011 and 2010, 5.8 million and 3.9 million, respectively, potentially dilutive shares of common stock were not included in the diluted net income per share calculations because they would have been antidilutive.

For the six months ended June 30, 2011 and 2010, 4.1 million and 3.9 million, respectively, potentially dilutive shares of common stock were not included in the diluted net income per share calculations because they would have been antidilutive.

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Stock Based Compensation

6 Months Ended

Jun. 30, 2011

Stock Based Compensation

Stock Based Compensation

7. Stock Based Compensation

Optimer Pharmaceuticals, Inc.

Stock Options

In November 1998, the Company adopted the 1998 Stock Plan (the “1998 Plan”).  The Company terminated and ceased granting options under the 1998 Plan upon the closing 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 closing of the Company’s initial public offering. A total of 2,000,000 shares of the Company’s common stock were initially made available for sale under the 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 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. Pursuant to this provision, 750,000 additional shares of the Company’s common stock were reserved for issuance under the 2006 Plan on January 1, 2011, 2010 and 2009.  Under the 2006 Plan, 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.

In March and in June 2011, the Company’s Board of Directors approved amendments to the 2006 Plan to provide for the reservation of an additional 1,750,000 shares and 1,000,000 shares, respectively, of the Company’s common stock to be used exclusively for the grant of awards to individuals not previously an employee or non-employee director of the Company (or following a bona fide period of non-employment with the Company), as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules.

Options granted under both the 1998 Plan and the 2006 Plan generally expire 10 years from the date of grant (five years for a 10% or greater 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.

Performance-Based Stock Options, Performance-Based Restricted Stock Units, and Stock Awards

On May 5, 2010, the Company’s Board of Directors appointed Pedro Lichtinger as its President and CEO and as a member of its Board of Directors.  Pursuant to Mr. Lichtinger’s offer letter, he received performance-based stock options to purchase up to an aggregate of 480,000 shares of common stock and performance-based restricted stock units covering up to an aggregate of 120,000 shares of common stock, which vest over time beginning on the dates the Company achieves specified development and commercialization goals.  In February 2011, one of the performance criteria was met, and, in May 2011, another one of the performance criteria was met. As a result of the accomplishment of these goals, 1/4th of the performance-based stock options and performance-based restricted stock units related to each goal will vest on the one-year anniversary of the achievement of such goal and the remaining shares will vest in 36 equal monthly installments thereafter.

Simultaneously with Mr. Lichtinger’s appointment, Michael Chang resigned as the Company’s President and CEO.  The Company entered into a consulting agreement with Dr. Chang to provide general consulting services. Pursuant to his consulting agreement and as part of his compensation, Dr. Chang received performance-based stock options to purchase up to an aggregate of 400,000 shares of common stock which vest over time beginning on the dates certain regulatory filings are accepted and approved. Dr. Chang has continued to serve as the Chairman of the Company’s Board of Directors. In January 2011, one of the performance criteria was met, and, in May 2011, another one of the performance criteria was met. As a result of the accomplishment of these goals,1/4th of the option shares related to each goal vested upon the accomplishment of such goal. The remaining shares will vest in 24 equal monthly installments over the subsequent two-year period.

Employee Stock Purchase Plan

Optimer also grants stock awards under its employee stock purchase plan (“ESPP”). Under the terms of the ESPP, eligible employees may purchase shares of Optimer’s common stock at the lesser of 85% of the fair market value of Optimer’s common stock on the offering date or the purchase date.

Valuations

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options and stock awards, 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 of the underlying stock.  The following table shows the assumptions used to compute stock-based compensation expense for the stock options, performance-based stock options, performance-based restricted stock units, and ESPP purchase rights during the three and six months ended June 30, 2011 and 2010, using the Black-Scholes option pricing model:

	Three months endedJune 30,				Six months endedJune 30,
Stock Options	2011		2010		2011		2010
Risk-free interest rate	2.10-3.46	%	2.66-3.53	%	2.10-3.46	%	2.66-3.53	%
Dividend yield	0.00	%	0.00	%	0.00	%	0.00	%
Expected life of options (years)	6.08-9.08		6.05-10.00		5.27-9.49		5.02-10.00
Volatility	69.13-72.20	%	71.24-79.07	%	69.13-73.63	%	71.24-79.07	%

	Three months endedJune 30,				Six months endedJune 30,
ESPP	2011		2010				2010
Risk-free interest rate	0.14-0.16	%	0.19-0.20	%	0.14-0.18	%	0.17-0.20	%
Dividend yield	0.00	%	0.00	%	0.00	%	0.00	%
Expected life of options (years)	0.5		0.5		0.5		0.5
Volatility	41.05-44.29	%	34.23-39.62	%	40.01-44.29	%	34.08-39.62	%

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.

Total stock-based compensation expense related to all of the Company’s stock options, restricted stock units, stock awards issued to employees and consultants, and employee stock purchases, recognized for the three months and six months ended June 30, 2011 and 2010, was comprised as follows:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Research and development	$	637,374	$	406,145	$	1,312,897	$	790,142
Marketing	215,413		94,997		258,278		188,308
General and administrative	1,604,209		1,623,761		3,017,054		2,091,006
Stock-based compensation expense	$	2,456,996	$	2,124,903	$	4,588,229	$	3,069,456

At June 30, 2011, the total unrecognized compensation expense related to unvested stock options and restricted stock units issued to employees was approximately $24.0 million and the related weighted-average period over which such expense is expected to be recognized is approximately 3.5 years.

Optimer Biotechnology, Inc.

Stock Options

In March 2010, OBI’s board of directors approved a Stock Option Plan and reserved 8.0 million shares of OBI common stock for issuance of equity awards thereunder. The Stock Option Plan provides for the issuance of stock options, restricted stock awards and stock appreciation rights to employees of OBI. The options generally vest over four years and have a maximum contractual term of ten years.

Valuations

The following table shows the assumptions used to compute stock-based compensation expense for the stock options granted by OBI during the three months and six months ended June 30, 2011 and 2010, using the Black-Scholes option pricing model:

	Three months endedJune 30,				Six months endedJune 30,
Stock Options	2011		2010		2011		2010
Risk-free interest rate	1.75	%	1.38	%	1.63-1.750	%	1.25-1.38	%
Dividend yield	0.00	%	0.00	%	0.00	%	0.00	%
Expected life of options (years)	6.08		6.08		6.08		6.08
Volatility	88.35	%	92.14	%	88.12-88.35	%	91.65-92.14	%

The risk-free interest rate assumption was based on the Central Bank of China interest rates.  The assumed dividend yield was based on OBI’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 OBI’s limited history.  Due to OBI’s limited historical data, OBI used the historical volatility of OBI’s peers whose share prices are publicly available to estimate the volatility rate of OBI stock options.

The following table summarizes the stock-based compensation expense for OBI included in each operating expense line item in Optimer’s consolidated statements of operations for the three months and six months ended June 30, 2011 and 2010:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Research and development	$	15,303	$	11,592	$	27,727	$	19,026
Marketing	791		—		791		—
General and administrative	36,165		30,325		70,933		62,785
Stock-based compensation expense	$	52,259	$	41,917	$	99,451	$	81,811

At June 30, 2011, the total unrecognized compensation expense related to unvested stock options issued to OBI employees was approximately $607,000 and the related weighted-average period over which this expense is expected to be recognized was approximately 2.8 years.

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Interim Financial Information

6 Months Ended

Jun. 30, 2011

Interim Financial Information

Interim Financial Information

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.

Optimer is a biopharmaceutical company focused on discovering, developing and commercializing innovative hospital specialty products.  The Company currently has one approved anti-infective product, DIFICID™ (fidaxomicin), for the treatment of Clostridium difficile-associated diarrhea (“CDAD”), and one anti-infective product candidate, 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.

In May 2011, the U.S. Food and Drug Administration (“FDA”), granted marketing approval for DIFICID for the treatment of CDAD in adults 18 years of age and older.

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 months and six months ended June 30, 2011 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, 2010, which was filed with the Securities and Exchange Commission (“SEC”) on March 10, 2011.

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.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2011

Fair Value of Financial Instruments

Fair Value of Financial Instruments

3.   Fair Value of Financial Instruments

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements as of June 30, 2011:

	Quoted Prices in Active Markets(Level 1)		Other Observable Inputs(Level 2)		Unobservable Inputs(Level 3)		Total
Cash equivalents	$	61,402,529	$	—	$	—	$	61,402,529
Marketable securities	96,391,742		—		—		96,391,742
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, 2011	$	882,000
Total gains and losses:
Realized net income	—
Unrealized in accumulated other comprehensive income	—
Purchases, sales, issuances and settlements	—
Transfers in (out) of Level 3	—
Ending balance at June 30, 2011	$	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 June 30, 2011, the Company held one ARPS valued at $882,000 with a perpetual maturity date that resets every 28 days.  Although as of June 30, 2011, this ARPS continued to pay interest according to its stated terms, the market in these securities continues to be illiquid. Based on a discounted cash flow model used to determine the estimated fair value of its investment in the ARPS, 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 assumptions used for the discontinued cash flow model include estimates for interest rates, timing and amount of cash flows and expected holding period of the ARPS.  The Company’s ARPS is classified as a long-term investment on the consolidated balance sheets, as the Company does not believe it could liquidate its security in the near term.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	46,602,501	39,278,965
Common stock, shares outstanding	46,602,501	39,278,965